WELLTECH, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
(1) Organization and Control-
WellTech, Inc. (a Delaware corporation) and subsidiaries ("WellTech" or
the "Company") are engaged in the oil and gas well servicing industry in the
United States, South America and Russia.
(2) Summary of Significant Accounting Policies-
Principles of consolidation - The consolidated financial statements
include the accounts of WellTech, Inc. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated. Certain
reclassifications have been made to the prior period financial statements to
conform with the current year's presentation.
Investments - WellTech owns a 39% interest in Dawson WellTech, LLC and
a 24% interest in Key Energy Group, Inc., both domestic well servicing
companies. WellTech also owns a 50% interest in Servicios WellTech, S. A. a
joint venture well servicing company operating in Argentina.
These investments are accounted for by the equity method.
WellTech also has certain non-well servicing investments which are
accounted for by the cost method. During 1993 and 1992 WellTech reassessed the
carrying value of its non-well servicing investments and recorded provisions of
$582,000 and 2,369,000, respectively, to write these investments down to their
estimated net realizable value.
Cash and cash equivalents - Cash equivalents include all highly liquid
short-term investments with maturities of three months or less.
Property and equipment - Property and equipment consists principally of
well servicing rigs and related equipment. Additions, renewals and betterments
that add materially to the productive capacity or extend the useful life of an
asset are capitalized. Expenditures for maintenance and repairs are expensed as
incurred. Upon retirement or disposal, the asset and related allowance for
depreciation accounts are eliminated. Any gains or losses on such transactions
are included in income.
Depreciation is provided for financial reporting purposes on a
straight-line basis over the following estimated useful lives:
Well servicing equipment 3 to 20 years
Buildings and other 3 to 30 years