Calfrac revenue doubles as oil price rebound puts fracking crews back on job

CALGARY _ Higher oil prices are helping energy producers to pull the Canadian well completion business out of the deep funk it entered after the crude price crunch of 2014.

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.

By comparison, Calfrac had 4,900 employees and Trican had 6,741 at the end of 2014.

“Thinking back to 2016, everyone was concerned for their jobs and the future of the company and industry,” said Scott Treadwell, Calfrac’s vice-president of capital markets and strategy.

“There’s been a lot of hard work to execute the turnaround over the last 18 months.”

During the first quarter, Calfrac said it reactivated an eighth hydraulic fracturing unit in Canada and a 16th in the United States, while moving another unit from Canada to the U.S. to take advantage of brighter prospects there.

Hydraulic fracturing or “fracking” involves injecting liquids, sand and chemicals under high pressure to break apart tight rock formations underground to allow more oil and gas to escape into the well.

Calfrac remains cautious about the outlook going forward but it might consider building new equipment later this year if market signals remain positive, said CEO Fernando Aguilar on a conference call on Tuesday.

“On a year-over-year basis, the frack business in general is looking quite a bit better,” said Greg Colman, an analyst with National Bank Financial.

National Bank is forecasting that the U.S. fracking fleet will grow by about three million horsepower to 16 million to 17 million horsepower this year.

In Canada, where about 1.3 million horsepower is active out of about two million horsepower in the fleet, little change is expected.

“We are aware the U.S. market is activating a lot of horsepower, more than Canada,” said Colman.

“Canada’s supply is actually decreasing a little bit because people are taking horsepower out of Canada, so we’re not too sure how that plays out.”

Calfrac reported revenue of $583 million in the three months ended March 31, up 117 per cent over the $269 million it brought in a year earlier.

It says its net income was $1.9 million or one cent per share versus a loss of $21.7 million or 16 cents per share a year earlier.