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SEC Filings

10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
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Coiled Tubing Services
Revenues for our Coiled Tubing Services segment decreased $57.9 million, or 64.4%, to $32.0 million for the combined year ended December 31, 2016, compared to $89.8 million for the year ended December 31, 2015. The decrease for this segment is primarily due to lower spending from our customers as a result of lower oil prices. These market conditions resulted in reduced customer activity and a reduction in the price received for our services.
Operating expenses for our Coiled Tubing Services segment were $51.5 million during the combined year ended December 31, 2016, which represented a decrease of $193.5 million, or 79.0%, compared to $245.0 million for the year ended December 31, 2015. These expenses decreased primarily due to no impairment expense in 2016 compared to $82.7 million impairment of goodwill and a $51.1 million impairment of fixed assets in 2015 and as a result of a decrease in employee compensation costs, repair and maintenance expense and fuel costs as we sought to reduce our cost structure and as a result of lower activity levels.
Fishing and Rental Services
Revenues for our Fishing and Rental Services segment decreased $62.7 million, or 51.4%, to $59.2 million for the combined year ended December 31, 2016, compared to $121.9 million for the year ended December 31, 2015. The decrease for this segment is primarily due to lower spending from our customers as a result of lower oil prices. These market conditions resulted in reduced customer activity and a reduction in the price received for our services.
Operating expenses for our Fishing and Rental Services segment were $85.9 million during the combined year ended December 31, 2016, which represented a decrease of $233.4 million, or 73.1%, compared to $319.3 million for the year ended December 31, 2015. These expenses decreased primarily due to no impairment expense in 2016 compared to $173.5 million impairment of goodwill and a $6.0 million impairment of intangible assets in 2015 and as a result of a decrease in employee compensation costs, repair and maintenance expense and fuel costs as we sought to reduce our cost structure and as a result of lower activity levels.
International
Revenues for our International segment decreased $34.9 million, or 69.3%, to $15.5 million for the combined year ended December 31, 2016, compared to $50.3 million for the year ended December 31, 2015. The decrease was primarily attributable to lower customer activity in Mexico and the exit of operations in the Middle East, South America.
Operating expenses for our International segment decreased $158.2 million, or 68.0%, to $74.6 million for the combined year ended December 31, 2016, compared to $232.9 million for the year ended December 31, 2015. These expenses decreased primarily due to impairment expense of $44.6 million in 2016 compared to $80.8 million impairment of assets held for sale and a $4.4 million impairment of goodwill in 2015 and as a result of a decrease in employee compensation costs and equipment expense from lower activity and the exit of certain International markets.
Functional support
Operating expenses for our Functional Support segment decreased $15.2 million, or 10.8%, to $125.6 million (30.1% of consolidated revenues) for the combined year ended December 31, 2016 compared to $140.8 million (17.8% of consolidated revenues) for the year ended December 31, 2015. The decrease is primarily due to lower employee compensation costs due to reduced staffing levels and $30.8 million lower expenses related to our FCPA investigations by the DOJ and the SEC, which concluded in April and August 2016, respectively, partially off-set by $25.8 million in professional fees related to corporate restructuring in 2016.
Liquidity and Capital Resources
We require capital to fund our ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions, our debt service payments and our other obligations. We believe that our internally generated cash flows from operations, current reserves of cash and availability under our ABL Facility are sufficient to finance our cash requirements for current and future operations, budgeted capital expenditures, debt service and other obligations for the next twelve months.
Oil and natural gas prices began a rapid and substantial decline in the fourth quarter of 2014. Depressed commodity price conditions persisted and worsened during 2015 and remained depressed during 2016 and 2017. As a result, demand for our products and services declined substantially, and the prices we are able to charge our customers for our products and services have also declined substantially. These trends materially and adversely affected our results of operations, cash flows and financial condition during 2017 and, unless conditions in our industry improve, this trend will potentially continue beyond 2017.
In response to these conditions, we have undertaken several actions detailed below in an effort to preserve and improve our liquidity and financial position.

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