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S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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         An opinion of counsel is not binding on the  Internal  Revenue  Service
(the "Service") or the courts. Further, the opinion of tax counsel will be based
on, among other things,  current law and certain  representations  as to factual
matters made by, among others,  WellTech and Key which,  if incorrect in certain
material  respects,  would jeopardize the conclusions  reached by counsel in its
opinion.  Neither  WellTech  nor  Key  is  currently  aware  of  any  facts  and
circumstances  which  would  cause  any such  representations  made by it to tax
counsel to be untrue or incorrect in any material respect.

         If the Merger failed to qualify under Section 368(a)(1)(A) of the Code,
WellTech  would  recognize  gain equal to the excess of the fair market value of
the  Key  Common  Stock  and  New  Key  Warrants  distributed  to  the  WellTech
stockholders  in the  Merger  plus  the  amount  of  WellTech  liabilities  over
WellTech's  basis  in the  assets  transferred  to  Key  pursuant  thereto.  Any
resulting  corporate  income tax on such gain  would be  payable by Key,  as the
successor to WellTech.

Backup Withholding

         Under the backup withholding rules, a holder of Key Common Stock may be
subject to backup  withholding  at the rate of 31% with respect to dividends and
proceeds of redemption,  unless such  stockholder  (a) is a corporation or comes
within certain other exempt  categories  and, when required,  demonstrates  this
fact or (b) provides a correct taxpayer  identification number,  certifies as to
no loss of  exemption  from  backup  withholding  and  otherwise  complies  with
applicable  requirements of the backup  withholding  rules.  Any amount withheld
under these rules will be credited against the stockholder's  federal income tax
liability. Key may require holders of Key Common Stock to establish an exemption
from backup withholding or to make arrangements satisfactory to Key with respect
to the payment of backup  withholding.  A  stockholder  who does not provide Key
with his, her or its current  taxpayer  identification  number may be subject to
penalties imposed by the Service.

                          ITEM 2: KEY CHARTER AMENDMENT

         One of the  purposes of the Key Special  Meeting is the approval of the
Key Charter  Amendment.  The Board of  Directors of Key approved the Key Charter
Amendment at a meeting  held on October 5, 1995 and found that it was  advisable
and in the best interests of Key and its stockholders. The Key Charter Amendment
provides,  among other things, for an increase in the total number of authorized
shares of Key Common Stock from 10,000,000 to 25,000,000.

         After  giving  effect  to the  consummation  of  the  Merger  (and  the
reservation of 750,000 shares of Key Common Stock for issue upon exercise of the
New Key Warrants,  1,150,000  shares of Key Common Stock for issue upon exercise
of  options  granted  or to be granted  under the Key 1995  Stock  Option  Plan,
300,000 shares for issue upon exercise of options granted or to be granted under
the Key Outside  Directors  Stock  Option Plan and 75,000  shares for issue upon

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