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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 Taxes

         Income tax expenses of $950,000 for fiscal 1994 increased from $413,000
in income tax expense for fiscal  1993.  The  increase in income tax expense was
due to the  increase  in income  before  extraordinary  items.  Because of Key's
adoption of "fresh-start reporting," it is required to report any utilization of
net operating loss carryforwards  arising prior to the 1992 Reorganization as an
increase in stockholders'  equity rather than as a credit to income tax expense.
(See Note 3 of Notes to Consolidated Financial Statements of Key.)

Extraordinary Item

         During fiscal 1993, Key recorded an extraordinary  gain on discharge of
indebtedness of $2,868,000 in connection with the 1992 Reorganization  Plan. See
Note 3 of Notes to Consolidated Financial Statements of Key.

Net Income

         Net  income  for  fiscal  1994  was  $1,345,000,  a 21%  increase  from
$1,111,000  for fiscal 1993,  before an adjustment of $4,586,000  related to the
1992 Reorganization Plan.

Cash Flow

         Net cash provided by operating  activities  increased  $1,524,000  from
$318,000  during the 1994 fiscal year to  $1,842,000  for the 1993  period.  The
increase was attributable primarily to an increase in net income.

         Net cash used in investing activities increased from $1,821,000 for the
1993 period to $5,608,000 for fiscal 1994. The increase was primarily the result
of increased  capital  expenditures for the oil well service  operations  during
1994 and $850,000 for  expenditures  for oil gas properties.  Increased oil well
service capital expenditures was primarily the result of improvements  necessary
for the WellTech West Texas equipment.

         Net cash provided by financing  activities  was  $4,316,000  for fiscal
1994 as compared to $1,918,000  for fiscal 1993.  The increase was primarily the
result of the proceeds from  long-term  debt during  fiscal 1994  primarily as a
result of the  financing of the  improvement  costs to the equipment of the West
Texas  operations  of  WellTech  and to  finance  the  purchase  of oil  and gas
properties by Odessa Exploration.

Liquidity and Capital Resources

         At December 31, 1995, Key had $955,000 in cash and restricted cash.

         Yale E. Key has projected  $2.5 million for oil field  service  capital
expenditures  for fiscal  1996 as  compared to  approximately  $2.8  million for
fiscal 1995.  Capital  expenditures  are  expected to be  primarily  capitalized