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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Key Energy Services Inc | NYSE:KEG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.266 | 0 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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04-2648081
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1301 McKinney Street, Suite 1800, Houston, Texas
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77010
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
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Smaller reporting company
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ý
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Emerging growth company
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¨
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Common Stock, $0.01 par value
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KEG
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New York Stock Exchange
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(Title of each class)
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(Trading symbol)
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(Name of each exchange on which registered)
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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||
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Item 3.
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Item 4.
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Item 5.
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||
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Item 6.
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•
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conditions in the oil and natural gas industry, especially oil and natural gas prices and capital expenditures by oil and natural gas companies;
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•
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volatility in oil and natural gas prices;
|
•
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our ability to implement price increases or maintain pricing on our core services;
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•
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risks that we may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed in our businesses;
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•
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industry capacity;
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•
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asset impairments or other charges;
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•
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the periodic low demand for our services and resulting operating losses and negative cash flows;
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•
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our highly competitive industry as well as operating risks, which are primarily self-insured, and the possibility that our insurance may not be adequate to cover all of our losses or liabilities;
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•
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significant costs and potential liabilities resulting from compliance with applicable laws, including those resulting from environmental, health and safety laws and regulations, specifically those relating to hydraulic fracturing, as well as climate change legislation or initiatives;
|
•
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our historically high employee turnover rate and our ability to replace or add workers, including executive officers and skilled workers;
|
•
|
our ability to implement technological developments and enhancements;
|
•
|
severe weather impacts on our business, including from hurricane activity;
|
•
|
our ability to successfully identify, make and integrate acquisitions and our ability to finance future growth of our operations or future acquisitions;
|
•
|
our ability to achieve the benefits expected from disposition transactions;
|
•
|
the loss of one or more of our larger customers;
|
•
|
our ability to generate sufficient cash flow and liquidity to meet debt service obligations, meet contractual payment obligations and fund our operations;
|
•
|
the amount of our debt and the limitations imposed by the covenants in the agreements governing our debt, including our ability to comply with covenants under our debt agreements;
|
•
|
an increase in our debt service obligations due to variable rate indebtedness;
|
•
|
our ability to restructure our debt agreements with our lenders on acceptable terms, if at all, and adjust our debt levels;
|
•
|
the structure and timing of any financial, transactional, or other strategic alternative that we may pursue to address our capital structure and whether any such financial, transactional, or other strategic alternative will be completed;
|
•
|
our ability to achieve the benefits of our cost efficiency and cash flow growth initiatives;
|
•
|
our inability to achieve our financial, capital expenditure and operational projections, including quarterly and annual projections of revenue, operating income and/or loss margin and our inaccurate assessment of future activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually);
|
•
|
our ability to respond to changing or declining market conditions;
|
•
|
our ability to maintain sufficient liquidity;
|
•
|
adverse impact of litigation;
|
•
|
our ability to regain compliance with the listing requirements of, and maintain the listing of our common stock on, the New York Stock Exchange; and
|
•
|
other factors affecting our business described in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 and in the other reports we file with the Securities and Exchange Commission.
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,606
|
|
|
$
|
50,311
|
|
Accounts receivable, net of allowance for doubtful accounts of $476 and $1,056, respectively
|
67,246
|
|
|
74,253
|
|
||
Inventories
|
15,214
|
|
|
15,861
|
|
||
Other current assets
|
13,496
|
|
|
18,073
|
|
||
Total current assets
|
118,562
|
|
|
158,498
|
|
||
Property and equipment
|
443,774
|
|
|
439,043
|
|
||
Accumulated depreciation
|
(199,892
|
)
|
|
(163,333
|
)
|
||
Property and equipment, net
|
243,882
|
|
|
275,710
|
|
||
Intangible assets, net
|
361
|
|
|
404
|
|
||
Other non-current assets
|
11,341
|
|
|
8,562
|
|
||
TOTAL ASSETS
|
$
|
374,146
|
|
|
$
|
443,174
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
18,360
|
|
|
$
|
13,587
|
|
Current portion of long-term debt
|
2,914
|
|
|
2,500
|
|
||
Other current liabilities
|
73,533
|
|
|
87,377
|
|
||
Total current liabilities
|
94,807
|
|
|
103,464
|
|
||
Long-term debt
|
240,009
|
|
|
241,079
|
|
||
Workers’ compensation, vehicular and health insurance liabilities
|
25,880
|
|
|
24,775
|
|
||
Other non-current liabilities
|
31,701
|
|
|
28,336
|
|
||
Commitments and contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 10,000,000 authorized and one share issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 100,000,000 shares authorized, 20,498,674 and 20,363,198 outstanding
|
205
|
|
|
204
|
|
||
Additional paid-in capital
|
268,406
|
|
|
264,945
|
|
||
Retained deficit
|
(286,862
|
)
|
|
(219,629
|
)
|
||
Total equity
|
(18,251
|
)
|
|
45,520
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
374,146
|
|
|
$
|
443,174
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
REVENUES
|
$
|
106,523
|
|
|
$
|
134,721
|
|
|
$
|
328,739
|
|
|
$
|
404,442
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
87,956
|
|
|
106,103
|
|
|
266,714
|
|
|
314,061
|
|
||||
Depreciation and amortization expense
|
14,584
|
|
|
21,808
|
|
|
43,142
|
|
|
62,881
|
|
||||
General and administrative expenses
|
21,375
|
|
|
23,925
|
|
|
66,014
|
|
|
71,353
|
|
||||
Operating loss
|
(17,392
|
)
|
|
(17,115
|
)
|
|
(47,131
|
)
|
|
(43,853
|
)
|
||||
Interest expense, net of amounts capitalized
|
8,411
|
|
|
8,708
|
|
|
26,164
|
|
|
25,425
|
|
||||
Other income, net
|
(351
|
)
|
|
(213
|
)
|
|
(1,732
|
)
|
|
(1,972
|
)
|
||||
Loss before income taxes
|
(25,452
|
)
|
|
(25,610
|
)
|
|
(71,563
|
)
|
|
(67,306
|
)
|
||||
Income tax benefit (expense)
|
(37
|
)
|
|
1,750
|
|
|
4,330
|
|
|
1,588
|
|
||||
NET LOSS
|
$
|
(25,489
|
)
|
|
$
|
(23,860
|
)
|
|
$
|
(67,233
|
)
|
|
$
|
(65,718
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
$
|
(1.25
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(3.30
|
)
|
|
$
|
(3.25
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
20,443
|
|
|
20,252
|
|
|
20,398
|
|
|
20,234
|
|
|
|
|
|
||||
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(67,233
|
)
|
|
$
|
(65,718
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
43,142
|
|
|
62,881
|
|
||
Bad debt expense
|
538
|
|
|
387
|
|
||
Accretion of asset retirement obligations
|
126
|
|
|
121
|
|
||
Amortization of deferred financing costs
|
346
|
|
|
357
|
|
||
Gain on disposal of assets, net
|
(3,785
|
)
|
|
(7,402
|
)
|
||
Share-based compensation
|
3,499
|
|
|
4,582
|
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
6,469
|
|
|
(20,994
|
)
|
||
Other current assets
|
5,224
|
|
|
8,365
|
|
||
Accounts payable, accrued interest and accrued expenses
|
(9,077
|
)
|
|
(4,392
|
)
|
||
Share-based compensation liability awards
|
5
|
|
|
835
|
|
||
Other assets and liabilities
|
3,961
|
|
|
5,916
|
|
||
Net cash used in operating activities
|
(16,785
|
)
|
|
(15,062
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(16,483
|
)
|
|
(28,521
|
)
|
||
Proceeds from sale of assets
|
8,362
|
|
|
11,955
|
|
||
Net cash used in investing activities
|
(8,121
|
)
|
|
(16,566
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repayments of long-term debt
|
(1,875
|
)
|
|
(1,875
|
)
|
||
Repayments of finance lease obligations
|
(59
|
)
|
|
—
|
|
||
Payment of deferred financing costs
|
(828
|
)
|
|
—
|
|
||
Repurchases of common stock
|
(37
|
)
|
|
(271
|
)
|
||
Proceeds from exercise of warrants
|
—
|
|
|
3
|
|
||
Net cash used in financing activities
|
(2,799
|
)
|
|
(2,143
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(27,705
|
)
|
|
(33,771
|
)
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
50,311
|
|
|
77,065
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
22,606
|
|
|
$
|
43,294
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Rig Services
|
|
$
|
197,375
|
|
|
$
|
227,913
|
|
Fishing and Rental Services
|
|
43,534
|
|
|
47,801
|
|
||
Coiled Tubing Services
|
|
32,134
|
|
|
60,513
|
|
||
Fluid Management Services
|
|
55,696
|
|
|
68,215
|
|
||
Total
|
|
$
|
328,739
|
|
|
$
|
404,442
|
|
|
COMMON STOCKHOLDERS
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Deficit
|
|
Total
|
|||||||||||
|
Number of Shares
|
|
Amount at Par
|
|
|
|||||||||||||
Balance at December 31, 2018
|
20,363
|
|
|
$
|
204
|
|
|
$
|
264,945
|
|
|
$
|
(219,629
|
)
|
|
$
|
45,520
|
|
Share-based compensation
|
11
|
|
|
—
|
|
|
816
|
|
|
—
|
|
|
816
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,441
|
)
|
|
(23,441
|
)
|
||||
Balance at March 31, 2019
|
20,374
|
|
|
$
|
204
|
|
|
$
|
265,761
|
|
|
$
|
(243,070
|
)
|
|
$
|
22,895
|
|
Common stock purchases
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Share-based compensation
|
35
|
|
|
—
|
|
|
1,414
|
|
|
—
|
|
|
1,414
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,303
|
)
|
|
(18,303
|
)
|
||||
Balance at June 30, 2019
|
20,408
|
|
|
$
|
204
|
|
|
$
|
267,171
|
|
|
$
|
(261,373
|
)
|
|
$
|
6,002
|
|
Common stock purchases
|
(23
|
)
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
(33
|
)
|
||||
Share-based compensation
|
114
|
|
|
1
|
|
|
1,268
|
|
|
—
|
|
|
1,269
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,489
|
)
|
|
(25,489
|
)
|
||||
Balance at September 30, 2019
|
20,499
|
|
|
$
|
205
|
|
|
$
|
268,406
|
|
|
$
|
(286,862
|
)
|
|
$
|
(18,251
|
)
|
|
COMMON STOCKHOLDERS
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Deficit
|
|
Total
|
|||||||||||
|
Number of Shares
|
|
Amount at Par
|
|
|
|
||||||||||||
Balance at December 31, 2017
|
20,217
|
|
|
$
|
202
|
|
|
$
|
259,314
|
|
|
$
|
(130,833
|
)
|
|
$
|
128,683
|
|
Exercise of warrants
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Share-based compensation
|
14
|
|
|
—
|
|
|
2,400
|
|
|
—
|
|
|
2,400
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,963
|
)
|
|
(24,963
|
)
|
||||
Balance at March 31, 2018
|
20,231
|
|
|
$
|
202
|
|
|
$
|
261,715
|
|
|
$
|
(155,796
|
)
|
|
$
|
106,121
|
|
Exercise of warrants
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Share-based compensation
|
14
|
|
|
—
|
|
|
502
|
|
|
—
|
|
|
502
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,895
|
)
|
|
(16,895
|
)
|
||||
Balance at June 30, 2018
|
20,245
|
|
|
$
|
202
|
|
|
$
|
262,219
|
|
|
$
|
(172,691
|
)
|
|
$
|
89,730
|
|
Common stock purchases
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
|
(271
|
)
|
||||
Share-based compensation
|
52
|
|
|
1
|
|
|
1,679
|
|
|
—
|
|
|
1,680
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,860
|
)
|
|
(23,860
|
)
|
||||
Balance at September 30, 2018
|
20,297
|
|
|
$
|
203
|
|
|
$
|
263,627
|
|
|
$
|
(196,551
|
)
|
|
$
|
67,279
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Other current assets:
|
|
|
|
||||
Prepaid current assets
|
$
|
4,057
|
|
|
$
|
11,207
|
|
Reinsurance receivable
|
6,617
|
|
|
6,365
|
|
||
Operating lease right-of-use assets
|
2,517
|
|
|
—
|
|
||
Other
|
305
|
|
|
501
|
|
||
Total
|
$
|
13,496
|
|
|
$
|
18,073
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Other non-current assets:
|
|
|
|
||||
Reinsurance receivable
|
$
|
6,980
|
|
|
$
|
6,743
|
|
Deposits
|
1,121
|
|
|
1,309
|
|
||
Operating lease right-of-use assets
|
2,853
|
|
|
—
|
|
||
Other
|
387
|
|
|
510
|
|
||
Total
|
$
|
11,341
|
|
|
$
|
8,562
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Other current liabilities:
|
|
|
|
||||
Accrued payroll, taxes and employee benefits
|
$
|
15,760
|
|
|
$
|
19,346
|
|
Accrued operating expenditures
|
14,423
|
|
|
15,861
|
|
||
Income, sales, use and other taxes
|
4,993
|
|
|
8,911
|
|
||
Self-insurance reserve
|
25,819
|
|
|
25,358
|
|
||
Accrued interest
|
6,672
|
|
|
7,105
|
|
||
Accrued insurance premiums
|
4
|
|
|
5,651
|
|
||
Unsettled legal claims
|
2,545
|
|
|
4,356
|
|
||
Accrued severance
|
40
|
|
|
83
|
|
||
Operating leases
|
2,448
|
|
|
—
|
|
||
Other
|
829
|
|
|
706
|
|
||
Total
|
$
|
73,533
|
|
|
$
|
87,377
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Other non-current liabilities:
|
|
|
|
||||
Asset retirement obligations
|
$
|
9,115
|
|
|
$
|
9,018
|
|
Environmental liabilities
|
2,395
|
|
|
2,227
|
|
||
Accrued sales, use and other taxes
|
17,005
|
|
|
17,024
|
|
||
Operating leases
|
3,120
|
|
|
—
|
|
||
Other
|
66
|
|
|
67
|
|
||
Total
|
$
|
31,701
|
|
|
$
|
28,336
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Trademark:
|
|
|
|
||||
Gross carrying value
|
$
|
520
|
|
|
$
|
520
|
|
Accumulated amortization
|
(159
|
)
|
|
(116
|
)
|
||
Net carrying value
|
$
|
361
|
|
|
$
|
404
|
|
|
Weighted
average remaining
amortization
period (years)
|
|
Expected amortization expense (in thousands)
|
||||||||||||||||||
|
Remainder
of 2019 |
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||||
Trademarks
|
6.3
|
|
$
|
14
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
|
|
|
||||
|
September 30, 2019
|
|
December 31, 2018
|
||||
Term Loan Facility due 2021
|
$
|
243,125
|
|
|
$
|
245,000
|
|
Unamortized debt issuance costs
|
(1,903
|
)
|
|
(1,421
|
)
|
||
Finance lease obligation
|
1,701
|
|
|
—
|
|
||
Total
|
242,923
|
|
|
243,579
|
|
||
Less current portion
|
(2,914
|
)
|
|
(2,500
|
)
|
||
Long-term debt
|
$
|
240,009
|
|
|
$
|
241,079
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||
|
September 30, 2019
|
|
September 30, 2019
|
||
Term Loan Facility
|
12.61
|
%
|
|
12.82
|
%
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income
|
$
|
(122
|
)
|
|
$
|
(201
|
)
|
|
$
|
(639
|
)
|
|
$
|
(580
|
)
|
Other
|
(229
|
)
|
|
(12
|
)
|
|
(1,093
|
)
|
|
(1,392
|
)
|
||||
Total
|
$
|
(351
|
)
|
|
$
|
(213
|
)
|
|
$
|
(1,732
|
)
|
|
$
|
(1,972
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic and Diluted EPS Calculation:
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(25,489
|
)
|
|
$
|
(23,860
|
)
|
|
$
|
(67,233
|
)
|
|
$
|
(65,718
|
)
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
20,443
|
|
|
20,252
|
|
|
20,398
|
|
|
20,234
|
|
||||
Basic and diluted loss per share
|
$
|
(1.25
|
)
|
|
$
|
(1.18
|
)
|
|
$
|
(3.30
|
)
|
|
$
|
(3.25
|
)
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
RSUs
|
1,882
|
|
|
1,078
|
|
|
1,994
|
|
|
1,367
|
|
Stock options
|
54
|
|
|
159
|
|
|
74
|
|
|
163
|
|
Warrants
|
1,838
|
|
|
1,838
|
|
|
1,838
|
|
|
1,838
|
|
Total
|
3,774
|
|
|
3,075
|
|
|
3,906
|
|
|
3,368
|
|
|
|
||
|
September 30, 2019
|
||
Right-of-Use Assets under Operating Leases
|
|
||
Operating lease right-of-use assets, current portion
|
$
|
2,517
|
|
Operating lease right-of-use assets, non-current portion
|
2,853
|
|
|
Total operating lease assets
|
$
|
5,370
|
|
|
|
||
Operating lease liabilities, current portion
|
$
|
2,448
|
|
Operating lease liabilities, non-current portion
|
3,120
|
|
|
Total operating lease liabilities
|
$
|
5,568
|
|
|
|
||
Right-of-Use Assets under Finance Leases
|
|
||
Property and equipment, at cost
|
$
|
1,760
|
|
Less accumulated depreciation
|
73
|
|
|
Property and equipment, net
|
$
|
1,687
|
|
|
|
||
Current portion of long-term debt
|
$
|
414
|
|
Long-term debt
|
1,287
|
|
|
Total finance lease liabilities
|
$
|
1,701
|
|
|
September 30, 2019
|
||||||
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2019
|
$
|
659
|
|
|
$
|
119
|
|
2020
|
2,676
|
|
|
485
|
|
||
2021
|
1,508
|
|
|
485
|
|
||
2022
|
493
|
|
|
485
|
|
||
2023
|
493
|
|
|
283
|
|
||
Thereafter
|
188
|
|
|
—
|
|
||
Total lease payments
|
6,017
|
|
|
1,857
|
|
||
Less imputed interest
|
(449
|
)
|
|
(156
|
)
|
||
Total
|
$
|
5,568
|
|
|
$
|
1,701
|
|
(1)
|
Long-lived assets include fixed assets, intangibles and other non-current assets.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
WTI Cushing Oil(1)
|
|
NYMEX Henry
Hub Natural Gas(1)
|
|
Average Baker
Hughes U.S. Land
Drilling Rigs(2)
|
|
Average AESC Well Service Active Rig Count(3)
|
||||||
2019:
|
|
|
|
|
|
|
|
|
||||||
First Quarter
|
|
$
|
54.82
|
|
|
$
|
2.92
|
|
|
1,023
|
|
|
1,295
|
|
Second Quarter
|
|
$
|
59.88
|
|
|
$
|
2.57
|
|
|
967
|
|
|
1,311
|
|
Third Quarter
|
|
$
|
56.34
|
|
|
$
|
2.38
|
|
|
894
|
|
|
1,263
|
|
|
|
|
|
|
|
|
|
|
||||||
2018:
|
|
|
|
|
|
|
|
|
||||||
First Quarter
|
|
$
|
62.91
|
|
|
$
|
3.08
|
|
|
951
|
|
|
1,220
|
|
Second Quarter
|
|
$
|
68.07
|
|
|
$
|
2.85
|
|
|
1,021
|
|
|
1,297
|
|
Third Quarter
|
|
$
|
69.69
|
|
|
$
|
2.93
|
|
|
1,032
|
|
|
1,337
|
|
Fourth Quarter
|
|
$
|
59.97
|
|
|
$
|
3.77
|
|
|
1,050
|
|
|
1,316
|
|
(1)
|
Represents the average of the monthly average prices for each of the periods presented. Source: EIA and Bloomberg
|
(2)
|
Source: www.bakerhughes.com
|
(3)
|
Source: www.aesc.net
|
|
|
Rig Hours
|
|
Trucking Hours
|
|
Key’s
Working Days(1)
|
|||
2019:
|
|
|
|
|
|
|
|||
First Quarter
|
|
151,309
|
|
|
150,740
|
|
|
63
|
|
Second Quarter
|
|
154,017
|
|
|
144,996
|
|
|
63
|
|
Third Quarter
|
|
142,151
|
|
|
150,518
|
|
|
64
|
|
Total 2019
|
|
447,477
|
|
|
446,254
|
|
|
190
|
|
|
|
|
|
|
|
|
|||
2018:
|
|
|
|
|
|
|
|||
First Quarter
|
|
175,232
|
|
|
214,194
|
|
|
63
|
|
Second Quarter
|
|
187,578
|
|
|
201,427
|
|
|
64
|
|
Third Quarter
|
|
180,943
|
|
|
184,310
|
|
|
63
|
|
Fourth Quarter
|
|
156,456
|
|
|
179,405
|
|
|
62
|
|
Total 2018
|
|
700,209
|
|
|
779,336
|
|
|
252
|
|
(1)
|
Key’s working days are the number of weekdays during the quarter minus national holidays.
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
REVENUES
|
$
|
106,523
|
|
|
$
|
134,721
|
|
|
$
|
328,739
|
|
|
$
|
404,442
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
87,956
|
|
|
106,103
|
|
|
266,714
|
|
|
314,061
|
|
||||
Depreciation and amortization expense
|
14,584
|
|
|
21,808
|
|
|
43,142
|
|
|
62,881
|
|
||||
General and administrative expenses
|
21,375
|
|
|
23,925
|
|
|
66,014
|
|
|
71,353
|
|
||||
Operating loss
|
(17,392
|
)
|
|
(17,115
|
)
|
|
(47,131
|
)
|
|
(43,853
|
)
|
||||
Interest expense, net of amounts capitalized
|
8,411
|
|
|
8,708
|
|
|
26,164
|
|
|
25,425
|
|
||||
Other income, net
|
(351
|
)
|
|
(213
|
)
|
|
(1,732
|
)
|
|
(1,972
|
)
|
||||
Loss before income taxes
|
(25,452
|
)
|
|
(25,610
|
)
|
|
(71,563
|
)
|
|
(67,306
|
)
|
||||
Income tax benefit (expense)
|
(37
|
)
|
|
1,750
|
|
|
4,330
|
|
|
1,588
|
|
||||
NET LOSS
|
$
|
(25,489
|
)
|
|
$
|
(23,860
|
)
|
|
$
|
(67,233
|
)
|
|
$
|
(65,718
|
)
|
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2019
|
|
2018
|
||||
Interest income
|
$
|
(122
|
)
|
|
$
|
(201
|
)
|
Other
|
(229
|
)
|
|
(12
|
)
|
||
Total
|
$
|
(351
|
)
|
|
$
|
(213
|
)
|
|
|
|
|
||||
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2019
|
|
2018
|
||||
Interest income
|
$
|
(639
|
)
|
|
$
|
(580
|
)
|
Other
|
(1,093
|
)
|
|
(1,392
|
)
|
||
Total
|
$
|
(1,732
|
)
|
|
$
|
(1,972
|
)
|
|
|
|
|
||||
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash used in operating activities
|
$
|
(16,785
|
)
|
|
$
|
(15,062
|
)
|
Cash paid for capital expenditures
|
(16,483
|
)
|
|
(28,521
|
)
|
||
Proceeds received from sale of fixed assets
|
8,362
|
|
|
11,955
|
|
||
Repayments of long-term debt
|
(1,875
|
)
|
|
(1,875
|
)
|
||
Repayments of finance lease obligations
|
(59
|
)
|
|
—
|
|
||
Payment of deferred financing costs
|
(828
|
)
|
|
—
|
|
||
Other financing activities, net
|
(37
|
)
|
|
(268
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(27,705
|
)
|
|
$
|
(33,771
|
)
|
|
|
||
Year
|
Principal
Payments
|
||
2019
|
$
|
625
|
|
2020
|
2,500
|
|
|
2021
|
240,000
|
|
|
Total principal payments
|
$
|
243,125
|
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
Period
|
|
Number of
Shares Purchased
|
|
Average Price
Paid per Share(1)
|
|||
July 1, 2019 to July 31, 2019
|
|
2,215
|
|
|
$
|
2.55
|
|
August 1, 2019 to August 31, 2019
|
|
20,387
|
|
|
1.30
|
|
|
September 1, 2019 to September 30, 2019
|
|
—
|
|
|
—
|
|
|
Total
|
|
22,602
|
|
|
$
|
1.42
|
|
(1)
|
The price paid per share with respect to the tax withholding repurchases was determined using the closing prices on the applicable vesting date.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32**
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
*
|
Filed herewith
|
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**
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Furnished herewith
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Date:
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November 8, 2019
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By:
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/s/ J. MARSHALL DODSON
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J. Marshall Dodson
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Senior Vice President and Chief Financial Officer
(As duly authorized officer and Principal Financial Officer)
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1 Year Key Energy Services Chart |
1 Month Key Energy Services Chart |
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