Key Energy Invests $35MM in Geostream for 50% Equity Interest

Key Energy Services, Inc. has agreed to invest approximately $35 million in Geostream Services Group in exchange for a fifty percent (50%) equity interest in the Company. Geostream, which is headquartered in Moscow, provides drilling and workover services and sub-surface engineering and modeling in the Russian Federation. Key also has the right to purchase the other 50% of the equity interests of Geostream at a future date. Geostream will use the capital invested by Key to purchase drilling and other equipment to expand its business and service offerings.

Dick Alario, Key's Chairman and CEO, commented, "This investment is another step in our plan to expand Key's international business. The Russian market is one of the fastest growing oilfield services markets in the world and we are excited to enter this partnership with a well-respected service company like Geostream. This company's management, under the leadership of Dr. Boris Levin, has many years of oil and gas industry experience, is well known in the Russian oilfield services industry, and its client list includes both Russian and international oil & gas companies. Dr. Levin's prior success with U.S. investors in this market gives us great confidence that we have found the right partner for our expansion into the Eastern Hemisphere."

Key's investment in Geostream is contingent upon the approval of a Russian Federation regulatory authority. Upon receipt of regulatory approval, Key will invest approximately $18 million for a 26% equity interest in Geostream. The remaining investment of approximately $17 million is expected to occur in the first quarter of 2009, increasing Key's total ownership to 50% of Geostream.