Key Energy CEO says company comfortable increasing leverage ratio to make acquisitions

By Jennifer Lanning Drey

Portland, Ore., April 25 - Key Energy Services Inc. would be comfortable with increasing its net debt to EBITDA ratio to 1.25 times and possibly to 1.5 times if the right acquisition opportunity presented itself, Dick Alario, Key Energy's chief executive officer, said Friday during a presentation at the 2008 Burkenroad Reports Investment Conference in New Orleans.

The company currently has a net debt to EBITDA ratio of 1.0 time.

Key Energy has a goal of maintaining a cash balance of about $50 million and revolving credit facility availability of $100 million but intends to use additional available cash for share repurchases and acquisitions.

"We think the marketplace will be full of opportunities for us to get the things done that we want to do with the company," Alario said.

Key Energy expects to spend $150 million to $200 million of its cash flow on share repurchases during the balance of the year, he said.

Additionally, Key is pursuing both tuck-in acquisitions and select international growth opportunities.

"I'm sure that we'll be moving on some deals in 2008," Alario said.

Globally, the company is looking to pursue its organic initiative in Mexico, expansion in the Latin American markets through its base in Argentina, opportunities in the Middle East and possible partnerships in Russia, he said.

"The opportunities both inside the U.S. and outside are extremely bright, and I think I've got the right team to take advantage of it," Alario said.

Key Energy Services is a rig-based well services provider based in Houston.

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