Key Energy Services Inc. (KEG) announced that it expects third quarter 2012 consolidated results from continuing operations to be below prior view. Compared to previous quarter, consolidated revenue to decline 4% to 5%, and operating income margins to decline 250 to 350 basis points.
Key also added that it has sold its Argentina operations effective September 14 and expects to record a non-cash, pre-tax charge against discontinued operations of about $45 million in the third quarter.
The company noted that the change in outlook relative to its earlier view is primarily attributed to market declines in U.S. drilling and completion related activity.
U.S. Rig Services business has experienced a slight activity decline during the quarter, its income contribution to third quarter results is expected to be in line with the prior quarter and the results from international operations are anticipated to be in line with earlier expectations.
The company noted that its prior expectations were for activity in its core oil markets to be relatively flat in the second half of 2012. Instead, since the beginning of the third quarter, drilling rig counts in these markets are down approximately 8%, and indications are that customer demand may decline further through the fourth quarter in addition to typical seasonal declines.
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