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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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              CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF KEY

         On August 5, 1993, Key completed the acquisition of Odessa Exploration,
which was  effective  as of July 1, 1993,  in  consideration  of the issuance of
150,000 shares of Key Common Stock to D. Kirk Edwards,  the former owner and the
now current President and Chief Executive Officer of Odessa Exploration, and the
assumption of approximately $1.8 million in bank debt. Key has guaranteed all of
the assumed  bank debt.  In  connection  with the  acquisition,  Key granted Mr.
Edwards  a  percentage  reversionary  working  interest  in five  deep gas wells
located  in west Texas  upon  repayment  of  approximately  $1.6  million of the
assumed  bank debt from  Key's  earnings  from the five  wells.  The  percentage
reversionary  working  interest  decreases based on the date of repayment of the
assumed  bank debt and ranges  from 20% of the  earnings  from the five wells if
repayment  occurs on or prior to July 7, 1995,  to 5% of the  earnings  from the
five wells if repayment occurs after July 7, 1996.

         Key leases automotive  equipment from an independent third party, which
purchases the equipment  from an automobile  dealership in which Mr.  Emmert,  a
former officer and director of Key, has a majority interest. The net proceeds to
the automotive dealership totaled $399,000,  $1,058,000, and $713,000 for fiscal
1995,  fiscal 1994 and the twelve months ended June 30, 1993,  respectively.  In
the  opinion of the Board of  Directors  of Key,  the  purchases  of  automotive
equipment were on terms at least as favorable to Key as could have been obtained
from a third  party.  This opinion is based on  information  provided by a third
party leasing  company,  that is not affiliated  with the officer or Key, to the
Board  regarding  purchase  prices and equipment  lease rentals offered by third
parties and the conclusion of the Board that the leases of automotive  equipment
were as favorable as leases of  automotive  equipment  from third party  leasing
companies, who did not make purchases from Mr. Emmert's automobile dealership.

         Key paid  $55,000 and  $90,000  for fiscal  1994 and the twelve  months
ended June 30, 1993, respectively,  for oil field related services and equipment
to two oil field related  companies in which Mr.  Laidley and Mr. Emmert have an
interest.  In the opinion of the Board of Directors of Key,  based on its review
of competitive  bids, these  transactions were on terms at least as favorable to
Key as could have been obtained from a third party.


         In March of 1995,  Odessa  Exploration  entered into a credit agreement
with Norwest Bank Texas, Midland, N.A. ("Norwest"). As part of this transaction,
seven individuals,  including Messrs.  Wolkowitz,  Emmert, Laidley,  Edwards and
John, as attorney in fact for one of his children,  pledged  approximately  $2.7
million  in  collateral  to secure  Odessa  Exploration's  credit  facility.  As
compensation for such pledge, Key paid these individuals a one-time fee equal to
1% of the  collateral  each  individual  pledged.  Key also  agreed to pay these
individuals a monthly fee equal to 3% per annum of the  collateral  pledge.  The
aggregate fees paid to such seven  individuals  during 1995 were $72,250.  Key's
Board of Directors  believes that these fees were on terms at least as favorable
to Odessa  Exploration  as could have been  obtained  from a third party.  As of
December  31, 1995,  Norwest  waived the pledge of  collateral  and released the
collateral to the seven individuals who had pledged it.


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