WASHINGTON, D.C. 20549

SCHEDULE 13G*

(Rule 13d-102)

 

 

CUSIP No.

492914106

13G

Page 2 of 12 Pages

CUSIP No.

492914106

13G

Page 3 of 12 Pages

1.		NAMES OF REPORTING PERSONS
		MHR FUND MANAGEMENT LLC
2.		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
		(a)   o
		(b)   þ
3.		SEC USE ONLY
4.		CITIZENSHIP OR PLACE OF ORGANIZATION
		Delaware
			5.		SOLE VOTING POWER
NUMBER OF					16,666,419
SHARES			6.		SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH			7.		SOLE DISPOSITIVE POWER
REPORTING
PERSON					16,666,419
WITH			8.		SHARED DISPOSITIVE POWER
9.		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
		16,666,419
10.		CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)
		o
11.		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)
		13.4%
12.		TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
		OO

CUSIP No.

492914106

13G

Page 5 of 12 Pages

Page 6 of 12 Pages

Key Energy Services, Inc.

1301 McKinney Street, Suite 1800

Houston, TX 77010

This Statement is filed on behalf of each of the following persons (collectively, the “Reporting Persons”):

1. MHR Institutional Partners III LP (“Institutional Partners III”);

2. MHR Institutional Advisors III LLC (“Institutional Advisors III”);

3. MHR Fund Management LLC (“Fund Management”); and

4. Mark H. Rachesky, MD (“Dr. Rachesky”).

This Statement relates to securities held for the accounts of each of MHR Institutional Partners II LP (“Institutional Partners II”), MHR Institutional Partners IIA LP (“Institutional Partners IIA”) and Institutional Partners III, each a Delaware limited partnership. MHR Institutional Advisors II LLC (“Institutional Advisors II”) is the general partner of each of Institutional Partners II and Institutional Partners IIA and, in such capacity, may be deemed to beneficially own the Shares held for the accounts of each of Institutional Partners II and Institutional Partners IIA. Institutional Advisors III is the general partner of Institutional Partners III and, in such capacity, may be deemed to beneficially own the Shares held for the account of Institutional Partners III. Fund Management is a Delaware limited liability company that is an affiliate of and has an investment management agreement with Institutional Partners II, Institutional Partners IIA and Institutional Partners III and other affiliated entities, pursuant to which it has the power to vote or direct the vote and to dispose or to direct the disposition of the Shares reported herein and, accordingly, Fund Management may be deemed to beneficially own the Shares reported herein which are held for the account of each of Institutional Partners II, Institutional Partners IIA and Institutional Partners III. Dr. Rachesky is the managing member of Institutional Advisors II, Institutional Advisors III and Fund Management and, in such capacity, may be deemed to beneficially own the Shares held for the accounts of each of Institutional Partners II, Institutional Partners IIA and Institutional Partners III.

The address of the principal business office of each of the Reporting Persons is 40 West 57^th Street, 24^th Floor, New York, NY 10019.

1. Institutional Partners III is a Delaware limited partnership.

2. Institutional Advisors III is a Delaware limited liability company.

3. Fund Management is a Delaware limited liability company.

4. Dr. Rachesky is a United States citizen.

Common Stock

492914106

Item 3.   If this statement is filed pursuant to §§ 240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:

(a)	o		Broker or dealer registered under Section 15 of the Act (15 U.S.C. 78o);
(b)	o		Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c);
(c)	o		Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c);
(d)	o		Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8);
(e)	o		An investment adviser in accordance with § 240.13d-1(b)(1)(ii)(E);
(f)	o		An employee benefit plan or endowment fund in accordance with § 240.13d-1(b)(1)(ii)(F);
(g)	o		A parent holding company or control person in accordance with § 240.13d-1(b)(1)(ii)(G);
(h)	o		A savings association as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(i)	o		A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act (15 U.S.C. 80a-3);
(j)	o		A non-U.S. institution in accordance with § 240.13d-1(b)(1)(ii)(J);
(k)	o		Group, in accordance with § 240.13d-1(b)(1)(ii)(K).

If filing as a non-U.S. institution in accordance with § 240.13d-1(b)(1)(ii)(J), please specify the type of institution:                          

Item 4. Ownership.

Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.

(a) Amount beneficially owned:

As of the date hereof:

	1.		Institutional Partners II may be deemed to be the beneficial owner of 966,176 Shares held for its own account.
	2.		Institutional Partners IIA may be deemed to be the beneficial owner of 2,434,097 Shares held for its own account.
	3.		Institutional Advisors II may be deemed to be the beneficial owner of 3,400,273 Shares. This number consists of (A) 966,176 Shares held for the account of Institutional Partners II and (B) 2,434,097 Shares held for the account of Institutional Partners IIA.
	4.		Institutional Partners III may be deemed to be the beneficial owner of 13,266,146 Shares held for its own account.
	5.		Institutional Advisors III may be deemed to be the beneficial owner of 13,266,146 Shares. This number consists of 13,266,146 Shares held for the account of Institutional Partners III.
	6.		Fund Management may be deemed to be the beneficial owner of 16,666,419 Shares. This number consists of all of the Shares otherwise described in this Item 4(a) by virtue of Fund Management’s investment management agreement with Institutional Partners II, Institutional Partners IIA and Institutional Partners III.
	7.		Dr. Rachesky may be deemed to be the beneficial owner of 16,666,419 Shares. This number consists of all of the Shares otherwise described in this Item 4(a) by virtue of Dr. Rachesky’s position as the managing member of each of Fund Management, Institutional Advisors II and Institutional Advisors III.

(b) Percent of class:

The percentages used herein are calculated based upon the information contained in the Issuer’s Form 10-Q for the quarterly period ended September 30, 2009, which disclosed that there were 123,942,776 Shares outstanding as of October 28, 2009.
	1.		Institutional Partners II may be deemed to be the beneficial owner of approximately 0.8% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	2.		Institutional Partners IIA may be deemed to be the beneficial owner of approximately 2.0% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	3.		Institutional Advisors II may be deemed to be the beneficial owner of approximately 2.7% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	4.		Institutional Partners III may be deemed to be the beneficial owner of approximately 10.7% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	5.		Institutional Advisors III may be deemed to be the beneficial owner of approximately 10.7% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	6.		Fund Management may be deemed to be the beneficial owner of approximately 13.4% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.
	7.		Dr. Rachesky may be deemed to be the beneficial owner of approximately 13.4% of the total number of Shares outstanding, calculated in accordance with Rule 13d-3(d)(1)(i) under the Act.

(c) Number of Shares as to which the person has:

1.

Institutional Partners II

	(i)		Sole power to vote or to direct the vote: 966,176
	(ii)		Shared power to vote or to direct the vote: 0
	(iii)		Sole power to dispose or to direct the disposition of: 966,176
	(iv)		Shared power to dispose or to direct the disposition of: 0

2.

Institutional Partners IIA

	(i)		Sole power to vote or to direct the vote: 2,434,097
	(ii)		Shared power to vote or to direct the vote: 0
	(iii)		Sole power to dispose or to direct the disposition of: 2,434,097
	(iv)		Shared power to dispose or to direct the disposition of: 0

3.

Institutional Advisors II

	(i)		Sole power to vote or to direct the vote: 3,400,273
	(ii)		Shared power to vote or to direct the vote: 0
	(iii)		Sole power to dispose or to direct the disposition of: 3,400,273
	(iv)		Shared power to dispose or to direct the disposition of: 0

4.

Institutional Partners III

	(i)		Sole power to vote or to direct the vote: 13,266,146
	(ii)		Shared power to vote or to direct the vote: 0
	(iii)		Sole power to dispose or to direct the disposition of: 13,266,146
	(iv)		Shared power to dispose or to direct the disposition of: 0

5.

Institutional Advisors III

Item 7. Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person.

This Item 9 is not applicable.

Item 10. Certification.

By signing below each signatory certifies that, to the best of its knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

SIGNATURE

     After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Statement is true, complete and correct.

February 12, 2010

		MHR INSTITUTIONAL PARTNERS III LP
		By: MHR Institutional Advisors III LLC, its General Partner
		By:		/s/  Hal Goldstein
				Name: Hal Goldstein
				Title: Vice President
		MHR INSTITUTIONAL ADVISORS III LLC
		By:		/s/  Hal Goldstein
				Name: Hal Goldstein
				Title: Vice President
		MHR FUND MANAGEMENT LLC
		By:		/s/  Hal Goldstein
				Name: Hal Goldstein
				Title: Managing Principal
		MARK H. RACHESKY, M.D.
		By:		/s/  Hal Goldstein, Attorney in Fact