Energy services company Key Energy Services Inc. (KEG:NYSE) has a bullish outlook for next year in part because because of strong land fundamentals in the U.S., according to investment bank Raymond James. As a result of this and the company's rising revenue in 3Q11, the bank increased its rating of the energy services company to Outperform and provided a target share price of C$16.50.
Key signed a C$90 million contract with PEMEX which is expected to initiate before the end of 2011. The energy services company reported that it is generating as much revenue with 18 rigs as it was with 24 rigs in 2010.
The Edge transaction was closed at the end of the quarter and increased revenue for the period by C$21 million for less than a month's worth of work. Key's management expects the project to add C$80 million to EBITDA every year.
The company reported earnings per share (EPS) of C$0.31, which beat investment bank Raymond James' estimate of C$0.28. Key Energy Services Inc. closed at C$13.39 on October 28 and hit a 52-week high/low of C$20.77 and C$8.27, respectively.