HOUSTON,
June 13, 2017 /PRNewswire/ -- Key
Energy Services, Inc. (NYSE: KEG) has closed on the sale of its
frac stack and well testing assets (the "Assets") to Covenant
Testing Technologies, LLC ("Covenant"), a leading provider of
flowback and well testing services in North America, for total consideration of
$23.7 million, consisting of
$19.0 million of cash and a
convertible preferred equity security interest in Covenant
representing $4.7 million of
principal value issued to Key. Covenant is an affiliate of Catapult
Energy Services Group, LLC, an oilfield services portfolio company
funded by NGP and NGP Energy Technology Partners. Proceeds from the
transaction will be used for general corporate purposes.
The Assets contributed approximately 16% of Fishing & Rental
Services segment revenue in the first quarter 2017. The transaction
will result in an approximately $17.0
million gain on sale of the Assets. Key does not expect to
pay any cash taxes associated with this gain.
Key's President and Chief Executive Officer, Robert Drummond, stated, "This divestiture
represents another milestone in Key's continued effort to dispose
of non-core assets to position the company as a leading production
services provider in the U.S. We appreciate John and the Covenant
team's commitment to closing this transaction and wish the Covenant
team continued success moving forward."
Covenant's Chief Executive Officer, John Cavitt, commented, "Covenant is excited to
announce the addition to our existing fleet of flowback and well
testing equipment. These assets will service the growing demand of
our customers in the Permian Basin and will position Covenant as
one of the largest pure play well flow management businesses in the
U.S. We are honored to have Key as an equity partner and are
grateful for a smooth, accretive transaction for both
parties."
About Key Energy Services
Key Energy Services is the largest onshore, rig-based well
servicing contractor based on the number of rigs owned. Key
provides a complete range of well intervention services and has
operations in all major onshore oil and gas producing regions of
the continental United States and
internationally in Russia.
About Covenant Testing Technologies
Founded in 2013, Covenant combines leading technology with
some of the most skilled and knowledgeable operators in the
business. With operations in the key areas of the Permian Basin and
Niobrara Shale, Covenant provides best-in-class flowback and well
testing services with a special focus on horizontal and pad
drilling for the upstream oil and gas services industry. Covenant
is an affiliate of Catapult Energy Services Group.
About Catapult Energy Services Group
Founded in 2013, Catapult uses an innovative approach to
establish and invest in start-up oilfield services companies. Led
by experienced entrepreneurs, Catapult is funded by NGP and NGP
Energy Technology Partners.
About NGP
Founded in 1988, NGP is a premier private equity firm in
the natural resources industry with approximately $17 billion of cumulative equity commitments
organized to make strategic investments in the energy and natural
resources sectors. For more information visit
www.ngpenergycapital.com.
About NGP Energy Technology Partners
NGP Energy Technology Partners ("NGP ETP") invests equity
capital for growth and buyout transactions in companies that
provide products and services to the oil and gas, power,
environmental, energy efficiency, and alternative energy sectors.
Founded in 2005, NGP ETP manages approximately $500 million in committed capital and is led by
investment professionals that have extensive experience investing
in those subsectors. The investment team strives to partner with
strong, experienced management teams and work with them to create
significant value.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements that are not historical in nature or that relate
to future events and conditions are, or may be deemed to be,
forward-looking statements. These forward-looking statements are
based on Key's current expectations, estimates and projections and
its management's beliefs and assumptions concerning future events
and financial trends affecting its financial condition and results
of operations. In some cases, you can identify these statements by
terminology such as "may," "will," "should," "predicts," "expects,"
"believes," "anticipates," "projects," "potential" or "continue" or
the negative of such terms and other comparable terminology. These
statements are only predictions and are subject to substantial
risks and uncertainties and are not guarantees of performance.
Future actions, events and conditions and future results of
operations may differ materially from those expressed in these
statements. In evaluating those statements, you should carefully
consider the information above as well as the risks outlined in
"Item 1A. Risk Factors," in Key's Annual Report on Form 10-K for
the year ended December 31, 2016 and
in other reports Key files with the Securities and Exchange
Commission.
Key undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
press release except as required by law. All of Key's written and
oral forward-looking statements are expressly qualified by these
cautionary statements and any other cautionary statements that may
accompany such forward-looking statements.
Important factors that may affect Key's expectations,
estimates or projections include, but are not limited to, the
following: conditions in the oil and natural gas industry,
especially oil and natural gas prices and capital expenditures by
oil and natural gas companies; volatility in oil and natural gas
prices; Key's ability to implement price increases or maintain
pricing on its core services; risks that Key may not be able to
reduce, and could even experience increases in, the costs of labor,
fuel, equipment and supplies employed in its businesses; industry
capacity; asset impairments or other charges; the periodic low
demand for Key's services and resulting operating losses and
negative cash flows; Key's highly competitive industry as well as
operating risks, which are primarily self-insured, and the
possibility that its insurance may not be adequate to cover all of
its losses or liabilities; significant costs and potential
liabilities resulting from compliance with applicable laws,
including those resulting from environmental, health and safety
laws and regulations, specifically those relating to hydraulic
fracturing, as well as climate change legislation or initiatives;
Key's historically high employee turnover rate and its ability to
replace or add workers, including executive officers and skilled
workers; Key's ability to incur debt or long-term lease
obligations; Key's ability to implement technological developments
and enhancements; severe weather impacts on Key's business; Key's
ability to successfully identify, make and integrate acquisitions
and its ability to finance future growth of its operations or
future acquisitions; Key's ability to achieve the benefits expected
from disposition transactions; the loss of one or more of Key's
larger customers; Key's ability to generate sufficient cash flow to
meet debt service obligations; the amount of Key's debt and the
limitations imposed by the covenants in the agreements governing
its debt, including its ability to comply with covenants under its
current debt agreements; an increase in Key's debt service
obligations due to variable rate indebtedness; Key's inability to
achieve its financial, capital expenditure and operational
projections, including quarterly and annual projections of revenue
and/or operating income and its inaccurate assessment of future
activity levels, customer demand, and pricing stability which may
not materialize (whether for Key as a whole or for geographic
regions and/or business segments individually); risks affecting
Key's international operations, including risks affecting Key's
ability to execute its plans to withdraw from international markets
outside North America; Key's
ability to respond to changing or declining market conditions,
including Key's ability to reduce the costs of labor, fuel,
equipment and supplies employed and used in its businesses; Key's
ability to maintain sufficient liquidity; the adverse impact of
litigation; and other factors affecting Key's business described in
"Item 1A. Risk Factors" in its Annual Report on Form 10-K for the
year ended December 31, 2016, and
other reports Key files with the Securities and Exchange
Commission.
Contact:
West Gotcher, Investor Relations
713-757-5539
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SOURCE Key Energy Services, Inc.