AMENDMENT NO. 1 TO CREDIT AGREEMENT

Exhibit 10.1

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This Amendment No. 1 to Credit Agreement, dated as of October 27, 2009, (this “ Amendment ”), is entered into by KEY ENERGY SERVICES, INC. , a Maryland corporation (the “ Borrower ”), the lenders party to the Credit Agreement described below, BANK OF AMERICA, N.A. , as Paying Agent, Co-Administrative Agent, Swing Line Lender and L/C Issuer, and Wells Fargo Bank, National Association, as Co-Administrative Agent, Swing Line Lender and L/C Issuer.

INTRODUCTION

Reference is made to the Credit Agreement dated as of November 29, 2007 (as modified from time to time, the “ Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (collectively, the “ Lenders ” and individually, a “ Lender ”), Bank of America, N.A., as Paying Agent, Co-Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Co-Administrative Agent, Swing Line Lender and L/C Issuer and Banc of America Securities LLC (“ BAS ”) and Wells Fargo Securities, LLC, as successor to Wells Fargo Bank, National Association, as Joint Lead Arrangers and Joint Book Managers.

The Borrower has requested, and the Lenders have agreed, and the Paying Agent has acknowledged such agreement, on the terms and conditions set forth herein, to make certain amendments to the Credit Agreement.

THEREFORE , in connection with the foregoing and for other good and valuable consideration, the Borrower and the Lenders hereby agree, and the Paying Agent hereby acknowledges such agreement, as follows:

Section 1. Definitions; References . Unless otherwise defined in this Amendment, each term used in this Amendment that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement.

Section 2. Amendment of Credit Agreement

(a)  Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in appropriate alphabetical order:

“ Adjusted Total Capitalization ” means, as of any date of determination, the sum of (i) Consolidated Funded Indebtedness as of such date plus (ii) Consolidated Net Worth as of such date plus $110,000,000.

“ Consolidated Senior Secured Debt ” means all Consolidated Funded Indebtedness that is secured by a Lien on any Property.

“ Consolidated Senior Secured Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Senior Secured Debt as of such date to (b) Consolidated EBITDA of the Borrower and its Subsidiaries on a consolidated basis from the most recently completed Measurement Period. For purposes of calculating the Consolidated Senior Secured Leverage Ratio as of any date, Consolidated EBITDA shall be calculated on a pro forma basis (as certified by the Borrower to the Co-Administrative Agents and as reasonably approved by the Co-Administrative Agents) assuming that (i) all Acquisitions made, and any Indebtedness incurred or repaid in connection therewith, during the most recently completed Measurement Period and (ii) all Dispositions of any Subsidiary or of all or substantially all the assets of any Subsidiary or of any line of business or division of the Borrower or any Subsidiary completed, and any Indebtedness incurred or repaid in connection therewith, during such Measurement Period have been made or incurred or repaid on the first day of such Measurement Period (but without any adjustment to Consolidated EBITDA for projected cost savings or other synergies other than cost savings or synergies realized within, or to be realized within, 180 days following the consummation of such Acquisition or Disposition, as applicable, as demonstrated to and as approved by the Co-Administrative Agents in their reasonable discretion).

“ First Amendment ” means Amendment No. 1 to Credit Agreement dated as of October 27, 2009 among the Borrower, the Lenders party thereto, the Paying Agent, the Co-Administrative Agents, the Swing Line Lenders and the L/C Issuers.

“ First Amendment Effective Date ” means October 27, 2009.

“ Foreign Investment Add-Back Amount ” means, with respect to any asset the acquisition of which is included as a Capital Expenditure for purposes of calculating compliance with Section 7.12 , if such asset is thereafter sold to, or contributed or otherwise invested pursuant to Section 7.03(k) in, a joint venture or Foreign Subsidiary for cash actually received by a Loan Party in the United States or a promissory note payable to a Loan Party, an amount equal to the lesser of (a) the cash so received or original principal amount of such promissory note and (b) the amount included in the calculation of compliance with Section 7.12 with respect to the acquisition of such asset.

“ Insignificant Foreign Subsidiary ” means any Foreign Subsidiary of the Borrower designated as an “ Insignificant Foreign Subsidiary ” which had assets having an aggregate book value not exceeding, as of the last day of the fiscal quarter most recently ended for which financial statements have been delivered by the Borrower pursuant to Section 6.01(a) or (b) , as the case may be, 5% of the consolidated total assets of the Borrower and its Subsidiaries; provided that all Foreign Subsidiaries so designated as Insignificant Foreign Subsidiaries may not have, in the aggregate, assets having an aggregate book value exceeding, as of the last day of the fiscal quarter most recently ended for which financial statements have been delivered by the Borrower pursuant to Section 6.01(a) or (b) , as the case may be, 5% of the consolidated total assets of the Borrower and its Subsidiaries. All of the Insignificant Foreign Subsidiaries as of the First Amendment Effective Date are listed on Schedule 5.13 and designated thereon as “ Insignificant Foreign Subsidiaries ”.

“ Net Cash Proceeds ” means, in connection with any issuance or sale of any Equity Interest, or the incurrence or issuance of any debt securities or instruments or the incurrence of loans, the cash proceeds received in connection with such transactions, net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees and expenses actually incurred in connection therewith.

“ Post-Amendment Equity Interest and Indebtedness Net Cash Proceeds Amount ” means an amount equal to the aggregate Net Cash Proceeds received by the Borrower after the First Amendment Effective Date from the issuance of any Equity Interest or any Indebtedness permitted by Section 7.02(k) ; provided , that Borrower shall provide notice to the Paying Agent of each such issuance and its intent to utilize such Net Cash Proceeds to increase the Post-Amendment Foreign Investment Amount, Acquisition basket, or Capital Expenditure basket, as applicable, and shall provide to the Paying Agent such information as the Paying Agent shall reasonably request with respect to such issuance. Once any portion of the Post-Amendment Equity Interest and Indebtedness Net Cash Proceeds Amount has been used to increase the amount of Guarantees permitted to be incurred pursuant to Section 7.02(e) , Indebtedness of Foreign Subsidiaries permitted to be incurred pursuant to Section 7.02(i) , Investments in Foreign Subsidiaries permitted to be made pursuant to Section 7.03(k) , Acquisitions permitted to be made pursuant to Section 7.02(h)(iv)(y) , or Capital Expenditures permitted to be made pursuant to Section 7.12 , such portion shall no longer be available to increase the amount of Guarantees, Indebtedness of Foreign Subsidiaries, Investments in Foreign Subsidiaries, Acquisitions, or Capital Expenditures that may be incurred or made pursuant to any such Section.

“ Post-Amendment Foreign Investment Amount ” means at any time (i) for any fiscal year, $75,000,000 and (ii) in the aggregate since the First Amendment Effective Date, the sum of (x) the greater of $200,000,000 and 25% of the Borrower’s Consolidated Net Worth (as reflected on the consolidated balance sheet of the Borrower most recently delivered to the Paying Agent pursuant to Section 6.01(a) or Section 6.01(b) , as applicable), plus (y) any portion of the Post-Amendment Equity Interest and Indebtedness Net Cash Proceeds Amount utilized by the Borrower to increase the amount of Guarantees permitted to be incurred pursuant to Section 7.02(e) , Indebtedness of Foreign Subsidiaries permitted to be incurred pursuant to Section 7.02(i) , and Investments in Foreign Subsidiaries permitted to be made pursuant to Section 7.03(k) , as notified to the Paying Agent.

“ Property ” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Equity Interests.

“ Wholly Owned Subsidiary ” means as to any Person, any other Person all of the Equity Interests of which (other than, in the case of a Foreign Subsidiary, directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Borrower or a Subsidiary) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

(b)  Section 1.01 of the Credit Agreement is hereby amended by replacing the definition of “ Applicable Fee Rate ” in its entirety with the following:

“ Applicable Fee Rate ” means, at any time, the applicable percentage per annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Paying Agent pursuant to Section 6.02(b) :

Any increase or decrease in the Applicable Fee Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) ; provided , however , that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 1 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered.

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Fee Rate for any period shall be subject to the provisions of Section 2.10(b) .

(c)  Section 1.01 of the Credit Agreement is hereby amended by replacing the last sentence of the definition of “ Applicable Percentage ” in its entirety with the following:

The Applicable Percentage of each Lender as of the First Amendment Effective Date is set forth opposite the name of such Lender on Schedule 2.01 .

(d)  Section 1.01 of the Credit Agreement is hereby amended by replacing the definition of “ Applicable Rate ” in its entirety with the following:

“ Applicable Rate ” means the applicable percentage per annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Paying Agent pursuant to Section 6.02(b) :

Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) ; provided , however , that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 1 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered.

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b) .

(e)  Section 1.01 of the Credit Agreement is hereby amended by replacing the definition of “ Defaulting Lender ” in its entirety with the following:

“ Defaulting Lender ” means any Lender that, as determined by the Paying Agent, (a) has failed to perform its obligation to fund any portion of its Loans (or participations in respect of Letters of Credit or Swing Line Loans) within three Business Days of the date required to be funded by it hereunder, unless such obligation is the subject of a good faith dispute, (b) has notified the Borrower, the Paying Agent or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement that it does not intend to comply with its funding obligations under this Agreement or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after written request by the Paying Agent, to confirm in a manner satisfactory to the Paying Agent, the L/C Issuers and the Swing Line Lenders that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans (or participations in respect of Letters of Credit or Swing Line Loans), (d) otherwise has failed to pay over to the Paying Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Laws, or (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in such Lender or direct or indirect parent company thereof by a Governmental Authority.

(f)  Section 1.01 of the Credit Agreement is hereby amended by replacing the definition of “ Revolving Credit Facility ” in its entirety with the following:

“ Revolving Credit Facility ” means, at any time, the aggregate amount of the Lenders’ Revolving Credit Commitments at such time. As of the First Amendment Effective Date, the amount of the Revolving Credit Facility is $300,000,000.

(g)  Section 1.01 of the Credit Agreement is hereby amended by replacing the definition of “ Security Documents ” in its entirety with the following:

“ Security Documents ” means, collectively, the Security Agreement, vessel mortgages, collateral assignments, security agreement supplements, security agreements, pledge agreements or other similar agreements delivered to the Paying Agent pursuant to Section 6.12 , and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Paying Agent for the benefit of the Secured Parties, and shall expressly include any arrangements entered into by any L/C Issuer with the Borrower pursuant to Section 2.03(a)(iii)(F) .

(h)  Section 2.04(a) of the Credit Agreement is hereby amended by replacing the first sentence of such Section in its entirety with the following:

Subject to the terms and conditions set forth herein, and if an AutoBorrow Agreement is in effect with respect to any Swing Line Lender, subject to the terms and conditions of such AutoBorrow Agreement, each Swing Line Lender may, in its sole discretion, in reliance upon the agreements of the other Lenders set forth in this Section 2.04 , make loans (each such loan, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of its Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of either Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Revolving Credit Commitment; provided , however , that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Revolving Credit Facility at such time, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time shall not exceed such Lender’s Revolving Credit Commitm