SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.

Key Energy Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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[LOGO]

KEY ENERGY GROUP, INC.
TWO TOWER CENTER, 20TH FLOOR
EAST BRUNSWICK, NJ 08816

November , 1998

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
Key Energy Group, Inc. (the "Company") to be held at Two Tower Center, 20th
Floor, East Brunswick, New Jersey 08816, at 11:00 A.M. on Tuesday, December 8,
1998.

Matters to be considered and acted upon by the Stockholders include (i) the
election of six directors; and (ii) a proposal to amend the Company's Amended
and Restated Articles of Incorporation to change the name of the Company to "Key
Energy Services, Inc." (the "Amendment"). These matters and the procedures for
voting your shares are discussed in the accompanying Notice of Annual Meeting
and Proxy Statement.

The adoption of the Amendment requires the affirmative vote of two-thirds
of the outstanding shares of Common Stock of the Company. The failure to vote in
person or by proxy, or an abstention from voting, will have the same effect as a
vote against the Amendment. Therefore, the Directors urge each Stockholder,
whether or not intending to attend the meeting in person, to execute the
enclosed proxy and return it in the enclosed envelope. Returning a proxy will
not prevent a Stockholder from voting in person at the meeting.

Sincerely,

Francis D. John
Chairman of the Board,
President and Chief Executive Officer
3

KEY ENERGY GROUP, INC.
TWO TOWER CENTER, 20TH FLOOR
EAST BRUNSWICK, NEW JERSEY 08816

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 8, 1998

------------------------

Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Key Energy Group, Inc. will be held at Two Tower Center, 20th
Floor, East Brunswick, New Jersey 08816 on Tuesday, December 8, 1998 at 11:00
A.M. (Eastern Standard Time), to consider and act upon the following matters:

(1) To elect six Directors for the ensuing year or until their successors
are elected and qualified;

(2) To consider and act upon a proposal to amend the Company's Amended and
Restated Articles of Incorporation to change the name of the Company to
"Key Energy Services, Inc."; and

(3) To consider and act on such other business as may properly come before
the Annual Meeting.

The Board of Directors has fixed the close of business on November 3, 1998,
as the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting. Only those Stockholders of record on that
date will be entitled to notice of and to vote at the Annual Meeting.

A complete list of the Stockholders entitled to vote at the Annual Meeting
will be open for inspection at the Company's offices, Two Tower Center, 20th
Floor, East Brunswick, New Jersey, at least 10 days before the Annual Meeting.

By Order of the Board of Directors

Jack D. Loftis, Jr.
Secretary

East Brunswick, New Jersey
November , 1998

IMPORTANT

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL THE PROXY CARD IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE ANNUAL
MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED WITHIN THE
UNITED STATES. A STOCKHOLDER MAY, IF SO DESIRED, REVOKE HIS PROXY AND VOTE HIS
SHARES IN PERSON AT THE MEETING.
4

KEY ENERGY GROUP, INC.
TWO TOWER CENTER, 20TH FLOOR
EAST BRUNSWICK, NEW JERSEY 08816

PROXY STATEMENT
FOR
ANNUAL STOCKHOLDERS MEETING
TO BE HELD DECEMBER 8, 1998

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Key Energy Group, Inc. (the "Company") for
use at the Company's Annual Meeting of Stockholders (the "Annual Meeting") to be
held at Two Tower Center, 20th Floor, East Brunswick, New Jersey 08816 at 11:00
A.M. on Tuesday, December 8, 1998, and at any adjournment thereof. This Proxy
Statement and the accompanying form of proxy are first being mailed to the
Company's Stockholders on or about November , 1998. The Company's Annual
Report to Stockholders for the fiscal year ended June 30, 1998, is being mailed
to Stockholders with the mailing of this Proxy Statement.

The Company will bear all costs of solicitation of proxies. In addition to
solicitations by mail, the Company's Directors, officers and regular employees,
without additional remuneration, may solicit proxies by telephone, telegraph and
personal interviews. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their reasonable out-of-pocket expenses
incurred in connection with the distribution of such proxy materials. In
addition, D.F. King & Co. has been engaged to solicit proxies for the Company
for a fee of $5,000, plus costs and expenses.

REVOCABILITY OF PROXIES

Any Stockholder giving a proxy has the power to revoke it at any time
before it is exercised, by delivering to the Secretary of the Company at its
principal executive offices located at Two Tower Center, 20th Floor, East
Brunswick, New Jersey 08816, a written notice of revocation or another duly
executed proxy bearing a later date. A Stockholder also may revoke his or her
proxy by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy.

RECORD DATE, VOTING AND SHARE OWNERSHIP

Only holders of record of common stock, par value $.10 per share (the
"Common Stock"), of the Company at the close of business on November 3, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. Each share of Common Stock is entitled to one
vote. On the Record Date there were outstanding and entitled to vote
shares of Common Stock.

The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the votes entitled to be cast ( shares) will
constitute a quorum for the transaction of business at the Annual Meeting. A
proxy, if received in time for voting and not revoked, will be voted at the
Annual Meeting in accordance with the instructions contained therein. Where a
choice is not so specified, the shares represented by the proxy will be voted
"for" the election of the nominees for Directors listed herein and in favor of
the other matters set forth in the Notice of Annual Meeting accompanying this
Proxy Statement. A Stockholder marking the proxy "Abstain" will not be counted
as voting in favor of or against the particular proposals from which the
Stockholder has elected to abstain. If a quorum exists, the proposal can be
adopted by an affirmative vote of (i) in the case of election of Directors, a
plurality; and (ii) in the case of the proposal to adopt the amendment to the
Company's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation") to change the Company's name to "Key Energy Services, Inc." (the
"Amendment"), two-thirds of the issued and outstanding shares of Common Stock.
Since the proposal to adopt the Amendment requires the affirmative vote of
two-thirds of the issued and outstanding shares of Common Stock, as opposed to a
percentage of the issued and outstanding shares of Common Stock that are present
at the Annual Meeting
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(and for which a vote for the proposal has been cast), the failure to vote in
person or by proxy will have the same effect as a vote against the Amendment.

Votes cast at the Annual Meeting will be tabulated by a duly appointed
inspector of election. The inspector will treat shares represented by a properly
signed and returned proxy as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote or abstaining. Likewise, the inspector will treat shares represented by
"broker non-votes" as present for purposes of determining a quorum, although
such shares will not be voted on any matter for which the record holder of such
shares lacks authority to act. Broker non-votes are proxies with respect to
shares held in record name by brokers or nominees, as to which (i) instructions
have not been received from the beneficial owners of persons entitled to vote;
(ii) the broker or nominee does not have discretionary voting power under
applicable national securities exchange rules or the instrument under which it
serves in such capacity; and (iii) the record holder has indicated on the proxy
card or otherwise notified the Company that it does not have authority to vote
such shares on that matter.

ELECTION OF DIRECTORS

At the Annual Meeting, six Directors are to be elected, each Director to
hold office until the next Annual Meeting of Stockholders and until his
successor is elected and qualified. The persons named in the accompanying proxy
have been designated by the Board of Directors, and unless authority is
withheld, they intend to vote for the election of the nominees named below to
the Board of Directors. All of the nominees previously have been elected as
Directors by the Stockholders. If any of the nominees become unavailable to
serve, the shares represented by proxies will be voted for the election of a
substitute nominee selected by the persons named in the proxy, or the Board may
be reduced accordingly; however, the Board of Directors is not aware of any
circumstances likely to render any nominee unavailable for election.

Certain information concerning the nominees is set forth below.

COMMON STOCK
BENEFICIALLY OWNED
NOVEMBER 3, 1998(1)
----------------------
DIRECTOR PERCENT
NAME POSITION AGE SINCE SHARES OF CLASS(2)
- ---- -------- --- -------- ------- -----------

Francis D. John(3)(6).......... Chairman of the Board, 44 1988 474,535 2.5%
President and Chief
Executive Officer
Kevin P. Collins(3)(4)(7)...... Director 47 1996 111,738 *
William Manly(4)(5)(8)......... Director 75 1989 72,709 *
W. Phillip Marcum(5)(9)........ Director 54 1996 111,738 *
David J. Breazzano(3)(4)(10)... Director 42 1997 10,000 *
Morton Wolkowitz(3)(5)(11)..... Director 70 1989 398,616 2.2%

- ---------------
* Less than one percent.

(1) Includes all shares with respect to which each person directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise, has or shares the power to vote or to direct voting of such
shares and/or to dispose or to direct the disposition of such shares.

(2) Based on shares of Common Stock outstanding at November 3, 1998
plus, for each beneficial owner, those number of shares underlying
currently exercisable options or warrants held by each executive officer or
Director.

(3) Member of the Executive Committee.

(4) Member of the Audit Committee.

(5) Member of the Compensation Committee.

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6

(6) Includes 437,500 shares issuable upon the exercise of vested options and
6,914 shares issuable pursuant to currently exercisable warrants. Does not
include (i) 437,500 shares issuable pursuant to options that have not
vested; and (ii) 50,045 shares held by Mr. John as custodian for his two
children.

(7) Includes 56,666 shares issuable upon the exercise of vested options. Does
not include 63,334 shares issuable pursuant to options that have not
vested.

(8) Includes 70,000 shares issuable upon the exercise of vested options. Does
not include 50,000 shares issuable pursuant to options that have not
vested.

(9) Includes 56,666 shares issuable upon the exercise of vested options. Does
not include 63,334 shares issuable pursuant to options that have not
vested.

(10) Includes 10,000 shares issuable upon the exercise of vested options. Does
not include 40,000 shares issuable pursuant to options that have not
vested.

(11) Includes 97,000 shares issuable upon the exercise of vested options and
6,914 shares issuable pursuant to currently exercisable warrants. Does not
include 58,000 shares issuable pursuant to options that have not vested.

Francis D. John has been Chairman of the Board since August 1996 and the
Chief Executive Officer since October 1989. He has been a Director and President
since June 1988 and served as the Chief Financial Officer from October 1989
through July 1997. Before joining the Company, he was Executive Vice President
of Finance and Manufacturing of Fresenius U.S.A., Inc. Mr. John previously held
operational and financial positions with Unisys, Mack Trucks and Arthur
Andersen. He received a BS from Seton Hall University and an MBA from Fairleigh
Dickinson University.

David J. Breazzano has been a Director since October 1997. Mr. Breazzano is
currently one of the three principals at DDJ Capital Management, LLC, an
investment management firm which was established in 1996. Mr. Breazzano
previously served as a Vice President and Portfolio Manager at Fidelity
Investments ("Fidelity") from 1990 to 1996. Prior to joining Fidelity, Mr.
Breazzano was President and Chief Investment Officer of the T. Rowe Price
Recovery Fund. He is also a director of BioSafe International, Inc. He holds a
BS from Union College and an MBA from Cornell University.

Kevin P. Collins has been a Director since March 1996. Mr. Collins is a
managing member of the Old Hill Company LLC. From 1992 to 1997, he has served as
a principal of JHP Enterprises, Ltd., and from 1985 to 1992, as Senior Vice
President of DG Investment Bank, Ltd., both of which were engaged in providing
corporate finance and advisory services. Mr. Collins was a Director of WellTech,
Inc. ("WellTech") from January 1994 until March 1996 when WellTech was merged
into the Company (the "WellTech Merger"). He holds a BS and an MBA from the
University of Minnesota.

William Manly has been a Director since December 1989. He retired from his
position as an Executive Vice President of Cabot Corporation in 1986, a position
he had held since 1978. Mr. Manly is a Director of Metallamics, Inc. and
CitiSteel, Inc. He holds a BS and an MS from the University of Notre Dame.

W. Phillip Marcum has been a Director since March 1996. Mr. Marcum was a
director of WellTech from January 1994 until March 1996. From October 1995 until
March 1996, Mr. Marcum was the acting Chairman of the Board of Directors of
WellTech. He has been Chairman of the Board, President and Chief Executive
Officer of Marcum Natural Gas Services, Inc. since January 1991 and is a
Director of Hydrologic, Inc. He holds a BBA from Texas Tech University.

Morton Wolkowitz served as President and Chief Executive Officer of Wolkow
Braker Roofing Corporation, a company that provided a variety of roofing
services, from 1958 through 1989. Mr. Wolkowitz has been a private investor
since 1989. He holds a BS from Syracuse University.

BOARD AND COMMITTEE MEETINGS

During the fiscal year ended June 30, 1998, the Board of Directors held six
meetings. Each of the current directors who then was in office attended at least
75% of the meetings of the Board of Directors and all committees thereof on
which such Director served.

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7

The Board of Directors has designated an Executive Committee, an Audit
Committee and a Compensation Committee. The Executive Committee may take such
actions as the Board delegates to it. The Executive Committee held eight
meetings during fiscal year 1998. The Audit Committee meets with the Company's
independent auditors at least twice annually to review financial results,
internal financial controls and procedures, and audit plans and recommendations.
It also recommends the selection, retention or termination of independent public
accountants, approves services provided by the independent public accountants
before providing such services, and evaluates the possible effect the
performance of such services will have on their independence. The Audit
Committee held two meetings during fiscal year 1998. See "Additional
Information -- Auditors." The Compensation Committee recommends to the Board of
Directors the compensation of Executive Officers and Directors and the adoption
of stock grant and stock option plans. The Compensation Committee held two
meetings during fiscal year 1998.

DIRECTOR COMPENSATION

Compensation for the non-employee Directors for fiscal year 1998 was $3,000
per month. Such compensation is for service as a Director as well as for
advisory services that Directors may provide the Company from time to time.
Directors also are reimbursed for travel and other expenses directly associated
with Company business. All non-employee Directors have been granted options to
purchase shares of Common Stock under the Key Energy Group, Inc. 1997 Incentive
Plan (the "1997 Incentive Plan"). During fiscal year 1998, no options were
granted under the 1997 Incentive Plan.

EXECUTIVE OFFICERS

The Company's executive officers serve at the pleasure of the Board of
Directors and are subject to annual appointment by the Board at its first
meeting following the Annual Meeting of Stockholders. All the Company's
executive offices are listed below, with the exception of Mr. John, who is
included in the foregoing table.

Kenneth V. Huseman, 45, has served as Executive Vice President of the
Company since March 1996 and as Chief Operating Officer of the Company since
August 1996. He was the Mid-Continent Regional President of WellTech from August
1994 to March 1996, and Vice President and Mid-Continent Regional Manager of
WellTech from April 1993 to August 1994. Before serving at WellTech, he worked
for Pool Energy Services Co. He holds a BBA from Texas Tech University.

Stephen E. McGregor, 49, joined the Company in July 1997 as an Executive
Vice President and Chief Financial Officer and has held the title of Treasurer
since January 1998. From July 1995 until July 1997, he was Senior Advisor to BT
Wolfensohn and its predecessor James D. Wolfensohn, Inc. He was President and
Member of Pacific Century Group L.L.C. from September 1993 until July 1995, and
was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom in its
Washington, D.C. and London, England offices from 1982 until 1993. Mr. McGregor
also served as Deputy Assistant Secretary for Oil and Gas Policy during the
Carter Administration and before that was counsel to the United States Senate
Commerce Committee. Mr. McGregor has a B.A. degree from Boston University and a
J.D. from the College of William and Mary.

Danny R. Evatt, 39, has served as Vice President and Chief Accounting
Officer of the Company, or its functional equivalent, since July 1990. Mr. Evatt
served as the Company's Treasurer from July 1990 until January 1998 at which
time he was also appointed Chief Information Officer. In addition to serving as
Chief Information Officer, Mr. Evatt currently holds the title of Vice President
of Financial Operations. He holds a BBA from Texas A&M University.

James Byerlotzer, 52, joined the Company in September 1998 as Vice
President -- Permian Basin Operations after the Company's acquisition of Dawson
Production Services, Inc. ("Dawson"). From February 1997 to September 1998, he
served as the Senior Vice President and Chief Operating Officer of Dawson. From
1981 to 1997, Mr. Byerlotzer was employed by Pride Petroleum Services, Inc.
("Pride"). Beginning in February 1996, Mr. Byerlotzer served as the Vice
President Domestic Operations of Pride. Prior to that time, he served as Pride's
Vice President -- Permian Basin and in various other operating positions in
Pride's Gulf Coast and California operations. Mr. Byerlotzer holds a BA from the
University of Missouri in St. Louis.

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8

Michael R. Furrow, 47, joined the Company in September 1998 as Vice
President -- Western Operations after the Company's acquisition of Dawson. From
February 1997 to September 1998 he served as Vice President of Permian Basin
Region of Dawson. From February 1990 to February 1997 he held the positions of
Vice President, area manager and regional manager in Alice and Midland, Texas
and Bakersfield, California for Pride. Prior to that he was Vice
President -- Production with Harkins & Company in Alice, Texas from 1984 to
1990, and was with Shell Oil Company in Houston and New Orleans from 1969 to
1984. Mr. Furrow holds a BS in Civil Engineering from the University of
Nebraska.

MANAGEMENT STOCKHOLDINGS

The following table provides information as of November 3, 1998 with
respect to the shares of Common Stock beneficially owned by (i) each Director
and executive officer of the Company and (ii) all Directors and executive
officers as a group. Except as noted below, each holder has sole voting and
investment power with respect to all shares of Common Stock listed as owned by
such person. The Company does not know of any person beneficially owning more
than 5% of the outstanding Common Stock.

PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER SHARES(1) SHARES(2)
- ------------------------ --------- -------------

Francis D. John(3).......................................... 474,535 2.5%
Kevin P. Collins(4)......................................... 111,738 *
William Manly(5)............................................ 72,709 *
W. Philip Marcum(6)......................................... 111,738 *
David J. Breazzano(7)....................................... 10,000 *
Morton Wolkowitz(8)......................................... 398,616 2.2%
Danny R. Evatt(9)........................................... 35,000 *
Kenneth V. Huseman(10)...................................... 221,990 1.2%
Stephen E. McGregor(11)..................................... 91,667 *
James Byerlotzer(12)........................................ 2,500 *
Michael R. Furrow(13)....................................... 2,500 *
--------- ---
Directors and Executive Officers as a group (11 persons).... 1,532,993 7.9%
========= ===

- ---------------
* Less than 1%

(1) Includes all shares with respect to which each Director or executive
officer directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares the power to vote
or to direct voting of such shares and/or to dispose or to direct the
disposition of such shares. Includes shares that may be purchased under
currently exercisable stock options granted under the 1997 Incentive Plan.

(2) Based on shares of Common stock outstanding at November 3, 1998,
plus, for each beneficial owner, those number of shares underlying
currently exercisable options or warrants held by each executive officer or
Director.

(3) Includes 437,500 shares issuable upon exercise of vested options and 6,914
shares issuable pursuant to currently exercisable warrants. Does not
include (i) 437,500 shares issuable pursuant to options that have not
vested, and (ii) 50,045 shares held by Mr. John as custodian for his two
children.

(4) Includes 56,666 shares issuable upon the exercise of vested options. Does
not include 63,334 shares issuable pursuant to options that have not
vested.

(5) Includes 70,000 shares issuable upon the exercise of vested options. Does
not include 50,000 shares issuable pursuant to options that have not
vested.

(6) Includes 56,666 shares issuable upon the exercise of vested options. Does
not include 63,334 shares issuable pursuant to options that have not
vested.

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9

(7) Includes 10,000 shares issuable upon the exercise of vested options. Does
not include 40,00 shares issuable pursuant to options that have not vested.

(8) Includes 97,000 shares issuable upon the exercise of vested options and
6,914 shares issuable pursuant to currently exercisable warrants. Does not
include 58,000 shares issuable pursuant to options that have not vested.

(9) Includes 30,000 shares issuable upon the exercise of vested options. Does
not include 15,000 shares issuable pursuant to options that have not
vested.

(10) Includes 208,334 shares issuable upon the exercise of vested options. Does
not include 291,666 shares issuable pursuant to options that have not
vested.

(11) Includes 91,667 shares issuable upon the exercise of vested options. Does
not include 258,333 shares issuable pursuant to options that have not
vested.

(12) Including 2,500 shares issuable upon the exercise of vested options. Does
not include 7,500 shares issuable pursuant to options that have not vested.

(13) Including 2,500 shares issuable upon the exercise of vested options. Does
not include 7,500 shares issuable pursuant to options that have not vested.

REQUIRED VOTE

The six nominees for election as Directors who receive the greatest number
of votes shall be elected as Directors.

The Board of Directors recommends that the Stockholders vote FOR the
election of each of the nominees listed above.

PROPOSED AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION

The Board of Directors has proposed an amendment (the "Amendment") to the
Company's Articles of Incorporation which, if adopted, would change the name of
the Company to "Key Energy Services, Inc."

It is the belief of the Board of Directors that the name of the Company be
changed to Key Energy Services, Inc. to more adequately reflect the business of
the Company and to be more consistent with the Company's ongoing operations,
thereby benefitting both the Company and its stockholders.

Set forth in Exhibit A to this Proxy Statement are the Articles of
Amendment to the Amended and Restated Articles of Incorporation of the Company.
If this proposal is adopted by the Stockholders, the Amended and Restated
Articles would be amended as provided therein.

REQUIRED VOTE

The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Common Stock is required to approve the Amendment. Since
the affirmative vote of two-thirds of the issued and outstanding shares of
Common Stock is required to approve the amendment, as opposed to a specified
percentage of the shares present and voting at the Annual Meeting, the failure
to vote in person or by proxy, or an abstention from voting, will have the same
affect as a vote against the Amendment.

The Board of Directors recommends that the Stockholders vote FOR the
Amendment.

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OTHER INFORMATION

EXECUTIVE COMPENSATION

The following table sets forth the compensation, including bonuses, earned
by the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers (other than the Chief Executive Officer) during
each of the three fiscal years ended June 30, 1998, 1997 and 1996.

SUMMARY COMPENSATION TABLE

LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) ---------------------
-------------------- SHARES
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS(2)
- --------------------------- ---- -------- -------- ---------------------

Francis D. John............................ 1998 $395,000 $ 0 --
President and Chief Executive Officer 1997 341,250 500,000 250,000
1996 325,000 257,250(3) --(4)
Kenneth V. Huseman......................... 1998 240,000 400,000 --
Executive Vice President and Chief 1997 200,000 125,000(5) 100,000
Operating Officer 1996 45,000(6) -- 100,000
Stephen E. McGregor........................ 1998 272,500(7) 275,000(8) 250,000
Executive Vice President, Chief Financial 1997 -- -- --
Officer and Treasurer 1996 -- -- --
Danny R. Evatt............................. 1998 137,500 30,000 --
Chief Information Officer and Vice 1997 125,000 25,080 15,000
President of Financial Operations 1996 115,000 41,250 50,000
C. Ron Laidley............................. 1998 225,000 -- --
President of Yale E. Key(9) 1997 204,000 95,000 20,000
1996 194,000 97,250 125,000
Kenneth C. Hill............................ 1998 190,000 35,000 --
Vice President(9) 1997 180,000 50,000 10,000
1996 45,000(6) -- 75,000

- ---------------
(1) Perquisites and other personal benefits in each year to each named executive
office did not exceed the lesser of $50,000 or 10 percent of such
individuals total salary and bonus.

(2) Represents the number of shares issuable pursuant to vested and non-vested
stock options granted during the applicable fiscal year.

(3) Consists of (i) $150,000 paid as a bonus under Mr. John's employment
agreement in connection with the WellTech Merger and (ii) $107,250 paid as a
performance bonus for services rendered in fiscal 1996.

(4) In October 1995 Mr. John agreed to exchange 180,000 shares of Common Stock
in which he was vested pursuant to a predecessor stock option plan to the
1997 Incentive Plan for (i) options to purchase 500,000 shares of Common
Stock at an exercise price of $5.00 per share and (ii) $300,000 in cash.
Such options were issued and such cash was paid to Mr. John in November
1996.

(5) The Board awarded Mr. Huseman this discretionary bonus after fiscal 1998 in
recognition of the successful completion of a series of acquisitions in
fiscal 1998 and fiscal 1999.

(6) Messrs. Huseman and Hill became executive officers of the Company upon
consummation of the WellTech Merger. This amount represents salary from
March 29, 1996 to June 30, 1996. Messrs. Huseman's and Hill's annual salary
for the 1996 fiscal year was $180,000.

(7) Includes payments made to Mr. McGregor under a consulting agreement with the
Company pursuant to which he was retained from July 15, 1997 through
December 31, 1997.

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(8) The Board awarded Mr. McGregor this discretionary bonus after fiscal 1998 in
recognition of the successful completion of a series of financing
transactions in fiscal 1998 and fiscal 1999.

(9) Messrs. Hill and Laidley served as executive officers of the Company for a
portion of the 1998 fiscal year, but as of June 30, 1998 did not serve in
such capacity.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information relating to options to
purchase Common Stock granted under the 1997 Incentive Plan to the executive
officers named in the Summary Compensation Table above during fiscal year 1998.

INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OF OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR(2) SHARE DATE PRESENT VALUE(3)
- ---- ------------- ----------------- --------- ---------- ----------------

Stephen E. McGregor......... 250,000(1) 61% $20.44 7/15/07 $4,180,504

- ---------------
(1) These options vest as follows: (i) 200,000 of these options vest in three
equal annual installments commencing on July 15, 1998, and (ii) 50,000 of
these options vest on July 15, 2006 unless before July 15, 2000 the closing
price of the common stock of the Company is equal to or greater than $30 per
share for 60 consecutive trading days, in which case the options will vest
on such 60th consecutive trading day.

(2) Based on options to purchase a total of 416,000 shares of Common Stock
granted under the 1997 Incentive Plan during fiscal 1998.

(3) The grant date value of stock options was estimated using the Black-Scholes
option pricing model with the following assumptions: expected
volatility -- 112%; risk-free interest rate -- 5.79%; time of exercise -- 5
years; and no dividend yield.

AGGREGATED OPTION EXERCISES AND VALUES AS OF FISCAL YEAR END

The following table sets forth certain information as of June 30, 1998
relating to option grants pursuant to the 1997 Incentive Plan (and predecessor
incentive plans) to the executive officers named in the Summary Compensation
Table above.

VALUE OF UNEXERCISED
NUMBER NUMBER OF UNEXERCISED IN-THE MONEY-OPTIONS
OF SHARES OPTIONS AT JUNE 30, 1998 AT JUNE 30,1998(b)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(a) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------

Francis D. John........... -- -- 557,500 192,500 $3,514,063 $548,438
Stephen E. McGregor....... -- -- -- 250,000 -- --
Kenneth V. Huseman........ -- -- 116,667 83,333 501,043 298,997
Danny R. Evatt............ 30,000 $ 273,750 15,000 20,000 60,938 101,563
Kenneth C. Hill........... -- -- 61,250 23,750 316,406 105,470
C. Ron Laidley............ 60,000 1,725,000 110,000 35,000 812,500 203,125

- ---------------
(a) The dollar values in this column are calculated by determining the
difference between the fair market value of the Company's common stock on
the date of exercise of the relevant options and the exercise price of such
options. The fair market value on the date of exercise is based on the last
sale price of the Company's common stock on the NYSE or AMEX, as applicable,
on such date.

(b) The dollar values in this column are calculated by determining the
difference between the fair market value of the Company's common stock for
which the relevant options are exercisable as of the end of the fiscal year
and the exercise price of the options. The fair market value is based on the
last sale price of the Company's common stock on the NYSE on June 30, 1998
of $13.125.

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EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

Effective as of July 1, 1995, the Company entered into an employment
agreement with Mr. John which provides that Mr. John will serve as President,
Chief Executive Officer and a Director of the Company for a three-year term
commencing July 1, 1995 and continuing until June 30, 1998, and thereafter the
term will be automatically extended for successive one-year terms unless
terminated no later than 30 days prior to the commencement of the next extension
term. Under this agreement, Mr. John initially received base compensation of
$325,000 per year and is eligible for (i) an annual incentive bonus of up to 30%
of base compensation contingent upon the Company's achievement of goals to be
set forth in a strategic plan to be developed by the Executive Committee of the
Board of Directors, and (ii) additional bonuses in the discretion of the Board
of Director's to recognize extraordinary performance by Mr. John or the Company.
Base compensation is reviewed annually and has been (and may be in the future)
increased (but not decreased) by the Board of Directors in its discretion. Mr.
John's current annual base salary is $395,000. If during the term of the
agreement Mr. John is terminated the Company for any reason other than for
cause, or if he terminates his employment because of a material breach by the
Company or following a change of control of the Company, (i) he will receive
severance compensation equal to three times his base compensation in effect at
the time of termination, payable in 36 equal monthly installments; provided,
however, that if termination results from a change of control, severance
compensation will be payable in a lump sum on the date of termination and (iii)
all stock options granted through such date will automatically vest. Mr. John is
also subject to restrictions on competition during the term of the agreement
and, with certain exceptions, the severance period. Mr. John has waived his
rights with respect to a change of control resulting from the WellTech Merger.

Mr. Huseman has entered into an employment agreement with the Company
effective as of August 3, 1996. This employment agreement is for a three-year
term, commencing on March 29, 1996 and continuing until August 2, 1999,
thereafter the term will be automatically extended for successive one-year terms
unless terminated no later than 30 days prior to the commencement of the next
extension term. Under this agreement, Mr. Huseman initially received base
compensation of $180,000 per year and is eligible for an additional annual
incentive bonus of up to 50% of his base compensation. Base compensation is
reviewed annually and has been (and may be in the future) increased (but not
decreased) by the Board of Directors in its discretion. Mr. Huseman's current
annual base salary is $240,000. If during the term of his employment agreement,
Mr. Huseman is terminated by the Company for any reason other than for cause, or
if he terminates his employment because of a material breach by the Company or
following a change of control of the Company, he will be entitled to severance
compensation equal to two times his base compensation in effect at the time of
termination payable in equal installments over a 24-month period following
termination; provided, however, that if termination results from a change of
control of the company, severance compensation will be payable in a lump sum on
the date of termination. Mr. Huseman is also subject to restrictions on
competition during the term of this agreement and, with certain exceptions,
during the severance period.

Mr. McGregor has entered into employment agreement with the Company
effective as of January 1, 1998. This employment agreement commences on January
1, 1998 and continues until June 30, 2000. Thereafter the term will be
automatically extended for successive one-year terms unless terminated no later
than 30 days prior to the commencement of the next extension term. Under this
agreement, Mr. McGregor initially received base compensation of $240,000 per
year, and is eligible for an additional annual incentive bonus of up to 50% of
his base compensation. Base compensation is reviewed annually and may be in the
future increased (but not decreased) by the Board of Directors in its
discretion. Mr. McGregor's current annual base salary is $240,000. If during the
term of his employment agreement, Mr. McGregor is terminated by the Company for
any reason other than for cause, or if he terminates his employment because of a
material breach by the Company or following a change of control of the Company,
he will be entitled to severance compensation equal to two times his base
compensation in effect at the time of termination payable in equal installments
over a 24-month period following termination; provided, however, that if
termination results from a change of control of the company, severance
compensation will be payable in a lump sum on the date of

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13

termination. Mr. McGregor is also subject to restrictions on competition during
the term of this agreement and, with certain exceptions, during the severance
period.

The Company has also entered into an employment agreement effective as of
July 1, 1995 with Mr. Evatt. Mr. Evatt's agreement originally provided that he
would serve as the Company's Chief Accounting Officer and Treasurer for a
three-year term commencing July 1, 1995, and thereafter for successive one-year
terms unless terminated 30 days prior to the commencement of an extension term.
Under the agreement, Mr. Evatt initially received base compensation of $105,000
per year and is eligible to participate in an incentive compensation plan
providing for cash bonuses up to 30% of his base compensation. Base compensation
is reviewed annually and has been (and may be in the future) increased (but not
decreased) by the Board of Directors in its discretion. Mr. Evatt's current
annual base salary is $142,000. If during the term of his agreement Mr. Evatt is
terminated by the Company for any reason other than for cause, or if Mr. Evatt
terminates his employment because of a material breach by the Company, he will
be entitled to receive severance compensation equal to his base compensation,
payable in equal installments over a 12-month period following the termination.
Mr. Evatt's agreement also contains restrictions on competition.

Mr. Hill has entered into an employment agreement with the Company for a
three-year term commencing on March 29, 1996 and continuing until March 29,
1999. Thereafter, the term will be automatically extended for successive
one-year terms unless terminated no later than 30 days prior to the commencement
of the next extension term. Under the agreement, Mr. Hill will receive a base
compensation of $180,000 per year and will be eligible for an additional annual
incentive bonus of up to 50% of his base compensation. Base compensation is
reviewed annually and has been (and may be in the future) increased (but not
decreased) by the Board of Directors in its discretion. Mr. Hill's current
annual base salary is $190,000. If during the term of his employment agreement,
Mr. Hill is terminated by the Company for any reason other than for cause, or if
he terminates his employment because of a material breach by the Company or
following a change of control of the Company, he will be entitled to severance
compensation equal to one and one-half (1 1/2) times his base compensation in
effect at the time of termination payable in equal installments over an 18-month
period following termination. Mr. Hill also is subject to restrictions on
competition during the term of his agreement and, with certain exceptions,
during the severance period.

The Company has also entered into an employment agreement as of July 1,
1995 with Mr. Laidley. Mr. Laidley's agreement provides that he will serve as
President of Yale E. Key, Inc., a wholly owned subsidiary of the Company ("Yale
E. Key"), for a three-year term commencing July 1, 1995, and thereafter for
successive one-year terms unless terminated 30 days prior to the commencement of
an extension term, receive base compensation of $192,000 per year (subject to
increase), participate in an incentive compensation plan providing for cash
bonuses up to 50% of base compensation, and receive stock options under the
Option Plan. If during the term of his agreement Mr. Laidley is terminated for
any reason other than for cause or if he terminates his employment because of a
material breach by Yale E. Key or following a change of control of Yale E. Key,
he will be entitled to severance compensation equal to one and one-half (1 1/2)
times his base compensation, payable in equal installments over an 18-month
period following termination. Mr. Laidley's agreement contains restrictions on
competition.

OTHER COMPENSATION

The Company has no other deferred compensation, pension or retirement plans
in which executive officers participate.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

10
14

$600,000 of which was paid by Odessa upon consummation of the agreement and
$400,000 of which is payable in equal quarterly installments over the next two
years. Marcum Natural Gas also granted Odessa a right of first refusal to
participate in future projects developed by Marcum Gas Transmission on terms and
conditions identical to those provided to Marcum Gas Transmission.

COMPENSATION COMMITTEE REPORT

The Compensation Committee is responsible for establishing the Company's
compensation philosophy and policies, setting the terms of and administering its
option plans, reviewing and approving employment contracts and salary
recommendations for executive officers and setting the compensation for the
Chief Executive Officer. The Company's overall compensation philosophy is to
align the financial interests of management with those of the Company's
stockholders, taking into account the Company's expectations for growth and
profitability, the necessity to attract and retain the best possible executive
talent and to reward its executives commensurate with their ability to enhance
stockholder value. Accordingly, employment agreements with the executive
officers approved by the Compensation Committee provide for compensation
consisting of base salary, participation in an incentive compensation plan based
upon performance and stock options and other stock-based awards. The
Compensation Committee's decision to adopt the 1997 Incentive Plan and the prior
stock-based incentive plans, was taken, in part, to align more closely the
financial interests of executive officers and key employees with those of the
Company's stockholders. The Compensation Committee believes that providing
executives with opportunities to acquire significant stakes in the Company's
growth and prosperity through grants of stock options and other incentive awards
will enable the Company to attract and retain executives with the outstanding
managerial abilities essential to the Company's success, motivate these
executives to perform to their full potential and enhance stockholder value.

In approving base and incentive compensation levels for executive officers,
the Compensation Committee has considered the actual results of operations with
the Company's internal projections and target levels for revenues, income before
taxes and extraordinary items, net income and earnings per share. The
Compensation Committee determined that in each of the three years ended June 30,
1998, the Company exceeded its internal projections and target levels. The
Compensation Committee believes that during this three-year period, salary
increases and bonuses had been conservative and modest compared with the
Company's performance, in large part due to the Compensation Committee's and the
Board of Directors' conservative approach following the Company's successful
reorganization in December 1992.

The employment agreements with the Company's executive officers allow for
significant bonuses in future years pursuant to the Company's management
incentive bonus plan. Bonus awards under such plan are based upon achieving
certain earnings goals and the attainment of individual qualitative goals
relating to the employee's position and responsibilities. The Board of Directors
determines the Company's overall earnings goals and, with the review and
approval of the Compensation Committee, the Chief Executive Officer sets the
earnings and individual qualitative goals for the Company's operating
subsidiaries.

Fiscal year 1998 compensation for Mr. John as Chief Executive Officer and
Chief Financial Officer consisted of a base salary of $395,000. Mr. John's base
salary was set under the terms of his employment agreement. Mr. John's fiscal
1998 compensation was determined after consideration and analysis of, among
other things, the Company's three year performance history and the relationship
of the Company's performance to internal projections and targets, all of which
were exceeded; the modest salary increases and conservative bonuses paid to Mr.
John during the three year period prior to fiscal 1997; average cash and other
compensation and equity positions of chief executive officers of selected
companies deemed by the Compensation Committee to be comparable; Mr. John's
central role in the Company's successful reorganization and operating results
since the reorganization; the Company's deferral of payment of emergence or
success bonuses to Mr. John; the fact that Mr. John has identified, negotiated
and structured numerous beneficial acquisitions and financings without payment
of investment banking or finders' fees or receipt of bonuses with respect
thereto; and Mr. John's agreement to forego designated and committed awards
under the Company's previously existing stock-based incentive plans.

11
15

Since the Company's reorganization in December 1992, total Stockholder
value has increased from a negative net worth of $5.6 million at November 30,
1992 to a positive net worth of $154.9 million at June 30, 1998. In addition to
leading the Company through its critical post-reorganization period, Mr. John
strengthened the Company's position through strategic acquisitions, and by
negotiating and structuring the Company's financings. Corporate overhead has
remained low and staffing patterns lean. In these and other initiatives, Mr.
John has enhanced the Company's ability to compete effectively and has
positioned the Company to participate in future growth in the industry and to
enhance stockholder value.

The Compensation Committee believes that its current policies have been and
will continue to be successful in aligning the financial interests of executive
officers with those of the Company's stockholders and the Company's performance.
Nevertheless, the Compensation Committee intends to continue to review whether
and how to modify its policies to further link executive compensation with both
individual and Company performance.

William Manly
W. Phillip Marcum
Morton Wolkowitz

COMPARATIVE PERFORMANCE GRAPH

Set forth below is a chart comparing the yearly change in the Company's
Common Stock against the S&P 500 Index and a peer group comprised of six of the
Company's competitors (the "Peer Group").

Key S&P 500 Peer Group (2)

1993(1) 100.00 100.00 100.00
1994 129.41 101.41 79.97
1995 117.65 127.84 84.04
1996 194.12 161.08 156.74
1997 419.11 216.98 260.81
1998 308.82 282.42 209.42

- ---------------
(1) All values for the Company and the Peer Group are as of June 30 of the year
presented.

(2) Peer Group consists of Dawson Production Services, Inc., Pool Energy
Services Company, Grey Wolf, Inc.(formerly DI Industries, Inc.), Nabors
Industries, Inc., Patterson Energy, Inc. and UTI Energy, Inc. Values are
adjusted for dividends, when applicable.

12
16

CERTAIN TRANSACTIONS

In order to assist Francis D. John, the Chairman of the Board, President
and Chief Executive Officer of the Company, with the acquisition of and
relocation to a new primary residence, the Company has provided to Mr. John
interim or bridge loans in the aggregate amount of $2,350,000 pending Mr. John
obtaining a mortgage financing from a financial institution, or other third
party lender, or otherwise arranging for the repayment of such loans. Mr. John's
indebtedness to the Company is evidenced by three (3) notes payable to the
Company on demand, which bear interest on the principal balance outstanding
thereunder at the rate equal to 125 basis points above the most recently
published "London Interbank Offered Rates (LIBOR)" for one month contracts,
redetermined on each monthly anniversary of the dates thereof. The notes provide
that interest is due and payable upon the payment of any principal thereunder in
the amount equal to accrued and unpaid interest calculated as described above on
the amount of the principal payment being made. Payment of the notes is secured
by a mortgage on the property in question executed by Mr. John in favor of the
Company.

Effective as of July 1, 1997, WellTech Eastern Inc., a wholly owned
subsidiary of the Company ("WellTech Eastern"), entered into three real property
leases with HIDCO Development Company, an entity in which Kenneth C. Hill, who
served as a Vice President of the Company for a portion of the 1998 fiscal year,
owns an interest. Each lease is a standard form triple-net lease, providing for
a five-year term and monthly rental payments of $3,000. The leases enable
WellTech Eastern to operate yards in Ripley, West Virginia, Indiana,
Pennsylvania and Mt. Pleasant, Michigan.

On January 6, 1998, Marcum Natural Gas Services, Inc. ("Marcum Natural
Gas"), a diversified provider of products and services to the natural gas
industry and a company for which W. Phillip Marcum, one of the Directors of the
Company, serves as Chairman of the Board, President and Chief Executive Officer,
sold certain assets held by its wholly owned subsidiary, Marcum Gas
Transmission, Inc. ("Marcum Gas Transmission"), to Odessa Incorporated, a wholly
owned subsidiary of the Company ("Odessa"). Marcum Natural Gas sold the assets
for a total consideration of $1,000,000, $600,000 of which was paid by Odessa
upon consummation of the agreement and $400,000 of which is payable in equal
quarterly installments over the next two years. Marcum Natural Gas also granted
Odessa a right of first refusal to participate in future projects developed by
Marcum Gas Transmission on terms and conditions identical to those provided to
Marcum Gas Transmission.

During fiscal year 1998, the Company deposited $350,000 in a money market
account as collateral to secure a bank loan made to a business entity in which
Danny R. Evatt, Chief Information Officer and Vice President of Financial
Operations of the Company, owns an interest. Such amount is still on deposit as
collateral for the loan.

AUDITORS

KPMG Peat Marwick LLP ("Peat Marwick"), certified public accounting firm,
has served as the Company's independent auditor for several years. Although
management anticipates that this relationship will continue during fiscal 1999,
no formal action is proposed to be taken at the Annual Meeting with respect to
the continued employment of Peat Marwick inasmuch as no such action is legally
required. A representative of Peat Marwick plans to attend the Annual Meeting
and will be available to answer appropriate questions. The representative also
will have an opportunity to make a statement at the Annual Meeting if he so
desires, although it is not expected that any statement will be made.

The Audit Committee of the Board of Directors assists the Board of
Directors in assuring that the Company's accounting and reporting practices are
in accordance with applicable requirements. The Audit Committee reviews with the
auditors the scope of the proposed audit work and meets with the auditors to
discuss matters pertaining to the audit and any other matter that the Audit
Committee or the auditors may wish to discuss. In addition, the Audit Committee
would recommend the appointment of new auditors to the Board of Directors if
future circumstances were to indicate that such action is desirable.

13
17

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who beneficially own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership on Form 3 and changes in ownership on Forms 4 or 5 with the Securities
and Exchange Commission (the "Commission"). Such officers, directors and 10%
stockholders also are required by Commission rules to furnish the Company with
copies of all Section 16(a) reports they file. Based solely on its review of the
copies of such forms received by it, the Company is not aware of any failure,
during the fiscal year ended June 30, 1998 or prior fiscal years, by its
Directors, executive officers or 10% stockholders to comply with Section 16(a)
filing requirements applicable to such individuals, other than with respect to
three transactions consummated by Mr. Manly that should have been reported in
1992 and 1993. These transactions, which were reported by Mr. Manly on a Form 5
filed on August 14, 1998, were as follows: the purchase of 1,011 shares on
December 11, 1992, the purchase of 1,520 shares on January 6, 1993, and the
purchase of 178 shares on an unknown date.

LIMITATION ON INCORPORATION BY REFERENCE

Notwithstanding any reference in prior or future filings by the Company
with the Commission that purport to incorporate this Proxy Statement by
reference into another filing, such incorporation shall not include any material
herein under the captions "Other Information -- Compensation Committee Report"
or "Other Information -- Comparative Performance Graph."

OTHER MATTERS

The Board of Directors does not know of any other matters that may come
before the Annual Meeting; however, if any other matters are properly presented
to the Annual Meeting, the persons named in the accompanying proxy intend to
vote, or otherwise act, in accordance with their best judgment on such matters.

The Company expects to hold its 1999 Annual Meeting on or about December 7,
1999. A Stockholder who intends to present a proposal at the 1999 Annual Meeting
of Stockholders for inclusion in the Company's 1999 proxy statement relating to
that meeting must submit such proposal by July 9, 1999. For the proposal to be
included in the proxy statement, the Stockholder submitting the proposal must
meet certain eligibility standards and comply with certain procedures
established by the Commission, and the proposal must comply with the
requirements as to form and substance established by applicable laws and
regulations. The proposal must be mailed to the Company's principal executive
office, at the address stated herein, and should be directed to the attention of
the General Counsel.

The Company's Annual Report to Stockholders covering the fiscal year ended
June 30, 1998 has been mailed to each Stockholder entitled to vote at the Annual
Meeting or accompanies this Proxy Statement.

By Order of the Board of Directors

Francis D. John
Chairman of the Board, President and
Chief Executive Officer

November , 1998

14
18

EXHIBIT A

ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
KEY ENERGY GROUP, INC.

Key Energy Group, Inc., a Maryland corporation (the "Corporation"),
certifies to the Maryland Department of Assessments and Taxation as follows:

(1) The Corporation desires to amend its Amended and Restated Articles of
Incorporation as are currently in effect (the "Articles of
Incorporation") in accordance with Section 2-601 and 2-602 of the
Maryland General Corporation Law.

(2) These Articles of Amendment amend Article SECOND of the Amended and
Restated Articles of Incorporation of the Corporation.

(3) The Board of Directors of the Corporation, by unanimous written consent
effective as of October 30, 1998, adopted a resolution that these
Articles of Amendment shall be submitted for shareholder approval as
being advisable and in the best interests of the Corporation.

(4) These Articles of Amendment were duly adopted by the stockholders of
the Corporation in accordance with Section 2-604 of the Maryland
General Corporation Law at the Corporation's Annual Meeting held on
December 8, 1998.

Article SECOND of the Amended and Restated Articles of Incorporation is
amended to read in its entirety as follows:

SECOND: The name of the corporation is:

KEY ENERGY SERVICES, INC.

IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed in its name and on its behalf by its President and witnessed by its
Secretary on December , 1998.

- -------------------------------------------- --------------------------------------------
Jack D. Loftis, Jr., Secretary Francis D. John, President

THE UNDERSIGNED, President of Key Energy Services, Inc., who executed on
behalf of the Corporation these Articles of Amendment, hereby acknowledges in
the name and on behalf of the Corporation that the foregoing Articles of
Amendment are to be the corporate act of the Corporation and hereby certifies
that the matters and facts set forth herein with respect to authorization and
approval thereof are true in all material respects under the penalties of
perjury.

------------------------------------
Francis D. John, President

15
19
PROXY
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
KEY ENERGY GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 8, 1998

The undersigned Stockholder of Key Energy Group, Inc. (the "Company" or
"KEG") hereby constitutes and appoints Francis D. John and Jack D. Loftis, Jr.,
and each of them singly, proxies and attorneys of the undersigned, with full
power of substitution to each, for and in the name of the undersigned to vote
and act upon all matters (unless and except as expressly limited below) at the
Annual Meeting of Stockholders to be held on Tuesday, December 8, 1998, at Two
Tower Center, 20th Floor, East Brunswick, New Jersey 08816, at 11:00a.m. local
time, and at any and all adjournments thereof, in respect of all shares of the
Common Stock, par value $.01 per share, of the Company held by the undersigned
or in respect of which the undersigned would be entitled to vote or act, with
all the powers the undersigned would possess if personally present. All proxies
heretofore given by the undersigned in respect of said meeting are hereby
revoked.

ITEM 1. To elect Directors:
FOR ELECTING ALL NOMINEES WITHHOLD AUTHORITY
(except for person(s) whose name(s) To vote for all nominees listed / /
is (are) written below) / /

Nominees: Francis D. John, David J. Breazzano, Kevin P. Collins, William Manly,
W. Phillip Marcum and Morton Wolkowitz

INSTRUCTION: To withhold authority to vote for any individual nominee, write
that person's name here:

- --------------------------------------------------------------------------------
(Continued and to be Signed on Reverse Side)

ITEM 2: To ratify the Amendment to the Company's Amended and Restated Articles
of Incorporation to change the Company's name to Key Energy Services, Inc.

/ / FOR / /AGAINST / /ABSTAIN

Specify desired action by check marks in the appropriate spaces. This
Proxy will be voted as specified. If no specification is made, the Proxy will be
voted for the nominees named in the Proxy Statement and in favor of Item 2. The
persons named proxies have discretionary authority that they intend to exercise
in favor of the proposals referred to and according to their best judgment as to
other matters that properly come before the meeting or any adjournment thereof.

Dated:________________________________
Please Print name
Of Stockholder here:_____________________
Please sign here:________________________

The signature on this Proxy should
correspond exactly With the Stockholder's
name as printed above. In the Case of joint
tenancies, coexecutors, or co-trustees, both
should sign. Persons signing as Attorney,
Executor, Administrator, Trustee or Guardian
should Give their full title.

(Please complete, sign, date and return this
Proxy in The enclosed envelope as soon as
possible.)