HOUSTON, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Key Energy Services, Inc.(OTC: KEGX) today reported third quarter 2020 consolidated revenues of $42.9 million and a net loss of $3.9 million, or $(0.28) per basic share, as compared to consolidated revenues of $34.8 million and a net loss of $19.1 million, or $(1.39) per basic share, for the second quarter of 2020. The results for the third quarter of 2020 include: (1) severance and restructuring related expense of $0.3 million, or $(0.02) per basic share, related to the Company’s ongoing cost reduction efforts and the first quarter debt restructuring; (2) a gain of $8.0 million, or $0.58 per basic share, related to a favorable settlement of a legal matter; (3) gains on the sale of assets of $0.5 million, or $0.04 per basic share; (4) non-recurring professional fees of $1.5 million, or $(0.11) per basic share; and (5) share-based compensation expense of $0.4 million, or $(0.03) per basic share. Excluding these items, the Company reported a net loss of $10.2 million, or $(0.74) per basic share, for the third quarter of 2020.

Earnings per share amounts for the second quarter of 2020 included: (1) gains on sale of assets of $0.6 million, or $0.04 per basic share; (2) restructuring expense related to the Company’s debt restructuring completed in the first quarter of 2020 of $0.7 million, or $(0.05) per basic share; (3) severance expense of $2.2 million, or $(0.16) per basic share; and (4) share-based compensation expense of $0.3 million, or $(0.02) per basic share. Excluding these items, the Company reported a net loss of $16.5 million, or $(1.20) per basic share, for the second quarter of 2020.

Financial Overview

Third quarter 2020 Rig Services revenues were $29.6 million, up approximately 42% as compared to second quarter 2020 revenues of $20.8 million. Third quarter 2020 rig hours were approximately 65,000 hours, an increase of approximately 50% from the second quarter of 2020. Completion hours increased 28% and comprised 10% of our third quarter rig activity, as compared to 12% in the second quarter. The Rig Services segment generated income before income taxes of $1.8 million (6.2% of revenues) and Adjusted EBITDA of $5.8 million (19.6% of revenue) in the third quarter of 2020 as compared to a loss before income taxes of $2.4 million ((11.4)% of revenue) and Adjusted EBITDA of $2.6 million (12.4% of revenue) in the second quarter of 2020. Higher customer activity, partially offset by slightly lower pricing attributable to geographic mix, positively impacted revenue, margins and Adjusted EBITDA during the third quarter.

Third quarter 2020 Fluid Management Services revenues were $7.5 million as compared to second quarter 2020 revenues of $8.1 million. Truck hours were marginally lower at approximately 69,000 hours as compared to 71,000 hours in the second quarter of 2020. The segment was essentially breakeven on an income before income tax basis and generated Adjusted EBITDA of $0.5 million (6.2% of revenue) in the third quarter of 2020 as compared to income before income taxes of $0.1 million (1.3% of revenue) and Adjusted EBITDA of $0.5 million (6.3% of revenue) in the second quarter of 2020. Fluid Management Services activity remained depressed due to lower completion and production activity attributable to low oil and gas prices.

Third quarter 2020 Fishing & Rental Services revenues were $4.1 million, essentially flat as compared to second quarter 2020 revenues of $4.0 million. The segment generated a loss before income taxes of $0.4 million ((10.7)% of revenue) and Adjusted EBITDA of $0.4 million in the third quarter of 2020 as compared to a loss before income taxes of $1.7 million ((43.3)% of revenue) and Adjusted EBITDA of nil in the second quarter of 2020. Third quarter 2020 loss before income taxes and Adjusted EBITDA improved over the second quarter due to lower depreciation expense and lower operating expenses resulting from the Company’s cost reduction program.

Third quarter 2020 Coiled Tubing Services revenues were $1.7 million as compared to second quarter 2020 revenues of $1.9 million. Utilization of large diameter coiled tubing units averaged 0.4 units during the third quarter of 2020 as compared to 0.4 during the second quarter of 2020. Pricing for Coiled Tubing Services in the third quarter was essentially flat versus the second quarter of 2020. Both pricing and utilization during the third quarter of 2020 continued to be negatively impacted by reduced customer demand attributable to lower completion activity resulting from low oil prices. The segment loss before income taxes was $1.3 million ((77.3)% of revenue) and Adjusted EBITDA was $(0.5) million ((27.2)% of revenue) in the third quarter of 2020 as compared to a loss before income taxes of $1.8 million ((98.1)% of revenue) and Adjusted EBITDA of $(0.6) million ((30.5)% of revenue) in the second quarter of 2020. The improvement in the loss before income taxes and Adjusted EBITDA in the third quarter of 2020 was attributable to lower operating expenses resulting from the Company’s cost reduction initiatives.

General and Administrative Expenses

General and Administrative (G&A) expenses were $12.3 million in the third quarter of 2020 compared to $13.6 million in the second quarter. Third quarter 2020 G&A expenses include $0.3 million of severance and restructuring expense and $1.5 million of nonrecurring professional fees. Second quarter 2020 G&A expenses included $1.6 million of severance and restructuring costs. Excluding these items, G&A expense was $10.5 million in the third quarter of 2020, a decrease of approximately 12% as compared to $12.0 million in the second quarter of 2020. G&A expenses continued to benefit from steps taken in the first half of 2020 to lower personnel costs, including wage cuts and the suspension of the Company’s match of 401(k) contributions.

Liquidity

As of September 30, 2020, Key had total liquidity of $13.2 million, consisting of $4.5 million in unrestricted cash and $8.7 million of borrowing capacity under the ABL Credit Facility. As of September 30, 2020, Key’s total borrowing base under the ABL Credit Facility was $44.9 million, with collateral consisting of $17.5 million of eligible accounts receivable and $27.4 million of cash posted as additional collateral to support outstanding letters of credit. At November 6, 2020, Key’s liquidity was $13.0 million, consisting of $4.6 million of unrestricted cash and $8.4 million of borrowing capacity under the ABL Credit Facility. Capital expenditures and asset sales proceeds for the third quarter of 2020 were $0.2 million and $1.6 million, respectively, and for the nine months ended September 30, 2020, totaled $1.2 million and $5.0 million, respectively.

About Key Energy Services
Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States.