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Calfrac shares fall on Q4 results miss, cautious outlook

Calfrac shares fall on Q4 results miss, cautious outlook

Shares of Calfrac Well Services (TSE:CFW) slumped Tuesday, after it reported fourth quarter results that missed views on a drop in drilling activity and weak natural gas prices, and provided a cautious outlook for the first half of 2013.

The company also announced that its annual $1.00 per share dividend will be paid quarterly beginning in March.

Calfrac’s stock fell 6.22 per cent as at about 11:15 a.m. EDT, trading at $24.58. 

For the quarter that ended December 31, the specialized oilfield services provider posted net earnings of $11.2 million or 25 cents per diluted share, compared to net income of $78.9 million or $1.79 per diluted share a year earlier.

Calfrac noted that the latest quarter included a $3.8 million foreign exchange gain, compared to an unrealized foreign exchange loss of $1.0 million in the year-ago period. 

Earnings before exchange gains or losses stood at $8.07 million or 18 cents per diluted share, compared to $78.38 million or $1.78 per diluted share a year earlier.

Sales came in at $367.5 million, a decrease of 25 per cent from the $490 million recorded a year earlier.

Calfrac said the decline was primarily a result of lower pricing in the U.S., combined with reduced activity in Canada and the U.S., which was due to lower overall drilling and completion activity on account of weakness in natural gas prices. 

The company noted that the decline in Canada and the U.S. was partially offset by “strong growth” in its Latin American operations.

Analysts polled by Thomson Reuters expected per share earnings of 31 cents on $398.06 million in sales.

Revenue from Calfrac's Canadian operations stood at $201.5 million, versus $237.2 million in the comparable period of 2011, on account of an overall decline in natural gas drilling and completions activity in the Western Canada Sedimentary Basin. 

The average number of active drilling rigs in western Canada fell 28 per cent in the fourth quarter.

Calfrac's U.S. operations saw revenues fall 46 per cent to $110.0 million from $202.5 million a year earlier, mostly a result of a “significant reduction” in equipment utilization and increased pricing pressure. 

In Russia, revenue fell by 21 per cent to $24.2 million from $30.7 million a year ago, due to smaller job sizes and severe winter conditions.

Calfrac’s Latin America operations, meanwhile, saw revenues rise 63 per cent to $31.7 million from $19.5 million in the year-ago quarter due to higher fracturing activity and pricing, larger job sizes and the start-up of multi-stage fracturing jobs in Mexico, it said.

Gross margin narrowed sharply to 12.4 per cent from 30.7 per cent a year ago. 

Looking ahead, Calfrac said with a mild winter in North America tempering natural gas price recovery and therefore gas-related drilling, combined with a relatively stable oil-focused rig count in North America, it is taking a conservative approach to the first half of 2013. 

Its 2013 capital budget has been reduced by $43.0 million to $74.0 million, of which $20.0 million is expected to be carried over into 2014. 

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September 24 2015
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