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Calfrac Announces Second Quarter Results and Contract Award


CALGARY, July 31, 2013 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX-CFW) announces its financial and operating results for the three and six months ended June 30, 2013.

HIGHLIGHTS


                                                 Six Months Ended June
               Three Months Ended June 30,                         30,
                   2013     2012    Change    2013    2012      Change

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

(unaudited)                                                           

Financial                                                             

Revenue         288,701  335,780      (14) 712,098 809,887        (12)

Operating
income((1))      16,307   29,810      (45)  78,977 143,191        (45)

EBITDA((2))      16,235   18,736      (13)  81,404 146,731        (45)

  Per share -
  basic            0.36     0.42      (14)    1.79    3.33        (46)

  Per share -
  diluted          0.35     0.42      (17)    1.78    3.29        (46)

Net income
(loss)
attributable
to                                                                    

  the
  shareholders
  of Calfrac                                                          

  before
  foreign
  exchange                                                            

  losses or
  gains((3))   (14,969)  (4,294)     (249)   7,707  54,971        (86)

  Per share -
  basic          (0.33)   (0.10)     (230)    0.17    1.25        (86)

  Per share -
  diluted        (0.33)   (0.10)     (230)    0.17    1.23        (86)

Net income
(loss)
attributable
to                                                                    

  the
  shareholders
  of Calfrac   (14,584) (11,855)      (23)  10,061  58,986        (83)

  Per share -
  basic          (0.32)   (0.27)      (19)    0.22    1.34        (84)

  Per share -
  diluted        (0.32)   (0.27)      (19)    0.22    1.32        (83)

Working
capital (end
of period)      319,982  357,128      (10) 319,982 357,128        (10)

Total equity
(end of
period)         784,247  747,591         5 784,247 747,591           5

Weighted
average common                                                        

  shares
  outstanding
  (#)                                                                 

  Basic          45,616   44,270         3  45,392  44,040           3

  Diluted        45,904   44,684         3  45,725  44,610           3
                                                                      

Operating (end
of period)                                                            

Pumping
horsepower
(000s)                                       1,025     830          23

Coiled tubing
units (#)                                       29      29           -

Cementing
units (#)                                       30      23          30

((1))  Operating income is defined as net income (loss) before
       depreciation, interest, foreign exchange gains or losses, gains
       or losses on disposal of capital assets and income taxes.
       Management believes that operating income is a useful
       supplemental measure as it provides an indication of the
       financial results generated by Calfrac's business segments prior
       to consideration of how these segments are financed or how they
       are taxed. Operating income is a measure that does not have any
       standardized meaning under International Financial Reporting
       Standards (IFRS) and, accordingly, may not be comparable to
       similar measures used by other companies.

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

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

CEO's MESSAGE

I am pleased to present Calfrac's operating and financial highlights for the 
three and six months ended June 30, 2013 and to discuss our prospects for the 
remainder of 2013 and beyond. During the second quarter, the Company:
    --  had an active quarter in western Canada despite wet weather
        conditions delaying some planned completions activity until the
        third quarter of 2013;
    --  experienced strong equipment utilization in the unconventional
        natural gas resource plays of the United States;
    --  commenced fracturing operations in Argentina; and
    --  experienced further increases in the number of horizontal
        multi-stage fracturing treatments performed in Mexico and
        Western Siberia.

Financial Highlights

For the three months ended June 30, 2013, the Company recorded:
    --  revenue of $288.7 million, a decrease of 14 percent from the
        second quarter of 2012 due primarily to lower pricing in Canada
        and the United States combined with lower activity in Canada
        due to unseasonably wet weather in western Canada. The decrease
        was offset partially by higher fracturing activity in the
        Marcellus and Fayetteville unconventional natural gas shale
        plays in the United States, increased multi-stage fracturing
        activity in Russia and the commencement of fracturing
        operations in Argentina;
    --  operating income of $16.3 million versus $29.8 million in the
        same quarter of 2012, due mainly to competitive pricing
        pressures in Canada and the United States and lower activity in
        western Canada due to adverse weather conditions; and
    --  a net loss attributable to shareholders of Calfrac of $14.6
        million or $0.32 per share diluted compared to a net loss of
        $11.9 million or $0.27 per share diluted in the second quarter
        of 2012, which included a foreign exchange loss of $9.8
        million.

For the six months ended June 30, 2013, the Company generated:
    --  revenue of $712.1 million, a decrease of 12 percent from the
        first six months of 2012, driven primarily by competitive
        pricing pressures in Canada and the United States and lower
        fracturing and coiled tubing activity in the unconventional
        plays of the Western Canada Sedimentary Basin due to inclement
        weather during the second quarter, offset partially by higher
        multi-stage fracturing activity in Western Siberia;
    --  operating income of $79.0 million versus $143.2 million in the
        same period of 2012, the decrease of 45 percent being mainly a
        result of competitive pricing pressures in Canada and the
        United States, higher transportation costs associated with the
        completion of larger fracturing jobs in Canada and start-up
        costs associated with the commencement of fracturing operations
        in Argentina; and
    --  net income attributable to shareholders of Calfrac of $10.1
        million or $0.22 per share diluted compared to net income of
        $59.0 million or $1.32 per share diluted in the same period of
        2012.

Operational Highlights

Canada

During the second quarter of 2013, fracturing and coiled tubing activity in 
western Canada was significantly affected by unseasonably wet weather which 
culminated in record flooding in southern Alberta in late June. These 
conditions severely hampered Calfrac's ability to execute all of its planned 
projects for the second quarter and, as a result, this work was deferred until 
the third quarter. Despite this, the Company was very active in the Montney 
unconventional resource play and completed several large multi-well pad 
projects in this region.

In the midst of challenging operating conditions in Canada during the second 
quarter and Calfrac's continued focus on managing its cost structure, the 
Company assigned a significant number of Canadian field employees to the 
United States. This served to provide the United States division with 
experienced field employees during a very active quarter in the Marcellus 
natural gas resource play.

United States

Calfrac's United States operations sustained the positive momentum generated 
in the first quarter of 2013 as revenue and operating income both increased on 
a quarter-over-quarter basis. These improvements were primarily driven by 
increased equipment utilization in the Marcellus natural gas play and the 
impact of cost-saving initiatives implemented in late 2012 and early 2013. 
Equipment and personnel were transferred from Canada during the second quarter 
to meet the strong customer demand in the Marcellus play. The benefits of the 
increased activity in this region was offset only partially by lower than 
expected fracturing activity in the Bakken oil shale play in North Dakota, 
resulting from a longer than anticipated spring break-up period and similar 
wet weather to that hampering operations in western Canada. Activity in the 
Fayetteville shale play met the Company's expectations as its fracturing fleet 
remained active. Development of the Niobrara play in Colorado continued and 
Calfrac was active in several projects during the second quarter. While still 
in the early stages of development, the initial success of the Niobrara oil 
play provides optimism for increased industry activity in the future.

Russia

Activity in Calfrac's Russian operations during the second quarter of 2013 met 
expectations as the onset of spring weather provided the environment for 
increased equipment utilization and lower operating costs. As a result, 
revenue and operating income increased from the first quarter of 2013. The 
improvement in equipment utilization was partially due to an increase in the 
number of horizontal multi-stage completions in Western Siberia. While still 
in the early stages of development, Calfrac remains optimistic that the 
adoption of this technology will gain further acceptance and create a driver 
of future growth in operating and financial performance in Russia.

Latin America

Budget reductions implemented by Calfrac's main customer in Mexico during the 
second quarter of 2013 significantly decreased activity in that country from 
the first quarter. The Company responded by rationalizing its operating cost 
structure while maintaining strong market share in the northern region of 
Mexico. Some of this work included horizontal multi-stage completions in the 
Burgos field which were not affected by the budget cutbacks. Calfrac has 
adjusted its cost structure for the expected level of activity in the short 
term and, if required, will proactively implement further reductions.

Calfrac's commencement of fracturing operations in Argentina during May 2013 
was a major milestone for the Company. The start-up phase has gone 
exceptionally well and mitigated the impact of the slowdown in Mexico during 
the second quarter. While most of its initial projects were focused on 
completions within conventional reservoirs, the Company expects to commence 
fracturing operations in unconventional plays in the near future. Calfrac 
believes that the move to unconventional plays could provide the basis for 
significant growth over the longer term.

In Colombia, challenging market conditions persisted in the second quarter of 
2013, resulting in lower than expected equipment utilization and financial 
performance. Permitting and infrastructure issues remain barriers to greater 
oilfield activity. The Company expects that these issues will be resolved in 
the future, but continues to closely manage its operating costs while focusing 
on expanding its customer base. Calfrac currently operates four cementing 
units in Colombia and does not intend to deploy any additional equipment until 
market conditions improve.

Outlook and Business Prospects

The Company expects that the strength in North American commodity prices will 
result in higher oilfield activity in the unconventional resource plays of 
Canada and the United States during the second half of 2013 and into 2014. 
This industry trend is anticipated to result in larger multi-well pad designs, 
longer horizontal legs and greater stimulation intensity. In addition, the use 
of multi-stage completion technology in horizontal wellbores in Mexico, 
Argentina and Russia is expected to continue to increase equipment utilization 
in those markets over the short and long term.

Fracturing and coiled tubing activity in western Canada remains very strong. 
Calfrac expects that oil-focused activity will remain stable for the remainder 
of the year with the introduction of higher rate treatments in certain plays, 
such as the Cardium, driving higher equipment utilization. The development of 
natural gas for future liquefied natural gas (LNG) export projects is 
anticipated to drive significant growth for Calfrac. The Company has a strong 
and active customer base as well as a number of long-term relationships with 
large customers in the Montney, Deep Basin and Duvernay plays. Calfrac expects 
that well completion activity will continue to grow in Canada as many of these 
plays transition from delineation to development. Positive initial production 
results, particularly with regard to natural gas liquids, provide significant 
optimism about the future development of the Duvernay play. The Duvernay 
resource play represents one of the most capital intensive plays in western 
Canada and has the potential to materially increase the demand for completion 
services in western Canada over the longer term. Calfrac is one of the most 
active service providers in this play and anticipates that its positioning 
will form the basis for further growth opportunities. Over the longer term, 
further operational efficiencies are expected to be achieved through the 
expanded use of 24-hour operations and multi-well pad development.

Looking beyond the Duvernay play, a broader key driver of long-term growth for 
Calfrac is the emergence of LNG export projects, a number of which have been 
proposed and some of which have to date received key regulatory approvals. The 
prepatory activity is expected to increase with the influx of capital from 
foreign entities and large multi-national companies. As sufficient natural gas 
production and reserves must be available to support the construction of LNG 
export facilities and future LNG exports, the related increase in capital 
investment should provide a significant platform for growth for Calfrac's 
Canadian operations, as a number of longstanding customers are involved in the 
associated projects. The Company's leadership position in the development of 
the Montney, Duvernay and Horn River resource plays is expected to enable it 
to participate significantly in the development of the natural gas reserves 
required to support these LNG initiatives. In relation to this trend, Calfrac 
is pleased to announce that it has entered into a multi-year minimum 
commitment contract for the provision of three fracturing spreads to Progress 
Energy Canada Ltd. for its Montney project in northeast British Columbia, and 
has also executed a right of first call agreement for an additional spread in 
respect of Progress' non-Montney work. These agreements represent another 
major milestone in the long-term relationship between Progress and Calfrac, 
and the Company looks forward to working closely with the Progress team to 
assist it in the development of its world class assets in the Montney play. In 
anticipation of securing this contract and to service the growth anticipated 
in the Canadian marketplace, Calfrac has increased its Canadian horsepower by 
approximately 34 percent over the past 12-month period, and has been actively 
securing the additional employee base required to meet the anticipated work 
commitments under the agreements while continuing to meet the increasing 
demand for its services with other customers. As a result, Calfrac expects to 
be able to meet the increased demand for its services with its existing 
equipment fleet, but will continue to closely monitor market conditions and is 
well positioned with its critical suppliers to efficiently augment its 
previously announced capital budget as may be required in the context of the 
evolving Canadian market.

The operational improvements that were implemented in the United States in 
late 2012 and early 2013 resulted in improved financial performance during the 
first half of 2013 in the midst of very challenging market conditions in some 
key markets. Calfrac continues to be focused on prudently managing its cost 
structure and expanding its customer relationships in order to maximize 
profitability. There continues to be near-term uncertainty, however, as the 
United States pressure pumping market remains oversupplied. While the Company 
does not expect market conditions to change significantly in the third 
quarter, activity may decline in the fourth quarter as producers evaluate 
their capital budgets. That said, Calfrac believes that the strength in 
commodity prices may lead to increased activity in the regions where it 
operates as the Company looks toward 2014 and beyond.

Calfrac remains well-positioned in the United States pressure pumping market. 
The Company services two of the most active unconventional resource plays in 
the United States, the Bakken oil shale play in North Dakota and the Marcellus 
shale natural gas play in Pennsylvania and West Virginia. Calfrac believes 
that the Marcellus shale play will continue to be a primary region for natural 
gas development due to its low cost structure and proximity to markets. 
Calfrac currently operates four fracturing crews in this region and, based on 
a recent tender award, expects to deploy a fifth crew late in 2013. Due to the 
Company's strong customer base in the Fayetteville shale play of Arkansas, 
activity is anticipated to remain stable despite recent reductions in overall 
oilfield activity in this region. Calfrac's longstanding presence in the 
Rockies region provides additional growth prospects in the Niobrara shale oil 
play as many producers have begun using longer reach horizontal wells and 
greater stimulation intensity with encouraging results.

Calfrac's year-to-date operating and financial results in Russia are 
consistent with expectations from the 2013 contract tender process. Future 
growth and improved profitability in this division will be based on the 
expanded use of new technologies in Western Siberia, such as horizontal 
drilling and multi-stage completions. The Company believes that there is 
significant future potential in Russia given the country's position as a 
leading producer of oil and natural gas. Over the last few quarters, the 
number of multi-stage fracturing jobs completed in Russia has increased 
significantly. Consequently, Calfrac expects that this trend will continue to 
drive demand for its services over the short and long term as Russia's 
producing sector gains confidence in this completion strategy.

The Company expects the use of multi-stage fracturing technology within 
horizontal wellbores in Mexico to become more common over the longer term as 
capital budgets are replenished. The budget constraints introduced by 
Calfrac's customer in Mexico during the second quarter, however, are expected 
to curtail the Company's equipment utilization in the third quarter and, 
potentially, the remainder of the year. In response to these new market 
conditions, Calfrac reduced its Mexican operating cost structure during the 
second quarter to align with expected levels of activity. The Company 
continues to monitor the business environment closely and will take further 
actions, if required.

With Calfrac's successful entry into the Argentinean fracturing market during 
the second quarter, the Company believes that it is well-positioned to take 
advantage of opportunities related to the development of significant 
unconventional resource plays in that country. Calfrac believes that 
horizontal drilling combined with multi-stage fracturing will be key to 
unlocking these resources. As there is very limited in-country capacity to 
service these emerging unconventional plays, the Company's strategy to lever 
its longstanding reputation for technical expertise and a strong commitment to 
safety and service quality is anticipated to provide the foundation for 
long-term growth in Argentina.

The Colombian oilfield service market remains challenging due to lower than 
expected industry drilling activity caused by permitting and infrastructure 
issues. The Company currently operates four cementing units in Colombia and 
remains focused on expanding its customer base as well as managing its cost 
structure to improve future financial performance.

In closing, I would like to thank Calfrac's employees for their efforts to 
assist the communities that were hit by the flooding in southern Alberta at 
the end of June. Through your hard work and commitment the Company was able to 
navigate the evacuation of its corporate head office without detrimental 
effect on its operations. I also want to thank-you for the outstanding job you 
did illustrating firsthand the volunteerism that sets this region and this 
company apart through your assistance with preventative sand bagging in Red 
Deer and Medicine Hat prior to the flooding, and through the operation of pump 
trucks and the formation of volunteer work crews to assist affected homeowners 
in Calgary, High River and Medicine Hat in the days following the flooding. 
The Company recognizes that the rebuild from this disaster will take a great 
deal of time, and hopes that your efforts and the efforts of the thousands of 
other volunteers has in some small way assisted in that process.

On behalf of the Board of Directors,

Douglas R. Ramsay
Chief Executive Officer

July 30, 2013

2013 Overview

In the second quarter of 2013, the Company:
    --  generated revenue of $288.7 million, a decrease of 14 percent
        from the second quarter of 2012 due primarily to lower pricing
        in Canada and the United States combined with lower activity in
        Canada due to unseasonably wet weather in western Canada. The
        decrease was offset partially by higher fracturing activity in
        the Marcellus and Fayetteville natural gas shale plays,
        increased multi-stage fracturing activity in Russia and the
        commencement of fracturing operations in Argentina;
    --  reported operating income of $16.3 million versus $29.8 million
        in the same quarter of 2012, due mainly to competitive pricing
        pressures in Canada and the United States and lower activity in
        western Canada due to adverse weather conditions;
    --  reported a net loss attributable to shareholders of Calfrac of
        $14.6 million or $0.32 per share diluted compared to a net loss
        of $11.9 million or $0.27 per share diluted in the second
        quarter of 2012, which included a foreign exchange loss of $9.8
        million;
    --  incurred capital expenditures of $46.6 million, principally
        related to the Company's fracturing operations in Canada, the
        United States and Argentina; and
    --  declared a quarterly dividend of $0.25 per share.

In the six months ended June 30, 2013, the Company:
    --  generated revenue of $712.1 million, a decrease of 12 percent
        from the first six months of 2012 driven primarily by
        competitive pricing pressures in Canada and the United States,
        plus lower fracturing and coiled tubing activity in the
        unconventional plays of the Western Canada Sedimentary Basin
        due to inclement weather during the second quarter, offset
        partially by higher multi-stage fracturing activity in Western
        Siberia;
    --  reported operating income of $79.0 million versus $143.2
        million in the same period of 2012, a decrease of 45 percent,
        mainly as a result of competitive pricing pressures in Canada
        and the United States, higher transportation costs associated
        with the completion of larger fracturing jobs in Canada and
        start-up costs associated with the commencement of fracturing
        operations in Argentina;
    --  reported net income attributable to shareholders of Calfrac of
        $10.1 million or $0.22 per share diluted compared to net income
        of $59.0 million or $1.32 per share diluted in the same period
        of 2012; and
    --  incurred capital expenditures of $90.6 million primarily to
        bolster the Company's fracturing operations in Canada, the
        United States and Argentina.

Financial Overview - Three Months Ended June 30, 2013 Versus 2012

Canada                                                            

Three Months Ended June 30,                     2013      2012   Change

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

(unaudited)                                                            

Revenue                                       80,719   104,720     (23)

Expenses                                                               

  Operating                                   74,751    95,083     (21)

  Selling, General and Administrative (SG&A)   3,932     3,808        3
                                              78,683    98,891     (20)

Operating income((1))                          2,036     5,829     (65)

Operating income (%)                            2.5%      5.6%     (55)

Fracturing revenue per job ($)               195,191   185,377        5

Number of fracturing jobs                        402       512     (21)

Pumping horsepower, end of period (000s)         404       302       34

Coiled tubing revenue per job ($)             27,128    36,594     (26)

Number of coiled tubing jobs                      83       268     (69)

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

((1))  Refer to "Non-GAAP Measures" on page 17 for further information.

Revenue

Revenue from Calfrac's Canadian operations during the second quarter of 2013 
was $80.7 million versus $104.7 million in the comparable three-month period 
of 2012. The 23 percent decrease in revenue was primarily due to no fracturing 
and coiled tubing activity in the Horn River area of northeast British 
Columbia combined with a more competitive pricing environment offset partially 
by the completion of larger fracturing jobs. During the second quarter of 
2012, a significant Horn River project was completed, but the Company had no 
activity in that region in 2013. In addition, extremely wet weather in June in 
western Canada, specifically in southern and central Alberta, delayed planned 
completion projects until the third quarter contributing to the decrease in 
fracturing activity.

Operating Income

Operating income in Canada decreased by 65 percent to $2.0 million during the 
second quarter of 2013 from $5.8 million in the same period of 2012 due to a 
more competitive pricing environment, combined with lower overall equipment 
utilization.

United States                                                      

Three Months Ended June 30,                 2013      2012   Change

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

(unaudited)                                                        

Revenue                                  146,275   175,136     (16)

Expenses                                                           
    Operating                             116,916   136,795     (15)
    SG&A                                    4,184     5,478     (24)
                                         121,100   142,273     (15)

Operating income((1))                     25,175    32,863     (23)

Operating income (%)                       17.2%     18.8%      (9)

Fracturing revenue per job ($)            61,649    76,187     (19)

Number of fracturing jobs                  2,254     2,207        2

Pumping horsepower, end of period (000s)     501       456       10

Coiled tubing units, end of period (#)         -         1    (100)

Cementing revenue per job ($)             32,670    33,149      (1)

Number of cementing jobs                     224       157       43

Cementing units, end of period (#)            17        11       55

US$/C$ average exchange rate((2))         1.0233    1.0104        1

((1))  Refer to "Non-GAAP Measures" on page 17 for further information.

((2))  Source: Bank of Canada.

Revenue

Revenue from Calfrac's United States operations decreased during the second 
quarter of 2013 to $146.3 million from $175.1 million in the comparable 
quarter of 2012. The decrease was due primarily to competitive pricing 
pressures in the United States market and the completion of smaller fracturing 
jobs in the Bakken play of North Dakota, offset partially by higher fracturing 
and cementing activity. Fracturing activity in the Marcellus and Fayetteville 
shale plays was significantly higher in the second quarter of 2013 than in the 
same period in 2012. This increase was offset partially by lower activity in 
the Bakken oil shale play of North Dakota, due to a longer than expected 
spring break-up period and unseasonably wet weather similar to that in western 
Canada.

Operating Income

Operating income in the United States was $25.2 million for the second quarter 
of 2013, a decrease of 23 percent from the comparative period in 2012 
primarily due to lower overall revenue. The decrease in operating income was 
limited by reductions in labour and maintenance expenses resulting from 
cost-saving initiatives implemented by the Company in late 2012 and early 
2013, combined with supply chain and logistical improvements and declines in 
the cost of certain materials such as guar.

Russia                                                                

Three Months Ended June 30,                     2013     2012   Change

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

(unaudited)                                                           

Revenue                                       37,305   29,244       28

Expenses                                                              
    Operating                                  32,259   26,070       24
    SG&A                                        1,689    1,402       20
                                              33,948   27,472       24

Operating income((1))                          3,357    1,772       89

Operating income (%)                            9.0%     6.1%       48

Fracturing revenue per job ($)                98,337   89,026       10

Number of fracturing jobs                        312      223       40

Pumping horsepower, end of period (000s)          48       45        7

Coiled tubing revenue per job ($)             52,158   58,699     (11)

Number of coiled tubing jobs                     127      160     (21)

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

Rouble/C$ average exchange rate((2))          0.0323   0.0329      (2)

((1))  Refer to "Non-GAAP Measures" on page 17 for further information.

((2))  Source: Bank of Canada.

Revenue

During the second quarter of 2013, the Company's revenue from Russian 
operations increased by 28 percent to $37.3 million from $29.2 million in the 
corresponding quarter of 2012. The increase in revenue was mainly due to an 
increased demand for horizontal multi-stage fracturing operations in Western 
Siberia. During the second quarter, approximately 30 percent of Calfrac's 
total Russian fracturing activity was related to multi-stage well completions 
compared to no activity in the comparable period of 2012. The increase in 
revenue was partially offset by lower coiled tubing activity resulting from 
the increased use of multi-stage fracturing completions, which reduced the 
requirements for coiled tubing operations, combined with a decrease in coiled 
tubing job sizes.

Operating Income

Operating income in Russia in the second quarter of 2013 was $3.4 million 
compared to $1.8 million in the corresponding period of 2012. The increase in 
operating income was primarily due to operational efficiencies resulting from 
higher fracturing equipment utilization and higher overall revenue.

Latin America                                                          

Three Months Ended June 30,                      2013     2012   Change

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

(unaudited)                                                            

Revenue                                        24,402   26,680      (9)

Expenses                                                               
    Operating                                   23,898   24,001        -
    SG&A                                         1,470    1,449        1
                                               25,368   25,450        -

Operating (loss) income((1))                    (966)    1,230    (179)

Operating (loss) income (%)                     -4.0%     4.6%    (187)

Pumping horsepower, end of period (000s)           72       27      167

Cementing units, end of period (#)                 13       11       18

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

Mexican peso/C$ average exchange rate((2))     0.0820   0.0747       10

Argentinean peso/C$ average exchange rate((2)) 0.1953   0.2272     (14)

((1))  Refer to "Non-GAAP Measures" on page 17 for further information.

((2))  Source: Bank of Canada.

Revenue

Calfrac's operations in Latin America generated total revenue of $24.4 million 
during the second quarter of 2013 versus $26.7 million in the comparable 
three-month period in 2012. For the three months ended June 30, 2013 and 2012, 
revenue generated through subcontractors was $3.3 million and $6.5 million, 
respectively. The decrease in revenue was due to lower fracturing activity in 
the Chicontepec field in Mexico resulting from customer budget reductions, and 
was partially offset by the commencement of fracturing operations in Argentina 
combined with higher cementing and coiled tubing activity and the completion 
of larger cementing jobs in Argentina. Lower activity in Colombia also 
contributed to the year-over-year decrease in revenue.

Operating (Loss) Income

Calfrac's Latin America division incurred an operating loss of $1.0 million 
during the second quarter of 2013 compared to operating income of $1.2 million 
in the comparative quarter in 2012. The decrease in operating income was 
primarily due to lower equipment utilization in Mexico.

Corporate                                               

Three Months Ended June 30,     2013       2012   Change

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

(unaudited)                                             

Expenses                                                
    Operating                   2,567      2,482        3
    SG&A                       10,728      9,402       14
                              13,295     11,884       12

Operating loss((1))         (13,295)   (11,884)       12

% of Revenue                    4.6%       3.5%       31

((1))  Refer to "Non-GAAP Measures" on page 17 for further information.

Operating Loss

The 12 percent increase in corporate expenses in the second quarter of 2013 
over the same period in 2012 was mainly due to higher stock-based compensation 
expenses of $1.0 million resulting from additional restricted share units 
granted and a higher stock price in 2013. The increase was offset partially by 
lower professional fees.

Depreciation

For the three months ended June 30, 2013, depreciation expense increased by 17 
percent to $26.0 million from $22.3 million in the corresponding quarter of 
2012. The increase in depreciation expense was mainly a result of a larger 
equipment fleet operating in North America and Argentina.

Foreign Exchange Gains or Losses

The Company recorded a foreign exchange loss of $0.1 million during the second 
quarter of 2013 versus a $9.8 million loss in the comparable period in 2012. 
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 loss recorded 
in the quarter was largely attributable to the translation of United States 
dollar-denominated liabilities in Russia and Mexico offset partially by the 
translation of United States dollar-denominated assets in Canada. The value of 
the United States dollar appreciated against the Russian rouble and Mexican 
peso during the second quarter, which resulted in a foreign exchange loss 
related to these net monetary positions. The foreign exchange loss was offset 
by the foreign exchange gain related to the net monetary asset position in 
Canada as the United States dollar appreciated against the Canadian dollar 
during the quarter.

Interest

The Company's interest expense during the second quarter of 2013 was $9.3 
million versus $9.0 million for the comparable period in 2012. The increase 
was related to additional short-term borrowing in Latin America and a draw on 
Calfrac's revolving credit facilities during the second quarter of 2013.

Income Tax Expenses

The Company recorded an income tax recovery of $4.1 million during the second 
quarter of 2013 versus a recovery of $0.5 million in the comparable period of 
2012. The decrease in total income tax expense was primarily due to lower 
profitability in the United States. The effective income tax recovery rate for 
2013 was 21 percent compared to 4 percent in 2012. The higher effective 
recovery rate for the second quarter of 2013 was primarily due to larger tax 
losses in Canada combined with a lower percentage of taxable income in the 
United States, which has a higher average statutory tax rate.

Summary of Quarterly Results
                                                                                               

Three Months         Sept.       Dec.       Mar.       June       Sept.       Dec.       Mar.       June
Ended                  30,        31,        31,        30,         30,        31,        31,        30,
                      2011       2011       2012       2012        2012       2012       2013       2013

(unaudited)            ($)        ($)        ($)        ($)         ($)        ($)        ($)        ($)

Financial                                                                                               

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

Revenue            440,491    490,037    474,107    335,780     417,842    367,487    423,397    288,701

Operating          126,527    150,364    113,381     29,810      70,604     43,218     62,670     16,307
income((1))

EBITDA((1))        102,042    149,146    127,995     18,736      70,874     46,866     65,169     16,235

  Per share -         2.33       3.40       2.92       0.42        1.59       1.05       1.44       0.36
  basic

  Per share -         2.30       3.38       2.87       0.42        1.58       1.04       1.43       0.35
  diluted

Net income                                                                                              
(loss)
attributable

  to                47,381     78,921     70,841   (11,855)      26,917     11,243     24,645   (14,584)
  shareholders
  of Calfrac

  Per share -         1.08       1.80       1.62     (0.27)        0.60       0.25       0.55     (0.32)
  basic

  Per share -         1.07       1.79       1.59     (0.27)        0.60       0.25       0.54     (0.32)
  diluted

Capital             85,130    101,008     84,075     75,286      63,962     55,694     43,989     46,618
expenditures

Working            375,823    398,526    431,053    357,128     353,182    322,857    332,241    319,982
capital (end
of period)

Total equity       632,889    700,569    779,426    747,591     783,091    780,759    802,581    784,247
(end of
period)
                                                                                                        

Operating (end                                                                                          
of period)

Pumping                656        719        782        830         845        977      1,013      1,025
horsepower
(000s)

Coiled tubing           29         29         29         29          29         29         29         29
units (#)

Cementing               23         23         23         23          25         26         28         30
units (#)

((1))  Refer to "Non-GAAP Measures" on page 17 for further information

Seasonality of Operations

The Company's Canadian and United States businesses are seasonal. The lowest 
activity is typically experienced during the second quarter of the year when 
road weight restrictions are in place due to spring break-up conditions and 
access to well sites in Canada and North Dakota is reduced (refer to "Business 
Risks - Seasonality" in the Company's 2012 Annual Report).

Foreign Exchange Fluctuations

The Company's consolidated financial statements are reported in Canadian 
dollars. Accordingly, the quarterly results are directly affected by 
fluctuations in the United States, Russian, Mexican, Argentinean and Colombian 
currency exchange rates (refer to "Business Risks - Fluctuations in Foreign 
Exchange Rates" in the Company's 2012 Annual Report).

Financial Overview - Six Months Ended June 30, 2013 Versus 2012

Canada                                                         

Six Months Ended June 30,                   2013    2012 Change

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

(unaudited)                                                    

Revenue                                  312,295 330,544    (6)

Expenses                                                       
    Operating                             246,546 239,356      3
    SG&A                                    7,802   8,027    (3)
                                         254,348 247,383      3

Operating income((1))                     57,947  83,161   (30)

Operating income (%)                       18.6%   25.2%   (26)

Fracturing revenue per job ($)           215,011 195,118     10

Number of fracturing jobs                  1,384   1,549   (11)

Pumping horsepower, end of period (000s)     404     302     34

Coiled tubing revenue per job ($)         24,371  32,276   (24)

Number of coiled tubing jobs                 604     877   (31)

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

((1)) Refer to "Non-GAAP Measures" on page 17 for further
information.

Revenue

Revenue from Calfrac's Canadian operations during the first six months of 2013 
was $312.3 million versus $330.5 million in the comparable period of 2012. The 
6 percent decrease in revenue was primarily due to competitive pricing 
pressures as well as no fracturing and coiled tubing activity in the Horn 
River area of northeast British Columbia during the second quarter of 2013. In 
addition, extremely wet weather in western Canada during June delayed planned 
completion projects until the third quarter of 2013.

Operating Income

Operating income in Canada decreased by 30 percent to $57.9 million during the 
first six months of 2013 from $83.2 million in the same period of 2012. The 
decrease in Canadian operating income was primarily due to a more competitive 
pricing environment combined with higher logistical costs in the first quarter 
of 2013 associated with the completion of larger fracturing jobs and longer 
average travel distances to well sites in the unconventional oil and natural 
gas resource plays of western Canada. In addition, there was no activity in 
the Horn River region during the second quarter of 2013 whereas a significant 
project was completed during the comparable period of 2012.

United States                                                       

Six Months Ended June 30,                        2013    2012 Change

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

(unaudited)                                                         

Revenue                                       273,285 370,035   (26)

Expenses                                                            
    Operating                                  220,765 282,591   (22)
    SG&A                                         9,306  10,477   (11)
                                              230,071 293,068   (21)

Operating income((1))                          43,214  76,967   (44)

Operating income (%)                            15.8%   20.8%   (24)

Fracturing revenue per job ($)                 58,418  79,237   (26)

Number of fracturing jobs                       4,438   4,488    (1)

Pumping horsepower, end of period (000s)          501     456     10

Coiled tubing units, end of period (#)              -       1  (100)

Cementing revenue per job ($)                  32,539  31,696      3

Number of cementing jobs                          431     328     31

Cementing units, end of period (#)                 17      11     55

US$/C$ average exchange rate((2))              1.0156  1.0058      1

((1)) Refer to "Non-GAAP Measures" on page 17 for further
information.

((2)) Source: Bank of Canada.

Revenue

Revenue from Calfrac's United States operations during the first six months of 
2013 decreased to $273.3 million from $370.0 million in the comparable period 
of 2012. The decrease was due primarily to competitive pricing pressures in 
the United States market combined with lower fracturing activity and the 
completion of smaller fracturing jobs in the Bakken shale play of North 
Dakota. The decrease was partially offset by higher activity in the Marcellus 
and Fayetteville shale natural gas plays.

Operating Income

Operating income in the United States was $43.2 million for the six months 
ended June 30, 2013 compared to $77.0 million in the first six months of 2012. 
The decrease in operating income was primarily due to competitive pricing 
pressures and lower fracturing equipment utilization in the unconventional 
natural gas plays of the United States during the first quarter of 2013. The 
decrease in operating income was mitigated by reductions in labour and 
maintenance expenses resulting from cost-saving initiatives implemented by the 
Company in late 2012 and early 2013, combined with supply chain and logistical 
improvements and declines in certain key materials such as guar.

Russia                                                             

Six Months Ended June 30,                        2013   2012 Change

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

(unaudited)                                                        

Revenue                                        74,466 57,341     30

Expenses                                                           
    Operating                                   65,836 51,210     29
    SG&A                                         3,283  2,805     17
                                               69,119 54,015     28

Operating income((1))                           5,347  3,326     61

Operating income (%)                             7.2%   5.8%     24

Fracturing revenue per job ($)                102,013 93,492      9

Number of fracturing jobs                         587    407     44

Pumping horsepower, end of period (000s)           48     45      7

Coiled tubing revenue per job ($)              56,746 58,454    (3)

Number of coiled tubing jobs                      257    330   (22)

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

Rouble/C$ average exchange rate((2))           0.0327 0.0325      1

((1)) Refer to "Non-GAAP Measures" on page 17 for further
information.

((2)) Source: Bank of Canada.

Revenue

During the first six months of 2013, the Company's revenue from Russian 
operations increased by 30 percent to $74.5 million from $57.3 million in the 
corresponding period of 2012. The increase in revenue was mainly due to higher 
fracturing activity as a result of the successful introduction of multi-stage 
fracturing programs in 2013 and larger conventional fracturing job sizes. 
Coiled tubing activity declined as a result of the increased use of 
multi-stage fracturing operations, which reduced the requirements for coiled 
tubing operations, combined with a decrease in coiled tubing job sizes.

Operating Income

Operating income in Russia in the first six months of 2013 was $5.3 million 
compared to $3.3 million in the corresponding period of 2012. The increase in 
operating income was primarily a result of operational efficiencies associated 
with multi-stage fracturing jobs forming a larger proportion of total activity 
in 2013.

Latin America                                                      

Six Months Ended June 30,                        2013   2012 Change

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

(unaudited)                                                        

Revenue                                        52,052 51,967      -

Expenses                                                           
    Operating                                   49,064 45,355      8
    SG&A                                         2,802  2,864    (2)
                                               51,866 48,219      8

Operating income((1))                             186  3,748   (95)

Operating income (%)                             0.4%   7.2%   (94)

Pumping horsepower, end of period (000s)           72     27    167

Cementing units, end of period (#)                 13     11     18

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

Mexican peso/C$ average exchange rate((2))     0.0809 0.0759      7

Argentinean peso/C$ average exchange rate((2)) 0.1982 0.2290   (13)

((1)) Refer to "Non-GAAP Measures" on page 17 for further
information.

((2)) Source: Bank of Canada.

Revenue

Calfrac's Latin America operations generated total revenue of $52.1 million 
during the first six months of 2013, virtually unchanged from $52.0 million in 
the comparable period in 2012. For the six months ended June 30, 2013 and 
2012, revenue generated through subcontractors was $9.1 million and $12.5 
million, respectively.

Revenue for the six months ended June 30, 2013 increased due to the 
commencement of fracturing activity in Argentina combined with higher 
cementing and coiled tubing activity in that country. The increase was offset 
by lower fracturing activity in the Chicontepec field in Mexico resulting from 
customer budget constraints and lower activity in Colombia as a result of 
infrastructure and permitting issues.

Operating Income

For the six months ended June 30, 2013, Calfrac's Latin America division 
generated operating income of $0.2 million compared to $3.8 million in the 
comparative period in 2012. The decrease in operating income was primarily due 
to lower equipment utilization in Mexico and start-up costs associated with 
the commencement of fracturing activity in Argentina.

Corporate                                                

Six Months Ended June 30,     2013     2012        Change

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

(unaudited)                                              

Expenses                                                 
    Operating                 4,777    4,662             2
    SG&A                     22,940   19,349            19
                            27,717   24,011            15

Operating loss((1))       (27,717) (24,011)            15

% of Revenue                  3.9%     3.0%            30

((1)) Refer to "Non-GAAP Measures" on page 17 for further
information.

Operating Loss

The 15 percent increase in corporate expenses for the six months ended June 
30, 2013 over the comparative period in 2012 was mainly due to a $2.6 million 
increase in stock-based compensation expenses resulting from additional 
restricted share units granted and a higher stock price in 2013, as well as 
higher occupancy costs. The increase was offset partially by lower 
professional fees.

Depreciation

For the six months ended June 30, 2013, depreciation expense increased by 15 
percent to $50.8 million from $44.3 million in the corresponding period of 
2012. The increase is mainly a result of a larger fleet of equipment operating 
in North America and Argentina.

Foreign Exchange Gains or Losses

The Company recorded a foreign exchange gain of $2.3 million during the first 
six months of 2013 versus a $4.1 million gain in the comparative period of 
2012. 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 the first six months of 2013 was attributable to the 
net U.S. dollar denominated asset position in Canada as the U.S. dollar 
appreciated by six percent against the Canadian dollar during this period. 
This gain was partially offset by the impact of the eight percent appreciation 
of the U.S. dollar versus the Russian rouble related to the Company's U.S. 
dollar debt in that country.

Interest

The Company's interest expense during the first six months of 2013 increased 
from the comparable period of 2012 by $0.6 million to $18.5 million. The 
increase was related to additional short-term borrowing in Latin America and a 
draw on Calfrac's revolving credit facility during the second quarter.

Income Tax Expenses

The Company recorded an income tax expense of $2.9 million during the first 
six months of 2013 compared to income tax expense of $25.7 million in the 
comparable period of 2012. The effective income tax rate for the six-month 
period ended June 30, 2013 was 24 percent compared to 30 percent in 2012. The 
lower effective tax rate for the first six months of 2013 was 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
                                                         
                    Three Months Ended June   Six Months Ended June 30,
                    30,
                        2013           2012        2013            2012

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

(unaudited)                                                            

Cash flows provided                                                    
by (used in):

  Operating            3,400         90,363      44,902         174,439
  activities

  Financing           24,587          1,101      41,472           8,159
  activities

  Investing         (44,720)       (74,732)   (104,374)       (149,475)
  activities

  Effect of              465        (1,400)       6,462             465
  exchange rate
  changes on cash
  and cash
  equivalents

Increase (decrease) (16,268)         15,332    (11,538)          33,588
in cash and cash
equivalents

Operating Activities

The Company's cash provided by operating activities for the six months ended 
June 30, 2013 was $44.9 million versus $174.4 million in the comparable period 
of 2012. The decrease was primarily due to a decline in operating margins in 
Canada and the United States and slower accounts receivable collections in 
Mexico. At June 30, 2013, Calfrac's working capital was approximately $320.0 
million, a decrease of 1 percent from December 31, 2012. The Company had a 
receivable of US$55.0 million at June 30, 2013 with a customer operating in 
Mexico that has been outstanding for greater than 120 days, for which no 
provision has been made. The payment delay is consistent with the situation of 
many other oilfield service companies in this market. Collection of the full 
amount is expected by the end of the year, although the timing is uncertain.

Financing Activities

Cash flow provided by financing activities during the first six months of 2013 
was $41.5 million compared to $8.2 million in the comparable 2012 period. 
During the first six months of 2013, the Company made a $25.9 million draw on 
its credit facility, received bank loan proceeds of $12.5 million in 
Argentina, issued $12.2 million of Calfrac common shares, paid dividends of 
$8.3 million and repaid $0.7 million of finance lease obligations.

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 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 Canadian prime rate loans and U.S. base rate loans, the rate 
ranges from 0.50 percent to 1.25 percent above the respective base rates for 
such loans. 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 June 30, 2013, the Company had drawn $26.3 
million on its operating facility and used $17.9 million of its credit 
facilities for letters of credit, leaving $255.8 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 instead of semi-annually commencing with a $0.25 
dividend that was declared in the first quarter of 2013. In June 2013, Calfrac 
declared a $0.25 dividend that was paid on July 15.

Investing Activities

Calfrac's net cash used for investing activities was $104.4 million for the 
first six months of 2013 versus $149.5 million for the comparative period in 
2012. Cash outflows relating to capital expenditures were $105.3 million 
during the period compared to $150.7 million in 2012. Capital expenditures 
were primarily to support the Company's Canadian, United States and 
Argentinean 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 carry-over 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 the first six months of 2013 was a gain of $6.5 million 
versus a gain of $0.5 million during 2012. 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 June 30, 2013, the Company had cash and cash equivalents of $30.9 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 July 26, 
2013, there were 46,016,096 common shares issued and outstanding, and 
2,747,375 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 (TSX) during the last five trading days preceding the relevant 
dividend payment date.

Normal Course Issuer Bid

On November 1, 2012, the Company filed a Notice of Intention (the "Renewal 
Notice") to renew its Normal Course Issuer Bid (the "Renewed NCIB") with the 
TSX. 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 Renewed NCIB will be 
cancelled. The Company did not purchase any shares under the Renewed NCIB 
during the first six months of 2013. A copy of the Renewal Notice may be 
obtained by any shareholder, without charge, by contacting the Company's 
Corporate Secretary at 411 - 8th 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 under 
"Business Risks" below.

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

Business Risks

The business of Calfrac is subject to certain risks and uncertainties. Prior 
to making any investment decision regarding Calfrac, investors should 
carefully consider, among other things, the risk factors set forth in the 
Company's most recently filed Annual Information Form, which are specifically 
incorporated by reference herein.

The Annual Information Form is available through the Internet on the Canadian 
System for Electronic Document Analysis and Retrieval (SEDAR), which can be 
accessed at www.sedar.com. Copies of the Annual Information Form may also be 
obtained on request without charge from Calfrac at 411 - 8(th) Avenue S.W., 
Calgary, Alberta, Canada, T2P 1E3, or at www.calfrac.com, or by facsimile at 
403-266-7381.

Non-GAAP Measures

Certain supplementary measures in this press release do not have any 
standardized meaning as prescribed under IFRS and are therefore considered 
non-GAAP measures. These measures include operating income, EBITDA and net 
income attributable to the shareholders of Calfrac before foreign exchange 
gains and losses. These measures may not be comparable to similar measures 
presented by other entities. These measures have been described and presented 
in this press release in order to provide shareholders and potential investors 
with additional information regarding the Company's financial results, 
liquidity and its ability to generate funds to finance its operations. 
Management's use of these measures has been disclosed further in this press 
release as these measures are discussed and presented.

Additional Information

Further information regarding Calfrac Well Services Ltd., including the most 
recently filed Annual Information Form, can be accessed on the Company's 
website at www.calfrac.com or under the Company's public filings found at 
www.sedar.com.

Second Quarter Conference Call

Calfrac will be conducting a conference call for interested analysts, brokers, 
investors and news media representatives to review its 2013 second quarter 
results at 10:00 a.m. (Mountain Time) on Wednesday, July 31, 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 17426327). A webcast of the conference call may be accessed via the 
Company's website at www.calfrac.com.

CONSOLIDATED BALANCE SHEETS                                            
                                                  June 30, December 31,

As at                                                 2013         2012

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

ASSETS                                                                 

Current assets                                                         

  Cash and cash equivalents                         30,943       42,481

  Accounts receivable                              312,516      320,143

  Income taxes recoverable                           2,974          292

  Inventories                                      115,603      118,713

  Prepaid expenses and deposits                     18,058       10,697
                                                   480,094      492,326

Non-current assets                                                     

  Property, plant and equipment                  1,069,945    1,005,101

  Goodwill                                          10,523       10,523

  Deferred income tax assets                        21,456       16,871

Total assets                                     1,582,018    1,524,821
                                                            

LIABILITIES AND EQUITY                                                 

Current liabilities                                                    

  Accounts payable and accrued liabilities         147,399      168,250

  Bank loan (note 3)                                12,273            -

  Current portion of long-term debt (note 4)           440          479

  Current portion of finance lease obligations           -          740
                                                   160,112      169,469

Non-current liabilities                                                

  Long-term debt (note 4)                          493,083      441,018

  Other long-term liabilities                          308          435

  Deferred income tax liabilities                  144,268      133,140

Total liabilities                                  797,771      744,062

Equity attributable to the shareholders of                             
Calfrac

  Capital stock (note 5)                           320,055      300,451

  Contributed surplus (note 7)                      26,159       27,546

  Loan receivable for purchase of common shares    (2,500)      (2,500)
  (note 12)

  Retained earnings                                445,432      458,543

  Accumulated other comprehensive income (loss)    (3,606)      (2,403)
                                                   785,540      781,637

Non-controlling interest                           (1,293)        (878)

Total equity                                       784,247      780,759

Total liabilities and equity                     1,582,018    1,524,821

See accompanying notes to the consolidated financial statements.
    CONSOLIDATED STATEMENTS OF OPERATIONS
                    Three Months Ended June Six Months Ended June 30,
                                        30,
                        2013           2012    2013              2012

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

Revenue              288,701        335,780 712,098           809,887

Cost of sales (note  276,363        306,704 637,772           667,514
13)

Gross profit          12,338         29,076  74,326           142,373

Expenses                                                             

  Selling, general    22,002         21,538  46,134            43,523
  and
  administrative

  Foreign exchange        86          9,786 (2,293)           (4,084)
  losses (gains)

  (Gain) loss on        (14)          1,288   (134)               544
  disposal of
  property, plant
  and equipment

  Interest             9,285          8,982  18,488            17,917
                      31,359         41,594  62,195            57,900

Income (loss)       (19,021)       (12,518)  12,131            84,473
before income tax

Income tax expense                                                   
(recovery)

  Current              (756)           (16)   1,726             1,118

  Deferred           (3,326)          (533)   1,156            24,630
                     (4,082)          (549)   2,882            25,748

Net income (loss)   (14,939)       (11,969)   9,249            58,725
for the period
                                                                     

Net income (loss)                                                    
attributable to:

  Shareholders of   (14,584)       (11,855)  10,061            58,986
  Calfrac

  Non-controlling      (355)          (114)   (812)             (261)
  interest
                    (14,939)       (11,969)   9,249            58,725
                                                                     

Earnings (loss) per                                                  
share (note 5)

  Basic               (0.32)         (0.27)    0.22              1.34

  Diluted             (0.32)         (0.27)    0.22              1.32

See accompanying notes to the consolidated financial statements.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                    Three Months Ended June Six Months Ended June 30,
                                        30,
                        2013           2012    2013              2012

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

Net income (loss)   (14,939)       (11,969)   9,249            58,725
for the period

Other comprehensive                                                  
income (loss)

Items that may be                                                    
subsequently
reclassified to
profit or loss:

  Change in foreign    (785)          (524) (1,249)           (4,461)
  currency
  translation
  adjustment

Comprehensive       (15,724)       (12,493)   8,000            54,264
income (loss) for
the period

Comprehensive                                                        
income (loss)
attributable to:

  Shareholders of   (15,326)       (12,280)   8,858            54,628
  Calfrac

  Non-controlling      (398)          (213)   (858)             (364)
  interest
                    (15,724)       (12,493)   8,000            54,264

See accompanying notes to the consolidated financial statements.
     

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

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

Balance - January   300,451
1, 2013                          27,546    (2,500)       (2,403)  458,543  781,637       (878)  780,759

Net income (loss)         -
for the period                        -          -             -   10,061   10,061       (812)    9,249

Other comprehensive        
income (loss):                                                                                         
       Cumulative                                                                               (1,249)
       translation
       adjustment         -           -          -       (1,203)        -  (1,203)        (46)

Comprehensive             -
income (loss) for
the period                            -          -       (1,203)   10,061    8,858       (858)    8,000

Stock options:                                                                                         
       Stock-based                                                                                2,861
       compensation
       recognized         -       2,861          -             -        -    2,861           -
       Proceeds                                                                                  12,248
       from
       issuance of
       shares        16,496     (4,248)          -             -        -   12,248           -

Dividend                   
Reinvestment Plan
shares                                                                                                 
       issued (note                                                                               3,108
       18)            3,108           -          -             -        -    3,108           -

Dividends                 -           -          -             - (22,847) (22,847)           - (22,847)

Non-controlling           -
interest
contribution                          -          -             -        -        -         118      118

Dilution of               -
non-controlling
interest                              -          -             -    (325)    (325)         325        -

Balance - June 30,  320,055
2013                             26,159    (2,500)       (3,606)  445,432  785,540     (1,293)  784,247
                                                                                                       

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

Net income (loss)         -
for the period                        -          -             -   58,986   58,986       (261)   58,725

Other comprehensive        
income (loss):                                                                                         
       Cumulative                                                                               (4,461)
       translation
       adjustment         -           -          -       (4,358)        -  (4,358)       (103)

Comprehensive             -
income (loss) for
the period                            -          -       (4,358)   58,986   54,628       (364)   54,264

Stock options:                                                                                         
       Stock-based                                                                                3,321
       compensation
       recognized         -       3,321          -             -        -    3,321           -
       Proceeds                                                                                   9,655
       from
       issuance of
       shares        12,718     (3,063)          -             -        -    9,655           -

Dividend                   
Reinvestment Plan
shares                                                                                                 
       issued (note                                                                               1,771
       18)            1,771           -          -             -        -    1,771           -

Dividends                 -           -          -             - (22,182) (22,182)           - (22,182)

Non-controlling           -
interest
contribution                          -          -             -        -        -         193      193

Balance - June 30,  286,306
2012                             24,428    (2,500)       (3,024)  442,758  747,968       (377)  747,591

See accompanying notes to the consolidated financial statements.
    

CONSOLIDATED STATEMENTS OF CASH FLOWS
                      Three Months Ended June
                                          30, Six Months Ended June 30,
                          2013           2012      2013            2012

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

CASH FLOWS PROVIDED           
BY (USED IN)                                                           

OPERATING ACTIVITIES                                                   

  Net income (loss)
  for the period      (14,939)       (11,969)     9,249          58,725

  Adjusted for the
  following:                                                           
    Depreciation        25,971         22,272    50,785          44,341
    Stock-based
    compensation         1,382          1,751     2,861           3,321
    Unrealized
    foreign exchange
    losses (gains)       2,385         11,472   (2,586)         (3,917)
    (Gain) loss on
    disposal of
    property, plant
    and
         equipment        (14)          1,288     (134)             544
    Interest             9,285          8,982    18,488          17,917
    Deferred income
    taxes              (3,326)          (533)     1,156          24,630

  Interest paid       (17,708)       (17,040)  (17,961)        (17,301)

  Changes in items of
  working capital
  (note 10)                364         74,140  (16,956)          46,179

Cash flows provided      3,400
by operating
activities                             90,363    44,902         174,439

FINANCING ACTIVITIES                                                   

  Bank loan proceeds     3,403          1,386    12,549           2,734

  Issuance of
  long-term debt, net
  of debt issuance
       costs            25,920             71    25,920              71

  Long-term debt
  repayments             (120)          (116)     (238)           (230)

  Finance lease
  obligation
  repayments             (603)        (1,136)     (740)         (1,466)

  Net proceeds on
  issuance of common
  shares                 4,254            896    12,248           9,655

  Dividends paid, net
  of DRIP (note 18)    (8,267)              -   (8,267)         (2,605)

Cash flows provided     24,587
by financing
activities                              1,101    41,472           8,159

INVESTING ACTIVITIES                                                   

  Purchase of
  property, plant and
  equipment (note 10) (45,073)       (75,175) (105,296)       (150,663)

  Proceeds on
  disposal of
  property, plant and
       equipment           235            250       804             995

  Other                    118            193       118             193

Cash flows used in    (44,720)
investing activities                 (74,732) (104,374)       (149,475)

Effect of exchange
rate changes on cash
and
     cash equivalents      465        (1,400)     6,462             465

Increase (decrease)   (16,268)
in cash and cash
equivalents                            15,332  (11,538)          33,588

Cash and cash           47,211
equivalents,
beginning of period                   151,311    42,481         133,055

Cash and cash           30,943
equivalents, end of
period                                166,643    30,943         166,643

See accompanying notes to the consolidated financial statements.
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2013 and 2012

(Amounts in text and tables are in thousands of Canadian dollars,
except share data and certain other exceptions as indicated)
(unaudited)
    1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND ADOPTION OF IFRS

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

These condensed consolidated interim financial statements were prepared in 
accordance with International Accounting Standard (IAS) 34 Interim Financial 
Reporting using accounting policies consistent 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). They should be read in conjunction with the 
annual financial statements for the year ended December 31, 2012. 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 Audit Committee of the Board 
of Directors for issuance on July 30, 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.

The adoption of accounting standards and amendments, effective January 1, 
2013, is disclosed in the March 31, 2013 interim consolidated financial 
statements.

3. BANK LOAN

The Company's Argentinean subsidiary has two operating lines of credit of 
which a total of ARS62,872($12,273) was drawn at June 30, 2013. The interest 
rate ranges from 17.7 percent to 22.0 percent and both lines of credit are 
secured by letters of credit issued by the Company.

4. LONG-TERM DEBT
                                                  June 30, December 31,

As at                                                 2013         2012

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

US$450,000 senior unsecured notes due December 1,                      
2020,
    bearing interest at 7.5% payable semi-annually  473,310      447,705

Less: unamortized debt issuance costs              (6,831)      (6,895)
                                                   466,479      440,810

Extendible revolving term loan facility, secured                       
by Canadian
    and U.S. assets of the Company                   26,295            -

Less: unamortized debt issuance costs              (1,249)      (1,444)
                                                    25,046      (1,444)

US$1,838 mortgage maturing May 2018 bearing                            
interest at U.S.

prime less 1%, repayable at US$33 per month

principal and

interest, secured by certain real property 1,933 2,003

ARS330 Argentina term loan maturing December 31, 2013

bearing interest at 18.25%, repayable at ARS61

per month

principal and interest, secured by a Company 65 128

guarantee

493,523 441,497

Less: current portion of long-term debt (440) (479)


                                                   493,083      441,018


The fair value of the senior unsecured notes, as measured based on the closing 
quoted market price at June 30, 2013, was $468,577 (December 31, 2012 - 
$443,228). 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 Canadian prime rate loans and U.S. 
base rate loans, the rate ranges from 0.50 percent to 1.25 percent above the 
respective base rates for such loans. 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. The facility is 
repayable on or before its maturity of September 27, 2016, assuming the 
facility is not extended. The maturity may be extended by one or more years at 
the Company's request and lenders' acceptance. The Company may also 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) 
for the six months ended June 30, 2013 was $18,452 (six months ended June 30, 
2012 - $18,241).

The Company also has an extendible operating loan facility, which includes 
overdraft protection in the amount of $20,000. The interest rate is based on 
the parameters of certain bank covenants in the same fashion as the revolving 
term facility. Drawdowns under this facility are repayable on September 27, 
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 lenders' acceptance. The operating facility is secured 
by the Company's Canadian and U.S. assets.

At June 30, 2013, the Company had utilized $44,228 of its loan facility, 
including $17,933 for letters of credit, leaving $255,772 in available credit.

5. CAPITAL STOCK

Authorized capital stock consists of an unlimited number of common shares.
                                 Six Months Ended          Year Ended
                                    June 30, 2013   December 31, 2012

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

Balance, beginning of period  45,020,641  300,451 43,709,073  271,817

Issued upon exercise of stock    744,162   16,496    686,488   14,836
options

Dividend Reinvestment Plan                                           
shares

  issued (note 18)               125,024    3,108    625,080   13,798

Balance, end of period        45,889,827  320,055 45,020,641  300,451


The weighted average number of common shares outstanding for the six months 
ended June 30, 2013 was 45,391,688 basic and 45,724,984 diluted (six months 
ended June 30, 2012 - 44,040,443 basic and 44,610,458 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 8.

6. 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 six months ended June 30, 2013 or for the year ended 
December 31, 2012.

7. CONTRIBUTED SURPLUS
                                     Six Months   Year Ended
                                          Ended December 31,

Continuity of Contributed Surplus June 30, 2013         2012

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

Balance, beginning of period             27,546       24,170
       Stock options expensed             2,861        6,990
       Stock options exercised          (4,248)      (3,614)

Balance, end of period                   26,159       27,546

 
8. STOCK-BASED COMPENSATION

(a) Stock Options

Six Months Ended June 30,                  2013               2012
                                            Average            Average
                                           Exercise           Exercise

Continuity of Stock Options        Options    Price   Options    Price
                                       (#)     (C$)       (#)     (C$)

Balance, beginning of period     2,920,412    25.67 3,198,475    23.31
       Granted during the period   697,200    24.53   634,700    28.14
       Exercised for common      (744,162)    16.46 (584,013)    16.53
       shares
       Forfeited/expired         (103,425)    28.09 (203,575)    26.81

Balance, end of period           2,770,025    27.77 3,045,587    25.38

Stock options vest equally over four years and expire five years from the date of grant. The exercise price of outstanding options ranges from $8.35 to $37.18 with a weighted average remaining life of 3.07 years. When stock options are exercised, the proceeds, together with the amount of compensation expense previously recorded in contributed surplus, are added to capital stock.

During the six months ended June 30, 2013, $2,861 of compensation expense was recognized for stock options (six months ended June 30, 2012 - $3,321). This amount is included in selling, general and administrative expenses.

(b) Stock Units

Six Months Ended 2013 2012 June 30,

Continuity of Deferred Performance Restricted Deferred Performance Restricted Stock Units


                    Stock       Stock      Stock    Stock       Stock      Stock
                    Units       Units      Units    Units       Units      Units
                      (#)         (#)        (#)      (#)         (#)        (#)

Balance,           35,000      45,000    247,230   35,000      40,000          -
beginning of
period
       Granted     35,000      45,000    389,375   35,000      45,000    252,085
       during
       the
       period
       Exercised (35,000)    (45,000)   (82,410) (35,000)    (40,000)          -
       Forfeited        -           -   (26,000)        -           -   (12,330)

Balance, end of    35,000      45,000    528,195   35,000      45,000    239,755
period

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 six months ended June 30, 2013, $509 of compensation expense was recognized for deferred stock units (six months ended June 30, 2012 - $407). This amount is included in selling, general and administrative expenses. At June 30, 2013, the liability pertaining to deferred stock units was $530 (December 31, 2012 - $877).

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 six months ended June 30, 2013, $754 of compensation expense was recognized for performance stock units (six months ended June 30, 2012 - $681). This amount is included in selling, general and administrative expenses. At June 30, 2013, the liability pertaining to performance stock units was $682 (December 31, 2012 - $1,127).

The Company grants 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 six months ended June 30, 2013, $4,716 of compensation expense was recognized for restricted share units (six months ended June 30, 2012 - $1,670). This amount is included in selling, general and administrative expense. At June 30, 2013, the liability pertaining to restricted share units was $6,381 (December 31, 2012 - $3,693).

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.

9. 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 and long-term debt.

The fair values of financial instruments included in the consolidated balance sheets, except long-term debt, approximate their carrying amounts. The fair value of the senior unsecured notes based on the closing market price at June 30, 2013 was $468,577 before deduction of unamortized debt issuance costs (December 31, 2012 - $443,228). The carrying value of the senior unsecured notes at June 30, 2013 was $473,310 before deduction of unamortized debt issuance costs (December 31, 2012 - $447,705). The fair value of the remaining long-term debt approximates its carrying value, as described in note 4.

10. SUPPLEMENTAL CASH FLOW INFORMATION

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

Three Months Ended June 30, Six Months Ended June 30,


                     2013               2012     2013             2012

(C$000s)                                                              

Accounts           89,675            117,811    7,627          102,853
receivable

Income taxes      (3,247)            (1,651)  (2,681)          (1,352)
recoverable

Inventory           2,615           (11,044)    3,110         (21,154)

Prepaid expenses  (9,424)            (4,874)  (7,361)          (5,584)
and deposits

Accounts payable (79,179)           (25,872) (17,524)         (28,346)
and accrued
liabilities

Other long-term      (76)              (230)    (127)            (238)
liabilities
                      364             74,140 (16,956)           46,179
    Purchase of property, plant and equipment is comprised of:
                    Three Months Ended June Six Months Ended June 30,
                    30,
                        2013           2012      2013            2012

(C$000s)                                                             

Property, plant and (46,618)       (75,286)  (90,607)       (159,361)
equipment additions

Changes in                                                           
liabilities related
to the purchase

  of property,         1,545            111  (14,689)           8,698
  plant and
  equipment
                    (45,073)       (75,175) (105,296)       (150,663)

 
11. 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.
                                               June 30, December 31,

For the Twelve Months Ended                        2013         2012

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

Net income                                       46,885       96,361

Adjusted for the following:                                         

  Depreciation                                   96,825       90,381

  Amortization of debt issuance costs and debt    1,257        1,234
  discount

  Stock-based compensation                        6,530        6,990

  Unrealized foreign exchange gains             (9,564)     (10,895)

  Gain on disposal of property, plant and           124          802
  equipment

  Deferred income taxes                          13,168       36,642

Cash flow                                       155,225      221,515

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 June 30, 2013, the long-term debt to cash flow ratio was 3.18:1 (December 31, 2012 - 1.99:1) calculated on a 12-month trailing basis as follows:

June 30, December 31,

As at 2013 2012

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

Long-term debt (net of unamortized debt issuance 493,523 441,497 costs) (note 4)

Cash flow 155,225 221,515

Long-term debt to cash flow ratio 3.18:1 1.99:1

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.

12. RELATED-PARTY TRANSACTIONS

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 $2,564 as at June 30, 2013 (December 31, 2012 - $2,119). In accordance with applicable accounting standards regarding share purchase loans receivable, this loan is classified as a reduction of shareholders' equity due to its non-recourse nature. In addition, the shares purchased with the loan proceeds are considered to be, in substance, stock options.

The Company leases certain premises from an entity controlled by a director of the Company. The rent charged for these premises for the six months ended June 30, 2013 was $208 (six months ended June 30, 2012 - $178), as measured at the exchange amount.

13. 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:

Six Months Ended June 30, 2013 2012

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

Product costs 218,299 240,436

Depreciation 50,785 44,341

Amortization of debt issuance costs and debt discount 639 616

Employee benefits expense (note 14) 179,472 176,552

14. EMPLOYEE BENEFITS EXPENSE

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

Six Months Ended June 30, 2013 2012

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

Salaries and short-term employee benefits 167,626 167,299

Post-employment benefits (group retirement savings 2,089 1,698 plan)

Share-based payments 8,840 6,066

Termination benefits 917 1,489


                                                   179,472 176,552


15. 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 $9,373 (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 claims 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 $48 (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 $15 (11 euros), plus interest.

Another one of the lawsuits seeking salaries in arrears of $175 (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 $601 (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 yet for the postponed hearing.

The maximum aggregate interest payable under the claims noted above amounted 
to $16,398 (11,977 euros) as at June 30, 2013.

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 was recorded in the 
Company's financial statements.

16. SEGMENTED INFORMATION

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

The business segments presented reflect the Company's management structure and 
the way its management reviews business performance. The Company evaluates the 
performance of its operating segments primarily based on operating income, as 
defined below.
                          United           Latin                       
                  Canada  States  Russia America Corporate Consolidated

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

Three Months Ended June
30, 2013                                                               

Revenue           80,719 146,275  37,305  24,402         -      288,701

Operating income
(loss)((1))        2,036  25,175   3,357   (966)  (13,295)       16,307

Segmented assets 655,600 627,853 136,132 162,433         -    1,582,018

Capital
expenditures      28,116  11,349   4,533   2,620         -       46,618

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

Three Months Ended June
30, 2012                                                               

Revenue          104,720 175,136  29,244  26,680         -      335,780

Operating income
(loss)((1))        5,829  32,863   1,772   1,230  (11,884)       29,810

Segmented assets 717,001 571,539 120,507  69,610         -    1,478,657

Capital
expenditures      43,308  27,183   1,249   3,546         -       75,286

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

Six Months Ended June
30, 2013                                                               

Revenue          312,295 273,285  74,466  52,052         -      712,098

Operating income
(loss)((1))       57,947  43,214   5,347     186  (27,717)       78,977

Segmented assets 655,600 627,853 136,132 162,433         -    1,582,018

Capital
expenditures      45,407  32,158   6,964   6,078         -       90,607

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

Six Months Ended June
30, 2012                                                               

Revenue          330,544 370,035  57,341  51,967         -      809,887

Operating income
(loss)((1))       83,161  76,967   3,326   3,748  (24,011)      143,191

Segmented assets 717,001 571,539 120,507  69,610         -    1,478,657

Capital
expenditures      80,502  72,722   2,108   4,029         -      159,361

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

Operating income (loss) is defined as net income (loss) before ((1)) depreciation, interest, foreign exchange gains or losses, gains


       or losses on disposal of property, plant and equipment, and
       income taxes.
                       Three Months Ended June Six Months Ended June 30,
                                       30,
                       2013           2012    2013              2012

(C$000s)                                                            

Net income (loss)  (14,939)       (11,969)   9,249            58,725

Add back (deduct):                                                  

  Depreciation       25,971         22,272  50,785            44,341

  Interest            9,285          8,982  18,488            17,917

  Foreign exchange       86          9,786 (2,293)           (4,084)
  losses (gains)

  (Gain) loss on                                                    
  disposal of
  property, plant
  and

  equipment            (14)          1,288   (134)               544

  Income taxes      (4,082)          (549)   2,882            25,748

Operating income     16,307         29,810  78,977           143,191


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 June 30, Six Months Ended June 30,
                 2013                2012    2013              2012

(C$000s)                                                           

Fracturing    263,496             299,281 647,641           728,660

Coiled tubing   9,505              21,214  31,106            51,998

Cementing      12,414               8,828  24,277            16,703

Other           3,286               6,457   9,074            12,526
              288,701             335,780 712,098           809,887

 
17. SEASONALITY OF OPERATIONS

The Company's Canadian and United States businesses are seasonal in nature. 
The lowest activity levels in these areas are typically experienced during the 
second quarter of the year when road-weight restrictions are in place and 
access to wellsites in Canada and North Dakota is reduced.

18. 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 $0.25 per common share was declared on February 26, 2013 and 
paid on April 15, 2013. Of the total dividend of $11,375, $3,108 was 
reinvested under the DRIP into 125,024 common shares of the Company.

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

A dividend of $0.25 per common share ($11,472) was declared on June 14, 2013, 
to be paid on July 15, 2013.

 

SOURCE Calfrac Well Services Ltd.

Douglas R. Ramsay    Chief Executive Officer Telephone:  403-266-6000 Fax:  403-266-7381 Tom J. Medvedic Senior Vice President, Corporate Development & Interim Chief Financial Officer Telephone:  403-266-6000 Fax:  403-266-7381

To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/July2013/31/c2606.html

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

-0- Jul/31/2013 10:00 GMT

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