From Seeking Alpha
The
following is a "small cap insight"
column by Sarfaraz A. Khan about a company with a market cap of less than $5
billion.
Houston,
Texas based Key Energy Services (NYSE:KEG) is the biggest
onshore rig-based well services contractor in terms of the number of rigs. The
company has operations in all the leading energy plays of the United States
from the oil markets of Permian and Bakken to the gas markets of Haynesville.
The company also has international operations in Latin America, Middle East and
Russia.
Key has been
growing at a reasonable pace, but since Q2-2012, the firm has reported
declining revenues. Key has now recorded four consecutive drops in sequential
revenues. This came on the back of softness in the U.S market. Here, the drop
was primarily due to the weak natural gas pricing environment and a reduction
in customer spending in the oil market. The company gets more than 80% of its
revenues from the U.S.
(figure a)
Quarterly
Results
After a year
of without any growth, Key is now eyeing a turnaround; its most recent
quarterly results have shown the first signs of improvements. The company
operates in two main segments, U.S and International. The U.S is further
divided into four service area; Rig Services, Fluid Management, Coiled Tubing
and Fishing & Rental services. A short description of Key's operations and
its revenue breakdown for Q2-2013 are shown in the picture below.
(figure b)
Q2: Signs
of Improvement
Key posted an
across the board year-over-year drop in revenues. However, the business
reported considerable sequential improvements in revenues in its two main
business units; rig services and coiled tubing services ….. Read full article with figures
