Key Energy Services Inc. (KEG) said it has consummated the second tranche of its investment in Russian oilfield services company OOO GeoStream Services Group effective September 1, 2009. Following its initial investment of $17.6 million in October of 2008, Key made an additional capital infusion of approximately $16.2 million, increasing its ownership interest in GeoStream from 26% to 50%. Following the closing of the second tranche, Key has the right to appoint a majority of GeoStream's board, and would now consolidate GeoStream's financial results.
In conjunction with the second closing, GeoStream has agreed to purchase from Key a customized suite of equipment, including two 400 series workover rigs, two 1,000 HP drilling rigs, cementing equipment, and fishing tools for approximately $23.0 million in total, a portion of which would be seller financed. The workover and drilling rigs would include associated complimentary support equipment, all of which is highly mobile and designed for rapid rig-up, deployment and demobilization. The two 400 series workover rigs were designed and fabricated by Key specifically for operations in the Russian market, and the two 1,000 HP drilling units were engineered and upgraded to operate in Arctic conditions. Additionally, Key is planning to license its proprietary KeyView system technology to GeoStream, and to provide technical services to GeoStream.
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