Odessa Exploration Incorporated
On August 5, 1993, Key acquired Odessa Exploration Incorporated ("OEI"). The
effective date of the OEI acquisition was July 1, 1993, when Key took effective
control. OEI is engaged in the operation of oil and natural gas wells and
exploration for oil and natural gas. OEI was acquired in consideration of the
issuance of 150,000 shares of Key Common Stock (which had a closing market value
of approximately $638,000 at July 1, 1993) to Mr. D. Kirk Edwards, the former
owner and the now current President and CEO of OEI, and the assumption of
approximately $1,811,000 in bank debt. Key guaranteed all of the assumed OEI
bank debt. The acquisition was accounted for as a purchase.
The following unaudited pro forma results of operations have been prepared as
though Clint Hurt Drilling and WellTech West Texas had been acquired on July 1,
June 30, 1995 June 30, 1994
(In thousands, except share data)
Revenues $50,485 $ 48,069
Net income 2,798 2,146
Earnings per share:
Net income $0.40 $0.31
Weighted average shares outstanding: 6,924 6,914
3. 1992 REORGANIZATION PLAN
On October 20, 1992, Key, then known as National Environmental Group, Inc.
("NEGI") and several affiliated companies, filed a Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code (the "Prepackaged Plan"). Under the
Prepackaged Plan, holders of the various debt issues, preferred stockholders and
common stockholders of Key and affiliates received shares of Key Common Stock in
exchange for their claims. On December 4, 1992, the Prepackaged Plan was
confirmed. The Prepackaged Plan was implemented by merging Key Energy Group,
Inc., a newly formed, wholly-owned subsidiary of NEGI, with and into NEGI,
merging ESKEY Inc., a wholly-owned subsidiary of NEGI, into NEGI, and
liquidating YFC International, N.V., another wholly-owned subsidiary of NEGI.
The Articles of Incorporation of NEGI were amended to (a) reduce Key's
authorized capital stock to 10,000,000 shares, (b) prohibit the issuance of
non-voting equity securities and (c) change the name to Key Energy Group, Inc.
In connection with the reorganization, a reverse stock split of the common stock
occurred as a result of which each share of NEGI common stock converted into
.0178 shares of Key Common Stock, and each share of NEGI preferred stock
converted into 1.04 shares of Key Common Stock.