SIMMONS & COMPANY
December 29, 1995
Board of Directors
Key Energy Group, Inc.
257 Livingston Avenue
New Brunswick, New Jersey 08901
Members of the Board:
You have requested the opinion of Simmons & Company International ("Simmons") as
investment bankers as to the fairness, from a financial point of view, to the
holders of common stock of Key Energy Group, Inc. ("Key" or "the Company") of
the consideration to be paid by Key in the proposed merger of WellTech, Inc.
("WellTech") with and into Key, pursuant to the Agreement and Plan of Merger
("the Agreement"), executed by Key and WellTech ("the Proposed Merger").
As more specifically set forth in the Agreement, in the Proposed Merger shares
of common stock of WellTech ("WellTech Common Stock") will be converted into an
aggregate of 4,929,962 shares of common stock, par value of $0.10 per share, of
Key ("Key Common Stock") and 750,000 warrants to purchase an aggregate of
750,000 shares of Key Common Stock at $6.75 per share ("New Key Warrants"). As
part of the Proposed Merger, 1,429,962 of the 1,635,000 shares of Key Common
Stock owned by WellTech prior to the transaction, and the warrants to purchase
an aggregate of 250,000 shares of Key Common Stock at $5.00 per share held by
WellTech prior to the transaction, will be canceled.
Simmons, as a specialized, energy-related investment banking firm, is engaged
in, among other things, the valuation of businesses and their securities in
connection with mergers and acquisitions, the management and underwriting of
sales of equity and debt to the public and private placements of equity and
debt. In addition, in the ordinary course of business, Simmons may actively
trade the securities of Key for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
In connection with rendering its opinion, Simmons has reviewed and analyzed,
among other things, the following: (i) the Agreement; (ii) the financial
statements and other information concerning the Company, including the Annual
Reports on Form 10-K of the Company for each