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8-K
KEY ENERGY SERVICES INC filed this Form 8-K on 02/27/2018
Entire Document
 


 
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February 26, 2017

 
 
 


The following table sets forth summary data for the fourth quarter and full-year 2017 and prior comparable quarterly periods:
 
Successor
 
 
Predecessor
 
Three Months Ended
 
Period from December 16, 2016 through December 31, 2016
 
 
Period from October 1, 2016 through December 15, 2016
 
December 31, 2017 (Unaudited)
 
September 30, 2017 (Unaudited)
 
 
 
Revenues
$
116.3

 
$
110.7

 
$
17.8

 
 
$
90.9

Net income (loss)
(22.3
)
 
(38.2
)
 
(10.2
)
 
 
173.4

Diluted income (loss) per share
(1.11
)
 
(1.90
)
 
(0.51
)
 
 
1.08

Adjusted EBITDA*
1.8

 
0.6

 
(4.9
)
 
 
0.8

* Adjusted EBITDA does not exclude costs incurred in connection with the Company’s FCPA investigations completed in 2016.
 
Successor
 
 
Predecessor
 
Year Ended December 31, 2017 (Unaudited)
 
Period from December 16, 2016 through December 31, 2016
 
 
Period from January 1, 2016 through December 15, 2016
Revenues
$
436.2

 
$
17.8

 
 
$
399.4

Net loss
(120.6
)
 
(10.2
)
 
 
(131.7
)
Diluted loss per share
(6.00
)
 
(0.51
)
 
 
(0.82
)
Adjusted EBITDA*
(9.2
)
 
(4.9
)
 
 
(48.7
)
* Adjusted EBITDA does not exclude costs incurred in connection with the Company’s FCPA investigations completed in 2016.
U.S. Results
Fourth quarter 2017 U.S. Rig Services revenues of $64.8 million were up 4.6% as compared to the third quarter 2017 revenues of $61.9 million, with rig hours increasing approximately 1% to 164,480 hours with rig hours per work day increasing approximately 5% in the fourth quarter. Production activity as a percentage of rig hours increased approximately 250 basis points in the fourth quarter as workover and maintenance activity increased, primarily in the Permian Basin. Margins declined by approximately 210 basis points in the fourth quarter of 2017 from the third quarter of 2017 largely due to the on-boarding of personnel and the equipment make ready costs associated with increasing activity.
Fourth quarter 2017 Fluid Management Services revenues of $23.3 million were up 12.3% as compared to the third quarter 2017 revenues of $20.7 million. Fourth quarter truck hours were up approximately 9% quarter on quarter with revenue per truck hour increasing approximately 3% due to higher pricing and higher water disposal volumes. Fluid Management Services margins improved approximately 410 basis points on higher activity and pricing, as well as the non-recurrence of a charge of $4.0 million due to a legal settlement and of equipment make ready costs and labor inefficiencies that were incurred in the third quarter.
Fourth quarter 2017 Coiled Tubing Services revenues of $14.9 million were up 18.9% as compared to the third quarter 2017 revenue of $12.5 million on higher utilization of large diameter coiled tubing units during the fourth quarter of 2017 as compared to the third quarter of 2017. Coiled Tubing Services margins were negatively impacted by approximately 580 basis points in the fourth quarter as compared to the third quarter due to equipment start-up and labor inefficiencies. The Company expects to have twelve of its 2 3/8 inch and greater diameter coiled tubing units deployed by the end of the first quarter of 2018.
Fourth quarter 2017 Fishing & Rental Services revenues of $13.4 million were down 5.7% as compared to the third quarter 2017 revenues of $14.2 million. Fourth quarter 2017 Fishing & Rental Services margins were negatively impacted by approximately 850 basis points due largely to lower fishing activity and equipment repair costs.
International Segment
The company completed its exit of international operations in the third quarter. Fourth quarter 2017 included a loss of $0.4 million dollars as a result of the Company’s liquidation of remaining legal entities. The Company does not anticipate having an International reporting segment in 2018.
General and Administrative Expenses    
General and Administrative (G&A) expenses were $16.8 million for the fourth quarter 2017 compared to $37.2 million in the prior quarter. Fourth quarter G&A expenses included a $3.7 million gain related to stock-based compensation cancellation expense. This compares to third quarter 2017 G&A expenses of $37.2 million which included $11.6 million of legal fees and settlements, $3.3 million of stock-based compensation expense and $0.2 million in severance. Excluding these items and International G&A of $0.1 million, G&A expense in the fourth quarter was $20.4 million as compared to $21.0 million in the third quarter of 2017.
Liquidity
As of December 31, 2017, Key had total liquidity of $97.8 million, consisting of $73.1 million in unrestricted cash and $24.7 million of borrowing capacity available under the Company’s $100.0 million asset-based loan facility. This compares to total liquidity of $104.2 million at September 30, 2017, consisting of $77.7 million in unrestricted cash and $26.5 million of borrowing capacity available under the Company’s $100.0 million asset-based loan facility. Capital expenditures for the fourth quarter of 2017 were $6.5 million and were $16.1 million for full-year 2017.
Conference Call Information    
As previously announced, Key management will host a conference call to discuss its fourth quarter and full-year 2017 financial results on Tuesday, February 27, 2018 at 10:00 a.m. CST. Callers from the United States and Canada should dial 888-794-4637 to access the call. International callers should dial 352-204-8973. All callers should ask for the "Key Energy Services Conference Call" or provide the access code 5698079. The conference call will also be available live via the internet. To access the webcast, go to www.keyenergy.com and select "Investor Relations."
A telephonic replay of the conference call will be available on Tuesday, February 27, 2018, beginning approximately two hours after the completion of the conference call and will remain available for two weeks. To access the replay, call 855-859-2056 or 800-585-8367. The access code for the replay is 5698079. The replay will also be accessible at www.keyenergy.com under "Investor Relations" for a period of at least 90 days.



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