Calfrac Announces Third Quarter Results

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Nov 07, 2012, 06:00 ET

CALGARY, Nov. 7, 2012 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX: CFW) announces its financial and operating results for the three and nine months ended September 30, 2012.

HIGHLIGHTS
	Three Months Ended September 30,			Nine Months Ended September 30,
	2012	2011	Change	2012	2011	Change
(C$000s, except per share and unit data)	($)	($)	(%)	($)	($)	(%)
(unaudited)
Financial
Revenue	417,842	440,491	(5)	1,227,729	1,047,355	17
Operating income⁽¹⁾	70,604	126,527	(44)	213,795	262,464	(19)
EBITDA⁽²⁾	70,874	102,042	(31)	217,605	249,536	(13)
Per share - basic	1.59	2.33	(32)	4.92	5.72	(14)
Per share - diluted	1.58	2.30	(31)	4.87	5.62	(13)
Net income attributable to
the shareholders of Calfrac
before foreign exchange
losses or gains⁽³⁾	26,888	69,017	(61)	81,858	120,708	(32)
Per share - basic	0.60	1.58	(62)	1.85	2.77	(33)
Per share - diluted	0.60	1.56	(62)	1.83	2.72	(33)
Net income attributable to
the shareholders of Calfrac	26,917	47,381	(43)	85,903	108,530	(21)
Per share - basic	0.60	1.08	(44)	1.94	2.49	(22)
Per share - diluted	0.60	1.07	(44)	1.92	2.44	(21)
Working capital (end of period)	353,182	375,823	(6)	353,182	375,823	(6)
Total equity (end of period)	783,091	632,889	24	783,091	632,889	24
Weighted average common
shares outstanding (000s)
Basic	44,558	43,767	2	44,214	43,649	1
Diluted	44,949	44,337	1	44,723	44,436	1

Operating (end of period)
Pumping horsepower (000s)				845	656	29
Coiled tubing units (#)				29	29	-
Cementing units (#)				25	23	9

⁽¹⁾	Operating income is defined as net income (loss) before depreciation, interest, foreign exchange gains or losses, gains or losses on disposal of capital assets and income taxes. 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 International Financial Reporting Standards (IFRS) and, accordingly, may not be comparable to similar measures used by other companies.
⁽²⁾	EBITDA is defined as net income (loss) before interest, income 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 IFRS and, accordingly, may not be comparable to similar measures used by other companies.
⁽³⁾	Net income attributable to the shareholders of Calfrac before foreign exchange gains or losses is defined as net income (loss) attributable to the shareholders of Calfrac before foreign exchange gains or losses on an after-tax basis. Management believes that net income attributable to the shareholders of Calfrac before foreign exchange gains or losses is a useful supplemental measure as it provides an indication of the financial results generated by Calfrac without the impact of foreign exchange fluctuations, which are not fully controllable by the Company. Net income attributable to the shareholders of Calfrac before foreign exchange gains or losses is a measure that does not have any standardized meaning prescribed under IFRS and, accordingly, may not be comparable to similar measures used by other companies.

CEO's MESSAGE
I am pleased to present Calfrac's operating and financial highlights for the three and nine months ended September 30, 2012 and to discuss the Company's prospects for the remainder of 2012 and beyond. During the third quarter, the Company:

achieved strong third quarter revenue, despite customers continuing to adjust their capital spending programs due to the ongoing weakness in natural gas prices and volatility in crude oil prices; and
remained active in the early-stage development of many emerging unconventional resource plays in North America.

Financial Highlights

For the three months ended September 30, 2012, the Company recorded:

revenue of $417.8 million, a decrease of 5 percent from the third quarter of 2011 driven primarily by lower pricing in the United States combined with reduced activity in Canada due to a decline in overall drilling and completion activity in Canada as customers continued to adjust their capital spending programs due to the weakness in natural gas prices. The revenue decline in Canada and the United States was partially offset by strong growth in Calfrac's Latin American operations;
operating income of $70.6 million versus $126.5 million in the same quarter of 2011, mainly due to the impact of competitive pricing pressures in the United States market combined with higher product costs in Canada and the United States;
EBITDA of $70.9 million or $1.58 per share diluted versus $102.0 million or $2.30 per share diluted in the comparable quarter of 2011; and
net income attributable to shareholders of Calfrac of $26.9 million or $0.60 per share diluted, including a $0.4 million foreign exchange gain, compared to net income of $47.4 million or $1.07 per share diluted in the third quarter of 2011, which included a primarily unrealized foreign exchange loss of $23.7 million.

For the nine months ended September 30, 2012, the Company generated:

record year-to-date revenue of $1.2 billion versus $1.0 billion in the first nine months of 2011, led by strong growth in Calfrac's United States and Latin American operations;
operating income of $213.8 million compared to $262.5 million in the same period of 2011, a decrease of 19 percent, mainly as a result of higher product costs and competitive pricing pressure in Canada and the United States;
EBITDA of $217.6 million or $4.87 per share diluted versus $249.5 million or $5.62 per share diluted in the comparable period of 2011; and
net income attributable to the shareholders of Calfrac of $85.9 million or $1.92 per share diluted compared to net income of $108.5 million or $2.44 per share diluted in the same period of 2011.

Operational Highlights

Canada

Activity in the third quarter of 2012 began slowly due to the lingering effects of wet weather following an extended spring break-up, combined with the impact of lower crude oil prices and high Canadian differentials. In August and September, activity increased significantly and was mainly focused in the unconventional oil and liquids-rich plays of western Canada. While the Company experienced some pricing erosion, pricing stabilized as the quarter progressed and Calfrac believes that further pricing pressure is unlikely for the remainder of 2012, due to the Company's longstanding customer relationships and significant contract coverage in Canada.

During the third quarter the Company was engaged in many of the emerging liquids-rich natural gas and oil plays throughout western Canada, such as the Beaverhill Lake, Duvernay, Slave Point and Montney. Calfrac was particularly active in the Duvernay shale play. Several projects in these plays commenced in the third quarter and are expected to continue throughout the next couple of quarters. The Company expects that the development of these plays will drive further expansion of its Canadian division.

United States

Calfrac's third-quarter results in the United States were dampened by lower activity levels, increased pricing competition and higher input costs, which resulted in lower operating margins than in the second quarter. Calfrac's established presence in its operating areas, combined with significant contract coverage, lessened the impact of these factors on the Company's results for the third quarter. Calfrac remains focused on managing its commodity and logistical requirements for its operations. The significant industry shift to unconventional oil basins has resulted in high demand and costs for certain grades of proppant, guar and other chemicals, which had a negative impact on Calfrac's operating margins. Calfrac was able to avoid a more significant negative financial impact in the first half of the year by proactively purchasing sufficient guar to cover its requirements. However, the spike in the price of guar during the second quarter had a significant financial impact on the United States division's financial performance in the third quarter. As the cost of guar has begun to come back down in recent months, the Company expects this expense to decrease.

Pricing continued to deteriorate during the third quarter in all operating regions. Calfrac maintains a disciplined approach to pricing and will not compete for work that does not generate a suitable financial return. This resulted in lower levels of callout-related activity during the quarter, as the Company chose not to compete in what became a predatory pricing environment. The pricing decline is primarily driven by the greater availability of equipment due to the sharp decline in natural gas-oriented drilling and completions combined with the significant increase in fracturing capacity in the United States. However, Calfrac's contract-based strategy has provided some stability in revenue amidst a very competitive environment.

Calfrac has a large presence in the Bakken oil shale play and Marcellus shale natural gas play, which are among the most economic oil and natural gas producing plays in the United States. Late in the third quarter, the Company completed its new district facility in Smithfield, Pennsylvania, allowing Calfrac to efficiently service the southwest portion of the Marcellus shale play and most of the emerging Utica play. In addition, Calfrac is in the final stages of completing a new district facility in Williston, North Dakota, which will serve the Company's expanding presence in that region.

Russia

Third-quarter 2012 results for Calfrac's Russian operations demonstrated improvement in both revenue and operating margins from the second quarter of 2012. Improved weather, a more active customer base and Calfrac's proactive management of its operating cost structure combined to deliver the improvement.

Latin America

Calfrac attained record revenue in Mexico during the third quarter of 2012. The majority of the Company's activity was focused in the Chicontepec field, where new technologies are being deployed in an effort to improve the productivity of wells in this region. If such technologies are successful, the Company believes that this region will provide a solid platform for significant growth in Mexico. Cementing and coiled tubing activity in Argentina during the third quarter were consistent with the previous quarter. Calfrac continues to expand its geographical and customer base as development of several emerging shale natural gas and tight oil plays begin to gain momentum. During the third quarter, the Company commenced deploying fracturing equipment to Argentina and plans to begin operations before year-end. Calfrac continued to expand its cementing operations in Colombia during the third quarter and currently operates four cementing crews. The Company was successful in a recent long-term cementing services contract tender with one of the largest oil and gas producers in that country. This development is anticipated to be a growth driver for Calfrac's Colombian operations and it is expected that this emerging international market will grow measurably in the future.

Outlook and Business Prospects

With the recent improvement in natural gas prices and the stability of crude oil prices, Calfrac remains optimistic that North American drilling and completion activity in 2013 will increase over 2012, primarily through the continued development of unconventional resource plays. Technological advancements being applied to tight oil producing reservoirs are expected to improve the economics of these plays and spur additional growth in the Company's oil-focused revenue base. The improvement in natural gas prices from historic lows is also projected to increase activity in Canada and the United States, resulting in higher equipment utilization for Calfrac.

The Company anticipates being active in the oil and natural gas resource plays of western Canada throughout the remainder of 2012 and into 2013, due to Calfrac's strong customer base and long-term contractual arrangements. Well completion activity in the numerous unconventional light oil plays is expected to grow as many of the emerging plays in the Western Canada Sedimentary Basin move to commercial development. However, the Company recognizes that lower crude oil prices and high Canadian crude oil differentials may dampen the cash flows and capital programs of its customer base. As a result, Calfrac will closely monitor its customers' 2013 capital spending plans and prudently adjust the Company's operations and cost structure, as required.

The natural gas resource plays of northwest Alberta and northeast British Columbia are some of the most economic gas-producing areas in North America and activity is expected to increase as the commodity price environment improves. Calfrac believes that activity in the liquids-rich reservoirs of the Deep Basin and Duvernay plays will continue to be strong throughout 2013 and could drive significant future demand for its fracturing and coiled tubing services. The Company is also maintaining a leadership position in the development of the Montney resource play and expects further operational efficiencies to be achieved through the expanded use of 24-hour operations as well as pads for completion work.

In the United States, the Company continues to proactively manage its business in a very competitive market. Pricing has deteriorated in many of the basins in which Calfrac operates, although this has been mitigated by the Company's contract position. As Calfrac has demonstrated in the past, it will remain keenly focused on managing its cost structure in order to maximize financial returns. The Company expects activity to decrease further in the fourth quarter of 2012 as some customers have completed a significant portion of their 2012 capital budgets. Lower pricing combined with reduced activity will likely result in lower operating margins in the fourth quarter. The Company remains optimistic that the recovery in natural gas prices combined with the stability in crude oil prices will bring more normalized activity levels in 2013.

Calfrac's two largest operating regions in the United States are the Bakken oil shale play in North Dakota and the Marcellus shale gas play in Pennsylvania and West Virginia. The Company operates four fracturing fleets in the Bakken, two of which are committed to one of the largest operators in the area under a long-term minimum commitment contract. While pricing has declined in the play generally, Calfrac believes that its contractual position will partially mitigate these pressures.

Calfrac believes that the Marcellus shale play has evolved into one of the most economic natural gas producing regions in the United States. The Company operates three large fracturing spreads in this region, two of which are supported by long-term minimum commitment contracts. Calfrac recently completed a state-of-the-art district facility in Smithfield, Pennsylvania to service this play. Through this base, the Company's operations are also well-positioned to service the Marcellus' liquids-rich area or "wet gas window", which is becoming more prominent. The facility will also provide the capacity to service a large portion of the emerging Utica shale play.

Calfrac expects that equipment utilization in Russia will remain relatively high throughout the remainder of 2012 based on its contract position and customer commitments to complete their 2012 capital programs. The Company remains focused on streamlining its operating costs in an effort to improve future financial performance. In addition, the introduction of new drilling and completion technologies in Western Siberia, including horizontal drilling and multi-stage completions, provide significant future potential to Calfrac. Although the adoption of these technologies is in its early stages, Russia has experienced an increase in the number of horizontal wells drilled and completed during 2012. Over the longer term, Calfrac expects that the fracturing of Russian natural gas wells will also become more prevalent as Russia is one of the world's largest natural gas producers. This is anticipated to also drive additional future demand for the Company's services.

The Mexican oilfield service environment continues to improve as Mexico's primary energy producer refocuses on onshore development. As a result, Calfrac anticipates that there will be additional opportunities to deploy horizontal technology to Mexico's producing regions. The Company expects to participate in many tenders over the next several quarters, which could form the basis of future growth in this market. In Argentina, the Company remains encouraged by the development of a number of unconventional resource plays, which is expected to drive oilfield activity over the longer term. Horizontal drilling combined with multi-stage fracturing will be key inputs for unlocking these reservoirs. To date very limited industry capacity has been sent in-country to service these emerging plays. In response to these market opportunities, Calfrac is in the midst of deploying fracturing equipment into Argentina, which is expected to commence operations late in the fourth quarter. The Company entered the Colombian oilfield service market in the third quarter of 2012. Calfrac has been very encouraged by recent developments in this region and expects that it will provide significant opportunities to carry out the Company's long-term strategy of deploying leading completion technology to regions with strong growth opportunities.

Equipment constructed as part of the Company's 2012 capital program is being delivered as planned and the Company expects that the majority will be deployed in late 2012 or early 2013. This capital program will be funded by cash on hand plus future cash flows. Calfrac's balance sheet is very strong and included working capital of $353.2 million and unused credit facilities of $246.5 million at the end of the third quarter. Subsequent to September 30, 2012, the Company increased its credit facilities from $250.0 million to $300.0 million and extended the term to September 27, 2016. This provides the Company with additional flexibility to pursue long-term growth opportunities as they arise.

I would also like to take this opportunity to thank John Grisdale for over ten years of service to Calfrac. John recently retired as President of the Company's United States Operating Division, a position he had held since 2007. The Company has initiated a search for John's replacement and, in the interim, Bruce Payne, Calfrac's Vice President, Global Operations, who served as President of Calfrac's Canadian Operating Division from 2009 to 2012, has been assigned operational responsibility for its United States operations, including Health, Safety and Environment. In addition, Umberto Marseglia, Calfrac's Vice President, Global Business, will provide additional support and direction to the Sales and Marketing and Technical Services teams in the United States. Both of these functions report directly to Fernando Aguilar, President and Chief Operating Officer.

On behalf of the Board of Directors,

Douglas R. Ramsay
Chief Executive Officer
November 6, 2012

2012 Overview

In the third quarter of 2012, the Company:

reported revenue of $417.8 million, a decrease of 5 percent from the third quarter of 2011 driven primarily by lower pricing in the United States combined with reduced activity in Canada due to a decline in overall drilling and completion activity in Canada as customers continued to adjust their capital spending programs due to the weakness in natural gas prices. The revenue decline in Canada and the United States was partially offset by strong growth in Calfrac's Latin American operations;
reported operating income of $70.6 million versus $126.5 million in the same quarter of 2011, mainly due to the impact of competitive pricing pressures in the Canada and United States markets combined with higher use of more costly proppants and higher product costs in both regions; and
reported net income attributable to shareholders of Calfrac of $26.9 million or $0.60 per share diluted, including a $0.4 million foreign exchange gain, compared to net income of $47.4 million or $1.07 per share diluted in the third quarter of 2011, which included a mainly unrealized foreign exchange loss of $23.7 million.

In the nine months ended September 30, 2012, the Company:

increased revenue by 17 percent to $1.2 billion from $1.0 billion in the first nine months of 2011, primarily by achieving strong growth in activity in Calfrac's United States and Latin American operations;
reported operating income of $213.8 million versus $262.5 million in the same period of 2011, a decrease of 19 percent, mainly as a result of higher product costs and competitive pricing pressure in Canada and the United States;
reported net income attributable to the shareholders of Calfrac of $85.9 million or $1.92 per share diluted compared to net income of $108.5 million or $2.44 per share diluted in the same period of 2011;
recorded capital expenditures of $223.3 million primarily to bolster the Company's fracturing operations; and
reported working capital of $353.2 million at September 30, 2012.

Financial Overview - Three Months Ended September 30, 2012 Versus 2011

Canada


Three Months Ended September 30,	2012	2011	Change
(C$000s, except operational information)	($)	($)	(%)
(unaudited)
Revenue	200,763	230,011	(13)
Expenses
Operating	139,527	138,364	1
Selling, General and Administrative (SG&A)	4,865	4,444	9
	144,392	142,808	1
Operating income⁽¹⁾	56,371	87,203	(35)
Operating income (%)	28.1%	37.9%	(26)
Fracturing revenue per job ($)	205,452	160,649	28
Number of fracturing jobs	891	1,317	(32)
Pumping horsepower, end of period (000s)	306	256	20
Coiled tubing revenue per job ($)	33,852	23,819	42
Number of coiled tubing jobs	523	774	(32)
Coiled tubing units, end of period (#)	22	22	-

⁽¹⁾ Refer to "Non-GAAP Measures" on page 16 for further information.

Revenue

Revenue from Calfrac's Canadian operations during the third quarter of 2012 was $200.8 million versus $230.0 million in the comparable three-month period of 2011. The decrease in revenue was primarily due to the overall decline in natural gas drilling and completions activity in the Western Canada Sedimentary Basin. Total drilling activity in western Canada decreased by approximately 30 percent during the third quarter of 2012 from the corresponding period in 2011. This decrease in activity was partially offset by work that was deferred from the second quarter due to an early spring break-up as well as an increase in average job sizes resulting from the shift in activity towards the oil and liquids-rich areas of western Canada.

Operating Income

Operating income in Canada decreased by 35 percent to $56.4 million during the third quarter of 2012 from $87.2 million in the same period of 2011. The decrease was primarily due to pricing pressure, lower equipment utilization and higher guar expenses, which resulted from cost inflation and the shift in activity toward the oil and liquids-rich areas of western Canada.

United States


Three Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	158,473	165,114	(4)
Expenses
Operating	130,843	115,094	14
SG&A	4,956	3,729	33
	135,799	118,823	14
Operating income⁽¹⁾	22,674	46,291	(51)
Operating income (%)	14.3%	28.0%	(49)
Fracturing revenue per job ($)	65,508	86,578	(24)
Number of fracturing jobs	2,335	1,851	26
Pumping horsepower, end of period (000s)	467	333	40
Cementing revenue per job ($)	29,507	29,985	(2)
Number of cementing jobs	153	162	(6)
Cementing units, end of period (#)	11	9	22
US$/C$ average exchange rate⁽²⁾	0.9957	0.9800	2

⁽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 by 4 percent during the third quarter of 2012 to $158.5 million from $165.1 million in the comparable quarter of 2011. The decrease was due primarily to the completion of smaller fracturing jobs and competitive pricing pressures in the United States market. The decrease in revenue was partially offset by a 26 percent increase in fracturing activity resulting from a larger number of fracturing fleets operating in the Bakken play of North Dakota.

Operating Income

Operating income in the United States was $22.7 million for the third quarter of 2012, a decrease of $23.6 million from the comparative period in 2011. The decrease in operating income was primarily due to competitive pricing pressure combined with higher product costs. The increase in product expenses was mainly due to increases in the price of guar, which is a primary component of oil-focused fluid systems. Higher equipment repairs and maintenance expenses combined with an increase in the number of SG&A personnel supporting the United States operation also contributed to the lower operating income.

Russia


Three Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	31,228	29,233	7
Expenses
Operating	26,181	24,439	7
SG&A	1,552	1,449	7
	27,733	25,888	7
Operating income⁽¹⁾	3,495	3,345	4
Operating income (%)	11.2%	11.4%	(2)
Fracturing revenue per job ($)	99,390	114,816	(13)
Number of fracturing jobs	220	195	13
Pumping horsepower, end of period (000s)	45	45	-
Coiled tubing revenue per job ($)	60,011	53,884	11
Number of coiled tubing jobs	156	127	23
Coiled tubing units, end of period (#)	6	6	-
Rouble/C$ average exchange rate⁽²⁾	0.0312	0.0336	(7)

⁽¹⁾	Refer to "Non-GAAP Measures" on page 16 for further information.
⁽²⁾	Source: Bank of Canada.

Revenue

During the third quarter of 2012, the Company's revenue from Russian operations increased by 7 percent to $31.2 million from $29.2 million in the corresponding quarter of 2011. The increase in revenue was mainly due to a 23 percent increase in coiled tubing activity combined with the completion of larger coiled tubing jobs. The increase was partially offset by the depreciation of the Russian rouble by 7 percent versus the Canadian dollar. The 13 percent increase in fracturing activity was completely offset by a 13 percent decrease in average job sizes due to the Company no longer being required to provide proppant to a significant customer in Western Siberia.

Operating Income

Operating income in Russia in the third quarter of 2012 was $3.5 million compared to $3.3 million in the corresponding period of 2011. The increase in operating income was primarily due to the larger revenue base. The increase was mostly offset by higher fuel consumption due to longer travel distances to job locations in Western Siberia.

Latin America


Three Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	27,378	16,133	70
Expenses
Operating	23,649	15,428	53
SG&A	1,739	1,121	55
	25,388	16,549	53
Operating income (loss)⁽¹⁾	1,990	(416)	-
Operating income (loss) (%)	7.3%	-2.6%	-
Pumping horsepower, end of period (000s)	27	22	23
Cementing units, end of period (#)	13	9	44
Coiled tubing units, end of period (#)	1	1	-
Mexican peso/C$ average exchange rate⁽²⁾	0.0756	0.0796	(5)
Argentine peso/C$ average exchange rate⁽²⁾	0.2160	0.2246	(4)

⁽¹⁾	Refer to "Non-GAAP Measures" on page 16 for further information.
⁽²⁾	Source: Bank of Canada.

Revenue

Calfrac's operations in Latin America generated total revenue of $27.4 million during the third quarter of 2012 versus $16.1 million in the comparable three-month period in 2011. For the three months ended September 30, 2012 and 2011, revenue generated through subcontractors was $5.4 million and $3.2 million, respectively. The increase in revenue was primarily due to higher fracturing activity, job sizes and pricing in Mexico. Higher cementing and coiled tubing activity in Argentina combined with a full quarter of cementing operations in Colombia also contributed to the increase.

Operating Income

Calfrac's Latin America division generated operating income of $2.0 million during the third quarter of 2012 compared to an operating loss of $0.4 million in the comparative quarter in 2011. The turn-around in operating income was primarily due to higher fracturing activity in Mexico. Higher cementing and coiled tubing activity in Argentina also contributed to the positive change from operating loss to operating income. The improvement due to higher utilization was partially offset by higher personnel costs in Argentina and lower than expected cementing equipment utilization in Colombia.

Corporate


Three Months Ended September 30,	2012	2011	Change
(C$000s)	($)	($)	(%)
(unaudited)
Expenses
Operating	2,848	1,635	74
SG&A	11,078	8,261	34
	13,926	9,896	41
Operating loss⁽¹⁾	(13,926)	(9,896)	41
% of Revenue	3.3%	2.2%	50

⁽¹⁾ Refer to "Non-GAAP Measures" on page 16 for further information.

Operating Loss

The 41 percent increase in Corporate operating expenses from the third quarter of 2011 was mainly due to an increase in the Company's global operations and procurement personnel to support the Company's larger scale of operations. These planned additions are designed to support Calfrac's continued focus on service quality, operating efficiency and cost management. Stock-based compensation in the form of restricted share units also contributed to the increase in corporate expenses. The Company granted restricted share units during the first quarter of 2012.

Depreciation

For the three months ended September 30, 2012, depreciation expense increased by 2 percent to $22.4 million from $21.9 million in the corresponding quarter of 2011. The increase in depreciation expense is mainly a result of a larger fleet of equipment operating in North America offset partially by the impact of fully depreciated componentized assets in Canada and the United States.

Foreign Exchange Gains or Losses

The Company recorded a foreign exchange gain of $0.4 million during the third quarter of 2012 versus a $23.7 million foreign exchange loss in the comparative three-month period of 2011. Foreign exchange gains and losses arise primarily from the translation of net monetary assets or liabilities that were held in U.S. dollars in Canada, Russia and Latin America. The majority of the Company's foreign exchange gain recorded in the third quarter of 2012 was attributable to its Russian operations, which have substantial U.S. dollar-denominated liabilities. During the quarter, the U.S. dollar weakened against the Russian rouble by approximately 6 percent, resulting in unrealized foreign exchange gains related to this indebtedness.

Interest

The Company's interest expense during the third quarter of 2012 was $9.5 million compared to $8.7 million for the comparable period in 2011. The increase is primarily due to non-recurring interest costs in Latin America.

Income Tax Expenses

The Company recorded an income tax expense of $12.3 million during the third quarter of 2012 compared to income tax expense of $24.1 million in the comparable period of 2011. Lower profitability in the United States resulted in the decrease in overall income tax expense.

The effective income tax rate for the three months ended September 30, 2012 and 2011 was 32 percent and 34 percent, respectively. The mix of earnings in the various tax jurisdictions in which Calfrac operates resulted in a lower effective tax rate in the third quarter of 2012.

Summary of Quarterly Results


Three Months Ended	Dec. 31,	Mar. 31,	June 30,	Sept. 30,	Dec. 31,	Mar. 31,	June 30,	Sept. 30,
	2010	2011	2011	2011	2011	2012	2012	2012
(unaudited)	($)	($)	($)	($)	($)	($)	($)	($)
Financial (C$000s, except per share and operating data)
Revenue	268,710	337,408	269,456	440,491	490,037	474,107	335,780	417,842
Operating income⁽¹⁾	62,184	88,000	47,937	126,527	150,364	113,381	29,810	70,604
EBITDA⁽¹⁾	62,464	96,897	50,597	102,042	149,146	127,995	18,736	70,874
Per share - basic	1.44	2.23	1.16	2.33	3.40	2.92	0.42	1.59
Per share - diluted	1.42	2.18	1.14	2.30	3.38	2.87	0.42	1.58
Net income (loss) attributable
to shareholders of Calfrac	16,126	49,078	12,071	47,381	78,921	70,841	(11,855)	26,917
Per share - basic	0.37	1.13	0.28	1.08	1.80	1.62	(0.27)	0.60
Per share - diluted	0.37	1.11	0.27	1.07	1.79	1.59	(0.27)	0.60
Capital expenditures	47,015	65,777	72,047	85,130	101,008	84,075	75,286	63,962
Working capital (end of period)	341,677	356,370	324,832	375,823	398,526	431,053	357,128	353,182
Total equity (end of period)	502,032	556,277	568,607	632,889	700,569	779,426	747,591	783,091

Operating (end of period)
Pumping horsepower (000s)	481	530	584	656	719	782	830	845
Coiled tubing units (#)	29	29	29	29	29	29	29	29
Cementing units (#)	21	21	22	23	23	23	23	25

⁽¹⁾ Refer to "Non-GAAP Measures" on page 16 for further information

Financial Overview - Nine Months Ended September 30, 2012 Versus 2011

Canada


Nine Months Ended September 30,	2012	2011	Change
(C$000s, except operational information)	($)	($)	(%)
(unaudited)
Revenue	531,306	518,047	3
Expenses
Operating	378,881	346,381	9
SG&A	12,892	11,525	12
	391,773	357,906	9
Operating income⁽¹⁾	139,533	160,141	(13)
Operating income (%)	26.3%	30.9%	(15)
Fracturing revenue per job ($)	198,892	158,781	25
Number of fracturing jobs	2,440	2,984	(18)
Pumping horsepower, end of period (000s)	306	256	20
Coiled tubing revenue per job ($)	32,865	23,723	39
Number of coiled tubing jobs	1,400	1,865	(25)
Coiled tubing units, end of period (#)	22	22	-

⁽¹⁾ Refer to "Non-GAAP Measures" on page 16 for further information.

Revenue

Revenue from Calfrac's Canadian operations during the first nine months of 2012 was $531.3 million versus $518.0 million in the comparable nine-month period of 2011. The 3 percent increase in revenue was primarily due to larger job sizes as a result of the shift in activity towards the oil and liquids-rich regions of western Canada offset by an overall decline in natural gas drilling and completions activity in 2012. Revenue generated in oil and liquids-rich natural gas plays comprised 75 percent of total Canadian revenue during the first nine months of 2012 compared to 69 percent in the same period of 2011.

Operating Income

Operating income in Canada decreased by 13 percent to $139.5 million during the first nine months of 2012 from $160.1 million in the same period of 2011. The decrease is primarily caused by pricing pressure combined with lower equipment utilization and higher guar costs resulting from a combination of increased pricing and the shift in activity toward the oil and liquids-rich areas of western Canada.

United States


Nine Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	528,508	405,220	30
Expenses
Operating	413,434	271,315	52
SG&A	15,433	9,988	55
	428,867	281,303	52
Operating income⁽¹⁾	99,641	123,917	(20)
Operating income (%)	18.9%	30.6%	(38)
Fracturing revenue per job ($)	74,539	79,881	(7)
Number of fracturing jobs	6,823	4,943	38
Pumping horsepower, end of period (000s)	467	333	40
Cementing revenue per job ($)	31,000	24,173	28
Number of cementing jobs	481	429	12
Cementing units, end of period (#)	11	9	22
US$/C$ average exchange rate⁽²⁾	1.0025	0.9778	3

⁽¹⁾	Refer to "Non-GAAP Measures" on page 16 for further information.
⁽²⁾	Source: Bank of Canada.

Revenue

Revenue from Calfrac's United States operations increased during the first nine months of 2012 to $528.5 million from $405.2 million in the comparable period of 2011. The increase in United States revenue was due primarily to the expansion of fracturing operations in the Bakken play of North Dakota during 2012 and higher fracturing and cementing activity in the Marcellus shale formation in Pennsylvania and West Virginia due to a larger fleet of equipment operating for a full year.

Operating Income

Operating income in the United States was $99.6 million for the nine months ended September 30, 2012, a decrease of 20 percent from the comparative period in 2011. Operating income as a percentage of revenue decreased by 38 percent to 19 percent in the first nine months of 2012 from 31 percent in the comparative period of 2011. The decrease in operating income as a percentage of revenue was primarily due to the impact of competitive pricing pressures combined with a greater use of higher-cost proppants and guar-based chemical systems in North Dakota, which are more costly than traditional fluid systems used in shale gas development. In addition, the Company incurred higher SG&A expenses in order to expand its divisional organization to more effectively support Calfrac's larger United States operations.

Russia


Nine Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	88,569	85,367	4
Expenses
Operating	77,391	71,416	8
SG&A	4,358	5,027	(13)
	81,749	76,443	7
Operating income⁽¹⁾	6,820	8,924	(24)
Operating income (%)	7.7%	10.5%	(27)
Fracturing revenue per job ($)	95,561	110,382	(13)
Number of fracturing jobs	627	561	12
Pumping horsepower, end of period (000s)	45	45	-
Coiled tubing revenue per job ($)	58,954	53,279	11
Number of coiled tubing jobs	486	440	10
Coiled tubing units, end of period (#)	6	6	-
Rouble/C$ average exchange rate⁽²⁾	0.0323	0.0340	(5)

⁽¹⁾	Refer to "Non-GAAP Measures" on page 16 for further information.
⁽²⁾	Source: Bank of Canada.

Revenue

During the first nine months of 2012, the Company's revenue from Russian operations increased by 4 percent to $88.6 million from $85.4 million in the corresponding nine-month period of 2011. The increase in revenue was mainly due to higher fracturing and coiled tubing activity combined with the completion of larger coiled tubing jobs. This was partially offset by smaller fracturing job sizes as a result of the Company no longer providing proppant to a significant customer in Western Siberia during 2012, combined with the 5 percent depreciation in the Russian rouble versus the Canadian dollar.

Operating Income

Operating income in Russia in the first nine months of 2012 was $6.8 million compared to $8.9 million in the corresponding period of 2011. The decrease in operating income was primarily due to higher guar costs and increased fuel expenses.

Latin America


Nine Months Ended September 30,	2012	2011	Change
(C$000s, except operational and exchange rate information)	($)	($)	(%)
(unaudited)
Revenue	79,346	38,721	105
Expenses
Operating	69,005	37,568	84
SG&A	4,603	2,546	81
	73,608	40,114	83
Operating income (loss)⁽¹⁾	5,738	(1,393)	-
Operating income (loss) (%)	7.2%	-3.6%	-
Pumping horsepower, end of period (000s)	27	22	23
Cementing units, end of period (#)	13	9	44
Coiled tubing units, end of period (#)	1	1	-
Mexican peso/C$ average exchange rate⁽²⁾	0.0758	0.0813	(7)
Argentine peso/C$ average exchange rate⁽²⁾	0.2245	0.2298	(2)

⁽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 $79.3 million during the first nine months of 2012 versus $38.7 million in the comparable nine-month period in 2011. For the nine months ended September 30, 2012 and 2011, revenue generated through subcontractors was $17.9 million and $7.7 million, respectively.

The increase in revenue was primarily due to higher fracturing activity in Mexico combined with improved pricing. Higher cementing and coiled tubing activity in Argentina along with improved cementing activity and larger job sizes in Colombia also contributed to the increase in Latin American revenue.

Operating Income

For the nine months ended September 30, 2012, Calfrac's Latin America division generated operating income of $5.7 million compared to an operating loss of $1.4 million in the comparative period in 2011.

The improvement in operating income was primarily due to improved pricing and higher equipment utilization in Mexico and Argentina. This increase was offset partially by higher personnel costs in Argentina and lower-than-expected equipment utilization in Colombia's cementing operations.

Corporate


Nine Months Ended September 30,	2012	2011	Change
(C$000s)	($)	($)	(%)
(unaudited)
Expenses
Operating	7,510	4,503	67
SG&A	30,427	24,622	24
	37,937	29,125	30
Operating loss⁽¹⁾	(37,937)	(29,125)	30
% of Revenue	3.1%	2.8%	11

⁽¹⁾ Refer to "Non-GAAP Measures" on page 16 for further information.

Operating Loss

The 30 percent increase in Corporate operating expenses from the first nine months of 2011 was mainly due to an increase in the number of personnel supporting the Company's expanded operations as well as higher stock-based compensation expenses resulting from the restricted share units that were granted in 2012. The Company commenced granting of restricted share units during the first quarter of 2012.

Depreciation

For the nine months ended September 30, 2012, depreciation expense increased by 4 percent to $66.7 million from $64.5 million in the corresponding period of 2011. The increase in depreciation expense is mainly a result of a larger fleet of equipment operating in North America, offset partially by the impact of fully depreciated componentized assets in Canada and the United States.

Foreign Exchange Gains or Losses

The Company recorded a foreign exchange gain of $4.4 million during the first nine months of 2012 versus a $13.2 million loss in the comparative period of 2011. Foreign exchange gains and losses arise primarily from the translation of net monetary assets or liabilities that were held in U.S. dollars in Canada, Russia and Latin America.

Interest

The Company's interest expense during the first nine months of 2012 increased from the comparable period of 2011 by $1.0 million to $27.4 million.

Income Tax Expenses

The Company recorded an income tax expense of $38.1 million during the first nine months of 2012 compared to income tax expense of $50.3 million in the comparable period of 2011. The decrease in overall income tax expense is primarily the result of lower profitability in the United States.

The effective income tax rate for the nine-month periods ended September 30, 2012 and 2011 was 31 percent and 32 percent, respectively.

Liquidity and Capital Resources


	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s)	($)	($)	($)	($)
(unaudited)
Cash flows provided by (used in):
Operating activities	2,590	42,196	177,029	144,261
Financing activities	(15,464)	(1,550)	(7,305)	(5,095)
Investing activities	(54,802)	(98,057)	(204,277)	(226,317)
Effect of exchange rate changes on cash and cash equivalents	(2,512)	12,551	(2,047)	11,443
Decrease in cash and cash equivalents	(70,188)	(44,860)	(36,600)	(75,708)

Operating Activities

The Company's cash flow provided by operating activities for the nine months ended September 30, 2012 was $177.0 million versus cash flow provided by operating activities of $144.3 million in 2011. This increase was primarily due to higher revenue in Canada and the United States offset partially by lower operating percentages in the United States. At September 30, 2012, Calfrac's working capital was approximately $353.2 million, a decrease of 11 percent from December 31, 2011. The Company reviewed its accounts receivable balance in detail at September 30, 2012 and determined that a provision for doubtful accounts receivable totalling $1.6 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

Cash flow used in financing activities during the first nine months of 2012 was $7.3 million compared to $5.1 million in the comparable 2011 period. During the first nine months of 2012, the Company issued $10.5 million of Calfrac common shares, received bank loan proceeds of $2.7 million, paid dividends of $18.7 million and repaid $1.6 million of finance lease obligations.

On November 18, 2010, Calfrac completed a private placement of senior unsecured notes for an aggregate principal of US$450.0 million due on December 1, 2020, which bear semi-annual interest of 7.50 percent per annum. The Company used the net proceeds of the offering to repay indebtedness, including the funding of the tender offer for its 7.75 percent senior notes due in 2015, as well as for general corporate purposes and to pay related fees and expenses.

Subsequent to September 30, 2012, the Company increased its credit facilities with a syndicate of Canadian chartered banks from $250.0 million to $300.0 million and extended the term to September 27, 2016, assuming the facility is not further extended. The maturity date may be extended by one or more years at the Company's request and lenders' acceptance. The Company also has the ability to prepay principal without penalty. The facilities consist of an operating facility of $20.0 million and a syndicated facility of $280.0 million. The interest rates for these facilities are based on the parameters of certain bank covenants. For prime-based loans, the rate ranges from prime plus 0.50 percent to prime plus 1.25 percent. For LIBOR-based loans and bankers' acceptance-based loans, the margin thereon ranges from 1.50 percent to 2.25 percent above the respective base rates for such loans. As at September 30, 2012, the Company had utilized $3.5 million of its credit facilities for letters of credit, leaving $246.5 million in available credit at such date.

Investing Activities

For the nine months ended September 30, 2012, Calfrac's cash flow used in investing activities was $204.3 million versus $226.3 million for 2011. Capital expenditures were $223.3 million in the first nine months of 2012 compared to $223.0 million in the same period of 2011. Capital expenditures were primarily related to supporting the Company's fracturing operations throughout North America.

Calfrac's 2012 capital budget is projected to be $271.0 million, of which $240.0 million will be directed towards its Canadian and U.S. operations and $31.0 million towards operations in Russia and Latin America. In addition to the 2012 capital program outlined above, Calfrac expects that the carryover amount of approximately $150 million related to its 2011 capital program will be completed during the fourth quarter of 2012. The capital program will focus on the Company's fracturing operations in Canada and the United States as well as facilities and infrastructure capital required to support Calfrac's expanding fracturing, coiled tubing and cementing operations in many of the most active North American unconventional oil and natural gas markets. A portion of this capital is also dedicated to expanding Calfrac's presence in the well servicing markets in Argentina and Colombia.

The effect of changes in foreign exchange rates on the Company's cash and cash equivalents during the first nine months of 2012 was a decrease of $2.0 million versus an increase of $11.4 million during the same period of 2011. These changes relate to cash and cash equivalents held by the Company in a foreign currency.

At September 30, 2012, the Company had cash and cash equivalents of $96.5 million compared to $133.1 million at December 31, 2011.

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 the remainder of 2012 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 October 31, 2012, there were 44,728,459 common shares issued and outstanding, and 2,963,987 options to purchase common shares.

The Company has a Dividend Reinvestment Plan that allows shareholders to direct cash dividends paid on all or a portion of their common shares to be reinvested in additional common shares that will be issued at 95 percent of the volume-weighted average price of the common shares traded on the Toronto Stock Exchange during the last five trading days preceding the relevant dividend payment date.

Normal Course Issuer Bid

The Company filed a Notice of Intention to make a Normal Course Issuer Bid (NCIB) with the Toronto Stock Exchange (TSX) on November 2, 2011. Under the NCIB, the Company may acquire up to 3,246,216 common shares, which was 10 percent of the public float outstanding as at October 31, 2011, during the period November 7, 2011 through November 6, 2012. The maximum number of common shares that may be acquired by the Company during a trading day is 42,392, with the exception that the Company is allowed to make one block purchase of common shares per calendar week that exceeds such limit. All purchases of common shares will be made through the facilities of the TSX at the market price of the shares at the time of acquisition. Any shares acquired under the bid will be cancelled. To date, the Company purchased 196,800 common shares under the NCIB for a total cost of approximately $4.9 million, all financed out of working capital. The Company did not purchase any shares under the NCIB during the first nine months of 2012.

The Company also filed a Notice of Intention (the "Renewal Notice") to renew the NCIB (the "Renewed NCIB") with the TSX on November 1, 2012. Under the Renewed NCIB, the Company may acquire up to 3,318,738 common shares, which was 10 percent of the public float outstanding as at October 31, 2012, during the period November 12, 2012 through November 11, 2013. Subject to the block purchase exemption described in the preceding paragraph, the maximum number of common shares that may be acquired by the Company during a trading day is 44,254. All purchases of common shares will be made through the facilities of the TSX, alternative trading systems or such other exchanges or marketplaces through which the common shares trade from time to time at the market price of the shares at the time of acquisition. Any shares acquired under the bid will be cancelled. A copy of the Renewal Notice may be obtained by any shareholder, without charge, by contacting the Company's Corporate Secretary at 411 - 8^th Avenue S.W., Calgary, Alberta, T2P 1E3, or by telephone at 403-266-6000.

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", "could", "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, future costs or potential liabilities, 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 and North American drilling activity. 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; the demand for fracturing and other stimulation services during drilling and completion of oil and natural gas wells; commodity prices; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; changes in legislation and the regulatory environment; sourcing, pricing and availability of raw materials, components, 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.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized, or that they will have the expected consequences or effects on the Company or its business or operations. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.

Business Risks

The business of Calfrac is subject to certain risks and uncertainties. Prior to making any investment decision regarding Calfrac, investors should carefully consider, among other things, the risk factors set forth in the Company's most recently filed Annual Information Form, which are specifically 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 - 8^th Avenue S.W., Calgary, Alberta, Canada, T2P 1E3, or at www.calfrac.com, or by facsimile at 403-266-7381.

Non-GAAP Measures

Certain supplementary measures in this press release do not have any standardized meaning as prescribed under IFRS and are therefore considered non-GAAP measures. These measures include operating income, EBITDA and net income attributable to the shareholders of Calfrac before foreign exchange gains and losses. 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.

Third Quarter Conference Call

Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2012 second quarter results at 10:00 a.m. (Mountain Time) on Wednesday, November 7, 2012. The conference call dial-in number is 1-888-231-8191 or 647-427-7450. The seven-day replay numbers are 1-855-859-2056 or 416-849-0833 (once connected, enter 50098288). A webcast of the conference call may be accessed via the Company's website at www.calfrac.com.

CONSOLIDATED BALANCE SHEETS
	September 30,	December 31,
As at	2012	2011
(C$000s) (unaudited)	($)	($)
ASSETS
Current assets
Cash and cash equivalents	96,455	133,055
Accounts receivable	304,247	313,898
Income taxes recoverable	-	1,340
Inventories	123,600	94,344
Prepaid expenses and deposits	13,143	10,148
	537,445	552,785
Non-current assets
Property, plant and equipment	967,616	825,504
Goodwill	10,523	10,523
Deferred income tax assets	16,964	16,309
Total assets	1,532,548	1,405,121
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	177,938	149,740
Income taxes payable	53	-
Bank loan (note 3)	4,916	2,309
Current portion of long-term debt (note 4)	481	476
Current portion of finance lease obligations (note 5)	875	1,734
	184,263	154,259
Non-current liabilities
Long-term debt (note 4)	436,138	450,545
Finance lease obligations (note 5)	-	740
Other long-term liabilities	485	774
Deferred income tax liabilities	128,571	98,234
Total liabilities	749,457	704,552
Equity attributable to the shareholders of Calfrac
Capital stock (note 6)	293,570	271,817
Contributed surplus (note 8)	25,864	24,170
Loan receivable for purchase of common shares (note 14)	(2,500)	(2,500)
Retained earnings	469,675	405,954
Accumulated other comprehensive income (loss)	(2,867)	1,334
	783,742	700,775
Non-controlling interest	(651)	(206)
Total equity	783,091	700,569
Total liabilities and equity	1,532,548	1,405,121

See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s, except per share data) (unaudited)	($)	($)	($)	($)
Revenue	417,842	440,491	1,227,729	1,047,355
Cost of sales (note 15)	345,454	316,858	1,012,968	795,643
Gross profit	72,388	123,633	214,761	251,712
Expenses
Selling, general and administrative	24,190	19,003	67,713	53,709
Foreign exchange (gains) losses	(358)	23,720	(4,442)	13,244
Loss (gain) on disposal of property, plant and equipment	88	765	632	(316)
Interest	9,504	8,739	27,421	26,436
	33,424	52,227	91,324	93,073
Income before income tax	38,964	71,406	123,437	158,639
Income tax expense (recovery)
Current	3,959	(956)	5,077	1,245
Deferred	8,350	25,077	32,980	49,095
	12,309	24,121	38,057	50,340
Net income for the period	26,655	47,285	85,380	108,299

Net income (loss) attributable to:
Shareholders of Calfrac	26,917	47,381	85,903	108,530
Non-controlling interest	(262)	(96)	(523)	(231)
	26,655	47,285	85,380	108,299

Earnings per share (note 6)
Basic	0.60	1.08	1.94	2.49
Diluted	0.60	1.07	1.92	2.44

See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s) (unaudited)	($)	($)	($)	($)
Net income for the period	26,655	47,285	85,380	108,299
Other comprehensive income (loss):
Change in foreign currency translation adjustment	145	13,868	(4,316)	10,340
Comprehensive income for the period	26,800	61,153	81,064	118,639
Comprehensive income (loss) attributable to:
Shareholders of Calfrac	27,074	61,252	81,702	118,858
Non-controlling interest	(274)	(99)	(638)	(219)
	26,800	61,153	81,064	118,639

See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Equity Attributable to the Shareholders of Calfrac
	Share Capital	Contributed Surplus	Loan Receivable for Purchase of Common Shares	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total	Non- Controlling Interest	Total Equity
(C$000s) (unaudited)	($)	($)	($)	($)	($)	($)	($)	($)
Balance - January 1, 2012	271,817	24,170	(2,500)	1,334	405,954	700,775	(206)	700,569
Net income (loss) for the period	-	-	-	-	85,903	85,903	(523)	85,380
Other comprehensive income (loss):
Cumulative translation adjustment	-	-	-	(4,201)	-	(4,201)	(115)	(4,316)
Comprehensive income (loss) for the period	-	-	-	(4,201)	85,903	81,702	(638)	81,064
Stock options:
Stock-based compensation recognized	-	5,064	-	-	-	5,064	-	5,064
Proceeds from issuance of shares	13,899	(3,370)	-	-	-	10,529	-	10,529
Dividend Reinvestment Plan shares
issued (note 20)	7,854	-	-	-	-	7,854	-	7,854
Dividends	-	-	-	-	(22,182)	(22,182)	-	(22,182)
Non-controlling interest contribution	-	-	-	-	-	-	193	193
Balance - September 30, 2012	293,570	25,864	(2,500)	(2,867)	469,675	783,742	(651)	783,091

Balance - January 1, 2011	263,490	15,468	(2,500)	(4,252)	229,865	502,071	(39)	502,032
Net income (loss) for the period	-	-	-	-	108,530	108,530	(231)	108,299
Other comprehensive income (loss):
Cumulative translation adjustment	-	-	-	10,328	-	10,328	12	10,340
Comprehensive income (loss) for the period	-	-	-	10,328	108,530	118,858	(219)	118,639
Stock options:
Stock-based compensation recognized	-	6,158	-	-	-	6,158	-	6,158
Proceeds from issuance of shares	9,126	(1,988)	-	-	-	7,138	-	7,138
Shares cancelled (note 8)	(105)	105	-	-	-	-	-	-
Denison Plan of Arrangement (note 8)	-	2,206	-	-	-	2,206	-	2,206
Dividends	-	-	-	-	(3,284)	(3,284)	-	(3,284)
Balance - September 30, 2011	272,511	21,949	(2,500)	6,076	335,111	633,147	(258)	632,889

See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s) (unaudited)	($)	($)	($)	($)
CASH FLOWS PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income for the period	26,655	47,285	85,380	108,299
Adjusted for the following:
Depreciation	22,406	21,897	66,747	64,461
Stock-based compensation	1,743	1,311	5,064	6,158
Unrealized foreign exchange (gains) losses	(4,516)	25,783	(8,433)	13,242
Loss (gain) on disposal of property, plant and equipment	88	765	632	(316)
Interest	9,504	8,739	27,421	26,436
Deferred income taxes	8,350	25,077	32,980	49,095
Interest paid	(412)	632	(17,713)	(18,070)
Changes in items of working capital (note 11)	(61,228)	(89,293)	(15,049)	(105,044)
Cash flows provided by operating activities	2,590	42,196	177,029	144,261
FINANCING ACTIVITIES
Bank loan proceeds	-	1,162	2,734	1,258
Issuance of long-term debt, net of debt issuance costs	-	(811)	71	(422)
Long-term debt repayments	(106)	(109)	(336)	(7,767)
Finance lease obligation repayments	(133)	(326)	(1,599)	(963)
Denison Plan of Arrangement (note 8)	-	-	-	2,206
Net proceeds on issuance of common shares	874	1,818	10,529	7,138
Dividends paid (note 20)	(16,099)	(3,284)	(18,704)	(6,545)
Cash flows used in financing activities	(15,464)	(1,550)	(7,305)	(5,095)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (note 11)	(55,320)	(98,590)	(205,983)	(229,728)
Proceeds on disposal of property, plant and equipment	518	533	1,513	3,389
Other	-	-	193	22
Cash flows used in investing activities	(54,802)	(98,057)	(204,277)	(226,317)
Effect of exchange rate changes on cash and cash equivalents	(2,512)	12,551	(2,047)	11,443
Decrease in cash and cash equivalents	(70,188)	(44,860)	(36,600)	(75,708)
Cash and cash equivalents, beginning of period	166,643	185,756	133,055	216,604
Cash and cash equivalents, end of period	96,455	140,896	96,455	140,896

See accompanying notes to the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2012
(Amounts in text and tables are in thousands of Canadian dollars, except share data and certain other exceptions as indicated) (unaudited)

1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ADOPTION OF IFRS

Calfrac Well Services Ltd. (the "Company") was formed through the amalgamation of Calfrac Well Services Ltd. (predecessor company originally incorporated on June 28, 1999) and Denison Energy Inc. ("Denison") on March 24, 2004 under the Business Corporations Act (Alberta). The registered office is at 411 - 8^th Avenue S.W., Calgary, Alberta, Canada, T2P 1E3. The Company provides specialized oilfield services, including hydraulic fracturing, coiled tubing, cementing and other well completion services to the oil and natural gas industries in Canada, the United States, Russia, Mexico, Argentina and Colombia.

The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as set out in Part I of the Canadian Institute of Chartered Accountants' (CICA) Handbook, which requires publicly accountable enterprises to prepare their financial statements under International Financial Reporting Standards (IFRS).

These condensed consolidated interim financial statements were prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting using accounting policies consistent with IFRS as issued by the International Accounting Standards Board (IASB) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC). They should be read in conjunction with the annual financial statements for the year ended December 31, 2011, which were prepared in accordance with IFRS.

These financial statements were approved by the Audit Committee of the Board of Directors for issuance on November 6, 2012.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual financial statements.

For purposes of calculating income taxes during interim periods, the Company utilizes estimated annualized income tax rates. Current income tax expense is only recognized when taxable income is such that current income taxes become payable.

3. BANK LOAN

The Company's Colombian subsidiary has an operating line of credit of which US$5,000 was drawn at September 30, 2012 (December 31, 2011 - $2,270). It bears interest at the LIBOR rate plus 4.5 percent and is secured by a Company guarantee.

4. LONG-TERM DEBT

	September 30,	December 31,
As at	2012	2011
(C$000s)	($)	($)
US$450,000 senior unsecured notes due December 1, 2020,
bearing interest at 7.5% payable semi-annually	442,440	457,650
Less: unamortized debt issuance costs	(7,031)	(7,943)
	435,409	449,707
$230,000 extendible revolving term loan facility, secured by
Canadian and U.S. assets of the Company	-	-
Less: unamortized debt issuance costs	(1,027)	(1,359)
	(1,027)	(1,359)
US$2,101 mortgage maturing May 2018 bearing interest at U.S.
prime less 1%, repayable at US$33 per month principal and
interest, secured by certain real property	2,066	2,399
ARS819 Argentina term loan maturing December 31, 2013
bearing interest at 18.25%, repayable at ARS61 per month
principal and interest, secured by a Company guarantee	171	274
	436,619	451,021
Less: current portion of long-term debt	(481)	(476)
	436,138	450,545

The fair value of the senior unsecured notes, as measured based on the closing quoted market price at September 30, 2012, was $438,016 (December 31, 2011 - $446,209). The carrying values of the mortgage obligations, term loan and revolving term loan facilities approximate their fair values as the interest rates are not significantly different from current interest rates for similar loans.

The interest rate on the $230,000 revolving term loan facility is based on the parameters of certain bank covenants. For prime-based loans, the rate ranges from prime plus 0.5 percent to prime plus 1.25 percent. For LIBOR-based loans and bankers' acceptance-based loans, the margin thereon ranges from 1.75 percent to 2.5 percent above the respective base rates for such loans. The facility is repayable on or before its maturity date of September 27, 2015, assuming the facility is not extended. The maturity date may be extended by one or more years at the Company's request and lenders' acceptance. The Company also has the ability to prepay principal without penalty. Debt issuance costs related to this facility are amortized over the facility's term.

Interest on long-term debt (including the amortization of debt issuance costs) for the nine months ended September 30, 2012 was $27,232 (year ended December 31, 2011 - $36,312).

The Company also has an extendible operating loan facility, which includes overdraft protection in the amount of $20,000. The interest rate is based on the parameters of certain bank covenants in the same fashion as the revolving term facility. Drawdowns under this facility are repayable on September 27, 2015, assuming the facility is not extended. The term and commencement of principal repayments may be extended by one year on each anniversary at the Company's request and lender's acceptance. The operating facility is secured by the Canadian and U.S. assets of the Company.

At September 30, 2012, the Company had utilized $3,490 of its loan facility for letters of credit, leaving $246,510 in available credit.

Subsequent to September 30, 2012, the revolving term loan facility and operating loan facility were extended. The revolving term loan facility was increased to $280,000 and is based on the parameters of certain bank covenants. For prime-based loans, the rate ranges from prime plus 0.5 percent to prime plus 1.25 percent. For LIBOR-based loans and bankers' acceptance-based loans, the margin thereon ranges from 1.5 percent to 2.25 percent above the respective base rates for such loans. The facility is repayable on or before its maturity date of September 27, 2016, assuming the facility is not extended. The maturity date may be extended by one or more years at the Company's request and lenders' acceptance. The Company also has the ability to prepay principal without penalty.

5. FINANCE LEASE OBLIGATIONS


	September 30,	December 31,
As at	2012	2011
(C$000s)	($)	($)
Finance lease contracts bearing interest at 5.68%, repayable at
$49 per month, secured by certain equipment	899	2,579
Less: interest portion of contractual payments	(24)	(105)
	875	2,474
Less: current portion of finance lease obligations	(875)	(1,734)
	-	740

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

6. CAPITAL STOCK

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


	Nine Months Ended		Year Ended
	September 30, 2012		December 31, 2011
Continuity of Common Shares	Shares	Amount	Shares	Amount
	(#)	(C$000s)	(#)	(C$000s)
Balance, beginning of period	43,709,073	271,817	43,488,099	263,490
Issued upon exercise of stock options	646,263	13,899	434,250	9,656
Dividend Reinvestment Plan shares
issued (note 20)	369,648	7,854	-	-
Shares cancelled (note 8)	-	-	(16,476)	(105)
Purchased under Normal Course Issuer Bid	-	-	(196,800)	(1,224)
Balance, end of period	44,724,984	293,570	43,709,073	271,817

The weighted average number of common shares outstanding for the nine months ended September 30, 2012 was 44,214,061 basic and 44,722,718 diluted (nine months ended September 30, 2011 - 43,649,499 basic and 44,436,450 diluted). The difference between basic and diluted shares is attributable to the dilutive effect of stock options issued by the Company as disclosed in note 9.

7. NORMAL COURSE ISSUER BID

The Company received regulatory approval to purchase its own common shares in accordance with a Normal Course Issuer Bid for the one-year period November 7, 2011 through November 6, 2012. No shares were purchased during the period January 1, 2012 through September 30, 2012. During the year ended December 31, 2011, 196,800 common shares were purchased at a cost of $4,926 and, of the amount paid, $1,224 was charged to capital stock and $3,702 to retained earnings. The common shares were cancelled prior to December 31, 2011.

The Company has filed a Notice of Intention to make a Normal Course Issuer Bid with the Toronto Stock Exchange. Under the Normal Course Issuer Bid, the Company will be permitted to acquire up to approximately 3.3 million of its common shares during the period November 12, 2012 through November 11, 2013. Any shares acquired under the bid will be cancelled. A copy of the Notice of Intention to make a Normal Course Issuer Bid is available without charge on request to the Company's Corporate Secretary.

8. CONTRIBUTED SURPLUS


	Nine Months	Year Ended
	Ended	December 31,
Continuity of Contributed Surplus	Sept. 30, 2012	2011
(C$000s)	($)	($)
Balance, beginning of period	24,170	15,468
Stock options expensed	5,064	8,500
Stock options exercised	(3,370)	(2,109)
Shares cancelled	-	105
Denison Plan of Arrangement	-	2,206
Balance, end of period	25,864	24,170

The Plan of Arrangement that governed the amalgamation with Denison in 2004 included a six-year "sunset clause" which provided that untendered shares would be surrendered to the Company after six years. On January 19, 2011, 16,476 common shares of the Company previously held in trust for untendered shareholders were cancelled. In addition, the Company became entitled to approximately 517,000 shares of Denison Mines Corporation. These shares were sold on the Toronto Stock Exchange for net proceeds of approximately $2,189.

For accounting purposes, the cancellation of the 16,476 common shares was recorded as a reduction of capital stock and an increase in contributed surplus in the amount of $105, which represents the book value of the cancelled shares as of the date of amalgamation with Denison on March 24, 2004. The receipt and sale of the shares of Denison Mines Corporation is considered an equity contribution by the Company's owners. Consequently, the net proceeds from their sale, along with approximately $17 of cash received in respect of fractional share entitlements, were added to contributed surplus in an amount totalling $2,206.

9. STOCK-BASED COMPENSATION

(a) Stock Options

Nine months ended Sept. 30,	2012		2011
		Average		Average
		Exercise		Exercise
Continuity of Stock Options	Options	Price	Options	Price
	(#)	(C$)	(#)	(C$)
Balance, beginning of period	3,198,475	23.31	2,583,825	17.50
Granted during the period	673,400	27.88	1,127,800	34.30
Exercised for common shares	(646,263)	16.29	(409,400)	17.44
Forfeited	(272,475)	26.32	(98,275)	25.34
Balance, end of period	2,953,137	25.60	3,203,950	23.18

Stock options vest equally over four years and expire five years from the date of grant. The exercise price of outstanding options ranges from $8.35 to $37.18, with a weighted average remaining life of 2.79 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.

(b) Restricted Share Units

During the first quarter of 2012, the Company commenced granting of restricted share units to its employees. These units vest equally over three years and are settled either in cash (equal to the market value of the underlying shares at the time of exercise) or in Company shares purchased on the open market. The fair value of the restricted share units is recognized over the vesting period, based on the current market price of the Company's shares. For the nine months ended September 30, 2012, $2,670 of compensation expense was recognized for restricted share units (nine months ended September 30, 2011 - $nil). This amount is included in selling, general and administrative expense. There were 246,205 restricted share units outstanding as at September 30, 2012.

10. FINANCIAL INSTRUMENTS

The Company's financial instruments included in the consolidated balance sheets are comprised of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, bank loan, long-term debt and finance lease obligations.

The fair values of financial instruments included in the consolidated balance sheets, except long-term debt, approximate their carrying amounts. The fair value of the senior unsecured notes, based on the closing market price at September 30, 2012, was $438,016 before deduction of unamortized debt issuance costs (December 31, 2011 - $446,209). The carrying value of the senior unsecured notes at September 30, 2012 was $442,440 before deduction of unamortized debt issuance costs (December 31, 2011 - $457,650). The fair values of the remaining long-term debt and finance lease obligations approximate their carrying values, as described in notes 4 and 5.

11. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in non-cash operating assets and liabilities are as follows:

	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s)
Accounts receivable	(93,203)	(120,052)	9,650	(125,478)
Income taxes recoverable / payable	2,744	(1,396)	1,393	626
Inventory	(8,102)	(17,966)	(29,256)	(31,624)
Prepaid expenses and deposits	2,589	(2,590)	(2,995)	(3,631)
Accounts payable and accrued liabilities	34,795	52,736	6,448	55,172
Other long-term liabilities	(51)	(25)	(289)	(109)
	(61,228)	(89,293)	(15,049)	(105,044)

Purchase of property, plant and equipment is comprised of:

	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s)
Property, plant and equipment additions	(63,962)	(85,130)	(223,323)	(222,954)
Change in liabilities related to purchase of
property, plant and equipment	8,642	(13,460)	17,340	(6,774)
	(55,320)	(98,590)	(205,983)	(229,728)

12. 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 calculated on a 12-month trailing basis and is defined below.

		September 30,	December 31,
For the twelve months ended		2012	2011
(C$000s)		($)	($)
Net income		164,238	187,157
Adjusted for the following:
	Depreciation	89,743	87,457
	Amortization of debt issuance costs and debt discount	1,240	1,207
	Stock-based compensation	7,406	8,500
	Unrealized foreign exchange (gains) losses	(9,730)	11,945
	Loss (gain) on disposal of property, plant and equipment	860	(88)
	Deferred income taxes	70,922	87,037
Cash flow		324,679	383,215

The ratio of long-term debt to cash flow does not have any standardized meaning under IFRS and may not be comparable to similar measures used by other companies.

At September 30, 2012, the long-term debt to cash flow ratio was 1.34:1 (December 31, 2011 - 1.18:1) calculated on a 12-month trailing basis as follows:

	September 30,	December 31,
As at	2012	2011
(C$000s, except ratio)	($)	($)
Long-term debt (net of unamortized debt issuance costs) (note 4)	436,619	451,021
Cash flow	324,679	383,215
Long-term debt to cash flow ratio	1.34:1	1.18:1

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.

13. PURCHASE OBLIGATIONS

The Company has obligations for the purchase of products, services and capital assets over the next four years that total approximately $224,321.

14. RELATED-PARTY TRANSACTIONS

An entity controlled by a director of the Company provides ongoing real estate advisory services to the Company. The fees charged for such services for the nine months ended September 30, 2012 were $24 (year ended December 31, 2011 - $90), as measured at the exchange amount.

In November 2010, the Company lent a senior officer $2,500 to purchase common shares of the Company on the Toronto Stock Exchange. The loan is on a non-recourse basis and is secured by the common shares acquired with the loan proceeds. It is for a term of five years and bears interest at 3.375 percent per annum, payable annually. The market value of the shares that secure the loan was approximately $2,002 as at September 30, 2012 (December 31, 2011 - $2,411). In accordance with applicable accounting standards regarding share purchase loans receivable, this loan is classified as a reduction of shareholders' equity due to its non-recourse nature. In addition, the shares purchased with the loan proceeds are considered to be, in substance, stock options.

The Company leases certain premises from an entity controlled by a director of the Company. The rent charged for these premises for the nine months ended September 30, 2012 was $267 (year ended December 31, 2011 - $312), as measured at the exchange amount.

15. PRESENTATION OF EXPENSES

The Company presents its expenses on the consolidated statements of operations using the function-of-expense method whereby expenses are classified according to their function within the Company. This method was selected as it is more closely aligned with the Company's business structure. The Company's functions under IFRS are as follows:

operations; and
selling, general and administrative.

Cost of sales includes direct operating costs (including product costs, direct labour and overhead costs) and depreciation on assets relating to operations.

Additional information on the nature of expenses is as follows:

Nine Months Ended September 30,	2012	2011
(C$000s)	($)	($)
Product costs	374,947	269,359
Depreciation	66,747	64,461
Amortization of debt issuance costs and debt discount	922	889
Employee benefits expense (note 16)	268,382	220,332

16. EMPLOYEE BENEFITS EXPENSE

Employee benefits include all forms of consideration given by the Company in exchange for services rendered by employees.

Nine Months Ended September 30,	2012	2011
(C$000s)	($)	($)
Salaries and short-term employee benefits	253,415	210,254
Post-employment benefits (group retirement savings plan)	2,499	2,072
Share-based payments	10,901	7,720
Termination benefits	1,567	286
	268,382	220,332

17. CONTINGENCIES

Greek Litigation

As a result of the acquisition and amalgamation with 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 natural gas operations in that country. Several groups of former employees 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 $8,649 (6,846 euros) plus interest were due to the former employees. This decision was appealed to the Athens Court of Appeal, which allowed the appeal in 2001 and annulled the above-mentioned decision of the Athens Court of First Instance. The said group of former employees filed an appeal with the Supreme Court of Greece, which was heard on May 29, 2007. The Supreme Court of Greece allowed the appeal and sent the matter back to the Athens Court of Appeal for the consideration of the quantum of awardable salaries in arrears. On June 3, 2008, the Athens Court of Appeal rejected NAPC's appeal and reinstated the award of the Athens Court of First Instance, which decision was further appealed to the Supreme Court of Greece. The matter was heard on April 20, 2010 and a decision rejecting such appeal was rendered in June 2010. NAPC and the Company are assessing available rights of appeal to any other levels of court in any jurisdiction 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 $44 (35 euros), plus interest. The appeal of this decision was heard on June 2, 2009, at which time an additional claim by the plaintiff was also heard. A decision in respect of the hearing has been rendered which accepted NAPC's appeal of the initial claim and partially accepted the additional claim of the plaintiff, resulting in an award of approximately $14 (11 euros), plus interest.

Another one of the lawsuits seeking salaries in arrears of $162 (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 was heard on September 21, 2010 and the decision rendered declared once again the appeal inadmissible due to technical reasons. The remaining action, which is seeking salaries in arrears of approximately $555 (439 euros) plus interest, was scheduled to be heard before the Athens Court of First Instance on October 1, 2009, but was adjourned until November 18, 2011 as a result of the Greek elections. On November 18, 2011 the hearing of this claim was again postponed until May 24, 2012, on which date it was further postponed until February 22, 2013

The maximum aggregate interest payable under the claims noted above amounted to $14,543 (11,511 euros) as at September 30, 2012.

The previously disclosed agreement with a Greek exploration and production company pursuant to which the Company had agreed to assign approximately 90 percent of its entitlement under an offshore licence agreement for consideration including a full indemnity in respect of the Greek legal claims described above has expired in accordance with its terms. Notwithstanding such expiry, the Greek exploration and production company continues to work towards the satisfaction of the conditions precedent in the expired agreement in order to facilitate a closing.

Management is of the view that it is improbable there will be an outflow of economic resources from the Company to settle these claims. Consequently, no provision has been recorded in these interim consolidated financial statements.

U.S. Litigation

A collective and class action claim was filed against the Company on September 27, 2012 in the United States District Court for the Western District of Pennsylvania. The direction and financial consequences of the complaint cannot be determined at this time and consequently, no provision has been recorded in the Company's financial statements.

18. SEGMENTED INFORMATION

The Company's activities are conducted in four geographic segments: Canada, the United States, Russia and Latin America. All activities are related to hydraulic fracturing, coiled tubing, cementing and other well completion services for the oil and natural gas industry.

The business segments presented reflect the Company's management structure and the way its management reviews business performance. The Company evaluates the performance of its operating segments primarily based on operating income, as defined below.

		United		Latin
	Canada	States	Russia	America	Corporate	Consolidated
(C$000s)	($)	($)	($)	($)	($)	($)
Three Months Ended September 30, 2012
Revenue	200,763	158,473	31,228	27,378	-	417,842
Operating income (loss)⁽¹⁾	56,371	22,674	3,495	1,990	(13,926)	70,604
Segmented assets	727,781	590,146	123,185	91,436	-	1,532,548
Capital expenditures	22,184	39,256	1,610	912	-	63,962
Goodwill	7,236	2,308	979	-	-	10,523
Three Months Ended September 30, 2011
Revenue	230,011	165,114	29,233	16,133	-	440,491
Operating income (loss)⁽¹⁾	87,203	46,291	3,345	(416)	(9,896)	126,527
Segmented assets	662,917	503,107	123,869	43,533	-	1,333,426
Capital expenditures	43,088	38,179	2,864	999	-	85,130
Goodwill	7,236	2,308	979	-	-	10,523
Nine Months Ended September 30, 2012
Revenue	531,306	528,508	88,569	79,346	-	1,227,729
Operating income (loss)⁽¹⁾	139,533	99,641	6,820	5,738	(37,937)	213,795
Segmented assets	727,781	590,146	123,185	91,436	-	1,532,548
Capital expenditures	102,686	111,978	3,719	4,940	-	223,323
Goodwill	7,236	2,308	979	-	-	10,523
Nine Months Ended September 30, 2011
Revenue	518,047	405,220	85,367	38,721	-	1,047,355
Operating income (loss)⁽¹⁾	160,141	123,917	8,924	(1,393)	(29,125)	262,464
Segmented assets	662,917	503,107	123,869	43,533	-	1,333,426
Capital expenditures	104,045	109,949	7,461	1,499	-	222,954
Goodwill	7,236	2,308	979	-	-	10,523

⁽¹⁾	Operating income (loss) is defined as net income (loss) before depreciation, interest, foreign exchange gains or losses, gain or loss on disposal of property, plant and equipment, and income taxes or recoveries. Operating income was calculated as follows:


	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s)
Net income	26,655	47,285	85,380	108,299
Add back (deduct):
Depreciation	22,406	21,897	66,747	64,461
Interest	9,504	8,739	27,421	26,436
Foreign exchange (gains) losses	(358)	23,720	(4,442)	13,244
Loss (gain) on disposal of property, plant and
equipment	88	765	632	(316)
Income taxes	12,309	24,121	38,057	50,340
Operating income	70,604	126,527	213,795	262,464

Operating income does not have any standardized meaning under IFRS and may not be comparable to similar measures used by other companies.

The following table sets forth consolidated revenue by service line:

	Three Months Ended Sept. 30,		Nine Months Ended Sept. 30,
	2012	2011	2012	2011
(C$000s)
Fracturing	376,030	405,747	1,104,690	957,307
Coiled tubing	28,579	25,548	80,577	68,143
Cementing	7,865	5,980	24,568	14,161
Other	5,368	3,216	17,894	7,744
	417,842	440,491	1,227,729	1,047,355

19. SEASONALITY OF OPERATIONS

The Company's Canadian business is seasonal. The lowest activity is typically experienced during the second quarter of the year when road weight restrictions are in place and access to wellsites in Canada is reduced.

20. DIVIDEND REINVESTMENT PLAN

The Company has a Dividend Reinvestment Plan (DRIP) that allows shareholders to direct cash dividends paid on all or a portion of their common shares to be reinvested in additional common shares that are issued at 95 percent of the volume-weighted average price of the common shares traded on the Toronto Stock Exchange during the last five trading days preceding the relevant dividend payment date.

A dividend of $0.10 per common share was declared on December 8, 2011 and paid on January 31, 2012. Of the total dividend in the amount of $4,376, $1,771 was reinvested under the DRIP into 71,189 common shares of the Company.

A dividend of $0.50 per common share was declared on June 15, 2012 and paid on July 16, 2012. Of the total dividend in the amount of $22,182, $6,083 was reinvested under the DRIP into 298,459 common shares of the Company.

SOURCE: Calfrac Well Services Ltd.

Douglas R. Ramsay
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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