Calfrac revenue doubles as oil price rebound

On Tuesday, Calgary-based Calfrac Well Services Ltd. reported it more than doubled its first-quarter revenue compared with the same period last year and is reactivating equipment it parked over the past three years.

Meanwhile, both Calfrac and its crosstown rival, Trican Well Service Ltd., have been rehiring.

According to disclosure documents, Calfrac added 1,000 employees in 2017 to take its total to 3,800 at year-end and Trican hired almost 900 people to jump to 2,067 staff.

Calfrac Well Services Ltd. (the “Corporation”) is incorporated under the Business Corporations Act (Alberta). The
head office of the Corporation is located at 411 – 8th Avenue S.W., Calgary, Alberta T2P 1E3 and the registered office
of the Corporation is located at 4500, 855 – 2nd Street S.W., Calgary, Alberta T2P 4K7.

For the Corporation, 2017 was a year of transition and significant growth. The fundamentals of the Corporation’s
business improved throughout the year and that has set the stage for strong performance in 2018. At the global level,
oil inventories continue to normalize due to production cuts by the Organization of Petroleum Exporting Countries
(“OPEC”) and non-OPEC players, and with robust demand growth globally, oil prices have reset closer to the level
needed to balance the market.

The cash flows and spending of the Corporation’s customer base also improved rapidly
through 2017, and is expected to continue growing in 2018. This higher level of investment drove a rapid reactivation
of the Corporation’s equipment, especially in the United States, where the Corporation grew from three active fleets
in late 2016 to 14 fleets today.

The Corporation’s 2018 capital program is anticipated to be approximately $132 million, comprised of $104 million
of maintenance capital, $22 million in refurbishment capital and $6 million in corporate initiatives.

Fracturing Services. The principal focus of the Corporation’s business is the provision of hydraulic fracturing services
to oil and natural gas exploration and production companies. The objective of hydraulic fracturing is to increase the conductivity of an oil or natural gas zone within a reservoir to the wellbore, thus increasing the flow of hydrocarbons,
allowing a greater proportion of hydrocarbons to be extracted or produced from that zone. The completion of
“unconventional reservoirs”, including unconventional oil and gas shales, siltstones, mudstones and other traditionally
bypassed reservoirs is a technically and operationally challenging segment of the hydraulic fracturing market that is
characterized by increasing numbers of horizontal wells, multi-stage fracture treatments and elevated proppant and
pumping pressure demands. The Corporation has become a leading service provider in the deeper, more technically
challenging plays in Alberta, northeast British Columbia, Saskatchewan, Colorado, North Dakota, Montana, Utah,
Arkansas, Ohio, Pennsylvania, Wyoming, West Virginia, Texas and New Mexico by offering innovative equipment,
technology solutions and highly trained personnel to execute these difficult projects.

As of December 31, 2017, the Corporation’s HP fleet consisted of:

– approximately 420,000 HP in Canada, of which approximately 277,000 HP is active and
approximately 143,000 HP has been temporarily idled;
– approximately 783,000 HP in the United States, of which approximately 653,000 HP is active and
approximately 130,000 HP has been temporarily idled;
– approximately 77,000 HP in Russia, all of which is active;
– approximately 108,000 HP in Argentina, all of which is active; and
– approximately 7,000 HP in Mexico, all of which is idle.

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