Key Energy Reports 48% Increase in Second Quarter Earnings Over Previous Quarter to Record $11.1 Million of Net Income
EAST BRUNSWICK, N.J.--(BUSINESS WIRE)--Jan. 24, 2001--Key Energy Services, Inc. (NYSE: KEG) today announced that its net income before extraordinary gains for the three months ended December 31, 2000 rose by 48% to approximately $11.1 million from approximately $7.5 million for the three months ended September 30, 2000 and compared to a net loss of approximately $5.7 million for the three months ended December 31, 1999. The significant rise in net income as compared to the same period last year resulted from higher pricing, increased utilization and lower interest expense. Net income before extraordinary gains per diluted share for the December quarter increased by 38% to approximately $0.11 from approximately $0.08 for the three months ended September 30, 2000 and compared to a loss of approximately $0.07 for the quarter ended December 31, 1999.
EBITDA for the December quarter reached record levels, rising 78% to approximately $51.5 million for the three months ended December 31, 2000 from approximately $29.0 million for the quarter ended December 31, 1999. EBITDA for the six months ended December 31, 2000 increased 95% to approximately $98.3 million as compared to $50.5 million for the six months ended December 31, 1999.
Revenues for the quarter ended December 31, 2000 rose by 28% to approximately $203.9 million over the same period last year and increased by approximately 6% over the three months ended September 30, 2000. The revenues and operating results for the December quarter were adversely affected by extreme ice and snow conditions in Texas, Oklahoma and Arkansas during the last ten days of December. The lost hours were more than offset by increased rates for the Company's services in most markets.
Total interest expense continued to decline to $14.6 million for the three months ended December 31, 2000 from $18.1 million for the quarter ended December 31, 1999. Of the $14.6 million for the December quarter, approximately $13.6 million represented cash interest expense. This reduction in interest expense does not include any benefit from the recent reduction in floating interest rates or the next contractual reduction in interest rates anticipated under the Company's revolving credit facility.
The Company used a portion of its free cash flow to reduce its outstanding indebtedness. Total long term debt, excluding capitalized leases, was reduced by approximately $14.2 million to approximately $523.0 million at December 31, 2000. The Company's net debt (excluding capital leases) to capitalization ratio at December 31, 2000 also improved to approximately 55.5% from 57.7% at September 30, 2000.
Francis D. John, the Company's Chairman and Chief Executive Officer, commented on the quarter, "This is a unique time for Key as well as for the oilfield services industry. We are experiencing unprecedented demand for our drilling rigs, deep gas workover rigs, horizontal workover packages, well maintenance rigs and ancillary equipment. Today, demand for our services remains at historically high levels, with multiple-week backlogs in most of our operating areas, including Argentina and Canada. As a result of this strong demand, prices have risen over the past six months and should continue to do so in the future. As the industry leader, we are investing heavily in capital expenditures to refurbish our fleet of well service rigs, drilling rigs, facilities and trucking operations, having refurbished more than 100 rigs over the past twelve months. It is important to note, however, that despite improving pricing, current rates remain well below the levels needed to economically justify building new well service rigs."
Mr. John continued, "Over the past two years, we have successfully executed on our operating plan, resulting in a vastly improved balance sheet, an undisputed industry-leading market position, upgraded well service and drilling equipment and motivated, well-trained employees. With capital spending by our customers expected to increase by 15% to 25% during calendar year 2001, we will continue to work with our customers to structure agreements that allow us to profitably invest in our equipment and people."
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. |
