Key Energy Services To Re-Structure, Allowing It To Remain A Publicly Traded Company -- August 25, 2016

From SeekingAlpha:

• Key Energy Services (KEG) unveils a plan support agreement to be implemented ahead of prepackaged Chapter 11 reorganization in which it would remain a publicly traded company.
• Under the plan, senior noteholders would own ~95% of the reorganized company’s common stock; current shareholders would have a ~5% stake; P-E firm Platinum Equity would become Key's largest shareholder upon completion of the restructuring.
• KEG expects its reorganization will reduce its debt to $250M from nearly $1B.

I have mentioned Key Energy rarely on the blog, mostly back in 2012 when "Cramer" mentioned the company.

Not ready for prime time. A reader asked my thought on the restructuring agreement. This was my (slightly edited) reply:

I don't known when I last "followed" KEG.

What little I know about KEG restructuring sounds like many of the other restructuring deals in the oil patch. Holders of "common shares" who held on through the "end" will not be happy.

But if one thinks that oil is going to be a lot higher four years from now, there are going to be some great buying opportunities.

Mike Filloon (Bakken Updates) contributed often to SeekingAlpha during the boom; but then in calendar year 2015 he seemed not to write as much. Now, all  of a sudden, we see four articles from him, and he says he's long (bullish) in a number of tight oil operators.

When I see four articles from Filloon in a very short space of time, I get the feeling that he's very aware that things may have turned the corner.

Note: this is not an investment site. Do not make any investment, financial, travel,  job, or relationship decisions based on what you read here or what you think you may have read here. Everything I post on this site -- even the non-energy posts -- is to help me better understand the Bakken and keep it in perspective. It should not be used as an investment tool. If this is important to you, go to the source.

One can "search" for KEG or Key Energy Services on the blog. I think I only really talked about it for a short period of time back during the boom, when Cramer mentioned it, back in 2012.

I do not know if KEG is working in the Bakken; some time ago a reader sent me an e-mail suggesting KEG was no longer in North Dakota.

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A Note For The Granddaughters

Genome: The Autobiography of a Species in 23 Chapters
Matt Ridley
c. 1999
DDS: 599.935 RID

"We may live on a natural gas machine." -- WSJ

A Field Guide to Bacteria
Betsey Dexter Dyer
c. 2003
DDS: 579.3 DYE

I could be wrong, but it appears that a senior in high school with plans to major in biology in college would be well-advised to scan through Dyer's book during the summer between graduating from high school and entering college. 

Dyer seems to suggest that Archaea separated from Eubacteria. I believe Woese argues that the two (along with eukaryotes) had a common ancestor before all three diverged.

Archaea: very, very odd life forms. Their cell walls are strange (fragmented, or "missing" altogether) and are made of chemicals unknown in other bacteria. They are also found in odd, inhospitable environments.

Archaea:

• methanogens
• hyperthermophiles
• halophiles (salt lovers) 

Photosynthetic bacteria

• green sulfur bacteria: use hydrogen sulfide (H2S) as source of hydrogen; waste product sulfur, which is hard to get rid of
• green nonsulfur bacteria: use water as source of hydrogen; waste product oxygen;
• cyanobacteria
• some of the protobacteria (purple bacteria)
• heliobacteria

Protobacteria (purple bacteria)
highly diverse; extremely successful
all are gram negative (trivial, but "first" among ways to differentiate bacteria)
five subgroups denoted by Greek letters (alpha, beta, gamma, delta, epsilon) based on DNA sequences

The Gram-Positive Bacteria

• gram-positive: thick, but simple, wall
• gram-negative: thin, but complex, wall; and membrane
• gram-variables: with EM, appear to be gram-positive based on appearance of cell walls
• gram staining is not used to identify archaea
• DNA: gram-positives -- one major branch; as a group, ubiquitous and highly successful
• DNA: gram-negaives -- nine major branches
• Gram-Positive
• of food and drinks
• of soil and other substrates
• symbionts of animals and plants

Cyanobacteria

• hard to find because eukaryotes (plants) dominate landscape; began with the emergence of eukaryotic algae 2 billion years ago
• look for cyanobacteria: hot springs, acid or alkaline lakes, hypersaline waters, dry desert crusts, bare Antarctic rocks
• the great innovation of cyanobacteria: oxygen-generating photosynthesis; evolved about 3.5 billion years ago; once established, became dominant form of metabolism for fixing carbon in the form of sugars
• before cyanobacteria, the only alternative was H2S

Types of Cyanobacteria

• of aquatic and terrestrial habitats
• cyanobacterial associations with other organisms

Bacteroides, Gliders, and their relatives

• are still being sorted and categorized based on DNA sequences

Spirochetes: a chapter of their own

• symbionts of invertebrates, particularly molluscs and termites
• in both organisms, spirochetes involved in helping digestion

Thermus and Deinococcus

• tough, resilient bacteria that form their own cohesive taxonomic group based more on their DNA sequences than on physical characteriestics
• Thermus: hot springs
• Deinococcus: completely lacking in field marks
• originally discovered in canned meat that had been preserved using irradiation (but they are not pathogens)
• can withstand doses of radiation thousands of times greater than typical lethal doses
• 500 to 1,000 rads will kill a human
• some Deinococcus can withstand millions of rads

Planctomycetes and their relatives

• most distinctive members: stalked bacteria
• unusual and fairly common; strange 
• Chlamydia: unstalked, but related to Planctomycetes
• having an appendage is not distinctive enough to be placed in Planctomycetes
• stalks: extensions of the cell that have no protoplasm
• prosthecae: extensions of the cell that have protoplasm

From wiki:

The three-domain system is a biological classification introduced by Carl Woese that divides cellular life forms into archaea, bacteria, and eukaryote domains.

In particular, it emphasizes the separation of prokaryotes into two groups, originally called Eubacteria (now Bacteria) and Archaebacteria (now Archaea).

Woese argued that, on the basis of differences in 16S rRNA genes, these two groups and the eukaryotes each arose separately from an ancestor with poorly developed genetic machinery, often called a progenote.

To reflect these primary lines of descent, he treated each as a domain, divided into several different kingdoms. Woese initially used the term "kingdom" to refer to the three primary phylogenic groupings, and this nomenclature was widely used until the term "domain" was adopted in 1990.

Prokaryotes vs eukaryotes.

Prokaryotes: Bacteria and Archaea. 

From Evolution: The Whole Story, Steve Parker, general editor, c. 2015.

Yet persuasive evidence of shared characteristics suggests that chloroplasts, which have their own genetic make-up distinct from the other plant genes in the cell nucleus, were once free-living cyanobacteria, pages 56 - 57.

The Ediacaran animals lived mostly on, or close to, the surface of seabed sediments, in shallow seas, or deep on the ocean floor, and some left trace fossils of their burrows. A possible trigger for the evolution of htese diverse creatures could have been a rise in the proportion of oxygen in the atmosphere, produced mainly by photosynthetic cyanobacteria, page 47. 

The Ediacaran were pre-Cambrian.