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Calfrac Announces Fourth Quarter Results


CALGARY, Feb. 26, 2013 /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, 2012.

HIGHLIGHTS


                        Three Months Ended       Years Ended December
                              December 31,                        31,
                       2012    2011 Change      2012      2011 Change

(C$000s, except per     ($)     ($)    (%)       ($)       ($)    (%)
share and unit
data)

(unaudited)                                                          

Financial                                                            

Revenue             367,487 490,037   (25) 1,595,216 1,537,392      4

Operating income(    43,218 150,364   (71)   257,013   412,828   (38)
(1))

EBITDA((2))          46,866 149,146   (69)   264,471   398,682   (34)
       Per share -     1.05    3.40   (69)      5.97      9.13   (35)
       basic
       Per share -     1.04    3.38   (69)      5.90      8.98   (34)
       diluted

Net income                                                           
attributable to
       the                                                           
       shareholders
       of Calfrac
       before                                                        
       foreign
       exchange
       losses         8,073  78,388   (90)    89,931   199,097   (55)
       (gains)((3))
       Per share -     0.18    1.79   (90)      2.03      4.57   (56)
       basic
       Per share -     0.18    1.78   (90)      2.01      4.48   (55)
       diluted

Net income                                                           
attributable to
       the           11,243  78,921   (86)    97,146   187,451   (48)
       shareholders
       of Calfrac
       Per share -     0.25    1.80   (86)      2.19      4.29   (49)
       basic
       Per share -     0.25    1.79   (86)      2.17      4.22   (49)
       diluted

Working capital                              322,857   398,526   (19)
(end of period)

Total equity (end                            780,759   700,569     11
of period)

Weighted average                                                     
common
       shares                                                        
       outstanding
       (000s)
       Basic         44,694  43,805      2    44,335    43,689      1
       Diluted       45,073  44,091      2    44,808    44,393      1
                                                                     

Operating (end of                                                    
period)

Pumping horsepower                               977       719     36
(000s)

Coiled tubing units                               29        29      -
(#)

Cementing units (#)                               26        23     13

((1))  Operating income is defined as net income (loss) before
       depreciation, interest, foreign exchange gains or losses, gains
       or losses on disposal of property, plant and equipment 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 2012 
and to discuss our prospects for 2013. During the fourth quarter, our Company:
    --  experienced a very active quarter in Canada despite lower
        overall industry activity;
    --  completed its new district facilities in North Dakota and
        Pennsylvania to better service the Bakken oil shale play as
        well as the Marcellus and Utica natural gas shale plays;
    --  commenced performing multi-stage fracturing treatments in
        Mexico and Western Siberia; and
    --  announced that its annual $1.00 per share dividend will be paid
        quarterly beginning in March 2013.

Financial Highlights

For the three months ended December 31, 2012, the Company recorded:
    --  revenue of $367.5 million, a decrease of 25 percent from the
        fourth quarter of 2011 driven primarily by lower pricing in the
        United States combined with reduced activity in Canada and the
        United States due to a decline in overall drilling and
        completion activity 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 $43.2 million versus $150.4 million in the
        same quarter of 2011, mainly due to the impact of competitive
        pricing pressures in the United States market combined with
        lower equipment utilization in Canada and the United States;
        and
    --  net income attributable to shareholders of Calfrac of $11.2
        million or $0.25 per share diluted, including a $3.8 million
        foreign exchange gain, compared to net income of $78.9 million
        or $1.79 per share diluted in the fourth quarter of 2011, which
        included a foreign exchange loss of $1.0 million.

For the year ended December 31, 2012, the Company generated:
    --  record revenue of $1.6 billion versus $1.5 billion in 2011,
        driven by strong growth in the Company's Latin America
        division;
    --  operating income of $257.0 million versus $412.8 million in
        2011, a decrease of 38 percent, mainly as a result of lower
        activity in Canada combined with competitive pricing pressures
        and higher product costs in Canada and the United States; and
    --  net income attributable to the shareholders of Calfrac of $97.1
        million or $2.17 per share diluted, which included a non-cash
        foreign exchange gain of $8.3 million, compared to results in
        2011 of $187.5 million or $4.22 per share diluted, which
        included a primarily non-cash foreign exchange loss of $14.2
        million.

Operational Highlights

Canada

Despite a significant reduction in drilling activity during the second half of 
2012, Calfrac maintained high levels of equipment utilization throughout most 
of the fourth quarter as a result of its significant contract coverage 
combined with a strong customer mix which was made up of some of the more 
active operators in Western Canada. However, the Company did experience a 
greater reduction in activity during the Christmas holiday season than it had 
in the previous two years and also experienced some pricing weakness on 
callout work in western Canada during the fourth quarter.

The Company remained active in the development of many unconventional resource 
plays throughout the Western Canada Sedimentary Basin in the fourth quarter, 
including the Montney, Deep Basin, Duvernay, Cardium and Viking plays, as well 
as several emerging unconventional oil plays. Activity was particularly 
focused on the Duvernay and Cardium plays, both of which required a 
significant increase in horsepower from earlier in the year. Calfrac 
anticipates that the development of these reservoirs will drive further 
expansion of its Canadian division.

The Company continued to execute its 2012 capital program during the fourth 
quarter by deploying approximately 70,000 new pumping horsepower, exiting the 
year with approximately 375,000 horsepower in Canada. As a result, Calfrac 
maintains its position as one of the largest fracturing service providers in 
western Canada.

United States

Calfrac's fourth-quarter results were affected by lower-than-expected activity 
by some of its customers and additional pricing competition, which resulted in 
significantly lower revenue and operating margins than in the third quarter of 
2012. The latter part of the fourth quarter brought particularly low equipment 
utilization for the industry as the United States rig count declined steadily 
in the Company's operating regions as the quarter progressed. The sharp 
decline in natural gas-oriented drilling and completion activity combined with 
the significant increase in fracturing capacity in the United States resulted 
in an increasingly predatory pricing environment in the fourth quarter in 
which the Company chose not to participate. In response to these market 
conditions, Calfrac instituted numerous cost reduction measures through the 
fourth quarter and early in the first quarter of 2013 to maintain 
profitability in this lower-revenue environment.

Calfrac's district operations in North Dakota and Pennsylvania service some of 
the most economic oil and natural gas producing plays in the United States. 
The Company recently completed its new district facility in Smithfield, 
Pennsylvania, which enables Calfrac to efficiently service the southwest 
portion of the Marcellus shale play and most of the emerging Utica shale play. 
In addition, Calfrac completed a new district facility in Williston, North 
Dakota during the fourth quarter which will serve the Company's expanding 
presence in that region. The completion of this infrastructure construction 
was required in order to maintain high levels of service quality for our 
clients in core operating areas. Calfrac is keenly aware of the continuing 
deterioration in the United States pumping business, and in conjunction with 
the completion of the build-out of core operating bases undertook several 
measures throughout the quarter to rationalize its cost structure. One-time 
charges associated with that process reduced reported fourth-quarter operating 
income.

Russia

Revenue and operating margins in the fourth quarter for Calfrac's Russian 
operations were lower than expected as a result of reduced fracturing activity 
during the quarter as some customers curtailed the scope of their projects. In 
addition, extremely cold temperatures in Western Siberia during December 
delayed planned coiled tubing projects. This decrease in activity combined 
with higher fuel and other costs related to operating in winter and increased 
travel requirements to remote locations reduced quarterly financial 
performance in Russia. On the positive side, the Company completed a number of 
multi-stage fracturing jobs in horizontal wells during the fourth quarter, 
with additional horizontal pressure pumping work performed in January, and 
anticipates this trend to accelerate in 2013.

Latin America

Calfrac's financial results in Mexico continued to improve during the fourth 
quarter of 2012. The Company passed a milestone in the development of its 
Mexican business, completing its first two multi-stage fracturing treatments 
in horizontal wells during the fourth quarter. Both wells were 16-stage 
completions that were supported by equipment from the Company's United States 
operations and incorporated many of the technologies that Calfrac provides in 
Canada and the United States. These technologies are now being deployed to 
improve Mexican production rates, and Calfrac is very pleased with this 
emerging trend and the initial successes that have been realized. The Company 
is optimistic that these technologies will provide a solid basis for growth in 
the Mexican market.

Cementing and coiled tubing activity in Argentina during the fourth quarter 
was consistent with Calfrac's plans as overall oilfield activity in Argentina 
continued to trend higher. During the fourth quarter, the Company deployed 
additional fracturing equipment into Argentina and plan to commence operations 
during the first quarter to service conventional and emerging unconventional 
shale natural gas and tight oil plays in Argentina. Calfrac also expanded its 
presence in Colombia through the deployment of additional cementing equipment, 
and currently operates six 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.

Outlook and Business Prospects

With a mild winter in North America tempering natural gas price recovery and 
therefore gas-related drilling, combined with a relatively stable oil-focused 
rig count in North America, Calfrac is taking a conservative approach to the 
first half of 2013. Calfrac has demonstrated in previous cyclical oilfield 
service activity downturns that it is able to prudently manage operating and 
capital costs and, with its strong balance sheet, make strategic acquisitions 
that provide solid, accretive value to shareholders. The Company is presently 
focused on optimizing its cost structure and capital expenditures to provide a 
sustainable business model for long-term growth. As a result, Calfrac's 2013 
capital has been reduced by $43.0 million for a total anticipated capital 
budget of $74.0 million, of which $20.0 million is expected to be carried over 
into 2014. The 2012 capital budget carryforward to 2013 is approximately 
$107.0 million and total capital expenditures in 2013 are estimated to be 
approximately $161.0 million.

Canada is the Company's largest operating segment and offers the greatest 
visibility on activity and revenue. Calfrac's Canadian business has been built 
on a strong customer base and long-term contractual arrangements. Although 
January started slower than expected, activity has increased substantially and 
is anticipated to remain very strong until spring break-up, supported by an 
increase in drilling activity in late 2012 that has continued into 2013.

The Company believes that well completion activity will continue to grow as 
many of the emerging plays in the Western Canada Sedimentary Basin, such as 
the Duvernay and liquids-rich Deep Basin and Montney areas, transition to full 
scale commercial development. Calfrac recognizes, however, that capital 
programs of its customer base may be restricted until there is greater 
certainty regarding the commodity price environment. As a result, Calfrac will 
closely monitor its customers' 2013 capital spending plans and proactively 
adjust its cost structure, particularly in the second quarter, as 2013 
activity is anticipated to be lower overall than in 2011 and 2012.

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 with the continued influx of capital from 
foreign entities and large multi-national companies. The interest in Canada is 
largely predicated on a long-term liquefied natural gas (LNG) export strategy. 
Because sufficient natural gas production must be available on completion of 
LNG export facilities within the next five years, the associated increase in 
capital investment could have a meaningful impact on Calfrac's Canadian 
operations as early as the third quarter of this year, as a number of 
longstanding customers are involved in these plans.

The Company's leadership position in the development of the Montney and Horn 
River resource plays is expected to position it to participate significantly 
in the development of the resources needed to support LNG exports. Further 
operational efficiencies are expected to be achieved through the expanded use 
of 24-hour operations and multi-well pad development. Calfrac also believes 
that activity in the liquids-rich natural gas reservoirs of the Deep Basin and 
Duvernay plays will continue to be strong throughout 2013 and could generate 
significant future demand for its fracturing and coiled tubing services. 
Calfrac remains one of the most active service providers in these plays and 
anticipates that its positioning will form the basis of further growth 
opportunities in Canada during 2013.

In the United States, pricing has decreased in all of the basins in which 
Calfrac operates, although the decline has been mitigated by the Company's 
contract position. The Company recently rationalized its United States cost 
structure and initiated supply chain and logistical improvements to ensure 
improved profitability in a lower-revenue environment. Calfrac expects to 
begin realizing the benefits of these initiatives in the first quarter of 
2013. Although the Company does not expect the United States pumping sector's 
dynamics to change significantly during the first half of 2013, it is 
cautiously optimistic that well drilling and completions activity will improve 
in the latter part of the year, leading to improved financial performance.

Calfrac believes that it is well-positioned to navigate through a period of 
uncertainty in the U.S. pressure pumping business. In addition to its contract 
position, Calfrac services some of the most active unconventional resource 
plays in the United States, including the Bakken oil shale play in North 
Dakota and the Marcellus shale gas play in Pennsylvania and West Virginia. 
Calfrac expects activity in North Dakota will increase as oil producers refine 
their completion programs to improve their well economics and develop other 
reservoirs in the region. The Company also believes that the Marcellus shale 
play is one of the most economic natural gas producing regions in the United 
States and will become significantly more active as the price of natural gas 
recovers. Calfrac currently operates three large fracturing spreads in this 
play, all supported by minimum commitment contracts. Calfrac's primary base of 
operations is close to the liquids-rich natural gas area of the Marcellus in 
southwest Pennsylvania, which is expected to become more active in 2013. The 
Company is also able to service a large portion of the emerging Utica shale 
play from its facility in Smithfield, Pennsylvania, and has fractured a number 
of wells in that play. As a result, Calfrac is anticipated to have a strong 
base level of activity in 2013 and to benefit from overall increases in United 
States oil and natural gas development.

Calfrac recently reorganized its senior management team in the United States 
to execute its growth strategy and better focus on profitable growth 
opportunities. The Company is pleased to announce the appointment of Lindsay 
Link as President of Calfrac's United States Division effective February 1, 
2013. Mr. Link has 30 years of experience in pressure pumping, coiled tubing, 
cementing and general oilfield services in domestic and international markets. 
In addition, Chad Leier was promoted to Vice President, Sales, Marketing & 
Engineering for the United States Division effective February 11, 2013. Mr. 
Leier has 13 years of pressure pumping service experience, joining Calfrac in 
2005 and progressing through a number of operational, sales, engineering and 
senior managerial roles.

Calfrac recently completed the 2013 contract tender process in Russia and 
expects that equipment utilization will improve over 2012. The Russian pricing 
environment is not anticipated to change significantly, due to competitive 
pressures. Consequently, the Company remains focused on streamlining its cost 
structure 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, provides 
significant future potential. The Company is very pleased to have initiated 
multi-stage fracturing of horizontal wells in 2012, which it sees as a driver 
of demand for its services over the short and long terms as Russia's producing 
sector gains confidence in this approach.

The Mexican oilfield service environment has improved over the last two years 
as its primary energy producer focused additional resources on onshore oil and 
natural gas development. Calfrac anticipates additional opportunities to apply 
horizontal technology to many of Mexico's producing regions. Calfrac expects 
that its initial horizontal fracturing jobs in Mexico will result in more work 
of this nature in 2013 and beyond. Several tenders are planned for 2013 which 
provide the opportunity for incremental work and, contingent on Calfrac's 
success in securing such work, the allocation of additional capital equipment 
to Mexico.

In Argentina, the Company remains optimistic about the development 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 to unlocking these resources. To date, there is very 
limited capacity in-country to service these emerging plays. Calfrac is in the 
midst of testing and preparing its recently deployed fracturing equipment, 
which is expected to commence operations during the first quarter of 2013. The 
Company entered the Colombian oilfield service market in late 2011 and is 
currently focused on building its customer base. While the pace of development 
in Colombia was slower than expected in 2012 due to permitting and 
infrastructure issues, Calfrac believes that this market has significant 
long-term growth opportunities.

On behalf of the Board of Directors,

Douglas R. Ramsay
Chief Executive Officer
February 26, 2013

2012 Overview

For the three months ended December 31, 2012, the Company recorded:
    --  revenue of $367.5 million, a decrease of 25 percent from the
        fourth quarter of 2011 driven primarily by lower pricing in the
        United States combined with reduced activity in Canada and the
        United States. This decrease was due to a decline in overall
        drilling and completion activity 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 $43.2 million versus $150.4 million in the
        same quarter of 2011, mainly due to the impact of competitive
        pricing pressures in the United States market combined with
        lower equipment utilization in Canada and the United States;
    --  EBITDA of $46.9 million or $1.04 per share diluted versus
        $149.2 million or $3.38 per share diluted in the comparable
        quarter of 2011; and
    --  net income attributable to shareholders of Calfrac of $11.2
        million or $0.25 per share diluted, which included a $3.8
        million foreign exchange gain, compared to net income of $78.9
        million or $1.79 per share diluted in the fourth quarter of
        2011, which included a foreign exchange loss of $1.0 million.

In 2012, the Company:
    --  increased revenue by 4 percent to $1.6 billion from $1.5
        billion in 2011, driven by strong growth in the Company's Latin
        America division;
    --  reported operating income of $257.0 million versus $412.8
        million in 2011, a decrease of 38 percent, mainly as a result
        of lower volumes of work in Canada combined with competitive
        pricing pressures and higher product costs in Canada and the
        United States;
    --  reported net income attributable to the shareholders of Calfrac
        of $97.1 million or $2.17 per share diluted, which included a
        non-cash foreign exchange gain of $8.3 million, compared to
        results in 2011 of $187.5 million or $4.22 per share diluted,
        which included a primarily non-cash foreign exchange loss of
        $14.2 million;
    --  incurred capital expenditures of $279.0 million, principally to
        bolster the Company's fracturing operations in Canada and the
        United States;
    --  completed its new district facility in Smithfield,
        Pennsylvania, allowing it to efficiently service the southwest
        portion of the Marcellus shale play and most of the emerging
        Utica play. In addition, the Company completed a new district
        facility in Williston, North Dakota during the fourth quarter,
        which will serve its expanding presence in that region;
    --  increased its credit facilities from $250.0 million to $300.0
        million with a syndicate of financial institutions, and
        extended their term to September 27, 2016;
    --  reported a period-end working capital decrease of 19 percent
        from December 31, 2011 to $322.9 million at December 31, 2012;
    --  increased its semi-annual dividend by 400 percent from $0.10
        per share to $0.50 per share in February 2012, announced in
        December 2012 that dividend frequency will become quarterly
        commencing with a $0.25 dividend to be declared in the first
        quarter of 2013, and declared dividends of $44.6 million or
        $1.00 per share in 2012 compared to $7.7 million or $0.175 per
        share in 2011; and
    --  announced a capital budget for 2013 of $117.0 million in
        December 2012 and subsequently reduced it to $74.0 million in
        February 2013. It will focus on maintenance and support capital
        and further investment in logistics equipment. Approximately
        $25.0 million of capital is allocated to supporting Calfrac's
        growing Latin American operations, including an investment in
        coiled tubing and fracturing equipment. The 2013 capital
        program does not contemplate expansion capital for Calfrac's
        Canadian, United States or Russian operations. In addition,
        approximately $107.0 million remaining from Calfrac's 2012
        capital program is expected to be spent in 2013.

Financial Overview - Three Months Ended December 31, 2012 Versus 2011

Canada

Three Months Ended December 31,                2012    2011 Change

(C$000s, except operational information)        ($)     ($)    (%)

(unaudited)                                                       

Revenue                                     201,573 237,286   (15)

Expenses                                                          
       Operating                            147,518 134,681     10
       Selling, General and Administrative    5,033   4,384     15
       (SG&A)
                                            152,551 139,065     10

Operating income((1))                        49,022  98,221   (50)

Operating income (%)                          24.3%   41.4%   (41)

Fracturing revenue per job ($)              192,600 183,063      5

Number of fracturing jobs                     1,001   1,181   (15)

Pumping horsepower, end of period (000s)        375     285     32

Coiled tubing revenue per job ($)            22,689  30,301   (25)

Number of coiled tubing jobs                    387     696   (44)

Coiled tubing units, end of period (#)           21      21      -

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Revenue

Revenue from Calfrac's Canadian operations during the fourth quarter of 2012 
was $201.6 million versus $237.3 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. The average number of active drilling rigs in western 
Canada decreased by approximately 28 percent in the fourth quarter of 2012 
from the same period in 2011. The decrease in activity was partially offset by 
an increase in average job sizes resulting from the shift in activity towards 
the oil and liquids-rich natural gas areas of western Canada.

Operating Income

Operating income in Canada decreased by 50 percent to $49.0 million during the 
fourth quarter of 2012 from $98.2 million in the same period of 2011. The 
decrease was primarily due to the lower revenue base and pricing pressure. In 
addition, lower equipment utilization contributed to the reduction in 
operating income. Wet weather conditions in the first half of October, and a 
greater slow down in activity during the Christmas holiday season were the 
main drivers.

United States                                                  

Three Months Ended December 31,                  2012    2011 Change

(C$000s, except operational and exchange rate     ($)     ($)    (%)
information)

(unaudited)                                                         

Revenue                                       109,975 202,511   (46)

Expenses                                                            

  Operating                                    99,048 137,342   (28)

  SG&A                                          5,439   4,877     12
                                              104,487 142,219   (27)

Operating income((1))                           5,488  60,292   (91)

Operating income (%)                             5.0%   29.8%   (83)

Fracturing revenue per job ($)                 52,347  88,471   (41)

Number of fracturing jobs                       1,943   2,200   (12)

Pumping horsepower, end of period (000s)          492     364     35

Cementing revenue per job ($)                  30,678  30,360      1

Number of cementing jobs                          180     182    (1)

Cementing units, end of period (#)                 12       9     33

US$/C$ average exchange rate((2))              0.9913  1.0231    (3)

((1))  Refer to "Non-GAAP Measures" on page 18 for further information.

((2))  Source: Bank of Canada.

Revenue

Revenue from Calfrac's United States operations decreased during the fourth 
quarter of 2012 to $110.0 million from $202.5 million in the comparable 
quarter of 2011. The decrease was due primarily to a significant reduction in 
equipment utilization and increased pricing pressure as the decrease in 
natural gas drilling and completion activity created more competition in 
nearly all of the Company's operating regions. Completions activity in natural 
gas producing areas such as the Marcellus and Fayetteville shale plays as well 
as the Piceance Basin were significantly impacted as the number of active 
gas-focused drilling rigs in these areas decreased by 33 percent in the fourth 
quarter of 2012 from the same period in 2011.

Operating Income

Operating income in the United States was $5.5 million for the fourth quarter 
of 2012, a decrease of 91 percent from the comparative period in 2011. The 
decrease in operating income was primarily due to competitive pricing pressure 
and lower fracturing equipment utilization in the unconventional natural gas 
plays of the United States. SG&A expenses increased as a result of 
restructuring costs incurred during the fourth quarter of 2012.

Russia                                                        

Three Months Ended December 31,                 2012    2011 Change

(C$000s, except operational and exchange rate    ($)     ($)    (%)
information)

(unaudited)                                                        

Revenue                                       24,197  30,737   (21)

Expenses                                                           

  Operating                                   22,707  25,534   (11)

  SG&A                                         1,744   1,385     26
                                              24,451  26,919    (9)

Operating income (loss)((1))                   (254)   3,818  (107)

Operating income (loss) (%)                    -1.0%   12.4%  (108)

Fracturing revenue per job ($)                84,063 126,819   (34)

Number of fracturing jobs                        199     190      5

Pumping horsepower, end of period (000s)          45      45      -

Coiled tubing revenue per job ($)             54,117  54,442    (1)

Number of coiled tubing jobs                     138     122     13

Coiled tubing units, end of period (#)             7       6     17

Rouble/C$ average exchange rate((2))          0.0319  0.0328    (3)

((1))  Refer to "Non-GAAP Measures" on page 18 for further information.

((2))  Source: Bank of Canada.

Revenue

During the fourth quarter of 2012, the Company's revenue from Russian 
operations decreased by 21 percent to $24.2 million from $30.7 million in the 
corresponding three-month period of 2011. Revenue declined due to smaller job 
sizes and the Company no longer providing proppant to a significant customer 
in Western Siberia. In addition, coiled tubing equipment utilization was 
reduced as a result of severe winter conditions toward the end of the fourth 
quarter.

Operating Income (Loss)

Russia incurred an operating loss of $0.3 million during the fourth quarter of 
2012 compared to operating income of $3.8 million in the corresponding period 
of 2011. This decrease in operating income was primarily due to the lower 
revenue base combined with the higher cost of Arctic-grade diesel fuel due to 
the onset of winter.

Latin America                                                

Three Months Ended December 31,                 2012   2011 Change

(C$000s, except operational and exchange rate    ($)    ($)    (%)
information)

(unaudited)                                                       

Revenue                                       31,742 19,503     63

Expenses                                                          

  Operating                                   26,489 16,911     57

  SG&A                                         2,152  1,187     81
                                              28,641 18,098     58

Operating income((1))                          3,101  1,405    121

Operating income (%)                            9.8%   7.2%     36

Pumping horsepower, end of period (000s)          65     25    160

Cementing units, end of period (#)                13      9     44

Coiled tubing units, end of period (#)             1      1      -

Mexican peso/C$ average exchange rate((2))    0.0766 0.0750      2

Argentine peso/C$ average exchange rate((2))  0.2066 0.2211    (7)

((1))  Refer to "Non-GAAP Measures" on page 18 for further information.

((2))  Source: Bank of Canada.

Revenue

Calfrac's Latin America operations generated total revenue of $31.7 million 
during the fourth quarter of 2012 versus $19.5 million in the comparable 
three-month period in 2011. The increase in revenue was primarily due to 
higher fracturing activity and pricing, larger job sizes and an increase in 
the scale of operations due to the commencement of multi-stage fracturing jobs 
in Mexico. Higher cementing and coiled tubing activity as well as larger 
cementing job sizes in Argentina combined with higher cementing activity in 
Colombia also contributed to this increase.

Operating Income

Operating income in Latin America for the three months ended December 31, 2012 
was $3.1 million versus $1.4 million in the comparative quarter in 2011. The 
increase was primarily due to higher equipment utilization and pricing in 
Mexico. This increase was offset partially by start-up costs related to the 
planned commencement of fracturing operations in Argentina in early 2013 
combined with lower than expected equipment utilization in Colombia. The 
Company operated a larger number of cementing crews in Colombia during the 
fourth quarter of 2012 than the comparative three-month period in 2011, but 
overall utilization was hindered by a slower than expected pace of development 
in that country due to permitting and infrastructure issues.

Corporate                                                   

Three Months Ended December 31,              2012     2011 Change

(C$000s, except operational information)      ($)      ($)    (%)

(unaudited)                                                      

Expenses                                                         

  Operating                                 2,464    1,757     40

  SG&A                                     11,675   11,615      1
                                           14,139   13,372      6

Operating loss((1))                      (14,139) (13,372)      6
                                                                 

% of Revenue                                 3.8%     2.7%     41

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Operating Loss

The 6 percent increase in corporate expenses from the fourth quarter of 2011 
was mainly due to an increase in the Company's global operations and 
procurement personnel to support its continued focus on service quality, 
operating efficiency and cost management. Higher stock-based compensation 
expenses related to the issuance of restricted stock units in 2012 also 
contributed to the increase in corporate expenses. This increase was offset 
partially by lower annual bonus expenses.

Depreciation

For the three months ended December 31, 2012, depreciation expense increased 
by 3 percent to $23.6 million from $23.0 million in the corresponding quarter 
of 2011. The increase was 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 Losses or Gains

The Company realized a foreign exchange gain of $3.8 million during the fourth 
quarter of 2012 versus a foreign exchange loss of $1.0 million 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 United States dollars in Canada, Russia and Latin America. 
The Company's foreign exchange gain recorded in the fourth quarter of 2012 was 
largely attributable to the translation of United States dollar-denominated 
debt held in Russia. The value of the United States dollar at December 31, 
2012 weakened against the Russian rouble, resulting in a consolidated net 
foreign exchange gain.

Interest

The Company's net interest expense of $8.9 million for the fourth quarter of 
2012 represented a decrease of $0.1 million from $9.0 million in the 
comparable period of 2011.

Income Tax Expenses

The Company recorded income tax expense of $3.3 million during the fourth 
quarter of 2012 compared to $38.2 million in the comparable period of 2011. 
The effective income tax rate for the three months ended December 31, 2012 was 
23 percent compared to 33 percent in the same quarter of 2011. The decrease in 
total income tax expense was primarily due to lower profitability in Canada 
and the United States. Tax losses in the United States, which has a high 
statutory tax rate, were the main driver of the decline in the consolidated 
effective income tax rate.

Summary of
Quarterly
Results                                                                

Quarters Ended       Mar.       June       Sept.       Dec.
                      31,        30,         30,        31,       Total

(C$000s,
except per
share and
operating
data)                 ($)        ($)         ($)        ($)         ($)

(unaudited)                                                            

2012                                                                   

Financial                                                              

Revenue           474,107    335,780     417,842    367,487   1,595,216

Operating
income((1))       113,381     29,810      70,604     43,218     257,013

EBITDA((1))       127,995     18,736      70,874     46,866     264,471

  Per share -                                                      5.97
  basic              2.92       0.42        1.59       1.05

  Per share -                                                      5.90
  diluted            2.87       0.42        1.58       1.04

Net income
attributable
to the
shareholders
of Calfrac         70,841   (11,855)      26,917     11,243      97,146

  Per share -                                                      2.19
  basic              1.62     (0.27)        0.60       0.25

  Per share -                                                      2.17
  diluted            1.59     (0.27)        0.60       0.25

Capital
expenditures       84,075     75,286      63,962     55,694     279,017

Working
capital (end
of period)        431,053    357,128     353,182    322,857     322,857

Total equity
(end of
period)           779,426    747,591     783,091    780,759     780,759
                                                                       

Operating (end
of period)                                                             

Pumping
horsepower
(000s)                782        830         845        977            

Coiled tubing
units (#)              29         29          29         29            

Cementing
units (#)              23         23          25         26            

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Quarters Ended       Mar.       June       Sept.       Dec.       Total
                      31,        30,         30,        31,

(C$000s,              ($)        ($)         ($)        ($)         ($)
except per
share and
operating
data)

(unaudited)                                                            

2011                                                                   

Financial                                                              

Revenue           337,408    269,456     440,491    490,037   1,537,392

Operating          88,000     47,937     126,527    150,364     412,828
income((1))

EBITDA((1))        96,897     50,597     102,042    149,146     398,682

  Per share -        2.23       1.16        2.33       3.40        9.13
  basic

  Per share -        2.18       1.14        2.30       3.38        8.98
  diluted

Net income         49,078     12,071      47,381     78,921     187,451
(loss)
attributable
to the
shareholders
of Calfrac

  Per share -        1.13       0.28        1.08       1.80        4.29
  basic

  Per share -        1.11       0.27        1.07       1.79        4.22
  diluted

Capital            65,777     72,047      85,130    101,008     323,962
expenditures

Working           356,370    324,832     375,823    398,526     398,526
capital (end
of period)

Total equity      556,277    568,607     632,889    700,569     700,569
(end of
period)
                                                                       

Operating (end                                                         
of period)

Pumping               530        584         656        719            
horsepower
(000s)

Coiled tubing          29         29          29         29            
units (#)

Cementing              21         22          23         23            
units (#)

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Financial Overview - Year Ended December 31, 2012 Versus 2011 
    Canada                                                    

Years Ended December 31,                    2012    2011 Change

(C$000s, except operational information)     ($)     ($)    (%)

(unaudited)                                                    

Revenue                                  732,880 755,333    (3)

Expenses                                                       

  Operating                              526,400 481,062      9

  SG&A                                    17,925  15,909     13
                                         544,325 496,971     10

Operating income((1))                    188,555 258,362   (27)

Operating income (%)                       25.7%   34.2%   (25)

Fracturing revenue per job ($)           197,062 165,666     19

Number of fracturing jobs                  3,441   4,165   (17)

Pumping horsepower, end of period (000s)     375     285     32

Coiled tubing revenue per job ($)         30,661  25,511     20

Number of coiled tubing jobs               1,787   2,561   (30)

Coiled tubing units, end of period (#)        21      21      -

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Revenue

Revenue from Calfrac's Canadian operations was $732.9 million in 2012 versus 
$755.3 million in 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 in the latter half of 2012. The average 
number of active drilling rigs in western Canada decreased by approximately 25 
percent in 2012 from 2011. The decline in activity was partially offset by a 
19 percent increase in average job size as a result of the continued shift in 
activity into the unconventional oil and liquids-rich natural gas regions of 
western Canada.

Operating Income

Operating income in Canada decreased by 27 percent to $188.6 million in 2012 
from $258.4 million in 2011. The decline was primarily caused by a more 
competitive pricing environment combined with lower equipment utilization as a 
result of lower industry activity. Higher guar expenses resulting from a 
combination of cost inflation and the shift in activity into the 
unconventional oil and liquids-rich natural gas areas of western Canada also 
contributed to the decline in operating income.

United States
                                                                    

Years Ended December 31,                         2012    2011 Change

(C$000s, except operational and exchange rate
information)                                      ($)     ($)    (%)

(unaudited)                                                         

Revenue                                       638,483 607,731      5

Expenses                                                            
       Operating                              512,482 408,657     25
       SG&A                                    20,872  14,865     40
                                              533,354 423,522     26

Operating income((1))                         105,129 184,209   (43)

Operating income (%)                            16.5%   30.3%   (46)

Fracturing revenue per job ($)                 69,620  82,527   (16)

Number of fracturing jobs                       8,766   7,143     23

Pumping horsepower, end of period (000s)          492     364     35

Cementing revenue per job ($)                  30,912  26,016     19

Number of cementing jobs                          661     611      8

Cementing units, end of period (#)                 12       9     33

C$/US$ average exchange rate((2))              0.9996  0.9891      1

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.
((2)) Source: Bank of Canada.

Revenue

Revenue from Calfrac's United States operations increased by 5 percent to 
$638.5 million in 2012 from $607.7 million in 2011, primarily due to an 
expansion of fracturing operations in the Bakken play of North Dakota 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.

The increase in revenue was offset partially by a decrease in fracturing and 
cementing activity in the natural gas-focused plays in Arkansas and Colorado 
due to the impact of low natural gas prices. The sustained low natural gas 
price environment resulted in a 23 percent year-over-year decrease in 
gas-focused drilling rig activity in the areas that the Company operates in 
the United States. In addition, pricing pressure increased during the year's 
second half as competition and activity increased in most of the Company's 
United States operating districts.

Operating Income

Operating income in the United States was $105.1 million for 2012, a decrease 
of 43 percent from 2011. Operating income as a percentage of revenue decreased 
from 30 percent in 2011 to 17 percent in 2012. This 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 
operations in the United States.

Russia
                                                               

Years Ended December 31,                         2012    2011 Change

(C$000s, except operational and exchange rate     ($)     ($)    (%)
information)

(unaudited)                                                         

Revenue                                       112,765 116,105    (3)

Expenses                                                            
       Operating                              100,098  96,950      3
       SG&A                                     6,101   6,413    (5)
                                              106,199 103,363      3

Operating income((1))                           6,566  12,742   (48)

Operating income (%)                             5.8%   11.0%   (47)

Fracturing revenue per job ($)                 92,791 114,541   (19)

Number of fracturing jobs                         826     751     10

Pumping horsepower, end of period (000s)           45      45      -

Coiled tubing revenue per job ($)              57,884  53,531      8

Number of coiled tubing jobs                      624     562     11

Coiled tubing units, end of period (#)              7       6     17

Rouble/C$ average exchange rate((2))           0.0322  0.0337    (4)

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.
((2)) Source: Bank of Canada.

Revenue

The Company's revenue from Russian operations decreased by 3 percent to $112.8 
million in 2012 from $116.1 million in 2011. The decline was mainly due to 
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 a 4 percent depreciation in the Russian rouble versus the Canadian 
dollar. This decline was partially offset by higher fracturing and coiled 
tubing activity combined with the completion of larger coiled tubing jobs.

Operating Income

Operating income in Russia was $6.6 million in 2012 compared to $12.7 million 
in 2011. The decrease in operating income was primarily due to the significant 
increase in chemical prices, primarily guar, during the first half of 2012. In 
addition, higher fuel consumption related to longer travel distances to job 
locations in Western Siberia and increased fuel prices also contributed to the 
decline in operating income during 2012.

Latin America
                                                              

Years Ended December 31,                         2012   2011 Change

(C$000s, except operational and exchange rate     ($)    ($)    (%)
information)

(unaudited)                                                        

Revenue                                       111,088 58,223     91

Expenses                                                           
       Operating                               95,494 54,479     75
       SG&A                                     6,755  3,732     81
                                              102,249 58,211     76

Operating income((1))                           8,839     12      -

Operating income (%)                             8.0%      -      -

Pumping horsepower, end of period (000s)           65     25    160

Cementing units, end of period (#)                 13      9     44

Coiled tubing units, end of period (#)              1      1      -

Mexican peso/C$ average exchange rate((2))     0.0760 0.0798    (5)

Argentine peso/C$ average exchange rate((2))   0.2201 0.2277    (3)

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.
((2)) Source: Bank of Canada.

Revenue

Calfrac's Latin American operations generated total revenue of $111.1 million 
during 2012, almost double the $58.2 million in 2011. Revenue generated from 
non-core services increased from $10.5 million in 2011 to $23.9 million in 
2012. The increase in total revenue was primarily due to a 43 percent increase 
in fracturing activity combined with the completion of larger jobs and higher 
contract pricing. In addition, significantly higher cementing and coiled 
tubing activity in Argentina as well as a full year of cementing activity in 
Colombia also contributed to the increase.

Operating Income

During 2012, Calfrac's Latin America division generated operating income of 
$8.8 million versus a breakeven position in 2011. The sharp improvement was 
primarily due to improved pricing in Mexico and higher equipment utilization 
in Mexico and Argentina. This increase was partially offset by fracturing 
start-up costs in Argentina and lower than expected cementing equipment 
utilization in Colombia.

Corporate
                                            

Years Ended December 31,     2012     2011 Change

(C$000s)                      ($)      ($)    (%)

(unaudited)                                      

Expenses                                         
       Operating            9,973    6,260     59
       SG&A                42,103   36,237     16
                           52,076   42,497     23

Operating loss((1))      (52,076) (42,497)     23
                                                 

% of Revenue                 3.3%     2.8%     18

((1)) Refer to "Non-GAAP Measures" on page 18 for further information.

Operating Loss

The 23 percent increase in corporate expenses over 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. Higher stock-based compensation expenses of 
$2.0 million resulting from the restricted share units granted in 2012, 
commencing during the first quarter also contributed to the increase in 
corporate expenses.

Depreciation

Depreciation expense increased by 3 percent to $90.4 million for 2012 from 
$87.5 million in 2011. The increase was 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 Losses or Gains

The Company realized a foreign exchange gain of $8.3 million during 2012 
versus a $14.2 million loss in 2011. Foreign exchange gains and losses arise 
primarily from the translation of net monetary assets or liabilities that were 
held in United States dollars in Canada, Russia and Latin America. The 
majority of the Company's foreign exchange gain recorded in 2012 was 
attributable to the translation of United States dollar-denominated 
liabilities in Canada, Russia and Mexico. The value of the United States 
dollar depreciated significantly against the Canadian dollar, Russian rouble 
and Mexican peso during 2012 and was significantly lower at December 31, 2012, 
resulting in a foreign exchange gain related to these net monetary liabilities.

Interest

The Company's interest expense increased by $0.9 million to $36.4 million in 
2012. The increase was related to short term borrowing costs in Latin America.

Income Tax Expenses

The Company recorded income tax expense of $41.4 million during 2012 versus 
$88.6 million during 2011. The effective income tax rate for 2012 was 30 
percent compared to 32 percent in 2011. The decrease in total income tax 
expense was primarily due to lower profitability in the United States and 
Canada. The effective tax rate for 2012 was 2 percent lower than for 2011 
primarily due to a lower percentage of taxable income in the United States, 
which has a higher average statutory tax rate.

Liquidity and Capital Resources
                                                              

Years Ended December 31,                                2012      2011

(C$000s)                                                 ($)       ($)

(unaudited)                                                           

Cash provided by (used in):                                           
       Operating activities                          196,251   258,787
       Financing activities                         (28,762)   (9,048)
       Investing activities                        (259,184) (335,906)
       Effect of exchange rate changes on cash and     1,121     2,618
       cash equivalents

Decrease in cash and cash equivalents               (90,574)  (83,549)

Operating Activities

The Company's cash provided by operating activities for the year ended 
December 31, 2012 was $196.3 million versus $258.8 million in 2011. This 
decrease was primarily due to a decline in operating margins in Canada and the 
United States. At December 31, 2012, Calfrac's working capital was 
approximately $322.9 million, a decrease of 19 percent from December 31, 2011. 
The Company reviewed its accounts receivable in detail at December 31, 2012 
and 2011 and determined that a provision for doubtful accounts receivable 
totalling $0.3 million and $1.4 million, respectively, was adequate. The $1.4 
million provision in 2011 was written off in 2012 upon the completion of the 
customer's Chapter 11 restructuring proceedings. A $0.3 million provision was 
set up in 2012, which related primarily to a customer that filed a 
receivership order in Canada during the fourth quarter of 2012.

Financing Activities

Net cash used in financing activities for 2012 was $28.8 million compared to 
$9.0 million in 2011. During 2012, the Company issued $11.2 million of common 
shares, received bank loan proceeds of $2.7 million, paid cash dividends of 
$35.1 million, repaid $2.2 million of finance lease obligations and long term 
debt and repaid the $4.9 million bank loan in Colombia.

On October 10, 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. The maturity date may be extended 
by one or more years at the Company's request and lenders' acceptance. The 
Company also may 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 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 December 31, 
2012, the Company had used $8.7 million of its credit facilities for letters 
of credit, leaving $291.3 million in available credit.

Calfrac pays quarterly dividends to shareholders at the discretion of the 
Board of Directors, which qualify as "eligible dividends" as defined by the 
Canada Revenue Agency. In February 2012, the Company increased its semi-annual 
cash dividend from $0.10 to $0.50 per share, beginning with the dividend paid 
on July 16, 2012, thereby increasing the annualized dividend to $1.00 per 
share beginning in 2012. In December 2012, the Company announced that it would 
pay dividends quarterly commencing with a $0.25 dividend to be declared in the 
first quarter of 2013. Calfrac's Board of Directors declared dividends of 
$44.6 million or $1.00 per share in 2012, compared to $7.7 million or $0.175 
per share in 2011.

Investing Activities

Calfrac's net cash used for investing activities was $259.2 million for 2012 
versus $335.9 million for 2011. Capital expenditures were $279.0 million in 
2012 compared to $324.0 million in 2011. Capital expenditures were primarily 
to support the Company's North American fracturing operations.

Calfrac's 2013 capital budget is projected to be $74.0 million, of which $25.0 
million will be directed towards growing its Latin America operations, 
including an investment in coiled tubing and fracturing equipment. The 
remaining capital program will focus on maintenance and support capital and 
further investment in logistics equipment. In addition to the 2013 capital 
program outlined above, Calfrac expects that the carryover amount of 
approximately $107.0 million related to its 2012 capital program will be 
completed in 2013.

Effect of Exchange Rate Changes on Cash and Cash Equivalents

The effect of changes in foreign exchange rates on the Company's cash and cash 
equivalents during 2012 was a gain of $1.1 million versus a gain of $2.6 
million during 2011. These gains relate to cash and cash equivalents held by 
the Company in a foreign currency.

With its strong working capital position, available 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 2013 and beyond.

At December 31, 2012, the Company had cash and cash equivalents of $42.5 
million.

Outstanding Share Data

The Company is authorized to issue an unlimited number of common shares. 
Employees have been granted options to purchase common shares under the 
Company's shareholder-approved stock option plan. The number of shares 
reserved for issuance under the stock option plan is equal to a maximum of 10 
percent of the Company's issued and outstanding common shares. As at February 
22, 2013, there were 45,315,803 common shares issued and outstanding, and 
3,237,575 options to purchase common shares.

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 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. During 2012, $13.8 million was reinvested under the 
DRIP into 625,080 common shares of the Company.

Normal Course Issuer Bid

The Company filed a Notice of Intention (the "Renewal Notice") to renew the 
Normal Course Issuer Bid (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. The 
maximum number of common shares that may be acquired by the Company during a 
trading day is 44,254, 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 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 expected operating 
strategies, future capital expenditures, future financial resources, 
anticipated equipment utilization levels, future oil and natural gas well 
activity in each of the Company's operating jurisdictions, future costs or 
potential liabilities, anticipated benefits of the Company's competitive 
position, anticipated outcomes of specific events, trends in the oil and 
natural gas industry, the Company's growth prospects including, without 
limitation, its international growth strategy and prospects and the impact of 
changes in accounting policies and standards on the Company and its financial 
statements. 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, but not 
limited to, the general stability of the economic and political environment in 
which the Company operates, the Company's expectations for its current and 
prospective customers' capital budgets and geographical areas of focus, the 
Company's existing contracts and the status of current negotiations with key 
customers and suppliers, the focus of the Company's customers on oil and 
liquids rich plays in the current natural gas pricing environment in North 
America, the effect unconventional gas projects have had on supply and demand 
fundamentals for natural gas and the likelihood that the current tax and 
regulatory regime will remain substantially unchanged.. 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; the demand for fracturing 
and other stimulation services during drilling and completion of oil and 
natural gas wells; changes in legislation and the regulatory environment; 
liabilities and risks, including environmental liabilities and risks inherent 
in oil and natural gas operations; 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. Further 
information about these and other risks and uncertainties may be found in the 
Company's most recently filed Annual Information Form.

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

Business Risks

The business of Calfrac is subject to certain risks and uncertainties. Prior 
to making any investment decision regarding Calfrac, investors should 
carefully consider, among other things, the risk factors set forth in the 
Company's most recently filed Annual Information Form, which are 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 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 2012 fourth quarter 
results at 10:00 a.m. (Mountain Time) on Tuesday, February 26, 2013. 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 96180761). 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,                                       2012      2011

(C$000s) (unaudited)                                      ($)       ($)

ASSETS                                                                 

Current assets                                                         
                        Cash and cash equivalents      42,481   133,055
                        Accounts receivable           320,143   313,898
                        Income taxes recoverable          292     1,340
                        Inventories                   118,713    94,344
                        Prepaid expenses and           10,697    10,148
                        deposits
                                                      492,326   552,785

Non-current assets                                                     
                        Property, plant and         1,005,101   825,504
                        equipment
                        Goodwill                       10,523    10,523
                        Deferred income tax assets     16,871    16,309

Total assets                                        1,524,821 1,405,121

LIABILITIES AND EQUITY                                                 

Current liabilities                                                    
                        Accounts payable and          168,250   149,740
                        accrued liabilities
                        Bank loan (note 3)                  -     2,309
                        Current portion of                479       476
                        long-term debt (note 4)
                        Current portion of finance        740     1,734
                        lease obligations (note 5)
                                                      169,469   154,259

Non-current liabilities                                      
                        Long-term debt (note 4)       441,018   450,545
                        Finance lease obligations           -       740
                        (note 5)
                        Other long-term liabilities       435       774
                        Deferred income tax           133,140    98,234
                        liabilities

Total liabilities                                     744,062   704,552

Equity attributable to the shareholders of Calfrac                     

Capital stock (note 6)                                300,451   271,817

Contributed surplus (note 8)                           27,546    24,170

Loan receivable for purchase of common shares (note   (2,500)   (2,500)
14)

Retained earnings                                     458,543   405,954

Accumulated other comprehensive (loss) income         (2,403)     1,334
                                                      781,637   700,775

Non-controlling interest                                (878)     (206)

Total equity                                          780,759   700,569

Total liabilities and equity                        1,524,821 1,405,121

Contingencies (note 18)
See accompanying notes to the consolidated financial statements.
                                                             

CONSOLIDATED STATEMENTS                                      
OF OPERATIONS
                          Three Months Ended Dec. Years Ended Dec. 31,
                          31,
                             2012            2011      2012       2011

(C$000s, except per share     ($)             ($)       ($)        ($)
data) (unaudited)

Revenue                   367,487         490,037 1,595,216  1,537,392

Cost of sales (note 15)   321,860         339,221 1,334,828  1,134,864

Gross profit               45,627         150,816   260,388    402,528

Expenses                                                              
       Selling, general    26,043          23,448    93,756     77,157
       and administrative
       Foreign exchange   (3,818)             990   (8,260)     14,234
       (gains) losses
       Loss (gain) on         170             228       802       (88)
       disposal of
       property, plant
       and equipment
       Interest             8,933           9,053    36,354     35,489
                           31,328          33,719   122,652    126,792

Income before income tax   14,299         117,097   137,736    275,736

Income tax expense                                                    
       Current              (344)             297     4,733      1,542
       Deferred             3,662          37,942    36,642     87,037
                            3,318          38,239    41,375     88,579

Net income for the period  10,981          78,858    96,361    187,157
                                                                      

Net income (loss)                                                     
attributable to:
       Shareholders of     11,243          78,921    97,146    187,451
       Calfrac
       Non-controlling      (262)            (63)     (785)      (294)
       interest
                           10,981          78,858    96,361    187,157
                                                                      

Earnings per share (note                                              
6)
       Basic                 0.25            1.80      2.19       4.29
       Diluted               0.25            1.79      2.17       4.22

See accompanying notes to the consolidated financial statements.
                                                            

CONSOLIDATED STATEMENTS OF                                  
COMPREHENSIVE INCOME
                           Three Months Ended Dec. Years Ended Dec. 31,
                           31,
                             2012             2011    2012         2011

(C$000s) (unaudited)          ($)              ($)     ($)          ($)

Net income for the period  10,981           78,858  96,361      187,157

Other comprehensive (loss)                                             
income
       Change in foreign      460          (4,627) (3,856)        5,713
       currency
       translation
       adjustment

Comprehensive income for   11,441           74,231  92,505      192,870
the period

Comprehensive income                                                   
(loss) attributable to:
       Shareholders of     11,707           74,179  93,409      193,037
       Calfrac
       Non-controlling      (266)               52   (904)        (167)
       interest
                           11,441           74,231  92,505      192,870

See accompanying notes to the consolidated financial statements.
                                                                                                

CONSOLIDATED
STATEMENTS OF                                                                                   
CHANGES IN EQUITY
                                                                                                
                             Equity Attributable to the Shareholders of Calfrac                        
                                              Loan
                                        Receivable
                                               for
                                          Purchase   Accumulated
                                                of         Other                          Non-
                      Share Contributed     Common Comprehensive Retained          Controlling    Total
                    Capital     Surplus     Shares Income (Loss) Earnings    Total    Interest   Equity

(C$000s)                ($)         ($)        ($)           ($)      ($)      ($)         ($)      ($)

Balance - January   271,817      24,170    (2,500)         1,334  405,954  700,775       (206)  700,569
1, 2012

Net income for the        -           -          -             -   97,146   97,146       (785)   96,361
year

Other comprehensive                                                                                    
income:
       Cumulative         -           -          -       (3,737)        -  (3,737)       (119)  (3,856)
       translation
       adjustment

Comprehensive             -           -          -       (3,737)   97,146   93,409       (904)   92,505
income for the year

Stock options:                                                                                         
       Stock-based        -       6,990          -             -        -    6,990           -    6,990
       compensation
       recognized
       Proceeds      14,836     (3,614)          -             -        -   11,222           -   11,222
       from
       issuance of
       shares

Dividend             13,798           -          -             -        -   13,798           -   13,798
Reinvestment Plan
shares issued (note
21)

Dividends                 -           -          -             - (44,557) (44,557)           - (44,557)

Non-controlling           -           -          -             -        -        -         232      232
interest
contribution

Balance - December  300,451      27,546    (2,500)       (2,403)  458,543  781,637       (878)  780,759
31, 2012
                                                                                                       

Balance - January   263,490      15,468    (2,500)       (4,252)  229,865  502,071        (39)  502,032
1, 2011

Net income for the        -           -          -             -  187,451  187,451       (294)  187,157
year

Other comprehensive                                                                                    
income:
       Cumulative         -           -          -         5,586        -    5,586         127    5,713
       translation
       adjustment

Comprehensive             -           -          -         5,586  187,451  193,037       (167)  192,870
income for the year

Stock options:                                                                                         
       Stock-based        -       8,500          -             -        -    8,500           -    8,500
       compensation
       recognized
       Proceeds       9,656     (2,109)          -             -        -    7,547           -    7,547
       from
       issuance of
       shares

Shares cancelled      (105)         105          -             -        -        -           -        -
(note 8)

Denison Plan of           -       2,206          -             -        -    2,206           -    2,206
Arrangement (note
8)

Shares purchased    (1,224)           -          -             -  (3,702)  (4,926)           -  (4,926)
under Normal Course
Issuer Bid (note 7)

Dividends                 -           -          -             -  (7,660)  (7,660)           -  (7,660)

Balance - December  271,817      24,170    (2,500)         1,334  405,954  700,775       (206)  700,569
31, 2011

See accompanying notes to the consolidated financial statements.
                                                           

CONSOLIDATED STATEMENTS OF                                   
CASH FLOWS
                             Three Months Ended Years Ended Dec. 31,
                             Dec. 31,
                                 2012      2011      2012       2011

(C$000s) (unaudited)              ($)       ($)       ($)        ($)

CASH FLOWS PROVIDED BY (USED                                        
IN)

OPERATING ACTIVITIES                                                
             Net income for    10,981    78,858    96,361    187,157
             the period
             Adjusted for                                           
             the following:
               Depreciation    23,634    22,996    90,381     87,457
               Stock-based      1,926     2,342     6,990      8,500
               compensation
               Unrealized     (2,462)   (1,297)  (10,895)     11,945
               foreign
               exchange
               (gains)
               losses
               Loss (gain)        170       228       802       (88)
               on disposal
               of property,
               plant    and
               equipment
               Interest         8,933     9,053    36,354     35,489
               Deferred         3,662    37,942    36,642     87,037
               income taxes
             Interest paid   (16,883)  (17,668)  (34,596)   (35,738)
             Changes in      (10,739)  (17,928)  (25,788)  (122,972)
             items of
             working capital
             (note 11)

Cash flows provided by         19,222   114,526   196,251    258,787
operating activities

FINANCING ACTIVITIES                                                
             Bank loan              -     1,051     2,734      2,309
             proceeds
             Debt issuance      (511)         -     (440)      (422)
             costs
             Bank loan        (4,948)         -   (4,948)          -
             repayments
             Long-term debt     (125)     (115)     (461)    (7,882)
             repayments
             Finance lease      (135)     (372)   (1,734)    (1,335)
             obligation
             repayments
             Denison Plan of        -         -         -      2,206
             Arrangement
             (note 8)
             Net proceeds on      693       409    11,222      7,547
             issuance of
             common shares
             Dividends paid  (16,431)         -  (35,135)    (6,545)
             Shares                 -   (4,926)         -    (4,926)
             purchased under
             Normal Course
             Issuer Bid
             (note 7)

Cash flows used in financing (21,457)   (3,953)  (28,762)    (9,048)
activities

INVESTING ACTIVITIES                                                
             Purchase of     (55,338) (109,978) (261,321)  (339,706)
             property, plant
             and equipment
             Proceeds on          392       255     1,905      3,644
             disposal of
             property, plant
             and equipment
             Other                 39       134       232        156

Cash flows used in investing (54,907) (109,589) (259,184)  (335,906)
activities

Effect of exchange rate         3,168   (8,825)     1,121      2,618
changes on cash and cash
equivalents

Decrease in cash and cash    (53,974)   (7,841)  (90,574)   (83,549)
equivalents

Cash and cash equivalents,     96,455   140,896   133,055    216,604
beginning of  period

Cash and cash equivalents,     42,481   133,055    42,481    133,055
end of period

See accompanying notes to the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As at and for the years ended December 31, 2012 and 2011

(Amounts in text and tables are in thousands of Canadian dollars, except share 
data and certain other exceptions as indicated)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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.

These consolidated financial statements have been prepared in accordance with 
International Financial Reporting Standards (IFRS) as issued by the 
International Accounting Standards Board (IASB) and interpretations by the 
International Financial Reporting Interpretations Committee (IFRIC).

The Company has consistently applied the same accounting policies throughout 
all periods presented, as if these policies had always been in effect.

These financial statements were approved by the Board of Directors for 
issuance on February 25, 2013.

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 had an operating line of credit of which 
US$2,270 was drawn at December 31, 2011. The interest was LIBOR rate plus 4.50 
percent and was secured by a Company guarantee.

4. LONG-TERM DEBT

As at December 31,                                        2012    2011

(C$000s)                                                   ($)     ($)

US$450,000 senior unsecured notes due December 1,                     
       2020, bearing interest at 7.5% payable          447,705 457,650
       semi-annually

Less: unamortized debt issuance costs                  (6,895) (7,943)
                                                       440,810 449,707

$280,000 extendible revolving term loan facility,                     
secured
       by Canadian and U.S. assets of the Company            -       -

Less: unamortized debt issuance costs                  (1,444) (1,359)
                                                       (1,444) (1,359)

US$2,014 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   2,003   2,399
       property

ARS633 Argentina term loan maturing December 31, 2013                 
       bearing interest at 18.25%, repayable at ARS61                 
       per month
       principal and interest, secured by a Company        128     274
       guarantee
                                                       441,497 451,021

Less: current portion of long-term debt                  (479)   (476)
                                                       441,018 450,545
                                                                

The fair value of the senior unsecured notes, as measured based on the closing 
quoted market price at December 31, 2012, was $443,228 (December 31, 2011 - 
$446,209). The carrying values of the mortgage obligations, term loans 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 $280,000 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 1.5 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. Debt issuance costs related 
to this facility are amortized over its term.

Interest on long-term debt (including the amortization of debt issuance costs 
and debt discount) for the year ended December 31, 2012 was $36,085 (year 
ended December 31, 2011 - $36,119).

The Company also has an extendible operating loan facility, which includes 
overdraft protection in the amount of $20,000. The interest rate is based upon 
the parameters of certain bank covenants in the same fashion as the revolving 
term facility. Drawdowns under this facility are repayable on September 27, 
2016, 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 December 31, 2012, the Company had utilized $8,656 of its loan facility for 
letters of credit, leaving $291,344 in available credit.

5. FINANCE LEASE OBLIGATIONS

As at December 31,                                  2012    2011

(C$000s)                                             ($)     ($)

Finance lease contracts bearing interest at 5.68%,              
repayable at
       $49 per month, secured by certain equipment   753   2,579

Less: interest portion of contractual payments      (13)   (105)
                                                     740   2,474

Less: current portion of finance lease obligations (740) (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.

Years Ended December 31,                     2012                2011

Continuity of Common Shares       Shares   Amount     Shares   Amount
                                     (#) (C$000s)        (#) (C$000s)

Balance, beginning of year    43,709,073  271,817 43,488,099  263,490

Issued upon exercise of stock    686,488   14,836    434,250    9,656
options

Dividend Reinvestment Plan       625,080   13,798          -        -
shares issued (note 21)

Shares cancelled (note 8)              -        -   (16,476)    (105)

Purchased under Normal Course          -        -  (196,800)  (1,224)
Issuer Bid

Balance, end of year          45,020,641  300,451 43,709,073  271,817
                                                              

The weighted average number of common shares outstanding for the year ended 
December 31, 2012 was 44,334,810 basic and 44,808,099 diluted (year ended 
December 31, 2011 - 43,688,744 basic and 44,393,234 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 and for the one-year period November 12, 2012 
through November 11, 2013. There were no shares purchased under the Normal 
Course Issuer Bid for the year ended December 31, 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.

8. CONTRIBUTED SURPLUS
                                                 
                                     Year Ended   Year Ended

December 31, December 31, Continuity of Contributed Surplus 2012 2011

(C$000s) ($) ($)

Balance, beginning of year 24,170 15,468


       Stock options expensed             6,990        8,500
       Stock options exercised          (3,614)      (2,109)
       Shares cancelled                       -          105
       Denison Plan of Arrangement            -        2,206

Balance, end of year                     27,546       24,170
                                                 

The Plan of Arrangement that governed the amalgamation with Denison in 2004 
included a six-year "sunset clause" which provided that untendered share 
positions 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, have been added to contributed 
surplus in an amount totalling $2,206.

9. STOCK-BASED COMPENSATION

(a) Stock Options

Continuity of Stock Options              2012               2011
                                          Average            Average
                                         Exercise           Exercise
                                 Options    Price   Options    Price
                                     (#)     (C$)       (#)     (C$)

Balance, January 1             3,198,475    23.31 2,583,825    17.50
       Granted during the year   704,200    27.71 1,179,800    34.09
       Exercised for common    (686,488)    16.35 (434,250)    17.38
       shares
       Forfeited               (295,775)    26.60 (130,900)    25.51

Balance, December 31           2,920,412    25.67 3,198,475    23.31
                                                             

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

(b) Stock Units

Continuity of                        2012                            2011
Stock Units
                 Deferred Performance Restricted Deferred Performance Restricted
                    Stock       Stock      Stock    Stock       Stock      Stock
                    Units       Units      Units    Units       Units      Units
                      (#)         (#)        (#)      (#)         (#)        (#)

Balance, January   35,000      40,000          -        -      55,000          -
1
       Granted     35,000      45,000    270,135   35,000      55,000          -
       during
       the year
       Exercised (35,000)    (40,000)          -        -    (62,500)          -
       Forfeited        -           -   (22,905)        -     (7,500)          -

Balance,           35,000      45,000    247,230   35,000      40,000          -
December 31
                                                                       

The Company grants deferred stock units to its outside directors. These units 
vest in November of the year of grant 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 deferred 
stock units is recognized equally over the vesting period, based on the 
current market price of the Company's shares. During the year ended December 
31, 2012, $885 of compensation expense was recognized for deferred stock units 
(year ended December 31, 2011 - $998). This amount is included in selling, 
general and administrative expenses.

The Company grants performance stock units to its senior officers who do not 
participate in the stock option plan. The amount of the grants earned is 
linked to corporate performance and the grants vest on the approval of the 
Board of Directors at the meeting held to approve the consolidated financial 
statements for the year in respect of which performance is being evaluated. As 
with the deferred stock units, performance stock units are settled either in 
cash or Company shares purchased on the open market. During the year ended 
December 31, 2012, $1,296 of compensation expense was recognized for 
performance stock units (year ended December 31, 2011 - $1,330). This amount 
is included in selling, general and administrative expenses.

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. During the 
year ended December 31, 2012, $3,693 of compensation expense was recognized 
for restricted share units (year ended December 31, 2011 - $nil). This amount 
is included in selling, general and administrative expense.

Changes in the Company's obligations under the deferred and performance stock 
unit plans, which arise from fluctuations in the market value of the Company's 
shares underlying these compensation programs, are recorded as the share value 
changes.

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 due to the 
short-term maturity of those instruments. The fair value of the senior 
unsecured notes based on the closing market price at December 31, 2012 was 
$443,228 before deduction of unamortized debt issuance costs (December 31, 
2011 - $446,209). The carrying value of the senior unsecured notes at December 
31, 2012 was $447,705 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 7 and 8.

11. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in non-cash operating assets and liabilities for the years ended 
December 31, 2012 and 2011 are as follows:
                     Three Months Ended Dec. 31, Years Ended Dec. 31,
                         2012               2011     2012        2011

(C$000s)                  ($)                ($)      ($)         ($)

Accounts receivable  (15,895)           (10,768)  (6,245)   (136,246)

Income taxes            (345)              1,318    1,048       1,944
recoverable

Inventory               4,887            (4,499) (24,369)    (36,123)

Prepaid expenses and    2,447              1,862    (548)     (1,769)
deposits

Accounts payable and  (1,782)            (5,662)    4,666      49,510
accrued liabilities

Other long-term          (51)              (179)    (340)       (288)
liabilities
                     (10,739)           (17,928) (25,788)   (122,972)
                                                           

Purchase of property, plant and equipment is comprised of:
                      Three Months Ended Dec. 31, Years Ended Dec. 31,
                          2012               2011      2012       2011

(C$000s)                   ($)                ($)                     

Property, plant and   (55,694)          (101,008) (279,017)  (323,962)
equipment additions

Change in liabilities                                                 
related to purchase
       of property,        356            (8,970)    17,696   (15,744)
       plant and
       equipment
                      (55,338)          (109,978) (261,321)  (339,706)
                                                             

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.
                                                           

Years Ended December 31,                             2012    2011

(C$000s)                                              ($)     ($)

Net income for the year                            96,361 187,157

Adjusted for the following:                                      

  Depreciation                                     90,381  87,457

  Amortization of debt issuance costs and debt      1,234   1,207
  discount

  Stock-based compensation                          6,990   8,500

  Unrealized foreign exchange (gains) losses     (10,895)  11,945

  Loss (gain) on disposal of property, plant and      802    (88)
  equipment

  Deferred income taxes                            36,642  87,037

Cash flow                                         221,515 383,215
                                                           

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 December 31, 2012, the long-term debt to cash flow ratio was 1.99:1 
(December 31, 2011 - 1.18:1) calculated on a 12-month trailing basis as 
follows:
                                                                

As at December 31,                                        2012    2011

(C$000s, except ratio)                                     ($)     ($)

Long-term debt (net of unamortized debt issuance costs          
and

  debt discount) (note 4)                              441,497 451,021

Cash flow                                              221,515 383,215

Long-term debt to cash flow ratio                       1.99:1  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 
property, plant and equipment over the next five years that total 
approximately $369,230.

14. RELATED-PARTY TRANSACTIONS

An entity controlled by a director of the Company provides ongoing real estate 
advisory services to the Company. The aggregate fees charged for such services 
during 2012 were $29 (2011 - $90), as measured at the exchange amount. This 
arrangement was discontinued in 2013.

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 the rate of 
3.375 percent per annum, payable annually. The market value of the shares that 
secure the loan was approximately $2,119 as at December 31, 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 aggregative rent charged for these premises during 2012 was 
$356 (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:
                                                               

Years Ended December 31,                                 2012    2011

(C$000s)                                                  ($)     ($)

Product costs                                         490,222 401,522

Depreciation                                           90,381  87,457

Amortization of debt issuance costs and debt discount   1,234   1,207

Employee benefits expense (note 16)                   356,844 310,085
                                                               

16. EMPLOYEE BENEFITS EXPENSE

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

Years Ended December 31,                              2012    2011

(C$000s)                                               ($)     ($)

Salaries and short-term employee benefits          337,919 295,525

Post-employment benefits (group retirement savings   3,587   2,914
plan)

Share-based payments                                12,866  10,836

Termination benefits                                 2,472     810
                                                   356,844 310,085
                                                            

17. COMPENSATION OF KEY MANAGEMENT

Key management is defined as the Company's Board of Directors, Chief Executive 
Officer, Chief Financial Officer, and Chief Operating Officer. Compensation 
awarded to key management included:
                                                                

Years Ended December 31,                                  2012  2011

($C000s)                                                   ($)   ($)

Salaries, fees and short-term benefits                   2,756 2,732

Post-employment benefits (group retirement savings plan)    34    32

Share-based payments                                     2,392 2,326
                                                         5,182 5,090
                                                                

In the event of termination, key management (excluding the Board of Directors) 
are entitled to one to two years of annual compensation. In the event of 
termination resulting from change of control, key management (excluding the 
Board of Directors) are entitled to two years of annual compensation.

18. 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 $8,981 (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 $46 (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 $168 (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 $576 (439 euros) plus interest, was scheduled to be 
heard before the Athens Court of First Instance on October 1, 2009, but has 
been postponed a total of four times, including the most recent postponement 
on February 22, 2013. No new date has been set for the postponed hearing.

The maximum aggregate interest payable under the claims noted above amounted 
to $15,263 (11,635 euros) as at December 31, 2012.

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 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.

19. 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.
                                                           
              Canada     United  Russia   Latin Corporate Consolidated
                         States         America

(C$000s)         ($)        ($)     ($)     ($)       ($)          ($)

Three Months Ended December 31,                                       
2012

Revenue      201,573    109,975  24,197  31,742         -      367,487

Operating     49,022      5,488   (254)   3,101  (14,139)       43,218
income
(loss)((1))

Segmented    707,663    568,665 126,564 121,929         -    1,524,821
assets

Capital       22,216     26,351   2,454   4,673         -       55,694
expenditures

Goodwill       7,236      2,308     979       -         -       10,523

Three Months Ended                                                    
December 31, 2011

Revenue      237,286    202,511  30,737  19,503         -      490,037

Operating     98,221     60,292   3,818   1,405  (13,372)      150,364
income
(loss)((1))

Segmented    710,143    534,294 118,197  42,487         -    1,405,121
assets

Capital       35,415     61,006   3,140   1,447         -      101,008
expenditures

Goodwill       7,236      2,308     979       -         -       10,523

Year Ended December 31, 2012                                          

Revenue      732,880    638,483 112,765 111,088         -    1,595,216

Operating    188,555    105,129   6,566   8,839  (52,076)      257,013
income
(loss)((1))

Segmented    707,663    568,665 126,564 121,929         -    1,524,821
assets

Capital      124,902    138,328   6,173   9,614         -      279,017
expenditures

Goodwill       7,236      2,308     979       -         -       10,523

Year Ended December                                                   
31, 2011

Revenue      755,333    607,731 116,105  58,223         -    1,537,392

Operating    258,362    184,209  12,742      12  (42,497)      412,828
income
(loss)((1))

Segmented    710,143    534,294 118,197  42,487         -    1,405,121
assets

Capital      139,459    170,956  10,601   2,946         -      323,962
expenditures

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, gains or losses on disposal of
          property, plant and equipment, and income
          taxes.
                                                          
                              Three Months Ended Years Ended Dec. 31,
                                        Dec. 31,

Years Ended December 31,         2012       2011    2012         2011

(C$000s)                          ($)                ($)          ($)

Net income                     10,981     78,858  96,361      187,157

Add back (deduct):                                                   
             Depreciation      23,634     22,996  90,381       87,457
             Interest           8,933      9,053  36,354       35,489
             Foreign exchange (3,818)        990 (8,260)       14,234
             (gains) losses
             Loss (gain) on                                          
             disposal of
             property, plant
               and equipment      170        228     802         (88)
             Income taxes       3,318     38,239  41,375       88,579

Operating income               43,218    150,364 257,013      412,828
                                                          

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 Dec. 31, Years Ended Dec. 31,

Years Ended December      2012              2011      2012       2011
31,

(C$000s)                   ($)               ($)       ($)        ($)

Fracturing           1,436,279           449,137 1,436,279  1,406,444

Coiled tubing          100,239            30,496   100,239     98,639

Cementing               34,750             7,673    34,750     21,834

Other                   23,948             2,731    23,948     10,475
                     1,595,216           490,037 1,595,216  1,537,392
                                                            

The Company's customer base consists of over 190 oil and natural gas 
exploration and production companies, ranging from large multinational 
publicly traded companies to small private companies. Notwithstanding the 
Company's broad customer base, Calfrac has four significant customers that 
collectively accounted for approximately 33 percent of the Company's revenue 
for the year ended December 31, 2012 (year ended December 31, 2011 - four 
significant customers for approximately 26 percent) and of such customers, one 
customer accounted for approximately 13 percent of the Company's revenue for 
the year ended December 31, 2012 (year ended December 31, 2011 - 7 percent).

20. 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.

21. 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 $4,376 in dividends declared, $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 $22,182 in dividends declared, $6,083 was reinvested 
under the DRIP into 298,459 common shares of the Company.

A dividend of $0.50 per common share was declared on December 14, 2012 and 
paid on December 21, 2012. Of the $22,375 in dividends declared, $5,944 was 
reinvested under the DRIP into 255,432 common shares of the Company.

 

 

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

SOURCE: Calfrac Well Services Ltd.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2013/26/c8381.html

CO: Calfrac Well Services Ltd.
ST: Alberta
NI: OIL ERN CONF 

-0- Feb/26/2013 11:00 GMT

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