Key Energy Services (KEG) Richard J. Alario on Q4 2015 Results - Earnings Call Transcript

| About: Key Energy (KEG)

Key Energy Services, Inc. (NYSE:KEG)

Q4 2015 Earnings Call

February 18, 2016 11:00 am ET

Executives

West P. Gotcher - Director-Investor Relations & Corporate Development

Richard J. Alario - Chairman, President and Chief Executive Officer

Robert Wayne Drummond - President & Chief Operating Officer

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Analysts

Michael Urban - Deutsche Bank Securities, Inc.

Kenneth Blake Hancock - Scotia Howard Weil

John Watson - Simmons & Company International

Operator

Good morning. My name is Connor and I'll be your conference operator today. At this time, I would like to welcome everyone to the Key Energy Services Q4 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer session. Thank you.

West Gotcher, Director of Investor Relations and Corporate Development, you may begin your conference.

West P. Gotcher - Director-Investor Relations & Corporate Development

Thank you, Connor. Thank you all for joining Key Energy Services for our fourth quarter 2015 financial results conference call. This call includes forward-looking statements. A number of factors could cause the actual results to differ materially from the expectations expressed in this call including risk factors discussed in our 2014 Form 10-K and other reports most recently filed with the SEC which are available on our website.

This call may also include references to non-GAAP financial measures. Please refer to our website for a reconciliation of any non-GAAP financial measures provided in this call to the comparable GAAP financial measures. For reference, our general Investor Presentation is available on Key's website at keyenergy.com under the Investor Relations tab.

I'm now going to turn over the call to Dick Alario, Key's CEO, who'll provide some introductory comments, and Robert Drummond, Key's President and COO, will provide some comments regarding the fourth quarter and on trends he's seeing in the business. Finally, Marshall Dodson, our CFO, will review our results. Dick?

Richard J. Alario - Chairman, President and Chief Executive Officer

Thank you, West. Good morning, everyone. As West indicated, Robert Drummond will cover the results from the quarter today. I'll keep my commentary to market conditions and some general thoughts about steps we're taking to deal with them.

But first, with respect to the CEO succession disclosure that we made last August, we're announcing this morning that effective March 1, I'll retire from Key Energy Services and Robert will assume the position of CEO along with his current duties as President and Chief Operating Officer.

As you all will recall, we brought Robert on board last year with a plan for me to retire once he was ready to take over. He's there, and the Key board and I have agreed that the time has come.

I want to thank the Key Directors for managing this transition with the best interest of all of Key's constituents in mind, and for doing so in a transparent and seamless manner. I also want to thank all of Key's employees for their commitment to the company and for their hard work, especially in the last year as we work together to deal with the hellish market.

And, of course, I thank Robert for jumping aboard when he did, and for the way he's embraced Key and the work that we do for our customers. I'm fully confident that he and his talented team will lead Key through this downturn, take advantage of the opportunities that will present themselves as the cycle improves.

Almost any measure, the health of today's U.S. oil and gas industry is as challenging as we've seen since the 1980s. The continued rapid decline in E&P spending and the resulting stacking of equipment has put remarkable pressure on the U.S. oilfield services complex. In fact, entering the fourth quarter, we expected about double the seasonal slowdown in activity that we've seen over the past few years, and that proved to be the right view.

Our mantra throughout this downturn has been control what we can control, and we've been executing on it well. Robert and his teams continued efforts to streamline the company in order to face the reality of today's service environment head-on continued to generate results as significant costs continued to come out of the structure at both the direct and functional support levels during the quarter.

The fact that our normalized U.S. operating income actually improved sequentially in the face of a 14% revenue decline is a testament to the team's ability to accurately judge the market in which they participate and proactively execute on the appropriate courses of action. Although we've taken a lot of cost out, this market downturn is showing few discernible signs of relief, except for the notion that the cure for low oil prices is low oil prices. So Key will continue to control what it can control in order to size the operation for what the market will provide in order to preserve capital.

During the quarter we were able to maintain our liquidity, as the actions that we took were critical and effective in helping preserve our ability to sustain in this environment and to ensure survivability. We believe it's prudent to remain diligent with respect to evaluating avenues, to enhance our liquidity in the near- to intermediate-term. Without question, ample liquidity is the leading factor in the decisions that we make as we believe that those who get to the other side of this down cycle will merge as the winners in the long-term.

With respect to the FCPA investigations, we're continuing to cooperate with the SEC and with the Justice Department in connection with their respective inquiries and that's all we'll be saying about that matter today.

So with that I'll turn it over to Robert who'll provide some commentary on the quarter, some more color on the actions that we've taken, and on the market trends that he's seeing. Robert?

Robert Wayne Drummond - President & Chief Operating Officer

Thank you, Dick. But before I get started, I'd like to take the opportunity to thank you and the board for the opportunity to become the CEO of Key. You've gone out of your way to make this transition easy for me, and I very much appreciate your guidance and professionalism. I wish you the best in your future endeavors.

Starting with a few of last quarter's results, Key generated consolidated revenue of $150.2 million and a consolidated GAAP net loss of $0.97 per share. Excluding some one-time items Marshall will go over a little later; Key generated a loss of $67.6 million or $0.27 per share.

In the U.S., revenues of $145.4 million were down 14% sequentially, although the normalized U.S. operating income margin actually improved by about 50 basis points, with the normalized operating loss improving $3 million sequentially to about $15 million.

Internationally, revenue was down 37% sequentially and normalized operating income improved by about $2 million as the cost associated with the company's exit from international markets moderated.

Last quarter I discussed a series of actions that we have implemented with a stated goal of creating a more efficient organizational structure to facilitate the delivery of superior service in a way that is not only cost-effective, but is also accretive to Key's overall liquidity profile.

We implemented those actions as planned. And as a result, our U.S. business and Functional Support segments improved EBITDA by $4 million and reached breakeven in the face of a 14% decline in revenues.

In addition to the bottom line impact of these actions, we've been able to maintain strong service delivery and delivered the company's best safety performance ever during 2015.

I'd like to take and update the market on what's happening over the last quarter regarding a series of organizational changes discussed in last quarter's call, as these efforts have not slowed down at all. The goal of these changes is not simply to reduce costs in a downturn, but also to better prepare Key to take advantage of a market return and generate superior incremental margins by scaling these efficiencies as activity and pricing returns.

From a G&A perspective, moving to a flatter, more consolidated structure gave us a Q4 exit head count 27% lower than when we started in Q3. Over the fourth quarter, we continued to assess our organization in light of continued oil price deterioration, and began taking actions to further reduce our G&A head count by an additional 20% during Q1 of 2016. These steps were 95% completed by the end of January. And along with some additional non-head count cost reductions, we expect to generate about $20 million of annualized cost savings from our Q4 run rate.

So, the impact of a more efficient organizational structure is not limited to simply cutting overhead costs. The streamlining of field processes and line management reporting has allowed our U.S. operating segments to achieve materially better decrementals over the past few quarters than would otherwise be implied. We've been able to achieve these results through a flattened field management, and also expect to save another approximately $8 million annually as a result of additional flattening that's taking place right now.

Further, the bench of talent we are retaining has allowed us to maintain our service quality as we push responsibilities down through into the organization. For instance, in some markets we're running fully crewed workover rig crews, fully comprised of rig operators. A rig operator previously would have been the senior worker in charge of a given crew. So not only have we high-graded our active workforce, who can continue to deliver superior service, but we've also kept the optionality to quickly add crews with seasoned leaders when the market returns. So our current employees are highly experienced, and they want to be at Key and they want to continue to show that in our results.

So before I turn to some market commentary and outlook, I want to reiterate the proactive stance we've taken relative to aggressively reshaping our business and more importantly, to think of all of our Key employees and managers for the rapid execution in carrying out this strategy. I cannot overstate how much change our organization has successfully implemented in such a short period of time. It would have been exceedingly difficult for us to have achieved similar results had we taken a wait-and-see approach.

Key and the whole team is committed to aggressively controlling what we can control throughout this downturn. So as we look forward, oil in the low $30s or below challenges just about every activity in the oilfield. Until there is incremental consequence in a reasonable and sustainable upward trajectory in oil prices, we believe our activity will remain weak and pricing under pressure. We have excellent relationships with our customers, and we're working with them to adapt to this mutually challenging business environment.

And this necessitates our continued course of action relative to a sharp focus on the profitability of every job we take and to balancing market share with price. Every decision we make is weighed against its impact to our cash flow. While the near-term activity and pricing environment remains challenged, we believe the medium-term outlook for production services, like our service rig grow stronger, because well maintenance continues to be postponed.

Given the recent announcement around massive capital spending cuts by many of the U.S. producers, we believe production in the U.S. dropped meaningfully as decline rates and lack of investments take hold.

As this occurs, we believe that commodities prices will return to a level that motivates our customers to increase production from their existing wells and this positions Key's to leverage our production services business to generate significant upward trajectory in our top- and bottom-line results.

And our belief is supported by the following facts. First, it's no secret that the absolute well count has been growing significantly in the recent years due to the proliferation of horizontal oil wells.

In fact, a number of horizontal oil wells have quadrupled since 2010, with nearly 100,000 horizontal wells in the lower 48. We view this as distinctively favorable to our production business as these deeper, more complex wells have now begun to age to the degree where they're needing normal course of maintenance. The rigs we've been adding to our fleet over the past years are ideally suited to do this work.

Second and taking that thought one step further, during the wave of new horizontal well additions we've seen over the past half decade, impetus to drill and complete these wells with $90 plus oil was so strong that many producers dedicated all available financial and human capital to these activities. And the historical balance between maintenance and drilling and completion spend was skewed towards completions.

As such, maintenance programs on these base production were deferred, meaningful number of otherwise valuable oil wells have gone underserved. This is clearly evident in the oil production of stripper wells that produce less than 15 barrels per day. The cumulative production from these 700,000 plus wells has been consistently over 1.2 million barrels per day since the late 1990s, with a very low decline rate. The production rate for these wells decrease dramatically, however, in 2014 as well maintenance began to be deferred and production actually fell below 1 million barrels per day.

Increased focus on the maintenance of these wells can restore production levels closer to the historic production rate. And again, Key's large well servicing rig fleet is well-positioned to take advantage of this.

In addition to the stripper well opportunity as our customers have dealt with their own falling revenues and cash flows over the past 15 months, we believe that maintenance programs have been even further curtailed with a increasing number of later-generation wells coming off line due to maintain issues. We believe that as operators focus on capital efficiency and return on capital, they will seek to maintain an increased production from these existing wells.

Within the current oil price outlook, we believe the single-well economics of managing basic well maintenance compares favorably to drilling new wells in many of the U.S. basins. We believe Key's large well service rig fleet and our focus on production services will benefit as the value of these capital efficient return accretive activities regain focus. While it's hard to predict the timing for the oil recovery, we believe the rationale is clear as to how Key will benefit in the new normal industry landscape.

Though we're focused on optimizing our cost structure and preserving liquidity currently, it's important to sustain and recognize the value drivers in our business and how we are positioned to benefit from the backlog of opportunities and the growth in demand for our services as the industry begins to recover.

Now let me turn the call over to Marshall.

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Thanks, Robert. Lots of moving parts again this quarter, but starting with the combined U.S. and Functional Support segments, we generated adjusted EBITDA of negative $3 million in the fourth quarter. This includes $2.7 million of FCPA investigation costs, and $1.2 million of asset repatriation and make-ready costs. Excluding these items, the adjusted EBITDA was just over breakeven on $150.2 million of revenue, as compared to $7 million negative in adjusted EBITDA in the third quarter, which includes $2.5 million of FCPA costs and $1 million of asset repatriation and make-ready costs. Quarter-on-quarter it's an improvement of about $4 million on a revenue decline of $24 million, as the cost reduction steps we continue to push serve to mute the margin impact of that revenue decline.

Diving into our businesses, in our U.S. Rig business revenues fell about 9% quarter-on-quarter, roughly in line with rig activity, with pricing about flat. The operating loss in the fourth quarter of $6.5 million was burdened by $1.2 million of costs associated with the relocation of rigs from outside the U.S. as compared to $1 million in the third quarter. We also wrote off about $5 million in deposits, with about $1.6 million of that being due to our vendors' financial condition and the rest relating to 2014 orders that we can no longer defer, and we've now cancelled.

We also incurred about $300,000 in severance and another $300,000 of loss on obsolete asset dispositions. Excluding these items, our operating income improved about $3 million in the fourth quarter, while enduring a $7 million revenue decline as a result of steps to lower our operating costs.

While our activity in California held up during the fourth quarter and represented about a quarter of our total hours, as we moved into 2016, we've experienced our customers strongly reacting to their low realized prices in this market, cutting back their activity 35% on average in the first quarter as compared to the fourth quarter average.

Fluid Management Services revenues fell 22% quarter-on-quarter as truck hours fell 20% from Q3. Operating loss in the fourth quarter included a couple hundred thousand dollars of severance and a loss of approximately $10 million as we sold eight SWDs in the Bakken, a market we had otherwise exited for this business. Excluding this loss, our operating income fell to $5.8 million as compared to $3.9 million in the prior quarter. The cost saving steps we're taking somewhat muted the activity loss, with decrements at 25%, but were not enough to offset the impact of lost revenues.

Coiled Tubing Services revenues were $16.3 million in the fourth quarter, down 21% from the third quarter, while our operating loss excluding impairments of $7 million was $3.6 million as compared to an operating loss of $5 million in the prior quarter, which excludes a sales tax charge of $5.6 million in that quarter and impairments. Activity declined 10% on lower completion activity with utilization of our largest units falling to around 40% from around 60% in the prior quarter. Cost reduction steps were able to offset some of the lower activity.

Fishing & Rental revenues were $23 million, down $4 million or 15% in the quarter, with our operating loss improving about $700,000 sequentially on continued cost containment and cross-selling with our U.S. rig business. The revenue decline was led by drilling and completion rentals, which fell about 20%, making up about a third of the quarter-on-quarter decline.

Turning to our International segment. For the quarter, revenue was $4.8 million, down 37% sequentially, with an operating loss of $72 million, which includes a loss of $40 million on asset sales and an asset impairment of $23 million on our assets in Russia.

I'll provide an update on our exit in a moment. But first in Mexico, during the quarter we took steps to further reduce costs and consolidate our remaining operations into Southern Mexico, where we currently have nine rigs remaining. Any assets in the northern region not relocated to the U.S., or to our operations in the south were sold, resulting in a loss of $29.9 million during the quarter. Excluding this loss, our operating loss in Mexico was $4.2 million on revenue of $1.2 million. Our operating loss includes depreciation expense of $2.5 million.

While PEMEX resumed activity late in December, given the impact of oil prices and the uncertainty in PEMEX's current activity, we expect revenues to be between $1 million and $3 million next quarter, and for our operating loss to narrow to close to breakeven at the high end of our activity and to somewhat better than Q4 at the low end of our activity.

Turning to our international exit status, all of our physical assets in Colombia, Ecuador, Bahrain and Oman have been sold or relocated to the U.S. We expect that by the end of March our remaining presence will be a handful of back-office employees necessary to complete our exit and liquidation over the next few quarters. In Russia we recorded a charge of $23 million as we work with our potential buyers to finalize their diligence and reach a final transaction.

In 2015, we moved 19 rigs and ancillary equipment from our international operations to the U.S. Total proceeds from all sales are expected to be around $20 million with $5 million collected in the fourth quarter of 2015 and $10 million collected so far in 2016. Our net working capital recovery has been about flat net of operating and relocation costs. We still expect to realize another $5 million or so over the course of 2016 from the liquidation of our remaining presence.

G&A expense were $39 million for the fourth quarter and included $2.7 million of FCPA investigation costs and around $700,000 in severance as compared to the third quarter G&A of $45.3 million which included $2.5 million of FCPA investigation cost and $1.6 million in severance. Excluding these costs, G&A in the fourth quarter was $35.6 million as compared to $41.2 million in the third quarter.

In January, we made further head count reductions, and we expect to benefit by approximately $5 million a quarter with a full quarter run rate of around $28 million to $30 million per quarter for our U.S. Operations and Functional Support segments after the reductions and $2 million to $3 million a quarter in expense for our International operations.

By mid 2016, this international amount should taper to around $1 million a quarter. This G&A run rate excludes FCPA costs, and we expect those to be flat to down over the next quarter.

Depreciation and amortization expense was $41.9 million for the fourth quarter as compared to $45.3 million in the third quarter. Cash flow used in operations was $1.5 million for the fourth quarter as compared to $19.6 million in the third quarter, as we benefited from a $4 million tax refund, lower cash interest cost and our cost reduction measures. Capital expenditures for the quarter were $2 million.

For 2016, we may incur up to $20 million of capital expenditures over the course of the year. During the quarter, our effective tax rate was 30.2%. The difference from the normal rate is due to the valuation allowances and charges we recorded in the quarter.

Turning to our balance sheet liquidity, we ended the quarter with $204 million in cash and $27.2 million available under our credit facility for $231.5 million in total available liquidity as compared to $229.6 million in liquidity at the end of the third quarter, essentially flat.

At the end of the fourth quarter, our asset coverage ratio for covenant compliance stood at 1.8 times as compared to 1.9 times for the prior quarter with the appraised net orderly liquidation value of our equipment being $486.5 million for purposes of that covenant calculation.

We remain committed to proactively addressing our liquidity profile. We have a variety of options available to us to enhance our liquidity position, including the ability to add additional secured debt under our existing credit facilities. We continued to evaluate the need and structure of additional liquidity and pursue the path to most beneficial.

In the first quarter we have cash interest cost of $30 million, a $21 million increase over the fourth quarter with some of the higher cash cost being offset by international proceeds. Additionally in the first quarter, we're burdened by the frontloading of payroll taxes that typically occurs in the first quarter. We expect that to be about $3 million. Interest expense was $21.7 million during the fourth quarter, and we expect first quarter interest to be between $20 million and $22 million.

With that, I'll turn it back over to Robert.

Robert Wayne Drummond - President & Chief Operating Officer

Thank you, Marshall. I'll conclude the call by publicly thanking Dick again on behalf of the company for his 12 years of dedicated service, we're going to miss you man.

We have a strong team here at Key, and I'm looking forward to a successful tenure as CEO. I am committed to working with our customers and our stakeholders to find mutually beneficial solutions to manage through the current challenges in the long-term future.

With that, this concludes our prepared remarks. Connor, we're now going to open up the call for questions.

Question-and-Answer Session

Operator

We'll pause for just a moment to compile the Q&A roster. Your first question comes from line of Mike Urban with Deutsche Bank. Your line is open.

Michael Urban - Deutsche Bank Securities, Inc.

Thanks. Good morning, guys.

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Good morning.

Robert Wayne Drummond - President & Chief Operating Officer

Good morning, Mike.

Michael Urban - Deutsche Bank Securities, Inc.

So we completely agree with your thesis on operators focusing on production once they actually do start spending some money. Is there any indication at this point that they're going down that path? Is there any planning around that? And to the extent that customers are talking to you about their plans, is there some kind of trigger there they're looking for, or is it just the commodity price stabilizing? Is there a level? Is it setting budgets, just any kind of indicator as to what ultimately unlocks that spending when and if it comes?

Robert Wayne Drummond - President & Chief Operating Officer

So I'm glad you agree with the thesis. Look, we spend a lot of time talking to our customers. And a number of them have been the one who've told us that. I think what they do track is the percentage of their wells that are down due to maintenance and that number has been on the increase. But as far as them having specific plans to start to address it yet, I don't have a lot of visibility on that. And I think they've been in the mix of dealing with the oil price reduction until this point and making their necessary cost adjustments and reductions accordingly. But they will pretty soon I believe become focused on that. A number of them have told me that will be the case.

As far as what oil price triggers it, I think that that is a little bit specific to the basin. And we're seeing significant pressure on California at these oil prices. They have a little bit of a different oil price to the realized oil price there. So I think it's a bit customer, a bit basin specific.

But we've kind of been running the math on our own a bit, the payout for doing a workover and improving the production on an individual well only by 10 barrels even at $35 oil payout, since you've got certain assumptions you take with that, but the payout has been more in the neighborhood of 90 to 120 days. So I think once they kind of get recalibrated on CapEx versus OpEx spending, we're going to start to see a little bit of that. I hope that that occurs against the current second (28:23) quarter.

Michael Urban - Deutsche Bank Securities, Inc.

Great, that's helpful. And on the CapEx front you talked about spending up to $20 million. That's quite a bit higher than where you exited last year. It sounds like that's not necessarily a hard and fast number. Is that contingent upon seeing things get better? Are you – is it sustainable at the level that you were in Q4 which I guess was about $2 million, or is that still an under-spend even in this environment?

Robert Wayne Drummond - President & Chief Operating Officer

Well, look, I think that the guidance is really – it's pretty loose in a sense that that would be CapEx that are not directly planned for any particular project or any particular growth, more or less call it big item maintenance kind of CapEx.

We don't anticipate seeing an increase from where we are right now unless we saw some kind of significant activity improvement. In fact, I think we're sitting in a good spot when it comes to outlook. We could essentially double our rig count from where we are today without spending very much, or deploy double the rigs we have today without spending hardly any CapEx going forward or stay within the guidance we've already given. So we're focused on maintaining those assets and keeping them kind of warm stacked, but no real growth CapEx. We're trying to deal with what we can deal with right now.

Michael Urban - Deutsche Bank Securities, Inc.

Okay. So we shouldn't necessarily model in that $20 million – just to be clear you're going to be around that exit rate for now and if you do see anything you can get up to that number, is that the way to think about it?

Robert Wayne Drummond - President & Chief Operating Officer

I think that's fair.

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Yeah. I think as we think about the business today, we're obviously looking to spend as close to zero as we can, but that's going to be hard to do in a broad sense over the course of the year. You know, we'll have to spend something but we think that that's not going to be over $20 million with where the business is today, unless we start to see activity pick up sometime in the back half of the year. But for right now, something around what we spent plus or minus is probably pretty fair for modeling.

Michael Urban - Deutsche Bank Securities, Inc.

Okay, got you. That's all for me. Thank you.

Robert Wayne Drummond - President & Chief Operating Officer

Thank you.

Operator

Your next question comes from the line of Blake Hancock with Howard Weil. Your line is open.

Kenneth Blake Hancock - Scotia Howard Weil

Good morning, guys.

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Good morning.

Kenneth Blake Hancock - Scotia Howard Weil

As we think about, just moving into 1Q here, is it realistic to kind of think about absolute profit levels being flat in 1Q excluding any of these payroll impacts? Or was 4Q more the result of your cost containment efforts and you know we're going to have another period of lag here given the head count reductions we saw in January?

Robert Wayne Drummond - President & Chief Operating Officer

Thanks for the question Blake. Look, as we go into Q4, I think, you've heard the number of announcements that customers are making on their reductions in spend. And we have in fact been very proactively taking cost out. In Q4 it showed in the results a bit and we already got a good jump in January as we highlighted in the prepared remarks.

But I think as the operators reduce activity, we will begin to see and are beginning to see more pricing pressure as the total activity available for people to work on is getting less. So while we've been extremely proactive on cost, I think the challenge in Q1 will be to maintain pricing as high as you can and the battle for market share that ensues.

Kenneth Blake Hancock - Scotia Howard Weil

No, that's great. I really appreciate it. And then I guess on those lines, are we starting to flirt with levels in some of these kind of non-rig services segments, where theoretically cash flow – it would be cash flow accretive to kind of temporarily shutter operations, or is just the opinion of the long-term impact not worth taking that route?

Robert Wayne Drummond - President & Chief Operating Officer

Look, that's a very good question and one that we entertain quite frequently internally. And over the past 12 months we've actually shut down like about 29 different district locations and various product lines to that effect. And as we go forward, we will continue to look at it that way, and if it's more even I would say in the short term cash accretive to do so, we may do more of that. And I think that that will be determined a bit as the operators spend completely materializes in activity change.

Kenneth Blake Hancock - Scotia Howard Weil

No, that's perfect. And one more if I can here for Marshall. Just on kind of how we should think about cash drain over 2016 and you've kind of laid out the interest expense and the payroll tax for 1Q and assuming that interest payment kind of holds for the rest of the year. Given that CapEx and the asset sales, is there anything else that we need to be baking in from a cash component over the rest of the year?

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

No, I think those are the big pieces now. Our bond interest payment is semi-annually so that we didn't have a payment in the fourth quarter. We do in the first and again towards the end of the year and then the term loan interest is quarterly. So that and the CapEx and picking up the remaining bits of the international proceeds are probably the main items.

Kenneth Blake Hancock - Scotia Howard Weil

All right, that's perfect. I appreciate it guys. Thank you.

Robert Wayne Drummond - President & Chief Operating Officer

Thanks.

Operator

Your next question comes from line of John Watson with Simmons & Company. Your line is open.

John Watson - Simmons & Company International

Good morning, guys.

Robert Wayne Drummond - President & Chief Operating Officer

Good morning.

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

Good morning.

John Watson - Simmons & Company International

Marshall, on the SWDs, I believe you said eight were sold in the Bakken. If possible, could you disclose the total sales price for those eight?

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

So they were sold in a number of different ways in different packages. In total it's probably about $1 million-ish in Q4 and another $1 million-ish earlier in Q1.

John Watson - Simmons & Company International

Okay. Great. And then just one more for me. Are there any plans to sell any well service rigs anytime in the near future? And if so, how many might be sold?

John Marshall Dodson - Chief Financial Officer, Treasurer & Senior VP

That's not currently in our plans. We've been making that rig-by-rig evaluation internationally but right now we don't foresee doing that.

John Watson - Simmons & Company International

Okay, wonderful. Thanks, guys. I'll turn it back.

Robert Wayne Drummond - President & Chief Operating Officer

Thank you.

Operator

There are no further questions at this time. I'll turn the call back over to Mr. Gotcher for closing remarks.

West P. Gotcher - Director-Investor Relations & Corporate Development

Thank you, Connor. This concludes our call. Replay of this call can be accessed on our website at keyenergy.com, under the Investor Relations' tab. Also, under the Investor Relations' tab, we've posted schedule of our quarterly rig and truck hours. Thank you for joining us today.

Operator

This concludes today's conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!