Code of

Business Conduct
Effective: April 2006
Revised: April 2009

keyenergy.com

Key Energy Services

ices
1301 McKinney
Suite 1800
Houston, Texas 77010

Telephone: 713.651.4300
Facsimile: 713.652.4005
www.keyenergy.com
www.ke

Dear Fellow Key Employees,

At Key, our number one goal is to be the premium well-site provider of
production services and solutions. In order to achieve this goal, we must
commit to always acting lawfully, ethically and with integrity. Just as our
personal values guide us to make the right decisions in our personal lives,
the Companys five Core Values Safety, Ethics, Respect for the Individual,
Respect for the Community, and Performance should serve as guideposts
in our professional lives at the Company.
A simple translation of this Code is, Do the right thing, without
exception. All employees, without regard to position within the Company
or location in the world, must read the Code and be committed to it, not
just when it is convenient or expedient, not just when other people are
watching, not just when it improves our financial results, but consistently
and without exception. We must hold ourselves and those around us
accountable for following the rules of Key, the rules of our customers, and
the laws of the countries in which we work.
This Code serves as a road map for ethical issues. It provides direction
related to day-to-day business dealings and relationships. It also tells you
exactly how to reach out to real people within the Company who can
answer your questions or address your concerns. Whether the conduct
involves you, your coworkers or someone outside of the Company, it is
your responsibility to find help or seek answers to your questions. The
pages at the very back of the book, in the section called Where to Find
Help, outline several ways that you can obtain guidance and support.
It is one thing to talk about setting high standards and it is another thing
to actually live by them. We are all accountable to these high standards
and nothing less. The Board of Directors and your managers very much
appreciate your faithful attention to our Code of Business Conduct and I
can assure you that I personally appreciate your desire to do the right thing,
without exception.
With thanks,

Dick Alario
Chairman, President and Chief Executive Officer
Key Energy Services, Inc.

Table of Contents
About the Code of Business Conduct..................................................1
1. Applicability of the Code............................................................................ 2
2. Our Core Values............................................................................................ 2
3. Effective Date of the Code......................................................................... 3
4. Employees Must Understand the Code and its Policies......................... 4
5. Monitoring and Oversight........................................................................... 5
6. Certificate of Compliance........................................................................... 5
7. Waiver............................................................................................................. 5
Your Relationship with the Company..................................................7
1. Protection of Company Assets Policy....................................................... 7
2. Prevention of Fraud Policy......................................................................... 8
3. Confidential and Proprietary Information Policy.................................... 9
4. Privacy Policy............................................................................................... 10
5. Inside Information and Insider Trading Policy...................................... 10
6. Financial Integrity Policy........................................................................... 16
7. Legal Review Policy.................................................................................... 17
The Companys Relationship with Others......................................... 19
1. Health, Safety and Environmental Policy............................................... 19
2. Honest Communication is Required........................................................ 19
3. Requests for Information from the Media and Public.......................... 20
4. Political Contributions............................................................................... 20
5. Public Speaking and Publishing Articles................................................. 21
6. Press Releases.............................................................................................. 21
7. Community Involvement........................................................................... 21
8. Community Projects................................................................................... 22
The Companys Relationship with Our Customers and the
Marketplace .......................................................................................23
1. Conflicts of Interest Policy....................................................................... 23
2. Acceptance of Gifts and Gratuities Policy............................................. 25
3. Gifts to Customers, Suppliers and Contractors Policy......................... 27
Competition and Antitrust Policy ......................................................29
Transacting International Business .................................................. 31
1. International Boycott Policy...................................................................... 31
2. Foreign Corrupt Practices Policy.............................................................. 32
3. Export Controls.......................................................................................... 34
Effective: April 2006
Revised: April 2009

4. U.S. Embargos/Trade Sanctions.............................................................. 35

5. Money Laundering...................................................................................... 35
Consequences of Violating the Code or its Policies..........................37
Where to Find Help and Report Violations.......................................39
1. Asking Questions and Reporting Concerns........................................... 39
2. Where and How to Report........................................................................ 39
3. Investigations............................................................................................... 40
4. Non-Retaliation Policy............................................................................... 41
CERTIFICATE OF COMPLIANCE................................................43

Code of Business Conduct

About the Code of Business Conduct

Our Code of Business Conduct (the Code) has been adopted by the
Board of Directors of Key Energy Services, Inc. It establishes our high
standards of ethical and legal behavior for all employees and officers. The
Code is a collection of policies that reflect our core values. The policies
contained in the Code are designed to equip employees and officers with
the knowledge to prevent and detect violations of our policies as well as
applicable laws and regulations.
The purpose of the Code is to establish general standards for:
Deterring wrongdoing;
Promoting compliance with applicable governmental laws, rules, and
regulations;
Encouraging honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and professional
relationships;
Promoting full, fair, accurate, timely, and understandable disclosure in
reports and documents that we file with, or submit to, governmental
agencies and in other public communications made;
Accountability for business conduct; and
Advancing the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code.
The Code, together with other related policies and procedures, forms our
Ethics & Compliance program. The Code exceeds the requirements of the
definition of a Code of Ethics contained in the regulations of the United
States Securities and Exchange Commission (the SEC) issued pursuant
to Section 406 of the Sarbanes-Oxley Act of 2002 and the corporate
governance rules of the New York Stock Exchange regarding codes of
business conduct.
While the Code sets out in general terms our standards of integrity and
business conduct, no code can address every situation that individuals may
encounter. The omission of a specific act from the Code does not mean
that act is acceptable or lawful. As a result, the Code is not a substitute
for good judgment, accountability, and guidance on proper business
Effective: April 2006
Revised: April 2009

Rules of the Road

Use Good Judgment
Hold Others Accountable
Seek Guidance
on Proper Business
Conduct

conduct. Employees are encouraged to

seek additional guidance and support
from those designated as responsible for
business conduct matters. Ultimately, we
must determine the right
thing to do to maintain our personal and
corporate integrity.

1. Applicability of the Code

The Code applies to the Company and its subsidiaries and affiliates,
(collectively, the Company, Key, we, us, its and our) including
all business units in all of our offices and locations around the world. All
employees and officers in all business units are expected to be familiar with
the Code and to apply it in the daily performance of their work-related
responsibilities.
Employees and officers who violate the Code or who knowingly permit
another to do so are subject to disciplinary action up to and including
termination of employment and other appropriate measures. All violations
must be reported.
2. Our Core Values
In most situations, our personal values guide us to the right decision. Within
our business, we believe that the Companys core values should guide
our decisions, actions, and conduct. Putting our core values into practice
creates lasting benefits for our associates, stockholders, customers, and
the communities in which we live. These five values are meant to be our
guideposts, or rules of the road, for every action we take:
Safety: Securing our Success. At the Company, we are passionate about

safety. Embracing safety as a value means constantly planning ahead, not

just looking at the days statistics. Safety is an absolute for employees, for
contractors, and for the communities where we operate.
Ethics: Assuring our Success. In all we do, we will be ethical, honest,
and forthright. We will constantly strive to do what is right. We will operate
with the utmost integrity, where the law is not only upheld, but respected,
and promises made are promises kept.
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Code of Business Conduct

Respect for the Individual: Retaining Those Responsible for our

Success. At the Company, we want to recruit, reward, and retain the

best. We understand the value of diversity, provide opportunities through

training and development of our people, and strive to be an employer
of choice.
Respect for the Community: Sharing our Success. We are dedicated
to protecting our environment and adding value to our communities by
promoting volunteerism and active participation.
Performance: Measuring our Success. Measuring our success is

accountability. Accountability is about doing what we say we are going

to do. We expect to be judged by the successful execution of our
commitments as a company, and as individuals. We expect to succeed in the
long term by using our employee energy and integrity to attain our clear,
achievable goals.
Employees and officers of the Company are
expected to conduct their business in accordance
with these values. We must not simply comply
with laws, regulations, and policies; we must work
according to our values and endeavor to conduct
ourselves in a manner beyond reproach. We must
all exercise sound judgment in the service of our
reputation as a market business leader, employer of
choice, and good corporate citizen.

Safety
Ethics

CORE
VALUES

Respect for
Individual
Respect for
Community
Performance

3. Effective Date of the Code

The Code is effective as of April 5, 2006, as revised in April 2009, and
supercedes any prior similar documents, including the document entitled
Code of Business Conduct and Ethics.
The Code does not replace any other published policies or procedures of
the Company, such as other work rules or personal conduct policies. Upon
receipt of the Code, employees will be required to certify they have read
and agree to abide by the Code. Periodic recertification will be required.
The Company will continue to release the Code in hard-copy form at
regular intervals, and will review and revise it periodically as needed. In
addition to the hard-copy version that all employees are provided, the Code
also appears on the Companys Intranet, and in any conflict between the
Effective: April 2006
Revised: April 2009

printed version and the most current Intranet version, the Intranet version
will control.
The Company expressly states:
It reserves the right to unilaterally change at any time the Code or the
Companys policies and procedures.
Nothing contained in the Code or the Companys policies and procedures
shall be construed or applied as binding interpretation or definition of
the law or industry practice.
Nothing contained in the Code or the Companys policies and procedures
is intended by the Company to be, nor shall it be, construed as an
employment agreement.
Any act by employees in violation of the Code or the Companys policies
and procedures, as well as any U.S. or foreign law or regulation, is beyond
the scope of such persons authority and is not an act by or on behalf of
the Company.
4. Employees Must Understand the Code and its Policies
The Companys employees must read and understand not only the
standards contained in the Code, but also the values on which they are
based. Employees also have an obligation to comply with the letter and
the spirit of the Code and to encourage others to do the same. Employees
are personally responsible for abiding by the Code, all applicable Company
policies and procedures, and all applicable laws and regulations, as well
as for behaving in a highly ethical manner as they conduct business.
Employees should regularly review the Code.
Employees must be alert to and promptly raise
any concerns or report any violations of the Code
in accordance with the Companys procedure for
reporting violations of the Code, as described in the
Code. Employees should cooperate fully and honestly
in the Companys investigation of alleged illegal or
unethical activity when called upon.

Ethical
business
conduct is
everyones
responsibility

Employees must not knowingly help another person conduct business in a

manner contrary to the Companys core values or in violation of the Code,
Company policies and procedures, or applicable laws and regulations.
4

Code of Business Conduct

Employees must honestly complete the Certificate of Compliance to the

Code as requested by the Company.
5. Monitoring and Oversight
The Ethics Committee is a committee appointed by the President,
consisting of representation from Internal Audit, Legal, HR, and
Operations. The Ethics Committee assists in monitoring compliance with
the Code, Company policies and procedures, and applicable laws and
regulations. The Internal Audit Department will routinely conduct audits of
issues that have regulatory or compliance implications.
The Audit Committee of the Companys Board of Directors shall have
oversight of the administration of the Code and responsibility for the
Ethics & Compliance program within the Company. Significant or material
events related to the Companys Ethics & Compliance program shall be
reported immediately to the chair of the Audit Committee. At least once
a year, the Ethics Committee or Director Internal Audit shall report to
the Audit Committee regarding the Companys Ethics & Compliance
program activities, and of the occurrence of all significant events relating
to the Code.
6. Certificate of Compliance
The Certificate of Compliance is given to all new employees and is sent
to employees periodically by Internal Audit on behalf of the Ethics
Committee. The Certificate of Compliance contains an acknowledgment
that the signer has read the Code and is in compliance with its requirements
and knows of no employee or officer who is not in compliance with
its requirements. Except where expressly prohibited by written law,
completing and returning a signed Certificate of Compliance is a condition
of employment.
7. Waiver
No waiver of a provision of the Code may be made for executive officers
except with the prior approval of the Board of Directors.

Effective: April 2006

Revised: April 2009

Code of Business Conduct

Your Relationship with the Company

1. Protection of Company Assets Policy
Company Assets include, but are not limited to, such things as the
Companys technology, telephone systems, computer systems, vehicles,
credit cards, documents, equipment, facilities, information, logos and
names, materials, and supplies. Employees
must use and maintain these assets with the
utmost care and respect, guarding against
waste and abuse, to conduct Company
Rules of the Road
business. Proper use of Company Assets is the
Use Company Assets
responsibility of all employees. Personal use of
for the Benefit of the
Company Assets on an occasional and limited
Company
basis might be acceptable, provided there are
Protect Company
no measurable increased costs to the Company.
Assets
The use of the Companys Assets or resources
Protect Assets of
for personal financial gain is strictly prohibited.
Others
Employees must:
Use Company Assets only to fulfill the Companys goals and purposes.
Use best efforts to protect all Company Assets from loss, damage,
misuse, or theft and assist the Company in its efforts to control costs.
Be cost-conscious and alert to opportunities for improving performance
while reducing costs.
Protect not only Company Assets, but also the assets of others with
which we are entrusted, including physical property as well as intellectual
property, such as confidential or proprietary information, copyrighted
works of authorship, and trademarks.
Not make or use any unauthorized copies of software, tapes, books, or
other legally protected work.

STOP

Effective: April 2006

Revised: April 2009

Personal use
of Company
Assets for
personal
financial gain
is prohibited.
7

2. Prevention of Fraud Policy

The Company prohibits all forms of
fraud, which can include:
embezzlement;
misuse of the Company credit card;
misuse of fuel or a Company fuel card;
forgery or alteration of negotiable
instruments such as Company checks
and drafts;
misappropriation of Company Assets
or the assets of another employee,
customer, partner or supplier;
conversion to personal use of cash,
securities, supplies or any other
Company Asset;

Q: I am taking my
brother-in-law out for
a nice steak dinner to
celebrate his birthday.
He works in the IT
department of a big
customer of Key. Can I
use my Company-issued
credit card?
A: No. The Companyissued credit card
may only be used
for business-related
expenses and may not
be used for personal use
or gain.

unauthorized handling or reporting of transactions; or

falsification of Company records or financial statements for personal
gain.
Preventing fraud is everyones responsibility.
Managers must ensure that all expenditures by their
subordinates are appropriately documented, and
properly identified in the Companys accounting
records. The Loss Prevention Hotline can be
contacted toll free any time for a report of fraud or for help in investigating
at 866-902-3438. Employees must report any suspected fraud to the Legal
Department, Loss Prevention, Internal Audit, or through the Ethics Line.
All such reports will be investigated by Loss Prevention or the Legal
Department. Fraud involving more than $50,000 of estimated loss, or
involving a breach of the Companys internal controls by any level of
management, will be reported to the Audit Committee of the Board of
Directors, the Chief Executive Officer, and the Chief Financial Officer.
Preventing
fraud is
everyones
responsibility.

Loss Prevention Hotline: (866) 902-3438

Code of Business Conduct

3. Confidential and Proprietary Information Policy

Confidential and proprietary information includes any and all information
regarding the Company and its affiliates other than publicly available
information, such as information disclosed in its public filings under the
Securities Exchange Act. Employees must not use confidential information
for personal use or to benefit a third party. Confidential and proprietary
information includes, but is not limited to, any information regarding
the existence or terms of any potential acquisitions by the Company,
personnel information (including information relating to any and all
aspects of compensation of any and all employees of the Company), ideas,
discoveries, designs, inventions, technology, improvements, trade secrets,
know-how, manufacturing and services, processes, design specifications,
writings and other works of authorship, computer programs, financial
information, accounting information, organizational structure, Company
expenditures, marketing plans, customer lists and data, business plans or
methods and the like, that relate in any manner to the actual or anticipated
business of the Company.
Employees must:
Carefully protect Keys confidential and proprietary information and act
responsibly with the sensitive information of competitors, customers,
and other stakeholders.
Not obtain information about our competitors through unlawful or
unethical means, such as theft, illegal entry, electronic eavesdropping, or
surveillance. We will not misrepresent ourselves, our positions, or our
circumstances to persuade another to release information, nor will we
commission a third party to do so.
Not transfer confidential email messages or any message intended for
internal use only outside the Company.
Respect the trade secrets, copyrights, trademarks, and patent rights of
others. Employees shall protect the confidentiality of Keys information
and of its intellectual property interest in any works created or authored
by employees in the course of their employment.
Safeguard Keys confidential and proprietary information even when they
leave employment with Key.

Effective: April 2006

Revised: April 2009

4. Privacy Policy
Employees must respect the confidentiality and privacy of our suppliers,
our contractors, our customers, our employees, and others with whom
we do business. Employees must not use confidential information of our
suppliers, contractors, customers, or employees for personal use, or to
benefit a third party. The Company collects such information only when
necessary to conduct its business and protects the information from
unnecessary disclosure. The Company will disclose confidential information
or personal data only when necessary and when appropriate approval to
do so has been obtained and/or when it is compelled to do so by legal,
regulatory, or professional requirements. Consistent with the Companys
Record Retention Policy, the Company will dispose of confidential,
personal data in a manner that will protect the confidentiality of the data.
5. Inside Information and Insider Trading Policy
Federal and state securities laws prohibit any person who is aware of
material nonpublic information about a company from trading in securities
of that company. These laws also prohibit a person from disclosing material
nonpublic information to other persons who may trade on the basis of that
information.
Personnel and Others Covered. This policy not only applies to

employees, it also applies to family members who share the same address
or are financially dependent, any unrelated person who shares the same
address (other than employees or tenants), resides with the employee, or
any other person or entity whose transactions in Company securities are
directed by the employee or are subject to his or her influence or control.
The Companys employees are responsible for making sure that these other
persons and entities comply with this policy.
Transactions Covered. This policy applies to any purchase or sale

of Company securities, including common stock, options to purchase our

common stock, any other type of securities that the Company may issue,
such as preferred stock, convertible debentures and warrants, as well as
exchange-traded options, other derivative securities, and puts, calls and
short sales involving Company securities.
Trading and Disclosure Restrictions. The following trading and

disclosure restrictions apply to all of our employees, officers and directors:

10

Code of Business Conduct

 If you have material

nonpublic information
regarding the Company,
you must not trade or
advise anyone else to
trade in our securities
until such information
has been publicly
disclosed.

Q: My son is beginning his career as a

stock broker and is still living at home.
He asked me if the rumor that we had been
awarded a big contract were true, as he
wanted to make an impression on his new
boss by bringing up a winning stock. Is it
okay for me to tell him that we closed the deal
before it is made public?
A: No. The Companys policy prohibiting
insider trading and unauthorized disclosure
of information to others applies to your son.
Further, only Senior Management or the
Investor Relations Department may speak
about the Companys financial status.

If you have material

nonpublic information
regarding any other
company that you
obtained from your
employment or
relationship with the Company, you must not trade or advise anyone else
to trade in the securities of that other company until such information
has been publicly disclosed.
Do not share material nonpublic information with people in the
Company whose jobs do not require them to have the information.
Do not disclose any nonpublic information, material or otherwise,
concerning the Company to anyone outside the Company unless required
as part of your duties and the person receiving the information has a
reason to know the information for Company business purposes.
Q: A market analyst asked me if it
were true that we acquired one of our
competitors. I know we are currently in
the closing process. If I deny this, I am
lying. What should I say?
A: Tell the analyst that as to these types of
matters, he should contact the Companys
Investor Relations Department.

Effective: April 2006

Revised: April 2009

11

Definition of Material Information. Information about our Company is

material if there is a substantial likelihood that a reasonable stockholder

or investor would consider it important in making a decision to buy, sell
or hold our securities, or if the disclosure of the information would be
expected to significantly alter the total mix of the information in the
marketplace about us. In simple terms, material information is any type of
information that could reasonably be expected to affect the market price
of our securities. Both positive and
Q: I know the financial
negative information may be material.
Examples include:
earnings estimates (including
changes of previously announced
estimates);
a significant change in our
operations, projections or strategic
plans;
a potential merger, acquisition or
tender offer;

results of the Company

before most others in the
Company do. If we beat
the forecasts, it would
be a perfect time to buy
Company stock. Can I do
this?
A: No. You have material
nonpublic information
regarding the Company. It
is illegal for you to trade at
that time.

a potential sale of significant assets or subsidiaries;

the gain or loss of a major supplier or customer;
a new product or discovery;
a significant pricing change in our products or services;
a declaration of a stock split, a public or private securities offering by us
or a change in our dividend policies or amounts;
a change in accounting policies;
a change in senior management;
impending bankruptcy or possible liquidity problems; or
an actual or threatened major lawsuit.
Definition of Nonpublic Information. Nonpublic information is

information that is not generally available to the investing public. If you

12

Code of Business Conduct

are aware of material nonpublic information, you may not trade until the
information has been widely disclosed to the public (for example, through
a press release or an SEC filing) and the market has had sufficient time
to absorb the information. For purposes of this policy, information will
generally be considered public after the second full trading day following
the Companys public release of the information. For example, if the
Company issued a press release on a Tuesday, the first day that trading could
occur would be on Friday. If you are not sure
whether information is material or nonpublic,
If in doubt, ask.
consult with the Chief Compliance Officer,
Senior Vice President and General Counsel,
for guidance before engaging in any transaction in Company securities.
Refer to the Companys internal website for the Chief Compliance Officers
contact information.

Transactions by Directors, Officers and Certain Other Employees.

The Company has adopted special trading procedures for directors

and officers. In addition, from time to time, specific employees may
be instructed to refrain from any trading activities as a result of their
involvement with financial information, material developments, special
projects, and other activities or events. If you are subject to special trading
restrictions, you will be notified of these trading restrictions by your
manager and/or the Chief Compliance Officer.
Twenty Twenty Hindsight. Remember, anyone scrutinizing employee

transactions will be doing so after the fact, with the benefit of hindsight.
As a practical matter, before engaging in any transaction, you should
carefully consider how enforcement authorities and others might view the
transaction in hindsight.
Unauthorized Disclosure of Information. Employees are prohibited
from disclosing to anyone inside or outside the Company any nonpublic
information obtained at or through the Company, except when such
disclosure is part of your regular duties and is needed to enable the
Company to carry out its business properly and effectively.
Responses to Inquiries. The Company is subject to laws that govern the

timing of our disclosures of material information to the public and others.

Our Regulation FD (Fair Disclosure) Policy provides that only certain
designated employees may discuss the Company with the news media,
securities analysts and investors. All inquiries from outsiders regarding
Effective: April 2006
Revised: April 2009

13

material nonpublic information about the Company should be forwarded

to the Chief Financial Officer or the Investor Relations Department.
Accordingly, when an inquiry is made by an outsider, the following response
will generally be appropriate:
As to these types of matters, please contact the Investor
Relations Department.
Protecting the Confidentiality of Company Information. In order to

protect the Companys information and comply with applicable regulations,

employees should:
avoid discussions of confidential matters in places where they might be
overheard or otherwise disseminated;
mark sensitive documents confidential and use sealed envelopes
marked confidential;
provide instructions to receptionists regarding outside inquiries;
use code names for sensitive projects and passwords to restrict computer
access; and
not use any Internet message boards or similar medium available to the
public to post any unauthorized messages regarding the Company or our
business, financial condition, employees, clients or other matters related
to us.
Communicating Potential Material Information to Senior
Management. If you become aware of information about the Company

that is or may become material, you should promptly communicate that

information to the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Chief Accounting Officer, or the Chief Compliance
Officer. This communication is very important to allow the Company to
determine whether, how, and when the information should be reported
to the public. It is also critical to permit the Chief Compliance Officer to
determine whether to permit transactions in our securities.
Civil and Criminal Penalties. If you violate the insider trading or tipping
laws, you may be required to:
pay civil penalties up to three times the profit made or loss avoided;
pay a criminal penalty of up to $5 million; and
serve a jail term of up to 20 years.
14

Code of Business Conduct

In addition, the Company and/or the supervisors of a person who violates

these laws may also be subject to civil or criminal penalties if they did not
take appropriate steps to prevent illegal trading. The insider trading laws
prohibit not only trading on the basis of
material nonpublic information, but also
Insider trading carries
criminal penalties of up
tipping, that is, communicating material
to $5 million and jail time
nonpublic information to other persons
of up to 20 years.
who may trade or advise others to trade on
the basis of that information.

Company Discipline. If you violate this policy or insider trading or

tipping laws, you may be subject to disciplinary action by the Company, up

to and including termination for cause. A violation of our Company policy
is not necessarily the same as a violation of law and we may determine that
specific conduct violates policy, whether or not the conduct also violates
the law. We are not required to await the filing or conclusion of a civil or
criminal action against an alleged violator before taking disciplinary action.
Needless to say, a violation of law, or even an SEC Investigation that does
not result in prosecution, can tarnish ones reputation and irreparably
damage a career, as well as negatively impact the Company.
Reporting of Violations. Any employee or officer who violates this policy
or any federal or state laws governing insider trading or tipping, or knows
of any such violation by any other employee, officer or director, must
report the violation immediately to the Chief Compliance Officer.

Exceptions For Stock Option Exercises. This policy does not

apply to your exercise of an employee stock option. It also does not
apply to your election to have the Company withhold shares subject
to an option to satisfy tax withholding requirements. This policy
does apply, however, to sales of shares received upon exercise of an
option.
Exceptions For Trades Pursuant To Pre-Arranged Trading
Plans. The trading restrictions in this policy do not apply to trading
in Company securities if the trades occur pursuant to a prearranged
trading plan that has been pre-cleared by our Chief Compliance
Officer. An SEC rule, Rule 10b51(c), provides a defense from
insider trading liability for trades that occur pursuant to a prearranged
trading plan that meets certain specified conditions. You must
pre-clear any such trading plan with our Chief Compliance Officer
and you must enter into the trading plan at a time when you were not
Effective: April 2006
Revised: April 2009

15

aware of any material nonpublic information. As a condition to the

approval of any such plan, the Chief Compliance Officer may require
the inclusion in the plan of any provisions deemed necessary or
advisable to comply with the law and Company policy. Any changes
to a trading plan that has been adopted must be approved by the
Chief Compliance Officer before any further transactions can be
effected pursuant to the plan.
Post-Termination Transactions. The Insider Trading Policy will

continue to apply to employee transactions in Key securities even after they

have terminated their employment. If you are in possession of material,
nonpublic information when your employment terminates, you may not
trade in Key securities until that information has become public or is no
longer material.
Questions or Reporting. It is your responsibility to comply with the

securities laws and this policy. If you have questions about this policy,
please contact our Chief Compliance Officer at:
Chief Compliance Officer
Office of the General Counsel
Key Energy Services, Inc.
1301 McKinney Street, Suite 1800
Houston, Texas 77010
713-651-4300
6. Financial Integrity Policy
Management, stockholders, creditors, our colleagues, and government
entities rely upon the accuracy of the Companys financial records. It is
therefore imperative that the financial records and reports produced or
derived from those records be maintained and presented in accordance
with the laws and regulations in each applicable jurisdiction. Those records
must accurately and fairly reflect in reasonable detail the assets, liabilities,
expenses, and revenues of the Company. By demonstrating honesty in our
accounting practices, we generate trust with our customers, suppliers, and
stockholders and enhance our reputation.
General Policy. False and misleading accounting records, transactions,

books and reports are strictly prohibited. Maintaining secret or unrecorded

Company funds or bank accounts are also strictly prohibited. All Company
records must be truthful and accurate. When we fail to record financial
information accurately, we risk damaging our reputation, losing business,
16

Code of Business Conduct

decreasing customer and stockholder

confidence, and facing penalties.
Personnel Covered. The responsibility
for ensuring that false or intentionally
misleading entries are not made in the
Companys accounting records resides
not only with accounting, finance and
audit personnel but also with all other
employees.
Proper Documentation Required.

Financial Checklist
Do your financial results
appear to be consistent
with performance?
Are there any new financial
reporting risks that you are
aware of that have not been
disclosed to management?
Are there any items you feel
should be included in the
financial statements that are
not included or have been
presented differently?

No intentional misclassification of
transactions as to accounts, business
units, or accounting periods are
permitted and accurate documentation in reasonable detail must support all
transactions, large or small. Thus, the preparation of expense reports and
time sheets, the posting of sales and marketing data, and the recording of
significant capital improvements or investments require the utmost degree
of accuracy and transparency. Proper documentation of all contracts,
agreements, and arrangements concerning the Company and/or its business
and operations shall be maintained on the Companys premises or at
locations and facilities controlled by the Company.

Ethical
business
conduct is
everyones
responsibility.

Consequences of Violations of the Policy. The

consequences of altering, modifying, or destroying

any relevant Company documents or records are
severe and may include prosecution. An employee
who has any doubt about the legality or propriety
of modifying or destroying any document or record
should contact his/her supervisor, the Legal Department, or the Internal
Audit Department.
7. Legal Review Policy
All agreements, contracts, and other legal documents which bind the
Company and/or its properties, or concern the Companys business
operations shall be reviewed and approved by the Companys Legal
Department prior to execution. The Legal Department from time to time
may prepare standard forms of agreements and other documents for use by
employees and authorize employees to use the form or model agreements
and documents without further review by the Legal Department.
Effective: April 2006
Revised: April 2009

17

Employees are expected to promptly provide the Companys Legal

Department with copies of all legal documents requested, which will be
maintained in the Companys records.
From time to time, employees may be contacted by government
representatives or legal counsel representing other companies, government
agencies, or individuals in connection with investigations that concern the
Company, its businesses, clients, employees, or suppliers. All requests for
information other than what is provided on a routine basis should
be reported to the Legal Department immediately. An employee
who is contacted for documents or confidential information should refer
the requestor to the Legal Department. Likewise,
if an employee receives a subpoena or other
request to testify or produce documents, a copy
All requests for
of the subpoena or request should be forwarded
information must
immediately to the Legal Department, and will be
be reviewed
handled by the Legal Department.
by the Legal
Department. If in

The Legal Departments guidance should be received

doubt, ask.
before responding to any request, and all responses
must be coordinated through the Legal Department.
All information provided should be truthful and accurate. Employees
must never mislead any investigator and must never modify or destroy
documents or records in response to an investigation or subpoena request.
The Legal Department periodically presents compliance programs that you
may be required to attend. In addition, the Legal Department has written
materials explaining in greater detail some complex laws and regulations,
and the Companys commitment to complying with them. These materials
are available to all employees upon request, and you may be sent copies
and asked to study them. If you need more information about any law or
regulation that you believe impacts the Companys business, you should
contact the Legal Department for guidance.

18

Code of Business Conduct

The Companys Relationship with Others

1. Health, Safety and Environmental Policy
One of the Companys primary objectives is to provide a safe and secure
working environment that is free of incidents, accidents, and unsafe acts.
In order to achieve and maintain this safe workplace, every employee must
understand and adhere to the Companys health, safety, and environmental
policies and procedures; the laws, rules, and regulations of the areas in
which we conduct our business; and, often, the rules of our customers.
Compliance with the governing policies, laws, and regulations is the
responsibility of every manager and employee and is a condition of
employment. No deviations from such policies, laws, and regulations are
permitted without prior approval from the appropriate Company personnel
or government regulatory agency.
Every employee must take responsibility for achieving a workplace that is
incident-free. This responsibility includes exercising good judgment and
common sense while performing job duties. If an employee identifies an
act, condition, or equipment that poses a risk to them, their fellow workers,
members of the public, or the environment, the employee has the authority
and responsibility to stop the operation and to immediately report such
at-risk act, condition, or equipment. Employees must ensure that all atrisk acts, conditions, or equipment are corrected or repaired or adequate
precautions are taken prior to commencing or resuming work. Employees
must assist in identifying the root causes of incidents and helping to
develop preventive measures.
It is managements responsibility to enforce the health, safety, and
environmental policies, laws, and regulations. Management must establish
and maintain effective safety programs applicable to their operations and
must hold their employees accountable. No task is so important or must be
performed so quickly that the safety of the Companys employees, those
who work beside the Company, or the environment are in jeopardy. There is
no compromise when it comes to health, safety, and the environment.
2. Honest Communication is Required
The Company is committed to conducting business in an open and
honest manner. All communications, whether internal or external, should
be accurate and forthright. These communications may include, but are
not limited to, general internal reports and memoranda, advertising, media
broadcasts, marketing, sales brochures, and illustrations.
Effective: April 2006
Revised: April 2009

19

The Company will provide accurate information when promoting its

products and services. Misleading, false, or exaggerated claims concerning
our products and services, or those of our competitors, are unacceptable.
These same principles must be adhered to when responding to inquiries
from customers, fellow employees, the media, regulatory agencies, and
stockholders.
The publication or circulation, either internally or externally, of any oral or
written statement that is false, derogatory, malicious, or defamatory of any
other person, and in particular the Companys competitors, is prohibited.
The use of Company letterhead, e-mail, or reference to business address or
title is prohibited in expressing a private view in a public forum.
3. Requests for Information from the Media and Public
We are subject to laws that govern the timing of
All inquiries
our disclosures of material information to the
regarding
public and others. Our Regulation FD Policy
material nonpublic
provides that only certain designated employees
information about
may discuss the Company with the news media,
the Company must
securities analysts, and investors. All inquiries
be forwarded to the
from outsiders regarding material nonpublic
Investor Relations
information about the Company should be
Department.
forwarded to the Investor Relations Department.
Accordingly, when an inquiry is made by an outsider, the following response
will generally be appropriate:
As to these types of matters, please contact the Companys
Investor Relations Department.

For more guidance on this topic, contact the Legal Department, or see the
Companys Regulation FD Policy, found on the Companys Intranet.
4. Political Contributions
Only the Companys Political Action Committee or its designees are
permitted to use the Companys resources to participate in political
activities, and all such activities shall be conducted in strict accordance with
federal and state law. Employees must not use the Companys money, credit,
property, or services for political activities. Outside of Company business
hours, employees may participate in any political activities of their choice,
but the Company will not support or reimburse employees financially. For
more guidance on this topic, contact the Legal Department.
20

Code of Business Conduct

5. Public Speaking and Publishing Articles

Speeches and articles offer excellent opportunities for the Company and
its employees to present topics, ideas, and information of interest to
business and professional audiences. These communications provide
the public with a clearer understanding of our Company and its various
business units. A speech or article on a professional topic written by
an employee for delivery to an audience or publication represents the
Company; therefore, speeches and articles must be approved by Investor
Relations prior to the speaking engagement or submission for publication.
For more guidance on this topic, see the Companys Regulation FD Policy,
found on the Companys Intranet.
6. Press Releases
Press releases allow the Company to announce important and relevant
information to the public through the media. If a business unit or
department with the Company anticipates the necessity for a press
release to be created, the business unit or department must contact
Investor Relations to discuss the appropriateness of such a release and to
provide the needed information. For more guidance on this topic, see the
Companys Regulation FD Policy, found on the Companys Intranet.
7. Community Involvement
The Company directly and through its employees contributes to the
general well-being and improvement of towns, cities, and regions where
it has operations. The Company provides financial support to worthwhile
community programs in areas such as social welfare, health, education, and
arts and culture to promote the development of positive relationships in
the areas where we have business interests. The Company also encourages
the recruitment of qualified local personnel where practical. Community
involvement and requests for corporate contributions should go through
the Human Resources Department. While the Company encourages
employees to participate in charitable organizations and other community
activities of their choice, these outside activities should not interfere with
job duties. No employee may pressure another employee to express a view
that is contrary to a personal belief or to contribute to or support political,
religious, or charitable causes.

Effective: April 2006

Revised: April 2009

21

8. Community Projects
When a new project or business issue affects a local community, the
business unit should seek the guidance of the Human Resources
Department to help facilitate communications with the affected community.
The Human Resources Department will serve as a liaison with local
communities as project development occurs.

22

Code of Business Conduct

The Companys Relationship with Our Customers

and the Marketplace
1. Conflicts of Interest Policy
In General. It is the objective of the Company

If ever in doubt, ask.

to award business to suppliers of goods

and services solely on the basis of commercial considerations such as
competitive price, high quality, dependable service, timely delivery, and
reputation of the supplier. Employees are expected to deal with suppliers,
contractors, vendors, and all others doing business with the Company on
the sole basis of these considerations without favor, preference, obligation,
or other such pressure which may impair the employees objectivity.
The Company expects employees to avoid those relationships that might
affect their judgment in performing their duties or be construed as a
conflict of interest. There are, however, many circumstances in which a real
or apparent conflict of interest may arise. A conflict of interest is deemed
to exist whenever, as a result of the nature or responsibilities of his or her
employment with the Company, an employee is in a position to further any
personal financial interest or the financial interest of any member of the
employees family.
Examples of Conflicts of Interest. The following examples are

illustrative only and are not intended to be all inclusive:

An employees investment or financial interest in, or holding an employee,
director, consultant, or agent position with, any supplier, customer, or
competitor of the Company (except for an investment in publicly traded
securities as described below).
The solicitation of gifts or services from
any actual or prospective customer,
supplier, or competitor of the Company, or
any governmental body or official, whether
or not he, she, or it has business dealings
with the Company.
An employees disclosure or use of any
confidential information gained by reason
of employment by the Company for profit
or advantage for himself or herself, or
anyone else.
Effective: April 2006
Revised: April 2009

Q: I want to start a
small business in my
spare time. Will this
be considered a conflict
of interest?
A: Maybe. If your
business interferes with
your obligations to the
Company or is related
to the oilfield services
industry, it would likely
be a conflict.

23

 An employees competition with the

Company in the acquisition or disposition
of rights or property.
The following situations would not be
considered conflicts of interest:
Ownership of an insignificant percentage
(1% or less of the outstanding shares) of
publicly traded securities of a supplier,
customer, or competitor of the Company.

Q: My daughter owns
an office cleaning
business. Can I hire her
to clean the Key district
office?
A: No. This is a conflict
of interest. You would be
in a position to further
the financial interest of a
family member.

A transaction with one of the Companys banks, which transaction is

customary and conducted on standard commercially available terms, such
as a home mortgage or bank loan.
A transaction or relationship disclosed in accordance with this Conflicts
of Interest Policy and determined by the Chief Compliance Officer not
to be a prohibited conflict of interest.
No employee, regardless of salary level, shall engage in any business or
conduct, or enter into any agreement or arrangement, which would give
rise to actual or potential conflicts of interest. No employee should permit
himself or herself to be placed in a position which might give rise to the
appearance that he or she has a conflict of interest.
No officer of the Company shall, directly or indirectly, including through
any subsidiary, obtain credit for himself or herself, or another officer,
arrange for the extension of such credit, or renew an extension of such
credit in the form of a personal loan from the Company.
Employees must advance the legitimate interests of the Company when
the opportunity to do so arises. Employees shall not (a) take for themselves
personally opportunities that properly belong to the Company or are
discovered through the use of Company property, information, or position;
(b) use Company property, information, or position for personal gain; or (c)
compete with the Company.
Questions and Reporting Requirements. Employees who seek to do
business with the Company as a vendor, or who desire to enter into any
commercial enterprise in the oil and gas industry, must seek prior written
approval from the Ethics Committee, through their Line of Business.
Employees who believe they or their family have an actual or potential
24

Code of Business Conduct

conflict of interest shall report, in writing, to the Ethics Committee.

Employees who have knowledge of an actual/apparent conflict involving
another employee should report it to the Ethics Committee.
Requests and reports should be addressed to the Ethics Committee as
follows:
Ethics Committee
Key Energy Services, Inc.
1301 McKinney Street, Suite 1800
Houston, Texas 77010
713-651-4300
ethics@keyenergy.com
Dedicated fax line: 432-618-3521
The Line of Business Manager shall consult with the Ethics Committee
to determine whether a conflict of interest actually exists. The Ethics
Committee shall recommend measures to be taken to neutralize any
adverse effect of the conflict of interest reported, if any such measures
are available or appropriate under the circumstances, or will disallow the
potential enterprise or relationship. This procedure shall be applied so as to
minimize its effect on the personal affairs of employees consistent with the
protection of the Companys interests.
2. Acceptance of Gifts and Gratuities Policy
An employee may not accept, or give permission for a member of the
employees immediate family to accept, gifts of more than nominal value
from an actual or prospective customer, supplier, or contractor of the
Company, or any governmental official who is attempting to establish
dealings with the Company by providing such gifts, without the written
approval of an employees supervisor.
Limitations on Gifts Received. More specifically, one-time gifts which
are valued at less than $100.00 and which contain marks or names of the
vendor do not require written approval. Gifts from vendors of a value
of more than $100.00 must be disclosed and approved in writing by the
employees supervisor. Gifts from vendors of a value of more than $250.00
individually, or which total a value of $250.00 per vendor per year, must
be disclosed and approved in writing by an executive officer. This does not
preclude an employees acceptance of reasonable business entertainment,
such as lunch or dinner, or events involving normal sales promotion,
customarily made available to other customers of the sponsoring
organization, advertising, or publicity.
Effective: April 2006
Revised: April 2009

25

The following types of items may generally be accepted by an employee:

Reciprocal meals (food and beverages).
Advertising articles (pens,
paperweights, ashtrays, hats, jackets,
shirts, and similar items bearing the
donors logo or company name).
Holiday foods or beverages
(turkeys, hams, liquor).
Sports or theater tickets (individual
events only).

Q: One of our vendors wants

to give me season tickets to a
sporting event. Can I accept?
A: Not if the season tickets are for
one persons sole use. This would
be over the permissible value.
You would have to obtain the
written permission of an executive
officer to accept. If a vendor offers
you a couple of tickets to one
sporting event, that would likely be
acceptable as long as the tickets
were within the permissible value.

Pleasure trips (sports events,

hunting, fishing, golfing, etc.)
customarily made available to
other customers of the sponsoring
organization, with pre-approval by employees supervisor.

Unacceptable Gifts. The following types of items and services may not

be accepted by an employee regardless of value:

Cash.
Loans or financing (except at prevailing commercial rates and terms with
banks or other lending institutions).
Credit cards.
Transportation equipment (autos, trucks, boats, etc.)
Establishment of credit on behalf of the employee, unless available
generally to all Key employees.
Airline or other transportation tickets and/or individual charters (except
for properly authorized pleasure trips referred to above).
Discounts on personal purchases, unless available generally to all Key
employees through Company-sponsored programs.
Improvements or repairs to personal or real property (except at prevailing
commercial rates and terms).
Sale or purchase of personal or real property (except at prevailing
commercial rates and terms).
Gift certificates.
Finders fees or fees for the referral of business.
26

Code of Business Conduct

3. Gifts to Customers, Suppliers and Contractors Policy

Building strong relationships with suppliers, contractors, and customers is
integral to being a world-class company. That means the Companys need
to continue treating them as we would like to be treated with honesty,
fairness, and respect. The Company must keep our commitments of quality,
reliability, and service.
We expect our suppliers, contractors, and customers and others who do
business with us or on our behalf to conduct their business on behalf of
the Company in compliance with all applicable laws and regulations and to
adhere to the same standards of fair and ethical business conduct to which
we hold ourselves. We also expect our employees to adhere to the codes
of conduct of our suppliers, contractors, and customers when aware of
those codes.
Limitations Given. In the U.S., an employee may not give gifts of more

than nominal value ($100.00) to an actual or prospective customer, supplier,

or contractor of the Company, or any governmental official, in an attempt
to establish dealings with the Company by providing such gifts, without the
written approval of the employees supervisor. For guidance of gifts outside
the U.S., review the Foreign Corrupt Practices Policy on page 32.
The following types of items may generally be given by an employee
without prior approval:
Reciprocal meals (food and beverages).
Advertising articles (pens, paperweights, ashtrays, hats, jackets, shirts, and
similar items bearing the donors logo or company name).
Holiday foods or beverages (turkeys, hams, liquor).
Sports or theater tickets (individual events only).
Pleasure trips (sports events, hunting, fishing, golfing, etc.) customarily
made available to other customers of the Company, may be offered only,
with pre-approval by an executive officer.
Employees must:
Be fair in our choice of suppliers and contractors and honest in all
business interactions with them.
Choose our suppliers and contractors based on appropriate criteria,
such as value, quality, price, technical excellence, service, reputation,
experience, and capacity.
Effective: April 2006
Revised: April 2009

27

 Not make decisions about suppliers or contractors on the basis of

personal relationships and friendships or the opportunity for personal
financial gain.
Disclose when a relative or close personal friend has an ownership
interest in, or significant management position with, any supplier,
contractor or customer.
Not perform work for Key as a contractor, supplier, or consultant while
in the employ of Key.
Not offer bribes or accept kickbacks from our suppliers, contractors, or
customers for any reason.
Safeguard all information received from our suppliers, contractors, and
customers and not disclose it to anyone outside of the Company without
the appropriate approval to do so and/or when we are compelled to do
so by legal, regulatory, or professional requirements.
Deal fairly with our suppliers, contractors, and customers. Do not
take advantage of them through manipulation, concealment, abuse of
privileged information, misrepresentation of material facts, or any other
unfair practice.
Not make false or misleading remarks to suppliers, contractors, or
customers about other suppliers, contractors, customers, or Company
competitors or their products or services.
Not suggest or imply that suppliers to or customers of our Company are
required to purchase products or services from us.

28

Code of Business Conduct

Competition and Antitrust Policy

The Company is committed to
conducting its business in an
open, vigorous, and competitive
fashion. Any activity that
undermines this commitment is
unacceptable and may also be
illegal. Therefore, all purchases
and sales must be predicated
strictly on considerations of
efficiency, price, quality, service,
and suitability.

Dealing with Competitors:

Never discuss the details of a deal
with a competitor.
Never agree to allocate markets or
territories.
Never share information contained in
bids or proposals.
Never agree to fix or control pricing.
Never agree to compensate each
other for costs related to bidding on
work without the written consent of
the Legal Department. This activity
must be disclosed to the client.

The U.S. and many other

countries regulate, and in some
If you obtain any information about a
instances prohibit, certain types
competitor that is marked confidential
of anti-competitive behavior.
or proprietary, call the Legal
For example, Canada, Japan,
Department immediately.
Mexico, and the European
If you have had a potentially
Union have all enacted
problematic discussion or interaction
legislation that prohibit many
with a competitor that could be
of the same type of activities
construed as anti-competitive, call the
Legal Department immediately.
that are prohibited under U.S.
antitrust law with regard to
many types of business practices. The European Union and certain other
countries have imposed requirements that are more onerous than those
under U.S. antitrust laws. Distribution agreements, patent, copyright and
trademark licenses, territorial restrictions on resellers, rebates and discounts
to customers are but a few of the subjects which may be covered by more
restrictive practices of countries other than the United States.
The Companys policy is to comply with the antitrust laws and the
competition laws of the countries where we operate. The Company expects
every employee to comply with them fully. Violations of the law can result
in severe penalties, including personal criminal liability.
No employee, officer, or agent of the Company shall enter into any
understanding, agreement, plan, or scheme, express or implied, formal
or informal, with any competitor in regard to prices, terms, or conditions
of sale or service, production, distribution, territories, or customers; nor
Effective: April 2006
Revised: April 2009

29

exchange or discuss with a competitor prices, terms, or conditions of sale

or service, or any other competitive information; nor engage in any other
conduct which violates any applicable antitrust or competition laws. Normal
subcontracting arrangements or joint proposals with competitors which are
not in violation of applicable antitrust or competition laws, and which have
been approved by the Legal Department, are not prohibited by this Policy.
Any discussion with competitors in connection with a project in which the
competitor is an alliance partner, joint venturer, or subcontractor must be
pre-cleared and coordinated with the Legal Department.
Each employee, officer, or agent responsible for the conduct or practices
of the Company which may involve the application of the antitrust or
competition laws should consult with and be guided by the advice of the
Legal Department. The Legal Department periodically presents antitrust
compliance programs that you may be required to attend. In addition, the
Legal Department has written materials explaining in greater detail the U.S.
antitrust laws and the Companys commitment to complying with them.
These materials are available to all employees upon request, and you may
be sent copies and asked to study them. Any questions on matters having
possible antitrust or competition implications will be referred to the Legal
Department prior to taking any action with respect to such matters.
There shall be no exception to this policy, nor shall it be compromised or
qualified by anyone acting for or on behalf of the Company.

30

Code of Business Conduct

Transacting International Business

The Company operates in many different countries. This dimension of
our business adds a certain complexity to our endeavors with regard to
the way in which we conduct ourselves. It is Company policy to abide
by the national and local laws of the countries where we operate, except
to the extent penalized by U.S. law. This includes, but is not limited to,
immigration, customs, tax, or exchange control laws or regulations. Actions
taken with the intent to circumvent the application of such laws are
prohibited. The observance of applicable laws, including the laws of the
U.S. that have application outside of U.S. territory, is a strict requirement
for all employees in the conduct of the Companys affairs.
All employees are required to be familiar with the laws affecting their
business activities and assume responsibility for compliance. Company
management should also have an effective and comprehensive internal
control program to monitor compliance with the applicable regulations.
The following policies provide guidance in five subject areas where the
law must be strictly observed when conducting international business
transactions by or on behalf of the Company.
1. International Boycott Policy
Certain United States federal laws and regulations, including the Export
Administration Act and the Internal Revenue Code of 1986, and their
respective regulations, require the Company not to participate in certain
activities (even though required by the laws of another country in which the
Company may operate or to which it may sell goods or services) which have
the effect of boycotting or furthering another countrys boycott of United
States businesses and countries friendly to the United States. In addition,
these laws and regulations require that the Company not furnish certain
information as to the identity or nationality of its directors, employees,
stockholders, subcontractors, and suppliers or as to the presence or absence
of Company operations or business dealings in or with countries subject
to a boycott where such information is requested in furtherance of the
boycott. These laws also require the Company to report the receipt of
boycott related requests whether or not the Company complies with the
requests.
Accordingly, the Company will sell its products and services only where
permitted under the applicable laws of the countries in which the Company
Effective: April 2006
Revised: April 2009

31

operates. The Company will, in the conduct of its business, comply with
the applicable laws of the United States regarding boycotts.
Any action which may require a report to a governmental agency in
compliance with a boycott request, even though such action is not
prohibited by law or applicable regulation and does not invoke any tax
sanctions, must be cleared in advance with the Legal Department.
Neither the Company nor any of its directors, employees or agents shall
take any action which will violate the laws or regulations dealing with
participation in boycotts.
It is impossible to summarize all of the laws and regulations that impact the
Companys international business. Therefore, it is imperative that employees
involved in international transactions seek assistance from the Legal
Department in such transactions, or whenever there are questions relating
to a proposed transaction that may be affected by the U.S. antiboycott laws.
2. Foreign Corrupt Practices Policy

For more information

INFO

on the FCPA, see

In general, the Foreign Corrupt Practices
Act (FCPA) prohibits payments to foreign the Companys FCPA
Compliance Manual which
officials for the purpose of obtaining or
can be found on the
keeping business. For purposes of the
Companys Intranet.
FCPA, a foreign official is any officer or
employee of an instrumentality of a foreign government, including stateowned or controlled energy companies, such as Petroleos Mexicanos,
SA (PEMEX), as well as political officers and candidates for political
office. Further description and examples, as well as instructions for proper
transaction of business outside the U.S., are found on-line in the Companys
FCPA Compliance Manual. The rules are summarized briefly as follows:
Foreign Officials and Foreign Instrumentalities. In order to assist

in obtaining or retaining business, or directing business to any entity, no

person shall make any offer, payment, promise to pay, or the authorization
of the payment of any money, offer, gift, promise to give, or the
authorization of any promise to give anything of value to any foreign
official, foreign instrumentality, political official, or political candidate, for
the purpose of:
influencing any act or decision of such foreign official in his or her
official capacity, including a decision to fail to perform his or her official
functions;
32

Code of Business Conduct

 inducing such foreign official to use his or her influence with a foreign
government or instrumentality thereof to affect or influence any act or
decision of such government or instrumentality;
influencing any act or decision of such political party, official, or
candidate in its, his, or her official capacity, including a decision to fail to
perform its, his, or her official functions;
inducing such political party, official, or candidate to use its, his, or her
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality; or
securing any improper business advantage.
Agents and Third Parties. No person shall make any offer, payment,
promise to pay, or the authorization of the payment of any money, offer,
gift, promise to give, or the authorization of any promise to give anything
of value to any persons, while knowing that all or a portion of such money
or thing of value will be offered, given, or promised, directly or indirectly,
to any foreign official, to any foreign political party or official thereof, or
to any candidate for foreign political office for any of the purposes listed
above.
Gifts to Foreign Officials. Generally, no gifts of any value can be given
to a foreign official. If the situation warrants a token gift of other than
nominal value, the employee must consult with and receive written approval
from the FCPA Compliance Officer prior to offering such a gift. The
approval of the FCPA Compliance Officer is required to ensure that the
gift is consistent with the FCPA, and that the gift is lawful, customary, and
necessary to the conduct of business in the country where it is made.
Coordination with the FCPA Compliance Officer. Employment of a

foreign agent, commencement of significant business operations outside

the United States, gifts, or entertainment of a foreign official must be
approved in advance by the FCPA Compliance Officer.
Training. Key recognizes and emphasizes the importance of anti-

corruption training as an essential component of an FCPA compliance

program. To that end, Key provides FCPA and anti-corruption training,
both in person and through web-based programs, periodically at times
to be determined by the Companys General Counsel. Certain Company
employees, as well as third party representatives, will be required to attend
Effective: April 2006
Revised: April 2009

33

these training sessions and to provide the Company with certifications of

attendance.
Violations of the FCPA. The penalties for FCPA violations are severe.
Any employee, who violates Key policies relating to the FCPA, or the
FCPA itself, will be disciplined and may be terminated. Intentional
violations of the FCPA will result in termination. Further, the Company
may not indemnify any employee who is convicted for violating the FCPA.
Violations of the FCPA can result in criminal and civil liability for both
corporations and individuals. Further, in addition to civil and criminal
penalties, a person or company found in violation of the FCPA may be
disqualified from U.S. government contracts, export licenses, and other
government financing and insurance programs.
Additional Policy and Guidance. The Company has established further
guidance in its FCPA procedures and FCPA Compliance Manual. However,
given the complicated nature of the FCPA and related laws regarding
foreign transactions, employees involved in international transactions
should seek assistance from the FCPA Compliance Officer or the Legal
Department prior to engaging in international transactions. Any employee
with concerns about a current or pending contract, or a desire to report
problems can call the FCPA Compliance Officer at 713-651-5491 or the
EthicsLine, toll-free at 1-800-299-9565. Potential problems can only be
resolved if reported.

3. Export Controls
The highly complex U.S. export control laws and regulations require
particular attention. Employees involved in any export transaction must
observe the following requirements:
All information furnished in connection with the export must be accurate
and truthful, including information relative to the value of the exports
and the technology in question. This requirement applies whether the
information is furnished to the government, coworkers, or third parties
that are engaged to facilitate the export on behalf of the Company.
Ensure that a regulation or specific export license covers the export in
question. This rule applies to exports of goods and services, as well as
exports of technology.
Be alert to instances in which inaccurate information may have been
34

Code of Business Conduct

furnished to us or to our agents relative to the ultimate destination or use

of the products.
The definition of export is quite extensive. For example, a conversation
of a technical nature with a citizen of another country may constitute
an export even though the conversation takes place entirely within the
U.S. If any employee has a doubt as to whether any situation involves
an export or the accuracy of the information being provided to us
concerning the ultimate destination or use of anything that the Company
exports, guidance should be sought from the Legal Department.
4. U.S. Embargos/Trade Sanctions
From time to time the U.S. prohibits or restricts trade and other commercial
dealings between U.S. citizens (which term includes U.S. person, U.S.
incorporated companies, aliens resident in the U.S. and in some instances
foreign-based affiliates of U.S. companies) and certain countries, including
residents and citizens of those countries. Violations of the restrictions
and prohibitions can result in the imposition of substantial fines or
imprisonment for prosecuted violators. The Company requires that all
employees adhere to the letter and the spirit of these restrictions and
prohibitions.
The countries, and citizens or residents of those countries, which are
the target of these prohibitions, change from time to time. Further, the
regulatory controls on those countries vary both in scope and complexity.
For these reasons, it is imperative that employees involved in international
transactions seek assistance from the Legal Department concerning those
transactions, or whenever there are questions relating to a proposed
transaction that may be affected by embargos or trade sanctions.
5. Money Laundering
Consistent with federal law and regulations, the Company prohibits
activities which would enable money laundering. The Companys policy
prohibits the receipt of cash or cash equivalents that are the proceeds
of crime. The Companys employees must exercise good judgment and
common sense, and assess the integrity and ethical business practices of
customers and business partners, and must promptly report suspicious
transactions or activities by any customer to Keys Legal Department.
The Legal Department will give prompt legal advice regarding the
Effective: April 2006
Revised: April 2009

35

transaction. In particular, Key employees should be suspicious and report

to the Legal Department when payments are made in currencies other
than that specified in the invoice, or by cash or cash equivalents, or they
are made by someone not a party to the contract or originate from an
account other than the normal business relationship account. Other items
to report include the customers request or attempt to make payments
for each invoice or group of invoices by multiple checks or drafts, or a
customers request to make an overpayment. To avoid potential money
laundering, the Company employees should always assess the integrity of
potential customers, communicate with customers about our compliance
expectations of them, and monitor their business practices. Do not
do business with any customer or other business partner suspected of
wrongdoing relating to dealings with the Company, unless those suspicious
are investigated and resolved or otherwise approved by the Companys
Legal Department.

36

Code of Business Conduct

Consequences of Violating the Code or its Policies

We expect everyone to observe the letter and the spirit of the Code.
Periodically, employees are required to complete and sign the Certificate of
Compliance. Except where expressly prohibited by law, the completion and
return of the Certificate of Compliance is a condition of employment. The
Certificate of Compliance contains an acknowledgement that the employee
has read the Code, is in compliance with its requirements, and knows of
no other employee or officer who is not in compliance. The Certificate of
Compliance is sent out periodically by the Ethics Committee on behalf of
the Audit Committee of the Board of Directors.
Any employee who violates the Code, Company policies and
procedures, or the law, or knowingly permits a subordinate to do
so, or fails to report a violation of the Code by another employee or
officer, will be subject to disciplinary action, up to and including
termination, and may also be subjected to civil or criminal
prosecution, or claims for damages or losses.
The Audit Committee of the Board of Directors shall have oversight
of the administration of the Code and responsibility for the corporate
compliance effort within the Company. The Ethics Committee and the
Director Internal Audit monitor and periodically audit the Companys
business conduct to ensure compliance with the Code. All employees who
are asked to participate in or cooperate with those efforts are required to
do so. At least once a year, the Ethics Committee or the Director Internal
Audit shall inform the Audit Committee about the Companys corporate
compliance activities and of the occurrence of all significant events relating
to the Code.

Effective: April 2006

Revised: April 2009

37

38

Code of Business Conduct

Where to Find Help and Report Violations

1. Asking Questions and Reporting Concerns
You must report violations of the Code when you become aware of them.
You should also ask questions about any legal issues or perceived ethical
business issues. You will not be disciplined, lose your job, or be retaliated
against in any way for asking questions or reporting concerns, as long as
you are acting in good faith. Good faith does not mean that you have to
be right but it does mean that you believe you are providing truthful
information.
As a first step, talk with your supervisor or manager. If that is
uncomfortable or impractical, you may contact a member of the Human
Resources Department, the Legal Department, an Internal Auditor, a
member of the Ethics Committee, or report or ask questions through the
EthicsLine.
2. Where and How to Report
You may contact the Ethics Committee in writing at:
Key Energy Services
1301 McKinney Street
Suite 1800
Houston, TX 77010
ethics@keyenergy.com
Dedicated fax line: 432-618-3521
You may call toll free to the EthicsLine:
United States and Canada: 1-800-299-9565
Argentina: 0-800-288-5288, at the tone, dial 888-299-9565
Mexico: 0-1-800-112-2020, at the tone, dial 888-299-9565
Russia (Moscow): 363-2400, at the tone or operator, dial
888-299-9565
Russia (outside Moscow): 8^812-363-2400, at the tone or operator,
dial 888-299-9565
Colombia: 01-800-518-1654
The Kingdom of Bahrain: 8000-0999
You may call collect to the US number: 1-770-613-6329.
You may send an online report through the EthicsLine at
www.reportlineweb.com/KeyEnergy.
Effective: April 2006
Revised: April 2009

39

Although you are encouraged to identify yourself to assist the Company

in effectively addressing your concern, you may choose to remain
anonymous, and the Company will respect your choice. The EthicsLine is
managed by an outside vendor and not equipped with caller ID, recorders,
or other devices that can identify or trace the number from which you
are calling. You may also call our Director of Loss Prevention, toll free, at
866-902-3438.
3. Investigations
The Company is committed to investigating promptly all reported concerns
to the extent possible. Once a concern is reported, you can expect the
following:
Your report will be taken seriously.
Your report will be carefully evaluated before it is referred for
investigation.
Your report will be investigated by the appropriate people, which
could include representatives from the Ethics Committee, the Legal
Department, the Human Resources Department, or Internal Audit.
Your report will be handled promptly, discreetly, and professionally.
Discussions and inquiries will be kept in confidence to the extent
appropriate or permitted by law.
If appropriate, you can obtain certain follow-up information about how
the Company addressed your report.

Investigation Process
Human
Resources
Department

Your
Supervisor
Issue Not
Resolved

Issue Arises
Your
Manager

EthicsLine
1-800-299-9565
(in US and
Canada)

Legal
Department
Internal Audit
Department
Ethics
Committee

Internal Audit will coordinate any investigation and recommend needed

corrective action or changes. All employees must cooperate fully with
investigations of alleged violations.
40

Code of Business Conduct

4. Non-Retaliation Policy
The Company will not tolerate any reprisal or retaliation against a person
who in good faith reports a known or suspected violation of a law,
regulation, Company policy, or the Code. Employees who believe they have
been retaliated against should contact the Human Resources Department
or the Ethics Committee immediately. Employees who retaliate against
other employees for reporting a problem will themselves be subject to
disciplinary action, up to and including termination of employment. Any
employee who knowingly reports false or misleading information may be
subject to disciplinary action.

1. Ethical business conduct is

everyones responsibility.
2. Prevention of fraud is
everyones responsibility.
3. If in doubt, ask.
4. If still in doubt, ask again.
5. Dont turn your back on
unethical behavior.
6. Take responsibility.

Effective: April 2006

Revised: April 2009

41

42

Code of Business Conduct

CERTIFICATE OF COMPLIANCE
Please read carefully, check the appropriate boxes, and sign below.
I HAVE READ AND UNDERSTAND THE KEY ENERGY SERVICES, INC.
CODE OF BUSINESS CONDUCT. I CONFIRM THAT I HAVE COMPLIED
WITH AND WILL CONTINUE TO COMPLY WITH THE LETTER AND
SPIRIT OF THE CODE AND ITS POLICIES DURING MY EMPLOYMENT
WITH THE COMPANY.
Are you aware of any violations or suspected violations of the Code by any
employee?

___ Yes
___ No
Do you or any member of your family (spouse, children, father, mother, brother,
sister, aunts, uncles, nieces, nephews, grandparents, and in-laws) or household have
any interest or affiliation which might conflict with the interests of the Company?
(See the definition and illustrative examples under Conflicts of Interest Policy.)

___ Yes

___ No

During your employment with the Company, have you or any member of your
family or household engaged in any activity that might conflict with the interests
of the Company? (See the definition and illustrative examples under Conflicts of
Interest Policy.)

___ Yes

___ No

If you answered Yes to any of the above questions, you must attach a separate
page, explaining in writing to the Chief Compliance Officer the circumstances in
which:
you have reasonable basis for belief that a violation of the Code has occurred;
you have, or any member of your family or household has, or may have, engaged
in any activity which violates the letter or spirit of the Code; or
you have, or any member of your family or household has, or may have, an
interest which violates the letter or the spirit of the Code.
I AGREE TO GIVE PROMPTLY A WRITTEN REPORT TO THE
CHIEF COMPLIANCE OFFICER OF KEY ENERGY SERVICES, INC.
DESCRIBING ANY CIRCUMSTANCES IN WHICH ANY OF THE ABOVE
OCCURS, OR IN THE EVENT THAT I OR ANY MEMBER OF MY FAMILY
OR HOUSEHOLD MAY BE CONTEMPLATING AN ACTIVITY OR
ACQUISITION WHICH COULD BE A VIOLATION OF THE CODE.
________________________________________________________________
Name (typed or printed)

EIN

District Office

_________________________________________

_____________________

Signature

Date

Effective: April 2006

Revised: April 2009

43

44

Code of Business Conduct

1301 McKinney Street

Suite 1800
Houston, TX 77010
www.keyenergy.com

2009 Key Energy Services. All Rights Reserved.

KE2001
April 2009
149318