HOUSTON, May 9 /PRNewswire-FirstCall/ -- Key Energy Services, Inc.
(Pink Sheets: KEGS) announced today its rig and trucking hours for
the month of April 2007 and provided selected financial data for
the quarter ended March 31, 2007. Conference Call The Company will
hold an investor conference call on May 10, 2007 at 10:00 am CDT.
To access the call, which is open to the public, please call the
conference call operator at the following number: (888) 794-4637
and ask for the "Key Energy Services Conference Call."
International callers should dial (706) 679-7045. The conference
call will also be available on the web. To access the webcast, go
to http://www.keyenergy.com/ and select "Investor Relations." A
replay of the conference call will be available on May 10, 2007
beginning at 2:00 pm CDT and will be available for two weeks. To
access the replay, please call (800) 642-1687. The access code for
the replay is 5370866. Financial Results Revenue for the March 2007
quarter totaled approximately $406 million. This represents a 17%
increase over the same quarter in 2006. The improvement is due
largely to higher pricing and expanded capacity, but offset by
lower rig and trucking hours. In addition, the Company's balance
sheet remains strong. Total debt, including capitalized leases, at
March 31, 2007 was $420.5 million while cash and short term
investments were $187.6 million. General and administrative costs
during the March 2007 quarter include approximately $7 million of
financial reporting-related expenses, including accounting,
consulting and legal costs. See "Selected Financial Data" below.
Activity Update Financial results and activity levels were
negatively impacted during the March 2007 quarter by inclement
weather, primarily during the month of January. Today, market
conditions for the Company's services remain strong in most
regions, although certain natural gas markets like South Texas
continue to experience reduced demand for services, and certain
other markets are adjusting to increased capacity. The Company's
non-holiday weekly rig hours averaged approximately 48,000 over the
past three weeks and modest improvement in the rig hours is
expected in the coming months. Trucking hours have improved in
recent weeks and activity levels within the Company's pressure
pumping segment are strong. Overall pricing for the Company's well
service operations is stable to slightly improving. The Company
implemented increases in select regions during the March quarter
and these increases are now in place. The improvements in pricing
are generally expected to offset select price discounts which have
been made due to competitive pressures in other regions. Within the
pressure pumping segment, the Company has slightly increased the
discount on its services due to competitive pressures and increased
discounting by both larger competitors and new competition.
Commenting on current market conditions, Dick Alario, Chairman and
CEO, stated, "Business is generally quite good and the sector
appears to be in a modest recovery from the brief lull we
experienced during the March quarter. We continue to see strength
in our oil-oriented regions, and inquiries for equipment in our
natural gas regions are beginning to increase, particularly in the
Rockies. Where activity levels remain flat, we are evaluating the
reassignment of equipment to other divisions domestically as well
as opportunities to send equipment to either Argentina or Mexico."
Mr. Alario concluded, "Our positive outlook for 2007 remains firmly
in place and, based on our March results, we now estimate that
revenue for 2007 will be in the range of $1.70 to $1.75 billion.
Our estimate assumes that pricing for all of our services
stabilizes and that commodity prices remain strong. Further, our
estimate also assumes that a large portion of the new industry
capacity that is coming to market is used to replace older, less
efficient equipment." April Rig and Trucking Hours For the month
ending April 30, 2007 March 31, 2007 April 30, 2006 Working Days 20
22 19 Rig Hours 200,216 218,445 211,394 Trucking Hours 189,841
197,593 185,123 The Company calculates working days as total
weekdays for the month less any company holidays that occur that
month. For the month of May 2007, there are 21 working days.
Financial Reporting Update The Company continues to work on the
preparation of its 2004, 2005 and 2006 financial statements and is
making good progress. While the Company is unable to predict a
specific date when it will complete and file its 2006 Annual Report
on Form 10-K, the Company continues to believe that the July 31,
2007 deadline for filing the 10-K pursuant to the terms of the
Company's senior credit facility is achievable. Selected Financial
Data The following selected financial information for the Company
is as of and for the quarters ended March 31, 2007, and 2006,
respectively. This unaudited information has been prepared by
management in accordance with generally accepted accounting
principles. However, this selected financial data is subject to
adjustments due to the need to roll forward the changes and policy
modifications that came out of the restatement process and
adjustments resulting from the finalization and audit of the 2004
through 2006 financial statements. Further, the selected financial
data has not been reviewed or audited by the Company's independent
accountants. The table does not contain all the financial statement
line captions and notes that would be presented in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.
Quarter Ended Quarter Ended March 31, 2007 March 31, 2006 Select
Statement of (In thousands (In thousands Operations Data: -
Unaudited) - Unaudited) Revenue: Well servicing $308,249 $271,910
Pressure pumping 74,077 51,798 Fishing and rental services 23,682
23,244 TOTAL REVENUE $406,008 $346,952 Costs and Expenses: Well
servicing $180,112 $172,610 Pressure pumping 44,462 29,113 Fishing
and rental services 13,566 14,801 General and administrative 50,993
39,979 Interest (1) 10,206 9,884 March 31, 2007 March 31, 2006 (In
thousands (In thousands Select Balance Sheet Data: - Unaudited) -
Unaudited) Current Assets: Cash and cash equivalents (2) $65,237
$109,397 Short term investments (2) 122,388 0 Accounts receivable,
net of allowance for doubtful accounts 265,970 219,717 Inventory
21,109 17,489 Prepaid expenses and other current assets 17,321
24,912 TOTAL CURRENT ASSETS $492,025 $371,515 Current Liabilities:
Accounts payable $77,057 $64,334 Other accrued liabilities 116,672
83,077 Accrued interest 4,216 6,361 Current portion of long-term
debt and capital lease obligations 12,501 12,748 TOTAL CURRENT
LIABILITIES $210,446 $166,520 Long-term debt, less current portion
(3) $391,000 $395,000 Capital lease obligations, less current
portion 17,002 17,496 Non-current accrued expenses 22,125 33,998
Notes (1) Interest expense includes amortization of deferred debt
issuance costs of approximately $0.5 million for each of the
quarters ended March 31, 2007 and 2006, respectively. (2) Capital
expenditures were approximately $48.6 million and $40.4 million for
the quarters ended March 31, 2007 and 2006, respectively. (3) There
were no outstanding borrowings under the Company's revolving credit
facility as of April 30, 2007. The information herein represents
the results for only one quarter and the information herein is not
necessarily indicative of the results that may be reported for the
fiscal year ended December 31, 2007. The information herein is
select financial data and does not represent a complete set of
financial statements, which would include additional financial data
and notes to financial statements. Although the restatement of the
Company's prior year financial statements has been completed, the
unaudited information herein may be subject to adjustments due to
the restatement, as certain corrections of prior period historical
information will affect amounts recorded in subsequent periods. It
is possible that the process of completing and auditing the
Company's financial statements for the fiscal years ending 2004,
2005, 2006 and 2007 could require other changes to the Company's
financial statements. Any of the foregoing changes could,
individually or in the aggregate, be material to the Company's
financial position, results of operations or liquidity. Key Energy
Services, Inc. is the world's largest rig-based well service
company. The Company provides oilfield services including well
servicing, pressure pumping, fishing and rental tools, electric
wireline and other oilfield services. The Company has operations in
all major onshore oil and gas producing regions of the continental
United States and internationally in Argentina. Certain statements
contained in this news release constitute "forward- looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
current expectations, estimates and projections about the Company,
the Company's industry, management's beliefs and certain
assumptions made by management. Whenever possible, the Company has
identified these "forward-looking statements" by words such as
"expects," "believes," "anticipates" and similar phrases. Readers
are cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict,
including, but not limited to: uncertainties affecting whether the
Company will be able to complete and file financial statements for
2004, 2005 and 2006, and the timing thereof; the risk of possible
changes in the scope and nature of, and the time required to
complete, the audit of the Company's 2004, 2005 and 2006 financial
statements; the impact of governmental investigations; possible
legal consequences of failure to file compliant SEC filings for
2003, 2004 and 2005; risks that the Company will be unable to
satisfy the requirements for re- listing on a national stock
exchange or the timing thereof; the potential impact on operations
of the Company's ongoing process to complete the 2004, 2005 and
2006 financial statements; the effect of on-going financial
reporting and restatement-related expenses; possible additional tax
liabilities as a result of the restatement of financial results;
risks that the Company's efforts to remediate internal control and
accounting deficiencies will not be effective; potential financial
or other effects of on-going class action and derivative litigation
and litigation with former officers; risks affecting the ability of
the Company to maintain or improve operations, including the
ability to maintain price increases, possible over-supply of new
rigs coming into the market and weather risks; risks associated
with technology investments and the receptiveness of customers to
the new technology investments; and risks that the Company will be
unable to achieve budgeted financial targets and risks affecting
activity levels for rig hours, including the risk that commodity
prices decline or the risk that capital budgets from the Company's
customers decrease. Readers should also refer to the section
entitled "Risk Factors" in the 2003 Financial and Informational
Report filed with a Form 8-K/A on October 26, 2006 for discussion
of risks arising from the restatement process and other risks to
which the Company is subject. Because such statements involve risks
and uncertainties, the actual results and performance of the
Company may differ materially from the results expressed or implied
by such forward-looking statements. Given these uncertainties,
readers are cautioned not to place undue reliance on such
forward-looking statements. Unless otherwise required by law, the
Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the result of
any revisions to the forward-looking statements made here; however,
readers should review carefully reports or documents the Company
files periodically with the Securities and Exchange Commission.
Contact: John Daniel (713) 651-4300 DATASOURCE: Key Energy
Services, Inc. CONTACT: John Daniel of Key Energy Services, Inc.,
+1-713-651-4300 Web site: http://www.keyenergy.com/
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