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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (63968)	4/6/2000 11:54:00 AM
From: jim_p	Respond to of 95453

EAST BRUNSWICK, N.J., Apr 6, 2000 (BUSINESS WIRE) -- Key Energy Services, Inc. (NYSE: KEG) today announced that (1) since January 1, 2000 it has reduced (or taken irrevocable action to reduce) its long term debt by a total of approximately $30 million, (2) it has completed the exchange of several non-core business units in South Texas for certain assets in which the Company has critical mass in the same area, and (3) it has executed and closed a forward sale of approximately one-tenth of its total proved oil and gas reserves for $20 million. Francis D. John, the Chairman and Chief Executive Officer stated, "These moves, especially the significant reduction in our debt, highlight Key's rapidly improving operations. We are executing on our promise to reduce debt, improve the strategic position of core businesses, and to enhance shareholder value." The three transactions are discussed below: Key has repaid (or given irrevocable notice of repayment for)approximately $27 million under its revolving credit and term loan facilities. Key has also reduced its outstanding subordinated and convertible debt by approximately $4 million. The Company expects to save at least $5.5 million per year in cash needs through a combination of reduced future interest expense and lower scheduled amortization. Key exchanged several of its non-core business units in South Texas for valuable oilfield trucking and fluid hauling assets that complement and expand the Company's already strong franchise in that market. South Texas is one of the fastest growing gas markets in the U.S. The new assets, acquired from Tetra Technologies, Inc. (NYSE: TTI), will be immediately accretive to earnings and will allow the Company to enhance both the quality and the scope of services it provides its customers. As a result of the swap, Key will exit the production testing, slickline and pipe testing business in that market. Key agreed to sell a part of its future production from its Odessa Exploration Incorporated ("OEI") subsidiary to a financial buyer for gross proceeds of $20 million. The forward sale allows Key to monetize a portion of this non-core asset, to lock in favorable futures prices for oil and natural gas, and to retain significant upside on the remaining reserves. The forward sale represents approximately one-tenth of OEI's total proved reserves and one-fifth of OEI's total proved developed producing reserves. In addition, Key has cancelled its agreement with an investment banker to explore a possible sale of OEI. Mr. John added, "As the largest land based well service company, we continue to benefit from the growing recovery in oil and gas markets. We view the recent OPEC agreement very favorably and see a climate where producers are increasingly confident in making longer-term investment decisions. Increased stability of prices, even at lower levels, is a very positive development for Key. As a result, we expect our hours, our margins and our cash flow to continue their sequential improvement." Key Energy is the world's largest rig-based well servicing firm, owning approximately 1,400 well service rigs and 1,200 oilfield trucks, 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.