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

To: BigBull who wrote (71166)	8/18/2000 12:07:54 PM
From: BigBull	Read Replies (1) \| Respond to of 95453

KEG article: oilandgasinvestor.com Key Energy Services Turns Corner Since what chairman and CEO Francis D. John calls “the dark days of March 1999,” things are finally looking up for Key Energy Services Inc. (NYSE: KEG). U.S. well servicing activity is rising, with operators facing a backlog of two or three weeks in most natural gas-prone drilling areas, and second-half spending by E&P companies will be up. And after completing a $101.5-million equity offering on June 30, the company’s high debt burden has been reduced. Net debt to capitalization is 60%. Key is based in East Brunswick, New Jersey, but operational headquarters are in Midland, Texas, heart of the Permian Basin. Following a string of acquisitions over the last two years, Key is now the world’s largest well service company with 1,400 service rigs, 73 drilling rigs and 1,200 oilfield trucks for hauling fluids. The company has a greater percentage of rigs capable of servicing deep gas wells than its nearest competitor, Pool Energy Services (now a part of Nabors Drilling.) About 60% of its revenue comes from natural gas well activity. “We have survived a horrendous hit,” says John. “Our margins are back to 1997 levels yet on two-thirds the revenue—which shows you how much we have cut costs.” This year Key should have cash flow of about $700 million and 35% to 40% of the well servicing market. Last year the company got walloped by the drilling downturn, particularly in West Texas, long its traditional stronghold. The oilfield workover and well service firm went from about 8,500 employees to about 5,500, but today, rehiring has the workforce back up to about 8,000 people. In the last year Key has opened two new training centers, in Midland and Houston, where new hires train on real well service rigs, then serve apprenticeships on location, followed by more training. “Our vision is to ultimately be viewed as the Schlumberger or Halliburton of the well servicing industry. We want to take the image of well servicing to a new level. We provide workover services, fishing tools, frac tanks, coiled tubing, contract drilling and other services. Our philosophy is not to take some guy out of a doughnut shop and throw him on a rig,” John says. “We are providing real value.” More important, in late June Key was able to complete the issuance of 11 million shares at $9.625 for net proceeds of $101.5 million. Key was required to use 25% of the proceeds to repay senior subordinated debt, and it has the right to redeem up to 35% of its $150-million of 14% senior subordinated notes due 2009 at 114% of par value. Funded debt has been reduced to about $553 million. The company has assets in place to generate revenues of $1 billion annually and achieve EBITDA (earnings before income taxes, depreciation and amortization) of at least $300 million. During Key’s road show in June to sell the equity deal, John was astonished to hear some investors in Boston say they were so worried about high gas prices and possible shortages this coming winter, they thought the National Guard might be called out to man drilling and service rigs. Key’s 52-week price range has been 3 11/16 to 12 ¼. Recent price is 8 5/16. ---Leslie Haines, editor, Oil and Gas Investor

To: BigBull who wrote (71166)	8/18/2000 1:02:29 PM
From: Roebear	Read Replies (1) \| Respond to of 95453

BigBull, I listened to the TESOF CC also, and can confirm what you say, things look good. Especially when I look at the old TESOF profits from the boom in 98 (WOW) and I believe, IMHO, their top drive rentals will likely rival that year soon. You almost got to hear a question on those rentals levels by me, but I waited a bit for another question, not believing there were no more(!) and 'call over' came while I was entering my numbers for the question. Also, I got interrupted by a business call and missed the part about 50 Million in product sales being "booked" with no marketing effort yet. From hearing the last part of that it sounded like new business, just can't be certain because I missed crucial parts. Seems like someone in Toronto likes to buy 5-600 share blocks. Get ready for some of that "Stealth" accumulation, ggg. One thing I really got from the CC was this is a company that has not been discovered here in the US, but when they announce a large contract (My guess, this autumn/winter) with an oil major for casing drilling, IMHO, this stock will FLY! It's getting near to being my 'one decision' OSX stock. Best Regards, Roebear