HOUSTON, June 14, 2021 (GLOBE NEWSWIRE) — Key Energy Services, Inc. (OTC: KEGX) today provided the following operational and financial update.
Operational Update
Despite the impacts of winter storm Uri, which reduced consolidated revenues in the first quarter by approximately $3 million, first quarter 2021 consolidated revenue grew 10.9% or $5.2 million to $52.4 million, as compared to $47.2 million in the 2020 fourth quarter. Rig Services segment revenue and rig hours for the first quarter of 2021 totaled $35.3 million and 89,600 respectively, up approximately 12% and 18% versus the fourth quarter of 2020. First quarter 2021 Fishing & Rental Services segment revenues were up roughly 22% to $6.4 million versus the fourth quarter of 2020, while Fluid Management Services segment revenues totaled $7.8 million in the 2021 first quarter, up roughly 4% versus the fourth quarter of 2020. Truck hours for the first quarter of 2021 were essentially flat versus the fourth quarter of 2020 at 71,400. Coiled Tubing Services segment revenues were flat at $2.9 million in the first quarter of 2021, versus $2.8 million in the 2020 fourth quarter.
Liquidity
At June 11, 2021, Key’s liquidity was $13.7 million, consisting of $6.2 million of unrestricted cash and $7.5 million of borrowing capacity under the Company’s ABL Credit Facility. No advances are currently outstanding under the Company’s ABL Credit Facility. As of June 11, 2021, Key’s total borrowing base under the ABL Credit Facility was $44.6 million, with collateral consisting of $33.9 million of eligible accounts receivable and $16.1 million of cash posted as additional collateral to support outstanding letters of credit.
Key’s President and Chief Executive Officer, Marshall Dodson, stated, “In spite of the February winter storm that disrupted operations, and the ongoing impact of COVID 19, we are pleased with our first quarter activity and the positive momentum that has carried through into the second quarter. Pricing increased in nearly all of our markets in the second quarter of 2021, with pricing in many markets recovering to pre-pandemic levels. Offsetting much of the pricing gains are inflationary pressures, most significantly wages due to increased competition for employees and former and potential employees moving to other industries or choosing to not yet reenter the workforce. Given continued strength in commodity prices, we expect to see further increases in activity and in the pricing of our services in the second half of 2021 as our customers seek to maximize production from their existing base of producing oil wells.”
Dodson continued, “Despite first quarter 2021 weather reducing our rig average by 8, we averaged 104 well service rigs in the first quarter of 2021, up from an average 92 well service rigs in the fourth quarter of 2020. In March, we averaged 118 rigs and continued that momentum into April, averaging 124 well service rigs. This compares favorably to Key’s 2020 lowest monthly average rig count of 47 rigs in May and our fourth quarter of 2019 average of 132 rigs. Our liquidity position is benefiting from cash flow positive operating results and, due to a corresponding increase in our accounts receivable borrowing base under our ABL Credit Facility, recovery of cash originally used to collateralize our outstanding letters of credit. This cash recovery has served to offset the typical use of cash associated with higher activity and growing working capital needs.
“Our efforts to lower our cost structure have continued into 2021, and we expect our second half 2021 G&A run rate to be more than 50% below the Q4 2019 G&A level. In addition to the continued steps to improve our cost structure, we have made significant progress rationalizing our fleet of well service rigs. We entered 2020 with approximately 850 well service rigs and over the past year have cut up and scrapped roughly 300 well service rigs. We are currently evaluating another 150 well service rigs that will likely be scrapped over the next year. Key last worked approximately 400 rigs in 2014.
“Finally, our team is extremely focused on providing our customers best in class service and equipment and doing so safely. I’m pleased to say that even with the challenges of increasing activity and a growing employee base, Key is working safer than at any time in its history with a TRIR this year of less than 1.0 through April of 2021 as well as for the twelve months then ended. I would like to thank the men and women of Key for all of their dedication and efforts through the challenges of the past year and for their focus and constant drive to make every job we do at Key incident free.”
About Key Energy Services
Key Energy Services is a leading onshore, rig-based well servicing contractor and provides a complete range of well intervention services with operations in all major onshore oil and gas producing regions of the continental United States.
