2013 Credit Suisse Energy Summit February 6, 2013 Dick Alario Chairman, President and Chief Executive Officer Exhibit 99.1 |
2 Safe Harbor Language This presentation may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any matters that are not of historic fact are forward-looking statements. These forward-looking statements are based on Key's current expectations, estimates and projections about Key, its industry, its management’s beliefs and certain assumptions made by management, and include statements regarding future operational expectations and anticipated financial performance. No assurance can be given that such expectations, estimates or projections will prove to have been correct. Whenever possible, these “forward-looking statements” are identified by words such as “expects,” “believes,” “anticipates” and similar phrases. Readers and any audience are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, but not limited to: risks that Key will be unable to achieve its financial and operational projections, including quarterly and annual projections of revenue and/or operating income and risks that Key’s expectations regarding future activity levels, customer demand, and pricing stability may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually); risks that fundamentals in the U.S. oil and gas markets may not yield anticipated future growth in Key’s businesses, or could further deteriorate or worsen from the recent market declines, and/or that Key could experience further unexpected declines in activity and demand for its rig service, fluid management service, coiled tubing service, and fishing and rental service businesses; risks relating to Key’s ability to implement technological developments and enhancements; risks relating to compliance with environmental, health and safety laws and regulations, as well as actions by governmental and regulatory authorities; risks affecting Key’s international operations, including risks that Key may not be able to achieve its international growth and mobilization strategy in the foreign countries in which Key operates; risks associated with the recently completed sale of Key’s Argentine operations, including risks that Key may be unable to achieve the benefits contemplated under the transaction; risks, in responding to changing or declining market conditions, that Key may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed and used in Key's businesses; risks relating to changes in the demand for or the price of oil and natural gas; risks that Key may not be able to execute its capital expenditure program and/or that any such capital expenditure investments, if made, will not generate adequate returns; and other risks affecting Key’s ability to maintain or improve operations, including its ability to maintain prices for services under market pricing pressures, weather risks, and the impact of potential increases in general and administrative expenses. Because such statements involve risks and uncertainties, Key's actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Other important risk factors that may affect Key's business, results of operations and financial position are discussed in its most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and in other Securities and Exchange Commission filings. Unless otherwise required by law, Key also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. However, readers should review carefully reports and documents that Key files periodically with the Securities and Exchange Commission. |
3 Service Offering Rig Services • Heavy Workover • Horizontal Well Completions • Re-completions • Specialty Drilling • Repair & Maintenance • Plugging & Abandonment Fluid Management Services • Fluid Transportation • Fluids Disposal • Storage Tank Rental • Total Field Fluid Logistics Management • Fresh & Brine Water Supply Coiled Tubing Services • Wellbore Cleanout • Multi-stage Frac Plug Milling • Plug Setting & Retrieval • Logging & Perforating Tool Deployment • Remedial Repair & Maintenance Fishing & Rental Services • Drill Pipe & Tubing Rental • Pressure & Flow Control Equipment Rental • Edge Frac Stacks & Well Testing • Pipe & Downhole Tool Retrieval (1) Results from Continuing Operations, which exclude Key’s Argentina operations. Key’s Argentina operations were sold effective September 14, 2012 and were reported as discontinued operations for the above stated periods. 2011 3Q 2012 YTD Revenue % Of Revenue % Of (In millions) Total (In millions) Total U.S. Rig Services $726 42% $614 41% Fluid Management Services $388 22% $277 19% Coiled Tubing Services $232 13% $162 11% Fishing & Rental Services $184 11% $202 14% International (1) $199 12% $239 16% Total Revenue (1) $1,729 100% $1,494 100% 3 |
4 Key’s Global Presence Globally recognized franchise of safe, consistent and reliable job execution with a broad customer base. Well Servicing Workover Drilling & Completion Reservoir Engineering Well Servicing Workover Drilling & Completion Fluid Management Coiled Tubing Fishing & Rental Frac Stack Rental Well Testing Well Servicing Workover Completion Coiled Tubing Wireline Reservoir Engineering Well Servicing Workover Completion Well Servicing Workover Completion |
5 U.S. Market Source: Smith Bits; through 1/25/2013. 0 50 100 150 200 250 300 2009 2010 2011 2012 2013 Eagle Ford 0 50 100 150 200 250 2009 2010 2011 2012 2013 Bakken 0 100 200 300 400 500 2009 2010 2011 2012 2013 Permian Basin Drilling Rig Count Horizontal Rig Count 2009 2010 2011 2012 2013 0 10 20 30 40 50 60 West Coast 0 50 100 150 200 250 2009 2010 2011 2012 2013 Haynesville 0 20 40 60 80 100 120 140 160 2009 2010 2011 2012 2013 Marcellus / Utica Drilling Rig Count Horizontal Rig Count 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2009 2010 2011 2012 2013 Total U.S. Onshore Drilling Rig Counts Onshore Oil-Directed Rigs Onshore Gas-Directed Rigs Horizontal Rig Count (%) Oil-Directed Rigs (%) California, Eagle Ford and Bakken Permian Basin Other Oil Markets Haynesville Other Gas Markets Key's Estimated 3Q 2012 U.S. Revenue Split by Market ~25% ~15% ~5% ~10% ~45% |
6 Growing Backlog of Potential Horizontal Well Interventions The secular growth in producing horizontal wells should lead to increased demand for Key’s higher capability workover rigs and higher well intervention service intensity. 550 HP Rig with 116’ Derrick and 425 HP Rig with 102’ Derrick |
7 U.S. Revenue Potential for Underutilized Assets We believe there is approximately 25% to 30% additional U.S. revenue potential if Key’s existing service capacity were operating at effective full utilization levels of 90%. $0 $100 $200 $300 $400 $500 $600 U.S. Rigs Fluid Management Services Coiled Tubing Services Fishing & Rental Services U.S. Total Source: Key Energy Services, Inc. Hypothetical Additional Quarterly Revenue Potential* Q3 2012 Actual Reported Revenue * Represents hypothetical additional revenue that might have been generated if all of Key's existing assets had been operating at full effective utilization of 90% and at the same pricing levels that were realized during the third quarter. |
8 Oil Well Life Cycle Exposure Key’s growing toolbox of service solutions deliver value throughout the well’s life cycle. Rig Services Coiled Tubing Services Fluid Management Services Fishing & Rental Services Drill & Complete Production Abandonment Horizontal well completions Specialty fit-for-purpose drilling Logistics management: fluid delivery, storage and disposal Pre-frac wellbore preparation Post-frac plug milling Premium drill pipe and blowout preventers Frac stack assemblies and well testing Fishing services Heavy workovers Repair and maintenance Re-completions Produced water handling and disposal Wellbore cleanouts Slim-hole drill-outs Remedial well stimulation Workstring and tubing rental Fishing services Well prep and pipe removal Fishing and pipe recovery Fluid delivery and disposal Fluid treatments and cementing |
9 International Markets Heavy Workover Rig in Mexico Key has generated strong international growth. $12 $57 $129 $101 $199 $138 $239 $0 $50 $100 $150 $200 $250 $300 2007 2008 2009 2010 2011 Q1-Q3 2011 Q1-Q3 2012 Historical International Revenue Growth* Source: Key Energy Services,Inc. 73% Y/Y 52% CAGR 2008 - 2011 *Excluding Argentina for all periods. Argentina was was sold in September 2012. |
10 Well Interventions Drive Value Key’s growth in well interventions contributes to production growth in PEMEX’s ATG asset. |
11 • Reduce costs and improve U.S. operating efficiencies. • Capitalize on international growth opportunities. • Use free cash flow to enhance shareholder value. 2013 Focus |
13 Appendix - The KeyView ® System The KeyView ® System is a proprietary technology that provides equipment-verified data to achieve enhanced operational IQ. • Patented system with job activity monitoring, recording capabilities and automated controls that provides operators with an “intelligent” rig that can meaningfully improve job safety, quality and efficiency. • Safety incidents reduced by as much as 56%. • Job quality improved by as much as 63%. • Efficiency improved by as much as 50%. • Real-time analytics and advanced benchmarking yield actionable efficiency gain opportunities. • Growing database of >50,000 jobs allows for historical and peer comparison. 0 10 20 30 40 50 60 Typical Permian Basin Job Typical Bakken Shale Job Pipe Tripping Transition Workover Activity Well Control Stand-by Mobilization Crew Break BOP/TAC/PKR Other Safety Source:Key Energy Services, Inc. |
14 Appendix – Class 4, 500 HP Heavy Workover Rig 14 |
15 Appendix – Class 5, 1,000 HP Modular Completion Rig 15 |
16 Appendix – Extended Reach Coiled Tubing Unit 16 |
17 Appendix – Frac Stack Equipment Layout 17 |