Calfrac Announces Fourth Quarter Results
CALGARY, March 3 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX-CFW) announces its financial and operating results for the three months and year ended December 31, 2009.
HIGHLIGHTS
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Three Months Ended Year Ended
December 31, December 31,
2009 2008 Change 2009 2008 Change
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(000s, except ($) ($) (%) ($) ($) (%)
per share and
unit data)
(unaudited)
Financial
Revenue 173,124 172,430 - 591,500 564,363 5
Operating
income(1) 23,157 25,658 (10) 71,135 81,940 (13)
Net income
(loss) 864 7,861 (89) (5,536) 17,864 (131)
Per share
- basic 0.02 0.21 (90) (0.14) 0.47 (130)
Per share
- diluted 0.02 0.21 (90) (0.14) 0.47 (130)
Funds
provided by
operations(2) 19,580 24,838 (21) 54,620 80,747 (32)
Per share
- basic 0.48 0.66 (27) 1.42 2.14 (34)
Per share
- diluted 0.48 0.66 (27) 1.42 2.14 (34)
EBITDA(3) 23,398 26,740 (13) 68,795 83,957 (18)
Per share
- basic 0.58 0.71 (18) 1.79 2.23 (20)
Per share
- diluted 0.57 0.71 (20) 1.79 2.23 (20)
Working capital
(end of
period) 128,243 100,575 28 128,243 100,575 28
Shareholders'
equity (end
of period) 459,932 393,476 17 459,932 393,476 17
Weighted
average common
shares
outstanding
(No.)
Basic 40,653 37,826 7 38,475 37,697 2
Diluted 40,956 37,826 8 38,475 37,717 2
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Operating (end
of period)
Pumping
horsepower
(000s) 456 287 59
Coiled tubing
units (No.) 28 18 56
Cementing
units (No.) 21 18 17
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(1) Operating income is defined as net income (loss) before depreciation,
interest, equity share of net income from long-term investments,
foreign exchange gains or losses, gains or losses on disposal of
capital assets, income taxes and non-controlling interest. Management
believes that operating income is a useful supplemental measure as it
provides an indication of the financial results generated by
Calfrac's business segments prior to consideration of how these
segments are financed or how they are taxed. Operating income is a
measure that does not have any standardized meaning under generally
accepted accounting principles ("GAAP") and, accordingly, may not be
comparable to similar measures used by other companies.
(2) Funds provided by operations is defined as cash provided by operating
activities before the net change in non-cash operating assets and
liabilities. Funds provided by operations is a measure that provides
shareholders and potential investors with additional information
regarding the Company's liquidity and its ability to generate funds
to finance its operations. Management utilizes this measure to assess
the Company's ability to finance operating activities and capital
expenditures. Funds provided by operations is a measure that does not
have any standardized meaning prescribed under GAAP and, accordingly,
may not be comparable to similar measures used by other companies.
(3) EBITDA is defined as net income (loss) before interest, taxes,
depreciation, amortization and non-controlling interest. EBITDA is
presented because it is frequently used by securities analysts and
others for evaluating companies and their ability to service debt.
EBITDA is a measure that does not have any standardized meaning
prescribed under GAAP and, accordingly, may not be comparable to
similar measures used by other companies.
PRESIDENT'S MESSAGE
I am pleased to present Calfrac's operating and financial highlights for the three months and year ended December 31, 2009 and discuss our prospects for 2010. During the fourth quarter, our Company:
- completed the acquisition of Century Oilfield Services Inc.
("Century") for a total purchase price of $100.9 million, including
transaction costs of $5.2 million, and assumed $29.0 million of
indebtedness and other liabilities, net of working capital;
- increased its conventional pumping horsepower by 59 percent from 2008
to approximately 450,000 at the end of 2009 as a result of the
acquisition of Century, the purchase of fracturing equipment from
Pure Energy Services Ltd. ("Pure") during the third quarter of 2009
and the 2009 capital program;
- negotiated an increase to the Company's credit facilities to $175.0
million with a syndicate of Canadian financial institutions, which
assisted with the funding of the Century acquisition;
- closed a private offering of an additional US$100.0 million of senior
notes due in February 2015, the proceeds of which were used to repay
a portion of Calfrac's outstanding revolving term credit facilities;
and
- received the Supplier of the Year award for 2009 from Royal Dutch
Shell's Upstream Americas division as a result of the Company's
delivery of superior service quality and excellent Health, Safety and
Environment performance throughout its fracturing and coiled tubing
operations in western Canada.
Financial Highlights
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For the three months ended December 31, 2009, the Company recorded:
- revenue of $173.1 million versus $172.4 million in the fourth quarter
of 2008 led by higher activity in the Company's Latin American and
Russian divisions;
- operating income of $23.2 million versus $25.7 million in the
comparable period in 2008 resulting from lower income in the United
States being mostly offset by improved financial results in Canada,
Russia and Latin America; and
- net income of $0.9 million or $0.02 per share compared to $7.9
million or $0.21 per share in the comparable 2008 period, which
included a foreign exchange gain of $0.1 million versus $1.1 million
in the comparable period of 2008.
For the year ended December 31, 2009, the Company's results included:
- an increase in revenue of 5 percent to $591.5 million from $564.4
million in 2008 driven primarily by strong growth in Calfrac's
international operations;
- a net loss of $5.5 million or $0.14 per share compared to net income
of $17.9 million or $0.47 per share in 2008, which included a foreign
exchange loss of $3.8 million or $0.10 per share versus a foreign
exchange gain of $1.9 million in 2008 or $0.05 per share;
- funds provided by operations of $54.6 million or $1.42 per share
versus $80.7 million or $2.14 per share in 2008; and
- working capital of $128.2 million and $148.0 million of unutilized
credit facilities at the end of the year.
Operational Highlights
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Canada
During the fourth quarter, fracturing and coiled tubing activity in western Canada continued to be concentrated in the Montney and Deep Basin unconventional natural gas resource plays of northern Alberta and northeast British Columbia. In addition, activity levels in the Bakken oil play in southeast Saskatchewan gained momentum throughout the fourth quarter and the acquisition of Century expanded the Company's presence in this region. Calfrac also participated in the renewed activity in the Cardium light oil play located in central Alberta.
United States
Fracturing and cementing activity levels in the Fayetteville basin continued to be strong during the fourth quarter. In addition, higher natural gas prices and the mitigation of gas takeaway issues resulted in solid activity levels in the Rocky Mountain region during the quarter. In November, the Company commenced operations in the Marcellus play in Pennsylvania with the transfer of a large fracturing fleet from the Company's Grand Junction district. However, the Company did incur some start-up costs related to the commencement of these fracturing operations. Initial interest from producers in this region has been encouraging and Calfrac's expects to grow its customer base in 2010.
Russia
In Western Siberia, fracturing and coiled tubing activity levels were relatively strong during the fourth quarter, but negatively impacted by extremely cold winter weather conditions in December which continued into January. The Company's reported financial results were also impacted by a 19 percent decline in the value of the Russian rouble from the fourth quarter of 2008. A sixth coiled tubing unit and fourth fracturing spread were deployed into Russia late in the fourth quarter and early in the first quarter of 2010, respectively. The Company has been awarded work in four operating areas in Russia with two of that country's largest oil and natural gas companies. The Company has commenced work based on the written authorizations of these customers and has executed four annual contracts in respect of the award, with two additional annual contracts pending execution upon the finalization of their terms. As a result of such annual contract awards, Calfrac expects high levels of equipment utilization in the upcoming year.
Mexico
Fracturing and cementing activity in Mexico during the fourth quarter of 2009 was concentrated in the Chicontepec field where the Company currently operates two fracturing spreads and six cementing units. As a result of Pemex's continued focus on drilling and completions in this region, fracturing and cementing activity during the fourth quarter reached record levels offsetting the decline in fracturing activity in the Burgos natural gas field of northern Mexico.
Argentina
During the fourth quarter, activity in the Company's cementing operations in Argentina was strong although impacted by the completion of smaller jobs. Calfrac continues to generate strong operating margins in this market. The Company continues to develop new market opportunities as the Argentine business environment evolves.
Corporate
On November 10, 2009, the Company completed the acquisition of Century for a total purchase price of $100.9 million, including transaction costs of $5.2 million, and assumed $29.0 million of indebtedness and other liabilities, net of working capital. This transaction provided the Company with equipment built similar to Calfrac's specifications at a discount to replacement cost, a larger presence within the Montney, Deep Basin and Bakken unconventional resource plays and makes Calfrac the largest Canadian fracturing service provider in terms of fracturing pumping capacity.
On September 29, 2009, the Company increased its credit facilities from $90.0 million to $170.0 million with a syndicate of Canadian chartered banks, and further increased these facilities on December 22, 2009 to $175.0 million. This facility assisted with the financing of the Century acquisition and provides further financial flexibility to the Company.
On December 16, 2009, the Company closed a private offering of an additional US$100.0 million of senior notes due in February 2015, the proceeds of which were used to repay a portion of Calfrac's outstanding credit facilities.
Outlook and Business Prospects
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As a result of the recent improvement in global economic conditions, oil and natural gas prices have strengthened, leading to higher levels of drilling and completion activity in Canada and the United States during the fourth quarter of 2009 and the early part of 2010. Well completions activity in Canada and the United States during 2010 is expected to remain focused on horizontal wells incorporating multi-stage fracturing technology and coiled tubing within unconventional oil and natural gas resource plays, which is expected to increase overall utilization levels for the pressure pumping service industry during 2010.
The Company closed the acquisition of Century during the fourth quarter and has integrated these operations within its Canadian operating structure. This acquisition is expected to help drive future growth in Canada with the energy sector's ongoing focus on unconventional natural gas and oil plays. Stronger commodity price fundamentals are anticipated during 2010, which are expected to result in higher fracturing and coiled tubing equipment utilization in Canada. The recent industry trend toward using multi-stage fracturing completion technology within horizontal wells drilled into oil reservoirs such as the Cardium, Viking, Lower Shaunavon and Bakken is expected to provide additional demand for pressure pumping services in the Western Canada Sedimentary Basin. Calfrac has allocated a portion of its 2010 capital budget to augmenting the infrastructure required to support its newest operating districts in Dawson Creek and Fort Nelson, British Columbia and Estevan, Saskatchewan, which support the Montney, Horn River and Bakken unconventional resource plays, respectively. Overall, the financial performance of Calfrac's western Canada operations during 2010 is anticipated to improve significantly from 2009.
In the United States, fracturing and cementing activity in the Fayetteville shale play of Arkansas is expected to remain strong in 2010 and, as a result of higher overall demand for pressure pumping services, pricing levels in this market are anticipated to improve from the fourth quarter of 2009. Well completions activity in the Rocky Mountain region of Colorado is also expected to be higher than in the previous year due to increased pipeline infrastructure, which has alleviated most of the takeaway constraints experienced by Calfrac's customers. The fracturing assets acquired from Pure during the third quarter provided Calfrac with the operational flexibility to enter the Marcellus shale play of Pennsylvania during the fourth quarter. The Company expects that drilling and completion activity in this new play will increase significantly and provide further growth opportunities for Calfrac in this market.
As discussed above, Calfrac was recently awarded work with two of Russia's largest oil and natural gas companies and currently operates four fracturing spreads and six coiled tubing units in this oil-focused market. With a larger equipment fleet and broader customer base, the Company expects continued strong financial performance in this region during 2010.
The Company expanded its Mexican pressure pumping operations in the Poza Rica area during 2009 with the commencement of fracturing operations during the second quarter and cementing operations in September. Calfrac currently operates two fracturing spreads and six cementing units in the Chicontepec oil and natural gas field, where completion activity levels are expected to remain strong in 2010. However, activity for the Company's fracturing crew in the Burgos field of northern Mexico is anticipated to decline slightly from 2009 levels as Pemex focuses on the development of the Chicontepec region. In Argentina, utilization of Calfrac's three cementing units and acidizing equipment is expected to be relatively strong during the coming year. The Company's Latin America management team is continuing to evaluate future opportunities for growth in the Latin America market.
Calfrac is also pleased to announce that its Board of Directors has approved an $11 million increase to the 2010 capital budget for a revised total of $56 million. The majority of this additional capital will be focused on new sand storage and handling equipment related to the Company's upcoming activity in the Horn River Basin and the addition of 7,500 hydraulic horsepower to its equipment fleet currently operating in the Marcellus Shale play. The total approved capital budget for 2010, including $14 million of carryforward capital from 2009, is now $70 million.
On February 18, 2010, Calfrac and seven other pressure pumping companies received a request for information from the Congress of the United States, Committee on Energy and Commerce in relation to the practice of hydraulic fracturing. The Company confirmed to the Committee that it will voluntarily provide the requested information on a timely basis. Calfrac is committed to developing energy resources in an environmentally sound manner and in accordance with all applicable laws and regulations. Calfrac does not view this Congressional request as a criticism of the Company or its hydraulic fracturing operations.
Overall, demand for pressure pumping services in North America over the short term is expected to increase from the previous year and the long-term outlook for the pressure pumping industry remains strong. Calfrac continues to focus on streamlining its cost structure and improving operating efficiencies. The Company will continue to execute its strategic business model by capitalizing on future growth opportunities while using a conservative approach in order to maintain financial flexibility and a strong balance sheet.
On behalf of the Board of Directors,
Douglas R. Ramsay
President & Chief Executive Officer
March 3, 2010
2009 Overview
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In the fourth quarter of 2009, the Company:
- generated revenue of $173.1 million versus $172.4 million in the
fourth quarter of 2008;
- reported net income of $0.9 million or $0.02 per share compared to
$7.9 million or $0.21 per share in the comparable 2008 period, which
included a foreign exchange gain of $0.1 million versus $1.1 million
in the comparable period of 2008;
- completed the acquisition of Century for a total purchase price for
accounting purposes of $100.9 million, including transaction costs of
$5.2 million, and assumed $29.0 million of indebtedness and other
liabilities, net of working capital;
- negotiated an increase to the Company's credit facilities to $175.0
million with a syndicate of Canadian financial institutions, which
assisted with the funding of the Century acquisition; and
- closed a private offering of an additional US$100.0 million of senior
notes due in February 2015, the proceeds of which were used to repay
a portion of Calfrac's outstanding credit facilities.
For the year ended December 31, 2009 the Company:
- responded to difficult economic conditions by significantly reducing
costs and North American headcount beginning in the first quarter;
- increased revenue by 5 percent to $591.5 million from $564.4 million
in 2008 driven primarily by strong growth in Calfrac's international
operations;
- reported operating income of $71.1 million, a decrease of 13 percent
from 2008, which included the impact of cost reduction measures
undertaken in Canada and the United States early in the second
quarter offset partially by restructuring costs of approximately $1.5
million;
- reported a net loss of $5.5 million or $0.14 per share compared to
net income of $17.9 million or $0.47 per share in 2008, which
included a foreign exchange loss of $3.8 million versus a foreign
exchange gain of $1.9 million in 2008;
- generated funds provided by operations of $54.6 million or $1.42 per
share versus $80.7 million or $2.14 per share in 2008;
- incurred capital expenditures of $102.2 million, including $42.3
million for the acquisition of the fracturing assets of Pure,
primarily to bolster the Company's fracturing fleet;
- increased its conventional pumping horsepower by 59 percent to
approximately 450,000 at the end of 2009 as a result of the
acquisition of Century, organic growth and the purchase of Pure's
fracturing equipment; and
- paid dividends of $4.0 million or $0.10 per share from funds provided
by operations compared to $3.8 million or $0.10 per share in 2008.
Financial Overview - Three Months Ended December 31, 2009 Versus 2008
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Canada
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Three Months Ended December 31, 2009 2008 Change
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(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 84,754 82,788 2
Expenses
Operating 63,344 67,905 (7)
SG&A 2,653 3,069 (14)
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65,997 70,974 (7)
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Operating income(1) 18,757 11,814 59
Operating income (%) 22.1% 14.3% 55
Fracturing revenue per job ($) 91,134 70,102 30
Number of fracturing jobs 868 988 (12)
Coiled tubing revenue per job ($) 23,442 11,251 108
Number of coiled tubing jobs 241 904 (73)
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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 fourth quarter of 2009 was $84.8 million versus $82.8 million in the comparable three-month period of 2008. The 2 percent increase in revenue was primarily due to the completion of larger jobs in the unconventional resource plays located in northern Alberta and northeast British Columbia and an increase in oil-related fracturing in the resource plays of southeast Saskatchewan and west central Alberta. This increase was partially driven by incremental revenue as a result of the acquisition of Century in mid-November 2009. These factors were partially offset by lower shallow gas fracturing activity in southern Alberta and the impact of suspending shallow coiled tubing and cementing operations in Canada during the second quarter of 2009.
Operating Expenses
Operating expenses in Canada decreased by 7 percent to $63.3 million during the fourth quarter of 2009 from $67.9 million in the same period of 2008. The decrease in Canadian operating expenses was mainly due to lower overall fracturing and coiled tubing activity levels combined with lower personnel costs attributable to the impact of restructuring initiatives undertaken during the second quarter of 2009.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations during the fourth quarter of 2009 decreased from the corresponding period in 2008 by 14 percent to $2.7 million primarily due to lower compensation expenses as a result of restructuring initiatives undertaken early in the second quarter of 2009.
United States
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Three Months Ended December 31, 2009 2008 Change
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(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 54,256 68,790 (21)
Expenses
Operating 48,760 47,026 4
SG&A 2,091 4,007 (48)
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50,851 51,033 -
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Operating income(1) 3,405 17,757 (81)
Operating income (%) 6.3% 25.8% (76)
Fracturing revenue per job ($) 59,263 87,615 (32)
Number of fracturing jobs 867 733 18
Cementing revenue per job ($) 21,458 18,347 17
Number of cementing jobs 134 249 (46)
Cdn$/US$ average exchange rate(2) 1.0563 1.2124 (13)
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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 decreased during the fourth quarter of 2009 to $54.3 million from $68.8 million in the comparable quarter of 2008. The decrease in United States revenue was due primarily to the depreciation in the value of the United States dollar, competitive pricing pressures, lower fracturing activity levels and smaller job sizes in the Rocky Mountain region and lower cementing activity levels. This was partially offset by higher fracturing activity levels and job sizes in Arkansas, the commencement of fracturing operations in Pennsylvania and the completion of larger cementing jobs.
Operating Expenses
Operating expenses in the United States were $48.8 million for the fourth quarter of 2009, an increase of 4 percent from the comparative period in 2008. The increase in operating expenses was primarily due to the increased usage of proppant resulting from the completion of larger fracturing jobs in Arkansas and start-up expenses related to the commencement of fracturing operations in the Marcellus shale play of Pennsylvania. In addition, higher equipment repair expenses due to the increase in fracturing activity in the unconventional resource plays of the United States also contributed to this increase in operating expenses. These factors were offset partially by the impact of the depreciation in the value of the United States dollar.
SG&A Expenses
SG&A expenses in the United States during the fourth quarter of 2009 decreased by 48 percent from the comparable period in 2008 to $2.1 million primarily due to lower personnel expenses and the impact of the depreciation in the value of the United States dollar. This decrease was offset partially by a $0.4 million provision for doubtful accounts receivable related to a customer that filed for Chapter 11 restructuring under United States bankruptcy law.
Russia
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Three Months Ended December 31, 2009 2008 Change
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(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 14,698 12,223 20
Expenses
Operating 10,667 10,540 1
SG&A 984 1,156 (15)
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11,651 11,696 -
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Operating income(1) 3,047 527 478
Operating income (%) 20.7% 4.3% 381
Fracturing revenue per job ($) 74,379 129,217 (42)
Number of fracturing jobs 120 49 145
Coiled tubing revenue per job ($) 52,959 61,369 (14)
Number of coiled tubing jobs 109 96 14
Cdn$/rouble average exchange rate(2) 0.0358 0.0444 (19)
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(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
During the fourth quarter of 2009, the Company's revenue from Russian operations increased by 20 percent to $14.7 million from $12.2 million in the corresponding three-month period of 2008. The increase in revenue was mainly due to higher fracturing and coiled tubing activity levels being partially offset by smaller job sizes, lower annual contract pricing, extremely cold weather conditions in Western Siberia during December 2009 and the depreciation of the Russian rouble by 19 percent versus the Canadian dollar.
Operating Expenses
Operating expenses in Russia in the fourth quarter of 2009 were $10.7 million compared to $10.5 million in the corresponding period of 2008. The increase in operating expenses was primarily due to the higher revenue base and equipment utilization combined with higher fuel expenses as a result of the extremely cold weather conditions in Western Siberia during December 2009, offset partially by the depreciation in the Russian rouble against the Canadian dollar.
SG&A Expenses
SG&A expenses in Russia were $1.0 million for the three-month period ended December 31, 2009 versus $1.2 million in the same quarter of 2008. The decrease was primarily due to the depreciation of the Russian rouble.
Latin America
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Three Months Ended December 31, 2009 2008 Change
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(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 19,416 8,629 125
Expenses
Operating 16,389 7,692 113
SG&A 430 282 52
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16,819 7,974 111
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Operating income(1) 2,597 655 296
Operating income (%) 13.4% 7.6% 76
Cdn$/Mexican peso average
exchange rate(2) 0.0809 0.0928 (13)
Cdn$/Argentine peso average
exchange rate(2) 0.2765 0.3574 (23)
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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 $19.4 million during the fourth quarter of 2009 versus $8.6 million in the comparable three-month period in 2008. For the three months ended December 31, 2009 and 2008, revenue generated through subcontractors was $4.4 million and $2.4 million, respectively. The increase in revenue was primarily due to higher fracturing activity with the expansion of the Company's fracturing operations into the Chicontepec region during the second quarter and the completion of larger jobs in Mexico. In addition, revenue in the Latin America division increased due to the commencement of cementing operations in Mexico during the third quarter of 2009 combined with higher cementing activity levels in Argentina. This increase was partially offset by the depreciation of the Mexican and Argentine peso versus the Canadian dollar and smaller job sizes in Argentina.
Operating Expenses
Operating expenses in Latin America for the three months ended December 31, 2009 increased by 113 percent from the comparative period in 2008 to $16.4 million. This increase was primarily due to higher fracturing activity and higher product costs related to the completion of more and larger fracturing jobs in Mexico. In addition, operating expenses increased as a result of costs related to the start-up and commencement of cementing operations in Mexico during the third quarter of 2009 and incremental expenses related to higher activity levels in Argentina.
SG&A Expenses
SG&A expenses in Latin America increased to $0.4 million from $0.3 million in the comparable quarter of 2008 primarily due to the Company's expanded scale of operations in Mexico and Argentina.
Corporate
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Three Months Ended December 31, 2009 2008 Change
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(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 520 747 (30)
SG&A 4,129 4,348 (5)
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4,649 5,095 (9)
Operating loss(1) (4,649) (5,095) 9
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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 research and development ("R&D") personnel located in the Corporate headquarters who directly support the Company's global field operations. The 30 percent decrease in Corporate operating expenses from the fourth quarter of 2008 is mainly due to lower compensation expenses as a result of a decrease in the number of personnel supporting the Company's operations and the impact of cost-saving initiatives implemented during the second quarter of 2009.
SG&A Expenses
For the three months ended December 31, 2009, Corporate SG&A expenses decreased by 5 percent from the comparable 2008 period to $4.1 million, mainly due to lower expenses resulting from cost-saving measures implemented early in the second quarter of 2009, offset partially by higher stock-based compensation expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $4.3 million for the fourth quarter of 2009 represented an increase of $0.8 million from $3.5 million in the comparable period of 2008. This increase was primarily due to higher overall long-term debt levels, offset partially by lower interest expense related to the Company's unsecured senior notes resulting from the depreciation in the value of the United States dollar.
For the three months ended December 31, 2009, depreciation expense increased by 23 percent to $17.6 million from $14.3 million in the corresponding quarter of 2008. The increase in depreciation expense is mainly a result of a larger fleet of equipment operating in North America, the Company's acquisition of fracturing assets from Pure and the fracturing and coiled tubing equipment acquired in the acquisition of Century, offset partially by the depreciation in the value of the United States dollar.
Foreign Exchange Losses or Gains
The Company realized a foreign exchange gain of $0.1 million during the fourth quarter of 2009 versus $1.1 million in the comparative three-month period of 2008. Foreign exchange gains and losses arise primarily from the translation of Calfrac's international operations in Russia, Mexico and Argentina using the temporal method. On a quarter-over-quarter basis, the decrease in the foreign exchange gain was mainly due to the impact of the significant depreciation of the Canadian dollar on foreign net assets denominated in United States dollars during the fourth quarter of 2008.
Income Tax Expenses
The Company recorded an income tax expense of $0.6 million during the fourth quarter of 2009 compared to income tax expense of $1.1 million in the comparable period of 2008. The effective income tax rate for the three months ended December 31, 2009 was 41 percent compared to an effective tax rate of 12 percent in the same quarter of 2008. The decrease in total income tax expense was primarily due to pre-tax losses in the United States and lower profitability in Canada, offset partially by higher profitability in Mexico, Russia and Argentina combined with the impact of lower enacted Canadian future income tax rates on the Company's future income tax asset. The increase in the effective tax rate was primarily due to Canadian income for the fourth quarter of 2009 being taxed at full statutory rates; however, the provision for income taxes on Canadian income in the fourth quarter of 2008 was tax affected at a significantly lower effective rate due to the offsetting impact of drawing down the deferred credit related to Denison amalgamation in 2004.
Summary of Quarterly Results
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Three Months Ended Mar. 31, June 30, Sept. 30, Dec. 31,
2008 2008 2008 2008
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(000s, except per share
and unit data) ($) ($) ($) ($)
(unaudited)
Financial
Revenue 145,627 94,657 151,650 172,430
Operating income (loss)(1) 29,477 (1,008) 27,812 25,658
Net income (loss) 14,269 (15,469) 11,203 7,861
Per share - basic 0.38 (0.41) 0.30 0.21
Per share - diluted 0.38 (0.41) 0.30 0.21
Funds provided by operations(1) 28,790 (9) 27,128 24,838
Per share - basic 0.77 - 0.72 0.66
Per share - diluted 0.77 - 0.72 0.66
EBITDA(1) 31,047 (813) 26,983 26,740
Per share - basic 0.83 (0.02) 0.71 0.71
Per share - diluted 0.83 (0.02) 0.71 0.71
Capital expenditures 14,820 19,341 18,414 32,233
Working capital
(end of period) 111,989 94,056 104,700 100,575
Shareholders' equity
(end of period) 377,056 364,068 378,890 393,476
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Operating (end of period)
Pumping horsepower (000s) 232 255 287 287
Coiled tubing units (No.) 18 18 18 18
Cementing units (No.) 17 17 18 18
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Three Months Ended Mar. 31, June 30, Sept. 30, Dec. 31,
2009 2009 2009 2009
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(000s, except per share
and unit data) ($) ($) ($) ($)
(unaudited)
Financial
Revenue 180,388 104,727 133,261 173,124
Operating income (loss)(1) 27,427 4,052 16,499 23,157
Net income (loss) 5,528 (14,770) 2,842 864
Per share - basic 0.15 (0.39) 0.08 0.02
Per share - diluted 0.15 (0.39) 0.08 0.02
Funds provided by operations(1) 22,713 128 12,199 19,580
Per share - basic 0.60 - 0.32 0.48
Per share - diluted 0.60 - 0.32 0.48
EBITDA(1) 25,945 4,340 15,112 23,398
Per share - basic 0.69 0.11 0.40 0.58
Per share - diluted 0.69 0.11 0.40 0.57
Capital expenditures 15,857 9,862 58,212 18,245
Working capital
(end of period) 129,532 111,864 103,331 128,243
Shareholders' equity
(end of period) 402,537 380,515 378,972 459,932
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Operating (end of period)
Pumping horsepower (000s) 303 319 371 456
Coiled tubing units (No.) 18 18 18 28
Cementing units (No.) 20 20 21 21
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Financial Overview - Year Ended December 31, 2009 Versus 2008
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 241,821 273,398 (12)
Expenses
Operating 199,214 222,362 (10)
Selling, General and Administrative
(SG&A) 9,743 10,742 (9)
--------------------------------
208,957 233,104 (10)
--------------------------------
Operating income(1) 32,864 40,294 (18)
Operating income (%) 13.6% 14.7% (7)
Fracturing revenue per job ($) 90,741 62,657 45
Number of fracturing jobs 2,372 3,620 (34)
Coiled tubing revenue per job ($) 19,280 10,182 89
Number of coiled tubing jobs 1,193 2,953 (60)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Revenue
Revenue from Calfrac's Canadian operations during 2009 decreased by 12 percent to $241.8 million from $273.4 million in 2008 primarily due to lower fracturing and coiled tubing activity resulting from lower drilling and completion activity levels in the Western Canada Sedimentary Basin combined with the impact of suspending the Company's shallow coiled tubing operations and primary cementing operations in April 2009. This decline in activity was partially offset by an increase in the proportion of larger jobs completed in the unconventional resource plays located in northwest Alberta and northeast British Columbia resulting in a 45 percent increase in fracturing revenue per job. In addition, incremental revenue was generated as a result of the acquisition of Century in mid-November 2009.
Operating Expenses
Operating expenses in Canada were $199.2 million during 2009 versus $222.4 million in 2008 mainly due to lower activity levels and reflect the impact of cost rationalization measures initiated in the second quarter of 2009. This was offset by an increase in equipment repair expenses due primarily to a higher proportion of fracturing activity in the unconventional resource plays of western Canada and larger equipment fleet combined with $1.3 million of restructuring costs.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations were $9.7 million during 2009, a decrease of 9 percent from the corresponding period of 2008 due primarily to lower personnel costs arising from restructuring initiatives implemented early in the second quarter.
United States
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 218,276 205,999 6
Expenses
Operating 184,973 143,247 29
SG&A 7,410 9,964 (26)
--------------------------------
192,383 153,211 26
--------------------------------
Operating income(1) 25,893 52,788 (51)
Operating income (%) 11.9% 25.6% (54)
Fracturing revenue per job ($) 71,515 67,669 6
Number of fracturing jobs 2,840 2,872 (1)
Cementing revenue per job ($) 20,259 14,904 36
Number of cementing jobs 749 782 (4)
Cdn$/US$ average exchange rate(2) 1.1420 1.0660 7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Revenue from Calfrac's United States operations increased during 2009 to $218.3 million from $206.0 million in 2008 primarily due to the impact of the 7 percent appreciation in the value of the United States dollar versus the Canadian dollar. Higher fracturing activity levels in Arkansas, the positive impact of acquiring Pure's fracturing assets in August 2009 and the completion of larger cementing jobs were largely offset by competitive pricing pressures and lower fracturing activity in the Rocky Mountain region of Colorado.
Operating Expenses
Operating expenses in the United States were $185.0 million for 2009, an increase of 29 percent from 2008. This increase in operating expenses was primarily due to the impact of the appreciation of the United States dollar against the Canadian dollar, increased usage of proppant resulting from the completion of larger fracturing jobs in Arkansas and higher equipment repair expenses from the increase in fracturing activity in the unconventional resource plays of the United States.
SG&A Expenses
SG&A expenses in the United States during 2009 decreased by 26 percent from 2008 to $7.4 million primarily due to lower compensation expenses, offset partially by the appreciation of the United States dollar.
Russia
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 66,630 57,355 16
Expenses
Operating 44,032 44,577 (1)
SG&A 3,631 3,936 (8)
--------------------------------
47,663 48,513 (2)
--------------------------------
Operating income(1) 18,967 8,842 115
Operating income (%) 28.5% 15.4% 85
Fracturing revenue per job ($) 75,204 132,636 (43)
Number of fracturing jobs 558 234 138
Coiled tubing revenue per job ($) 46,983 61,924 (24)
Number of coiled tubing jobs 525 425 24
Cdn$/rouble average exchange rate(2) 0.0360 0.0429 (16)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
During 2009, the Company's revenue from Russian operations increased by 16 percent to $66.6 million from $57.4 million in 2008 primarily due to higher fracturing and coiled tubing activity being partially offset by smaller job sizes, lower annual contract pricing and the depreciation of the Russian rouble by 16 percent against the Canadian dollar.
Operating Expenses
Operating expenses in Russia in 2009 were $44.0 million compared to $44.6 million in 2008 primarily due to the depreciation in the Russian rouble versus the Canadian dollar offset by higher fracturing and coiled tubing activity.
SG&A Expenses
SG&A expenses in Russia were $3.6 million for 2009 versus $3.9 million in 2008 primarily due to the depreciation of the Russian rouble, offset partially by higher insurance costs and professional fees.
Latin America
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational and
exchange rate information) ($) ($) (%)
(unaudited)
Revenue 64,773 27,611 135
Expenses
Operating 52,046 28,552 82
SG&A 2,115 876 141
--------------------------------
54,161 29,428 84
--------------------------------
Operating income (loss)(1) 10,612 (1,817) 684
Operating income (loss) (%) 16.4% -6.6% 348
Cdn$/Mexican peso average
exchange rate(2) 0.0845 0.0959 (12)
Cdn$/Argentine peso average
exchange rate(2) 0.3037 0.3319 (8)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Calfrac's Latin America operations generated total revenue of $64.8 million during 2009 versus $27.6 million in 2008. The increase in revenue was primarily due to higher fracturing activity and larger job sizes in Mexico as a result of the Company's expansion into the Chicontepec region during the second quarter of 2009 and the addition of a third fracturing crew during the third quarter. In addition, the Company commenced cementing operations in Mexico during the third quarter of 2009 to service the Chicontepec region. Cementing activity in Argentina, which commenced during the second quarter of 2008, generated higher revenue with a full year of operations in 2009. These factors were offset partially by the 12 percent and 8 percent declines in the Mexican and Argentine pesos, respectively, versus the Canadian dollar.
Operating Expenses
Operating expenses in Latin America for 2009 increased by 82 percent from 2008 to $52.0 million. This increase was primarily due to a higher revenue base related to the start-up and commencement of fracturing operations and cementing operations in the Chicontepec region during the second and third quarters of 2009, respectively, combined with incremental expenses related to the Company's operations in Argentina, which began during the second quarter of 2008. In addition, Calfrac's Mexican operations incurred higher proppant costs as a result of the completion of larger fracturing jobs. These factors were partially offset by the depreciation of the Mexican and Argentine pesos.
SG&A Expenses
SG&A expenses in Latin America in 2009 increased by $1.2 million from 2008 to $2.1 million primarily due to the Company's expanded scale of operations in Mexico and Argentina.
Corporate
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008 Change
-------------------------------------------------------------------------
(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 2,418 2,520 (4)
SG&A 14,783 15,647 (6)
--------------------------------
17,201 18,167 (5)
Operating loss(1) (17,201) (18,167) 5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Operating Expenses
Operating expenses primarily relate to global operations and R&D personnel located in the Corporate headquarters who directly support the Company's global field operations. The 4 percent decrease in Corporate operating expenses from 2008 is mainly due to cost reduction measures implemented early in the second quarter.
SG&A Expenses
For 2009, Corporate SG&A expenses decreased by 6 percent to $14.8 million, mainly due to lower expenses arising from restructuring initiatives implemented early in the second quarter, offset slightly by higher stock-based compensation expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $15.2 million for 2009 represented an increase of $3.6 million from $11.6 million in 2008. This increase was primarily due to higher interest expense related to the Company's unsecured senior notes resulting from the appreciation in the value of the United States dollar and additional interest expense related to the utilization of a portion of the Company's revolving term credit facilities.
For 2009, depreciation expense increased by 24 percent to $63.2 million from $51.1 million in 2008. This increase was mainly due to the Company's larger fleet of equipment operating in North America as a result of the 2009 capital program, the acquisition of fracturing assets from Pure, the appreciation in the value of the United States dollar and the fracturing and coiled tubing equipment acquired in the corporate acquisition of Century.
Foreign Exchange Losses or Gains
The Company incurred a foreign exchange loss of $3.8 million during 2009 versus a foreign exchange gain of $1.9 million in 2008. Foreign exchange gains and losses arise primarily from the translation of Calfrac's international operations in Russia, Mexico and Argentina using the temporal method. The change from a foreign exchange gain to a loss was mainly due to the appreciation of the Canadian dollar as at December 31, 2009 versus December 31, 2008 and the effect this change had on foreign net assets denominated in United States dollars, Russian roubles, Mexican pesos or Argentine pesos.
Income Tax Expenses
The Company recorded an income tax recovery of $4.2 million during 2009 versus income tax expense of $3.5 million during 2008. The effective income tax rate for 2009 was 44 percent compared to an effective tax rate of 17 percent in 2008. The change in the effective income tax rate period-over-period is due to the change in the mix of taxable earnings and losses incurred in the countries in which the Company operates and the differing rates of income tax attributable to those earnings and losses. In addition, Canadian losses for 2009 are being recovered at full statutory rates; however, the provision for income taxes on Canadian income in 2008 was tax affected at a significantly lower effective rate due to the offsetting impact of drawing down the deferred credit related to the Denison Energy Inc. ("Denison") amalgamation in 2004.
Liquidity and Capital Resources
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Years Ended December 31, 2009 2008
-------------------------------------------------------------------------
(000s) ($) ($)
(unaudited)
Cash provided by (used in):
Operating activities 55,927 50,111
Financing activities 70,282 19,172
Investing activities (129,114) (81,837)
Effect of exchange rate changes on
cash and cash equivalents (8,517) 9,942
-------------------------------------------------------------------------
Decrease in cash and cash equivalents (11,422) (2,612)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating Activities
The Company's cash provided by operating activities for the year ended December 31, 2009 was $55.9 million versus $50.1 million in 2008. The change was primarily due to a $31.9 million net increase in non-cash working capital that was offset by a $26.1 million reduction in funds provided by operations (refer to "Non-GAAP Measures" on page 16). At December 31, 2009, Calfrac's working capital was approximately $128.2 million, an increase of 28 percent from December 31, 2008. The Company reviewed its year-end accounts receivable in detail and determined that a provision for doubtful accounts receivable totalling $1.4 million was adequate. The majority of this provision related to a customer that filed for Chapter 11 restructuring under United States bankruptcy law.
Financing Activities
Net cash provided by financing activities for 2009 was $70.3 million compared to $19.2 million in 2008. During 2009, the Company issued long-term debt for a total of $216.1 million, repaid $107.2 million of its revolving term credit facility and $34.6 million of its operating credit facility. In addition, Calfrac received proceeds of $0.2 million from the issuance of common shares during 2009 versus $8.9 million during 2008.
On September 29, 2009, the Company increased its credit facilities from $90.0 million to $170.0 million with a syndicate of Canadian chartered banks, and further increased these facilities on December 22, 2009 to $175.0 million. The facilities consist of an operating facility of $10.0 million and an extendible revolving term syndicated facility of $165.0 million. The terms of the renewed credit facility are based upon parameters of certain bank covenants with advances bearing interest at rates ranging from prime plus 1 percent to prime plus 1.75 percent. As of December 31, 2009, the Company had drawn $27.0 million on its syndicated facility, including letters of credit and bank overdraft, leaving a further $148.0 million in available credit.
On December 16, 2009, Calfrac completed an additional private placement of senior unsecured notes for an aggregate principal amount of US$100.0 million. The Company's US$235.0 million of senior unsecured notes are due on February 15, 2015 and bear interest at 7.75 percent per annum, which is paid semi-annually.
At December 31, 2009, the Company had cash and cash equivalents of $25.1 million. A portion of these funds was invested in short-term investments, which consisted primarily of an overnight money market fund.
The Company pays semi-annual dividends to shareholders of $0.05 per common share at the discretion of the Board of Directors, which qualify as "eligible dividends" as defined by the Canada Revenue Agency. These dividends were funded by funds provided by operations (refer to "Non-GAAP Measures" on page 16) and totalled $4.0 million and $3.8 million in 2009 and 2008, respectively.
Investing Activities
For 2009, Calfrac's net cash used for investing activities was $129.1 million versus $81.8 million for 2008. Capital expenditures were $102.2 million in 2009 compared to $84.8 million in 2008. Capital expenditures included the acquisition of the fracturing assets of Pure during the third quarter of 2009 for $42.3 million, and the remainder was primarily related to increasing the pumping capacity of the Company's fracturing equipment fleet throughout North America.
On November 10, 2009, the Company acquired all of the issued and outstanding common shares of Century, a privately held fracturing services company operating in Western Canada. Under the terms of the agreement, the purchase price of $90.0 million consisted of approximately $13.5 million of cash plus 5,144,344 common shares of the Company, with an agreed value of $76.5 million. For accounting purposes, the shares issuable in the transaction have a fair value of approximately $82.2 million based on the weighted average price of the Company's shares for the three trading days preceding and the three trading days following the date of the announcement of the agreement. The fair value of the share consideration for accounting purposes is calculated on a different basis than the agreed value and results in a higher recorded purchase price. Including transaction costs, the total consideration was $100.9 million for accounting purposes.
On January 11, 2008, the Company acquired the remaining 70 percent of the common shares of ChemErgy Ltd. that it did not previously own for aggregate consideration of approximately $6.6 million. The purchase price was satisfied through the payment to the vendors of approximately $4.8 million in cash, the transfer of real property at a value of approximately $0.5 million and the issuance of 71,581 common shares of the Company with a value of approximately $1.3 million.
On January 4, 2008, the Company acquired all the shares of 1368303 Alberta Ltd. from a Canadian competitor for cash and share consideration totalling approximately $2.7 million. The Company issued 78,579 common shares with a value of approximately $1.3 million in conjunction with the acquisition, in addition to approximately $1.4 million of cash. All of the consideration paid was assigned to capital assets, as the acquired company had no assets or liabilities other than fracturing equipment.
Additionally, net cash used for investing activities was impacted by the net change in non-cash working capital from the purchase of capital assets.
The effect of changes in foreign exchange rates on the Company's cash and cash equivalents during 2009 was a loss of $8.5 million versus a gain of $9.9 million during 2008. These gains and losses relate to cash and cash equivalents held by the Company in a foreign currency.
With its strong working capital position, unutilized credit facilities and anticipated funds provided by operations, the Company expects to have adequate resources to fund its financial obligations and planned capital expenditures for 2010 and beyond.
Outstanding Share Data
The Company is authorized to issue an unlimited number of common shares. Employees have been granted options to purchase common shares under the Company's shareholder-approved stock option plan. The number of shares reserved for issuance under the stock option plan is equal to 10 percent of the Company's issued and outstanding common shares. As at February 28, 2010, there were 43,022,515 common shares issued and outstanding, and 3,311,849 options to purchase common shares.
Advisories
-------------------------------------------------------------------------
Forward-Looking Statements
In order to provide Calfrac shareholders and potential investors with information regarding the Company and its subsidiaries, including management's assessment of Calfrac's plans and future operations, certain statements contained in this press release, including statements that contain words such as "anticipates", "can", "may", "might", "could", "potential", "expect", "believe", "intend", "forecast", "will", or similar words suggesting future outcomes, are forward-looking statements. Forward-looking statements in this document include, but are not limited to, statements with respect to future capital expenditures, future financial resources, future oil and natural gas well activity, outcome of specific events, trends in the oil and natural gas industry and the Company's growth prospects including, without limitation, its international growth strategy and prospects. These statements are derived from certain assumptions and analyses made by the Company based on its experience and interpretation of historical trends, current conditions, expected future developments and other factors that it believes are appropriate in the circumstances, including assumptions related to commodity pricing, North American drilling activity and the expectation that access to capital will continue to be restricted for many of Calfrac's customers. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company's expectations. The most significant risk factors to Calfrac relate to prevailing economic conditions; commodity prices; sourcing, pricing and availability of raw materials, component parts, equipment, suppliers, facilities and skilled personnel; dependence on major customers; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; and regional competition. Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Further information about these risks and uncertainties may be found under "Business Risks" below.
Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized, or that they will have the expected consequences or effects on the Company or its business or operations. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.
Business Risks
The business of Calfrac is subject to certain risks and uncertainties. Prior to making any investment decision regarding Calfrac, investors should carefully consider, among other things, the risk factors set forth in the Company's most recently filed Annual Information Form and incorporated by reference herein.
The Annual Information Form is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at www.sedar.com. Copies of the Annual Information Form may also be obtained on request without charge from Calfrac at 411 - 8th Avenue S.W., Calgary, Alberta T2P 1E3, or at www.calfrac.com, or by facsimile at 403-266-7381.
Non-GAAP Measures
Certain measures in this press release do not have any standardized meaning as prescribed under Canadian GAAP and are therefore considered non-GAAP measures. These measures include operating income, funds provided by operations and EBITDA. These measures may not be comparable to similar measures presented by other entities. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. Management's use of these measures has been disclosed further in this press release as these measures are discussed and presented.
Additional Information
Further information regarding Calfrac Well Services Ltd., including the most recently filed Annual Information Form, can be accessed on the Company's website at www.calfrac.com or under the Company's public filings found at www.sedar.com.
Fourth Quarter Conference Call
Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2009 fourth quarter results at 10:00 a.m. (Mountain Time) on Thursday, March 4, 2010. The conference call dial-in number is 1-888-231-8191 or 647-427-7450. The seven-day replay numbers are 1-800-642-1687 or 416-849-0833 (once connected, enter 56349546). A webcast of the conference call may be accessed via the Company's website at www.calfrac.com.
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As at December 31, December 31,
2009 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($)
ASSETS
Current assets
Cash and cash equivalents 25,070 36,492
Accounts receivable 135,775 120,048
Income taxes recoverable 1,780 6,681
Inventory 44,297 41,123
Prepaid expenses and deposits 6,746 5,813
-------------------------------------------------------------------------
213,668 210,157
Capital assets 579,233 459,874
Goodwill 10,523 10,523
Future income taxes 37,466 11,218
-------------------------------------------------------------------------
840,890 691,772
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities 82,212 94,582
Bank loan - 15,000
Current portion of long-term debt (note 4) 1,996 -
Current portion of capital lease obligations
(note 5) 1,217 -
-------------------------------------------------------------------------
85,425 109,582
Long-term debt (note 4) 267,351 159,899
Capital lease obligations (note 5) 3,808 -
Other long-term liabilities 1,227 1,368
Future income taxes 20,474 24,815
Deferred credit 2,505 2,588
Non-controlling interest 168 44
-------------------------------------------------------------------------
380,958 298,296
-------------------------------------------------------------------------
Shareholders' equity
Capital stock (note 6) 251,282 168,813
Contributed surplus (note 7) 10,808 7,297
Retained earnings 202,083 211,652
Accumulated other comprehensive income (loss) (4,241) 5,714
-------------------------------------------------------------------------
459,932 393,476
-------------------------------------------------------------------------
840,890 691,772
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contingencies (note 11)
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Year Ended
Dec. 31, Dec. 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s, except per share data) ($) ($) ($) ($)
(unaudited)
Revenue 173,124 172,430 591,500 564,363
-------------------------------------------------------------------------
Expenses
Operating 139,681 133,910 482,682 441,259
Selling, general and
administrative 10,286 12,862 37,683 41,164
Depreciation 17,625 14,279 63,188 51,147
Interest, net 4,297 3,499 15,248 11,572
Equity share of income
from long-term investments - - - (122)
Foreign exchange losses
(gains) (79) (1,099) 3,823 (1,904)
Loss (gain) on disposal
of capital assets (162) 17 (1,483) 9
-------------------------------------------------------------------------
171,648 163,468 601,141 543,125
-------------------------------------------------------------------------
Income (loss) before income
taxes and non-controlling
interest 1,476 8,962 (9,641) 21,238
-------------------------------------------------------------------------
Income tax expense (recovery)
Current 619 (210) 1,853 (4,058)
Future (20) 1,330 (6,082) 7,573
-------------------------------------------------------------------------
599 1,120 (4,229) 3,515
-------------------------------------------------------------------------
Income (loss) before non-
controlling interest 877 7,862 (5,412) 17,723
Non-controlling interest 13 (19) 124 (141)
-------------------------------------------------------------------------
Net income (loss) for the
period 864 7,861 (5,536) 17,864
Retained earnings,
beginning of period 203,365 206,150 211,652 198,039
Dividends (2,146) (1,887) (4,033) (3,779)
Premium on purchase of
shares - (472) - (472)
-------------------------------------------------------------------------
Retained earnings, end
of period 202,083 211,652 202,083 211,652
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings (loss) per share
(note 6)
Basic 0.02 0.21 (0.14) 0.47
Diluted 0.02 0.21 (0.14) 0.47
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED
OTHER COMPREHENSIVE INCOME (LOSS)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Year Ended
Dec. 31, Dec. 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
Net income (loss) for
the period 864 7,861 (5,536) 17,864
Other comprehensive
income (loss)
Change in foreign currency
translation adjustment (1,121) 8,355 (9,955) 11,918
-------------------------------------------------------------------------
Comprehensive income (loss) (257) 16,216 (15,491) 29,782
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
beginning of period (3,120) (2,641) 5,714 (6,204)
Other comprehensive income
(loss) for the period (1,121) 8,355 (9,955) 11,918
-------------------------------------------------------------------------
Accumulated other
comprehensive income (loss),
end of period (4,241) 5,714 (4,241) 5,714
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Year Ended
Dec. 31, Dec. 31,
2009 2008 2009 2008
-------------------------------------------------------------------------
(000s) (unaudited) ($) ($) ($) ($)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income (loss) for
the period 864 7,861 (5,536) 17,864
Items not involving cash
Depreciation 17,625 14,279 63,188 51,147
Amortization of debt
issue costs 317 185 849 649
Stock-based compensation 943 1,185 3,560 3,768
Equity share of income
from long-term
investments - - - (122)
Loss (gain) on disposal
of capital assets (162) 17 (1,483) 9
Future income taxes (20) 1,330 (6,082) 7,573
Non-controlling interest 13 (19) 124 (141)
-------------------------------------------------------------------------
19,580 24,838 54,620 80,747
Net change in non-cash
operating assets and
liabilities 11,057 (1,853) 1,307 (30,636)
-------------------------------------------------------------------------
30,637 22,985 55,927 50,111
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan proceeds - 15,000 5,000 15,000
Issuance of long-term
debt 153,562 65,000 216,103 65,000
Bank loan repayments (19,634) - (39,634) -
Long-term debt
repayments (107,143) (65,000) (107,201) (65,000)
Capital lease obligation
repayments (166) - (166) -
Purchase of common shares - (932) - (932)
Net proceeds on issuance
of common shares 213 - 213 8,883
Dividends (2,146) (1,887) (4,033) (3,779)
-------------------------------------------------------------------------
24,686 12,181 70,282 19,172
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital
assets (18,245) (32,233) (102,176) (84,807)
Proceeds on disposal
of capital assets 155 33 2,288 318
Acquisitions, net of
cash acquired (note 9) (18,692) - (18,692) (6,117)
Long-term investments
and other - - - 326
Net change in non-cash
working capital from
purchase of capital
assets (3,266) 4,263 (10,534) 8,443
-------------------------------------------------------------------------
(40,048) (27,937) (129,114) (81,837)
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents (827) 6,522 (8,517) 9,942
-------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 14,448 13,751 (11,422) (2,612)
Cash and cash equivalents,
beginning of period 10,622 22,741 36,492 39,104
-------------------------------------------------------------------------
Cash and cash equivalents,
end of period 25,070 36,492 25,070 36,492
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2009
(figures in text and tables are in 000s except share data and certain
other exceptions as indicated) (unaudited)
1. BASIS OF PRESENTATION
The interim financial statements of Calfrac Well Services Ltd. (the
"Company") do not conform in all respects to the requirements of
generally accepted accounting principles (GAAP) for annual financial
statements. The interim financial statements should be read in
conjunction with the most recent annual financial statements.
2. SEASONALITY OF OPERATIONS
The Company's Canadian business is seasonal in nature. The lowest
activity levels are typically experienced during the second quarter
of the year when road weight restrictions are in place and access to
wellsites in Canada is reduced.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The interim financial statements follow the same accounting
policies and methods of application as the most recent annual
financial statements, except for the adoption of the Canadian
Institute of Chartered Accountants (CICA) Handbook Section 3064
Goodwill and Intangible Assets and Handbook Section 3862
Financial Instruments: Disclosures.
Section 3064 replaces the previous Section 3062 and establishes
standards for the recognition, measurement, presentation and
disclosure of intangible assets and goodwill subsequent to its
initial recognition. The adoption of Section 3064 has not had an
impact on the Company's consolidated financial statements, as the
provisions relating to goodwill are unchanged from the previous
standard and the Company has no recognizable intangible assets.
Section 3862 provides revised and enhanced disclosure
requirements for liquidity disclosure risks and the fair value
measurement of financial instruments. Fair value measurements are
to be classified using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
adoption of this revised standard has not had an impact on the
disclosures in the Company's consolidated financial statements.
(b) In February 2008, the Canadian Accounting Standards Board (AcSB)
confirmed that International Financial Reporting Standards (IFRS)
will replace Canadian GAAP in 2011 for profit-oriented Canadian
publicly accountable enterprises. As a result, the Company will
be required to report its results in accordance with IFRS
beginning in 2011. The Company has developed a changeover plan to
complete the transition to IFRS by January 1, 2011, including the
preparation of required comparative information. The impact of
IFRS on the Company's consolidated financial statements is not
reasonably determinable at this time.
4. LONG-TERM DEBT
As at December 31, 2009 2008
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(000s) ($) ($)
US$235,000 senior unsecured notes, due
February 15, 2015 bearing interest at 7.75%,
payable semi-annually 246,985 164,430
Less: unamortized debt issue costs and
unamortized debt discount (11,768) (4,531)
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235,217 159,899
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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 24,699 -
Less: unamortized debt issue costs (1,128) -
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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 7,379 -
US$3,107 mortgage maturing May 16, 2018 bearing
interest at U.S. prime less 1%, repayable US$35
per month principal and interest, secured by
certain real property 3,180 -
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269,347 159,899
Less: current portion of long-term debt (1,996) -
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267,351 159,899
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The fair value of the senior unsecured notes based on the closing
market price at December 31, 2009 was $239,575 (December 31, 2008 -
$77,282). The carrying value of the revolving credit facility
approximates its fair value due to its variable interest rate and
first priority security position. The carrying values of the mortgage
obligations approximate their fair values as the interest rates are
not significantly different than current mortgage rates for similar
loans.
The interest rate on the term revolving facility is based upon the
parameters of certain bank covenants, and range from prime plus 1% to
prime plus 1.75%. The facility is repayable in 7 equal quarterly
principal instalments of $1,235 commencing December 31, 2010 plus a
final payment of $16,054 on September 28, 2012, assuming the facility
is not extended. The term and commencement of principal repayments
under the facility may be extended by one year on each anniversary at
the request of the Company and acceptance by the lenders. The Company
also has the ability to prepay principal without penalty.
5. OBLIGATIONS UNDER CAPITAL LEASES
As at December 31, 2009 2008
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(000s) ($) ($)
Capital lease contracts bearing interest at
rates ranging from 5.68% to 6.58%, repayable
$124 per month, secured by certain equipment 5,599 -
Less: interest portion of contractual payments (574) -
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5,025 -
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Less: current portion of capital lease
obligations (1,217) -
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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 than current rates for similar leases.
6. CAPITAL STOCK
Authorized capital stock consists of an unlimited number of common
shares.
Continuity of
Common Shares 2009 2008
---------------------------------------------------------------------
Shares Amount Shares Amount
---------------------------------------------------------------------
(No.) ($000s) (No.) ($000s)
Balance, January 1 37,741,561 168,813 37,201,872 155,254
Issued upon exercise
of stock options 12,975 262 492,311 11,379
Issued on
acquisitions
(note 9) 5,144,344 82,207 150,160 2,640
Purchased under
Normal Course
Issuer Bid - - (102,782) (460)
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Balance, December 31 42,898,880 251,282 37,741,561 168,813
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The weighted average number of common shares outstanding for the year
December 31, 2009 was 38,475,444 basic and 38,475,444 diluted (year
ended December 31, 2008 - 37,696,924 basic and 37,716,914 diluted).
The difference between basic and diluted shares for the year ended
December 31, 2008 was attributable to the dilutive effect of stock
options issued by the Company and shares held in trust. All of the
outstanding options disclosed in note 8 could be potentially dilutive
in the future; however, they were not included in the calculation of
diluted shares for the year ended December 31, 2009, as they would
have an anti-dilutive effect.
7. CONTRIBUTED SURPLUS
Continuity of Contributed Surplus 2009 2008
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(000s) ($) ($)
Balance, January 1 7,297 6,025
Stock options expensed 3,560 3,768
Stock options exercised (49) (2,496)
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Balance, December 31 10,808 7,297
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8. STOCK OPTIONS
Continuity of
Stock Options 2009 2008
---------------------------------------------------------------------
Average Average
Exercise Exercise
Options Price Options Price
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(No.) ($) (No.) ($)
Balance, January 1 2,043,344 21.69 1,224,223 22.90
Granted during
the period 865,000 8.60 1,429,400 19.66
Exercised for
common shares (12,975) 16.43 (492,311) 18.04
Forfeited (222,826) 22.59 (87,468) 23.79
Expired (164,400) 32.59 (30,500) 27.80
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Balance, December 31 2,508,143 16.70 2,043,344 21.69
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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 3.06 years. When stock options are
exercised the proceeds, together with the amount of compensation
expense previously recorded in contributed surplus, are added to
capital stock.
9. ACQUISITIONS
(a) Asset Acquisition
On August 14, 2009, the Company purchased the fracturing assets of a
competitor for $44,513 including related transaction costs. The
Company acquired $42,252 of capital assets comprised of fracturing
equipment and certain real property, as well as $2,261 of the
vendor's parts and materials inventory. The purchase price was
satisfied through payment of $41,071 in cash and the assumption of
long-term debt in the amount of $3,442.
(b) Century Oilfield Services Inc.
On November 10, 2009, the Company acquired all of the issued and
outstanding shares of Century Oilfield Services Inc. for aggregate
consideration of $100,898. The Company issued 5,144,344 common shares
at a value of $15.98 per share (based on the volume weighted average
share price for the three days prior to and after the announcement
date of September 20, 2009) with a value of $82,207 in conjunction
with the acquisition, in addition to cash of $13,506 and transaction
costs of $5,185. Net assets acquired and liabilities assumed were as
follows:
(000s) ($)
---------------------------------------------------------------------
Working capital 18,216
Capital assets 108,930
Future income tax asset 21,014
Bank loan and long-term debt (42,069)
Obligation under capital leases (5,193)
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Total consideration 100,898
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10. CAPITAL STRUCTURE
The Company's capital structure is comprised of shareholders' equity
and long-term debt. The Company's objectives in managing capital are
(i) to maintain flexibility so as to preserve the Company's access to
capital markets and its ability to meet its financial obligations,
and (ii) to finance growth, including potential acquisitions.
The Company manages its capital structure and makes adjustments in
light of changing market conditions and new opportunities, while
remaining cognizant of the cyclical nature of the oilfield services
sector. To maintain or adjust its capital structure, the Company may
revise its capital spending, adjust dividends paid to shareholders,
issue new shares or new debt or repay existing debt.
The Company monitors its capital structure and financing requirements
using, amongst other parameters, the ratio of long-term debt to cash
flow. Cash flow for this purpose is defined as cash provided by
operating activities before the net change in non-cash operating
assets and liabilities as reflected in the consolidated statement of
cash flows. The ratio of long-term debt to cash flow does not have
any standardized meaning prescribed under GAAP and may not be
comparable to similar measures used by other companies.
At December 31, 2009, the long-term debt to cash flow ratio was
4.93:1 (December 31, 2008 - 1.98:1) calculated on a 12-month trailing
basis as follows:
As at December 31, 2009 2008
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(000s) ($) ($)
Long-term debt (net of unamortized debt
issue costs and debt discount) (note 4) 269,347 159,899
Cash flow 54,620 80,747
---------------------------------------------------------------------
Long-term debt to cash flow ratio 4.93 1.98
---------------------------------------------------------------------
---------------------------------------------------------------------
The higher ratio at December 31, 2009 as compared to December 31,
2008 is partially due to the fact that additional long-term debt was
assumed as part of the Century acquisition (note 9b). Also, the
additional cash flow contributed as a result of this acquisition was
only included in the Company's results for the period November 10,
2009 through December 31, 2009.
The Company is subject to certain financial covenants relating to
working capital, leverage and the generation of cash flow in respect
of its operating and revolving credit facilities. These covenants are
monitored on a monthly basis. The Company is in compliance with all
such covenants.
The Company's capital management objectives, evaluation measures and
targets have remained unchanged over the periods presented.
11. CONTINGENCIES
Greek Operations
As a result of the acquisition and amalgamation with Denison Energy
Inc. ("Denison") in 2004, the Company assumed certain legal
obligations relating to Denison's Greek operations.
In 1998, North Aegean Petroleum Company E.P.E. ("NAPC"), a Greek
subsidiary of a consortium in which Denison participated (and which
is now a majority-owned subsidiary of the Company), terminated
employees in Greece as a result of the cessation of its oil and gas
operations in that country. Several groups of former employees have
filed claims against NAPC and the consortium alleging that their
termination was invalid and that their severance pay was improperly
determined.
In 1999, the largest group of plaintiffs received a ruling from the
Athens Court of First Instance that their termination was invalid and
that salaries in arrears amounting to approximately $10,270 (6,846
euros) plus interest was due to the former employees. This decision
was appealed to the Athens Court of Appeal, which allowed the appeal
in 2001 and annulled the above-mentioned decision of the Athens Court
of First Instance. The said group of former employees filed an appeal
with the Supreme Court of Greece, which was heard on May 29, 2007.
The Supreme Court of Greece allowed the appeal and sent the matter
back to the Athens Court of Appeal for the consideration of the
quantum of awardable salaries in arrears. On June 3, 2008, the Athens
Court of Appeal rejected NAPC's appeal and reinstated the award of
the Athens Court of First Instance, which decision has been further
appealed to the Supreme Court of Greece, and on November 3, 2009 was
postponed until March 16, 2010. Counsel to NAPC has obtained a
judicial order entitling NAPC to obtain certain employment
information in respect of the plaintiffs which is required in order
to assess the extent to which the plaintiffs have mitigated any
damages which may otherwise be payable. NAPC intends to vigorously
defend the appeal decision before the Supreme Court of Greece both in
relation to the merits of the plaintiffs' case as well as in respect
of the quantum of any damages which may be awarded. In the event that
an adverse ruling is issued by the Supreme Court of Greece, NAPC and
the Company intend to assess available rights of appeal to any other
levels of court in any jurisdiction where such an appeal is
warranted.
Several other smaller groups of former employees have filed similar
cases in various courts in Greece. One of these cases was heard by
the Athens Court of First Instance on January 18, 2007. By judgment
rendered November 23, 2007, the plaintiff's allegations were
partially accepted, and the plaintiff was awarded compensation for
additional work of approximately $53 (35 euros), plus interest. The
appeal of this decision was heard on June 2, 2009, at which time an
additional claim by the plaintiff seeking damages of $335
(223 euros), plus interest, was also heard. A decision in respect of
the hearing has been rendered which accepted NAPC's appeal and
rejected the additional claim of the plaintiff. Another one of the
lawsuits seeking salaries in arrears of $192 (128 euros), plus
interest, was heard by the Supreme Court of Greece on November 6,
2007, at which date the appeal of the plaintiffs was denied for
technical reasons due to improper service. A rehearing of this appeal
scheduled for September 22, 2009 was postponed until September 21,
2010. The remaining action, which is seeking salaries in arrears of
approximately $659 (439 euros) plus interest, was scheduled to be
heard before the Athens Court of First Instance on October 1, 2009,
but was adjourned as a result of the recently held Greek elections.
No date has been set for the adjourned hearing.
The Company has signed an agreement with a Greek exploration and
production company pursuant to which it has agreed to assign
approximately 90% of its entitlement under an offshore license
agreement for consideration including a full indemnity in respect of
the Greek legal claims described above. The completion of the
transactions contemplated by such agreement is subject to certain
conditions precedent, the fulfillment of which is not in the
Company's control.
The direction and financial consequences of the potential decisions
in these actions cannot be determined at this time and, consequently,
no provision has been recorded in these financial statements.
12. SEGMENTED INFORMATION
The Company's activities are conducted in four geographic segments:
Canada, Russia, the United States and Latin America. All activities
are related to fracturing, coiled tubing, cementing and well
stimulation services for the oil and natural gas industry.
United
Canada Russia States
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(000s) ($) ($) ($)
Three Months Ended December 31, 2009
Revenue 84,754 14,698 54,256
Operating income (loss)(1) 18,757 3,047 3,405
Segmented assets 447,889 110,372 240,975
Capital expenditures 11,487 4,663 1,668
Goodwill 7,236 979 2,308
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Three Months Ended December 31, 2008
Revenue 82,788 12,223 68,790
Operating income (loss)(1) 11,814 527 17,757
Segmented assets 299,487 110,207 262,266
Capital expenditures 19,342 4,596 7,229
Goodwill 7,236 979 2,308
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Year Ended December 31, 2009
Revenue 241,821 66,630 218,276
Operating income (loss)(1) 32,864 18,967 25,893
Segmented assets 447,889 110,372 240,975
Capital expenditures 35,196 7,798 56,558
Goodwill 7,236 979 2,308
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Year Ended December 31, 2008
Revenue 273,398 57,355 205,999
Operating income (loss)(1) 40,294 8,842 52,788
Segmented assets 299,487 110,207 262,266
Capital expenditures 36,585 6,343 37,534
Goodwill 7,236 979 2,308
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Latin Consol-
America Corporate idated
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(000s) ($) ($) ($)
Three Months Ended December 31, 2009
Revenue 19,416 - 173,124
Operating income (loss)(1) 2,597 (4,649) 23,157
Segmented assets 41,654 - 840,890
Capital expenditures 427 - 18,245
Goodwill - - 10,523
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Three Months Ended December 31, 2008
Revenue 8,629 - 172,430
Operating income (loss)(1) 655 (5,095) 25,658
Segmented assets 19,812 - 691,772
Capital expenditures 1,066 - 32,233
Goodwill - - 10,523
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Year Ended December 31, 2009
Revenue 64,773 - 591,500
Operating income (loss)(1) 10,612 (17,201) 71,135
Segmented assets 41,654 - 840,890
Capital expenditures 2,624 - 102,176
Goodwill - - 10,523
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Year Ended December 31, 2008
Revenue 27,611 - 564,363
Operating income (loss)(1) (1,817) (18,167) 81,940
Segmented assets 19,812 - 691,772
Capital expenditures 4,345 - 84,807
Goodwill - - 10,523
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(1) Operating income (loss) is defined as net income (loss) plus
depreciation, interest, equity share of net income from long-term
investments, foreign exchange gains or losses, gains or losses on
disposal of capital assets, income taxes and non-controlling
interest.
The following table sets forth consolidated revenue by service line:
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Three Months Ended Year Ended
Dec. 31, Dec. 31,
2009 2008 2009 2008
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(000s) ($) ($) ($) ($)
Fracturing 151,391 145,101 504,441 468,274
Coiled tubing 11,422 16,062 47,667 56,386
Cementing 5,942 8,866 25,696 30,116
Other 4,369 2,401 13,696 9,587
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173,124 172,430 591,500 564,363
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The Company's customer base consists of over 180 oil and natural gas
exploration and production companies, ranging from large
multinational public companies to small private companies.
Notwithstanding the Company's broad customer base, Calfrac has four
significant customers that collectively accounted for approximately
49 percent of the Company's revenue for the year ended December 31,
2009 (December 31, 2008 - three significant customers for
approximately 35 percent) and of such customers, one customer
accounted for approximately 17 percent of the Company's revenue for
the year ended December 31, 2009 (December 31, 2008 - 12 percent).
%SEDAR: 00002062E
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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