Calfrac's Second Quarter Results Reflect Benefits of Geographic Diversification



    CALGARY, Aug. 8 /CNW/ - Calfrac Well Services Ltd. ("Calfrac") (TSX-CFW)
is pleased to announce its financial and operating results for the three and
six months ended June 30, 2007.

    
    HIGHLIGHTS

    -------------------------------------------------------------------------
                       Three Months Ended June 30,  Six Months Ended June 30,
                           2007     2006   Change     2007     2006   Change
    -------------------------------------------------------------------------
    (000s, except per        ($)      ($)      (%)      ($)      ($)      (%)
     share and unit data)
    (unaudited)

    Financial
    Revenue              87,778   66,973       31  216,285  192,983       12
    Gross margin(1)      22,095   14,446       53   60,317   64,373       (6)
    Net income (loss)      (303)   1,569     (119)  18,474   36,125      (49)
      Per share
        - basic           (0.01)    0.04     (125)    0.51     1.00      (49)
        - diluted         (0.01)    0.04     (125)    0.51     0.98      (48)
    Cash flow from
     operations(2)       10,835    7,208       50   39,662   48,865      (19)
      Per share
        - basic            0.30     0.20       50     1.09     1.35      (19)
        - diluted          0.30     0.20       50     1.09     1.33      (18)
    EBITDA(3)            14,569    8,761       66   44,892   51,498      (13)
      Per share
        - basic            0.40     0.24       67     1.24     1.42      (13)
        - diluted          0.40     0.24       67     1.23     1.40      (12)
    Working capital      86,971   28,741      203   86,971   28,741      203
    Shareholders'
     equity             321,218  267,559       20  321,218  267,559       20
    Weighted average
     common shares
     outstanding (No.)
      Basic              36,399   36,277        -   36,348   36,305        -
      Diluted            36,433   36,582        -   36,412   36,676       (1)
    -------------------------------------------------------------------------
                                                      (No.)    (No.)      (%)
    Operating
    Fracturing spreads
     at period end
      Conventional
       fracturing                                       23       19       21
      Coalbed methane                                    4        4        -
    -------------------------------------------------------------------------
      Total                                             27       23       17
    Coiled tubing units                                 15       14        7
    Cementing units                                     15       11       36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    1.  Gross margin is defined as revenue less operating expenses excluding
        depreciation. Gross margin is a measure that does not have any
        standardized meaning prescribed under GAAP, and accordingly, may not
        be comparable to similar measures used by other companies.

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

    3.  EBITDA is defined as income before interest, taxes, depreciation and
        amortization. EBITDA is presented because it is frequently used by
        securities analysts and others for evaluating companies and their
        ability to service debt. EBITDA is a measure that does not have any
        standardized meaning prescribed under GAAP, and accordingly, may not
        be comparable to similar measures used by other companies.
    


    PRESIDENT'S MESSAGE


    I am pleased to present the highlights for the three and six-month
periods ended June 30, 2007 and provide an outlook for the remainder of year.
During the second quarter, Calfrac expanded the scale of its operations in the
United States and Russia as well as streamlined its Canadian operations in
response to a slowdown in drilling activity in the Western Canadian
Sedimentary Basin ("WCSB"). Subsequent to the end of the reporting period, the
Company was awarded a three-year contract with Pemex for the provision of
fracturing services in the Burgos field of northern Mexico.
    Calfrac's second quarter net income was reduced by a $1.4 million foreign
exchange loss related to the impact of the appreciating Canadian dollar on the
translation of the Company's Russian operations. Excluding this item, Calfrac
would have earned a profit of $1.1 million or $0.03 per share (basic) in the
second quarter of 2007.

    Financial Highlights

    For the three months ended June 30, 2007, the Company:

    
    -   realized record second quarter revenue of $87.8 million;

    -   earned net income before foreign exchange losses of $1.1 million or
        $0.03 per share (basic);

    -   recorded cash flow from operations before changes in non-cash working
        capital of $10.8 million or $0.30 per share (basic); and

    -   improved average consolidated revenue per fracturing job from the
        comparable quarter in 2006 by 31% to $71,516.

    For the six months ended June 30, 2007, Calfrac:

    -   realized revenue of $216.3 million;

    -   earned net income of $18.5 million or $0.51 per share (basic);

    -   recorded cash flow from operations before changes in non-cash working
        capital of $39.7 million or $1.09 per share (basic);

    -   achieved EBITDA of $44.9 million or $1.24 per share (basic); and

    -   improved average consolidated revenue per fracturing job from the
        same period of the prior year by 17% to $65,852.
    

    Operational Highlights

    Canadian Operations

    During the second quarter of 2007, Calfrac's Canadian operations were
adversely impacted by an overall decline in natural gas drilling activity
throughout the WCSB, which was primarily caused by lower natural gas prices
and an extended spring breakup due to wet weather in Alberta during the months
of May and June. In anticipation of this downturn in activity, we proactively
rationalized our Canadian operations and workforce across all service lines,
reallocated equipment and senior personnel to higher activity regions within
North America and Russia as well as maintained a strong focus on managing
operating expenses. The Company's operations dedicated to the deeper, more
technically challenging areas of northern Alberta and northeastern British
Columbia continued to be reasonably active during the quarter. We were able to
continue working in these regions throughout April by utilizing moveable pads
to access remote northern drilling locations that were impacted by an early
spring breakup. Additionally, our long-term contractual arrangements with
customers involved in the shallow gas markets of southern Alberta resulted in
relatively strong activity levels during the three months ended June 30, 2007.
Fracturing activity in the coalbed methane ("CBM") market continued to be
weak, but Calfrac is insulated somewhat due to our long-term contract base. We
believe that the Company's established relationships with an active customer
base will provide a solid base of activity for our Canadian fracturing, coiled
tubing and cementing operations over the remainder of the year.

    United States Operations

    The Company's United States operations generated record revenues and were
a major driver of Calfrac's consolidated financial performance during the
second quarter. Our fracturing operations in Colorado's DJ Basin were
particularly active as a result of serving an expanded customer base in this
region, while activity in the Piceance Basin was lower in April but gathered
momentum through the end of the quarter. The financial and operating results
from our newest operating district in Beebe, Arkansas exceeded expectations
and these operations were augmented by the deployment of a second multi-pumper
fracturing spread in early June 2007 to serve increased customer demand in the
Fayetteville Basin.

    Russian Operations

    Since the end of the first quarter, Calfrac has furthered its strategy of
growing the scale of its Russian operations. A fourth deep coiled tubing unit
was deployed into Western Siberia during June 2007, and in July an additional
multi-pumper fracturing spread and deep coiled tubing unit became operational
in the Russian market. Of particular note, during the period Calfrac pumped a
670-tonne fracturing job in Western Siberia - the largest in Company history
and believed to be one of the largest jobs ever completed in Russia for one of
our customers.

    Outlook

    The Company believes that the lower activity levels experienced in
Western Canada during the first half of 2007 will continue throughout the
remainder of the year and, potentially, beyond. Our long-term contracts with
major customers involved in the CBM and shallow gas markets are expected to
mitigate some of the near-term decline in Canadian drilling activity. The
Company is committed to further expanding its customer base in the deeper
basins of northern Alberta and northeastern British Columbia and, where
necessary, streamlining its operations.
    In the United States, we anticipate that activity will continue to be
very robust throughout the remainder of 2007, and as a result, our financial
returns from this geographic segment should remain strong. We currently
operate six fracturing spreads and expect to further expand our equipment
fleet in the U.S. market during the third quarter by introducing cementing
operations into certain existing operating areas, which should further bolster
our operating and financial results. We also intend to continue to prudently
pursue new market opportunities.
    To date in 2007, Calfrac has continued to organically grow the scale of
its operations in Western Siberia, and as a result, currently operates three
fracturing spreads and five deep coiled tubing units in this international
pressure pumping market. We believe that this larger scale of operations,
supported by our annual contractual commitments with two of Russia's major oil
and gas producers, provides the foundation for continued improvement in
financial and operating performance as the year progresses.
    In mid-July, we announced our intention to enter Mexico's well services
market pursuant to the terms of a three-year contract awarded by the country's
state oil company, Pemex. A new district office in Reynoso is expected to open
during the fourth quarter of 2007 to support hydraulic fracturing operations
in the Burgos field located in northern Mexico. The equipment required for
this new international operation will be primarily redeployed from our
existing North American fleet. We believe that entry into the Mexican well
services market provides an exciting opportunity for Calfrac to expand in a
major international fracturing market that has substantial potential for
future growth. In addition, this expansion represents a continuation of our
Company's strategy to diversify geographically into new markets that are not
as dependent on natural gas drilling as the Canadian and United States
markets.
    Our 2007 capital program has been focused on enhancing the pumping
capacity of the Company's fracturing equipment fleet and, by the end of the
second quarter, a significant portion of these capital expenditures were
incurred. New equipment has been deployed into our growing markets within the
United States and Russia as well as the deeper basin markets in Canada. As at
June 30, 2007, we have the capacity to operate 27 fracturing spreads,
15 coiled tubing units and 15 cementing units in our three geographic markets.
    Effective September 1, 2007, our Company's organizational structure will
be redesigned to align with our geographic and corporate segments. As a
result, I am pleased to announce the following promotions within Calfrac's
executive team:

    
    -   John L. Grisdale - President, United States Operating Division

    -   Donald R. Battenfelder - President, Canadian Operating Division

    -   Robert L. Sutherland - President, Russian Operating Division

    -   Tom J. Medvedic - Senior Vice-President, Finance & Chief Financial
        Officer

    -   Dwight M. Bobier - Senior Vice-President, Technical Services

    -   Stephen T. Dadge - Senior Vice-President, Corporate Services
    

    The Presidents of the three geographic segments will report to Gordon
Dibb, Chief Operating Officer, while the three Senior Vice-Presidents will
report directly to me with an indirect reporting relationship to Gordon Dibb.
In addition, Larry (Lee) Burleson and Fredrick (Bruce) Payne have been
promoted to Vice-President, United States Sales & Marketing and
Vice-President, United States Operations, respectively, and will report to
John Grisdale.
    At the end of the second quarter, the Company's balance sheet remained
very strong with cash of $44.3 million, working capital of $87.0 million and
undrawn credit facilities of $90.0 million. Consequently, Calfrac has the
financial strength and flexibility to pursue future growth either organically
or through prudent acquisitions.
    Despite the current soft Canadian market conditions, we are excited about
the prospects for Calfrac and I look forward to reporting the progress of our
Company's growth plans later in the year.


    On behalf of the Board of Directors,


    Douglas R. Ramsay
    President & Chief Executive Officer

    August 7, 2007



    MANAGEMENT'S DISCUSSION AND ANALYSIS


    This Management's Discussion and Analysis ("MD&A") for Calfrac Well
Services Ltd. ("Calfrac" or the "Company") has been prepared by management as
of August 7, 2007 and is a review of the financial condition and results of
operations of the Company based on accounting principles generally accepted in
Canada. Its focus is primarily a comparison of the financial performance for
the three and six months ended June 30, 2007 and 2006 and should be read in
conjunction with the unaudited interim consolidated financial statements and
accompanying notes for those periods as well as the audited financial
statements and MD&A for the year ended December 31, 2006. Readers should also
refer to the "Forward-Looking Statements" legal advisory at the end of this
MD&A.
    All financial amounts and measures presented in this MD&A are expressed
in Canadian dollars unless otherwise indicated. The definitions of certain
non-GAAP measures used within this MD&A have been included at the end of this
MD&A.

    Second Quarter 2007 Performance Summary

    Calfrac Well Services Ltd. is an independent provider of specialized
oilfield services in Canada, the United States and Russia, including
fracturing, coiled tubing, cementing and other well stimulation services. The
Company has established, and continues to maintain, a leadership position by
providing high quality, responsive service through an expanding geographic
network, increased operating fleet and growing customer base. Despite a
prolonged spring breakup in Canada and significantly higher foreign exchange
losses on the translation of the Company's Russian operations, for the three
months ended June 30, 2007 Calfrac:

    
    -   increased revenue by 31% to $87.8 million compared to $67.0 million
        in the second quarter of 2006;

    -   incurred a net loss of $0.3 million or $0.01 per share (basic)
        compared to net income of $1.6 million or $0.04 per share (basic)
        recorded in the same three-month period of 2006;

    -   realized cash flow from operations before changes in non-cash working
        capital of $10.8 million or $0.30 per share (basic) compared to
        $7.2 million or $0.20 per share (basic) in the same quarter a year
        ago; and

    -   maintained a strong balance sheet with working capital of
        $87.0 million and long-term debt of $138.8 million.
    

    Revenue

    Canadian Operations

    Revenue from Canadian operations for the first quarter of 2007 decreased
31% to $29.4 million compared to $42.7 million during the same quarter of
2006. Canadian fracturing revenue for the three months ended June 30, 2007
totaled $26.8 million compared to $36.8 million recorded in the same
three-month period of the prior year. Revenue was negatively impacted by lower
activity levels as a result of an extended spring breakup due to wet weather
in Alberta during May and June, concerns related to natural gas commodity
prices and competitive industry pricing pressures in the Western Canadian
Sedimentary Basin ("WCSB"). During the second quarter of 2007, Calfrac
completed 543 Canadian fracturing jobs for average revenue of $49,441 per job
compared to 726 jobs for $50,729 per job in the corresponding period of 2006.
The year-over-year decrease in the Company's Canadian fracturing revenue per
job was primarily a result of competitive pricing pressures in the WCSB and an
increase in the number of lower revenue shallow gas jobs completed during the
quarter offset partially by the completion of a greater percentage of larger,
more expensive fracturing jobs in the technically challenging basins of
northern Alberta and northeastern British Columbia.
    For the quarter ended June 30, 2007, revenue from coiled tubing
operations was $1.1 million compared to $2.4 million for the same period of
2006. The total number of jobs completed in the 2007 three-month period was
735 for average revenue of $1,526 per job compared to 858 jobs for $2,830 per
job in 2006. The lower average revenue per job in the second quarter of 2007
was primarily due to lower activity levels in the deeper basin markets of
northern Alberta and northeastern British Columbia as well as the impact of
transferring a deep coiled tubing unit to Russia in April 2007.
    Revenue from the Company's cementing operations totaled $1.4 million for
the three months ended June 30, 2007 compared to $3.5 million recorded in the
second quarter of 2006. The 60% decrease in revenue can be primarily
attributed to a significant decline in Western Canadian drilling activity and
the impact of wet weather in Alberta during May and June. The total number of
jobs completed in the second quarter of 2007 was 115 for average revenue of
$12,034 per job compared to 309 jobs for $11,184 per job in the same period of
2006. The increased revenue per job in the 2007 three-month period was
primarily a result of a larger proportion of deeper cement jobs being
completed in Western Canada.

    United States Operations

    Revenue from Calfrac's United States operations in the second quarter of
2007 increased to $41.1 million compared to $20.2 million recorded in the same
period of 2006. This 103% increase was primarily due to a full quarter of
activity in the Company's newest district located in Arkansas, the transfer of
an additional multi-pumper fracturing spread into this market in early June as
well as strong activity in the DJ Basin. For the three months ended June 30,
2007, the Company completed 492 fracturing jobs in the United States for
average revenue of $83,448 per job compared to 335 jobs for $60,132 per job in
the same period of 2006. The increase in the reported revenue per job during
the second quarter of 2007 was primarily related to the commencement of
operations in Arkansas during March 2007 partially offset by a larger
proportion of work in the DJ Basin, which tends to have lower revenues on a
per job basis, and a stronger Canadian dollar.

    Russian Operations

    In June 2007, Calfrac deployed an additional coiled tubing unit into the
Russian well services market, and as a result, was operating two multi-pumper
fracturing spreads and four coiled tubing units by the end of the second
quarter. For the three months ended June 30, 2007, the Company's revenue from
Russian operations totaled $17.4 million, an increase of $13.3 million from
the second quarter of 2006. This 330% increase was primarily due to an
expanded equipment fleet and higher levels of fracturing and coiled tubing
activity throughout the Company's Western Siberian operations.

    Gross Margin

    Consolidated gross margin for the second quarter of 2007 was
$22.1 million, a 53% increase from $14.4 million recorded in the same period
of 2006. The higher consolidated gross margin for the three months ended
June 30, 2007 was primarily due to improved operating and financial
performance from the Company's United States and Russian operations offset
partially by the impact of increased competitive pricing pressures and reduced
activity in Canada as well as the appreciation of the Canadian dollar. As a
percentage of revenue, consolidated gross margin was 25% for the three months
ended June 30, 2007 compared to 22% in the corresponding period of 2006. The
increase in consolidated gross margin percentage was primarily a result of a
significant increase in the financial results from the United States and
Russia marginally offset by the impact of lower activity and an extended
spring breakup in Canada.

    Expenses

    Operating Expenses

    Operating expenses for the three months ended June 30, 2007 totaled
$65.7 million compared to $52.5 million in the same three-month period of
2006. The 25% year-over-year increase was due primarily to a broader scale of
operations in North America and Russia as well as higher district expenses in
the quarter related to Calfrac's newest operating regions in Beebe, Arkansas
and Purpe, Western Siberia.

    Selling, General and Administrative ("SG&A") Expenses

    During the second quarter of 2007, SG&A expenses totaled $6.5 million
compared to $5.6 million in the corresponding three-month period of 2006. This
increase in SG&A expenses was primarily a result of the Company's larger
operating scale and revenue base. SG&A expenses as a percentage of revenue
were 7% for the three months ended June 30, 2007 versus 8% for the comparable
quarter of the prior year.

    Interest and Depreciation Expenses

    The Company recorded net interest expense of $2.5 million for the quarter
ended June 30, 2007 compared to $0.5 million in the corresponding period of
2006. The higher interest expense was primarily a result of the closing of a
private placement of unsecured senior notes in February 2007 for an aggregate
amount of US$135.0 million offset slightly by interest earned on the Company's
surplus cash. Depreciation expense during the second quarter of 2007 increased
49% to $8.7 million from $5.9 million recorded in the comparable period of
2006 primarily due to a larger equipment fleet operating across the Company's
North American and international operations.

    Income Tax

    Income tax expense for the quarter ended June 30, 2007 totaled
$3.6 million compared to $0.8 million recorded in the same period of the prior
year. Current tax expense for the three months ended June 30, 2007 was
$1.7 million compared to $1.5 million in 2006. Future income tax expense for
the three-month period ended June 30, 2007 was $1.9 million, an increase of
$2.6 million from the second quarter of 2006. The increase in total income tax
expense was primarily related to significantly higher profitability in the
United States and Russia during the quarter. The higher effective tax rate for
the second quarter of 2007 was primarily due to the income earned in the
United States and Russia being taxed at full statutory rates and the tax
recovery related to losses incurred in Canada being at a significantly lower
rate as a result of tax attributes from the amalgamation with Denison Energy
Inc.

    Net Income

    For the quarter ended June 30, 2007, the Company incurred a net loss of
$0.3 million or $0.01 per share (basic) compared to net income of $1.6 million
or $0.04 per share (basic) during the second quarter of 2006. The decline in
net income was primarily a result of lower activity levels in Canada due to a
prolonged spring breakup, competitive pricing pressures in the Canadian
pressure pumping services market, higher foreign exchange losses, interest,
depreciation and income tax expenses offset partially by improved financial
performance from Calfrac's United States and Russian operations.

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the three months ended June 30, 2007 increased to $10.8 million or $0.30 per
share (basic) from $7.2 million or $0.20 per share (basic) recorded in the
second quarter of 2006. For the quarter ended June 30, 2007, cash flow from
operations was used primarily to finance the Company's capital expenditures.

    
    Summary of Quarterly Results
    -------------------------------------------------------------------------
    Three Months Ended               Sep.30,    Dec.31,    Mar.31,    Jun.30,
                                       2005       2005       2006       2006
    -------------------------------------------------------------------------
    (000s, except per share
     and unit data)                      ($)        ($)        ($)        ($)
    (unaudited)

    Financial
    Revenue                          77,377    111,634    126,010     66,973
    Gross margin(1)                  25,694     43,336     49,927     14,446
    Net income (loss)                12,947     27,372     34,556      1,569
      Per share - basic                0.36       0.75       0.95       0.04
                - diluted              0.35       0.75       0.94       0.04
    Cash flow from operations(2)     18,503     33,794     41,656      7,208
      Per share - basic                0.51       0.93       1.15       0.20
                - diluted              0.51       0.92       1.13       0.20
    EBITDA(3)                        18,234     34,131     42,736      8,761
      Per share - basic                0.50       0.94       1.18       0.24
                - diluted              0.50       0.93       1.16       0.24
    Capital expenditures             29,241     20,612     50,631     36,501
    Working capital                  12,962     39,396     37,071     28,741
    Shareholders' equity            207,679    234,021    271,084    267,559
    -------------------------------------------------------------------------
                                       (No.)      (No.)      (No.)      (No.)
    Operating
    Fracturing spreads
      Conventional                       13         17         18         19
      Coalbed methane                     4          4          4          4
    -------------------------------------------------------------------------
      Total                              17         21         22         23
    Coiled tubing units                  11         11         12         14
    Cementing units                       8          9          9         11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Financial
    Revenue                         115,112    118,322    128,507     87,778
    Gross margin(1)                  36,500     34,488     38,222     22,095
    Net income (loss)                19,418     16,907     18,777       (303)
      Per share - basic                0.54       0.47       0.52      (0.01)
                - diluted              0.53       0.46       0.52      (0.01)
    Cash flow from operations(2)     27,560     25,507     28,827     10,835
      Per share - basic                0.76       0.70       0.79       0.30
                - diluted              0.76       0.70       0.79       0.30
    EBITDA(3)                        29,614     28,421     30,324     14,569
      Per share - basic                0.82       0.78       0.84       0.40
                - diluted              0.81       0.78       0.83       0.40
    Capital expenditures             23,931     44,415     48,521     19,972
    Working capital                  31,158     31,225    105,549     86,971
    Shareholders' equity            287,616    303,510    326,184    321,218
    -------------------------------------------------------------------------
                                       (No.)      (No.)      (No.)      (No.)
    Operating
    Fracturing spreads
      Conventional                       19         21         23         23
      Coalbed methane                     4          4          4          4
    -------------------------------------------------------------------------
      Total                              23         25         27         27
    Coiled tubing units                  14         14         14         15
    Cementing units                      11         13         15         15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    1.  Gross margin is defined as revenue less operating expenses excluding
        depreciation. Gross margin is a measure that does not have any
        standardized meaning prescribed under GAAP, and accordingly, may not
        be comparable to similar measures used by other companies.

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

    3.  EBITDA is defined as income before interest, taxes, depreciation and
        amortization. EBITDA is presented because it is frequently used by
        securities analysts and others for evaluating companies and their
        ability to service debt. EBITDA is a measure that does not have any
        standardized meaning prescribed under GAAP, and accordingly, may not
        be comparable to similar measures used by other companies.


    Six Months 2007 Performance Summary

    Calfrac achieved the following financial results during the six months
ended June 30, 2007:

    -   increased revenue by 12% to $216.3 million compared to $193.0 million
        in the first half of 2006;

    -   earned net income of $18.5 million or $0.51 per share (basic)
        compared to $36.1 million or $1.00 per share (basic) recorded in the
        same period a year ago; and

    -   realized cash flow from operations before changes in non-cash working
        capital of $39.7 million or $1.09 per share (basic) compared to
        $48.9 million or $1.35 per share (basic) in the same six-month period
        of 2006.
    

    Revenue

    Canadian Operations

    For the first six months of 2007, revenue from Canadian operations
decreased 24% to $115.9 million compared to $151.7 million during the same
period of 2006. Canadian fracturing revenue totaled $101.8 million compared to
$135.5 million recorded in the first six months of 2006. Revenue was
negatively impacted by lower activity levels as a result of concerns related
to the price of natural gas as well as increased price competition and an
extended spring breakup in Western Canada. During the first half of 2007,
Calfrac completed 1,941 Canadian fracturing jobs for average revenue of
$52,434 per job compared to 2,464 jobs for $54,978 per job in the
corresponding period of 2006. The year-over-year decrease in the Company's
Canadian fracturing revenue per job was primarily a result of competitive
pricing pressures in the WCSB and a significant increase in the number of
shallow gas jobs completed to date in 2007 offset slightly by the completion
of fewer but larger fracturing jobs in the technically challenging basins of
northern Alberta and northeastern British Columbia.
    For the six months ended June 30, 2007, revenue from coiled tubing
operations was $6.0 million compared to $7.0 million for the same period of
2006. The total number of jobs completed in the first half of 2007 was 1,916
for average revenue of $3,117 per job compared to 2,172 jobs for $3,245 per
job in 2006. The slightly lower average revenue per job in the first half of
2007 was primarily due to the impact of industry pricing pressures.
    The Company's revenue from cementing operations totaled $8.2 million for
the first half of 2007 compared to $9.2 million recorded in the same period of
2006. The 11% decrease in revenue can be primarily attributed to lower overall
activity levels in the WCSB. The total number of jobs completed in the first
six months of 2007 was 612 for average revenue of $13,384 per job compared to
936 jobs for $9,840 per job a year ago. The higher revenue per job in the 2007
six-month period was primarily as a result of a larger proportion of deeper
cement jobs being completed in Western Canada.

    United States Operations

    Revenue from Calfrac's United States operations in the first six months
of 2007 almost doubled to $70.9 million compared to $35.9 million recorded in
the same period of 2006. This increase was primarily due to the start-up of
the Company's new Arkansas district and strong activity in its Colorado
operating districts. For the period ended June 30, 2007, the Company completed
848 fracturing jobs in the United States for average revenue of $83,634 per
job compared to 583 jobs for $61,230 per job in the same period a year ago.
The increase in the reported revenue per job during the 2007 first half was
primarily related to the commencement of operations in Arkansas during
March 2007.

    Russian Operations

    As at June 30, 2007, the Company was operating two fracturing spreads and
four coiled tubing units throughout Western Siberia. During the six months
ended June 30, 2007, Calfrac's revenue from Russian operations increased from
the same period in 2006 by $24.0 million to $29.4 million due to a larger
equipment fleet and broader scale of operations. The Company considers its
Russian operations to have reached a critical mass with the deployment of a
third multi-pumper fracturing spread and fifth coiled tubing unit in
July 2007. Calfrac expects that the positive momentum experienced to date from
its Russian operations will lead to improved financial performance in future
periods.

    Gross Margin

    Consolidated gross margin for the first six months of 2007 was
$60.3 million, a 6% decrease from $64.4 million recorded in the same period of
2006. The lower consolidated gross margin in the first half of 2007 was
primarily due to the impact of lower levels of Western Canadian field
activity, competitive pricing pressures in Canada and higher operating
expenses related to new operating bases offset partially by improved financial
performance from the Company's United States and Russian operations. As a
percentage of revenue, consolidated gross margin was 28% for the six months
ended June 30, 2007 compared to 33% in the corresponding period of 2006. The
decrease in consolidated gross margin percentage was primarily a result of the
impact of competitive pricing pressures experienced in the WCSB as well as a
higher proportion of total revenue being earned from comparatively lower
margin regions of southern Alberta, the DJ Basin and Western Siberia.

    Expenses

    Operating Expenses

    For the six months ended June 30, 2007, operating expenses totaled
$156.0 million compared to $128.6 million in the same period of 2006. The 21%
year-over-year increase was due primarily to a broader scale of operations in
North America and Russia as well as higher district expenses related to
Calfrac's newest operating regions in Beebe, Arkansas as well as
Khanty-Mansiysk and Purpe, Western Siberia.

    Selling, General and Administrative ("SG&A") Expenses

    During the first half of 2007, SG&A expenses totaled $14.1 million versus
$13.0 million in the comparable period of 2006 and were offset slightly by a
lower bonus provision as a result of the decline in the Company's
profitability. SG&A expenses as a percentage of revenue were 7% for the six
months ended June 30, 2007, consistent with the same period a year ago.

    Interest and Depreciation Expenses

    The Company recorded net interest expense of $4.4 million for the six
months ended June 30, 2007 compared to $0.8 million in the corresponding
period of 2006. The higher interest expense was primarily a result of the
closing in February 2007 of a private placement of US$135.0 million of
unsecured senior notes and increased debt levels incurred to finance the
Company's capital programs offset slightly by interest earned on the Company's
cash balances. Depreciation expense during the first half of 2007 increased
49% to $16.6 million from $11.2 million recorded in the comparable period of
2006 primarily due to a larger fleet of equipment across the Company's North
American and international operations. Subsequent to June 30, 2006, the
Company has deployed four new fracturing spreads, one additional coiled tubing
unit and four cementing units as well as other support equipment into its
three operating regions.

    Income Tax

    Income tax expense for the first half of 2007 totaled $5.3 million
compared to $3.4 million recorded in the same period of the prior year.
Current tax expense for the six months ended June 30, 2007 was $2.4 million, a
decrease of $0.4 million from the comparable period in 2006. Future tax
expense for the 2007 six-month period was $3.0 million versus $0.6 million a
year ago. The increase in tax expense was primarily related to higher
profitability in the United States and Russia as well as the timing of
deductibility of certain expenses for income tax purposes.

    Net Income

    For the six months ended June 30, 2007, net income was $18.5 million or
$0.51 per share (basic) compared to $36.1 million or $1.00 per share (basic)
in 2006. The decline in net income was primarily a result of lower activity
levels and competitive pricing pressures in Canada, especially in the coalbed
methane and shallow gas markets, larger foreign exchange losses related to the
translation of the Company's net investment in Russia as well as higher
depreciation, interest and income tax expenses.

    Cash Flow

    Cash flow from operations before changes in non-cash working capital for
the six months ended June 30, 2007 decreased to $39.7 million or $1.09 per
share (basic) from $48.9 million or $1.35 per share (basic) recorded in the
same period of 2006.

    Liquidity and Capital Resources

    Operating Activities

    As at June 30, 2007, Calfrac had positive working capital of
$87.0 million, long-term debt totaled $138.8 million and undrawn credit
facilities were $90.0 million. The increase in the Company's working capital
position from December 31, 2006 was primarily due to a higher cash balance as
a result of the issuance of unsecured senior notes in February 2007. As at the
date of this report, the Company had 36,465,604 common shares issued and
outstanding.

    Financing Activities

    On February 13, 2007, the Company completed a private placement of
unsecured senior notes for an aggregate principal amount of US$135.0 million.
These notes bear interest at 7.75% and are due on February 15, 2015. The
Company also has an operating line of credit of $25.0 million with advances
bearing interest at either the bank's prime rate, U.S. base rate, LIBOR plus
1% or bankers' acceptances plus 1%. In addition, Calfrac has a $65.0 million
revolving term loan credit facility that bears interest at either the bank's
prime rate plus 0.25%, U.S. base rate plus 0.25%, LIBOR plus 1.25% or bankers'
acceptance plus 1.25% and is secured by a general security agreement over all
of the North American assets of the Company. Calfrac used a portion of the
note proceeds on the closing date to repay its existing credit facilities.

    Investing Activities

    Capital expenditures for the three and six months ended June 30, 2007
totaled $20.0 million and $68.5 million, respectively, and were primarily
focused on increasing the Company's fracturing pumping capabilities in its
three geographic markets: Canada, the United States and Russia. A portion of
these expenditures related to the completion of the 2006 capital program,
including the completion of two additional fracturing spreads (one spread
deployed to each of the Canadian and Russian well services markets) during the
first quarter of 2007, a deep coiled tubing unit deployed to Western Siberia
and two cementing units that were deployed to the deep basin market of Western
Canada.
    With its current working capital position, available credit facilities
and anticipated cash flow from operations, the Company expects to have
adequate resources to fund its financial obligations for 2007 and beyond.

    Internal Control Over Financial Reporting

    There have been no changes in the Company's internal control over
financial reporting that occurred during the most recent interim period ended
June 30, 2007 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.

    Accounting Policies and Estimates

    Changes in Accounting Policies

    Comprehensive Income

    The Company adopted the Canadian Institute of Chartered Accountants
("CICA") Handbook Section 1530, Comprehensive Income, on January 1, 2007. The
new standard introduces comprehensive income, which consists of net income and
other comprehensive income ("OCI"). For the Company, OCI is currently
comprised of the changes in the foreign currency translation adjustment
balance.
    The cumulative changes in OCI are included in accumulated other
comprehensive income ("AOCI"), which is presented as a new category within
shareholders' equity in the consolidated balance sheets. The Company's
consolidated financial statements now include a statement of accumulated other
comprehensive income, which provides the continuity of the AOCI balance.

    Financial Instruments

    On January 1, 2007, the Company adopted CICA Section 3855, Financial
Instruments - Recognition and Measurement. This standard establishes the
recognition and measurement criteria for financial assets, liabilities and
derivatives. All financial instruments are required to be measured at fair
value on initial recognition of the instrument, except for certain related
party transactions. Measurement in subsequent periods depends on whether the
financial instrument has been classified as "held-for-trading,"
"available-for-sale," "held-to-maturity," "loans and receivables" or "other
financial liabilities" as defined by the standard.
    Cash and cash equivalents are designated as "held-for-trading" and are
measured at carrying value, which approximates fair value due to the
short-term nature of these instruments. Accounts receivable are designated as
"loans and receivables" and are carried at cost. Accounts payable are
designated as "other financial liabilities" and are carried at cost. Long-term
debt is designated as "other financial liabilities" and carried at amortized
cost using the effective interest method. The financing costs associated with
the Company's US$135.0 million private placement of unsecured senior notes on
February 13, 2007 are included in the amortized cost of the debt. These costs
are amortized to interest expense over the term of the debt, which matures on
February 15, 2015.

    Foreign Currency Translation

    During the first quarter of 2007, the Company's U.S. subsidiaries were
reclassified from integrated to self-sustaining foreign operations.
Consequently, Calfrac prospectively began translating the financial accounts
of its United States subsidiaries using the current rate translation method.
Under this method, assets and liabilities are translated into Canadian dollars
from their functional currency using the exchange rate in effect at the
consolidated balance sheet date. Revenues and expenses are translated to
Canadian dollars at monthly average exchange rates. Gains or losses in
translation are deferred and included in accumulated other comprehensive
income in the shareholders' equity section of the consolidated balance sheet
in accordance with CICA Section 1530, Comprehensive Income. Prior to this
reclassification, the temporal method of translation was used to translate the
U.S. subsidiaries and will continue to be used to translate the financial
accounts of the Company's Russian subsidiaries into Canadian currency.

    Critical Accounting Policies and Estimates

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

    Depreciation

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

    Stock-Based Compensation

    As described in note 8 to the annual consolidated financial statements,
the fair value of stock options are estimated at the grant date using the
Black-Scholes option pricing model, which includes underlying assumptions
related to the risk-free interest rate, average expected option life,
estimated volatility of the Company's shares and anticipated dividends.

    Risk Factors

    This document contains forward-looking statements based on current
expectations that involve a number of business risks and uncertainties. The
factors that could cause results to differ materially include, but are not
limited to, national and global economic conditions, crude oil and natural gas
prices, foreign currency fluctuations, the impact of the Kyoto Protocol
accord, weather conditions, the ability of oil and gas companies to raise
capital, and other unforeseen circumstances that could impact the use of
services provided by Calfrac. The entire listing of business risks pertaining
to the Company's operations are contained within the most recently filed
Annual Information Form, which is available at www.sedar.com.

    Outlook

    Due to the impact of lower natural gas prices, drilling activity in
Western Canada is not expected to return to normal levels in the near-term.
The Company will rely on its strong customer base and contractual arrangements
to support its Canadian pressure pumping operations. Calfrac will continue to
focus on prudently managing operating costs and, where necessary, further
streamline its operations to improve its future financial performance.
    The Company anticipates that drilling activity will continue to be strong
throughout its operating bases in Colorado and Arkansas over the remainder of
the year. Calfrac has been very encouraged by the performance of its newest
district in Beebe, Arkansas and recently deployed a second fracturing crew
into this area. Cementing operations are also planned to be added into this
market during the third quarter to further diversify the Company's operations
in the United States. The Company believes that its U.S. operations will be a
significant component of the Company's overall financial results for 2007 and
beyond.
    The Company believes that its Russian operations have achieved a critical
mass with a current equipment fleet of three multi-pumper fracturing spreads
and five deep coiled tubing units. Consequently, Calfrac expects that the
financial results from this geographic segment will continue to improve into
the future.
    Calfrac recently announced its intention to enter the Mexican well
services market during the fourth quarter of 2007. A long-term contract was
awarded by Pemex for the provision of fracturing operations in the Burgos
field of northern Mexico. This is a strategic move for the Company as this new
geographic segment will further diversify its operations from the pressure
pumping markets of Canada and the United States as well as offer significant
opportunities for future expansion.

    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 future plans and operations, certain statements made
in this MD&A may contain words such as "anticipate," "can," "may," "expect,"
"believe," "intend," "forecast," or similar words suggesting future outcomes
or statements regarding an outlook, which constitute forward-looking
statements or information ("forward-looking statements"). These statements may
include, but are not limited to, future capital expenditures, future financial
resources, future oil and gas well activity, outcome of specific events and
trends in the oil and gas industry. Readers are cautioned that the foregoing
list of significant factors is not exhaustive. These statements are derived
from certain assumptions and analysis made by the Company based on its
experience and interpretation of historical trends, current conditions,
expected future developments and other factors that it believes are
appropriate in the circumstances. These statements are subject to a number of
known and unknown risks and uncertainties, which are discussed previously in
this MD&A, that could cause actual results to differ materially from the
Company's expectations. Although Calfrac believes that the expectations
presented by these forward-looking statements are reasonable, there can be no
assurances that actual results or developments anticipated by the Company will
be realized or such expectations will prove to be correct. Furthermore, the
forward-looking statements contained in this MD&A are made as at the date of
this MD&A and Calfrac assumes no obligation to update publicly, except as
required by applicable securities laws, any such forward-looking information
whether as a result of new information, future events or otherwise. The
forward-looking statements contained in this MD&A are expressly qualified
under this cautionary statement.

    Non-GAAP Measures

    Certain measures in this MD&A do not have any standardized meaning as
prescribed under Canadian GAAP, such as gross margin, cash flow from
operations, cash flow, cash flow per share (basic), cash flow per share
(diluted), EBITDA, EBITDA per share (basic) and EBITDA per share (diluted),
and therefore, are considered non-GAAP measures. These measures may not be
comparable to similar measures presented by other entities. These measures
have been described and presented in this MD&A in order to provide
shareholders and potential investors with additional information regarding the
Company's liquidity and its ability to generate funds to finance its
operations. Management's use of these measures has been disclosed further in
this MD&A as these measures are discussed and presented.

    Second Quarter Conference Call

    Calfrac will be conducting a conference call for interested analysts,
brokers, investors and media representatives to review its 2007 second quarter
results at 10:00 a.m. (Calgary time) on Thursday, August 9, 2007. The
conference call dial-in number is 1-800-588-4942 or 416-644-3424. The
seven-day replay numbers are 1-877-289-8525 or 416-640-1917 and enter 21241168
followed by the number sign. A webcast of the conference call may be accessed
via the Company's website at www.calfrac.com.

    Additional Information

    Calfrac Well Services Ltd. is a leading provider of specialized oilfield
services, including fracturing, coiled tubing, cementing and well stimulation
services, which are designed to increase the production of hydrocarbons from
wells drilled throughout Western Canada, the United States and Russia. The
common shares of Calfrac are listed for trading on the Toronto Stock Exchange
under the symbol CFW. Additional information relating to Calfrac Well Services
Ltd. can be accessed on the Company's website at www.calfrac.com or under the
Company's filings found at www.sedar.com.


    
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    As at                                             June 30,   December 31,
                                                         2007           2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                                     ($)            ($)

    Assets
    Current assets
      Cash and cash equivalents                        44,340          5,580
      Accounts receivable                              64,693         84,481
      Inventory                                        20,263         13,387
      Prepaid expenses and deposits                    11,641          7,463
    -------------------------------------------------------------------------
                                                      140,937        110,911
    Capital assets                                    368,437        327,832
    Long-term investment                                  996            396
    Goodwill                                            6,003          6,003
    Future income taxes                                 5,714          9,048
    -------------------------------------------------------------------------
                                                      522,087        454,190
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities         52,542         77,344
      Income taxes payable                              1,424          2,342
    -------------------------------------------------------------------------
                                                       53,966         79,686
    Long-term debt (note 4)                           138,754         60,000
    Other long-term liabilities                         2,334          4,743
    Deferred credit                                     5,815          6,251
    -------------------------------------------------------------------------
                                                      200,869        150,680
    -------------------------------------------------------------------------
    Shareholders' equity
    Capital stock (note 5)                            141,390        139,841
    Shares held in trust (note 6)                      (2,030)        (3,869)
    Contributed surplus (note 7)                        5,418          4,393
    Retained earnings                                 179,800        163,145
    Accumulated other comprehensive
     income (loss) (note 3)                            (3,360)             -
    -------------------------------------------------------------------------
                                                      321,218        303,510
    -------------------------------------------------------------------------
                                                      522,087        454,190
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    (000s, except per share data)        ($)        ($)        ($)        ($)
     (unaudited)

    Revenue                          87,778     66,973    216,285    192,983
    -------------------------------------------------------------------------
    Expenses
      Operating                      65,683     52,527    155,968    128,610
      Selling, general and
       administrative                 6,481      5,557     14,118     13,025
      Depreciation                    8,743      5,877     16,643     11,182
      Interest, net                   2,524        540      4,429        808
      Equity share of income from
       long-term investments           (600)       (70)      (600)       (70)
      Foreign exchange losses
       (gains)                        1,380        202      1,369        (76)
      Loss (gain) on disposal
       of capital assets                265         (4)       538         (4)
    -------------------------------------------------------------------------
                                     84,476     64,629    192,465    153,475
    -------------------------------------------------------------------------
    Income before income taxes        3,302      2,344     23,820     39,508
    -------------------------------------------------------------------------
    Income tax expense (recovery)
      Current                         1,715      1,528      2,364      2,758
      Future                          1,890       (753)     2,982        625
    -------------------------------------------------------------------------
                                      3,605        775      5,346      3,383
    -------------------------------------------------------------------------
    Net income (loss) for
     the period                        (303)     1,569     18,474     36,125
    Retained earnings,
     beginning of period            181,922    128,878    163,145     94,322
    Dividends                        (1,819)    (1,813)    (1,819)    (1,813)
    -------------------------------------------------------------------------
    Retained earnings,
     end of period                  179,800    128,634    179,800    128,634
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per share
      Basic                           (0.01)      0.04       0.51       1.00
      Diluted                         (0.01)      0.04       0.51       0.98
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER
    COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                   ($)        ($)        ($)        ($)

    Net income (loss) for the period   (303)     1,569     18,474     36,125
    Other comprehensive income (loss)
      Change in foreign currency
       translation adjustment        (2,661)         -     (3,360)         -
    -------------------------------------------------------------------------
    Comprehensive income (loss)      (2,964)     1,569     15,114     36,125
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income (loss), beginning
     of period                         (699)         -          -          -
      Other comprehensive income
       (loss) for the period         (2,661)         -     (3,360)         -
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income (loss), end of period    (3,360)         -     (3,360)         -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                   ($)        ($)        ($)        ($)

    Cash provided by (used in)
    Operating activities
      Net income (loss) for
       the period                      (303)     1,569     18,474     36,125
      Items not involving cash
        Depreciation                  8,743      5,877     16,643     11,182
        Amortization of debt
         issue costs                    171          -        265          -
        Stock-based compensation        669        589      1,360      1,007
        Equity share of income from
         long-term investments         (600)       (70)      (600)       (70)
        Loss (gain) on disposal
         of capital assets              265         (4)       538         (4)
        Future income taxes           1,890       (753)     2,982        625
    -------------------------------------------------------------------------
      Funds provided by operations   10,835      7,208     39,662     48,865
      Net change in non-cash
       operating assets and
       liabilities                    7,817     28,891       (762)    11,882
    -------------------------------------------------------------------------
                                     18,652     36,099     38,900     60,747
    -------------------------------------------------------------------------
    Financing activities
      Issue of long-term debt             -     35,000    199,790     45,000
      Long-term debt repayments           -     (1,567)  (107,546)    (2,466)
      Net proceeds on issue
       of common shares               1,176          -      1,214        703
      Dividends                      (1,819)    (1,813)    (1,819)    (1,813)
      Purchase of common shares      (2,037)    (3,869)    (2,037)    (3,869)
    -------------------------------------------------------------------------
                                     (2,680)    27,751     89,602     37,555
    -------------------------------------------------------------------------
    Investing activities
      Purchase of capital assets    (19,972)   (36,501)   (68,493)   (87,132)
      Proceeds on disposal of
       capital assets                    50         40        416      4,159
      Net change in non-cash working
       capital from purchase of
       capital assets               (14,651)     2,514    (14,756)     7,881
    -------------------------------------------------------------------------
                                    (34,573)   (33,947)   (82,833)   (75,072)
    -------------------------------------------------------------------------
    Effect of exchange rate changes
     on cash and cash equivalents    (5,718)         -     (6,909)         -
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash position                  (24,319)    29,903     38,760     23,210
    Cash and cash equivalents
     (bank indebtedness),
     beginning of period             68,659    (17,506)     5,580    (10,813)
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   44,340     12,397     44,340     12,397
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    For the Six Months Ended June 30, 2007
    (000s, except share data) (unaudited)

    1.  Basis of Presentation

        The interim financial statements do not conform in all respects to
        the requirements of generally accepted accounting principles for
        annual financial statements. The interim financial statements should
        be read in conjunction with the most recent annual financial
        statements.

    2.  Seasonality of Operations

        The business of Calfrac Well Services Ltd. (the "Company") is
        seasonal in nature. The lowest activity levels are experienced during
        the second quarter of the year when road weight restrictions are in
        place and access to wellsites in Canada is reduced.

    3.  Summary of Significant Accounting Policies

        The interim financial statements follow the same accounting policies
        and methods of their application as the most recent annual financial
        statements, except as follows:

        (a) Comprehensive Income

            The Company adopted the Canadian Institute of Chartered
            Accountants ("CICA") Handbook Section 1530, Comprehensive Income,
            on January 1, 2007. The new standard introduces comprehensive
            income, which consists of net income and other comprehensive
            income ("OCI"). For the Company, OCI is currently comprised of
            the changes in the foreign currency translation adjustment
            balance.

            The cumulative changes in OCI are included in accumulated other
            comprehensive income ("AOCI"), which is presented as a new
            category within shareholders' equity in the consolidated balance
            sheets. The Company's consolidated financial statements now
            include a statement of accumulated other comprehensive income,
            which provides the continuity of the AOCI balance.

        (b) Financial Instruments

            On January 1, 2007, the Company adopted CICA Section 3855,
            Financial Instruments - Recognition and Measurement. This
            standard establishes the recognition and measurement criteria for
            financial assets, liabilities and derivatives. All financial
            instruments are required to be measured at fair value on initial
            recognition of the instrument, except for certain related party
            transactions. Measurement in subsequent periods depends on
            whether the financial instrument has been classified as
            "held-for-trading," "available-for-sale," "held-to-maturity,"
            "loans and receivables" or "other financial liabilities" as
            defined by the standard.

            Cash and cash equivalents are designated as "held-for-trading"
            and are measured at carrying value, which approximates fair value
            due to the short-term nature of these instruments. Accounts
            receivable are designated as "loans and receivables" and are
            carried at cost. Accounts payable are designated as "other
            financial liabilities" and are carried at cost. Long-term debt is
            designated as "other financial liabilities" and carried at
            amortized cost using the effective interest method. The financing
            costs associated with the Company's US$135,000 private placement
            of unsecured senior notes on February 13, 2007 are included in
            the amortized cost of the debt. These costs are amortized to
            interest expense over the term of the debt, which matures on
            February 15, 2015.


        (c) Foreign Currency Translation

            During the first quarter of 2007, the Company's U.S. subsidiaries
            were reclassified from integrated to self-sustaining foreign
            operations. As a result, the Company has prospectively adopted
            the current rate method of translating its U.S. operations into
            Canadian dollars whereby assets and liabilities are translated at
            the rate of exchange at the balance sheet date, revenues and
            expenses are translated at average monthly exchange rates, and
            gains and losses in translation are deferred and included in the
            shareholders' equity section as accumulated other comprehensive
            income in accordance with CICA Section 1530, Comprehensive
            Income. Prior to this reclassification, the Company's U.S.
            operations were translated into Canadian dollars using the
            temporal method, which continues to be followed in respect of the
            Company's Russian operations.

    4.  Long-Term Debt

        On February 13, 2007, the Company completed a private placement of
        unsecured senior notes for an aggregate amount of US$135,000. The
        notes are due in full on February 15, 2015 and bear interest at 7.75%
        payable semi-annually. A portion of the proceeds of the offering was
        used to repay the Company's existing operating and revolving term
        credit facilities. In conjunction with this offering, the Company's
        existing revolving term credit facility was reduced from $125,000 to
        $65,000.

    5.  Capital Stock

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

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

        Balance, January 1, 2007                   36,388,408        139,841
        Issued upon exercise of stock options          77,196          1,549
        ---------------------------------------------------------------------
        Balance, June 30, 2007                     36,465,604        141,390
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    6.  Shares Held in Trust

        The Company has established a Trust to purchase and hold Company
        stock on behalf of certain employees who have elected to receive a
        portion of their annual bonus entitlement in the form of Company
        shares. At June 30, 2007, the Trust held 83,029 shares, which were
        purchased on the open market at a cost of $2,030 (June 30, 2006 -
        113,508 shares at a cost of $3,869). These shares vest with employees
        in March of the year following their purchase at which time they are
        distributed to those individuals participating in the plan. Shares
        held within the Trust are not considered outstanding for purposes of
        calculating basic earnings per share, but are included in the
        calculation of diluted earnings per share.

    7.  Contributed Surplus

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

        Balance, January 1, 2007                                       4,393
          Stock options expensed                                       1,360
          Stock options exercised                                       (335)
        ---------------------------------------------------------------------
        Balance, June 30, 2007                                         5,418
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    8.  Stock Options

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

        Balance, January 1, 2007                    1,505,796          22.15
          Granted during the period                         -              -
          Exercised for common shares                 (77,196)         15.73
          Forfeited                                   (44,001)         26.16
        ---------------------------------------------------------------------
        Balance, June 30, 2007                      1,384,599          22.39
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

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

    9.  Related Party Transactions

        For the six months ended June 30, 2007, the Company purchased $17,977
        (2006 - $9,286) of products and services from a company in which it
        holds a 30% equity interest. At June 30, 2007, accounts payable
        included $6,892 of indebtedness to this related party (June 30,
        2006 - $2,621).

    10. Contingencies

        Greek Operations

        As a result of the acquisition and amalgamation with Denison Energy
        Inc. ("Denison") in 2004, the Company assumed certain legal
        obligations relating to Denison's Greek operations.

        In 1998, a consortium in which a Greek subsidiary of Denison
        participated, terminated employees in Greece as a result of the
        cessation of its oil and gas operations in that country. Several
        groups of employees have filed claims alleging that their termination
        was invalid and that their severance pay was improperly determined.

        In 1999, the largest group of plaintiffs received a ruling from the
        Athens Court of First Instance that their termination was invalid and
        that compensation was due to the 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 employees filed an appeal with the
        Supreme Court of Greece, which was heard on May 29, 2007. A ruling on
        the appeal is expected to be provided in September of this year.

        Several other smaller groups of employees have filed similar cases in
        various courts in Greece. Some of these cases were heard in 2004. In
        general, the finding of these courts has been that the termination of
        the employees was valid and in some instances have awarded the
        employees immaterial amounts of additional compensation and in one
        case have referred the matter back to a lower court to be reheard
        based on more specific grounds.

        As a result of the above-mentioned court hearings, a majority of the
        number of former employees with respect to these smaller groups of
        claimants have received payment of the immaterial amounts awarded to
        them and waived their right of recourse to the Supreme Court of
        Greece. The remainder have filed an appeal to the Supreme Court of
        Greece or have advised that they are waiting for the outcome of the
        May 29, 2007 hearing of the Supreme Court of Greece before proceeding
        further.

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

        Legal Claim - ChemErgy

        On July 19, 2007, Calfrac was served with a statement of claim by its
        chemical supplier, ChemErgy, and three of its shareholders. The
        statement of claim alleges that Calfrac has taken unfair and
        oppressive actions with respect to the interests of the plaintiffs
        and seeks to restrain Calfrac from taking certain actions. The
        plaintiffs are seeking general damages of not less than $250 and
        punitive damages of $500. Calfrac's management does not expect that
        this dispute will have a material adverse effect on the Company's
        business.

    11. Segmented Information

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

        ---------------------------------------------------------------------
                                                              Inter-
                                                            segment
                                                    United    Elimi-  Consol-
                                  Canada   Russia   States  nations   idated
        ---------------------------------------------------------------------
        (000s)                        ($)      ($)      ($)      ($)      ($)

        Three Months Ended
         June 30, 2007
        Revenue                   29,352   17,370   41,056        -   87,778
        Operating income
         (loss)(1)                (3,798)   4,076   15,336        -   15,614
        Segmented assets(2)      392,124  107,066  181,039 (158,142) 522,087
        Capital expenditures       6,877   11,415    1,680        -   19,972
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        Three Months Ended
         June 30, 2006
        Revenue                   42,713    4,036   20,224        -   66,973
        Operating income
         (loss)(1)                 2,692   (1,354)   7,551        -    8,889
        Segmented assets(2)      390,638   48,724   28,575  (69,036) 398,901
        Capital expenditures      14,986   21,427       88        -   36,501
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        Six Months Ended
         June 30, 2007
        Revenue                  115,938   29,425   70,922        -  216,285
        Operating income(1)       18,896    5,680   21,623        -   46,199
        Segmented assets(2)      392,124  107,066  181,039 (158,142) 522,087
        Capital expenditures      20,791   25,429   22,273        -   68,493
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        Six Months Ended
         June 30, 2006
        Revenue                  151,724    5,383   35,876        -  192,983
        Operating income
         (loss)(1)                42,266   (2,912)  11,994        -   51,348
        Segmented assets(2)      390,638   48,724   28,575  (69,036) 398,901
        Capital expenditures      59,550   25,705    1,877        -   87,132
        Goodwill                   6,003        -        -        -    6,003
        ---------------------------------------------------------------------
        1.  Operating income (loss) is defined as revenue less operating
            expenses (excluding depreciation) and selling, general and
            administrative expenses.

        2.  Assets operated by the Company's U.S. subsidiary during 2006 were
            acquired through a lease arrangement with the Canadian parent
            company. The cost base of these assets was $51.6 million at
            June 30, 2006. During the first quarter of 2007, these assets
            were sold to the U.S. subsidiary by the parent company.


        The following table sets forth consolidated revenue by service line:

        ---------------------------------------------------------------------
                                    Three Months Ended      Six Months Ended
                                               June 30,              June 30,
                                       2007       2006       2007       2006
        ---------------------------------------------------------------------
        (000s)                                                 ($)        ($)
        Fracturing                   79,669     58,032    191,958    172,221
        Coiled tubing                 6,725      5,485     16,136     11,552
        Cementing                     1,384      3,456      8,191      9,210
        ---------------------------------------------------------------------
                                     87,778     66,973    216,285    192,983
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    

    %SEDAR: 00002062E




For further information:

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


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