Key Energy Services (KEG) Misses Q2 EPS by 4c
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Key Energy Services (NYSE: KEG) reported Q2 EPS of ($0.27), $0.04 worse than the analyst estimate of ($0.23). Revenue for the quarter came in at $197.5 million versus the consensus estimate of $233.53 million.
Key's Chairman and Chief Executive Officer, Dick Alario, stated, "The second quarter presented heightened challenges in the U.S. market as reduced customer activity and competitive pressures drove utilization and pricing lower. Also, severe weather disruptions in some of our largest U.S. regions further compounded the decline in activity during the quarter. Our U.S. production-related activity continued to perform better than the broader indicators associated with new-well completion. Although activity decline rates were lower than we experienced in the first quarter, pricing was worse than expected as competitive pressures intensified during the quarter.
"We made progress during the quarter as it relates to the exit of international markets outside of North America. We believe we are near the finalization of a sale of our business in Oman and believe that we will have substantially exited these markets by the end of 2015.
"Looking forward, recent weakness in oil prices has brought a fresh wave of uncertainty around future commodity prices and the associated economics required to support drilling and completion activities. We believe this enhances the potential for a greater shift in spending by our customers toward production maintenance which is Key's core competency. We continue to diversify our U.S. revenue base as a result of focusing on the mix of customers and markets where we add the most value. In addition, we continue to identify opportunities to improve Key's organizational and cost structure.
"As previously announced, we successfully refinanced our revolving credit facility through a combination of an asset-based revolving credit facility and a term loan facility. Given what appears to be a more prolonged low oil price environment, we expect to spend less than $20 million on capital expenditures during the second half of 2015. We believe a replenished balance sheet, combined with the capital expenditure reduction and materially lower FCPA investigation costs, should provide Key with sufficient liquidity to emerge a stronger company on the other side of this cycle."
For earnings history and earnings-related data on Key Energy Services (KEG) click here.
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