Calfrac Announces First Quarter Results



    CALGARY, May 6 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the
Company") (TSX-CFW) is pleased to announce its financial and operating results
for the three months ended March 31, 2009.

    
    HIGHLIGHTS
    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s, except per share and unit data)            ($)       ($)       (%)
    (unaudited)

    Financial
    Revenue                                      180,388   145,627        24
    Operating income(1)                           27,427    29,477        (7)
    Net income                                     5,528    14,269       (61)
      Per share - basic & diluted                   0.15      0.38       (61)
    Cash flow from operations(2)                  22,713    28,790       (21)
      Per share - basic & diluted                   0.60      0.77       (22)
    EBITDA(3)                                     25,945    31,047       (16)
      Per share - basic & diluted                   0.69      0.83       (17)
    Working capital (end of period)              129,532   111,989        16
    Shareholders' equity (end of period)         402,537   377,056         7
    Weighted average common shares outstanding
     (No.)
      Basic                                       37,742    37,388         1
      Diluted                                     37,742    37,464         1
    -------------------------------------------------------------------------

    Operating (end of period) (No.)
    Fracturing spreads
      Conventional fracturing(4)                      25        24         4
      Coalbed methane(4)                               2         4       (50)
    -------------------------------------------------------------------------
      Total(4)                                        27        28        (4)
    Coiled tubing units                               18        18         -
    Cementing units                                   20        17        18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Operating income is defined as revenue less operating expenses, which
        excludes depreciation, and selling, general and administrative
        expenses. 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) Cash flow is defined as funds provided by operations as reflected in
        the consolidated statement of cash flows. Cash flow and cash flow per
        share are measures that provide shareholders and potential investors
        with additional information regarding the Company's liquidity and its
        ability to generate funds to finance its operations. Management
        utilizes these measures to assess the Company's ability to finance
        operating activities and capital expenditures. Cash flow and cash
        flow per share are not measures that 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 income 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.

    (4) The reported number of available conventional and coalbed methane
        fracturing spreads was changed during the fourth quarter of 2008 to
        reflect the reconfiguration of Calfrac's fracturing horsepower
        requirements in North America.


    PRESIDENT'S MESSAGE

    I am pleased to present Calfrac's operating and financial highlights for
the three months ended March 31, 2009 and discuss our prospects for the
remainder of the year. During the first quarter, our Company:

    -   experienced strong fracturing and cementing activity levels in the
        Fayetteville shale play in Arkansas;
    -   signed five annual contracts for the provision of fracturing and
        coiled tubing services in Western Siberia during 2009;
    -   combined Calfrac's Mexico and Argentina operations under an
        experienced management team to form a new Latin America division; and
    -   initiated cost reduction measures in Canada and the United States
        through workforce planning which resulted in restructuring costs of
        $0.9 million in the first quarter and a 16% reduction in personnel.

    Financial Highlights

    For the three months ended March 31, 2009, the Company achieved:

    -   revenue of $180.4 million, an increase of 24 percent from 2008;
    -   net income of $5.5 million or $0.15 per share compared to
        $14.3 million or $0.38 per share in the same period in 2008;
    -   cash flow from operations before changes in non-cash working capital
        of $22.7 million or $0.60 per share versus $28.8 million or $0.77 per
        share in the same quarter of 2008; and
    -   exited the quarter in strong financial condition with working capital
        of $129.5 million and $60.0 million of unutilized credit facilities.
    

    Given the uncertainty and pessimism currently being experienced in the
global economy which has resulted in low commodity pricing, restricted access
to capital for the exploration and production sector and reduced rates of oil
and natural gas drilling in western Canada and parts of the United States,
Calfrac's geographical and service line diversification was a great benefit
during the quarter. Solid performance by our international operations and
continued growth in the United States helped to offset weakness in our
Canadian segment. Strength in certain regional North American markets helped
to offset declining activity levels in others. Calfrac has entered the second
quarter of 2009 with a solid balance sheet, good access to credit and
relatively strong cash flow.

    Operational Highlights

    Canada

    The Company's fracturing and coiled tubing operations located in the
deeper basins of northern Alberta and northeast British Columbia were active
during the first quarter of 2009 but below expectations. Activity levels for
all service lines in western Canada were focused on the Montney and Horn River
unconventional natural gas resource plays, as Calfrac continued to expand in
northeast British Columbia in order to serve these emerging unconventional
reservoirs. In addition, the shallow gas and coalbed methane fracturing
markets of southern and central Alberta were relatively active during the
first quarter, despite weakening natural gas prices. In response to the market
slowdown in western Canada at the end of the first quarter, the Company
initiated significant cost cutting measures including reductions of personnel,
salary rollbacks and discretionary spending constraints.

    United States

    In the United States, strong fracturing and cementing activity levels in
the Fayetteville basin continued to drive the financial performance of this
operating region, which delivered increases in both revenue and operating
income. However, steadily weakening natural gas prices significantly impacted
fracturing activity levels in the Rockies during the first quarter. In
response to these adverse market conditions, the Company transferred personnel
and equipment into Arkansas and realigned its cost structure in the United
States, including workforce reductions, salary rollbacks and reducing
discretionary spending.

    Russia

    During the first quarter, fracturing and coiled tubing activity levels in
Western Siberia were better than anticipated resulting in improved financial
performance from this geographic segment. The reported Canadian dollar
financial results, however, were negatively impacted by a 17 percent decline
in the value of the Russian rouble from the fourth quarter of 2008. Five new
annual contracts were signed in the first quarter and the Company is expecting
to sustain equipment utilization at the levels experienced during the first
quarter.

    Mexico

    Financial and operating results for Mexico in the first quarter of 2009
were very encouraging, primarily due to the completion of a greater number of
larger and more technically demanding jobs. The Company expects this positive
momentum to continue throughout the remainder of the year.

    Argentina

    Calfrac's cementing operations in Argentina achieved strong activity
levels and financial performance during the first quarter due to higher
drilling activity and a more diversified customer base. The Company entered
this new market with minimal capital investment during the second quarter of
2008. This conservative approach is bearing fruit and the Company intends to
continue to develop new market opportunities as the Argentina business
environment improves.

    Future Prospects

    The global economic slowdown has reduced demand for oil and natural gas
which has led to significantly lower North American drilling activity levels
and intense price competition for pressure pumping services in Canada and the
United States. In response to these difficult market conditions, the Company
has proactively aligned its cost structure by reducing its Canadian and United
States workforce by approximately 30 percent including reductions that will be
completed by the middle of May, instituting wage rollbacks of between 3
percent and 20 percent for employees in exchange for a reduced work schedule,
lowering its 2009 capital program to $15.0 million and cutting discretionary
spending. In addition, Calfrac is implementing cost rationalization measures
throughout its supply chain in an effort to further reduce operating expenses.
The Company also suspended primary cementing operations in the Canadian
market, but will honour any long-term projects and continue to provide
remedial cementing services from its district bases. These measures are
underpinned by the Company's financial foundation of a strong balance sheet,
including the year-over-year increase in working capital from approximately
$112 million to approximately $130 million entering the second quarter.
    In April 2009, Calfrac made an organizational change in the Canadian
operating division's senior management team. Bruce Payne was appointed
President of the Company's Canadian Division, replacing Don Battenfelder, who
will remain with the organization as Vice President, Operations in Canada.
Bruce was most recently the Company's Vice President, Operations in the United
States and has over 35 years of pressure pumping services experience,
including a diverse background in operations, finance, sales and marketing and
technology. This organizational change is expected to deliver improvements in
the Canadian segment's operational and financial performance.
    To date in the second quarter of 2009, Calfrac continues to be active in
northwest Alberta and northeast British Columbia as certain operators in the
oil and natural gas industry continue to focus on drilling in unconventional
reservoirs. Drilling activity levels after the end of spring break-up in
Canada are highly uncertain and will depend on commodity prices and the
availability of investment capital, however, activity levels in the Montney,
Horn River and Bakken resource plays are expected to be relatively strong.
    In the United States, fracturing and cementing activity levels in the
Fayetteville shale play of Arkansas are expected to remain relatively strong
throughout the remainder of 2009. In response to increasing customer demand,
Calfrac recently transferred a fourth fracturing spread and an additional
cementing crew into this market. Competitive pricing pressures, however, are
anticipated to reduce operating margins during the rest of the year. The
Company's fracturing operations based in Colorado are expected to continue to
experience low levels of activities in this area until natural gas prices
increase significantly and, accordingly, the Company has reduced the labour
force in these regions as well as transferred equipment and personnel into
areas of higher activity.
    In Russia, the Company has five signed annual contracts for the provision
of fracturing and coiled tubing services with two of that country's largest
oil and natural gas companies. As a result, Calfrac's equipment fleet of three
fracturing spreads and five coiled tubing units is expected to remain highly
utilized throughout 2009. While the most recent tender process has resulted in
lower pricing, the Company does expect that its equipment will be more highly
utilized, resulting in guarded optimism about 2009 revenue and operating
income for this region.
    The solid operating and financial performance achieved in Mexico during
the first quarter of 2009 is expected to continue. In Argentina, the Company
plans to introduce acidizing services early in the second quarter, broadening
the scale of operations in this market. The Company's management team in Latin
America will continue to evaluate opportunities that could expand the scale of
these operations into other service lines and operating regions in the future.
    Overall, the global economic recession is expected to reduce short-term
demand for pressure pumping services, particularly in North America; however,
Calfrac's long-term outlook for the pressure pumping industry remains strong.
Calfrac has taken proactive steps to rationalize its cost structure and
improve operating efficiencies. The Company will maintain its strong balance
sheet while striving to best execute its strategy through these adverse market
conditions. Calfrac believes that this approach leaves it well-positioned to
capitalize on future opportunities.

    
    On behalf of the board of directors,

    Douglas R. Ramsay
    President & Chief Executive Officer

    May 5, 2009



    First Quarter 2009 Overview
    ---------------------------
    In the first quarter of 2009, the Company:

    -   increased revenue by 24 percent to $180.4 million from $145.6 million
        in the first quarter of 2008;
    -   reported net income of $5.5 million or $0.15 per share compared to
        $14.3 million or $0.38 per share in the comparable 2008 period;
    -   reported operating income of $27.4 million in the first quarter of
        2009;
    -   generated cash flow from operations of $22.7 million or $0.60 per
        share;
    -   incurred capital expenditures of $15.9 million primarily to bolster
        the Company's fracturing equipment fleet;
    -   experienced strong fracturing and cementing activity levels in the
        Fayetteville shale play in Arkansas;
    -   signed five annual contracts for the provision of fracturing and
        coiled tubing services in Western Siberia during 2009;
    -   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
        $0.9 million in the first quarter and a 16% reduction in personnel;
        and
    -   incurred a foreign exchange loss of $1.6 million in the first quarter
        of 2009 versus a foreign exchange gain of $1.4 million in the
        comparable period of 2008.

    Financial Overview - Three Months Ended March 31, 2009 Versus Three
    -------------------------------------------------------------------
    Months Ended March 31, 2008
    ---------------------------

    Canada

    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s, except operational information)            ($)       ($)       (%)
    (unaudited)

    Revenue                                       85,074    83,085         2
    Expenses
    Operating                                     73,017    60,172        21
    SG&A                                           2,720     2,310        18
                                                -----------------------------
                                                  75,737    62,482        21
                                                -----------------------------
    Operating income(1)                            9,337    20,603       (55)
    Operating income (%)                           11.0%     24.8%       (56)
    Fracturing revenue per job ($)                83,859    52,995        58
    Number of fracturing jobs                        865     1,273       (32)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below for further information.
    


    Revenue

    Revenue from Calfrac's Canadian operations during the first quarter of
2009 increased by 2 percent to $85.1 million from $83.1 million in the
comparable three-month period of 2008. Canadian fracturing revenue for the
quarter totalled $72.5 million, an increase of 8 percent from the $67.5
million generated in the corresponding quarter of 2008. The Company completed
865 Canadian fracturing jobs for average revenue of $83,859 per job in the
first quarter of 2009 compared to 1,273 jobs for average revenue of $52,995
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 Montney and Horn River 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 $1.6 million from the comparable period in 2008 to $9.7 million
in the first quarter of 2009. During this period Calfrac completed 545 jobs
for average revenue of $17,862 per job compared to 1,036 jobs for average
revenue of $7,813 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, including the Montney play, 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 first quarter of 2009
realized revenue of $2.8 million, a 63 percent decrease from the $7.5 million
recorded in the corresponding quarter of 2008. For the three months ended
March 31, 2009, the Company completed 267 jobs for average revenue of $10,491
per job, compared to 986 jobs for average revenue of $7,635 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 continued reduction in the
number of wells being completed in western Canada, especially shallow gas
wells in the southern Alberta market.

    Operating Expenses

    Operating expenses in Canada increased by 21 percent to $73.0 million
during the first quarter of 2009 from $60.2 million in the same period of
2008. The increase in Canadian operating expenses was mainly due to higher
levels of activity in the unconventional reservoirs of western Canada, an
increase in equipment repair expenses and restructuring costs, offset slightly
by lower fuel expenses.

    Selling, General and Administrative (SG&A) Expenses

    SG&A expenses for Calfrac's Canadian operations were $2.7 million during
the first quarter of 2009, an increase of 18 percent from the corresponding
period of 2008 due primarily to higher personnel costs.

    
    United States

    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s, except operational information)            ($)       ($)       (%)
    (unaudited)

    Revenue                                       68,542    40,875        68
    Expenses
    Operating                                     49,163    27,426        79
    SG&A                                           2,140     2,086         3
                                                -----------------------------
                                                  51,303    29,512        74
                                                -----------------------------
    Operating income(1)                           17,239    11,363        52
    Operating income (%)                           25.2%     27.8%        (9)
    Fracturing revenue per job ($)               105,865    67,966        56
    Number of fracturing jobs                        593       587         1
    Cdn$/US$ average exchange rate(2)             1.2453    1.0042        24
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below for further information.
    (2) Source: Bank of Canada.
    


    Revenue

    Revenue from Calfrac's United States operations increased significantly
during the first quarter of 2009 to $68.5 million from $40.9 million in the
comparable quarter of 2008. In the first quarter of 2009, the Company
completed 593 fracturing jobs in the United States for average revenue of
$105,865 per job compared to 587 jobs for average revenue of $67,966 per job
in the first three months of 2008. The increase in United States revenue and
revenue per job were due primarily to higher fracturing activity levels in
Arkansas combined with the appreciation in the value of the United States
dollar, offset partially by lower fracturing activity levels in Colorado.
Higher cementing activity in Arkansas during the first quarter of 2009 also
contributed to the increase in revenue from the comparative three-month period
in 2008.

    Operating Expenses

    Operating expenses in the United States were $49.2 million for the first
quarter of 2009, an increase of 79 percent from the comparative period in 2008
primarily due to a higher revenue base, the impact of the higher value of the
United States dollar, higher proppant and equipment repair expenses 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 quarter of 2009
increased by 3 percent from the comparable period in 2008 to $2.1 million
primarily due to the appreciation in the value of the United States dollar,
offset partially by lower compensation expenses.

    
    Russia

    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s, except operational information)            ($)       ($)       (%)
    (unaudited)

    Revenue                                       14,965    14,877         1
    Expenses
    Operating                                     10,911    12,467       (12)
    SG&A                                             878       700        25
                                                -----------------------------
                                                  11,789    13,167       (10)
                                                -----------------------------
    Operating income(1)                            3,176     1,710        86
    Operating income (%)                           21.2%     11.5%        84
    Fracturing revenue per job ($)                75,211   141,341       (47)
    Number of fracturing jobs                        134        62       116
    Cdn$/Rouble average exchange rate(2)          0.0367    0.0415       (12)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below for further information.
    (2) Source: Bank of Canada.
    


    Revenue

    During the first quarter of 2009, the Company's revenue from Russian
operations increased by 1 percent to $15.0 million from $14.9 million in the
corresponding three-month period of 2008. Fracturing revenue in the first
three months of 2009 was $10.1 million versus $8.8 million in the
corresponding quarter of 2008. In the first quarter of 2009, the Company
completed 134 Russian fracturing jobs for average revenue of $75,211 per job
compared to 62 jobs for average revenue of $141,341 per job in the comparable
period of 2008.
    Revenue from the Company's coiled tubing operations in Western Siberia
during the first quarter of 2009 decreased to $4.9 million from $6.1 million
in the comparable period of 2008. During this period, Calfrac completed 109
jobs for average revenue of $44,831 per job compared to 88 jobs for average
revenue of $69,478 per job in the comparable quarter of 2008.
    In Russia, fracturing and coiled tubing revenue per job for the three
months ended March 31, 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 12 percent versus the Canadian dollar.
Total revenue during the first quarter of 2009 was consistent with 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 first quarter of 2009 were $10.9
million compared to $12.5 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 and better equipment utilization.

    SG&A Expenses

    SG&A expenses in Russia were $0.9 million for the three-month period
ended March 31, 2009 versus $0.7 million in the same quarter of 2008. The
increase was primarily due to an increase in personnel costs, offset partially
by the depreciation of the Russian rouble.

    
    Latin America

    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s, except operational information)            ($)       ($)       (%)
    (unaudited)

    Revenue                                       11,807     6,790        74
    Expenses
    Operating                                      9,073     7,290        24
    SG&A                                             423       106       299
                                                -----------------------------
                                                   9,496     7,396        28
                                                -----------------------------
    Operating income(1)                            2,311      (606)      481
    Operating income (%)                           19.6%     -8.9%       320
    Cdn$/Mexico Peso average exchange rate(2)     0.0867    0.0929        (7)
    Cdn$/Argentina Peso average exchange rate(2)  0.3444    0.3161         9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below for further information.
    (2) Source: Bank of Canada.
    


    Revenue

    Calfrac's Latin America operations generated total revenue of $11.8
million during the first quarter of 2009 versus $6.8 million in the comparable
three-month period in 2008. For the three months ended March 31, 2009 and
2008, revenue generated through subcontractors was $3.2 million and $3.1
million, respectively. The increase in revenue was primarily due to the
completion of larger fracturing jobs in Mexico and the commencement of
cementing operations in Argentina during the second quarter of 2008.

    Operating Expenses

    Operating expenses in Latin America for the three months ended March 31,
2009 increased from the comparative period in 2008 by 24 percent to $9.1
million. This increase was due primarily to 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 $0.3 million from the
comparable quarter of 2008 to $0.4 million in the first quarter of 2009
primarily due to the Company's expanded scale of operations in Mexico and
Argentina.

    
    Corporate

    -------------------------------------------------------------------------
    Three Months Ended March 31,                    2009      2008    Change
    -------------------------------------------------------------------------
    (000s)                                            ($)       ($)       (%)
    (unaudited)

    Expenses
    Operating                                        779       530        47
    SG&A                                           3,857     3,063        26
                                                -----------------------------
                                                   4,636     3,593        29
    Operating loss(1)                             (4,636)   (3,593)      (29)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below 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 47 percent increase in Corporate operating
expenses from the first 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 March 31, 2009, Corporate SG&A expenses
increased by 26 percent to $3.9 million, mainly due to higher stock-based
compensation expenses.

    Interest and Depreciation Expenses

    The Company's net interest expense of $3.7 million for the first quarter
of 2009 increased by $1.0 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 $20.0 million drawdown on the Company's revolving term
facility during the first three months of 2009.
    For the three months ended March 31, 2009, depreciation expense increased
by 26 percent to $14.9 million from $11.8 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 $1.6 million during the
first quarter of 2009 versus a foreign exchange gain of $1.4 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 depreciation of the Russian rouble against the Canadian
dollar and the impact of the depreciation of the Canadian dollar on United
States dollar denominated liabilities held in Canada.

    Income Tax Expenses

    The Company recorded income tax expense of $1.8 million during the first
quarter of 2009 compared to $2.3 million in the comparable period of 2008. For
the three months ended March 31, 2009, Calfrac recorded a current income tax
expense of $0.6 million compared to a tax recovery of $0.1 million in the
corresponding period in 2008. Calfrac recorded a future income tax expense of
$1.1 million for the quarter ended March 31, 2009 compared to $2.4 million for
the same period of 2008. The decrease in total income tax expense was
primarily due to lower Company profitability and significant foreign exchange
losses in Russia which related to the Company's U.S. dollar denominated
long-term debt and are deductible for income taxes. The effective income tax
rate for the three months ended March 31, 2009 was 24 percent compared to an
effective tax rate of 14 percent in the same quarter of 2008. The effective
income tax rate for the first quarter of 2009 increased from the comparable
period in 2008 mainly due to higher earnings in the United States, where the
Company incurs income taxes at higher effective tax rates.

    Net Income

    Net income was $5.5 million or $0.15 per share in the first quarter of
2009 versus $14.3 million or $0.38 per share in the same period of 2008
primarily due to higher operating expenses ($35.1 million), an increase in
depreciation costs ($3.1 million), foreign exchange losses instead of foreign
exchange gains ($3.0 million), higher SG&A expenses ($1.8 million), and an
increase in net interest expenses ($1.0 million), offset partially by higher
revenue ($34.8 million) and lower income tax expenses ($0.6 million).

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the three months ended March 31, 2009 decreased to $22.7 million or $0.60 per
share from $28.8 million or $0.77 per share during the same period in 2008.
The decrease in cash flow from operations in the 2009 first quarter from the
2008 first quarter resulted mainly from an increase in operating expenses
($35.1 million), foreign exchange losses instead of gains ($3.0 million),
higher SG&A expenses ($1.8 million), current income tax expenses ($0.7
million) and interest costs ($1.0 million) offset partially by higher revenue
($34.8 million).

    
    Quarterly Financial Summary

    -------------------------------------------------------------------------
    Three Months Ended                 June 30, Sept. 30,  Dec. 31,  Mar. 31,
                                          2007      2007      2007      2008
    -------------------------------------------------------------------------
    (000s, except per share and unit        ($)       ($)       ($)       ($)
     data)
    (unaudited)

    Financial

    Revenue                             87,778   129,585   114,450   145,627
    Operating income(1)                 15,614    34,024    19,872    29,477
    Net income (loss)                     (303)   16,441     3,653    14,269
      Per share - basic                  (0.01)     0.45      0.10      0.38
      Per share - diluted                (0.01)     0.45      0.10      0.38
    Cash flow from operations(1)        10,835    28,398    19,582    28,790
      Per share - basic                   0.30      0.78      0.53      0.77
      Per share - diluted                 0.30      0.78      0.53      0.77
    EBITDA(1)                           14,569    34,107    18,790    31,047
      Per share - basic                   0.40      0.94      0.51      0.83
      Per share - diluted                 0.40      0.93      0.51      0.83
    Capital expenditures                19,972    11,345    12,101    14,820
    Working capital (end of period)     86,971    99,696    92,156   111,989
    Shareholders' equity (end of
     period)                           321,218   336,858   350,915   377,056
    -------------------------------------------------------------------------

    Operating

    Fracturing spreads (end of period)
     (No.)
      Conventional(2)                       23        24        24        24
      Coalbed methane(2)                     4         4         4         4
    -------------------------------------------------------------------------
      Total(2)                              27        28        28        28
    Coiled tubing units (end of period)
     (No.)                                  15        17        18        18
    Cementing units (end of period)
     (No.)                                  15        16        16        17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three Months Ended                 June 30, Sept. 30,  Dec. 31,  Mar. 31,
                                          2008      2008      2008      2009
    -------------------------------------------------------------------------
    (000s, except per share and unit        ($)       ($)       ($)       ($)
     data)
    (unaudited)

    Financial

    Revenue                             94,657   151,650   172,430   180,388
    Operating income(1)                 (1,008)   27,812    25,658    27,427
    Net income (loss)                  (15,469)   11,203     7,861     5,528
      Per share - basic                  (0.41)     0.30      0.21      0.15
      Per share - diluted                (0.41)     0.30      0.21      0.15
    Cash flow from operations(1)            (9)   27,128    24,838    22,713
      Per share - basic                      -      0.72      0.66      0.60
      Per share - diluted                    -      0.72      0.66      0.60
    EBITDA(1)                             (813)   26,983    26,740    25,945
      Per share - basic                  (0.02)     0.71      0.71      0.69
      Per share - diluted                (0.02)     0.71      0.71      0.69
    Capital expenditures                19,341    18,414    32,233    15,857
    Working capital (end of period)     94,056   104,700   100,575   129,532
    Shareholders' equity (end of
     period)                            364,068  378,890   393,476   402,537
    -------------------------------------------------------------------------

    Operating

    Fracturing spreads (end of period)
     (No.)
      Conventional(2)                        25       25        24        25
      Coalbed methane(2)                      4        4         2         2
    -------------------------------------------------------------------------
      Total(2)                               29       29        26        27
    Coiled tubing units (end of period)
     (No.)                                   18       18        18        18
    Cementing units (end of period)
     (No.)                                   17       18        18        20
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" section below for further
        information.
    (2) The reported number of available conventional and coalbed methane
        fracturing spreads was changed during the fourth quarter of 2008 to
        reflect the reconfiguration of Calfrac's fracturing horsepower
        requirements in North America.


    Liquidity and Capital Resources

    -------------------------------------------------------------------------
    Three Months Ended March 31,                              2009      2008
    -------------------------------------------------------------------------
    (000s)                                                      ($)       ($)
    (unaudited)

    Cash provided by (used in):
      Operating activities                                  13,985    11,580
      Financing activities                                  15,000     5,256
      Investing activities                                 (22,292)  (21,019)
      Effect of exchange rate changes on cash and
       cash equivalents                                      2,082     1,701
    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash equivalents         8,775    (2,482)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Operating Activities

    The Company's cash flow from operations, excluding changes in non-cash
working capital, was $22.7 million during the first quarter of 2009 compared
to $28.8 million in the same period of 2008. The decrease was primarily due to
higher operating and SG&A expenses being partially offset by higher revenues
as discussed above under "Cash Flow". Net cash provided by operating
activities was also impacted by the net change in non-cash working capital. As
at March 31, 2009, Calfrac had working capital of $129.5 million, an increase
of $17.5 million from March 31, 2008. The increase in working capital was
primarily due to an increase in accounts receivable and inventory partially
offset by higher accounts payable, all of which were mainly due to a broader
scale of operations than at the end of March 2008. 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 in the first quarter of 2009
increased to $15.0 million from $5.3 million in the same 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 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 March 31, 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 March 31, 2009, the Company had cash and cash equivalents of $45.3
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.

    Investing Activities

    For the first quarter of 2009, Calfrac's net cash used for investing
activities was $22.3 million, up from $21.0 million for the same period of
2008. Capital expenditures were $15.9 million in the first three months of
2009, an increase of $1.0 million from the same period in the prior year.
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 quarter of 2009 was a gain of $2.1 million
versus a gain of $1.7 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 cash flow from operations, the Company expects to have adequate
resources to fund its financial obligations and planned capital expenditures
for 2009 and beyond.

    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 April 30, 2009,
there were 37,741,561 common shares issued and outstanding, and 2,746,874
options to purchase common shares.

    Advisories

    Forward-Looking Statements

    In 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, cash flow from
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.

    First Quarter Conference Call

    Calfrac will be conducting a conference call for interested analysts,
brokers, investors and news media representatives to review its 2009 first
quarter results at 10:00 a.m. (Mountain Daylight Time) on Thursday, May 7,
2009. The conference call dial-in number is 1-800-814-4941 or 416-644-3430.
The seven-day replay numbers are 1-877-289-8525 or 416-640-1917 (once
connected, enter 21304749 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                                             March 31,  December 31,
                                                          2009          2008
    -------------------------------------------------------------------------
    (000s) (unaudited)                                      ($)           ($)

    ASSETS
    Current assets
      Cash and cash equivalents                         45,267        36,492
      Accounts receivable                              132,390       120,048
      Income taxes recoverable                           6,564         6,681
      Inventory                                         41,924        41,123
      Prepaid expenses and deposits                      5,607         5,813
    -------------------------------------------------------------------------
                                                       231,752       210,157
    Capital assets                                     467,917       459,874
    Goodwill                                            10,523        10,523
    Future income taxes                                 14,456        11,218
    -------------------------------------------------------------------------
                                                       724,648       691,772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Accounts payable and accrued liabilities          92,220        94,582
      Bank loan (note 4)                                10,000        15,000
    -------------------------------------------------------------------------
                                                       102,220       109,582
    Long-term debt (note 5)                            185,773       159,899
    Other long-term liabilities                          1,356         1,368
    Future income taxes                                 29,411        24,815
    Deferred credit                                      3,268         2,588
    Non-controlling interest                                83            44
    -------------------------------------------------------------------------
                                                       322,111       298,296
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 6)                             168,813       168,813
    Contributed surplus (note 7)                         8,272         7,297
    Retained earnings                                  217,180       211,652
    Accumulated other comprehensive income               8,272         5,714
    -------------------------------------------------------------------------
                                                       402,537       393,476
    -------------------------------------------------------------------------
                                                       724,648       691,772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Contingencies (note 11)

    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

    -------------------------------------------------------------------------
    Three Months Ended March 31,                          2009          2008
    -------------------------------------------------------------------------
    (000s, except per share data) (unaudited)               ($)           ($)

    Revenue                                            180,388       145,627
    -------------------------------------------------------------------------
    Expenses
      Operating                                        142,944       107,886
      Selling, general and administrative               10,017         8,264
      Depreciation                                      14,928        11,810
      Interest, net                                      3,688         2,694
      Equity share of income from long-term
       investments                                           -          (122)
      Foreign exchange losses (gains)                    1,554        (1,426)
      Gain on disposal of capital assets                   (72)          (22)
    -------------------------------------------------------------------------
                                                       173,059       129,084
    -------------------------------------------------------------------------
    Income before income taxes and
     non-controlling interest                            7,329        16,543
    -------------------------------------------------------------------------
    Income taxes
      Current                                              634          (102)
      Future                                             1,128         2,431
    -------------------------------------------------------------------------
                                                         1,762         2,329
    -------------------------------------------------------------------------
    Income before non-controlling interest               5,567        14,214
    Non-controlling interest                                39           (55)
    -------------------------------------------------------------------------
    Net income for the period                            5,528        14,269
    Retained earnings, beginning of period             211,652       198,039
    -------------------------------------------------------------------------
    Retained earnings, end of period                   217,180       212,308
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
      Basic                                               0.15          0.38
      Diluted                                             0.15          0.38
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER
    COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
    Three Months Ended March 31,                          2009          2008
    -------------------------------------------------------------------------
    (000s) (unaudited)                                      ($)           ($)

    Net income for the period                            5,528        14,269
    Other comprehensive income
      Change in foreign currency translation
       adjustment                                        2,558         1,564
    -------------------------------------------------------------------------
    Comprehensive income                                 8,086        15,833
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss),
     beginning of period                                 5,714        (6,204)
      Other comprehensive income for the period          2,558         1,564
    -------------------------------------------------------------------------
    Accumulated other comprehensive income (loss),
     end of period                                       8,272        (4,640)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
    Three Months Ended March 31,                          2009          2008
    -------------------------------------------------------------------------
    (000s) (unaudited)                                      ($)           ($)

    CASH PROVIDED BY (USED IN)
    OPERATING ACTIVITIES
      Net income for the period                          5,528        14,269
      Items not involving cash
        Depreciation                                    14,928        11,810
        Amortization of debt issue costs                   187           152
        Stock-based compensation                           975           327
        Equity share of income from long-term
         investments                                         -          (122)
        Gain on disposal of capital assets                 (72)          (22)
        Future income taxes                              1,128         2,431
        Non-controlling interest                            39           (55)
    -------------------------------------------------------------------------
      Funds provided by operations                      22,713        28,790
      Net change in non-cash operating assets
       and liabilities                                  (8,728)      (17,210)
    -------------------------------------------------------------------------
                                                        13,985        11,580
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Bank loan proceeds                                 5,000             -
      Issue of long-term debt                           20,000             -
      Bank loan repayments                             (10,000)            -
      Net proceeds on issuance of common shares              -         5,256
    -------------------------------------------------------------------------
                                                        15,000         5,256
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Purchase of capital assets                       (15,857)      (14,820)
      Proceeds on disposal of capital assets                31           105
      Acquisitions, net of cash acquired (note 9)            -        (6,117)
      Long-term investments and other                        -           243
      Net change in non-cash working capital
       from purchase of capital assets                  (6,466)         (430)
    -------------------------------------------------------------------------
                                                       (22,292)      (21,019)
    -------------------------------------------------------------------------
    Effect of exchange rate changes on cash and
     cash equivalents                                    2,082         1,701
    -------------------------------------------------------------------------
    Increase (decrease) in cash position                 8,775        (2,482)
    Cash and cash equivalents, beginning of period      36,492        39,104
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period            45,267        36,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE THREE MONTHS ENDED MARCH 31, 2009
    (figures in text and tables are in 000s except share data) (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 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 and is assessing the
            potential impacts of this changeover accordingly.

    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 March 31, 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                                         March 31,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        (000s)                                              ($)           ($)

        US$135,000 senior unsecured notes, due
         February 15, 2015 bearing interest at
         7.75%, payable semi-annually                  170,276       164,430
        Less: unamortized debt issue costs              (4,503)       (4,531)
        ---------------------------------------------------------------------
                                                       165,773       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             -
        ---------------------------------------------------------------------
                                                       185,773       159,899
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The fair value of the senior unsecured notes based on the closing
        price at March 31, 2009 was $80,881 (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,
        and 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 date at the request of the Company and acceptance by the
        lenders. The Company also has the ability to prepay the loan
        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, March 31, 2009                     37,741,561       168,813
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The weighted average number of common shares outstanding for the
        three months ended March 31, 2009 was 37,741,561 basic and
        37,741,561 diluted (2008 - 37,387,770 basic and 37,463,950 diluted).
        The difference between basic and diluted shares for the three months
        ended March 31, 2008 was attributable to the dilutive effect of stock
        options issued by the Company and the shares held in trust.

    7.  CONTRIBUTED SURPLUS

        ---------------------------------------------------------------------
        Continuity of Contributed Surplus (year-to-date)              Amount
        ---------------------------------------------------------------------
        (000s)                                                            ($)

        Balance, January 1, 2009                                       7,297
          Stock options expensed                                         975
          Stock options exercised                                          -
        ---------------------------------------------------------------------
        Balance, March 31, 2009                                        8,272
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    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                    822,500          8.35
          Exercised for common shares                        -             -
          Forfeited                                    (22,966)        19.15
          Expired                                      (35,000)        37.86
        ---------------------------------------------------------------------
        Balance, March 31, 2009                      2,807,878         17.60
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Stock options vest equally over three or four years and expire three
        and one-half or five years from the date of grant. 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.  ACQUISITIONS

        (a) 1368303 Alberta Ltd.

            On January 4, 2008, the Company acquired all the shares of
            1368303 Alberta Ltd. from a Canadian competitor for cash and
            share consideration totalling $2,720. The Company issued
            78,579 common shares with a value of $1,357 in conjunction with
            the acquisition, in addition to $1,363 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.

        (b) ChemErgy Ltd.

            On January 11, 2008, the Company acquired the remaining
            70 percent of the common shares of ChemErgy Ltd. ("ChemErgy")
            that it did not previously own for aggregate consideration of
            $6,638. The purchase price was satisfied through the payment to
            the vendors of $4,843 in cash, the transfer of real property at a
            value of $512, and the issuance of 71,581 common shares of the
            Company with a value of $1,283. ChemErgy's operations were
            subsequently wound up into the Company's and ChemErgy was
            dissolved on January 31, 2008. Net assets acquired were as
            follows:

            -----------------------------------------------------------------
                                                                       Amount
            -----------------------------------------------------------------
            (000s)                                                        ($)

            Goodwill                                                   4,520
            Cash                                                          89
            Other working capital                                      1,658
            Capital assets                                               371
            -----------------------------------------------------------------
            Total consideration                                        6,638
            -----------------------------------------------------------------
            -----------------------------------------------------------------

    10. 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 funds provided by
        operations 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 March 31, 2009, the long-term debt to cash flow ratio was 2.49:1
        (December 31, 2008 - 1.98:1) calculated on a 12-month trailing basis
        as follows:

        ---------------------------------------------------------------------
        As at                                         March 31,  December 31,
                                                          2009          2008
        ---------------------------------------------------------------------
        (000s)                                              ($)           ($)

        Long-term debt (net of unamortized debt
         issue costs)                                  185,773       159,899
        Cash flow                                       74,670        80,747
        ---------------------------------------------------------------------
        Long-term debt to cash flow ratio                 2.49          1.98
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company is subject to certain financial covenants in respect of
        its operating and revolving credit facilities. 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.

    11. 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 $11,440 (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 $57 (34 Euros), plus interest. NAPC has appealed this
        decision, and a hearing date of June 2, 2009 has been set. 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. The remaining
        action, which is seeking damages of approximately $1,161 (695 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.

    12. COMPARATIVES

        Certain comparatives have been reclassified to conform with the
        financial statement presentation adopted in the current period.

    13. 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    Latin             Consol-
                         Canada   Russia  States  America  Corporate  idated
        ---------------------------------------------------------------------
        (000s)               ($)      ($)     ($)      ($)       ($)      ($)

        Three Months
         Ended March 31,
         2009
        Revenue          85,074   14,965   68,542   11,807        -  180,388
        Operating income
         (loss)(1)        9,337    3,176   17,239    2,311   (4,636)  27,427
        Segmented
         assets         308,251  112,733  279,236   24,428        -  724,648
        Capital
         expenditures     9,805      360    4,994      698        -   15,857
        Goodwill          7,236      979    2,308        -        -   10,523
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Three Months
         Ended March 31,
         2008
        Revenue          83,085   14,877   40,875    6,790        -  145,627
        Operating income
         (loss)(1)       20,603    1,710   11,363     (606)  (3,593)  29,477
        Segmented
         assets         274,634  103,751  198,544   15,429        -  592,358
        Capital
         expenditures     3,033      543    9,443    1,801        -   14,820
        Goodwill          7,236      979    2,308        -        -   10,523
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (1) Operating income (loss) is defined as revenue less operating
            expenses, which excludes depreciation, and selling, general and
            administrative expenses.


        The following table sets forth consolidated revenue by service line:

        ---------------------------------------------------------------------
        Three Months Ended March 31,                      2009          2008
        ---------------------------------------------------------------------
        (000s)                                             ($)            ($)

        Fracturing                                    152,792        119,791
        Coiled tubing                                  14,622         14,208
        Cementing                                       9,822          8,507
        Other                                           3,152          3,121
        ---------------------------------------------------------------------
                                                      180,388        145,627
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
    

    %SEDAR: 00002062E




For further information:

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


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