HOUSTON, Sept. 21, 2021 (GLOBE NEWSWIRE) — Key Energy Services, Inc. (“Key” or the “Company”)(OTC: KEGX) today announced the sale of substantially all of its Texas and New Mexico fluid management and salt water disposal well assets for cash and the assumption by the buyer of the related asset retirement obligations. The sale effectively completes the Company’s exit from this line of business in these states. The sales proceeds will be used by the Company to further strengthen its liquidity position and for reinvestment. Gibson, Dunn & Crutcher LLP served as legal advisor to Key.
Key’s President and Chief Executive Officer, Marshall Dodson, stated, “The sale of these assets represents a significant milestone in our efforts to focus Key on our core operations. While our liquidity position has already benefited from our positive operating cash flow and recovery of cash previously used to collateralize our outstanding letters of credit, the proceeds from this asset sale significantly accelerate that improvement and provide Key with additional resources to take advantage of opportunities in the market today. I want to thank the employees impacted by this transaction for their hard work and dedication to Key over the years and we wish them much future success.”
Dodson continued, “Our current levels of activity are the highest Key has seen since November of 2019. Although we continue to benefit from improving demand for our services, shortages of qualified employees and the impacts of COVID continue to weigh on our recovery.
“Financially, with higher activity, net pricing improvements and reduced cost structure we continue to generate positive operating cash flow. We are experiencing cost pressures with labor, steel and other products, however, we expect that these higher costs will be offset by further price increases in 2021 and in 2022.
The rationalizing of our rig fleet has continued, with roughly 350 well service rigs scrapped since the end of 2019. We expect to be at our target fleet size of around 400 rigs by the first quarter of 2022.”
“Finally, I want to thank our team for continuing to provide our customers best in class service and equipment and doing so safely. Key would not be in the strong position we are in today without the dedication, effort and professionalism of my fellow employees.”
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature or that relate to future events and conditions are, or may be deemed to be, forward-looking statements. These forward-looking statements are based on Key’s current expectations, estimates and projections and its management’s beliefs and assumptions concerning future events and financial trends affecting its financial condition and results of operations. The words and phrases such as “may,” “will,” “should,” “predicts,” “expects,” “believes,” “anticipates,” “projects,” “forecasts,” “views,” “continues,” “potential,” “goal” and similar expressions identify forward‐looking statements and express our expectations about future events. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward‐looking statements. These statements are only predictions or estimates 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 and the assumptions on which they are based could prove incorrect.
Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control.
Important factors that may affect Key’s expectations, estimates or projections include, but are not limited to, the following: Key’s ability to realize anticipated benefits from, and manage liabilities associated with, the transaction discussed in this press release; public health crises, such as the COVID-19 pandemic, including its impact on economic and other conditions globally and any related actions taken by businesses and governments, among others; adverse conditions in the services and oil and natural gas industries, especially oil and natural gas prices and reduced activity and capital expenditures by oil and natural gas companies; a failure of customer activity to reach or remain at expected levels; Key’s ability to satisfy its cash and liquidity needs, including its ability to generate sufficient liquidity or cash flow from operations or to obtain adequate financing to fund its operations or otherwise meet its obligations as they come due; Key’s ability to retain and access employees, customers or suppliers as a result of its financial condition generally or as a result of its recent restructuring; Key’s inability to achieve the potential benefits of the restructuring; Key’s ability to achieve the benefits of cost-cutting initiatives, including its plan to optimize its geographic footprint, including exiting certain locations and reducing its regional and corporate overhead costs; 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; actions by OPEC and non-OPEC oil producing countries, the general volatility of oil and natural gas prices and the cyclicality of the oil and gas industry; asset impairments or other charges; the highly competitive nature of Key’s 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; changes in government; Key’s ability to replace or add workers, including executive officers and skilled workers; Key’s ability to implement technological developments and enhancements; severe weather impacts on Key’s business, including hurricane activity; 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 business combinations, disposition or acquisition transactions; the loss of one or more of Key’s larger customers; the amount of Key’s debt and the limitations imposed by the covenants in the agreements governing its debt, including its ability to comply with covenants under its current debt agreements; Key’s ability to maintain sufficient liquidity and access to capital; the failure to meet requirements necessary for a release of cash collateral posted by Key under its current debt agreements; an increase in Key’s debt service obligations due to variable rate indebtedness; Key’s inability to achieve its financial, capital expenditure and operational projections, including quarterly and annual projections of revenue and/or operating income and its inaccurate assessment of future activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually); Key’s ability to respond to changing or declining market conditions, including Key’s ability to restart operations or to reduce the costs of labor, fuel, equipment and supplies employed and used in its businesses; and the adverse impact of litigation and disputes. The unprecedented nature of the COVID-19 pandemic may make it more difficult to identify potential risks, give rise to risks that are currently unknown, or amplify the impact of known risks.
Any forward‐looking statement speaks only as of the date of this press release, and Key undertakes no obligation to update or withdraw any forward‐looking statement to reflect events or circumstances after the date of this press release, except as required by law. All of Key’s written and oral forward‐looking statements are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward‐looking statements.
About Key Energy Services
Key Energy Services is a leading onshore, rig-based well servicing contractor and provides a complete range of well intervention services with operations in all major onshore oil and gas producing regions of the continental United States.