Fiscal 1995 revenues of $44,689,000 increased $10,068,000 or 29% over
fiscal 1994 revenues of $34,621,000. Fiscal 1995 revenues increased due to the
acquisition of oil and gas producing properties by Odessa Exploration, the
operation of the assets of WellTech West Texas (which included twelve months of
fiscal 1995 and seven months of fiscal 1994), and the additional revenues from
Clint Hurt (which was acquired in March 1995). In addition, Key continued to
expand its services offering oil well fishing tools, blow-out preventers and oil
well frac tanks.
Fiscal 1995 costs and expenses of $41,361,000 increased $9,035,000 or
28% over fiscal 1994 costs and expenses of $32,326,000. Fiscal 1995 costs and
expenses increased primarily due to the operations of WellTech West Texas and
the acquisition of Clint Hurt as well as increased lease operating costs due to
acquisitions of oil and gas producing properties by Odessa Exploration.
Income before income taxes was $3,328,000 for fiscal 1995, which was a
45% increase from $2,295,000 in fiscal 1994. The increase in income before
income taxes was due to the increase in revenues for the current fiscal year,
the acquisition by Odessa Exploration of producing oil and gas properties, the
operations of WellTech West Texas and the acquisition of Clint Hurt.
Interest expense increased from $830,000 during fiscal 1994 to
$1,478,000 during fiscal 1995, primarily as a result of borrowings for the
acquisition and drilling of oil and gas producing properties by Odessa
Exploration and the acquisition of Clint Hurt.
General and Administrative Expenses
General and administrative expenses increased 23% or $812,000 to
$4,352,000 during fiscal 1995 from $3,540,000 during fiscal 1994, primarily due
to increased expenses of Odessa Exploration and the acquisition of Clint Hurt
and WellTech West Texas. However, as a percent of revenues, general and
administrative expenses decreased from 10.2% of revenues during fiscal 1994 to
9.7% of revenues during fiscal 1995.
Depreciation and Depletion Expense
Depreciation and depletion expense increased 100% to $2,738,000 in
fiscal 1995 from $1,371,000 in fiscal 1994 due mainly to the additional
depreciation expense associated with the acquisition of the WellTech West Texas
oil field service equipment and subsequent capital expenditures on such
Income tax expense of $1,150,000 for fiscal 1995 increased from
$950,000 in income tax expense for fiscal 1994. The increase in income taxes was
primarily due to the increase in operating income. However, Key does not expect
to be required to remit a significant amount of the $1,150,000 in federal income
taxes in cash during fiscal 1996, because of the availability of net operating
loss carry forwards.