Calfrac Announces Second Quarter Results
CALGARY, Aug. 3 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX-CFW) announces its financial and operating results for the three and six months ended June 30, 2010.
HIGHLIGHTS
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Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 Change 2010 2009 Change
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(000s, except ($) ($) (%) ($) ($) (%)
per share and
unit data)
(unaudited)
Financial
Revenue 164,849 104,727 57 391,972 285,115 37
Operating
income(1) 14,907 4,052 268 53,815 31,479 71
Net income
(loss) (10,457) (14,770) 29 3,179 (9,242) 134
Per share
- basic (0.24) (0.39) 38 0.07 (0.24) 129
Per share
- diluted (0.24) (0.39) 38 0.07 (0.24) 129
Funds
provided by
operations(2) 6,159 128 4,712 42,671 22,841 87
Per share
- basic 0.14 - - 0.99 0.61 62
Per share
- diluted 0.14 - - 0.98 0.61 61
EBITDA(3) 11,976 4,340 176 52,843 30,285 74
Per share
- basic 0.28 0.11 155 1.23 0.80 54
Per share
- diluted 0.28 0.11 155 1.22 0.80 53
Working capital
(end of
period) 139,581 111,864 25 139,581 111,864 25
Shareholders'
equity (end
of period) 466,746 380,515 23 466,746 380,515 23
Weighted
average
common shares
outstanding
(No.)
Basic 43,047 37,742 14 43,017 37,742 14
Diluted 43,150 37,742 14 43,398 37,742 15
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Operating (end
of period)
Pumping
horsepower
(000s) 472 319 48
Coiled tubing
units (No.) 28 18 56
Cementing
units (No.) 21 20 5
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(1) Operating income is defined as net income (loss) before depreciation,
interest, foreign exchange gains or losses, gains or losses on
disposal of capital assets, income taxes and non-controlling
interest. Management believes that operating income is a useful
supplemental measure as it provides an indication of the financial
results generated by Calfrac's business segments prior to
consideration of how these segments are financed or how they are
taxed. Operating income is a measure that does not have any
standardized meaning under generally accepted accounting principles
("GAAP") and, accordingly, may not be comparable to similar measures
used by other companies.
(2) Funds provided by operations is defined as cash provided by operating
activities before the net change in non-cash operating assets and
liabilities. Funds provided by operations is a measure that provides
shareholders and potential investors with additional information
regarding the Company's liquidity and its ability to generate funds
to finance its operations. Management utilizes this measure to assess
the Company's ability to finance operating activities and capital
expenditures. Funds provided by operations is a measure that does not
have any standardized meaning prescribed under GAAP and, accordingly,
may not be comparable to similar measures used by other companies.
(3) EBITDA is defined as net income (loss) before interest, taxes,
depreciation, amortization and non-controlling interest. EBITDA is
presented because it is frequently used by securities analysts and
others for evaluating companies and their ability to service debt.
EBITDA is a measure that does not have any standardized meaning
prescribed under GAAP and, accordingly, may not be comparable to
similar measures used by other companies.
PRESIDENT'S MESSAGE
I am pleased to present Calfrac's operating and financial highlights for the three and six months ended June 30, 2010 and to discuss our prospects for the remainder of 2010. During the second quarter, our Company:
- achieved record second quarter revenue resulting from high levels of
pressure pumping activity in the unconventional plays of western
Canada and the United States;
- achieved strong period-over-period growth in operating income and
EBITDA despite inclement weather in western Canada;
- proactively executed preventative maintenance and recruiting programs
in Canada in order to benefit from the expected strong demand for the
Company's services for the remainder of 2010 and into 2011;
- mobilized a large fracturing spread and set up logistics for a
significant project in the Horn River Basin that commenced early in
the third quarter; and
- announced a $60 million increase to its 2010 capital program for a
revised total of $176 million, including carryforward capital. This
increase primarily related to the construction of a large fracturing
spread for Calfrac's U.S. operations, supported by a recently
executed long-term minimum commitment contract with a large customer
focused on the Marcellus shale play in Pennsylvania.
Financial Highlights
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For the three months ended June 30, 2010, the Company recorded:
- record second quarter revenue of $164.8 million versus $104.7 million
in the comparable quarter of 2009 led by higher year-over-year
activity in Canada and the United States;
- operating income of $14.9 million versus $4.1 million in the
comparable period in 2009 resulting from strong financial performance
due to strong activity and improved pricing in Canada and the United
States combined with a continued focus on cost control;
- the sale of certain redundant Canadian real estate assets from the
acquisition of Century Oilfield Services Inc. ("Century") for
proceeds of $4.7 million and a gain on disposal of $1.0 million; and
- a net loss of $10.5 million or $0.24 per share, including a foreign
exchange loss of $4.1 million, compared to a net loss of
$14.8 million or $0.39 per share in the second quarter of 2009, which
included a $0.5 million foreign exchange loss; and
For the six months ended June 30, 2010, Calfrac generated:
- revenue of $392.0 million, an increase of 37 percent from the first
half of 2009;
- operating income of $53.8 million versus $31.5 million in the
comparable period in 2009 resulting from strong activity levels in
Canada and the United States;
- net income of $3.2 million or $0.07 per share compared to a net loss
$9.2 million or $0.24 per share in the comparable 2009 period; and
- end-of-period working capital of $139.6 million, an increase of
9 percent from December 31, 2009.
Operational Highlights
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Canada
In the second quarter of 2010, Calfrac experienced relatively strong demand for its pressure pumping services despite prolonged poor weather and spring break-up conditions. Activity was concentrated in the unconventional natural gas and oil resource plays of western Canada, including the Deep Basin, Cardium and Bakken formations. In anticipation of high levels of activity throughout the remainder of 2010, the Company focused on the preventative maintenance of its equipment fleet as well as the recruitment of new field personnel during the second quarter. In addition, Calfrac prepared for a significant Horn River project that commenced operations in late June. The Company expects that the industry trend towards large, horizontal multi-well completions in the unconventional gas and oil resource plays of the Western Canada Sedimentary Basin will continue to drive improved financial results in this market throughout the remainder of 2010 and into 2011.
United States
The Company's fracturing operations in the Marcellus shale play of Pennsylvania experienced a significant increase in activity during the second quarter of 2010. In addition, Calfrac increased its capital budget in June by $60.0 million related mainly to the construction of a large fracturing spread for this region that is supported by a signed long-term minimum commitment contract with a major oil and natural gas corporation. This fracturing fleet is expected to begin operating late in the fourth quarter of 2010, increasing the number of Calfrac fracturing spreads operating in this area to two. In Arkansas, fracturing and cementing activity levels continue to be robust. The deployment of several pumping units to this region during the quarter assisted in bringing maintenance costs to normalized levels. Activity levels in the Rocky Mountain region of Colorado were consistent with the previous quarter, although activity in the Niobrara oil shale play in northern Colorado increased during the quarter, which provides solid growth prospects for the future. During the second quarter, the Company also completed a large fracturing project in the Bakken play of North Dakota and continues to evaluate future opportunities in this market. Operating margins in the United States benefited from pricing improvements that occurred late in the first quarter and early in the second quarter. Overall, Calfrac anticipates that the current high levels of equipment utilization will be sustained throughout the remainder of the year which, combined with improved pricing, should result in strong operating margins in the United States market.
Russia
Activity levels in Western Siberia during the second quarter were lower than anticipated primarily due to a slower pace of development by the Company's customers and well access issues related to wet spring weather conditions. The Company's reported financial results were also impacted by a 7 percent decline in the value of the Russian rouble from the second quarter of 2009. However, Calfrac expects higher levels of equipment utilization and stronger financial performance throughout the remainder of the year. In addition, the Company recently commenced deployment of a fifth fracturing spread into Russia, which is anticipated to begin operations late in the fourth quarter of 2010.
Latin America
Fracturing and cementing activity levels in Mexico during the second quarter were lower than expected due to the impact of Pemex budgetary constraints combined with security issues and the impact of Hurricane Alex on northern Mexico. Fracturing activity in the Chicontepec region is anticipated to remain relatively strong throughout the remainder of 2010 as Pemex continues to concentrate on well completion activities in central Mexico; however, cementing activity is expected to be lower. Activity in the Burgos natural gas field of northern Mexico is not expected to significantly improve in 2010 due to Pemex's focus on crude oil production. In response to these market conditions, the Company has transferred some fracturing equipment into the United States and is currently evaluating opportunities to transfer other equipment to existing and new opportunities in Latin America.
During the second quarter, cementing activity levels and operating margins in Argentina were lower than anticipated due primarily to a reduction in drilling activity by the Company's major customer. Activity returned to normal levels by mid-June and is expected to remain relatively strong throughout the remainder of the year. A shallow coiled tubing unit was recently deployed from Canada to Argentina and is expected to commence operations towards the end of the third quarter of 2010.
Outlook and Business Prospects
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Natural gas and crude oil prices have stabilized and exploration and development activity in Canada and the United States remains focused on horizontal wells incorporating multi-stage fracturing technology in unconventional resource plays. This industry trend is expected to increase overall utilization levels for the pressure pumping service industry during the remainder of 2010 and beyond.
Activity in the Horn River shale gas play of northeast British Columbia commenced in late June and is anticipated to be strong during the third quarter. In addition, activity in the Montney and Deep Basin plays continues to be very robust with a greater proportion of wells being drilled horizontally. The industry focus on developing unconventional natural gas and oil plays is expected to result in high levels of equipment utilization in Canada throughout the remainder of the year and continue to drive the financial performance of Calfrac's Canadian division. Activity in unconventional light oil plays, such as the Cardium, Viking and Bakken, is expected to continue to be very robust. This industry trend has led to significantly greater commodity-based diversification for the Company's Canadian operations.
Calfrac entered the Marcellus shale play of Pennsylvania during the fourth quarter of 2009 and the Company expects that the demand for pressure pumping services in this region will increase significantly throughout this year. The addition of a second large fracturing spread to serve the growing demand in this market is anticipated late in the fourth quarter. Fracturing and cementing activity in the Fayetteville shale play of Arkansas is expected to remain strong during 2010 due to high overall customer demand. Fracturing activity levels in the Rocky Mountain region of Colorado are expected to remain consistent with the first six months of 2010 although the continued development of the Niobrara oil shale play in northern Colorado provides a significant growth opportunity for this market. The improved pricing levels recently seen in the U.S. market are anticipated to drive strong operating margins during the remainder of the year.
Calfrac operates in Russia under the terms of eight annual contracts with two of that country's largest oil and natural gas companies and currently operates four fracturing spreads and six coiled tubing units in this oil-focused market. A fifth fracturing spread has been deployed into this market but will not commence operations until late in the fourth quarter of 2010. The Company expects activity to improve in the second half of the year as its customers focus on completing their 2010 programs, which is anticipated to lead to stronger financial performance during the second half of the year.
Fracturing activity in the Chicontepec oil and natural gas field of central Mexico is expected to remain relatively strong throughout 2010 but cementing activity levels are anticipated to decrease significantly from the second quarter as Pemex remains focused on well completions in this region. In the Burgos natural gas field of northern Mexico, activity levels are anticipated to be low as Pemex develops its onshore oil-producing areas such as the Chicontepec region. As a result, the Company has recently restructured its operations in Reynosa, has transferred some fracturing equipment to more active areas in the United States and is currently evaluating other growth opportunities in existing and new Latin America markets.
The Company has deployed a coiled tubing unit to Argentina and it is expected to become operational in September 2010. This new service line will augment the cementing and acidizing operations, which are anticipated to be relatively active throughout the remainder of the year.
In June, Calfrac announced a $60 million increase to its 2010 capital program for a revised total of $176 million, including carryforward capital. The increase is primarily related to construction of a large fracturing spread for Calfrac's U.S. operations, supported by a recently executed long-term minimum commitment contract with CNX Gas Company (CONSOL Energy) relating to the Marcellus shale basin. Delivery of the spread is expected late in the fourth quarter of 2010. The incremental capital will add 55,000 horsepower to Calfrac's fracturing fleet, bringing its total pressure pumping capacity to approximately 585,000 hydraulic horsepower upon culmination of the 2010 capital program. The balance of the increase in capital will be used to strengthen Calfrac's infrastructure as the Company bolsters its presence in the Marcellus shale play in the U.S. and the unconventional plays in northern Alberta and northeast British Columbia in Canada. It is expected that approximately $25 million of the expanded 2010 capital program will be expended in 2011. The increased capital will be funded from cash flow and existing credit facilities.
On May 11, 2010, the Company announced the election of Kevin Baker and Lorne Gartner to its board of directors. Mr. Baker was most recently President and Chief Executive Officer of Century, and brings to the Calfrac board valuable industry experience backed by over 38 years of corporate legal experience. Mr. Gartner is an independent businessman with a strong financial and banking background, who most recently was managing director of Royal Bank of Canada Capital Markets.
The outlook for the North American pressure pumping services industry is anticipated to remain strong over the long term due primarily to the expected growth of unconventional natural gas and oil plays, which remain profitable at relatively low commodity prices. The Company continues to focus on maintaining a competitive cost structure and improving operating efficiencies. Calfrac will continue to capitalize on future growth opportunities in existing and new markets while using a conservative financial approach in order to maintain a strong balance sheet and overall financial flexibility.
On behalf of the Board of Directors,
Douglas R. Ramsay
President & Chief Executive Officer
August 3, 2010
2010 Overview
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In the second quarter of 2010, the Company:
- achieved record second quarter revenue of $164.8 million with an
increase of 57 percent from the comparable quarter of 2009 driven
primarily by strong growth and improved pricing in Calfrac's Canadian
and United States operations;
- reported operating income of $14.9 million versus $4.1 million in the
same quarter of 2009, an increase of 268 percent, mainly as a result
of high levels of fracturing activity in the unconventional plays of
western Canada and the United States;
- sold redundant Canadian real estate assets from the acquisition of
Century for proceeds of $4.7 million and a gain on disposal of
$1.0 million;
- reported a net loss of $10.5 million or $0.24 per share, including a
$4.1 million foreign exchange loss, compared to a net loss of
$14.8 million or $0.39 per share in the second quarter of 2009, which
included a foreign exchange loss of $0.5 million;
- generated funds provided by operations of $6.2 million or $0.14 per
share versus $0.1 million in the second quarter of 2009; and
- announced a $60 million increase to its 2010 capital program for a
revised total of $176 million, including carryforward capital. This
increase is primarily to fund the construction of a large fracturing
spread for Calfrac's United States operations, supported by a
recently executed three-year minimum commitment contract with a large
customer focused on the Marcellus shale play in Pennsylvania.
In the six months ended June 30, 2010, the Company:
- increased revenue by 37 percent to $392.0 million from $285.1 million
in the first six months of 2009 driven primarily by strong growth in
Calfrac's Canadian and United States operations and the contribution
from the acquisition of Century in November 2009;
- reported operating income of $53.8 million versus $31.5 million in
the same period of 2009, an increase of 71 percent, mainly as a
result of high levels of fracturing activity in the unconventional
resource plays of western Canada and the United States;
- reported net income of $3.2 million or $0.07 per share compared to
net loss of $9.2 million or $0.24 per share in the same period of
2009;
- generated funds provided by operations of $42.7 million or $0.99 per
share versus $22.8 million or $0.61 per share in the comparable
period of 2009; and
- increased its period-end working capital by 9 percent over
December 31, 2009 to $139.6 million at June 30, 2010.
Financial Overview - Three Months Ended June 30, 2010 Versus 2009
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Canada
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Three Months Ended June 30, 2010 2009 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 52,183 26,529 97
Expenses
Operating 48,277 25,632 88
Selling, General and Administrative
(SG&A) 2,406 2,217 9
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50,683 27,849 82
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Operating income (loss)(1) 1,500 (1,320) 214
Operating income (loss) (%) 2.9% -5.0% 158
Fracturing revenue per job ($) 104,189 153,680 (32)
Number of fracturing jobs 455 143 218
Coiled tubing revenue per job ($) 28,603 25,661 11
Number of coiled tubing jobs 167 147 14
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Revenue
Revenue from Calfrac's Canadian operations during the second quarter of 2010 was $52.2 million versus $26.5 million in the comparable three-month period of 2009. The 97 percent increase in revenue was primarily due to higher fracturing and coiled tubing activity in the unconventional natural gas resource plays of northern Alberta and northeast British Columbia and an increase in oil-related fracturing in the resource plays of Saskatchewan and west central Alberta, combined with improved pricing. This increase was partially driven by incremental revenue as a result of the acquisition of Century in mid-November 2009, which added 70,000 horsepower to the Canadian equipment fleet. These factors were partially offset by lower fracturing activity in the Horn River unconventional play of northeast British Columbia.
Operating Expenses
Operating expenses in Canada increased by 88 percent to $48.3 million during the second quarter of 2010 from $25.6 million in the same period of 2009. The increase in Canadian operating expenses was mainly due to higher overall fracturing activity levels in the unconventional oil and natural gas resource plays of western Canada combined with the larger overall size of Calfrac's Canadian fleet and the opening of district offices in Dawson Creek and Fort Nelson. Significant preventative maintenance and recruiting programs undertaken in anticipation of strong activity levels throughout the remainder of 2010 also resulted in additional operating costs.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations during the second quarter of 2010 increased from the corresponding period in 2009 by 9 percent to $2.4 million, primarily due to an increase in personnel and related costs following the acquisition of Century in November 2009.
United States
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Three Months Ended June 30, 2010 2009 Change
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(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 77,687 42,954 81
Expenses
Operating 56,273 41,792 35
SG&A 2,544 1,595 59
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58,817 43,387 36
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Operating income (loss)(1) 18,870 (433) 4,458
Operating income (loss) (%) 24.3% -1.0% 2,530
Fracturing revenue per job ($) 67,871 78,911 (14)
Number of fracturing jobs 1,098 497 121
Cementing revenue per job ($) 22,442 18,046 24
Number of cementing jobs 141 207 (32)
Cdn$/US$ average exchange rate(2) 1.0278 1.1670 (12)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Revenue from Calfrac's United States operations increased during the second quarter of 2010 to $77.7 million from $43.0 million in the comparable quarter of 2009. The increase was due primarily to higher fracturing activity levels in all operating regions, the commencement of fracturing operations in Pennsylvania during the fourth quarter of 2009, the completion of a large fracturing project in the Bakken play of North Dakota during May 2010, improved pricing and larger cementing job sizes. This was partially offset by the 12 percent decline in the United States dollar against the Canadian dollar and lower cementing activity levels.
Operating Expenses
Operating expenses in the United States were $56.3 million for the second quarter of 2010, an increase of 35 percent from the comparative period in 2009. The increase in operating expenses was primarily due to the larger equipment fleet as a result of the acquisition of fracturing assets from Pure Energy Services Ltd. ("Pure") during the third quarter of 2009 combined with the commencement of fracturing operations in the Marcellus shale play of Pennsylvania. These factors were offset partially by the impact of the depreciation of the United States dollar versus the Canadian dollar.
SG&A Expenses
SG&A expenses in the United States during the second quarter of 2010 increased by 59 percent from the comparable period in 2009 to $2.5 million primarily due to the higher personnel expenses related to the Company's larger scope of operations resulting from the acquisition of Pure's fracturing assets during August 2009 and the expansion into the Marcellus Basin during the fourth quarter of 2009 combined with higher annual bonus expenses. These factors were offset partially by the impact of the decline in value of the United States dollar compared to the Canadian dollar.
Russia
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Three Months Ended June 30, 2010 2009 Change
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(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 18,046 19,193 (6)
Expenses
Operating 15,361 11,719 31
SG&A 1,036 881 18
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16,397 12,600 30
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Operating income(1) 1,649 6,593 (75)
Operating income (%) 9.1% 34.4% (74)
Fracturing revenue per job ($) 89,931 76,419 18
Number of fracturing jobs 122 157 (22)
Coiled tubing revenue per job ($) 45,349 46,124 (2)
Number of coiled tubing jobs 156 156 -
Cdn$/rouble average exchange rate(2) 0.0339 0.0363 (7)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
During the second quarter of 2010, the Company's revenue from Russian operations decreased by 6 percent to $18.0 million from $19.2 million in the corresponding three-month period of 2009. The decrease in revenue was mainly due to lower fracturing activity levels resulting from a slower pace of development by the Company's customers and the depreciation of the Russian rouble by 7 percent versus the Canadian dollar. This decrease in revenue was offset partially by the completion of larger fracturing and coiled tubing jobs in Western Siberia.
Operating Expenses
Operating expenses in Russia in the second quarter of 2010 were $15.4 million compared to $11.7 million in the corresponding period of 2009. The increase in operating expenses was primarily due to the provision of proppant for a new customer in Western Siberia offset partially by the depreciation in the Russian rouble against the Canadian dollar.
SG&A Expenses
SG&A expenses in Russia were $1.0 million for the three-month period ended June 30, 2010 versus $0.9 million in the same quarter of 2009. The increase in SG&A expenses was primarily due to higher personnel expenses resulting from the Company's broader scope of operations in Western Siberia, offset partially by the depreciation of the Russian rouble versus the Canadian dollar.
Latin America
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Three Months Ended June 30, 2010 2009 Change
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(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 16,933 16,051 5
Expenses
Operating 17,323 12,257 41
SG&A 773 645 20
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18,096 12,902 40
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Operating income (loss)(1) (1,163) 3,149 (137)
Operating income (loss) (%) -6.9% 19.6% (135)
Cdn$/Mexican peso average exchange rate(2) 0.0818 0.0876 (7)
Cdn$/Argentine peso average exchange
rate(2) 0.2602 0.3088 (16)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Calfrac's Latin America operations generated total revenue of $16.9 million during the second quarter of 2010 versus $16.1 million in the comparable three-month period in 2009. For the three months ended June 30, 2010 and 2009, revenue generated through subcontractors was $5.5 million and $3.0 million, respectively. The increase in revenue was primarily due to higher fracturing activity in the Chicontepec field as the Company began fracturing operations in this region during the second quarter of 2009 and the commencement of cementing operations in Mexico during the third quarter of 2009. This increase was partially offset by the depreciation of the Mexican and Argentine peso versus the Canadian dollar, lower fracturing activity and smaller job sizes in the Burgos field of northern Mexico, the completion of smaller jobs in the Chicontepec region, and lower cementing activity in Argentina.
Operating Expenses
Operating expenses in Latin America for the three months ended June 30, 2010 increased by 41 percent from the comparable period in 2009 to $17.3 million. The increase was primarily due to a broader scale of fracturing operations in Mexico, higher subcontractor activity and an increase in equipment rental expenses related to fracturing activity in the Chicontepec region. In addition, operating expenses increased due to the commencement of cementing operations in Mexico during the third quarter of 2009. This increase in operating expenses was partially offset by the impact of the decline in the Mexican and Argentine pesos versus the Canadian dollar.
SG&A Expenses
SG&A expenses in Latin America increased to $0.8 million from $0.6 million in the comparable quarter of 2009 primarily due to the Company's expanded scale of operations in Mexico and Argentina, offset by the impact of the depreciation of the Mexican and Argentine peso.
Corporate
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Three Months Ended June 30, 2010 2009 Change
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(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 1,081 630 72
SG&A 4,868 3,307 47
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5,949 3,937 51
Operating loss(1) (5,949) (3,937) 51
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Operating Expenses
Operating expenses primarily relate to global operations and R&D personnel located in the corporate headquarters who directly support the Company's global field operations. The 72 percent increase in corporate operating expenses from the second quarter of 2009 is mainly due to higher compensation expenses as a result of an increase in the number of personnel supporting the growth in the Company's operations combined with more resources dedicated to the Company's R&D activities.
SG&A Expenses
For the three months ended June 30, 2010, corporate SG&A expenses increased by 47 percent from the comparable 2009 period to $4.9 million, mainly due to higher stock-based compensation expenses and additional corporate personnel supporting the Company's broader scale of operations.
Interest and Depreciation Expenses
The Company's net interest expense of $6.2 million for the second quarter of 2010 represented an increase of $2.7 million from $3.5 million in the comparable period of 2009. This increase was primarily due to the issuance of an additional US$100.0 million in senior unsecured notes during December 2009 and a larger drawdown on the Company's revolving term loan facility. The increase in total long-term debt was used to partially fund the purchase of fracturing assets from Pure and the acquisition of Century. This increase was partially offset by lower interest expense related to the Company's unsecured senior notes resulting from the depreciation of the United States dollar.
For the three months ended June 30, 2010, depreciation expense increased to $19.2 million from $15.2 million in the corresponding quarter of 2009. The increase is mainly a result of a larger fleet of equipment operating in North America from the Company's 2009 and 2010 capital programs, the 2009 acquisition of fracturing assets from Pure and the fracturing and coiled tubing equipment acquired in the acquisition of Century in November 2009. This increase was offset partially by the depreciation of the United States dollar versus the Canadian dollar.
Foreign Exchange Losses or Gains
The Company incurred a foreign exchange loss of $4.1 million during the second quarter of 2010 versus a $0.5 million loss in the comparative three-month period of 2009. Foreign exchange gains and losses arise from the translation of Calfrac's international operations in Russia, Mexico and Argentina using the temporal method. The foreign exchange loss recorded in the second quarter of 2010 was primarily related to the translation of a U.S. dollar-denominated inter-company loan from a subsidiary in the United States to the parent company. As the U.S. subsidiary is translated using the current rate method, the associated foreign exchange gain is recorded in the Statement of Other Comprehensive Income.
Income Tax Expenses
The Company recorded an income tax recovery of $2.9 million during the second quarter of 2010 compared to income tax expense of $0.4 million in the comparable period of 2009. The effective income tax rate for the three months ended June 30, 2010 was 22 percent versus negative 3 percent in the comparable quarter of 2009. The decrease in total income tax expense was primarily due to lower earnings generated in Russia and Mexico and the fact that the Company recovered taxes at full statutory rates in Canada on losses incurred during the second quarter. This decrease was offset partially by higher profitability in the United States. The higher effective tax rate was primarily a result of the Company recovering tax at statutory rates in Canada during the second quarter after completing the drawdown of the remaining deferred credit balance in the first quarter of 2010.
Summary of Quarterly Results
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Three Months Ended Sept. 30, Dec. 31, Mar. 31, June 30,
2008 2008 2009 2009
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(000s, except per share and
unit data) ($) ($) ($) ($)
(unaudited)
Financial
Revenue 151,650 172,430 180,388 104,727
Operating income(1) 27,812 25,658 27,427 4,052
Net income (loss) 11,203 7,861 5,528 (14,770)
Per share - basic 0.30 0.21 0.15 (0.39)
Per share - diluted 0.30 0.21 0.15 (0.39)
Funds provided by operations(1) 27,128 24,838 22,713 128
Per share - basic 0.72 0.66 0.60 -
Per share - diluted 0.72 0.66 0.60 -
EBITDA(1) 26,983 26,740 25,945 4,340
Per share - basic 0.71 0.71 0.69 0.11
Per share - diluted 0.71 0.71 0.69 0.11
Capital expenditures 18,414 32,233 15,857 9,862
Working capital (end of period) 104,700 100,575 129,532 111,864
Shareholders' equity (end of
period) 378,890 393,476 402,537 380,515
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Operating (end of period)
Pumping horsepower (000s) 287 287 303 319
Coiled tubing units (No.) 18 18 18 18
Cementing units (No.) 18 18 20 20
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Three Months Ended Sept. 30, Dec. 31, Mar. 31, June 30,
2009 2009 2010 2010
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(000s, except per share and
unit data) ($) ($) ($) ($)
(unaudited)
Financial
Revenue 133,261 173,124 227,123 164,849
Operating income(1) 16,499 23,157 38,908 14,907
Net income (loss) 2,842 864 13,636 (10,457)
Per share - basic 0.08 0.02 0.32 (0.24)
Per share - diluted 0.08 0.02 0.31 (0.24)
Funds provided by operations(1) 12,199 19,580 36,512 6,159
Per share - basic 0.32 0.48 0.85 0.14
Per share - diluted 0.32 0.48 0.84 0.14
EBITDA(1) 15,112 23,398 40,867 11,976
Per share - basic 0.40 0.58 0.95 0.28
Per share - diluted 0.40 0.57 0.94 0.28
Capital expenditures 58,212 18,245 14,938 26,825
Working capital (end of period) 103,331 128,243 157,688 139,581
Shareholders' equity (end of
period) 378,972 459,932 474,718 466,746
-------------------------------------------------------------------------
Operating (end of period)
Pumping horsepower (000s) 371 456 465 472
Coiled tubing units (No.) 18 28 28 28
Cementing units (No.) 21 21 21 21
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Financial Overview - Six Months Ended June 30, 2010 Versus 2009
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
Six Months Ended June 30, 2010 2009 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 185,814 111,604 66
Expenses
Operating 138,220 98,649 40
SG&A 6,669 4,938 35
--------------------------------
144,889 103,587 40
--------------------------------
Operating income(1) 40,925 8,017 410
Operating income (%) 22.0% 7.2% 206
Fracturing revenue per job ($) 115,634 93,764 23
Number of fracturing jobs 1,476 1,008 46
Coiled tubing revenue per job ($) 31,147 19,519 60
Number of coiled tubing jobs 486 692 (30)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Revenue
Revenue from Calfrac's Canadian operations during the first six months of 2010 was $185.8 million versus $111.6 million in the comparable six-month period of 2009. The 66 percent increase in revenue was primarily due to the completion of larger jobs in the unconventional resource plays located in northern Alberta and northeast British Columbia and an increase in oil-related fracturing in the Bakken and Viking resource plays of Saskatchewan and the Cardium play of west central Alberta, combined with higher pricing levels. This increase was partially driven by incremental revenue as a result of the acquisition of Century in mid-November 2009, which added 70,000 horsepower and 10 coiled tubing units to the Canadian equipment fleet.
Operating Expenses
Operating expenses in Canada increased by 40 percent to $138.2 million during the first six months of 2010 from $98.6 million in the same period of 2009. The increase in Canadian operating expenses was mainly due to higher overall fracturing activity levels, Calfrac's enlarged fleet size, larger job sizes in the unconventional oil and natural gas resource plays of western Canada and costs incurred in the second quarter related to preventative maintenance and recruiting programs.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations during the first six months of 2010 increased by 35 percent from the corresponding period in 2009 to $6.7 million, primarily due to an increase in personnel and related costs following the acquisition of Century in November 2009 combined with higher annual bonus expenses.
United States
-------------------------------------------------------------------------
Six Months Ended June 30, 2010 2009 Change
-------------------------------------------------------------------------
(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 133,719 111,496 20
Expenses
Operating 106,323 90,955 17
SG&A 4,439 3,734 19
--------------------------------
110,762 94,689 17
--------------------------------
Operating income(1) 22,957 16,807 37
Operating income (%) 17.2% 15.1% 14
Fracturing revenue per job ($) 61,812 93,575 (34)
Number of fracturing jobs 2,074 1,090 90
Cementing revenue per job ($) 20,370 20,385 -
Number of cementing jobs 271 466 (42)
Cdn$/US$ average exchange rate(2) 1.0340 1.2059 (14)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Revenue from Calfrac's United States operations increased during the first six months of 2010 to $133.7 million from $111.5 million in the comparable period of 2009. The increase was due primarily to higher fracturing activity levels in the Fayetteville shale play of Arkansas and the Rocky Mountain region of Colorado and the commencement of fracturing operations in Pennsylvania during the fourth quarter of 2009, combined with larger cementing job sizes. This was partially offset by the 14 percent decline in the United States dollar against the Canadian dollar, smaller fracturing job sizes, the impact of competitive pricing pressures in the first quarter of 2010 and lower cementing activity levels.
Operating Expenses
Operating expenses in the United States were $106.3 million for the first six months of 2010, an increase of 17 percent from the comparative period in 2009. The increase in operating expenses was primarily due to a higher revenue base, the larger equipment fleet as a result of the acquisition of fracturing assets from Pure during the third quarter of 2009 combined with expenses related to the commencement of fracturing operations in the Marcellus shale play of Pennsylvania. In addition, higher equipment repair expenses due to the increase in fracturing activity in the unconventional resource plays of the United States also contributed to this increase in operating expenses. These factors were offset partially by the impact of the depreciation of the United States dollar.
SG&A Expenses
SG&A expenses in the United States during the first six months of 2010 increased by 19 percent from the comparable period in 2009 to $4.4 million primarily due to higher personnel expenses related to the Company's larger scope of operations resulting from the acquisition of Pure's fracturing assets during August 2009, the expansion into the Marcellus Basin during the fourth quarter of 2009 and higher annual bonus expenses. This increase was offset slightly by the impact of the decline in the value of the U.S. dollar against the Canadian dollar.
Russia
-------------------------------------------------------------------------
Six Months Ended June 30, 2010 2009 Change
-------------------------------------------------------------------------
(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 35,622 34,158 4
Expenses
Operating 31,239 22,629 38
SG&A 2,077 1,760 18
--------------------------------
33,316 24,389 37
--------------------------------
Operating income(1) 2,306 9,769 (76)
Operating income (%) 6.5% 28.6% (77)
Fracturing revenue per job ($) 85,735 75,863 13
Number of fracturing jobs 266 291 (9)
Coiled tubing revenue per job ($) 44,503 45,592 (2)
Number of coiled tubing jobs 288 265 9
Cdn$/rouble average exchange rate(2) 0.0344 0.0365 (6)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
During the first six months of 2010, the Company's revenue from Russian operations increased by 4 percent to $35.6 million from $34.2 million in the corresponding six-month period of 2009. The increase in revenue was mainly due to higher coiled tubing activity levels due to a larger equipment fleet and contract base combined with an increase in fracturing job sizes. This increase in revenue was offset partially by the impact on equipment utilization of long periods of cold weather during January and February 2010, lower fracturing activity levels and the depreciation of the Russian rouble by 6 percent versus the Canadian dollar.
Operating Expenses
Operating expenses in Russia in the first six months of 2010 were $31.2 million compared to $22.6 million in the corresponding period of 2009. The increase in operating expenses was primarily due to the higher revenue base, the provision of proppant for a new customer in Western Siberia, higher fuel consumption and greater downtime as a result of persistent cold weather in Western Siberia during the first two months of 2010. These factors were offset partially by the depreciation in the Russian rouble against the Canadian dollar.
SG&A Expenses
SG&A expenses in Russia were $2.1 million for the six-month period ended June 30, 2010 versus $1.8 million in the same period of 2009. The increase in SG&A expenses was primarily due to higher personnel expenses resulting from Calfrac's larger operating scale in Western Siberia, offset partially by the depreciation of the Russian rouble against the Canadian dollar.
Latin America
-------------------------------------------------------------------------
Six Months Ended June 30, 2010 2009 Change
-------------------------------------------------------------------------
(000s, except operational and exchange
rate information) ($) ($) (%)
(unaudited)
Revenue 36,817 27,857 32
Expenses
Operating 34,958 21,329 64
SG&A 1,446 1,068 35
--------------------------------
36,404 22,397 63
--------------------------------
Operating income(1) 413 5,460 (92)
Operating income (%) 1.1% 19.6% (94)
Cdn$/Mexican peso average exchange rate(2) 0.0817 0.0872 (6)
Cdn$/Argentine peso average exchange
rate(2) 0.2636 0.3265 (19)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Calfrac's Latin America operations generated total revenue of $36.8 million during the first six months of 2010 versus $27.9 million in the comparable six-month period in 2009. For the six months ended June 30, 2010 and 2009, revenue generated through subcontractors was $10.8 million and $6.1 million, respectively. The increase in revenue was primarily due to higher fracturing activity in the Chicontepec region as the Company began fracturing operations during the second quarter of 2009, the commencement of cementing operations in Mexico during the third quarter of 2009 and higher subcontractor activity. This increase was partially offset by the depreciation of the Mexican and Argentine pesos versus the Canadian dollar, and lower fracturing activity and smaller job sizes in the Burgos field of northern Mexico, combined with smaller cementing job sizes in Argentina.
Operating Expenses
Operating expenses in Latin America for the six months ended June 30, 2010 increased by 64 percent from the comparative period in 2009 to $35.0 million. The increase was primarily due to a broader scale of fracturing operations in Mexico, higher product costs related to fracturing activity in the Chicontepec region and higher subcontractor activity. In addition, operating expenses increased due to the start-up and commencement of cementing operations in Mexico during the third quarter of 2009. This increase in operating expenses was partially offset by the impact of the decline in the Mexican and Argentine pesos versus the Canadian dollar.
SG&A Expenses
SG&A expenses in Latin America increased to $1.4 million during the first six months of 2010 from $1.1 million in the first half of 2009 primarily due to the Company's expanded scale of operations in Mexico and Argentina, offset by the impact of the depreciation of the Mexican and Argentine pesos against the Canadian dollar.
Corporate
-------------------------------------------------------------------------
Six Months Ended June 30, 2010 2009 Change
-------------------------------------------------------------------------
(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 2,301 1,410 63
SG&A 10,485 7,164 46
--------------------------------
12,786 8,574 49
Operating loss(1) (12,786) (8,574) (49)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Operating Expenses
Operating expenses primarily relate to global operations and R&D personnel located in the corporate headquarters who directly support the Company's global field operations. The 63 percent increase in corporate operating expenses from the first six months of 2009 is mainly due to higher compensation expenses as a result of an increase in the number of personnel supporting the Company's operations stemming from the acquisition of Century and Pure's fracturing assets.
SG&A Expenses
For the six months ended June 30, 2010, corporate SG&A expenses increased by 46 percent from the comparable 2009 period to $10.5 million, mainly due to higher stock-based compensation expenses, additional corporate personnel supporting the Company's broader scale of operations and higher bonus expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $12.3 million for the first six months of 2010 represented an increase of $5.1 million from $7.2 million in the comparable period of 2009. This increase was primarily due to the issuance of an additional US$100.0 million in senior unsecured notes during December 2009 and a larger drawdown on the Company's revolving term loan facility. Total debt levels increased in order to partially fund the purchase of Pure's fracturing assets and the acquisition of Century in 2009. This increase was partially offset by lower interest expense related to the Company's unsecured senior notes resulting from the depreciation of the United States dollar.
For the six months ended June 30, 2010, depreciation expense increased by 29 percent to $38.8 million from $30.1 million in the corresponding period of 2009. The increase is mainly due to a larger fleet of equipment operating in North America resulting from Calfrac's capital investment program, the 2009 acquisition of fracturing assets from Pure and the fracturing and coiled tubing equipment acquired in the acquisition of Century in November 2009, offset partially by the depreciation of the United States dollar versus the Canadian dollar.
Foreign Exchange Losses or Gains
The Company incurred a foreign exchange loss of $2.0 million during the first six months of 2010 versus a $2.1 million loss in the comparative six-month period of 2009. Foreign exchange gains and losses arise from the translation of Calfrac's international operations in Russia, Mexico and Argentina using the temporal method. The foreign exchange loss recorded in the first six months of 2010 was primarily related to the translation of a U.S. dollar-denominated inter-company loan from a subsidiary in the United States to the parent company. As the United States subsidiary is translated using the current rate method, the associated foreign exchange gain is recorded in the Statement of Other Comprehensive Income.
Income Tax Expenses
The Company recorded an income tax recovery of $1.4 million during the first six months of 2010 compared to income tax expense of $2.1 million in the comparable period of 2009. The effective income tax rate for the six months ended June 30, 2010 was negative 82 percent versus negative 31 percent in the comparable period of 2009. The Company's consolidated income tax provision and effective tax rate are impacted by the mix of earnings or losses from the different jurisdictions in which it operates. Taxable earnings during the first six months of 2010 were higher in Canada and the United States and lower in Russia, Mexico and Argentina compared to the first half of 2009. Furthermore, the effective tax rate on Canadian earnings was reduced during the first quarter of 2010 by the elimination of the deferred credit balance, which resulted from the amalgamation with Denison Energy Inc. Canadian earnings or losses are now subject to income taxes at full statutory rates, including the tax recovery on losses realized during the second quarter of 2010.
Liquidity and Capital Resources
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
(000s) ($) ($) ($) ($)
(unaudited)
Cash provided by (used in):
Operating activities 22,271 23,026 22,197 37,011
Financing activities (2,438) (1,887) 13,859 13,113
Investing activities (19,892) (10,694) (37,548) (32,986)
Effect of exchange rate
changes on cash and
cash equivalents 5,866 (5,588) 1,905 (3,506)
-------------------------------------------------------------------------
Increase in cash and cash
equivalents 5,807 4,857 413 13,632
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating Activities
The Company's cash provided by operating activities for the six months ended June 30, 2010 was $22.2 million versus $37.0 million in the first half of 2009. The decrease was due primarily to a $34.6 million net decrease in non-cash working capital that was partially offset by a $19.8 million increase in funds provided by operations (refer to "Non-GAAP Measures" on page 16). At June 30, 2010, Calfrac's working capital was approximately $139.6 million, an increase of 9 percent from December 31, 2009. The Company reviewed its period-end accounts receivable in detail and determined that a provision for doubtful accounts receivable totalling $1.4 million was adequate. The majority of this provision related to a customer that filed for Chapter 11 restructuring under United States bankruptcy law.
Financing Activities
Net cash provided by financing activities during the first six months of 2010 was $13.9 million compared to $13.1 million in the comparable period of 2009. During the first six months of 2010, the Company drew down $15.0 million on its revolving credit facility. In addition, Calfrac received proceeds of $2.1 million from the issuance of common shares and paid dividends of $2.2 million.
On September 29, 2009, the Company increased its credit facilities from $90.0 million to $170.0 million with a syndicate of Canadian chartered banks, and on December 22, 2009 further increased these facilities to $175.0 million. The facilities consist of an operating facility of $10.0 million and an extendible revolving term syndicated facility of $165.0 million. The terms of the renewed credit facilities are based upon parameters of certain bank covenants with advances bearing interest at rates ranging from prime plus 1 percent to prime plus 1.75 percent. As of June 30, 2010, the Company had drawn $40.3 million on its syndicated facility, including letters of credit, leaving $134.7 million in available credit.
On December 16, 2009, Calfrac completed an additional private placement of senior unsecured notes for an aggregate principal amount of US$100.0 million. The Company's combined total of US$235.0 million of senior unsecured notes is due on February 15, 2015. The notes bear interest at 7.75 percent per annum, which is paid semi-annually.
At June 30, 2010, the Company had cash and cash equivalents of $25.5 million. A portion of these funds was invested in short-term investments, which consisted primarily of an overnight money market fund.
Investing Activities
For the six months ended June 30, 2010, Calfrac's net cash used for investing activities was $37.5 million versus $33.0 million for 2009. Capital expenditures were $41.8 million in 2010 compared to $25.7 million in 2009. Capital expenditures were primarily related to supporting the Company's fracturing operations throughout North America.
In March 2010, the Company acquired a non-controlling interest in one of its subsidiaries for approximately $2.1 million. The agreement required an immediate cash payment of approximately $1.5 million as well as a second cash payment to be made in 2011, which is based upon a formula incorporating the earnings generated by the subsidiary during 2010, subject to a minimum payment. The second cash payment is currently estimated to be approximately $0.5 million. The acquisition was accounted for as a step acquisition and the consideration paid has been assigned to goodwill as the fair value of the subsidiary's tangible assets, net of liabilities, was nominal.
On November 10, 2009, the Company acquired all of the issued and outstanding common shares of Century, a privately held fracturing services company operating in Western Canada. Under the terms of the agreement, the purchase price of $90.0 million consisted of approximately $13.5 million of cash plus 5,144,344 common shares of the Company with an agreed value of $76.5 million. For accounting purposes, the shares issuable in the transaction have a fair value of approximately $82.2 million based on the weighted average price of the Company's shares for the three trading days preceding and the three trading days following the date of the announcement of the agreement. The fair value of the share consideration for accounting purposes is calculated on a different basis than the agreed value and results in a higher recorded purchase price. Including transaction costs, the total consideration was $100.9 million for accounting purposes.
Additionally, net cash used for investing activities was impacted by the net change in non-cash working capital from the purchase of capital assets.
The effect of changes in foreign exchange rates on the Company's cash and cash equivalents during the first six months of 2010 was a gain of $1.9 million versus a loss of $3.5 million during the same period of 2009. These gains and losses relate to cash and cash equivalents held by the Company in a foreign currency.
With its strong working capital position, credit facilities and anticipated funds provided by operations, the Company expects to have adequate resources to fund its financial obligations and planned capital expenditures for 2010 and beyond.
Outstanding Share Data
The Company is authorized to issue an unlimited number of common shares. Employees have been granted options to purchase common shares under the Company's shareholder-approved stock option plan. The number of shares reserved for issuance under the stock option plan is equal to a maximum of 10 percent of the Company's issued and outstanding common shares. As at July 31, 2010, there were 43,069,790 common shares issued and outstanding, and 2,998,175 options to purchase common shares.
Advisories
-------------------------------------------------------------------------
Forward-Looking Statements
In order to provide Calfrac shareholders and potential investors with information regarding the Company and its subsidiaries, including management's assessment of Calfrac's plans and future operations, certain statements contained in this press release, including statements that contain words such as "anticipates", "can", "may", "might", "could", "potential", "expect", "believe", "intend", "forecast", "will", or similar words suggesting future outcomes, are forward-looking statements. Forward-looking statements in this document include, but are not limited to, statements with respect to future capital expenditures, future financial resources, future oil and natural gas well activity, outcome of specific events, trends in the oil and natural gas industry and the Company's growth prospects including, without limitation, its international growth strategy and prospects. These statements are derived from certain assumptions and analyses made by the Company based on its experience and interpretation of historical trends, current conditions, expected future developments and other factors that it believes are appropriate in the circumstances, including assumptions related to commodity pricing, North American drilling activity and the expectation that access to capital will continue to be restricted for many of Calfrac's customers. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company's expectations. The most significant risk factors to Calfrac relate to prevailing economic conditions; commodity prices; sourcing, pricing and availability of raw materials, component parts, equipment, suppliers, facilities and skilled personnel; dependence on major customers; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; and regional competition. Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Further information about these risks and uncertainties may be found in the Company's most recently filed Annual Information Form.
Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized, or that they will have the expected consequences or effects on the Company or its business or operations. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.
Business Risks
The business of Calfrac is subject to certain risks and uncertainties. Prior to making any investment decision regarding Calfrac, investors should carefully consider, among other things, the risk factors set forth in the Company's most recently filed Annual Information Form, which are incorporated by reference herein.
The Annual Information Form is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at www.sedar.com. Copies of the Annual Information Form may also be obtained on request without charge from Calfrac at 411 - 8th Avenue S.W., Calgary, Alberta T2P 1E3, or at www.calfrac.com, or by facsimile at 403-266-7381.
Non-GAAP Measures
Certain measures in this press release do not have any standardized meaning as prescribed under Canadian GAAP and are therefore considered non-GAAP measures. These measures include operating income, funds provided by operations and EBITDA. These measures may not be comparable to similar measures presented by other entities. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. Management's use of these measures has been disclosed further in this press release as these measures are discussed and presented.
Additional Information
Further information regarding Calfrac Well Services Ltd., including the most recently filed Annual Information Form, can be accessed on the Company's website at www.calfrac.com or under the Company's public filings found at www.sedar.com.
Second Quarter Conference Call
Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2010 second quarter results at 10:00 a.m. (Mountain Time) on Wednesday, August 4, 2010. The conference call dial-in number is 1-888-231-8191 or 647-427-7450. The seven-day replay numbers are 1-800-642-1687 (once connected, enter 87282903). A webcast of the conference call may be accessed via the Company's website at www.calfrac.com.
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at June 30, December 31,
2010 2009
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($)
ASSETS
Current assets
Cash and cash equivalents 25,483 25,070
Accounts receivable 143,958 135,775
Income taxes recoverable 1,688 1,780
Inventory 57,335 44,297
Prepaid expenses and deposits 11,039 6,746
-------------------------------------------------------------------------
239,503 213,668
Capital assets 580,422 579,233
Goodwill (note 4) 12,582 10,523
Future income taxes 39,762 37,466
-------------------------------------------------------------------------
872,269 840,890
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 88,250 82,212
Current portion of long-term debt (note 5) 10,417 1,996
Current portion of capital lease
obligations (note 6) 1,255 1,217
-------------------------------------------------------------------------
99,922 85,425
Long-term debt (note 5) 277,986 267,351
Capital lease obligations (note 6) 3,172 3,808
Other long-term liabilities 1,128 1,227
Future income taxes 23,152 20,474
Deferred credit - 2,505
Non-controlling interest 163 168
-------------------------------------------------------------------------
405,523 380,958
-------------------------------------------------------------------------
Shareholders' equity
Capital stock (note 7) 253,859 251,282
Contributed surplus (note 8) 13,075 10,808
Retained earnings 203,109 202,083
Accumulated other comprehensive loss (3,297) (4,241)
-------------------------------------------------------------------------
466,746 459,932
-------------------------------------------------------------------------
872,269 840,890
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contingencies (note 12)
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,
2010 2009 2010 2009
-------------------------------------------------------------------------
(000s, except per share data) ($) ($) ($) ($)
(unaudited)
Revenue 164,849 104,727 391,972 285,115
-------------------------------------------------------------------------
Expenses
Operating 138,314 92,029 313,041 234,973
Selling, general and
administrative 11,628 8,646 25,116 18,663
Depreciation 19,206 15,187 38,768 30,115
Interest, net 6,179 3,500 12,332 7,188
Foreign exchange losses 4,094 541 1,955 2,095
Gain on disposal of
capital assets (1,163) (829) (983) (901)
-------------------------------------------------------------------------
178,258 119,074 390,229 292,133
-------------------------------------------------------------------------
Income (loss) before
income taxes and
non-controlling interest (13,409) (14,347) 1,743 (7,018)
-------------------------------------------------------------------------
Income taxes
Current 623 827 1,034 1,461
Future (3,542) (445) (2,465) 683
-------------------------------------------------------------------------
(2,919) 382 (1,431) 2,144
-------------------------------------------------------------------------
Income (loss) before
non-controlling interest (10,490) (14,729) 3,174 (9,162)
Non-controlling interest (33) 41 (5) 80
-------------------------------------------------------------------------
Net income (loss) for
the period (10,457) (14,770) 3,179 (9,242)
Retained earnings, beginning
of period 215,719 217,180 202,083 211,652
Dividends (2,153) (1,887) (2,153) (1,887)
-------------------------------------------------------------------------
Retained earnings,
end of period 203,109 200,523 203,109 200,523
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share
Basic (0.24) (0.39) 0.07 (0.24)
Diluted (0.24) (0.39) 0.07 (0.24)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
Net income (loss) for
the period (10,457) (14,770) 3,179 (9,242)
Other comprehensive income
Change in foreign currency
translation adjustment 2,924 (6,132) 944 (3,574)
-------------------------------------------------------------------------
Comprehensive income (loss) (7,533) (20,902) 4,123 (12,816)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
beginning of period (6,221) 8,272 (4,241) 5,714
Other comprehensive income
(loss) for the period 2,924 (6,132) 944 (3,574)
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
end of period (3,297) 2,140 (3,297) 2,140
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income (loss) for
the period (10,457) (14,770) 3,179 (9,242)
Items not involving cash
Depreciation 19,206 15,187 38,768 30,115
Amortization of debt
issue costs and
debt discount 698 177 1,390 364
Stock-based compensation 1,450 767 2,787 1,742
Gain on disposal
of capital assets (1,163) (829) (983) (901)
Future income taxes
(recovery) (3,542) (445) (2,465) 683
Non-controlling interest (33) 41 (5) 80
-------------------------------------------------------------------------
6,159 128 42,671 22,841
Net change in non-cash
operating assets and
liabilities 16,112 22,898 (20,474) 14,170
-------------------------------------------------------------------------
22,271 23,026 22,197 37,011
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan proceeds - - - 5,000
Issuance of long-term debt (59) - 14,930 20,000
Bank loan repayments - - - (10,000)
Long-term debt repayments (188) - (376) -
Capital lease obligation
repayments (302) - (599) -
Net proceeds on issuance
of common shares 264 - 2,057 -
Dividends (2,153) (1,887) (2,153) (1,887)
-------------------------------------------------------------------------
(2,438) (1,887) 13,859 13,113
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital
assets (26,825) (9,862) (41,763) (25,719)
Proceeds on disposal
of capital assets 4,736 1,143 4,936 1,174
Acquisitions (note 4) 143 - (2,059) -
Net change in non-cash
working capital
from purchase of capital
assets 2,054 (1,975) 1,338 (8,441)
-------------------------------------------------------------------------
(19,892) (10,694) (37,548) (32,986)
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents 5,866 (5,588) 1,905 (3,506)
-------------------------------------------------------------------------
Increase in cash and cash
equivalents 5,807 4,857 413 13,632
Cash and cash equivalents,
beginning of period 19,676 45,267 25,070 36,492
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 25,483 50,124 25,483 50,124
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------
For the Six Months Ended June 30, 2010
(figures in text and tables are in 000s except share data and certain
other exceptions as indicated) (unaudited)
1. BASIS OF PRESENTATION
The interim financial statements of Calfrac Well Services Ltd. (the
"Company") do not conform in all respects to the requirements of
generally accepted accounting principles (GAAP) for annual financial
statements. The interim financial statements should be read in
conjunction with the most recent annual financial statements.
2. SEASONALITY OF OPERATIONS
The Company's Canadian business is seasonal in nature. The lowest
activity levels are typically experienced during the second quarter
of the year when road weight restrictions are in place due to spring
break-up and access to wellsites in Canada is reduced.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The interim financial statements follow the same accounting
policies and methods of application as the most recent annual
financial statements.
(b) In February 2008, the Canadian Accounting Standards Board (AcSB)
confirmed that International Financial Reporting Standards (IFRS)
will replace Canadian GAAP in 2011 for profit-oriented Canadian
publicly accountable enterprises. As a result, the Company will
be required to report its results in accordance with IFRS
beginning in 2011. The Company has developed a changeover plan to
complete the transition to IFRS by January 1, 2011, including the
preparation of required comparative information. The impact of
IFRS on the Company's consolidated financial statements is not
reasonably determinable at this time.
4. GOODWILL
In March 2010, the Company acquired a non-controlling interest in
one of its subsidiaries for $2,059. The agreement required an
immediate cash payment of $1,527 as well as a second cash payment to
be made in 2011, which is based upon a formula incorporating the
earnings generated by the subsidiary during 2010, subject to a
minimum payment. The second cash payment is currently estimated to be
approximately $532. The acquisition was accounted for as a step
acquisition and the consideration paid has been assigned to goodwill
as the fair value of the subsidiary's tangible assets, net of
liabilities, was nominal.
5. LONG-TERM DEBT
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As at June 30, December 31,
2010 2009
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(000s) ($) ($)
US$235,000 senior unsecured notes, due
February 15, 2015, bearing interest
at 7.75%, payable semi-annually 250,181 246,985
Less: unamortized debt issue costs and
unamortized debt discount (10,770) (11,768)
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239,411 235,217
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$165,000 extendible revolving term loan
facility currently bearing interest at the
Canadian prime rate plus 1%, secured by the
Canadian and U.S. assets of the Company 39,699 24,699
Less: unamortized debt issue costs (926) (1,128)
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38,773 23,571
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Mortgage obligations maturing between
June 2012 and April 2013 bearing interest at
rates ranging from 4.94% to 6.69%, repayable
$69 per month principal and interest, secured
by certain real property 7,173 7,379
US$2,943 mortgage maturing May 16, 2018
bearing interest at U.S. prime less 1%,
repayable US$35 per month principal and
interest, secured by certain real property 3,046 3,180
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288,403 269,347
Less: current portion of long-term debt (10,417) (1,996)
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277,986 267,351
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The fair value of the senior unsecured notes based on the closing
market price at June 30, 2010 was $241,425 (December 31, 2009 -
$239,575). The carrying value of the revolving credit facility
approximates its fair value due to its variable interest rate and
first priority security position. The carrying values of the mortgage
obligations approximate their fair values as the interest rates are
not significantly different from current mortgage rates for similar
loans.
The interest rate on the term revolving facility is based upon the
parameters of certain bank covenants, and ranges from prime plus 1%
to prime plus 1.75%. The facility is repayable in seven equal
quarterly principal instalments of $1,985 commencing December 31,
2010 plus a final payment of $25,805 on September 28, 2012, assuming
the facility is not extended. The term and commencement of principal
repayments under the facility may be extended by one year on each
anniversary at the request of the Company and acceptance by the
lenders. The Company also has the ability to prepay principal without
penalty.
The Company also has an extendible operating loan facility which
includes overdraft protection in the amount of $10,000. The interest
rate is based upon the parameters of certain bank covenants and
ranges from prime plus 1 percent to prime plus 1.75 percent.
Drawdowns under this facility are repayable on September 28, 2012,
assuming the facility is not extended. The term and commencement of
principal repayments may be extended by one year on each anniversary
at the request of the Company and acceptance of the lender. The
operating facility is secured by the Canadian and U.S. assets of the
Company.
6. OBLIGATIONS UNDER CAPITAL LEASES
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As at June 30, December 31,
2010 2009
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(000s) ($) ($)
Capital lease contracts bearing interest at
rates ranging from 5.68% to 6.58%, repayable
$124 per month, secured by certain equipment 4,855 5,599
Less: interest portion of contractual payments (428) (574)
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4,427 5,025
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Less: current portion of capital lease
obligations (1,255) (1,217)
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3,172 3,808
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The carrying values of the capital lease obligations approximate
their fair values as the interest rates are not significantly
different from current rates for similar leases.
7. CAPITAL STOCK
Authorized capital stock consists of an unlimited number of common
shares.
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Continuity of Common Shares (year-to-date) Shares Amount
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(No.) ($000s)
Balance, January 1 42,898,880 251,282
Issued upon exercise of stock options 155,010 2,577
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Balance, June 30 43,053,890 253,859
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The weighted average number of common shares outstanding for the six
months ended June 30, 2010 was 43,017,353 basic and 43,398,101
diluted (six months ended June 30, 2009 - 37,741,561 basic and
37,741,561 diluted). The difference between basic and diluted shares
for the six months ended June 30, 2010 is attributable to the
dilutive effect of stock options issued by the Company as disclosed
in note 9.
8. CONTRIBUTED SURPLUS
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Continuity of Contributed Surplus (year-to-date) 2010
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(000s) ($)
Balance, January 1 10,808
Stock options expensed 2,787
Stock options exercised (520)
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Balance, June 30 13,075
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9. STOCK OPTIONS
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Continuity of
Stock Options (year-to-date) 2010 2009
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Average Average
Exercise Exercise
Options Price Options Price
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(No.) ($) (No.) ($)
Balance, January 1 2,508,143 16.70 2,043,344 21.69
Granted during
the period 1,081,200 20.82 847,500 8.41
Exercised for
common shares (155,010) 13.27 - -
Forfeited (62,966) 20.16 (102,006) 18.67
Expired (357,292) 23.71 (35,000) 37.86
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Balance, June 30 3,014,075 17.45 2,807,878 17.51
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Stock options vest equally over three or four years and expire three-
and-one-half or five years from the date of grant. The exercise price
of outstanding options ranges from $8.35 to $29.79 with a weighted
average remaining life of 3.56 years. When stock options are
exercised the proceeds, together with the amount of compensation
expense previously recorded in contributed surplus, are added to
capital stock.
10. CAPITAL STRUCTURE
The Company's capital structure is comprised of shareholders' equity
and long-term debt. The Company's objectives in managing capital are
(i) to maintain flexibility so as to preserve the Company's access to
capital markets and its ability to meet its financial obligations,
and (ii) to finance growth, including potential acquisitions.
The Company manages its capital structure and makes adjustments in
light of changing market conditions and new opportunities, while
remaining cognizant of the cyclical nature of the oilfield services
sector. To maintain or adjust its capital structure, the Company may
revise its capital spending, adjust dividends paid to shareholders,
issue new shares or new debt or repay existing debt.
The Company monitors its capital structure and financing requirements
using, amongst other parameters, the ratio of long-term debt to cash
flow. Cash flow for this purpose is defined as cash provided by
operating activities before the net change in non-cash operating
assets and liabilities as reflected in the consolidated statement of
cash flows. The ratio of long-term debt to cash flow does not have
any standardized meaning prescribed under GAAP and may not be
comparable to similar measures used by other companies.
At June 30, 2010, the long-term debt to cash flow ratio was 3.9:1
(December 31, 2009 - 4.9:1) calculated on a 12-month trailing basis
as follows:
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As at June 30, December 31,
2010 2009
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(000s) ($) ($)
Long-term debt (net of unamortized debt issue
costs and debt discount) (note 5) 288,403 269,347
Cash flow 74,450 54,620
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Long-term debt to cash flow ratio 3.9:1 4.9:1
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The Company is subject to certain financial covenants relating to
working capital, leverage and the generation of cash flow in respect
of its operating and revolving credit facilities. These covenants are
monitored on a monthly basis. The Company is in compliance with all
such covenants.
The Company's capital management objectives, evaluation measures and
targets have remained unchanged over the periods presented.
11. RELATED PARTY TRANSACTIONS
An entity controlled by a director of the Company provides ongoing
real estate advisory services to the Company. The aggregate fees
charged for such services following the election of said director on
May 11, 2010 was $17, as measured at the exchange amount.
12. CONTINGENCIES
Greek Operations
As a result of the acquisition and amalgamation with Denison Energy
Inc. ("Denison") in 2004, the Company assumed certain legal
obligations relating to Denison's Greek operations.
In 1998, North Aegean Petroleum Company E.P.E. (NAPC), a Greek
subsidiary of a consortium in which Denison participated (and which
is now a majority-owned subsidiary of the Company), terminated
employees in Greece as a result of the cessation of its oil and gas
operations in that country. Several groups of former employees have
filed claims against NAPC and the consortium alleging that their
termination was invalid and that their severance pay was improperly
determined.
In 1999, the largest group of plaintiffs received a ruling from the
Athens Court of First Instance that their termination was invalid and
that salaries in arrears amounting to approximately $9,167 (6,846
euros) plus interest was due to the former employees. This decision
was appealed to the Athens Court of Appeal, which allowed the appeal
in 2001 and annulled the above-mentioned decision of the Athens Court
of First Instance. The said group of former employees filed an appeal
with the Supreme Court of Greece, which was heard on May 29, 2007.
The Supreme Court of Greece allowed the appeal and sent the matter
back to the Athens Court of Appeal for the consideration of the
quantum of awardable salaries in arrears. On June 3, 2008, the Athens
Court of Appeal rejected NAPC's appeal and reinstated the award of
the Athens Court of First Instance, which decision was further
appealed to the Supreme Court of Greece. The matter was heard on
April 20, 2010 and a decision rejecting such appeal was rendered
in June 2010. NAPC and the Company are assessing available rights of
appeal to any other levels of court in any jurisdiction outside
Greece where such an appeal is warranted. Counsel to NAPC has
obtained a judicial order entitling NAPC to obtain certain employment
information in respect of the plaintiffs which is required in order
to assess the extent to which the plaintiffs have mitigated any
damages which may otherwise be payable.
Several other smaller groups of former employees have filed similar
cases in various courts in Greece. One of these cases was heard by
the Athens Court of First Instance on January 18, 2007. By judgment
rendered November 23, 2007, the plaintiff's allegations were
partially accepted, and the plaintiff was awarded compensation for
additional work of approximately $47 (35 euros), plus interest. The
appeal of this decision was heard on June 2, 2009, at which time an
additional claim by the plaintiff seeking damages of $299 (223
euros), plus interest, was also heard. A decision in respect of the
hearing has been rendered which accepted NAPC's appeal and rejected
the additional claim of the plaintiff. Another one of the lawsuits
seeking salaries in arrears of $171 (128 euros), plus interest, was
heard by the Supreme Court of Greece on November 6, 2007, at which
date the appeal of the plaintiffs was denied for technical reasons
due to improper service. A rehearing of this appeal scheduled for
September 22, 2009 was postponed until September 21, 2010. The
remaining action, which is seeking salaries in arrears of
approximately $588 (439 euros) plus interest, was scheduled to be
heard before the Athens Court of First Instance on October 1, 2009,
but was adjourned until November 18, 2011 as a result of the Greek
elections.
The Company has signed an agreement with a Greek exploration and
production company pursuant to which it has agreed to assign
approximately 90 percent of its entitlement under an offshore licence
agreement for consideration including a full indemnity in respect of
the Greek legal claims described above. The completion of the
transactions contemplated by such agreement is subject to certain
conditions precedent, the fulfillment of which is not in the
Company's control.
The direction and financial consequences of the potential decisions
in these actions cannot be determined at this time and, consequently,
no provision has been recorded in these financial statements.
Potential Claim
The Company has a potential claim related to a contract the outcome
of which is not reasonably determinable at this time. The amount of
the claim on an after-tax basis is estimated to be approximately
$2,300.
13. SEGMENTED INFORMATION
The Company's activities are conducted in four geographic segments:
Canada, Russia, the United States and Latin America. All activities
are related to fracturing, coiled tubing, cementing and well
stimulation services for the oil and natural gas industry.
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United
Canada Russia States
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(000s) ($) ($) ($)
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Three Months Ended June 30, 2010
Revenue 52,183 18,046 77,687
Operating income (loss)(1) 1,500 1,649 18,870
Segmented assets 444,775 116,727 260,071
Capital expenditures 19,141 1,967 5,515
Goodwill 7,236 979 2,308
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Three Months Ended June 30, 2009
Revenue 26,529 19,193 42,954
Operating income (loss)(1) (1,320) 6,593 (433)
Segmented assets 267,928 106,641 240,777
Capital expenditures 2,586 1,077 5,796
Goodwill 7,236 979 2,308
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Six Months Ended June 30, 2010
Revenue 185,814 35,622 133,719
Operating income (loss)(1) 40,925 2,306 22,957
Segmented assets 444,775 116,727 260,071
Capital expenditures 26,132 3,315 11,698
Goodwill 7,236 979 2,308
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Six Months Ended June 30, 2009
Revenue 111,604 34,158 111,496
Operating income (loss)(1) 8,017 9,769 16,807
Segmented assets 267,928 106,641 240,777
Capital expenditures 12,392 1,436 10,790
Goodwill 7,236 979 2,308
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Latin Consol-
America Corporate idated
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(000s) ($) ($) ($)
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Three Months Ended June 30, 2010
Revenue 16,933 - 164,849
Operating income (loss)(1) (1,163) (5,949) 14,907
Segmented assets 50,696 - 872,269
Capital expenditures 202 - 26,825
Goodwill 2,059 - 12,582
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Three Months Ended June 30, 2009
Revenue 16,051 - 104,727
Operating income (loss)(1) 3,149 (3,937) 4,052
Segmented assets 31,556 - 646,902
Capital expenditures 403 - 9,862
Goodwill - - 10,523
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Six Months Ended June 30, 2010
Revenue 36,817 - 391,972
Operating income (loss)(1) 413 (12,786) 53,815
Segmented assets 50,696 - 872,269
Capital expenditures 618 - 41,763
Goodwill 2,059 - 12,582
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Six Months Ended June 30, 2009
Revenue 27,857 - 285,115
Operating income (loss)(1) 5,460 (8,574) 31,479
Segmented assets 31,556 - 646,902
Capital expenditures 1,101 - 25,719
Goodwill - - 10,523
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(1) Operating income (loss) is defined as net income (loss) before
depreciation, interest, foreign exchange gains or losses, gains
or losses on disposal of capital assets, income taxes and non-
controlling interest.
The following table sets forth consolidated revenue by service line:
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Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
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(000s) ($) ($) ($) ($)
Fracturing 142,581 84,997 343,108 237,789
Coiled tubing 11,851 10,967 27,954 25,589
Cementing 4,915 5,780 10,085 15,602
Other 5,502 2,983 10,825 6,135
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164,849 104,727 391,972 285,115
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%SEDAR: 00002062E
For further information: Douglas R. Ramsay, President and Chief Executive Officer, Telephone: 403-266-6000, Fax: 403-266-7381; Laura A. Cillis, Senior Vice President, Finance, and Chief Financial Officer, Telephone: 403-266-6000, Fax: 403-266-7381; Tom J. Medvedic, Senior Vice President, Corporate Development, Telephone: 403-266-6000, Fax: 403-266-7381
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