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  
-0- May/08/2014 10:00 GMT
 
 
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