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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Common Stock (CE) | USOTC:KEGX | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0166 | 4 | 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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¨
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Non-accelerated filer
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ý
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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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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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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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our ability to continue as a going concern;
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•
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public health crises, such as the COVID-19 pandemic, including its impact on economic and other conditions globally, demand for oil and natural gas, and any related actions taken by businesses and governments, among others;
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•
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adverse conditions in the services and oil and natural gas industries, especially declines or volatility in oil and natural gas prices and capital expenditures by oil and natural gas companies;
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•
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our ability to satisfy our cash and liquidity needs, including our ability to generate sufficient liquidity or cash flow from operations or to obtain adequate financing to fund our operations or otherwise meet our obligations as they come due;
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•
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our ability to retain employees, customers or suppliers as a result of our financial condition generally or as a result of our recent Restructuring (as defined below);
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•
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our inability to achieve the potential benefits of the Restructuring;
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•
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our ability to achieve the benefits of cost-cutting initiatives, including our plan to optimize our geographic footprint (including exiting certain locations and reducing our regional and corporate overhead costs);
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•
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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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actions by OPEC and non-OPEC oil producing countries;
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•
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asset impairments or other charges;
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•
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the low demand for our services and resulting operating losses and negative cash flows;
|
•
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the highly competitive nature of our industry;
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•
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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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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;
|
•
|
our historically high employee turnover rate and our ability to replace or add workers, including executive officers and skilled workers;
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•
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our ability to implement technological developments and enhancements;
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•
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severe weather impacts on our business, including from hurricane activity;
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•
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our ability to successfully identify, make and integrate acquisitions and our ability to finance future growth of our operations or future acquisitions;
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•
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our ability to achieve the benefits expected from business combinations, disposition or acquisition transactions;
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•
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the loss of one or more of our larger customers;
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•
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the amount of our debt, the limitations imposed by the covenants in the agreements governing our debt, and our ability to comply with covenants under our debt agreements;
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•
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our ability to maintain sufficient liquidity and access to capital;
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•
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an increase in our debt service obligations due to variable rate indebtedness;
|
•
|
our inability to achieve our financial, capital expenditure and operational projections, including quarterly and annual projections of revenue, and/or operating income and the possibility of 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);
|
•
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our ability to respond to changing or declining market conditions;
|
•
|
adverse impact of litigation or disputes; and
|
•
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other factors affecting our business and financial condition described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
June 30,
2020 |
|
December 31,
2019 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,864
|
|
|
$
|
14,426
|
|
Restricted cash
|
250
|
|
|
250
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,085 and $881, respectively
|
20,069
|
|
|
51,091
|
|
||
Inventories
|
13,698
|
|
|
13,565
|
|
||
Other current assets
|
17,774
|
|
|
22,260
|
|
||
Total current assets
|
58,655
|
|
|
101,592
|
|
||
Property and equipment
|
388,229
|
|
|
432,917
|
|
||
Accumulated depreciation
|
(218,409
|
)
|
|
(205,352
|
)
|
||
Property and equipment, net
|
169,820
|
|
|
227,565
|
|
||
Intangible assets, net
|
318
|
|
|
347
|
|
||
Other non-current assets
|
40,400
|
|
|
18,366
|
|
||
TOTAL ASSETS
|
$
|
269,193
|
|
|
$
|
347,870
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,641
|
|
|
$
|
8,700
|
|
Current portion of long-term debt
|
1,076
|
|
|
2,919
|
|
||
Other current liabilities
|
51,607
|
|
|
90,715
|
|
||
Total current liabilities
|
61,324
|
|
|
102,334
|
|
||
Long-term debt
|
51,954
|
|
|
240,007
|
|
||
Workers’ compensation, vehicular and health insurance liabilities
|
27,394
|
|
|
26,072
|
|
||
Interest payable
|
16,283
|
|
|
—
|
|
||
Other non-current liabilities
|
31,094
|
|
|
30,710
|
|
||
Commitments and contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common stock, $0.01 par value; 150,000,000 and 2,000,000 shares authorized, 13,781,262 and 410,990 outstanding
|
340
|
|
|
206
|
|
||
Additional paid-in capital
|
307,982
|
|
|
265,588
|
|
||
Retained deficit
|
(227,178
|
)
|
|
(317,047
|
)
|
||
Total equity
|
81,144
|
|
|
(51,253
|
)
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
269,193
|
|
|
$
|
347,870
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
REVENUES
|
$
|
34,750
|
|
|
$
|
112,943
|
|
|
$
|
110,058
|
|
|
$
|
222,216
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
29,904
|
|
|
90,564
|
|
|
91,565
|
|
|
178,758
|
|
||||
Depreciation and amortization expense
|
8,054
|
|
|
14,262
|
|
|
18,280
|
|
|
28,558
|
|
||||
General and administrative expenses
|
13,637
|
|
|
22,544
|
|
|
28,890
|
|
|
44,639
|
|
||||
Impairment expense
|
—
|
|
|
—
|
|
|
41,242
|
|
|
—
|
|
||||
Operating loss
|
(16,845
|
)
|
|
(14,427
|
)
|
|
(69,919
|
)
|
|
(29,739
|
)
|
||||
Gain on debt restructuring
|
—
|
|
|
—
|
|
|
(170,648
|
)
|
|
—
|
|
||||
Interest expense, net of amounts capitalized
|
2,066
|
|
|
8,520
|
|
|
10,287
|
|
|
17,753
|
|
||||
Other income, net
|
(15
|
)
|
|
(239
|
)
|
|
(400
|
)
|
|
(1,381
|
)
|
||||
Income (loss) before income taxes
|
(18,896
|
)
|
|
(22,708
|
)
|
|
90,842
|
|
|
(46,111
|
)
|
||||
Income tax benefit (expense)
|
(229
|
)
|
|
4,405
|
|
|
(973
|
)
|
|
4,367
|
|
||||
NET INCOME (LOSS)
|
$
|
(19,125
|
)
|
|
$
|
(18,303
|
)
|
|
$
|
89,869
|
|
|
$
|
(41,744
|
)
|
Loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.39
|
)
|
|
$
|
(44.86
|
)
|
|
$
|
10.06
|
|
|
$
|
(102.31
|
)
|
Diluted
|
$
|
(1.39
|
)
|
|
$
|
(44.86
|
)
|
|
$
|
10.00
|
|
|
$
|
(102.31
|
)
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
13,781
|
|
|
408
|
|
|
8,935
|
|
|
408
|
|
||||
Diluted
|
13,781
|
|
|
408
|
|
|
8,991
|
|
|
408
|
|
|
|
|
|
||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
89,869
|
|
|
$
|
(41,744
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
18,280
|
|
|
28,558
|
|
||
Impairment expense
|
41,242
|
|
|
—
|
|
||
Bad debt expense
|
1,175
|
|
|
261
|
|
||
Accretion of asset retirement obligations
|
85
|
|
|
82
|
|
||
Gain on debt restructuring
|
(170,648
|
)
|
|
—
|
|
||
Amortization of deferred financing costs
|
260
|
|
|
241
|
|
||
Gain on disposal of assets, net
|
(767
|
)
|
|
(1,459
|
)
|
||
Share-based compensation
|
252
|
|
|
2,230
|
|
||
Changes in working capital:
|
|
|
|
||||
Accounts receivable
|
29,847
|
|
|
2,422
|
|
||
Other current assets
|
4,353
|
|
|
(1,741
|
)
|
||
Accounts payable, accrued interest and accrued expenses
|
(38,526
|
)
|
|
(4,647
|
)
|
||
Share-based compensation liability awards
|
3
|
|
|
34
|
|
||
Other assets and liabilities
|
(13,636
|
)
|
|
4,400
|
|
||
Net cash used in operating activities
|
(38,211
|
)
|
|
(11,363
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Capital expenditures
|
(979
|
)
|
|
(12,362
|
)
|
||
Proceeds from sale of assets
|
3,363
|
|
|
4,780
|
|
||
Net cash provided by (used in) investing activities
|
2,384
|
|
|
(7,582
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from long-term debt
|
30,000
|
|
|
—
|
|
||
Repayments of long-term debt
|
(3
|
)
|
|
(1,250
|
)
|
||
Repayments of finance lease obligations
|
(340
|
)
|
|
—
|
|
||
Payment of deferred financing costs
|
(1,385
|
)
|
|
(828
|
)
|
||
Repurchases of common stock
|
(7
|
)
|
|
(4
|
)
|
||
Net cash provided by (used in) financing activities
|
28,265
|
|
|
(2,082
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(7,562
|
)
|
|
(21,027
|
)
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
14,676
|
|
|
50,311
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
7,114
|
|
|
$
|
29,284
|
|
•
|
pursuant to exchange agreements entered into at the closing of the Restructuring, we exchanged approximately $241.9 million aggregate outstanding principal of our term loans (together with accrued interest thereon) held by Supporting Term Lenders under our Prior Term Loan Facility into (i) approximately 13.4 million newly issued shares of common stock representing 97% of the Company’s outstanding shares after giving effect to such issuance (and without giving effect to dilution by the New Warrants and MIP (each as defined below)) and (ii) $20 million of term loans under our new $51.2 million term loan facility (the “New Term Loan Facility”), each on a pro rata basis based on their holdings of term loans under the Prior Term Loan Facility;
|
•
|
completed a 1-for-50 reverse stock split of our outstanding common stock. All pre-Restructuring shares prices, including shares outstanding and earnings per share, have been adjusted to reflect the 1-for-50 reverse stock split;
|
•
|
distributed to our common stockholders of record as of February 18, 2020 two series of warrants (the “New Warrants”);
|
•
|
entered into the $51.2 million New Term Loan Facility, of which (i) $30 million was funded at closing of the Restructuring with new cash proceeds from the Supporting Term Lenders and $20 million was issued in exchange for term loans held by the Supporting Term Lenders under the Prior Term Loan Facility as described above and (ii) an approximate $1.2 million was a senior secured term loan tranche in respect of term loans held by lenders under the Prior Term Loan Facility who were not Supporting Term Lenders;
|
•
|
entered into the New ABL Facility (as defined below);
|
•
|
adopted a new management incentive plan (the “MIP”) representing up to 9% of the Company’s outstanding shares after giving effect to the issuance of shares described above; and
|
•
|
made certain changes to the Company’s governance, including changes to our Board of Directors (the “Board”), amendments to our governing documents and entry into the Stockholders Agreement (as defined below) with the Supporting Term Lenders.
|
|
|
Six Months Ended
|
||||||
|
|
June 30,
|
||||||
|
|
2020
|
|
2019
|
||||
Rig Services
|
|
$
|
68,734
|
|
|
$
|
132,910
|
|
Fishing and Rental Services
|
|
13,563
|
|
|
29,399
|
|
||
Coiled Tubing Services
|
|
6,704
|
|
|
22,420
|
|
||
Fluid Management Services
|
|
21,057
|
|
|
37,487
|
|
||
Total
|
|
$
|
110,058
|
|
|
$
|
222,216
|
|
|
COMMON STOCKHOLDERS
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Deficit
|
|
Total
|
|||||||||||
|
Number of Shares
|
|
Amount at Par
|
|
|
|||||||||||||
Balance at December 31, 2019
|
411
|
|
|
$
|
206
|
|
|
$
|
265,588
|
|
|
$
|
(317,047
|
)
|
|
$
|
(51,253
|
)
|
Common stock purchases
|
(1
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Share-based compensation
|
3
|
|
|
2
|
|
|
(75
|
)
|
|
—
|
|
|
(73
|
)
|
||||
Issuance of shares pursuant to the Restructuring Support Agreement
|
13,368
|
|
|
133
|
|
|
41,855
|
|
|
—
|
|
|
41,988
|
|
||||
Issuance of warrants pursuant to the Restructuring Support Agreement
|
—
|
|
|
—
|
|
|
296
|
|
|
—
|
|
|
296
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
108,994
|
|
|
108,994
|
|
||||
Balance at March 31, 2020
|
13,781
|
|
|
340
|
|
|
$
|
307,657
|
|
|
(208,053
|
)
|
|
99,944
|
|
|||
Share-based compensation
|
—
|
|
|
—
|
|
|
325
|
|
|
—
|
|
|
325
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,125
|
)
|
|
(19,125
|
)
|
||||
Balance at June 30, 2020
|
13,781
|
|
|
$
|
340
|
|
|
$
|
307,982
|
|
|
$
|
(227,178
|
)
|
|
$
|
81,144
|
|
|
COMMON STOCKHOLDERS
|
|
|
|||||||||||||||
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Deficit
|
|
Total
|
|||||||||||
|
Number of Shares
|
|
Amount at Par
|
|
|
|
||||||||||||
Balance at December 31, 2018
|
407
|
|
|
$
|
204
|
|
|
$
|
264,945
|
|
|
$
|
(219,629
|
)
|
|
$
|
45,520
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
816
|
|
|
—
|
|
|
816
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,441
|
)
|
|
(23,441
|
)
|
||||
Balance at March 31, 2019
|
407
|
|
|
204
|
|
|
265,761
|
|
|
(243,070
|
)
|
|
22,895
|
|
||||
Common stock purchases
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Share-based compensation
|
1
|
|
|
—
|
|
|
1,414
|
|
|
—
|
|
|
1,414
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,303
|
)
|
|
(18,303
|
)
|
||||
Balance at June 30, 2019
|
408
|
|
|
$
|
204
|
|
|
$
|
267,171
|
|
|
$
|
(261,373
|
)
|
|
$
|
6,002
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Other current assets:
|
|
|
|
||||
Prepaid current assets
|
$
|
7,545
|
|
|
$
|
13,118
|
|
Reinsurance receivable
|
6,636
|
|
|
6,475
|
|
||
Operating lease right-of-use assets
|
3,593
|
|
|
2,394
|
|
||
Other
|
—
|
|
|
273
|
|
||
Total
|
$
|
17,774
|
|
|
$
|
22,260
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Other non-current assets:
|
|
|
|
||||
Reinsurance receivable
|
$
|
7,054
|
|
|
$
|
6,887
|
|
Deposits
|
32,612
|
|
|
8,689
|
|
||
Operating lease right-of-use assets
|
439
|
|
|
2,404
|
|
||
Other
|
295
|
|
|
386
|
|
||
Total
|
$
|
40,400
|
|
|
$
|
18,366
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Other current liabilities:
|
|
|
|
||||
Accrued payroll, taxes and employee benefits
|
$
|
8,504
|
|
|
$
|
14,463
|
|
Accrued operating expenditures
|
7,111
|
|
|
12,919
|
|
||
Income, sales, use and other taxes
|
2,869
|
|
|
5,115
|
|
||
Self-insurance reserve
|
24,543
|
|
|
25,366
|
|
||
Accrued interest
|
2,204
|
|
|
15,476
|
|
||
Accrued insurance premiums
|
1,721
|
|
|
4,990
|
|
||
Unsettled legal claims
|
2,013
|
|
|
7,020
|
|
||
Accrued severance
|
—
|
|
|
2,636
|
|
||
Operating leases
|
2,599
|
|
|
2,502
|
|
||
Other
|
43
|
|
|
228
|
|
||
Total
|
$
|
51,607
|
|
|
$
|
90,715
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Other non-current liabilities:
|
|
|
|
||||
Asset retirement obligations
|
$
|
8,803
|
|
|
$
|
9,035
|
|
Environmental liabilities
|
1,851
|
|
|
2,047
|
|
||
Accrued sales, use and other taxes
|
17,005
|
|
|
17,005
|
|
||
Deferred tax liabilities
|
484
|
|
|
—
|
|
||
Operating leases
|
1,783
|
|
|
2,590
|
|
||
Federal insurance contributions act tax
|
1,137
|
|
|
—
|
|
||
Other
|
31
|
|
|
33
|
|
||
Total
|
$
|
31,094
|
|
|
$
|
30,710
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Trademark:
|
|
|
|
||||
Gross carrying value
|
$
|
520
|
|
|
$
|
520
|
|
Accumulated amortization
|
(202
|
)
|
|
(173
|
)
|
||
Net carrying value
|
$
|
318
|
|
|
$
|
347
|
|
|
Weighted
average remaining
amortization
period (years)
|
|
Expected amortization expense (in thousands)
|
||||||||||||||||||
|
Remainder
of 2020 |
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||||
Trademarks
|
5.5
|
|
$
|
29
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
$
|
58
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Term Loan Facility due 2025
|
$
|
50,000
|
|
|
$
|
—
|
|
Term Loan Facility due 2021
|
1,207
|
|
|
243,125
|
|
||
Unamortized debt issuance costs
|
(2,923
|
)
|
|
(1,799
|
)
|
||
Finance lease obligation
|
4,746
|
|
|
1,600
|
|
||
Total
|
53,030
|
|
|
242,926
|
|
||
Less current portion(1)
|
(1,076
|
)
|
|
(2,919
|
)
|
||
Long-term debt
|
$
|
51,954
|
|
|
$
|
240,007
|
|
(1)
|
Of the current portion of debt, $1.1 million and $0.4 million is related to finance leases as of June 30, 2020 and December 31, 2019, respectively.
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Interest income
|
$
|
(25
|
)
|
|
$
|
(195
|
)
|
|
$
|
(82
|
)
|
|
$
|
(517
|
)
|
Other
|
10
|
|
|
(44
|
)
|
|
(318
|
)
|
|
(864
|
)
|
||||
Total
|
$
|
(15
|
)
|
|
$
|
(239
|
)
|
|
$
|
(400
|
)
|
|
$
|
(1,381
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Basic Calculation:
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(19,125
|
)
|
|
$
|
(18,303
|
)
|
|
$
|
89,869
|
|
|
$
|
(41,744
|
)
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
13,781
|
|
|
408
|
|
|
8,935
|
|
|
408
|
|
||||
Basic earnings (loss) per share
|
$
|
(1.39
|
)
|
|
$
|
(44.86
|
)
|
|
$
|
10.06
|
|
|
$
|
(102.31
|
)
|
Diluted EPS Calculation:
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(19,125
|
)
|
|
$
|
(18,303
|
)
|
|
$
|
89,869
|
|
|
$
|
(41,744
|
)
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
13,781
|
|
|
408
|
|
|
8,935
|
|
|
408
|
|
||||
RSUs
|
—
|
|
|
—
|
|
|
56
|
|
|
—
|
|
||||
Total
|
13,781
|
|
|
408
|
|
|
8,991
|
|
|
408
|
|
||||
Diluted earnings (loss) per share
|
$
|
(1.39
|
)
|
|
$
|
(44.86
|
)
|
|
$
|
10.00
|
|
|
$
|
(102.31
|
)
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
RSUs
|
301
|
|
|
40
|
|
|
58
|
|
|
41
|
|
Stock options
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Warrants
|
2,924
|
|
|
37
|
|
|
1,880
|
|
|
37
|
|
Total
|
3,226
|
|
|
78
|
|
|
1,939
|
|
|
79
|
|
|
|
|
|
||||
|
June 30, 2020
|
|
December 31, 2019
|
||||
Right-of-use assets under operating leases
|
|
|
|
||||
Operating lease right-of-use assets, current portion
|
$
|
3,593
|
|
|
$
|
2,394
|
|
Operating lease right-of-use assets, non-current portion
|
439
|
|
|
2,404
|
|
||
Total operating lease assets
|
$
|
4,032
|
|
|
$
|
4,798
|
|
|
|
|
|
||||
Operating lease liabilities, current portion
|
$
|
2,599
|
|
|
$
|
2,502
|
|
Operating lease liabilities, non-current portion
|
1,783
|
|
|
2,590
|
|
||
Total operating lease liabilities
|
$
|
4,382
|
|
|
$
|
5,092
|
|
|
|
|
|
||||
Right-of-use assets under finance leases
|
|
|
|
||||
Property and equipment, at cost
|
$
|
5,246
|
|
|
$
|
1,760
|
|
Less accumulated depreciation
|
554
|
|
|
183
|
|
||
Property and equipment, net
|
$
|
4,692
|
|
|
$
|
1,577
|
|
|
|
|
|
||||
Current portion of long-term debt
|
$
|
1,063
|
|
|
$
|
419
|
|
Long-term debt
|
3,683
|
|
|
1,181
|
|
||
Total finance lease liabilities
|
$
|
4,746
|
|
|
$
|
1,600
|
|
|
June 30, 2020
|
||||||
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2020
|
$
|
1,492
|
|
|
$
|
638
|
|
2021
|
1,747
|
|
|
1,277
|
|
||
2022
|
705
|
|
|
1,277
|
|
||
2023
|
528
|
|
|
1,075
|
|
||
2024
|
189
|
|
|
792
|
|
||
Thereafter
|
—
|
|
|
225
|
|
||
Total lease payments
|
4,661
|
|
|
5,284
|
|
||
Less imputed interest
|
(279
|
)
|
|
(538
|
)
|
||
Total
|
$
|
4,382
|
|
|
$
|
4,746
|
|
As of and for the three months ended June 30, 2020
|
|||||||||||||||||||||||||||
|
Rig Services
|
|
Fishing and Rental Services
|
|
Coiled Tubing Services
|
|
Fluid Management Services
|
|
Functional
Support
|
|
Reconciling
Eliminations
|
|
Total
|
||||||||||||||
Revenues from external customers
|
$
|
20,825
|
|
|
$
|
3,971
|
|
|
$
|
1,867
|
|
|
$
|
8,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,750
|
|
Intersegment revenues
|
10
|
|
|
54
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|||||||
Depreciation and amortization
|
4,138
|
|
|
1,349
|
|
|
1,164
|
|
|
717
|
|
|
686
|
|
|
—
|
|
|
8,054
|
|
|||||||
Other operating expenses
|
18,992
|
|
|
4,340
|
|
|
2,521
|
|
|
7,259
|
|
|
10,429
|
|
|
—
|
|
|
43,541
|
|
|||||||
Operating income (loss)
|
(2,305
|
)
|
|
(1,718
|
)
|
|
(1,818
|
)
|
|
111
|
|
|
(11,115
|
)
|
|
—
|
|
|
(16,845
|
)
|
|||||||
Interest expense, net of amounts capitalized
|
68
|
|
|
6
|
|
|
14
|
|
|
11
|
|
|
1,967
|
|
|
—
|
|
|
2,066
|
|
|||||||
Income (loss) before income taxes
|
(2,364
|
)
|
|
(1,718
|
)
|
|
(1,831
|
)
|
|
104
|
|
|
(13,087
|
)
|
|
—
|
|
|
(18,896
|
)
|
|||||||
Long-lived assets(1)
|
115,036
|
|
|
16,001
|
|
|
14,135
|
|
|
15,202
|
|
|
50,164
|
|
|
—
|
|
|
210,538
|
|
|||||||
Total assets
|
136,287
|
|
|
20,014
|
|
|
17,766
|
|
|
20,577
|
|
|
64,048
|
|
|
10,501
|
|
|
269,193
|
|
|||||||
Capital expenditures
|
102
|
|
|
88
|
|
|
105
|
|
|
(9
|
)
|
|
11
|
|
|
—
|
|
|
297
|
|
(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
|
•
|
pursuant to exchange agreements entered into at the closing of the Restructuring, we exchanged approximately $241.9 million aggregate outstanding principal of our term loans (together with accrued interest thereon) held by Supporting Term Lenders under our Prior Term Loan Facility into (i) approximately 13.4 million newly issued shares of common stock representing 97% of the Company’s outstanding shares after giving effect to such issuance (and without giving effect to dilution by the New Warrants and MIP (each as defined below)) and (ii) $20 million of term loans under our new $51.2 million term loan facility (the “New Term Loan Facility”), each on a pro rata basis based on their holdings of term loans under the Prior Term Loan Facility;
|
•
|
completed a 1-for-50 reverse stock split of our outstanding common stock. All pre-Restructuring shares prices, including shares outstanding and earnings per share, have been adjusted to reflect the 1-for-50 reverse stock split;
|
•
|
distributed to our common stockholders of record as of February 18, 2020 two series of warrants (the “New Warrants”);
|
•
|
entered into the $51.2 million New Term Loan Facility, of which (i) $30 million was funded at closing of the Restructuring with new cash proceeds from the Supporting Term Lenders and $20 million was issued in exchange for term loans held by the Supporting Term Lenders under the Prior Term Loan Facility as described above and (ii) an approximate $1.2 million was a senior secured term loan tranche in respect of term loans held by lenders under the Prior Term Loan Facility who were not Supporting Term Lenders;
|
•
|
entered into the New ABL Facility (as defined below);
|
•
|
adopted a new management incentive plan (the “MIP”) representing up to 9% of the Company’s outstanding shares after giving effect to the issuance of shares described above; and
|
•
|
made certain changes to the Company’s governance, including changes to our Board of Directors (the “Board”), amendments to our governing documents and entry into the Stockholders Agreement (as defined below) with the Supporting Term Lenders.
|
|
|
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)
|
||||||
2020:
|
|
|
|
|
|
|
|
|
||||||
First Quarter
|
|
$
|
41.00
|
|
|
$
|
1.90
|
|
|
764
|
|
|
978
|
|
Second Quarter
|
|
$
|
27.96
|
|
|
$
|
1.70
|
|
|
378
|
|
|
498
|
|
|
|
|
|
|
|
|
|
|
||||||
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
|
|
Fourth Quarter
|
|
$
|
56.82
|
|
|
$
|
2.40
|
|
|
797
|
|
|
1,143
|
|
(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: Association of Energy Service Companies data at www.aesc.net
|
|
|
Rig Hours
|
|
Trucking Hours
|
|
Key’s
Working Days(1)
|
|||
2020:
|
|
|
|
|
|
|
|||
First Quarter
|
|
101,341
|
|
|
106,786
|
|
|
64
|
|
Second Quarter
|
|
43,526
|
|
|
71,007
|
|
|
63
|
|
Total 2020
|
|
144,867
|
|
|
177,793
|
|
|
127
|
|
|
|
|
|
|
|
|
|||
2019:
|
|
|
|
|
|
|
|||
First Quarter
|
|
151,309
|
|
|
150,740
|
|
|
63
|
|
Second Quarter
|
|
154,017
|
|
|
144,996
|
|
|
63
|
|
Third Quarter
|
|
142,151
|
|
|
150,518
|
|
|
64
|
|
Fourth Quarter
|
|
114,727
|
|
|
121,152
|
|
|
62
|
|
Total 2019
|
|
562,204
|
|
|
567,406
|
|
|
252
|
|
(1)
|
Key’s working days are the number of weekdays during the quarter minus national holidays.
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
REVENUES
|
$
|
34,750
|
|
|
$
|
112,943
|
|
|
$
|
110,058
|
|
|
$
|
222,216
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Direct operating expenses
|
29,904
|
|
|
90,564
|
|
|
91,565
|
|
|
178,758
|
|
||||
Depreciation and amortization expense
|
8,054
|
|
|
14,262
|
|
|
18,280
|
|
|
28,558
|
|
||||
General and administrative expenses
|
13,637
|
|
|
22,544
|
|
|
28,890
|
|
|
44,639
|
|
||||
Impairment expense
|
—
|
|
|
—
|
|
|
41,242
|
|
|
—
|
|
||||
Operating loss
|
(16,845
|
)
|
|
(14,427
|
)
|
|
(69,919
|
)
|
|
(29,739
|
)
|
||||
Gain on debt restructuring
|
—
|
|
|
—
|
|
|
(170,648
|
)
|
|
—
|
|
||||
Interest expense, net of amounts capitalized
|
2,066
|
|
|
8,520
|
|
|
10,287
|
|
|
17,753
|
|
||||
Other income, net
|
(15
|
)
|
|
(239
|
)
|
|
(400
|
)
|
|
(1,381
|
)
|
||||
Income (loss) before income taxes
|
(18,896
|
)
|
|
(22,708
|
)
|
|
90,842
|
|
|
(46,111
|
)
|
||||
Income tax benefit (expense)
|
(229
|
)
|
|
4,405
|
|
|
(973
|
)
|
|
4,367
|
|
||||
NET INCOME (LOSS)
|
$
|
(19,125
|
)
|
|
$
|
(18,303
|
)
|
|
$
|
89,869
|
|
|
$
|
(41,744
|
)
|
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Interest income
|
$
|
(25
|
)
|
|
$
|
(195
|
)
|
Other
|
10
|
|
|
(44
|
)
|
||
Total
|
$
|
(15
|
)
|
|
$
|
(239
|
)
|
|
|
|
|
||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Interest income
|
$
|
(82
|
)
|
|
$
|
(517
|
)
|
Other
|
(318
|
)
|
|
(864
|
)
|
||
Total
|
$
|
(400
|
)
|
|
$
|
(1,381
|
)
|
|
|
|
|
||||
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2020
|
|
2019
|
||||
Net cash used in operating activities
|
$
|
(38,211
|
)
|
|
$
|
(11,363
|
)
|
Cash paid for capital expenditures
|
(979
|
)
|
|
(12,362
|
)
|
||
Proceeds received from sale of fixed assets
|
3,363
|
|
|
4,780
|
|
||
Proceeds from long-term debt
|
30,000
|
|
|
—
|
|
||
Repayments of long-term debt
|
(3
|
)
|
|
(1,250
|
)
|
||
Repayments of finance lease obligations
|
(340
|
)
|
|
—
|
|
||
Payment of deferred financing costs
|
(1,385
|
)
|
|
(828
|
)
|
||
Other financing activities, net
|
(7
|
)
|
|
(4
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(7,562
|
)
|
|
$
|
(21,027
|
)
|
|
|
||
Year
|
Principal
Payments
|
||
Remainder of 2020
|
$
|
7
|
|
2021
|
1,200
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
2025
|
50,000
|
|
|
Total principal payments
|
$
|
51,207
|
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
Period
|
|
Number of
Shares Purchased
|
|
Average Price
Paid per Share(1)
|
|||
April 1, 2020 to April 30, 2020
|
|
60
|
|
|
$
|
2.09
|
|
May 1, 2020 to May 31, 2020
|
|
—
|
|
|
—
|
|
|
June 1, 2020 to June 30, 2020
|
|
—
|
|
|
—
|
|
|
Total
|
|
60
|
|
|
$
|
2.09
|
|
(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
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.1+
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3*+
|
|
|
|
|
|
10.4*+
|
|
|
|
|
|
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
|
|
|
**
|
Furnished herewith
|
|
|
+
|
Compensatory arrangement
|
|
|
|
|
KEY ENERGY SERVICES INC.
|
||
|
|
|
|
|
|
|
Date:
|
August 14, 2020
|
|
|
By:
|
/s/ NELSON M. HAIGHT
|
|
|
|
|
|
|
Nelson M. Haight
|
|
|
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
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