Onshore rig-based well servicing contractor Key Energy Services, Inc. (KEG) on Wednesday reported a year-over-year plunge in profit for the first quarter, hurt by a 27% drop in quarterly revenues. Earnings per share for the quarter dropped and missed analysts' expectations by two cents.
Key Energy is an onshore, rig-based well servicing contractor, providing a range of oil-well services to major oil companies and independent oil and natural gas production companies, including rig-based well maintenance, oilfield trucking services, among others. The company has operations in all major onshore oil and gas producing regions of the continental U.S., Argentina, and Mexico.
In a statement, chairman and chief executive officer, Dick Alario said, "While there is little satisfaction to be gained from our first quarter results, our cost reduction initiatives have allowed Key to remain profitable while adding cash to the balance sheet even as the market has softened."
The company added that some early signs of improvement in April were masked by adverse weather conditions and the Easter Holiday, especially pertaining to oil driven activity in the Permian Basin and Mid-Continent regions. Rig hours in April are estimated to decline 8% from March, the company noted.
Houston, Texas-based Key energy reported net income of $0.90 million or $0.01 per share for the first quarter, sharply lower than $34.48 million or $0.27 per share in the prior-year quarter.
On average, eleven analysts surveyed by Thomson Reuters expected the company to report earnings of $0.03 per share for the first quarter. Analysts' estimate typically excludes special items.
Total revenues for the quarter declined 27% to $331.99 million from $456.40 million in the same quarter last year. Six Wall Street analysts had a consensus revenue estimate of $362.05 million for the first quarter.
General and administrative expenses for the quarter dropped 28% to $48.71 million from the year-ago quarter's $67.73 million. The company ended the first quarter with cash and cash equivalents of $174.17 million, compared to $29.87 million at end of the prior-year quarter.
Looking ahead, the company expects to be capable of achieving revenue in excess of $120 million annualized in Mexico by late in second quarter of 2009. The company also now expects capital expenditures to about $100 million for the full year 2009.
"With the relatively short payback on oil well maintenance and service at today's commodity price, we believe our core customer base will soon begin to increase maintenance driven investment in the mature oil producing regions of the US," Alario added.
KEG closed Wednesday's regular trading session at $5.39, up $0.37 or 7.37% on a volume of 1.07 million shares, lower than the three-month average volume of 1.29 million shares.
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