10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________________________________

Form 10-Q

 _____________________________________________ 

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-08038

  _____________________________________________

KEY ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)

  _____________________________________________

Delaware	04-2648081
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1301 McKinney Street, Suite 1800, Houston, Texas	77010
(Address of principal executive offices)	(Zip Code)

(713) 651-4300

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

  ____________________________________________

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	ý	Smaller reporting company	ý
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨ No  ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No  ¨

As of August 5, 2020, the number of outstanding shares of common stock of the registrant was 13,781,347.

KEY ENERGY SERVICES, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended June 30, 2020

Part I — Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
Part II — Other Information
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature or that relate to future events and conditions are, or may be deemed to be, forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections and management’s beliefs and assumptions concerning future events and financial trends affecting our financial condition and results of operations. In some cases, you can identify these statements by terminology such as “may,” “will,” “should,” “predicts,” “expects,” “believes,” “anticipates,” “projects,” “potential” or “continue” or the negative of such terms and other comparable terminology. These statements are subject to substantial risks and uncertainties and are not guarantees of performance. Future actions, events and conditions and future results of operations may differ materially from those expressed in these statements. In evaluating those statements, you should carefully consider the information herein as well as the risks outlined in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”), and in Part II “Item 1A. Risk Factors” our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the “Q1 2020 Form 10-Q”) and our information in the reports we file with the Securities and Exchange Commission.

We undertake no obligation to update or withdraw any forward-looking statement to reflect events or circumstances after the date of this report except as required by law. All of our written and oral forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements.

Important factors that may affect our expectations, estimates or projections include, but are not limited to, the following:

• our ability to continue as a going concern;

• public health crises, such as the COVID-19 pandemic, including its impact on economic and other conditions globally, demand for oil and natural gas, and any related actions taken by businesses and governments, among others;

• adverse conditions in the services and oil and natural gas industries, especially declines or volatility in oil and natural gas prices and capital expenditures by oil and natural gas companies;

• our ability to satisfy our cash and liquidity needs, including our ability to generate sufficient liquidity or cash flow from operations or to obtain adequate financing to fund our operations or otherwise meet our obligations as they come due;

• our ability to retain employees, customers or suppliers as a result of our financial condition generally or as a result of our recent Restructuring (as defined below);

• our inability to achieve the potential benefits of the Restructuring;

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• our ability to achieve the benefits of cost-cutting initiatives, including our plan to optimize our geographic footprint (including exiting certain locations and reducing our regional and corporate overhead costs);

• our ability to implement price increases or maintain pricing on our core services;

• risks that we may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed in our businesses;

• industry capacity;

• actions by OPEC and non-OPEC oil producing countries;

• asset impairments or other charges;

• the low demand for our services and resulting operating losses and negative cash flows;

• the highly competitive nature of our industry;

• operating risks, which are primarily self-insured, and the possibility that our insurance may not be adequate to cover all of our losses or liabilities;

• significant costs and potential liabilities resulting from compliance with applicable laws, including those resulting from environmental, health and safety laws and regulations, specifically those relating to hydraulic fracturing, as well as climate change legislation or initiatives;

• our historically high employee turnover rate and our ability to replace or add workers, including executive officers and skilled workers;

• our ability to implement technological developments and enhancements;

• severe weather impacts on our business, including from hurricane activity;

• our ability to successfully identify, make and integrate acquisitions and our ability to finance future growth of our operations or future acquisitions;

• our ability to achieve the benefits expected from business combinations, disposition or acquisition transactions;

• the loss of one or more of our larger customers;

• the amount of our debt, the limitations imposed by the covenants in the agreements governing our debt, and our ability to comply with covenants under our debt agreements;

• our ability to maintain sufficient liquidity and access to capital;

• an increase in our debt service obligations due to variable rate indebtedness;

• our inability to achieve our financial, capital expenditure and operational projections, including quarterly and annual projections of revenue, and/or operating income and the possibility of our inaccurate assessment of future activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually);

• our ability to respond to changing or declining market conditions;

• adverse impact of litigation or disputes; and

• other factors affecting our business and financial condition described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

As noted in our financial statements in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, pursuant to accounting principles generally accepted in the United States, these conditions raise substantial doubt about our ability to continue as a going concern within the 12 months post issuance of the consolidated financial statements. The unprecedented nature of the COVID-19 pandemic and recent market decline may make it more difficult to identify potential risks, give rise to risks that are currently unknown, or amplify the impact of known risks.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Key Energy Services, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	June 30, 2020			December 31, 2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,864		$	14,426
Restricted cash	250			250
Accounts receivable, net of allowance for doubtful accounts of $1,085and $881, respectively	20,069			51,091
Inventories	13,698			13,565
Other current assets	17,774			22,260
Total current assets	58,655			101,592
Property and equipment	388,229			432,917
Accumulated depreciation	(218,409		)	(205,352		)
Property and equipment, net	169,820			227,565
Intangible assets, net	318			347
Other non-current assets	40,400			18,366
TOTAL ASSETS	$	269,193		$	347,870
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	8,641		$	8,700
Current portion of long-term debt	1,076			2,919
Other current liabilities	51,607			90,715
Total current liabilities	61,324			102,334
Long-term debt	51,954			240,007
Workers’ compensation, vehicular and health insurance liabilities	27,394			26,072
Interest payable	16,283			—
Other non-current liabilities	31,094			30,710
Commitments and contingencies
Equity:
Common stock, $0.01 par value; 150,000,000 and 2,000,000 shares authorized, 13,781,262 and 410,990 outstanding	340			206
Additional paid-in capital	307,982			265,588
Retained deficit	(227,178		)	(317,047		)
Total equity	81,144			(51,253		)
TOTAL LIABILITIES AND EQUITY	$	269,193		$	347,870

See the accompanying notes which are an integral part of these condensed consolidated financial statements.

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Key Energy Services, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
REVENUES	$	34,750		$	112,943		$	110,058		$	222,216
COSTS AND EXPENSES:
Direct operating expenses	29,904			90,564			91,565			178,758
Depreciation and amortization expense	8,054			14,262			18,280			28,558
General and administrative expenses	13,637			22,544			28,890			44,639
Impairment expense	—			—			41,242			—
Operating loss	(16,845		)	(14,427		)	(69,919		)	(29,739		)
Gain on debt restructuring	—			—			(170,648		)	—
Interest expense, net of amounts capitalized	2,066			8,520			10,287			17,753
Other income, net	(15		)	(239		)	(400		)	(1,381		)
Income (loss) before income taxes	(18,896		)	(22,708		)	90,842			(46,111		)
Income tax benefit (expense)	(229		)	4,405			(973		)	4,367
NET INCOME (LOSS)	$	(19,125	)	$	(18,303	)	$	89,869		$	(41,744	)
Loss per share:
Basic	$	(1.39	)	$	(44.86	)	$	10.06		$	(102.31	)
Diluted	$	(1.39	)	$	(44.86	)	$	10.00		$	(102.31	)
Weighted average shares outstanding:
Basic	13,781			408			8,935			408
Diluted	13,781			408			8,991			408

See the accompanying notes which are an integral part of these condensed consolidated financial statements.

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Key Energy Services, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended
	June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	89,869		$	(41,744	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense	18,280			28,558
Impairment expense	41,242			—
Bad debt expense	1,175			261
Accretion of asset retirement obligations	85			82
Gain on debt restructuring	(170,648		)	—
Amortization of deferred financing costs	260			241
Gain on disposal of assets, net	(767		)	(1,459		)
Share-based compensation	252			2,230
Changes in working capital:
Accounts receivable	29,847			2,422
Other current assets	4,353			(1,741		)
Accounts payable, accrued interest and accrued expenses	(38,526		)	(4,647		)
Share-based compensation liability awards	3			34
Other assets and liabilities	(13,636		)	4,400
Net cash used in operating activities	(38,211		)	(11,363		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(979		)	(12,362		)
Proceeds from sale of assets	3,363			4,780
Net cash provided by (used in) investing activities	2,384			(7,582		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt	30,000			—
Repayments of long-term debt	(3		)	(1,250		)
Repayments of finance lease obligations	(340		)	—
Payment of deferred financing costs	(1,385		)	(828		)
Repurchases of common stock	(7		)	(4		)
Net cash provided by (used in) financing activities	28,265			(2,082		)
Net decrease in cash, cash equivalents and restricted cash	(7,562		)	(21,027		)
Cash, cash equivalents, and restricted cash, beginning of period	14,676			50,311
Cash, cash equivalents, and restricted cash, end of period	$	7,114		$	29,284

See the accompanying notes which are an integral part of these condensed consolidated financial statements.

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Key Energy Services, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

NOTE 1. GENERAL

Key Energy Services, Inc., and its wholly owned subsidiaries (collectively, “Key,” the “Company,” “we,” “us,” “its,” and “our”) provide a full range of well services to major oil companies and independent oil and natural gas production companies. Our services include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services. Additionally, certain of our rigs are capable of specialty drilling applications. We operate in most major oil and natural gas producing regions of the continental United States. An important component of our growth strategy is to make acquisitions that will strengthen our core services or presence in selected markets, and that we also make strategic divestitures from time to time. We expect that the industry in which we operate will experience consolidation, and the we expect to explore opportunities and engage in discussions regarding these opportunities, which could include mergers, consolidations or acquisitions or further dispositions or other transactions, although there can be no assurance that any such activities will be consummated.

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed December 31, 2019 balance sheet was prepared from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). Certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in this Quarterly Report on Form 10-Q. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2019 Form 10-K.

The unaudited condensed consolidated financial statements contained in this report include all normal and recurring material adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented herein. The results of operations for the six months endedJune 30, 2020 are not necessarily indicative of the results expected for the full year or any other interim period, due to fluctuations in demand for our services, timing of maintenance and other expenditures, and other factors.

We have evaluated events occurring after the balance sheet date included in this Quarterly Report on Form 10-Q through the date on which the unaudited condensed consolidated financial statements were issued, for possible disclosure of a subsequent event.

Market Conditions, COVID-19 and Going Concern

As a company that provides services to oil and gas exploration and development companies, we are exposed to a number of risks and uncertainties that are inherent to our industry. In addition to such industry-specific risks, the global public health crisis associated with the novel coronavirus (“COVID-19”) has, and is anticipated to continue to have, an adverse effect on global economic activity for the immediate future and has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities. The slowdown in global economic activity attributable to COVID-19 has resulted in a dramatic decline in the demand for energy, which directly impacts our industry and the Company. In addition, global crude oil prices experienced a decline in late 2019 and a collapse starting in early March 2020 as a direct result of failed negotiations between the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia regarding reduced supply of oil. As the breadth of the COVID-19 health crisis expanded throughout the month of March 2020 and governmental authorities implemented more restrictive measures to limit person-to-person contact, global economic activity continued to decline commensurately. The associated impact on the energy industry has been adverse and continued to be exacerbated by the unresolved conflict regarding production. In the second week of April, OPEC, Russia and certain other petroleum producing nations (“OPEC+”) reconvened to discuss the matter of production cuts in light of unprecedented disruption and supply and demand imbalances that expanded since the failed negotiations in early March 2020. Agreements were reached to cut production by up to 10 million barrels of oil per day with allocations to be made among the OPEC+ participants. In early June, these agreements were further extended through July 2020. These production cuts, other voluntary production curtailments and reduced drilling have helped to bring demand and supply closer to balance and stabilized commodity prices. However, US and international crude oil stocks remain at historically high levels, commodity prices remain depressed relative to 2019 levels, and there remains continued uncertainty around the timing of any recovery in economic activity and demand for energy.

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Despite a significant decline in drilling by U.S. producers starting in mid-March 2020, domestic supply continued to exceed demand through May 2020, which led to significant operational stress with respect to capacity limitations associated with storage, pipeline and refining infrastructure, particularly within the Gulf Coast region. While these trends began to reverse in June 2020 due to production curtailments, natural well decline and reduced drilling activity, there remains a historically high amount of crude oil in storage. The combined effect of the aforementioned factors has had an adverse impact on the industry in general and our operations specifically.

These conditions and events have adversely affected the demand for oil and natural gas, as well as for our services. The collapse in the demand for oil caused by this unprecedented global health and economic crisis, coupled with oil oversupply, has had, and is reasonably likely to continue to have, a material adverse impact on the demand for our services and the prices we can charge for our services. The decline in our customers’ demand for our services has had, and is likely to continue to have, a material adverse impact on our financial condition, results of operations and cash flows.

To date, we have enhanced the cost control measures related to operational and general and administrative expenses to optimize cost during this time period with the goal of ensuring that margins are preserved as well as increased efforts on improving working capital until customer spend increases.

Due to the uncertainty of future oil and natural gas prices and the effect the COVID-19 pandemic will continue to have on our results of operations and financial condition, there is substantial doubt as to the Company’s ability to continue as a going concern. Management has prepared these consolidated condensed financial statements in accordance with US GAAP applicable to a going concern, which contemplates that assets will be realized and liabilities will be discharged in the normal course of business as they become due. These consolidated condensed financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material and adverse to the financial results of the Company.

Restructuring and Reverse Stock Split

On March 6, 2020, we closed the previously announced restructuring of our capital structure and indebtedness (the “Restructuring”) pursuant to the Restructuring Support Agreement, dated as of January 24, 2020 (the “RSA”), with lenders under our Prior Term Loan Facility (as defined below) collectively holding over 99.5% (the “Supporting Term Lenders”) of the principal amount of the Company’s then outstanding term loans. Pursuant to the RSA and the Restructuring contemplated thereby, among other things, we effected the following transactions and changes to our capital structure and governance:

• pursuant to exchange agreements entered into at the closing of the Restructuring, we exchanged approximately $241.9 million aggregate outstanding principal of our term loans (together with accrued interest thereon) held by Supporting Term Lenders under our Prior Term Loan Facility into (i) approximately 13.4 million newly issued shares of common stock representing 97% of the Company’s outstanding shares after giving effect to such issuance (and without giving effect to dilution by the New Warrants and MIP (each as defined below)) and (ii) $20 million of term loans under our new $51.2 million term loan facility (the “New Term Loan Facility”), each on a pro rata basis based on their holdings of term loans under the Prior Term Loan Facility;

• completed a 1-for-50 reverse stock split of our outstanding common stock. All pre-Restructuring shares prices, including shares outstanding and earnings per share, have been adjusted to reflect the 1-for-50 reverse stock split;

• distributed to our common stockholders of record as of February 18, 2020 two series of warrants (the “New Warrants”);

• entered into the $51.2 million New Term Loan Facility, of which (i) $30 million was funded at closing of the Restructuring with new cash proceeds from the Supporting Term Lenders and $20 million was issued in exchange for term loans held by the Supporting Term Lenders under the Prior Term Loan Facility as described above and (ii) an approximate $1.2 million was a senior secured term loan tranche in respect of term loans held by lenders under the Prior Term Loan Facility who were not Supporting Term Lenders;

• entered into the New ABL Facility (as defined below);

• adopted a new management incentive plan (the “MIP”) representing up to 9% of the Company’s outstanding shares after giving effect to the issuance of shares described above; and

• made certain changes to the Company’s governance, including changes to our Board of Directors (the “Board”), amendments to our governing documents and entry into the Stockholders Agreement (as defined below) with the Supporting Term Lenders.

In accordance with the RSA at the closing of the Restructuring, the Company amended and restated its certificate of incorporation and entered into a stockholders agreement (the “Stockholders Agreement”) with the Supporting Term Lenders in order to, among other things, provide for a Board of seven members. Pursuant to the Stockholders Agreement, our Board consists

8

of our chief executive officer and six other members appointed by various Supporting Term Lenders. Specifically, pursuant to the Stockholders Agreement, Supporting Term Lenders who hold more than 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate two directors and Supporting Term Lenders who hold between 10% and 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate one director. All appointees or nominees of Supporting Term Lenders, other than any director appointed or nominated by Soter Capital LLC (“Soter”), must meet the “independent director” requirements set forth in Section 303A of the NYSE Listed Company Manual. In addition, pursuant to the Stockholders Agreement, Supporting Term Lenders are entitled to appoint a non-voting board observer subject to specified ownership thresholds.

In accordance with the RSA and following the closing of the Restructuring, the Company distributed to stockholders of record as of February 18, 2020 the New Warrants. The New Warrants were issued in two series each with a four-year exercise period. The first series entitles the holders to purchase in the aggregate 1,669,730 newly issued shares of common stock, representing 10% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate exercise price of the first series of New Warrants is $19.23 and was determined based on the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring. The second series of New Warrants entitles the holders to purchase in the aggregate 1,252,297 newly issued shares of common stock, representing 7.5% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate strike price of the second series of New Warrants is $28.85 and was determined based on the product of (i) the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring, multiplied by (ii) 1.50.

For more information on our New Term Loan Facility and New ABL Facility entered into in connection with the Restructuring, see “Note 7. Debt.”

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

The preparation of these unaudited condensed consolidated financial statements requires us to develop estimates and to make assumptions that affect our financial position, results of operations and cash flows. These estimates may also impact the nature and extent of our disclosure, if any, of our contingent liabilities. Among other things, we use estimates to (i) analyze assets for possible impairment, (ii) determine depreciable lives for our assets, (iii) assess future tax exposure and realization of deferred tax assets, (iv) determine amounts to accrue for contingencies, (v) value tangible and intangible assets, (vi) assess workers’ compensation, vehicular liability, self-insured risk accruals and other insurance reserves, (vii) provide allowances for our uncollectible accounts receivable, (viii) value our asset retirement obligations, and (ix) value our equity-based compensation. We review all significant estimates on a recurring basis and record the effect of any necessary adjustments prior to publication of our financial statements. Adjustments made with respect to the use of estimates relate to improved information not previously available. Because of the limitations inherent in this process, our actual results may differ materially from these estimates. We believe that the estimates used in the preparation of these interim financial statements are reasonable.

There have been no material changes or developments in our evaluation of accounting estimates and underlying assumptions or methodologies that we believe to be a “Critical Accounting Policy or Estimate” as disclosed in our 2019 Form 10-K.

Recent Accounting Developments

ASU 2016-13. In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments that will change how companies measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount. The amendments in this update were effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. We adopted the new standard effective January 1, 2020 and the adoption of this standard did not have a material impact on our consolidated financial statements.

ASU 2019-12. In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes that will simplify accounting for income taxes by eliminating certain exceptions to the guidance for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes that are partially based on income and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We adopted the new standard effective April 1, 2020. Most of the changes were not applicable to Key and there was no significant impact to the Company’s financial statements upon adoption of this standard.

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Coronavirus Aid, Relief and Economic Security Act (“CARES Act”)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. It is a large tax-and-spending package intended to provide additional economic relief to address the impact of the COVID-19 pandemic. The CARES Act includes several significant business tax provisions that, among other things, eliminate the taxable income limit for certain net operating losses (NOL) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; accelerate refunds of previously generated corporate alternative minimum tax (AMT) credits; and generally increased the business interest limitation under section 163(j) from 30 percent to 50 percent. Key has analyzed the income tax provisions under the CARES Act, and concluded that none of the provisions have a significant impact to the Company's income tax positions. Future regulatory guidance under the CARES Act or additional legislation enacted by Congress in connection with the COVID-19 pandemic could impact our tax provision in future periods. In addition to income tax provisions, the CARES Act also includes tax provisions relating to refundable payroll tax credits and deferment of employer’s social security tax payments. Specifically, the CARES Act permits an employer to defer 50 percent of its 2020 social security tax payments to the end of 2021 and the remaining 50 percent to the end of 2022. Beginning in April of 2020, we began deferring our employer social security payments. The Company continues to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

NOTE 3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by revenue source (in thousands). Sales taxes are excluded from revenues.

	Six Months Ended
	June 30,
	2020		2019
Rig Services	$	68,734	$	132,910
Fishing and Rental Services	13,563		29,399
Coiled Tubing Services	6,704		22,420
Fluid Management Services	21,057		37,487
Total	$	110,058	$	222,216

Disaggregation of Revenue

We have disaggregated our revenues by our reportable segments which include Rig Services, Fishing & Rental Services, Coiled Tubing Services and Fluid Management Services segments.

Rig Services

Our Rig Services segment include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. We also provide specialty drilling services to oil and natural gas producers with certain of our larger rigs that are capable of providing conventional and horizontal drilling services. Our rigs encompass various sizes and capabilities, allowing us to service all types of oil and gas wells.

We recognize revenue within the Rig Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically daily, as we have the right to invoice the customer for the services performed. Rig Services are billed monthly, and payment terms are usually 30 days from invoice receipt.

Fishing and Rental Services

We offer a full line of services and rental equipment designed for use in providing drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing a broad array of “fishing tools.” Our rental tool inventory consists of drill pipe, tubulars, handling tools (including our patented Hydra-Walk® pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units, foam air units.

We recognize revenue within the Fishing and Rental Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically

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daily, as we have the right to invoice the customer for the services performed. Fishing and Rental Services are billed and paid monthly. Payment terms for Fishing and Rental Services are usually 30 days from invoice receipt.

Coiled Tubing Services

Coiled Tubing Services involve the use of a continuous metal pipe spooled onto a large reel, which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing is also used for a number of horizontal well applications such as milling temporary isolation plugs that separate frac zones, and various other pre- and post-hydraulic fracturing well preparation services.

We recognize revenue within the Coiled Tubing Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue, typically daily, as the services are provided as we have the right to invoice the customer for the services performed. Coiled Tubing Services are billed and paid monthly. Payment terms for Coiled Tubing Services are usually 30 days from invoice receipt.

Fluid Management Services

We provide transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. We also provide disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by us or a third party.

We recognize revenue within the Fluid Management Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically daily, as we have the right to invoice the customer for the services performed. Fluid Management Services are billed and paid monthly. Payment terms for Fluid Management Services are usually 30 days from invoice receipt.

Arrangements with Multiple Performance Obligations

While not typical for our business, our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or using expected cost-plus margin. For combined products and services within a contract, we account for individual products and services separately if they are distinct –- i.e., if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate products and services within a contract based on the prices at which we separately sell our services. For items that are not sold separately, we estimate the standalone selling prices using the expected cost-plus margin approach.

Contract Balances

Under our revenue contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our revenue contracts do not give rise to contract assets or liabilities under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within general and administrative expenses.

The majority of our services are short-term in nature, with a contract term of one year or less. For those contracts, we have utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

Additionally, our payment terms are short-term in nature with settlements of one year or less. We have, therefore, utilized the practical expedient in ASC 606-10-32-18 exempting the Company from adjusting the promised amount of consideration for the effects of a significant financing component given that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Further, in many of our service contracts we have a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date (for example, a service contract in which an

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entity bills a fixed amount for each hour of service provided). For those contracts, we have utilized the practical expedient in ASC 606-10-55-18 exempting the Company from disclosure of the recognition of revenue in the amount that the Company has a right to invoice.

Accordingly, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

NOTE 4. EQUITY

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2020 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock					Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares		Amount at Par
Balance at December 31, 2019	411		$	206		$	265,588		$	(317,047	)	$	(51,253	)
Common stock purchases	(1	)	(1		)	(7		)	—			(8		)
Share-based compensation	3		2			(75		)	—			(73		)
Issuance of shares pursuant to the Restructuring Support Agreement	13,368		133			41,855			—			41,988
Issuance of warrants pursuant to the Restructuring Support Agreement	—		—			296			—			296
Net income	—		—			—			108,994			108,994
Balance at March 31, 2020	13,781		340			$	307,657		(208,053		)	99,944
Share-based compensation	—		—			325			—			325
Net loss	—		—			—			(19,125		)	(19,125		)
Balance at June 30, 2020	13,781		$	340		$	307,982		$	(227,178	)	$	81,144

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2019 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock			Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares	Amount at Par
Balance at December 31, 2018	407	$	204	$	264,945		$	(219,629	)	$	45,520
Share-based compensation	—	—		816			—			816
Net loss	—	—		—			(23,441		)	(23,441		)
Balance at March 31, 2019	407	204		265,761			(243,070		)	22,895
Common stock purchases	—	—		(4		)	—			(4		)
Share-based compensation	1	—		1,414			—			1,414
Net loss	—	—		—			(18,303		)	(18,303		)
Balance at June 30, 2019	408	$	204	$	267,171		$	(261,373	)	$	6,002

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NOTE 5. OTHER BALANCE SHEET INFORMATION

The table below presents comparative detailed information about other current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current assets:
Prepaid current assets	$	7,545	$	13,118
Reinsurance receivable	6,636		6,475
Operating lease right-of-use assets	3,593		2,394
Other	—		273
Total	$	17,774	$	22,260

The table below presents comparative detailed information about other non-current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current assets:
Reinsurance receivable	$	7,054	$	6,887
Deposits	32,612		8,689
Operating lease right-of-use assets	439		2,404
Other	295		386
Total	$	40,400	$	18,366

The table below presents comparative detailed information about other current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current liabilities:
Accrued payroll, taxes and employee benefits	$	8,504	$	14,463
Accrued operating expenditures	7,111		12,919
Income, sales, use and other taxes	2,869		5,115
Self-insurance reserve	24,543		25,366
Accrued interest	2,204		15,476
Accrued insurance premiums	1,721		4,990
Unsettled legal claims	2,013		7,020
Accrued severance	—		2,636
Operating leases	2,599		2,502
Other	43		228
Total	$	51,607	$	90,715

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The table below presents comparative detailed information about other non-current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current liabilities:
Asset retirement obligations	$	8,803	$	9,035
Environmental liabilities	1,851		2,047
Accrued sales, use and other taxes	17,005		17,005
Deferred tax liabilities	484		—
Operating leases	1,783		2,590
Federal insurance contributions act tax	1,137		—
Other	31		33
Total	$	31,094	$	30,710

NOTE 6. INTANGIBLE ASSETS

The components of our other intangible assets as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

	June 30, 2020			December 31, 2019
Trademark:
Gross carrying value	$	520		$	520
Accumulated amortization	(202		)	(173		)
Net carrying value	$	318		$	347

The weighted average remaining amortization periods and expected amortization expense for the next five years for our definite lived intangible assets are as follows:

	Weighted average remaining amortization period (years)	Expected amortization expense (in thousands)
		Remainder of 2020		2021		2022		2023		2024
Trademarks	5.5	$	29	$	58	$	58	$	58	$	58

Amortization expense for our intangible assets was less than $0.1 millionfor the three and six months endedJune 30, 2020 and 2019.

NOTE 7. DEBT

As of June 30, 2020 and December 31, 2019, the components of our debt were as follows (in thousands):

	June 30, 2020			December 31, 2019
Term Loan Facility due 2025	$	50,000		$	—
Term Loan Facility due 2021	1,207			243,125
Unamortized debt issuance costs	(2,923		)	(1,799		)
Finance lease obligation	4,746			1,600
Total	53,030			242,926
Less current portion(1)	(1,076		)	(2,919		)
Long-term debt	$	51,954		$	240,007

(1) Of the current portion of debt, $1.1 million and $0.4 million is related to finance leases as of June 30, 2020 and December 31, 2019, respectively.

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Prior Long-Term Debt Arrangements

Prior to the Restructuring, the Company was party to two credit facilities. The Company and Key Energy Services, LLC, were borrowers (the “ABL Borrowers”) under an ABL Facility with the financial institutions party thereto from time to time as lenders (the “ABL Lenders”), Bank of America, N.A., as administrative agent for the lenders (the “Administrative Agent”) and Bank of America, N.A., as sole collateral agent for the lenders, providing for aggregate commitments from the ABL Lenders of $80 million (the “Prior ABL Facility”). In addition, on December 15, 2016, the Company entered into the term loan facility among the Company, as borrower, certain subsidiaries of the Company named as guarantors therein, the financial institutions party thereto from time to time as Lenders (collectively, the “Term Loan Lenders”) and Cortland Capital Market Services LLC and Cortland Products Corp., as agent for the Lenders (the “Prior Term Loan Facility”).

As previously announced, on October 29, 2019, the Company entered into a forbearance agreement (as amended on December 6, 2019, December 20, 2019, January 10, 2020 and January 31, 2020, the “ABL Forbearance Agreement”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”), and all of the lenders party thereto (the “Lenders”) regarding a cross-default under the Loan and Security Agreement, dated as of December 15, 2016, by and among Key, the Administrative Agent and the Lenders.

On February 28, 2020, the Company and the Lenders party thereto amended the ABL Forbearance Agreement (the “Forbearance Agreement Amendment”). Pursuant to the Forbearance Agreement Amendment, the Lenders party thereto agreed, among other things, to extend the forbearance period until the earliest of (i) March 6, 2020, (ii) the occurrence of certain specified early termination events and (iii) the date on which the previously announced RSA between the Company and certain lenders under the Company’s term loan facility is terminated in accordance with its terms. In connection with the ABL Forbearance Agreement, the Company elected not to make scheduled interest payments due October 18, 2019 and January 20, 2020 under the Prior Term Loan Facility. The Company’s failure to make these interest payments resulted in a default under the Prior Term Loan Facility and a cross-default under the Prior ABL Facility.

Effective March 6, 2020, upon the closing of the Restructuring, we entered into the New Term Loan Facility and the New ABL Facility, which superseded the Prior Term Loan Facility and Prior ABL Facility. A description of each of the new and prior facilities follows.

New ABL Facility

On March 6, 2020, the Company and Key Energy Services, LLC, as borrowers (the “ABL Borrowers”), entered into Amendment No. 3 to the Company’s existing ABL facility, dated as of December 15, 2016 (as amended, the “New ABL Facility”) with the financial institutions party thereto from time to time as lenders (the “ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Agent”) for the ABL Lenders. The New ABL Facility provides for aggregate commitments from the ABL Lenders of $70 million, which mature on the earlier of (x) April 5, 2024 and (y) 181 days prior to the scheduled maturity date of the Company’s term loan facility or the scheduled maturity date of the Company’s other material debt in an aggregate principal amount exceeding $15 million.

The New ABL Facility provides the ABL Borrowers with the ability to borrow up to an aggregate principal amount equal to the lesser of (i) the aggregate revolving commitments then in effect and (ii) the sum of (a) 85% of the value of eligible accounts receivable plus (b) 80% of the value of eligible unbilled accounts receivable, subject to a limit equal to the greater of (x) $30 million and (y) 25% of the commitments. The amount that may be borrowed under the New ABL Facility is subject to increase or reduction based on certain segregated cash or reserves provided for by the New ABL Facility. In addition, the percentages of accounts receivable and unbilled accounts receivable included in the calculation described above is subject to reduction to the extent of certain bad debt write-downs and other dilutive items provided in the New ABL Facility.     

Borrowings under the New ABL Facility bears interest, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.75% to 3.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR plus 1.0% plus (b) an applicable margin that varies from 1.75% to 2.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time. The New ABL Facility provides that, in the event LIBOR becomes unascertainable for the requested interest period or otherwise becomes unavailable or replaced by other benchmark interest rates, then the Company and the ABL Agent may amend the New ABL Facility for the purpose of replacing LIBOR with one or more SOFR-based rates or another alternate benchmark rate giving consideration to the general practice in similar U.S. dollar denominated syndicated credit facilities.

In addition, the New ABL Facility provides for unused line fees of 0.5% to 0.375% per year, depending on utilization, letter of credit fees and certain other factors. The New ABL Facility may in the future be guaranteed by certain of the Company’s existing and future subsidiaries (the “ABL Guarantors,” and together with the ABL Borrowers, the “ABL Loan Parties”). To secure their obligations under the New ABL Facility, each of the ABL Loan Parties has granted or will grant, as applicable, to the ABL Agent a first-priority security interest for the benefit of the ABL Lenders in its present and future accounts receivable, inventory

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and related assets and proceeds of the foregoing (the “ABL Priority Collateral”). In addition, the obligations of the ABL Loan Parties under the ABL Facility are secured by second-priority liens on the Term Priority Collateral (as described below under “New Term Loan Facility”).

The revolving loans under the New ABL Facility may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to breakage or similar costs.

The New ABL Facility contains certain affirmative and negative covenants, including covenants that restrict the ability of the ABL Loan Parties to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends and the sale of assets. The New ABL Facility also contains a requirement that the ABL Borrowers comply, during certain periods, with a fixed charge coverage ratio of at least 1.00 to 1.00.

On May 20, 2020, the ABL Borrowers, the ABL Lenders and Administrative Agent, entered into Amendment No. 4 to the New ABL Facility. Pursuant to the Fourth Amendment, the parties agreed, among other things, to (i) reduce the Lenders’ aggregate commitments to make revolving loans to $50 million, (ii) increase the applicable interest rate margin by 100 basis points to 375-425 basis points for LIBOR borrowings (with a 1.00% LIBOR floor) and 275-325 basis points for base rate borrowings (with a 2.00% base rate floor), in each case depending on the fixed charge coverage ratio at the time of determination, (iii) lower the availability thresholds for triggering certain covenants and (iv) add certain reporting requirements.

As of June 30, 2020, we had no borrowings outstanding, $36.3 million of letters of credit, $28.6 million posted as additional collateral ($21.2 million of which was posted in the second quarter of 2020) recorded in deposits on our balance sheet and $7.8 million of borrowing capacity available under our New ABL Facility. The letters of credit are related to our workers’ compensation and auto insurance costs. The additional collateral is required to collateralize our outstanding letters of credit and maintain compliance with the minimum borrowing capacity available under our New ABL Facility.

As of June 30, 2020, we were in compliance with all covenants under our New ABL Facility.

New Term Loan Facility

On March 6, 2020, the Company entered into an amendment and restatement agreement with the Supporting Term Lenders and Cortland Capital Market Services LLC and Cortland Products Corp., as agent (the “Term Agent”), which amended and restated the Prior Term Loan Facility, among the Company, as borrower, certain subsidiaries of the Company named as guarantors therein, the financial institutions party thereto from time to time as lenders and the Term Agent (as amended and restated by the amendment and restatement agreement, the “New Term Loan Facility”). Prior to the closing of the Restructuring, there were approximately $243.1 million aggregate principal amount of term loans outstanding under the Prior Term Loan Facility. Following the closing of the Restructuring, the New Term Loan Facility is comprised of (i) $30 million new money term loans funded by the Supporting Term Lenders and $20 million new term loans excluding new money issued in exchange for existing term loans held by the Supporting Term Lenders (collectively, the “New Term Loans”) and (ii) an approximate $1.2 million senior secured term loan tranche in respect of the existing term loans held by lenders who are not Supporting Term Lenders (the “Continuing Term Loans”). As of June 30, 2020, there was $51.2 million outstanding under the New Term Loan Facility.

For the $20 million new term loans excluding new money which were accounted for as a troubled debt restructuring with a modification of terms in accordance with ASC 470-60, “Troubled Debt Restructurings by Debtors”, which addresses certain aspects of the accounting for debt, a total of $16.3 million of estimated future undiscounted interest payments has been accrued per ASC 470-60 and presented as Interest Payable in the accompanying balance sheet. Interest payments made in the future associated with the modified $20 million new term loans will be a reduction to interest payable, which is recorded as a long-term liability on our consolidated balance sheet, and not to interest expense. Fluctuations in the effective interest rate used to estimate future cash flows will be accounted for as changes in estimates for the period in which the change occurred. However, the carrying amount of the restructured payable will remain unchanged, and future cash payments will reduce the carrying amount until the time that any gain recognized cannot be offset by future cash payments.

The New Term Loan Facility will mature on August 28, 2025, with respect to the New Term Loans, and on December 15, 2021 with respect to the Continuing Term Loans. Such maturity date may, at the Company’s request, be extended by one or more of the term loan lenders pursuant to the terms of the New Term Loan Facility. The New Term Loans will bear interest at a per annum rate equal to LIBOR for six months, plus 10.25%. The Company has the option to pay interest in kind at an annual rate of LIBOR plus 12.25% on the outstanding principal amount of the New Term Loans for the first two years following the closing of the Restructuring. The Continuing Term Loans will bear interest at a per annum rate equal to LIBOR for one, two, three, six or, with the consent of all term loan lenders, up to 12 months, and the Company has the option to pay interest in kind of up to 100 basis points of the per annum interest due on the Continuing Term Loans.

The New Term Loan Facility is guaranteed by certain of the Company’s existing and future subsidiaries (the “Term Loan Guarantors,” and together with the Company, the “Term Loan Parties”). To ensure their obligations under the New Term Loan

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Facility, each of the Term Loan Parties has granted or will grant, as applicable, to the Term Agent a first-priority security interest for the benefit of the Term Loan Lenders in substantially all of each Term Loan Party’s assets other than certain excluded assets and the ABL Priority Collateral (the “Term Priority Collateral”). In addition, the obligations of the Term Loan Parties under the New Term Loan Facility are secured by second-priority liens on the ABL Priority Collateral (as described above under “ABL Facility”).

The New Term Loans may be prepaid at the Company’s option, subject to the payment of a prepayment premium (which may be waived by lenders holding New Term Loans under the New Term Loan Facility representing at least two-thirds of the aggregate outstanding principal amount of the New Term Loans) in certain circumstances as provided in the New Term Loan Facility. If a prepayment is made prior to the first anniversary of the closing of the Restructuring, such prepayment premium is equal to 3% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the first anniversary to the second anniversary of the closing of the Restructuring, the prepayment premium is equal to 2% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the second anniversary to the third anniversary of the closing of the Restructuring, the prepayment premium is equal to 1% of the principal amount of the New Term Loans prepaid; and there is no prepayment premium thereafter. The Company is required to make principal payments in respect of the Continuing Term Loans in the amount of $3,125 per quarter commencing with the quarter ended March 31, 2020 and is required to pay $1,190,625 on the maturity date of the Continuing Term Loans.

In addition, pursuant to the New Term Loan Facility, the Company must prepay or offer to prepay, as applicable, term loans with the net cash proceeds of certain debt incurrences and asset sales, excess cash flow, receipt of extraordinary cash proceeds (e.g., tax and insurance) and upon certain change of control transactions, subject in each case to certain exceptions.

The New Term Loan Facility contains certain affirmative and negative covenants, including covenants that restrict the ability of the Term Loan Parties to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends and the sale of assets. The New Term Loan Facility also contains a financial covenant requiring that the Company maintain Liquidity (as defined in the New Term Loan Facility) of not less than $10 million as of the last day of any fiscal quarter, subject to certain exceptions and cure rights.

As of June 30, 2020, we were in compliance with all covenants under our New Term Loan Facility.

The weighted average interest rate on the outstanding borrowings under the New Term Loan Facility for the three month periods ended June 30, 2020 and from March 6, 2020, the beginning of the New Term Loan Facility, to June 30, 2020 were 13.17%.

Prior ABL Facility

As described above, the Company and Key Energy Services, LLC were borrowers under the Prior ABL Facility that provided for aggregate commitments from the ABL Lenders of $80 million.

On April 5, 2019, the ABL Borrowers, as borrowers, the financial institutions party thereto as lenders and Bank of America, N.A. (the “ABL Agent”), as administrative agent for the lenders, entered into Amendment No. 1 (“Amendment No. 1”) to the Prior ABL Facility, among the ABL Borrowers, the financial institutions party thereto from time to time as lenders, the ABL Agent and the co-collateral agents for the lenders, Bank of America, N.A. and Wells Fargo Bank, National Association. The amendment, among other things, lowered the applicable margin for borrowings to (i) from between 2.50% and 4.50% to between 2.00% and 2.50% for LIBOR borrowings and (ii) from 1.50% and 3.50% to between 1.00% and 1.50% for base rate borrowings. On December 20, 2019, the Company and the Lenders amended the ABL Forbearance Agreement and the Loan Agreement to, among other things, (i) reduce the minimum availability Key is required to maintain under the ABL Forbearance Agreement from $12.5 million to $10 million and (ii) reduce the aggregate revolving commitments under the Loan Agreement from $100 million to $80 million.

The Prior ABL Facility provided the ABL Borrowers with the ability to borrow up to an aggregate principal amount equal to the lesser of (i) the aggregate revolving commitments then in effect and (ii) the sum of (a) 85% of the value of eligible accounts receivable plus (b) 80% of the value of eligible unbilled accounts receivable, subject to a limit equal to the greater of (x) $35 million and (y) 25% of the Commitments.

The contractual interest rates under the Prior ABL Facility were, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.50% to 4.50% depending on the ABL Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR, plus 1.0% plus (b) an applicable margin that varied from 1.50% to 3.50% depending on the ABL Borrowers’ fixed charge coverage ratio at such time. In addition, the Prior ABL Facility provided for unused line fees of 1.0% to 1.25% per year, depending on utilization, letter of credit fees and certain other factors.

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Prior Term Loan Facility

As described above, the Company and certain subsidiaries were parties to the Prior Term Loan Facility, which had an initial outstanding principal amount of $250 million.

Borrowings under the Prior Term Loan Facility bore interest, at the Company’s option, at a per annum rate equal to (i) LIBOR for one, two, three, six, or, with the consent of the Term Loan Lenders, 12 months, plus 10.25% or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the Federal Funds rate, plus 0.50% and (z) 30-day LIBOR, plus 1.0% plus (b) 9.25%.

The weighted average interest rate on the outstanding borrowings under the Prior Term Loan Facility in 2020, prior to the Restructuring, was 15.45%.

NOTE 8. OTHER INCOME

The table below presents comparative detailed information about our other income and expense, shown on the condensed consolidated statements of operations as “other income, net” for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Interest income	$	(25	)	$	(195	)	$	(82	)	$	(517	)
Other	10			(44		)	(318		)	(864		)
Total	$	(15	)	$	(239	)	$	(400	)	$	(1,381	)

NOTE 9. INCOME TAXES

We are subject to U.S. federal income tax as well as income taxes in multiple state and foreign jurisdictions. Our effective tax rates for the three months endedJune 30, 2020 and 2019 were (1.2)% and 19.4%, respectively, and 1.1% and 9.5% for the six months endedJune 30, 2020 and 2019, respectively. The variance between our effective rate and the U.S. statutory rate is due to the impact of permanent differences and other tax adjustments, such as valuation allowances against deferred tax assets and a true-up adjustment to income tax receivable.

We continued recording income taxes using a year-to-date effective tax rate method for the three and six months ended June 30, 2020 and 2019. The use of this method was based on our expectations that a small change in our estimated ordinary income could result in a large change in the estimated annual effective tax rate. We will re-evaluate our use of this method each quarter until such time as a return to the annualized effective tax rate method is deemed appropriate.

The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. Due to the history of losses in recent years and the continued challenges affecting the oil and gas industry and global economy, management continues to believe it is more likely than not that we will not be able to realize our net deferred tax assets. No release of our deferred tax asset valuation allowance was made during the six months ended June 30, 2020.

The Company did not recognize any unrecognized tax benefits during three or six months ended June 30, 2020. As of June 30, 2020, we had no unrecognized tax benefits.

Cancellation of Indebtedness Income (“CODI”)

Under the RSA, a substantial portion of the Company’s term loans were exchanged for newly issued shares and new term loans of the Company. Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than the adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that an insolvent debtor may exclude CODI from taxable income up to the amount of insolvency but must reduce certain of its tax attributes by the amount of any CODI excluded pursuant to the insolvency exception. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. Based on the market value of the Company’s equity, and the adjusted issue price of the term loans issued in the exchange, the estimated amount of U.S. CODI is approximately $206.0 million, $197.8 million of which is excluded pursuant to the insolvency exception and $8.2 million of which will be included in taxable income. Due to the application of the insolvency exception, the Company will reduce the value of its U.S. net operating losses that had a value of $476.8 million as of June 30, 2020. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of the restructuring, or January 1, 2021. Further

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any remaining net operating losses, tax credits, and certain built-in-losses or deductions existing as of the date of the ownership change will be limited under IRC Section 382 due to the change in control resulting from the restructuring.

The CARES Act

As noted above in Note 2 under the heading—Significant Accounting Policies Coronavirus Aid, Relief and Economic Security Act, the CARES Act includes several significant business tax provisions that, among other things, eliminate the taxable income limit for certain net operating losses (NOL) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; accelerate refunds of previously generated corporate alternative minimum tax (AMT) credits; and generally increased the business interest limitation under section 163(j) from 30 percent to 50 percent. Key has analyzed the income tax provisions under the CARES Act, and concluded that none of the provisions have a significant impact to the Company's income tax positions. Future regulatory guidance under the CARES Act or additional legislation enacted by Congress in connection with the COVID-19 pandemic could impact our tax provision in future periods. In addition to income tax provisions, the CARES Act also includes tax provisions relating to refundable payroll tax credits and deferment of employer’s social security tax payments. Specifically, the CARES Act permits an employer to defer 50 percent of its 2020 social security tax payments to the end of 2021 and the remaining 50 percent to the end of 2022. Beginning in April of 2020, we began deferment of employer’s social security payments. The Company continues to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

NOTE 10. COMMITMENTS AND CONTINGENCIES

Litigation

Various suits and claims arising in the ordinary course of business are pending against us. We conduct business throughout the continental United States and may be subject to jury verdicts or arbitrations that result in outcomes in favor of the plaintiffs. We continually assess our contingent liabilities, including potential litigation liabilities, as well as the adequacy of our accruals and our need for the disclosure of these items, if any. We establish a provision for a contingent liability when it is probable that a liability has been incurred and the amount is reasonably estimable. We have $2.0 million of other liabilities related to litigation that is deemed probable and reasonably estimable as of June 30, 2020. We do not believe that the disposition of any of these matters will result in an additional loss materially in excess of amounts that have been recorded.

Self-Insurance Reserves

We maintain reserves for workers’ compensation and vehicle liability on our balance sheet based on our judgment and estimates using an actuarial method based on claims incurred. We estimate general liability claims on a case-by-case basis. We maintain insurance policies for workers’ compensation, vehicle liability and general liability claims. These insurance policies carry self-insured retention limits or deductibles on a per occurrence basis. The retention limits or deductibles are accounted for in our accrual process for all workers’ compensation, vehicular liability and general liability claims. The deductibles have a $5 million maximum per vehicular liability claim, and a $2 million maximum per general liability claim and a $1 million maximum per workers’ compensation claim. As of June 30, 2020 and December 31, 2019, we have recorded $51.9 million and $51.4 million, respectively, of self-insurance reserves related to workers’ compensation, vehicular liabilities and general liability claims. Partially offsetting these liabilities, we had $13.7 million and $13.4 million of insurance receivables as of June 30, 2020 and December 31, 2019, respectively. We believe that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued for existing claims.

Environmental Remediation Liabilities

For environmental reserve matters, including remediation efforts for current locations and those relating to previously disposed properties, we record liabilities when our remediation efforts are probable and the costs to conduct such remediation efforts can be reasonably estimated. As of each of June 30, 2020 and December 31, 2019, we have recorded $1.9 million and $2.0 million, respectively, for our environmental remediation liabilities. We believe that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued.

NOTE 11. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is determined by dividing net loss attributable to Key by the weighted average number of common shares actually outstanding during the period. Diluted earnings (loss) per common share is based on the increased number of shares that would be outstanding assuming conversion of potentially dilutive outstanding securities using the treasury stock and “as if converted” methods.

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The components of our income (loss) per share are as follows (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020		2019
Basic Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
Basic earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.06	$	(102.31	)
Diluted EPS Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
RSUs	—			—			56		—
Total	13,781			408			8,991		408
Diluted earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.00	$	(102.31	)

Restricted stock units (“RSUs”), stock options, and warrants are included in the computation of diluted earnings per share using the treasury stock method. Restricted stock awards are legally considered issued and outstanding when granted and are included in basic weighted average shares outstanding.

The Company has issued potentially dilutive instruments such asRSUs, stock options and warrants. However, the Company did not include these instruments in its calculation of diluted loss per share during the periods presented, because to include them would be anti-dilutive. The following table shows potentially dilutive instruments (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020	2019	2020	2019
RSUs	301	40	58	41
Stock options	1	1	1	1
Warrants	2,924	37	1,880	37
Total	3,226	78	1,939	79

No events occurred after June 30, 2020 that would materially affect the number of weighted average shares outstanding.

NOTE 12. SHARE-BASED COMPENSATION

Common Stock Awards

We recognized employee share-based compensation expense of $0.3 million and $1.4 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized employee share-based compensation expense of $0.3 million and $2.1 million during the six months endedJune 30, 2020 and 2019, respectively. Our employee share-based awards, including common stock awards, stock option awards and phantom shares, vest in equal installments over a three-year period or vest in a 40%-60% split respectively over a two-year period. Additionally, we recognized share-based compensation expense related to our outside directors of zero and$0.1 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized share-based compensation expense related to our outside directors of less than negative $0.1 million and $0.2 million during the six months endedJune 30, 2020 and 2019, respectively. The unrecognized compensation cost related to our unvested share-based awards as of June 30, 2020 is estimated to be $3.1 million and is expected to be recognized over a weighted-average period of 1.3 years.

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Stock Option Awards

As of June 30, 2020, all outstanding stock options are vested and there are no unrecognized costs related to our stock options.

Phantom Share Plan

We recognized compensation expense related to our phantom shares of less than $0.1 million and less than negative $0.1 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized compensation expense related to our phantom shares of less than $0.1 million and less than $0.1 million during the six months endedJune 30, 2020 and 2019, respectively. The unrecognized compensation cost related to our unvested phantom shares as of June 30, 2020 is estimated to be less than $0.1 million and is expected to be recognized over a weighted-average period of 0.5 years.

NOTE 13. TRANSACTIONS WITH RELATED PARTIES

The Company previously had a corporate advisory services agreement between with Platinum Equity Advisors, LLC (“Platinum”), an affiliate of Soter, pursuant to which Platinum provides certain business advisory services to the Company. The dollar amounts related to these related party activities were material to the Company’s condensed consolidated financial statements.

In March 2020, the Company and Platinum Equity Advisors, LLC (“Platinum”), entered into a letter agreement (the “CASA Letter Agreement”) regarding outstanding payments owed to Platinum by the Company under the Corporate Advisory Services Agreement, dated as of December 15, 2016 (the “Advisory Agreement”). Pursuant to the CASA Letter Agreement, Platinum agreed to release the Company from its outstanding payment obligations under the Advisory Agreement in exchange for the right to a potential payment of $4.0 million upon the occurrence of certain reorganization events involving the Company and ceased providing any business advisory services to the Company.

NOTE 14. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, cash equivalents, accounts receivable, accounts payable and accrued liabilities. These carrying amounts approximate fair value because of the short maturity of the instruments or because the carrying value is equal to the fair value of these instruments.

New Term Loan Facility. Because of the variable interest rates feature and recent initiation of these loans, we believe the carrying value approximates the fair value of the loans borrowed under this facility.

NOTE 15. LEASES

We have operating leases for certain corporate offices and operating locations and finance leases for certain vehicles. We determine if a contract is a lease or contains an embedded lease at the inception of the contract. Operating lease right-of-use (“ROU”) assets are included in other current and other non-current assets, and operating lease liabilities are included in other current and other non-current liabilities in our consolidated balance sheets. Finance lease ROU assets are included in property and equipment, net, and finance lease liabilities are included in our current portion of long-term debt, and long-term debt on our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our risk adjusted incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease. Our leases have remaining lease terms of less than one year to five years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Lease expense for lease payments is recognized on a straight-line basis over the non-cancelable term of the lease.

We recognized $0.7 million and $0.7 million of costs related to our operating leases during the three months ended June 30, 2020 and June 30, 2019, respectively. We recognized $1.4 million and $1.4 million of costs related to our operating leases during the six months ended June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020, our operating leases have a weighted average remaining lease term of 2.3 years and a weighted average discount rate of 5.63%.

We recognized $0.3 million and zero of costs related to our finance leases during the three months ended June 30, 2020 and June 30, 2019, respectively. We recognized $0.4 million and zero of costs related to our finance leases during the six months ended June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020, our finance leases have a weighted average remaining lease term of 4.3 years and a weighted average discount rate of 5.11%.

Supplemental balance sheet information related to leases as of June 30, 2020 and December 31, 2019are as follows (in thousands):

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	June 30, 2020		December 31, 2019
Right-of-use assets under operating leases
Operating lease right-of-use assets, current portion	$	3,593	$	2,394
Operating lease right-of-use assets, non-current portion	439		2,404
Total operating lease assets	$	4,032	$	4,798
Operating lease liabilities, current portion	$	2,599	$	2,502
Operating lease liabilities, non-current portion	1,783		2,590
Total operating lease liabilities	$	4,382	$	5,092
Right-of-use assets under finance leases
Property and equipment, at cost	$	5,246	$	1,760
Less accumulated depreciation	554		183
Property and equipment, net	$	4,692	$	1,577
Current portion of long-term debt	$	1,063	$	419
Long-term debt	3,683		1,181
Total finance lease liabilities	$	4,746	$	1,600

The maturities of our operating and finance lease liabilities as of June 30, 2020 are as follows (in thousands):

	June 30, 2020
	Operating Leases			Finance Leases
Remainder of 2020	$	1,492		$	638
2021	1,747			1,277
2022	705			1,277
2023	528			1,075
2024	189			792
Thereafter	—			225
Total lease payments	4,661			5,284
Less imputed interest	(279		)	(538		)
Total	$	4,382		$	4,746

NOTE 16. SEGMENT INFORMATION

Our reportable business segments are Rig Services, Fishing and Rental Services, Coiled Tubing Services and Fluid Management Services. We also have a “Functional Support” segment associated with overhead and other costs in support of our reportable segments. We evaluate the performance of our segments based on gross margin measures. All inter-segment sales pricing is based on current market conditions.

Rig Services

Our Rig Services include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. We also provide specialty drilling services to oil and natural gas producers with certain of our larger rigs that are capable of providing conventional and horizontal drilling services. Our rigs encompass various sizes and capabilities, allowing us to service all types of wells. Many of our rigs are outfitted with our proprietary KeyView® technology, which captures and reports well site operating data and provides safety control systems. We believe that this technology allows our customers and our crews to better monitor well site operations, improves efficiency and safety, and adds value to the services that we offer.

The completion and recompletion services provided by our rigs prepare wells for production, whether newly drilled, or recently extended through a workover operation. The completion process may involve selectively perforating the well casing to access production zones, stimulating and testing these zones, and installing tubular and downhole equipment. We typically provide

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a well service rig and may also provide other equipment to assist in the completion process. Completion services vary by well and our work may take a few days to several weeks to perform, depending on the nature of the completion.

The workover services that we provide are designed to enhance the production of existing wells and generally are more complex and time consuming than normal maintenance services. Workover services can include deepening or extending wellbores into new formations by drilling horizontal or lateral wellbores, sealing off depleted production zones and accessing previously bypassed production zones, converting former production wells into injection wells for enhanced recovery operations and conducting major subsurface repairs due to equipment failures. Workover services may last from a few days to several weeks, depending on the complexity of the workover.

Maintenance services provided with our rig fleet are generally required throughout the life cycle of an oil or natural gas well. Examples of these maintenance services include routine mechanical repairs to the pumps, tubing and other equipment, removing debris and formation material from wellbores, and pulling rods and other downhole equipment from wellbores to identify and resolve production problems. Maintenance services are generally less complicated than completion and workover related services and require less time to perform.

Our rig fleet is also used in the process of permanently shutting-in oil or natural gas wells that are at the end of their productive lives. These plugging and abandonment services generally require auxiliary equipment in addition to a well servicing rig. The demand for plugging and abandonment services is not significantly impacted by the demand for oil and natural gas because well operators are required by state regulations to plug wells that are no longer productive.

Fishing and Rental Services

We offer a full line of fishing services and rental equipment designed for use in providing drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing a broad array of “fishing tools.” Our rental tool inventory consists of drill pipe, tubulars, handling tools (including our patented Hydra-Walk^® pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units and foam air units. We sold our well testing assets and our frac stack equipment used to support hydraulic fracturing operations and the associated flowback of frac fluids in the second quarter of 2017.

Demand for our fishing and rental services is closely related to capital spending by oil and natural gas producers, which is generally a function of oil and natural gas prices.

Coiled Tubing Services

Coiled Tubing Services involve the use of a continuous metal pipe spooled onto a large reel which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing is also used for a number of horizontal well applications such as milling temporary isolation plugs that separate frac zones, and various other pre- and post-hydraulic fracturing well preparation services.

Fluid Management Services

We provide transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. We also provide disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by us or a third party. In addition, we operate a fleet of hot oilers capable of pumping heated fluids used to clear soluble restrictions in a wellbore. Demand and pricing for these services generally correspond to demand for our well service rigs.

Functional Support

Our Functional Support segment includes unallocated overhead costs associated with administrative support for our reporting segments.

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Financial Summary

The following tables set forth our unaudited segment information as of and for the three and six months ended June 30, 2020 and 2019 (in thousands):

As of and for the three months ended June 30, 2020
	Rig Services			Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	20,825		$	3,971		$	1,867		$	8,087		$	—		$	—		$	34,750
Intersegment revenues	10			54			—			5			—			(69		)	—
Depreciation and amortization	4,138			1,349			1,164			717			686			—			8,054
Other operating expenses	18,992			4,340			2,521			7,259			10,429			—			43,541
Operating income (loss)	(2,305		)	(1,718		)	(1,818		)	111			(11,115		)	—			(16,845		)
Interest expense, net of amounts capitalized	68			6			14			11			1,967			—			2,066
Income (loss) before income taxes	(2,364		)	(1,718		)	(1,831		)	104			(13,087		)	—			(18,896		)
Long-lived assets(1)	115,036			16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287			20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	102			88			105			(9		)	11			—			297

As of and for the three months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	67,884	$	14,812		$	11,747		$	18,500	$	—		$	—		$	112,943
Intersegment revenues	166		287			—			32		—			(485		)	—
Depreciation and amortization	6,141		4,204			1,270			2,182		465			—			14,262
Other operating expenses	55,861		12,430			11,926			16,119		16,772			—			113,108
Operating income (loss)	5,882		(1,822		)	(1,449		)	199		(17,237		)	—			(14,427		)
Interest expense, net of amounts capitalized	26		6			14			10		8,464			—			8,520
Income (loss) before income taxes	5,867		(1,823		)	(1,461		)	185		(25,476		)	—			(22,708		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	983		—			1,151			1,898		3,290			—			7,322

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As of and for the six months ended June 30, 2020
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	68,734	$	13,563		$	6,704		$	21,057		$	—		$	—		$	110,058
Intersegment revenues	125		225			—			34			5			(389		)	—
Depreciation and amortization	8,167		4,182			2,338			2,228			1,365			—			18,280
Impairment expense	—		17,551			—			23,691			—			—			41,242
Other operating expenses	59,546		13,298			7,140			18,889			21,582			—			120,455
Operating income (loss)	1,021		(21,468		)	(2,774		)	(23,751		)	(22,947		)	—			(69,919		)
Gain on debt restructuring	—		—			—			—			(170,648		)	—			(170,648		)
Interest expense, net of amounts capitalized	100		12			27			23			10,125			—			10,287
Income (loss) before income taxes	941		(21,468		)	(2,800		)	(23,769		)	137,938			—			90,842
Long-lived assets(1)	115,036		16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287		20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	390		106			272			123			88			—			979

As of and for the six months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	132,910	$	29,399		$	22,420		$	37,487	$	—		$	—		$	222,216
Intersegment revenues	254		1,195			—			75		—			(1,524		)	—
Depreciation and amortization	12,130		8,354			2,526			4,623		925			—			28,558
Other operating expenses	110,442		23,990			23,481			32,556		32,928			—			223,397
Operating income (loss)	10,338		(2,945		)	(3,587		)	308		(33,853		)	—			(29,739		)
Interest expense, net of amounts capitalized	36		13			30			21		17,653			—			17,753
Income (loss) before income taxes	10,336		(2,947		)	(3,614		)	291		(50,177		)	—			(46,111		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	2,813		2,073			1,917			2,055		3,504			—			12,362

(1) Long-lived assets include fixed assets, intangibles and other non-current assets.

NOTE 17. ASSET IMPAIRMENT

Asset Impairments

During the six months ended June 30, 2020 the Company recognized an asset impairment of $41.2 million. The COVID-19 pandemic has resulted in significant economic disruption globally. Government action to restrict travel and suspend business operations has significantly reduced global economic activity. In addition, the recent steep decline in the price of crude oil has decreased the value in some of our long-lived assets.

The Company assesses triggering events in accordance with ASC 360-10-35-21. Triggering events that were deemed to be present included: a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical location, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group), and a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. During the first quarter of 2020, we recognized an impairment expense to long-lived assets.

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Impairment of Long-Lived Assets    

The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets used in operations are assessed for impairment whenever changes in circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. Long-lived assets must be grouped at the lowest level for which independent cash flows can be identified (asset groups). If the sum of the undiscounted cash flows is less than the carrying value of an asset group, the fair value of each asset group must be calculated and the carrying value is written down to the calculated fair value if necessary. If the fair value of an asset group exceeds the carrying value, no impairment expense is necessary for that asset group.

During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all five of our asset groups as a result of the significant economic impacts and the effects of COVID-19. The five asset groups were determined to be Rigs, Fluid Management Services - Trucks, Fluid Management Services - Saltwater Disposal Wells, Fishing & Rental Services, and Coiled Tubing Services. We assessed each asset group for impairment by comparing the undiscounted pretax cash flows to the carrying value of each asset group. We determined that all our asset groups, excluding Rigs, had carrying values that exceeded the undiscounted cash flows. The determination of undiscounted cash flows included management’s best estimates of the expected future cash flows per asset group for the next five years. The determinations of expected future cash flows and the salvage value of long-lived assets require considerable judgement and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for the purposes of this impairment analysis will prove to be an accurate prediction of the future. Should our assumptions change significantly in future periods, it is possible we may determine the carrying values of the Rigs asset group exceeds the undiscounted pretax cashflows, which would result in an impairment expense.

It was determined that the fair value of the Fluid Management Services - Trucks, Fluid Management Services - Saltwater Disposal Wells, and Fishing & Rental Service asset groups was less than the carrying value of the respective asset groups by approximately $8.8 million, $14.8 million and $17.6 million, respectively, as of March 31, 2020. As a result, we recorded a total impairment charge of $41.2 million to asset impairment on the consolidated statements of income at March 31, 2020. We determined that the fair value of our Coiled Tubing Services asset group exceeded the carrying value. As such, no impairment expense was charged to the Coiled Tubing Services asset group.

The Company incorporated the income, market, and cost approaches to determine the fair value of each asset group. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The market approach was utilized when there was an observable secondary market or where there was ample asset data available. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. Fair value determination requires a considerable amount of judgement and is sensitive to changes in underlying assumptions and economic factors. As a result, there can be no assurance that the fair value estimates made for the impairment analysis will prove to be an accurate prediction for the future. 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Key Energy Services, Inc., and its wholly owned subsidiaries provide a full range of well services to major oil companies and independent oil and natural gas production companies. Our services include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services. Additionally, certain of our rigs are capable of specialty drilling applications. We operate in most major oil and natural gas producing regions of the continental United States. An important component of the Company’s growth strategy is to make acquisitions that will strengthen its core services or presence in selected markets, and the Company also makes strategic divestitures from time to time. The Company expects that the industry in which it operates will experience consolidation, and the Company expects to explore opportunities and engage in discussions regarding these opportunities, which could include mergers, consolidations or acquisitions or further dispositions or other transactions, although there can be no assurance that any such activities will be consummated.

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of and for the three and six months ended June 30, 2020 and 2019, included elsewhere herein, and the audited consolidated financial statements and notes thereto included in the 2019 Form 10-K and the Q1 2020 Form 10-Q.

We provide information regarding four business segments: Rig Services, Fishing and Rental Services, Coiled Tubing Services and Fluid Management Services. We also have a “Functional Support” segment associated with overhead and other costs in support of our reportable segments. See “Note 16. Segment Information” in “Item 1. Financial Statements” of Part I of this report for a summary of our business segments.

Restructuring and Reverse Stock Split

On March 6, 2020, we closed the previously announced restructuring of our capital structure and indebtedness (the “Restructuring”) pursuant to the Restructuring Support Agreement, dated as of January 24, 2020 (the “RSA”), with lenders under our Prior Term Loan Facility (as defined below) collectively holding over 99.5% (the “Supporting Term Lenders”) of the principal amount of the Company’s then outstanding term loans. Pursuant to the RSA and the Restructuring contemplated thereby, among other things we effected the following transactions and changes to our capital structure and governance:

• pursuant to exchange agreements entered into at the closing of the Restructuring, we exchanged approximately $241.9 million aggregate outstanding principal of our term loans (together with accrued interest thereon) held by Supporting Term Lenders under our Prior Term Loan Facility into (i) approximately 13.4 million newly issued shares of common stock representing 97% of the Company’s outstanding shares after giving effect to such issuance (and without giving effect to dilution by the New Warrants and MIP (each as defined below)) and (ii) $20 million of term loans under our new $51.2 million term loan facility (the “New Term Loan Facility”), each on a pro rata basis based on their holdings of term loans under the Prior Term Loan Facility;

• completed a 1-for-50 reverse stock split of our outstanding common stock. All pre-Restructuring shares prices, including shares outstanding and earnings per share, have been adjusted to reflect the 1-for-50 reverse stock split;

• distributed to our common stockholders of record as of February 18, 2020 two series of warrants (the “New Warrants”);

• entered into the $51.2 million New Term Loan Facility, of which (i) $30 million was funded at closing of the Restructuring with new cash proceeds from the Supporting Term Lenders and $20 million was issued in exchange for term loans held by the Supporting Term Lenders under the Prior Term Loan Facility as described above and (ii) an approximate $1.2 million was a senior secured term loan tranche in respect of term loans held by lenders under the Prior Term Loan Facility who were not Supporting Term Lenders;

• entered into the New ABL Facility (as defined below);

• adopted a new management incentive plan (the “MIP”) representing up to 9% of the Company’s outstanding shares after giving effect to the issuance of shares described above; and

• made certain changes to the Company’s governance, including changes to our Board of Directors (the “Board”), amendments to our governing documents and entry into the Stockholders Agreement (as defined below) with the Supporting Term Lenders.

In accordance with the RSA at the closing of the Restructuring, the Company amended and restated its certificate of incorporation and entered into a stockholders agreement (the “Stockholders Agreement”) with the Supporting Term Lenders in order to, among other things, provide for a Board of seven members. Pursuant to the Stockholders Agreement, our Board consists

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of our chief executive officer and six other members appointed by various Supporting Term Lenders. Specifically, pursuant to the Stockholders Agreement, Supporting Term Lenders who hold more than 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate two directors and Supporting Term Lenders who hold between 10% and 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate one director. All appointees or nominees of Supporting Term Lenders, other than any director appointed or nominated by Soter Capital LLC (“Soter”), must meet the “independent director” requirements set forth in Section 303A of the NYSE Listed Company Manual. In addition, pursuant to the Stockholders Agreement, Supporting Term Lenders are entitled to appoint a non-voting board observer subject to specified ownership thresholds.

In accordance with the RSA and following the closing of the Restructuring, the Company distributed to stockholders of record as of February 18, 2020 the New Warrants. The New Warrants were issued in two series each with a four-year exercise period. The first series entitles the holders to purchase in the aggregate 1,669,730 newly issued shares of common stock, representing 10% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate exercise price of the first series of New Warrants is $19.23 and was determined based on the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring. The second series of New Warrants entitles the holders to purchase in the aggregate 1,252,297 newly issued shares of common stock, representing 7.5% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate strike price of the second series of New Warrants is $28.85 and was determined based on the product of (i) the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring, multiplied by (ii) 1.50.

For more information on our New Term Loan Facility and New ABL Facility entered into in connection with the Restructuring, see “Note 7. Debt” in Part I, Item 1 of this report.

PERFORMANCE MEASURES

In assessing overall activity in the U.S. onshore oilfield service industry in which we operate, we believe that the Baker Hughes U.S. land drilling rig count, which is publicly available on a weekly basis, is the best available barometer of exploration and production (“E&P”) companies’ capital spending and resulting activity levels. Historically, our activity levels have been highly correlated with U.S. onshore capital spending by our E&P company customers as a group.

	WTI Cushing Oil(1)		NYMEX Henry Hub Natural Gas(1)		Average Baker Hughes U.S. Land Drilling Rigs(2)	Average AESC Well Service Active Rig Count(3)
2020:
First Quarter	$	41.00	$	1.90	764	978
Second Quarter	$	27.96	$	1.70	378	498
2019:
First Quarter	$	54.82	$	2.92	1,023	1,295
Second Quarter	$	59.88	$	2.57	967	1,311
Third Quarter	$	56.34	$	2.38	894	1,263
Fourth Quarter	$	56.82	$	2.40	797	1,143

(1) Represents the average of the monthly average prices for each of the periods presented. Source: EIA and Bloomberg

(2) Source: www.bakerhughes.com

(3) Source: Association of Energy Service Companies data at www.aesc.net

Internally, we measure activity levels for our well servicing operations primarily through our rig and trucking hours. Generally, as capital spending by E&P companies increases, demand for our services also rises, resulting in increased rig and trucking services and more hours worked. Conversely, when activity levels decline due to lower spending by E&P companies, we generally provide fewer rig and trucking services, which results in fewer hours worked.

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Rig activity occurs primarily on weekdays during daylight hours. Accordingly, we track rig activity on a “per working day” basis. Key’s working days per quarter, which exclude national holidays, are indicated in the table below. Our trucking activity tends to occur on a 24/7 basis. Accordingly, we track our trucking activity on a “per calendar day” basis. The following table presents our quarterly rig and trucking hours from 2019 through the second quarter of 2020:

	Rig Hours	Trucking Hours	Key’s  Working Days(1)
2020:
First Quarter	101,341	106,786	64
Second Quarter	43,526	71,007	63
Total 2020	144,867	177,793	127
2019:
First Quarter	151,309	150,740	63
Second Quarter	154,017	144,996	63
Third Quarter	142,151	150,518	64
Fourth Quarter	114,727	121,152	62
Total 2019	562,204	567,406	252

(1) Key’s working days are the number of weekdays during the quarter minus national holidays.

MARKET AND BUSINESS CONDITIONS AND OUTLOOK

The outbreak of COVID-19 has caused an unprecedented global health crisis and significant economic disruption. National, state and local governments have instituted various measures including quarantining, stay-at-home orders and travel restrictions designed to slow the spread of COVID-19 and protect their populations and economies, including in the areas in which the Company operates. These actions have significantly curtailed economic activity, disrupted global supply chains and materially reduced demand for oil and natural gas, creating a supply and demand imbalance that has negatively impacted commodity prices. The decline in the demand and pricing for oil and natural gas has negatively impacted our customers and the demand for and pricing we receive for our services. These production cuts, other voluntary production curtailments and reduced new well drilling have helped to bring supply and demand closer to balance and stabilized commodity prices. However, US and international crude stocks remain at historically high levels and there remains a high degree of uncertainty regarding the timing and extent of any recovery in economic activity and energy demand. Although commodity prices have recovered from the lows of April 2020, pricing remains depressed compared to 2019 levels. Additionally, recent increases in COVID-19 infections have resulted in the re-implementation of travel and other restrictions on economic activity that were recently relaxed, which could further delay any improvement in energy demand. COVID-19 has also impacted how we conduct our business. While we have taken steps to keep our employees safe by supporting those affected, mandating that as many employees as possible work from home, and monitoring those who cannot do so and are required to be at work, our ability to serve our customers and execute our business could be adversely affected should a significant number of our employees contract COVID-19 and require quarantine. The extent to which our future results are affected by the COVID-19 pandemic and related economic downturn will depend on various factors and consequences beyond our control, such as the duration and scope of the pandemic; additional actions by businesses and governments in response to the pandemic, and the speed and effectiveness of responses to combat the virus. COVID-19 may also adversely affect our results in a manner that is either not currently known or that we do not currently consider to be a significant risk to our business. For additional detail, please refer to Risk Factors in our 2019 Form 10-K and our Q1 2020 Form 10-Q.

We experienced a downturn in demand for our services in 2019, and this decline has increased in 2020 for the reasons discussed above. The macroeconomic events that began in March 2020 resulted in significant revisions to our customers’ capital spending programs for 2020. We expect reduced demand for our services and pricing pressure to continue for the foreseeable future, particularly as compared to the previous year. While activity levels have improved to 63 well service rigs working in July 2020 as compared to 47 well service rigs working in May 2020, as of the date of this filing, we have limited visibility into whether our customers will continue to resume their production maintenance activities, the timing of any increase in activity, or the extent of any improvement in demand for our services. However, as oil supply adjusts to demand and commodity prices stabilize, we expect demand for our services to increase as our customers begin to bring shut-in wells back on line and resume normal well maintenance work.

We initiated a number of actions in the fourth quarter 2019 aimed at conserving cash and protecting our liquidity, and these actions have continued into the second quarter of 2020, including: completing the refinancing of our capital structure,

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internally realigning our operations, exiting operations and areas to focus on certain markets where we had the best competitive positions, and reducing our overhead costs, including suspension of our 401K match, given the reduced operating footprint. We remain focused on maximizing our current equipment fleet, but we may further reduce our planned expenditures and defer acquisition of new equipment or maintenance if market conditions decline further.

Given the dynamic nature of the macroeconomic events discussed above, we are unable to reasonably estimate the period of time that these market conditions will exist, the extent of the impact they will have on our business, liquidity, results of operations, financial condition, or the timing of any subsequent recovery.

RESULTS OF OPERATIONS

The following table shows our consolidated results of operations for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
REVENUES	$	34,750		$	112,943		$	110,058		$	222,216
COSTS AND EXPENSES:
Direct operating expenses	29,904			90,564			91,565			178,758
Depreciation and amortization expense	8,054			14,262			18,280			28,558
General and administrative expenses	13,637			22,544			28,890			44,639
Impairment expense	—			—			41,242			—
Operating loss	(16,845		)	(14,427		)	(69,919		)	(29,739		)
Gain on debt restructuring	—			—			(170,648		)	—
Interest expense, net of amounts capitalized	2,066			8,520			10,287			17,753
Other income, net	(15		)	(239		)	(400		)	(1,381		)
Income (loss) before income taxes	(18,896		)	(22,708		)	90,842			(46,111		)
Income tax benefit (expense)	(229		)	4,405			(973		)	4,367
NET INCOME (LOSS)	$	(19,125	)	$	(18,303	)	$	89,869		$	(41,744	)

Consolidated Results of Operations — Three Months Ended June 30, 2020 and 2019

Revenues

Our revenues for the three months ended June 30, 2020 decreased $78.2 million, or 69.2%, to $34.8 million from $112.9 million for the three months ended June 30, 2019, due to lower customer spending and activity as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations. See “Segment Operating Results — Three Months Ended June 30, 2020 and 2019” below for a more detailed discussion of the change in our revenues.

Direct Operating Expenses

Our direct operating expenses decreased $60.7 million, to $29.9 million (86.1% of revenues), for the three months ended June 30, 2020, compared to $90.6 million (80.2% of revenues) for the three months ended June 30, 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to the decrease in activity levels discussed above.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased $6.2 million, or 43.5%, to $8.1 million during the three months ended June 30, 2020, compared to $14.3 million for the three months ended June 30, 2019. This decrease is primarily due to certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 of $41.2 million that reduced their depreciable base for future periods.

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General and Administrative Expenses

General and administrative expenses decreased $8.9 million, to $13.6 million (39.2% of revenues), for the three months ended June 30, 2020, compared to $22.5 million (20.0% of revenues) for the three months ended June 30, 2019. The decrease is primarily due to lower employee compensation costs of $4.4 million due to reduced staffing levels and a $3.1 million decrease in professional fees.

Interest Expense, Net of Amounts Capitalized

Interest expense decreased $6.5 million, or 75.8%, to $2.1 million for the three months ended June 30, 2020, compared to $8.5 million for the same period in 2019. This decrease is primarily related to the March 2020 restructuring that reduced debt balances by approximately $190 million and the related decrease in interest expense under the New Term Loan Facility.

Other Income, Net

During the quarter ended June 30, 2020, we recognized other income, net, of less than $0.1 million, compared to other income, net, of $0.2 million for the quarter ended June 30, 2019.

The following table summarizes the components of other income, net for the periods indicated (in thousands):

	Three Months Ended
	June 30,
	2020			2019
Interest income	$	(25	)	$	(195	)
Other	10			(44		)
Total	$	(15	)	$	(239	)

Income Tax Benefit (Expense)

We recorded an income tax expense of $0.2 million on a pre-tax loss of $18.9 million in the three months ended June 30, 2020, compared to an income tax benefit of $4.4 million on a pre-tax loss of $22.7 million in the three months ended June 30, 2019. Our effective tax rate was (1.2)% for the three months ended June 30, 2020, compared to 19.4% for the three months ended June 30, 2019. The variance between our effective rate and the U.S. statutory rate is due to the impact of permanent differences, and other tax adjustments, such as valuation allowances against deferred tax assets and a true-up adjustment to income tax receivable.

Segment Operating Results — Three Months Ended June 30, 2020 and 2019

The following table shows operating results for each of our segments for the three months ended June 30, 2020 and 2019 (in thousands):

For the three months ended June 30, 2020
	Rig Services			Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Total
Revenues from external customers	$	20,825		$	3,971		$	1,867		$	8,087	$	—		$	34,750
Operating expenses	23,130			5,689			3,685			7,976		11,115			51,595
Operating income (loss)	(2,305		)	(1,718		)	(1,818		)	111		(11,115		)	(16,845		)

For the three months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Total
Revenues from external customers	$	67,884	$	14,812		$	11,747		$	18,500	$	—		$	112,943
Operating expenses	62,002		16,634			13,196			18,301		17,237			127,370
Operating income (loss)	5,882		(1,822		)	(1,449		)	199		(17,237		)	(14,427		)

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Rig Services

Revenues for our Rig Services segment decreased $47.1 million, or 69.3%, to $20.8 million for the three months ended June 30, 2020, compared to $67.9 million for the three months ended June 30, 2019. The decrease for this segment is primarily due to lower customer activity and spending as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $7.9 million of revenue in the corresponding 2019 period that did not re-occur in 2020.

Operating expenses for our Rig Services segment were $23.1 million during the three months ended June 30, 2020, which represented a decrease of $38.9 million, or 62.7%, compared to $62.0 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, equipment expense due to a decrease in activity levels and a decrease in depreciation expense of due certain assets becoming fully depreciated in December of 2019.

Fishing and Rental Services

Revenues for our Fishing and Rental Services segment decreased $10.8 million, or 73.2%, to $4.0 million for the three months ended June 30, 2020, compared to $14.8 million for the three months ended June 30, 2019. The decrease for this segment is primarily due to lower customer activity and spending as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy.

Operating expenses for our Fishing and Rental Services segment were $5.7 million during the three months ended June 30, 2020, which represented a decrease of $10.9 million, or 65.8%, compared to $16.6 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, equipment expense due to a decrease in activity levels, and a decrease in depreciation expense due to certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 that reduced their depreciable base for future periods and a decrease in repair and maintenance expense due to lower activity levels.

Coiled Tubing Services

Revenues for our Coiled Tubing Services segment decreased $9.9 million, or 84.1%, to $1.9 million for the three months ended June 30, 2020, compared to $11.7 million for the three months ended June 30, 2019. The decrease for this segment is primarily due to lower spending from our customers on drilling and completions as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. These market conditions also reduced the price we received for our services. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $4.2 million of revenue in the corresponding 2019 period.

Operating expenses for our Coiled Tubing Services segment were $3.7 million during the three months ended June 30, 2020, which represented a decrease of $9.5 million, or 72.1%, compared to $13.2 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to lower activity levels.

Fluid Management Services

Revenues for our Fluid Management Services segment decreased $10.4 million, or 56.3%, to $8.1 million for the three months ended June 30, 2020, compared to $18.5 million for the three months ended June 30, 2019. The decrease for this segment is primarily due to lower spending from our customers on drilling and completions as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $2.2 million of revenue in the corresponding 2019 period that did not re-occur in 2020.

Operating expenses for our Fluid Management Services segment were $8.0 million during the three months ended June 30, 2020, which represented a decrease of $10.3 million, or 56.4%, compared to $18.3 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to lower activity levels and a decrease in depreciation expense certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 that reduced their depreciable base for future periods.

Functional Support

Operating expenses for Functional Support, which represent expenses associated with managing our reporting segments, decreased $6.1 million, or 35.5%, to $11.1 million (32.0% of consolidated revenues) for the three months ended June 30, 2020 compared to $17.2 million (15.3% of consolidated revenues) for the same period in 2019. The decrease is primarily due to lower employee compensation costs of $3.0 million due to reduced staffing levels and a $3.1 million decrease in professional fees.

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Consolidated Results of Operations — Six Months EndedJune 30, 2020 and 2019

Revenues

Our revenues for the six months endedJune 30, 2020 decreased $112.2 million, or 50.5%, to $110.1 million from $222.2 millionfor the six months endedJune 30, 2019, due to lower customer activity and spending as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations. See “Segment Operating Results — Six Months EndedJune 30, 2020 and 2019” below for a more detailed discussion of the change in our revenues.

Direct Operating Expenses

Our direct operating expenses decreased $87.2 million, to $91.6 million (83.2% of revenues), for the six months endedJune 30, 2020, compared to $178.8 million (80.4% of revenues) for the six months endedJune 30, 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to lower activity levels as compared to the corresponding 2019 period.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased $10.3 million, or 36.0%, to $18.3 million during the six months endedJune 30, 2020, compared to $28.6 millionfor the six months endedJune 30, 2019. This decrease is primarily due to certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 that reduced their depreciable base for future periods.

General and Administrative Expenses

General and administrative expenses decreased $15.7 million, to $28.9 million (26.2% of revenues), for the six months endedJune 30, 2020, compared to $44.6 million (20.1% of revenues) for the six months endedJune 30, 2019. The decrease is primarily due to lower employee compensation costs of $5.8 million due to reduced staffing levels and a $13.6 million decrease in professional fees.

Impairment Expense

During the six months ended June 30, 2020, the Company recognized an asset impairment of $41.2 million. It was determined that the fair value of the assets of Fluid Management Services and Fishing & Rental Services was less than the carrying value of those respective segment’s assets. As a result, we recorded an impairment of $17.6 million and $23.7 million at those segments, respectively.

Gain on debt restructuring

During the six months ended June 30, 2020 the Company recognized a gain of $170.6 million related to the recent restructuring of corporate debt. For more information on our New Term Loan Facility and New ABL Facility entered into in connection with the Restructuring, see “Note 1. General” and “Note 7. Debt.”

Interest Expense, Net of Amounts Capitalized

Interest expense decreased $7.5 million, or 42.1%, to $10.3 millionfor the six months endedJune 30, 2020, compared to $17.8 million for the same period in 2019. This decrease is primarily related to the March 2020 restructuring that reduced debt balances by approximately $190 million and the related decrease in interest expense under the New Term Loan Facility.

Other Income, Net

During the six months endedJune 30, 2020, we recognized other income, net, of $0.4 million, compared to other income, net, of $1.4 millionfor the six months endedJune 30, 2019.

The following table summarizes the components of other income, net for the periods indicated (in thousands):

	Six Months Ended
	June 30,
	2020			2019
Interest income	$	(82	)	$	(517	)
Other	(318		)	(864		)
Total	$	(400	)	$	(1,381	)

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Income Tax Benefit (Expense)

We recorded an income tax expense of $1.0 million on a pre-tax income of $90.8 millionfor the six months endedJune 30, 2020, compared to an income tax benefit of $4.4 million on a pre-tax loss of $46.1 million for the same period in 2019. Our effective tax rate was 1.1%for the six months endedJune 30, 2020, compared to 9.5%for the six months endedJune 30, 2019. Our variance between our effective rate and the U.S. statutory rate is due to the impact of permanent differences, and other tax adjustments, such as valuation allowances against deferred tax assets and a true-up adjustment to income tax receivable.

Segment Operating Results — Six Months EndedJune 30, 2020 and 2019

The following table shows operating results for each of our segments for the six months endedJune 30, 2020 and 2019 (in thousands):

For the six months ended June 30, 2020
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Total
Revenues from external customers	$	68,734	$	13,563		$	6,704		$	21,057		$	—		$	110,058
Operating expenses	67,713		35,031			9,478			44,808			22,947			179,977
Operating income (loss)	1,021		(21,468		)	(2,774		)	(23,751		)	(22,947		)	(69,919		)

For the six months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Total
Revenues from external customers	$	132,910	$	29,399		$	22,420		$	37,487	$	—		$	222,216
Operating expenses	122,572		32,344			26,007			37,179		33,853			251,955
Operating income (loss)	10,338		(2,945		)	(3,587		)	308		(33,853		)	(29,739		)

Rig Services

Revenues for our Rig Services segment decreased $64.2 million, or 48.3%, to $68.7 millionfor the six months endedJune 30, 2020, compared to $132.9 millionfor the six months endedJune 30, 2019. The decrease for this segment is primarily due to lower customer activity and spending as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $17.3 million of revenue in the corresponding 2019 period that did not re-occur in 2020.

Operating expenses for our Rig Services segment were $67.7 millionfor the six months endedJune 30, 2020, which represented a decrease of $54.9 million, or 44.8%, compared to $122.6 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, equipment expense due to a decrease in activity levels and a decrease in depreciation expense of due certain assets becoming fully depreciated in December of 2019.

Fishing and Rental Services

Revenues for our Fishing and Rental Services segment decreased $15.8 million, or 53.9%, to $13.6 millionfor the six months endedJune 30, 2020, compared to $29.4 millionfor the six months endedJune 30, 2019. The decrease for this segment is primarily due to lower customer activity and spending on drilling and completions as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy.

Operating expenses for our Fishing and Rental Services segment were $35.0 millionfor the six months endedJune 30, 2020, which represented an increase of $2.7 million, or 8.3% compared to $32.3 million for the same period in 2019. This increase is primarily a result of the $17.6 million impairment of assets in the first quarter of 2020 partially offset by a decrease in employee headcount and related compensation costs due to a decrease in activity levels and a decrease in depreciation expense due to certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 that reduced their depreciable base for future periods and a decrease in repair and maintenance expense due to lower activity levels.

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Coiled Tubing Services

Revenues for our Coiled Tubing Services segment decreased $15.7 million, or 70.1%, to $6.7 millionfor the six months endedJune 30, 2020, compared to $22.4 millionfor the six months endedJune 30, 2019. The decrease for this segment is primarily due to lower spending from our customers on drilling and completions as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. These market conditions also reduced the price we received for our services. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $6.7 million of revenue in the corresponding 2019 period that did not re-occur in 2020.

Operating expenses for our Coiled Tubing Services segment were $9.5 millionfor the six months endedJune 30, 2020, which represented a decrease of $16.5 million, or 63.6%, compared to $26.0 million for the same period in 2019. This decrease is primarily a result of a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to lower activity levels as compared to the prior year.

Fluid Management Services

Revenues for our Fluid Management Services segment decreased $16.4 million, or 43.8%, to $21.1 millionfor the six months endedJune 30, 2020, compared to $37.5 millionfor the six months endedJune 30, 2019. The decrease for this segment is primarily due to lower spending from our customers on drilling and completions as a result of lower oil prices and the negative impact the COVID-19 pandemic has had on the economy. Additionally, in the fourth quarter of 2019, the Company strategically exited a number of non-core and underperforming locations which represented $4.6 million of revenue in the corresponding 2019 period that did not re-occur in 2020.

Operating expenses for our Fluid Management Services segment were $44.8 millionfor the six months endedJune 30, 2020, which represented an increase of $7.6 million, or 20.5%, compared to $37.2 million for the same period in 2019. This increase is primarily a result of the $23.7 million impairment of assets recorded in the first quarter of 2020, partially offset by a decrease in employee headcount and related compensation costs, fuel expense and repair and maintenance expense due to lower activity levels versus the prior year and a decrease in depreciation expense certain assets becoming fully depreciated in December of 2019 and the impairment of certain assets in the first quarter of 2020 that reduced their depreciable base for future periods.

Functional Support

Operating expenses for Functional Support, which represent expenses associated with managing our reporting segments, decreased $10.9 million, or 32.2%, to $22.9 million (20.8% of consolidated revenues) for the six months endedJune 30, 2020 compared to $33.9 million (15.2% of consolidated revenues) for the same period in 2019. The decrease is primarily related to a credit of $4.3 million recorded in March 2020 related to a restructuring related concession on accrued professional fees and lower employee compensation costs of $3.2 due to reduced staffing levels and a $13.7 million decrease in professional fees, partially offset by an increase in insurance claims of $5.6 million.

LIQUIDITY AND CAPITAL RESOURCES

Effective as of March 6, 2020, we completed the Restructuring of our capital structure and indebtedness and, among other things, reduced our outstanding debt from $241.9 million as of December 31, 2019 to $51.2 million as of the closing of the Restructuring. For more information on the Restructuring, see “--Restructuring and Reverse Stock Split” above.

We require capital to fund our ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions, our debt service payments and our other obligations. We expect to utilize our internally generated cash flows from operations, current reserves of cash, availability under the New ABL Facility and proceeds from the sale of assets to finance our cash requirements for current and future operations, budgeted capital expenditures, debt service and other obligations.

The conditions and events discussed in “Note 1. General-Market Conditions, COVID-19 and Going Concern” in “Item 1. Financial Statements” and in “Market and Business Conditions and Outlook” above have adversely affected the demand for oil and natural gas, as well as for our services. The collapse in the demand for oil caused by this unprecedented global health and economic crisis, coupled with oil oversupply, has had, and is reasonably likely to continue to have, a material adverse impact on the demand for our services and the prices we can charge for our services. The decline in our customers’ demand for our services has had, and is likely to continue to have, a material adverse impact on our financial condition, results of operations and cash flows.

The decrease in oil and natural gas prices has adversely affected our customers and resulted in a decrease in the creditworthiness of some our customers. While we historically have not experienced significant losses related to customer creditworthiness, our allowance for doubtful accounts as a percentage of accounts receivable has increased and if current conditions persist, there is no assurance that we will not experience losses in the future or delays in collecting our receivables.

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Beginning in the fourth quarter of 2019, we have focused on cost control measures related to operational and general and administrative expenses to reduce cash costs during this time period and with the goal of preserving margins and improving working capital until our customers increase spending.

Due to the uncertainty regarding future oil and natural gas prices and the effect the COVID-19 pandemic will continue to have on our results of operations and financial condition, there is substantial doubt as to the Company’s ability to continue as a going concern. Management has prepared the consolidated condensed financial statements as of June 30, 2020 in accordance with US GAAP applicable to a going concern, which contemplates that assets will be realized and liabilities will be discharged in the normal course of business as they become due. These consolidated condensed financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses and balance sheet classifications that would be necessary if the Company was unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material and adverse to the financial results of the Company.

Current Financial Condition and Liquidity

As of June 30, 2020, we had total liquidity of $14.7 million which consisted of $6.9 million cash and cash equivalents and $7.8 million of borrowing capacity available under our ABL Facility. As of December 31, 2019, prior to the Restructuring, we had $14.4 million cash and cash equivalents and, although we had $24.0 million of borrowing capacity available, we were unable to borrow any amounts under the ABL Facility.

Our working capital was $(2.7) million as of June 30, 2020, compared to $(0.7) million as of December 31, 2019. Our working capital decreased from the prior year end primarily as a result of a decrease in cash and cash equivalents, accounts receivable and prepaid assets partially offset by a decrease in accrued interest and other accrued interest expenses attributable to the March 2020 restructuring. As of June 30, 2020, we had no borrowings outstanding, $36.3 million of letters of credit, $28.6 million posted as additional collateral recorded in deposits on our balance sheet and $7.8 million of borrowing capacity available under our ABL Facility.The additional collateral is required to support our outstanding letters of credit and to maintain compliance with the minimum borrowing capacity covenant under our New ABL Facility. As of August 7, 2020, we had no borrowings outstanding $36.3 million of letters of credit, $28.9 million posted as additional collateral recorded in deposits on our balance sheet and $9.3 million of borrowing capacity available under our ABL Facility.

The following table summarizes our cash flows for the six months ended June 30, 2020 and 2019 (in thousands):

	Six Months Ended
	June 30,
	2020			2019
Net cash used in operating activities	$	(38,211	)	$	(11,363	)
Cash paid for capital expenditures	(979		)	(12,362		)
Proceeds received from sale of fixed assets	3,363			4,780
Proceeds from long-term debt	30,000			—
Repayments of long-term debt	(3		)	(1,250		)
Repayments of finance lease obligations	(340		)	—
Payment of deferred financing costs	(1,385		)	(828		)
Other financing activities, net	(7		)	(4		)
Net decrease in cash, cash equivalents and restricted cash	$	(7,562	)	$	(21,027	)

Cash used in operating activities was $38.2 million for the six months ended June 30, 2020 compared to cash used in operating activities of $11.4 million for the six months ended June 30, 2019. Cash used in operating activities for the six months ended June 30, 2020 was primarily related to net losses adjusted for noncash items and a decrease in accrued interest and other accrued liabilities partially offset by a decrease in accounts receivables. Cash used in operating activities for the six months ended June 30, 2019 was primarily related to net losses adjusted for noncash items.

Cash provided by investing activities was $2.4 million for the six months endedJune 30, 2020 which consisted of $3.4 million in proceeds from sales in assets, partially offset by $1.0 million of capital expenditures. Cash used in investing activities of $7.6 million for the six months endedJune 30, 2019 which consisted of $12.4 million of capital expenditures, partially offset by $4.8 million in proceeds from sales of assets. Our capital expenditures are primarily related to the ongoing maintenance of our equipment and the addition of new equipment.

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Cash provided by financing activities was $28.3 million for the six months endedJune 30, 2020 compared to cash used in financing activities of $2.1 million for the six months endedJune 30, 2019. Financing cash inflows for the six months ended June 30, 2020 primarily relate to proceeds of long-term debt related to the March 2020 refinancing. Financing cash outflows for the six months ended June 30, 2019 primarily relate to the repayment of long-term debt.

Debt Service

As of June 30, 2020, our annual debt maturities for our New Term Loan Facility were as follows (in thousands):

Year	Principal Payments
Remainder of 2020	$	7
2021	1,200
2022	—
2023	—
2024	—
2025	50,000
Total principal payments	$	51,207

New ABL Facility

On March 6, 2020, the Company and Key Energy Services, LLC, as borrowers (the “ABL Borrowers”), entered into Amendment No. 3 to the Company’s existing ABL facility, dated as of December 15, 2016 (as amended, the “New ABL Facility”) with the financial institutions party thereto from time to time as lenders (the “ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Agent”) for the ABL Lenders. The New ABL Facility provides for aggregate commitments from the ABL Lenders of $70 million, which mature on the earlier of (x) April 5, 2024 and (y) 181 days prior to the scheduled maturity date of the Company’s term loan facility or the scheduled maturity date of the Company’s other material debt in an aggregate principal amount exceeding $15 million.

The New ABL Facility provides the ABL Borrowers with the ability to borrow up to an aggregate principal amount equal to the lesser of (i) the aggregate revolving commitments then in effect and (ii) the sum of (a) 85% of the value of eligible accounts receivable plus (b) 80% of the value of eligible unbilled accounts receivable, subject to a limit equal to the greater of (x) $30 million and (y) 25% of the commitments. The amount that may be borrowed under the New ABL Facility is subject to increase or reduction based on certain segregated cash or reserves provided for by the New ABL Facility. In addition, the percentages of accounts receivable and unbilled accounts receivable included in the calculation described above is subject to reduction to the extent of certain bad debt write-downs and other dilutive items provided in the New ABL Facility.     

Borrowings under the New ABL Facility bears interest, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.75% to 3.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR plus 1.0% plus (b) an applicable margin that varies from 1.75% to 2.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time. The New ABL Facility provides that, in the event LIBOR becomes unascertainable for the requested interest period or otherwise becomes unavailable or replaced by other benchmark interest rates, then the Company and the ABL Agent may amend the New ABL Facility for the purpose of replacing LIBOR with one or more SOFR-based rates or another alternate benchmark rate giving consideration to the general practice in similar U.S. dollar denominated syndicated credit facilities.

In addition, the New ABL Facility provides for unused line fees of 0.5% to 0.375% per year, depending on utilization, letter of credit fees and certain other factors. The New ABL Facility may in the future be guaranteed by certain of the Company’s existing and future subsidiaries (the “ABL Guarantors,” and together with the ABL Borrowers, the “ABL Loan Parties”). To secure their obligations under the New ABL Facility, each of the ABL Loan Parties has granted or will grant, as applicable, to the ABL Agent a first-priority security interest for the benefit of the ABL Lenders in its present and future accounts receivable, inventory and related assets and proceeds of the foregoing (the “ABL Priority Collateral”). In addition, the obligations of the ABL Loan Parties under the ABL Facility are secured by second-priority liens on the Term Priority Collateral (as described below under “New Term Loan Facility”).

The revolving loans under the New ABL Facility may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to breakage or similar costs.

The New ABL Facility contains certain affirmative and negative covenants, including covenants that restrict the ability of the ABL Loan Parties to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of

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dividends and the sale of assets. The New ABL Facility also contains a requirement that the ABL Borrowers comply, during certain periods, with a fixed charge coverage ratio of at least 1.00 to 1.00. As of June 30, 2020, we have no borrowings outstanding, $36.3 million of letters of credit, $28.6 million posted as additional collateral recorded in deposits on our balance sheet and $7.8 million of borrowing capacity available under our ABL Facility.The additional collateral is required to maintain compliance with the minimum borrowing capacity available under our New ABL Facility.

On May 20, 2020, the ABL Borrowers, the ABL Lenders and Administrative Agent, entered into Amendment No. 4 to the New ABL Facility. Pursuant to the Fourth Amendment, the parties agreed, among other things, to (i) reduce the Lenders’ aggregate commitments to make revolving loans to $50 million, (ii) increase the applicable interest rate margin by 100 basis points to 375-425 basis points for LIBOR borrowings (with a 1.00% LIBOR floor) and 275-325 basis points for base rate borrowings (with a 2.00% base rate floor), in each case depending on the fixed charge coverage ratio at the time of determination, (iii) lower the availability thresholds for triggering certain covenants and (iv) add certain reporting requirements.

As of June 30, 2020, we were in compliance with all covenants under our New ABL Facility.

New Term Loan Facility

On March 6, 2020, the Company entered into an amendment and restatement agreement with the Supporting Term Lenders and Cortland Capital Market Services LLC and Cortland Products Corp., as agent (the “Term Agent”), which amended and restated the Prior Term Loan Facility, among the Company, as borrower, certain subsidiaries of the Company named as guarantors therein, the financial institutions party thereto from time to time as lenders and the Term Agent (as amended and restated by the amendment and restatement agreement, the “New Term Loan Facility”). Prior to the closing of the Restructuring, there were approximately $243.1 million aggregate principal amount of term loans outstanding under the Prior Term Loan Facility. Following the closing of the Restructuring, the New Term Loan Facility is comprised of (i) $30 million new money term loans funded by the Supporting Term Lenders and $20 million new term loans excluding new money issued in exchange for existing term loans held by the Supporting Term Lenders (collectively, the “New Term Loans”) and (ii) an approximate $1.2 million senior secured term loan tranche in respect of the existing term loans held by lenders who are not Supporting Term Lenders (the “Continuing Term Loans”). As of June 30, 2020, there was $51.2 million outstanding under the New Term Loan Facility.

The New Term Loan Facility will mature on August 28, 2025, with respect to the New Term Loans, and on December 15, 2021 with respect to the Continuing Term Loans. Such maturity date may, at the Company’s request, be extended by one or more of the term loan lenders pursuant to the terms of the New Term Loan Facility. The New Term Loans will bear interest at a per annum rate equal to LIBOR for six months, plus 10.25%. The Company has the option to pay interest in kind at an annual rate of LIBOR plus 12.25% on the outstanding principal amount of the New Term Loans for the first two years following the closing of the Restructuring. The Continuing Term Loans will bear interest at a per annum rate equal to LIBOR for one, two, three, six or, with the consent of all term loan lenders, up to 12 months, and the Company has the option to pay interest in kind of up to 100 basis points of the per annum interest due on the Continuing Term Loans.

The New Term Loan Facility is guaranteed by certain of the Company’s existing and future subsidiaries (the “Term Loan Guarantors,” and together with the Company, the “Term Loan Parties”). To ensure their obligations under the New Term Loan Facility, each of the Term Loan Parties has granted or will grant, as applicable, to the Term Agent a first-priority security interest for the benefit of the Term Loan Lenders in substantially all of each Term Loan Party’s assets other than certain excluded assets and the ABL Priority Collateral (the “Term Priority Collateral”). In addition, the obligations of the Term Loan Parties under the New Term Loan Facility are secured by second-priority liens on the ABL Priority Collateral (as described above under “ABL Facility”).

The New Term Loans may be prepaid at the Company’s option, subject to the payment of a prepayment premium (which may be waived by lenders holding New Term Loans under the New Term Loan Facility representing at least two-thirds of the aggregate outstanding principal amount of the New Term Loans) in certain circumstances as provided in the New Term Loan Facility. If a prepayment is made prior to the first anniversary of the closing of the Restructuring, such prepayment premium is equal to 3% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the first anniversary to the second anniversary of the closing of the Restructuring, the prepayment premium is equal to 2% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the second anniversary to the third anniversary of the closing of the Restructuring, the prepayment premium is equal to 1% of the principal amount of the New Term Loans prepaid; and there is no prepayment premium thereafter. The Company is required to make principal payments in respect of the Continuing Term Loans in the amount of $3,125 per quarter commencing with the quarter ended March 31, 2020 and is required to pay $1,190,625 on the maturity date of the Continuing Term Loans.

In addition, pursuant to the New Term Loan Facility, the Company must prepay or offer to prepay, as applicable, term loans with the net cash proceeds of certain debt incurrences and asset sales, excess cash flow, receipt of extraordinary cash proceeds (e.g., tax and insurance) and upon certain change of control transactions, subject in each case to certain exceptions.

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The New Term Loan Facility contains certain affirmative and negative covenants, including covenants that restrict the ability of the Term Loan Parties to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends and the sale of assets. The New Term Loan Facility also contains a financial covenant requiring that the Company maintain Liquidity (as defined in the New Term Loan Facility) of not less than $10 million as of the last day of any fiscal quarter, subject to certain exceptions and cure rights.

As of June 30, 2020, we were in compliance with all covenants under our Term Loan Facility.

Capital Expenditures

During the six months ended June 30, 2020, our capital expenditures totaled $1.0 million. In light of the decline in planned E&P capital spending, reduced activity by our customers and consequent reduced demand for our services, in April, we reduced our capital expenditure plan for 2020 from the original amount of $15 to $20 million to the current amount of approximately $5 million. These capital expenditures are primarily related to the ongoing maintenance of our equipment and addition of new equipment. Our capital expenditure program for 2020 is subject to market conditions, including activity levels, commodity prices, industry capacity and specific customer needs as well as cash flows, including cash generated from asset sales. Our focus for 2020 will be the maximization of our current equipment fleet. We may also further reduce our planned expenditures, defer acquisition of new equipment or maintenance and dispose of noncore assets if market conditions decline further. Should our operating cash flows or activity levels prove to be insufficient to fund our currently planned capital spending levels, management expects it will adjust our capital spending plans accordingly.

Off-Balance Sheet Arrangements

At June 30, 2020 we did not, and we currently do not, have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our quantitative and qualitative disclosures about market risk from those disclosed in our 2019 Form 10-K. More detailed information concerning market risk can be found in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our 2019 Form 10-K.

ITEM 4.     CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, management performed, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on this evaluation, management concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the second quarter of 2020 that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various suits and claims that have arisen in the ordinary course of business. We do not believe that the disposition of any of our ordinary course litigation will result in a material adverse effect on our consolidated financial position, results of operations or cash flows. For additional information on legal proceedings, see “Note 10. Commitments and Contingencies” in “Item 1. Financial Statements” of Part I of this report, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There are numerous factors that may adversely affect our business and results of operations, many of which are beyond our control, which seem immaterial or which are unknown to us currently. In addition to information set forth in this report, including in Part I, Item 8 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” you should carefully read and consider the factors set out in Part I, Item 1A “Risk Factors” of our 2019 Form 10-K and Part II, Item 1A “Risk Factors” in our Q1 2020 Form 10-Q. The unprecedented nature of the current pandemic and downturn in the worldwide economy and oil and gas industry may make it more difficult to identify all the risks to our business, results of operations and financial condition and the ultimate impact of identified risks.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

During the three months ended June 30, 2020, we repurchased the shares shown in the table below to satisfy tax withholding obligations upon the vesting of restricted stock awarded to certain of our employees:

Period	Number of Shares Purchased	Average Price Paid per Share(1)
April 1, 2020 to April 30, 2020	60	$	2.09
May 1, 2020 to May 31, 2020	—	—
June 1, 2020 to June 30, 2020	—	—
Total	60	$	2.09

(1) The price paid per share with respect to the tax withholding repurchases was determined using the closing prices on the applicable vesting date.

Unregistered Sales of Equity Securities

As discussed in Part I of this report, in accordance with the RSA and following the closing of the Restructuring, the Company distributed to stockholders of record as of February 18, 2020 the New Warrants. The New Warrants were issued in two series each with a four-year exercise period. The first series entitles the holders to purchase in the aggregate 1,669,730 newly issued shares of common stock, representing 10% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate exercise price of the first series of New Warrants is $19.23 and was determined based on the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring. The second series of New Warrants entitles the holders to purchase in the aggregate 1,252,297 newly issued shares of common stock, representing 7.5% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate strike price of the second series of New Warrants is $28.85 and was determined based on the product of (i) the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring, multiplied by (ii) 1.50. Such securities were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Key Energy Services, Inc., dated March 6, 2020 (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on March 9, 2020, File No. 001-08038).
3.2	Amended and Restated Bylaws of Key Energy Services, Inc., dated March 6, 2020 (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on March 9, 2020, File No. 001-08038).
10.1+	Employment Agreement, dated as of June 15, 2020, between Key Energy Services, Inc. and Nelson Haight (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 15, 2020, File No. 001-08038).
10.2	Amendment No. 4 to Loan Agreement, dated as of May 20, 2020, by and among Key Energy Services, Inc., Key Energy Services, LLC, the Lenders party thereto, and Bank of America, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 22, 2020, File No. 001-08038).
10.3*+	Form of Amended and Restated 2019 Equity and Cash Incentive Plan Performance-Based Restricted Stock Unit Award Agreement
10.4*+	Form of Amended and Restated 2019 Equity and Cash Incentive Plan Time-Vested Restricted Stock Unit Award Agreement
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith
**	Furnished herewith
+	Compensatory arrangement

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		KEY ENERGY SERVICES INC.
Date:	August 14, 2020	By:	/s/ NELSON M. HAIGHT
			Nelson M. Haight
			Senior Vice President, Chief Financial Officer and Treasurer
			(Duly Authorized Officer and Principal Financial Officer)

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EX-10.3

Exhibit 10.3

KEY ENERGY SERVICES, INC.

AMENDED AND RESTATED 2019 EQUITY AND CASH INCENTIVE PLAN

PERFORMANCE-BASED

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT, including Appendix A and Appendix B attached hereto (this “Agreement”), dated as of ____________, 20___ (the “Date of Grant”), is made by and between Key Energy Services, Inc., a Delaware corporation (the “Company”), and ____________ (the “Participant”).

R E C I T A L S:

WHEREAS, awards of Restricted Stock Units may be granted pursuant to the Key Energy Services, Inc. Amended and Restated 2019 Equity and Cash Incentive Plan (the “Plan”) as Performance Awards; and

WHEREAS, in recognition of the Participant’s services to the Company, the Administrator has determined that it is in the best interests of the Company and its stockholders to grant performance-based Restricted Stock Units to the Participant pursuant to the terms of the Plan and subject to the further terms and conditions set forth herein.

NOW, THEREFORE, in consideration for the services rendered by the Participant to the Company and the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.Grant of Restricted Stock Units. The Company hereby grants the Participant a target award (this “Award”)of [•] performance-based Restricted Stock Units (the “PSUs”). Up to 150% of the PSUs may become earned in accordance with the vesting terms set forth in Section 4 below and Appendix B attached hereto (such PSUs that become so earned, the “Earned PSUs”).

2.Dividend Equivalents. Each PSU that becomes an Earned PSU shall be credited with dividend equivalents (the “Dividend Equivalents”) in an amount, without interest, equal to the cumulative cash and stock dividends declared or paid on one share of Common Stock, if any, following the Date of Grant and prior to the date the Earned PSU is settled in accordance with Section 5.

3.Incorporation by Reference. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Administrator shall have the authority to interpret and construe the Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Participant and his or her legal representative in respect of any questions arising under the Plan or this Agreement.

4.Vesting of PSUs. Subject to the Participant’s (a) Continuous Service through the last day of the applicable Performance Period (as defined on Appendix B) and (b) compliance with the terms and conditions of this Agreement (including the restrictive covenants set forth in Appendix A) (collectively, clauses (a) and (b), the “Service Vesting Requirements”), the PSUs shall become Earned PSUs subject to the achievement of specified performance goals (the “Performance Goals”) in accordance with Appendix B. Following completion of the Performance Period, the Administrator shall review and certify in writing whether the Performance Goals for the Performance Period have been met. PSUs that do not become Earned PSUs shall be automatically forfeited, without the payment of any consideration therefor, as of the end of the Performance Period.

5.Settlement.

(a)Amount. The Company will deliver one share of Common Stock plus a cash amount equal to the aggregate Dividend Equivalents, if any, for each Earned PSU, less any withholding (as permitted pursuant to the Plan and Section 7 hereof). Neither the value of shares of Common Stock nor the value of Dividend Equivalents shall bear any interest owing to the passage of time. Neither this Section 5 nor any action taken in accordance with this Section 5 shall be construed to create a trust or a funded or secured obligation of any kind.

(b)Timing. Delivery in respect of the Earned PSUs and any associated Dividend Equivalents will be made as soon as administratively practicable following completion of the certification required by Section 4 above, and in any event within 60 days following the end of the applicable Performance Period. Such delivery shall be subject to the Participant’s continued compliance with the restrictive covenants set forth in Appendix A.

6.Termination of Continuous Service. Except as otherwise provided in the Participant’s employment agreement or the Plan, all unvested PSUs and any Dividend Equivalents with respect thereto shall be forfeited, without the payment of any consideration therefor, immediately and automatically upon termination of the Participant’s Continuous Service for any reason.

7.Tax Withholding. The Company shall have the right to withhold from any delivery of Common Stock due under the Plan and this Agreement an amount equal to the applicable required withholding obligation in respect of any federal, state or local tax.

8.No Rights as Stockholder. The Participant shall have no rights as a stockholder with respect to the shares of Common Stock underlying the PSUs unless and until the Participant has become the record holder of such shares.

9.Restrictive Covenants. The provisions of Appendix A attached hereto, which are deemed to be part of this Agreement as if fully set forth herein, shall apply to the Participant. By accepting this Agreement, the Participant agrees to be bound by such provisions. The Participant further acknowledges and agrees that the restrictive covenants contained in Appendix A are reasonable and enforceable in all respects.

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10.Detrimental Activity.

(a)Upon delivery of Common Stock in respect of Earned PSUs, the Participant shall certify in a manner acceptable to the Company that the Participant has not engaged in any Detrimental Activity.

(b)The Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict this Award, in whole or in part, at any time if the Participant engages in any Detrimental Activity.

(c)In the event a Participant engages in Detrimental Activity after delivery of Common Stock in respect of Earned PSUs and during any period for which any restrictive covenant prohibiting such activity is applicable to the Participant, such delivery may be rescinded within one (1) year after the Participant engages in such Detrimental Activity. In the event of any such rescission, (i) if the Participant still owns the Common Stock received pursuant to the Award, the Participant shall return to the Company such Common Stock or (ii) if the Participant no longer owns the Common Stock received pursuant to the Award, the Participant shall pay to the Company an amount in cash equal to the value received by Participant upon the sale of the Common Stock received pursuant to the Award (the “Rescission Amount”), in such manner and on such terms and conditions as may be required by the Company. The Company shall be entitled to set-off the Rescission Amount against any amount owed to the Participant by the Company, subject to compliance with including Section 409A of the Code, if applicable, and other applicable laws.

11.Compliance with Laws, Regulations and Company Policies. The grant and settlement of the PSUs hereunder shall be subject to compliance by the Company and the Participant with all applicable requirements of state and federal laws and regulatory agencies and with all applicable requirements of any stock exchange on which the Common Stock may be listed at the time of such issuance or transfer, if applicable. This Award shall also be subject to any applicable clawback or recoupment policies, share trading and stock ownership policies of the Company, and other policies that may be implemented by the Board from time to time.

12.Section 409A. Any amounts payable with respect to the PSUs are intended to be exempt from Section 409A of the Code in reliance on the short-term deferral exemption set forth in the final regulations issued thereunder. If any amounts payable with respect to the PSUs are determined to be subject to Section 409A of the Code, such payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code. All payments to be made upon a termination of employment may only be made upon a “separation from service” under Section 409A of the Code. For purposes of Section 409A of the Code, each payment shall be treated as a separate payment. In no event may the Participant, directly or indirectly, designate the calendar year in which the payments under this Agreement will be made. Notwithstanding anything in this Agreement to the contrary, if the Participant is a “specified employee” as defined by Section 409A of the Code, then if and to the extent required by Section 409A of the Code, any payment with respect to the PSUs upon a separation from service will not be made before the date that is six months after the Participant separates from service or such earlier date permitted by Section 409A of the Code. Notwithstanding the foregoing, the Company and its Affiliates make no representations

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that the PSUs provided under this Agreement are exempt from or compliant with Section 409A of the Code and in no event shall the Company or any Affiliate be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code.

13.No Right to Continuous Service. Nothing in this Agreement shall be deemed by implication or otherwise to impose any limitation on any right of the Company or any of its Affiliates to terminate the Participant’s Continuous Service at any time. The grant of the PSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted in the past.

14.Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first class mail, return receipt requested, facsimile transmission, courier service or personal delivery:

If to the Company:

Key Energy Services, Inc.

1301 McKinney Street, Suite 1800

Houston, Texas 77010

Facsimile: 713-651-4559

Attention: General Counsel

If to the Participant:

At the address on file with the Company

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.

15.Bound by Plan. By accepting this Agreement, the Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all of the terms and provisions of the Plan.

16.Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and on the Participant and the Participant’s executors, administrators, heirs, and successors.

17.Amendment of this Award. Subject to Section 18 and subject to the terms of the Plan, the Administrator at any time and from time to time may amend the terms of this Award; provided, however, that the Participant’s rights under this Award shall not be impaired by any such amendment unless the Company requests the Participant’s consent and the Participant consents in writing, or except as otherwise permitted under the Plan.

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18.Adjustment Upon Changes in Capitalization. The shares of Common Stock underlying the PSUs and the Performance Goals may be adjusted as provided in the Plan, including pursuant to Article 14 of the Plan. The Participant, by accepting this Agreement, irrevocably and unconditionally consents and agrees to any such adjustments as may be made at any time hereafter.

19.Transfer Restrictions. The PSUs may not be sold, transferred or otherwise alienated or hypothecated.

20.Governing Law and Venue. The provisions of this Agreement shall be construed and enforced in accordance with the laws and decisions of the State of Delaware, without regard to such state’s conflict of law principles. Any dispute or conflict between the parties shall be brought in a state or federal court located in Wilmington, Delaware. The parties hereto submit to jurisdiction and venue in Wilmington, Delaware and all objections to such venue and jurisdiction are hereby waived.

21.Severability. If any provision of this Agreement or any part of any provision of this Agreement is determined to be unenforceable for any reason whatsoever, it shall be severable from the rest of the Agreement and shall not invalidate or affect the other portions or parts of this Agreement, which shall remain in full force and effect. Furthermore, each covenant contained in this Agreement shall stand independently and be enforceable without regard to any other covenants or to any other provisions of this Agreement.

22.Waiver. The waiver by the Company of a breach of any provision contained in this Agreement shall not operate or be construed as a waiver of any subsequent breach or as a waiver of any other provisions of this Agreement.

23.Entire Agreement. Except as otherwise provided in this Agreement, this Agreement constitutes the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and supersedes all prior and contemporaneous arrangements, agreements and understandings, both oral and written, with respect to the subject matter hereof. Notwithstanding the foregoing, and for the avoidance of doubt, the restrictive covenants contained in Appendix A hereto shall be in addition to, and not in lieu of, any restrictive covenants that the Participant is currently subject to with respect to the Company or its Affiliates.

24.Interpretation. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation of construction, and shall not constitute a part of this Agreement. All references to “including” shall be construed as meaning “including without limitation.” Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

25.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one instrument.

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Delivery of an executed counterpart of this Agreement by facsimile or portable document format (.pdf) attachment to electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

26.No Liability for Good Faith Determinations. The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the PSUs granted hereunder.

27.Consent to Electronic Delivery; Electronic Signature. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports and all other forms of communications) in connection with this and any other award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet, or third-party stock plan administration website, to which the Participant has access. The Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement effective as of the Date of Grant set forth above.

KEY ENERGY SERVICES, INC.
By:
	Name:
	Title:

By acceptance of this Award, the Participant (a) acknowledges receipt of the Plan incorporated herein, (b) confirms that the prospectus for the Plan has been made available to the Participant, (c) acknowledges that he or she has read this Agreement, the Plan and the Plan prospectus and understands the terms and conditions of them, (d) accepts this Award, (e) agrees to be bound by the terms of the Plan and this Agreement (including the restrictive covenants set forth in Appendix A attached hereto), and (f) agrees that all decisions and determinations of the Administrator with respect to this Award shall be final and binding on the Participant and any other person having or claiming an interest under this Award.

The undersigned hereby accepts the terms of this Agreement and the Plan.

PARTICIPANT

Name:

SIGNATURE PAGE TO

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

APPENDIX A

PROTECTION OF INFORMATION; NON-COMPETITION; NON-SOLICITATION

1.Non-Disclosure of Confidential Information. In the course of the Participant’s employment with the Company or any of the Company’s direct or indirect subsidiaries (collectively, “subsidiaries” or each a “subsidiary”), and the performance of the Participant’s duties on behalf of the Company or any of its subsidiaries, the Participant will be provided with, and will have access to, Confidential Information (as defined below). In consideration, and as a condition, of the Participant’s receipt of and access to Confidential Information, and as a condition of the Company’s entry into this Agreement, the Participant, both during the course of the Participant’s employment with the Company or any of its subsidiaries and thereafter, shall not disclose any Confidential Information to any person or entity and shall not use any Confidential Information except for the benefit of the Company or its subsidiaries or with the express written consent of the Chief Executive Officer or the General Counsel of the Company. The Participant shall follow all Company policies and protocols regarding the security of all documents and other material containing Confidential Information (regardless of the medium on which such Confidential Information is stored). This Section 1 shall apply to all Confidential Information, whether known or later to become known to the Participant during the period that the Participant is employed or affiliated with the Company or any of its subsidiaries.

2.Permitted Disclosures. Notwithstanding the foregoing, or any other provision of this Agreement or the Plan:

a.the Participant shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is: (i) made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; or (iii) protected under the whistleblower provisions of applicable law;

b.in the event the Participant files a lawsuit for retaliation by the Company or any of its subsidiaries for the Participant’s reporting of a suspected violation of law, the Participant may (i) disclose a trade secret to the Participant’s attorney and (ii) use the trade secret information in the court proceeding related to such lawsuit, in each case, if the Participant (A) files any document containing such trade secret under seal; and (B) does not otherwise disclose such trade secret, except pursuant to court order; and

c.nothing shall prevent the Participant from lawfully, and without obtaining prior authorization from the Company or any of its subsidiaries, (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by the U.S. Securities and Exchange Commission (the “SEC”) or any other governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to an employee individually from any Governmental Authority; (iii) testifying, participating or otherwise assisting in an action or proceeding by any Governmental Authorities relating to a possible violation of law, including providing documents or other confidential information to Governmental Authorities; or (iv) receiving an award for information provided to the SEC or any other Governmental Authority. Neither the Plan nor this Agreement (nor any other agreement between the Participant and the Company or a subsidiary of the Company) shall be

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construed or applied to require the Participant to obtain prior authorization from the Company or any of its subsidiaries before engaging in any of the foregoing conduct referenced in this Section 2, or to notify the Company or any of its subsidiaries of having engaged in any such conduct.

3.Definition of Confidential Information. As used herein, “Confidential Information” means all non-public or proprietary information of, or related to, the Company or any of its subsidiaries, including all designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that (i) are acquired by or disclosed to the Participant during the period that the Participant is or has been employed or affiliated with the Company or any of its subsidiaries (whether acquired or disclosed during business hours or otherwise and whether acquired or disclosed on the Company’s premises or otherwise) or (ii) relate to the businesses or properties, products or services of the Company or any of its subsidiaries (including all such information relating to technical information, including engineering and scientific research, development, methodology, devices and processes; formulas and chemical compositions; blueprints, designs and drawings; financial information, budgets, projections and results; business and marketing plans, strategies, and programs; employee and contractor lists and records; business methods, and operating and production procedures; pricing, sales data, prospect and customer lists and information; supplier and vendor lists and information; terms of commercial contracts, as well as all such information relating to corporate opportunities, operations, future plans, methods of doing business, business plans, strategies for developing business and market share, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or acquisition targets or their requirements, the identity of key contacts within customers’ organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names and marks). Moreover, all documents, presentations, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic databases, maps, data, models and all other writings or materials of any type including or embodying any Confidential Information shall be the sole and exclusive property of the Company or any of its subsidiaries and is subject to the same restrictions on disclosure applicable to all Confidential Information as set forth above. Confidential Information does not include any information that is or becomes generally available to the public other than as a result of a disclosure or wrongful act of the Participant or any of the Participant’s agents or which was known to the Participant prior to his or her employment with the Company.

4.Non-Competition; Non-Solicitation.

a.In granting this Award to the Participant, the Company provides the Participant a further incentive to build the Company’s goodwill and links the Participant’s interests to the Company’s long-term business interests. As an inducement for the Company to grant this Award and enter into this Agreement, and in order to protect the Confidential Information and the Company’s and its subsidiaries goodwill, the Participant voluntarily agrees to the covenants set forth in this Section 4. The Participant agrees and acknowledges that the limitations and restrictions set forth herein, including the geographical and temporal restrictions on certain activities, are (i) reasonable in all respects and not oppressive, (ii) a material and substantial part of the Company’s willingness to enter into this Agreement, and (iii) intended and necessary to protect the Company’s and its subsidiaries’ Confidential Information, goodwill, and substantial and legitimate business interests.

b.The Participant agrees that during the Prohibited Period, the Participant shall not, without prior written approval of the Company, directly or indirectly, for the Participant, or on behalf of or in conjunction with any other person or entity of whatever nature:

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i.engage in or carry on within the Market Area in competition with the Company or any of its subsidiaries in any aspect of the Business, which prohibition shall prevent the Participant from directly or indirectly owning, managing, operating, becoming an officer, director, employee or consultant of, or otherwise being affiliated with any person or entity primarily engaged in, or planning to primarily engage in, the Business in the Market Area (A) in any capacity if the Participant is a Vice President or above at the Company and (B) in any capacity in which the Participant’s duties are the same or similar to those performed for the Company or any of its subsidiaries if the Participant is below the level of a Vice President at the Company; for purposes of this provision, “primarily engage” means that at least twenty percent (20%) of the gross revenue of a person or entity’s business is from business directly competitive with the Business;

ii.appropriate any Business Opportunity of, or relating to, the Company or any of its subsidiaries located in the Market Area;

iii.within the Market Area, solicit, canvass, approach, encourage, entice or induce any (A) current customer or supplier of the Company or any of its subsidiaries with whom or which the Participant had contact in the last twenty-four (24) months of his or her employment with the Company or its subsidiaries, (B) Prospective Customer or Supplier with whom or which the Participant had contact in the last six (6) months of his or her employment with the Company or its subsidiaries or (C) any such customer, supplier or Prospective Customer or Supplier about whom or which the Participant obtained Confidential Information, in each such case, to cease or lessen such customer’s or supplier’s or Prospective Customer’s or Supplier’s business with the Company or any of its subsidiaries in the Business;

iv.solicit, canvass, approach, encourage, entice or induce any employee or contractor of the Company or any of its subsidiaries to terminate his, her or its employment or engagement therewith, excluding general advertisements and solicitations not targeted at the employees or contractors of the Company or its subsidiaries; or

v.employ or cause any other person or entity to employ any person who was an employee or contractor of the Company or any of its subsidiaries in the past six (6) months.

Notwithstanding the above referenced limitations in Sections 4(b)(i), 4(b)(ii) and 4(b)(iii), such limitations shall not apply following the termination of the Participant’s employment with the Company and (as applicable) any of its subsidiaries in those portions of the Market Area located within the State of Oklahoma. Instead, the Participant agrees that, during the portion of the Prohibited Period that occurs after the Participant is no longer employed by the Company or any of its subsidiaries, the restrictions on the Participant’s activities within those portions of the Market Area located within the State of Oklahoma (in addition to those restrictions set forth in Sections 1 and4(b)(iv) and (v) herein) shall be as follows: the Participant will not directly or indirectly solicit the sale of goods, services, or a combination of goods and services from the established customers of the Company or any of its subsidiaries.

c.For purposes of this Section 4, the following terms shall have the following meanings:

i.“Business” means the business and operations that are the same or similar to those performed by, or planning to be performed by, the Company or any of its subsidiaries and for which the Participant obtained Confidential Information or had direct or indirect

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responsibilities during the period of the Participant’s employment with the Company or any of its subsidiaries, which business and operations include (if Participant obtained Confidential Information or had direct or indirect responsibilities with respect to such business and operations on behalf of the Company or any of its subsidiaries during the period of his or her employment) without limitation: rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, and fishing and rental services.

ii.“Business Opportunity” shall mean any commercial, investment or other business opportunity relating to the Business.

iii.“Market Area” means (A) onshore land areas in the Continental United States within seventy-five (75) miles of any location that the Participant was either based or performed material services on behalf of the Company or any of its subsidiaries and (B) each of the following basins and oil and gas shale plays: Bakken, Barnett, Denver-Julesberg, Eagle Ford, Fayetteville, Granite Wash, Haynesville, Marcellus, Mississippi Lime, Niobrara, Permian, Powder River, SCOOP, STACK, Tuscaloosa, Williston, and Woodford; provided, however, that a basin or play shall not be included within the Market Area if (1) the Participant had no direct or indirect responsibilities with respect to such basin or play during the last twenty-four (24) months of the Participant’s employment or engagement with the Company or any of its subsidiaries, or (2) the Participant obtained no Confidential Information with respect to the Company’s or any of its subsidiaries’ Business in such basin or play.

iv.“Prohibited Period” [shall mean the period during which the Participant is employed by the Company or any of its subsidiaries and continuing for a period of twelve (12) months following the date that the Participant is no longer employed by the Company or any of its subsidiaries]Note to Draft: For Messrs. Dodson’s and Coale’s and Ms. Hargis’ agreements. [shall mean the period during which the Participant is employed by the Company or any of its subsidiaries and continuing for a period of months equal to the monthly base salary amount received by Participant as severance following the date that the Participant is no longer employed by the Company or any of its subsidiaries; provided, however, in no event shall the Prohibited Period exceed twelve (12) months following the date that the Participant is no longer employed with the Company. For example, if a Participant receives six (6) months’ base salary as severance, the Prohibited Period for such Participant will be six (6) months following the date that the Participant is no longer employed with the Company or any of its subsidiaries. Notwithstanding the foregoing, the Prohibited Period with respect to Section 4(b)(iv) of this Appendix A shall always be a period of twelve (12) months]

v.“Prospective Customeror Supplier” shall mean, any person whom the Company, has, within the six (6) months prior to the termination of Participant’s employment with the Company or its subsidiaries, offered (by means of a personal meeting, telephone call or targeted letter or written proposal, or other similar communication) to, in the case of a customer, provide services competitive with the Business or, in the case of a supplier, obtain services from such supplier.

d.Return of Confidential Information. Upon the termination of the Participant’s employment with the Company or any of its subsidiaries, and at any other time upon request of the Company, the Participant shall promptly surrender and deliver to the Company all documents (including electronically stored information) and all copies thereof and all other materials of any

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nature containing or pertaining to all Confidential Information (including any Company-issued computer, mobile devise or other equipment) in the Participant’s possession, custody or control and the Participant shall not retain any such document or other materials or property.

e.Specific Performance. Because of the difficulty of measuring economic losses to the Company and its subsidiaries as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that would be caused to the Company and its subsidiaries for which it would have no other adequate remedy, the Participant agrees that the Company and each of its subsidiaries shall be entitled to enforce the foregoing covenants, in the event of a breach, by injunctions and restraining orders and that such enforcement shall not be the Company’s or its subsidiaries’ exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company and its subsidiaries, at law and equity.

f.Severability. The covenants in this Appendix A to the Agreement are severable and separate, and the unenforceability of any specific covenant (or any portion thereof) shall not affect the provisions of any other covenant (or portion thereof). Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the Participant and the Company that such restrictions be enforced to the fullest extent which the arbitrator deems reasonable and this Agreement shall thereby be reformed.

g.Third-Party Beneficiaries. Each of the Company’s subsidiaries that is not a signatory hereto shall be a third-party beneficiary of the Participant’s representations, covenants and obligations set forth in this Appendix A and shall be entitled to enforce such representations, covenants and obligations as if a party hereto.

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APPENDIX B

PERFORMANCE PERIOD; PERFORMANCE GOALS

Subject to satisfaction of the Service Vesting Requirements, the PSUs shall be eligible to become Earned PSUs based on the Company’s free cash flow achievement over the period beginning on January 1, 2020 and ending on December 31, 2022 (the “Performance Period”) in accordance with the terms set forth in this Appendix B.

Establishment of Performance Years

The Performance Period shall be divided into three separate sub-periods (each, a “Performance Year”) as follows:

2020 Performance Year:	January 1, 2020 - December 31, 2020
2021 Performance Year:	January 1, 2021 - December 31, 2021
2022 Performance Year:	January 1, 2022 - December 31, 2022

One-third of the PSUs granted under the Award will be allocated to each Performance Year and will be eligible to become Earned PSUs, at the end of the Performance Period, based on certified performance for that Performance Year and the Participant’s satisfaction of the Service Vesting Requirements.

Performance Payout Calculation

Achievement of the Performance Goals with respect to each Performance Year will be determined based on the Company’s FCF (as defined below) as compared to the FCF Threshold, Target and Maximum established by the Committee for such Performance Year. The FCF Threshold, Target and Maximum Performance Goals for each of the 2021 and 2022 Performance Years will be established by the Committee within the first 90 days of each respective year, and communicated to the Participant as soon as practicable thereafter. For the 2020 Performance Year, the FCF Threshold, Target and Maximum Performance Goals shall be as set forth in the following table:

Performance Level		Performance Payout as a Percentage of Target*
Below Threshold	Less than negative $2,000,000	0%
Threshold	Negative $2,000,000	50%
Target	$0	100%
Maximum	$2,000,000 or greater	150%

* Achievement of FCF performance between the Threshold, Target and Maximum levels set forth in the table above will be calculated using linear interpolation; provided, however, that in no event will the performance payout exceed 150%.

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As used herein, “FCF” means operating cash flow less investing cash flow, both as reported under Generally Accepted Accounting Principles, with proceeds from the sale of a business and costs of a restructuring to be included or excluded at the discretion of the Committee.

Change in Control

In the event of a Change in Control prior to the end of the Performance Period in which this Award is not assumed by any successor entity or acquirer: (i) the Performance Period shall be deemed to end as of the date of such Change in Control, (ii) with respect to each Performance Year that ended prior to the date of such Change in Control, performance shall be based on actual FCF achievement for such Performance Year, and (iii) with respect to each Performance Year that has not ended as of the date of such Change in Control (including the Performance Year during which such Change in Control occurs), performance shall be based on target achievement (100%) for such Performance Year.

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EX-10.4

Exhibit 10.4

KEY ENERGY SERVICES, INC.

AMENDED AND RESTATED 2019 EQUITY AND CASH INCENTIVE PLAN

TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT, including Appendix A attached hereto (this “Agreement”), dated as of ____________, [2020] (the “Date of Grant”), is made by and between Key Energy Services, Inc., a Delaware corporation (the “Company”), and ____________ (the “Participant”).

R E C I T A L S:

WHEREAS, Awards of Restricted Stock Units may be granted pursuant to the Key Energy Services, Inc. Amended and Restated 2019 Equity and Cash Incentive Plan (the “Plan”); and

WHEREAS, in recognition of the Participant’s services to the Company, the Administrator has determined that it is in the best interests of the Company and its stockholders to grant Restricted Stock Units to the Participant pursuant to the terms of the Plan and subject to the further terms and conditions set forth herein.

NOW, THEREFORE, in consideration for the services rendered by the Participant to the Company and the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.Grant of Restricted Stock Units. The Company hereby grants the Participant (a)[•] time-vested Restricted Stock Units (“Time-Vested Restricted Stock Units”), (the “Restricted Stock Unit Award”), subject to the applicable vesting terms set forth in Section 4 hereof.

2.Dividend Equivalents. Each Restricted Stock Unit shall be credited with dividend equivalents (the “Dividend Equivalents”) in an amount, without interest, equal to the cumulative cash and stock dividends declared or paid on one share of Common Stock, if any, following the Date of Grant and prior to the date the Restricted Stock Unit is settled in accordance with Section 5.

3.Incorporation by Reference. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Administrator shall have the authority to interpret and construe the Plan and this Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Participant and his or her legal representative in respect of any questions arising under the Plan or this Agreement.

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4.Vesting of Restricted Stock Units.

(a)Time-Vested Restricted Stock Units. Subject to (i) the Participant’s Continuous Service through the applicable Vesting Date (as defined below) and (ii) compliance with the terms and conditions of this Agreement (including without limitation, the restrictive covenants set forth in Appendix A), one-third (1/3) of the Time-Vested Restricted Stock Units shall vest on each of the first three (3) anniversaries of the Date of Grant (each, a “Vesting Date”).

5.Settlement.

(a)Amount. The Company will deliver one share of Common Stock plus a cash amount equal to the aggregate Dividend Equivalents, if any, for each vested Restricted Stock Unit, less any withholding (as permitted pursuant to the Plan and Section 7 hereof). Neither the value of shares of Common Stock nor the value of Dividend Equivalents shall bear any interest owing to the passage of time. Neither this Section 5 nor any action taken in accordance with this Section 5 shall be construed to create a trust or a funded or secured obligation of any kind.

(b)Timing. Delivery in respect of the vested Restricted Stock Units and any associated Dividend Equivalents will be made as soon as administratively practicable following the Vesting Date. Such delivery shall be subject to the Participant’s continued compliance with the restrictive covenants set forth in Appendix A.

6.Termination of Continuous Service. Except as otherwise provided in the Participant’s employment agreement or the Plan, all unvested Restricted Stock Units shall be forfeited upon termination of the Participant’s Continuous Service for any reason.

7.Tax Withholding. The Company shall have the right to withhold from any delivery of Common Stock due under the Plan and this Agreement an amount equal to the applicable required withholding obligation in respect of any federal, state or local tax.

8.No Rights as Stockholder. The Participant shall have no rights as a stockholder with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Participant has become the record holder of such shares.

9.Restrictive Covenants. The provisions of Appendix A attached hereto, which are deemed to be part of this Agreement as if fully set forth herein, shall apply to the Participant. By accepting this Agreement, the Participant agrees to be bound by such provisions. The Participant further acknowledges and agrees that the restrictive covenants contained in Appendix A are reasonable and enforceable in all respects.

10.Detrimental Activity.

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(a)Upon delivery of Common Stock in respect of vested Restricted Stock Units, the Participant shall certify in a manner acceptable to the Company that the Participant has not engaged in any Detrimental Activity.

(b)The Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict this Restricted Stock Unit Award, in whole or in part, at any time if the Participant engages in any Detrimental Activity.

(c)In the event a Participant engages in Detrimental Activity after delivery of Common Stock in respect of vested Restricted Stock Units and during any period for which any restrictive covenant prohibiting such activity is applicable to the Participant, such delivery may be rescinded within one (1) year after the Participant engages in such Detrimental Activity. In the event of any such rescission, the Participant shall (i) if the Participant still owns the Common Stock received pursuant to the Award, the Participant shall return to the Company such Common Stock or (ii) if the Participant no longer owns the Common Stock received pursuant to the Award, the Participant shall pay to the Company an amount in cash equal to the value received by Participant upon the sale of the Common Stock received pursuant to the Award (the “Rescission Amount”), in such manner and on such terms and conditions as may be required by the Company. The Company shall be entitled to set-off the Rescission Amount against any amount owed to the Participant by the Company, subject to compliance with Section 409A of the Code, if applicable.

11.Compliance with Laws, Regulations and Company Policies. The grant and payment of the Restricted Stock Units hereunder shall be subject to compliance by the Company and the Participant with all applicable requirements of state and federal laws and regulatory agencies and with all applicable requirements of any stock exchange on which the Common Stock may be listed at the time of such issuance or transfer, if applicable. The Restricted Stock Unit Award shall also be subject to any applicable clawback or recoupment policies, share trading and stock ownership policies of the Company, and other policies that may be implemented by the Board from time to time.

12.Section 409A. Any amounts payable with respect to the Restricted Stock Units are intended to be exempt from Section 409A of the Code in reliance on the short-term deferral exemption set forth in the final regulations issued thereunder. If any amounts payable with respect to the Restricted Stock Units are determined to be subject to Section 409A of the Code, such payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code. All payments to be made upon a termination of employment may only be made upon a “separation from service” under Section 409A of the Code. For purposes of Section 409A of the Code, each payment shall be treated as a separate payment. In no event may the Participant, directly or indirectly, designate the calendar year in which the payments under this Agreement will be made. Notwithstanding anything in this Agreement to the contrary, if the Participant is a “specified employee” as defined by Section 409A of the Code, then if and to the extent required by Section 409A of the Code, any payment with respect to the Restricted Stock Units upon a separation from service will not be made before the date that is six (6) months after the Participant separates from service or such earlier date permitted by Section 409A of the Code.

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13.No Right to Continuous Service. Nothing in this Agreement shall be deemed by implication or otherwise to impose any limitation on any right of the Company or any of its Affiliates to terminate the Participant’s Continuous Service at any time.

14.Waiver of Change in Control Severance and Equity Acceleration Rights in Connection With the Company’s Out-of-Court Restructuring. The parties acknowledge that the Participant is party to a [NAME OF AGREEMENT] with the Company, dated as of [•] (the “[NAME OF AGREEMENT]”), and may also hold outstanding awards granted pursuant to the Company’s 2016 Equity and Cash Incentive Plan, 2019 Equity and Cash Incentive Plan and/or 2017 Phantom Share Award Plan and associated award agreements (such plans, awards and award agreements, collectively, the “Existing Awards”). The parties further acknowledge that pursuant to a Restructuring Support Agreement dated as of January 24, 2020, by and among the Company, Key Energy Services, LLC and certain other parties (as may be amended from time to time) (the “RSA”), the Company will undergo an out-of-court restructuring that will result in a change in the ownership structure of the Company (this, together with any other transactions contemplated by the RSA, the “Restructuring”). In consideration of the Restricted Stock Unit Award granted hereunder, the Participant acknowledges and agrees that, for purposes of the [NAME OF AGREEMENT] and any of the Existing Awards, the Restructuring shall not constitute a “change of control” (or any similar concept found in the [NAME OF AGREEMENT] or any of the terms and conditions governing any of the Existing Awards), and the [NAME OF AGREEMENT] and the Existing Awards are each hereby amended accordingly.

15.Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first class mail, return receipt requested, facsimile transmission, courier service or personal delivery:

If to the Company:

Key Energy Services, Inc.

1301 McKinney Street, Suite 1800

Houston, Texas 77010

Facsimile: 713-651-4559

Attention: General Counsel

If to the Participant:

At the address on file with the Company

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.

16.Bound by Plan. By accepting this Agreement, the Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all of the terms and provisions of the Plan.

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17.Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and on the Participant and the Participant’s executors, administrators, heirs, and successors.

18.Amendment of Restricted Stock Unit Award. Subject to Section 19 and subject to the terms of the Plan, the Administrator at any time and from time to time may amend the terms of this Restricted Stock Unit Award; provided, however, that the Participant’s rights under this Restricted Stock Unit Award shall not be impaired by any such amendment unless the Company requests the Participant’s consent and the Participant consents in writing, or except as otherwise permitted under the Plan.

19.Adjustment Upon Changes in Capitalization. The shares of Common Stock underlying the Restricted Stock Units may be adjusted as provided in the Plan including, without limitation, Article 14 of the Plan. The Participant, by accepting this Agreement, irrevocably and unconditionally consents and agrees to any such adjustments as may be made at any time hereafter.

20.Transfer Restrictions. The Restricted Stock Unit Award may not be sold, transferred or otherwise alienated or hypothecated.

21.Governing Law and Venue. The provisions of this Agreement shall be construed and enforced in accordance with the laws and decisions of the State of Delaware, without regard to such state’s conflict of law principles. Any dispute or conflict between the parties shall be brought in a state or federal court located in Wilmington, Delaware. The parties hereto submit to jurisdiction and venue in Wilmington, Delaware and all objections to such venue and jurisdiction are hereby waived.

22.Severability. If any provision of this Agreement or any part of any provision of this Agreement is determined to be unenforceable for any reason whatsoever, it shall be severable from the rest of the Agreement and shall not invalidate or affect the other portions or parts of this Agreement, which shall remain in full force and effect. Furthermore, each covenant contained in this Agreement shall stand independently and be enforceable without regard to any other covenants or to any other provisions of this Agreement.

23.Waiver. The waiver by the Company of a breach of any provision contained in this Agreement shall not operate or be construed as a waiver of any subsequent breach or as a waiver of any other provisions of this Agreement.

24.Entire Agreement. Except as otherwise provided in this Agreement, this Agreement constitutes the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and supersedes all prior and contemporaneous arrangements, agreements and understandings, both oral and written, with respect to the subject matter hereof. Notwithstanding the foregoing, and for the avoidance of doubt, the restrictive covenants contained in Appendix A hereto shall be in addition to, and not in lieu of, any restrictive covenants that the Participant is currently subject to with respect to the Company or its Affiliates.

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25.Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation of construction, and shall not constitute a part of this Agreement.

26.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or portable document format (.pdf) attachment to electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

27.No Liability for Good Faith Determinations. The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Stock Units granted hereunder.

28.Consent to Electronic Delivery; Electronic Signature. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports and all other forms of communications) in connection with this and any other award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which the Participant has access. The Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement effective as of the Date of Grant set forth above.

KEY ENERGY SERVICES, INC.
By:
	Name:
	Title:

By acceptance of this Restricted Stock Unit Award, the Participant (a) acknowledges receipt of the Plan incorporated herein, (b) confirms that the prospectus for the Plan has been made available to the Participant, (c) acknowledges that he or she has read this Agreement, the Plan and the Plan prospectus and understands the terms and conditions of them, (d) accepts the Restricted Stock Unit Award, (e) agrees to be bound by the terms of the Plan and this Agreement (including the restrictive covenants set forth in Appendix A attached hereto), and (f) agrees that all decisions and determinations of the Administrator with respect to the Restricted Stock Unit Award shall be final and binding on the Participant and any other person having or claiming an interest under the Restricted Stock Unit Award.

The undersigned hereby accepts the terms of this Agreement and the Plan.

PARTICIPANT

Name:

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APPENDIX A

PROTECTION OF INFORMATION; NON-COMPETITION; NON-SOLICITATION

1.Non-Disclosure of Confidential Information. In the course of the Participant’s employment with the Company or any of the Company’s direct or indirect subsidiaries (collectively, “subsidiaries” or each a “subsidiary”), and the performance of the Participant’s duties on behalf of the Company or any of its subsidiaries, the Participant will be provided with, and will have access to Confidential Information (as defined below). In consideration, and as a condition, of the Participant’s receipt of and access to Confidential Information, and as a condition of the Company’s entry into this Agreement, the Participant, both during the course of the Participant’s employment with the Company or any of its subsidiaries and thereafter, shall not disclose any Confidential Information to any person or entity and shall not use any Confidential Information except for the benefit of the Company or its subsidiaries or with the express written consent of the Chief Executive Officer or the General Counsel of the Company. The Participant shall follow all Company policies and protocols regarding the security of all documents and other material containing Confidential Information (regardless of the medium on which such Confidential Information is stored). This Section 1 shall apply to all Confidential Information, whether known or later to become known to the Participant during the period that the Participant is employed or affiliated with the Company or any of its subsidiaries.

2.Permitted Disclosures. Notwithstanding the foregoing, or any other provision of this Agreement or the Plan:

(a)the Participant shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is: made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; or (iii) protected under the whistleblower provisions of applicable law;

(b)in the event the Participant files a lawsuit for retaliation by the Company or any of its subsidiaries for the Participant’s reporting of a suspected violation of law, the Participant may (i) disclose a trade secret to the Participant’s attorney and (ii) use the trade secret information in the court proceeding related to such lawsuit, in each case, if the Participant (A) files any document containing such trade secret under seal; and (B) does not otherwise disclose such trade secret, except pursuant to court order; and

(c)nothing shall prevent the Participant from lawfully, and without obtaining prior authorization from the Company or any of its subsidiaries, (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by the U.S. Securities and Exchange Commission (the “SEC”) or any other governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to an employee individually from any Governmental Authority; (iii) testifying, participating or otherwise assisting in an action or proceeding by any Governmental Authorities relating to a possible violation of law, including providing documents or other confidential information to Governmental Authorities; or (iv) receiving an award for information provided to the SEC or any other Governmental Authority. Neither the Plan nor this

Agreement (nor any other agreement between the Participant and the Company or a subsidiary of the Company) shall be construed or applied to require the Participant to obtain prior authorization from the Company or any of its subsidiaries before engaging in any of the foregoing conduct referenced in this Section 2, or to notify the Company or any of its subsidiaries of having engaged in any such conduct.

3.Definition of Confidential Information. As used herein, “Confidential Information” means all non-public or proprietary information of, or related to, the Company or any of its subsidiaries, including, without limitation, all designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that (i) are acquired by or disclosed to the Participant during the period that the Participant is or has been employed or affiliated with the Company or any of its subsidiaries (whether acquired or disclosed during business hours or otherwise and whether acquired or disclosed on the Company’s premises or otherwise) or (ii) relate to the businesses or properties, products or services of the Company or any of its subsidiaries (including all such information relating to technical information, including engineering and scientific research, development, methodology, devices and processes; formulas and chemical compositions; blueprints, designs and drawings; financial information, budgets, projections and results; business and marketing plans, strategies, and programs; employee and contractor lists and records; business methods, and operating and production procedures; pricing, sales data, prospect and customer lists and information; supplier and vendor lists and information; terms of commercial contracts, as well as all such information relating to corporate opportunities, operations, future plans, methods of doing business, business plans, strategies for developing business and market share, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or acquisition targets or their requirements, the identity of key contacts within customers’ organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names and marks). Moreover, all documents, presentations, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic databases, maps, data, models and all other writings or materials of any type including or embodying any Confidential Information shall be the sole and exclusive property of the Company or any of its subsidiaries and is subject to the same restrictions on disclosure applicable to all Confidential Information as set forth above. Confidential Information does not include any information that is or becomes generally available to the public other than as a result of a disclosure or wrongful act of the Participant or any of the Participant’s agents or which was known to the Participant prior to his or her employment with the Company.

4.Non-Competition; Non-Solicitation.

(a)In granting the Restricted Stock Unit Award to the Participant, the Company provides the Participant a further incentive to build the Company’s goodwill and links the Participant’s interests to the Company’s long-term business interests. As an inducement for the Company to grant the Restricted Stock Unit Award and enter into this Agreement, and in order to protect the Confidential Information, and the Company’s and its subsidiaries goodwill, the Participant voluntarily agrees to the covenants set forth in this Section 4(a). The Participant agrees and acknowledges that the limitations and restrictions set forth herein, including the geographical and temporal restrictions on certain activities, are reasonable in all respects and not oppressive and are material and substantial part of the Company’s willingness to enter into this Agreement, and are intended and necessary to protect the Company’s and its subsidiaries’ Confidential Information, goodwill, and substantial and legitimate business interests.

(b)The Participant agrees that during the Prohibited Period, the Participant shall not, without prior written approval of the Company, directly or indirectly, for the Participant, or on behalf of or in conjunction with any other person or entity of whatever nature:

(i)engage in or carry on within the Market Area in competition with the Company or any of its subsidiaries in any aspect of the Business, which prohibition shall prevent the Participant from directly or indirectly owning, managing, operating, becoming an officer, director, employee or consultant of, or otherwise being affiliated with any person or entity primarily engaged in, or planning to primarily engage in, the Business in the Market Area (x) in any capacity if the Participant is a Vice President or above at the Company and (y) in any capacity in which the Participant’s duties are the same or similar to those performed for the Company or any of its subsidiaries if the Participant is below the level of a Vice President at the Company; for purposes of this provision, “primarily engage” means that at least twenty percent (20%) of the gross revenue of a person or entity’s business is from business directly competitive with the Business;

(ii)appropriate any Business Opportunity of, or relating to, the Company or any of its subsidiaries located in the Market Area;

(iii)within the Market Area, solicit, canvass, approach, encourage, entice or induce any (i) current customer or supplier of the Company or any of its subsidiaries with whom or which the Participant had contact in the last 24 months of his or her employment with the Company or its subsidiaries, (ii) Prospective Customer or Supplier with whom or which the Participant had contact in the last 6 months of his or her employment with the Company or its subsidiaries or (iii) any such customer, supplier or Prospective Customer or Supplier about whom or which the Participant obtained Confidential Information to cease or lessen such customer’s or supplier’s or Prospective Customer’s or Supplier’s business with the Company or any of its subsidiaries in the Business;

(iv)solicit, canvass, approach, encourage, entice or induce any employee or contractor of the Company or any of its subsidiaries to terminate his, her or its employment or engagement therewith, excluding general advertisements and solicitations not targeted at the employees or contractors of the Company or its subsidiaries; or

(v)employ or cause any other person or entity to employ any person who was an employee or contractor of the Company or any of its subsidiaries in the past six (6) months.

Notwithstanding the above referenced limitations in Sections 4(b)(i), 4(b)(ii) and 4(b)(iii), such limitations shall not apply following the termination of the Participant’s employment with the Company and (as applicable) any of its subsidiaries in those portions of the Market Area located within the State of Oklahoma. Instead, the Participant agrees that, during the portion of the Prohibited Period that occurs after the Participant is no longer employed by the Company or any of its subsidiaries, the restrictions on the Participant’s activities within those portions of the Market Area located within the State of Oklahoma (in addition to those restrictions set forth in Sections 1 and 4(b)(iv) herein) shall be as follows: the Participant will not directly or indirectly solicit the sale of goods, services, or a combination of goods and services from the established customers of the Company or any of its subsidiaries.

(c)For purposes of this Section 4, the following terms shall have the following meanings:

(i)“Business” means the business and operations that are the same or similar to those performed by, or planning to be performed by, the Company or any of its subsidiaries and for which the Participant obtained Confidential Information or had direct or indirect responsibilities during the period of the Participant’s employment with the Company or any of its subsidiaries, which business and operations include (if Participant obtained Confidential Information or had direct or indirect responsibilities with respect to such business and operations on behalf of the Company or any of its subsidiaries during the period of his or her employment) without limitation: rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, and fishing and rental services.

(ii)“Business Opportunity” shall mean any commercial, investment or other business opportunity relating to the Business.

(iii)“Market Area” means (a) onshore land areas in the Continental United States within seventy-five (75) miles of any location that the Participant was either based or performed material services on behalf of the Company or any of its subsidiaries and (b) each of the following basins and oil and gas shale plays: Bakken, Barnett, Denver-Julesberg, Eagle Ford, Fayetteville, Granite Wash, Haynesville, Marcellus, Mississippi Lime, Niobrara, Permian, Powder River, SCOOP, STACK, Tuscaloosa, Williston, and Woodford; provided, however, that a basin or play shall not be included within the Market Area if (1) the Participant had no direct or indirect responsibilities with respect to such basin or play during the last 24 months of the Participant’s employment or engagement with the Company or any of its subsidiaries, or (2) the Participant obtained no Confidential Information with respect to the Company’s or any of its subsidiaries’ Business in such basin or play.

(iv)“Prohibited Period” [shall mean the period during which the Participant is employed by the Company or any of its subsidiaries and continuing for a period of twelve (12) months following the date that the Participant is no longer employed by the Company or any of its subsidiaries][shall mean the period during which the Participant is employed by the Company or any of its subsidiaries and continuing for a period of months equal to the monthly base salary amount received by Participant as severance following the date that the Participant is no longer employed by the Company or any of its subsidiaries; provided, however, in no event shall the Prohibited Period exceed twelve (12) months following the date that the Participant is no longer employed with the Company. For example, if a Participant receives six (6) months base salary as severance, the Prohibited Period for such Participant will be six (6) months following the date that the Participant is no longer employed with the Company or any of its subsidiaries. Notwithstanding the foregoing, the Prohibited Period with respect to Section 4(b)(iv) of this Appendix A shall always be a period of twelve (12) months].

(v)“Prospective Customeror Supplier” shall mean, any person whom the Company, has, within the six (6) months prior to the termination of Participant’s employment with the Company or its subsidiaries, offered (by means of a personal meeting, telephone call or targeted letter or written proposal, or other similar

communication) to, in the case of a customer, provide services competitive with the Business or, in the case of a supplier, obtain services from such supplier.

(d)Return of Confidential Information. Upon the termination of the Participant’s employment with the Company or any of its subsidiaries, and at any other time upon request of the Company, the Participant shall promptly surrender and deliver to the Company all documents (including electronically stored information) and all copies thereof and all other materials of any nature containing or pertaining to all Confidential Information (including any Company-issued computer, mobile devise or other equipment) in the Participant’s possession, custody or control and the Participant shall not retain any such document or other materials or property.

(e)Specific Performance. Because of the difficulty of measuring economic losses to the Company and its subsidiaries as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that would be caused to the Company and its subsidiaries for which it would have no other adequate remedy, the Participant agrees that the Company and each of its subsidiaries shall be entitled to enforce the foregoing covenants, in the event of a breach, by injunctions and restraining orders and that such enforcement shall not be the Company’s or its subsidiaries’ exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company and its subsidiaries, at law and equity.

(f)Severability. The covenants in this Appendix A to the Agreement are severable and separate, and the unenforceability of any specific covenant (or any portion thereof) shall not affect the provisions of any other covenant (or portion thereof). Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the Participant and the Company that such restrictions be enforced to the fullest extent which the arbitrator deems reasonable and this Agreement shall thereby be reformed.

(g)Third-Party Beneficiaries. Each of the Company’s subsidiaries that is not a signatory hereto shall be a third-party beneficiary of the Participant’s representations, covenants and obligations set forth in this Appendix A and shall be entitled to enforce such representations, covenants and obligations as if a party hereto.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, J. Marshall Dodson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Key Energy Services, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:	August 14, 2020	/s/ J. MARSHALL DODSON
		J. Marshall Dodson
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT

I, Nelson M. Haight, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Key Energy Services;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:	August 14, 2020	/s/ NELSON M. HAIGHT
		Nelson M. Haight
		Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned officers of Key Energy Services, Inc. (the "Company") hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, to such officer's knowledge that:

(1) the accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2020 as filed with the U.S. Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods expressed in the Report.

Dated:	August 14, 2020	/s/ J. MARSHALL DODSON
		J. Marshall Dodson
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated:	August 14, 2020	/s/ NELSON M. HAIGHT
		Nelson M. Haight
		Senior Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 05, 2020
Document Documentand Entity Information [Abstract]
Entity Registrant Name	KEY ENERGY SERVICES INC
Entity Central Index Key	0000318996
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		13,781,347
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 6,864	$ 14,426
Restricted cash	250	250
Accounts receivable, net of allowance for doubtful accounts of $1,085 and $881, respectively	20,069	51,091
Inventories	13,698	13,565
Other current assets	17,774	22,260
Total current assets	58,655	101,592
Property and equipment	388,229	432,917
Accumulated depreciation	(218,409)	(205,352)
Property and equipment, net	169,820	227,565
Intangible assets, net	318	347
Other non-current assets	40,400	18,366
TOTAL ASSETS	269,193	347,870
Current liabilities:
Accounts payable	8,641	8,700
Current portion of long-term debt	1,076	2,919
Other current liabilities	51,607	90,715
Total current liabilities	61,324	102,334
Long-term debt	51,954	240,007
Workers’ compensation, vehicular and health insurance liabilities	27,394	26,072
Interest Payable	16,283	0
Other non-current liabilities	31,094	30,710
Commitments and contingencies
Equity:
Common stock, $0.01 par value; 150,000,000 and 2,000,000 shares authorized, 13,781,262 and 410,990 outstanding	340	206
Additional paid-in capital	307,982	265,588
Retained deficit	(227,178)	(317,047)
Total equity	81,144	(51,253)
TOTAL LIABILITIES AND EQUITY	$ 269,193	$ 347,870

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,085	$ 881
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	2,000,000
Common stock, shares outstanding	13,781,262	410,990

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Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
REVENUES	$ 34,750	$ 112,943	$ 110,058	$ 222,216
COSTS AND EXPENSES:
Direct operating expenses	29,904	90,564	91,565	178,758
Depreciation and amortization expense	8,054	14,262	18,280	28,558
General and administrative expenses	13,637	22,544	28,890	44,639
Impairment expense	0	0	41,242	0
Operating loss	(16,845)	(14,427)	(69,919)	(29,739)
Gain on debt restructuring	0	0	(170,648)	0
Interest expense, net of amounts capitalized	2,066	8,520	10,287	17,753
Other income, net	(15)	(239)	(400)	(1,381)
Income (loss) before income taxes	(18,896)	(22,708)	90,842	(46,111)
Income tax benefit (expense)	(229)	4,405	(973)	4,367
NET INCOME (LOSS)	$ (19,125)	$ (18,303)	$ 89,869	$ (41,744)
Loss per share:
Earnings Per Share, Basic	$ (1.39)	$ (44.86)	$ 10.06	$ (102.31)
Earnings Per Share, Diluted	$ (1.39)	$ (44.86)	$ 10.00	$ (102.31)
Weighted average shares outstanding:
Basic	13,781	408	8,935	408
Diluted	13,781	408	8,991	408

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Statement of Cash Flows [Abstract]
Net loss	$ 89,869	$ (41,744)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	18,280	28,558
Impairment expense	41,242	0
Bad debt expense	1,175	261
Accretion of asset retirement obligations	85	82
Gain on debt restructuring	(170,648)	0
Amortization of deferred financing costs	260	241
Gain on disposal of assets, net	(767)	(1,459)
Share-based compensation	252	2,230
Changes in working capital:
Accounts receivable	29,847	2,422
Other current assets	4,353	(1,741)
Accounts payable, accrued interest and accrued expenses	(38,526)	(4,647)
Share-based compensation liability awards	3	34
Other assets and liabilities	(13,636)	4,400
Net cash used in operating activities	(38,211)	(11,363)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(979)	(12,362)
Proceeds from sale of assets	3,363	4,780
Net cash provided by (used in) investing activities	2,384	(7,582)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt	30,000	0
Repayments of long-term debt	(3)	(1,250)
Repayments of finance lease obligations	(340)	0
Payment of deferred financing costs	1,385	828
Repurchases of common stock	7	4
Net cash provided by (used in) financing activities	28,265	(2,082)
Net decrease in cash, cash equivalents and restricted cash	(7,562)	(21,027)
Cash, cash equivalents, and restricted cash, beginning of period	14,676	50,311
Cash, cash equivalents, and restricted cash, end of period	$ 7,114	$ 29,284

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GENERAL

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

GENERAL

Key Energy Services, Inc., and its wholly owned subsidiaries (collectively, “Key,” the “Company,” “we,” “us,” “its,” and “our”) provide a full range of well services to major oil companies and independent oil and natural gas production companies. Our services include rig-based and coiled tubing-based well maintenance and workover services, well completion and recompletion services, fluid management services, fishing and rental services, and other ancillary oilfield services. Additionally, certain of our rigs are capable of specialty drilling applications. We operate in most major oil and natural gas producing regions of the continental United States. An important component of our growth strategy is to make acquisitions that will strengthen our core services or presence in selected markets, and that we also make strategic divestitures from time to time. We expect that the industry in which we operate will experience consolidation, and the we expect to explore opportunities and engage in discussions regarding these opportunities, which could include mergers, consolidations or acquisitions or further dispositions or other transactions, although there can be no assurance that any such activities will be consummated.

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed December 31, 2019 balance sheet was prepared from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). Certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in this Quarterly Report on Form 10-Q. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2019 Form 10-K.

The unaudited condensed consolidated financial statements contained in this report include all normal and recurring material adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented herein. The results of operations for the six months endedJune 30, 2020 are not necessarily indicative of the results expected for the full year or any other interim period, due to fluctuations in demand for our services, timing of maintenance and other expenditures, and other factors.

We have evaluated events occurring after the balance sheet date included in this Quarterly Report on Form 10-Q through the date on which the unaudited condensed consolidated financial statements were issued, for possible disclosure of a subsequent event.

Market Conditions, COVID-19 and Going Concern

As a company that provides services to oil and gas exploration and development companies, we are exposed to a number of risks and uncertainties that are inherent to our industry. In addition to such industry-specific risks, the global public health crisis associated with the novel coronavirus (“COVID-19”) has, and is anticipated to continue to have, an adverse effect on global economic activity for the immediate future and has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities. The slowdown in global economic activity attributable to COVID-19 has resulted in a dramatic decline in the demand for energy, which directly impacts our industry and the Company. In addition, global crude oil prices experienced a decline in late 2019 and a collapse starting in early March 2020 as a direct result of failed negotiations between the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia regarding reduced supply of oil. As the breadth of the COVID-19 health crisis expanded throughout the month of March 2020 and governmental authorities implemented more restrictive measures to limit person-to-person contact, global economic activity continued to decline commensurately. The associated impact on the energy industry has been adverse and continued to be exacerbated by the unresolved conflict regarding production. In the second week of April, OPEC, Russia and certain other petroleum producing nations (“OPEC+”) reconvened to discuss the matter of production cuts in light of unprecedented disruption and supply and demand imbalances that expanded since the failed negotiations in early March 2020. Agreements were reached to cut production by up to 10 million barrels of oil per day with allocations to be made among the OPEC+ participants. In early June, these agreements were further extended through July 2020. These production cuts, other voluntary production curtailments and reduced drilling have helped to bring demand and supply closer to balance and stabilized commodity prices. However, US and international crude oil stocks remain at historically high levels, commodity prices remain depressed relative to 2019 levels, and there remains continued uncertainty around the timing of any recovery in economic activity and demand for energy.

Despite a significant decline in drilling by U.S. producers starting in mid-March 2020, domestic supply continued to exceed demand through May 2020, which led to significant operational stress with respect to capacity limitations associated with storage, pipeline and refining infrastructure, particularly within the Gulf Coast region. While these trends began to reverse in June 2020 due to production curtailments, natural well decline and reduced drilling activity, there remains a historically high amount of crude oil in storage. The combined effect of the aforementioned factors has had an adverse impact on the industry in general and our operations specifically.

These conditions and events have adversely affected the demand for oil and natural gas, as well as for our services. The collapse in the demand for oil caused by this unprecedented global health and economic crisis, coupled with oil oversupply, has had, and is reasonably likely to continue to have, a material adverse impact on the demand for our services and the prices we can charge for our services. The decline in our customers’ demand for our services has had, and is likely to continue to have, a material adverse impact on our financial condition, results of operations and cash flows.

To date, we have enhanced the cost control measures related to operational and general and administrative expenses to optimize cost during this time period with the goal of ensuring that margins are preserved as well as increased efforts on improving working capital until customer spend increases.

Due to the uncertainty of future oil and natural gas prices and the effect the COVID-19 pandemic will continue to have on our results of operations and financial condition, there is substantial doubt as to the Company’s ability to continue as a going concern. Management has prepared these consolidated condensed financial statements in accordance with US GAAP applicable to a going concern, which contemplates that assets will be realized and liabilities will be discharged in the normal course of business as they become due. These consolidated condensed financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported revenues and expenses and balance sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material and adverse to the financial results of the Company.

Restructuring and Reverse Stock Split

On March 6, 2020, we closed the previously announced restructuring of our capital structure and indebtedness (the “Restructuring”) pursuant to the Restructuring Support Agreement, dated as of January 24, 2020 (the “RSA”), with lenders under our Prior Term Loan Facility (as defined below) collectively holding over 99.5% (the “Supporting Term Lenders”) of the principal amount of the Company’s then outstanding term loans. Pursuant to the RSA and the Restructuring contemplated thereby, among other things, we effected the following transactions and changes to our capital structure and governance:

• pursuant to exchange agreements entered into at the closing of the Restructuring, we exchanged approximately $241.9 million aggregate outstanding principal of our term loans (together with accrued interest thereon) held by Supporting Term Lenders under our Prior Term Loan Facility into (i) approximately 13.4 million newly issued shares of common stock representing 97% of the Company’s outstanding shares after giving effect to such issuance (and without giving effect to dilution by the New Warrants and MIP (each as defined below)) and (ii) $20 million of term loans under our new $51.2 million term loan facility (the “New Term Loan Facility”), each on a pro rata basis based on their holdings of term loans under the Prior Term Loan Facility;

• completed a 1-for-50 reverse stock split of our outstanding common stock. All pre-Restructuring shares prices, including shares outstanding and earnings per share, have been adjusted to reflect the 1-for-50 reverse stock split;

• distributed to our common stockholders of record as of February 18, 2020 two series of warrants (the “New Warrants”);

• entered into the $51.2 million New Term Loan Facility, of which (i) $30 million was funded at closing of the Restructuring with new cash proceeds from the Supporting Term Lenders and $20 million was issued in exchange for term loans held by the Supporting Term Lenders under the Prior Term Loan Facility as described above and (ii) an approximate $1.2 million was a senior secured term loan tranche in respect of term loans held by lenders under the Prior Term Loan Facility who were not Supporting Term Lenders;

• entered into the New ABL Facility (as defined below);

• adopted a new management incentive plan (the “MIP”) representing up to 9% of the Company’s outstanding shares after giving effect to the issuance of shares described above; and

• made certain changes to the Company’s governance, including changes to our Board of Directors (the “Board”), amendments to our governing documents and entry into the Stockholders Agreement (as defined below) with the Supporting Term Lenders.

In accordance with the RSA at the closing of the Restructuring, the Company amended and restated its certificate of incorporation and entered into a stockholders agreement (the “Stockholders Agreement”) with the Supporting Term Lenders in order to, among other things, provide for a Board of seven members. Pursuant to the Stockholders Agreement, our Board consists of our chief executive officer and six other members appointed by various Supporting Term Lenders. Specifically, pursuant to the Stockholders Agreement, Supporting Term Lenders who hold more than 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate two directors and Supporting Term Lenders who hold between 10% and 25% of the Company’s outstanding shares as of the closing of the Restructuring are entitled to nominate one director. All appointees or nominees of Supporting Term Lenders, other than any director appointed or nominated by Soter Capital LLC (“Soter”), must meet the “independent director” requirements set forth in Section 303A of the NYSE Listed Company Manual. In addition, pursuant to the Stockholders Agreement, Supporting Term Lenders are entitled to appoint a non-voting board observer subject to specified ownership thresholds.

In accordance with the RSA and following the closing of the Restructuring, the Company distributed to stockholders of record as of February 18, 2020 the New Warrants. The New Warrants were issued in two series each with a four-year exercise period. The first series entitles the holders to purchase in the aggregate 1,669,730 newly issued shares of common stock, representing 10% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate exercise price of the first series of New Warrants is $19.23 and was determined based on the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring. The second series of New Warrants entitles the holders to purchase in the aggregate 1,252,297 newly issued shares of common stock, representing 7.5% of the Company’s common shares at the closing of the Restructuring on an as-exercised basis (after giving effect to the exercise of all New Warrants, but subject to dilution by issuances under the MIP). The aggregate strike price of the second series of New Warrants is $28.85 and was determined based on the product of (i) the aggregate outstanding principal amount of term loans under the Prior Term Loan Facility plus accrued interest thereon at the default rate as of the closing of the Restructuring, multiplied by (ii) 1.50.

For more information on our New Term Loan Facility and New ABL Facility entered into in connection with the Restructuring, see “Note 7. Debt.”

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SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

The preparation of these unaudited condensed consolidated financial statements requires us to develop estimates and to make assumptions that affect our financial position, results of operations and cash flows. These estimates may also impact the nature and extent of our disclosure, if any, of our contingent liabilities. Among other things, we use estimates to (i) analyze assets for possible impairment, (ii) determine depreciable lives for our assets, (iii) assess future tax exposure and realization of deferred tax assets, (iv) determine amounts to accrue for contingencies, (v) value tangible and intangible assets, (vi) assess workers’ compensation, vehicular liability, self-insured risk accruals and other insurance reserves, (vii) provide allowances for our uncollectible accounts receivable, (viii) value our asset retirement obligations, and (ix) value our equity-based compensation. We review all significant estimates on a recurring basis and record the effect of any necessary adjustments prior to publication of our financial statements. Adjustments made with respect to the use of estimates relate to improved information not previously available. Because of the limitations inherent in this process, our actual results may differ materially from these estimates. We believe that the estimates used in the preparation of these interim financial statements are reasonable.

There have been no material changes or developments in our evaluation of accounting estimates and underlying assumptions or methodologies that we believe to be a “Critical Accounting Policy or Estimate” as disclosed in our 2019 Form 10-K.

Recent Accounting Developments

ASU 2016-13. In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments that will change how companies measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount. The amendments in this update were effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. We adopted the new standard effective January 1, 2020 and the adoption of this standard did not have a material impact on our consolidated financial statements.

ASU 2019-12. In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes that will simplify accounting for income taxes by eliminating certain exceptions to the guidance for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes that are partially based on income and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We adopted the new standard effective April 1, 2020. Most of the changes were not applicable to Key and there was no significant impact to the Company’s financial statements upon adoption of this standard.

Coronavirus Aid, Relief and Economic Security Act (“CARES Act”)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. It is a large tax-and-spending package intended to provide additional economic relief to address the impact of the COVID-19 pandemic. The CARES Act includes several significant business tax provisions that, among other things, eliminate the taxable income limit for certain net operating losses (NOL) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; accelerate refunds of previously generated corporate alternative minimum tax (AMT) credits; and generally increased the business interest limitation under section 163(j) from 30 percent to 50 percent. Key has analyzed the income tax provisions under the CARES Act, and concluded that none of the provisions have a significant impact to the Company's income tax positions. Future regulatory guidance under the CARES Act or additional legislation enacted by Congress in connection with the COVID-19 pandemic could impact our tax provision in future periods. In addition to income tax provisions, the CARES Act also includes tax provisions relating to refundable payroll tax credits and deferment of employer’s social security tax payments. Specifically, the CARES Act permits an employer to defer 50 percent of its 2020 social security tax payments to the end of 2021 and the remaining 50 percent to the end of 2022. Beginning in April of 2020, we began deferring our employer social security payments. The Company continues to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2020

ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS [Abstract]

REVENUES ADOPTION OF ASC 606

REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by revenue source (in thousands). Sales taxes are excluded from revenues.

	Six Months Ended
	June 30,
	2020		2019
Rig Services	$	68,734	$	132,910
Fishing and Rental Services	13,563		29,399
Coiled Tubing Services	6,704		22,420
Fluid Management Services	21,057		37,487
Total	$	110,058	$	222,216

Disaggregation of Revenue

We have disaggregated our revenues by our reportable segments which include Rig Services, Fishing & Rental Services, Coiled Tubing Services and Fluid Management Services segments.

Rig Services

Our Rig Services segment include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. We also provide specialty drilling services to oil and natural gas producers with certain of our larger rigs that are capable of providing conventional and horizontal drilling services. Our rigs encompass various sizes and capabilities, allowing us to service all types of oil and gas wells.

We recognize revenue within the Rig Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically daily, as we have the right to invoice the customer for the services performed. Rig Services are billed monthly, and payment terms are usually 30 days from invoice receipt.

Fishing and Rental Services

We offer a full line of services and rental equipment designed for use in providing drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing a broad array of “fishing tools.” Our rental tool inventory consists of drill pipe, tubulars, handling tools (including our patented Hydra-Walk® pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units, foam air units.

We recognize revenue within the Fishing and Rental Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically daily, as we have the right to invoice the customer for the services performed. Fishing and Rental Services are billed and paid monthly. Payment terms for Fishing and Rental Services are usually 30 days from invoice receipt.

Coiled Tubing Services

Coiled Tubing Services involve the use of a continuous metal pipe spooled onto a large reel, which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing is also used for a number of horizontal well applications such as milling temporary isolation plugs that separate frac zones, and various other pre- and post-hydraulic fracturing well preparation services.

We recognize revenue within the Coiled Tubing Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue, typically daily, as the services are provided as we have the right to invoice the customer for the services performed. Coiled Tubing Services are billed and paid monthly. Payment terms for Coiled Tubing Services are usually 30 days from invoice receipt.

Fluid Management Services

We provide transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. We also provide disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by us or a third party.

We recognize revenue within the Fluid Management Services segment by measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred as the services are rendered to the customer. Specifically, we recognize revenue as the services are provided, typically daily, as we have the right to invoice the customer for the services performed. Fluid Management Services are billed and paid monthly. Payment terms for Fluid Management Services are usually 30 days from invoice receipt.

Arrangements with Multiple Performance Obligations

While not typical for our business, our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or using expected cost-plus margin. For combined products and services within a contract, we account for individual products and services separately if they are distinct –- i.e., if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate products and services within a contract based on the prices at which we separately sell our services. For items that are not sold separately, we estimate the standalone selling prices using the expected cost-plus margin approach.

Contract Balances

Under our revenue contracts, we invoice customers once our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our revenue contracts do not give rise to contract assets or liabilities under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within general and administrative expenses.

The majority of our services are short-term in nature, with a contract term of one year or less. For those contracts, we have utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

Additionally, our payment terms are short-term in nature with settlements of one year or less. We have, therefore, utilized the practical expedient in ASC 606-10-32-18 exempting the Company from adjusting the promised amount of consideration for the effects of a significant financing component given that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Further, in many of our service contracts we have a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided). For those contracts, we have utilized the practical expedient in ASC 606-10-55-18 exempting the Company from disclosure of the recognition of revenue in the amount that the Company has a right to invoice.

Accordingly, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

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EQUITY

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

EQUITY

EQUITY

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2020 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock					Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares		Amount at Par
Balance at December 31, 2019	411		$	206		$	265,588		$	(317,047	)	$	(51,253	)
Common stock purchases	(1	)	(1		)	(7		)	—			(8		)
Share-based compensation	3		2			(75		)	—			(73		)
Issuance of shares pursuant to the Restructuring Support Agreement	13,368		133			41,855			—			41,988
Issuance of warrants pursuant to the Restructuring Support Agreement	—		—			296			—			296
Net income	—		—			—			108,994			108,994
Balance at March 31, 2020	13,781		340			$	307,657		(208,053		)	99,944
Share-based compensation	—		—			325			—			325
Net loss	—		—			—			(19,125		)	(19,125		)
Balance at June 30, 2020	13,781		$	340		$	307,982		$	(227,178	)	$	81,144

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2019 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock			Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares	Amount at Par
Balance at December 31, 2018	407	$	204	$	264,945		$	(219,629	)	$	45,520
Share-based compensation	—	—		816			—			816
Net loss	—	—		—			(23,441		)	(23,441		)
Balance at March 31, 2019	407	204		265,761			(243,070		)	22,895
Common stock purchases	—	—		(4		)	—			(4		)
Share-based compensation	1	—		1,414			—			1,414
Net loss	—	—		—			(18,303		)	(18,303		)
Balance at June 30, 2019	408	$	204	$	267,171		$	(261,373	)	$	6,002

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OTHER BALANCE SHEET INFORMATION

6 Months Ended

Jun. 30, 2020

Supplemental Balance Sheet Disclosures [Abstract]

OTHER BALANCE SHEET INFORMATION

OTHER BALANCE SHEET INFORMATION

The table below presents comparative detailed information about other current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current assets:
Prepaid current assets	$	7,545	$	13,118
Reinsurance receivable	6,636		6,475
Operating lease right-of-use assets	3,593		2,394
Other	—		273
Total	$	17,774	$	22,260

The table below presents comparative detailed information about other non-current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current assets:
Reinsurance receivable	$	7,054	$	6,887
Deposits	32,612		8,689
Operating lease right-of-use assets	439		2,404
Other	295		386
Total	$	40,400	$	18,366

The table below presents comparative detailed information about other current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current liabilities:
Accrued payroll, taxes and employee benefits	$	8,504	$	14,463
Accrued operating expenditures	7,111		12,919
Income, sales, use and other taxes	2,869		5,115
Self-insurance reserve	24,543		25,366
Accrued interest	2,204		15,476
Accrued insurance premiums	1,721		4,990
Unsettled legal claims	2,013		7,020
Accrued severance	—		2,636
Operating leases	2,599		2,502
Other	43		228
Total	$	51,607	$	90,715

The table below presents comparative detailed information about other non-current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current liabilities:
Asset retirement obligations	$	8,803	$	9,035
Environmental liabilities	1,851		2,047
Accrued sales, use and other taxes	17,005		17,005
Deferred tax liabilities	484		—
Operating leases	1,783		2,590
Federal insurance contributions act tax	1,137		—
Other	31		33
Total	$	31,094	$	30,710

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INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

INTANGIBLE ASSETS

The components of our other intangible assets as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

	June 30, 2020			December 31, 2019
Trademark:
Gross carrying value	$	520		$	520
Accumulated amortization	(202		)	(173		)
Net carrying value	$	318		$	347

The weighted average remaining amortization periods and expected amortization expense for the next five years for our definite lived intangible assets are as follows:

	Weighted average remaining amortization period (years)	Expected amortization expense (in thousands)
		Remainder of 2020		2021		2022		2023		2024
Trademarks	5.5	$	29	$	58	$	58	$	58	$	58

Amortization expense for our intangible assets was less than $0.1 millionfor the three and six months endedJune 30, 2020 and 2019.

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LONG-TERM DEBT

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

LONG-TERM DEBT

DEBT

As of June 30, 2020 and December 31, 2019, the components of our debt were as follows (in thousands):

	June 30, 2020			December 31, 2019
Term Loan Facility due 2025	$	50,000		$	—
Term Loan Facility due 2021	1,207			243,125
Unamortized debt issuance costs	(2,923		)	(1,799		)
Finance lease obligation	4,746			1,600
Total	53,030			242,926
Less current portion(1)	(1,076		)	(2,919		)
Long-term debt	$	51,954		$	240,007

(1) Of the current portion of debt, $1.1 million and $0.4 million is related to finance leases as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, we had no borrowings outstanding, $36.3 million of letters of credit, $28.6 million posted as additional collateral ($21.2 million of which was posted in the second quarter of 2020) recorded in deposits on our balance sheet and $7.8 million of borrowing capacity available under our New ABL Facility. The letters of credit are related to our workers’ compensation and auto insurance costs. The additional collateral is required to collateralize our outstanding letters of credit and maintain compliance with the minimum borrowing capacity available under our New ABL Facility.

As of June 30, 2020, we were in compliance with all covenants under our New ABL Facility.

New Term Loan Facility

On March 6, 2020, the Company entered into an amendment and restatement agreement with the Supporting Term Lenders and Cortland Capital Market Services LLC and Cortland Products Corp., as agent (the “Term Agent”), which amended and restated the Prior Term Loan Facility, among the Company, as borrower, certain subsidiaries of the Company named as guarantors therein, the financial institutions party thereto from time to time as lenders and the Term Agent (as amended and restated by the amendment and restatement agreement, the “New Term Loan Facility”). Prior to the closing of the Restructuring, there were approximately $243.1 million aggregate principal amount of term loans outstanding under the Prior Term Loan Facility. Following the closing of the Restructuring, the New Term Loan Facility is comprised of (i) $30 million new money term loans funded by the Supporting Term Lenders and $20 million new term loans excluding new money issued in exchange for existing term loans held by the Supporting Term Lenders (collectively, the “New Term Loans”) and (ii) an approximate $1.2 million senior secured term loan tranche in respect of the existing term loans held by lenders who are not Supporting Term Lenders (the “Continuing Term Loans”). As of June 30, 2020, there was $51.2 million outstanding under the New Term Loan Facility.

For the $20 million new term loans excluding new money which were accounted for as a troubled debt restructuring with a modification of terms in accordance with ASC 470-60, “Troubled Debt Restructurings by Debtors”, which addresses certain aspects of the accounting for debt, a total of $16.3 million of estimated future undiscounted interest payments has been accrued per ASC 470-60 and presented as Interest Payable in the accompanying balance sheet. Interest payments made in the future associated with the modified $20 million new term loans will be a reduction to interest payable, which is recorded as a long-term liability on our consolidated balance sheet, and not to interest expense. Fluctuations in the effective interest rate used to estimate future cash flows will be accounted for as changes in estimates for the period in which the change occurred. However, the carrying amount of the restructured payable will remain unchanged, and future cash payments will reduce the carrying amount until the time that any gain recognized cannot be offset by future cash payments.

The New Term Loan Facility will mature on August 28, 2025, with respect to the New Term Loans, and on December 15, 2021 with respect to the Continuing Term Loans. Such maturity date may, at the Company’s request, be extended by one or more of the term loan lenders pursuant to the terms of the New Term Loan Facility. The New Term Loans will bear interest at a per annum rate equal to LIBOR for six months, plus 10.25%. The Company has the option to pay interest in kind at an annual rate of LIBOR plus 12.25% on the outstanding principal amount of the New Term Loans for the first two years following the closing of the Restructuring. The Continuing Term Loans will bear interest at a per annum rate equal to LIBOR for one, two, three, six or, with the consent of all term loan lenders, up to 12 months, and the Company has the option to pay interest in kind of up to 100 basis points of the per annum interest due on the Continuing Term Loans.

The New Term Loan Facility is guaranteed by certain of the Company’s existing and future subsidiaries (the “Term Loan Guarantors,” and together with the Company, the “Term Loan Parties”). To ensure their obligations under the New Term Loan Facility, each of the Term Loan Parties has granted or will grant, as applicable, to the Term Agent a first-priority security interest for the benefit of the Term Loan Lenders in substantially all of each Term Loan Party’s assets other than certain excluded assets and the ABL Priority Collateral (the “Term Priority Collateral”). In addition, the obligations of the Term Loan Parties under the New Term Loan Facility are secured by second-priority liens on the ABL Priority Collateral (as described above under “ABL Facility”).

The New Term Loans may be prepaid at the Company’s option, subject to the payment of a prepayment premium (which may be waived by lenders holding New Term Loans under the New Term Loan Facility representing at least two-thirds of the aggregate outstanding principal amount of the New Term Loans) in certain circumstances as provided in the New Term Loan Facility. If a prepayment is made prior to the first anniversary of the closing of the Restructuring, such prepayment premium is equal to 3% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the first anniversary to the second anniversary of the closing of the Restructuring, the prepayment premium is equal to 2% of the principal amount of the New Term Loans prepaid; if a prepayment is made from the second anniversary to the third anniversary of the closing of the Restructuring, the prepayment premium is equal to 1% of the principal amount of the New Term Loans prepaid; and there is no prepayment premium thereafter. The Company is required to make principal payments in respect of the Continuing Term Loans in the amount of $3,125 per quarter commencing with the quarter ended March 31, 2020 and is required to pay $1,190,625 on the maturity date of the Continuing Term Loans.

In addition, pursuant to the New Term Loan Facility, the Company must prepay or offer to prepay, as applicable, term loans with the net cash proceeds of certain debt incurrences and asset sales, excess cash flow, receipt of extraordinary cash proceeds (e.g., tax and insurance) and upon certain change of control transactions, subject in each case to certain exceptions.

The New Term Loan Facility contains certain affirmative and negative covenants, including covenants that restrict the ability of the Term Loan Parties to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends and the sale of assets. The New Term Loan Facility also contains a financial covenant requiring that the Company maintain Liquidity (as defined in the New Term Loan Facility) of not less than $10 million as of the last day of any fiscal quarter, subject to certain exceptions and cure rights.

As of June 30, 2020, we were in compliance with all covenants under our New Term Loan Facility.

The weighted average interest rate on the outstanding borrowings under the New Term Loan Facility for the three month periods ended June 30, 2020 and from March 6, 2020, the beginning of the New Term Loan Facility, to June 30, 2020 were 13.17%.

Prior ABL Facility

As described above, the Company and Key Energy Services, LLC were borrowers under the Prior ABL Facility that provided for aggregate commitments from the ABL Lenders of $80 million.

On April 5, 2019, the ABL Borrowers, as borrowers, the financial institutions party thereto as lenders and Bank of America, N.A. (the “ABL Agent”), as administrative agent for the lenders, entered into Amendment No. 1 (“Amendment No. 1”) to the Prior ABL Facility, among the ABL Borrowers, the financial institutions party thereto from time to time as lenders, the ABL Agent and the co-collateral agents for the lenders, Bank of America, N.A. and Wells Fargo Bank, National Association. The amendment, among other things, lowered the applicable margin for borrowings to (i) from between 2.50% and 4.50% to between 2.00% and 2.50% for LIBOR borrowings and (ii) from 1.50% and 3.50% to between 1.00% and 1.50% for base rate borrowings. On December 20, 2019, the Company and the Lenders amended the ABL Forbearance Agreement and the Loan Agreement to, among other things, (i) reduce the minimum availability Key is required to maintain under the ABL Forbearance Agreement from $12.5 million to $10 million and (ii) reduce the aggregate revolving commitments under the Loan Agreement from $100 million to $80 million.

The Prior ABL Facility provided the ABL Borrowers with the ability to borrow up to an aggregate principal amount equal to the lesser of (i) the aggregate revolving commitments then in effect and (ii) the sum of (a) 85% of the value of eligible accounts receivable plus (b) 80% of the value of eligible unbilled accounts receivable, subject to a limit equal to the greater of (x) $35 million and (y) 25% of the Commitments.

The contractual interest rates under the Prior ABL Facility were, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.50% to 4.50% depending on the ABL Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR, plus 1.0% plus (b) an applicable margin that varied from 1.50% to 3.50% depending on the ABL Borrowers’ fixed charge coverage ratio at such time. In addition, the Prior ABL Facility provided for unused line fees of 1.0% to 1.25% per year, depending on utilization, letter of credit fees and certain other factors.

Prior Term Loan Facility

As described above, the Company and certain subsidiaries were parties to the Prior Term Loan Facility, which had an initial outstanding principal amount of $250 million.

Borrowings under the Prior Term Loan Facility bore interest, at the Company’s option, at a per annum rate equal to (i) LIBOR for one, two, three, six, or, with the consent of the Term Loan Lenders, 12 months, plus 10.25% or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the Federal Funds rate, plus 0.50% and (z) 30-day LIBOR, plus 1.0% plus (b) 9.25%.

The weighted average interest rate on the outstanding borrowings under the Prior Term Loan Facility in 2020, prior to the Restructuring, was 15.45%.

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OTHER INCOME, NET

6 Months Ended

Jun. 30, 2020

Other Income and Expenses [Abstract]

OTHER INOME, NET

OTHER INCOME

The table below presents comparative detailed information about our other income and expense, shown on the condensed consolidated statements of operations as “other income, net” for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Interest income	$	(25	)	$	(195	)	$	(82	)	$	(517	)
Other	10			(44		)	(318		)	(864		)
Total	$	(15	)	$	(239	)	$	(400	)	$	(1,381	)

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INCOME TAXES

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We are subject to U.S. federal income tax as well as income taxes in multiple state and foreign jurisdictions. Our effective tax rates for the three months endedJune 30, 2020 and 2019 were (1.2)% and 19.4%, respectively, and 1.1% and 9.5% for the six months endedJune 30, 2020 and 2019, respectively. The variance between our effective rate and the U.S. statutory rate is due to the impact of permanent differences and other tax adjustments, such as valuation allowances against deferred tax assets and a true-up adjustment to income tax receivable.

We continued recording income taxes using a year-to-date effective tax rate method for the three and six months ended June 30, 2020 and 2019. The use of this method was based on our expectations that a small change in our estimated ordinary income could result in a large change in the estimated annual effective tax rate. We will re-evaluate our use of this method each quarter until such time as a return to the annualized effective tax rate method is deemed appropriate.

The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. Due to the history of losses in recent years and the continued challenges affecting the oil and gas industry and global economy, management continues to believe it is more likely than not that we will not be able to realize our net deferred tax assets. No release of our deferred tax asset valuation allowance was made during the six months ended June 30, 2020.

The Company did not recognize any unrecognized tax benefits during three or six months ended June 30, 2020. As of June 30, 2020, we had no unrecognized tax benefits.

Cancellation of Indebtedness Income (“CODI”)

Under the RSA, a substantial portion of the Company’s term loans were exchanged for newly issued shares and new term loans of the Company. Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than the adjusted issue price. The Internal Revenue Code of 1986, as amended (“IRC”), provides that an insolvent debtor may exclude CODI from taxable income up to the amount of insolvency but must reduce certain of its tax attributes by the amount of any CODI excluded pursuant to the insolvency exception. The amount of CODI realized by a taxpayer is the adjusted issue price of any indebtedness discharged less the sum of (i) the amount of cash paid, (ii) the issue price of any new indebtedness issued and (iii) the fair market value of any other consideration, including equity, issued. Based on the market value of the Company’s equity, and the adjusted issue price of the term loans issued in the exchange, the estimated amount of U.S. CODI is approximately $206.0 million, $197.8 million of which is excluded pursuant to the insolvency exception and $8.2 million of which will be included in taxable income. Due to the application of the insolvency exception, the Company will reduce the value of its U.S. net operating losses that had a value of $476.8 million as of June 30, 2020. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of the restructuring, or January 1, 2021. Further any remaining net operating losses, tax credits, and certain built-in-losses or deductions existing as of the date of the ownership change will be limited under IRC Section 382 due to the change in control resulting from the restructuring.

The CARES Act

As noted above in Note 2 under the heading—Significant Accounting Policies Coronavirus Aid, Relief and Economic Security Act, the CARES Act includes several significant business tax provisions that, among other things, eliminate the taxable income limit for certain net operating losses (NOL) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; accelerate refunds of previously generated corporate alternative minimum tax (AMT) credits; and generally increased the business interest limitation under section 163(j) from 30 percent to 50 percent. Key has analyzed the income tax provisions under the CARES Act, and concluded that none of the provisions have a significant impact to the Company's income tax positions. Future regulatory guidance under the CARES Act or additional legislation enacted by Congress in connection with the COVID-19 pandemic could impact our tax provision in future periods. In addition to income tax provisions, the CARES Act also includes tax provisions relating to refundable payroll tax credits and deferment of employer’s social security tax payments. Specifically, the CARES Act permits an employer to defer 50 percent of its 2020 social security tax payments to the end of 2021 and the remaining 50 percent to the end of 2022. Beginning in April of 2020, we began deferment of employer’s social security payments. The Company continues to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Litigation

Various suits and claims arising in the ordinary course of business are pending against us. We conduct business throughout the continental United States and may be subject to jury verdicts or arbitrations that result in outcomes in favor of the plaintiffs. We continually assess our contingent liabilities, including potential litigation liabilities, as well as the adequacy of our accruals and our need for the disclosure of these items, if any. We establish a provision for a contingent liability when it is probable that a liability has been incurred and the amount is reasonably estimable. We have $2.0 million of other liabilities related to litigation that is deemed probable and reasonably estimable as of June 30, 2020. We do not believe that the disposition of any of these matters will result in an additional loss materially in excess of amounts that have been recorded.

Self-Insurance Reserves

We maintain reserves for workers’ compensation and vehicle liability on our balance sheet based on our judgment and estimates using an actuarial method based on claims incurred. We estimate general liability claims on a case-by-case basis. We maintain insurance policies for workers’ compensation, vehicle liability and general liability claims. These insurance policies carry self-insured retention limits or deductibles on a per occurrence basis. The retention limits or deductibles are accounted for in our accrual process for all workers’ compensation, vehicular liability and general liability claims. The deductibles have a $5 million maximum per vehicular liability claim, and a $2 million maximum per general liability claim and a $1 million maximum per workers’ compensation claim. As of June 30, 2020 and December 31, 2019, we have recorded $51.9 million and $51.4 million, respectively, of self-insurance reserves related to workers’ compensation, vehicular liabilities and general liability claims. Partially offsetting these liabilities, we had $13.7 million and $13.4 million of insurance receivables as of June 30, 2020 and December 31, 2019, respectively. We believe that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued for existing claims.

Environmental Remediation Liabilities

For environmental reserve matters, including remediation efforts for current locations and those relating to previously disposed properties, we record liabilities when our remediation efforts are probable and the costs to conduct such remediation efforts can be reasonably estimated. As of each of June 30, 2020 and December 31, 2019, we have recorded $1.9 million and $2.0 million, respectively, for our environmental remediation liabilities. We believe that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued.

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EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

LOSS) PER SHARE

Basic earnings (loss) per share is determined by dividing net loss attributable to Key by the weighted average number of common shares actually outstanding during the period. Diluted earnings (loss) per common share is based on the increased number of shares that would be outstanding assuming conversion of potentially dilutive outstanding securities using the treasury stock and “as if converted” methods.

The components of our income (loss) per share are as follows (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020		2019
Basic Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
Basic earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.06	$	(102.31	)
Diluted EPS Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
RSUs	—			—			56		—
Total	13,781			408			8,991		408
Diluted earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.00	$	(102.31	)

Restricted stock units (“RSUs”), stock options, and warrants are included in the computation of diluted earnings per share using the treasury stock method. Restricted stock awards are legally considered issued and outstanding when granted and are included in basic weighted average shares outstanding.

The Company has issued potentially dilutive instruments such asRSUs, stock options and warrants. However, the Company did not include these instruments in its calculation of diluted loss per share during the periods presented, because to include them would be anti-dilutive. The following table shows potentially dilutive instruments (in thousands):

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020	2019	2020	2019
RSUs	301	40	58	41
Stock options	1	1	1	1
Warrants	2,924	37	1,880	37
Total	3,226	78	1,939	79

No events occurred after June 30, 2020 that would materially affect the number of weighted average shares outstanding.

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Common Stock Awards

We recognized employee share-based compensation expense of $0.3 million and $1.4 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized employee share-based compensation expense of $0.3 million and $2.1 million during the six months endedJune 30, 2020 and 2019, respectively. Our employee share-based awards, including common stock awards, stock option awards and phantom shares, vest in equal installments over a three-year period or vest in a 40%-60% split respectively over a two-year period. Additionally, we recognized share-based compensation expense related to our outside directors of zero and$0.1 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized share-based compensation expense related to our outside directors of less than negative $0.1 million and $0.2 million during the six months endedJune 30, 2020 and 2019, respectively. The unrecognized compensation cost related to our unvested share-based awards as of June 30, 2020 is estimated to be $3.1 million and is expected to be recognized over a weighted-average period of 1.3 years.

Stock Option Awards

As of June 30, 2020, all outstanding stock options are vested and there are no unrecognized costs related to our stock options.

Phantom Share Plan

We recognized compensation expense related to our phantom shares of less than $0.1 million and less than negative $0.1 million during the three months endedJune 30, 2020 and 2019, respectively. We recognized compensation expense related to our phantom shares of less than $0.1 million and less than $0.1 million during the six months endedJune 30, 2020 and 2019, respectively. The unrecognized compensation cost related to our unvested phantom shares as of June 30, 2020 is estimated to be less than $0.1 million and is expected to be recognized over a weighted-average period of 0.5 years.

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TRANSACTIONS WITH RELATED PARTIES

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH RELATED PARTIES

The Company previously had a corporate advisory services agreement between with Platinum Equity Advisors, LLC (“Platinum”), an affiliate of Soter, pursuant to which Platinum provides certain business advisory services to the Company. The dollar amounts related to these related party activities were material to the Company’s condensed consolidated financial statements.

In March 2020, the Company and Platinum Equity Advisors, LLC (“Platinum”), entered into a letter agreement (the “CASA Letter Agreement”) regarding outstanding payments owed to Platinum by the Company under the Corporate Advisory Services Agreement, dated as of December 15, 2016 (the “Advisory Agreement”). Pursuant to the CASA Letter Agreement, Platinum agreed to release the Company from its outstanding payment obligations under the Advisory Agreement in exchange for the right to a potential payment of $4.0 million upon the occurrence of certain reorganization events involving the Company and ceased providing any business advisory services to the Company.

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ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, cash equivalents, accounts receivable, accounts payable and accrued liabilities. These carrying amounts approximate fair value because of the short maturity of the instruments or because the carrying value is equal to the fair value of these instruments.

New Term Loan Facility. Because of the variable interest rates feature and recent initiation of these loans, we believe the carrying value approximates the fair value of the loans borrowed under this facility.

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LEASES

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

We have operating leases for certain corporate offices and operating locations and finance leases for certain vehicles. We determine if a contract is a lease or contains an embedded lease at the inception of the contract. Operating lease right-of-use (“ROU”) assets are included in other current and other non-current assets, and operating lease liabilities are included in other current and other non-current liabilities in our consolidated balance sheets. Finance lease ROU assets are included in property and equipment, net, and finance lease liabilities are included in our current portion of long-term debt, and long-term debt on our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our risk adjusted incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease. Our leases have remaining lease terms of less than one year to five years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Lease expense for lease payments is recognized on a straight-line basis over the non-cancelable term of the lease.

We recognized $0.7 million and $0.7 million of costs related to our operating leases during the three months ended June 30, 2020 and June 30, 2019, respectively. We recognized $1.4 million and $1.4 million of costs related to our operating leases during the six months ended June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020, our operating leases have a weighted average remaining lease term of 2.3 years and a weighted average discount rate of 5.63%.

We recognized $0.3 million and zero of costs related to our finance leases during the three months ended June 30, 2020 and June 30, 2019, respectively. We recognized $0.4 million and zero of costs related to our finance leases during the six months ended June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020, our finance leases have a weighted average remaining lease term of 4.3 years and a weighted average discount rate of 5.11%.

Supplemental balance sheet information related to leases as of June 30, 2020 and December 31, 2019are as follows (in thousands):

	June 30, 2020		December 31, 2019
Right-of-use assets under operating leases
Operating lease right-of-use assets, current portion	$	3,593	$	2,394
Operating lease right-of-use assets, non-current portion	439		2,404
Total operating lease assets	$	4,032	$	4,798
Operating lease liabilities, current portion	$	2,599	$	2,502
Operating lease liabilities, non-current portion	1,783		2,590
Total operating lease liabilities	$	4,382	$	5,092
Right-of-use assets under finance leases
Property and equipment, at cost	$	5,246	$	1,760
Less accumulated depreciation	554		183
Property and equipment, net	$	4,692	$	1,577
Current portion of long-term debt	$	1,063	$	419
Long-term debt	3,683		1,181
Total finance lease liabilities	$	4,746	$	1,600

The maturities of our operating and finance lease liabilities as of June 30, 2020 are as follows (in thousands):

	June 30, 2020
	Operating Leases			Finance Leases
Remainder of 2020	$	1,492		$	638
2021	1,747			1,277
2022	705			1,277
2023	528			1,075
2024	189			792
Thereafter	—			225
Total lease payments	4,661			5,284
Less imputed interest	(279		)	(538		)
Total	$	4,382		$	4,746

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SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Our reportable business segments are Rig Services, Fishing and Rental Services, Coiled Tubing Services and Fluid Management Services. We also have a “Functional Support” segment associated with overhead and other costs in support of our reportable segments. We evaluate the performance of our segments based on gross margin measures. All inter-segment sales pricing is based on current market conditions.

Rig Services

Our Rig Services include the completion of newly drilled wells, workover and recompletion of existing oil and natural gas wells, well maintenance, and the plugging and abandonment of wells at the end of their useful lives. We also provide specialty drilling services to oil and natural gas producers with certain of our larger rigs that are capable of providing conventional and horizontal drilling services. Our rigs encompass various sizes and capabilities, allowing us to service all types of wells. Many of our rigs are outfitted with our proprietary KeyView® technology, which captures and reports well site operating data and provides safety control systems. We believe that this technology allows our customers and our crews to better monitor well site operations, improves efficiency and safety, and adds value to the services that we offer.

The completion and recompletion services provided by our rigs prepare wells for production, whether newly drilled, or recently extended through a workover operation. The completion process may involve selectively perforating the well casing to access production zones, stimulating and testing these zones, and installing tubular and downhole equipment. We typically provide a well service rig and may also provide other equipment to assist in the completion process. Completion services vary by well and our work may take a few days to several weeks to perform, depending on the nature of the completion.

The workover services that we provide are designed to enhance the production of existing wells and generally are more complex and time consuming than normal maintenance services. Workover services can include deepening or extending wellbores into new formations by drilling horizontal or lateral wellbores, sealing off depleted production zones and accessing previously bypassed production zones, converting former production wells into injection wells for enhanced recovery operations and conducting major subsurface repairs due to equipment failures. Workover services may last from a few days to several weeks, depending on the complexity of the workover.

Maintenance services provided with our rig fleet are generally required throughout the life cycle of an oil or natural gas well. Examples of these maintenance services include routine mechanical repairs to the pumps, tubing and other equipment, removing debris and formation material from wellbores, and pulling rods and other downhole equipment from wellbores to identify and resolve production problems. Maintenance services are generally less complicated than completion and workover related services and require less time to perform.

Our rig fleet is also used in the process of permanently shutting-in oil or natural gas wells that are at the end of their productive lives. These plugging and abandonment services generally require auxiliary equipment in addition to a well servicing rig. The demand for plugging and abandonment services is not significantly impacted by the demand for oil and natural gas because well operators are required by state regulations to plug wells that are no longer productive.

Fishing and Rental Services

We offer a full line of fishing services and rental equipment designed for use in providing drilling and workover services. Fishing services involve recovering lost or stuck equipment in the wellbore utilizing a broad array of “fishing tools.” Our rental tool inventory consists of drill pipe, tubulars, handling tools (including our patented Hydra-Walk^® pipe-handling units and services), pressure-control equipment, pumps, power swivels, reversing units and foam air units. We sold our well testing assets and our frac stack equipment used to support hydraulic fracturing operations and the associated flowback of frac fluids in the second quarter of 2017.

Demand for our fishing and rental services is closely related to capital spending by oil and natural gas producers, which is generally a function of oil and natural gas prices.

Coiled Tubing Services

Coiled Tubing Services involve the use of a continuous metal pipe spooled onto a large reel which is then deployed into oil and natural gas wells to perform various applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations utilizing acid and chemical treatments. Coiled tubing is also used for a number of horizontal well applications such as milling temporary isolation plugs that separate frac zones, and various other pre- and post-hydraulic fracturing well preparation services.

Fluid Management Services

We provide transportation and well-site storage services for various fluids utilized in connection with drilling, completions, workover and maintenance activities. We also provide disposal services for fluids produced subsequent to well completion. These fluids are removed from the well site and transported for disposal in saltwater disposal wells owned by us or a third party. In addition, we operate a fleet of hot oilers capable of pumping heated fluids used to clear soluble restrictions in a wellbore. Demand and pricing for these services generally correspond to demand for our well service rigs.

Functional Support

Our Functional Support segment includes unallocated overhead costs associated with administrative support for our reporting segments.

Financial Summary

The following tables set forth our unaudited segment information as of and for the three and six months ended June 30, 2020 and 2019 (in thousands):

As of and for the three months ended June 30, 2020
	Rig Services			Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	20,825		$	3,971		$	1,867		$	8,087		$	—		$	—		$	34,750
Intersegment revenues	10			54			—			5			—			(69		)	—
Depreciation and amortization	4,138			1,349			1,164			717			686			—			8,054
Other operating expenses	18,992			4,340			2,521			7,259			10,429			—			43,541
Operating income (loss)	(2,305		)	(1,718		)	(1,818		)	111			(11,115		)	—			(16,845		)
Interest expense, net of amounts capitalized	68			6			14			11			1,967			—			2,066
Income (loss) before income taxes	(2,364		)	(1,718		)	(1,831		)	104			(13,087		)	—			(18,896		)
Long-lived assets(1)	115,036			16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287			20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	102			88			105			(9		)	11			—			297

As of and for the three months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	67,884	$	14,812		$	11,747		$	18,500	$	—		$	—		$	112,943
Intersegment revenues	166		287			—			32		—			(485		)	—
Depreciation and amortization	6,141		4,204			1,270			2,182		465			—			14,262
Other operating expenses	55,861		12,430			11,926			16,119		16,772			—			113,108
Operating income (loss)	5,882		(1,822		)	(1,449		)	199		(17,237		)	—			(14,427		)
Interest expense, net of amounts capitalized	26		6			14			10		8,464			—			8,520
Income (loss) before income taxes	5,867		(1,823		)	(1,461		)	185		(25,476		)	—			(22,708		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	983		—			1,151			1,898		3,290			—			7,322

As of and for the six months ended June 30, 2020
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	68,734	$	13,563		$	6,704		$	21,057		$	—		$	—		$	110,058
Intersegment revenues	125		225			—			34			5			(389		)	—
Depreciation and amortization	8,167		4,182			2,338			2,228			1,365			—			18,280
Impairment expense	—		17,551			—			23,691			—			—			41,242
Other operating expenses	59,546		13,298			7,140			18,889			21,582			—			120,455
Operating income (loss)	1,021		(21,468		)	(2,774		)	(23,751		)	(22,947		)	—			(69,919		)
Gain on debt restructuring	—		—			—			—			(170,648		)	—			(170,648		)
Interest expense, net of amounts capitalized	100		12			27			23			10,125			—			10,287
Income (loss) before income taxes	941		(21,468		)	(2,800		)	(23,769		)	137,938			—			90,842
Long-lived assets(1)	115,036		16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287		20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	390		106			272			123			88			—			979

As of and for the six months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	132,910	$	29,399		$	22,420		$	37,487	$	—		$	—		$	222,216
Intersegment revenues	254		1,195			—			75		—			(1,524		)	—
Depreciation and amortization	12,130		8,354			2,526			4,623		925			—			28,558
Other operating expenses	110,442		23,990			23,481			32,556		32,928			—			223,397
Operating income (loss)	10,338		(2,945		)	(3,587		)	308		(33,853		)	—			(29,739		)
Interest expense, net of amounts capitalized	36		13			30			21		17,653			—			17,753
Income (loss) before income taxes	10,336		(2,947		)	(3,614		)	291		(50,177		)	—			(46,111		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	2,813		2,073			1,917			2,055		3,504			—			12,362

(1) Long-lived assets include fixed assets, intangibles and other non-current assets.

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ASSET IMPAIRMENT

6 Months Ended

Jun. 30, 2020

Impaired Long-Lived Assets Held and Used [Line Items]

Asset Impairment Charges [Text Block]

ASSET IMPAIRMENT

Asset Impairments

During the six months ended June 30, 2020 the Company recognized an asset impairment of $41.2 million. The COVID-19 pandemic has resulted in significant economic disruption globally. Government action to restrict travel and suspend business operations has significantly reduced global economic activity. In addition, the recent steep decline in the price of crude oil has decreased the value in some of our long-lived assets.

The Company assesses triggering events in accordance with ASC 360-10-35-21. Triggering events that were deemed to be present included: a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical location, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group), and a current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. During the first quarter of 2020, we recognized an impairment expense to long-lived assets.

Impairment of Long-Lived Assets    

The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets used in operations are assessed for impairment whenever changes in circumstances indicate that the carrying value of the assets may not be recoverable based on the expected undiscounted future cash flow of an asset group. Long-lived assets must be grouped at the lowest level for which independent cash flows can be identified (asset groups). If the sum of the undiscounted cash flows is less than the carrying value of an asset group, the fair value of each asset group must be calculated and the carrying value is written down to the calculated fair value if necessary. If the fair value of an asset group exceeds the carrying value, no impairment expense is necessary for that asset group.

During the first quarter of 2020, we identified long-lived asset impairment triggers relating to all five of our asset groups as a result of the significant economic impacts and the effects of COVID-19. The five asset groups were determined to be Rigs, Fluid Management Services - Trucks, Fluid Management Services - Saltwater Disposal Wells, Fishing & Rental Services, and Coiled Tubing Services. We assessed each asset group for impairment by comparing the undiscounted pretax cash flows to the carrying value of each asset group. We determined that all our asset groups, excluding Rigs, had carrying values that exceeded the undiscounted cash flows. The determination of undiscounted cash flows included management’s best estimates of the expected future cash flows per asset group for the next five years. The determinations of expected future cash flows and the salvage value of long-lived assets require considerable judgement and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for the purposes of this impairment analysis will prove to be an accurate prediction of the future. Should our assumptions change significantly in future periods, it is possible we may determine the carrying values of the Rigs asset group exceeds the undiscounted pretax cashflows, which would result in an impairment expense.

It was determined that the fair value of the Fluid Management Services - Trucks, Fluid Management Services - Saltwater Disposal Wells, and Fishing & Rental Service asset groups was less than the carrying value of the respective asset groups by approximately $8.8 million, $14.8 million and $17.6 million, respectively, as of March 31, 2020. As a result, we recorded a total impairment charge of $41.2 million to asset impairment on the consolidated statements of income at March 31, 2020. We determined that the fair value of our Coiled Tubing Services asset group exceeded the carrying value. As such, no impairment expense was charged to the Coiled Tubing Services asset group.

The Company incorporated the income, market, and cost approaches to determine the fair value of each asset group. The income approach utilized significant assumptions including management’s best estimates of the expected future cash flows and the estimated useful life of the asset group. The market approach was utilized when there was an observable secondary market or where there was ample asset data available. The cost approach utilized assumptions for the current replacement costs of similar assets adjusted for estimated depreciation and deterioration of the existing equipment and economic obsolescence. Fair value determination requires a considerable amount of judgement and is sensitive to changes in underlying assumptions and economic factors. As a result, there can be no assurance that the fair value estimates made for the impairment analysis will prove to be an accurate prediction for the future.

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SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Accounting Standards Not Yet Adopted in this Report

Recent Accounting Developments

ASU 2016-13. In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326),Measurement of Credit Losses on Financial Instruments that will change how companies measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount. The amendments in this update were effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. We adopted the new standard effective January 1, 2020 and the adoption of this standard did not have a material impact on our consolidated financial statements.

ASU 2019-12. In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes that will simplify accounting for income taxes by eliminating certain exceptions to the guidance for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes that are partially based on income and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We adopted the new standard effective April 1, 2020. Most of the changes were not applicable to Key and there was no significant impact to the Company’s financial statements upon adoption of this standard.

Coronavirus Aid, Relief and Economic Security Act (“CARES Act”)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. It is a large tax-and-spending package intended to provide additional economic relief to address the impact of the COVID-19 pandemic. The CARES Act includes several significant business tax provisions that, among other things, eliminate the taxable income limit for certain net operating losses (NOL) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years; accelerate refunds of previously generated corporate alternative minimum tax (AMT) credits; and generally increased the business interest limitation under section 163(j) from 30 percent to 50 percent. Key has analyzed the income tax provisions under the CARES Act, and concluded that none of the provisions have a significant impact to the Company's income tax positions. Future regulatory guidance under the CARES Act or additional legislation enacted by Congress in connection with the COVID-19 pandemic could impact our tax provision in future periods. In addition to income tax provisions, the CARES Act also includes tax provisions relating to refundable payroll tax credits and deferment of employer’s social security tax payments. Specifically, the CARES Act permits an employer to defer 50 percent of its 2020 social security tax payments to the end of 2021 and the remaining 50 percent to the end of 2022. Beginning in April of 2020, we began deferring our employer social security payments. The Company continues to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

6 Months Ended

Jun. 30, 2020

ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS [Abstract]

REVENUES ADOPTION OF ASC 606 [Table Text Block]

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by revenue source (in thousands). Sales taxes are excluded from revenues.

	Six Months Ended
	June 30,
	2020		2019
Rig Services	$	68,734	$	132,910
Fishing and Rental Services	13,563		29,399
Coiled Tubing Services	6,704		22,420
Fluid Management Services	21,057		37,487
Total	$	110,058	$	222,216

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EQUITY (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Stockholders Equity

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2020 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock					Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares		Amount at Par
Balance at December 31, 2019	411		$	206		$	265,588		$	(317,047	)	$	(51,253	)
Common stock purchases	(1	)	(1		)	(7		)	—			(8		)
Share-based compensation	3		2			(75		)	—			(73		)
Issuance of shares pursuant to the Restructuring Support Agreement	13,368		133			41,855			—			41,988
Issuance of warrants pursuant to the Restructuring Support Agreement	—		—			296			—			296
Net income	—		—			—			108,994			108,994
Balance at March 31, 2020	13,781		340			$	307,657		(208,053		)	99,944
Share-based compensation	—		—			325			—			325
Net loss	—		—			—			(19,125		)	(19,125		)
Balance at June 30, 2020	13,781		$	340		$	307,982		$	(227,178	)	$	81,144

A reconciliation of the total carrying amount of our equity accounts for the six months ended June 30, 2019 is as follows (in thousands):

	COMMON STOCKHOLDERS
	Common Stock			Additional Paid-in Capital			Retained Deficit			Total
	Number of Shares	Amount at Par
Balance at December 31, 2018	407	$	204	$	264,945		$	(219,629	)	$	45,520
Share-based compensation	—	—		816			—			816
Net loss	—	—		—			(23,441		)	(23,441		)
Balance at March 31, 2019	407	204		265,761			(243,070		)	22,895
Common stock purchases	—	—		(4		)	—			(4		)
Share-based compensation	1	—		1,414			—			1,414
Net loss	—	—		—			(18,303		)	(18,303		)
Balance at June 30, 2019	408	$	204	$	267,171		$	(261,373	)	$	6,002

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OTHER BALANCE SHEET INFORMATION (Tables)

6 Months Ended

Jun. 30, 2020

Supplemental Balance Sheet Disclosures [Abstract]

Other Current Assets

The table below presents comparative detailed information about other current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current assets:
Prepaid current assets	$	7,545	$	13,118
Reinsurance receivable	6,636		6,475
Operating lease right-of-use assets	3,593		2,394
Other	—		273
Total	$	17,774	$	22,260

Other Noncurrent Assets

The table below presents comparative detailed information about other non-current assets at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current assets:
Reinsurance receivable	$	7,054	$	6,887
Deposits	32,612		8,689
Operating lease right-of-use assets	439		2,404
Other	295		386
Total	$	40,400	$	18,366

Other Current Liabilities

The table below presents comparative detailed information about other current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other current liabilities:
Accrued payroll, taxes and employee benefits	$	8,504	$	14,463
Accrued operating expenditures	7,111		12,919
Income, sales, use and other taxes	2,869		5,115
Self-insurance reserve	24,543		25,366
Accrued interest	2,204		15,476
Accrued insurance premiums	1,721		4,990
Unsettled legal claims	2,013		7,020
Accrued severance	—		2,636
Operating leases	2,599		2,502
Other	43		228
Total	$	51,607	$	90,715

Other Noncurrent Liabilities

The table below presents comparative detailed information about other non-current liabilities at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
Other non-current liabilities:
Asset retirement obligations	$	8,803	$	9,035
Environmental liabilities	1,851		2,047
Accrued sales, use and other taxes	17,005		17,005
Deferred tax liabilities	484		—
Operating leases	1,783		2,590
Federal insurance contributions act tax	1,137		—
Other	31		33
Total	$	31,094	$	30,710

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INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Other Intangible Assets

The components of our other intangible assets as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

	June 30, 2020			December 31, 2019
Trademark:
Gross carrying value	$	520		$	520
Accumulated amortization	(202		)	(173		)
Net carrying value	$	318		$	347

Weighted Average Remaining Amortization Periods and Expected Amortization Expense for the Next Five Years for Intangible

The weighted average remaining amortization periods and expected amortization expense for the next five years for our definite lived intangible assets are as follows:

	Weighted average remaining amortization period (years)	Expected amortization expense (in thousands)
		Remainder of 2020		2021		2022		2023		2024
Trademarks	5.5	$	29	$	58	$	58	$	58	$	58

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LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

As of June 30, 2020 and December 31, 2019, the components of our debt were as follows (in thousands):

	June 30, 2020			December 31, 2019
Term Loan Facility due 2025	$	50,000		$	—
Term Loan Facility due 2021	1,207			243,125
Unamortized debt issuance costs	(2,923		)	(1,799		)
Finance lease obligation	4,746			1,600
Total	53,030			242,926
Less current portion(1)	(1,076		)	(2,919		)
Long-term debt	$	51,954		$	240,007

Weighted Average Interest Rates

The weighted average interest rate on the outstanding borrowings under the Prior Term Loan Facility in 2020, prior to the Restructuring, was 15.45%.

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OTHER INCOME, NET (Tables)

6 Months Ended

Jun. 30, 2020

Other Income and Expenses [Abstract]

Other Income and Expense

The table below presents comparative detailed information about our other income and expense, shown on the condensed consolidated statements of operations as “other income, net” for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Interest income	$	(25	)	$	(195	)	$	(82	)	$	(517	)
Other	10			(44		)	(318		)	(864		)
Total	$	(15	)	$	(239	)	$	(400	)	$	(1,381	)

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EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The components of our income (loss) per share are as follows (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020		2019
Basic Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
Basic earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.06	$	(102.31	)
Diluted EPS Calculation:
Numerator
Net income (loss)	$	(19,125	)	$	(18,303	)	$	89,869	$	(41,744	)
Denominator
Weighted average shares outstanding	13,781			408			8,935		408
RSUs	—			—			56		—
Total	13,781			408			8,991		408
Diluted earnings (loss) per share	$	(1.39	)	$	(44.86	)	$	10.00	$	(102.31	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2020	2019	2020	2019
RSUs	301	40	58	41
Stock options	1	1	1	1
Warrants	2,924	37	1,880	37
Total	3,226	78	1,939	79

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LEASES (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Operating Lease, Lease Income [Table Text Block]

Supplemental balance sheet information related to leases as of June 30, 2020 and December 31, 2019are as follows (in thousands):

	June 30, 2020		December 31, 2019
Right-of-use assets under operating leases
Operating lease right-of-use assets, current portion	$	3,593	$	2,394
Operating lease right-of-use assets, non-current portion	439		2,404
Total operating lease assets	$	4,032	$	4,798
Operating lease liabilities, current portion	$	2,599	$	2,502
Operating lease liabilities, non-current portion	1,783		2,590
Total operating lease liabilities	$	4,382	$	5,092
Right-of-use assets under finance leases
Property and equipment, at cost	$	5,246	$	1,760
Less accumulated depreciation	554		183
Property and equipment, net	$	4,692	$	1,577
Current portion of long-term debt	$	1,063	$	419
Long-term debt	3,683		1,181
Total finance lease liabilities	$	4,746	$	1,600

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

The maturities of our operating and finance lease liabilities as of June 30, 2020 are as follows (in thousands):

	June 30, 2020
	Operating Leases			Finance Leases
Remainder of 2020	$	1,492		$	638
2021	1,747			1,277
2022	705			1,277
2023	528			1,075
2024	189			792
Thereafter	—			225
Total lease payments	4,661			5,284
Less imputed interest	(279		)	(538		)
Total	$	4,382		$	4,746

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SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

The following tables set forth our unaudited segment information as of and for the three and six months ended June 30, 2020 and 2019 (in thousands):

As of and for the three months ended June 30, 2020
	Rig Services			Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	20,825		$	3,971		$	1,867		$	8,087		$	—		$	—		$	34,750
Intersegment revenues	10			54			—			5			—			(69		)	—
Depreciation and amortization	4,138			1,349			1,164			717			686			—			8,054
Other operating expenses	18,992			4,340			2,521			7,259			10,429			—			43,541
Operating income (loss)	(2,305		)	(1,718		)	(1,818		)	111			(11,115		)	—			(16,845		)
Interest expense, net of amounts capitalized	68			6			14			11			1,967			—			2,066
Income (loss) before income taxes	(2,364		)	(1,718		)	(1,831		)	104			(13,087		)	—			(18,896		)
Long-lived assets(1)	115,036			16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287			20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	102			88			105			(9		)	11			—			297

As of and for the three months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	67,884	$	14,812		$	11,747		$	18,500	$	—		$	—		$	112,943
Intersegment revenues	166		287			—			32		—			(485		)	—
Depreciation and amortization	6,141		4,204			1,270			2,182		465			—			14,262
Other operating expenses	55,861		12,430			11,926			16,119		16,772			—			113,108
Operating income (loss)	5,882		(1,822		)	(1,449		)	199		(17,237		)	—			(14,427		)
Interest expense, net of amounts capitalized	26		6			14			10		8,464			—			8,520
Income (loss) before income taxes	5,867		(1,823		)	(1,461		)	185		(25,476		)	—			(22,708		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	983		—			1,151			1,898		3,290			—			7,322

As of and for the six months ended June 30, 2020
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services			Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	68,734	$	13,563		$	6,704		$	21,057		$	—		$	—		$	110,058
Intersegment revenues	125		225			—			34			5			(389		)	—
Depreciation and amortization	8,167		4,182			2,338			2,228			1,365			—			18,280
Impairment expense	—		17,551			—			23,691			—			—			41,242
Other operating expenses	59,546		13,298			7,140			18,889			21,582			—			120,455
Operating income (loss)	1,021		(21,468		)	(2,774		)	(23,751		)	(22,947		)	—			(69,919		)
Gain on debt restructuring	—		—			—			—			(170,648		)	—			(170,648		)
Interest expense, net of amounts capitalized	100		12			27			23			10,125			—			10,287
Income (loss) before income taxes	941		(21,468		)	(2,800		)	(23,769		)	137,938			—			90,842
Long-lived assets(1)	115,036		16,001			14,135			15,202			50,164			—			210,538
Total assets	136,287		20,014			17,766			20,577			64,048			10,501			269,193
Capital expenditures	390		106			272			123			88			—			979

As of and for the six months ended June 30, 2019
	Rig Services		Fishing and Rental Services			Coiled Tubing Services			Fluid Management Services		Functional Support			Reconciling Eliminations			Total
Revenues from external customers	$	132,910	$	29,399		$	22,420		$	37,487	$	—		$	—		$	222,216
Intersegment revenues	254		1,195			—			75		—			(1,524		)	—
Depreciation and amortization	12,130		8,354			2,526			4,623		925			—			28,558
Other operating expenses	110,442		23,990			23,481			32,556		32,928			—			223,397
Operating income (loss)	10,338		(2,945		)	(3,587		)	308		(33,853		)	—			(29,739		)
Interest expense, net of amounts capitalized	36		13			30			21		17,653			—			17,753
Income (loss) before income taxes	10,336		(2,947		)	(3,614		)	291		(50,177		)	—			(46,111		)
Long-lived assets(1)	128,945		45,616			17,340			51,175		23,909			—			266,985
Total assets	178,747		59,541			27,949			63,880		58,610			14,788			403,515
Capital expenditures	2,813		2,073			1,917			2,055		3,504			—			12,362

(1) Long-lived assets include fixed assets, intangibles and other non-current assets.

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GENERAL (Details) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Extinguishment of Debt, Amount	$ 241.9
Long-term Debt, Gross	$ 51.2
Stockholders' Equity Note, Stock Split, Conversion Ratio	50
Cash Proceeds For Supporting Term Lenders [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Long-term Debt, Gross	$ 20.0
New Cash Proceeds [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Long-term Debt, Gross	30.0
Cash Proceeds For Non-Supporting Term Lenders [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Long-term Debt, Gross	$ 1.2
Warrants - Series 1 [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Class of Warrant or Right, Outstanding | shares	1,669,730
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 19.23
Warrants - Series 2 [Member]
Troubled Debt Restructuring, Debtor, Current Period [Line Items]
Class of Warrant or Right, Outstanding | shares	1,252,297
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 28.85

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
REVENUES ADOPTION OF ASC 606 [Line Items]
REVENUES	$ 34,750	$ 112,943	$ 110,058	$ 222,216
Rig Services
REVENUES ADOPTION OF ASC 606 [Line Items]
REVENUES	20,825	67,884	68,734	132,910
Fluid Management Services
REVENUES ADOPTION OF ASC 606 [Line Items]
REVENUES	8,087	18,500	21,057	37,487
Coiled Tubing Services
REVENUES ADOPTION OF ASC 606 [Line Items]
REVENUES	1,867	11,747	6,704	22,420
Fishing and Rental Services
REVENUES ADOPTION OF ASC 606 [Line Items]
REVENUES	$ 3,971	$ 14,812	$ 13,563	$ 29,399

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EQUITY (Details) - USD ($) $ / shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period (in shares)		410,990			410,990
Balance at end of period (in shares)	13,781,262				13,781,262
Balance at beginning of period	$ 99,944	$ (51,253)	$ 22,895	$ 45,520	$ (51,253)	$ 45,520
Common stock purchases		(8)
Share-based compensation	325	(73)	1,414	816
Issuance of shares pursuant to the Restructuring Support Agreement, value		41,988
Issuance of warrants pursuant to the Restructuring Support Agreement, value		296
Net loss	(19,125)	108,994	(18,303)	(23,441)	89,869	(41,744)
Balance at end of period	$ 81,144	$ 99,944	$ 6,002	$ 22,895	$ 81,144	$ 6,002
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period (in shares)	13,781,000	411,000	407,000	407,000	411,000	407,000
Common stock purchases (in shares)		(1,000)
Share-based compensation (in shares)	0	3,000	1,000	0
Balance at end of period (in shares)	13,781,000	13,781,000	408,000	407,000	13,781,000	408,000
Balance at beginning of period	$ 340	$ 206	$ 204	$ 204	$ 206	$ 204
Common stock purchases		(1)
Share-based compensation	0	$ 2	0	0
Issuance of shares pursuant to the Restructuring Support Agreement		13,368,000
Issuance of shares pursuant to the Restructuring Support Agreement, value		$ 133
Issuance of warrants pursuant to the Restructuring Support Agreement		$ 0
Balance at end of period	340	$ 340	204	204	340	204
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	307,657	265,588	265,761	264,945	265,588	264,945
Common stock purchases		(7)
Share-based compensation	325	(75)	1,414	816
Issuance of shares pursuant to the Restructuring Support Agreement, value		41,855
Issuance of warrants pursuant to the Restructuring Support Agreement, value		296
Balance at end of period	307,982	307,657	267,171	265,761	307,982	267,171
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance at beginning of period	(208,053)	(317,047)	(243,070)	(219,629)	(317,047)	(219,629)
Common stock purchases		0
Net loss	(19,125)	108,994	(18,303)	(23,441)
Balance at end of period	$ (227,178)	$ (208,053)	$ (261,373)	$ (243,070)	$ (227,178)	$ (261,373)

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OTHER BALANCE SHEET INFORMATION - Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other current assets:
Prepaid current assets	$ 7,545	$ 13,118
Reinsurance receivable	6,636	6,475
Operating lease right-of-use assets	3,593	2,394
Other	0	273
Total	$ 17,774	$ 22,260

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OTHER BALANCE SHEET INFORMATION - Other Noncurrent Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other non-current assets:
Reinsurance receivable	$ 7,054	$ 6,887
Deposits	32,612	8,689
Operating Lease Right of Use Asset Non-Current	439	2,404
Other	295	386
Total	$ 40,400	$ 18,366

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OTHER BALANCE SHEET INFORMATION - Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other current liabilities:
Accrued payroll, taxes and employee benefits	$ 8,504	$ 14,463
Accrued operating expenditures	7,111	12,919
Income, sales, use and other taxes	2,869	5,115
Self-insurance reserve	24,543	25,366
Accrued interest	2,204	15,476
Accrued insurance premiums	1,721	4,990
Unsettled legal claims	2,013	7,020
Accrued severance	0	2,636
Operating leases	2,599	2,502
Other	43	228
Total	$ 51,607	$ 90,715

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OTHER BALANCE SHEET INFORMATION - Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other non-current liabilities:
Asset retirement obligations	$ 8,803	$ 9,035
Environmental liabilities	1,851	2,047
Accrued sales, use and other taxes	17,005	17,005
Deferred tax liabilities	484	0
Operating leases	1,783	2,590
Federal insurance contributions act tax	1,137	0
Other	31	33
Total	$ 31,094	$ 30,710

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INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 100	$ 100	$ 100	$ 100
Patents, trademarks and tradename
Intangible Assets [Line Items]
Gross carrying value	520		520		$ 520
Accumulated amortization	202		202		173
Net carrying value	$ 318		$ 318		$ 347

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INTANGIBLE ASSETS - Weighted Average Remaining Amortization Periods and Expected Amortization Expense for Next Five Years for Intangible Assets (Details) - Patents, trademarks and tradename $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	5 years 6 months
Expected Amortization Expense-Remainder of 2019	$ 29
Expected Amortization Expense-2020	58
Expected Amortization Expense-2021	58
Expected Amortization Expense-2022	58
Expected Amortization Expense-2023	$ 58

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LONG-TERM DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 51,200
Unamortized debt issuance costs	(2,923)	$ (1,799)
Finance lease obligation	4,746	1,600
Total debt	53,030	242,926
Current portion of long-term debt	1,076	2,919
Long-term debt	51,954	240,007
Finance Lease, Liability, Current	1,063	419
Due 2025 [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	50,000	0
Due 2021 [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 1,207	$ 243,125

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LONG-TERM DEBT LONG-TERM DEBT - ABL Facility (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Line of Credit Facility [Line Items]
Deposits	$ 32,612,000	$ 32,612,000	$ 8,689,000
Debt Payment At Maturity	1,190,625	1,190,625
ABL Facility [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 0	$ 0
Eligible Accounts Receivable for ABL Facility Borrowings	85.00%	85.00%
Eligible Unbilled Accounts Receivable For ABL Facility Borrowings	80.00%	80.00%
Maximum Eligible Unbilled Accounts Receivable For ABL Facility Borrowings	$ 0	$ 0
Maximum Percent Of Commitment For ABL Facility Borrowings		25.00%
Line of Credit Facility, Borrowing Capacity, Description		The ABL Facility provides the ABL Borrowers with the ability to borrow up to an aggregate principal amount equal to the lesser of (i) the aggregate revolving commitments then in effect and (ii) the sum of  85% of the value of eligible accounts receivable plus (b) 80% of the value of eligible unbilled accounts receivable, subject to a limit equal to the greater of (x) $35 million and (y) 25% of the Commitments.
Line of Credit Facility, Remaining Borrowing Capacity	$ 7,800,000	$ 7,800,000
Fixed charge coverage ratio	1	1
Credit Facility revolving loans, carrying value	$ 0	$ 0
Letters of Credit Outstanding, Amount	36,300,000	36,300,000
Deposits	28,600,000	$ 28,600,000
Payments for Other Deposits	$ 21,200,000
Debt Instrument, Description of Variable Rate Basis		Borrowings under the New ABL Facility will bear interest, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.75% to 3.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR plus 1.0% plus (b) an applicable margin that varies from 1.75% to 2.25% depending on the ABL Borrowers’ fixed charge coverage ratio at such time.
Prior ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Description of Variable Rate Basis		Borrowings under the ABL Facility will bear interest, at the ABL Borrowers’ option, at a per annum rate equal to (i) LIBOR for 30, 60, 90, 180, or, with the consent of the ABL Lenders, 360 days, plus an applicable margin that varies from 2.0% to 2.5% depending on the Borrowers’ fixed charge coverage ratio at such time or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the federal funds rate, plus 0.50% or (z) 30-day LIBOR, plus 1.0% plus (b) an applicable margin that varies from 1.0% to 1.5% depending on the Borrowers’ fixed charge coverage ratio at such time. In addition, the ABL Facility provides for unused line fees of 1.00% to 1.25% per year, depending on utilization, letter of credit fees and certain other factors.
Federal Funds Purchased [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		0.50%
30-day LIBOR [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Maximum [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Commitment Fee Minimum		0.50%
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		3.25%
Maximum [Member] | Prime Rate [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Maximum [Member] | Federal Funds rate, plus 0.50% [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Maximum [Member] | 30-day LIBOR, plus 1.0% [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Minimum [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Commitment Fee Minimum		0.375%
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		2.75%
Minimum [Member] | Prime Rate [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.75%
Minimum [Member] | Federal Funds rate, plus 0.50% [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Minimum [Member] | 30-day LIBOR, plus 1.0% [Member] | ABL Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.00%
Term Loan Facility [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Description of Variable Rate Basis		Borrowings under the Term Loan Facility will bear interest, at the Company’s option, at a per annum rate equal to (i) LIBOR for one, two, three, six, or, with the consent of the Term Loan Lenders, 12 months, plus 10.25% or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the Federal Funds rate, plus 0.50% and (z) 30-day LIBOR, plus 1.0%  plus (b) 9.25%.
Debt Instrument, Periodic Payment, Principal		$ 3,125
Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		10.25%
Interest Rate For Option In Kind Interest Payments		12.25%
Term Loan Facility [Member] | Federal Funds rate, plus 0.50% [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		9.25%
Term Loan Facility [Member] | 30-day LIBOR, plus 1.0% [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate		9.25%

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LONG-TERM DEBT LONG-TERM DEBT - Term Loan Facility (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 51,200,000	$ 51,200,000
Term Loan Facility [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis		Borrowings under the Term Loan Facility will bear interest, at the Company’s option, at a per annum rate equal to (i) LIBOR for one, two, three, six, or, with the consent of the Term Loan Lenders, 12 months, plus 10.25% or (ii) a base rate equal to the sum of (a) the greatest of (x) the prime rate, (y) the Federal Funds rate, plus 0.50% and (z) 30-day LIBOR, plus 1.0%  plus (b) 9.25%.
Debt Instrument, Periodic Payment, Principal		$ 3,125
Loan Facility Weighted Average Interest Rate During Period	13.17%
Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		10.25%
Term Loan Facility [Member] | Federal Funds rate, plus 0.50% [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		9.25%
Term Loan Facility [Member] | 30-day LIBOR, plus 1.0% [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		9.25%
Prior Term Loan Facility [Member]
Debt Instrument [Line Items]
Loan Facility Weighted Average Interest Rate During Period		15.45%
Cash Proceeds For Supporting Term Lenders [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 20,000,000	$ 20,000,000
New Cash Proceeds [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	30,000,000	30,000,000
Cash Proceeds For Non-Supporting Term Lenders [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 1,200,000	$ 1,200,000

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OTHER INCOME, NET (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Other Income and Expenses [Abstract]
Interest income	$ (25)	$ (195)	$ (82)	$ (517)
Other	10	(44)	(318)	(864)
Total	$ 15	$ 239	$ 400	$ 1,381

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Effective tax rate	(1.20%)		19.40%	1.10%	9.50%
Cancellation Of Indebtedness Income		$ 206.0
Cancellation Of Indebtedness Income - Non-Taxable		197.8
Cancellation Of Indebtedness Income - Taxable		8.2
Operating Loss Carryforwards		$ 476.8

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Loss Contingencies [Line Items]
Unsettled legal claims	$ 2,013	$ 7,020
Maximum Vehicular Liability Claim Deductible	5,000
Maximum General Liability Claim Deductible	2,000
Maximum Workers Compensation Claim Deductible	1,000
Self-insurance liabilities related to workers' compensation, vehicular liabilities, and general liability claims recorded	51,900	51,400
Insurance receivables which partially offset self-insurance liabilities	13,700	13,400
Environmental remediation liabilities recorded	$ 1,900	$ 2,000

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Earnings Per Share, Diluted	$ (1.39)		$ (44.86)		$ 10.00	$ (102.31)
Earnings Per Share, Basic	$ (1.39)		$ (44.86)		$ 10.06	$ (102.31)
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	3,226		78		1,939	79
Numerator
Net loss	$ (19,125)	$ 108,994	$ (18,303)	$ (23,441)	$ 89,869	$ (41,744)
Denominator
Basic	13,781		408		8,935	408
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	301		40		58	41
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1		1		1	1
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,924		37		1,880	37
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	0		0		56	0

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SHARE-BASED COMPENSATION (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense recognized	$ 0.3	$ 1.4	$ 0.3	$ 2.1
Compensation expense expected to be recognized	3.1		$ 3.1
Compensation expense expected to be recognized, weighted average remaining vesting period			1 year 3 months 12 days
Phantom Share Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense recognized	0.1		$ 0.1	(0.1)
Compensation expense expected to be recognized	0.1		$ 0.1
Compensation expense expected to be recognized, weighted average remaining vesting period			6 months
Outside directors | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense recognized	$ 0.0	$ 0.1	$ 0.1	$ 0.2

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LEASES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Operating Lease, Cost	$ 700	$ 700	$ 1,400	$ 1,400
Operating Lease, Weighted Average Remaining Lease Term	2 years 4 months		2 years 4 months
Operating Lease, Weighted Average Discount Rate, Percent	5.60%		5.60%
Finance Lease, Interest Expense	$ 300	$ 0	$ 400	$ 0
Finance Lease, Weighted Average Discount Rate, Percent	5.10%		5.10%
Finance Lease, Weighted Average Remaining Lease Term	4 years 3 months 10 days		4 years 3 months 10 days
Operating Lease, Right-of-Use Asset, Current	$ 3,593		$ 3,593		$ 2,394
Operating Lease Right of Use Asset Non-Current	439		439		2,404
Operating Lease, Right-of-Use Asset	4,032		4,032		4,798
Operating Lease, Liability, Current	2,599		2,599		2,502
Operating Lease, Liability, Noncurrent	1,783		1,783		2,590
Operating Lease, Liability	4,382		4,382		5,092
Capital Leased Assets, Gross	5,246		5,246		1,760
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Flight Equipment, Accumulated Depreciation	554		554		183
Finance Lease, Right-of-Use Asset	4,692		4,692		1,577
Finance Lease, Liability, Current	1,063		1,063		419
Finance Lease, Liability, Noncurrent	3,683		3,683		1,181
Finance Lease, Liability	4,746		4,746		$ 1,600
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	1,492		1,492
Lessee, Operating Lease, Liability, Payments, Due Year Two	1,747		1,747
Lessee, Operating Lease, Liability, Payments, Due Year Three	705		705
Lessee, Operating Lease, Liability, Payments, Due Year Four	528		528
Lessee, Operating Lease, Liability, Payments, Due Year Five	189		189
Lessee, Operating Lease, Liability, Payments, Due after Year Five	0		0
Lessee, Operating Lease, Liability, Payments, Due	4,661		4,661
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(279)		(279)
Finance Lease, Liability, Payments, Remainder of Fiscal Year	638		638
Finance Lease, Liability, Payments, Due Year Two	1,277		1,277
Finance Lease, Liability, Payments, Due Year Three	1,277		1,277
Finance Lease, Liability, Payments, Due Year Four	1,075		1,075
Finance Lease, Liability, Payments, Due Year Five	792		792
Finance Lease, Liability, Payments, Due after Year Five	225		225
Finance Lease, Liability, Payment, Due	5,284		5,284
Finance Lease, Liability, Undiscounted Excess Amount	$ 538		$ 538
Maximum [Member]
Lessee, Operating Lease, Term of Contract	5 years		5 years
Lessee, Operating Lease, Renewal Term	5 years		5 years
Minimum [Member]
Lessee, Operating Lease, Term of Contract	1 year		1 year
Lessee, Operating Lease, Renewal Term	1 year		1 year

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SEGMENT INFORMATION (Details) - USD ($) $ in Thousands		3 Months Ended			6 Months Ended
		Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Segment Reporting Information [Line Items]
Revenues from external customers		$ 34,750		$ 112,943	$ 110,058	$ 222,216
Intersegment revenues		0		0	0	0
Depreciation and amortization		8,054		14,262	18,280	28,558
Impairment expense		0		0	41,242	0
Other operating expenses		43,541		113,108	120,455	223,397
Operating income (loss)		(16,845)		(14,427)	(69,919)	(29,739)
Gain on debt restructuring		0		0	(170,648)	0
Interest expense, net of amounts capitalized		2,066		8,520	10,287	17,753
Income (loss) before income taxes		(18,896)		(22,708)	90,842	(46,111)
Long-lived assets	[1]	210,538		266,985	210,538	266,985
Total assets		269,193		403,515	269,193	403,515	$ 347,870
Capital expenditures		297		7,322	979	12,362
Rig Services
Segment Reporting Information [Line Items]
Revenues from external customers		20,825		67,884	68,734	132,910
Intersegment revenues		10		166	125	254
Depreciation and amortization		4,138		6,141	8,167	12,130
Impairment expense					0
Other operating expenses		18,992		55,861	59,546	110,442
Operating income (loss)		(2,305)		5,882	1,021	10,338
Gain on debt restructuring					0
Interest expense, net of amounts capitalized		68		26	100	36
Income (loss) before income taxes		(2,364)		5,867	941	10,336
Long-lived assets	[1]	115,036		128,945	115,036	128,945
Total assets		136,287		178,747	136,287	178,747
Capital expenditures		102		983	390	2,813
Fishing and Rental Services
Segment Reporting Information [Line Items]
Revenues from external customers		3,971		14,812	13,563	29,399
Intersegment revenues		54		287	225	1,195
Depreciation and amortization		1,349		4,204	4,182	8,354
Impairment expense			$ 17,551		17,551
Other operating expenses		4,340		12,430	13,298	23,990
Operating income (loss)		(1,718)		(1,822)	(21,468)	(2,945)
Gain on debt restructuring					0
Interest expense, net of amounts capitalized		6		6	12	13
Income (loss) before income taxes		(1,718)		(1,823)	(21,468)	(2,947)
Long-lived assets	[1]	16,001		45,616	16,001	45,616
Total assets		20,014		59,541	20,014	59,541
Capital expenditures		88		0	106	2,073
Fluid Management Services
Segment Reporting Information [Line Items]
Revenues from external customers		8,087		18,500	21,057	37,487
Intersegment revenues		5		32	34	75
Depreciation and amortization		717		2,182	2,228	4,623
Impairment expense					23,691
Other operating expenses		7,259		16,119	18,889	32,556
Operating income (loss)		111		199	(23,751)	308
Gain on debt restructuring					0
Interest expense, net of amounts capitalized		11		10	23	21
Income (loss) before income taxes		104		185	(23,769)	291
Long-lived assets	[1]	15,202		51,175	15,202	51,175
Total assets		20,577		63,880	20,577	63,880
Capital expenditures		(9)		1,898	123	2,055
Coiled Tubing Services
Segment Reporting Information [Line Items]
Revenues from external customers		1,867		11,747	6,704	22,420
Intersegment revenues		0		0	0	0
Depreciation and amortization		1,164		1,270	2,338	2,526
Impairment expense					0
Other operating expenses		2,521		11,926	7,140	23,481
Operating income (loss)		(1,818)		(1,449)	(2,774)	(3,587)
Gain on debt restructuring					0
Interest expense, net of amounts capitalized		14		14	27	30
Income (loss) before income taxes		(1,831)		(1,461)	(2,800)	(3,614)
Long-lived assets	[1]	14,135		17,340	14,135	17,340
Total assets		17,766		27,949	17,766	27,949
Capital expenditures		105		1,151	272	1,917
Functional Support
Segment Reporting Information [Line Items]
Revenues from external customers		0		0	0	0
Intersegment revenues		0		0	5	0
Depreciation and amortization		686		465	1,365	925
Impairment expense	[2]				0
Other operating expenses		10,429		16,772	21,582	32,928
Operating income (loss)		(11,115)		(17,237)	(22,947)	(33,853)
Gain on debt restructuring					(170,648)
Interest expense, net of amounts capitalized		1,967		8,464	10,125	17,653
Income (loss) before income taxes		(13,087)		(25,476)	137,938	(50,177)
Long-lived assets	[1]	50,164		23,909	50,164	23,909
Total assets		64,048		58,610	64,048	58,610
Capital expenditures		11		3,290	88	3,504
Reconciling Eliminations
Segment Reporting Information [Line Items]
Revenues from external customers		0		0	0	0
Intersegment revenues		(69)		(485)	(389)	(1,524)
Depreciation and amortization		0		0	0	0
Impairment expense					0
Other operating expenses		0		0	0	0
Operating income (loss)		0		0	0	0
Gain on debt restructuring					0
Interest expense, net of amounts capitalized		0		0	0	0
Income (loss) before income taxes		0		0	0	0
Long-lived assets	[1]	0		0	0	0
Total assets		10,501		14,788	10,501	14,788
Capital expenditures		$ 0		$ 0	$ 0	$ 0

[1] Long-lived assets include fixed assets, intangibles and other non-current assets

[2] .

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ASSET IMPAIRMENT (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense	$ 0		$ 0	$ 41,242	$ 0
Fluid Management Services
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense				23,691
Fluid Management Services | Trucks [Member]
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense		$ 8,800
Fluid Management Services | Disposal Wells [Member]
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense		14,800
Fishing and Rental Services
Impaired Long-Lived Assets Held and Used [Line Items]
Impairment expense		$ 17,551		$ 17,551