Calfrac Announces Second Quarter Results

CALGARY, July 29, 2014 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the 
Company") (TSX-CFW) announces its financial and operating results for the 
three and six months ended June 30, 2014. 
HIGHLIGHTS 


                                                                          
                   Three Months Ended June 30,       Six Months Ended June
                                                                       30,
                       2014     2013    Change      2014    2013    Change
    (C$000s,            ($)
    except per
    share and unit
    data)                        ($)       (%)       ($)     ($)       (%)
    (unaudited)                                                           
    Financial                                                             
    Revenue         502,957  288,701        74 1,050,595 712,098        48
    Operating
    income(1)        44,833   16,307       175   108,950  78,977        38
      Per share -
      basic(3)         0.48     0.18       167      1.17    0.87        34
      Per share -
      diluted(3)       0.47     0.18       161      1.16    0.86        35
    Net income             
    (loss)
    attributable
    to                                                                    
      the
      shareholders
      of Calfrac                                                          
      before
      foreign
      exchange                                                            
      losses or
      gains(2)      (9,446) (14,969)        37     1,346   7,707      (83)
      Per share -
      basic(3)       (0.10)   (0.17)        41      0.01    0.09      (89)
      Per share -
      diluted(3)     (0.10)   (0.17)        41      0.01    0.09      (89)
    Net income             
    (loss)
    attributable
    to                                                                    
      the
      shareholders
      of Calfrac   (12,905) (14,584)        12   (3,959)  10,061     (139)
      Per share -
      basic(3)       (0.14)   (0.16)        13    (0.04)    0.11     (136)
      Per share -
      diluted(3)     (0.14)   (0.16)        13    (0.04)    0.11     (136)
    Working         334,320
    capital (end
    of period)               319,982         4   334,320 319,982         4
    Total equity    794,615
    (end of
    period)                  784,247         1   794,615 784,247         1
    Weighted               
    average common                                                        
      shares
      outstanding
      (#)                                                                 
      Basic(3)       93,946   91,232         3    93,440  90,784         3
      Diluted(3)     94,894   91,808         3    94,255  91,450         3
                                                                          
    Operating (end         
    of period)                                                            
    Pumping                
    horsepower
    (000s)                                         1,217   1,025        19
    Coiled tubing          
    units (#)                                         36      29        24
    Cementing              
    units (#)                                         31      30         3
    (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)  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.
    (3)  Prior year adjusted to reflect the two-for-one common share split
         that occurred on June 2, 2014.
          

Quarterly Overview

------------------------------
                                                                    
    Consolidated Highlights                                         
    Three Months Ended June 30, 2014              2014      2013   Change
    (C$000s, except operational information)       ($)       ($)      (%)
    (unaudited)                                                          
    Revenue                                    502,957   288,700       74
    Expenses                                                             
      Operating                                427,752   250,391       71
      Selling, general and administrative       30,372    22,002       38
      (SG&A)
                                               458,124   272,393       68
    Operating income(1)                         44,833    16,307      175
    Operating income (%)                          8.9%      5.6%       59
    Fracturing revenue per job ($)              75,982    84,427     (10)
    Number of fracturing jobs                    6,027     3,121       93
    Pumping horsepower, end of period (000s)     1,217     1,025       19
    Coiled tubing revenue per job ($)           40,934    39,112        5
    Number of coiled tubing jobs                   524       243      116
    Coiled tubing units, end of period (#)          36        29       24
    Cementing revenue per job ($)               35,563    29,770       19
    Number of Cementing jobs                       581       417       39
    Cementing units, end of period (#)              31        30        3
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
          

Revenue in the second quarter of 2014 for Calfrac was $503.0 million, which 
increased by 74 percent from the same period in 2013 and declined 8 percent 
from the first quarter of 2014. On a year over year basis, consolidated 
fracturing jobs increased by 93 percent, but consolidated revenue per 
fracturing job declined by 10 percent, primarily due to lower pricing. 
Sequentially, revenue per job decreased by 10 percent due to a greater 
proportion of revenue coming from the United States, which typically generates 
lower revenue per job compared to Canada, combined with lower pricing in 
Canada.

Pricing in Canada was lower in the second quarter of 2014 when compared to the 
first quarter of 2014, as the Company tried to encourage customers to complete 
more work, which is a typical strategy used during spring break-up. In the 
United States, pricing was higher in certain areas due to a limited amount of 
commodity-linked pricing agreements, but market pricing was unchanged from the 
previous quarter. In Russia, pricing is determined by contract awards which 
resulted in the Company experiencing minimal pricing changes during the 
quarter. Similarly, a significant portion of Calfrac's work in Argentina is 
under contract, resulting in immaterial pricing changes compared to the prior 
quarter.

Operating income for the second quarter of 2014 was $44.8 million, an increase 
of 175 percent from the comparable period in 2013 and a decline of 30 percent 
compared to the first quarter of 2014. Operating income as a percentage of 
revenue in 2014 was higher by 330 basis points compared to the same period 
last year due to significantly higher fracturing activity in the United States 
and Argentina. Further improvements were offset by weaker pricing in Canada. 
Sequentially, operating income as a percentage of revenue declined 280 basis 
points due to lower activity and pricing in Canada due to spring break-up.

In Canada, revenue declined by 64 percent sequentially to $96.2 million due to 
the onset of spring break-up. Operating income as a percentage of revenue 
decreased to negative 10 percent from positive 20 percent in the prior 
quarter, due to significantly lower activity levels related to spring 
break-up, weaker pricing and continued use of subcontractors.

In the United States, revenue increased by 50 percent compared to the first 
quarter of 2014 to $316.0 million in the second quarter of 2014 mainly as a 
result of higher activity across all of the Company's operating areas and 
improved pricing from select commodity-linked pricing agreements. The higher 
activity was a function of increased demand for completions work from 
Calfrac's customers and a reduction in weather-related issues. Operating 
income as a percentage of revenue increased to 19 percent in the second 
quarter of 2014 from 10 percent in the previous quarter. United States 
operating income margins increased due to higher activity, commodity-linked 
pricing agreements and reduced weather-related interruptions.

In Russia, revenue increased to $51.2 million in the second quarter of 2014 
from $38.9 million in the first quarter of 2014. The increase resulted from 
the Company being able to complete more jobs as weather conditions improved 
and the completion of larger fracturing jobs. Operating income as a percentage 
of revenue increased to 14 percent in the second quarter of 2014 from 2 
percent in the prior quarter due to higher activity and a reduction in costs 
related to the harsh weather conditions in the first quarter of 2014.

In Latin America, revenue increased by 32 percent quarter over quarter to 
$39.6 million due to higher activity in Mexico. Operating income as a 
percentage of revenue decreased to 10 percent from 20 percent due to higher 
costs in the Company's Mexico operations, while Argentina's operations had 
higher subcontractor expenses and incurred additional costs in preparation for 
the start-up of the second unconventional fracturing crew.

Net loss attributable to shareholders of Calfrac was $12.9 million or $0.14 
per share diluted, compared to $14.6 million or $0.16 per share diluted in the 
same period last year and a decrease from a net income of $8.9 million or 
$0.19 per share diluted in the previous quarter. Net income per share on a 
fully diluted basis was negatively impacted quarter over quarter by a 
reduction in Canadian activity due to spring break-up. As well, the Company 
incurred higher income taxes, interest and depreciation expenses, which were 
partially offset by lower foreign exchanges losses.

The Company believes its mix of customer commitments and spot market exposure 
leaves it well-positioned in the North American market. In both Latin America 
and Russia, Calfrac has the vast majority of its equipment under contract.

In the second quarter of 2014, Calfrac completed a two-for-one common share 
split and declared a post common share split quarterly dividend of $0.125 per 
share.

Outlook and Business Prospects

------------------------------

Spot natural gas prices have declined significantly in recent months due to 
higher-than-expected storage injections in the United States. Current pricing 
remains above the level seen at this time last year and should continue to 
underpin existing activity levels. Canadian natural gas storage levels remain 
relatively low and provide support for improved activity. Crude oil prices 
continue to warrant strong sustained activity levels. Calfrac continues to see 
a trend of greater service intensity through larger multi-well pad designs, 
more fracturing stages per horizontal well and increased tonnage per stage. 
Internationally, the trend towards greater unconventional development 
continues with the Company benefitting from greater use of multi-stage 
completion technology.

In western Canada, horizontal well completion activity is expected to be 
strong through the remainder of 2014 and into 2015. The Company expects 
activity levels to be greater than those realized in the second half of 2013 
due to stronger commodity prices which have resulted in certain customers 
increasing 2014 capital programs to accelerate development. Other developments 
that Calfrac believes will lead to an increased pace of completions activity 
include the weaker Canadian dollar, improved access to capital and LNG-related 
development. These trends have allowed Calfrac to implement pricing increases 
which will become effective throughout the second half of 2014.

Calfrac is maintaining a leadership position in the most important natural gas 
plays in western Canada and expects to be a key participant in the long-term 
development of these plays. The Company's customers in the Montney, Deep Basin 
and Duvernay are expected to increase their activity in the second half of 
2014 which should positively benefit the Company. In particular, the Company 
is committed to increasing the percentage of its fleet that is focused on 
24-hour operations which should be a catalyst for improved financial 
performance in the future.

Calfrac expects oil-focused activity in western Canada to be higher in the 
second half of 2014, when compared to the second half of 2013, due to 
increased demand in the Viking play, while activity in the Cardium is expected 
to remain stable. The Company continues to focus on increasing the percentage 
of its operations that are on a 24-hour basis in the oil plays of western 
Canada to improve equipment utilization. In addition, asset consolidation by 
certain oil and gas companies may present an opportunity for Calfrac to 
increase its activity.

In the United States, Calfrac expects activity to remain strong in upcoming 
quarters. The Company continues to have strong visibility across its U.S. 
operating areas, but believes delivering the efficiencies seen during the 
second quarter of 2014 will be challenging given the size of well pads that 
were completed. The Company believes that its Marcellus operations will 
continue to achieve high utilization levels for the remainder of 2014 due to 
this play's low cost structure and proximity to natural gas consuming markets. 
Calfrac's fifth Marcellus crew became operational in June 2014 and has seen 
strong customer demand. As well, producers continue to develop the Utica which 
could provide further opportunities for Calfrac. In the Fayetteville, Calfrac 
is expecting activity to remain stable for the remainder of the year. The 
Company temporarily deployed a third crew into this play during the second 
quarter of 2014 from Texas, but that crew has since returned to its original 
location, where it is expected to experience improved utilization levels. In 
the Eagle Ford, the Company continues to optimize its operations and pricing 
is expected to remain stable. The Company's Rockies operations and pricing are 
expected to be strong due to Niobrara activity. The Company continues to be 
optimistic about the Rockies region due to customer spending patterns and new 
entrants into the region. Calfrac's operations in North Dakota are expected to 
achieve strong utilization in the second half of 2014 due to improved customer 
demand and a reduction in competitors servicing this play. Pricing in the U.S. 
remains competitive across all of Calfrac's operating areas.

With higher product volumes being used for fracturing across North America 
there has been an increase in the industry's need for the use of third-party 
subcontractors. These subcontractors help facilitate the movement of product 
volumes to the well site when quantities are outside the scope of Calfrac's 
in-house capabilities. The Company continues to analyze and identify ways in 
which it can optimize its supply chain and logistical network in North 
America. A number of initiatives have been launched and will continue in 
upcoming quarters to balance the need for subcontract services and Calfrac's 
own logistical assets.

Calfrac continues to believe in the long-term potential of Argentina's 
conventional and unconventional oil and gas development. The increasing 
customer demand for the Company's services is providing the opportunity to 
deploy additional equipment into the country. Currently, an additional 32,000 
horsepower is being deployed into Argentina and is expected to become active 
late in the third quarter of 2014. The new spread is expected to be used for 
unconventional development in the Vaca Muerta shale play. Calfrac believes 
that its service quality and technical expertise are leading to its growing 
reputation as a service provider of choice in Argentina, thereby providing the 
foundation for long-term growth.

In Mexico, Calfrac remains optimistic over activity in the longer-term, once 
the national reform of the energy industry is completed. Calfrac believes this 
will set the stage for increased spending levels by PEMEX and create an avenue 
for new entrants to Mexico. In the near-term, the Company will continue to 
prudently manage its cost structure in Mexico and closely monitor ongoing 
developments to remain prepared to take advantage of new opportunities.

In Russia, Calfrac expects activity to remain stable for the remainder of 
2014. The Company believes that the expanded use of multi-stage completion 
technologies in Western Siberia, such as horizontal drilling and multi-stage 
completions will continue. In particular, Calfrac believes that initial work 
on the Bazhenov shale play could begin as early as 2015, which would be the 
first unconventional development in Russia. The Company expects the 
accelerating trend towards multi-stage completions will continue to drive 
demand for its services over the short and long term as Russia's producing 
sector gains confidence in this approach.

Calfrac recently announced an increase in its capital budget for 2014 to 
$360.0 million. The capital program will be focused on increasing the 
Company's fracturing and cementing capacity, as well as support and 
infrastructure initiatives. In addition, a portion of the capital will fund 
ongoing proactive maintenance programs which will improve the efficiency and 
useful life of the Company's equipment. Approximately $172.0 million will be 
spent on growth initiatives and $38.0 million will be used for support and 
infrastructure initiatives. The Company intends to deliver 80,000 horsepower 
to its U.S. fleet, 35,000 horsepower to its Canadian fleet, and 40,000 
horsepower and two cementing units to its Argentina fleet. Delivery of this 
equipment is expected to begin in early 2015 and continue throughout the first 
half of the year.

In summary, Calfrac's confidence in its business continues to increase due to 
customer indications of a higher level of oil and natural gas development in a 
number of Calfrac's operating areas. Furthermore, the trend in North America 
towards pad drilling, 24-hour operations, more stages per well and greater 
tonnage per stage is having a positive impact on Calfrac's equipment 
utilization. Internationally, careful planning has helped develop a number of 
unconventional markets leading to additional opportunities for Calfrac. The 
Company's people, service quality, technology, and HSE practices will make it 
a key partner in these developments. The Company considers itself 
well-positioned to take advantage of these opportunities.

Financial Overview - Three Months Ended June 30, 2014 Versus 2013

------------------------------
    Canada                                                          
    Three Months Ended June 30,                   2014      2013   Change
    (C$000s, except operational information)       ($)       ($)      (%)
    (unaudited)                                                          
    Revenue                                     96,213    80,719       19
    Expenses                                                             
      Operating                                101,738    74,751       36
      SG&A                                       3,797     3,932      (3)
                                               105,535    78,683       34
    Operating income(1)                        (9,322)     2,036    (558)
    Operating income (%)                         -9.7%      2.5%    (488)
    Fracturing revenue per job ($)             250,346   195,191       28
    Number of fracturing jobs                      360       402     (10)
    Pumping horsepower, end of period (000s)       384       404      (5)
    Coiled tubing revenue per job ($)           32,732    27,128       21
    Number of coiled tubing jobs                   186        83      124
    Coiled tubing units, end of period (#)          17        21     (19)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
          

Revenue

Revenue from Calfrac's Canadian operations during the second quarter of 2014 
was $96.2 million versus $80.7 million in the same period of 2013. The 
increase in revenue was a result of revenue per job increasing 28 percent, 
primarily due to higher service intensity and increased activity in the 
Duvernay liquids-rich natural gas resource play. The oil-focused plays of 
western Canada saw strong activity exiting the first quarter; however, this 
was partially offset by wet weather in the last two weeks of June. The 
industry trend of more fracturing stages per well also contributed to the 
increase in revenue. Pricing, however, was significantly weaker on a year over 
year basis.

Operating (Loss) Income

An operating loss of $9.3 million was incurred in Canada during the second 
quarter of 2014 compared to income of $2.0 million in the same period of 2013. 
The reversal to an operating loss was primarily due to lower pricing and a 
reduction in multi-well pad work, combined with increased subcontractor 
transportation costs and equipment repair expenses resulting from a very 
active first quarter. Higher subcontractor transportation costs were incurred 
due to larger product volumes and longer average travel distances to well 
sites in the unconventional oil and natural gas resource plays of western 
Canada.
    United States                                                   
    Three Months Ended June 30,                   2014      2013   Change
    (C$000s, except operational information)       ($)       ($)      (%)
    (unaudited)                                                          
    Revenue                                    315,971   146,275      116
    Expenses                                                             
      Operating                                249,563   116,916      113
      SG&A                                       7,694     4,184       84
                                               257,257   121,100      112
    Operating income(1)                         58,714    25,175      133
    Operating income (%)                         18.6%     17.2%        8
    Fracturing revenue per job ($)              59,473    61,649      (4)
    Number of fracturing jobs                    5,086     2,254      126
    Pumping horsepower, end of period (000s)       660       501       32
    Coiled tubing revenue per job ($)           45,469         -        -
    Number of coiled tubing jobs                    61         -        -
    Coiled tubing units, end of period (#)           8         -        -
    Cementing revenue per job ($)               40,454    32,670       24
    Number of cementing jobs                       265       224       18
    Cementing units, end of period (#)              18        17        6
    US$/C$ average exchange rate(2)             1.0905    1.0233        7
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada
          

Revenue

Revenue from Calfrac's United States operations increased to $316.0 million 
during the second quarter of 2014 from $146.3 million in the comparable 
quarter of 2013. The growth was primarily due to significantly higher activity 
across all of the Company's operating regions and a greater level of 24-hour 
operations along with the commencement of Calfrac's operations in the Eagle 
Ford during the fourth quarter of 2013. In addition, the weaker Canadian 
dollar increased reported revenue. Pricing in the United States was weaker 
than in the second quarter of 2013, but was offset by materially larger job 
sizes. Sand usage increased by 91 percent in the second quarter of 2014 from 
the second quarter of 2013.

Operating Income

Operating income in the United States was $58.7 million for the second quarter 
of 2014, a 133 percent increase from the comparative period in 2013. The 
increase was mainly due to the higher activity in the quarter. Operating 
income as a percentage of revenue increased to 19 percent from 17 percent year 
over year due to increased operating utilization. The gain in operating income 
was limited due to weaker pricing combined with significantly higher 
subcontractor costs and equipment repair costs.
    Russia                                                              
    Three Months Ended June 30,                   2014     2013   Change
    (C$000s, except operational information)       ($)      ($)      (%)
    (unaudited)                                                         
    Revenue                                     51,209   37,305       37
    Expenses                                                            
      Operating                                 42,524   32,259       32
      SG&A                                       1,463    1,689     (13)
                                                43,987   33,948       30
    Operating income(1)                          7,222    3,357      115
    Operating income (%)                         14.1%     9.0%       57
    Fracturing revenue per job ($)             126,584   98,337       29
    Number of fracturing jobs                      327      312        5
    Pumping horsepower, end of period (000s)        70       48       46
    Coiled tubing revenue per job ($)           57,068   52,158        9
    Number of coiled tubing jobs                   172      127       35
    Coiled tubing units, end of period (#)           7        7        -
    Rouble/C$ average exchange rate(2)          0.0312   0.0323      (3)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada.
          

Revenue

During the second quarter of 2014, the Company's revenue from its Russian 
operations increased by 37 percent to $51.2 million from $37.3 million in the 
corresponding three-month period of 2013. The increase was mainly due to the 
completion of larger fracturing jobs, particularly in the Nefteugansk region, 
the Company expanding its operations into Usinsk during 2014 and improved 
coiled tubing activity. During the second quarter of 2014, approximately 35 
percent of the Company's total fracturing jobs were multi-stage completions 
within horizontal wellbores versus 31 percent in the comparable quarter of 
2013.

Operating Income

Operating income in Russia was $7.2 million during the second quarter of 2014 
compared to $3.4 million in the corresponding period of 2013. The increase was 
due to the higher revenue base combined with a larger contribution from 
multi-stage fracturing jobs and lower SG&A expenses. Operating income as a 
percentage of revenue increased to 14 percent from 9 percent in the same 
period of the prior year due to higher utilization and a reduction in 
equipment repair costs.
    Latin America                                                          
    Three Months Ended June 30,                      2014     2013   Change
    (C$000s, except operational and exchange
    rate information)                                 ($)      ($)      (%)
    (unaudited)                                                            
    Revenue                                        39,564   24,402       62
    Expenses                                                               
      Operating                                    31,800   23,898       33
      SG&A                                          4,000    1,470      172
                                                   35,800   25,368       41
    Operating income(1)                             3,764    (966)      490
    Operating income (%)                             9.5%    -4.0%      338
    Pumping horsepower, end of period (000s)          103       72       43
    Cementing units, end of period (#)                 13       13        -
    Coiled tubing units, end of period (#)              4        1      300
    Mexican peso/C$ average exchange rate(2)       0.0839   0.0820        2
    Argentinean peso/C$ average exchange rate(2)   0.1354   0.1953     (31)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada.
          

Revenue

Calfrac's Latin American operations generated revenue of $39.6 million during 
the second quarter of 2014 versus $24.4 million in the comparable three-month 
period in 2013. The increase was due mainly to the significant increase in 
fracturing, cementing and coiled tubing activity in Argentina. This was offset 
by significantly lower activity in Mexico resulting from budget constraints 
experienced by the Company's major customer in the region. The Colombian 
cementing market also remained challenging as permitting and infrastructure 
issues continue to result in lower than expected activity.

Operating Income

Operating income in Latin America for the three months ended June 30, 2014 was 
$3.8 million compared to a loss of $1.0 million in the comparative quarter in 
2013. The improvement can be wholly attributed to the commencement of 
fracturing operations in Argentina during May 2013. Offsetting the improvement 
were operating losses incurred in Calfrac's Mexico and Colombia operations.
    Corporate                                                              
    Three Months Ended June 30,                    2014       2013   Change
    (C$000s, except operational information)        ($)        ($)      (%)
    (unaudited)                                                            
    Expenses                                                               
      Operating                                   2,127      2,567     (17)
      SG&A                                       13,418     10,728       25
                                                 15,545     13,295       17
    Operating loss(1)                          (15,545)   (13,295)       17
                                                                           
    % of Revenue                                   3.1%       4.6%     (33)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
          

Operating Loss

The 17 percent increase in corporate expenses from the second quarter of 2013 
was mainly due to higher quarter over quarter stock-based compensation 
expenses of $1.4 million resulting from an improved stock price in 2014. In 
addition, a non-recurring legal settlement in the second quarter of 2013 
resulted in a $1.0 million reduction in professional fees in that period.

Depreciation

For the three months ended June 30, 2014, depreciation expense increased by 32 
percent to $34.4 million from $26.0 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 primarily unrealized foreign exchange loss of $4.9 
million during the second quarter of 2014 versus a $0.1 million loss 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 second-quarter 2014 foreign exchange loss was largely 
attributable to the translation of United States dollar-denominated 
liabilities held in Argentina and United States dollar-denominated assets held 
in Canada. The Argentinean peso weakened while the Canadian dollar 
strengthened against the United States dollar since the end of the first 
quarter resulting in a foreign exchange loss. The loss was partially offset by 
a gain on United States dollar-denominated liabilities held in Russia. The 
Russian rouble strengthened against the United States dollar from the 
beginning of the quarter, resulting in a foreign exchange gain.

Interest

The Company's net interest expense of $14.5 million for the second quarter of 
2014 was $5.2 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 a weaker Canadian dollar relative to the United States 
dollar quarter over quarter. Loans under Calfrac's revolving credit facility 
during the second quarter of 2014 were higher than 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 in that country 
also contributed to the increase in interest expense during the quarter.

Income Tax Expenses

The Company recorded income tax expense of $4.0 million during the second 
quarter of 2014 compared to a recovery of $4.1 million in the comparable 
period of 2013. The increase in total income tax expense was primarily due to 
increased profitability in the United States and Argentina combined with $2.3 
million of income tax adjustments relating to prior periods for Canada and 
Mexico that were recorded in the second quarter of 2014. The effective tax 
rate was impacted by the mix of earnings; with losses incurred in a lower tax 
rate jurisdiction, partially offset by earnings in a higher tax rate 
jurisdiction.

Summary of Quarterly Results

------------------------------
                                                                                           
    Three Months     Sept.      Dec.      Mar.                Sept.      Dec.      Mar.
    Ended              30,       31,       31,   June 30,       30,       31,       31,   June 30,
                      2012      2012      2013       2013      2013      2013      2014       2014
    (unaudited)        ($)       ($)       ($)        ($)       ($)       ($)       ($)        ($)
    Financial                                                                              
    (C$000s,
    except per
    share and
    operating
    data)                                                                                         
    Revenue        417,842   367,487   423,397    288,701   388,662   463,054   547,638    502,957
    Operating
    income(1)       70,604    43,218    62,670     16,307    51,683    57,416    64,117     44,833
      Per share -
      basic(2)        0.79      0.48      0.69       0.18      0.56      0.62      0.69       0.48
      Per share -
      diluted(2)      0.79      0.48      0.69       0.18      0.56      0.62      0.68       0.47
    Net income
    (loss)
    attributable                                                                                  
      to the
      shareholders
      of Calfrac    26,917    11,243    24,645   (14,584)     6,089    11,764     8,946   (12,905)
      Per share -
      basic(2)        0.30      0.13      0.28     (0.16)      0.07      0.13      0.10     (0.14)
      Per share -
      diluted(2)      0.30      0.13      0.27     (0.16)      0.07      0.13      0.10     (0.14)
    Capital
    expenditures    63,962    55,694    43,989     46,618    34,683    45,227    27,331     35,585
    Working
    capital (end
    of period)     353,182   322,857   332,241    319,982   292,854   319,934   338,916    334,320
    Total equity
    (end of
    period)        783,091   780,759   802,581    784,247   786,933   795,207   803,904    794,615
                                                                                                  
    Operating (end
    of period)                                                                                    
    Pumping
    horsepower
    (000s)             845       977     1,013      1,025     1,025     1,194     1,215      1,217
    Coiled tubing
    units (#)           29        29        29         29        31        38        34         36
    Cementing
    units (#)           25        26        28         30        30        31        31         31
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Comparative amounts were adjusted to reflect the Company's
         two-for-one common share split that occurred on June 2, 2014.
          

Seasonality of Operations

------------------------------

Certain of the Company's Canadian and United States businesses are seasonal. 
The lowest activity is typically experienced during the second quarter of the 
year when road weight restrictions are in place due to spring break-up weather 
conditions and access to well sites in Canada and North Dakota is reduced 
(refer to "Business Risks - Seasonality" in the 2013 Annual Report).

Foreign Exchange Fluctuations

------------------------------

The Company's consolidated financial statements are reported in Canadian 
dollars. Accordingly, the quarterly results are directly affected by 
fluctuations in the United States, Russian, Mexican, Argentinean and Colombian 
currency exchange rates (refer to "Business Risks - Fluctuations in Foreign 
Exchange Rates" in the 2013 Annual Report).

Financial Overview - Six Months Ended June 30, 2014 Versus 2013

------------------------------
    Canada                                                               
    Six Months Ended June 30,                     2014      2013   Change
    (C$000s, except operational information)       ($)       ($)      (%)
    (unaudited)                                                          
    Revenue                                    363,887   312,295       17
    Expenses                                                             
      Operating                                312,257   246,546       27
      SG&A                                       8,473     7,802        9
                                               320,730   254,348       26
    Operating income(1)                         43,157    57,947     (26)
    Operating income (%)                         11.9%     18.6%     (36)
    Fracturing revenue per job ($)             226,774   215,011        5
    Number of fracturing jobs                    1,515     1,384        9
    Pumping horsepower, end of period (000s)       384       404      (5)
    Coiled tubing revenue per job ($)           28,788    24,371       18
    Number of coiled tubing jobs                   706       604       17
    Coiled tubing units, end of period (#)          17        21     (19)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
          

Revenue

Revenue from Calfrac's Canadian operations during the first six months of 2014 
was $363.9 million versus $312.3 million in the comparable period of 2013. The 
17 percent increase was due to the completion of significantly larger jobs 
during the period and higher activity primarily focused in the first quarter 
of 2014. In particular, activity in the Montney, Cardium, Deep Basin and 
Duvernay plays was higher although pricing was considerably weaker during the 
six months ended June 30, 2014 than in the same period of 2013.

Operating Income

Operating income in Canada decreased by 26 percent to $43.2 million during the 
first six months of 2014 from $57.9 million in the same period of 2013. The 
decrease in absolute terms and as a percentage of revenue was due to a more 
competitive pricing environment and customer mix combined with higher 
subcontractor costs and equipment repair costs. The increase in subcontractor 
expenses was due to longer travel distances to job locations, higher product 
usage and the impact of a weaker Canadian dollar on certain product costs.
    United States                                                   
    Six Months Ended June 30,                     2014      2013   Change
    (C$000s, except operational and exchange       ($)       ($)      (%)
    rate information)
    (unaudited)                                                          
    Revenue                                    527,010   273,285       93
    Expenses                                                             
      Operating                                433,469   220,765       96
      SG&A                                      13,150     9,306       41
                                               446,619   230,071       94
    Operating income(1)                         80,391    43,214       86
    Operating income (%)                         15.3%     15.8%      (3)
    Fracturing revenue per job ($)              57,643    58,418      (1)
    Number of fracturing jobs                    8,746     4,438       97
    Pumping horsepower, end of period (000s)       660       501       32
    Coiled tubing revenue per job ($)           52,949         -        -
    Number of coiled tubing jobs                    84         -        -
    Coiled tubing units, end of period (#)           8         -        -
    Cementing revenue per job ($)               37,286    32,539       15
    Number of cementing jobs                       494       431       15
    Cementing units, end of period (#)              18        17        6
    US$/C$ average exchange rate(2)             1.0965    1.0156        8
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada.
          

Revenue

Revenue from Calfrac's United States operations during the first six months of 
2014 increased to $527.0 million from $273.3 million in the comparable period 
of 2013. The increase resulted from significantly higher activity across all 
of the Company's operating regions and the commencement of operations in the 
Eagle Ford. Revenue improved in the Rockies, the Marcellus, the Fayetteville 
and the Bakken. Weaker pricing in the United States was offset by an increase 
in job sizes and more multi-stage pad work which resulted in higher 
utilization through the greater use of 24-hour operations. Sand consumption in 
the first six months of 2014 has increased by 95 percent over the same period 
in the prior year.

Operating Income

Operating income in the United States was $80.4 million for the six months 
ended June 30, 2014 compared to $43.2 million in the first six months of 2013. 
The increase was primarily due to higher utilization in the second quarter of 
2014 partially offset by higher subcontractor transportation costs as larger 
quantities of sand were required by Calfrac's customers. The increased sand 
usage also increased repair and maintenance expense. Calfrac has used 95 
percent more sand in the first six months of 2014 than in the comparable 
period of 2013, which also increased reliance on subcontractors. Operating 
income as a percentage of revenue in the first six months of 2014 was 
consistent with the comparative period of 2013.
    Russia                                                               
    Six Months Ended June 30,                     2014      2013   Change
    (C$000s, except operational and exchange
    rate information)                              ($)       ($)      (%)
    (unaudited)                                                          
    Revenue                                     90,123    74,466       21
    Expenses                                                             
      Operating                                 78,996    65,836       20
      SG&A                                       3,088     3,283      (6)
                                                82,084    69,119       19
    Operating income(1)                          8,039     5,347       50
    Operating income (%)                          8.9%      7.2%       24
    Fracturing revenue per job ($)             118,014   102,013       16
    Number of fracturing jobs                      616       587        5
    Pumping horsepower, end of period (000s)        70        48       46
    Coiled tubing revenue per job ($)           57,703    56,746        2
    Number of coiled tubing jobs                   302       257       18
    Coiled tubing units, end of period (#)           7         7        -
    Rouble/C$ average exchange rate(2)          0.0313    0.0327      (4)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada.
          

Revenue

During the first six months of 2014, the Company's revenue from Russian 
operations increased by 21 percent to $90.1 million from $74.5 million in the 
corresponding period of 2013. The increase was mainly due to the commencement 
of operations at Calfrac's fourth Russian operating base located in Usinsk, 
which typically performs larger fracturing jobs. Coiled tubing activity 
increased as a result of customer requirements in Khanty-Mansiysk, but was 
partially offset by a reduction in coiled tubing activity in other operating 
areas due to a greater number of horizontal well completions.

Operating Income

Operating income in Russia in the first six months of 2014 was $8.0 million 
compared to $5.3 million in the corresponding period of 2013. The increase was 
primarily a result of operational efficiencies associated with greater 
activity and multi-stage fracturing jobs forming a larger proportion of total 
activity in 2014. During the first six months of 2014, approximately 42 
percent of the Company's total fracturing jobs were multi-stage completions 
within horizontal wellbores versus 32 percent in the comparable period of 2013.
    Latin America                                                          
    Six Months Ended June 30,                        2014     2013   Change
    (C$000s, except operational and exchange
    rate information)                                 ($)      ($)      (%)
    (unaudited)                                                            
    Revenue                                        69,575   52,052       34
    Expenses                                                               
      Operating                                    53,007   49,064        8
      SG&A                                          6,912    2,802      147
                                                   59,919   51,866       16
    Operating income(1)                             9,656      186        -
    Operating income (%)                            13.9%     0.4%        -
    Pumping horsepower, end of period (000s)          103       72       43
    Cementing units, end of period (#)                 13       13        -
    Coiled tubing units, end of period (#)              4        1      300
    Mexican peso/C$ average exchange rate(2)       0.0836   0.0809        3
    Argentinean peso/C$ average exchange rate(2)   0.1405   0.1982     (29)
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
    (2)  Source: Bank of Canada.
          

Revenue

Calfrac's Latin America operations generated revenue of $69.6 million during 
the first six months of 2014, a 34 percent increase from $52.1 million in the 
comparable period in 2013. Revenue increased due to significantly higher 
fracturing activity in Argentina combined with higher cementing and coiled 
tubing activity in that country. The increase was partially offset by 
significantly lower activity in Mexico resulting from customer budget 
constraints and lower activity in Colombia as a result of infrastructure and 
permitting issues.

Operating Income

For the six months ended June 30, 2014, Calfrac's Latin America division 
generated operating income of $9.7 million compared to $0.2 million in the 
comparative period in 2013. The increase in operating income was primarily due 
to higher fracturing and cementing activity in Argentina, partially offset by 
low utilization in Mexico and Colombia.
    Corporate                                               
    Six Months Ended June 30,       2014       2013   Change
    (C$000s)                         ($)        ($)      (%)
    (unaudited)                                             
    Expenses                                                
      Operating                    4,420      4,777      (7)
      SG&A                        27,873     22,940       22
                                  32,293     27,717       17
    Operating loss(1)           (32,293)   (27,717)       17
    % of Revenue                    3.1%       3.9%       21
    (1)  Refer to "Non-GAAP Measures" on page 17 for further information.
          

Operating Loss

The 17 percent increase in corporate expenses for the six months ended June 
30, 2014 over the comparative period in 2013 was mainly due to a $2.7 million 
increase in stock-based compensation expenses resulting from additional 
restricted share units vesting and a higher stock price in 2014 as well as 
higher personnel and occupancy costs. In addition, a non-recurring legal 
settlement in the second quarter of 2013 resulted in a $1.0 million reduction 
in professional fees in that period.

Depreciation

For the six months ended June 30, 2014, depreciation expense increased by 34 
percent to $67.9 million from $50.8 million in the corresponding period of 
2013. The increase is mainly a result of the acquisition of the Eagle Ford 
assets at the beginning of the fourth quarter of 2013, a larger fleet of 
equipment operating in North America and Latin America, and foreign exchange 
impacts.

Foreign Exchange Gains or Losses

The Company recorded a primarily unrealized foreign exchange loss of $7.8 
million during the first six months of 2014 versus a gain of $2.3 million in 
the comparative 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 2014 foreign exchange loss was largely attributable to the 
translation of United States dollar-denominated liabilities held in Argentina 
and Russia. The Argentinean peso and Russian rouble weakened from the 
beginning of the year, resulting in a consolidated net foreign exchange loss.

Interest

The Company's interest expense during the first six months of 2014 increased 
from the comparable period of 2013 by $10.9 million to $29.4 million. 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 a weaker Canadian dollar relative to the United States 
dollar. Loans under the Company's revolving credit facility during the first 
six months of 2014 were higher than 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 in that country 
also contributed to the increase in interest expense.

Income Tax Expenses

The Company recorded an income tax expense of $6.6 million during the first 
six months of 2014 compared to $2.9 million in the comparable period of 2013. 
The increase in total income tax expense was primarily due to $3.1 million in 
tax adjustments relating to prior years recorded during the period that 
related to Canada and Mexico. The effective tax rate for the first six months 
of 2014 was impacted by a higher percentage of taxable income in the United 
States, which has a higher average statutory tax rate, and lower tax 
recoveries in certain other jurisdictions.

Liquidity and Capital Resources

------------------------------
                                                                           
                        Three Months Ended June
                                            30,   Six Months Ended June 30,
                            2014           2013       2014             2013
    (C$000s)                 ($)            ($)        ($)              ($)
    (unaudited)                                                            
    Cash flows provided
    by (used in):                                                          
      Operating
      activities          27,322          3,400     47,101           44,902
      Financing
      activities           9,988         24,587    (1,871)           41,472
      Investing
      activities        (42,160)       (44,720)   (66,790)        (104,374)
      Effect of
      exchange rate
      changes on
      cash and cash
      equivalents        (7,384)            465    (7,869)            6,462
    Decrease in cash
    and cash
    equivalents         (12,234)       (16,268)   (29,429)         (11,538)
                                                            

Operating Activities

The Company's cash provided by operating activities for the quarter ended June 
30, 2014 was $27.3 million versus $3.4 million in the comparative quarter in 
2013. The increase was primarily due to increased profitability in the United 
States. At June 30, 2014, Calfrac's working capital was approximately $334.3 
million, a 4 percent increase from December 31, 2013. At June 30, 2014, the 
Company had accounts receivable of US$39.5 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 provided by financing activities was $10.0 million during the second 
quarter of 2014 compared to $24.6 million in the comparable quarter of 2013. 
During the quarter, the Company drew net $8.4 million on its credit facility, 
issued $9.1 million of common shares for cash and paid cash dividends of $7.6 
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 June 30, 2014, 
the Company had used $31.5 million of its credit facilities for letters of 
credit and had $21.9 million outstanding under its credit facility, leaving 
$246.6 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.

On June 2, 2014, the Company's common shares were split on a two-for-one basis 
to shareholders on record as of May 23, 2014. Calfrac pays a quarterly 
dividend of $0.125 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 $42.2 million for the 
quarter ended June 30, 2014 versus $44.7 million for the same period in 2013. 
Cash outflows relating to capital expenditures were $42.5 million during 2014 
compared to $45.1 million in the comparable period in 2013. Capital 
expenditures were primarily to support the Company's Canadian, United States 
and Argentinean fracturing operations.

On July 3, 2014, Calfrac announced its plan to increase its 2014 capital 
budget to approximately $360.0 million from $150.0 million. The majority of 
the capital program increase is related to the construction of two fracturing 
fleets totaling 80,000 horsepower for Calfrac's United States operations, a 
35,000 horsepower fracturing fleet for Canada and a 40,000 horsepower 
fracturing fleet that will operate in the Vaca Muerta shale play in Argentina. 
In addition, two new twin cementing units will be constructed for Calfrac's 
Argentina operations. Delivery of the new equipment is expected to begin in 
early 2015. The increase in capital also includes approximately $38.0 million 
of additional support and maintenance capital to optimize fleet utilization in 
North America and Latin America. Approximately $120.0 million of the increased 
capital spending is expected to occur in 2015.

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 second quarter of 2014 was a loss of $7.4 million 
versus a gain of $0.5 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 June 30, 2014, the Company had cash and cash equivalents of $12.8 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 July 25, 2014, there 
were 94,758,485 common shares issued and outstanding and 4,530,575 options to 
purchase common shares.

The Company has a Dividend Reinvestment Plan that allows shareholders to 
direct that cash dividends paid on all or a portion of their common shares 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 and equipment delivery dates, 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, the impact of environmental regulations on the Company's 
business, 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 regimes 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 by competitors; 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 under "Business Risks" 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 may not be comparable to similar measures 
presented by other entities. These measures have been described and presented 
in this press release in order to provide shareholders and potential investors 
with additional information regarding the Company's financial results, 
liquidity and its ability to generate funds to finance its operations. 
Management's use of these measures has been disclosed further in this press 
release as these measures are discussed and presented.

Additional Information

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

Second Quarter Conference Call

Calfrac will be conducting a conference call for interested analysts, brokers, 
investors and news media representatives to review its 2014 second quarter 
results at 10:00 a.m. (Mountain Time) on Tuesday, July 29, 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 72025208). A webcast of the conference call may be accessed via the 
Company's website at www.calfrac.com.
    CONSOLIDATED BALANCE SHEETS                                 
                                                    June 30,   December 31,
    As at                                               2014           2013
    (C$000s) (unaudited)                                 ($)            ($)
    ASSETS                                                                 
    Current assets                                                         
      Cash and cash equivalents                       12,766         42,195
      Accounts receivable                            394,536        395,845
      Income taxes recoverable                             -          1,146
      Inventories                                    147,920        134,140
      Prepaid expenses and deposits                   19,097         17,189
                                                     574,319        590,515
    Non-current assets                                                     
      Property, plant and equipment                1,234,227      1,245,009
      Goodwill                                        10,523         10,523
      Deferred income tax assets                      24,048         23,884
    Total assets                                   1,843,117      1,869,931
                                                                
    LIABILITIES AND EQUITY                                                 
    Current liabilities                                                    
      Accounts payable and accrued liabilities       221,822        245,899
      Income taxes payable                               257              -
      Bank loan (note 3)                              17,530         24,298
      Current portion of long-term debt (note 4)         390            384
                                                     239,999        270,581
    Non-current liabilities                                                
      Long-term debt (note 4)                        651,773        651,553
      Other long-term liabilities                         88            198
      Deferred income tax liabilities                156,642        152,392
    Total liabilities                              1,048,502      1,074,724
    Equity attributable to the shareholders of                             
    Calfrac
    Capital stock (note 5)                           364,553        332,287
    Contributed surplus (note 6)                      23,339         27,658
    Loan receivable for purchase of common shares    (2,500)        (2,500)
    (note 11)
    Retained earnings                                412,715        440,179
    Accumulated other comprehensive loss             (2,521)          (839)
                                                     795,586        796,785
    Non-controlling interest                           (971)        (1,578)
    Total equity                                     794,615        795,207
    Total liabilities and equity                   1,843,117      1,869,931
                                                                
    See accompanying notes to the consolidated financial statements.
                                                             
    CONSOLIDATED STATEMENTS OF OPERATIONS          
                        Three Months Ended June   Six Months Ended June 30,
                        30,
                            2014           2013        2014            2013
    (C$000s, except per      ($)            ($)         ($)             ($)
    share data)
    (unaudited)
    Revenue              502,957        288,701   1,050,595         712,098
    Cost of sales (note  462,174        276,363     950,091         637,772
    12)
    Gross profit          40,783         12,338     100,504          74,326
    Expenses                                                               
      Selling, general    30,372         22,002      59,497          46,134
      and
      administrative
      Foreign exchange     4,936             86       7,778         (2,293)
      losses (gains)
      (Gain) loss on       (117)           (14)         723           (134)
      disposal of
      property, plant
      and equipment
      Interest            14,470          9,285      29,384          18,488
                          49,661         31,359      97,382          62,195
    Income (loss)        (8,878)       (19,021)       3,122          12,131
    before income tax
    Income tax expense                                                     
    (recovery)
      Current              2,751          (756)       3,406           1,726
      Deferred             1,219        (3,326)       3,144           1,156
                           3,970        (4,082)       6,550           2,882
    Net income (loss)   (12,848)       (14,939)     (3,428)           9,249
    for the period
                                                                           
    Net income (loss)                                                      
    attributable to:
      Shareholders of   (12,905)       (14,584)     (3,959)          10,061
      Calfrac
      Non-controlling         57          (355)         531           (812)
      interest
                        (12,848)       (14,939)     (3,428)           9,249
                                                                           
    Earnings (loss) per                                                    
    share(note 5)
      Basic               (0.14)         (0.16)      (0.04)            0.11
      Diluted             (0.14)         (0.16)      (0.04)            0.11
                                                   
    See accompanying notes to the consolidated financial statements.
                                       
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE       
    INCOME
                             Three Months Ended   Six Months Ended June
                             June 30,                               30,
                                 2014      2013      2014          2013
    (C$000s) (unaudited)          ($)       ($)       ($)           ($)
    Net income (loss) for    (12,848)  (14,939)   (3,428)         9,249
    the period
    Other comprehensive                                                
    income (loss)
    Items that may be                                                  
    subsequently
    reclassified to profit
    or loss:
      Change in foreign         1,489     (785)   (1,606)       (1,249)
      currency
      translation adjustment
    Comprehensive income     (11,359)  (15,724)   (5,034)         8,000
    (loss) for the period
                                                   
    Comprehensive income                                               
    (loss) attributable to:
      Shareholders of        (11,416)  (15,326)   (5,641)         8,858
      Calfrac
      Non-controlling              57     (398)       607         (858)
      interest
                             (11,359)  (15,724)   (5,034)         8,000
                                                           
    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 1, 2014 332,287      27,658    (2,500)         (839)  440,179  796,785     (1,578)  795,207
    Net income
    (loss)                -           -          -             -  (3,959)  (3,959)         531  (3,428)
    Other
    comprehensive
    income (loss):                                                                                     
      Cumulative
      translation
      adjustment          -           -          -       (1,682)        -  (1,682)          76  (1,606)
    Comprehensive
    income                -           -          -       (1,682)  (3,959)  (5,641)         607  (5,034)
    Stock options:                                                                                     
      Stock-based
      compensation
      recognized          -       1,787          -             -        -    1,787           -    1,787
      Proceeds from
      issuance of
      shares         23,940     (6,106)          -             -        -   17,834           -   17,834
    Dividend
    Reinvestment
    Plan shares                                                                                        
      issued (note
      17)             8,326           -          -             -        -    8,326           -    8,326
    Dividends             -           -          -             - (23,505) (23,505)           - (23,505)
    Balance - June
    30, 2014        364,553      23,339    (2,500)       (2,521)  412,715  795,586       (971)  794,615
                                                                                                       
    Balance -
    January 1, 2013 300,451      27,546    (2,500)       (2,403)  458,543  781,637       (878)  780,759
    Net income
    (loss)                -           -          -             -   10,061   10,061       (812)    9,249
    Other
    comprehensive
    income (loss):                                                                                     
      Cumulative
      translation
      adjustment          -           -          -       (1,203)        -  (1,203)        (46)  (1,249)
    Comprehensive
    income                -           -          -       (1,203)   10,061    8,858       (858)    8,000
    Stock options:                                                                                     
      Stock-based
      compensation
      recognized          -       2,861          -             -        -    2,861           -    2,861
      Proceeds from
      issuance of
      shares         16,496     (4,248)          -             -        -   12,248           -   12,248
    Dividend
    Reinvestment
    Plan shares                                                                                        
      Issued (note
      17)             3,108           -          -             -        -    3,108           -    3,108
    Dividends             -           -          -             - (22,847) (22,847)           - (22,847)
    Non-controlling
    interest
    contribution          -           -          -             -        -        -         118      118
    Dilution of
    non-controlling
    interest              -           -          -             -    (325)    (325)         325        -
    Balance - June
    30, 2013        320,055      26,159    (2,500)       (3,606)  445,432  785,540     (1,293)  784,247
                                                                           
    See accompanying notes to the consolidated financial statements.
                                  
    CONSOLIDATED STATEMENTS OF CASH FLOWS          
                        Three Months Ended June   Six Months Ended June 30,
                        30,
                            2014           2013       2014             2013
    (C$000s)                 ($)            ($)        ($)              ($)
    (unaudited)
    CASH FLOWS PROVIDED                                                    
    BY (USED IN)
    OPERATING                                                              
    ACTIVITIES
      Net income (loss) (12,848)       (14,939)    (3,428)            9,249
      for the period
      Adjusted for the                                                     
      following:
        Depreciation      34,422         25,971     67,943           50,785
        Stock-based          698          1,382      1,787            2,861
        compensation
        Unrealized         3,530          2,385      8,825          (2,586)
        foreign
        exchange losses
        (gains)
         (Gain) loss on    (117)           (14)        723            (134)
        disposal of
        property, plant
        and equipment
         Interest         14,470          9,285     29,384           18,488
        Deferred income    1,219        (3,326)      3,144            1,156
        taxes
      Interest paid     (26,296)       (17,708)   (28,175)         (17,961)
      Changes in items    12,244            364   (33,102)         (16,956)
      of working
      capital (note 9)
    Cash flows provided   27,322          3,400     47,101           44,902
    by operating
    activities
    FINANCING                                                              
    ACTIVITIES
      Bank loan            3,795          3,403      8,013           12,549
      proceeds
      Issuance of         24,456         25,920     24,456           25,920
      long-term debt,
      net of debt
      issuance costs
      Bank loan          (3,630)              -    (9,951)                -
      repayments
      Long-term debt    (16,111)          (120)   (27,275)            (238)
      repayments
      Finance lease            -          (603)          -            (740)
      obligation
      repayments
      Net proceeds on      9,072          4,254     17,834           12,248
      issuance of
      common shares
      Dividends paid,    (7,594)        (8,267)   (14,948)          (8,267)
      net of DRIP (note
      17)
    Cash flows provided    9,988         24,587    (1,871)           41,472
    by (used in)
    financing
    activities
    INVESTING                                                              
    ACTIVITIES
      Purchase of       (42,471)       (45,073)   (67,396)        (105,296)
      property, plant
      and equipment
      (note 9)
      Proceeds on            311            235        606              804
      disposal of
      property, plant
      and equipment
      Other                    -            118          -              118
    Cash flows used in  (42,160)       (44,720)   (66,790)        (104,374)
    investing
    activities
    Effect of exchange   (7,384)            465    (7,869)            6,462
    rate changes on
    cash and cash
    equivalents
    Increase (decrease) (12,234)       (16,268)   (29,429)         (11,538)
    in cash and cash
    equivalents
    Cash and cash         25,000         47,211     42,195           42,481
    equivalents,
    beginning of period
    Cash and cash         12,766         30,943     12,766           30,943
    equivalents, end of
    period
                                  
    See accompanying notes to the consolidated financial statements.
                                                   

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

------------------------------

As at and for the three and six months ended June 30, 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 July 28, 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 with a 
total of ARS133,621 ($17,530) drawn at June 30, 2014 (December 31, 2013 - 
ARS148,975 ($24,298)). The interest rate ranges from 32.0 percent to 38.0 
percent and both lines of credit are secured by bank letters of credit issued 
on behalf of the Company.

4. LONG-TERM DEBT
                                                                
                                                    June 30,   December 31,
    As at                                               2014           2013
    (C$000s)                                             ($)            ($)
    US$600,000 senior unsecured notes due December                         
    1, 2020,
      bearing interest at 7.50% payable              640,200        638,160
      semi-annually
    Less: unamortized debt issuance costs and debt  (10,391)       (11,161)
    discount
                                                     629,809        626,999
    $280,000 extendible revolving credit facility,                         
    secured by
      Canadian and U.S. assets of the Company         21,874         24,463
    Less: unamortized debt issuance costs            (1,100)        (1,291)
                                                      20,774         23,172
    US$1,481 mortgage maturing May 2018 bearing                            
    interest
      at U.S. prime less 1%, repayable at US$33 per                        
      month
      principal and interest, secured by certain       1,580          1,766
      real property
                                                     652,163        651,937
    Less: current portion of long-term debt            (390)          (384)
                                                     651,773        651,553
                                                              

The fair value of the senior unsecured notes, as measured based on the closing 
quoted market price at June 30, 2014, was $688,215 (December 31, 2013 - 
$652,921). The carrying values of the mortgage obligations 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 six months ended June 30, 2014 was $26,523 (six 
months ended June 30, 2013 - $18,452).

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 June 30, 2014, the Company had utilized $31,556 of its credit facility for 
letters of credit and had borrowed $21,874 against this facility, leaving 
$246,570 in available credit.

5. CAPITAL STOCK

Authorized capital stock consists of an unlimited number of common shares.
                                                      
                                  Six Months Ended              Year Ended
                                     June 30, 2014       December 31, 2013
    Continuity of Common         Shares     Amount       Shares     Amount
    Shares
                                    (#)   (C$000s)          (#)   (C$000s)
    Balance, beginning of    92,597,148    332,287   90,041,282    300,451
    period
    Issued upon exercise of   1,320,900     23,940    1,793,674     21,132
    stock options
    Dividend Reinvestment       529,628      8,326      762,192     10,704
    Plan shares issued (note
    17)
    Balance, end of period   94,447,676    364,553   92,597,148    332,287
                                                      

The weighted average number of common shares outstanding for the three months 
ended June 30, 2014 was 93,946,458 basic and 94,894,078 diluted (three months 
ended June 30, 2013 - 91,232,276 basic and 91,808,274 diluted). The weighted 
average number of common shares outstanding for the six months ended June 30, 
2014 was 93,439,536 basic and 94,254,620 diluted (six months ended June 30, 
2013 - 90,783,376 basic and 91,449,968 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.

On May 8, 2014, the Company's shareholders approved a split of its common 
shares on a two-for-one basis to all shareholders on record as of May 23, 
2014. The weighted average number of shares, stock options and share-based 
plans (such as RSUs, DSUs and PSUs) during the period and for all periods 
presented have been adjusted for this two-for-one share split, without a 
corresponding change in dollar amounts. Earnings per share have been adjusted 
to reflect the impact of the two-for-one share split.

6. CONTRIBUTED SURPLUS
                                                         
                                           Six Months     Year Ended
                                                Ended   December 31,
    Continuity of Contributed Surplus   June 30, 2014           2013
    (C$000s)                                      ($)            ($)
    Balance, beginning of period               27,658         27,546
      Stock options expensed                    1,787          5,454
      Stock options exercised                 (6,106)        (5,342)
    Balance, end of period                     23,339         27,658
                                                         

7. STOCK-BASED COMPENSATION

(a) Stock Options
                                                                  
    Six Months Ended June                2014                     2013
    30,
                                           Average                  Average
                                          Exercise                 Exercise
    Continuity of Stock         Options      Price       Options      Price
    Options
                                    (#)       (C$)           (#)       (C$)
    Balance, beginning of     5,002,750      13.99     5,840,824      12.84
    period
      Granted                 1,231,800      15.72     1,394,400      12.27
      Exercised for         (1,320,900)      13.50   (1,488,324)       8.23
      common shares
      Forfeited               (319,950)      14.52     (205,600)      14.06
      Expired                         -          -       (1,250)      11.24
    Balance, end of           4,593,700      14.56     5,540,050      13.88
    period
                                                                    

Stock options vest equally over four years and expire five years from the date 
of grant. The exercise price of outstanding options ranges from $10.37 to 
$19.05 with a weighted average remaining life of 2.92 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 six months ended June 30, 2014, $1,787 of compensation expense was 
recognized for stock options (six months ended June 30, 2013 - $2,861) and was 
included in selling, general and administrative expenses.

(b) Share Units
                                                                
    Six Months
    Ended June
    30,                                2014                                  2013
                Deferred   Performance   Restricted   Deferred   Performance   Restricted
                   Share         Share        Share      Share         Share        Share
    Continuity     Units         Units        Units      Units         Units        Units
    of Share
    Units
                     (#)           (#)          (#)        (#)           (#)          (#)
    Balance,      70,000        90,000    1,027,590     70,000        90,000      494,460
    beginning
    of period
      Granted     70,000       120,000      774,900     70,000        90,000      778,750
      Exercised (70,000)      (90,000)    (391,014)   (70,000)      (90,000)    (164,820)
      Forfeited        -             -     (62,110)          -             -     (52,000)
    Balance,      70,000       120,000    1,349,366     70,000        90,000    1,056,390
    end of
    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 six months ended June 
30, 2014, $702 of compensation expense was recognized for deferred share units 
(six months ended June 30, 2013 - $509). This amount is included in selling, 
general and administrative expenses. At June 30, 2014, the liability 
pertaining to deferred share units was $698 (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 six months ended June 30, 2014, $1,091 of compensation expense was 
recognized for performance share units (six months ended June 30, 2013 - 
$754). This amount is included in selling, general and administrative 
expenses. At June 30, 2014, the liability pertaining to performance share 
units was $865 (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 six months ended June 30, 2014, $8,009 of 
compensation expense was recognized for restricted share units (six months 
ended June 30, 2013 - $4,716). This amount is included in selling, general and 
administrative expenses. At June 30, 2014, the liability pertaining to 
restricted share units was $12,625 (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 June 30, 2014 was 
$688,215 before deduction of unamortized debt issuance costs (December 31, 
2013 - $652,921). The carrying value of the senior unsecured notes at June 30, 
2014 was $640,200 before deduction of unamortized debt issuance costs and debt 
discount (December 31, 2013 - $638,160). The fair values of the remaining 
long-term debt instruments 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 June    Six Months Ended June 30,
                     30,
                         2014            2013       2014             2013
    (C$000s)                                                             
    Accounts           47,538          89,675      1,310            7,627
    receivable
    Income taxes        1,766         (3,247)      1,404          (2,681)
    payable
    (recoverable)
    Inventory        (11,738)           2,615   (13,780)            3,110
    Prepaid expenses  (3,480)         (9,424)    (1,908)          (7,361)
    and deposits
    Accounts payable (21,787)        (79,179)   (20,018)         (17,524)
    and accrued
    liabilities
    Other long-term      (55)            (76)      (110)            (127)
    liabilities
                       12,244             364   (33,102)         (16,956)
                                                 
    Purchase of property, plant and equipment  
    is comprised of:
                                               
                     Three Months Ended June    Six Months Ended June 30,
                     30,
                         2014            2013       2014             2013
    (C$000s)                                                             
    Property, plant  (35,585)        (46,618)   (62,916)         (90,607)
    and equipment
    additions
    Changes in                                                           
    liabilities
    related to the
    purchase
      of property,    (6,886)           1,545    (4,480)         (14,689)
      plant and
      equipment
                     (42,471)        (45,073)   (67,396)        (105,296)
                                                          

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:
                                                               
                                                   June 30,   December 31,
    For the Twelve Months Ended                        2014           2013
    (C$000s)                                            ($)            ($)
    Net income                                       14,056         26,733
    Adjusted for the following:                                           
      Depreciation                                  127,164        110,006
      Amortization of debt issuance costs and debt    1,845          1,464
      discount
      Stock-based compensation                        4,380          5,454
      Unrealized foreign exchange losses             12,761          1,350
      Gain on business combination, net of tax      (2,747)        (2,747)
      Gain on disposal of property, plant and         (657)        (1,514)
      equipment
      Deferred income taxes                           5,344          3,356
    Cash flow                                       162,146        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 June 30, 2014, the long-term debt to cash flow ratio was 4.02:1 (December 
31, 2013 - 4.52:1) calculated on a 12-month trailing basis as follows:
                                                        
                                            June 30,   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)                652,163        651,937
    Cash flow                                162,146        144,102
    Long-term debt to cash flow ratio         4.02:1         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 provided a $2,500 loan to a senior officer 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 $3,376 as at June 30, 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 six months ended June 
30, 2014 was $404 (six months ended June 30, 2013 - $208), 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:
                                                                  
    Six Months Ended June 30,                           2014        2013
    (C$000s)                                             ($)         ($)
    Product costs                                    315,203     218,299
    Depreciation                                      67,943      50,785
    Amortization of debt issuance costs and debt       1,020         639
    discount
    Employee benefits expense (note 13)              246,797     179,472
                                                                  

13. EMPLOYEE BENEFITS EXPENSE

Employee benefits include all forms of consideration given by the Company in 
exchange for services rendered by employees.
                                                                
    Six Months Ended June 30,                         2014        2013
    (C$000s)                                           ($)         ($)
    Salaries and short-term employee benefits      231,610     167,626
    Post-employment benefits (group retirement       2,430       2,089
    savings plan)
    Share-based payments                            11,589       8,840
    Termination benefits                             1,168         917
                                                   246,797     179,472
                                                                

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 $10,002 (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 is 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 $4,181 (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 $4,247 
(2,907 euros) payable on such amounts as at June 30, 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 $51 (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 $16 (11 euros), plus interest.

Another one of the lawsuits seeking salaries in arrears of $187 (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 $641 (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 and penalties payable under the claims noted 
above amounted to $22,594 (15,465 euros) as at June 30, 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. Notice 
of the right 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 approved by the court extends 
through July 23, 2014. Discovery as to a mutually agreed-upon sample of the 
conditionally-certified opt-in class has been ongoing.

The Company timely filed answers to each complaint and believes it has 
defences 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 claimed or demanded an 
amount of damages, so 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 defences, 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.

On June 18, 2014, the U.S. Department of Labor (the "USDOL") commenced a wage 
and hour investigation in relation to the district office in Smithfield, 
Pennsylvania. The initial information requests from the USDOL covered all 
employees, going back two years from June 18, 2014. The USDOL was advised by 
the Company's external counsel of the class and collective action complaint 
discussed above, and subsequently agreed to limit its investigation to 
employees not subject to the complaint, which would be those in the Office 
Services, Coiled Tubing and Maintenance departments. The Company has provided 
the payroll and employee information for these departments for three pay 
periods, as requested by the USDOL. The direction and financial consequences 
of the investigation cannot be determined at this time.

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                                                
    June 30, 2014                                                                  
    Revenue         96,213   315,971    51,209    39,564           -        502,957
    Operating                                                         
    income
    (loss)(1)      (9,322)    58,714     7,222     3,764    (15,545)         44,833
    Segmented                                                         
    assets         631,664   866,514   167,000   177,939           -      1,843,117
    Capital        (3,528)                                            
    expenditures       (2)    33,199     2,957     2,684           -         35,312
    Goodwill         7,236     2,308       979         -           -         10,523
    Three Months Ended                                                
    June 30, 2013                                                                  
    Revenue         80,719   146,275    37,305    24,402           -        288,701
    Operating                                                         
    income
    (loss)(1)        2,036    25,175     3,357     (966)    (13,295)         16,307
    Segmented                                                         
    assets         655,600   627,853   136,132   162,433           -      1,582,018
    Capital                                                           
    expenditures    28,116    11,349     4,533     2,620           -         46,618
    Goodwill         7,236     2,308       979         -           -         10,523
    Six Months Ended June                                             
    30, 2014                                                                       
    Revenue        363,887   527,010    90,123    69,575           -      1,050,595
    Operating                                                         
    income
    (loss)(1)       43,157    80,391     8,039     9,656    (32,293)        108,950
    Segmented                                                         
    assets         631,664   866,514   167,000   177,939           -      1,843,117
    Capital                                                           
    expenditures    10,169    40,217     6,600     5,657           -         62,643
    Goodwill         7,236     2,308       979         -           -         10,523
    Six Months                                                        
    Ended June
    30, 2013                                                                       
    Revenue        312,295   273,285    74,466    52,052           -        712,098
    Operating                                                         
    income
    (loss)(1)       57,947    43,214     5,347       186    (27,717)         78,977
    Segmented                                                         
    assets         655,600   627,853   136,132   162,433           -      1,582,018
    Capital                                                           
    expenditures    45,407    32,158     6,964     6,078           -         90,607
    Goodwill         7,236     2,308       979         -           -         10,523
              Operating income (loss) is defined as net income (loss)
    (1)       before depreciation, interest, foreign exchange gains or
              losses, gains or losses on disposal of property, plant and
              equipment, and income taxes.
               Negative capital expenditures in the second quarter of 2014
    (2)       were due to equipment built in Canada that was subsequently
              transferred to the United States.
                                                
                                 
                       Three Months Ended June   Six Months Ended June 30,
                       30,
                           2014           2013      2014              2013
    (C$000s)                                                              
    Net income (loss)  (12,848)       (14,939)   (3,428)             9,249
    Add back (deduct):                                                    
      Depreciation       34,422         25,971    67,943            50,785
      Interest           14,470          9,285    29,384            18,488
      Foreign exchange    4,936             86     7,778           (2,293)
      losses (gains)
      (Gain) loss on      (117)           (14)       723             (134)
      disposal of
      property, plant
      and equipment
      Income taxes        3,970        (4,082)     6,550             2,882
    Operating income     44,833         16,307   108,950            78,977
                                                  

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 June 30,   Six Months Ended June 30,
                       2014                2013        2014            2013
    (C$000s)                                                               
    Fracturing      457,942             263,496     961,760         647,641
    Coiled tubing    21,449               9,505      47,922          31,106
    Cementing        20,662              12,414      36,419          24,277
    Other             2,904               3,286       4,494           9,074
                    502,957             288,701   1,050,595         712,098
                                                   

16. SEASONALITY OF OPERATIONS

Certain of 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 $0.125 per common share ($11,806) was declared on June 13, 2014, 
to be paid on July 15, 2014.

A dividend of $0.125 per common share was declared on February 26, 2014 and 
paid on April 15, 2014. Of the total dividend of $11,699, $4,105 was 
reinvested under the DRIP into 245,404 common shares of the Company.

A dividend of $0.125 per common share was declared on December 5, 2013 and 
paid on January 15, 2014. Of the total dividend of $11,575, $4,221 was 
reinvested under the DRIP into 284,224 common shares of the Company.

A dividend of $0.125 per common share was declared on September 17, 2013 and 
paid on October 15, 2013. Of the total dividend of $11,531, $4,282 was 
reinvested under the DRIP into 288,956 common shares of the Company.

A dividend of $0.125 per common share was declared on June 14, 2013 and paid 
on July 15, 2013. Of the total dividend of $11,472, $3,313 was reinvested 
under the DRIP into 223,188 common shares of the Company.

A dividend of $0.125 per common share was declared on February 26, 2013 and 
paid on April 15, 2013. Of the total dividend of $11,375, $3,108 was 
reinvested under the DRIP into 250,048 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/July2014/29/c8891.html 
CO: Calfrac Well Services Ltd.
ST: Alberta
NI: OIL ERN CONF  
-0- Jul/29/2014 10:00 GMT
 
 
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