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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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               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                 OPERATIONS AND FINANCIAL CONDITION OF WELLTECH


         The  following  discussion  should  be read  in  conjunction  with  the
financial statements of WellTech and related notes appearing elsewhere herein.

Operating Losses

         WellTech has generated losses during each of the past five years. These
losses were primarily  attributable  to the  operations of certain  unprofitable
locations  which have been sold or joint  ventured over the past several  years.
WellTech has also expanded its  profitable  operations  and acquired  additional
profitable  operations  during  this  time  period  (1991 - 1995)  resulting  in
declining  losses.  In  addition  to  the  unprofitable  operations,  WellTech's
overhead and level of outstanding  debt was more than the profitable  operations
could  service.  Steps were also taken in these and other areas to reduce losses
and improve  profitability.  From the year ended  December  31, 1991 to the nine
months ended  September  30, 1995,  direct  operating  costs as a percentage  of
revenues have decreased from 82.3% to 78.3%, general and administrative expenses
have  decreased from 18.9% of revenues to 14.5% and long term debt has decreased
from approximately $30.0 million to $10.0 million.

Nine Months Ended September 30, 1995 versus Nine Months Ended September 30, 1994

Results of Operations

Revenues

         Revenues increased to $52.2 million for the nine months ended September
30, 1995 compared to $35.0 million for the nine months ended September 30, 1994,
an increase of $17.2  million or 49%.  This  increase  was due to  increases  in
nearly all of WellTech's  operations  including  drilling  ($3.9  million),  Mid
Continent ($5.0 million),  Eastern ($1.1 million), Russia ($1.6 million) and the
consolidation of Servicios effective April 1995 ($6.2 million).

Operating Expenses

         Operating  expenses as a percentage of revenues were 78.3% for the nine
months ended September 30, 1995 versus 79.8% for the nine months ended September
30, 1994. This decrease was due to a provision for workers  compensation  losses
recorded in 1994. This was partially offset by the lower gross margins generated
by WellTech's drilling operations which were begun in late 1994.

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