CALGARY, Aug. 6 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the
Company") (TSX-CFW) announces its financial and operating results for the
three months and six months ended June 30, 2009 and expansion program.HIGHLIGHTS
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Three Months Ended June 30, Six Months Ended June 30,
2009 2008 Change 2009 2008 Change
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(000s, except ($) ($) (%) ($) ($) (%)
per share and
unit data)
(unaudited)
Financial
Revenue 104,727 94,657 11 285,115 240,283 19
Operating
income
(loss)(1) 4,052 (1,008) 502 31,479 28,469 11
Net loss (14,770) (15,469) 5 (9,242) (1,200) (670)
Per share
- basic (0.39) (0.41) 5 (0.24) (0.03) (700)
Per share
- diluted (0.39) (0.41) 5 (0.24) (0.03) (700)
Funds
provided by
operations(2) 128 (9) - 22,841 28,780 (21)
Per share
- basic - - - 0.61 0.77 (21)
Per share
- diluted - - - 0.61 0.77 (21)
EBITDA(3) 4,340 (813) 634 30,285 30,234 -
Per share
- basic 0.11 (0.02) 650 0.80 0.81 (1)
Per share
- diluted 0.11 (0.02) 650 0.80 0.80 -
Working capital
(end of
period) 111,864 94,056 19 111,864 94,056 19
Shareholders'
equity (end
of period) 380,515 364,068 5 380,515 364,068 5
Weighted
average common
Shares
outstanding
(No.)
Basic 37,742 37,728 - 37,742 37,558 -
Diluted 37,742 37,952 (1) 37,742 37,598 -
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Operating (end
of period)
Pumping
horsepower
(000s) 319 255 25
Coiled tubing
units (No.) 18 18 -
Cementing
units (No.) 20 17 18
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(1) Operating income is defined as net income (loss) plus depreciation,
interest, equity share of net income from long-term investments,
foreign exchange gains or losses, gains or losses on disposal of
capital assets, income taxes and non-controlling interest. Management
believes that operating income is a useful supplemental measure as it
provides an indication of the financial results generated by
Calfrac's business segments prior to consideration of how these
segments are financed or how they are taxed. Operating income is a
measure that does not have any standardized meaning under generally
accepted accounting principles ("GAAP") and, accordingly, may not be
comparable to similar measures used by other companies.
(2) Funds provided by operations is defined as cash provided by operating
activities before the net change in non-cash operating assets and
liabilities. Funds provided by operations is a measure that provides
shareholders and potential investors with additional information
regarding the Company's liquidity and its ability to generate funds
to finance its operations. Management utilizes this measure to assess
the Company's ability to finance operating activities and capital
expenditures. Funds provided by operations is a measure that does not
have any standardized meaning prescribed under GAAP and, accordingly,
may not be comparable to similar measures used by other companies.
(3) EBITDA is defined as net income (loss) before interest, taxes,
depreciation, amortization and non-controlling interest. EBITDA is
presented because it is frequently used by securities analysts and
others for evaluating companies and their ability to service debt.
EBITDA is a measure that does not have any standardized meaning
prescribed under GAAP and, accordingly, may not be comparable to
similar measures used by other companies.
PRESIDENT'S MESSAGE
I am pleased to present Calfrac's operating and financial highlights for
the three and six months ended June 30, 2009 and discuss our prospects for the
remainder of the year. During the second quarter, our Company:
- achieved record levels of fracturing and coiled tubing activity in
Western Siberia with increased revenue and improved margins;
- commenced fracturing operations in the Chicontepec region of Mexico;
- experienced strong levels of fracturing and cementing activity in the
Fayetteville shale play in Arkansas;
- continued to improve its strong Environment, Health and Safety (EH&S)
system through the introduction of several new safety initiatives
such as the Job Safety Analysis program;
- received an award for outstanding safety performance by a major oil
and natural gas producer in southern Alberta;
- concluded a thorough assessment of the workforce in order to assemble
and retain the strongest possible teams;
- suspended primary cementing operations in western Canada and began
redeploying equipment and personnel to the United States and Mexico
during the third quarter; and
- completed cost reduction measures in Canada and the United States
through workforce planning which resulted in additional restructuring
costs of $0.6 million in the second quarter and a total reduction in
Canadian and United States personnel of approximately 30 percent with
an estimated cost savings in excess of $2.0 million per month.
Financial Highlights
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For the three months ended June 30, 2009, the Company generated:
- revenue of $104.7 million, an increase of 11 percent from the second
quarter of 2008;
- operating income of $4.1 million versus an operating loss of
$1.0 million in the comparable period in 2008; and
- a net loss of $14.8 million or $0.39 per share compared to
$15.5 million or $0.41 per share in the same period in 2008.
For the six months ended June 30, 2009, the Company's results included:
- revenue of $285.1 million, an increase of 19 percent from 2008;
- a net loss of $9.2 million or $0.24 per share compared to
$1.2 million or $0.03 per share in the same period in 2008;
- funds provided by operations of $22.8 million or $0.61 per share
versus $28.8 million or $0.77 per share in the same quarter of 2008;
and
- working capital of $111.9 million and $60.0 million of unutilized
credit facilities at the end of the quarter.
Overall Calfrac continues to benefit from its solid presence in several
key North American unconventional resource plays, where drilling activity
remains relatively strong and revenue per job is high, as well as the positive
momentum achieved in its international markets.
Operational Highlights
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CanadaDuring the second quarter, the Company's fracturing and coiled tubing
activity in western Canada was concentrated in the Horn River unconventional
natural gas resource play located in northeast British Columbia. The low
natural gas price environment plus normal spring break-up weather conditions
significantly reduced shallow gas and coalbed methane activity levels in
central and southern Alberta. In April, Calfrac suspended its primary
cementing operations in Canada and commenced transferring equipment and
personnel to other international operating regions. The cost rationalization
measures instituted early in the second quarter helped to mitigate the
financial impact of the market slowdown.
United States
Fracturing and cementing activity levels in Arkansas remained strong
during the second quarter; however, competitive pricing pressures negatively
impacted operating income on a sequential quarterly basis. The low price
environment for natural gas continued to significantly impact fracturing
activity levels in the Rocky Mountain region. In response to these
deteriorating market conditions, the Company transferred personnel and
equipment into Arkansas, after having realigned its cost structure during the
first quarter.
Russia
In Russia, fracturing and coiled tubing activity levels reached record
levels, which resulted in strong financial performance from this geographic
segment. The reported Canadian dollar financial results, however, were
negatively impacted by a 15 percent decline in the value of the Russian rouble
from the second quarter of 2008. The five annual contracts signed during the
first quarter are expected to sustain the current high level of equipment
utilization throughout the remainder of the year.
Mexico
The completion of a greater number of larger and more technically
demanding jobs in the Burgos field and the commencement of fracturing
operations in the Chicontepec region during May, where the Company began
introducing a new technology to Pemex, resulted in a significant improvement
in year-over-year financial performance in Mexico. The Company expects this
positive momentum to continue throughout the year.
Argentina
During the second quarter, activity levels for the Company's cementing
operations in Argentina reached record levels, resulting in improved financial
performance from this geographic market. The Company used a conservative
approach in entering this new market during the second quarter of 2008 and
continues to develop new market opportunities as the Argentina business
environment improves.
Corporate
The Company continued to focus on improving its strong EH&S systems by
introducing several initiatives to enhance safe work practices such as Job
Safety Analysis. This program is aligned with the EH&S programs of some of our
major customers and mandates a review of potential site hazards before any job
is performed. During the second quarter, Calfrac was recognized by a major oil
and natural gas producer for its long-standing superior safety performance.
Calfrac's People Strategy places a strong emphasis on workforce planning,
as understanding current and future staffing needs is essential to meeting
customer expectations. In the second quarter, Calfrac conducted a thorough
assessment of its workforce. Its aim was to assemble and retain the strongest
possible teams as we managed through the current economic downturn. The result
was a workforce reduction in Canada and the United States of approximately 30
percent. Since this reduction, our turnover rate has declined to a very low
level and the quality of our service has continually improved. Additionally,
we recently launched a new benefits plan for Canadian employees to provide
more choice and enhanced coverage for them and their families on a cost
neutral basis to the Company.Outlook and Business Prospects
-------------------------------------------------------------------------The global economic recession has lowered the demand for oil and natural
gas which has led to a significant decline in drilling activity as well as
increased price competition for pressure pumping services in Canada and the
United States. North American natural gas prices are anticipated to remain low
for the near term. In response to these adverse market conditions, the Company
thoroughly realigned its cost structure through significant workforce
reductions in Canada and the United States, wage and retirement contribution
rollbacks as well as cuts to discretionary operating expenses. The Company
also suspended primary cementing operations in the Canadian market during
April and is currently redeploying a good portion of these assets into more
active international markets. These measures have contributed to maintaining
the Company's strong financial foundation entering the third quarter,
including a 19 percent year-over-year increase in working capital to
approximately $112 million.
Fracturing and coiled tubing activity levels in Canada are highly
uncertain but are anticipated to improve as the year progresses. To date in
the third quarter of 2009, activity levels in northwest Alberta, northeast
British Columbia and southeast Saskatchewan are increasing as certain oil and
natural gas producers increase their focus on unconventional drilling in the
Montney, Horn River and Bakken resource plays. Most recently the Company
completed a large scale operation for a major oil and natural gas company in
the Horn River region as the general contractor employing an array of multiple
services in record time with major cost savings to the customer. These wells
are typically drilled horizontally and require multiple fractures and large
pumping horsepower. Each such well has many times the revenue impact to
Calfrac as compared to conventional well completion methods.
In the United States, fracturing and cementing activity in the
Fayetteville shale play of Arkansas is expected to remain relatively strong
throughout the remainder of 2009, thanks to strong rates of return on these
highly productive wells. While the Company has experienced significant pricing
pressure in this market, Calfrac believes that pricing has stabilized.
Fracturing activity in the Rocky Mountains region is expected to remain low
until natural gas prices increase significantly due to the typically
higher-cost nature of the natural gas pools drilled in this region.
Consequently, Calfrac reduced its workforce in Colorado and redeployed
equipment and certain key personnel to our operations district in Beebe,
Arkansas. Additional cementing assets were transferred to this region with the
demand increase for the Company's cementing technologies.
As a result of annual contracts signed with two of Russia's largest oil
and natural gas companies, Calfrac expects that its fracturing and coiled
tubing equipment fleet will remain highly utilized throughout 2009. The higher
equipment utilization has resulted in increased operating efficiencies which
are expected to maintain Calfrac's financial performance in this region at
strong levels of operating income as a percentage of revenue.
In May, the Company commenced fracturing operations in Poza Rica, Mexico
servicing the Chicontepec oil and natural gas field for Pemex. During the
third quarter, Calfrac commenced cementing operations by redeploying four
cementing crews including bulk transportation and mixing plant equipment with
related infrastructure from Canada into the Chicontepec region, thus
diversifying its pressure pumping operations in Mexico. This expansion is
anticipated to lead to higher levels of overall equipment utilization and to
improve this geographic segment's financial performance.
In Argentina, Calfrac plans to add a third cementing unit during the
third quarter of 2009 to meet increasing customer demand in this market. The
Company's Latin America management team will continue to evaluate
opportunities to broaden the scale of these operations and continue to support
the growth in Mexico.
Calfrac is pleased to announce that the Company recently entered into an
agreement to purchase the fracturing assets of a U.S. competitor, Pure Energy
Services, for a total purchase price of approximately $42.8 million. This
price represents a discount to net book value and replacement cost. The assets
include approximately 45,000 of pumping horsepower, high-rate blenders, and
related sand handling equipment. The Company will also acquire certain land
and a rail spur associated with these operations. In addition to this
acquisition, Calfrac is also pleased to announce that its Board of Directors
has approved a $26 million increase to the 2009 capital budget for a revised
total of $41 million. The total approved capital budget for 2009, including
$20 million of carryforward capital from 2008, is now $61 million. The
combination of this asset acquisition and the increment to the capital budget
will allow Calfrac to further expand its geographical footprint in the U.S.
pressure pumping market as well as supplement the Company's fracturing and
coiled tubing equipment fleet for its growing markets within Canada, Russia
and Mexico. In Canada, Calfrac will augment its horsepower capabilities and
expand its deep coiled tubing equipment fleet as the Company continues to gain
a larger presence servicing Canada's unconventional natural gas resource
plays. The increase in the 2009 capital program will also focus on further
expansion opportunities in both Russia and Mexico. The capital allocated to
Russia will target expanding our coiled tubing fleet while Mexican capital
will facilitate the commencement of cementing operations as well as increase
Calfrac's presence in the Mexican fracturing market. These additional capital
expenditures are expected to be funded from the Company's cash on hand, funds
provided by operations and available credit facilities.
The Company is currently in negotiations with its lenders regarding its
credit facilities. The Company expects to conclude this process in the next
few weeks.
Overall, short-term demand for pressure pumping services remains
uncertain, particularly in North America. Calfrac's long-term outlook for the
pressure pumping industry, however, remains strong. Calfrac has extensively
rationalized its cost structure and improved its operating efficiencies.
Calfrac's geographical diversification continues to benefit the Company. The
Company believes that the improving financial performance of its international
segments can be extended. The Company is confident that it can maintain its
strong balance sheet and will strive to best execute its strategy through
these difficult market conditions. Calfrac believes that the strengths of its
business model and its conservative approach to the current economic
challenges leave it well-positioned to capitalize on future opportunities.On behalf of the Board of Directors,
Douglas R. Ramsay
President & Chief Executive Officer
August 6, 2009
2009 Overview
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In the second quarter of 2009, the Company:
- increased revenue by 11 percent to $104.7 million from $94.7 million
in the second quarter of 2008;
- reported a net loss of $14.8 million or $0.39 per share compared to a
net loss of $15.5 million or $0.41 per share in the comparable 2008
period;
- suspended primary cementing operations in Canada and began
redeploying a significant portion of this equipment into the United
States and Latin America during the third quarter;
- completed cost reduction measures in Canada and incurred an
additional $0.6 million of restructuring costs during the second
quarter of 2009; and
- recorded a foreign exchange loss of $0.5 million versus a foreign
exchange gain of $0.1 million in the comparable period of 2008.
For the six months ended June 30, 2009 the Company:
- increased revenue by 19 percent to $285.1 million from $240.3 million
in the comparative period in 2008;
- reported a net loss of $9.2 million or $0.24 per share compared to a
net loss of $1.2 million or $0.03 per share in the comparable 2008
period;
- incurred capital expenditures of $25.7 million primarily to bolster
the Company's fracturing equipment fleet;
- combined Calfrac's Mexico and Argentina operations under an
experienced management team to form a new Latin America division;
- initiated cost reduction measures in Canada and the United States
through workforce planning which resulted in restructuring costs of
$1.5 million during the first six months of 2009 and a 30 percent
reduction in personnel; and
- incurred a foreign exchange loss of $2.1 million versus a foreign
exchange gain of $1.5 million in the comparable period of 2008.
Financial Overview - Three Months Ended June 30, 2009 Versus 2008
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Canada
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Three Months Ended June 30, 2009 2008 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 26,529 32,231 (18)
Expenses
Operating 25,632 38,744 (34)
Selling, General and
Administrative (SG&A) 2,217 2,299 (4)
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27,849 41,043 (32)
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Operating loss(1) (1,320) (8,812) 85
Operating loss (%) -5.0% -27.3% 82
Fracturing revenue per job ($) 153,680 60,792 153
Number of fracturing jobs 143 444 (68)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.Revenue
Revenue from Calfrac's Canadian operations during the second quarter of
2009 decreased by 18 percent to $26.5 million from $32.2 million in the
comparable three-month period of 2008. Canadian fracturing revenue for the
quarter totalled $22.0 million, a decrease of 19 percent from the $27.0
million generated in the corresponding quarter of 2008. The Company completed
143 Canadian fracturing jobs for average revenue of $153,680 per job in the
second quarter of 2009 compared to 444 jobs for average revenue of $60,792 per
job in the comparable period of 2008. The higher average revenue per job was
primarily due to an increase in the proportion of larger jobs completed in the
Horn River unconventional resource plays located in northeast British
Columbia, combined with fewer lower-revenue fracturing jobs being completed in
the shallow gas market of southern Alberta.
Revenue from the Company's coiled tubing operations in western Canada
increased by $0.4 million from the comparable period in 2008 to $3.8 million
in the second quarter of 2009. During this period Calfrac completed 147 jobs
for average revenue of $25,661 per job compared to 275 jobs for average
revenue of $12,374 per job in the comparable quarter of 2008. The increase in
the average revenue per job was due primarily to an increase in activity in
the deeper reservoirs of western Canada which generates fewer but
higher-revenue jobs, as well as to a reduction in coiled tubing activity in
the shallow gas-producing regions of southern Alberta, which normally generate
a high number of lower-revenue jobs.
Calfrac's Canadian cementing operations during the second quarter of 2009
realized revenue of $0.8 million, a decrease of 57 percent from the $1.8
million recorded in the corresponding quarter of 2008. For the three months
ended June 30, 2009, the Company completed 38 jobs for average revenue of
$20,556 per job, compared to 166 jobs for average revenue of $11,062 per job
in the comparative period of 2008. The increase in average revenue per job was
due primarily to a higher proportion of jobs being completed in the deeper
basins of western Canada, offset slightly by competitive pricing pressures.
The steep decline in the number of jobs completed was due mainly to the
Company suspending its primary cementing operations in Canada during April
2009.
Operating Expenses
Operating expenses in Canada decreased by 34 percent to $25.6 million
during the second quarter of 2009 from $38.7 million in the same period of
2008. The decrease in Canadian operating expenses was mainly due to higher
than normal equipment repair, transportation and personnel expenses during the
second quarter of 2008 offset partially by restructuring costs of $0.6 million
in 2009.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations were $2.2 million during
the second quarter of 2009 versus $2.3 million in the corresponding period of
2008.United States
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Three Months Ended June 30, 2009 2008 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 42,954 41,767 3
Expenses
Operating 41,792 29,810 40
SG&A 1,595 1,688 (6)
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43,387 31,498 38
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Operating income (loss)(1) (433) 10,269 (104)
Operating income (loss) (%) -1.0% 24.6% (104)
Fracturing revenue per job ($) 78,911 56,820 39
Number of fracturing jobs 497 693 (28)
Cdn$/US$ average exchange rate(2) 1.1670 1.0080 16
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
Revenue from Calfrac's United States operations increased during the
second quarter of 2009 to $43.0 million from $41.8 million in the comparable
quarter of 2008. In the second quarter of 2009, the Company completed 497
fracturing jobs in the United States for average revenue of $78,911 per job
compared to 693 jobs for average revenue of $56,820 per job in the second
quarter of 2008. The increases in United States revenue and revenue per job
were due primarily to higher fracturing activity levels and larger job sizes
in Arkansas combined with the appreciation in the value of the United States
dollar, offset partially by lower fracturing activity levels in Colorado and
competitive pricing pressures.
During the second quarter of 2009, revenue from Calfrac's cementing
operations in the United States was $3.7 million, an increase of 56 percent
from the corresponding quarter of 2008. For the three months ended June 30,
2009, the Company completed 207 jobs for average revenue of $18,046 per job,
compared to 187 jobs for average revenue of $12,785 per job in the comparative
period of 2008. The increase in average revenue per job was due primarily to
the completion of a higher proportion of long-string cementing jobs in
Arkansas and the appreciation of the U.S. dollar.
Operating Expenses
Operating expenses in the United States were $41.8 million for the second
quarter of 2009, an increase of 40 percent from the comparative period in 2008
primarily due to the impact of the higher value of the United States dollar,
increased usage of proppant resulting from the completion of larger fracturing
jobs, higher equipment repair expenses as well as higher operating costs
related to the increased scale and activity levels of the Company's cementing
operations in Arkansas.
SG&A Expenses
SG&A expenses in the United States during the second quarter of 2009
decreased by 6 percent from the comparable period in 2008 to $1.6 million
primarily due to lower personnel costs, offset partially by the appreciation
in the value of the United States dollar.Russia
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Three Months Ended June 30, 2009 2008 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 19,193 15,057 27
Expenses
Operating 11,719 11,009 6
SG&A 881 1,019 (14)
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12,600 12,028 5
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Operating income(1) 6,593 3,029 118
Operating income (%) 34.4% 20.1% 71
Fracturing revenue per job ($) 76,419 135,997 (44)
Number of fracturing jobs 157 59 166
Cdn$/rouble average exchange rate(2) 0.0363 0.0427 (15)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
During the second quarter of 2009, the Company's revenue from Russian
operations increased by 27 percent to $19.2 million from $15.1 million in the
corresponding three-month period of 2008. Fracturing revenue in the second
quarter of 2009 was $12.0 million versus $8.0 million in the corresponding
quarter of 2008. In the second quarter of 2009, the Company completed 157
Russian fracturing jobs for average revenue of $76,419 per job compared to 59
jobs for average revenue of $135,997 per job in the comparable period of 2008.
Revenue from the Company's coiled tubing operations in Western Siberia
during the second quarter of 2009 increased slightly to $7.2 million from $7.0
million in the comparable period of 2008. During this period, Calfrac
completed 156 jobs for average revenue of $46,124 per job compared to 119 jobs
for average revenue of $59,102 per job in the comparable quarter of 2008.
In Russia, fracturing and coiled tubing revenue per job for the three
months ended June 30, 2009 decreased from the comparable period in 2008 mainly
due to smaller job sizes, lower annual contract pricing and the depreciation
of the Russian rouble by 15 percent versus the Canadian dollar. Total revenue
during the second quarter of 2009 was higher than the comparative three-month
period in 2008 primarily due to the impact of the above-noted items being
offset by higher fracturing and coiled tubing activity levels.
Operating Expenses
Operating expenses in Russia in the second quarter of 2009 were $11.7
million compared to $11.0 million in the corresponding period of 2008. The
increase in operating expenses was primarily due to higher personnel costs
offset partially by the depreciation in the Russian rouble against the
Canadian dollar.
SG&A Expenses
SG&A expenses in Russia were $0.9 million for the three-month period
ended June 30, 2009 versus $1.0 million in the same quarter of 2008. The
decrease was primarily due to the depreciation of the Russian rouble.Latin America
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Three Months Ended June 30, 2009 2008 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 16,051 5,602 187
Expenses
Operating 12,257 6,115 100
SG&A 645 237 172
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12,902 6,352 103
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Operating income (loss)(1) 3,149 (750) 520
Operating income (loss) (%) 19.6% -13.4% 246
Cdn$/Mexican peso average
exchange rate(2) 0.0876 0.0969 (10)
Cdn$/Argentine peso average
exchange rate(2) 0.3088 0.3173 (3)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
Calfrac's Latin America operations generated total revenue of $16.1
million during the second quarter of 2009 versus $5.6 million in the
comparable three-month period in 2008. For the three months ended June 30,
2009 and 2008, revenue generated through subcontractors was $3.0 million and
$2.0 million, respectively. The increase in revenue was primarily due to
higher fracturing activity and the completion of larger jobs in Mexico as well
as higher cementing activity levels in Argentina.
Operating Expenses
Operating expenses in Latin America for the three months ended June 30,
2009 doubled from the comparative period in 2008 to $12.3 million. This
increase was due primarily to higher fracturing activity and higher product
costs related to the completion of larger fracturing jobs in Mexico combined
with incremental expenses related to the Company's operations in Argentina
which began during the second quarter of 2008.
SG&A Expenses
SG&A expenses in Latin America increased by $0.4 million from the
comparable quarter of 2008 to $0.6 million in the second quarter of 2009
primarily due to the Company's expanded scale of operations in Mexico and
Argentina.Corporate
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Three Months Ended June 30, 2009 2008 Change
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(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 630 557 13
SG&A 3,307 4,187 (21)
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3,937 4,744 (17)
Operating loss(1) (3,937) (4,744) 17
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.Operating Expenses
Operating expenses primarily relate to manufacturing and R&D personnel
located in the Corporate headquarters who directly support the Company's
global field operations. The 13 percent increase in Corporate operating
expenses from the second quarter of 2008 is mainly due to an increase in the
number of personnel directly supporting the Company's broader scale of
operations.
SG&A Expenses
For the three months ended June 30, 2009, Corporate SG&A expenses
decreased by 21 percent from the comparable 2008 period to $3.3 million,
mainly due to lower stock-based compensation expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $3.5 million for the second quarter
of 2009 represented an increase of $0.8 million from $2.7 million in the
comparable period of 2008. This increase was primarily due to higher reported
interest expense related to the Company's unsecured senior notes resulting
from the appreciation in the value of the United States dollar and additional
interest expense related to the $30.0 million drawdown on the Company's credit
facilities.
For the three months ended June 30, 2009, depreciation expense increased
by 24 percent to $15.2 million from $12.3 million in the corresponding quarter
of 2008, mainly as a result of the Company's larger fleet of equipment
operating in North America and the appreciation in the value of the United
States dollar.
Foreign Exchange Losses (Gains)
The Company incurred a foreign exchange loss of $0.5 million during the
second quarter of 2009 versus a foreign exchange gain of $0.1 million in the
comparative three-month period of 2008. Foreign exchange gains and losses
arise primarily from the translation of Calfrac's international operations in
Russia, Mexico and Argentina using the temporal method. On a
quarter-over-quarter basis, the change in foreign exchange losses (gains) was
mainly due to the impact of the appreciation of the Canadian dollar on United
States dollar-denominated assets held in the Company's Russian segment during
the second quarter of 2009.
Income Tax Expenses
The Company recorded income tax expense of $0.4 million during the second
quarter of 2009 compared to an income tax recovery of $0.3 million in the
comparable period of 2008. The effective income tax rate for the three months
ended June 30, 2009 was negative 3 percent compared to an effective tax rate
of 2 percent in the same quarter of 2008. The increase in total income tax
expense was primarily due to higher profitability in Russia, Mexico and
Argentina offset partially by lower profitability in the United States. The
low effective income tax rate for the second quarter of both 2009 and 2008 is
a reflection of significant losses incurred in Canada for tax purposes where
income taxes are recovered at a significantly lower effective tax rate due to
tax attributes from the amalgamation in 2004 with Denison Energy Inc.Summary of Quarterly Results
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Three Months Ended Sept. 30, Dec. 31, Mar. 31, June 30,
2007 2007 2008 2008
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(000s, except per share ($) ($) ($) ($)
and unit data)
(unaudited)
Financial
Revenue 129,585 114,450 145,627 94,657
Operating income (loss)(1) 34,024 19,872 29,477 (1,008)
Net income (loss) 16,441 3,653 14,269 (15,469)
Per share - basic 0.45 0.10 0.38 (0.41)
Per share - diluted 0.45 0.10 0.38 (0.41)
Funds provided by
operations(1) 28,398 19,582 28,790 (9)
Per share - basic 0.78 0.53 0.77 -
Per share - diluted 0.78 0.53 0.77 -
EBITDA(1) 34,107 18,790 31,047 (813)
Per share - basic 0.94 0.51 0.83 (0.02)
Per share - diluted 0.93 0.51 0.83 (0.02)
Capital expenditures 11,345 12,101 14,820 19,341
Working capital (end
of period) 99,696 92,156 111,989 94,056
Shareholders' equity
(end of period) 336,858 350,915 377,056 364,068
-------------------------------------------------------------------------
Operating (end of period)
Pumping horsepower (000s) N/A N/A 232 255
Coiled tubing units (No.) 17 18 18 18
Cementing units (No.) 16 16 17 17
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Sept. 30, Dec. 31, Mar. 31, June 30,
2008 2008 2009 2009
-------------------------------------------------------------------------
(000s, except per share ($) ($) ($) ($)
and unit data)
(unaudited)
Financial
Revenue 151,650 172,430 180,388 104,727
Operating income (loss)(1) 27,812 25,658 27,427 4,052
Net income (loss) 11,203 7,861 5,528 (14,770)
Per share - basic 0.30 0.21 0.15 (0.39)
Per share - diluted 0.30 0.21 0.15 (0.39)
Funds provided by
operations(1) 27,128 24,838 22,713 128
Per share - basic 0.72 0.66 0.60 -
Per share - diluted 0.72 0.66 0.60 -
EBITDA(1) 26,983 26,740 25,945 4,340
Per share - basic 0.71 0.71 0.69 0.11
Per share - diluted 0.71 0.71 0.69 0.11
Capital expenditures 18,414 32,233 15,857 9,862
Working capital (end
of period) 104,700 100,575 129,532 111,864
Shareholders' equity
(end of period) 378,890 393,476 402,537 380,515
-------------------------------------------------------------------------
Operating (end of period)
Pumping horsepower (000s) 287 287 303 319
Coiled tubing units (No.) 18 18 18 18
Cementing units (No.) 18 18 20 20
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
N/A - Not Available
Financial Overview - Six Months Ended June 30, 2009 Versus 2008
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
Six Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 111,604 115,316 (3)
Expenses
Operating 98,649 98,916 -
SG&A 4,938 4,609 7
-------------------------------
103,587 103,525 -
-------------------------------
Operating income(1) 8,017 11,791 (32)
Operating income (%) 7.2% 10.2% (29)
Fracturing revenue per job ($) 93,764 55,011 70
Number of fracturing jobs 1,008 1,717 (41)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.Revenue
Revenue from Calfrac's Canadian operations during the first six months of
2009 decreased by 3 percent to $111.6 million from $115.3 million in the
comparable six-month period of 2008. Canadian fracturing revenue for the
period totalled $94.5 million, consistent with the corresponding period of
2008. The Company completed 1,008 Canadian fracturing jobs for average revenue
of $93,764 per job in the first six months of 2009 compared to 1,717 jobs for
average revenue of $55,011 per job in the comparable period of 2008. The
higher average revenue per job was primarily due to an increase in the
proportion of larger jobs completed in the unconventional resource plays
located in northwest Alberta and northeast British Columbia, combined with
fewer lower-revenue fracturing jobs being completed in the shallow gas market
of southern Alberta.
Revenue from the Company's coiled tubing operations in western Canada
increased by $2.0 million from the comparable period in 2008 to $13.5 million
in the first six months of 2009. During this period Calfrac completed 692 jobs
for average revenue of $19,519 per job compared to 1,311 jobs for average
revenue of $8,769 per job in the comparable period of 2008. The increase in
the average revenue per job was due primarily to an increase in activity in
the deeper reservoirs of western Canada, including the Horn River play, which
generates fewer but higher-revenue jobs, as well as a reduction in coiled
tubing activity in the shallow gas-producing regions of southern Alberta,
which normally generate a high number of lower-revenue jobs.
Calfrac's Canadian cementing operations during the first six months of
2009 realized revenue of $3.6 million, a 62 percent decrease from the $9.4
million recorded in the corresponding period of 2008. For the six months ended
June 30, 2009, the Company completed 305 jobs for average revenue of $11,745
per job, compared to 1,152 jobs for average revenue of $8,129 per job in the
comparative period of 2008. The increase in average revenue per job was due
primarily to a higher proportion of jobs being completed in the deeper basins
of western Canada, offset slightly by competitive pricing pressures. The steep
decline in the number of jobs was due mainly to the Company suspending its
primary cementing operations in Canada during April 2009 and a reduction in
the number of wells drilled in western Canada during the first quarter of 2009
as compared to the same period of 2008.
Operating Expenses
Operating expenses in Canada were $98.6 million during the first six
months of 2009 versus $98.9 million in the same period of 2008. The very
slight decrease in Canadian operating expenses was mainly due to lower fuel
expenses offset by an increase in equipment repair expenses and $1.5 million
of restructuring costs.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations were $4.9 million during
the first six months of 2009, an increase of 7 percent from the corresponding
period of 2008 due primarily to higher personnel costs.United States
-------------------------------------------------------------------------
Six Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 111,496 82,642 35
Expenses
Operating 90,955 57,236 59
SG&A 3,734 3,774 (1)
-------------------------------
94,689 61,010 55
-------------------------------
Operating income(1) 16,807 21,632 (22)
Operating income (%) 15.1% 26.2% (42)
Fracturing revenue per job ($) 93,575 61,932 51
Number of fracturing jobs 1,090 1,280 (15)
Cdn$/US$ average exchange rate(2) 1.2059 1.0061 20
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
Revenue from Calfrac's United States operations increased significantly
during the first six months of 2009 to $111.5 million from $82.6 million in
the comparable quarter of 2008. In the first six months of 2009, the Company
completed 1,090 fracturing jobs in the United States for average revenue of
$93,575 per job compared to 1,280 jobs for average revenue of $61,932 per job
in the first six months of 2008. The increases in United States revenue and
revenue per job were due primarily to higher fracturing activity in Arkansas
combined with the appreciation in the value of the United States dollar,
offset partially by lower fracturing activity in Colorado.
Revenue from the Company's United States cementing operations increased
by $6.1 million from the comparable period in 2008 to $9.5 million in the
first six months of 2009. During this period Calfrac completed 466 jobs for
average revenue of $20,385 per job compared to 265 jobs for average revenue of
$12,716 per job in the comparable period of 2008. The increase in the average
revenue per job was due primarily to an increase in the completion of larger
cementing jobs and the impact of the appreciation in the U.S. dollar.
Operating Expenses
Operating expenses in the United States were $91.0 million for the first
six months of 2009, an increase of 59 percent from the comparative period in
2008 primarily due to a higher revenue base, the impact of the appreciation of
the United States dollar versus the Canadian dollar, increased usage of
proppant resulting from the completion of larger fracturing jobs, higher
equipment repair expenses due to the same cause, as well as higher operating
costs related to the increased scale and activity levels from the Company's
cementing operations in Arkansas.
SG&A Expenses
SG&A expenses in the United States during the first six months of 2009
decreased by 1 percent from the comparable period in 2008 to $3.7 million
primarily due to lower compensation expenses, offset partially by the
appreciation of the United States dollar.Russia
-------------------------------------------------------------------------
Six Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 34,158 29,934 14
Expenses
Operating 22,629 23,476 (4)
SG&A 1,760 1,719 2
-------------------------------
24,389 25,195 (3)
-------------------------------
Operating income(1) 9,769 4,739 106
Operating income (%) 28.6% 15.8% 81
Fracturing revenue per job ($) 75,863 138,735 (45)
Number of fracturing jobs 291 121 140
Cdn$/rouble average exchange rate(2) 0.0365 0.0421 (13)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
During the first six months of 2009, the Company's revenue from Russian
operations increased by 14 percent to $34.2 million from $29.9 million in the
corresponding six-month period of 2008. Fracturing revenue in the first six
months of 2009 was $22.1 million versus $16.8 million in the corresponding
period of 2008. In the first six months of 2009, the Company completed 291
Russian fracturing jobs for average revenue of $75,863 per job compared to 121
jobs for average revenue of $138,735 per job in the comparable period of 2008.
Revenue from the Company's coiled tubing operations in Western Siberia
during the first six months of 2009 decreased to $12.1 million from $13.1
million in the comparable period of 2008. During this period, Calfrac
completed 265 jobs for average revenue of $45,592 per job compared to 207 jobs
for average revenue of $63,513 per job in the comparable period of 2008.
In Russia, fracturing and coiled tubing revenue per job for the six
months ended June 30, 2009 decreased from the comparable period in 2008 mainly
due to smaller job sizes, lower annual contract pricing and the depreciation
of the Russian rouble by 13 percent versus the Canadian dollar. Total revenue
during the first six months of 2009 was higher than in the comparative
six-month period in 2008 primarily due to the impact of the above-noted items
being offset by higher fracturing and coiled tubing activity.
Operating Expenses
Operating expenses in Russia in the first six months of 2009 were $22.6
million compared to $23.5 million in the corresponding period of 2008. The
decrease in operating expenses was primarily due to the depreciation in the
Russian rouble against the Canadian dollar, offset partially by higher
fracturing and coiled tubing activity.
SG&A Expenses
SG&A expenses in Russia were $1.8 million for the six-month period ended
June 30, 2009 versus $1.7 million in the same period of 2008. The slight
increase in SG&A expenses was primarily due to higher occupancy costs, offset
partially by the depreciation of the Russian rouble.Latin America
-------------------------------------------------------------------------
Six Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 27,857 12,391 125
Expenses
Operating 21,329 13,405 59
SG&A 1,068 342 212
-------------------------------
22,397 13,747 63
-------------------------------
Operating income (loss)(1) 5,460 (1,356) 503
Operating income (loss) (%) 19.6% -10.9% 280
Cdn$/Mexican peso average
exchange rate(2) 0.0872 0.0949 (8)
Cdn$/Argentine peso average
exchange rate(2) 0.3265 0.3167 3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.Revenue
Calfrac's Latin America operations generated total revenue of $27.9
million during the first six months of 2009 versus $12.4 million in the
comparable six-month period in 2008. For the six months ended June 30, 2009
and 2008, revenue generated through subcontractors was $6.1 million and $5.1
million, respectively. The increase in revenue was primarily due to higher
fracturing activity and larger job sizes in Mexico combined with higher
cementing activity in Argentina as these operations commenced during the
second quarter of 2008.
Operating Expenses
Operating expenses in Latin America for the six months ended June 30,
2009 increased from the comparative period in 2008 by 59 percent to $21.3
million. This increase was due primarily to a higher revenue base plus
increased product costs in Mexico related to the completion of larger
fracturing jobs, combined with incremental expenses related to the Company's
operations in Argentina which began during the second quarter of 2008.
SG&A Expenses
SG&A expenses in Latin America increased by $0.7 million from the
comparable period of 2008 to $1.1 million in the first six months of 2009
primarily due to the Company's expanded scale of operations in Mexico and
Argentina.Corporate
-------------------------------------------------------------------------
Six Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 1,410 1,087 30
SG&A 7,164 7,250 (1)
-------------------------------
8,574 8,337 3
Operating loss(1) (8,574) (8,337) (3)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.Operating Expenses
Operating expenses primarily relate to manufacturing and R&D personnel
located in the Corporate headquarters who directly support the Company's
global field operations. The 30 percent increase in Corporate operating
expenses from the first six months of 2008 is mainly due to an increase in the
number of personnel directly supporting the Company's broader scale of
operations.
SG&A Expenses
For the six months ended June 30, 2009, Corporate SG&A expenses decreased
by 1 percent to $7.2 million, mainly due to lower stock-based compensation
expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $7.2 million for the first six
months of 2009 represented an increase of $1.8 million from $5.4 million in
the comparable period of 2008. This increase was primarily due to higher
reported interest expense related to the Company's unsecured senior notes
resulting from the appreciation in the value of the United States dollar and
additional interest expense related to the $30.0 million drawdown on the
Company's operating and revolving term credit facilities.
For the six months ended June 30, 2009, depreciation expense increased by
25 percent to $30.1 million from $24.1 million in the corresponding period of
2008, mainly as a result of the Company's larger fleet of equipment operating
in North America and the appreciation in the value of the United States
dollar.
Foreign Exchange Losses (Gains)
The Company incurred a foreign exchange loss of $2.1 million during the
first six months of 2009 versus a foreign exchange gain of $1.5 million in the
comparative six-month period of 2008. Foreign exchange gains and losses arise
primarily from the translation of Calfrac's international operations in
Russia, Mexico and Argentina using the temporal method. The change from a
foreign exchange gain to a loss was mainly due to the depreciation of the
Russian rouble against the Canadian dollar in the first quarter of 2009 as
well as the impact of fluctuations in the exchange rate between the Canadian
and United States dollar during the first half of 2009 and its effect on
assets and liabilities held by the Company which are denominated in United
States dollars.
Income Tax Expenses
The Company recorded income tax expense of $2.1 million during the first
six months of 2009 and 2008, respectively. The effective income tax rate for
the six months ended June 30, 2009 was negative 31 percent compared to an
effective tax rate of 271 percent in the same period of 2008. The change in
the effective income tax rate for the first six months of 2009 compared to the
first half of 2008 is due to the change in the mix of taxable earnings and
losses incurred in the countries in which the Company operates and the
differing rates of income tax attributable to those earnings and losses.Liquidity and Capital Resources
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s) ($) ($) ($) ($)
(unaudited)
Cash provided by (used in):
Operating activities 23,026 17,375 37,011 28,953
Financing activities (1,887) 1,518 13,113 6,775
Investing activities (10,694) (12,869) (32,986) (33,886)
Effect of exchange rate
changes on cash and
cash equivalents (5,588) (130) (3,506) 1,570
-------------------------------------------------------------------------
Increase in cash and cash
equivalents 4,857 5,894 13,632 3,412
-------------------------------------------------------------------------
-------------------------------------------------------------------------Operating Activities
The Company's cash flow from operating activities for the six months
ended June 30, 2009 was $37.0 million versus $29.0 million in the comparable
period in 2008 primarily due to a $14.0 million net change in non-cash working
capital offset partially by a $5.9 million reduction in funds provided by
operations (refer to "Non-GAAP Measures" on page 16). As at June 30, 2009,
Calfrac had working capital of $111.9 million, an increase of $17.8 million
from June 30, 2008. The increase in working capital was primarily due to an
increase in inventory combined with lower accounts payable. The Company
reviewed its quarter-end accounts receivable balance in detail and determined
that a provision for doubtful accounts receivable totalling $1.1 million was
adequate. The majority of this provision related to a customer that filed for
Chapter 11 restructuring under United States bankruptcy law.
Financing Activities
Net cash provided by financing activities for the first six months of
2009 was $13.1 million compared to $6.8 million in the comparable period of
2008 as the Company drew $20.0 million on its revolving term credit facility
and repaid $5.0 million on its operating line of credit during the first
quarter of 2009. In addition, Calfrac received proceeds of $8.7 million from
the issuance of common shares during the first six month of 2008 and no such
amounts in the same period of 2009.
In February 2007, Calfrac completed a private placement of senior
unsecured notes for an aggregate principal amount of US$135.0 million. These
notes are due on February 15, 2015 and bear interest at 7.75 percent per
annum.
The Company has additional credit facilities of $90.0 million with a
syndicate of Canadian chartered banks. The operating line of credit is $25.0
million with advances bearing interest at either the bank's prime rate plus
0.75 percent, United States base rate plus 0.75 percent, LIBOR plus 2.25
percent or bankers' acceptances plus 2.25 percent. The revolving term loan is
$65.0 million and bears interest at either the bank's prime rate plus 1.0
percent, United States base rate plus 1.0 percent, LIBOR plus 2.5 percent or
bankers' acceptances plus 2.5 percent. As of June 30, 2009, the Company had
drawn $10.0 million on its operating line of credit and $20.0 million on its
revolving term loan, with a further $60 million in immediately available
credit should these funds be required.
At June 30, 2009, the Company had cash and cash equivalents of $50.1
million. A portion of these funds was invested in short-term investments,
which consisted primarily of an overnight money market fund and is not exposed
to any liquidity issues.
The Company pays semi-annual dividends to shareholders of $0.05 per
common share at the discretion of the Board of Directors, which qualify as
"eligible dividends" as defined by the Canada Revenue Agency. These dividends
are funded by funds provided by operations and totalled $1.9 million in each
of the first six months of 2009 and 2008.
Investing Activities
For the first six months of 2009, Calfrac's net cash used for investing
activities was $33.0 million, down slightly from $33.9 million for the same
period of 2008. Capital expenditures were $25.7 million in the first six
months of 2009 compared to $34.2 million in the same period of 2008. Capital
expenditures in 2009 were primarily related to increasing the pumping capacity
of the Company's fracturing equipment fleet throughout North America.
On January 11, 2008, the Company acquired the remaining 70 percent of the
common shares of ChemErgy Ltd. that it did not previously own for aggregate
consideration of approximately $6.6 million. The purchase price was satisfied
through the payment to the vendors of approximately $4.8 million in cash, the
transfer of real property at a value of approximately $0.5 million and the
issuance of 71,581 common shares of the Company with a value of approximately
$1.3 million.
On January 4, 2008, the Company acquired all the shares of 1368303
Alberta Ltd. from a Canadian competitor for cash and share consideration
totalling approximately $2.7 million. The Company issued 78,579 common shares
with a value of approximately $1.3 million in conjunction with the
acquisition, in addition to approximately $1.4 million of cash. All of the
consideration paid was assigned to capital assets, as the acquired company had
no assets or liabilities other than fracturing equipment.
Additionally, net cash used for investing activities was impacted by the
net change in non-cash working capital from the purchase of capital assets.
The effect of changes in foreign exchange rates on the Company's cash and
cash equivalents during the first six months of 2009 was a loss of $3.5
million versus a gain of $1.6 million during the same period of 2008. These
gains relate to cash and cash equivalents held by the Company in a foreign
currency.
With its strong working capital position, credit facilities and
anticipated funds provided by operations, the Company expects to have adequate
resources to fund its financial obligations and planned capital expenditures
for 2009 and beyond.
Proposed Acquisition
Subsequent to June 30, 2009, the Company entered into an agreement to
purchase the fracturing assets of a competitor for approximately $42.8
million. The purchase price is payable in cash less the Canadian dollar
equivalent of an assumed debt of US$3.2 million. In addition, the Company will
acquire approximately $3.5 million of the seller's parts and materials
inventory. The transaction is expected to close on or about August 14, 2009.
This acquisition is expected to be funded from the Company's cash on hand and
available credit facilities. These fracturing assets are anticipated to be
partially utilized within Calfrac's operations in the United States and the
remaining equipment will be redeployed to support the Company's pressure
pumping operations in Canada, Russia and Mexico.
Outstanding Share Data
The Company is authorized to issue an unlimited number of common shares.
Employees have been granted options to purchase common shares under the
Company's shareholder-approved stock option plan. The number of shares
reserved for issuance under the stock option plan is equal to 10 percent of
the Company's issued and outstanding common shares. As at July 31, 2009, there
were 37,741,561 common shares issued and outstanding, and 2,715,875 options to
purchase common shares.Advisories
-------------------------------------------------------------------------
Forward-Looking StatementsIn order to provide Calfrac shareholders and potential investors with
information regarding the Company and its subsidiaries, including management's
assessment of Calfrac's plans and future operations, certain statements
contained in this press release, including statements that contain words such
as "anticipates", "can", "may", "expect", "believe", "intend", "forecast",
"will", or similar words suggesting future outcomes, are forward-looking
statements. Forward-looking statements in this document include, but are not
limited to, statements with respect to future capital expenditures, future
financial resources, future oil and gas well activity, outcome of specific
events, trends in the oil and natural gas industry and the Company's growth
prospects including, without limitation, its international growth strategy and
prospects. These statements are derived from certain assumptions and analyses
made by the Company based on its experience and interpretation of historical
trends, current conditions, expected future developments and other factors
that it believes are appropriate in the circumstances, including assumptions
related to commodity pricing, North American drilling activity and the
expectation that access to capital will continue to be restricted for many of
Calfrac's customers. Forward-looking statements are subject to a number of
known and unknown risks and uncertainties that could cause actual results to
differ materially from the Company's expectations. The most significant risk
factors to Calfrac relate to prevailing economic conditions; commodity prices;
sourcing, pricing and availability of raw materials, component parts,
equipment, suppliers, facilities and skilled personnel; dependence on major
customers; uncertainties in weather and temperature affecting the duration of
the service periods and the activities that can be completed; and regional
competition. Readers are cautioned that the foregoing list of risks and
uncertainties is not exhaustive. Further information about these risks and
uncertainties may be found under "Business Risks" below.
Consequently, all of the forward-looking statements made in this press
release are qualified by these cautionary statements and there can be no
assurance that actual results or developments anticipated by the Company will
be realized, or that they will have the expected consequences or effects on
the Company or its business or operations. The Company assumes no obligation
to update publicly any such forward-looking statements, whether as a result of
new information, future events or otherwise, except as required pursuant to
applicable securities laws.
Business Risks
The business of Calfrac is subject to certain risks and uncertainties.
Prior to making any investment decision regarding Calfrac, investors should
carefully consider, among other things, the risk factors set forth in the
Company's most recently filed Annual Information Form, which risk factors are
incorporated by reference herein.
The Annual Information Form is available through the Internet on the
Canadian System for Electronic Document Analysis and Retrieval (SEDAR), which
can be accessed at www.sedar.com. Copies of the Annual Information Form may
also be obtained on request without charge from Calfrac at 411 - 8th Avenue
S.W., Calgary, Alberta T2P 1E3, or at www.calfrac.com, or by facsimile at
403-266-7381.
Non-GAAP Measures
Certain measures in this press release do not have any standardized
meaning as prescribed under Canadian GAAP and are therefore considered
non-GAAP measures. These measures include operating income, funds provided by
operations and EBITDA. These measures may not be comparable to similar
measures presented by other entities. These measures have been described and
presented in this press release in order to provide shareholders and potential
investors with additional information regarding the Company's financial
results, liquidity and its ability to generate funds to finance its
operations. Management's use of these measures has been disclosed further in
this press release as these measures are discussed and presented.
Additional Information
Further information regarding Calfrac Well Services Ltd., including the
most recently filed Annual Information Form, can be accessed on the Company's
website at www.calfrac.com or under the Company's public filings found at
www.sedar.com.
Second Quarter Conference Call
Calfrac will be conducting a conference call for interested analysts,
brokers, investors and news media representatives to review its 2009 second
quarter results at 10:00 a.m. (Mountain Daylight Time) on Friday, August 7,
2009. The conference call dial-in number is 1-866-250-4909 or 416-644-3430.
The seven-day replay numbers are 1-877-289-8525 or 416-640-1917 (once
connected, enter 21312102 followed by the number sign). A webcast of the
conference call may be accessed via the Company's website at www.calfrac.com.CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at June 30, December
2009 31, 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($)
ASSETS
Current assets
Cash and cash equivalents 50,124 36,492
Accounts receivable 74,666 120,048
Income taxes recoverable 5,160 6,681
Inventory 36,203 41,123
Prepaid expenses and deposits 6,617 5,813
-------------------------------------------------------------------------
172,770 210,157
Capital assets 446,547 459,874
Goodwill 10,523 10,523
Future income taxes 17,062 11,218
-------------------------------------------------------------------------
646,902 691,772
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 49,306 94,582
Bank loan (note 4) 10,000 15,000
Current portion of long-term debt (note 5) 1,600 -
-------------------------------------------------------------------------
60,906 109,582
Long-term debt (note 5) 171,430 159,899
Other long-term liabilities 1,353 1,368
Future income taxes 23,989 24,815
Deferred credit 8,586 2,588
Non-controlling interest 123 44
-------------------------------------------------------------------------
266,387 298,296
-------------------------------------------------------------------------
Shareholders' equity
Capital stock (note 6) 168,813 168,813
Contributed surplus (note 7) 9,039 7,297
Retained earnings 200,523 211,652
Accumulated other comprehensive income 2,140 5,714
-------------------------------------------------------------------------
380,515 393,476
-------------------------------------------------------------------------
646,902 691,772
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contingencies (note 10)
Subsequent event (note 13)
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s, except per share ($) ($) ($) ($)
data) (unaudited)
Revenue 104,727 94,657 285,115 240,283
-------------------------------------------------------------------------
Expenses
Operating 92,029 86,234 234,973 194,120
Selling, general and
administrative 8,646 9,431 18,663 17,694
Depreciation 15,187 12,285 30,115 24,095
Interest, net 3,500 2,687 7,188 5,381
Equity share of income
from long-term investments - - - (122)
Foreign exchange losses
(gains) 541 (84) 2,095 (1,509)
Gain on disposal of capital
assets (829) (111) (901) (134)
-------------------------------------------------------------------------
119,074 110,442 292,133 239,525
-------------------------------------------------------------------------
Income (loss) before income
taxes and non-controlling
interest (14,347) (15,785) (7,018) 758
-------------------------------------------------------------------------
Income taxes
Current 827 (2,320) 1,461 (2,422)
Future (445) 2,043 683 4,474
-------------------------------------------------------------------------
382 (277) 2,144 2,052
-------------------------------------------------------------------------
Loss before non-controlling
interest (14,729) (15,508) (9,162) (1,294)
Non-controlling interest 41 (39) 80 (94)
-------------------------------------------------------------------------
Net loss for the period (14,770) (15,469) (9,242) (1,200)
Retained earnings, beginning
of period 217,180 212,308 211,652 198,039
Dividends (1,887) (1,892) (1,887) (1,892)
-------------------------------------------------------------------------
Retained earnings, end of
period 200,523 194,947 200,523 194,947
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per share
Basic (0.39) (0.41) (0.24) (0.03)
Diluted (0.39) (0.41) (0.24) (0.03)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED
OTHER COMPREHENSIVE INCOME
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
Net loss for the period (14,770) (15,469) (9,242) (1,200)
Other comprehensive income
Change in foreign currency
translation adjustment (6,132) (277) (3,574) 1,287
-------------------------------------------------------------------------
Comprehensive income (loss) (20,902) (15,746) (12,816) 87
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
beginning of period 8,272 (4,640) 5,714 (6,204)
Other comprehensive income
(loss) for the period (6,132) (277) (3,574) 1,287
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
end of period 2,140 (4,917) 2,140 (4,917)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss for the period (14,770) (15,469) (9,242) (1,200)
Items not involving cash
Depreciation 15,187 12,285 30,115 24,095
Amortization of debt
issue costs 177 153 364 305
Stock-based compensation 767 1,129 1,742 1,456
Equity share of income
from long-term
investments - - - (122)
Gain on disposal of
capital assets (829) (111) (901) (134)
Future income taxes
(recovery) (445) 2,043 683 4,474
Non-controlling interest 41 (39) 80 (94)
-------------------------------------------------------------------------
128 (9) 22,841 28,780
Net change in non-cash
operating assets and
liabilities 22,898 17,384 14,170 173
-------------------------------------------------------------------------
23,026 17,375 37,011 28,953
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan proceeds - - 5,000 -
Issuance of long-term debt - - 20,000 -
Bank loan repayments - - (10,000) -
Net proceeds on issuance of
common shares - 3,410 - 8,667
Dividends (1,887) (1,892) (1,887) (1,892)
-------------------------------------------------------------------------
(1,887) 1,518 13,113 6,775
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital assets (9,862) (19,341) (25,719) (34,160)
Proceeds on disposal of
capital assets 1,143 153 1,174 258
Acquisitions, net of cash
acquired - - - (6,117)
Long-term investments and
other - - - 243
Net change in non-cash
working capital from
purchase of capital
assets (1,975) 6,319 (8,441) 5,890
-------------------------------------------------------------------------
(10,694) (12,869) (32,986) (33,886)
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents (5,588) (130) (3,506) 1,570
-------------------------------------------------------------------------
Increase in cash position 4,857 5,894 13,632 3,412
Cash and cash equivalents,
beginning of period 45,267 36,622 36,492 39,104
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 50,124 42,516 50,124 42,516
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2009
(figures in text and tables are in 000s except share data and certain
other exceptions as indicated) (unaudited)
1. BASIS OF PRESENTATION
The interim financial statements of Calfrac Well Services Ltd. (the
"Company") do not conform in all respects to the requirements of
generally accepted accounting principles (GAAP) for annual financial
statements. The interim financial statements should be read in
conjunction with the most recent annual financial statements.
2. SEASONALITY OF OPERATIONS
The Company's Canadian business is seasonal in nature. The lowest
activity levels are typically experienced during the second quarter
of the year when road weight restrictions are in place and access to
wellsites in Canada is reduced.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The interim financial statements follow the same accounting
policies and methods of application as the most recent annual
financial statements, except for the adoption of the Canadian
Institute of Chartered Accountants (CICA) Handbook Section 3064
Goodwill and Intangible Assets. Section 3064 replaces the
previous Section 3062 and establishes standards for the
recognition, measurement, presentation and disclosure of
intangible assets and goodwill subsequent to its initial
recognition. The adoption of Section 3064 has not had an impact
on the Company's consolidated financial statements, as the
provisions relating to goodwill are unchanged from the previous
standard and the Company has no recognizable intangible assets.
(b) In 2006, the CICA Accounting Standards Board (AcSB) adopted a
strategic plan for the direction of accounting standards in
Canada. As part of that plan, the AcSB confirmed in February 2008
that International Financial Reporting Standards (IFRS) will
replace Canadian GAAP in 2011 for profit-oriented Canadian
publicly accountable enterprises. As the Company will be required
to report its results in accordance with IFRS starting in 2011,
the Company has developed its project plan which includes the
following key elements:
- determine appropriate changes to accounting policies and
required amendments to financial disclosures;
- identify and implement changes in associated processes and
information systems;
- comply with internal control requirements; and
- educate and train internal and external stakeholders.
The Company is currently analysing accounting policy alternatives
and identifying implementation options for the areas that have
been identified as having the greatest potential impact to the
Company's financial statements or the greatest risk in terms of
complexity to implement. The areas identified to date include
capital assets, impairment and foreign currency translation.
4. BANK LOAN
The Company has an operating loan facility of $25,000 payable on
demand and bearing interest at the bank's prime rate plus
0.75 percent, of which $10,000 was drawn at June 30, 2009 (December
31, 2008 - $15,000). The facility is secured by a general security
agreement over all Canadian and U.S. assets of the Company.
5. LONG-TERM DEBT
---------------------------------------------------------------------
As at June 30, December
2009 31, 2008
---------------------------------------------------------------------
(000s) ($) ($)
US$135,000 senior unsecured notes, due
February 15, 2015 bearing interest at 7.75%,
payable semi-annually 157,005 164,430
Less: unamortized debt issue costs (3,975) (4,531)
---------------------------------------------------------------------
153,030 159,899
$65,000 extendible revolving term loan facility
bearing interest at the bankers' acceptance
rate plus stamping fees of 2.50%, secured by a
general security agreement over all Canadian
and U.S. assets of the Company 20,000 -
---------------------------------------------------------------------
173,030 159,899
Less: current portion of long-term debt (1,600) -
---------------------------------------------------------------------
171,430 159,899
---------------------------------------------------------------------
---------------------------------------------------------------------
The fair value of the senior unsecured notes based on the closing
price at June 30, 2009 was $135,024 (December 31, 2008 - $77,282).
The extendible revolving term loan facility is repayable in 15 equal
quarterly principal instalments of $800 commencing March 31, 2010
plus a final payment of $8,000 on December 31, 2013, assuming the
facility is not extended. The term and commencement of principal
repayments under the facility may be extended by one year on each
anniversary at the request of the Company and acceptance by the
lenders. The Company also has the ability to prepay principal without
penalty.
6. CAPITAL STOCK
Authorized capital stock consists of an unlimited number of common
shares.
---------------------------------------------------------------------
Continuity of Common Shares (year-to-date) Shares Amount
---------------------------------------------------------------------
(No.) ($000s)
Balance, January 1, 2009 37,741,561 168,813
Issued upon exercise of stock options - -
Issued on acquisitions - -
Purchased under Normal Course Issuer Bid - -
---------------------------------------------------------------------
Balance, June 30, 2009 37,741,561 168,813
---------------------------------------------------------------------
---------------------------------------------------------------------
The weighted average number of common shares outstanding for the six
months ended June 30, 2009 was 37,741,561 basic and 37,741,561
diluted (2008 - 37,557,750 basic and 37,597,814 diluted). The
difference between basic and diluted shares for the six months ended
June 30, 2008 was attributable to the dilutive effect of stock
options issued by the Company and shares held in trust. All of the
outstanding options disclosed in note 8 could be potentially dilutive
in the future; however they were not included in the calculation of
diluted shares for the six months ended June 30, 2009, as they would
have an anti-dilutive effect.
7. CONTRIBUTED SURPLUS
---------------------------------------------------------------------
Continuity of Contributed Surplus (year-to-date) Amount
---------------------------------------------------------------------
(000s) ($)
Balance, January 1, 2009 7,297
Stock options expensed 1,742
Stock options exercised -
---------------------------------------------------------------------
Balance, June 30, 2009 9,039
---------------------------------------------------------------------
---------------------------------------------------------------------
8. STOCK OPTIONS
---------------------------------------------------------------------
Average
Exercise
Continuity of Stock Options (year-to-date) Options Price
---------------------------------------------------------------------
(No.) ($)
Balance, January 1, 2009 2,043,344 21.69
Granted during the period 847,500 8.41
Exercised for common shares - -
Forfeited (102,006) 18.67
Expired (35,000) 37.86
---------------------------------------------------------------------
Balance, June 30, 2009 2,753,838 17.51
---------------------------------------------------------------------
---------------------------------------------------------------------
Stock options vest equally over three or four years and expire three-
and-one-half or five years from the date of grant. The exercise price
of outstanding options ranges from $8.35 to $31.16 with a weighted
average remaining life of 3.36 years. When stock options are
exercised the proceeds, together with the amount of compensation
expense previously recorded in contributed surplus, are added to
capital stock.
9. CAPITAL STRUCTURE
The Company's capital structure is comprised of shareholders' equity
and long-term debt. The Company's objectives in managing capital are
(i) to maintain flexibility so as to preserve the Company's access to
capital markets and its ability to meet its financial obligations,
and (ii) to finance growth, including potential acquisitions.
The Company manages its capital structure and makes adjustments in
light of changing market conditions and new opportunities, while
remaining cognizant of the cyclical nature of the oilfield services
sector. To maintain or adjust its capital structure, the Company may
revise its capital spending, adjust dividends paid to shareholders,
issue new shares or new debt or repay existing debt.
The Company monitors its capital structure and financing requirements
using, amongst other parameters, the ratio of long-term debt to cash
flow. Cash flow for this purpose is defined as cash provided by
operating activities before the net change in non-cash operating
assets and liabilities as reflected in the consolidated statement of
cash flows. The ratio of long-term debt to cash flow does not have
any standardized meaning prescribed under GAAP, and may not be
comparable to similar measures used by other companies.
At June 30, 2009, the long-term debt to cash flow ratio was 2.31:1
(December 31, 2008 - 1.98:1) calculated on a 12-month trailing basis
as follows:
---------------------------------------------------------------------
As at June 30, December
2009 31, 2008
---------------------------------------------------------------------
(000s) ($) ($)
Long-term debt (net of unamortized debt issue
costs) (note 5) 173,030 159,899
Cash flow 74,808 80,747
---------------------------------------------------------------------
Long-term debt to cash flow ratio 2.31 1.98
---------------------------------------------------------------------
---------------------------------------------------------------------
The Company is subject to certain financial covenants relating to
working capital, leverage and the generation of cash flow in respect
of its operating and revolving credit facilities. These covenants are
monitored on a monthly basis. The Company is in compliance with all
such covenants.
The Company's capital management objectives, evaluation measures and
targets have remained unchanged over the periods presented.
10. CONTINGENCIES
Greek Operations
As a result of the acquisition and amalgamation with Denison Energy
Inc. ("Denison") in 2004, the Company assumed certain legal
obligations relating to Denison's Greek operations.
In 1998, North Aegean Petroleum Company E.P.E. ("NAPC"), a Greek
subsidiary of a consortium in which Denison participated (and which
is now a majority-owned subsidiary of the Company), terminated
employees in Greece as a result of the cessation of its oil and gas
operations in that country. Several groups of former employees have
filed claims against NAPC and the consortium alleging that their
termination was invalid and that their severance pay was improperly
determined.
In 1999, the largest group of plaintiffs received a ruling from the
Athens Court of First Instance that their termination was invalid and
that compensation amounting to approximately $11,112 (6,846 euros)
plus interest was due to the former employees. This decision was
appealed to the Athens Court of Appeal, which allowed the appeal in
2001 and annulled the above-mentioned decision of the Athens Court of
First Instance. The said group of former employees filed an appeal
with the Supreme Court of Greece, which was heard on May 29, 2007.
The Supreme Court of Greece allowed the appeal and sent the matter
back to the Athens Court of Appeal for the consideration of damages.
On June 3, 2008, the Athens Court of Appeal rejected NAPC's appeal of
the Supreme Court of Greece's decision, and reinstated the award of
the Athens Court of First Instance, which decision has been further
appealed and is scheduled to be heard by the Supreme Court of Greece
on November 3, 2009. Counsel to NAPC has obtained a judicial order
entitling NAPC to obtain certain employment information in respect of
the plaintiffs which is required in order to assess the extent to
which the plaintiffs have mitigated any damages which may otherwise
be payable. NAPC intends to vigorously defend the appeal decision
before the Supreme Court of Greece both in relation to the merits of
the plaintiffs' case as well as in respect of the quantum of any
damages which may be awarded. In the event that an adverse ruling is
issued by the Supreme Court of Greece, NAPC and the Company intend to
assess available rights of appeal to any other levels of court in any
jurisdiction where such an appeal is warranted.
Several other smaller groups of former employees have filed similar
cases in various courts in Greece. One of these cases was heard by
the Athens Court of First Instance on January 18, 2007. By judgment
rendered November 23, 2007, the plaintiff's allegations were
partially accepted, and the plaintiff was awarded damages of
approximately $55 (34 euros), plus interest. NAPC's appeal of this
decision was heard on June 2, 2009, but to date no judgment has been
rendered. Another one of the lawsuits was heard by the Supreme Court
of Greece on November 6, 2007, at which date the appeal of the
plaintiffs was denied for technical reasons due to improper service.
A rehearing of this appeal has been scheduled for September 22, 2009.
The remaining action, which is seeking salaries in arrears of
approximately $713 (439 euros) plus interest, is scheduled to be
heard before the Athens Court of First Instance on October 1, 2009.
The direction and financial consequences of the potential decisions
in these actions cannot be determined at this time and, consequently,
no provision has been recorded in these financial statements.
11. COMPARATIVES
Certain comparatives have been reclassified to conform with the
financial statement presentation adopted in the current period.
12. SEGMENTED INFORMATION
The Company's activities are conducted in four geographic segments:
Canada, Russia, the United States and Latin America. All activities
are related to fracturing, coiled tubing, cementing and well
stimulation services for the oil and gas industry.
---------------------------------------------------------------------
United
Canada Russia States
---------------------------------------------------------------------
(000s) ($) ($) ($)
---------------------------------------------------------------------
Three Months Ended June 30, 2009
Revenue 26,529 19,193 42,954
Operating income (loss)(1) (1,320) 6,593 (433)
Segmented assets 267,928 106,641 240,777
Capital expenditures 2,586 1,077 5,796
Goodwill 7,236 979 2,308
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended June 30, 2008
Revenue 32,231 15,057 41,767
Operating income (loss)(1) (8,812) 3,029 10,269
Segmented assets 257,807 105,606 204,838
Capital expenditures 8,078 343 9,902
Goodwill 7,236 979 2,308
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended June 30, 2009
Revenue 111,604 34,158 111,496
Operating income (loss)(1) 8,017 9,769 16,807
Segmented assets 267,928 106,641 240,777
Capital expenditures 12,392 1,436 10,790
Goodwill 7,236 979 2,308
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended June 30, 2008
Revenue 115,316 29,934 82,642
Operating income (loss)(1) 11,791 4,739 21,632
Segmented assets 257,807 105,606 204,838
Capital expenditures 11,110 886 19,345
Goodwill 7,236 979 2,308
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Latin Consol-
America Corporate idated
---------------------------------------------------------------------
(000s) ($) ($) ($)
---------------------------------------------------------------------
Three Months Ended June 30, 2009
Revenue 16,051 - 104,727
Operating income (loss)(1) 3,149 (3,937) 4,052
Segmented assets 31,556 - 646,902
Capital expenditures 403 - 9,862
Goodwill - - 10,523
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Ended June 30, 2008
Revenue 5,602 - 94,657
Operating income (loss)(1) (750) (4,744) (1,008)
Segmented assets 16,765 - 585,016
Capital expenditures 1,018 - 19,341
Goodwill - - 10,523
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended June 30, 2009
Revenue 27,857 - 285,115
Operating income (loss)(1) 5,460 (8,574) 31,479
Segmented assets 31,556 - 646,902
Capital expenditures 1,101 - 25,719
Goodwill - - 10,523
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended June 30, 2008
Revenue 12,391 - 240,283
Operating income (loss)(1) (1,356) (8,337) 28,469
Segmented assets 16,765 - 585,016
Capital expenditures 2,819 - 34,160
Goodwill - - 10,523
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Operating income (loss) is defined as net income (loss) plus
depreciation, interest, equity share of net income from long-term
investments, foreign exchange gains or losses, gains or losses on
disposal of capital assets, income taxes and non-controlling
interest.
The following table sets forth consolidated revenue by service line:
---------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
---------------------------------------------------------------------
(000s) ($) ($) ($) ($)
Fracturing 84,997 77,617 237,789 197,407
Coiled tubing 10,967 10,436 25,589 24,644
Cementing 5,780 4,638 15,602 13,145
Other 2,983 1,966 6,135 5,087
---------------------------------------------------------------------
104,727 94,657 285,115 240,283
---------------------------------------------------------------------
---------------------------------------------------------------------
13. SUBSEQUENT EVENT
Subsequent to June 30, 2009, the Company entered into an agreement to
purchase the fracturing assets of a competitor for approximately
$42.8 million. The purchase price is payable in cash less the
Canadian dollar equivalent of an assumed debt of US$3.2 million. In
addition, the Company will acquire approximately $3.5 million of the
seller's parts and materials inventory. The transaction is expected
to close on or about August 14, 2009.%SEDAR: 00002062E
For further information: Douglas R. Ramsay, President and Chief
Executive Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Laura A.
Cillis, Senior Vice President, Finance and Chief Financial Officer, Telephone:
(403) 266-6000, Fax: (403) 266-7381; Tom J. Medvedic, Senior Vice President,
Corporate Development, Telephone: (403) 266-6000, Fax: (403) 266-7381
