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Key Energy Reports Profit and Record EBITDA for Fourth Quarter
EAST BRUNSWICK, N.J.--(BUSINESS WIRE)--Aug. 21, 2000--Key Energy Services, Inc. (NYSE: KEG - news) today reported a profit of approximately $332,000 or slightly more than $0.00 per basic share for the quarter ended June 30, 2000 compared to a loss of approximately $13.2 million or ($0.24) per basic share for the quarter ended June 30, 1999. EBITDA, defined as earnings before interest, taxes and depreciation and amortization, increased 130% to approximately $34.8 million for the quarter ended June 30, 2000 compared to approximately $15.1 million for the same period last year. Revenues for the quarter ended June 30, 2000 increased 37% to approximately $169.9 million compared to $124.4 million for the quarter ended June 30, 1999. For the fiscal year ended June 30, 2000, Key reported a 30% increase in revenues to approximately $637.7 million, a 73% increase in EBITDA to approximately $116.6 million and a substantially lower loss of approximately ($0.23) per share compared to ($1.94) per share for the fiscal year ended June 30, 1999. Well service rig, drilling rig and fluid hauling operations each experienced a significant sequential increase in utilization reflected in total hours worked during the quarter compared to the previous quarter ended March 30, 2000 and was vastly improved over the June 1999 quarter. Operating margins in all of Key's businesses continued to improve as well service rig hours, drilling rig hours and daily rates increased with improving customer demand.
Key significantly reduced debt and strengthened its balance sheet during the fiscal year ended June 30, 2000. Net debt to capitalization at June 30, 2000, including the cash proceeds from the equity offering that was completed on June 30, 2000, has improved to approximately 59%. The Company has used the net proceeds from the equity offering to repay approximately $100 million of long-term debt and has also repaid an additional $16.7 million of long-term debt during June and July 2000 from existing cash. Net income for the three months and the fiscal year ended June 30, 2000 includes an approximately $1.6 million gain from the early retirement of $10.2 million of long-term debt. Key's current outstanding long-term debt, excluding capitalized leases, is approximately $542 million. The Company has excellent liquidity with only $22 million outstanding under its $150 million revolving credit facility. Key has generated five consecutive quarters of sequential improvement in EBITDA and EBITDA margins and expects this trend to continue as the market improves.
Currently, demand for Key's services in all operating areas continues to increase. Total well service and drilling rig hours are averaging more than 52,000 hours per week since the 4th of July holiday week, compared to an average of 49,000 hours during the June 2000 quarter. The Company has recently instituted another round of rate increases for its well service rigs, drilling rigs and fluid hauling services that will phase in from July 15, 2000 through September 30, 2000.
Francis D. John, the Company's Chairman and Chief Executive Officer, stated, ``We are very excited about Key's prospects as market conditions are expected to strengthen in all operating areas. With strong natural gas prices and the U.S. drilling rig count approaching 1,000 units, we believe the next several quarters will show continued growth in revenues and earnings. We have done an outstanding job of reducing debt and fixed charges while also reducing operating costs as evidenced by our improving operating earnings and margins. In fact, Key's operations have been consistently profitable since May 2000. With the further benefit of the equity offering, the Company believes that its balance sheet and credit statistics are vastly improved which should enable Key to refinance its bank debt at more favorable rates.''
``We have clearly turned the corner,'' Mr. John continued, ``Key is exceptionally well positioned to benefit from the improved stability and strength of oil and gas prices. We have more than 300 additional well service and drilling rigs which, when deployed, will allow Key to grow without the need for acquisitions. We have multi-week wait lists in many of our regions, we are actively refurbishing equipment and we have just opened our second employee training school near Houston, TX to supply a steady stream of highly trained personnel to better serve our customers.''
Key Energy Services is the world's largest well service company and owns approximately 1,400 well service rigs and 1,200 fluid hauling vehicles, as well as 73 drilling rigs. The Company provides diversified energy operations including well servicing, contract drilling and other oilfield services and oil and natural gas production. The Company has operations in all major onshore oil and gas producing regions of the continental United States and in Argentina and Ontario, Canada.
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