HOUSTON, Feb. 27, 2017 /PRNewswire/ -- Key Energy
Services, Inc. (NYSE: KEG) today reported a net loss of
$131.7 million, or $0.82 per diluted share, on revenue of
$399.4 million for the period from
January 1, 2016 to December 15, 2016 for the Predecessor Company,
and a net loss of $10.2 million, or
$0.51 per diluted share, on revenue
of $17.8 million for the period from
December 16, 2016 to December 31, 2016 for the Successor Company. Upon
emergence from Chapter 11 bankruptcy on December 15, 2016, the Company adopted fresh
start accounting, which resulted in the Company becoming a new
entity for financial reporting purposes. References to "Successor"
relate to the financial position of the reorganized Key as of and
subsequent to December 16, 2016;
references to "Predecessor" refer to the financial position of Key
as of and prior to December 15, 2016
and the results of operations through December 15, 2016. As a result of the application
of fresh start accounting and the effects of the implementation of
the Prepackaged Plan of Reorganization, the financial statements on
or after December 16, 2016 are not
comparable with the financial statements prior to that date.
For the period October 1, 2016 to
December 15, 2016, the Predecessor
reported net income of $173.4
million, or $1.08 per diluted
share, on revenue of $90.9 million.
Predecessor results for the period from October 1, 2016 to December 15, 2016 include a net gain associated
with the Company's restructuring of $245.6
million, or $1.53 per diluted
share, a charge related to settlement accruals of $16.7 million, or $0.10 per diluted share, an impairment charge of
$4.6 million, or $0.03 per diluted share, professional fees
incurred in connection with our emergence from voluntary
reorganization of $3.1 million, or
$0.02 per diluted share, a charge
related to a vacation policy accrual change of $3.4 million, or $0.02 per diluted share, a financing-related and
insurance policy tail expense of $2.4
million, or $0.02 per diluted
share, an expense related to the vesting of equity compensation in
bankruptcy of $2.0 million, or
$0.01 per diluted share, severance
costs of $0.7 million, or
$0.00 per diluted share and a loss on
sale of assets of $0.1 million, or
$0.00 per diluted share. Excluding
these items, the Predecessor reported a normalized net loss of
$39.0, or $0.24 per diluted share. For the period
December 16, 2016 to December 31, 2016, the Successor reported a net
loss of $10.2 million, or
$0.51 per diluted share, on revenue
of $17.8 million. Successor results
for the period from December 16, 2016
to December 31, 2016 included a loss
on sale of assets of $0.4 million, or
$0.02 per diluted share. Excluding
this item, the Successor reported a normalized net loss of
$9.8 million, or $0.49 per diluted share. For the period
July 1, 2016 to September 30, 2016, Predecessor reported a net
loss of $130.8 million, or
$0.81 per diluted share, on revenue
of $102.4 million. Predecessor
results for the period July 1, 2016
to September 30, 2016 included a
charge of $40.0 million, or
$0.25 per share, for asset
impairments associated with the sale of Key's business in
Mexico, costs of $13.2 million, or $0.08 per share, in professional and other fees
related to Key's restructuring, costs of $6.3 million, or $0.04 per share, related to certain legal
settlements the Company is pursuing and a charge of $2.2 million, or $0.01 per share, related to the loss on sale of
certain obsolete assets.
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16,
2016 to
December 31,
2016
|
|
|
Period from
October 1, 2016
to December 15,
2016
|
|
Quarter ended
September 30,
2016
|
|
Quarter ended
December 31,
2015
|
|
Revenues
|
$
|
17.8
|
|
|
|
$
|
90.9
|
|
|
$
|
102.4
|
|
|
$
|
150.2
|
|
|
Net income
(loss)
|
(10.2)
|
|
|
|
173.4
|
|
|
(130.8)
|
|
|
(152.5)
|
|
|
Diluted income (loss)
per share
|
(0.51)
|
|
|
|
1.08
|
|
|
(0.81)
|
|
|
(0.97)
|
|
|
Adjusted
EBITDA*
|
(4.9)
|
|
|
|
0.8
|
|
|
(14.4)
|
|
|
(6.7)
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the
Company's completed FCPA investigations.
|
For the period from January 1,
2016 to December 15, 2016, the
Predecessor reported a net loss of $131.7
million, or $0.82 per diluted
share, on revenue of $399.4 million.
Predecessor results for the period from January 1, 2016 to December 15, 2016 included a net gain associated
with the Company's restructuring of $245.6
million, or $1.53 per diluted
share, an impairment charge of $44.6
million, or $0.28 per diluted
share, professional fees incurred in connection with our emergence
from voluntary reorganization of $25.8
million, or $0.16 per diluted
share, severance costs of $9.0
million, or $0.06 per diluted
share, a charge for certain legal settlements the Company is
pursuing of $16.7 million, or
$0.10 per diluted share, a loss on
sale of assets of $5.2 million, or
$0.03 per diluted share, a charge
associated with the completed FCPA investigation settlement of
$5.0 million, or $0.03 per diluted share, a charge related to a
vacation policy accrual change of $3.4
million, or $0.02 per diluted
share, a financing-related and insurance policy tail expense of
$2.4 million, or $0.02 per diluted share, and an expense related
to the vesting of equity compensation in bankruptcy of $2.0 million, or $0.01 per diluted share. Excluding these items,
the Company reported a normalized net loss of $256.7 million, or $1.60 per diluted share. For the period
December 16, 2016 to December 31, 2016, the Successor reported a net
loss of $10.2 million, or
$0.51 per diluted share, on revenue
of $17.8 million. Successor results
for the period from December 16, 2016
to December 31, 2016 included a loss
on sale of assets of $0.4 million, or
$0.02 per diluted share. Excluding
this item, the Successor reported a normalized net loss of
$9.8 million, or $0.49 per diluted share. For the twelve-month
period ending December 31, 2015, the
Predecessor reported a net loss of $917.7
million, or $5.86 per diluted
share, on revenue of $792.3
million.
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16, 2016
through December
31, 2016
|
|
|
Period from
January 1, 2016
through December
15, 2016
|
|
Year Ended
December 31, 2015
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
Revenues
|
$
|
17.8
|
|
|
|
$
|
399.4
|
|
|
$
|
792.3
|
|
|
Net loss
|
(10.2)
|
|
|
|
(131.7)
|
|
|
(917.7)
|
|
|
Diluted loss per
share
|
(0.51)
|
|
|
|
(0.82)
|
|
|
(5.86)
|
|
|
Adjusted
EBITDA*
|
(4.9)
|
|
|
|
(48.7)
|
|
|
(28.1)
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the
Company's completed FCPA investigations.
|
The following discussion and table sets forth financial
information by operating segment and other selected information for
the periods indicated. Except as otherwise indicated, the financial
measures discussed in these results of operations combine the
Successor and Predecessor results for the quarter ended
December 31, 2016 in order to provide
some comparability of such information to the quarter ended
September 30, 2016. While this
combined presentation is not presented according to generally
accepted accounting principles in the
United States ("GAAP"), management believes that providing
this financial information is the most relevant and useful method
for making comparisons to the prior periods.
|
Successor
|
|
Predecessor
|
|
Combined
|
|
Period from December
16, 2016 through
December 31, 2016
(Unaudited)
|
|
Period from
October 1,
2016 through
December 15, 2016
(Unaudited)
|
|
Period from
October 1,
2016 through
December 31, 2016
(Unaudited)
|
|
|
|
|
|
|
|
a
|
|
b
|
|
a+b
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
|
|
|
|
|
Revenue
|
8,549
|
|
|
53,250
|
|
|
61,799
|
|
|
Operating Income
|
(1,930)
|
|
|
(10,416)
|
|
|
(12,346)
|
|
|
Adjusted
EBITDA
|
(802)
|
|
|
9,682
|
|
|
8,880
|
|
|
Fluid Management
Services
|
|
|
|
|
|
|
Revenue
|
3,208
|
|
|
14,778
|
|
|
17,986
|
|
|
Operating Income
|
(1,138)
|
|
|
(10,884)
|
|
|
(12,022)
|
|
|
Adjusted
EBITDA
|
(151)
|
|
|
(2,409)
|
|
|
(2,560)
|
|
|
Coiled Tubing
Services
|
|
|
|
|
|
|
Revenue
|
1,392
|
|
|
6,275
|
|
|
7,667
|
|
|
Operating Income
|
(256)
|
|
|
(2,744)
|
|
|
(3,000)
|
|
|
Adjusted
EBITDA
|
(53)
|
|
|
115
|
|
|
62
|
|
|
Fishing & Rental
Services
|
|
|
|
|
|
|
Revenue
|
3,389
|
|
|
12,017
|
|
|
15,406
|
|
|
Operating Income
|
(265)
|
|
|
(6,669)
|
|
|
(6,934)
|
|
|
Adjusted
EBITDA
|
893
|
|
|
638
|
|
|
1,531
|
|
U.S. Results
Revenue in U.S. Rig Services for the combined fourth quarter
period of 2016 was $61.8 million. For
the period October 1, 2016 to
December 15, 2016, Predecessor U.S.
Rig Services generated an operating loss of $10.4 million, or -19.6% of revenue, and for the
period December 16, 2016 to
December 31, 2016, Successor U.S. Rig
Services generated an operating loss of $1.9
million, or -22.6% of revenue. U.S. Rig Services Adjusted
EBITDA for the combined fourth quarter period of 2016 was
$8.9 million, or 14.4% of revenue.
Predecessor U.S. Rig Services revenue for the third quarter of 2016
was $59.1 million and generated
Adjusted EBITDA of $6.8 million, or
11.5% of revenue.
Revenue in Fluid Management Services for the combined fourth
quarter period of 2016 was $18.0
million. For the period October 1,
2016 to December 15, 2016,
Predecessor Fluid Management Services generated an operating loss
of $10.9 million, or -73.7% of
revenue, and for the period December 16,
2016 to December 31, 2016,
Successor Fluid Management Services generated an operating loss of
$1.1 million, or -35.5% of revenue.
Fluid Management Services Adjusted EBITDA loss for the combined
fourth quarter period of 2016 was $2.6
million, or -14.2% of revenue. Predecessor Fluid Management
Services revenue for the third quarter of 2016 was $19.0 million and generated an Adjusted EBITDA
loss of $1.2 million, or -6.5% of
revenue.
Revenue in Coiled Tubing Services for the combined fourth
quarter period of 2016 was $7.7
million. For the period October 1,
2016 to December 15, 2016,
Predecessor Coiled Tubing Services generated an operating loss of
$2.7 million, or -43.7% of revenue,
and for the period December 16, 2016
to December 31, 2016, Successor
Coiled Tubing Services generated an operating loss of $0.3 million, or -18.4% of revenue. Coiled Tubing
Services Adjusted EBITDA loss for the combined fourth quarter
period of 2016 was $0.1 million, or
-0.8% of revenue. Predecessor
Coiled Tubing Services revenue for the third quarter of 2016 was
$7.1 million and generated an
Adjusted EBITDA loss of $1.6 million,
or -23.0% of revenue.
Revenue in Fishing & Rental Services for the combined fourth
quarter period of 2016 was $15.4
million. For the period October 1,
2016 to December 15, 2016,
Predecessor Fishing & Rental Services generated an operating
loss of $6.7 million, or -55.5% of
revenue, and for the period December 16,
2016 to December 31, 2016,
Successor Fishing & Rental Services generated an operating loss
of $0.3 million, or -7.8% of revenue.
Fishing & Rental Services Adjusted EBITDA for the combined
fourth quarter period of 2016 was $1.5
million, or 9.9% of revenue. Predecessor Fishing &
Rental Services revenue for the third quarter of 2016 was
$14.1 million and generated Adjusted
EBITDA of $0.4 million, or 2.8% of
revenue.
International Segment
Revenue in International segment for the combined fourth quarter
period of 2016 was $5.9 million. For
the period October 1, 2016 to
December 15, 2016, Predecessor
International generated an operating loss of $4.9 million, or -106.1% of revenue, and for the
period December 16, 2016 to
December 31, 2016, Successor
International generated operating income of $0.1 million, or 5.2% of revenue. International
Adjusted EBITDA for the combined fourth quarter period of 2016 was
$1.1 million, or 19.0% of revenue.
Predecessor International segment revenue for the third quarter of
2016 was $3.1 million and generated
an Adjusted EBITDA loss of $2.0
million, or -64.5% of revenue.
General and Administrative Expenses
General and Administrative (G&A) expenses for the combined
fourth quarter of 2016 were $40.2
million, which included $6.0
million of settlement accruals, $3.1
million of professional fees associated with the Company's
financial restructuring, a $2.4
million expense related to financing and D&O policy
expense, a $1.9 million expense related to vesting of
equity compensation in bankruptcy, a $0.6
million charge associated with changes to vacation accrual
policy and $0.7 million of severance
expense. Excluding these costs and International G&A of
$2.2 million, G&A in the fourth
quarter was $23.3 million. For the Predecessor third quarter
of 2016, G&A expenses were $42.5
million, which included $13.2
million of professional fees, $0.3
million in severance and $0.2
in costs associated with the completed FCPA investigations.
Overview and Outlook
Key's President and Chief Executive Officer, Robert Drummond, stated, "After emerging from
our prepackaged bankruptcy during the fourth quarter of 2016 with a
significantly improved balance sheet, we are encouraged to enter
2017 with early signals of a recovering U.S. oil services market in
North America. Stabilized oil
prices have enabled our customers to begin addressing well
maintenance needs and to begin evaluating new well
opportunities.
"During the fourth quarter, our Rig Services hours improved
approximately 4% sequentially, in a quarter where hours are
typically down 3% – 5% due to seasonality. We view this
counter-seasonal trend to be indicative of increased demand from
our customers to perform well maintenance on economic wells where
well maintenance may have previously been deferred due to low
commodity prices.
"Increased demand for our services is not limited to the Rig
Services segment, as we're currently seeing increased demand across
all of our service lines and are realizing a degree of pricing
discount recovery in all of our markets.
"We are encouraged by the cyclical and secular trends in our
core production services businesses. The underlying economic
rationale for our customers to perform well maintenance on
conventional oil wells and the new demand associated with well
maintenance of longer, more complex aging horizontal oil wells
continues to improve. We expect to see this new layer of demand
continue to develop in 2017 and we believe we are well-positioned
to benefit from these trends."
Conference Call Information
As previously announced, Key management will host a conference
call to discuss its fourth quarter and full-year 2016 financial
results on Tuesday, February 28, 2017
at 10:00 a.m. CST. Callers from the
U.S. and Canada should dial
888-794-4637 to access the call. International callers should dial
352-204-8973. All callers should ask for the "Key Energy Services
Conference Call" or provide the access code 71632175. The
conference call will also be available live via the internet. To
access the webcast, go to www.keyenergy.com and select "Investor
Relations."
A telephonic replay of the conference call will be available on
Tuesday, February 28, 2017, beginning
approximately two hours after the completion of the conference call
and will remain available for one week. To access the replay, call
855-859-2056 or 800-585-8367. The access code for the replay is
71632175. The replay will also be accessible at www.keyenergy.com
under "Investor Relations" for a period of at least 90 days.
Contact:
West Gotcher, Investor Relations
713-757-5539
|
Consolidated
Statements of Operations (in thousands, except per share amounts,
unaudited):
|
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16,
2016 through
December 31,
2016
|
|
|
Period from
October 1, 2016
to December 15,
2016
|
|
Three Months
Ended
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
REVENUES
|
$
|
17,830
|
|
|
|
$
|
90,917
|
|
|
$
|
102,406
|
|
|
$
|
150,174
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Direct operating
expenses
|
16,603
|
|
|
|
86,737
|
|
|
96,071
|
|
|
176,761
|
|
|
Depreciation and
amortization expense
|
3,574
|
|
|
|
26,221
|
|
|
33,467
|
|
|
41,894
|
|
|
General and
administrative expenses
|
6,501
|
|
|
|
33,653
|
|
|
42,456
|
|
|
38,963
|
|
|
Impairment
expense
|
—
|
|
|
|
4,646
|
|
|
40,000
|
|
|
29,100
|
|
|
Operating
loss
|
(8,848)
|
|
|
|
(60,340)
|
|
|
(109,588)
|
|
|
(136,544)
|
|
|
Interest expense, net
of amounts capitalized
|
1,364
|
|
|
|
10,259
|
|
|
21,120
|
|
|
21,743
|
|
|
Other (income) loss,
net
|
32
|
|
|
|
(1,778)
|
|
|
154
|
|
|
(705)
|
|
|
Reorganization items,
net
|
—
|
|
|
|
(245,571)
|
|
|
—
|
|
|
—
|
|
|
Income (loss) before
tax income taxes
|
(10,244)
|
|
|
|
176,750
|
|
|
(130,862)
|
|
|
(157,582)
|
|
|
Income tax (expense)
benefit
|
—
|
|
|
|
(3,318)
|
|
|
110
|
|
|
5,097
|
|
|
NET INCOME
(LOSS)
|
$
|
(10,244)
|
|
|
|
$
|
173,432
|
|
|
$
|
(130,752)
|
|
|
$
|
(152,485)
|
|
|
Income (loss)
per share:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.51)
|
|
|
|
$
|
1.08
|
|
|
$
|
(0.81)
|
|
|
$
|
(0.97)
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
20,090
|
|
|
|
160,449
|
|
|
160,846
|
|
|
157,585
|
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16, 2016
through December
31, 2016
|
|
|
Period from
January 1, 2016
through December
15, 2016
|
|
Year Ended
December 31, 2015
|
|
REVENUES
|
$
|
17,830
|
|
|
|
$
|
399,423
|
|
|
$
|
792,326
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
Direct operating
expenses
|
16,603
|
|
|
|
362,825
|
|
|
714,637
|
|
|
Depreciation and
amortization expense
|
3,574
|
|
|
|
131,296
|
|
|
180,271
|
|
|
General and
administrative expenses
|
6,501
|
|
|
|
163,257
|
|
|
202,631
|
|
|
Impairment
expense
|
—
|
|
|
|
44,646
|
|
|
722,096
|
|
|
Operating income
(loss)
|
(8,848)
|
|
|
|
(302,601)
|
|
|
(1,027,309)
|
|
|
Interest expense, net
of amounts capitalized
|
1,364
|
|
|
|
74,320
|
|
|
73,847
|
|
|
Other (income) loss,
net
|
32
|
|
|
|
(2,443)
|
|
|
9,394
|
|
|
Reorganization items,
net
|
—
|
|
|
|
(245,571)
|
|
|
—
|
|
|
Loss before tax
income taxes
|
(10,244)
|
|
|
|
(128,907)
|
|
|
(1,110,550)
|
|
|
Income tax (expense)
benefit
|
—
|
|
|
|
(2,829)
|
|
|
192,849
|
|
|
NET
LOSS
|
$
|
(10,244)
|
|
|
|
$
|
(131,736)
|
|
|
$
|
(917,701)
|
|
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.51)
|
|
|
|
$
|
(0.82)
|
|
|
$
|
(5.86)
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
Basic and
diluted
|
20,090
|
|
|
|
160,587
|
|
|
156,598
|
|
|
Segment Revenue
and Operating Income (in thousands, except for percentages,
unaudited):
|
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16,
2016 to
December 31,
2016
|
|
|
Period from
October 1, 2016
to December 15,
2016
|
|
Three Months
Ended
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
$
|
8,549
|
|
|
|
$
|
53,250
|
|
|
$
|
59,137
|
|
|
$
|
77,856
|
|
|
Fluid Management
Services
|
3,208
|
|
|
|
14,778
|
|
|
18,969
|
|
|
27,701
|
|
|
Coiled Tubing
Services
|
1,392
|
|
|
|
6,275
|
|
|
7,146
|
|
|
16,377
|
|
|
Fishing & Rental
Services
|
3,389
|
|
|
|
12,017
|
|
|
14,078
|
|
|
23,422
|
|
|
International
|
1,292
|
|
|
|
4,597
|
|
|
3,076
|
|
|
4,818
|
|
|
Consolidated
Total
|
$
|
17,830
|
|
|
|
$
|
90,917
|
|
|
$
|
102,406
|
|
|
$
|
150,174
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
$
|
(1,930)
|
|
|
|
$
|
(10,416)
|
|
|
$
|
(9,004)
|
|
|
$
|
(6,473)
|
|
|
Fluid Management
Services
|
(1,138)
|
|
|
|
(10,884)
|
|
|
(13,225)
|
|
|
(16,565)
|
|
|
Coiled Tubing
Services
|
(256)
|
|
|
|
(2,744)
|
|
|
(4,372)
|
|
|
(10,691)
|
|
|
Fishing & Rental
Services
|
(265)
|
|
|
|
(6,669)
|
|
|
(6,951)
|
|
|
(4,704)
|
|
|
International
|
67
|
|
|
|
(4,876)
|
|
|
(44,389)
|
|
|
(71,886)
|
|
|
Functional
Support
|
(5,326)
|
|
|
|
(24,751)
|
|
|
(31,647)
|
|
|
(26,225)
|
|
|
Consolidated
Total
|
$
|
(8,848)
|
|
|
|
$
|
(60,340)
|
|
|
$
|
(109,588)
|
|
|
$
|
(136,544)
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
(22.6)%
|
|
|
|
(19.6)%
|
|
|
(15.2)%
|
|
|
(8.3)%
|
|
|
Fluid Management
Services
|
(35.5)%
|
|
|
|
(73.7)%
|
|
|
(69.7)%
|
|
|
(59.8)%
|
|
|
Coiled Tubing
Services
|
(18.4)%
|
|
|
|
(43.7)%
|
|
|
(61.2)%
|
|
|
(65.3)%
|
|
|
Fishing & Rental
Services
|
(7.8)%
|
|
|
|
(55.5)%
|
|
|
(49.4)%
|
|
|
(20.1)%
|
|
|
International
|
5.2%
|
|
|
|
(106.1)%
|
|
|
(1,443.1)%
|
|
|
(1,492.0)%
|
|
|
Consolidated
Total
|
(49.6)%
|
|
|
|
(66.4)%
|
|
|
(107.0)%
|
|
|
(90.9)%
|
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16, 2016
through December
31, 2016
|
|
|
Period from
January 1, 2016
through December
15, 2016
|
|
Year Ended
December 31, 2015
|
|
Revenues
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
$
|
8,549
|
|
|
|
$
|
222,877
|
|
|
$
|
377,131
|
|
|
Fluid Management
Services
|
3,208
|
|
|
|
76,008
|
|
|
153,153
|
|
|
Coiled Tubing
Services
|
1,392
|
|
|
|
30,569
|
|
|
89,823
|
|
|
Fishing & Rental
Services
|
3,389
|
|
|
|
55,790
|
|
|
121,883
|
|
|
International
|
1,292
|
|
|
|
14,179
|
|
|
50,336
|
|
|
Consolidated
Total
|
$
|
17,830
|
|
|
|
$
|
399,423
|
|
|
$
|
792,326
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
$
|
(1,930)
|
|
|
|
$
|
(39,460)
|
|
|
$
|
(307,939)
|
|
|
Fluid Management
Services
|
(1,138)
|
|
|
|
(37,936)
|
|
|
(43,484)
|
|
|
Coiled Tubing
Services
|
(256)
|
|
|
|
(19,322)
|
|
|
(155,168)
|
|
|
Fishing & Rental
Services
|
(265)
|
|
|
|
(26,408)
|
|
|
(197,412)
|
|
|
International
|
67
|
|
|
|
(59,226)
|
|
|
(182,536)
|
|
|
Functional
Support
|
(5,326)
|
|
|
|
(120,249)
|
|
|
(140,770)
|
|
|
Consolidated
Total
|
$
|
(8,848)
|
|
|
|
$
|
(302,601)
|
|
|
$
|
(1,027,309)
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
(22.6)%
|
|
|
|
(17.7)%
|
|
|
(81.7)%
|
|
|
Fluid Management
Services
|
(35.5)%
|
|
|
|
(49.9)%
|
|
|
(28.4)%
|
|
|
Coiled Tubing
Services
|
(18.4)%
|
|
|
|
(63.2)%
|
|
|
(172.7)%
|
|
|
Fishing & Rental
Services
|
(7.8)%
|
|
|
|
(47.3)%
|
|
|
(162.0)%
|
|
|
International
|
5.2%
|
|
|
|
(417.7)%
|
|
|
(362.6)%
|
|
|
Consolidated
Total
|
(49.6)%
|
|
|
|
(75.8)%
|
|
|
(129.7)%
|
|
Following is a reconciliation of net loss as presented in
accordance with United States
generally accepted accounting principles (GAAP) to EBITDA and
Adjusted EBITDA as required under Regulation G of the Securities
Exchange Act of 1934.
|
Reconciliations of
EBITDA and Adjusted EBITDA to net loss (in thousands, except for
percentages, unaudited):
|
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16,
2016 to
December 31,
2016
|
|
|
Period from
October 1, 2016
to December 15,
2016
|
|
Three Months
Ended
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
Net income
(loss)
|
(10,244)
|
|
|
|
$
|
173,432
|
|
|
$
|
(130,752)
|
|
|
$
|
(152,485)
|
|
|
Income tax
benefit
|
—
|
|
|
|
3,318
|
|
|
(110)
|
|
|
(5,097)
|
|
|
Interest expense, net
of amounts capitalized
|
1,364
|
|
|
|
10,259
|
|
|
21,120
|
|
|
21,743
|
|
|
Interest
income
|
(20)
|
|
|
|
(37)
|
|
|
(104)
|
|
|
(58)
|
|
|
Depreciation and
amortization
|
3,574
|
|
|
|
26,221
|
|
|
33,467
|
|
|
41,894
|
|
|
EBITDA
|
$
|
(5,326)
|
|
|
|
$
|
213,193
|
|
|
$
|
(76,379)
|
|
|
$
|
(94,003)
|
|
|
%
of revenues
|
(29.9)%
|
|
|
|
234.5%
|
|
|
(74.6)%
|
|
|
(62.6)%
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
—
|
|
|
|
745
|
|
|
313
|
|
|
1,340
|
|
|
Restructuring items,
net
|
—
|
|
|
|
(245,571)
|
|
|
—
|
|
|
—
|
|
|
Impairment
expense
|
—
|
|
|
|
4,646
|
|
|
40,000
|
|
|
29,100
|
|
|
Loss on sales of
assets
|
384
|
|
|
|
81
|
|
|
2,163
|
|
|
50,907
|
|
|
Other
write-offs
|
—
|
|
|
|
—
|
|
|
—
|
|
|
5,937
|
|
|
Professional
fees
|
—
|
|
|
|
3,082
|
|
|
13,181
|
|
|
—
|
|
|
Settlement
accruals
|
—
|
|
|
|
16,740
|
|
|
6,316
|
|
|
—
|
|
|
Vacation policy
accrual change
|
—
|
|
|
|
3,396
|
|
|
—
|
|
|
—
|
|
|
Vesting of equity
compensation in bankruptcy
|
—
|
|
|
|
1,991
|
|
|
—
|
|
|
—
|
|
|
Financing related and
D&O policy tail expense
|
—
|
|
|
|
2,429
|
|
|
—
|
|
|
—
|
|
|
Other, net
|
—
|
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
Adjusted
EBITDA*
|
$
|
(4,942)
|
|
|
|
$
|
778
|
|
|
$
|
(14,406)
|
|
|
$
|
(6,719)
|
|
|
%
of revenues
|
(27.7)%
|
|
|
|
0.9%
|
|
|
(14.1)%
|
|
|
(4.5)%
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
17,830
|
|
|
|
$
|
90,917
|
|
|
$
|
102,406
|
|
|
$
|
150,174
|
|
|
|
* Adjusted EBITDA
does not exclude costs incurred in connection with the Company's
completed FCPA investigations.
|
|
Successor
|
|
|
Predecessor
|
|
Period from
December 16, 2016
through December
31, 2016
|
|
|
Period from
January 1, 2016
through December
15, 2016
|
|
Year Ended
December 31, 2015
|
|
Net loss
|
$
|
(10,244)
|
|
|
|
$
|
(131,736)
|
|
|
$
|
(917,701)
|
|
|
Income tax
benefit
|
—
|
|
|
|
2,829
|
|
|
(192,849)
|
|
|
Interest expense, net
of amounts capitalized
|
1,364
|
|
|
|
74,320
|
|
|
73,847
|
|
|
Interest
income
|
(20)
|
|
|
|
(407)
|
|
|
(159)
|
|
|
Depreciation and
amortization
|
3,574
|
|
|
|
131,296
|
|
|
180,271
|
|
|
EBITDA
|
$
|
(5,326)
|
|
|
|
$
|
76,302
|
|
|
$
|
(856,591)
|
|
|
%
of revenues
|
(29.9)%
|
|
|
|
19.1%
|
|
|
(108.1)%
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
—
|
|
|
|
8,992
|
|
|
9,718
|
|
|
Restructuring items,
net
|
—
|
|
|
|
(245,571)
|
|
|
—
|
|
|
Impairment
expense
|
—
|
|
|
|
44,646
|
|
|
722,096
|
|
|
Allowance for
collectibility of notes receivable
|
—
|
|
|
|
—
|
|
|
7,705
|
|
|
Loss on assets
destroyed in Mexico
|
—
|
|
|
|
—
|
|
|
2,160
|
|
|
Loss on sales of
assets
|
384
|
|
|
|
5,246
|
|
|
53,034
|
|
|
Legal
settlement
|
—
|
|
|
|
6,316
|
|
|
—
|
|
|
FCPA
settlement
|
—
|
|
|
|
5,000
|
|
|
—
|
|
|
Professional
fees
|
—
|
|
|
|
25,785
|
|
|
—
|
|
|
Settlement
accruals
|
—
|
|
|
|
16,740
|
|
|
—
|
|
|
Vacation policy
accrual change
|
—
|
|
|
|
3,396
|
|
|
—
|
|
|
Vesting of equity
compensation in bankruptcy
|
—
|
|
|
|
1,991
|
|
|
—
|
|
|
Financing related and
D&O policy tail expense
|
—
|
|
|
|
2,429
|
|
|
—
|
|
|
Other, net
|
—
|
|
|
|
46
|
|
|
—
|
|
|
Bad debt expense -
International
|
—
|
|
|
|
—
|
|
|
18,537
|
|
|
Other
write-offs
|
—
|
|
|
|
—
|
|
|
9,666
|
|
|
Sales tax
accrual
|
—
|
|
|
|
—
|
|
|
5,600
|
|
|
Adjusted
EBITDA*
|
$
|
(4,942)
|
|
|
|
$
|
(48,682)
|
|
|
$
|
(28,075)
|
|
|
%
of revenues
|
(27.7)%
|
|
|
|
(12.2)%
|
|
|
(3.5)%
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
17,830
|
|
|
|
$
|
399,423
|
|
|
$
|
792,326
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
completed FCPA investigations.
|
|
Successor
|
|
Period from
December 16, 2016 through December 31, 2016
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
|
Net income
(loss)
|
$
|
(1,930)
|
|
|
$
|
(1,138)
|
|
|
$
|
(256)
|
|
|
$
|
(265)
|
|
|
$
|
49
|
|
|
$
|
(6,704)
|
|
|
$
|
(10,244)
|
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,364
|
|
|
1,364
|
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(18)
|
|
|
(20)
|
|
|
Depreciation and
amortization
|
1,128
|
|
|
987
|
|
|
203
|
|
|
1,158
|
|
|
16
|
|
|
82
|
|
|
3,574
|
|
|
EBITDA
|
$
|
(802)
|
|
|
$
|
(151)
|
|
|
$
|
(53)
|
|
|
$
|
893
|
|
|
$
|
63
|
|
|
$
|
(5,276)
|
|
|
$
|
(5,326)
|
|
|
%
of revenues
|
(9.4)%
|
|
|
(4.7)%
|
|
|
(3.8)%
|
|
|
26.3%
|
|
|
4.9%
|
|
|
—%
|
|
|
(29.9)%
|
|
|
Loss on sale of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
384
|
|
|
—
|
|
|
384
|
|
|
Adjusted
EBITDA*
|
$
|
(802)
|
|
|
$
|
(151)
|
|
|
$
|
(53)
|
|
|
$
|
893
|
|
|
$
|
447
|
|
|
$
|
(5,276)
|
|
|
$
|
(4,942)
|
|
|
%
of revenues
|
(9.4)%
|
|
|
(4.7)%
|
|
|
(3.8)%
|
|
|
26.3%
|
|
|
34.6%
|
|
|
—%
|
|
|
(27.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
8,549
|
|
|
$
|
3,208
|
|
|
$
|
1,392
|
|
|
$
|
3,389
|
|
|
$
|
1,292
|
|
|
$
|
—
|
|
|
$
|
17,830
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
completed FCPA investigations.
|
|
Predecessor
|
|
Period from
October 1, 2016 through December 15, 2016
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
|
Net income
(loss)
|
$
|
(272,638)
|
|
|
$
|
(21,011)
|
|
|
$
|
49,346
|
|
|
$
|
(83,755)
|
|
|
$
|
(2,050)
|
|
|
$
|
503,540
|
|
|
$
|
173,432
|
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,735)
|
|
|
6,053
|
|
|
3,318
|
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,259
|
|
|
10,259
|
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8)
|
|
|
(29)
|
|
|
(37)
|
|
|
Depreciation and
amortization
|
11,964
|
|
|
4,858
|
|
|
2,155
|
|
|
5,162
|
|
|
430
|
|
|
1,652
|
|
|
26,221
|
|
|
EBITDA
|
$
|
(260,674)
|
|
|
$
|
(16,153)
|
|
|
$
|
51,501
|
|
|
$
|
(78,593)
|
|
|
$
|
(4,363)
|
|
|
$
|
521,475
|
|
|
$
|
213,193
|
|
|
%
of revenues
|
(489.5)%
|
|
|
(33.5)%
|
|
|
142.7%
|
|
|
(137.2)%
|
|
|
(398.0)%
|
|
|
—%
|
|
|
18.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
23
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
12
|
|
|
705
|
|
|
745
|
|
|
Restructuring items,
net
|
262,455
|
|
|
9,374
|
|
|
(52,094)
|
|
|
76,918
|
|
|
377
|
|
|
(542,601)
|
|
|
(245,571)
|
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,646
|
|
|
—
|
|
|
4,646
|
|
|
Loss on sales of
assets
|
(3)
|
|
|
229
|
|
|
3
|
|
|
(111)
|
|
|
(37)
|
|
|
—
|
|
|
81
|
|
|
Professional
fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,082
|
|
|
3,082
|
|
|
Settlement
accruals
|
4,609
|
|
|
3,644
|
|
|
334
|
|
|
2,135
|
|
|
—
|
|
|
6,018
|
|
|
16,740
|
|
|
Vacation policy
accrual change
|
1,916
|
|
|
477
|
|
|
119
|
|
|
240
|
|
|
—
|
|
|
644
|
|
|
3,396
|
|
|
Vesting of equity
compensation in bankruptcy
|
402
|
|
|
16
|
|
|
29
|
|
|
49
|
|
|
38
|
|
|
1,457
|
|
|
1,991
|
|
|
Financing related and
D&O policy tail expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,429
|
|
|
2,429
|
|
|
Other, net
|
954
|
|
|
—
|
|
|
222
|
|
|
—
|
|
|
—
|
|
|
(1,130)
|
|
|
46
|
|
|
Adjusted
EBITDA*
|
$
|
9,682
|
|
|
$
|
(2,409)
|
|
|
$
|
115
|
|
|
$
|
638
|
|
|
$
|
673
|
|
|
$
|
7,921
|
|
|
$
|
778
|
|
|
%
of revenues
|
18.2%
|
|
|
(16.3)%
|
|
|
1.8%
|
|
|
5.3%
|
|
|
14.6%
|
|
|
—%
|
|
|
0.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
53,250
|
|
|
$
|
14,778
|
|
|
$
|
6,275
|
|
|
$
|
12,017
|
|
|
$
|
4,597
|
|
|
$
|
—
|
|
|
$
|
90,917
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
completed FCPA investigations.
|
|
Predecessor
|
|
Period from
January 1, 2016 through December 15, 2016
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
|
Net income
(loss)
|
$
|
(301,649)
|
|
|
$
|
(48,013)
|
|
|
$
|
32,891
|
|
|
$
|
(103,474)
|
|
|
$
|
(53,950)
|
|
|
$
|
342,459
|
|
|
$
|
(131,736)
|
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,820)
|
|
|
8,649
|
|
|
2,829
|
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,320
|
|
|
74,320
|
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35)
|
|
|
(372)
|
|
|
(407)
|
|
|
Depreciation and
amortization
|
56,242
|
|
|
22,583
|
|
|
10,729
|
|
|
26,547
|
|
|
6,497
|
|
|
8,698
|
|
|
131,296
|
|
|
EBITDA
|
$
|
(245,407)
|
|
|
$
|
(25,430)
|
|
|
$
|
43,620
|
|
|
$
|
(76,927)
|
|
|
$
|
(53,308)
|
|
|
$
|
433,754
|
|
|
$
|
76,302
|
|
|
%
of revenues
|
(110.1)%
|
|
|
(33.5)%
|
|
|
142.7%
|
|
|
(137.9)%
|
|
|
(376.0)%
|
|
|
—%
|
|
|
19.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
1,061
|
|
|
321
|
|
|
270
|
|
|
295
|
|
|
983
|
|
|
6,062
|
|
|
8,992
|
|
|
Restructuring items,
net
|
262,455
|
|
|
9,374
|
|
|
(52,094)
|
|
|
76,918
|
|
|
377
|
|
|
(542,601)
|
|
|
(245,571)
|
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,646
|
|
|
—
|
|
|
44,646
|
|
|
Loss on sales of
assets
|
(1,360)
|
|
|
5,102
|
|
|
1,082
|
|
|
(274)
|
|
|
696
|
|
|
—
|
|
|
5,246
|
|
|
Legal
settlement
|
2,797
|
|
|
3,519
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
6,316
|
|
|
FCPA
settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|
5,000
|
|
|
Professional
fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,785
|
|
|
25,785
|
|
|
Settlement
accruals
|
4,609
|
|
|
3,644
|
|
|
334
|
|
|
2,135
|
|
|
—
|
|
|
6,018
|
|
|
16,740
|
|
|
Vacation policy
accrual change
|
1,916
|
|
|
477
|
|
|
119
|
|
|
240
|
|
|
—
|
|
|
644
|
|
|
3,396
|
|
|
Vesting of equity
compensation in bankruptcy
|
402
|
|
|
16
|
|
|
29
|
|
|
49
|
|
|
38
|
|
|
1,457
|
|
|
1,991
|
|
|
Financing related and
D&O policy tail expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,429
|
|
|
2,429
|
|
|
Other, net
|
954
|
|
|
—
|
|
|
222
|
|
|
—
|
|
|
—
|
|
|
(1,130)
|
|
|
46
|
|
|
Adjusted
EBITDA*
|
$
|
27,427
|
|
|
$
|
(2,977)
|
|
|
$
|
(6,418)
|
|
|
$
|
2,436
|
|
|
$
|
(6,568)
|
|
|
$
|
(62,582)
|
|
|
$
|
(48,682)
|
|
|
%
of revenues
|
12.3%
|
|
|
(3.9)%
|
|
|
(21.0)%
|
|
|
4.4%
|
|
|
(46.3)%
|
|
|
—%
|
|
|
(12.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
222,877
|
|
|
$
|
76,008
|
|
|
$
|
30,569
|
|
|
$
|
55,790
|
|
|
$
|
14,179
|
|
|
$
|
—
|
|
|
$
|
399,423
|
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
completed FCPA investigations.
|
"EBITDA" is defined as income or loss attributable to Key
before interest, taxes, depreciation, and amortization.
"Adjusted EBITDA" is EBITDA as further adjusted for certain
non-recurring or extraordinary items such as loss on debt
extinguishment, certain other gains or losses, asset retirements
and impairments, and certain non-recurring transaction or other
costs.
EBITDA and Adjusted EBITDA are non-GAAP measures that are
used as supplemental financial measures by the Company's management
and directors and by external users of the Company's financial
statements, such as investors, to assess:
- The financial performance of the Company's assets without
regard to financing methods, capital structure or historical cost
basis;
- The ability of the Company's assets to generate cash
sufficient to pay interest on its indebtedness;
- The Company's operating performance and return on invested
capital as compared to those of other companies in the well
services industry, without regard to financing methods and capital
structure; and
- The Company's operating trends underlying the items that
tend to be of a non-recurring nature.
EBITDA and Adjusted EBITDA have limitations as analytical
tools and should not be considered an alternative to net income,
operating income, cash flow from operating activities, or any other
measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but
not all, items that affect net income and operating income and
these measures may vary among other companies. Limitations to using
EBITDA and Adjusted EBITDA as an analytical tool include:
- EBITDA and Adjusted EBITDA do not reflect Key's current or
future requirements for capital expenditures or capital
commitments;
- EBITDA and Adjusted EBITDA do not reflect changes in, or
cash requirements necessary to service, interest or principal
payments on Key's debt;
- EBITDA and Adjusted EBITDA do not reflect income
taxes;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements;
- Other companies in Key's industry may calculate EBITDA and
Adjusted EBITDA differently than Key does, limiting their
usefulness as a comparative measure; and
- EBITDA and Adjusted EBITDA are a different calculation from
earnings before interest, taxes, depreciation and amortization as
defined for purposes of the financial covenants in the Company's
senior secured credit facility, and therefore should not be relied
upon for assessing compliance with covenants.
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 current expectations, estimates and projections about Key
Energy Services, Inc. and its wholly owned and controlled
subsidiaries, industry and management's beliefs and assumptions
concerning future events and financial trends affecting Key's
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 risks outlined in
"Item 1A. Risk Factors" in Key's Annual Report on Form 10-K
for the fiscal year ended December 31,
2015 and in other reports Key files with the SEC.
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 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 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; 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, 2015 and in other
reports Key files with the SEC.
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/key-energy-services-reports-fourth-quarter-and-full-year-2016-earnings-300414474.html
SOURCE Key Energy Services, Inc.