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KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
Entire Document

                         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