Key Energy Services reports Q2 2014 earnings

Key Energy Services has reported second quarter 2014 consolidated revenues of US$ 350.6 million and a pre-tax loss of US$ 61.7 million.

US segment

Second quarter 2014 US revenues were US$ 324.5 million, flat compared to the US$ 324.0 million in Q1 2014. Q2 2014 operating income was US$ 24.1 million, or 7.4% of revenue. This compares to US$ 35.7 million, or 11% of revenue in the first quarter of the year.

Rig hours outside of California and the Permian Basin increased at a more than seasonal pace, which helped offset declines in those markets. Operating income margins were negatively impacted by activity disruptions late in the quarter in Coiled Tubing Services and by costs associated with moving rigs from Mexico to the US.

International segment

Q2 2014 international revenues were US$ 26.1 million, down 18% compared to Q1 2014 revenues of US$ 32.1 million. Second quarter operating loss was US$ 36.8 million, compared to Q1 operating loss of US$ 10.5 million.

Operating income margins were adversely impacted by US$ 28.7 million of goodwill and other assets impairment associated with Key Energy Services’ operations in Russia, and US$ 1 million of severance, primarily associated with the downsizing of the company’s Mexico operations.

Overview and outlook

Key Energy Services President and CEO, Dick Alario, stated: “Our US business delivered flat revenue and lower margins during the second quarter. Given that these results did not meet our expectations, changes are underway to take advantage of market opportunities and improve performance. These steps include flattening the management structure, changing reporting relationships and placing certain lines of business under new management.”

“In our international segment, we remain encouraged that Mexican energy reform continues to progress. Also, due to the decline in oil production in our principal operating regions, we believe that demand for our services is building.

“For our production-driven businesses in the US, we believe the favourable oil price environment will support increased levels of demand. We also believe that the aging of the oil well inventory will lead operators to shift more resources to well interventions to optimize the significant investments that have been made over the past several years.”

Adapted from press release by Katie Woodward

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/08082014/key-energy-services-q2-2014-results-1231/