Calfrac Well Services Ltd Announces it’s Financial and Operating Results for the Three and Six Months Ended June 30, 2015

HIGHLIGHTS

Revenue in the second quarter of 2015 was $319.6 million, a decrease of 36 percent from the same period in 2014. The Company’s fracturing job count decreased by 30 percent due to lower activity in Canada and the United States while consolidated revenue per fracturing job decreased by 12 percent primarily due to significantly lower pricing in Canada and the United States, partially offset by an increase in job size and the appreciation of the U.S. dollar.

Pricing in Canada declined by an average of approximately 20 percent in the second quarter of 2015 from the second quarter of 2014. In the United States, pricing was lower by an average of 30 percent compared to the second quarter of 2014. In Argentina, pricing was down by less than 10 percent as the Company agreed to a pricing reduction during the first quarter of 2015 in light of lower crude oil prices in that market. In Russia, pricing is determined by contract awards which resulted in the Company achieving a nominal pricing increase during the most recent contract renewal process.

Operating loss for the second quarter of 2015 was $7.0 million, a decline of 116 percent from the comparable period in 2014. Operating income as a percentage of revenue was lower by 1,110 basis points compared to the same period last year due to significantly lower pricing in the United States and Canada, and to a lesser extent,Argentina, combined with lower utilization in the United States.

Net loss attributable to shareholders of Calfrac was $43.3 million or $0.45 per share diluted, compared to $12.9 million or $0.14 per share diluted in the same period last year, primarily due to lower pricing for the Company’s fracturing services.

In the second quarter of 2015, Calfrac declared a quarterly dividend of $0.0625 per share.

Revenue in the second quarter of 2015 was $319.6 million, a decrease of 47 percent from the first quarter of 2015. Revenue per fracturing job decreased by 6 percent due to lower pricing in the United States and Canada. The decrease in revenue per fracturing job was partially offset by the completion of larger jobs in the United States, as well as the appreciation of the U.S. dollar. Operating income as a percentage of revenue declined 680 basis points due to lower pricing and activity in the United States and Canada.

Pricing in Canada declined by an average of approximately 10 percent in the second quarter of 2015 from the first quarter of 2015. In the United States, pricing was lower on average by 15 percent than in the first quarter of 2015. In Argentina, pricing was consistent with the previous quarter. In Russia, pricing is determined by contract awards which resulted in the Company achieving a nominal pricing increase during the most recent contract renewal process.

In Canada, revenue declined by 70 percent to $66.9 million in the second quarter of 2015 due to continued pricing pressure combined with the onset of spring break-up conditions. Operating income as a percentage of revenue decreased to negative 9 percent from positive 9 percent due to significantly lower activity related to spring break-up and weaker pricing, offset partially by cost optimization initiatives that were realized during the quarter.

In the United States, revenue in the second quarter of 2015 declined by 43 percent from the first quarter of 2015 to $172.5 million, mainly as a result of lower pricing and activity. The decline was partially offset by the strengthening of the U.S. dollar. Total proppant used declined by 20 percent sequentially while tons per fracturing job increased by 14 percent due to service intensity and changes in geographical job mix. Operating income as a percentage of revenue decreased to a break-even position in the second quarter of 2015 from 4 percent in the previous quarter due to lower pricing but was partially offset by cost reductions.

In Russia, revenue increased to $38.9 million in the second quarter of 2015 from $30.5 million in the first quarter of 2015. The increase resulted from the rouble appreciating 18 percent. Fracturing activity improved by 8 percent due to fewer weather-related disruptions. Operating income as a percentage of revenue increased by 730 basis points to 12 percent due to normal seasonal improvement and the appreciation of the rouble.

In Latin America, revenue declined 5 percent to $41.3 million. The decrease was primarily due to lower activity inMexico. Operating income as a percentage of revenue was consistent at 10 percent.

OUTLOOK
Crude oil prices have weakened in recent months to a price range that is significantly lower than in 2014. As a result, it is anticipated that equipment utilization and pricing in the oilfield services industry will continue to be adversely affected for the remainder of the year and likely into 2016. Industry reports have indicated that North American oil and gas capital spending is down by 35 to 40 percent in 2015 from 2014. The first half of 2015 has demonstrated that customers are taking a very cautious approach in allocating capital and this is expected to continue to keep activity low in the second half of 2015.

Natural gas prices have declined modestly in recent months due to stronger-than-expected supply growth and storage levels returning to around the five-year average. Natural gas liquids pricing, which had been a key factor in natural gas development in Canada and the United States, has declined significantly. The anticipated impact of these developments is a reduction in activity in key natural gas plays in North America in 2015.

Calfrac is endeavoring to restructure its business in order to be profitable in a lower commodity price environment and continues to closely monitor its cost structure for additional savings. The Company is making every effort to protect its best people in order to quickly respond when market conditions improve and also to remain operationally strong over the long-term.

In addition, the Company believes that it is continuing to create a competitive advantage and deliver cost efficiencies through the ongoing implementation of various logistics initiatives despite a further weakening in the Canadian dollar which has increased U.S. dollar-denominated sand and proppant expenses. The logistics group has reduced costs for key products such as proppant and chemicals. Diesel fuel, a key input into operations, has fallen considerably in cost due to the decline in crude oil prices. Third-party trucking costs have also been lowered by attaining pricing concessions and more efficient use of the Company’s internal fleet. The impact of cost saving initiatives implemented across the Company will increase as the year progresses and Calfrac continues to analyze additional measures that it can employ to further lower its cost structure.

CANADA
For the first half of 2015, horizontal well completion activity was significantly lower in 2015 than in the first half of 2014. In 2015, spring break-up arrived earlier than expected due to warm weather conditions through the winter. Activity in the second half of 2015 will depend on the extent of and pace at which oil and natural gas prices recover, however, the Company anticipates activity to be at the lowest levels experienced since 2009. In response, Calfrac has temporarily idled approximately 44 percent of its Canadian fracturing equipment.

Calfrac intends to retain its leadership position in western Canada’s most important natural gas and natural gas liquids plays and expects to be a key participant in their long-term development. However, the weakening of natural gas and natural gas liquids prices is expected to lead to significantly lower activity in the second half of 2015 from the second half of 2014.

Calfrac expects oil-focused activity to be significantly lower for the remainder of 2015 than in 2014. A recovery in oil prices would, however, result in a relatively quick response in activity in the Viking and Cardium plays. The Company believes these plays will be an important component of its growth in the medium to long term.

UNITED STATES
In the United States, the Company anticipates that activity in the third and fourth quarters of 2015 will be lower than the second quarter of the year. Visibility for activity remains limited given the ongoing changes in capital spending plans by the Company’s customers and competitive pricing dynamics. In response to these difficult market conditions and lower levels of activity, Calfrac suspended its fracturing operations in the Fayetteville and will continue to assess the viability of each district in which it currently operates.

Sporadic activity and weak pricing has lead to the Company temporarily idling 40 percent of its fracturing equipment in the United States during the second quarter of 2015 due to margins that are not anticipated to meet the Company’s required financial returns. Calfrac has a plan in place to ensure that the equipment is kept up to its high standards and can be reactivated quickly when industry activity recovers.

RUSSIA
Calfrac expects its activity in Russia in 2015 to be similar to 2014, outside of normal weather-related variability. Calfrac’s participation in unconventional development will be delayed until sanctions applied by Canada, the United States and certain other jurisdictions are removed. The significant devaluation of the Russian rouble will decrease reported 2015 financial results versus 2014. The long-term prospects in Russia, however, remain encouraging as unconventional development has become a pillar of that country’s oil and natural gas growth plans.

LATIN AMERICA
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, such as the equipment delivered in December 2014 and an additional 40,000 horsepower, which is on schedule to be deployed in the latter part of 2015. Calfrac believes that its service quality and technical expertise are contributing to its reputation as a service provider of choice in Argentina, thereby providing the foundation for long-term growth.

In Mexico, Calfrac remains optimistic regarding activity in the longer term as the national reform of the energy industry is proceeding. Calfrac believes this will eventually set the stage for increased capital spending by Pemex and create an avenue for new oil and gas companies to enter Mexico.

DIVIDEND POLICY
Calfrac’s Board of Directors reviews the Company’s dividend policy on a quarterly basis. During the second quarter,Calfrac reduced its quarterly dividend by 50 percent to $0.0625 per share. The Board of Directors will continue to monitor market conditions in order to determine whether further changes to Calfrac’s dividend policy are required.

SUMMARY
The depressed prices for crude oil and natural gas and uncertainty as to the timing of a price recovery are likely to make the remainder of 2015 and early 2016 challenging for the entire industry, but Calfrac believes it has a well-defined strategy to manage the near-term challenges and remains optimistic about its future opportunities. The Company has an experienced Board of Directors and management team that have been through a number of industry downturns leaving Calfrac well positioned to navigate the current cycle. The Company has taken advantage of market opportunities in previous industry downturns to strengthen its operations and competitive position, which has had a positive effect on operational performance when industry activity has recovered. Over the long term, Calfrac believes that the pressure pumping services industry will remain an integral component of unconventional resource development and that the Company’s top-tier safety, service quality, logistics management and technology will serve to generate cost efficiencies for its customers and profitability for Calfrac.

FINANCIAL OVERVIEW – THREE MONTHS ENDED JUNE 30, 2015 VERSUS 2014

CANADA

REVENUE
Revenue from Calfrac’s Canadian operations during the second quarter of 2015 was $66.9 million versus $96.2 million in the same period of 2014. The 30 percent decrease was primarily due to a mix of lower activity and lower pricing for the Company’s fracturing services. Revenue per fracturing job decreased by 9 percent from the same period in the prior year as a result of significant pricing reductions offset partially by the impact of greater service intensity. Total proppant per reported fracturing job increased by 21 percent over the prior year while total proppant used declined by 8 percent. Coiled tubing jobs increased by 9 percent from the prior year due to higher activity in Saskatchewan light oil plays.

OPERATING LOSS
The operating loss in Canada during the second quarter of 2015 was $6.3 million compared to $9.3 million in the same period of 2014. The Company was able to reduce the second quarter loss compared to the same period in 2014 through the implementation of several cost reduction initiatives designed to remain competitive in a lower-price environment. Operating costs were 30 percent lower than in the comparable quarter, which is attributable to the decline in activity combined with the impact of cost savings realized during the quarter. The impact of a weaker Canadian dollar on the cost of proppant and chemicals that are sourced from the United States partially offset the product cost reductions achieved through supply chain initiatives. During the quarter, the Company decided to temporarily idle approximately 177,000 horsepower in Canada rather than operate at margins that do not meet its required financial returns. SG&A expenses declined by 36 percent year-over-year, primarily due to workforce reductions and a lower compensation structure.

REVENUE
Revenue from Calfrac’s United States operations decreased to $172.5 million during the second quarter of 2015 from $316.0 million in the comparable quarter of 2014 due to significantly lower fracturing activity and pricing in south Texas, North Dakota, Arkansas and Pennsylvania. Increased activity in the Rockies partially offset the decline in fracturing activity, resulting in 37 percent fewer fracturing jobs period-over-period. Revenue per job was 15 percent lower year- over-year due to significantly weaker pricing, partially offset by the continued adoption of greater service intensity per job and a stronger U.S. dollar. Proppant per fracturing job increased by 30 percent over the same period in the prior year while total proppant used declined by 5 percent.

OPERATING INCOME (LOSS)
The Company’s United States operations experienced an operating loss of $0.7 million for the second quarter of 2015 compared to operating income of $58.7 million in the same period in 2014. The decline was primarily due to significantly lower pricing and utilization. Operating income as a percentage of revenue declined materially from 19 percent in the second quarter of 2014 to a break-even result in 2015. The decline in the operating income percentage was due to intense pricing competition from many of the Company’s major competitors and lower equipment utilization in south Texas, North Dakota and Pennsylvania. Cost reduction initiatives mitigated the decline in operating income. In addition, Calfrac elected to temporarily idle approximately 279,000 horsepower inthe United States during the quarter, including the decision to suspend its fracturing operations in the Fayettevilleshale gas play in Arkansas. SG&A expenses decreased by 37 percent in the second quarter of 2015 from the same period in the prior year due to cost reduction initiatives that were implemented towards the end of the first quarter, which continued throughout the second quarter.

REVENUE
During the second quarter of 2015, revenue from Calfrac’s Russian operations decreased by 24 percent to $38.9 million from $51.2 million in the corresponding three-month period of 2014. The decrease in revenue, which is generated in roubles, was primarily related to the 25 percent devaluation of the Russian rouble in the second quarter of 2015 from the second quarter of 2014. The decline in the rouble was partially offset by slightly higher fracturing activity across all operating regions, with the exception of the Usinsk region, where warm weather resulted in the demobilization of equipment earlier than in 2014. Revenue per fracturing job declined by 29 percent due to the currency devaluation and lower acid fracturing activity in Usinsk, which typically has larger jobs. Lower coiled tubing activity in the Khanty-Mansiysk region also contributed to the decline in revenue.

OPERATING INCOME
Operating income in Russia was $4.7 million during the second quarter of 2015 compared to $7.2 million in the corresponding period of 2014, the decline being primarily due to the 25 percent devaluation of the rouble.  Operating income as a percentage of revenue declined from 14 percent to 12 percent due to weather-related interruptions in the Usinsk region. SG&A expenses declined by 48 percent in the second quarter of 2015 from the prior year’s quarter due to the impact of the depreciation of the Russian rouble and cost reduction initiatives.

REVENUE
Calfrac’s Latin American operations generated total revenue of $41.3 million during the second quarter of 2015 versus $39.6 million in the comparable three-month period in 2014. The continued growth resulted from an increase in unconventional activity in Argentina, which is more service intensive than conventional work, and thereby drove higher revenue per job. Activity in Mexico was muted during the second quarter of 2015 and offset most of the increase in Argentina revenue. The Company completed its existing commitments in Colombia during the quarter and is in the process of closing operations.

OPERATING INCOME
Operating income in Latin America for the three months ended June 30, 2015 was $4.1 million compared to $3.8 million in the comparative quarter in 2014. Operating income in the second quarter of 2015 was higher due to an increase in unconventional activity in Argentina combined with the impact of cost reduction initiatives in Mexico.

OPERATING LOSS
The 43 percent decline in corporate expenses from the second quarter of 2014 includes a reduction in stock-based compensation expense of $5.2 million resulting from a significant decline in the Company’s stock price at the end of the quarter. In addition, the Company implemented several cost reduction initiatives during the first quarter of 2015 to better align its cost structure with anticipated activity levels. These initiatives contributed approximately$1.5 million to the overall decrease in corporate expenses primarily by reducing corporate personnel costs and annual bonuses.

DEPRECIATION
For the three months ended June 30, 2015, depreciation expense increased by 14.7 percent to $39.5 million from$34.4 million in the corresponding quarter of 2014. The increase was mainly a result of a larger fleet of equipment operating in the United States and, to a lesser extent Canada, combined with a weaker Canadian dollar relative tothe United States dollar.

FOREIGN EXCHANGE LOSSES
The Company recorded a foreign exchange loss of $0.9 million during the second quarter of 2015 versus a loss of$4.9 million in the comparative three-month period of 2014. 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, Russiaand Latin America. The Company’s second-quarter 2015 foreign exchange loss was largely attributable to the translation of U.S. dollar-denominated liabilities held in Argentina as the value of the Argentinean peso depreciated against the U.S. dollar during the second quarter. The foreign exchange loss was partially offset by United Statesdollar-denominated liabilities held in Russia as the rouble appreciated against the U.S. dollar during the second quarter.

INTEREST
The Company’s net interest expense of $16.3 million for the second quarter of 2015 was $1.9 million higher than in the comparable period of 2014. Interest on U.S. dollar-denominated debt was higher due to a weaker Canadian dollar relative to the U.S. dollar. Loans on the Company’s revolving credit facility were consistent with the comparable quarter in 2014.

INCOME TAXES
The Company recorded an income tax recovery of $19.5 million during the second quarter of 2015 compared to an expense of $4.0 million in the comparable period of 2014. The reversal to a recovery was the result of pre-tax losses incurred during the quarter. The effective tax recovery rate was 31 percent during the second quarter of 2015. The 2015 tax recovery is net of $4.3 million of tax adjustments relating to the increased income tax rate inAlberta and income tax adjustments relating to prior periods for Canada, Argentina and Mexico that were recorded during the second quarter.

SUMMARY OF QUARTERLY RESULTS

SEASONALITY OF OPERATIONS
The Company’s North American business is 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 2014 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 exchange rates for United States, Russian, Mexican and Argentinean currency (refer to “Business Risks – Fluctuations in Foreign Exchange Rates” in the 2014 Annual Report).

FINANCIAL OVERVIEW – SIX MONTHS ENDED JUNE 30, 2015 VERSUS 2014

CANADA

REVENUE
Revenue from Calfrac’s Canadian operations during the first six months of 2015 was $288.3 million versus $363.9 million in the same period of 2014. The decrease was primarily due to a mix of lower pricing and lower activity for its fracturing services. Revenue per fracturing job increased by 9 percent from the same period in the prior year due to the completion of larger jobs. Total proppant per reported fracturing job increased by 27 percent over the prior year while total proppant used declined by 7 percent. Coiled tubing jobs decreased by 9 percent from the prior year due to lower integrated activity and less cleanout and milling work prior to spring break-up in 2015.

OPERATING INCOME
Operating income in Canada during the first six months of 2015 was $14.1 million compared to $43.2 million in the same period of 2014. The decrease in operating income was the result of significantly lower pricing and utilization. The impact of a weaker Canadian dollar on the cost of proppant and chemicals that is sourced from the United States also contributed to the reduction in operating income. During the second quarter of 2015, the Company elected to temporarily idle approximately 177,000 horsepower in Canada rather than operate at margins that do not meet its required financial returns. SG&A expenses declined by 47 percent year-over-year, primarily due to workforce reductions and a lower compensation structure combined with a reclassification of $2.9 million of employee costs from SG&A to operating costs during the first six months of 2015.

REVENUE
Revenue from Calfrac’s United States operations decreased to $477.6 million during the first six months of 2015 from $527.0 million in the comparable six-month period of 2014 due to significantly weaker pricing combined with lower fracturing activity. The number of fracturing jobs completed during the first six months of 2015 decreased by 6 percent from the comparable period in 2014, primarily due to lower activity in Arkansas, south Texas andPennsylvania, partially offset by higher activity in the Rockies and North Dakota. Revenue per job was slightly lower year-over-year as weaker pricing was offset by the continued customer adoption of greater service intensity per job and a stronger U.S. dollar. Proppant per fracturing job increased by 18 percent over the same period in the prior year while total proppant used increased by 21 percent.

OPERATING INCOME
Operating income in the United States was $10.7 million for the first six months of 2015, a decrease of 87 percent from the comparative period in 2014. The decline was primarily due to significantly lower pricing in all markets and decreased utilization in the Marcellus and Eagle Ford.  In addition, Calfrac elected to suspend its fracturing operations in the Fayetteville shale play in Arkansas during the second quarter. Operating income as a percentage of revenue declined materially from the comparative period of 2014 to 2 percent. The decline in the operating income percentage was due to the impact of lower pricing combined with lower equipment utilization inPennsylvania, south Texas and Arkansas. Cost reduction initiatives mitigated the decline in operating income. As a result of these difficult market conditions, the Company decided to temporarily idle approximately 279,000 horsepower in the United States during the second quarter rather than operate at margins that do not meet its required financial returns. SG&A expenses decreased by 12 percent in the first six months of 2015 from the same period in the prior year due to cost reduction initiatives that were implemented towards the end of the first quarter, which continued throughout the second quarter.

REVENUE
During the first six months of 2015, revenue from Calfrac’s Russian operations decreased by 23 percent to $69.4 million from $90.1 million in the corresponding six-month period of 2014. The decrease in revenue, which is generated in roubles, was primarily related to the 31 percent devaluation of the rouble in the first six months of 2015 when compared to the same period of 2014. The decline in the rouble was partially offset by higher fracturing activity in the Nefteugansk region. Revenue per fracturing job declined by 29 percent due to the currency devaluation but was partially offset by an increase in average job size and a modest rouble-based pricing increase.

OPERATING INCOME
Operating income in Russia was $6.2 million during the first six months of 2015 compared to $8.0 million in the corresponding period of 2014 primarily due to the 31 percent devaluation of the rouble offset by fewer weather-related interruptions and improved operational leverage. Modest pricing increases also helped maintain the operating income percentage during the period. SG&A expenses declined by 32 percent in the first six months of 2015 from the prior year’s first half due to the devaluation of the rouble.

REVENUE
Calfrac’s Latin American operations generated total revenue of $84.7 million during the first six months of 2015 versus $69.6 million in the comparable six-month period in 2014. The increase resulted from the significant growth in fracturing and coiled tubing activity in Argentina, which included the start-up of a second unconventional crew inDecember 2014. The Company also experienced revenue growth in the Las Heras region, which is more focused on conventional activity. Activity in Mexico was muted during the first six months of 2015.

OPERATING INCOME
Operating income in Latin America for the six months ended June 30, 2015 was $8.5 million compared to $9.7 million in the comparative period in 2014. Operating income was lower due to certain one-time costs and modestly lower pricing in Argentina combined with lower operating income in Mexico. Calfrac is also currently using subcontractors for services such as flowback and well testing more regularly than in the first six months of 2014, which had a negative impact on operating income as a percentage of revenue.

OPERATING LOSS
The 42 percent decline in corporate expenses for the first six months of 2015 compared to the same period in 2014 includes a reduction in stock-based compensation expense of $10.0 million resulting from a significant decline in the Company’s stock price. In addition, the Company implemented several cost reduction initiatives during the first six months of 2015 to align its cost structure with anticipated activity levels. These initiatives contributed approximately $3.6 million to the overall decrease in corporate expenses primarily by reducing corporate personnel costs and annual bonuses.

DEPRECIATION
For the six months ended June 30, 2015, depreciation expense increased by 13 percent to $76.9 million from$67.9 million in the first half of 2014. The increase was mainly a result of a larger fleet of equipment operating inthe United States and, to a lesser extent Canada, combined with a weaker Canadian dollar relative to the United States dollar.

FOREIGN EXCHANGE LOSSES
The Company recorded a foreign exchange loss of $1.7 million during the first six months of 2015 versus a loss of$7.8 million in the comparative six-month period of 2014. 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 andLatin America. The Company’s 2015 foreign exchange loss was largely attributable to the translation of U.S. dollar-denominated liabilities held in Argentina as the value of the Argentinean peso depreciated against the U.S. dollar during 2015. The foreign exchange loss was partially offset by gains on U.S. dollar-denominated assets held inCanada and U.S. dollar- denominated liabilities held in Russia.

INTEREST
The Company’s net interest expense of $32.8 million for the first six months of 2015 was $3.4 million higher than in the comparable period of 2014. Interest on U.S. dollar-denominated debt was higher due to a weaker Canadian dollar relative to the U.S. dollar. Loans on the Company’s revolving credit facility were consistent with the comparable period in 2014.

INCOME TAXES
The Company recorded an income tax recovery of $32.7 million for the first six months of 2015 compared to an expense of $6.6 million in the comparable period of 2014. The reversal to a recovery was the result of pre-tax losses incurred during the period. The effective tax recovery rate was 37 percent during 2015, which is net of $2.8 million of tax adjustments relating to the increased income tax rate in the province of Alberta and income tax adjustments relating to prior periods for Canada, the United States, Argentina and Mexico that were recorded during the period.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES
The Company’s cash provided by operating activities for the three months ended June 30, 2015 was $67.1 millionversus $27.3 million in the comparable quarter in 2014. The increase was primarily due to the reduction of working capital during the quarter offset by lower operating margins in the United States. At June 30, 2015, Calfrac’s working capital was approximately $340.6 million, a 23 percent decrease from December 31, 2014.

FINANCING ACTIVITIES
Net cash used for financing activities for the three months ended June 30, 2015 was $4.6 million compared to$10.0 million provided by financing activities in 2014. During the three months ended June 30, 2015, the Company increased its bank loan in Argentina by $2.7 million, paid cash dividends of $6.5 million, and paid $0.8 million in financing charges.

On October 1, 2014, the Company extended the term of its credit facilities by one year to September 27, 2018. 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. On January 29, 2015, Calfrac exercised the accordion feature of its syndicated credit facility, which increased the total facility from $300.0 million to $400.0 million. The terms and conditions of the facility remained unchanged. The facilities consist of an operating facility of $30.0 million and a syndicated facility of $370.0 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 2.25 percent. For LIBOR-based loans and bankers’ acceptance-based loans, the margin thereon ranges from 1.50 percent to 3.25 percent above the respective base rates. As at June 30, 2015, the Company had used$37.5 million of its credit facilities for letters of credit and had $56.8 million outstanding under its credit facility, leaving $305.7 million in available credit.

The Company’s credit facilities contain certain financial covenants. Weakened market conditions attributable to the significant reduction in the price of oil and natural gas have required some oil and gas service companies to seek covenant relief from their lenders. Although strictly not required, in light of the relief being granted to competitors, prior to the end of  the  second  quarter  Calfrac  negotiated  an  increase  to  certain  of  its  financial  covenants,  as  shown  below.

As at June 30, 2015 the Company was in compliance with its previous and increased financial covenants.

On June 2, 2014, the Company’s common shares were split on a two-for-one basis to shareholders of record as ofMay 23, 2014. Calfrac pays a quarterly dividend to shareholders at the discretion of the Board of Directors. OnJune 17, 2015, the Company reduced its quarterly dividend from $0.125 to $0.0625 per share, beginning with the dividend paid on July 15, 2015. For Canadian income tax purposes, all dividends paid by Calfrac on its common shares are designated as “eligible dividends” unless otherwise indicated.

INVESTING ACTIVITIES
Calfrac’s net cash used for investing activities was $42.4 million for the quarter ended June 30, 2015 versus $42.2 million for the comparable period in 2014. Cash outflows relating to capital expenditures were $45.0 million during 2015 compared to $42.5 million in 2014. Capital expenditures were primarily to support the Company’s Canadian,United States and Argentinean fracturing operations.

Calfrac’s 2015 capital program of $227.0 million includes carryover from 2014 of approximately $175.0 million. The Company’s 2015 capital budget of $52.0 million will be used for sustaining, infrastructure and maintenance initiatives.

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 2015 was a loss of $5.4 million versus $7.4 million during 2014. These losses relate to cash and cash equivalents held by the Company in a foreign currency.

With its strong 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 2015 and beyond.

At June 30, 2015, the Company had cash and cash equivalents of $65.9 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 24, 2015, there were 96,087,123 common shares issued and outstanding, and 5,543,874 options to purchase common shares.

The Company’s Dividend Reinvestment Plan allows shareholders to direct cash dividends paid on all or a portion of their common shares to be reinvested in additional common shares that will be issued at 95 percent of the volume- weighted average price of the common shares traded on the Toronto Stock Exchange (TSX) during the last five trading days preceding the relevant dividend payment date.

ADVISORIES
FORWARD-LOOKING STATEMENTS
In order to provide Calfrac shareholders and potential investors with information regarding the Company and its subsidiaries, including management’s assessment of Calfrac’s plans and future operations, certain statements contained in this press release, including statements that contain words such as “seek”, “anticipate”, “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 and targets, capital expenditure programs, future financial resources, anticipated equipment utilization levels, future oil and natural gas well activity in each of the Company’s operating jurisdictions, results of acquisitions, the impact of environmental regulations and economic reforms and sanctions 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 (including the Greek and U.S. litigation), 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 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 increasing the use of 24-hour operations in North America, the effectiveness of the cost reduction measures instituted by the Company in response to the significant decrease in commodity prices and expected oilfield activity in 2015, the effect unconventional gas projects have had on supply and demand fundamentals for natural gas and the likelihood that the current tax and regulatory regime will remain substantially unchanged.

Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. Such risk factors include: general economic conditions in Canada, the United States, Russia, Mexico, Argentina and Colombia; the demand for fracturing and other stimulation services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; regional competition; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; changes in legislation and the regulatory environment; sourcing, pricing and availability of raw materials, components, 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” above.

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 – 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1E3, or at www.calfrac.com, or by facsimile at 403-266-7381.

NON-GAAP MEASURES
Operating Income in this press release does not have any standardized meaning as prescribed under IFRS and is therefore considered a non-GAAP measure. This measure may not be comparable to similar measures presented by other entities. This measure has 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 Operating Income has been disclosed further in this press release as where it is 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 2015 second quarter results at 10:00 a.m. (Mountain Time) on Wednesday, July 29, 2015. 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 68635238). A webcast of the conference call may be accessed via the Company’s website atwww.calfrac.com.

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As at and for the three and six months ended June 30, 2015 and 2014
(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 – 8th 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, 2014. The Company has consistently applied the same accounting policies throughout all periods presented, as if these policies were always in effect.

These financial statements were approved by the Audit Committee of the Board of Directors for issuance on July 28, 2015.

2.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These condensed consolidated interim 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 LOANS

The Company’s Argentinean subsidiary has two operating lines of credit, and a total of ARS176,200 ($24,216) was drawn at June 30, 2015 (December 31, 2014 – ARS120,792 ($16,388)). The interest rate ranges from 24.0 percent to 48.0 percent per annum and both lines of credit are secured by letters of credit issued by the Company.

4.        LONG-TERM DEBT

The fair value of the senior unsecured notes, as measured based on the closing quoted market price at June 30, 2015, was $691,996 (December 31, 2014 – $595,131). The carrying values of the mortgage obligation, bank loans and revolving term loan 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 $370,000 revolving term loan 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 2.25 percent. For LIBOR-based loans and bankers’ acceptance-based loans the margin thereon ranges from 1.50 percent to 3.25 percent above the respective base rates for such loans. The facility is repayable on or before its maturity ofSeptember 27, 2018, 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, 2015 was $30,771 (six months ended June 30, 2014 – $26,523).

The Company also has an extendible operating loan facility, which includes overdraft protection in the amount of$30,000. The interest rate is based on the parameters of certain bank covenants in the same fashion as the revolving term facility. Drawdowns under this facility are repayable on September 27, 2018, 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 revolving term loan and operating facilities are secured by the Company’s Canadian and U.S. assets.

On January 29, 2015, the Company exercised an “accordion” feature contained in the terms of its loan facility and increased the facility from $300,000 to $400,000. The facility’s terms and conditions remain unchanged.

At June 30, 2015, the Company had utilized $37,439 of its loan facility for letters of credit and had $56,830outstanding under its revolving term loan facility, leaving $305,731 in available credit.

5.        FINANCE LEASE OBLIGATIONS

The carrying values of the finance lease obligations in Argentina approximate their fair values as the interest rates are not significantly different from current rates for similar leases in Argentina.

6.         CAPITAL STOCK

Authorized capital stock consists of an unlimited number of common shares.