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Key Energy Announces Conference Call
Monday November 6, 8:21 pm ET
HOUSTON, Nov. 6 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (OTC Pink Sheets: KEGS - News) announced today that it will hold an investor conference call on November 13, 2006 at 12:00pm EST. The call will be held in conjunction with the release of the Company's selected financial data for the third quarter of 2006. This information is expected to be released before the market opens on November 13, 2006. 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 Conference Call." The conference call will also be available on the web. To access the webcast, go to www.keyenergy.com and select "Investor Relations." A replay of the conference call will be available on November 13, 2006 beginning at 4:00pm EST and will be available for one week. To access the replay, please call (800) 642-1687. The access code for the replay is 1398718.
Key Energy Services, Inc. is the world's largest rig-based well service company. The Company provides oilfield services including well servicing and workover services, 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.
Contact: John Daniel
KEGS: Key Energy to Present at the Lehman Brothers CEO Energy/Power Conference
Friday September 1, 6:00 pm ET
HOUSTON, Sept. 1 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (OTC Pink Sheets: KEGS - News) announced today that Dick Alario, Key's Chairman and Chief Executive Officer, will present at the Lehman Brothers CEO Energy/Power Conference on Thursday, September 7, 2006. The presentation begins at 3:05pm EDT and will be available via a live webcast. To access the webcast go to http://www.keyenergy.com and select "Investor Relations."
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.
Contact: John Daniel
(713) 651-4300
KEGS: Key Energy Provides July Selected Financial Data
Monday August 21, 10:10 pm ET
HOUSTON, Aug. 21 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (Pink Sheets: KEGS - News) today provided its unaudited selected financial data for the month ended July 31, 2006. The Company separately released its selected financial data for the second quarter of 2006.
CONFERENCE CALL
The Company will host a conference call on August 22, 2006 at 11:00am EDT. During the conference call, the Company intends to discuss its 2003 Annual Report on Form 10-K as well as to provide an activity update, including a discussion of the second quarter selected financial data. To access the call, which is open to the public, please call the following number: (888) 428-4479 and ask for the "Key Energy Conference Call." The conference call will also be available on the web. To access the webcast go to www.keyenergy.com and select "Investor Relations." A replay of the conference call will be available on August 22, 2006 beginning at 6:00pm EDT and will be available for one week. To access the replay, please call (800) 475-6701. The access code for the replay is 838278.
SELECTED FINANCIAL DATA
The following selected financial information for the Company is for the month ended July 31, 2006. This unaudited information has been prepared by management in accordance with generally accepted accounting principles and 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 and nine months ended September 30, 2006 or Annual Report on Form 10-K for the year ended December 31, 2006.
Month Ended
July 31, 2006
Select Statement of Operations Data: (In thousands - Unaudited)
Revenue:
Well servicing $101,428
Pressure pumping 22,436
Fishing and rental services 7,553
TOTAL REVENUE $131,417
Costs and Expenses:
Well servicing $57,757
Pressure pumping 11,942
Fishing and rental services 4,679
General and administrative 13,400
Interest (1) 5,113
July 31, 2006
Select Balance Sheet Data: (In thousands - Unaudited)
Current Assets:
Cash and cash equivalents (2), (3) $145,898
Accounts receivable, net of allowance
for doubtful accounts 231,526
Inventory 19,057
Prepaid expenses and other current assets 49,945
TOTAL CURRENT ASSETS $446,426
Current Liabilities:
Accounts payable $78,327
Other accrued liabilities 97,236
Accrued interest 13,935
Current portion of long-term debt and
capital lease obligations 12,653
TOTAL CURRENT LIABILITIES $202,151
Long-term debt, less current portion (4) $394,000
Capital lease obligations, less current portion 20,818
Non-current accrued expenses 28,836
NOTES
(1) Interest expense includes amortization of deferred debt issue costs,
discount and premium of approximately $172,000 for the month ended
July 31, 2006.
(2) Cash and short term investments at August 15, 2006 totaled
approximately $140 million.
(3) Capital expenditures were approximately $15 million for the month
ended July 31, 2006.
(4) There were no outstanding borrowings under the Company's revolving
credit facility at August 15, 2006.
The information herein represents the results for only one month and the information herein is not necessarily indicative of the results that may be reported for the fiscal year ended December 31, 2006. 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. Until the restatement of the Company's prior year financial statements is completed, the unaudited information herein may differ from its restated financial statements. It is possible that the process of restating the prior year financial statements could require additional changes to the Company's financial statements for 2006 that individually or in the aggregate could 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, contract drilling, pressure pumping, fishing and rental tools 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.
Key Energy Services Earnings Call scheduled for 11:00 am ET today
Key Energy Provides Operations and Restatement Update
Monday June 19, 8:10 pm ET
HOUSTON, June 19 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (OTC Bulletin Board: KEGS - News) today provided an operational and financial update, including its May 2006 rig and trucking hours, and unaudited selected financial data for the month ended April 30, 2006. The Company also provided an update on the status of its restatement process.
OPERATIONS UPDATE
Activity levels remain strong as weekly rig hours, excluding the Memorial Day holiday weekend, continue to average over 53,000 hours. Earlier this month, Key placed in service its first wireline unit in its new Texas-based electric wireline operation. The Company has ordered 10 units and anticipates delivery of at least one unit per month until the order is complete.
Commenting on operating activity, Dick Alario, Chairman and CEO, stated, "Our customers continue to request upgraded equipment and highly-trained, efficient crews. To meet these needs, we elected to proceed with our second half pricing initiative which was announced last month. These increases will be phased in during the third quarter and will allow us to continue to invest in our fleet and our people, and to deliver better returns to our shareholders."
OPERATING DATA
For the month ending
May 31, 2006 April 30, 2006 May 31, 2005
Working Days 22 19 21
Rig Hours 234,752 211,394 218,774
Trucking Hours 213,786 185,123 214,373
The Company calculates working days as total weekdays for the month
less any company holidays that occur that month. For the month of
June 2006, there are 22 working days.
RESTATEMENT UPDATE
The Company continues to target a filing of the 2003 Form 10-K by the end of June. However, the timing of the filing depends on the time required to complete the audit of the financial statements.
SELECTED FINANCIAL DATA
The following selected financial information for the Company is for the month ended April 30, 2006. This unaudited information has been prepared by management in accordance with generally accepted accounting principles and 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 June 30, 2006 or Annual Report on Form 10-K for the year ended December 31, 2006.
Month Ended
April 30, 2006
Select Statement of Operations Data: (In thousands - Unaudited)
Revenue:
Well servicing $90,678
Pressure pumping 17,059
Fishing and rental services 7,439
TOTAL REVENUE $115,176
Costs and Expenses:
Well servicing $56,983
Pressure pumping 9,582
Fishing and rental services 4,562
General and administrative 13,753
Interest (A) 3,582
April 30, 2006
Select Balance Sheet Data: (In thousands - Unaudited)
Current Assets:
Cash and cash equivalents (B), © $123,481
Accounts receivable, net of allowance
for doubtful accounts 219,650
Inventory 16,958
Prepaid expenses and other current assets 28,417
TOTAL CURRENT ASSETS $388,506
Current Liabilities:
Accounts payable $71,166
Other accrued liabilities 89,324
Accrued interest 5,847
Current portion of long-term debt and
capital lease obligations 12,748
TOTAL CURRENT LIABILITIES $179,085
Long-term debt, less current portion (D) $395,000
Capital lease obligations, less
current portion 17,006
Non-current accrued expenses 33,994
NOTES
(A) Interest expense includes amortization of deferred debt issue costs,
discount and premium of approximately $169,000 for the month ended
April 30, 2006.
(B) Cash and short term investments at June 15, 2006 totaled
approximately $108 million. The cash balance reflects a $24 million
income tax payment made on June 15, 2006.
© Capital expenditures were approximately $19 million for the month
ended April 30, 2006.
(D) There were no outstanding borrowings under the Company's revolving
credit facility at June 15, 2006.
The information herein represents the results for only one month and the information herein is not necessarily indicative of the results that may be reported for the fiscal year ended December 31, 2006. 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. Until the restatement of the Company's prior year financial statements is completed, the unaudited information herein may differ from its restated financial statements. It is possible that the process of restating the prior year financial statements could require additional changes to the Company's financial statements for 2006 that individually or in the aggregate could 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, contract drilling, pressure pumping, fishing and rental tools 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.
KEGS: Key Energy Announces Record Revenues
Monday May 22, 9:47 pm ET
HOUSTON, May 22 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (Pink Sheets: KEGS - News) today provided an operational and financial update, including its April 2006 rig and trucking hours, and unaudited selected financial data for the quarter ended March 31, 2006. The Company also provided an update on the status of its restatement process and a litigation update.
FINANCIAL RESULTS
Revenue for the March 2006 quarter totaled approximately $346 million. This is a record and represents a 28% increase over the prior year and a 10% improvement from the December 2005 quarter. The improvement is due largely to higher pricing, expanded capacity and higher activity levels. In addition, the Company's balance sheet continues to strengthen. Total debt, including capitalized leases, at March 31, 2006 was $425 million while cash and short term investments were $109 million. In addition, as of May 19, 2006, cash and cash equivalents total approximately $115 million. See Selected Financial Data below.
OPERATIONS UPDATE
In its well servicing segment, the Company has received 16 of its newly constructed well service rigs while the majority of the remaining new rigs are expected to be delivered by the end of the third quarter this year. Rig utilization remains high in nearly all regions and has improved recently with weekly rig hours averaging over 53,000 hours during the past four weeks. In addition, for the week ended May 13, 2006, the Company recorded rig hours of 53,961. This represents the highest weekly total in several years.
The Company's pressure pumping operation continues to operate at capacity and benefited this quarter from the delivery of new pumping equipment. By the end of this quarter, our pressure pumping division will operate approximately 145,000 horsepower, which represents an increase of over 25% since the beginning of the year. As a result of superior performance in this business unit and to address continued strong demand for our services and the anticipated opening of a new pressure pumping facility in the Fayetteville Shale, the Company recently exercised an option to purchase 28,000 horsepower of new pumping and cementing equipment. The Company expects delivery of this new equipment to begin in the December 2006 quarter with all equipment delivered by the June 2007 quarter.
The Company's Board of Directors has recently authorized the ordering of up to $150 million of equipment for 2007 in part because of the long lead times required for new capital items as well as expectations of continued strong demand. The Company anticipates that it will order between 30 to 40 new well service rigs and new pressure pumping and cementing equipment which will be in addition to the 28,000 noted above. In addition, the Company intends to order additional fishing and rental equipment, heavy oilfield service vehicles and electric wireline units.
Commenting on recent operations, Dick Alario, Chairman and Chief Executive Officer, stated, "We are very pleased with the results of the record March 2006 quarter and continue to believe that 2006 will be another record year for the Company. We presently anticipate revenue for the year will be between $1.45 billion and $1.5 billion. Business fundamentals remain strong and our belief that we are in a long-term cyclical uptrend has not changed."
Mr. Alario continued, "In light of the continued strong demand for our services, we initiated regional price increases in January. This effort was successful, and because market conditions remain robust and customer demand has not abated, we have decided to implement additional pricing initiatives this summer. These increases are necessary as we seek to meet customer demand through additional capital and maintenance expenditures, offset rising costs and drive improving returns for our shareholders. Presently, the price increases are expected to be across all segments."
OPERATING DATA
For the month ending
April 30, March 31, April 30,
2006 2006 2005
Working Days 19 23 21
Rig Hours 211,394 232,446 216,004
Trucking Hours 185,123 214,582 214,047
The Company calculates working days as total weekdays for the month less any company holidays that occur that month. For the months of May and June 2006, there are 22 working days each.
RESTATEMENT UPDATE
Under its current work plan, the Company believes that the 2003 10-K can be filed on or before June 30, 2006. The Company will provide an additional update on the restatement process as part of its next monthly financial update which is expected to be released on June 19, 2006.
Commenting on the restatement, Mr. Alario stated, "We continue to make progress on the restatement and maintain our belief that we are close to finalizing the process. While the completion of the restatement is still subject to factors outside of our control, we are targeting a filing at the end of June."
SELECTED FINANCIAL DATA
The following selected financial information for the Company is for the quarter ended March 31, 2006. This unaudited information has been prepared by management in accordance with generally accepted accounting principles and 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, 2006 or Annual Report on Form 10-K for the year ended December 31, 2006.
Quarter Ended Quarter Ended
March 31, 2006 March 31, 2005
(In thousands- (In thousands-
Select Statement of Operations Data: Unaudited) Unaudited)
Revenue:
Well servicing $271,259 $218,712
Pressure pumping 51,798 30,504
Fishing and rental services 23,244 20,367
TOTAL REVENUE $346,301 $269,583
Costs and Expenses:
Well servicing $172,341 $148,736
Pressure pumping 29,113 19,237
Fishing and rental services 14,801 12,808
General and administrative 39,983 36,295
Interest (1) 9,884 14,007
March 31, 2006 March 31, 2005
(In thousands- (In thousands-
Select Balance Sheet Data: Unaudited) Unaudited)
Current Assets:
Cash and cash equivalents (2),(3) $109,397 $93,011
Accounts receivable, net of allowance
for doubtful accounts 219,949 197,149
Inventory 17,489 20,405
Prepaid expenses and other current assets 24,913 34,624
TOTAL CURRENT ASSETS $371,748 $345,189
Current Liabilities:
Accounts payable $64,331 $48,841
Other accrued liabilities 83,080 79,493
Accrued interest 6,361 6,396
Current portion of long-term debt and
capital lease obligations 12,748 3,971
TOTAL CURRENT LIABILITIES $166,520 $138,701
Long-term debt, less current portion (4) $395,000 $473,815
Capital lease obligations, less
current portion 17,496 7,942
Non-current accrued expenses 33,998 39,861
NOTES
(1) Interest expense includes amortization of deferred debt issue costs,
discount and premium of approximately $507,000 and $497,000 for the
quarters ended March 31, 2006 and 2005, respectively.
(2) Cash and short term investments at May 19, 2006 totaled approximately
$115 million.
(3) Capital expenditures were approximately $38 million and $14 million
for the quarters ended March 31, 2006 and 2005, respectively.
(4) There were no outstanding borrowings under the Company's revolving
credit facility at May 19, 2006.
LITIGATION UPDATE
The Company recently delivered a notice to its former chief executive officer, Francis D. John, of the Company's intention to treat his termination of employment effective May 1, 2004, as "for cause" under his employment agreement with the Company. In response to the notice, Mr. John has filed a lawsuit against the Company, in which he alleges, among other things, that the Company breached stock option agreements and his employment agreement. Mr. John alleges in his lawsuit that he has options to purchase 3,910,000 shares of stock. The Company had previously recorded a $16.4 million severance expense in connection with Mr. John's termination of employment, of which $9.0 million represented a non-cash charge for the write-off of the unamortized balance of Mr. John's prepaid retention bonus, and the balance consisted of severance and other termination costs. Mr. John would not be entitled to severance, certain other previously paid compensation or stock options under a "for cause" termination. The Company intends to vigorously defend itself against Mr. John's claims.
The Company has also been named in a lawsuit by its former General Counsel, Jack D. Loftis, Jr., in which he alleges breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, and wrongful termination. Mr. Loftis previously filed a "whistle-blower" claim under the Sarbanes-Oxley Act of 2002 with the Department of Labor ("DOL"). The DOL found that there was no reasonable cause to believe that the Company violated the Sarbanes-Oxley Act when it terminated Mr. Loftis, and dismissed the complaint. Mr. Loftis then made an appeal for administrative review in the DOL case, but has recently given notice of his intent to dismiss the appeal and to amend his lawsuit to add his whistle-blower claim. The Company intends to vigorously defend itself against all of Mr. Loftis' claims.
CONFERENCE CALL
The Company will host an investor conference call on Tuesday, May 23, 2006 at 10:00am EDT. During the conference call, the Company intends to provide an activity update as well as an update the status the restatement process. To access the call, which is open to the public, please call the conference operator at the following number: (800) 762-4717 and ask for the "Key Energy Conference Call." 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 23, 2006 beginning at 5:00pm EDT and will be available for one week. To access the replay, please call (800) 475-6701. The access code for the replay is 828643.
The information herein represents the results for only one quarter and prior period and the information herein is not necessarily indicative of the results that may be reported for the fiscal year ended December 31, 2006. 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. Until the restatement of the Company's prior year financial statements is completed, the unaudited information herein may differ from its restated financial statements. It is possible that the process of restating the prior year financial statements could require additional changes to the Company's financial statements for 2005 that individually or in the aggregate could 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, contract drilling, pressure pumping, fishing and rental tools 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 or the results of the ongoing review and restatements and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, but not limited to: the impact of the Company's current restatement process on its results for prior and current periods; uncertainties surrounding the restatement process, including the predictions for timing of filing and amount of the restatements; the risk of possible changes in the scope and nature of, the time required to complete, the issuance of audit opinions on the Company's prior year financial statements and the audit of the Company's 2003, 2004 and 2005 financial statements; the impact of governmental investigations; risks that the Company's independent auditors might have audit adjustments which results in additional delay in the restatement process; risks that the Company's inability to complete the restatement of its financial statements will impact operations; 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 that the Company will be unable to achieve budgeted financial targets; 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; and risks and uncertainties attendant to litigation with former executive officers. 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
Great ascending chart...just keeps on going up...GLTA
Key Energy Announces Conference Call
Monday May 8, 8:30 am ET
HOUSTON, May 8 /PRNewswire-FirstCall/ -- Key Energy Services, Inc. (Pink Sheets: KEGS - News) announced today that it will hold an investor conference call on May 23, 2006 at 10:00am EST. The call will be held in conjunction with the release of the Company's monthly rig and trucking hours and selected financial data for the first quarter of 2006. This information is expected to be released after the market closes on May 22, 2006. During the conference call, the Company will provide an activity update as well as discuss the status of the Company's restatement process. To access the call, which is open to the public, please call the conference call operator at the following number: (800) 762-4717 and ask for the "Key Energy Conference Call." 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 23, 2006 beginning at 5:00pm EST and will be available for one week. To access the replay, please call (800) 475-6701. The access code for the replay is 828643.
Key Energy Services, Inc. is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in essentially all major onshore oil and gas producing regions of the continental United States and internationally in Argentina.
Contact: John Daniel
(713) 651-4300
Key Energy Provides Operational, Financial and Restatement Update
PR Newswire - November 14, 2005 8:02 AM (EDT)
HOUSTON, Nov 14, 2005 /PRNewswire-FirstCall via COMTEX/ -- Key Energy Services, Inc. (Pink Sheets: KEGS) today provided an operational and financial update, including its October 2005 rig and trucking hours and unaudited selected financial data for the quarter ended September 30, 2005. The Company also provided an update on its restatement process.
CONFERENCE CALL
The Company will host a conference call today at 10:00am EST in conjunction with this release. During the conference call, the Company intends to provide an activity update as well as an update on the restatement process. To access the call, which is open to the public, please call the conference operator at the following number: (800) 762-4717 and ask for the "Key Energy Conference Call." 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 November 14, 2005 at 5:00pm EST and will be available for one week. To access the replay, please call (800) 475-6701. The access code for the replay is 802468.
OPERATIONS UPDATE
The Company will open a new well servicing and pressure pumping facility in the southern Barnett Shale of the Fort Worth Basin due to increased customer demand and service opportunities in this region. The Company anticipates that the new facility, which should be operational in second quarter 2006, will provide additional well service rigs and approximately 20,000 horsepower of pressure pumping equipment. This facility is also expected to provide electric wireline services.
Pricing for most of the Company's services continues to improve. The Company anticipates new regional price increases on its well service rig operations during the first quarter of 2006. In addition, the Company's pressure pumping division will implement a 10% increase to its price book effective January 1, 2006.
Commenting on recent operations, Dick Alario, Chairman and Chief Executive Officer, stated, "We continue to be very pleased with current activity levels and are excited for the upcoming year. Customer demand for our services shows no signs of abating while waiting lists for our services in many regions continue to grow."
Mr. Alario continued, "We are in the finishing stages of our 2006 budget preparation and presently budgeting capital expenditures for 2006 of approximately $185 million. Our current forecast is that revenue for 2006 will approach $1.4 billion. The capital expenditure budget includes an anticipated increase in the remanufacturing program of our well service rig fleet, the purchase of 30 new well service rigs, expansion of our pressure pumping operations as well as additional rental tool equipment and new electric wireline assets to support our market entry into two new regions in the southern United States."
OPERATING DATA
For the month ending
October 31, September 30, October 31,
2005 2005 2004
Working Days 21 21 21
Rig Hours 222,537 218,973 207,194
Trucking Hours 198,409 199,489 223,049
The Company calculates working days as total weekdays for the month less any company holidays that occur that month. For the months of November and December 2005, there are 20 working days.
REPAYMENT OF SENIOR NOTES
On November 8, 2005, the Company repaid the $275 million 8.375% Senior Notes due 2008 at a call price of 104.188. The Company repaid these 8.375% Notes with borrowings of $250 million from the Company's $400 million Term Loan B Facility and cash on hand. The Company has $400 million outstanding under its Term Loan B Facility and no borrowings under its $65 million revolving credit facility. In conjunction with the funding of the $400 million Term Loan B, the Company is required under the Credit Agreement to enter into an interest rate swap to fix a minimum of $200 million of the Term Loan B. The Company will evaluate swaps in the coming months and anticipates that a swap will be in place during the March 2006 quarter. Additionally, as of November 10, 2005, the Company had cash and cash equivalents of approximately $74.5 million.
RESTATEMENT UPDATE
As previously disclosed, the Company is in the process of finalizing supporting documentation for accounting treatments in the restatement. The purpose of this documentation process is to provide the appropriate accounting documentation to support the Company's restated financial statements. The Company believes that this documentation, when completed, will provide a clear audit trail and thereby facilitate the work of the Company's independent auditors.
The documentation process is ongoing and is taking considerably more time than previously anticipated. The process consists of preparing memoranda, supporting calculations and other information to support each adjustment to the 2003 financial statements and prior periods that the Company has determined are required in connection with the restatement. The memoranda, which are being prepared under the direction of the Company's new chief accounting officer, will document the Company's accounting positions under GAAP with respect to the matters under restatement, corrections to the financial statements required by the restatement, and actions to remediate the issues in the future. At present, the Company estimates that there will be over 60 supporting memoranda, of which the majority will relate to fixed assets. These memoranda are detailed and in many cases include substantial amounts of supporting data. The Company is making the memoranda available to the independent auditors as they are completed.
As the documentation process has continued, the Company has identified several instances in which prior assumptions were incorrect, the accounting entries did not correspond the memoranda, or, in some cases in which the GAAP analysis was flawed. While such errors have not required large numerical adjustments to the financial statements, they have required the Company to conduct additional review and analysis. In some cases, errors or changes in particular line items may result in adjustments to, and additional analysis of, other line items.
The Company has engaged accountants from a third party consulting firm to assist in the review and preparation of restatement adjustments and supporting documentation. The Company has also hired additional internal accounting staff, including a new director of financial reporting. In addition, the Company has engaged additional resources from the outside consulting firm to assist in completing the restatement of tax provision and deferred tax calculations.
The Company is unable at this time to predict when the documentation process will be complete, when its independent auditors will complete their audit of the Company's financial statements for the fiscal year ended December 31, 2003 and prior periods, or when the Company will file its Annual Report on Form 10-K for 2003. The filing date could be delayed by additional adjustments following audit comments by the Company's independent accountants.
Commenting on the restatement process, Dick Alario stated, "Although the steps we have taken recently will require more time to finish the restatement, I am encouraged because these measures will facilitate more accurate conclusions, assist us in completing the process and strengthen the Company's accounting and reporting functions."
SELECTED FINANCIAL DATA
The following selected financial information for the Company is for the quarter ended September 30, 2005. This unaudited information has been prepared by management in accordance with generally accepted accounting principles and has not been reviewed 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 September 30, 2005.
Quarter Ended Quarter Ended
September 30, September 30,
2005 2004
Select Statement of Operations Data: (In thousands - (In thousands -
Unaudited) Unaudited)
Revenue:
Well servicing $246,991 $213,612
Pressure pumping 41,881 24,525
Fishing and rental services 20,214 20,345
Other 407 591
TOTAL REVENUE $309,493 $259,073
Costs and Expenses:
Well servicing $157,294 $142,554
Pressure pumping 24,945 18,023
Fishing and rental services 13,499 12,647
General and administrative 36,255 35,119
Interest (1) 12,725 13,262
Loss on retirement of debt 2,411 -
September 30, December 31,
2005 2004
Select Balance Sheet Data: (In thousands - (In thousands -
Unaudited) Unaudited)
Current Assets:
Cash and cash equivalents (2), (3) $104,104 $19,261
Accounts receivable, net of allowance
for doubtful accounts 209,168 212,351
Inventory 23,196 18,500
Prepaid expenses and other current assets 27,041 20,197
TOTAL CURRENT ASSETS $363,509 $270,309
Current Liabilities:
Accounts payable $70,718 $59,872
Other accrued liabilities 73,171 71,304
Accrued interest 7,077 9,729
Current portion of long-term debt and
capital lease obligations 4,872 4,326
TOTAL CURRENT LIABILITIES $155,838 $145,231
Long-term debt, less current portion (4) $425,688 $473,878
Capital lease obligations, less current portion 9,745 8,677
Deferred revenue 171 557
Non-current accrued expenses 38,444 40,258
NOTES
(1) Interest expense includes amortization of deferred debt issue costs,
discount and premium of approximately $530,000 and $521,000 for the
quarters ended September 30, 2005 and 2004, respectively.
(2) Cash and short term investments at November 10, 2005 totaled
approximately $74.5 million.
(3) Capital expenditures were approximately $31,773,000 and $16,683,000
for the quarters ended September 30, 2005 and 2004, respectively.
(4) There were no outstanding borrowings under the Company's revolving
credit facility at November 10, 2005.
The information herein represents the results for only one quarter and prior period; and the information herein is not necessarily indicative of the results that may be reported for the fiscal year ended December 31, 2005. 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. Until the restatement of the Company's prior year financial statements is completed, the unaudited information herein may differ from its restated financial statements. It is possible that the process of restating the prior year financial statements could require additional changes to the Company's financial statements for 2005 that individually or in the aggregate could 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, contract drilling, pressure pumping, fishing and rental tools 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 or the results of the ongoing review and restatements and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, but not limited to: the impact of the Company's current restatement process on its results for prior and current periods; uncertainties surrounding the restatement process, including the timing and amount of the restatements; the risk of possible changes in the scope and nature of, the time required to complete, the issuance of audit opinions on the Company's prior year financial statements and the audit of the Company's 2003 and 2004 financial statements; the impact of governmental investigations; risks that the Company will not be able to successfully enter into an interest rate swap which would be a violation under the Company's senior credit facility; risks that the Company's inability to complete the restatement of its financial statements will impact operations; 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 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. 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
SOURCE Key Energy Services, Inc.
John Daniel, Key Energy Services, Inc., +1-713-651-4300
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