HOUSTON, Jan. 6, 2014 /PRNewswire/ -- Key Energy Services, Inc. (NYSE: KEG) today provided the following updates for the fourth quarter 2013:
- Key averaged 32 operating rigs in its International segment during the fourth quarter as compared to 35 average operating rigs in the third quarter. During the fourth quarter, the Company added 10 operating rigs associated with the 14 rigs which the Company had previously disclosed had new contracts or were awarded work. The Company expects two of these rigs to be idled by mid-first quarter 2014. Due to activity reductions almost entirely related to PEMEX, the Company exited the fourth quarter with 30 operating rigs in its International segment.
- As a result of lower than expected activity in the North Region of Mexico and uncertainty around the timing of increased workover activity, the Company took steps in the fourth quarter to further reduce its workforce and incurred severance costs of approximately $2 million.
- PEMEX is conducting an audit of the Company's aggregate billings of $372 million under its contracts with PEMEX. As a result, the Company expects to take a charge of between $2 million and $3 million in the fourth quarter 2013.
- The Company's total debt at December 31, 2013 was approximately $770 million as compared to $832.7 million as of September 30, 2013.
Commenting on the update, Key's Chairman, President and Chief Executive Officer, Dick Alario, stated, "Our activity levels with PEMEX in the fourth quarter were materially lower than our prior forecast, which was based on indications we received through discussions with PEMEX. We believe that activity will improve in the North Region of Mexico once the National Hydrocarbons Commission approves the assets which PEMEX will continue to manage. This approval process, commonly referred to as "Round Zero", is a requirement of the recently ratified energy reform in Mexico."
Alario continued, "Today we have 41 rigs in Mexico, five of which are currently operating. Our plan is to redeploy 10 to 12 rigs to the U.S. in the first half of 2014."
Commenting further, Alario stated, "In the U.S., fourth quarter activity was strong enough to overcome more severe weather than anticipated in our prior guidance, and we expect our fourth quarter U.S. results to be within our previously guided range."