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SEC Filings

KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  Under SFAS 109,  the effect on  deferred  tax assets and
liabilities  of a change in tax rate is  recognized in income in the period that
includes  the  enactment  date.  Under SFAS 109, a valuation  allowance  for the
deferred  tax assets is  recognized  when it is "more  likely than not" that the
benefit  of  deferred  tax assets  will not be  realized.  Adoption  of SFAS 109
resulted in the recording of a net deferred tax credit of $50,000 as of November
30, 1992 as part of "fresh-start  reporting".  The cumulative effect of SFAS 109
at July 1, 1992 was not material.  Financial statements of Key prior to November
30, 1992 do not reflect the adoption of SFAS 109.

Key and its  wholly-owned  subsidiaries  file a consolidated  federal income tax


Clint Hurt Drilling

On March 30, 1995, Key and Clint Hurt & Associates, Inc. ("CHA") entered into an
Asset Purchase  Agreement pursuant to which CHA sold to Key all of his assets in
West Texas.  Such assets mainly  consisted of four (4) oil and gas drilling rigs
and  related  equipment.  As  consideration  for the  acquisition,  Key paid CHA
$1,725,000, of which $1,000,000 was paid in cash and the balance in

the form of a 60-day promissory note. Mr. Clint Hurt entered into consulting and
noncompetition  agreements  with Key in  connection  with which Key issued 5,000
shares  of  its  common  stock  to  Mr.  Hurt.  Key  Energy  Drilling,  Inc.,  a
wholly-owned subsidiary of Key, operates as Clint Hurt Drilling. The acquisition
was  accounted  for using the purchase  method and the results of  operations of
Clint Hurt Drilling have been included in those of Key since April 1, 1995.

WellTech West Texas

On December 10, 1993, Key and WellTech,  Inc. ("WellTech") entered into an Asset
Purchase Agreement pursuant to which Key purchased substantially all assets used
by WellTech in its West Texas  operations.  The  transaction  was consummated in
August  1994.  As  consideration  for the  acquisition,  Key issued to  WellTech
1,635,000  shares  of  Common  Stock  of Key and  warrants  to  acquire  250,000
additional shares of Common Stock, at $5.00 per share,  which expire on February
5, 1997.

Commencing December 10, 1993, Key (through Yale E. Key) operated and managed the
operations  of the  WellTech  West Texas  region in  connection  with an interim
operating agreement (the "Interim Operations  Agreement").  In addition, as part
of the Interim  Operations  Agreement,  Key assumed  ownership of WellTech  West
Texas current assets and current liabilities.  The working capital items assumed
were immaterial.  Key's consolidated  statements of operations from December 10,
1993 through August 11, 1994,  include the direct revenues and expenses from the
West Texas  operations  of WellTech.  For the period after August 11, 1994,  the
results of operations include the effects of ownership of WellTech West Texas.