AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 2003
REGISTRATION NO. 333- 102874
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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KEY ENERGY SERVICES, INC.
Co-registrants are listed on the following pages.
(Exact name of registrant as specified in its charter)
MARYLAND 1381 04-2648081
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
6 DESTA DRIVE
MIDLAND, TEXAS 79705
(915) 620-0300
(Address, including zip code, and telephone number, including area code, of registrant's principal
executive offices)
FRANCIS D. JOHN
400 SOUTH RIVER ROAD
NEW HOPE, PENNSYLVANIA 18938
(215) 862-7900
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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COPIES TO:
JACK D. LOFTIS, JR. SAMUEL N. ALLEN
KEY ENERGY SERVICES, INC. PORTER & HEDGES, L.L.P.
400 SOUTH RIVER ROAD 700 LOUISIANA, 35TH FLOOR
NEW HOPE, PENNSYLVANIA 18938 HOUSTON, TEXAS 77002
(215) 862-7900 (713) 226-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANTS
UNDER REGISTRATION STATEMENT ON FORM S-3
The following subsidiaries of Key Energy Services, Inc. are co-registrants
under this Registration Statement for the purpose of providing guarantees, if
any, of payments on debt securities registered hereunder:
JURISDICTION OF I.R.S.
NAME INCORPORATION IDENTIFICATION
---- --------------- --------------
AES Acquisition, L.P........................................ Texas 76-0684876
Brooks Well Servicing Beneficial, L.P....................... Texas 46-0473384
Brooks Well Servicing, Inc.................................. Delaware 75-2739749
Brooks Well Servicing, LLC.................................. Delaware 48-1253652
Dawson Production Acquisition Corp.......................... Delaware 52-2022906
Dawson Production Management, Inc........................... Delaware 76-0525388
Dawson Production Partners, L.P............................. Delaware 76-0525389
Dawson Production Taylor, Inc............................... Delaware 52-2045563
Kalkaska Oilfield Services, Inc............................. Michigan 38-3083604
Key Energy Drilling Beneficial, L.P......................... Texas 46-0473380
Key Energy Drilling, Inc.................................... Delaware 22-3363468
Key Energy Drilling, LLC.................................... Delaware 43-1955835
Key Energy Services--California, Inc........................ Delaware 22-3617958
Key Energy Services--South Texas, Inc....................... Delaware 22-3594553
Key Four Corners, Inc....................................... Delaware 22-3530274
Key Rocky Mountain, Inc..................................... Delaware 22-3530272
MISR Key Energy Services, LLC............................... Delaware 42-1537527
Odessa Exploration Incorporated............................. Delaware 06-1377021
Q Energy Services, L.L.C.................................... Delaware 51-0414081
Q Oil & Gas Services, LLC................................... Texas 76-0693508
Q Production Services, L.P.................................. Texas 76-0678192
Q Services, Inc............................................. Texas 76-0550630
Q.V. Services, Inc.......................................... Texas 76-0472475
Q.V. Services, LLC.......................................... Delaware 33-1039536
Q.V. Services Beneficial, L.P............................... Texas 14-1866909
Q.V. Services of Texas, L.P................................. Texas 76-0516897
Quality Oil Field Services, L.P............................. Texas 75-2562835
Quality Tubular Services, L.P............................... Texas 76-0399390
Unitrak Services Holding, Inc............................... Texas 01-0728555
Unitrak Services, L.P....................................... Texas 01-0728561
Unitrak Services, LLC....................................... Delaware 30-0092733
Watson Oilfield Service & Supply, Inc....................... Delaware 22-3582713
Well-Co Oil Service, Inc.................................... Nevada 75-2513771
WellTech Eastern, Inc....................................... Delaware 38-3283245
WellTech Mid-Continent Beneficial, LP....................... Texas 46-0473376
WellTech Mid-Continent, Inc................................. Delaware 73-1532154
WellTech Mid-Continent, LLC................................. Delaware 71-0874911
Yale E. Key Beneficial, LP.................................. Texas 46-0473368
Yale E. Key, Inc............................................ Texas 75-1074929
Yale E. Key, LLC............................................ Delaware 71-0874913
SUBJECT TO COMPLETION, DATED APRIL 10, 2003
The information in this prospectus is not complete and may be changed. We may
not offer these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
[ KEY LOGO ]
$500,000,000
KEY ENERGY SERVICES, INC.
Common Stock
Debt Securities
Preferred Stock
Warrants
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We may offer and sell from time to time:
- common stock;
- debt securities;
- preferred stock; and
- warrants.
We will provide specific terms of the securities and each offering in a
supplement to this prospectus. The prospectus supplement also may add, update or
change information in this prospectus.
Our common stock is listed and traded on the New York Stock Exchange under
the symbol "KEG."
PLEASE READ AND CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 3 IN
THIS PROSPECTUS.
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Neither the SEC nor any state securities commission has approved these
securities or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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This prospectus is dated , 2003.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN
OFFER TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
TABLE OF CONTENTS
SECTION PAGE
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About This Prospectus....................................... 1
Key Energy Services, Inc.................................... 1
Risk Factors................................................ 3
Forward-Looking Statements.................................. 8
Where You Can Find More Information......................... 9
Use of Proceeds............................................. 10
Ratio of Earnings to Fixed Charges.......................... 10
Selected Financial Data..................................... 11
Description of Debt Securities.............................. 12
Description of Capital Stock................................ 17
Description of Warrants..................................... 19
Plan of Distribution........................................ 20
Legal Matters............................................... 22
Experts..................................................... 22
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission under a "shelf" registration process.
Using this process, we may offer the securities this prospectus describes in one
or more offerings with a total initial offering price of up to $500,000,000.
This prospectus provides you with a general description of the securities we may
offer. Each time we use this prospectus to offer securities, we will provide a
prospectus supplement and, if applicable, a pricing supplement. The prospectus
supplement and any pricing supplement will describe the specific terms of that
offering. The prospectus supplement and any pricing supplement may also add to,
update or change the information in this prospectus. Please carefully read this
prospectus, the prospectus supplement and any pricing supplement, in addition to
the information contained in the documents we refer to under the heading "Where
You Can Find More Information."
KEY ENERGY SERVICES, INC.
Based on the number of rigs we own and available industry data, we are the
largest onshore, rig-based well servicing contractor in the world. We provide a
complete range of well services to major oil companies and independent oil and
natural gas production companies, including:
- rig-based well maintenance, workover services to restore or increase
production on a well, completion services required on a well before
production starts, and recompletion services, including horizontal
recompletions, necessary to re-enter a well to complete production in a
new zone or formation;
- well intervention services, including services provided in connection with
the recovery of tools and other equipment that has been lost or become
trapped in a well and the rental of equipment used in the drilling,
completion and workover of a well;
- oilfield trucking services, including the hauling of equipment from one
wellsite to another, the transportation and disposal of various liquid
by-products produced by oil and natural gas wells and the transportation
and injection of fluids used to clear restrictions in a wellbore; and
- ancillary oilfield services.
We conduct well servicing operations onshore internationally in Argentina,
Egypt and in Ontario, Canada and in the following regions of the continental
United States:
- Gulf Coast (including South Texas, Central Gulf Coast of Texas and South
Louisiana);
- Permian Basin of West Texas and Eastern New Mexico;
- Mid-Continent (including the Anadarko, Hugoton, Arkoma and Fort Worth
Basins and the ArkLaTex region);
- Four Corners (including the San Juan, Piceance, Uinta and Paradox Basins);
- Eastern (including the Appalachian, Michigan and Illinois Basins);
- Rocky Mountains (including the Denver-Julesberg, Powder River, Wind River,
Green River and Williston Basins); and
- California (the San Joaquin Basin).
Based on the number of rigs we own and available industry data, we are also
a leading onshore drilling contractor. We conduct land drilling operations in a
number of major domestic producing basins, as well as in Argentina, Egypt and in
Ontario, Canada. In addition to our other businesses, we also produce and
develop oil and natural gas reserves in the Permian Basin region and Texas
Panhandle.
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We have built our leadership position in part through the acquisition and
consolidation of small, regional well service companies. We have also
implemented a strategy, which has contributed to our position within the
industry, to:
- improve our balance sheet and reduce our level of debt;
- build strong customer relationships by offering a broad range of equipment
and services that will meet most of our customer's needs at the wellsite;
- maximize utilization of our rig fleet by actively refurbishing our rigs
and related equipment; and
- train and professionally develop our employees, with an emphasis on
safety.
Our principal executive offices are located at 6 Desta Drive, Midland, Texas
79705, and our phone number is (915) 620-0300.
2
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS DESCRIBED BELOW AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR SECURITIES.
OTHER RISKS FACING OUR COMPANY OR RELATED TO EACH OFFERING MAY ALSO BE INCLUDED
IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND WE URGE YOU TO READ CAREFULLY ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT BEFORE YOU MAKE YOUR DECISION TO INVEST IN
OUR SECURITIES.
OUR BUSINESS IS DEPENDENT ON CONDITIONS IN THE OIL AND NATURAL GAS INDUSTRY,
ESPECIALLY THE CAPITAL EXPENDITURES OF OIL AND NATURAL GAS COMPANIES.
The demand for our services is primarily influenced by current and
anticipated oil and natural gas prices. Prices for oil and natural gas
historically have been extremely volatile and have reacted to changes in the
supply of and demand for oil and natural gas (including changes resulting from
the ability of the Organization of Petroleum Exporting Countries to establish
and maintain production quotas for oil prices), domestic and worldwide economic
conditions and political instability in oil producing countries. Weakness in oil
and natural gas prices (or the perception by our customers that oil and natural
gas prices will decrease) may cause lower rates and lower utilization of
available well service equipment. In addition, when oil and natural gas prices
are weak, or when our customers expect oil and natural gas prices to decrease,
fewer wells are drilled, resulting in less drilling and less maintenance work
for us. Additional factors that affect demand for our services include:
- the level of development, exploration and production activity of, and
corresponding spending by, oil and natural gas companies;
- oil and natural gas production costs;
- government regulation; and
- conditions in the worldwide oil and natural gas industry.
In addition, we anticipate that prices for oil and natural gas will continue
to be volatile and affect the demand for and pricing of our services. Decreases
in oil and natural gas prices can result in a reduction in the trading prices
and value of our securities, even if the decreases in oil and natural gas prices
do not affect our business generally. However, a material decline in oil or
natural gas prices or activities over a sustained period of time could
materially adversely affect the demand for our services and, therefore, our
results of operations and financial condition.
Periods of diminished or weakened demand for our services have occurred in
the past. Although we experienced a decrease in the demand for our services
beginning in August 2001, and continuing through September 2002, we have
recently seen modest improvement in the demand for our services. We believe the
decrease in demand was due to an overall weakening of demand for onshore well
services, which was attributable to general uncertainty about future oil and
nature gas prices and the U.S. economy. If these conditions return, demand for
our services could again decrease, having a material adverse effect on our
financial condition and results of operations. In light of these and other
factors relating to the oil and natural gas industry, our historical operating
results may not be indicative of future performance.
AN ECONOMIC DOWNTURN MAY ADVERSELY AFFECT OUR BUSINESS.
The United States economy is currently believed to be in a recession. An
economic downturn may cause reduced demand for petroleum-based products and
natural gas. In addition, many oil and natural gas production companies often
reduce or delay expenditures to reduce costs, which in turn may cause a
reduction in the demand for our services during these periods. According to
available industry data, in July 2001, there were approximately 1,293 active
drilling rigs in the United States. As of April 4, 2003, the number of active
drilling rigs had been reduced to 972. The number of active drilling rigs
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may be indicative of demands for services such as those we provide. If the
economic environment worsens, our business, financial condition and results of
operations may be further adversely impacted.
OUR BUSINESS INVOLVES CERTAIN OPERATING RISKS, WHICH ARE PRIMARILY SELF-INSURED,
AND OUR INSURANCE MAY NOT BE ADEQUATE TO COVER ALL LOSSES OR LIABILITIES WE
MIGHT INCUR IN OUR OPERATIONS.
Our operations are subject to many hazards and risks, including the
following:
- blow-outs, the uncontrolled flow of natural gas, oil or other well fluids
into the atmosphere or an underground formation;
- reservoir damage;
- loss of well control;
- collapse of the area around the wellbore;
- fires and explosions;
- accidents resulting in serious bodily injury and the loss of life or
property;
- pollution and other damage to the environment; and
- liabilities from accident or damage by our fleet of trucks.
If these hazards occur they could result in suspension of operations, damage
to or destruction of our equipment and the property of others and injury or
death to personnel.
We self insure a significant portion of these liabilities. For losses in
excess of our self-insurance limits, we maintain insurance from unrelated
commercial carriers. However, our insurance may not be adequate to cover all
losses or liabilities that we might incur in our operations. Furthermore, our
insurance may not adequately protect us against liability from all of the
hazards of our business. Moreover, we also are subject to the risk that we may
not be able to maintain or obtain insurance of the type and amount we desire at
a reasonable cost. If we were to incur a significant liability for which we are
uninsured or for which we were not fully insured it could have a material
adverse effect on our financial position and results of operations.
WE ARE SUBJECT TO THE ECONOMIC, POLITICAL AND SOCIAL INSTABILITY RISKS OF DOING
BUSINESS IN CERTAIN FOREIGN COUNTRIES.
We have operations in Argentina, Egypt and Canada, and may expand our
operations into other foreign countries. As a result, we are exposed to risks of
international operations, including:
- increased governmental ownership and regulation of the economy in the
markets where we operate;
- inflation and adverse economic conditions stemming from governmental
attempts to reduce inflation, such as imposition of higher interest rates
and wage and price controls;
- increased trade barriers, such as higher tariffs and taxes on imports of
commodity products;
- exchange controls or other currency restrictions;
- war, civil unrest or significant political instability;
- expropriation, confiscatory taxation and nationalization of our assets
located in the markets where we operate; and
- governmental policies limiting returns to foreign investors.
4
The occurrence of one or more of these risks may:
- negatively impact our results of operations;
- restrict the movement of funds;
- inhibit our ability to collect receivables; and
- lead to U.S. government or international sanctions.
WE HISTORICALLY HAVE EXPERIENCED A HIGH EMPLOYEE TURNOVER RATE. ANY DIFFICULTY
WE EXPERIENCE REPLACING OR ADDING WORKERS COULD ADVERSELY AFFECT OUR BUSINESS.
We historically have experienced an annual employee turnover rate of over
50%. The high turnover rate is caused by the nature of the work, which is
physically demanding and performed outdoors. As a result, workers may choose to
pursue employment in fields that offer a more desirable work environment at wage
rates that are competitive with ours. We cannot assure that at times of high
demand we will be able to retain, recruit and train an adequate number of
workers. Potential inability or lack of desire by workers to commute to our
facilities and job sites and competition for workers from other industries are
factors that could affect our ability to attract and retain workers. We believe
that our wage rates are competitive with the wage rates of our competitors and
other potential employers. A significant increase in the wages other employers
pay could result in a reduction in our workforce, increases in our wage rates,
or both. Either of these events could diminish our profitability and growth
potential.
WE ARE SUBJECT TO ENVIRONMENTAL, HEALTH AND SAFETY LAWS AND REGULATIONS THAT
EXPOSE US TO POTENTIAL LIABILITY.
Our operations are regulated under a number of foreign, federal, state and
local laws that govern, among other things, the handling, storage and disposal
of waste materials, some of which are classified as hazardous substances, and
the discharge of hazardous materials into the environment. Our operations are
subject to stringent regulations relating to protection of the environment and
waste handling. In addition to potential liability if we should fail to comply,
these regulations may expose us to liability for noncompliance of other parties,
without regard to whether we were negligent. Sanctions for noncompliance with
applicable environmental laws and regulations may include administrative, civil
and criminal penalties, revocation of permits and corrective action orders.
Furthermore, we may be liable for costs for environmental clean-up at currently
or previously owned or operated properties or off-site locations where we sent,
disposed of, or arranged for disposal of hazardous materials. Compliance with
existing laws or regulations, the adoption of new laws or regulations or the
more vigorous enforcement of environmental laws or regulations could have a
material adverse effect on our operations by increasing our expenses and
limiting our future business opportunities.
WE HAVE A SIGNIFICANT AMOUNT OF INDEBTEDNESS AND COULD INCUR ADDITIONAL
INDEBTEDNESS, WHICH COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND BUSINESS PROSPECTS AND PREVENT US FROM FULFILLING OUR
OBLIGATIONS UNDER OUR OUTSTANDING INDEBTEDNESS.
We had approximately $493.6 million of long-term indebtedness and capital
lease obligations outstanding at December 31, 2002. We are permitted under our
senior credit facility and the indentures governing our public debt securities
to incur additional debt, subject to certain limitations. If we incur additional
debt, our increased leverage could, for example:
- make it more difficult for us to satisfy our obligations under our public
debt securities or other indebtedness and, if we fail to comply with the
requirements of the other indebtedness, that failure could result in an
event of default on our public debt securities or such other indebtedness;
5
- require us to dedicate a substantial portion of our cash flow from
operations to required payments on indebtedness, thereby reducing the
availability of cash flow for working capital, capital expenditures and
other general business activities;
- limit our ability to obtain additional financing in the future for working
capital, capital expenditures and other general corporate activities;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- detract from our ability to successfully withstand a downturn in our
business or the economy generally; and
- place us at a competitive disadvantage against less leveraged competitors.
If new debt is added to our and our subsidiaries' current debt levels, the
related risks that we and they now face could increase.
WE MAY NOT BE ABLE TO GENERATE SIGNIFICANT CASH FLOW TO MEET OUR DEBT SERVICE
OBLIGATIONS.
Our ability to make payments on and to refinance our indebtedness, and to
fund planned capital expenditures, will depend on our ability to generate cash
in the future. This, to a certain extent, is subject to general economic and
financial conditions, competition in the markets where we operate, the impact of
legislative and regulatory actions on how we conduct our business and other
factors that are beyond our control.
We cannot assure you that our business will generate sufficient cash flow
from operations to service our outstanding indebtedness, or that future
borrowings will be available to us under our senior credit facility in an amount
sufficient to enable us to pay our indebtedness or to fund our other capital
needs. We may need to refinance all or a portion of our existing indebtedness on
or before maturity. We cannot assure you that we will be able to refinance any
of our indebtedness, including our senior credit facility, on commercially
reasonable terms or at all. If our business does not generate sufficient cash
flow from operations to service our outstanding indebtedness and we are not able
to refinance our indebtedness, including our senior credit facility, we may not
be able to continue to implement our business strategy as it relates to
strengthening our balance sheet by reducing debt and remanufacturing our rigs
and related equipment.
OUR DEBT INSTRUMENTS IMPOSE RESTRICTIONS ON US THAT MAY AFFECT OUR ABILITY TO
SUCCESSFULLY OPERATE OUR BUSINESS.
Our senior credit facility and the terms of the indentures for our public
debt securities limit our ability to take various actions, such as:
- incurring additional indebtedness;
- paying dividends;
- repurchasing junior indebtedness;
- making investments;
- entering into transactions with affiliates;
- merging or consolidating with other entities; and
- selling all or substantially all of our assets.
In addition, our senior credit facility requires us to maintain certain
financial covenant ratios and satisfy certain financial condition tests, several
of which become more restrictive over time and may require us to take action to
reduce our debt or take some other action in order to comply with them.
6
These restrictions also could limit our ability to obtain future financings,
make needed capital expenditures, withstand a downturn in our business or the
economy in general, or otherwise conduct necessary corporate activities. We also
may be prevented from taking advantage of business opportunities that arise
because of the limitations imposed on us by the restrictive covenants under our
senior credit facility and the indentures.
WE HAVE PURSUED AND CONTINUE TO PURSUE STRATEGIC ACQUISITIONS. OUR BUSINESS MAY
BE ADVERSELY AFFECTED IF WE CANNOT EFFECTIVELY INTEGRATE ACQUIRED OPERATIONS.
A component of our strategy includes acquiring complementary businesses.
Acquisitions involve a number of risks and challenges including:
- our ability to integrate acquired operations;
- potential loss of key employees and customers of the acquired companies;
and
- an increase in our expenses and working capital requirements.
Any of these factors could adversely affect our ability to achieve
anticipated levels of earnings and cash flow from acquisitions or realize other
anticipated benefits. Furthermore, competition from other potential buyers could
reduce our acquisition opportunities or cause us to pay a higher price than we
otherwise might pay.
THE TRADING PRICE OF OUR SECURITIES COULD BE SUBJECT TO SIGNIFICANT
FLUCTUATIONS.
The trading price of our common stock has been volatile. Factors such as
announcements of fluctuations in our or our competitors' operating results and
market conditions for oil and gas related stocks in general could have a
significant impact on the future trading prices of our securities. In
particular, the trading price of the common stock of many oil and gas companies
has experienced extreme price and volume fluctuations, which have at times been
unrelated to the operating performance of the companies whose stocks were
affected. In addition, the trading prices and value of our securities could be
subject to significant fluctuations in response to variations in our prospects
and operating results, which may in turn be affected by weakness in oil prices,
changes in interest rates and other factors. There can be no assurance that
these factors will not have an adverse effect on the trading prices of our
securities.
SINCE ARTHUR ANDERSEN LLP ACTED AS THE INDEPENDENT AUDITOR FOR Q
SERVICES, INC., YOUR ABILITY TO SEEK REMEDIES AGAINST, OR RECOVER FROM, THEM
RELATED TO THEIR WORK WILL BE LIMITED.
On July 19, 2002, we acquired Q Services. The consolidated financial
statements of Q Services as of December 31, 2001 and for each of the three years
in the period ended December 31, 2001 incorporated by reference herein were
audited by Arthur Andersen LLP. After reasonable efforts, we have not been able
to obtain Arthur Andersen's consent to the incorporation by reference of its
audit report dated April 17, 2002 into this prospectus.
Under Rule 437a of the Securities Act, we can incorporate by reference Q
Services' financial statements into the registration statement, which includes
this prospectus, without Arthur Andersen's written consent. Accordingly, Arthur
Andersen, or its successors, is not subject to the liability provisions of
Section 11 of the Securities Act for its reports on Q Services' consolidated
financial statements because Arthur Andersen did not consent to being named as
having prepared or certified those financial statements within the meanings of
Section 7 and 11 of the Securities Act. Furthermore, your ability, if any, to
recover damages from Arthur Andersen is further limited as a result of Arthur
Andersen's discontinuation of operations.
7
FORWARD-LOOKING STATEMENTS
The statements made in this prospectus or in the documents we have
incorporated by reference that are not statements of historical fact are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act. Forward-looking statements
generally can be identified by the use of words such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe," or similar expressions.
Although we believe that the expectations in our forward-looking statements
are reasonable, we cannot give any assurance that those expectations will be
correct. Our operations are subject to numerous uncertainties, risks and other
influences, many of which are outside our control and any of which could
materially affect our results of operations and ultimately prove the statements
we make to be inaccurate. We caution you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this prospectus.
Future events and actual results may differ materially from the results set
forth in or implied in the forward-looking statements. Factors that might cause
such a difference include:
- fluctuations in world-wide prices and demand for oil and natural gas;
- fluctuations in level of oil and natural gas exploration and development
activities;
- fluctuations in the demand for well servicing, contract drilling and
ancillary oilfield services;
- the existence of competitors, technological changes and developments in
the industry;
- the existence of operating risks inherent in the well servicing, contract
drilling and ancillary oilfield services industries; and
- general economic conditions, the existence of regulatory uncertainties,
and the possibility of political instability in any of the countries in
which we do business, in addition to other matters discussed herein.
Other factors that could cause actual results to differ materially from our
expectations are discussed under the heading "Risk Factors."
8
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 (registration
no. 333-102874) with the SEC with respect to the securities we are offering.
This prospectus is a part of that registration statement, however, it does not
contain all the information contained in the registration statement, including
its exhibits and schedules. You should refer to the registration statement,
including the exhibits and schedules, for further information about us and the
securities we are offering. Statements we make in this prospectus about certain
contracts or other documents are not necessarily complete. When we make those
statements, we refer you to the copies of the contracts or documents that are
filed as exhibits to the registration statement, because those statements are
qualified in all respects by reference to those exhibits. The registration
statement, including exhibits and schedules, is on file at the offices of the
SEC and may be inspected without charge.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our filings, including the registration statement, are
available to the public over the Internet at the SEC's web site at
HTTP://WWW.SEC.GOV. You also may read and copy any document we file at the SEC's
public reference room in Washington, D. C. The SEC's public reference room in
Washington is located at 450 5th Street, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information about the public
reference room.
SEC rules allow us to "incorporate by reference" in this prospectus the
information we file with the SEC, which means we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered part of this prospectus from the date we
file that document. Any reports filed by us with the SEC after the date of this
prospectus and before we sell all of the securities offered through this
prospectus will automatically update and, where applicable, supersede any
information contained in this prospectus or incorporated by reference in this
prospectus. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act until we sell all of the securities covered by this
prospectus:
- Transition Report on Form 10-K for the six-month period ended
December 31, 2002, as amended by the Transition Report on Form 10-K/A
filed on April 10, 2003;
- Current Report on Form 8-K filed on January 31, 2003, and Form 8-K/A filed
on April 10, 2003; and
- The description of our common stock contained in the registration
statement on Form 8-A dated March 27, 1998 and 8-A/A dated December 9,
2002, including any future amendments or reports that have been filed to
update the description.
You may request a copy of these filings, which we will provide to you at no
cost, by writing or telephoning us at the following address and telephone
number:
Key Energy Services, Inc.
400 South River Road
New Hope, Pennsylvania 18938
Attn: General Counsel
(215) 862-7900
9
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we will use the
net proceeds from the sale of the offered securities for general corporate
purposes. These purposes may include acquisitions, working capital, capital
expenditures, repayment and refinancing of indebtedness and repurchases and
redemptions of securities. Pending any specific application, we may initially
invest those funds in short-term marketable securities or apply them to the
reduction of short-term indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of our earnings to our fixed charges for each of the periods
indicated is as follows:
FISCAL YEAR ENDED JUNE 30, SIX MONTHS
---------------------------------------------------------------- ENDED
1998 1999 2000 2001 2002 DECEMBER 31, 2002
---- ---- ---- ---- ---- -----------------
2.61 -- -- 2.68 2.25 --
For these ratios, earnings consist of income from continuing operations
before income taxes and fixed charges. Fixed charges consist of interest
expenses, amortization of debt issuance expenses and the portions of rentals and
lease obligations representative of the interest factor. For the years ending
June 30, 1999 and 2000, and the six months ended December 31, 2002, earnings
were insufficient to cover fixed charges by $78.9 million, $25.8 million, and
$3.4 million, respectively. There was no preferred stock outstanding for any of
the periods shown above.
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SELECTED FINANCIAL DATA
The following selected financial data is derived from our historical
consolidated financial statements and should be read in conjunction with our
historical financial statements and the notes to the financial statements
included in our transition report on Form 10-K/A for the six months ended
December 31, 2002, which is incorporated by reference.
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------------
2002(1) 2002 2001 2000 1999(2) 1998
------------ ---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues............................... $ 408,998 $ 802,564 $ 873,262 $ 637,732 $ 491,817 $424,543
Operating costs:
Direct costs......................... 288,945 554,773 582,154 471,169 374,308 296,328
Depreciation, depletion and
amortization....................... 51,111 78,265 75,147 70,972 62,074 31,001
General and administrative........... 48,239 59,494 60,118 51,637 56,156 36,933
Interest............................. 22,743 43,332 56,560 71,930 67,401 21,476
Foreign currency transaction loss,
Argentina.......................... -- 1,443 -- -- -- --
Debt issuance costs.................. -- -- -- -- 6,307 --
Restructuring charge................. -- -- -- -- 4,504 --
Gain (loss) on retirement of debt.... (18) 4,812 (684) (2,191) -- --
Income (loss) before income taxes,
minority interest, and cumulative
effect............................... (2,022) 60,445 99,967 (25,785) (78,933) 38,805
Net income (loss)...................... (4,376) 38,146 62,710 (18,959) (53,258) 24,175
INCOME (LOSS) PER COMMON SHARE:
Basic................................ $ (0.03) $ 0.36 $ 0.64 $ (0.23) $ (1.94) $ 1.41
Diluted.............................. $ (0.03) $ 0.35 $ 0.61 $ (0.23) $ (1.94) $ 1.23
Average common shares outstanding:
Basic................................ 125,367 105,766 98,195 83,815 27,501 17,153
Assuming full dilution............... 125,367 107,462 102,271 83,815 27,501 24,024
Common shares issued at period end..... 128,758 110,308 101,440 97,210 82,738 18,267
Market price per common share at period
end.................................. $ 8.97 $ 10.50 $ 10.84 $ 9.64 $ 3.56 $ 13.12
Cash dividends paid on common shares... -- -- -- -- -- --
BALANCE SHEET DATA:
Cash................................... $ 9,044 $ 54,147 $ 2,098 $ 109,873 $ 23,478 $ 25,265
Current assets......................... 175,574 192,073 206,150 253,589 132,543 127,557
Property and equipment................. 1,291,853 1,093,104 1,014,675 920,437 871,940 547,537
Property and equipment, net............ 956,505 808,900 793,716 760,561 769,562 499,152
Total assets........................... 1,502,002 1,242,995 1,228,284 1,246,265 1,148,138 698,640
Current liabilities.................... 108,875 96,628 115,553 92,848 73,151 48,029
Long-term debt, including current
portion.............................. 493,565 443,610 493,907 666,600 699,978 399,779
Stockholders' equity................... 696,368 536,866 476,878 382,887 288,094 154,928
OTHER DATA:
Net cash provided by (used in):
Operating activities................. 57,594 178,716 143,347 34,860 (13,427) 40,925
Investing activities................. (146,073) (108,749) (83,980) (37,766) (294,654) (306,339)
Financing activities................. 44,054 (17,315) (167,142) 89,301 306,294 248,975
Working capital.......................... 66,699 95,445 90,597 160,741 59,392 79,528
Book value per common share(3)........... $ 5.41 $ 4.87 $ 4.70 $ 3.94 $ 3.47 $ 8.48
------------------------------
(1) FINANCIAL DATA FOR THE SIX MONTHS ENDED DECEMBER 31, 2002 INCLUDES THE
ALLOCATED PURCHASE PRICE OF Q SERVICES, INC. AND THE RESULTS OF THEIR
OPERATIONS, BEGINNING JULY 19, 2002.
(2) FINANCIAL DATA FOR THE YEAR ENDED JUNE 30, 1999 INCLUDES THE ALLOCATED
PURCHASE PRICE OF DAWSON PRODUCTION SERVICES, INC. AND THE RESULTS OF THEIR
OPERATIONS, BEGINNING SEPTEMBER 15, 1998.
(3) BOOK VALUE PER COMMON SHARE IS STOCKHOLDERS' EQUITY AT PERIOD END DIVIDED BY
THE NUMBER OF ISSUED COMMON SHARES AT PERIOD END.
11
DESCRIPTION OF DEBT SECURITIES
The debt securities will be:
- our direct unsecured or secured general obligations;
- either senior debt securities or subordinated debt securities; and
- issued under one or more separate indentures.
Senior debt securities will be issued under a senior indenture and
subordinated debt securities will be issued under a subordinated indenture.
Senior debt securities and subordinated debt securities may be guaranteed by
certain of our subsidiaries. The debt securities issued may be convertible into
shares of our common stock, preferred stock or warrants.
We have summarized selected provisions of the Indentures below. The summary
is not complete. The forms of the Indentures have been filed as exhibits to the
registration statement, and you should read the Indentures for provisions that
may be important to you. In the summary, we have included references to section
numbers of the Indentures so that you can easily locate those provisions.
Capitalized terms used in this summary have the meanings used in the Indentures.
GENERAL
We are a holding company that conducts substantially all operations through
our subsidiaries. Holders of debt securities generally will have a junior
position to claims of creditors of our subsidiaries including trade creditors,
debt holders, secured creditors, taxing authorities, guaranty holders and any
preferred stockholders. At December 31, 2002, we did not have any outstanding
preferred stock and we and our subsidiaries had approximately $493.6 million of
outstanding long-term debt and capital lease obligations.
- The Indentures do not limit the aggregate principal amount of debt
securities that can be issued thereunder. (Section 301)
- Debt securities may be issued in one or more series, each in an aggregate
principal amount we authorize before issuance, and may be in any currency
or currency unit that we may designate. (Section 301)
- Debt securities of a series may be issued in registered or global form.
(Sections 201 and 203)
- The Indentures do not limit the amount of other unsecured debt or
securities that we can issue.
- The senior debt securities will rank equally with all of our other senior
debt.
- The subordinated debt securities will have a junior position to all of our
senior debt. (Section 1301)
A prospectus supplement and a supplemental indenture relating to any series
of debt securities being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
- the title and type of debt securities being offered;
- the total principal amount of debt securities being offered;
- the dates on which the principal of, and premium, if any, on the offered
debt securities is payable;
- the interest rate;
- the date from which interest will accrue;
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- the interest payment dates;
- any optional redemption periods;
- any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem the debt securities;
- whether the debt securities will be convertible into shares of common
stock or exchangeable for other of our securities, and if so, the terms of
conversion or exchange;
- events causing acceleration of maturity;
- any provisions granting special rights to holders when specified events
occur;
- any changes to or additional events of default or covenants;
- any special tax implications of the debt securities; and
- any other terms of the debt securities. (Section 301)
GUARANTEES
- Debt securities may be guaranteed by some, but not all, of our
subsidiaries, including subsidiaries that we may acquire in the future. In
the event of a bankruptcy, liquidation or reorganization of any of the
non-guarantor subsidiaries, the non-guarantor subsidiaries will pay the
holders of their debt and their trade creditors before they will be able
to distribute any of their assets to us.
- The guarantees will be general obligations of each guarantor.
- The guarantors will jointly and severally guarantee any of our guaranteed
debt securities.
- The obligations of each guarantor under any guarantee will be limited as
necessary to prevent that guarantee from constituting a fraudulent
conveyance under applicable law.
- A guarantor may not consolidate with or merge into another company unless
the surviving company assumes all of the obligations of that guarantor
pursuant to a supplemental indenture satisfactory to the trustee, and only
if immediately after giving effect to the transaction, no default or event
of default would exist.
DENOMINATIONS
The debt securities will be issued in denominations of $1,000 or multiples
thereof. (Section 302)
SUBORDINATION
Under the subordinated indenture, payment of the principal, interest and any
premium on the subordinated debt securities generally will be subordinated and
junior in right of payment to the prior payment in full of all senior debt. The
subordinated indenture provides that no payment of principal, interest and or
premium on the subordinated debt securities may be made in the event:
- of any insolvency, bankruptcy or similar proceeding involving us or our
property (Section 1303); or
- we fail to pay the principal, interest, any premium or any other amounts
on any senior debt when due. (Sections 1301 and 1302)
The subordinated indenture will not limit the amount of senior debt that we
may incur.
13
Senior Indebtedness is defined to include all our secured and unsecured
direct or contingent liabilities and obligations, including our guarantees for
money we borrow, which is not expressed to be subordinate to or junior in right
of, payment to any of our other indebtedness, but does not include our
intercompany indebtedness, our trade payables and our tax liabilities.
EVENTS OF DEFAULT
The following are Events of Default under each Indenture:
- failure to pay principal or any premium on any debt security when due;
- failure to pay any interest on any debt security when due, continued for
30 days;
- failure to deposit any mandatory sinking fund payment when due, continued
for 30 days;
- failure to perform or breach of any covenant or warranty in the Indenture
that continues for 90 days after written notice;
- certain events of bankruptcy, insolvency or reorganization; and
- any other event of default as may be specified in the supplemental
indenture with respect to debt securities of such series. (Section 501)
An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities. The Trustee may withhold notice to the holders of debt securities of
any default (except in the payment of principal or interest) if the Trustee in
good faith determines the withholding of notice to be in the best interest of
the holders. (Section 602)
ACCELERATION OF DEBT UPON AN EVENT OF DEFAULT
If an Event of Default occurs either the Trustee or the holders of at least
25% in principal amount of the outstanding debt securities may declare the
principal amount of all the debt securities of the applicable series to be due
and payable immediately. (Section 502) If this happens, subject to certain
conditions, the holders of a majority of the outstanding principal amount of a
series of debt securities can void the declaration. These conditions include the
requirement that we have paid or deposited with the Trustee a sum sufficient to
pay all overdue principal and interest payments on the series of debt securities
subject to the default. (Section 502)
If an Event of Default occurs due to certain events of bankruptcy,
insolvency or reorganization, the principal amount of the outstanding debt
securities of all series will become immediately due and payable without any
declaration or other act on the part of either Trustee or any holder.
(Section 502)
Depending on the terms of our indebtedness, an Event of Default under an
Indenture may cause a cross default on our other indebtedness.
DUTIES OF TRUSTEE
Other than its duties in the case of default, the Trustee is not obligated
to exercise any of its rights or powers under either Indenture at the request,
order or direction of any holders unless the holders offer the Trustee
reasonable indemnity. (Section 603)
If the holders provide reasonable indemnification, the holders of a majority
of principal amount of any series of debt securities may direct the time, method
and place of conducting any proceeding or any remedy available to the Trustee,
or exercising any power conferred upon the Trustee for any series of debt
securities. (Section 512)
14
COVENANTS
Under the Indentures, we will:
- pay the principal, interest and premium, if any, on the debt securities
when due;
- maintain a place of payment;
- deliver a report to the Trustee at the end of each fiscal year reviewing
our obligations under the Indentures; and
- deposit sufficient funds with any payment agent on or before the due date
for the payment of any principal, interest or premium, if any. (Sections
1001, 1002, 1003 and 1005)
MODIFICATION OF INDENTURES
Each Indenture provides that we and the Trustee may, without the consent of
any holders of debt securities, enter into supplemental debt indentures for the
purposes, among other things, of:
- adding to our covenants;
- adding additional events of default;
- changing or eliminating any provisions of the indentures so long as there
are no holders entitled to the benefit of the provisions;
- establishing the form or terms of any series of debt securities; or
- curing ambiguities, defects or inconsistencies in the Indentures or making
any other provisions with respect to matters or questions arising under
the Indentures.
With specific exceptions, the Indentures or the rights of the holders of the
debt securities may be modified by us and the Trustee with the consent of the
holders of a majority of the outstanding principal amount of the debt securities
of each series affected by the modification, but no modification may be made
without the consent of the holders of each outstanding debt security affected
which would:
- change the maturity of any payment of principal of, or any premium on, or
any installment of interest on any debt security;
- change the terms of any sinking fund with respect to any debt security;
- reduce the principal amount of, or the interest or any premium on, any
debt security upon redemption or repayment at the option of the holder;
- change any place of payment where, or the currency in which, any debt
security or any premium or interest is payable;
- impair the right to sue for the enforcement of any payment on or with
respect to any debt security; or
- reduce the percentage in principal amount of outstanding debt securities
of any series required to consent to any supplemental debt indenture, any
waiver of compliance with provisions the Indenture or specific defaults
and their consequences provided for in the Indentures, or otherwise modify
the sections in the Indentures relating to these consents.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Each Indenture generally permits a consolidation or merger between us and
another company. They also permit us to sell all or substantially all of our
property and assets. If this happens, the
15
remaining or acquiring company will assume all of our responsibilities and
liabilities under the Indentures, including the payment of all amounts due on
the debt securities and performance of the covenants in the Indentures.
(Sections 801 and 802)
We will only consolidate or merge with or into another company or sell all
or substantially all of our assets according to the terms and conditions of the
Indentures. The remaining or acquiring company will assume our obligations under
the Indentures with the same effect as if it had been an original party to the
Indentures and we shall be released from all our liabilities and obligations
under either Indenture and any debt securities. (Sections 801 and 802)
Thereafter, the successor company may exercise our rights and powers under
either Indenture, in our name or in its own name. Any act or proceeding required
or permitted to be done by our board of directors or any of our officers may be
done by the board or officers of the successor company.
DISCHARGE AND DEFEASANCE
We will be discharged from all obligations under the applicable indenture
with respect to any series of debt securities, except for surviving obligations
to register the transfer or exchange of the debt securities, if:
- all debt securities of the series previously authenticated and delivered
under the relevant indenture have been delivered to the indenture trustee
for cancellation; or
- all debt securities of that series have become due and payable or will
become due and payable, at maturity or by redemption, and we deposit with
the applicable trustee funds or government securities sufficient to make
payments on the debt securities of that series on the dates those payments
are due.
To exercise our right to be discharged, we must deliver the following to the
applicable trustee:
- an opinion of counsel to the effect that the holders will not recognize
income, gain or loss for federal income tax purposes as a result of the
exercise of such option and will be subject to U.S. federal income tax on
the same; and
- an officers' certificate stating that all conditions precedent to the
satisfaction and discharge of the applicable indenture have been complied
with.
In addition to our right of discharge described above, we may deposit with
the applicable trustee funds or government securities sufficient to make
payments on the debt securities of a series on the dates those payments are due
and payable, then, at our option, either of the following will occur:
- we will be discharged from our obligations with respect to the debt
securities of that series ("legal defeasance"); or
- we will no longer have any obligation to comply with the restrictive
covenants under the applicable indenture, and the related events of
default will no longer apply to us, but some of our other obligations
under the indenture and the debt securities of that series, including our
obligation to make payments on those debt securities, will survive
("covenant defeasance").
If we defease a series of debt securities, the holders of the debt
securities of the series affected will not be entitled to the benefits of the
applicable indenture, except for our obligations to:
- register the transfer or exchange of debt securities;
- replace stolen, lost or mutilated debt securities; and
- maintain paying agencies and hold moneys for payment in trust.
16
Unless we inform you otherwise in the prospectus supplement, we will be
required to deliver to the applicable trustee an opinion of counsel that the
deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for U.S. federal income tax
purposes. If we elect legal defeasance, that opinion of counsel must be based on
a ruling from the U.S. Internal Revenue Service or a change in law to that
effect.
PAYMENT AND PAYING AGENTS
Principal, interest and premium, if any, on fully registered securities will
be paid at designated places. Payment will be made by check mailed to the person
in whose name the debt securities are registered on the day specified in the
Indentures or any prospectus supplement. Payments in other forms will be paid at
a place designated by us and specified in a prospectus supplement.
(Section 307)
Fully registered securities may be transferred or exchanged at the corporate
trust office of the Trustee or at any other office or agency maintained by us
for such purposes without the payment of any service charge except for any tax
or governmental charge. (Section 1002)
GLOBAL SECURITIES
The debt securities of a series may be issued in the form of one or more
global certificates that will be deposited with a depositary or its nominee
identified in a prospectus supplement. We may issue global debt securities in
either temporary or permanent form. We will describe in the prospectus
supplement the terms of any depositary arrangement and the rights and
limitations of owners of beneficial interests in any global debt security.
DESCRIPTION OF CAPITAL STOCK
As of April 9, 2003, our authorized capital stock was 200,000,000 shares,
all of which may be issued as shares of common stock and up to 15,169,320 of
which may be issued as shares of preferred stock. As of that date, we had
128,475,639 shares of common stock outstanding and no shares of preferred stock
outstanding.
COMMON STOCK
LISTING. Our common stock is listed on the New York Stock Exchange under
the symbol "KEG."
DIVIDENDS. Common stockholders may receive dividends when declared by the
board of directors. Dividends may be paid in cash, stock or another form.
However, certain of our existing debt agreements contain covenants that
currently restrict us from paying dividends. Additionally, in certain cases,
common stockholders may not receive dividends until we have satisfied our
obligations to any preferred stockholders.
FULLY PAID. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we issue will also be fully paid and
non-assessable.
VOTING RIGHTS. Common stockholders are entitled to one vote in the election
of directors and other matters for each share of common stock owned. Common
stockholders are not entitled to preemptive or cumulative voting rights.
OTHER RIGHTS. We will notify common stockholders of any stockholders'
meetings according to applicable law. If we liquidate, dissolve or wind-up our
business, either voluntarily or not, common stockholders will share equally in
the assets remaining after we pay our creditors and preferred stockholders.
17
TRANSFER AGENT AND REGISTRAR. Our transfer agent and registrar is American
Stock Transfer & Trust Company, New York, New York.
PREFERRED STOCK
Our board of directors can, without approval of our stockholders, issue one
or more series of preferred stock. The board can also determine the number of
shares of each series and the rights, preferences and limitations of each series
including the dividend rights, voting rights, conversion rights, redemption
rights and any liquidation preferences of any series of preferred stock, the
number of shares constituting each series and the terms and conditions of issue.
If we offer preferred stock, the specific terms will be described in a
prospectus supplement, including:
- the specific designation, number of shares, seniority and purchase price;
- any liquidation preference per share;
- any date of maturity;
- any redemption, repayment or sinking fund provisions;
- any dividend rate or rates and the dates on which any such dividends will
be payable (or the method by which such rates or dates will be
determined);
- any voting rights;
- if other than the currency of the United States, the currency or
currencies including composite currencies in which such preferred stock is
denominated and/or in which payments will or may be payable;
- the method by which amounts in respect of such preferred stock may be
calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation;
- whether such preferred stock is convertible or exchangeable and, if so,
the securities or rights into which such preferred stock is convertible or
exchangeable, and the terms and conditions upon which such conversions or
exchanges will be effected including conversion or exchange prices or
rates, the conversion or exchange period and any other related provisions;
- the place or places where dividends and other payments on the preferred
stock will be payable; and
- any additional voting, dividend, liquidation, redemption and other rights,
preferences, privileges, limitations and restrictions.
All shares of preferred stock offered will, when issued, be fully paid and
non-assessable.
The transfer agent, registrar, and dividend disbursement agent for a series
of preferred stock will be named in a prospectus supplement. The registrar for
shares of preferred stock will send notices to stockholders of any meetings at
which holders of the preferred stock have the right to elect directors or to
vote on any other matter.
In some cases, the issuance of preferred stock could delay a change in
control of us and make it harder to remove present management. Under certain
circumstances, preferred stock could also restrict dividend payments to common
stockholders.
18
DESCRIPTION OF WARRANTS
We may issue warrants, including warrants to purchase debt securities,
preferred stock, common stock or other securities. We may issue warrants
independently or together with other securities that may be attached to or
separate from the warrants.
If we issue warrants, we will do so under one or more warrant agreements
between us and a warrant agent that we will name in the prospectus supplement.
The prospectus supplement relating to any warrants being offered will
include specific terms relating to the offering. These terms will include some
or all of the following:
- the title of the warrants;
- the securities into which the warrants are exercisable;
- the exercise price;
- the aggregate number of warrants to be issued;
- the principal amount of securities purchasable upon exercise of each
warrant;
- the price or prices at which each warrant will be issued;
- the procedures for exercising the warrants;
- the date upon which the exercise of warrants will commence; and
- the expiration date, and any other material terms of the warrants.
19
PLAN OF DISTRIBUTION
We may sell the securities in and outside the United States (1) through
underwriters or dealers, (2) directly to purchasers or (3) through agents. The
prospectus supplement will set forth the following information:
- the terms of the offering;
- the names of any underwriters or agents;
- the name or names of any managing underwriter or underwriters;
- the purchase price of the securities from us;
- the net proceeds we will receive from the sale of the securities;
- any delayed delivery arrangements;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation;
- the initial public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any commissions paid to agents.
SALE THROUGH UNDERWRITERS OR DEALERS
If we use underwriters in the sale of the offered securities, the
underwriters will acquire the securities for their own account. The underwriters
may resell the securities from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Underwriters may offer securities
to the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters.
Unless we inform you otherwise in the prospectus supplement, the obligations of
the underwriters to purchase the securities will be subject to several
conditions, and the underwriters will be obligated to purchase all the offered
securities if they purchase any of them. The underwriters may change from time
to time any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
If we use underwriters in the sale of the offered securities, rules of the
SEC may limit the ability of the underwriters and certain selling group members
to bid for and purchase our securities until the distribution of the offered
securities is completed. As an exception to these rules, the underwriters are
permitted to engage in certain transactions that stabilize, maintain or
otherwise affect the price of the offered securities.
In connection with an underwritten offering, the underwriters may make short
sales of the offered securities and may purchase our securities on the open
market to cover positions created by short sales. Short sales involve the sale
by the underwriters of a greater number of securities than they are required to
purchase in the offering. "Covered" short sales are made in an amount not
greater than the over-allotment option we may grant to the underwriters in
connection with the offering. The underwriters may close out any covered short
position by either exercising the over-allotment option or purchasing our
securities in the open market. In determining the source of securities to close
out the covered short position, the underwriters will consider, among other
things, the price of securities available for purchase in the open market as
compared to the price at which they may purchase securities through the
over-allotment option. "Naked" short sales are sales in excess of the
over-allotment option. The underwriters must close out any naked short position
by purchasing our securities in the open market. A naked short position is more
likely to be created if the underwriters
20
are concerned that there may be downward pressure on the price of the securities
in the open market after pricing that could adversely affect investors who
purchase in the offering.
The underwriters may also impose a penalty bid on certain selling group
members. This means that if the underwriters purchase our securities in the open
market to reduce the selling group members' short position or to stabilize the
price of the securities, they may reclaim the amount of the selling concession
from the selling group members who sold those securities as part of the
offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of those purchases or those purchases could prevent
or retard a decline in the price of the security. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.
Neither we nor the underwriters will make any representation or prediction
as to the direction or magnitude of any effect that the transactions we describe
above may have on the price of the offered securities. In addition, neither we
nor the underwriters will make any representation that the underwriters will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. We will include
in the prospectus supplement the names of the dealers and the terms of the
transactions.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the securities directly. In that event, no underwriters or
agents would be involved. We may also sell the securities through agents we
designate from time to time. In the prospectus supplement, we will name any
agent involved in the offer or sale of the offered securities, and we will
describe any commissions payable by us to the agent. Unless we inform you
otherwise in the prospectus supplement, any agent will agree to use its
reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who
may be deemed to be underwriters within the meaning of the Securities Act with
respect to any sale of those securities. We will describe the terms of any such
sales in the prospectus supplement.
DELAYED DELIVERY CONTRACTS
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from selected types of institutions to
purchase securities from us at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The prospectus supplement will describe
the commission payable for solicitation of those contracts.
GENERAL INFORMATION
We may have agreements with the agents, dealers and underwriters to
indemnity them against civil liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments that the agents,
dealers or underwriters may be required to make. Agents, dealers and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of their businesses.
21
LEGAL MATTERS
Certain legal matters relating to the validity of the common stock, debt
securities, preferred stock and warrants will be passed upon by Porter & Hedges,
L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements and schedule of Key Energy
Services, Inc. as of December 31, 2002 and June 30, 2002 and 2001, and for the
six months ended December 31, 2002 and each of the years in the three-year
period ended June 30, 2002, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. Our report refers to a change in accounting for derivative
instruments and hedging activities in the year ended June 30, 2001, to a change
in accounting for goodwill and other intangible assets in the year ended
June 30, 2002 and to a change in accounting for asset retirement obligations in
the six months ended December 31, 2002.
The consolidated financial statements of Q Services, Inc. at December 31,
2001, and for each of the three years in the period ended December 31, 2001,
which are incorporated by reference into this registration statement on
Form S-3 of which this prospectus forms a part, have been audited by Arthur
Andersen LLP, independent auditors, as set forth in their report thereon.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table
sets forth expenses payable by Key Energy Services, Inc. (the "Company") in
connection with the issuance and distribution of the securities being
registered. All the amounts shown are estimates, except the SEC registration
fee.
SEC registration fee........................................ $ 46,000
Printing expenses........................................... 25,000
Legal fees and expenses..................................... 15,000
Accounting fees and expenses................................ 5,000
Miscellaneous expenses...................................... 16,000
--------
Total..................................................... $107,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 2-418 of the
Maryland General Corporation Law provides that a corporation may indemnify any
director made a party to any proceeding against judgments, penalties, fines,
settlements and reasonable expenses, unless it is established that (i) the act
or omission of the director was material to the matter giving rise to the
proceeding and was committed in bad faith or was a result of deliberate
dishonesty, (ii) the director actually received an improper personal benefit or
(iii) in a criminal proceeding, the director had reasonable cause to believe the
act or omission was unlawful. A director may not be indemnified in any
proceeding charging improper personal benefit was improperly received and, in a
derivative action, there shall not be indemnification if a director has been
adjudged liable to the corporation. A director or officer of a corporation who
has been successful in the defense of any proceeding shall be indemnified
against reasonable costs incurred in such defense. Indemnification may not be
made unless authorized for a specific proceeding after determination by the
board of directors, special legal counsel or the stockholders that
indemnification is permissible because the director has met the requisite
standard of conduct.
Article Seventh of the Company's Amended and Restated Articles of
Incorporation, as amended (the "Charter"), provides that the Company shall
indemnify (i) its directors and officers, whether serving the Company or at its
request any other entity, to the full extent required or permitted by the
Maryland law, including the advance of expenses under the procedures and to the
full extent permitted by law and (ii) other employees and agents to such extent
permitted by law. The foregoing rights of indemnification are not exclusive of
any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such By-laws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as may be permitted by
the Maryland law. Furthermore, no director or officer of the Company shall be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director or an officer, except to the extent that
exculpation from liability is not permitted under the Maryland law as in effect
when such breach occurred. No amendment of the Charter or repeal of any of its
provisions shall limit or eliminate the limitations on liability provided to
directors and officers with respect to acts or omissions occurring prior to such
amendment or repeal.
1
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
--------------------- -----------------------------------------------------------------------
+1.1 -- Form of Underwriting Agreement
**4.1 -- Form of Senior Indenture
**4.2 -- Form of Subordinated Indenture
*5.1 -- Opinion of Porter & Hedges, L.L.P.
Statement Regarding Computation of Ratio of Earnings to
*12.1 -- Fixed Charges
23.1 -- Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1)
*23.2 -- Consent of KPMG LLP
**24.1 -- Power of Attorney
**24.2 -- Power of Attorney for Guarantors
+25.1 -- Statement of Eligibility of Trustee on Form T-1
------------------------
* Filed herewith.
** Previously filed.
+ The Company will file as an exhibit to a current report on Form 8-K (i) any
underwriting agreement relating to the securities offered hereby or
(ii) any Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of the applicable trustee.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement; provided,
however, that notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that the undertakings set forth in clauses
(i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those clauses is contained
in periodic reports filed by the registrant pursuant to Section 13 or
15(d) of the Securities and Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement
2
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(a) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
(6) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it
was declared effective.
(7) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by our director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
3
SIGNATURES
Pursuant to the requirements of the Securities Act, Key Energy
Services, Inc. has duly caused this Amendment No. 1 to the registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New Hope, State of Pennsylvania on April 9,
2003.
KEY ENERGY SERVICES, INC.
By: /s/ FRANCIS D. JOHN
----------------------------------------
Francis D. John,
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the registration statement on Form S-3 has been signed below
by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
-------------------------------------- -------------------------------------- --------------
/s/ FRANCIS D. JOHN Chairman of the Board, President and
------------------------------------- Chief Executive Officer (Principal
Francis D. John Executive Officer) April 9, 2003
* Director
-------------------------------------
David J. Breazzano April 9, 2003
* Director
-------------------------------------
Kevin P. Collins April 9, 2003
* Director
-------------------------------------
William D. Fertig April 9, 2003
* Director
-------------------------------------
W. Phillip Marcum April 9, 2003
* Director
-------------------------------------
J. Robinson West April 9, 2003
* Director
-------------------------------------
Morton Wolkowitz April 9, 2003
/s/ ROYCE W. MITCHELL Executive Vice President, Chief
------------------------------------- Financial Officer and Chief Accounting
Royce W. Mitchell Officer April 9, 2003
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act, each Guarantor has duly
caused this Amendment No. 1 to the registration statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New Hope, State of Pennsylvania on April 9, 2003.
BROOKS WELL SERVICING, INC., DAWSON PRODUCTION
ACQUISITION CORP., DAWSON PRODUCTION
MANAGEMENT, INC., DAWSON PRODUCTION TAYLOR, INC.,
KALKASKA OILFIELD SERVICES, INC., KEY ENERGY
DRILLING, INC., KEY ENERGY
SERVICES--CALIFORNIA, INC., KEY ENERGY
SERVICES--SOUTH TEXAS, INC., KEY FOUR CORNERS, INC.,
KEY ROCKY MOUNTAIN, INC., ODESSA EXPLORATION
INCORPORATED, WATSON OILFIELD SERVICE &
SUPPLY, INC., WELL-CO OIL SERVICE, INC., WELLTECH
EASTERN, INC., WELLTECH MID-CONTINENT, INC., YALE E.
KEY, INC., MISR KEY ENERGY SERVICES, LLC,
Q SERVICES, INC., Q.V. SERVICES, INC., AND UNITRAK
SERVICES HOLDING, INC.
By: /s/ JACK D. LOFTIS, JR.
-----------------------------------------------
Jack D. Loftis, Jr., Vice President
DAWSON PRODUCTION PARTNERS, L.P.
By: DAWSON PRODUCTION MANAGEMENT, INC., AS SOLE
GENERAL PARTNER
BROOKS WELL SERVICING BENEFICIAL, L.P.
By: BROOKS WELL SERVICING, INC., AS SOLE GENERAL
PARTNER
KEY ENERGY DRILLING BENEFICIAL, L.P.
By: KEY ENERGY DRILLING, INC., AS SOLE GENERAL
PARTNER
Q.V. SERVICES BENEFICIAL, L.P.
By: Q.V. SERVICES, INC., AS SOLE GENERAL PARTNER
UNITRAK SERVICES, L.P.
By: UNITRAK SERVICES HOLDING, INC., AS SOLE GENERAL
PARTNER
WELLTECH MID-CONTINENT BENEFICIAL, LP
By: WELLTECH MID-CONTINENT, INC., AS SOLE GENERAL
PARTNER
YALE E. KEY BENEFICIAL, LP
By: YALE E. KEY, INC., AS SOLE GENERAL PARTNER
By: /s/ JACK D. LOFTIS, JR.
-----------------------------------------------
Jack D. Loftis, Jr., Vice President of each
corporate general partner listed above
Q ENERGY SERVICES, L.L.C.
Q.V. SERVICES, LLC
Q OIL & GAS SERVICES, LLC
BROOKS WELL SERVICING, LLC
KEY ENERGY DRILLING, LLC
UNITRAK SERVICES, LLC
YALE E. KEY, LLC
WELLTECH MID-CONTINENT, LLC
By: /s/ JACK D. LOFTIS, JR.
-----------------------------------------------
Jack D. Loftis, Jr., Manager of each limited
liability company listed above
AES ACQUISITION, L.P.
QUALITY TUBULAR SERVICES, L.P.
QUALITY OIL FIELD SERVICES, L.P.
Q PRODUCTION SERVICES, L.P.
Q.V. SERVICES OF TEXAS, L.P.
By: Q OIL & GAS SERVICES, LLC, the sole general
partner of each limited partnership listed above
By: /s/ JACK D. LOFTIS, JR.
------------------------------------------
Jack D. Loftis, Jr., Manager
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the registration statement on Form S-3 has been signed below
by the following persons in the capacities and on the dates indicated.
AES ACQUISITION, L.P.
BY: Q OIL & GAS SERVICES, LLC, AS SOLE GENERAL MANAGER
* Manager April 9, 2003
------------------------------------- (Principal Executive Officer)
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager April 9, 2003
------------------------------------- (Principal Financial Officer and
Royce W. Mitchell Principal Accounting Officer)
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
BROOKS WELL SERVICING, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Joe Eustace
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal April 9, 2003
------------------------------------- Financial Officer and Principal
Royce W. Mitchell Accounting Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
DAWSON PRODUCTION ACQUISITION CORP.
* President and Director (Principal April 9, 2003
------------------------------------- Executive Officer)
Joan L. Dobrzynski
* Director April 9, 2003
-------------------------------------
Lisa Oakes
* Vice President, Treasurer and Director April 9, 2003
------------------------------------- (Principal Accounting Officer)
Francis B. Jacobs, II
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer)
Royce W. Mitchell
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
DAWSON PRODUCTION MANAGEMENT, INC.
* President, Chief Executive Officer and April 9, 2003
------------------------------------- Director (Principal Executive Officer)
Francis D. John
* Vice President and Treasurer April 9, 2003
------------------------------------- (Principal Financial Officer and
Royce W. Mitchell Principal Accounting Officer)
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
DAWSON PRODUCTION PARTNERS, L.P.
BY: DAWSON PRODUCTION MANAGEMENT, INC. AS SOLE GENERAL PARTNER
* President, Chief Executive Officer and April 9, 2003
------------------------------------- Director (Principal Executive Officer)
Francis D. John
* Vice President and Treasurer April 9, 2003
------------------------------------- (Principal Financial Officer and
Royce W. Mitchell Principal Accounting Officer)
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
DAWSON PRODUCTION TAYLOR, INC.
* President and Director (Principal April 9, 2003
------------------------------------- Executive Officer)
Joan L. Dobrzynski
* Director April 9, 2003
-------------------------------------
Lisa Oakes
* Vice President, Treasurer and Director April 9, 2003
------------------------------------- (Principal Accounting Officer)
Francis B. Jacobs, II
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer)
Royce W. Mitchell
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KALKASKA OILFIELD SERVICES, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Phil Altman
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ENERGY DRILLING, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Steven A. Richards
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ENERGY SERVICES--CALIFORNIA, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
James D. Flynt
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ENERGY SERVICES--SOUTH TEXAS, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Joe Eustace
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY FOUR CORNERS, INC.
/s/ LARRY LEWIS President (Principal Executive April 9, 2003
------------------------------------- Officer)
Larry Lewis
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ROCKY MOUNTAIN, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
James D. Flynt
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
ODESSA EXPLORATION INCORPORATED
* President and Treasurer (Principal April 9, 2003
------------------------------------- Executive Officer and Principal
W. Bruce Lowe Accounting Officer)
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer)
Royce W. Mitchell
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WATSON OILFIELD SERVICE & SUPPLY, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
James D. Flynt
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WELL-CO OIL SERVICE, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
James J. Byerlotzer
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer)
Royce W. Mitchell
* Treasurer and Asst. Secretary April 9, 2003
------------------------------------- (Principal Accounting Officer)
Matt Simmons
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WELLTECH EASTERN, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Michael R. Furrow
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WELLTECH MID-CONTINENT, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Michael R. Furrow
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
BROOKS WELL SERVICING BENEFICIAL, L.P.
BY: BROOKS WELL SERVICING, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Joe Eustace
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
BROOKS WELL SERVICING, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ENERGY DRILLING BENEFICIAL, L.P.
BY: KEY ENERGY DRILLING, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Steven A. Richards
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
KEY ENERGY DRILLING, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
MISR KEY ENERGY SERVICES, LLC
* President and Chief Executive Officer April 9, 2003
-------------------------------------
Thomas B. Murphy
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
BY: KEY ENERGY SERVICES, INC., AS SOLE MEMBER
/s/ JACK D. LOFTIS, JR. Senior Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q ENERGY SERVICES, L.L.C.
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Joan L. Dobrzynski
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q OIL & GAS SERVICES, LLC
* Manager (Principal Executive Officer) April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager (Principal Financial Officer April 9, 2003
------------------------------------- and Principal Accounting Officer)
Royce W. Mitchell
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q PRODUCTION SERVICES, L.P.
BY: Q OIL & GAS SERVICES, LLC, AS SOLE GENERAL PARTNER
* Manager (Principal Executive Officer) April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager (Principal Financial Officer April 9, 2003
------------------------------------- and Principal Accounting Officer)
Royce W. Mitchell
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q SERVICES, INC.
* President and Director (Principal April 9, 2003
------------------------------------- Executive Officer)
Francis D. John
* Vice President and Treasurer April 9, 2003
------------------------------------- (Principal Financial Officer and
Royce W. Mitchell Principal Accounting Officer)
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
QUALITY OIL FIELD SERVICES, L.P.
BY: Q OIL & GAS SERVICES, LLC, AS SOLE GENERAL PARTNER
* Manager (Principal Executive Officer) April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager (Principal Financial Officer April 9, 2003
------------------------------------- and Principal Accounting Officer)
Royce W. Mitchell
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
QUALITY TUBULAR SERVICES, L.P.
BY: Q OIL & GAS SERVICES, LLC, AS SOLE GENERAL PARTNER
* Manager (Principal Executive Officer) April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager (Principal Financial Officer April 9, 2003
------------------------------------- and Principal Accounting Officer)
Royce W. Mitchell
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q.V. SERVICES, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Scott Jones
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q.V. SERVICES, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q.V. SERVICES BENEFICIAL, L.P.
BY: Q.V. SERVICES, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Scott Jones
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
Q.V. SERVICES OF TEXAS, L.P.
BY: Q OIL & GAS SERVICES, LLC, AS SOLE GENERAL PARTNER
* Manager (Principal Executive Officer) April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
James J. Byerlotzer
* Manager (Principal Financial Officer April 9, 2003
------------------------------------- and Principal Accounting Officer)
Royce W. Mitchell
* Manager April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
UNITRAK SERVICES HOLDING, INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
W. Bruce Lowe
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
UNITRAK SERVICES, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
UNITRAK SERVICES, L.P.
BY: UNITRAK SERVICES HOLDING, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
W. Bruce Lowe
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WELLTECH MID-CONTINENT BENEFICIAL, L.P.
BY: WELLTECH MID-CONTINENT, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Michael R. Furrow
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
/s/ JACK D. LOFTIS, JR. Vice President April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
WELLTECH MID-CONTINENT, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
YALE E. KEY BENEFICIAL, L.P.
BY: YALE E. KEY, INC., AS SOLE GENERAL PARTNER
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Tommy Pipes
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
YALE E. KEY INC.
* President (Principal Executive April 9, 2003
------------------------------------- Officer)
Tommy Pipes
* Vice President and Director April 9, 2003
-------------------------------------
Francis D. John
* Vice President (Principal Financial April 9, 2003
------------------------------------- Officer and Principal Accounting
Royce W. Mitchell Officer)
* Vice President and Treasurer April 9, 2003
-------------------------------------
Phillip M. Burch
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
YALE E. KEY, LLC
* Manager (Principal Executive Officer, April 9, 2003
------------------------------------- Principal Accounting Officer and
Francis D. John Principal Financial Officer)
/s/ JACK D. LOFTIS, JR. Manager April 9, 2003
-------------------------------------
Jack D. Loftis, Jr.
* Manager April 9, 2003
-------------------------------------
Michael G. Morgan
*By: /s/ JACK D. LOFTIS, JR.
-------------------------------------
Attorney-in-Fact
EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- ------------------------------------------------------------
+1.1 -- Form of Underwriting Agreement
**4.1 -- Form of Senior Indenture
**4.2 -- Form of Subordinated Indenture
*5.1 -- Opinion of Porter & Hedges, L.L.P.
*12.1 -- Statement Regarding Computation of Ratio of Earnings to
Fixed Charges
23.1 -- Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1)
*23.2 -- Consent of KPMG LLP
**24.1 -- Power of Attorney
**24.2 -- Power of Attorney for Guarantors
+25.1 -- Statement of Eligibility of Trustee on Form T-1
------------------------
* Filed herewith.
** Previously filed.
+ The Company will file as an exhibit to a current report on Form 8-K (i) any
underwriting agreement relating to the securities offered hereby or
(ii) any Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of the applicable trustee.