Calfrac Announces Fourth Quarter Results

CALGARY, March 3 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX-CFW) announces its financial and operating results for the three months and year ended December 31, 2009.

HIGHLIGHTS

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

    Financial
    Revenue        173,124   172,430         -   591,500   564,363         5
    Operating
     income(1)      23,157    25,658       (10)   71,135    81,940       (13)
    Net income
     (loss)            864     7,861       (89)   (5,536)   17,864      (131)
      Per share
       - basic        0.02      0.21       (90)    (0.14)     0.47      (130)
      Per share
       - diluted      0.02      0.21       (90)    (0.14)     0.47      (130)
    Funds
     provided by
     operations(2)  19,580    24,838       (21)   54,620    80,747       (32)
      Per share
       - basic        0.48      0.66       (27)     1.42      2.14       (34)
      Per share
       - diluted      0.48      0.66       (27)     1.42      2.14       (34)
    EBITDA(3)       23,398    26,740       (13)   68,795    83,957       (18)
      Per share
       - basic        0.58      0.71       (18)     1.79      2.23       (20)
      Per share
       - diluted      0.57      0.71       (20)     1.79      2.23       (20)
    Working capital
     (end of
     period)       128,243   100,575        28   128,243   100,575        28
    Shareholders'
     equity (end
     of period)    459,932   393,476        17   459,932   393,476        17
    Weighted
     average common
     shares
     outstanding
     (No.)
      Basic         40,653    37,826         7    38,475    37,697         2
      Diluted       40,956    37,826         8    38,475    37,717         2
    -------------------------------------------------------------------------

    Operating (end
     of period)
    Pumping
     horsepower
     (000s)                                          456       287        59
    Coiled tubing
     units (No.)                                      28        18        56
    Cementing
     units (No.)                                      21        18        17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Operating income is defined as net income (loss) before 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 months and year ended December 31, 2009 and discuss our prospects for 2010. During the fourth quarter, our Company:

    
    -   completed the acquisition of Century Oilfield Services Inc.
        ("Century") for a total purchase price of $100.9 million, including
        transaction costs of $5.2 million, and assumed $29.0 million of
        indebtedness and other liabilities, net of working capital;
    -   increased its conventional pumping horsepower by 59 percent from 2008
        to approximately 450,000 at the end of 2009 as a result of the
        acquisition of Century, the purchase of fracturing equipment from
        Pure Energy Services Ltd. ("Pure") during the third quarter of 2009
        and the 2009 capital program;
    -   negotiated an increase to the Company's credit facilities to $175.0
        million with a syndicate of Canadian financial institutions, which
        assisted with the funding of the Century acquisition;
    -   closed a private offering of an additional US$100.0 million of senior
        notes due in February 2015, the proceeds of which were used to repay
        a portion of Calfrac's outstanding revolving term credit facilities;
        and
    -   received the Supplier of the Year award for 2009 from Royal Dutch
        Shell's Upstream Americas division as a result of the Company's
        delivery of superior service quality and excellent Health, Safety and
        Environment performance throughout its fracturing and coiled tubing
        operations in western Canada.

    Financial Highlights
    -------------------------------------------------------------------------

        For the three months ended December 31, 2009, the Company recorded:

    -   revenue of $173.1 million versus $172.4 million in the fourth quarter
        of 2008 led by higher activity in the Company's Latin American and
        Russian divisions;
    -   operating income of $23.2 million versus $25.7 million in the
        comparable period in 2008 resulting from lower income in the United
        States being mostly offset by improved financial results in Canada,
        Russia and Latin America; and
    -   net income of $0.9 million or $0.02 per share compared to $7.9
        million or $0.21 per share in the comparable 2008 period, which
        included a foreign exchange gain of $0.1 million versus $1.1 million
        in the comparable period of 2008.

    For the year ended December 31, 2009, the Company's results included:

    -   an increase in revenue of 5 percent to $591.5 million from $564.4
        million in 2008 driven primarily by strong growth in Calfrac's
        international operations;
    -   a net loss of $5.5 million or $0.14 per share compared to net income
        of $17.9 million or $0.47 per share in 2008, which included a foreign
        exchange loss of $3.8 million or $0.10 per share versus a foreign
        exchange gain of $1.9 million in 2008 or $0.05 per share;
    -   funds provided by operations of $54.6 million or $1.42 per share
        versus $80.7 million or $2.14 per share in 2008; and
    -   working capital of $128.2 million and $148.0 million of unutilized
        credit facilities at the end of the year.

    Operational Highlights
    -------------------------------------------------------------------------
    

Canada

During the fourth quarter, fracturing and coiled tubing activity in western Canada continued to be concentrated in the Montney and Deep Basin unconventional natural gas resource plays of northern Alberta and northeast British Columbia. In addition, activity levels in the Bakken oil play in southeast Saskatchewan gained momentum throughout the fourth quarter and the acquisition of Century expanded the Company's presence in this region. Calfrac also participated in the renewed activity in the Cardium light oil play located in central Alberta.

United States

Fracturing and cementing activity levels in the Fayetteville basin continued to be strong during the fourth quarter. In addition, higher natural gas prices and the mitigation of gas takeaway issues resulted in solid activity levels in the Rocky Mountain region during the quarter. In November, the Company commenced operations in the Marcellus play in Pennsylvania with the transfer of a large fracturing fleet from the Company's Grand Junction district. However, the Company did incur some start-up costs related to the commencement of these fracturing operations. Initial interest from producers in this region has been encouraging and Calfrac's expects to grow its customer base in 2010.

Russia

In Western Siberia, fracturing and coiled tubing activity levels were relatively strong during the fourth quarter, but negatively impacted by extremely cold winter weather conditions in December which continued into January. The Company's reported financial results were also impacted by a 19 percent decline in the value of the Russian rouble from the fourth quarter of 2008. A sixth coiled tubing unit and fourth fracturing spread were deployed into Russia late in the fourth quarter and early in the first quarter of 2010, respectively. The Company has been awarded work in four operating areas in Russia with two of that country's largest oil and natural gas companies. The Company has commenced work based on the written authorizations of these customers and has executed four annual contracts in respect of the award, with two additional annual contracts pending execution upon the finalization of their terms. As a result of such annual contract awards, Calfrac expects high levels of equipment utilization in the upcoming year.

Mexico

Fracturing and cementing activity in Mexico during the fourth quarter of 2009 was concentrated in the Chicontepec field where the Company currently operates two fracturing spreads and six cementing units. As a result of Pemex's continued focus on drilling and completions in this region, fracturing and cementing activity during the fourth quarter reached record levels offsetting the decline in fracturing activity in the Burgos natural gas field of northern Mexico.

Argentina

During the fourth quarter, activity in the Company's cementing operations in Argentina was strong although impacted by the completion of smaller jobs. Calfrac continues to generate strong operating margins in this market. The Company continues to develop new market opportunities as the Argentine business environment evolves.

Corporate

On November 10, 2009, the Company completed the acquisition of Century for a total purchase price of $100.9 million, including transaction costs of $5.2 million, and assumed $29.0 million of indebtedness and other liabilities, net of working capital. This transaction provided the Company with equipment built similar to Calfrac's specifications at a discount to replacement cost, a larger presence within the Montney, Deep Basin and Bakken unconventional resource plays and makes Calfrac the largest Canadian fracturing service provider in terms of fracturing pumping capacity.

On September 29, 2009, the Company increased its credit facilities from $90.0 million to $170.0 million with a syndicate of Canadian chartered banks, and further increased these facilities on December 22, 2009 to $175.0 million. This facility assisted with the financing of the Century acquisition and provides further financial flexibility to the Company.

On December 16, 2009, the Company closed a private offering of an additional US$100.0 million of senior notes due in February 2015, the proceeds of which were used to repay a portion of Calfrac's outstanding credit facilities.

    
    Outlook and Business Prospects
    -------------------------------------------------------------------------
    

As a result of the recent improvement in global economic conditions, oil and natural gas prices have strengthened, leading to higher levels of drilling and completion activity in Canada and the United States during the fourth quarter of 2009 and the early part of 2010. Well completions activity in Canada and the United States during 2010 is expected to remain focused on horizontal wells incorporating multi-stage fracturing technology and coiled tubing within unconventional oil and natural gas resource plays, which is expected to increase overall utilization levels for the pressure pumping service industry during 2010.

The Company closed the acquisition of Century during the fourth quarter and has integrated these operations within its Canadian operating structure. This acquisition is expected to help drive future growth in Canada with the energy sector's ongoing focus on unconventional natural gas and oil plays. Stronger commodity price fundamentals are anticipated during 2010, which are expected to result in higher fracturing and coiled tubing equipment utilization in Canada. The recent industry trend toward using multi-stage fracturing completion technology within horizontal wells drilled into oil reservoirs such as the Cardium, Viking, Lower Shaunavon and Bakken is expected to provide additional demand for pressure pumping services in the Western Canada Sedimentary Basin. Calfrac has allocated a portion of its 2010 capital budget to augmenting the infrastructure required to support its newest operating districts in Dawson Creek and Fort Nelson, British Columbia and Estevan, Saskatchewan, which support the Montney, Horn River and Bakken unconventional resource plays, respectively. Overall, the financial performance of Calfrac's western Canada operations during 2010 is anticipated to improve significantly from 2009.

In the United States, fracturing and cementing activity in the Fayetteville shale play of Arkansas is expected to remain strong in 2010 and, as a result of higher overall demand for pressure pumping services, pricing levels in this market are anticipated to improve from the fourth quarter of 2009. Well completions activity in the Rocky Mountain region of Colorado is also expected to be higher than in the previous year due to increased pipeline infrastructure, which has alleviated most of the takeaway constraints experienced by Calfrac's customers. The fracturing assets acquired from Pure during the third quarter provided Calfrac with the operational flexibility to enter the Marcellus shale play of Pennsylvania during the fourth quarter. The Company expects that drilling and completion activity in this new play will increase significantly and provide further growth opportunities for Calfrac in this market.

As discussed above, Calfrac was recently awarded work with two of Russia's largest oil and natural gas companies and currently operates four fracturing spreads and six coiled tubing units in this oil-focused market. With a larger equipment fleet and broader customer base, the Company expects continued strong financial performance in this region during 2010.

The Company expanded its Mexican pressure pumping operations in the Poza Rica area during 2009 with the commencement of fracturing operations during the second quarter and cementing operations in September. Calfrac currently operates two fracturing spreads and six cementing units in the Chicontepec oil and natural gas field, where completion activity levels are expected to remain strong in 2010. However, activity for the Company's fracturing crew in the Burgos field of northern Mexico is anticipated to decline slightly from 2009 levels as Pemex focuses on the development of the Chicontepec region. In Argentina, utilization of Calfrac's three cementing units and acidizing equipment is expected to be relatively strong during the coming year. The Company's Latin America management team is continuing to evaluate future opportunities for growth in the Latin America market.

Calfrac is also pleased to announce that its Board of Directors has approved an $11 million increase to the 2010 capital budget for a revised total of $56 million. The majority of this additional capital will be focused on new sand storage and handling equipment related to the Company's upcoming activity in the Horn River Basin and the addition of 7,500 hydraulic horsepower to its equipment fleet currently operating in the Marcellus Shale play. The total approved capital budget for 2010, including $14 million of carryforward capital from 2009, is now $70 million.

On February 18, 2010, Calfrac and seven other pressure pumping companies received a request for information from the Congress of the United States, Committee on Energy and Commerce in relation to the practice of hydraulic fracturing. The Company confirmed to the Committee that it will voluntarily provide the requested information on a timely basis. Calfrac is committed to developing energy resources in an environmentally sound manner and in accordance with all applicable laws and regulations. Calfrac does not view this Congressional request as a criticism of the Company or its hydraulic fracturing operations.

Overall, demand for pressure pumping services in North America over the short term is expected to increase from the previous year and the long-term outlook for the pressure pumping industry remains strong. Calfrac continues to focus on streamlining its cost structure and improving operating efficiencies. The Company will continue to execute its strategic business model by capitalizing on future growth opportunities while using a conservative approach in order to maintain financial flexibility and a strong balance sheet.

    
    On behalf of the Board of Directors,

    Douglas R. Ramsay
    President & Chief Executive Officer

    March 3, 2010

    2009 Overview
    -------------------------------------------------------------------------

    In the fourth quarter of 2009, the Company:

    -   generated revenue of $173.1 million versus $172.4 million in the
        fourth quarter of 2008;
    -   reported net income of $0.9 million or $0.02 per share compared to
        $7.9 million or $0.21 per share in the comparable 2008 period, which
        included a foreign exchange gain of $0.1 million versus $1.1 million
        in the comparable period of 2008;
    -   completed the acquisition of Century for a total purchase price for
        accounting purposes of $100.9 million, including transaction costs of
        $5.2 million, and assumed $29.0 million of indebtedness and other
        liabilities, net of working capital;
    -   negotiated an increase to the Company's credit facilities to $175.0
        million with a syndicate of Canadian financial institutions, which
        assisted with the funding of the Century acquisition; and
    -   closed a private offering of an additional US$100.0 million of senior
        notes due in February 2015, the proceeds of which were used to repay
        a portion of Calfrac's outstanding credit facilities.

    For the year ended December 31, 2009 the Company:

    -   responded to difficult economic conditions by significantly reducing
        costs and North American headcount beginning in the first quarter;
    -   increased revenue by 5 percent to $591.5 million from $564.4 million
        in 2008 driven primarily by strong growth in Calfrac's international
        operations;
    -   reported operating income of $71.1 million, a decrease of 13 percent
        from 2008, which included the impact of cost reduction measures
        undertaken in Canada and the United States early in the second
        quarter offset partially by restructuring costs of approximately $1.5
        million;
    -   reported a net loss of $5.5 million or $0.14 per share compared to
        net income of $17.9 million or $0.47 per share in 2008, which
        included a foreign exchange loss of $3.8 million versus a foreign
        exchange gain of $1.9 million in 2008;
    -   generated funds provided by operations of $54.6 million or $1.42 per
        share versus $80.7 million or $2.14 per share in 2008;
    -   incurred capital expenditures of $102.2 million, including $42.3
        million for the acquisition of the fracturing assets of Pure,
        primarily to bolster the Company's fracturing fleet;
    -   increased its conventional pumping horsepower by 59 percent to
        approximately 450,000 at the end of 2009 as a result of the
        acquisition of Century, organic growth and the purchase of Pure's
        fracturing equipment; and
    -   paid dividends of $4.0 million or $0.10 per share from funds provided
        by operations compared to $3.8 million or $0.10 per share in 2008.


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

    Canada

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

    Revenue                                     84,754     82,788          2
    Expenses
      Operating                                 63,344     67,905         (7)
      SG&A                                       2,653      3,069        (14)
                                             --------------------------------
                                                65,997     70,974         (7)
                                             --------------------------------
    Operating income(1)                         18,757     11,814         59
    Operating income (%)                         22.1%      14.3%         55
    Fracturing revenue per job ($)              91,134     70,102         30
    Number of fracturing jobs                      868        988        (12)
    Coiled tubing revenue per job ($)           23,442     11,251        108
    Number of coiled tubing jobs                   241        904        (73)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    

Revenue

Revenue from Calfrac's Canadian operations during the fourth quarter of 2009 was $84.8 million versus $82.8 million in the comparable three-month period of 2008. The 2 percent increase in revenue was primarily due to the completion of larger jobs in the unconventional resource plays located in northern Alberta and northeast British Columbia and an increase in oil-related fracturing in the resource plays of southeast Saskatchewan and west central Alberta. This increase was partially driven by incremental revenue as a result of the acquisition of Century in mid-November 2009. These factors were partially offset by lower shallow gas fracturing activity in southern Alberta and the impact of suspending shallow coiled tubing and cementing operations in Canada during the second quarter of 2009.

Operating Expenses

Operating expenses in Canada decreased by 7 percent to $63.3 million during the fourth quarter of 2009 from $67.9 million in the same period of 2008. The decrease in Canadian operating expenses was mainly due to lower overall fracturing and coiled tubing activity levels combined with lower personnel costs attributable to the impact of restructuring initiatives undertaken during the second quarter of 2009.

SG&A Expenses

SG&A expenses for Calfrac's Canadian operations during the fourth quarter of 2009 decreased from the corresponding period in 2008 by 14 percent to $2.7 million primarily due to lower compensation expenses as a result of restructuring initiatives undertaken early in the second quarter of 2009.

United States

    
    -------------------------------------------------------------------------
    Three Months Ended December 31,               2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                     54,256     68,790        (21)
    Expenses
      Operating                                 48,760     47,026          4
      SG&A                                       2,091      4,007        (48)
                                             --------------------------------
                                                50,851     51,033          -
                                             --------------------------------
    Operating income(1)                          3,405     17,757        (81)
    Operating income (%)                          6.3%      25.8%        (76)
    Fracturing revenue per job ($)              59,263     87,615        (32)
    Number of fracturing jobs                      867        733         18
    Cementing revenue per job ($)               21,458     18,347         17
    Number of cementing jobs                       134        249        (46)
    Cdn$/US$ average exchange rate(2)           1.0563     1.2124        (13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 decreased during the fourth quarter of 2009 to $54.3 million from $68.8 million in the comparable quarter of 2008. The decrease in United States revenue was due primarily to the depreciation in the value of the United States dollar, competitive pricing pressures, lower fracturing activity levels and smaller job sizes in the Rocky Mountain region and lower cementing activity levels. This was partially offset by higher fracturing activity levels and job sizes in Arkansas, the commencement of fracturing operations in Pennsylvania and the completion of larger cementing jobs.

Operating Expenses

Operating expenses in the United States were $48.8 million for the fourth quarter of 2009, an increase of 4 percent from the comparative period in 2008. The increase in operating expenses was primarily due to the increased usage of proppant resulting from the completion of larger fracturing jobs in Arkansas and start-up expenses related to the commencement of fracturing operations in the Marcellus shale play of Pennsylvania. In addition, higher equipment repair expenses due to the increase in fracturing activity in the unconventional resource plays of the United States also contributed to this increase in operating expenses. These factors were offset partially by the impact of the depreciation in the value of the United States dollar.

SG&A Expenses

SG&A expenses in the United States during the fourth quarter of 2009 decreased by 48 percent from the comparable period in 2008 to $2.1 million primarily due to lower personnel expenses and the impact of the depreciation in the value of the United States dollar. This decrease was offset partially by a $0.4 million provision for doubtful accounts receivable related to a customer that filed for Chapter 11 restructuring under United States bankruptcy law.

Russia

    
    -------------------------------------------------------------------------
    Three Months Ended December 31,               2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                     14,698     12,223         20
    Expenses
      Operating                                 10,667     10,540          1
      SG&A                                         984      1,156        (15)
                                             --------------------------------
                                                11,651     11,696          -
                                             --------------------------------
    Operating income(1)                          3,047        527        478
    Operating income (%)                         20.7%       4.3%        381
    Fracturing revenue per job ($)              74,379    129,217        (42)
    Number of fracturing jobs                      120         49        145
    Coiled tubing revenue per job ($)           52,959     61,369        (14)
    Number of coiled tubing jobs                   109         96         14
    Cdn$/rouble average exchange rate(2)        0.0358     0.0444        (19)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    (2) Source: Bank of Canada.
    

Revenue

During the fourth quarter of 2009, the Company's revenue from Russian operations increased by 20 percent to $14.7 million from $12.2 million in the corresponding three-month period of 2008. The increase in revenue was mainly due to higher fracturing and coiled tubing activity levels being partially offset by smaller job sizes, lower annual contract pricing, extremely cold weather conditions in Western Siberia during December 2009 and the depreciation of the Russian rouble by 19 percent versus the Canadian dollar.

Operating Expenses

Operating expenses in Russia in the fourth quarter of 2009 were $10.7 million compared to $10.5 million in the corresponding period of 2008. The increase in operating expenses was primarily due to the higher revenue base and equipment utilization combined with higher fuel expenses as a result of the extremely cold weather conditions in Western Siberia during December 2009, offset partially by the depreciation in the Russian rouble against the Canadian dollar.

SG&A Expenses

SG&A expenses in Russia were $1.0 million for the three-month period ended December 31, 2009 versus $1.2 million in the same quarter of 2008. The decrease was primarily due to the depreciation of the Russian rouble.

Latin America

    
    -------------------------------------------------------------------------
    Three Months Ended December 31,               2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                     19,416      8,629        125
    Expenses
      Operating                                 16,389      7,692        113
      SG&A                                         430        282         52
                                             --------------------------------
                                                16,819      7,974        111
                                             --------------------------------
    Operating income(1)                          2,597        655        296
    Operating income (%)                         13.4%       7.6%         76
    Cdn$/Mexican peso average
     exchange rate(2)                           0.0809     0.0928        (13)
    Cdn$/Argentine peso average
     exchange rate(2)                           0.2765     0.3574        (23)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 $19.4 million during the fourth quarter of 2009 versus $8.6 million in the comparable three-month period in 2008. For the three months ended December 31, 2009 and 2008, revenue generated through subcontractors was $4.4 million and $2.4 million, respectively. The increase in revenue was primarily due to higher fracturing activity with the expansion of the Company's fracturing operations into the Chicontepec region during the second quarter and the completion of larger jobs in Mexico. In addition, revenue in the Latin America division increased due to the commencement of cementing operations in Mexico during the third quarter of 2009 combined with higher cementing activity levels in Argentina. This increase was partially offset by the depreciation of the Mexican and Argentine peso versus the Canadian dollar and smaller job sizes in Argentina.

Operating Expenses

Operating expenses in Latin America for the three months ended December 31, 2009 increased by 113 percent from the comparative period in 2008 to $16.4 million. This increase was primarily due to higher fracturing activity and higher product costs related to the completion of more and larger fracturing jobs in Mexico. In addition, operating expenses increased as a result of costs related to the start-up and commencement of cementing operations in Mexico during the third quarter of 2009 and incremental expenses related to higher activity levels in Argentina.

SG&A Expenses

SG&A expenses in Latin America increased to $0.4 million from $0.3 million in the comparable quarter of 2008 primarily due to the Company's expanded scale of operations in Mexico and Argentina.

Corporate

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

    Expenses
      Operating                                    520        747        (30)
      SG&A                                       4,129      4,348         (5)
                                             --------------------------------
                                                 4,649      5,095         (9)
    Operating loss(1)                           (4,649)    (5,095)         9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    

Operating Expenses

Operating expenses primarily relate to global operations and research and development ("R&D") personnel located in the Corporate headquarters who directly support the Company's global field operations. The 30 percent decrease in Corporate operating expenses from the fourth quarter of 2008 is mainly due to lower compensation expenses as a result of a decrease in the number of personnel supporting the Company's operations and the impact of cost-saving initiatives implemented during the second quarter of 2009.

SG&A Expenses

For the three months ended December 31, 2009, Corporate SG&A expenses decreased by 5 percent from the comparable 2008 period to $4.1 million, mainly due to lower expenses resulting from cost-saving measures implemented early in the second quarter of 2009, offset partially by higher stock-based compensation expenses.

Interest and Depreciation Expenses

The Company's net interest expense of $4.3 million for the fourth quarter of 2009 represented an increase of $0.8 million from $3.5 million in the comparable period of 2008. This increase was primarily due to higher overall long-term debt levels, offset partially by lower interest expense related to the Company's unsecured senior notes resulting from the depreciation in the value of the United States dollar.

For the three months ended December 31, 2009, depreciation expense increased by 23 percent to $17.6 million from $14.3 million in the corresponding quarter of 2008. The increase in depreciation expense is mainly a result of a larger fleet of equipment operating in North America, the Company's acquisition of fracturing assets from Pure and the fracturing and coiled tubing equipment acquired in the acquisition of Century, offset partially by the depreciation in the value of the United States dollar.

Foreign Exchange Losses or Gains

The Company realized a foreign exchange gain of $0.1 million during the fourth quarter of 2009 versus $1.1 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 decrease in the foreign exchange gain was mainly due to the impact of the significant depreciation of the Canadian dollar on foreign net assets denominated in United States dollars during the fourth quarter of 2008.

Income Tax Expenses

The Company recorded an income tax expense of $0.6 million during the fourth quarter of 2009 compared to income tax expense of $1.1 million in the comparable period of 2008. The effective income tax rate for the three months ended December 31, 2009 was 41 percent compared to an effective tax rate of 12 percent in the same quarter of 2008. The decrease in total income tax expense was primarily due to pre-tax losses in the United States and lower profitability in Canada, offset partially by higher profitability in Mexico, Russia and Argentina combined with the impact of lower enacted Canadian future income tax rates on the Company's future income tax asset. The increase in the effective tax rate was primarily due to Canadian income for the fourth quarter of 2009 being taxed at full statutory rates; however, the provision for income taxes on Canadian income in the fourth quarter of 2008 was tax affected at a significantly lower effective rate due to the offsetting impact of drawing down the deferred credit related to Denison amalgamation in 2004.

Summary of Quarterly Results

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

    Financial
    Revenue                         145,627     94,657    151,650    172,430
    Operating income (loss)(1)       29,477     (1,008)    27,812     25,658
    Net income (loss)                14,269    (15,469)    11,203      7,861
      Per share - basic                0.38      (0.41)      0.30       0.21
      Per share - diluted              0.38      (0.41)      0.30       0.21
    Funds provided by operations(1)  28,790         (9)    27,128     24,838
      Per share - basic                0.77          -       0.72       0.66
      Per share - diluted              0.77          -       0.72       0.66
    EBITDA(1)                        31,047       (813)    26,983     26,740
      Per share - basic                0.83      (0.02)      0.71       0.71
      Per share - diluted              0.83      (0.02)      0.71       0.71
    Capital expenditures             14,820     19,341     18,414     32,233
    Working capital
     (end of period)                111,989     94,056    104,700    100,575
    Shareholders' equity
     (end of period)                377,056    364,068    378,890    393,476
    -------------------------------------------------------------------------

    Operating (end of period)
    Pumping horsepower (000s)           232        255        287        287
    Coiled tubing units (No.)            18         18         18         18
    Cementing units (No.)                17         17         18         18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Financial
    Revenue                          180,388   104,727    133,261    173,124
    Operating income (loss)(1)        27,427     4,052     16,499     23,157
    Net income (loss)                  5,528   (14,770)     2,842        864
      Per share - basic                 0.15     (0.39)      0.08       0.02
      Per share - diluted               0.15     (0.39)      0.08       0.02
    Funds provided by operations(1)   22,713       128     12,199     19,580
      Per share - basic                 0.60         -       0.32       0.48
      Per share - diluted               0.60         -       0.32       0.48
    EBITDA(1)                         25,945     4,340     15,112     23,398
      Per share - basic                 0.69      0.11       0.40       0.58
      Per share - diluted               0.69      0.11       0.40       0.57
    Capital expenditures              15,857     9,862     58,212     18,245
    Working capital
     (end of period)                 129,532   111,864    103,331    128,243
    Shareholders' equity
     (end of period)                 402,537   380,515    378,972    459,932
    -------------------------------------------------------------------------

    Operating (end of period)
    Pumping horsepower (000s)            303       319        371        456
    Coiled tubing units (No.)             18        18         18         28
    Cementing units (No.)                 20        20         21         21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.



    Financial Overview - Year Ended December 31, 2009 Versus 2008
    -------------------------------------------------------------------------

    Canada

    -------------------------------------------------------------------------
    Years Ended December 31,                      2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                    241,821    273,398        (12)

    Expenses
      Operating                                199,214    222,362        (10)
      Selling, General and Administrative
       (SG&A)                                    9,743     10,742         (9)
                                             --------------------------------
                                               208,957    233,104        (10)
                                             --------------------------------
    Operating income(1)                         32,864     40,294        (18)
    Operating income (%)                         13.6%      14.7%         (7)
    Fracturing revenue per job ($)              90,741     62,657         45
    Number of fracturing jobs                    2,372      3,620        (34)
    Coiled tubing revenue per job ($)           19,280     10,182         89
    Number of coiled tubing jobs                 1,193      2,953        (60)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    

Revenue

Revenue from Calfrac's Canadian operations during 2009 decreased by 12 percent to $241.8 million from $273.4 million in 2008 primarily due to lower fracturing and coiled tubing activity resulting from lower drilling and completion activity levels in the Western Canada Sedimentary Basin combined with the impact of suspending the Company's shallow coiled tubing operations and primary cementing operations in April 2009. This decline in activity was partially offset by an increase in the proportion of larger jobs completed in the unconventional resource plays located in northwest Alberta and northeast British Columbia resulting in a 45 percent increase in fracturing revenue per job. In addition, incremental revenue was generated as a result of the acquisition of Century in mid-November 2009.

Operating Expenses

Operating expenses in Canada were $199.2 million during 2009 versus $222.4 million in 2008 mainly due to lower activity levels and reflect the impact of cost rationalization measures initiated in the second quarter of 2009. This was offset by an increase in equipment repair expenses due primarily to a higher proportion of fracturing activity in the unconventional resource plays of western Canada and larger equipment fleet combined with $1.3 million of restructuring costs.

SG&A Expenses

SG&A expenses for Calfrac's Canadian operations were $9.7 million during 2009, a decrease of 9 percent from the corresponding period of 2008 due primarily to lower personnel costs arising from restructuring initiatives implemented early in the second quarter.

United States

    
    -------------------------------------------------------------------------
    Years Ended December 31,                      2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                    218,276    205,999          6

    Expenses
      Operating                                184,973    143,247         29
      SG&A                                       7,410      9,964        (26)
                                             --------------------------------
                                               192,383    153,211         26
                                             --------------------------------
    Operating income(1)                         25,893     52,788        (51)
    Operating income (%)                         11.9%      25.6%        (54)
    Fracturing revenue per job ($)              71,515     67,669          6
    Number of fracturing jobs                    2,840      2,872         (1)
    Cementing revenue per job ($)               20,259     14,904         36
    Number of cementing jobs                       749        782         (4)
    Cdn$/US$ average exchange rate(2)           1.1420     1.0660          7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 2009 to $218.3 million from $206.0 million in 2008 primarily due to the impact of the 7 percent appreciation in the value of the United States dollar versus the Canadian dollar. Higher fracturing activity levels in Arkansas, the positive impact of acquiring Pure's fracturing assets in August 2009 and the completion of larger cementing jobs were largely offset by competitive pricing pressures and lower fracturing activity in the Rocky Mountain region of Colorado.

Operating Expenses

Operating expenses in the United States were $185.0 million for 2009, an increase of 29 percent from 2008. This increase in operating expenses was primarily due to the impact of the appreciation of the United States dollar against the Canadian dollar, increased usage of proppant resulting from the completion of larger fracturing jobs in Arkansas and higher equipment repair expenses from the increase in fracturing activity in the unconventional resource plays of the United States.

SG&A Expenses

SG&A expenses in the United States during 2009 decreased by 26 percent from 2008 to $7.4 million primarily due to lower compensation expenses, offset partially by the appreciation of the United States dollar.

Russia

    
    -------------------------------------------------------------------------
    Years Ended December 31,                      2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                     66,630     57,355         16

    Expenses
      Operating                                 44,032     44,577         (1)
      SG&A                                       3,631      3,936         (8)
                                             --------------------------------
                                                47,663     48,513         (2)
                                             --------------------------------
    Operating income(1)                         18,967      8,842        115
    Operating income (%)                         28.5%      15.4%         85
    Fracturing revenue per job ($)              75,204    132,636        (43)
    Number of fracturing jobs                      558        234        138
    Coiled tubing revenue per job ($)           46,983     61,924        (24)
    Number of coiled tubing jobs                   525        425         24
    Cdn$/rouble average exchange rate(2)        0.0360     0.0429        (16)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    (2) Source: Bank of Canada.
    

Revenue

During 2009, the Company's revenue from Russian operations increased by 16 percent to $66.6 million from $57.4 million in 2008 primarily due to higher fracturing and coiled tubing activity being partially offset by smaller job sizes, lower annual contract pricing and the depreciation of the Russian rouble by 16 percent against the Canadian dollar.

Operating Expenses

Operating expenses in Russia in 2009 were $44.0 million compared to $44.6 million in 2008 primarily due to the depreciation in the Russian rouble versus the Canadian dollar offset by higher fracturing and coiled tubing activity.

SG&A Expenses

SG&A expenses in Russia were $3.6 million for 2009 versus $3.9 million in 2008 primarily due to the depreciation of the Russian rouble, offset partially by higher insurance costs and professional fees.

Latin America

    
    -------------------------------------------------------------------------
    Years Ended December 31,                      2009       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational and
     exchange rate information)                     ($)        ($)        (%)
    (unaudited)

    Revenue                                     64,773     27,611        135

    Expenses
      Operating                                 52,046     28,552         82
      SG&A                                       2,115        876        141
                                             --------------------------------
                                                54,161     29,428         84
                                             --------------------------------
    Operating income (loss)(1)                  10,612     (1,817)       684
    Operating income (loss) (%)                  16.4%      -6.6%        348
    Cdn$/Mexican peso average
     exchange rate(2)                           0.0845     0.0959        (12)
    Cdn$/Argentine peso average
     exchange rate(2)                           0.3037     0.3319         (8)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 $64.8 million during 2009 versus $27.6 million in 2008. The increase in revenue was primarily due to higher fracturing activity and larger job sizes in Mexico as a result of the Company's expansion into the Chicontepec region during the second quarter of 2009 and the addition of a third fracturing crew during the third quarter. In addition, the Company commenced cementing operations in Mexico during the third quarter of 2009 to service the Chicontepec region. Cementing activity in Argentina, which commenced during the second quarter of 2008, generated higher revenue with a full year of operations in 2009. These factors were offset partially by the 12 percent and 8 percent declines in the Mexican and Argentine pesos, respectively, versus the Canadian dollar.

Operating Expenses

Operating expenses in Latin America for 2009 increased by 82 percent from 2008 to $52.0 million. This increase was primarily due to a higher revenue base related to the start-up and commencement of fracturing operations and cementing operations in the Chicontepec region during the second and third quarters of 2009, respectively, combined with incremental expenses related to the Company's operations in Argentina, which began during the second quarter of 2008. In addition, Calfrac's Mexican operations incurred higher proppant costs as a result of the completion of larger fracturing jobs. These factors were partially offset by the depreciation of the Mexican and Argentine pesos.

SG&A Expenses

SG&A expenses in Latin America in 2009 increased by $1.2 million from 2008 to $2.1 million primarily due to the Company's expanded scale of operations in Mexico and Argentina.

Corporate

    
    -------------------------------------------------------------------------
    Years Ended December 31,                      2009       2008     Change
    -------------------------------------------------------------------------
    (000s)                                          ($)        ($)        (%)
    (unaudited)

    Expenses
      Operating                                  2,418      2,520         (4)
      SG&A                                      14,783     15,647         (6)
                                             --------------------------------
                                                17,201     18,167         (5)
    Operating loss(1)                          (17,201)   (18,167)         5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" on page 16 for further information.
    

Operating Expenses

Operating expenses primarily relate to global operations and R&D personnel located in the Corporate headquarters who directly support the Company's global field operations. The 4 percent decrease in Corporate operating expenses from 2008 is mainly due to cost reduction measures implemented early in the second quarter.

SG&A Expenses

For 2009, Corporate SG&A expenses decreased by 6 percent to $14.8 million, mainly due to lower expenses arising from restructuring initiatives implemented early in the second quarter, offset slightly by higher stock-based compensation expenses.

Interest and Depreciation Expenses

The Company's net interest expense of $15.2 million for 2009 represented an increase of $3.6 million from $11.6 million in 2008. This increase was primarily due to higher 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 utilization of a portion of the Company's revolving term credit facilities.

For 2009, depreciation expense increased by 24 percent to $63.2 million from $51.1 million in 2008. This increase was mainly due to the Company's larger fleet of equipment operating in North America as a result of the 2009 capital program, the acquisition of fracturing assets from Pure, the appreciation in the value of the United States dollar and the fracturing and coiled tubing equipment acquired in the corporate acquisition of Century.

Foreign Exchange Losses or Gains

The Company incurred a foreign exchange loss of $3.8 million during 2009 versus a foreign exchange gain of $1.9 million in 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 appreciation of the Canadian dollar as at December 31, 2009 versus December 31, 2008 and the effect this change had on foreign net assets denominated in United States dollars, Russian roubles, Mexican pesos or Argentine pesos.

Income Tax Expenses

The Company recorded an income tax recovery of $4.2 million during 2009 versus income tax expense of $3.5 million during 2008. The effective income tax rate for 2009 was 44 percent compared to an effective tax rate of 17 percent in 2008. The change in the effective income tax rate period-over-period 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. In addition, Canadian losses for 2009 are being recovered at full statutory rates; however, the provision for income taxes on Canadian income in 2008 was tax affected at a significantly lower effective rate due to the offsetting impact of drawing down the deferred credit related to the Denison Energy Inc. ("Denison") amalgamation in 2004.

    
    Liquidity and Capital Resources
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Years Ended December 31,                                 2009       2008
    -------------------------------------------------------------------------
    (000s)                                                     ($)        ($)
    (unaudited)
    Cash provided by (used in):
      Operating activities                                 55,927     50,111
      Financing activities                                 70,282     19,172
      Investing activities                               (129,114)   (81,837)
      Effect of exchange rate changes on
       cash and cash equivalents                           (8,517)     9,942
    -------------------------------------------------------------------------
    Decrease in cash and cash equivalents                 (11,422)    (2,612)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Operating Activities

The Company's cash provided by operating activities for the year ended December 31, 2009 was $55.9 million versus $50.1 million in 2008. The change was primarily due to a $31.9 million net increase in non-cash working capital that was offset by a $26.1 million reduction in funds provided by operations (refer to "Non-GAAP Measures" on page 16). At December 31, 2009, Calfrac's working capital was approximately $128.2 million, an increase of 28 percent from December 31, 2008. The Company reviewed its year-end accounts receivable in detail and determined that a provision for doubtful accounts receivable totalling $1.4 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 2009 was $70.3 million compared to $19.2 million in 2008. During 2009, the Company issued long-term debt for a total of $216.1 million, repaid $107.2 million of its revolving term credit facility and $34.6 million of its operating credit facility. In addition, Calfrac received proceeds of $0.2 million from the issuance of common shares during 2009 versus $8.9 million during 2008.

On September 29, 2009, the Company increased its credit facilities from $90.0 million to $170.0 million with a syndicate of Canadian chartered banks, and further increased these facilities on December 22, 2009 to $175.0 million. The facilities consist of an operating facility of $10.0 million and an extendible revolving term syndicated facility of $165.0 million. The terms of the renewed credit facility are based upon parameters of certain bank covenants with advances bearing interest at rates ranging from prime plus 1 percent to prime plus 1.75 percent. As of December 31, 2009, the Company had drawn $27.0 million on its syndicated facility, including letters of credit and bank overdraft, leaving a further $148.0 million in available credit.

On December 16, 2009, Calfrac completed an additional private placement of senior unsecured notes for an aggregate principal amount of US$100.0 million. The Company's US$235.0 million of senior unsecured notes are due on February 15, 2015 and bear interest at 7.75 percent per annum, which is paid semi-annually.

At December 31, 2009, the Company had cash and cash equivalents of $25.1 million. A portion of these funds was invested in short-term investments, which consisted primarily of an overnight money market fund.

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 were funded by funds provided by operations (refer to "Non-GAAP Measures" on page 16) and totalled $4.0 million and $3.8 million in 2009 and 2008, respectively.

Investing Activities

For 2009, Calfrac's net cash used for investing activities was $129.1 million versus $81.8 million for 2008. Capital expenditures were $102.2 million in 2009 compared to $84.8 million in 2008. Capital expenditures included the acquisition of the fracturing assets of Pure during the third quarter of 2009 for $42.3 million, and the remainder was primarily related to increasing the pumping capacity of the Company's fracturing equipment fleet throughout North America.

On November 10, 2009, the Company acquired all of the issued and outstanding common shares of Century, a privately held fracturing services company operating in Western Canada. Under the terms of the agreement, the purchase price of $90.0 million consisted of approximately $13.5 million of cash plus 5,144,344 common shares of the Company, with an agreed value of $76.5 million. For accounting purposes, the shares issuable in the transaction have a fair value of approximately $82.2 million based on the weighted average price of the Company's shares for the three trading days preceding and the three trading days following the date of the announcement of the agreement. The fair value of the share consideration for accounting purposes is calculated on a different basis than the agreed value and results in a higher recorded purchase price. Including transaction costs, the total consideration was $100.9 million for accounting purposes.

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 2009 was a loss of $8.5 million versus a gain of $9.9 million during 2008. These gains and losses relate to cash and cash equivalents held by the Company in a foreign currency.

With its strong working capital position, unutilized 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 2010 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 February 28, 2010, there were 43,022,515 common shares issued and outstanding, and 3,311,849 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", "might", "could", "potential", "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 natural 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 and 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.

Fourth Quarter Conference Call

Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2009 fourth quarter results at 10:00 a.m. (Mountain Time) on Thursday, March 4, 2010. The conference call dial-in number is 1-888-231-8191 or 647-427-7450. The seven-day replay numbers are 1-800-642-1687 or 416-849-0833 (once connected, enter 56349546). A webcast of the conference call may be accessed via the Company's website at www.calfrac.com.

    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------

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

    ASSETS
    Current assets
      Cash and cash equivalents                         25,070        36,492
      Accounts receivable                              135,775       120,048
      Income taxes recoverable                           1,780         6,681
      Inventory                                         44,297        41,123
      Prepaid expenses and deposits                      6,746         5,813
    -------------------------------------------------------------------------
                                                       213,668       210,157
    Capital assets                                     579,233       459,874
    Goodwill                                            10,523        10,523
    Future income taxes                                 37,466        11,218
    -------------------------------------------------------------------------
                                                       840,890       691,772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Accounts payable and accrued liabilities          82,212        94,582
      Bank loan                                              -        15,000
      Current portion of long-term debt (note 4)         1,996             -
      Current portion of capital lease obligations
       (note 5)                                          1,217             -
    -------------------------------------------------------------------------
                                                        85,425       109,582
    Long-term debt (note 4)                            267,351       159,899
    Capital lease obligations (note 5)                   3,808             -
    Other long-term liabilities                          1,227         1,368
    Future income taxes                                 20,474        24,815
    Deferred credit                                      2,505         2,588
    Non-controlling interest                               168            44
    -------------------------------------------------------------------------
                                                       380,958       298,296
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 6)                             251,282       168,813
    Contributed surplus (note 7)                        10,808         7,297
    Retained earnings                                  202,083       211,652
    Accumulated other comprehensive income (loss)       (4,241)        5,714
    -------------------------------------------------------------------------
                                                       459,932       393,476
    -------------------------------------------------------------------------
                                                       840,890       691,772
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Contingencies (note 11)

    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
    -------------------------------------------------------------------------

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

    Revenue                      173,124     172,430     591,500     564,363
    -------------------------------------------------------------------------
    Expenses
      Operating                  139,681     133,910     482,682     441,259
      Selling, general and
       administrative             10,286      12,862      37,683      41,164
      Depreciation                17,625      14,279      63,188      51,147
      Interest, net                4,297       3,499      15,248      11,572
      Equity share of income
       from long-term investments      -           -           -        (122)
      Foreign exchange losses
       (gains)                       (79)     (1,099)      3,823      (1,904)
      Loss (gain) on disposal
       of capital assets            (162)         17      (1,483)          9
    -------------------------------------------------------------------------
                                 171,648     163,468     601,141     543,125
    -------------------------------------------------------------------------
    Income (loss) before income
     taxes and non-controlling
     interest                      1,476       8,962      (9,641)     21,238
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                        619        (210)      1,853      (4,058)
      Future                         (20)      1,330      (6,082)      7,573
    -------------------------------------------------------------------------
                                     599       1,120      (4,229)      3,515
    -------------------------------------------------------------------------
    Income (loss) before non-
     controlling interest            877       7,862      (5,412)     17,723
    Non-controlling interest          13         (19)        124        (141)
    -------------------------------------------------------------------------
    Net income (loss) for the
     period                          864       7,861      (5,536)     17,864
    Retained earnings,
     beginning of period         203,365     206,150     211,652     198,039
    Dividends                     (2,146)     (1,887)     (4,033)     (3,779)
    Premium on purchase of
     shares                            -        (472)          -        (472)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                   202,083     211,652     202,083     211,652
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per share
     (note 6)
      Basic                         0.02        0.21       (0.14)       0.47
      Diluted                       0.02        0.21       (0.14)       0.47
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED
    OTHER COMPREHENSIVE INCOME (LOSS)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                  Three Months Ended              Year Ended
                                             Dec. 31,                Dec. 31,
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    (000s) (unaudited)                ($)         ($)         ($)         ($)

    Net income (loss) for
     the period                      864       7,861      (5,536)     17,864
    Other comprehensive
     income (loss)
      Change in foreign currency
       translation adjustment     (1,121)      8,355      (9,955)     11,918
    -------------------------------------------------------------------------
    Comprehensive income (loss)     (257)     16,216     (15,491)     29,782
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive income (loss),
     beginning of period          (3,120)     (2,641)      5,714      (6,204)
      Other comprehensive income
       (loss) for the period      (1,121)      8,355      (9,955)     11,918
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive income (loss),
     end of period                (4,241)      5,714      (4,241)      5,714
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                  Three Months Ended              Year Ended
                                             Dec. 31,                Dec. 31,
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    (000s) (unaudited)                ($)         ($)         ($)         ($)

    CASH PROVIDED BY (USED IN)
     OPERATING ACTIVITIES
      Net income (loss) for
       the period                    864       7,861      (5,536)     17,864
      Items not involving cash
        Depreciation              17,625      14,279      63,188      51,147
        Amortization of debt
         issue costs                 317         185         849         649
        Stock-based compensation     943       1,185       3,560       3,768
        Equity share of income
         from long-term
         investments                   -           -           -        (122)
        Loss (gain) on disposal
         of capital assets          (162)         17      (1,483)          9
        Future income taxes          (20)      1,330      (6,082)      7,573
        Non-controlling interest      13         (19)        124        (141)
    -------------------------------------------------------------------------
                                  19,580      24,838      54,620      80,747
      Net change in non-cash
       operating assets and
       liabilities                11,057      (1,853)      1,307     (30,636)
    -------------------------------------------------------------------------
                                  30,637      22,985      55,927      50,111
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
      Bank loan proceeds               -      15,000       5,000      15,000
      Issuance of long-term
       debt                      153,562      65,000     216,103      65,000
      Bank loan repayments       (19,634)          -     (39,634)          -
      Long-term debt
       repayments               (107,143)    (65,000)   (107,201)    (65,000)
      Capital lease obligation
       repayments                   (166)          -        (166)          -
      Purchase of common shares        -        (932)          -        (932)
      Net proceeds on issuance
       of common shares              213           -         213       8,883
      Dividends                   (2,146)     (1,887)     (4,033)     (3,779)
    -------------------------------------------------------------------------
                                  24,686      12,181      70,282      19,172
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
      Purchase of capital
       assets                    (18,245)    (32,233)   (102,176)    (84,807)
      Proceeds on disposal
       of capital assets             155          33       2,288         318
      Acquisitions, net of
       cash acquired (note 9)    (18,692)          -     (18,692)     (6,117)
      Long-term investments
       and other                       -           -           -         326
      Net change in non-cash
       working capital from
       purchase of capital
       assets                     (3,266)      4,263     (10,534)      8,443
    -------------------------------------------------------------------------
                                 (40,048)    (27,937)   (129,114)    (81,837)
    -------------------------------------------------------------------------
    Effect of exchange rate
     changes on cash and cash
     equivalents                    (827)      6,522      (8,517)      9,942
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and cash equivalents         14,448      13,751     (11,422)     (2,612)
    Cash and cash equivalents,
     beginning of period          10,622      22,741      36,492      39,104
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                25,070      36,492      25,070      36,492
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    -------------------------------------------------------------------------

    FOR THE YEAR ENDED DECEMBER 31, 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 and Handbook Section 3862
            Financial Instruments: Disclosures.

            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.

            Section 3862 provides revised and enhanced disclosure
            requirements for liquidity disclosure risks and the fair value
            measurement of financial instruments. Fair value measurements are
            to be classified using a fair value hierarchy that reflects the
            significance of the inputs used in making the measurements. The
            adoption of this revised standard has not had an impact on the
            disclosures in the Company's consolidated financial statements.

        (b) In February 2008, the Canadian Accounting Standards Board (AcSB)
            confirmed that International Financial Reporting Standards (IFRS)
            will replace Canadian GAAP in 2011 for profit-oriented Canadian
            publicly accountable enterprises. As a result, the Company will
            be required to report its results in accordance with IFRS
            beginning in 2011. The Company has developed a changeover plan to
            complete the transition to IFRS by January 1, 2011, including the
            preparation of required comparative information. The impact of
            IFRS on the Company's consolidated financial statements is not
            reasonably determinable at this time.

    4.  LONG-TERM DEBT

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

        US$235,000 senior unsecured notes, due
         February 15, 2015 bearing interest at 7.75%,
         payable semi-annually                            246,985    164,430
        Less: unamortized debt issue costs and
         unamortized debt discount                        (11,768)    (4,531)
        ---------------------------------------------------------------------
                                                          235,217    159,899
        ---------------------------------------------------------------------
        $165,000 extendible revolving term loan
         facility currently bearing interest at the
         Canadian prime rate plus 1%, secured by the
         Canadian and U.S. assets of the Company           24,699          -
        Less: unamortized debt issue costs                 (1,128)         -
        ---------------------------------------------------------------------
                                                           23,571          -
        ---------------------------------------------------------------------
        Mortgage obligations maturing between
         June 2012 and April 2013 bearing interest at
         rates ranging from 4.94% to 6.69%, repayable
         $69 per month principal and interest, secured
         by certain real property                           7,379          -
        US$3,107 mortgage maturing May 16, 2018 bearing
         interest at U.S. prime less 1%, repayable US$35
         per month principal and interest, secured by
         certain real property                              3,180          -
        ---------------------------------------------------------------------
                                                          269,347    159,899
        Less: current portion of long-term debt            (1,996)         -
        ---------------------------------------------------------------------
                                                          267,351    159,899
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The fair value of the senior unsecured notes based on the closing
        market price at December 31, 2009 was $239,575 (December 31, 2008 -
        $77,282). The carrying value of the revolving credit facility
        approximates its fair value due to its variable interest rate and
        first priority security position. The carrying values of the mortgage
        obligations approximate their fair values as the interest rates are
        not significantly different than current mortgage rates for similar
        loans.

        The interest rate on the term revolving facility is based upon the
        parameters of certain bank covenants, and range from prime plus 1% to
        prime plus 1.75%. The facility is repayable in 7 equal quarterly
        principal instalments of $1,235 commencing December 31, 2010 plus a
        final payment of $16,054 on September 28, 2012, 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.

    5.  OBLIGATIONS UNDER CAPITAL LEASES

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

        Capital lease contracts bearing interest at
         rates ranging from 5.68% to 6.58%, repayable
         $124 per month, secured by certain equipment       5,599          -
        Less: interest portion of contractual payments       (574)         -
        ---------------------------------------------------------------------
                                                            5,025          -
        ---------------------------------------------------------------------
        Less: current portion of capital lease
         obligations                                       (1,217)         -
        ---------------------------------------------------------------------
                                                            3,808          -
        ---------------------------------------------------------------------

        The carrying values of the capital lease obligations approximate
        their fair values as the interest rates are not significantly
        different than current rates for similar leases.

    6.  CAPITAL STOCK

        Authorized capital stock consists of an unlimited number of common
        shares.

        Continuity of
         Common Shares                   2009                    2008
        ---------------------------------------------------------------------
                                  Shares      Amount      Shares      Amount
        ---------------------------------------------------------------------
                                    (No.)     ($000s)       (No.)     ($000s)

        Balance, January 1    37,741,561     168,813  37,201,872     155,254
        Issued upon exercise
         of stock options         12,975         262     492,311      11,379
        Issued on
         acquisitions
         (note 9)              5,144,344      82,207     150,160       2,640
        Purchased under
         Normal Course
         Issuer Bid                    -           -    (102,782)       (460)
        ---------------------------------------------------------------------
        Balance, December 31  42,898,880     251,282  37,741,561     168,813
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The weighted average number of common shares outstanding for the year
        December 31, 2009 was 38,475,444 basic and 38,475,444 diluted (year
        ended December 31, 2008 - 37,696,924 basic and 37,716,914 diluted).
        The difference between basic and diluted shares for the year ended
        December 31, 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 year ended December 31, 2009, as they would
        have an anti-dilutive effect.

    7.  CONTRIBUTED SURPLUS

        Continuity of Contributed Surplus                    2009       2008
        ---------------------------------------------------------------------
        (000s)                                                 ($)        ($)

        Balance, January 1                                  7,297      6,025
          Stock options expensed                            3,560      3,768
          Stock options exercised                             (49)    (2,496)
        ---------------------------------------------------------------------
        Balance, December 31                               10,808      7,297
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  STOCK OPTIONS

        Continuity of
         Stock Options                  2009                    2008
        ---------------------------------------------------------------------
                                             Average                 Average
                                            Exercise                Exercise
                                 Options       Price     Options       Price
        ---------------------------------------------------------------------
                                    (No.)         ($)       (No.)         ($)

        Balance, January 1     2,043,344       21.69   1,224,223       22.90
          Granted during
           the period            865,000        8.60   1,429,400       19.66
          Exercised for
           common shares         (12,975)      16.43    (492,311)      18.04
          Forfeited             (222,826)      22.59     (87,468)      23.79
          Expired               (164,400)      32.59     (30,500)      27.80
        ---------------------------------------------------------------------
        Balance, December 31   2,508,143       16.70   2,043,344       21.69
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        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 $29.79 with a weighted
        average remaining life of 3.06 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.  ACQUISITIONS

    (a) Asset Acquisition

        On August 14, 2009, the Company purchased the fracturing assets of a
        competitor for $44,513 including related transaction costs. The
        Company acquired $42,252 of capital assets comprised of fracturing
        equipment and certain real property, as well as $2,261 of the
        vendor's parts and materials inventory. The purchase price was
        satisfied through payment of $41,071 in cash and the assumption of
        long-term debt in the amount of $3,442.

    (b) Century Oilfield Services Inc.

        On November 10, 2009, the Company acquired all of the issued and
        outstanding shares of Century Oilfield Services Inc. for aggregate
        consideration of $100,898. The Company issued 5,144,344 common shares
        at a value of $15.98 per share (based on the volume weighted average
        share price for the three days prior to and after the announcement
        date of September 20, 2009) with a value of $82,207 in conjunction
        with the acquisition, in addition to cash of $13,506 and transaction
        costs of $5,185. Net assets acquired and liabilities assumed were as
        follows:

        (000s)                                                            ($)
        ---------------------------------------------------------------------
        Working capital                                               18,216
        Capital assets                                               108,930
        Future income tax asset                                       21,014
        Bank loan and long-term debt                                 (42,069)
        Obligation under capital leases                               (5,193)
        ---------------------------------------------------------------------
        Total consideration                                          100,898
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    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 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 December 31, 2009, the long-term debt to cash flow ratio was
        4.93:1 (December 31, 2008 - 1.98:1) calculated on a 12-month trailing
        basis as follows:

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

        Long-term debt (net of unamortized debt
         issue costs and debt discount) (note 4)          269,347    159,899
        Cash flow                                          54,620     80,747
        ---------------------------------------------------------------------
        Long-term debt to cash flow ratio                    4.93       1.98
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The higher ratio at December 31, 2009 as compared to December 31,
        2008 is partially due to the fact that additional long-term debt was
        assumed as part of the Century acquisition (note 9b). Also, the
        additional cash flow contributed as a result of this acquisition was
        only included in the Company's results for the period November 10,
        2009 through December 31, 2009.

        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.

    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 salaries in arrears amounting to approximately $10,270 (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 the
        quantum of awardable salaries in arrears. On June 3, 2008, the Athens
        Court of Appeal rejected NAPC's appeal and reinstated the award of
        the Athens Court of First Instance, which decision has been further
        appealed to the Supreme Court of Greece, and on November 3, 2009 was
        postponed until March 16, 2010. 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 compensation for
        additional work of approximately $53 (35 euros), plus interest. The
        appeal of this decision was heard on June 2, 2009, at which time an
        additional claim by the plaintiff seeking damages of $335
        (223 euros), plus interest, was also heard. A decision in respect of
        the hearing has been rendered which accepted NAPC's appeal and
        rejected the additional claim of the plaintiff. Another one of the
        lawsuits seeking salaries in arrears of $192 (128 euros), plus
        interest, 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
        scheduled for September 22, 2009 was postponed until September 21,
        2010. The remaining action, which is seeking salaries in arrears of
        approximately $659 (439 euros) plus interest, was scheduled to be
        heard before the Athens Court of First Instance on October 1, 2009,
        but was adjourned as a result of the recently held Greek elections.
        No date has been set for the adjourned hearing.

        The Company has signed an agreement with a Greek exploration and
        production company pursuant to which it has agreed to assign
        approximately 90% of its entitlement under an offshore license
        agreement for consideration including a full indemnity in respect of
        the Greek legal claims described above. The completion of the
        transactions contemplated by such agreement is subject to certain
        conditions precedent, the fulfillment of which is not in the
        Company's control.

        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. 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 natural gas industry.

                                                                      United
                                              Canada      Russia      States
        ---------------------------------------------------------------------
        (000s)                                    ($)         ($)         ($)

        Three Months Ended December 31, 2009
        Revenue                               84,754      14,698      54,256
        Operating income (loss)(1)            18,757       3,047       3,405
        Segmented assets                     447,889     110,372     240,975
        Capital expenditures                  11,487       4,663       1,668
        Goodwill                               7,236         979       2,308
        ---------------------------------------------------------------------
        Three Months Ended December 31, 2008
        Revenue                               82,788      12,223      68,790
        Operating income (loss)(1)            11,814         527      17,757
        Segmented assets                     299,487     110,207     262,266
        Capital expenditures                  19,342       4,596       7,229
        Goodwill                               7,236         979       2,308
        ---------------------------------------------------------------------
        Year Ended December 31, 2009
        Revenue                              241,821      66,630     218,276
        Operating income (loss)(1)            32,864      18,967      25,893
        Segmented assets                     447,889     110,372     240,975
        Capital expenditures                  35,196       7,798      56,558
        Goodwill                               7,236         979       2,308
        ---------------------------------------------------------------------
        Year Ended December 31, 2008
        Revenue                              273,398      57,355     205,999
        Operating income (loss)(1)            40,294       8,842      52,788
        Segmented assets                     299,487     110,207     262,266
        Capital expenditures                  36,585       6,343      37,534
        Goodwill                               7,236         979       2,308
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


                                               Latin                  Consol-
                                             America   Corporate      idated
        ---------------------------------------------------------------------
        (000s)                                    ($)         ($)         ($)

        Three Months Ended December 31, 2009
        Revenue                               19,416           -     173,124
        Operating income (loss)(1)             2,597      (4,649)     23,157
        Segmented assets                      41,654           -     840,890
        Capital expenditures                     427           -      18,245
        Goodwill                                   -           -      10,523
        ---------------------------------------------------------------------
        Three Months Ended December 31, 2008
        Revenue                                8,629           -     172,430
        Operating income (loss)(1)               655      (5,095)     25,658
        Segmented assets                      19,812           -     691,772
        Capital expenditures                   1,066           -      32,233
        Goodwill                                   -           -      10,523
        ---------------------------------------------------------------------
        Year Ended December 31, 2009
        Revenue                               64,773           -     591,500
        Operating income (loss)(1)            10,612     (17,201)     71,135
        Segmented assets                      41,654           -     840,890
        Capital expenditures                   2,624           -     102,176
        Goodwill                                   -           -      10,523
        ---------------------------------------------------------------------
        Year Ended December 31, 2008
        Revenue                               27,611           -     564,363
        Operating income (loss)(1)            (1,817)    (18,167)     81,940
        Segmented assets                      19,812           -     691,772
        Capital expenditures                   4,345           -      84,807
        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              Year Ended
                                             Dec. 31,                Dec. 31,
                                    2009        2008        2009        2008
        ---------------------------------------------------------------------
        (000s)                        ($)         ($)         ($)         ($)

        Fracturing               151,391     145,101     504,441     468,274
        Coiled tubing             11,422      16,062      47,667      56,386
        Cementing                  5,942       8,866      25,696      30,116
        Other                      4,369       2,401      13,696       9,587
        ---------------------------------------------------------------------
                                 173,124     172,430     591,500     564,363
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company's customer base consists of over 180 oil and natural gas
        exploration and production companies, ranging from large
        multinational public companies to small private companies.
        Notwithstanding the Company's broad customer base, Calfrac has four
        significant customers that collectively accounted for approximately
        49 percent of the Company's revenue for the year ended December 31,
        2009 (December 31, 2008 - three significant customers for
        approximately 35 percent) and of such customers, one customer
        accounted for approximately 17 percent of the Company's revenue for
        the year ended December 31, 2009 (December 31, 2008 - 12 percent).
    

%SEDAR: 00002062E

SOURCE Calfrac Well Services Ltd.

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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