Calfrac Announces Second Quarter Results



    CALGARY, Aug. 6 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the
Company") (TSX-CFW) is pleased to announce its financial and operating results
for the three and six months ended June 30, 2008.

    
    HIGHLIGHTS

    -------------------------------------------------------------------------
                       Three Months Ended June 30,  Six Months Ended June 30,
                           2008     2007   Change     2008     2007   Change
    -------------------------------------------------------------------------
    (000s, except per        ($)      ($)      (%)      ($)      ($)      (%)
     share and unit data)
    (unaudited)

    Financial
    Revenue              92,785   87,778        6  235,255  216,285        9
    Gross margin(1)       8,423   22,095      (62)  46,163   60,317      (23)
    Net income (loss)
     before stock-based
     compensation
     expenses           (13,790)     515   (2,778)   1,099   20,120      (95)
      Per share
        - basic           (0.37)    0.01   (3,800)    0.03     0.55      (95)
        - diluted         (0.37)    0.01   (3,800)    0.03     0.55      (95)
    Net income (loss)   (15,469)    (303)  (5,005)  (1,200)  18,474     (107)
      Per share
        - basic           (0.41)   (0.01)  (4,000)   (0.03)    0.51     (106)
        - diluted         (0.41)   (0.01)  (4,000)   (0.03)    0.51     (106)
    Cash flow from
     operations(2)           (9)  10,835     (100)  28,780   39,662      (27)
      Per share
        - basic               -     0.30     (100)    0.77     1.09      (29)
        - diluted             -     0.30     (100)    0.77     1.09      (29)
    EBITDA(3)              (813)  14,569     (106)  30,234   44,892      (33)
      Per share
        - basic           (0.02)    0.40     (105)    0.81     1.24      (35)
        - diluted         (0.02)    0.40     (105)    0.80     1.23      (35)
    Working capital      94,056   86,971        8   94,056   86,971        8
    Shareholders'
     equity             364,068  321,218       13  364,068  321,218       13
    Weighted average
     common shares
     outstanding (No.)
      Basic              37,728   36,399        4   37,558   36,348        3
      Diluted            37,952   36,433        4   37,598   36,412        3
    -------------------------------------------------------------------------
                                                      (No.)    (No.)      (%)
    Operating
    Fracturing spreads
     at period end
      Conventional
       fracturing                                       25       23        9
      Coalbed methane                                    4        4        -
    -------------------------------------------------------------------------
      Total                                             29       27        7
    Coiled tubing units                                 18       15       20
    Cementing units                                     17       15       13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    1.  Gross margin is defined as revenue less operating expenses excluding
        depreciation. Gross margin is a measure that does not have any
        standardized meaning prescribed under generally accepted accounting
        principles (GAAP) and, accordingly, may not be comparable to similar
        measures used by other companies.

    2.  Cash flow is defined as funds provided by operations as reflected in
        the consolidated statement of cash flows. Cash flow and cash flow per
        share are measures that provide shareholders and potential investors
        with additional information regarding the Company's liquidity and its
        ability to generate funds to finance its operations. Management
        utilizes these measures to assess the Company's ability to finance
        operating activities and capital expenditures. Cash flow and cash
        flow per share are not measures that have any standardized meaning
        prescribed under GAAP and, accordingly, may not be comparable to
        similar measures used by other companies.

    3.  EBITDA is defined as income before interest, taxes, depreciation and
        amortization. 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 the highlights for the three and six months ended
June 30, 2008 and discuss our prospects for the remainder of the year. During
the second quarter, our Company:

    -   experienced strong levels of activity in western Colorado and
        Arkansas;

    -   was awarded a major tender for fracturing services within some of
        western Canada's newest unconventional resource plays;

    -   prepared for increased activity in Canada throughout the remainder of
        2008 and into 2009 by adding field personnel, maintaining existing
        equipment and enhancing pumping capacity;

    -   deployed an additional fracturing spread into Mexico to improve the
        overall equipment utilization in this market; and

    -   commenced cementing operations in Argentina.

    Financial Highlights

    For the three months ended June 30, 2008, the Company:

    -   realized revenue of $92.8 million, an increase of six percent from
        the comparable period in 2007;

    -   incurred a net loss of $15.5 million or $0.41 per share (basic),
        however, assuming a Canadian statutory income tax rate of
        approximately 30 percent, the net loss would have decreased to
        $10.3 million or $0.27 per share (basic); and;

    -   exited the quarter in strong financial condition with working capital
        of $94.1 million and undrawn credit facilities of $90.0 million.

    For the six months ended June 30, 2008, Calfrac:

    -   increased revenue by nine percent from the first six months of 2007
        to $235.3 million;

    -   recorded a net loss of $1.2 million or $0.03 per share (basic);

    -   generated cash flow from operations before changes in non-cash
        working capital of $28.8 million or $0.77 per share (basic); and

    -   achieved EBITDA of $30.2 million or $0.81 per share (basic).
    

    Operational Highlights

    Evaluation of the Quarter's Results

    Calfrac expected to incur a net loss in the traditionally slower second
quarter, in which the effects of spring break-up in western Canada reduce
field activity levels. The Company took advantage of the opportunity offered
by reduced activities to perform extensive equipment maintenance and to add
and train new personnel in anticipation of high activity throughout the
remainder of the year and the first quarter of 2009. As a result, Canadian
repairs and maintenance expenses and personnel costs were higher than the same
quarter of the prior year by approximately $3.8 million and $2.3 million,
respectively.
    During the quarter, field activities in western Canada were slowed
further by particularly wet weather in central and southern Alberta during May
and June. In addition, operational delays encountered by a couple of our
larger customers in western Canada added to Calfrac's operating costs and
reduced margins. Furthermore, although the jobs completed in the second
quarter of 2008 were relatively large, they were subject to spring break-up
pricing. Calfrac also incurred start-up costs related to the deployment of a
second fracturing crew into Mexico as well as the commencement of cementing
operations in Argentina which negatively impacted the net income for the
second quarter. Consequently, the Company's overall costs and net loss during
the quarter were both substantially higher than initially expected. As noted
above, our tax position in Canada further contributed to the impact on net
earnings. As a result of the amalgamation with Denison Energy Inc. in 2004,
the Company has been subject to a lower effective tax rate on earnings in
Canada. Unfortunately, in periods where the Company sustains losses, only a
minimal tax recovery is recorded.
    While we are disappointed with the quarter's financial results, the
contributing factors referred to above are not expected to be recurring items.
We remain optimistic about the strength of the pressure pumping markets
throughout Calfrac's operating areas worldwide, and we are confident in
Calfrac's prospects for operational and financial growth in the second half of
2008 and 2009.
    Calfrac's growth plan is supported by an array of strengths and
advantages that bode well for our future success, including:

    
    -   a modern, well maintained equipment fleet;
    -   a focus on research, development and technology;
    -   a strong presence in growing North American resource plays that
        require complex fracturing;
    -   geographical diversification;
    -   a strong financial position;
    -   a customer list which includes the most active operators in each of
        our geographic segments;
    -   favourable industry reputation; and
    -   excellent personnel in the field as well as in our district, regional
        and corporate offices.
    

    Canada

    During the second quarter of 2008, the Company's activity levels in
Canada were lower than expected, which was due mainly to extremely wet weather
in central and southern Alberta during May and June. Activity was concentrated
in the deeper basins of northern Alberta and northeast British Columbia but
was subject to spring break-up pricing as a result of lower overall industry
utilization during this quarter. Consequently, the Company sustained a second
quarter loss which was compounded by only a nominal income tax recovery due to
the tax attributes from the amalgamation with Denison Energy Inc. While these
tax attributes serve to significantly lower income tax expenses in periods of
profitability, they also materially reduce income tax recoveries in quarters
when losses are incurred.
    In anticipation of higher levels of natural gas drilling activity
throughout the remainder of 2008 and into 2009, Calfrac's Canadian operations
during the quarter were focused on hiring and training new field personnel,
repairing existing equipment and adding new pumping capacity to its fracturing
equipment fleet.
    In June, the Company was awarded a one-year tender to provide fracturing
and deep coiled tubing services for a major customer that is actively
developing the Montney unconventional resource play in northeast British
Columbia and the foothills of Alberta.

    United States

    Calfrac's U.S. fracturing and cementing operations were very active
during the second quarter of 2008. The commissioning of the Rocky Mountain
Express Pipeline earlier in the year helped to alleviate the natural gas
take-away limitations in western Colorado and resulted in a record quarter of
activity for the Company's operations based in Grand Junction. Fracturing
equipment and personnel were temporarily redeployed from the DJ Basin to the
Piceance Basin in order to assist with meeting the strong demand for our
pressure pumping services in that region.
    The Company's fracturing operations in Arkansas reached record activity
levels in the three months ended June 30, 2008, as the trend continued in the
Fayetteville basin towards completing large, high-rate, multi-stage fracturing
jobs. Activity from Calfrac's cementing operations in Arkansas also increased
to record levels during the second quarter due to a new contract with a major
oil and natural gas company operating in this region and to additional
customer demand.
    Overall industry pricing pressures in the United States continued during
the second quarter. The pricing decline is believed to have reached its
trough, however, and we anticipate that this region will remain a key driver
of the Company's future financial performance.

    Russia

    Calfrac's current Russian equipment fleet of three fracturing spreads and
five coiled tubing units continued to be highly utilized throughout the
Company's two operating regions within Western Siberia during the first half
of the year. The Company remains focused on improving the future financial
results of this geographical market by realizing operating efficiencies and
prudently pursuing new growth opportunities.

    Mexico

    The Company deployed a second fracturing spread into the Burgos field of
northern Mexico in late April and commenced operating this equipment early in
the third quarter. We believe that this broader scale of operations will
provide the foundation for improved financial performance.

    Argentina

    Calfrac established a district base in Catriel, Argentina during the
first quarter and recently began cementing operations under the terms of a
negotiated arrangement with a local oil and natural gas company. The Company
intends to grow this operation and services provided as the market in
Argentina develops over time.

    Outlook

    North American natural gas prices are expected to remain strong in the
short and long term, providing the foundation for higher drilling activity
levels, which will be primarily focused on the development of new
unconventional natural gas resource plays.
    In Canada, higher natural gas prices have resulted in strong demand for
pressure pumping services in the deeper, more technically complex
unconventional reservoirs of the Western Canada Sedimentary Basin. These new
resource plays require significant hydraulic pumping capacity in order to
perform multiple fractures per well at high pumping rates and pressures. This
industry trend is expected to continue as these resource plays develop over
time. Additionally, drilling activity in the shallow gas regions of southern
Alberta is also anticipated to remain relatively active during 2008 with
increased activity anticipated for 2009 and 2010, offset slightly by lower
levels of activity in the coalbed methane (CBM) fracturing market.
    The Company anticipates that activity levels in the Piceance Basin of the
Rocky Mountain region and the Fayetteville Shale play of Arkansas will remain
very strong during the remainder of 2008. Calfrac believes that competitive
pricing pressures have stabilized and will be offset somewhat by higher levels
of equipment utilization as the industry trend toward developing tight sand
and shale gas reservoirs continues in existing and new basins. Calfrac expects
that its United States operations will be a key driver of the Company's
consolidated financial results for the remainder of 2008 and beyond.
    In Russia, the Company's annual contracts with one of Russia's largest
oil and natural gas companies are expected to ensure high levels of equipment
utilization in Western Siberia throughout the remainder of the year. Calfrac
will continue to review its fracturing and coiled tubing operations with a
view to improving financial returns.
    A second fracturing spread and related support equipment were deployed
into Mexico in late April. It is anticipated that the addition of this
equipment and the resulting larger operating scale will help transition
operations from the current start-up phase and result in higher levels of
activity, better equipment utilization and improved financial performance from
this geographical segment.
    The Company commenced cementing operations in Argentina during the second
quarter of 2008 under the terms of a negotiated arrangement with a local oil
and natural gas company. In conjunction with a strong local management team,
the Company will continue to evaluate future opportunities and prudently
expand the scale of operations as the pressure pumping market in Argentina
continues to develop.
    Calfrac is also pleased to announce that its Board of Directors has
approved a $27 million increase to the 2008 capital program, for a revised
total of $99 million. The additional capital will be focused mainly on
constructing a new high-rate conventional fracturing spread and a deep coiled
tubing unit for the Canadian market in time for the 2009 winter drilling
season. The addition to the 2008 capital program is expected to be funded from
the Company's cash on hand and cash flow from operations.
    The Company is also pleased to announce that Fernando Aguilar was elected
to Calfrac's Board of Directors at the most recent Annual General Meeting in
May. Mr. Aguilar's extensive international experience within the oilfield
services sector will be a significant benefit to Calfrac and its Board of
Directors.

    On behalf of the Board of Directors,


    Douglas R. Ramsay
    President & Chief Executive Officer

    August 5, 2008



    MANAGEMENT'S DISCUSSION AND ANALYSIS

    This Management's Discussion and Analysis (MD&A) for Calfrac Well
Services Ltd. ("Calfrac" or the "Company") has been prepared by management as
of August 5, 2008 and is a review of the financial condition and results of
operations of the Company based on accounting principles generally accepted in
Canada. Its focus is primarily a comparison of the financial performance for
the three and six months ended June 30, 2008 and 2007 and should be read in
conjunction with the unaudited interim consolidated financial statements and
accompanying notes for those periods as well as the audited consolidated
financial statements and MD&A for the year ended December 31, 2007. Readers
should also refer to the "Forward-Looking Statements" legal advisory at the
end of this MD&A.
    All financial amounts and measures presented in this MD&A are expressed
in Canadian dollars unless otherwise indicated. The definitions of certain
non-GAAP measures used within this MD&A have been included at the end of this
MD&A.

    
    Consolidated Highlights
    -----------------------
    Calfrac is an independent provider of specialized oilfield services in
Canada, the United States, Russia, Mexico and Argentina, including fracturing,
coiled tubing, cementing and other well stimulation services. The Company has
established a leadership position through an expanding geographic network,
larger operating fleet and growing customer base. For the three months ended
June 30, 2008, the Company:

    -   generated revenue of $92.8 million compared to $87.8 million in the
        same period of 2007;
    -   incurred a net loss of $15.5 million or $0.41 per share (basic)
        versus a net loss of $0.3 million or $0.01 per share (basic) in the
        same period of 2007;
    -   experienced a decrease of $10.8 million or $0.30 per share (basic) in
        cash flow from operations before changes in non-cash working capital
        during the second quarter of 2008 as compared to the corresponding
        quarter in 2007; and
    -   exited the quarter in strong financial condition with working capital
        of $94.1 million and undrawn credit facilities of $90.0 million.

    For the six months ended June 30, 2008, the Company:

    -   increased revenue by nine percent to $235.3 million from
        $216.3 million in the first half of 2007;
    -   recorded a net loss of $1.2 million or $0.03 per share (basic) versus
        net income of $18.5 million or $0.51 per share (basic) in the same
        period of 2007; and
    -   realized cash flow from operations before changes in non-cash working
        capital of $28.8 million or $0.77 per share (basic) compared to
        $39.7 million or $1.09 per share (basic) in the same period of 2007.


    Financial Overview - Three Months Ended June 30, 2008 Versus Three Months
    -------------------------------------------------------------------------
    Ended June 30, 2007
    -------------------

    Canada

    -------------------------------------------------------------------------
    Three Months Ended June 30,                   2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     32,231     29,352         10
    Expenses
    Operating                                   38,744     28,918         34
    Selling, General and Administrative
     (SG&A)                                      2,299      2,205          4
                                            ---------------------------------
                                                41,043     31,123         32
                                            ---------------------------------
    Operating Loss                              (8,812)    (1,771)      (397)
    Operating Loss (%)                          -27.3%      -6.0%
    Fracturing Revenue Per Job - Canada ($)     60,792     49,441         23
    Number of Fracturing Jobs - Canada             444        543        (18)
    

    Revenue

    Revenue from Calfrac's Canadian operations during the second quarter of
2008 increased by ten percent to $32.2 million from $29.4 million recorded in
the same three-month period of 2007. Canadian fracturing revenue for the
quarter totalled $27.0 million, consistent with the $26.8 million earned in
the corresponding quarter of 2007. For the three months ended June 30, 2008,
the Company completed 444 Canadian fracturing jobs for average revenue of
$60,792 per job compared to 543 jobs for average revenue of $49,441 per job in
the same period of 2007. The higher average revenue per job was primarily due
to an increase in the number of larger jobs completed in northern Alberta and
northeast British Columbia, combined with fewer lower revenue fracturing jobs
being completed in central and southern Alberta due to extremely wet weather
during May and June 2008.
    Revenue from the Company's coiled tubing operations in western Canada
increased by $2.3 million from the comparable period in 2007 to $3.4 million
in the second quarter of 2008. During this period Calfrac completed 275 jobs
for average revenue of $12,374 per job compared to 735 jobs for average
revenue of $1,526 per job in the same quarter of 2007. The increase in the
average revenue per job was due primarily to a reduction in coiled tubing
activity in the shallow gas-producing regions of southern Alberta, which
normally generate a high number of low-revenue jobs, as a result of extremely
wet weather in May and June 2008, as well as to an increase in activity in the
deeper reservoirs of the Western Canada Sedimentary Basin, which generate
fewer but higher-revenue jobs.
    Calfrac's Canadian cementing operations during the second quarter of 2008
achieved revenue of $1.8 million, a 33 percent increase from the $1.4 million
recorded in the corresponding quarter of 2007. For the three months ended
June 30, 2008, the Company completed 166 jobs for average revenue of $11,062
per job, compared to 115 jobs for average revenue of $12,034 per job in the
comparative period of 2007. The decrease in the average revenue per job was
due primarily to the impact of competitive pricing pressures in western
Canada.

    Operating Expenses

    Operating expenses in Canada increased by 34 percent to $38.7 million
during the second quarter of 2008 from $28.9 million in the same period of
2007. The increase in Canadian operating expenses was mainly due to an
increase in equipment repair expenses and personnel costs in anticipation of
higher activity levels throughout the remainder of 2008 combined with higher
fuel expenses. The Company also incurred significant costs in transporting
product to remote operating locations during the quarter.

    Selling, General and Administrative (SG&A) Expenses

    SG&A expenses for Calfrac's Canadian operations were $2.3 million during
the second quarter of 2008 compared to $2.2 million in the corresponding
period of 2007.

    
    United States and Latin America

    -------------------------------------------------------------------------
    Three Months Ended June 30,                   2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     45,497     41,056         11
    Expenses
    Operating                                   34,053     24,120         41
    SG&A                                         1,925      1,205         60
                                            ---------------------------------
                                                35,978     25,325         42
                                            ---------------------------------
    Operating Income                             9,519     15,731        (39)
    Operating Income (%)                         20.9%      38.3%
    Fracturing Revenue Per Job
     - United States ($)                        56,820     83,448        (32)
    Number of Fracturing Jobs
     - United States                               693        492         41
    

    Revenue

    Revenue from Calfrac's United States operations increased by two percent
during the second quarter of 2008 to $41.8 million from $41.1 million in the
same quarter of 2007. For the three months ended June 30, 2008, Calfrac's
Mexican and Argentinean operations generated revenue of $3.3 million and
$0.4 million, respectively. The Company commenced fracturing operations in
Mexico during the fourth quarter of 2007 and commenced cementing operations in
Argentina during the second quarter of 2008. Accordingly, there was no revenue
recorded in the comparable period of the prior year for these operations. The
increase in U.S. revenue was due primarily to higher fracturing activity
levels in Arkansas and the Piceance Basin of the Rocky Mountain region
resulting from the completion of more fracturing stages per well, combined
with an increase in cementing activity in Arkansas. These positive U.S.
results were almost entirely offset by competitive pricing pressures, lower
activity levels in the Denver Julesberg (DJ) Basin and a weaker U.S. dollar.
On a year-over-year basis, the appreciation of the Canadian dollar reduced
reported revenues in the United States by approximately $3.5 million.
    In the second quarter of 2008, the Company completed 693 fracturing jobs
in the United States for average revenue of $56,820 per job compared to
492 jobs for average revenue of $83,448 per job in the same quarter of 2007.
Revenue per job decreased mainly as a result of an increase in the average
number of stages completed in each day, competitive pricing pressures in all
operating districts and the impact of a stronger Canadian dollar.

    Operating Expenses

    Operating expenses in the United States and Latin America were
$34.1 million for the three months ended June 30, 2008, an increase of
41 percent from the comparative period in 2007. The increase was due mainly to
start-up expenses related to Mexico and Argentina, increased fuel costs and
higher operating costs related to the commencement of cementing operations in
Arkansas during the third quarter of 2007, partially offset by the impact of a
stronger Canadian dollar which reduced Calfrac's reported operating costs.

    SG&A Expenses

    In the second quarter of 2008, SG&A expenses in the United States and
Latin America increased by $0.7 million from the comparable period in 2007 to
$1.9 million primarily due to a larger number of divisional staff used to
support Calfrac's broader U.S. operations and to the commencement of
operations in Mexico and Argentina.

    
    Russia

    -------------------------------------------------------------------------
    Three Months Ended June 30,                   2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     15,057     17,370        (13)
    Expenses
    Operating                                   11,009     12,459        (12)
    SG&A                                         1,019        835         22
                                            ---------------------------------
                                                12,028     13,294        (10)
                                            ---------------------------------
    Operating Income                             3,029      4,076        (26)
    Operating Income (%)                         20.1%      23.5%
    

    Revenue

    The Company's revenue from Russian operations during the second quarter
of 2008 decreased by 13 percent to $15.1 million from $17.4 million in the
corresponding three-month period of 2007. The decrease was primarily due to
lower fracturing activity levels as a result of the closure of the Company's
Purpe district in January 2008 and the impact of a stronger Canadian dollar.
If the U.S./Canadian dollar exchange rate for the three months ended June 30,
2008 had remained consistent with the same quarter in 2007, reported revenue
for Calfrac's Russian operations would have increased by approximately
$1.3 million.

    Operating Expenses

    Operating expenses for the Company's Russian operations in the second
quarter of 2008 were $11.0 million compared to $12.5 million in the same
period of 2007. The decrease in operating expenses was primarily due to lower
levels of fracturing activity and the impact of a lower U.S. dollar, offset
partially by higher fuel expenses and costs associated with increased coiled
tubing activity.

    SG&A Expenses

    SG&A expenses in Russia were $1.0 million for the three-month period
ended June 30, 2008 versus $0.8 million in the corresponding period of 2007,
primarily as a result of higher personnel costs offset partially by the impact
of an appreciating Canadian dollar.

    
    Corporate

    -------------------------------------------------------------------------
    Three Months Ended June 30,                   2008       2007     Change
    -------------------------------------------------------------------------
    (000s)                                          ($)        ($)        (%)
    (unaudited)

    Expenses
    Operating                                      557        185        201
    SG&A                                         4,187      2,237         87
                                            ---------------------------------
                                                 4,744      2,422         96
                                            ---------------------------------
    Operating Loss                              (4,744)    (2,422)       (96)
    

    Operating Expenses

    Operating expenses primarily relate to personnel located in the Corporate
headquarters that directly support the Company's global field operations. The
increase in operating expenses from the second quarter of 2007 is mainly due
to the start-up of in-house laboratory services resulting from the acquisition
of ChemErgy Ltd. in January 2008.

    SG&A Expenses

    For the three months ended June 30, 2008, Corporate SG&A expenses were
$4.2 million compared to $2.2 million in the second quarter of 2007. The
increase was due mainly to a larger corporate organization supporting the
Company's broader operations and an increase of $0.9 million related to
stock-based compensation expenses.

    Interest, Depreciation and Other Expenses

    The Company recorded net interest expense of $2.7 million for the second
quarter of 2008 compared to $2.5 million for the same period of 2007. Interest
expense for the three months ended June 30, 2008 relates mainly to Calfrac's
senior unsecured notes, and increased from the second quarter of 2007
primarily due to lower interest income earned on the Company's surplus cash
offset by the impact of a higher Canadian dollar.
    For the three months ended June 30, 2008, depreciation expense increased
by 41 percent to $12.3 million from $8.7 million in the corresponding quarter
of 2007, mainly as a result of the Company's larger fleet of equipment
operating in North America and Russia.

    Income Tax Expenses

    The Company recorded an income tax recovery of $0.3 million during the
second quarter of 2008 compared to an income tax expense of $3.6 million in
the same period of 2007. For the three months ended June 30, 2008, Calfrac
recorded a current tax recovery of $2.3 million compared to an expense of
$1.7 million in the corresponding period in 2007. Calfrac recorded a future
income tax expense of $2.0 million for the quarter ended June 30, 2008
compared to $1.9 million for the same period of 2007. The effective income tax
recovery rate for the three months ended June 30, 2008 was two percent
compared to an effective tax rate of 109 percent in the same quarter of 2007.
The decrease in total income tax expense and overall rate was a result of a
majority of the second-quarter net loss being incurred in Canada which is only
recovered at a nominal rate due to the income tax attributes resulting from
the amalgamation with Denison Energy Inc., combined with lower profitability
in both the U.S. and Russia, where Calfrac's operations are subject to income
tax at full statutory rates.

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the three months ended June 30, 2008 decreased by $10.8 million or $0.30 per
share (basic) from the same period in 2007. The decrease in cash flow from
operations resulted mainly from:

    
    -   operating expenses in 2008 increasing by $18.7 million to
        $84.4 million; and
    -   an increase in SG&A expenses to $9.4 million in 2008 from
        $6.5 million in 2007;

    offset partially by:

    -   revenue increasing by six percent over 2007 to $92.8 million in 2008;
    -   cash taxes decreasing by $4.0 million during 2008 from 2007; and
    -   foreign exchange gains of $0.1 million in 2008 compared to foreign
        exchange losses of $1.4 million in 2007.


    Financial Overview - Three Months Ended June 30, 2008 Versus Three Months
    -------------------------------------------------------------------------
    Ended March 31, 2008
    --------------------

    Canada

    -------------------------------------------------------------------------
    Three Months Ended June 30 and March 31,      2008       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     32,231     83,085        (61)
    Expenses
    Operating                                   38,744     60,172        (36)
    SG&A                                         2,299      2,310          -
                                            ---------------------------------
                                                41,043     62,482        (34)
                                            ---------------------------------
    Operating Income (Loss)                     (8,812)    20,603       (143)
    Operating Income (Loss) (%)                 -27.3%      24.8%
    Fracturing Revenue Per Job - Canada ($)     60,792     52,995         15
    Number of Fracturing Jobs - Canada             444      1,273        (65)
    

    Revenue

    Calfrac's revenue from Canadian operations during the second quarter of
2008 decreased by 61 percent to $32.2 million from $83.1 million recorded in
the first quarter of 2008. Canadian fracturing revenue for the three months
ended June 30, 2008 was $27.0 million compared to $67.5 million in the first
three months of 2008 due primarily to lower activity levels resulting from
spring break-up and the impact of extremely wet weather in central and
southern Alberta during May and June. During the second quarter, the Company
completed 444 Canadian fracturing jobs for average revenue of $60,792 per job
compared to 1,273 jobs for average revenue of $52,995 per job in the first
quarter. The increase in fracturing revenue per job was primarily due to a
higher proportion of jobs completed in the technically challenging reservoirs
in northern Alberta and northeast British Columbia, combined with the
completion of fewer shallow gas and coalbed methane (CBM) jobs, which tend to
have lower average revenue per job.
    Revenue from Canadian coiled tubing operations for the three months ended
June 30, 2008 decreased by 58 percent to $3.4 million from $8.1 million
recorded in the first quarter of 2008 primarily due to decreased activity
levels resulting from the impact of spring break-up and extremely wet weather
during May and June in central and southern Alberta. During the second quarter
the Company completed 275 jobs for average revenue of $12,374 per job compared
to 1,036 jobs for average revenue of $7,813 per job in the first quarter. The
increase in the average revenue per job was due primarily to a higher
proportion of activity within the deeper, more technically challenging basins
of western Canada.
    The Company's cementing operations in Canada recorded revenue of
$1.8 million in the second quarter versus $7.5 million during the first
quarter. Cementing revenue decreased on a sequential basis primarily as a
result of the impact of spring break-up on Canadian cementing operations and
extremely wet weather experienced in central and southern Alberta during May
and June. The Company completed 166 jobs for average revenue of $11,062 per
job in the second quarter compared to 986 jobs for average revenue of $7,635
per job in the first quarter. Revenue per job during the second quarter
increased from the first quarter primarily due to the completion of a higher
proportion of cementing jobs in the deeper basins of western Canada.

    Operating Expenses

    Operating expenses in Canada decreased by 36 percent to $38.7 million
during the second quarter from $60.2 million in the first quarter. The
decrease in operating expenses in Canada was primarily due to lower activity
levels resulting from spring break-up and extremely wet weather in May and
June in central and southern Alberta, offset partially by higher equipment
repair and personnel expenses in preparation for higher activity levels
throughout the remainder of 2008.

    SG&A Expenses

    SG&A expenses for Calfrac's Canadian operations during the second quarter
were $2.3 million, consistent with the first quarter.

    
    United States and Latin America

    -------------------------------------------------------------------------
    Three Months Ended June 30 and March 31,      2008       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     45,497     44,508          2
    Expenses
    Operating                                   34,053     31,560          8
    SG&A                                         1,925      2,191        (12)
                                            ---------------------------------
                                                35,978     33,751          7
                                            ---------------------------------
    Operating Income                             9,519     10,757        (12)
    Operating Income (%)                         20.9%      24.2%
    Fracturing Revenue Per Job
     - United States ($)                        56,820     67,966        (16)
    Number of Fracturing Jobs
     - United States                               693        587         18
    

    Revenue

    The Company's revenue from United States operations during the second
quarter of 2008 increased by two percent to $41.8 million from $40.9 million
recorded in the first quarter of 2008. The increase in U.S. revenue was due
primarily to higher activity levels in western Colorado and Arkansas offset
slightly by lower activity in the DJ Basin. Calfrac completed 693 U.S.
fracturing jobs for average revenue of $56,820 per job in the second quarter
compared to 587 jobs for average revenue of $67,966 per job in the first
quarter. The lower revenue per job was mainly due to competitive pricing
pressures in the Fayetteville shale play in Arkansas.
    Calfrac's revenue from fracturing operations in Mexico decreased to
$3.3 million during the second quarter from $3.6 million in the first quarter
primarily due to lower fracturing activity levels.

    Operating Expenses

    During the second quarter, operating expenses in the United States and
Latin America were $34.1 million compared to $31.6 million in the first
quarter primarily due to higher proppant and fuel costs.

    SG&A Expenses

    SG&A expenses decreased by 12 percent to $1.9 million in the second
quarter from $2.2 million in the first quarter primarily due to lower bonus
expenses offset partially by higher costs to support the new operations in
Mexico and Argentina.

    
    Russia

    -------------------------------------------------------------------------
    Three Months Ended June 30 and March 31,      2008       2008     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     15,057     14,877          1
    Expenses
    Operating                                   11,009     12,467        (12)
    SG&A                                         1,019        700         46
                                            ---------------------------------
                                                12,028     13,167         (9)
                                            ---------------------------------
    Operating Income                             3,029      1,710         77
    Operating Income (%)                         20.1%      11.5%
    

    Revenue

    On a sequential quarterly basis, Calfrac's revenue from Russian
operations increased by one percent to $15.1 million in the second quarter of
2008 from $14.9 million in the first quarter of 2008 due primarily to higher
coiled tubing activity levels.

    Operating Expenses

    Operating expenses were $11.0 million in the second quarter compared to
$12.5 million in the first quarter. The decrease in operating expenses was
primarily due to lower maintenance costs, decreased fuel consumption due to
warmer weather and a reduction in product costs resulting from the Company's
customer supplying its own fracturing proppant.

    SG&A Expenses

    SG&A expenses were $1.0 million in the second quarter compared to
$0.7 million in the first quarter primarily due to higher personnel costs.

    
    Corporate

    -------------------------------------------------------------------------
    Three Months Ended June 30 and March 31,      2008       2008     Change
    -------------------------------------------------------------------------
    (000s)                                          ($)        ($)        (%)
    (unaudited)

    Expenses
    Operating                                      557        530          5
    SG&A                                         4,187      3,063         37
                                            ---------------------------------
                                                 4,744      3,593         32
                                            ---------------------------------
    Operating Loss                              (4,744)    (3,593)       (32)
    

    SG&A Expenses

    On a sequential quarterly basis, Corporate SG&A expenses were
$4.2 million in the second quarter of 2008, an increase of 37 percent from the
first quarter of 2008, primarily due to a $1.1 million increase in stock-based
compensation expenses.

    Interest, Depreciation and Other Expenses

    Net interest expense for the quarters ended June 30 and March 31, 2008
was consistent at $2.7 million.
    In the second quarter of 2008, depreciation expense increased to
$12.3 million from $11.8 million in the first quarter of 2008 primarily due to
Calfrac's larger equipment fleet in North America.

    Income Tax Expenses

    For the three months ended June 30, 2008, the Company recorded an income
tax recovery of $0.3 million compared to an income tax expense of $2.3 million
in the three-month period ended March 31, 2008. The Company recorded a current
tax recovery during the second quarter of 2008 of $2.3 million compared to a
recovery of $0.1 million in the first three months of 2008. Calfrac recorded a
future income tax expense of $2.0 million during the quarter ended June 30,
2008, a decrease of $0.4 million from the first quarter of 2008. The effective
income tax recovery rate for the second quarter of 2008 was two percent
compared to an effective tax rate of 14 percent for the three months ended
March 31, 2008. The low effective income tax rate was a result of the
Company's second quarter loss and first quarter earnings being mainly
generated from Canada, which recovers or incurs income taxes at a rate
significantly lower than the statutory rate due to tax attributes resulting
from the amalgamation with Denison Energy Inc.

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the second quarter of 2008 was $28.8 million or $0.77 per share (basic) lower
than for the first three months of 2008 primarily due to:

    
    -   a $49.7 million decline in revenue to $92.8 million;
    -   SG&A expenses increasing to $9.4 million from $8.3 million in the
        previous quarter; and
    -   foreign exchange gains decreasing by $1.3 million to $0.1 million;

    offset partially by:

    -   operating expenses decreasing by $20.4 million to $84.4 million; and
    -   current taxes decreasing by $2.2 million.


    Summary of Quarterly Results

    -------------------------------------------------------------------------
    Three Months Ended             Sept. 30,   Dec. 31,   Mar. 31,   June 30,
                                       2006       2006       2007       2007
    -------------------------------------------------------------------------
    (000s, except per share
     and unit data)                      ($)        ($)        ($)        ($)
    (unaudited)

    Financial
    Revenue                         115,112    118,322    128,507     87,778
    Gross margin(1)                  36,500     34,488     38,222     22,095
    Net income (loss)                19,418     16,907     18,777       (303)
      Per share - basic                0.54       0.47       0.52      (0.01)
                - diluted              0.53       0.46       0.52      (0.01)
    Cash flow from operations(2)     27,560     25,507     28,827     10,835
      Per share - basic                0.76       0.70       0.79       0.30
                - diluted              0.76       0.70       0.79       0.30
    EBITDA(3)                        29,614     28,421     30,324     14,569
      Per share - basic                0.82       0.78       0.84       0.40
                - diluted              0.81       0.78       0.83       0.40
    Capital expenditures             23,931     44,415     48,521     19,972
    Working capital                  31,158     31,225    105,549     86,971
    Shareholders' equity            287,616    303,510    326,184    321,218
    -------------------------------------------------------------------------
                                       (No.)      (No.)      (No.)      (No.)
    Operating
    Fracturing spreads
      Conventional                       19         21         23         23
      Coalbed methane                     4          4          4          4
    -------------------------------------------------------------------------
      Total                              23         25         27         27
    Coiled tubing units                  14         14         14         15
    Cementing units                      11         13         15         15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Financial
    Revenue                         129,585    114,450    142,470     92,785
    Gross margin(1)                  42,851     28,612     37,740      8,423
    Net income (loss)                16,441      3,653     14,269    (15,469)
      Per share - basic                0.45       0.10       0.38      (0.41)
                - diluted              0.45       0.10       0.38      (0.41)
    Cash flow from operations(2)     28,398     19,582     28,790         (9)
      Per share - basic                0.78       0.53       0.77          -
                - diluted              0.78       0.53       0.77          -
    EBITDA(3)                        34,107     18,790     31,047       (813)
      Per share - basic                0.94       0.51       0.83      (0.02)
                - diluted              0.93       0.51       0.83      (0.02)
    Capital expenditures             11,345     12,101     14,820     19,341
    Working capital                  99,696     92,156    111,989     94,056
    Shareholders' equity            336,858    350,915    377,056    364,068
    -------------------------------------------------------------------------
                                       (No.)      (No.)      (No.)
    Operating
    Fracturing spreads
      Conventional                       24         24         24         25
      Coalbed methane                     4          4          4          4
    -------------------------------------------------------------------------
      Total                              28         28         28         29
    Coiled tubing units                  17         18         18         18
    Cementing units                      16         16         17         17
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    1.  Gross margin is defined as revenue less operating expenses excluding
        depreciation. Gross margin 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.

    2.  Cash flow is defined as funds provided by operations as reflected in
        the consolidated statement of cash flows. Cash flow and cash flow per
        share are measures that provide shareholders and potential investors
        with additional information regarding the Company's liquidity and its
        ability to generate funds to finance its operations. Management
        utilizes these measures to assess the Company's ability to finance
        operating activities and capital expenditures. Cash flow and cash
        flow per share are not measures that have any standardized meaning
        prescribed under GAAP and, accordingly, may not be comparable to
        similar measures used by other companies.

    3.  EBITDA is defined as income before interest, taxes, depreciation and
        amortization. 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.


    Financial Overview - Six Months Ended June 30, 2008 Versus Six Months
    ---------------------------------------------------------------------
    Ended June 30, 2007
    -------------------

    Canada

    -------------------------------------------------------------------------
    Six Months Ended June 30,                     2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                    115,316    115,938         (1)
    Expenses
    Operating                                   98,916     87,477         13
    SG&A                                         4,609      5,056         (9)
                                            ---------------------------------
                                               103,525     92,533         12
                                            ---------------------------------
    Operating Income                            11,791     23,405        (50)
    Operating Income (%)                         10.2%      20.2%
    Fracturing Revenue Per Job - Canada ($)     55,011     52,434          5
    Number of Fracturing Jobs - Canada           1,717      1,941        (12)
    

    Revenue

    During the first six months of 2008, revenue from the Company's Canadian
operations was $115.3 million compared to $115.9 million in the comparable
period of 2007. Fracturing revenue in Canada totalled $94.5 million, a
decrease of seven percent from the $101.8 million generated in the comparative
period of 2007. The decrease was primarily due to lower fracturing activity
levels in western Canada, mainly as a result of extremely wet weather
conditions in central and southern Alberta during May and June. For the six
months ended June 30, 2008, the Company completed 1,717 Canadian fracturing
jobs for average revenue of $55,011 per job compared to 1,941 jobs for average
revenue of $52,434 per job in the corresponding period of 2007. Revenue per
job increased during the first six months of 2008 over the same period in 2007
primarily due to a greater number of jobs being completed in the deeper, more
technically challenging basins of western Canada and less shallow gas
fracturing activity in southern Alberta due to the aforementioned wet weather.
    Revenue from Canadian coiled tubing operations during the first six
months of 2008 increased by $5.5 million to $11.5 million primarily due to a
larger equipment fleet operating in the deeper reservoirs of western Canada.
For the first six months of 2008, the Company completed 1,311 jobs for average
revenue of $8,769 per job compared to 1,916 jobs for average revenue of
$3,117 per job in 2007. The increase in the average revenue per job was due
primarily to a higher proportion of activity in the deeper, more technically
challenging plays of the Western Canada Sedimentary Basin.
    Revenue from Calfrac's cementing operations during the six months ended
June 30, 2008 was $9.4 million, a 14 percent increase from the $8.2 million
recorded in the corresponding period in 2007. For the six months ended
June 30, 2008, the Company completed 1,152 jobs for average revenue of
$8,129 per job compared to 612 jobs for average revenue of $13,384 per job in
the comparative period of 2007. The decrease in the average revenue per job
was due primarily to a higher percentage of shallow cementing jobs completed
than in the corresponding period of the prior year, as well as the impact of
competitive pricing pressures in western Canada.

    Operating Expenses

    During the first six months of 2008, operating expenses from Calfrac's
operations in Canada increased by 13 percent to $98.9 million from
$87.5 million in the corresponding period of 2007. This increase in operating
costs was due primarily to a larger proportion of work being completed in the
deeper, more technically challenging regions of western Canada, more equipment
repairs and additional personnel costs in anticipation of higher activity
throughout the remainder of 2008 as well as higher fuel expenses.

    SG&A Expenses

    Calfrac's SG&A expenses during the first six months of 2008 in Canada
decreased to $4.6 million from $5.1 million in the comparative period of 2007
primarily as a result of lower annual bonus expenses due to lower Company
profitability.

    
    United States and Latin America

    -------------------------------------------------------------------------
    Six Months Ended June 30,                     2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     90,005     70,922         27
    Expenses
    Operating                                   65,613     46,114         42
    SG&A                                         4,116      2,367         74
                                            ---------------------------------
                                                69,729     48,481         44
                                            ---------------------------------
    Operating Income                            20,276     22,441        (10)
    Operating Income (%)                         22.5%      31.6%
    Fracturing Revenue Per Job
     - United States ($)                        61,932     83,634        (26)
    Number of Fracturing Jobs
     - United States                             1,280        848         51
    

    Revenue

    For the six months ended June 30, 2008, revenue from Calfrac's United
States operations was $82.6 million, an increase of 17 percent or
$11.7 million from the comparable period in 2007. Calfrac's operations in
Mexico and Argentina generated revenue of $7.0 million and $0.4 million,
respectively, during the first six months of 2008. There was no revenue
recorded in the comparable period of the prior year because the Company's
operations in Mexico began during the fourth quarter of 2007 and cementing
operations commenced in Argentina during the second quarter of 2008. The
increase in U.S. revenue was due primarily to higher activity levels in
Arkansas and the Piceance Basin of the Rocky Mountain region as a result of
the completion of a higher average number of fracturing stages per well and a
full six months of activity in Arkansas during 2008 versus only four months in
the comparable period of 2007. This was offset by competitive pricing
pressures, lower activity levels in the DJ Basin and a weaker U.S. dollar. On
a year-over-year basis, the appreciation of the Canadian dollar reduced
reported revenues in the United States by approximately $10.2 million. For the
six-month period ended June 30, 2008, the Company completed 1,280 fracturing
jobs in the United States for average revenue of $61,932 per job compared to
848 jobs for average revenue of $83,634 per job in the comparable period of
2007. Revenue per job decreased mainly as a result of competitive pricing
pressures in all operating districts, as well as the impact of a stronger
Canadian dollar.

    Operating Expenses

    In the United States and Latin America, operating expenses during the
first six months of 2008 increased by 42 percent to $65.6 million from
$46.1 million in the comparable period of 2007 mainly due to higher fracturing
activity levels in the United States, start-up expenses related to Calfrac's
Mexico and Argentina operations and increased fuel expenses, offset partially
by the appreciation of the Canadian dollar.

    SG&A Expenses

    SG&A expenses in the United States and Latin America for the six months
ended June 30, 2008 were $4.1 million compared to $2.4 million in the
corresponding period in 2007, primarily due to a larger divisional
organization to support the U.S operations, higher annual bonus expenses and
the commencement of operations in Mexico and Argentina, offset partially by
the depreciation of the U.S. dollar.

    
    Russia

    -------------------------------------------------------------------------
    Six Months Ended June 30,                     2008       2007     Change
    -------------------------------------------------------------------------
    (000s, except operational information)          ($)        ($)        (%)
    (unaudited)

    Revenue                                     29,934     29,425          2
    Expenses
    Operating                                   23,476     22,006          7
    SG&A                                         1,719      1,739         (1)
                                            ---------------------------------
                                                25,195     23,745          6
                                            ---------------------------------
    Operating Income                             4,739      5,680        (17)
    Operating Income (%)                         15.8%      19.3%
    

    Revenue

    In the first six months of 2008, the Company's revenue from Russian
operations increased by two percent to $29.9 million from $29.4 million in the
comparable period of 2007. This increase was due primarily to a larger
equipment fleet and higher coiled tubing activity levels, offset slightly by a
stronger Canadian dollar. If the U.S./Canadian dollar exchange rate for the
first six months of 2008 had remained consistent with the same period in 2007,
the reported revenue for Calfrac's Russian operations would have increased by
approximately $3.8 million.

    Operating Expenses

    Operating expenses in Russia during the first six months of 2008 were
$23.5 million versus $22.0 million in the corresponding period of 2007. The
increase in Russian operating expenses was primarily due to higher fuel
expenses offset partially by the appreciation of the Canadian dollar.

    SG&A Expenses

    SG&A expenses in Russia for the six months ended June 30, 2008 were
$1.7 million, consistent with the corresponding period in 2007.

    
    Corporate

    -------------------------------------------------------------------------
    Six Months Ended June 30,                     2008       2007     Change
    -------------------------------------------------------------------------
    (000s)                                          ($)        ($)        (%)
    (unaudited)

    Expenses
    Operating                                    1,087        371        193
    SG&A                                         7,250      4,956         46
                                            ---------------------------------
                                                 8,337      5,327         57
                                            ---------------------------------
    Operating Loss                              (8,337)    (5,327)       (57)
    

    Operating Expenses

    For the first six months of 2008, operating expenses for the Corporate
segment increased by $0.7 million from the comparable period of 2007 to
$1.1 million, primarily due to the start up of in-house laboratory services
resulting from the acquisition of ChemErgy Ltd. in January 2008.

    SG&A Expenses

    Corporate SG&A expenses during the first six months of 2008 were
$7.3 million, an increase of 46 percent or $2.3 million from the same period
in 2007, primarily due to a larger corporate staff supporting the Company's
broader geographical operating scale, and secondarily to stock-based
compensation expenses increasing by $0.7 million.

    Interest, Depreciation and Other Expenses

    For the six months ended June 30, 2008, the Company recorded net interest
expense of $5.4 million compared to $4.4 million in the corresponding period
of 2007. The higher interest expense in 2008 was primarily related to lower
interest earned on the Company's surplus cash offset partially by the impact
of the stronger Canadian dollar.
    During the first six months of 2008, depreciation expense increased by
45 percent to $24.1 million from $16.6 million in the comparative period in
2007, mainly due to a larger fleet of equipment operating in North America and
Russia.

    Income Tax Expenses

    In the first six months of 2008, the Company recorded an income tax
expense of $2.1 million versus $5.3 million in the comparative six-month
period in 2007. A current income tax recovery of $2.4 million was recorded
compared to an expense of $2.4 million in the corresponding period of 2007.
Calfrac recorded a future income tax expense of $4.5 million for the six
months ended June 30, 2008 compared to $3.0 million in the same period of
2007. The Company's effective income tax rate for the six months ended
June 30, 2008 was 271 percent compared to 22 percent in the same six-month
period of 2007. The decrease in total income tax expense was primarily due to
the Company's lower pre-tax net income. The overall effective tax rate
increased as a result of a greater proportion of the Company's earnings being
generated from the United States, where Calfrac's operations are subject to
income tax at full statutory rates and higher net losses in Canada which
recovers or incurs income taxes at a rate significantly lower than the
statutory rate due to tax attributes resulting from the amalgamation with
Denison Energy Inc.

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the six months ended June 30, 2008 was $28.8 million or $0.77 per share
(basic) compared to $39.7 million or $1.09 per share (basic) in the same
period of 2007, primarily as a result of:

    
    -   operating expenses increasing by $33.1 million to $189.1 million in
        2008; and
    -   a $3.6 million increase in SG&A expenses during 2008;

    offset partially by:

    -   revenue increasing by nine percent or $19.0 million to $235.3 million
        in 2008;
    -   a decrease in cash taxes of $4.8 million during 2008; and
    -   foreign exchange gains of $1.5 million in 2008 compared to foreign
        exchange losses of $1.4 million in 2007.


    Liquidity and Capital Resources

    -------------------------------------------------------------------------
    Six months ended June 30,                                2008       2007
    -------------------------------------------------------------------------
    (000s)                                                     ($)        ($)

    Cash provided by (used in):
      Operating activities                                 28,953     38,900
      Financing activities                                  6,775     89,602
      Investing activities                                (33,886)   (82,833)
      Effect of exchange rate changes on
       cash and cash equivalents                            1,570     (6,909)
    -------------------------------------------------------------------------
    Increase in cash and cash equivalents                   3,412     38,760
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Operating Activities

    The Company's cash flow from operations, excluding changes in non-cash
working capital, was $28.8 million during the first six months of 2008
compared to $39.7 million in the corresponding period of 2007, primarily due
to higher revenues being more than offset by higher operating, SG&A and
interest expenses. Net cash provided by operating activities was also impacted
by the net change in non-cash working capital. As at June 30, 2008, Calfrac
had working capital of $94.1 million, an increase of $7.1 million from
June 30, 2007. The increase in working capital was primarily due to an
increase in accounts receivable and inventory offset by higher accounts
payable, all of which were mainly due to a broader scale of operations than at
the end of June 2007.

    Financing Activities

    Net cash provided by financing activities in the first six months of 2008
decreased by $82.8 million from the same period in 2007. In February 2007,
Calfrac completed a private placement of senior unsecured notes for an
aggregate principal of US$135.0 million. These notes are due on February 15,
2015 and bear interest at 7.75 percent per annum. A portion of these proceeds
was used to repay the existing bank facilities.
    The Company has additional available credit facilities of $90.0 million
with a syndicate of Canadian chartered banks. The operating line of credit is
$25.0 million with advances bearing interest at either the bank's prime rate,
U.S. base rate, LIBOR plus one percent or bankers' acceptances plus one
percent. The revolving term loan is $65.0 million and bears interest at either
the bank's prime rate plus 0.25 percent, U.S. base rate plus 0.25 percent,
LIBOR plus 1.25 percent or bankers' acceptances plus 1.25 percent. At this
date, the Company has unused credit facilities in the amount of $90.0 million.
    At June 30, 2008, the Company had cash and cash equivalents of
$42.5 million. A portion of these funds was invested in short-term
investments, none of which was exposed to the liquidity issues surrounding
asset-backed securities.

    Investing Activities

    For the six months ended June 30, 2008, Calfrac's net cash used for
investing activities was $33.9 million, down from $82.8 million in the
corresponding period in 2007. Capital expenditures were $34.2 million, down
from $68.5 million in the same period of the prior year. Capital expenditures
for the first six months of 2008 were primarily related to increasing the
pumping capacity of the Company's fracturing equipment fleet throughout North
America.
    On January 11, 2008, the Company acquired the remaining 70 percent of the
common shares of ChemErgy Ltd. that it did not previously own for aggregate
consideration of approximately $6.6 million. The purchase price was satisfied
through the payment to the vendors of approximately $4.8 million in cash, the
transfer of real property at a value of approximately $0.5 million and the
issuance of 71,581 common shares of the Company with a value of approximately
$1.3 million.
    On January 4, 2008, the Company acquired all the shares of 1368303
Alberta Ltd. for cash and share consideration totalling approximately
$2.7 million. The Company issued 78,579 common shares with a value of
approximately $1.4 million in conjunction with the acquisition, in addition to
approximately $1.4 million of cash. One-hundred percent of the consideration
paid was assigned to capital assets, as the acquired company had no other
assets or liabilities.
    With its strong working capital position, available credit facilities and
anticipated cash flow from operations, the Company expects to have adequate
resources to fund its financial obligations and budgeted expenditures for 2008
and beyond.

    Internal Control over Financial Reporting

    There have been no changes in the Company's internal control over
financial reporting that occurred during the most recent interim period ended
June 30, 2008 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

    Accounting Policies and Estimates

    Changes in Accounting Policies

    The Company adopted the following sections from the Canadian Institute of
Chartered Accountants' (CICA) Handbook on January 1, 2008:

    Inventories

    Section 3031 Inventories replaces the previous standard on inventories
and provides more extensive guidance on measurement and expands disclosure
requirements. The new standard requires inventory to be valued on a first-in,
first-out or weighted average basis, and provides guidance on the
determination of cost and its subsequent recognition as an expense, including
any write-down to net realizable value. The adoption of this standard has not
had a material impact on the Company's consolidated financial statements.

    Financial Instruments

    Section 3862 Financial Instruments - Disclosures and Section 3863
Financial Instruments - Presentation together comprise a complete set of
disclosure and presentation requirements that revise and enhance current
disclosure requirements for financial instruments, but do not change the
existing presentation requirements.

    Capital Disclosures

    Section 1535 Capital Disclosures requires the Company to disclose its
objectives, policies and processes for managing its capital structure (see
note 10 to the interim consolidated financial statements).

    Critical Accounting Policies and Estimates

    This MD&A is based on the Company's annual consolidated financial
statements that have been prepared in accordance with Canadian GAAP.
Management is required to make assumptions, judgments and estimates in the
application of GAAP. Calfrac's significant accounting policies are described
in note 2 to the annual consolidated financial statements and note 3 to the
interim consolidated financial statements. The preparation of the consolidated
financial statements requires that certain estimates and judgments be made
concerning the reported amount of revenues and expenses and the carrying
values of assets and liabilities. These estimates are based on historical
experience and management's judgment. Anticipating future events involves
uncertainty and, consequently, the estimates used by management in the
preparation of the consolidated financial statements may change as future
events unfold, additional experience is acquired or the environment in which
the Company operates changes. The following accounting policies and practices
involve the use of estimates that have a significant impact on the Company's
financial results.

    Depreciation

    Depreciation of the Company's property and equipment incorporates
estimates of useful lives and residual values. These estimates may change as
more experience is obtained or as general market conditions change, thereby
impacting the operation of the Company's property and equipment.

    Stock-Based Compensation

    As described in note 9 to the annual consolidated financial statements,
the fair value of stock options is estimated at the grant date using the
Black-Scholes option pricing model, which includes underlying assumptions
related to the risk-free interest rate, average expected option life,
estimated volatility of the Company's shares and anticipated dividends.

    Business Risks

    The business of Calfrac is subject to certain risks and uncertainties.
Prior to making any investment decision regarding Calfrac, investors should
carefully consider, among other things, the risk factors set forth in the
Company's most recently filed Annual Information Form, which risk factors are
incorporated by reference herein.
    The Annual Information Form is available through the Internet on the
Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which
can be accessed at www.sedar.com. Copies of the Annual Information Form may
also be obtained on request without charge from Calfrac at 411 - 8th Avenue
S.W., Calgary, Alberta T2P 1E3, or at www.calfrac.com, or by facsimile at
403-266-7381.

    Outlook

    Calfrac believes that the fundamentals for North American natural gas
prices are strong and, as a result, that drilling activity within the Western
Canada Sedimentary Basin should be higher than previously expected. In April
2008, the Petroleum Services Association of Canada (PSAC) revised its 2008
drilling forecast upward from 14,500 to 16,500 wells. Several industry
analysts anticipate that the 2008 well count will be higher than this
forecast. The Company believes that Canadian natural gas drilling in 2008 and
beyond will be focused on the development of new technically challenging
unconventional reservoirs, such as the Montney, Horn River and Bakken resource
plays. Shallow gas drilling activity in southern Alberta is also expected to
be active, more than offsetting the anticipated low levels of activity in the
CBM fracturing market.
    Similar to Canada, the oil and natural gas industry in the United States
is focused on the development of new tight sand and shale gas plays. These
unconventional reservoirs typically require a higher number of fractures per
wellbore and significant hydraulic horsepower in order to pump at higher rates
and pressures. As a result, Calfrac's U.S. operations in Grand Junction and
Arkansas are expected to be very active during the remainder of 2008 and into
2009. Personnel and equipment from the Platteville district will continue to
support the Company's fracturing operations in western Colorado. The pricing
pressure recently experienced in these regions has stabilized and is expected
to be mitigated by higher equipment utilization levels in the second half of
the year. As a result, the Company's operations in the United States are
anticipated to be a major driver of Calfrac's consolidated operating and
financial performance for 2008 and beyond.
    The Company's fracturing and coiled tubing operations in Russia are
supported by annual contracts with one of Russia's largest oil and natural gas
companies and, consequently, are expected to remain highly utilized throughout
the remainder of 2008. Calfrac also continues to evaluate new opportunities to
grow its scale of operations within this geographic market.
    The operating scale of Calfrac's fracturing operations in Mexico was
enhanced through the deployment of a second fracturing spread in April 2008.
This larger equipment fleet is expected to generate improved future operating
and financial performance in this market.
    In Argentina, Calfrac commenced cementing operations in April 2008
supported by a negotiated arrangement with a local oil and natural gas
company. Calfrac believes that these operations will provide the foundation
for future expansion as the pressure pumping market in this country develops.

    Second Quarter Conference Call

    Calfrac will be conducting a conference call for interested analysts,
brokers, investors and news media representatives to review its 2008 second
quarter results at 9:00 a.m. (Mountain Daylight Time) on Thursday, August 7,
2008. The conference call dial-in number is 1-866-250-4909 or 416-915-5648.
The seven-day replay numbers are 1-877-289-8525 or 416-640-1917 and enter
21279298 followed by the number sign. A webcast of the conference call may be
accessed via the Company's website at www.calfrac.com.

    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 "anticipate", "can", "may", "expect", "believe", "intend", "forecast",
"will", or similar words suggesting future outcomes, are forward-looking
statements. These statements include, but are not limited to, future capital
expenditures, future financial resources, future oil and gas well activity,
outcome of specific events, trends in the oil and natural gas industry and the
Company's growth prospects, including, without limitation, its international
growth strategy and prospects. These statements are derived from certain
assumptions and analyses made by the Company based on its experience and
interpretation of historical trends, current conditions, expected future
developments and other factors that it believes are appropriate in the
circumstances. These 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, such as 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; regional competition; and other factors, many of which are beyond
the control of the Company. 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".
    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.

    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 gross margin, cash flow from
operations, cash flow, cash flow per share (basic), cash flow per share
(diluted), EBITDA, EBITDA per share (basic) and EBITDA per share (diluted).
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 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. can be accessed
on the Company's website at www.calfrac.com or under the Company's public
filings found at www.sedar.com.



    
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
                                                       June 30,  December 31,
    As at                                                 2008          2007
    -------------------------------------------------------------------------
    (000s) (unaudited)                                      ($)           ($)

    Assets
    Current assets
      Cash and cash equivalents                         42,516        39,104
      Accounts receivable                               76,201        86,980
      Income taxes recoverable                           4,049           786
      Inventory                                         28,412        25,013
      Prepaid expenses and deposits                      8,633         5,611
    -------------------------------------------------------------------------
                                                       159,811       157,494
    Capital assets                                     405,383       388,987
    Long-term investment                                     -           928
    Goodwill (note 9)                                   10,523         6,003
    Future income taxes                                  9,299         5,498
    -------------------------------------------------------------------------
                                                       585,016       558,910
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity
    Current liabilities
      Accounts payable and accrued liabilities          65,755        65,338
    Long-term debt (note 4)                            133,554       129,535
    Other long-term liabilities                          1,832         1,882
    Future income taxes                                 13,761         7,135
    Deferred credit                                      6,038         4,105
    Non-controlling interest                                 8             -
    -------------------------------------------------------------------------
                                                       220,948       207,995
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 5)                             169,001       155,254
    Shares held in trust (note 6)                           (4)       (2,199)
    Contributed surplus (note 7)                         5,041         6,025
    Retained earnings                                  194,947       198,039
    Accumulated other comprehensive income              (4,917)       (6,204)
    -------------------------------------------------------------------------
                                                       364,068       350,915
    -------------------------------------------------------------------------
                                                       585,016       558,910
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

                                     Three Months Ended     Six Months Ended
                                           June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s, except per share data)        ($)        ($)        ($)        ($)
    (unaudited)

    Revenue                          92,785     87,778    235,255    216,285
    -------------------------------------------------------------------------
    Expenses
      Operating                      84,362     65,683    189,092    155,968
      Selling, general and
       administrative                 9,431      6,481     17,694     14,118
      Depreciation                   12,285      8,743     24,095     16,643
      Interest, net                   2,687      2,524      5,381      4,429
      Equity share of income from
       long-term investments              -       (600)      (122)      (600)
      Foreign exchange losses
       (gains)                          (84)     1,380     (1,509)     1,369
      Loss (gain) on disposal of
       capital assets                  (111)       265       (134)       538
    -------------------------------------------------------------------------
                                    108,570     84,476    234,497    192,465
    -------------------------------------------------------------------------
    Income (loss) before income
     taxes and non-controlling
     interest                       (15,785)     3,302        758     23,820
    -------------------------------------------------------------------------
    Income taxes
      Current                        (2,320)     1,715     (2,422)     2,364
      Future                          2,043      1,890      4,474      2,982
    -------------------------------------------------------------------------
                                       (277)     3,605      2,052      5,346
    -------------------------------------------------------------------------
    Income (loss) before
     non-controlling interest       (15,508)      (303)    (1,294)    18,474
    Non-controlling interest            (39)         -        (94)         -
    -------------------------------------------------------------------------
    Net income (loss) for
     the period                     (15,469)      (303)    (1,200)    18,474
    Retained earnings, beginning
     of period                      212,308    181,922    198,039    163,145
    Dividends                        (1,892)    (1,819)    (1,892)    (1,819)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                      194,947    179,800    194,947    179,800
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per share
      Basic                           (0.41)     (0.01)     (0.03)      0.51
      Diluted                         (0.41)     (0.01)     (0.03)      0.51
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED
    OTHER COMPREHENSIVE INCOME

                                     Three Months Ended     Six Months Ended
                                           June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s) (unaudited)                   ($)        ($)        ($)        ($)

    Net income (loss) for
     the period                     (15,469)      (303)    (1,200)    18,474
    Other comprehensive income
     (loss)
      Change in foreign currency
       translation adjustment          (277)    (2,661)     1,287     (3,360)
    -------------------------------------------------------------------------
    Comprehensive income (loss)     (15,746)    (2,964)        87     15,114
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income, beginning of period     (4,640)      (699)    (6,204)         -
      Other comprehensive income
       (loss) for the period           (277)    (2,661)     1,287     (3,360)
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income, end of period           (4,917)    (3,360)    (4,917)    (3,360)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                     Three Months Ended     Six Months Ended
                                           June 30,              June 30,
                                       2008       2007       2008       2007
    -------------------------------------------------------------------------
    (000s) (unaudited)                   ($)        ($)        ($)        ($)

    Cash provided by (used in):
    Operating activities
      Net income (loss) for
       the period                   (15,469)      (303)    (1,200)    18,474
      Items not involving cash:
        Depreciation                 12,285      8,743     24,095     16,643
        Amortization of debt
         issue costs                    153        171        305        265
        Stock-based compensation      1,129        669      1,456      1,360
        Equity share of income from
         long-term investments            -       (600)      (122)      (600)
        Loss (gain) on disposal
         of capital assets             (111)       265       (134)       538
        Future income taxes           2,043      1,890      4,474      2,982
        Non-controlling interest        (39)         -        (94)         -
    -------------------------------------------------------------------------
      Funds provided by operations       (9)    10,835     28,780     39,662
      Net change in non-cash
       operating assets and
       liabilities                   17,384      7,817        173       (762)
    -------------------------------------------------------------------------
                                     17,375     18,652     28,953     38,900
    -------------------------------------------------------------------------
    Financing activities
      Issuance of long-term debt          -          -          -    199,790
      Long-term debt repayments           -          -          -   (107,546)
      Net proceeds on issuance of
       common shares                  3,410      1,176      8,667      1,214
      Dividends                      (1,892)    (1,819)    (1,892)    (1,819)
      Purchase of common shares           -     (2,037)         -     (2,037)
    -------------------------------------------------------------------------
                                      1,518     (2,680)     6,775     89,602
    -------------------------------------------------------------------------
    Investing activities
      Purchase of capital assets    (19,341)   (19,972)   (34,160)   (68,493)
      Proceeds on disposal of
       capital assets                   153         50        258        416
      Acquisitions, net of cash
       acquired (note 9)                  -          -     (6,117)         -
      Long-term investments and other     -          -        243          -
      Net change in non-cash
       working capital from
       purchase of capital assets     6,319    (14,651)     5,890    (14,756)
    -------------------------------------------------------------------------
                                    (12,869)   (34,573)   (33,886)   (82,833)
    -------------------------------------------------------------------------
    Effect of exchange rate changes
     on cash and cash equivalents      (130)    (5,718)     1,570     (6,909)
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     position                         5,894    (24,319)     3,412     38,760
    Cash and cash equivalents,
     beginning of period             36,622     68,659     39,104      5,580
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   42,516     44,340     42,516     44,340
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

    For the Six Months Ended June 30, 2008
    (figures in text and tables are in 000s, except share data) (unaudited)

    1.  Basis of Presentation

        The interim financial statements of Calfrac Well Services Ltd. (the
        "Company") do not conform in all respects to the requirements of
        generally accepted accounting principles (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 business of the Company 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

        The interim financial statements follow the same accounting policies
        and methods of application as the most recent annual financial
        statements, except for the adoption on January 1, 2008 of the
        following Canadian Institute of chartered Accountants (CICA) Handbook
        sections:

        (a) Inventories

            Section 3031 Inventories replaces the previous standard on
            inventories and provides more extensive guidance on measurement
            and expands disclosure requirements. The new standard requires
            inventory to be valued on a first-in, first-out or weighted
            average basis, and provides guidance on the determination of cost
            and its subsequent recognition as an expense, including any
            write-down to net realizable value. The adoption of this standard
            has not had a material impact on the Company's consolidated
            financial statements.

        (b) Financial Instruments

            Section 3862 Financial Instruments - Disclosures and Section 3863
            Financial Instruments - Presentation together comprise a complete
            set of disclosure and presentation requirements that revise and
            enhance current disclosure requirements for financial
            instruments, but do not change the existing presentation
            requirements.

        (c) Capital Disclosures

            Section 1535 Capital Disclosures requires the Company to disclose
            its objectives, policies and processes for managing its capital
            structure (see note 10).

    4.  Long-term Debt

        The carrying value of long-term debt at June 30, 2008 was $133,554
        (December 31, 2007 - $129,535) net of unamortized debt issue costs of
        $4,105 (December 31, 2007 - $4,290). The fair value of long-term debt
        at June 30, 2008 was $132,841 (December 31, 2007 - $128,138).

    5.  Capital Stock

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

        ---------------------------------------------------------------------
        Continuity of Common Shares (year-to-date)        Shares      Amount
        ---------------------------------------------------------------------
                                                            (No.)     ($000s)

        Balance, January 1, 2008                      37,201,872     155,254
          Issued upon exercise of stock options          484,163      11,107
          Issued on acquisitions (note 9)                150,160       2,640
        ---------------------------------------------------------------------
        Balance, June 30, 2008                        37,836,195     169,001
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The weighted average number of common shares outstanding for the six
        months ended June 30, 2008 was 37,557,750 basic and 37,597,814
        diluted (2007 - 36,348,231 basic and 36,411,690 diluted). The
        difference between basic and diluted shares is attributable to the
        dilutive effect of stock options issued by the Company and the shares
        held in trust (see note 6).

    6.  Shares Held in Trust

        The Company has established a Trust to purchase and hold Company
        stock on behalf of certain employees who have elected to receive a
        portion of their annual bonus entitlement in the form of Company
        shares. At June 30, 2008, the Trust held 175 shares which were
        purchased on the open market at a cost of $4 (June 30, 2007 - 83,029
        shares at a cost of $2,030). Trust shares vest with employees in
        March of the year following their purchase at which time they are
        distributed to individuals participating in the plan. Shares held
        within the Trust are not considered outstanding for purposes of
        calculating basic earnings per share, but are included in the
        calculation of diluted earnings per share.

    7.  Contributed Surplus

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

        Balance, January 1, 2008                                       6,025
          Stock options expensed                                       1,456
          Stock options exercised                                     (2,440)
        ---------------------------------------------------------------------
        Balance, June 30, 2008                                         5,041
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  Stock Options

        ---------------------------------------------------------------------
                                                                     Average
                                                                    Exercise
        Continuity of Stock Options (year-to-date)       Options       Price
        ---------------------------------------------------------------------
                                                            (No.)         ($)

        Balance, January 1, 2008                       1,224,223       22.90
          Granted during the period                    1,278,000       19.69
          Exercised for common shares                   (484,163)      17.90
          Forfeited                                      (39,801)      23.27
        ---------------------------------------------------------------------
        Balance, June 30, 2008                         1,978,259       22.04
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Stock options vest equally over three or four years and expire three-
        and-one-half or five years from the date of grant. When stock options
        are exercised, the proceeds, together with the amount of compensation
        expense previously recorded in contributed surplus, are added to
        capital stock.

    9.  Acquisitions

        (a) 1368303 Alberta Ltd.

            On January 4, 2008, the Company acquired all the shares of
            1368303 Alberta Ltd. for cash and share consideration totalling
            $2,720. The Company issued 78,579 common shares with a value of
            $1,357 in conjunction with the acquisition, in addition to $1,363
            of cash. One-hundred percent of the consideration paid was
            assigned to capital assets, as the acquired company had no other
            assets or liabilities.

        (b) ChemErgy Ltd.

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

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

            Goodwill                                                   4,520
            Working capital                                            1,747
            Capital assets                                               371
            -----------------------------------------------------------------
            Total consideration                                        6,638
            -----------------------------------------------------------------
            -----------------------------------------------------------------

    10. Capital Structure

        The Company's capital structure is comprised of shareholders' equity
        and long-term debt. The Company's objectives in managing capital are
        (i) to maintain flexibility so as to preserve the Company's access to
        capital markets and its ability to meet its financial obligations,
        and (ii) to finance growth including potential acquisitions.

        The Company manages its capital structure and makes adjustments in
        light of changing market conditions and new opportunities, while
        remaining cognizant of the cyclical nature of the oilfield services
        sector. To maintain or adjust its capital structure, the Company may
        revise its capital spending, adjust dividends paid to shareholders,
        issue new shares or new debt or repay existing debt.

        The Company monitors its capital structure and financing requirements
        using, amongst other parameters, the ratio of long-term debt to cash
        flow. Cash flow for this purpose is defined as funds provided by
        operations as reflected in the consolidated statement of cash flows.
        The ratio of long-term debt to cash flow does not have any
        standardized meaning prescribed under GAAP, and may not be comparable
        to similar measures used by other companies.

        At June 30, 2008, the long-term debt to cash flow ratio was 1.74:1
        (December 31, 2007 - 1.48:1) calculated on a 12-month trailing basis
        as follows:

        ---------------------------------------------------------------------
        As at                                          June 30,  December 31,
                                                          2008          2007
        ---------------------------------------------------------------------
        (000s)                                              ($)           ($)

        Long-term debt                                 133,554       129,535
        Cash flow                                       76,760        87,642
        ---------------------------------------------------------------------
        Long-term debt to cash flow ratio                 1.74          1.48
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company is subject to certain financial covenants in respect of
        its operating and revolving credit facilities. Although these
        facilities are undrawn at June 30, 2008, 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, a consortium in which a Greek subsidiary of Denison
        participated, 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 alleging that their
        termination was invalid and that their severance pay was improperly
        determined.

        In 1999, the largest group of plaintiffs received a ruling from the
        Athens Court of First Instance that their termination was invalid and
        that compensation amounting to approximately $12,400 was due to the
        former employees. This decision was appealed to the Athens Court of
        Appeal, which allowed the appeal in 2001 and annulled the above-
        mentioned decision of the Athens Court of First Instance. The said
        group of former employees filed an appeal with the Supreme Court of
        Greece, which was heard on May 29, 2007. The Supreme Court of Greece
        allowed the appeal and sent the matter back to the Athens Court of
        Appeal for the consideration of damages. On June 3, 2008, the Athens
        Court of Appeal rejected the Company's appeal of the Supreme Court of
        Greece's decision, but the text of such decision is not expected to
        be available until September of 2008. The Company has vigorously
        defended its position before all three levels of the Greek courts,
        both in relation to the merits of the plaintiffs' case and in respect
        of the quantum of any damages which may be awarded, and intends to
        assess its rights of further appeal to the Supreme Court of Greece as
        well as any other court in any jurisdiction where such an appeal is
        warranted on receipt of the text of the recent decision of the Athens
        Court of Appeal.

        Several other smaller groups of former employees have filed similar
        cases in various courts in Greece. One of these cases was heard by
        the Athens Court of First Instance on January 18, 2007. By judgment
        rendered November 23, 2007, the plaintiff's allegations were
        partially accepted, and the plaintiff was awarded damages of
        approximately $50, before interest. The Company has appealed this
        decision, but no date has been set for the hearing of such an appeal.
        Another one of the lawsuits was heard by the Supreme Court of Greece
        on November 6, 2007, at which date the appeal of the plaintiffs was
        denied for technical reasons due to improper service. The remaining
        action has been postponed indefinitely pending the outcome of the
        lawsuit involving the largest group of plaintiffs discussed above.

        The direction and financial consequence of the potential decision in
        these actions cannot be determined at this time.

    12. Segmented Information

        The Company's operations are conducted in three geographic segments:
        Canada, Russia and the United States/Latin America. All operations
        are related to fracturing, coiled tubing, cementing and well
        stimulation services for the oil and gas industry.

        ---------------------------------------------------------------------
                                                    United
                                                    States/
                                                     Latin     Corp-  Consol-
                                  Canada   Russia  America    orate   idated
        ---------------------------------------------------------------------
        (000s)                        ($)      ($)      ($)      ($)      ($)

        Three Months Ended
         June 30, 2008
        Revenue                   32,231   15,057   45,497        -   92,785
        Operating income
         (loss)(1)                (8,812)   3,029    9,519   (4,744)  (1,008)
        Segmented assets         257,807  105,606  221,603        -  585,016
        Capital expenditures       8,078      343   10,920        -   19,341
        Goodwill                   7,236      979    2,308        -   10,523
        ---------------------------------------------------------------------
        Three Months Ended
         June 30, 2007
        Revenue                   29,352   17,370   41,056        -   87,778
        Operating income
         (loss)(1)                (1,771)   4,076   15,731   (2,422)  15,614
        Segmented assets         260,322  107,066  154,699        -  522,087
        Capital expenditures       6,877   11,415    1,680        -   19,972
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        Six Months Ended
         June 30, 2008
        Revenue                  115,316   29,934   90,005        -  235,255
        Operating income
         (loss)(1)                11,791    4,739   20,276   (8,337)  28,469
        Segmented assets         257,807  105,606  221,603        -  585,016
        Capital expenditures      11,110      886   22,164        -   34,160
        Goodwill                   7,236      979    2,308        -   10,523
        ---------------------------------------------------------------------
        Six Months Ended
         June 30, 2007
        Revenue                  115,938   29,425   70,922        -  216,285
        Operating income
         (loss)(1)                23,405    5,680   22,441   (5,327)  46,199
        Segmented assets         260,322  107,066  154,699        -  522,087
        Capital expenditures      20,791   25,429   22,273        -   68,493
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        1.  Operating income (loss) is defined as revenue less operating
            expenses (excluding depreciation) and selling, general and
            administrative expenses.


        The following table sets forth consolidated revenue by service line:

        ---------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2008       2007       2008       2007
        ---------------------------------------------------------------------
        (000s)                           ($)        ($)        ($)        ($)

        Fracturing                   77,711     79,669    197,466    191,958
        Coiled tubing                10,436      6,725     24,644     16,136
        Cementing                     4,638      1,384     13,145      8,191
        ---------------------------------------------------------------------
                                     92,785     87,778    235,255    216,285
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
    





For further information:

For further information: Douglas R. Ramsay, President and Chief
Executive Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Tom J.
Medvedic, Senior Vice President, Finance and Chief Financial Officer,
Telephone: (403) 266-6000, Fax: (403) 266-7381


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