SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 7, 1998.
Key Energy Services, Inc.
(Exact Name of Registrant as Specified in Charter)
Maryland 1-8038 04-2648081
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Two Tower Center, 20th Floor, East Brunswick, New Jersey 08816
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone number, including area code: (732) 247-4822
Key Energy Group, Inc.
____________________________
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On December 7, 1998, the Registrant announced the implementation of a
company-wide restructuring plan, the terms of which are more fully described in
the Press Release dated December 7, 1998 attached as Exhibit A hereto, which is
incorporated herein by reference.
In addition, on December 8, 1998, at the Registrant's Annual Meeting of
Stockholders, the Stockholders ratified a proposal to amend the Registrant's
Articles of Incorporation to change the name of the Registrant from "Key Energy
Group, Inc." to "Key Energy Services, Inc" On December 9, 1998, the Registrant
filed Articles of Amendment with the Secretary of State of the State of Maryland
and this name change became effective.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit A Press Release dated December 7, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
KEY ENERGY SERVICES, INC.
December 18, 1998 By: ___________________________
/s/ Francis D. John
Francis D. John
Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT A
For Immediate Release: Contact: Jim Dean
Monday, December 7, 1998 (732) 247-4822
KEY ENERGY ANNOUNCES RESTRUCTURING AND
CONSOLIDATION PLAN WITH SIGNIFICANT COST REDUCTIONS
EAST BRUNSWICK, N.J., Dec. 7, 1998 - Key Energy Group, Inc. (NYSE: KEG)
announced today that it has commenced the implementation of a company-wide
restructuring plan to significantly reduce operating costs. In connection with
the restructuring plan and related non-recurring costs, expenses and fees, the
company expects that it will incur a one-time, pretax charge of up to an
estimated $15 million, or $0.82 per basic share, in the second fiscal quarter
ending December 31, 1998. In addition to the $11 million to $12 million of cost
savings and synergies the company estimates it has achieved as a result of its
acquisition of Dawson Production Services, Inc., the restructuring plan
announced today will result in the company ultimately saving an expected $9
million in additional costs on an annualized basis.
In addition, due to poor market conditions resulting from lower oil and gas
prices as well as non-recurring costs and expenses related to the integration of
recent acquisitions, the company estimates that it will incur an operating loss,
not including the aforementioned restructuring charge, in the quarter ended
December 31, 1998. The company currently estimates the operating loss to be in
the range of $0.12 to $0.15 per basic share. Despite the expected operating
loss, the company's after-tax cash flow, defined as net income plus non-cash
depreciation, depletion, and amortization charges plus deferred income tax
expense, is expected to increase from the first quarter level of $0.80 per share
based on results and activity levels experienced during the quarter to date.
Francis D. John, Chairman, President and Chief Executive Officer stated, "We are
aggressively cutting operating and overhead costs in all areas of the company,
including a substantial salary reduction for senior management. With depressed
oil prices and with the expectation that they will remain low for the
foreseeable future, management has focused its efforts on maintaining or
increasing market share while reducing cash operating and capital costs at all
levels." Mr. John added, "Cash flow per share for the quarter is expected to
increase over the previous quarter and previous year's quarter, despite
reporting the expected operating loss. Our successful efforts in consolidating
the domestic onshore well service business have strengthened our long-term
viability in this period of uncertainty. Key has demonstrated its ability to be
a low-cost service provider in all aspects of its business."
Key Energy is the world's largest well servicing firm, owning approximately
1,424 well service rigs, 1,121 oilfield trucks and 74 drilling rigs. The company
provides diversified energy operations including well servicing, contract
drilling and other oilfield services and oil and natural gas production. The
company has operations in all major onshore oil and gas producing regions of the
continental United States and in Argentina and Canada.
