By OGJ editors
HOUSTON, Aug. 12 -- Key Energy Services Inc., Midland, Tex., has agreed to sell all of its oil and gas properties for $19.7 million to an undisclosed buyer.
Subject to certain conditions, the sale is expected to close by Aug. 28.
Key Energy Services expects to use $12.4 million of the proceeds from the sale to pay off its volumetric production payment and to unwind related hedges, resulting in net cash proceeds of $7.3 million.
The company expects to record an after-tax charge of $7.8 million. For the 6 months ending June 30, the oil and gas properties contributed $2.9 million in revenue and a net loss of $500,000.
For the year ending Dec. 31, Key Energy's oil and gas operations will be treated as a discontinued operation.
Chairman and CEO Francis D. John said, "The company is focused on developing and enhancing its production services capabilities and will seek to exit those businesses that do not meet these objectives. Our oil and gas operations are not core to our business and, in fact, compete with some of our customers. Therefore, we have elected to exit this business."
Key Energy is a well service company and owns 1,492 well service rigs, 2,295 service vehicles, and 76 drilling rigs.
