Key Energy Services, Inc. operates as an onshore, rig-based well servicing contractor.
The company provides a range of well services to major oil companies and independent oil and natural gas production companies. Its services include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services. Additionally, certain rigs are capable of specialty...
Key Energy Services, Inc. operates as an onshore, rig-based well servicing contractor.
The company provides a range of well services to major oil companies and independent oil and natural gas production companies. Its services include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services. Additionally, certain rigs are capable of specialty drilling applications. The company operates in most major oil and natural gas producing regions of the continental United States.
Service Offerings
The company operates through Rig Services, Fishing and Rental Services, Coiled Tubing Services, and Fluid Management Services.
Rig Services
This segment includes the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. The company also provides specialty drilling services to oil and natural gas producers with certain of its larger rigs that are capable of providing conventional and horizontal drilling services. Its rigs encompass various sizes and capabilities, allowing the company to service all types of oil and gas wells. Majority of its rigs are outfitted with its proprietary KeyView technology, which captures and reports well site operating data and provides safety control systems.
The completion and recompletion services provided by the company’s rigs prepare wells for production, whether newly drilled or extended through a workover operation. The company provides a well service rig and might also provide other equipment to assist in the completion process.
The workover services that the company provides are designed to improve the production of existing wells and normal maintenance services. Workover services could include deepening or extending wellbores into new formations by drilling horizontal or lateral wellbores, sealing off depleted production zones and accessing previously bypassed production zones, converting former production wells into injection wells for operations and conducting major subsurface repairs due to equipment failures.
Maintenance services provided with the company’s rig fleet are required throughout the life cycle of an oil or natural gas well. These maintenance services include routine mechanical repairs to the pumps, tubing and other equipment, removing debris and formation material from wellbores, and pulling rods and other downhole equipment from wellbores to identify and resolve production problems.
The company’s rig fleet is also used in the process of permanently shutting-in oil or natural gas wells that are at the end of their productive lives. These plugging and abandonment services require auxiliary equipment in addition to a well servicing rig.
Fishing and Rental Services
This segment offers a line of fishing services and rental equipment designed for use in providing onshore drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing an array of fishing tools. The company’s rental tool inventory consists of drill pipe, tubulars, handling tools (including its patented Hydra-Walk pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units and foam air units. Its rental inventory also included frac stack equipment used to support hydraulic fracturing operations and the associated flowback of frac fluids, proppants, oil and natural gas.
Demand for the company’s Fishing and Rental Services is also closely related to capital spending by oil and natural gas producers.
Competition: The company’s primary competitors for its Fishing and Rental Services include Baker Oil Tools; Weatherford International Ltd.; Basic Energy Services, Inc.; Smith Services; Superior Energy Services, Inc.; Quail Tools; and Knight Oil Tools.
Coiled Tubing Services
This segment engages in the use of a continuous metal pipe spooled onto a large reel, which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing, particularly larger diameter coil units, is also used for various horizontal well applications, such as milling temporary isolation plugs that separate frac zones and various other pre- and post-hydraulic fracturing well preparation services.
Competition: The company’s primary competitors in the Coiled Tubing Services market include Schlumberger Ltd.; Baker Hughes; Halliburton Company; Superior Energy Services, Inc.; Nine Energy Services; and NexTier Oilfield Solutions Inc.
Fluid Management Services
This segment provides transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. It also provides disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by it or a third party.
Customers
The company’s customers include major oil companies, independent oil and natural gas production companies.
Strategy
An important component of the company’s strategy is to make acquisitions that would strengthen its core services or presence in selected markets, and the company also makes strategic divestitures from time to time.
Seasonality
The company’s operations are impacted by seasonal factors. Historically, the company’s business has been negatively impacted during the winter months due to inclement weather, fewer daylight hours and holidays. During the summer months, the company’s operations might be impacted by tropical or other inclement weather systems. During periods of heavy snow, ice or rain, the company might not be able to operate or move its equipment between locations, thereby reducing its ability to provide services and generate revenues. In the winter months when days become shorter, this reduces the amount of time that the company’s assets could work and therefore has a negative impact on total hours worked. Lastly, during the fourth quarter (year ended December 31, 2019), the company historically experience a significant slowdown during the Thanksgiving and Christmas holiday seasons and demand sometimes slows during this period as its customers exhaust their annual budgets.
Patents, Trade Secrets, Trademarks and Copyrights
All the issued patents have varying remaining durations through 2035, and began expiring in 2019.
Governmental Regulations
The company generates solid wastes that are subject to the requirements of the Resource Conservation and Recovery Act, as amended and comparable state statutes. The company is subject to the requirements of the federal Occupational Safety and Health Act, as amended and comparable state laws that regulate the protection of employee health and safety. The company operates SWD wells that are subject to the Clean Water Act, as amended; Safe Drinking Water Act; and state and local laws and regulations, including those established by the Underground Injection Control Program of the Environmental Protection Agency, which establishes the minimum program requirements.
History
The company was founded in 1977 and commenced its operations in 1978. It was formerly known as National Environmental Group, Inc. and changed its name to Key Energy Group, Inc. in 1992. Further, the company changed its name to Key Energy Services, Inc. in 1998.
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