Calfrac Announces First Quarter Results

 CALGARY, May 8, 2014 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the  Company") (TSX-CFW) announces its financial and operating results for the  three months ended March 31, 2014.  HIGHLIGHTS        Three Months Ended March 31,                    2014      2013   Change     (C$000s, except per share and unit data)         ($)       ($)      (%)     (unaudited)                                                                 Financial                                                                   Revenue                                      547,638   423,397       29     Operating income(1)                           64,117    62,670        2     EBITDA(2)                                     60,435    65,169      (7)           Per share - basic                         1.30      1.44     (10)           Per share - diluted                       1.29      1.43     (10)     Net income attributable to the                                       shareholders of Calfrac           before foreign exchange gains or     losses(3)                                     10,792    22,677     (52)           Per share - basic                         0.23      0.50     (54)           Per share - diluted                       0.23      0.50     (54)     Net income attributable to the                                       shareholders of Calfrac                        8,946    24,645     (64)           Per share - basic                         0.19      0.55     (65)           Per share - diluted                       0.19      0.54     (65)     Working capital (end of period)              338,916   332,241        2     Total equity (end of period)                 803,904   802,581        -     Weighted average common shares outstanding                           (000s)                                                                            Basic                                   46,463    45,165        3           Diluted                                 46,816    45,534        3                                                                                 Operating (end of period)                                                   Pumping horsepower (000s)                      1,215     1,013       20     Coiled tubing units (#)                           34        29       17     Cementing units (#)                               31        28       11     (1)  Operating income is defined as net income (loss) before          depreciation, interest, foreign exchange gains or losses, gains or          losses on disposal of property, plant and equipment, and income          taxes. Management believes that operating income is a useful          supplemental measure as it provides an indication of the financial          results generated by Calfrac's business segments prior to          consideration of how these segments are financed or how they are          taxed. Operating income is a measure that does not have any          standardized meaning under International Financial Reporting          Standards (IFRS) and, accordingly, may not be comparable to          similar measures used by other companies.     (2)  EBITDA is defined as net income (loss) before interest, income          taxes, depreciation and amortization. EBITDA is presented because          it is frequently used by securities analysts and others for          evaluating companies and their ability to service debt. EBITDA is          a measure that does not have any standardized meaning prescribed          under IFRS and, accordingly, may not be comparable to similar          measures used by other companies.     (3)  Net income attributable to the shareholders of Calfrac before          foreign exchange gains or losses is defined as net income (loss)          attributable to the shareholders of Calfrac before foreign          exchange gains or losses on an after-tax basis. Management          believes that net income attributable to the shareholders of          Calfrac before foreign exchange gains or losses is a useful          supplemental measure as it provides an indication of the financial          results generated by Calfrac without the impact of foreign          exchange fluctuations, which are not fully controllable by the          Company. Net income attributable to the shareholders of Calfrac          before foreign exchange gains or losses is a measure that does not          have any standardized meaning prescribed under IFRS and,          accordingly, may not be comparable to similar measures used by          other companies.  Quarterly Overview  ------------------------------     Consolidated Highlights                                                Three Months Ended March 31,                    2014      2013   Change     (C$000s, except operational information)         ($)       ($)      (%)     (unaudited)                                                                 Revenue                                      547,638   423,397       29     Expenses                                                                          Operating                              454,396   336,595       35           Selling, general and administrative                            (SG&A)                                        29,125    24,132       21                                                  483,521   360,727       34     Operating income(1)                           64,117    62,670        2     Operating income (%)                           11.7%     14.8%     (21)     Fracturing revenue per job ($)                95,114   107,543     (12)     Number of fracturing jobs                      5,297     3,572       48     Pumping horsepower, end of period (000s)       1,215     1,013       20     Coiled tubing revenue per job ($)             35,582    31,444       13     Number of coiled tubing jobs                     744       687        8     Coiled tubing units, end of period (#)            34        29       17     Cementing revenue per job ($)                 31,833    28,178       13     Number of Cementing jobs                         495       421       18     Cementing units, end of period (#)                31        28       11     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.  Revenue in the first quarter of 2014 for Calfrac was $547.6 million, which  increased by 29 percent from the same period in 2013. Consolidated fracturing  jobs increased by 48 percent, but consolidated revenue per fracturing job  declined by 12 percent primarily due to lower pricing.  Sequentially, revenue in the first quarter of 2014 increased by 18 percent  compared to the fourth quarter of 2013. Consolidated fracturing jobs increased  by 10 percent and fracturing revenue per job improved by 9 percent. The  quarter-over-quarter increase in fracturing revenue per job was primarily due  to customers completing larger jobs.  Pricing in Canada was stable in the first quarter of 2014 when compared to the  fourth quarter of 2013. In the United States, pricing was stable in all of  Calfrac's operating regions on a sequential basis.  Operating income for the first quarter of 2014 was $64.1 million, an increase  of 2 percent from the comparable period in 2013. Operating income margin as a  percentage of revenue was 12 percent, lower than the 15 percent generated in  the first quarter of 2013. This decline was primarily due to weaker pricing  combined with higher operating costs in Canada and the United States.  Operating income for the first quarter of 2014 was a 12 percent improvement  sequentially due to higher activity levels. Operating income margin as a  percentage of revenue was consistent with the fourth quarter of 2013. Calfrac  incurred higher costs on a sequential basis because its North American supply  chain and logistics operations were impacted by extremely cold weather which  increased third party trucking costs along with the impact of a weaker  Canadian dollar on inputs sourced from the United States.  In Canada, operating income as a percentage of revenue declined to 20 percent  from 24 percent in the same period of 2013 due to lower pricing, higher fuel  and subcontractor transportation costs combined with the impact of a weaker  Canadian dollar. United States operating income margins declined to 10 percent  from 14 percent on a year-over-year basis due to harsh weather conditions and  costs of integrating the Mission Well Services, LLC ("Mission") assets into  Calfrac's operations. In Russia, operating income margins decreased to 2  percent from 5 percent year-over-year as a result of abnormal weather  conditions. Latin American operating income margins increased to 20 percent  from 4 percent owing to the commencement of fracturing operations in Argentina.  Sequentially, Canadian operating income as a percentage of revenue increased  to 20 percent from 18 percent in the fourth quarter of 2013 due to higher  activity levels. In the United States, operating income margin decreased to 10  percent in the first quarter of 2014 from 16 percent. United States operating  income margins declined sequentially due to the impact of harsh winter  weather, supply chain and logistics issues and integration costs related to  the assets of Mission. In Russia, operating income declined to 2 percent in  the first quarter of 2014 from 6 percent in the fourth quarter of 2013 due to  weather-related issues. In Latin America, operating income margins increased  to 20 percent from 11 percent due to higher activity in Calfrac's Argentina  operations.  Net income attributable to shareholders of Calfrac was $8.9 million or $0.19  per share diluted, a 65 percent decline from $24.6 million or $0.54 per share  diluted in the same period last year. Net income per share on a fully diluted  basis was negatively impacted on a year-over-year basis by a foreign exchange  loss of $2.8 million compared to a gain of $2.4 million, depreciation expense  increasing by $8.7 million, and an increase in interest costs of $5.7 million.  Net income attributable to shareholders of Calfrac declined 24 percent  sequentially from $11.8 million or $0.25 per share diluted in the fourth  quarter of 2013. Net income per share on a fully diluted basis was negatively  impacted sequentially by a foreign exchange loss of $2.8 million compared to a  gain of $1.5 million in the prior quarter, depreciation expense increasing by  $2.1 million, an increase in interest costs of $1.5 million, and income tax  expense increasing by $1.5 million.  In the first quarter of 2014, Calfrac declared a quarterly dividend of $0.25  per share and proposed a two-for-one common share split.  The Company has expanded its 2014 capital program by $10.0 million to $130.0  million, plus an additional $20.0 million of carryover capital, for expected  2014 capital spending of $150.0 million. The additional funds will be used to  purchase ancillary equipment to support a number of Calfrac's operating areas.  Calfrac appointed Fernando Aguilar, President and CEO while appointing Doug  Ramsay, Vice-Chairman. Subsequent to the end of the quarter, the Company also  appointed Bruce Payne, President, of its Canadian division and Tom Medvedic,  Vice-President, Operations of its Canadian division.  Outlook and Business Prospects  ------------------------------  Spot natural gas prices were stronger than expected during the first quarter  of 2014 due to extremely cold temperatures throughout North America and  resulted in natural gas storage levels reaching 11-year lows in the United  States and 9-year lows in Canada. These developments have created the  potential for increased natural gas-related activity in the second half of  2014. Crude oil prices also continue to support strong sustained activity  levels. Calfrac is also seeing a trend towards greater service intensity in  North America through the form of larger pad designs, more fracturing stages  per horizontal well and increased tonnage per stage. Internationally, the  Company continues to benefit from the shift to horizontal development using  multi-stage completion technology.  In western Canada, fracturing and coiled tubing activity are expected to be  strong once spring break-up concludes. Calfrac's expectation is that activity  will increase at a moderate pace as break-up ends and road bans are  progressively lifted. The Company is also cautiously optimistic that activity  will increase in the second half of 2014 to levels higher than in the second  half of 2013 due to several factors, including stronger natural gas pricing  that occurred throughout the first quarter, stable oil pricing, a weaker  Canadian dollar (which improves the cash flows of producers), the positive  effects of oil and natural gas asset consolidation over the past six months,  LNG-related activity, and improved equity markets for Calfrac's customers. The  Company believes these factors could lead to improved pricing dynamics in  Canada in the second half of the year.  Calfrac has a leadership position in the key natural gas plays of Canada,  which include the Montney, Deep Basin, and Duvernay, and expects to  participate in the long-term development of these plays. Calfrac's customers  remain at the forefront of these developments, which should be a catalyst for  higher activity in the second half of 2014 and beyond. Calfrac's people,  service quality, technology and HSE practices will make it a key partner in  these developments.  Calfrac expects that oil-focused activity will remain stable for the rest of  the year, with the introduction of higher-rate treatments in certain plays,  such as the Cardium, driving higher equipment utilization. Activity in the  Viking play is expected to increase in 2014 over 2013. Calfrac also expects to  achieve further operational efficiencies in the Canadian market through the  expanded use of 24-hour operations and multi-well pad development.  In the United, States, Calfrac expects that it will experience moderate  activity increases throughout the remainder of the year which will result in  strong equipment utilization. This expectation is driven by the Company's  active customer base, contract coverage and positioning in some of the most  active plays in North America, which include the Marcellus, Eagle Ford and  North Dakota Bakken. Calfrac's strong customer relationships in the  Fayetteville and Rockies are resulting in high utilization levels. The Company  remains focused on effectively managing its cost structure to improve margin  performance in the face of competitive pricing.  The Company believes that Marcellus shale play activity will remain robust for  the remainder of the year due to its low cost structure for natural gas, its  proximity to consuming markets and additional natural gas pipeline takeaway  capacity. As a result, the Company will deploy a fifth crew in the second half  of 2014 using existing equipment sourced from other operating bases. As well,  the Utica play continues to deliver strong well results, which may provide the  basis for higher activity in that basin. In the Fayetteville, Calfrac is  expecting activity to be higher on a year-over-year basis, based on customer  indications and stronger natural gas prices. Rockies activity is also expected  to be stronger year-over-year as the Company has materially increased its  exposure with one of the most active operators in the Niobrara. In the Eagle  Ford, Calfrac continues to move forward with the integration of the Mission  assets. Pricing remains competitive, but Calfrac believes it is stable and  that activity should increase. Lastly, drilling activity in the North Dakota  Bakken remains high, but the market is oversupplied with pressure pumping  equipment. The Company continues to assess ways to improve its performance in  this region.  In Russia, Calfrac anticipates that equipment utilization will improve as 2014  progresses, following activity in the early portion of 2014 being negatively  impacted by inclement weather. The Company believes that the expanded use of  new technologies in Western Siberia, such as horizontal drilling and  multi-stage completions will continue. Approximately 50 percent of Calfrac's  fracturing work was focused on horizontal wells in the first quarter of 2014.  The Company 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 new technology.  Calfrac is excited about the prospects for oil and gas development in  Argentina. The Company began fracturing operations in 2013 and horizontal  activity has accelerated in 2014. The investments expected to be made in  Argentina by national and integrated oil companies provides support for  Calfrac's positive view on this market. The Company will deploy an additional  32,000 horsepower to the country in the second half of 2014, which includes an  additional high-rate pumping spread that is expected to focus on  unconventional development in the Vaca Muerta shale play. Customers are  increasingly attracted to Calfrac's reputation for service quality and  technical expertise, which is providing the foundation for long-term growth in  Argentina.  In Mexico, Calfrac expects unconventional development to become more prominent  over the longer term, once national reform of the energy industry is complete.  Calfrac believes this will set the stage for increased capital spending by  PEMEX as well as new entrants to Mexico. With this in mind, Calfrac will  continue to manage its cost structure and closely monitor ongoing developments  to remain prepared to take advantage of new opportunities.  In summary, Calfrac is confident that the opportunities it has developed over  time are gaining momentum. The Company is optimistic that the second half of  2014 will deliver better financial performance than seen in the comparable  period in 2013. Calfrac is focused on its core principles of service quality,  safety and technology and expects that further growth opportunities will  develop as the year unfolds. The Company considers itself well-positioned to  take advantage of these opportunities.  Financial Overview - Three Months Ended March 31, 2014 Versus 2013  ------------------------------     Canada                                                                    Three Months Ended March 31 ,                 2014      2013   Change     (C$000s, except operational information)       ($)       ($)      (%)     (unaudited)                                                               Revenue                                    267,674   231,576       16     Expenses                                                                        Operating                            210,519   171,795       23           SG&A                                   4,676     3,870       21                                                215,195   175,665       23     Operating income(1)                         52,479    55,911      (6)     Operating income (%)                         19.6%     24.1%     (19)     Fracturing revenue per job ($)             219,427   223,124      (2)     Number of fracturing jobs                    1,155       982       18     Pumping horsepower, end of period (000s)       392       404      (3)     Coiled tubing revenue per job ($)           27,377    23,932       14     Number of coiled tubing jobs                   520       521        -     Coiled tubing units, end of period (#)          17        21     (19)     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.  Revenue  Revenue from Calfrac's Canadian operations during the first quarter of 2014  was a Company record of $267.7 million versus $231.6 million in the same  period of 2013. The increase in revenue was driven by higher activity,  primarily in the Montney and Duvernay unconventional gas resource plays, as  the number of fracturing jobs increased by 18 percent from the first quarter  of 2013. Activity in the oil-focused plays of western Canada remained strong  during the quarter and continues to be a major contributor to the Company's  Canadian operations. The industry trend towards the completion of more stages  per well and higher service intensity also contributed to the increase in  revenue. Pricing, however, was significantly weaker on a year-over-year basis  which limited further revenue growth.  Operating Income  Operating income in Canada decreased by 6 percent to $52.5 million during the  first quarter of 2014 from $55.9 million in the same period of 2013. The  decrease in operating income was primarily due to lower pricing, higher fuel  and subcontractor transportation costs combined with the impact of a weaker  Canadian dollar on the cost of proppant that is sourced from the United  States. The significant increase in activity during the first quarter resulted  in sand volumes increasing by 41 percent from the first quarter of 2013 which  lead to higher subcontractor transportation costs. Some of these cost  increases were offset by cost recovery measures which were implemented late in  the quarter.     United States                                                             Three Months Ended March 31 ,                 2014      2013   Change     (C$000s, except operational and exchange                           rate information)                              ($)       ($)      (%)     (unaudited)                                                               Revenue                                    211,039   127,010       66     Expenses                                                                        Operating                            183,905   103,848       77           SG&A                                   5,457     5,123        7                                                189,362   108,971       74     Operating income(1)                         21,677    18,039       20     Operating income (%)                         10.3%     14.2%     (27)     Fracturing revenue per job ($)              55,100    55,084        -     Number of fracturing jobs                    3,660     2,184       68     Pumping horsepower, end of period (000s)       672       492       36     Cementing revenue per job ($)               33,621    32,397        4     Number of cementing jobs                       229       207       11     Cementing units, end of period (#)              18        15       20     US$/C$ average exchange rate(2)             1.1034    1.0089        9     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.     (2)  Source: Bank of Canada  Revenue  Revenue from Calfrac's United States operations increased during the first  quarter of 2014 to $211.0 million from $127.0 million in the comparable  quarter of 2013. The growth was primarily due to significantly higher activity  in the Niobrara oil play and the Marcellus natural gas shale play combined  with the addition of the Company's operating presence in the Eagle Ford play  following its acquisition of the assets of Mission in the fourth quarter of  2013. Revenue was adversely affected by inclement weather in January and  February, particularly in North Dakota, Arkansas, Pennsylvania and Colorado.  Activity and pricing in the Bakken were significantly weaker than in the same  period in 2013.  Operating Income  Operating income in the United States was $21.7 million for the first quarter  of 2014, a 20 percent increase from the comparative period in 2013. The  increase was mainly due to the higher activity in the quarter. Operating  margin as a percentage of revenue declined to 10 percent from 14 percent  year-over-year due to harsh weather conditions affecting equipment utilization  and logistics as well as costs of integrating the Mission assets into  Calfrac's operations.     Russia                                                                    Three Months Ended March 31 ,                 2014      2013   Change     (C$000s, except operational and exchange                           rate information)                              ($)       ($)      (%)     (unaudited)                                                               Revenue                                     38,914    37,161        5     Expenses                                                                        Operating                             36,472    33,578        9           SG&A                                   1,625     1,594        2                                                 38,097    35,172        8     Operating income(1)                            817     1,989     (59)     Operating income (%)                          2.1%      5.4%     (61)     Fracturing revenue per job ($)             108,316   106,185        2     Number of fracturing jobs                      289       275        5     Pumping horsepower, end of period (000s)        70        45       56     Coiled tubing revenue per job ($)           58,543    61,229      (4)     Number of coiled tubing jobs                   130       130        -     Coiled tubing units, end of period (#)           7         7        -     Rouble/C$ average exchange rate(2)          0.0315    0.0332      (5)     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.     (2)  Source: Bank of Canada.  Revenue  During the first quarter of 2014, the Company's revenue from Russian  operations increased by 5 percent to $38.9 million from $37.2 million in the  corresponding three-month period of 2013. The increase in revenue was mainly  due to higher fracturing activity as a result of the Company expanding its  operations into Usinsk for a new customer in the fourth quarter of 2013  combined with increased demand for horizontal multi-stage fracturing  operations in Western Siberia. During the first quarter of 2014, approximately  50 percent of the Company's total fracturing jobs were multi-stage completions  within horizontal wellbores versus 33 percent in the comparable quarter of  2013. The increase in revenue was partially offset by severely cold winter  weather in Western Siberia during January and February and warmer than  expected weather in Usinsk which reduced equipment utilization, as well as the  completion of smaller coiled tubing jobs.  Operating Income  Operating income in Russia was $0.8 million during the first quarter of 2014  compared to $2.0 million in the corresponding period of 2013. The decrease in  operating income was due to the unusual weather conditions during the first  quarter, which included both colder and warmer-than-normal conditions  affecting equipment utilization and access to well sites, respectively. In  addition, the start-up of a fourth district in Usinsk increased operating  costs over the first quarter of 2013.     Latin America                                                               Three Months Ended March 31 ,                    2014     2013   Change     (C$000s, except operational and exchange                             rate information)                                 ($)      ($)      (%)     (unaudited)                                                                 Revenue                                        30,011   27,650        9     Expenses                                                                          Operating                                21,207   25,166     (16)           SG&A                                      2,912    1,332      119                                                    24,119   26,498      (9)     Operating income(1)                             5,892    1,152      411     Operating income (%)                            19.6%     4.2%      367     Pumping horsepower, end of period (000s)           81       72       13     Cementing units, end of period (#)                 13       13        -     Coiled tubing units, end of period (#)              3        1      200     Mexican peso/C$ average exchange rate(2)       0.0834   0.0798        5     Argentinean peso/C$ average exchange rate(2)   0.1453   0.2012     (28)     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.     (2)  Source: Bank of Canada.  Revenue  Calfrac's Latin American operations generated total revenue of $30.0 million  during the first quarter of 2014 versus $27.7 million in the comparable  three-month period in 2013. The increase in revenue was due to the significant  increase in fracturing activity in Argentina, and the subsequent expansion of  operations into the Las Heras district in southern Argentina. This was offset  by significantly lower activity in Mexico resulting from budget constraints  experienced by the Company's major customer in the regions where Calfrac  operates. The Colombian cementing market also remained challenging as  permitting and infrastructure issues resulted in lower-than-expected equipment  utilization.  Operating Income  Operating income in Latin America for the three months ended March 31, 2014  was $5.9 million versus $1.2 million in the comparative quarter in 2013. The  significant increase in operating income was due to the increased level of  fracturing activity and equipment utilization in Argentina, partially offset  by low utilization in Mexico and Colombia.     Corporate                                                              Three Months Ended March 31 ,                  2014       2013   Change     (C$000s, except operational information)        ($)        ($)      (%)     (unaudited)                                                                 Expenses                                                                          Operating                               2,293      2,209        4           SG&A                                   14,455     12,212       18                                                  16,748     14,421       16     Operating loss(1)                          (16,748)   (14,421)       16                                                                                 % of Revenue                                   3.1%       3.4%      (9)     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.  Operating Loss  The 16 percent increase in corporate expenses from the first quarter of 2013  was mainly due to higher stock-based compensation expenses of $1.4 million  combined with higher corporate personnel costs.  Depreciation  For the three months ended March 31, 2014, depreciation expense increased by  35 percent to $33.5 million from $24.8 million in the corresponding quarter of  2013. The increase was mainly a result of the acquisition of assets from  Mission at the beginning of the fourth quarter of 2013 combined with asset  additions in Canada and the United States.  Foreign Exchange Losses or Gains  The Company recorded a foreign exchange loss of $2.8 million during the first  quarter of 2014 versus a $2.4 million gain in the comparative three-month  period of 2013. 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  first-quarter 2014 foreign exchange loss was largely attributable to the  translation of United States dollar-denominated liabilities held in Russia and  Argentina offset partially by a gain on United States dollar-denominated  assets held in Canada. The value of the United States dollar at March 31, 2014  had strengthened against the Canadian dollar, Russian Rouble and the  Argentinean peso from the beginning of the quarter, resulting in a  consolidated net foreign exchange loss.  Interest  The Company's net interest expense of $14.9 million for the first quarter of  2014 was $5.7 million higher than in the comparable period of 2013. The  increase was related to the issuance of an additional US$150.0 million of  Calfrac's 7.50 percent senior notes to finance the acquisition of assets from  Mission combined with the depreciation of the Canadian dollar relative to the  United States dollar.  The Company had up to US$23 million of loans on its  revolving credit facility during the first quarter compared to zero in the  comparable period in 2013. Additional short-term borrowing in Latin America to  fund the operational expansion in Argentina combined with higher interest  rates also contributed to the increase in interest expense during the quarter.  Income Tax Expenses  The Company recorded income tax expense of $2.6 million during the first  quarter of 2014 compared to $7.0 million in the comparable period of 2013. The  effective income tax rate for the three months ended March 31, 2014 was  consistent with the comparable quarter of 2013 at 22 percent. The decrease in  total income tax expense was primarily due to lower profitability in Canada,  the United States and Mexico offset partially by higher taxable income in  Argentina.     Summary of     Quarterly     Results                                                                                                    Three Months       June       Sept.       Dec.       Mar.       June       Sept.       Dec.       Mar.     Ended               30,         30,        31,        31,        30,         30,        31,        31,                        2012        2012       2012       2013       2013        2013       2013       2014     (unaudited)         ($)         ($)        ($)        ($)        ($)         ($)        ($)        ($)     Financial     (C$000s,     except per     share and     operating     data)                                                                                                      Revenue         335,780     417,842    367,487    423,397    288,701     388,662    463,054    547,638     Operating     income(1)        29,810      70,604     43,218     62,670     16,307      51,683     57,416     64,117     EBITDA(1)        18,736      70,874     46,866     65,169     16,235      46,862     57,667     60,435           Per     share -     basic              0.42        1.59       1.05       1.44       0.36        1.02       1.25       1.30           Per     share -     diluted            0.42        1.58       1.04       1.43       0.35        1.01       1.24       1.29     Net income     (loss)     attributable                                                                                                     to     shareholders     of Calfrac     (11,855)      26,917     11,243     24,645   (14,584)       6,089     11,764      8,946           Per     share -     basic            (0.27)        0.60       0.25       0.55     (0.32)        0.13       0.25       0.19           Per     share -     diluted          (0.27)        0.60       0.25       0.54     (0.32)        0.13       0.25       0.19     Capital     expenditures     75,286      63,962     55,694     43,989     46,618      34,683     45,227     27,331     Working     capital (end     of period)      357,128     353,182    322,857    332,241    319,982     292,854    319,934    338,916     Total equity     (end of     period)         747,591     783,091    780,759    802,581    784,247     786,933    795,207    803,904                                                                                                                Operating     (end of     period)                                                                                                    Pumping     horsepower     (000s)              830         845        977      1,013      1,025       1,025      1,194      1,215     Coiled     tubing units     (#)                  29          29         29         29         29          31         38         34     Cementing     units (#)            23          25         26         28         30          30         31         31     (1)  Refer to "Non-GAAP Measures" on page 12 for further information.     Liquidity and Capital Resources                                                                                                           Three Months Ended March 31 ,                           2014       2013     (C$000s)                                                 ($)        ($)     (unaudited)                                                                 Cash provided by (used in):                                                       Operating activities                            19,779     41,502           Financing activities                          (11,859)     16,885           Investing activities                          (24,630)   (59,654)           Effect of exchange rate changes on cash and      (485)      5,997     cash equivalents     (Decrease) increase in cash and cash equivalents    (17,195)      4,730  Operating Activities  The Company's cash provided by operating activities for the quarter ended  March 31, 2014 was $19.8 million versus $41.5 million in the comparative  quarter in 2013. The decrease was primarily due to changes in non-cash working  capital. At March 31, 2014, Calfrac's working capital was approximately $338.9  million, a six percent increase from December 31, 2013. At March 31, 2014, the  Company had accounts receivable of US$42.5 million (December 31, 2013 -  US$40.8 million) from a customer operating in Mexico that were outstanding for  greater than 120 days, for which no provision has been made. The payment delay  is consistent with the experience of many other oilfield service companies in  this market. Collection is expected in its entirety; however, the timing is  uncertain.  Financing Activities  Net cash used in financing activities was $11.9 million during the first  quarter of 2014 compared to cash provided by financing activities of $16.9  million in the comparable quarter of 2013. During the quarter, the Company  made net repayments on its bank loan totalling $2.1 million in Argentina,  repaid $11.2 million on its credit facility, issued $8.8 million of common  shares for cash and paid cash dividends of $7.4 million.  On August 8, 2013, the Company extended the term of its credit facilities by  one year to September 27, 2017. 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  prime-based loans and U.S. base-rate loans, the rate ranges from prime or U.S.  base rate plus 0.50 percent to prime plus 1.25 percent. For LIBOR-based loans  and bankers' acceptance-based loans, the margin thereon ranges from 1.50  percent to 2.25 percent above the respective base rates. As at March 31, 2014,  the Company had used $28.7 million of its credit facilities for letters of  credit and had $14.4 million outstanding under its credit facility, leaving  $256.9 million in available credit.  On October 8, 2013, the Company closed a private offering of US$150.0 million  aggregate principal of its 7.50 percent senior notes yielding net proceeds of  $150.2 million (US$145.4 million) after applicable discount and debt issuance  costs. Fixed interest on the notes is payable semi-annually on June 1 and  December 1 of each year. The notes will mature on December 1, 2020. The net  proceeds from this offering were used to finance the Mission asset acquisition.  Calfrac pays a quarterly dividend of $0.25 per share to shareholders at the  discretion of the Board of Directors, which qualify as "eligible dividends" as  defined by the Canada Revenue Agency.  Investing Activities  Calfrac's net cash used for investing activities was $24.6 million for the  quarter ended March 31, 2014 versus $59.7 million for 2013. Cash outflows  relating to capital expenditures were $24.9 million during 2014 compared to  $60.2 million in 2013. Capital expenditures were primarily to support the  Company's Canadian, United States and Argentinean fracturing operations.  Calfrac's 2014 capital budget is projected to be approximately $130.0 million,  of which $33.0 million is being directed towards growing its international  operations, including an investment in coiled tubing and fracturing equipment  in Russia and Argentina. In addition, approximately $20.0 million remaining  from Calfrac's 2013 capital program is expected to be expended in 2014. As  such, projected capital spending in 2014 is $150.0 million.  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 quarter of 2014 was a loss of $0.5 million versus  a gain of $6.0 million during the comparable period of 2013. These gains  relate to cash and cash equivalents held by the Company in a foreign currency.  With its substantial 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 2014 and beyond.  At March 31, 2014, the Company had cash and cash equivalents of $25.0 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 10 percent of  the Company's issued and outstanding common shares. As at May 5, 2014, there  were 47,078,888 common shares issued and outstanding, and 2,478,450 options to  purchase common shares.  The Company has a Dividend Reinvestment Plan that allows shareholders to  direct cash dividends paid on all or a portion of their common shares to be  reinvested in additional common shares that will be issued at 95 percent of  the volume-weighted average price of the common shares traded on the Toronto  Stock Exchange (TSX) during the last five trading days preceding the relevant  dividend payment date.  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 "seek", "anticipates", "plan", "continue", "estimate", "expect", "may",  "will", "project", "predict", "potential", "targeting", "intend", "could",  "might", "should", "believe", "forecast" or similar words suggesting future  outcomes, are forward-looking statements.  In particular, forward-looking statements in this press release include, but  are not limited to, statements with respect to expected operating strategies,  capital expenditure programs, future financial resources, anticipated  equipment utilization levels, future oil and natural gas well activity in each  of the Company's operating jurisdictions, results of acquisitions, ,future  costs or potential liabilities, projections of market prices and costs, supply  and demand for oilfield services, expectations regarding the Company's ability  to maintain its competitive position, anticipated benefits of the Company's  competitive position, expectations regarding the Company's ability to raise  capital, treatment under government regulatory regimes, commodity prices,  anticipated outcomes of specific events, trends in, and the growth prospects  of, the global 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  perception 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. Such risk factors include: general economic  conditions in Canada, the United States, Russia, Mexico, Argentina and  Colombia; the demand for fracturing and other stimulation services during  drilling and completion of oil and natural gas wells; volatility in market  prices for oil and natural gas and the effect of this volatility on the demand  for oilfield services generally; regional competition; liabilities and risks,  including environmental liabilities and risks, inherent in oil and natural gas  operations; changes in legislation and the regulatory environment; sourcing,  pricing and availability of raw materials, component parts, equipment,  suppliers, facilities and skilled personnel; the ability to integrate  technological advances and match advances of competition; the availability of  capital on satisfactory terms; intellectual property risks; uncertainties in  weather and temperature affecting the duration of the service periods and the  activities that can be completed; dependence on, and concentration of, major  customers; the creditworthiness and performance by the Company's  counterparties and customers; liabilities and risks associated with prior  operations; the effect of accounting pronouncements issued periodically;  failure to realize anticipated benefits of acquisitions and dispositions; and  currency exchange rate risk. Further information about these and other risks  and uncertainties may be found in the Company's most recently filed Annual  Information Form.  Consequently, all of the forward-looking statements made in this press release  are qualified by these cautionary statements and there can be no assurance  that actual results or developments anticipated by the Company will be  realized, or that they will have the expected consequences or effects on the  Company or its business or operations. These statements speak only as of the  respective date of this press release or the document incorporated by  reference herein. The Company assumes no obligation to update publicly any  such forward-looking statements, whether as a result of new information,  future events or otherwise, except as required pursuant to applicable  securities laws.  Business Risks  The business of Calfrac is subject to certain risks and uncertainties. Prior  to making any investment decision regarding Calfrac, investors should  carefully consider, among other things, the risk factors set forth in the  Company's most recently filed Annual Information Form, which are specifically  incorporated by reference herein.  The Annual Information Form is available through the Internet on the Canadian  System for Electronic Document Analysis and Retrieval (SEDAR), which can be  accessed at www.sedar.com. Copies of the Annual Information Form may also be  obtained on request without charge from Calfrac at 411 - 8(th) Avenue S.W.,  Calgary, Alberta, Canada, T2P 1E3, or at www.calfrac.com, or by facsimile at  403-266-7381.  Non-GAAP Measures  Certain supplementary measures in this press release do not have any  standardized meaning as prescribed under IFRS and are therefore considered  non-GAAP measures. These measures include operating income and EBITDA. These  measures may not be comparable to similar measures presented by other  entities. These measures have been described and presented in this press  release in order to provide shareholders and potential investors with  additional information regarding the Company's financial results, liquidity  and its ability to generate funds to finance its operations. Management's use  of these measures has been disclosed further in this press release as these  measures are discussed and presented.  Additional Information  Further information regarding Calfrac Well Services Ltd., including the most  recently filed Annual Information Form, can be accessed on the Company's  website at www.calfrac.com or under the Company's public filings found at  www.sedar.com.  First Quarter Conference Call  Calfrac will be conducting a conference call for interested analysts, brokers,  investors and news media representatives to review its 2014 first quarter  results at 10:00 a.m. (Mountain Time) on Thursday, May 8, 2014. 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 30792623). A  webcast of the conference call may be accessed via the Company's website at  www.calfrac.com.     CONSOLIDATED BALANCE SHEETS                                                                                 March 31,   December 31,     As at                                             2014           2013     (C$000s) (unaudited)                               ($)            ($)     ASSETS                                                                    Current assets                                                                  Cash and cash equivalents                 25,000         42,195           Accounts receivable                      442,073        395,845           Income taxes recoverable                   1,509          1,146           Inventories                              136,182        134,140           Prepaid expenses and deposits             15,617         17,189                                                    620,381        590,515     Non-current assets                                                              Property, plant and equipment          1,256,497      1,245,009           Goodwill                                  10,523         10,523           Deferred income tax assets                24,680         23,884     Total assets                                 1,912,081      1,869,931     LIABILITIES AND EQUITY                                                    Current liabilities                                                             Accounts payable and accrued             262,723        245,899     liabilities           Bank loan (note 3)                        18,340         24,298           Current portion of long-term debt            402            384     (note 4)                                                    281,465        270,581     Non-current liabilities                                                         Long-term debt (note 4)                  666,625        651,553           Other long-term liabilities                  143            198           Deferred income tax liabilities          159,944        152,392     Total liabilities                            1,108,177      1,074,724     Equity attributable to the shareholders of                                Calfrac     Capital stock (note 5)                         348,251        332,287     Contributed surplus (note 6)                    25,765         27,658     Loan receivable for purchase of common         (2,500)        (2,500)     shares (note 11)     Retained earnings                              437,426        440,179     Accumulated other comprehensive loss           (4,010)          (839)                                                    804,932        796,785     Non-controlling interest                       (1,028)        (1,578)     Total equity                                   803,904        795,207     Total liabilities and equity                 1,912,081      1,869,931     See accompanying notes to the consolidated financial statements.         CONSOLIDATED STATEMENTS OF OPERATIONS                              Three Months Ended March 31,                          2014      2013     (C$000s, except per share data) (unaudited)            ($)       ($)     Revenue                                            547,638   423,397     Cost of sales (note 12)                            487,917   361,409     Gross profit                                        59,721    61,988     Expenses                                                                       Selling, general and administrative           29,125    24,132           Foreign exchange losses (gains)                2,842   (2,379)           Loss (gain) on disposal of property, plant       840     (120)     and equipment           Interest                                      14,914     9,203                                                         47,721    30,836     Income before income tax                            12,000    31,152     Income tax expense                                                             Current                                          655     2,482           Deferred                                       1,925     4,482                                                          2,580     6,964     Net income                                           9,420    24,188                                                                              Net income (loss) attributable to:                                             Shareholders of Calfrac                        8,946    24,645           Non-controlling interest                         474     (457)                                                          9,420    24,188                                                                              Earnings per share(note 5)                                                     Basic                                           0.19      0.55           Diluted                                         0.19      0.54     See accompanying notes to the consolidated financial statements.         CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                   Three Months Ended March 31,                         2014     2013     (C$000s) (unaudited)                                  ($)      ($)     Net income                                          9,420   24,188     Other comprehensive loss                                               Items that may be subsequently reclassified to                         profit or loss:           Change in foreign currency translation      (3,095)    (464)     adjustment     Comprehensive income                                6,325   23,724     Comprehensive income (loss) attributable to:                                 Shareholders of Calfrac                       5,775   24,184           Non-controlling interest                        550    (460)                                                         6,325   23,724     See accompanying notes to the consolidated financial statements.         CONSOLIDATED     STATEMENTS OF                                                                                      CHANGES IN EQUITY                                                                                                                                   Equity Attributable to the Shareholders of Calfrac                                                                         Loan                                           Receivable                                                  for                                             Purchase   Accumulated                                                   of         Other                          Non-                         Share Contributed     Common Comprehensive Retained          Controlling    Total                       Capital     Surplus     Shares Income (Loss) Earnings    Total    Interest   Equity     (C$000s)              ($)         ($)        ($)           ($)      ($)      ($)         ($)      ($)     (unaudited)     Balance - January 332,287      27,658    (2,500)         (839)  440,179  796,785     (1,578)  795,207     1, 2014     Net income              -           -          -             -    8,946    8,946         474    9,420     Other                                                                                                     comprehensive     income (loss):           Cumulative        -           -          -       (3,171)        -  (3,171)          76  (3,095)     translation     adjustment     Comprehensive           -           -          -       (3,171)    8,946    5,775         550    6,325     income     Stock options:                                                                                                  Stock-based       -       1,089          -             -        -    1,089           -    1,089     compensation     recognized           Proceeds     11,744     (2,982)          -             -        -    8,762           -    8,762     from issuance of     shares     Dividend                                                                                                  Reinvestment Plan     shares           issued        4,220           -          -             -        -    4,220           -    4,220     (note 17)     Dividends               -           -          -             - (11,699) (11,699)           - (11,699)     Balance - March   348,251      25,765    (2,500)       (4,010)  437,426  804,932     (1,028)  803,904     31, 2014                                                                                                               Balance - January 300,451      27,546    (2,500)       (2,403)  458,543  781,637       (878)  780,759     1, 2013     Net income              -           -          -             -   24,645   24,645       (457)   24,188     Other                                                                                                     comprehensive     income (loss):           Cumulative        -           -          -         (461)        -    (461)         (3)    (464)     translation     adjustment     Comprehensive           -           -          -         (461)   24,645   24,184       (460)   23,724     income     Stock options:                                                                                                  Stock-based       -       1,479          -             -        -    1,479           -    1,479     compensation     recognized           Proceeds     10,768     (2,774)          -             -        -    7,994           -    7,994     from issuance of     shares     Dividends               -           -          -             - (11,375) (11,375)           - (11,375)     Balance - March   311,219      26,251    (2,500)       (2,864)  471,813  803,919     (1,338)  802,581     31, 2013     See accompanying notes to the consolidated financial statements.         CONSOLIDATED STATEMENTS OF CASH FLOWS                                Three Months Ended March 31,                            2014       2013     (C$000s) (unaudited)                                     ($)        ($)     CASH FLOWS PROVIDED BY (USED IN)                                            OPERATING ACTIVITIES                                                              Net income                                       9,420     24,188           Adjusted for the following:                                                       Depreciation                              33,521     24,814                 Stock-based compensation                   1,089      1,479                 Unrealized foreign exchange losses         5,295    (4,971)     (gains)                 Loss (gain) on disposal of property,         840      (120)     plant and equipment                 Interest                                  14,914      9,203                 Deferred income taxes                      1,925      4,482           Interest paid                                  (1,879)      (253)           Changes in items of working capital (note     (45,346)   (17,320)     9)     Cash flows provided by operating activities           19,779     41,502     FINANCING ACTIVITIES                                                              Bank loan proceeds                               4,218      9,146           Bank loan repayments                           (6,321)          -           Long-term debt repayments                     (11,164)      (118)           Finance lease obligation repayments                  -      (137)           Net proceeds on issuance of common shares        8,762      7,994           Dividends paid, net of DRIP (note 17)          (7,354)          -     Cash flows (used in) provided by financing          (11,859)     16,885     activities     INVESTING ACTIVITIES                                                              Purchase of property, plant and equipment     (24,925)   (60,223)     (note 9)           Proceeds on disposal of property, plant and        295        569     equipment     Cash flows used in investing activities             (24,630)   (59,654)     Effect of exchange rate changes on cash and cash       (485)      5,997     equivalents     Decrease in cash and cash equivalents               (17,195)      4,730     Cash and cash equivalents, beginning of period        42,195     42,481     Cash and cash equivalents, end of period              25,000     47,211     See accompanying notes to the consolidated financial statements.     NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  ------------------------------  As at and for the three months ended March 31, 2014 and 2013 (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 AND BASIS OF PRESENTATION  Calfrac Well Services Ltd. (the "Company") was formed through the amalgamation  of Calfrac Well Services Ltd. (predecessor company originally incorporated on  June 28, 1999) and Denison Energy Inc. ("Denison") on March 24, 2004 under the  Business Corporations Act (Alberta). The registered office is at 411 - 8(th)  Avenue S.W., Calgary, Alberta, Canada, T2P 1E3. The Company provides  specialized oilfield services, including hydraulic fracturing, coiled tubing,  cementing and other well completion services to the oil and natural gas  industries in Canada, the United States, Russia, Mexico, Argentina and  Colombia.  These 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, 2013. 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 May 5, 2014.  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  These interim consolidated financial statements follow the same accounting  policies and methods of application as the most recent annual financial  statements.  For purposes of calculating income taxes during interim periods, the Company  utilizes estimated annualized income tax rates. Current income tax expense is  only recognized when taxable income is such that current income taxes become  payable.  3. BANK LOAN  The Company's Argentinean subsidiary has two operating lines of credit, and a  total of ARS132,755 ($18,340) was drawn at March 31, 2014 (December 31, 2013 -  ARS148,975 ($24,298)). The interest rate ranges from 35.0 percent to 38.0  percent and both lines of credit are secured by letters of credit issued by  the Company.  4. LONG-TERM DEBT                                                   March 31,   December 31,     As at                                              2014           2013     (C$000s)                                            ($)            ($)     US$600,000 senior unsecured notes due                                      December 1, 2020,         bearing interest at 7.50% payable           663,300        638,160     semi-annually     Less: unamortized debt issuance costs and      (11,185)       (11,161)     debt discount                                                     652,115        626,999     $280,000 extendible revolving credit                                       facility, secured by         Canadian and U.S. assets of the Company      14,371         24,463     Less: unamortized debt issuance costs           (1,196)        (1,291)                                                      13,175         23,172     US$1,571 mortgage maturing May 2018 bearing                                interest         at U.S. prime less 1%, repayable at                                    US$33 per month         principal and interest, secured by            1,737          1,766     certain real property                                                     667,027        651,937     Less: current portion of long-term debt           (402)          (384)                                                     666,625        651,553  The fair value of the senior unsecured notes, as measured based on the closing  quoted market price at March 31, 2014, was $699,370 (December 31, 2013 -  $652,921). The carrying values of the mortgage obligations, term loans and  revolving credit 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 credit facility is based on the  parameters of certain bank covenants. For prime-based loans, the rate ranges  from prime plus 0.50 percent to prime plus 1.25 percent. For LIBOR-based loans  and bankers' acceptance-based loans the margin thereon ranges from 1.50  percent to 2.25 percent above the respective base rates for such loans. The  facility is repayable on or before its maturity of September 27, 2017,  assuming it 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  and debt discount) for the three months ended March 31, 2014 was $13,278  (three months ended March 31, 2013 - $9,082).  The Company also has an extendible operating 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  credit facility. Drawdowns under this facility are repayable on September 27,  2017, 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 March 31, 2014, the Company had utilized $28,688 of its credit facility for  letters of credit and had borrowed $14,371 against this facility, leaving  $256,941 in available credit.  5. CAPITAL STOCK  Authorized capital stock consists of an unlimited number of common shares.                                    Three Months Ended          Year Ended                                        March 31, 2014   December 31, 2013     Continuity of Common Shares       Shares   Amount     Shares   Amount                                          (#) (C$000s)        (#) (C$000s)     Balance, beginning of period  46,298,574  332,287 45,020,641  300,451     Issued upon exercise of stock    355,825   11,744    896,837   21,132     options     Dividend Reinvestment Plan     shares issued           (note 17)                  142,112    4,220    381,096   10,704     Balance, end of period        46,796,511  348,251 46,298,574  332,287  The weighted average number of common shares outstanding for the three months  ended March 31, 2014 was 46,463,491 basic and 46,815,582 diluted (three months  ended March 31, 2013 - 45,164,743 basic and 45,533,812 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 7.  6. CONTRIBUTED SURPLUS                                           Three Months     Year Ended                                                  Ended   December 31,     Continuity of Contributed Surplus   March 31, 2014           2013     (C$000s)                                       ($)            ($)     Balance, beginning of period                27,658         27,546           Stock options expensed                 1,089          5,454           Stock options exercised              (2,982)        (5,342)     Balance, end of period                      25,765         27,658  7. STOCK-BASED COMPENSATION  (a) Stock Options     Three Months Ended March 31,                2014               2013                                                  Average            Average                                                 Exercise           Exercise     Continuity of Stock Options         Options    Price   Options    Price                                             (#)     (C$)       (#)     (C$)     Balance, beginning of period      2,501,375    27.98 2,920,412    25.67           Granted                       591,750    31.19   678,750    24.46           Exercised for common shares (355,825)    24.62 (479,537)    16.67           Forfeited                    (43,800)    30.50  (43,700)    27.46     Balance, end of period            2,693,500    29.09 3,075,925    26.78  Stock options vest equally over four years and expire five years from the date  of grant. The exercise price of outstanding options ranges from $20.74 to  $37.18 with a weighted average remaining life of 2.97 years. When stock  options are exercised the proceeds, together with the compensation expense  previously recorded in contributed surplus, are added to capital stock.  For the three months ended March 31, 2014, $1,089 of compensation expense was  recognized for stock options (three months ended March 31, 2013 - $1,479) and  was included in selling, general and administrative expenses.  (b) Share Units     Three Months                        2014                            2013     Ended March 31,                     Deferred Performance Restricted Deferred Performance Restricted                        Share       Share      Share    Share       Share      Share     Continuity of      Units       Units      Units    Units       Units      Units     Stock Units                          (#)         (#)        (#)      (#)         (#)        (#)     Balance,          35,000      45,000    513,795   35,000      45,000    247,230     beginning of     period           Granted     35,000      60,000    368,650   35,000      45,000    380,650           Exercised (35,000)    (45,000)  (195,507) (35,000)    (45,000)   (82,410)           Forfeited        -           -    (9,194)        -           -    (8,250)     Balance, end of   35,000      60,000    677,744   35,000      45,000    537,220     period  The Company grants deferred share 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  share units is recognized equally over the vesting period, based on the  current market price of the Company's shares. During the three months ended  March 31, 2014, $311 of compensation expense was recognized for deferred share  units (three months ended March 31, 2013 - $217). This amount is included in  selling, general and administrative expenses. At March 31, 2014, the liability  pertaining to deferred share units was $308 (December 31, 2013 - $1,085).  The Company grants performance share 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 over three years 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 share units, performance share units  are settled either in cash or Company shares purchased on the open market.  During the three months ended March 31, 2014, $607 of compensation expense was  recognized for performance share units (three months ended March 31, 2013 -  $379). This amount is included in selling, general and administrative  expenses. At March 31, 2014, the liability pertaining to performance share  units was $381 (December 31, 2013 - $1,395).  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 three months ended March 31, 2014, $3,632 of  compensation expense was recognized for restricted share units (three months  ended March 31, 2013 - $2,183). This amount is included in selling, general  and administrative expenses. At March 31, 2014, the liability pertaining to  restricted share units was $8,248 (December 31, 2013 - $10,696).  Changes in the Company's obligations under the deferred, performance and  restricted share 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.  8. FINANCIAL INSTRUMENTS  Financial instruments included in the Company's 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 due to the  short-term maturity of those instruments. The fair value of the senior  unsecured notes based on the closing market price at March 31, 2014 was  $699,370 before deduction of unamortized debt issuance costs (December 31,  2013 - $652,921). The carrying value of the senior unsecured notes at March  31, 2014 was $663,300 before deduction of unamortized debt issuance costs and  debt discount (December 31, 2013 - $638,160). The fair values of the remaining  long-term debt approximate their carrying values, as described in note 4.  9. SUPPLEMENTAL CASH FLOW INFORMATION  Changes in non-cash operating assets and liabilities are as follows:     Three Months Ended March 31,                   2014       2013     (C$000s)                                        ($)        ($)     Accounts receivable                        (46,228)   (82,048)     Income taxes recoverable                      (362)        566     Inventory                                   (2,041)        495     Prepaid expenses and deposits                 1,571      2,063     Accounts payable and accrued liabilities      1,769     61,655     Other long-term liabilities                    (55)       (51)                                                (45,346)   (17,320)  Purchase of property, plant and equipment is comprised of:     Three Months Ended March 31,                     2014     2013     (C$000s)                                          ($)      ($)     Property, plant and equipment additions      (27,331) (43,989)     Change in liabilities related to purchase of                             property, plant and equipment             2,406 (16,234)                                                  (24,925) (60,223)  10. CAPITAL STRUCTURE  The Company's capital structure is comprised of shareholders' equity and  long-term debt. The Company's objectives in managing capital are (i) to  maintain flexibility so as to preserve its 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 as  follows:                                                      March 31, December 31,     For the Twelve Months Ended                           2014         2013     (C$000s)                                               ($)          ($)     Net income                                          11,965       26,733     Adjusted for the following:                                                     Depreciation                                   118,713      110,006         Amortization of debt issuance costs and debt     1,656        1,464     discount         Stock-based compensation                         5,064        5,454         Unrealized foreign exchange losses              11,616        1,350         Gain on business combination, net of tax       (2,747)      (2,747)         Gain on disposal of property, plant and          (554)      (1,514)     equipment         Deferred income taxes                              799        3,356     Cash flow                                          146,512      144,102  The ratio of long-term debt to cash flow does not have a standardized meaning  under IFRS and may not be comparable to similar measures used by other  companies.  At March 31, 2014, the long-term debt to cash flow ratio was 4.55:1 (December  31, 2013 - 4.52:1) calculated on a 12-month trailing basis as follows:                                               March 31,   December 31,     For the Twelve Months Ended                    2014           2013     (C$000s, except ratio)                          ($)            ($)     Long-term debt (net of unamortized debt                   issuance costs and           debt discount) (note 4)               667,027        651,937     Cash flow                                   146,512        144,102     Long-term debt to cash flow ratio            4.55:1         4.52:1  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  remained unchanged over the periods presented.  11. 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 3.375 percent  per annum, payable annually. The market value of the shares that secure the  loan was approximately $2,976 as at March 31, 2014 (December 31, 2013 -  $2,623). 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 three months ended  March 31, 2014 was $202 (three months ended March 31, 2013 - $89), as measured  at the exchange amount.  12. 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:     Three Months Ended March 31,                      2014      2013     (C$000s)                                           ($)       ($)     Product costs                                  167,480   129,322     Depreciation                                    33,521    24,814     Amortization of debt issuance costs and debt       510       318     discount     Employee benefits expense (note 13)            119,921    98,549  13. EMPLOYEE BENEFITS EXPENSE  Employee benefits include all forms of consideration given by the Company in  exchange for services rendered by employees.     Three Months Ended March 31,                            2014     2013     (C$000s)                                                 ($)      ($)     Salaries and short-term employee benefits            112,437   92,745     Post-employment benefits (group retirement savings     1,104    1,001     plan)     Share-based payments                                   5,640    4,259     Termination benefits                                     740      544                                                          119,921   98,549  14. 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 $10,426 (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. NAPC is also the subject of a claim for approximately  $4,359 (2,862 euros) from the Greek social security agency for social security  obligations associated with the salaries in arrears that are the subject of  the above-mentioned decision and penalties and interest of approximately  $3,352 (2,201 euros) payable on such amounts as at March 31, 2014.  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 $53 (35 euros), plus  interest. The appeal of this decision was heard on June 2, 2009, at which time  an additional claim by the plaintiff 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 $17 (11 euros), plus interest.  Another one of the lawsuits seeking salaries in arrears of $195 (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 $669 (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 hearing date has been set.  The maximum aggregate interest payable under the claims noted above amounted  to $18,910 (12,416 euros) as at March 31, 2014.  Management is of the view that it is improbable there will be a material  financial impact to the Company as a result of these claims. Consequently, no  provision has been recorded in these consolidated financial statements.  U.S. Litigation  A class and collective action complaint was filed against the Company in  September 2012 in the United States District Court for the Western District of  Pennsylvania. The complaint alleges failure to pay U.S. employees the correct  amount of overtime pay required by the Fair Labor Standards Act (FLSA) and  under the Pennsylvania Minimum Wage Act. In May 2013, the plaintiffs amended  their complaint to add a Colorado wage-hour claim. In June 2013, the parties  filed a joint stipulation for conditional certification of the FLSA collective  action with certain current and former employees as the defined class. The  notice to opt-in to the class was mailed to 1,204 current and former employees  in September 2013. The opt-in period expired on November 15, 2013 and 359  individuals opted in. A discovery plan has been approved by the court that  extends through June 23, 2014. Discovery as to a mutually agreed-upon sample  of the conditionally-certified opt-in class has been ongoing.  The Company has filed answers to each complaint in a timely manner and  believes it has defenses to each claim. At this time no motion for final class  certification as to the FLSA claim or motion for certification of the  Pennsylvania or Colorado state law claims has been filed. Thus no FLSA,  Pennsylvania or Colorado class has been certified. Plaintiffs have not alleged  an amount of damages and at this time it is not possible to predict the amount  of any potential recovery. Given the stage of the proceedings and the  existence of available defenses, no provision has been recorded in the  Company's financial statements regarding these claims, since the direction and  financial consequences of the claims in the amended complaint cannot be  determined at this time. The Company does not have insurance coverage for  these claims.  15. SEGMENTED INFORMATION  The Company's activities are conducted in four geographical 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 March     31, 2014                                                                            Revenue        267,674   211,039    38,914    30,011           -        547,638     Operating                                                              income     (loss)(1)       52,479    21,677       817     5,892    (16,748)         64,117     Segmented                                                              assets         743,115   839,856   162,800   166,310           -      1,912,081     Capital                                                                expenditures    13,697     7,018     3,643     2,973           -         27,331     Goodwill         7,236     2,308       979         -           -         10,523     Three Months                                                           Ended March     31, 2013                                                                            Revenue        231,576   127,010    37,161    27,650           -        423,397     Operating                                                              income     (loss)(1)       55,911    18,039     1,989     1,152    (14,421)         62,670     Segmented                                                              assets         767,589   597,552   136,174   137,229           -      1,638,544     Capital                                                                expenditures    17,291    20,809     2,431     3,458           -         43,989     Goodwill         7,236     2,308       979         -           -         10,523     (1)  Operating income (loss) is defined as net income (loss) before          depreciation, interest, foreign exchange gains or losses, gains or          losses on disposal of property, plant and equipment, and income          taxes.     Three Months Ended March 31,                             2014      2013     (C$000s)                                                  ($)       ($)     Net income                                              9,420    24,188     Add back (deduct):                                                                Depreciation                                     33,521    24,814           Interest                                         14,914     9,203           Foreign exchange losses (gains)                   2,842   (2,379)           Loss (gain) on disposal of property, plant and      840     (120)     equipment           Income taxes                                      2,580     6,964     Operating income                                       64,117    62,670  Operating income does not have a 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 March 31,      2014      2013     (C$000s)                           ($)       ($)     Fracturing                     503,818   384,144     Coiled tubing                   26,473    21,603     Cementing                       15,757    11,863     Other                            1,590     5,787                                    547,638   423,397  16. 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.  17. DIVIDEND REINVESTMENT PLAN  The Company's Dividend Reinvestment Plan (DRIP) 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, 2014 and  paid on April 15, 2014. Of the total dividend of $11,699, $4,106 was  reinvested under the DRIP into 122,702 common shares of the Company.  A dividend of $0.25 per common share was declared on December 5, 2013 and paid  on January 15, 2014. Of the total dividend of $11,574, $4,220 was reinvested  under the DRIP into 142,112 common shares of the Company.    SOURCE  Calfrac Well Services Ltd.  Fernando Aguilar President & Chief Executive Officer Telephone: 403-266-6000  Fax: 403-266-7381  Michael (Mick) J. McNulty Chief Financial Officer Telephone: 403-266-6000  Fax: 403-266-7381  Ian Gillies Manager, Investor Relations 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/May2014/08/c7306.html  CO: Calfrac Well Services Ltd. ST: Alberta NI: OIL ERN CONF