Key Energy Services has entered into an agreement to sell all of its oil and gas properties for approximately $19.7 million in cash. The sale is expected to close on or before August 28, 2003 and is subject to certain closing conditions. The Company currently expects to use approximately $12.4 million of the proceeds from the sale to pay off its
volumetric production payment and to unwind related hedges, resulting in net
cash proceeds to the Company of approximately $7.3 million. In connection
with the sale, the Company currently expects to record an after-tax charge of
approximately $7.8 million. For the six months ending June 30, 2003, the
Company's oil and gas properties contributed revenue of approximately
$2.9 million and a net loss of $0.5 million. For the three and nine months
ended September 30, 2003 and the year ended December 31, 2003, the Company's
oil and gas operations will be treated as a discontinued operation.
Mr. Francis D. John, Chairman and CEO, commented, "As we stated on our
earnings conference call in July, the Company is focused on developing and
enhancing its production services capabilities and will seek to exit those
businesses that do not meet these objectives. Our oil and gas operations are
not core to our business and, in fact, compete with some of our customers.
Therefore, we have elected to exit this business. In addition, the sale of
these properties will provide Key with additional cash that will be used for
debt reduction and/or expansion of our rental tool operations."