CALGARY, Aug. 6 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the
Company") (TSX-CFW) announces its financial and operating results for the
three months and six months ended June 30, 2009 and expansion program.
HIGHLIGHTS
-------------------------------------------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
(000s, except ($) ($) (%) ($) ($) (%)
per share and
unit data)
(unaudited)
Financial
Revenue 104,727 94,657 11 285,115 240,283 19
Operating
income
(loss)(1) 4,052 (1,008) 502 31,479 28,469 11
Net loss (14,770) (15,469) 5 (9,242) (1,200) (670)
Per share
- basic (0.39) (0.41) 5 (0.24) (0.03) (700)
Per share
- diluted (0.39) (0.41) 5 (0.24) (0.03) (700)
Funds
provided by
operations(2) 128 (9) - 22,841 28,780 (21)
Per share
- basic - - - 0.61 0.77 (21)
Per share
- diluted - - - 0.61 0.77 (21)
EBITDA(3) 4,340 (813) 634 30,285 30,234 -
Per share
- basic 0.11 (0.02) 650 0.80 0.81 (1)
Per share
- diluted 0.11 (0.02) 650 0.80 0.80 -
Working capital
(end of
period) 111,864 94,056 19 111,864 94,056 19
Shareholders'
equity (end
of period) 380,515 364,068 5 380,515 364,068 5
Weighted
average common
Shares
outstanding
(No.)
Basic 37,742 37,728 - 37,742 37,558 -
Diluted 37,742 37,952 (1) 37,742 37,598 -
-------------------------------------------------------------------------
Operating (end
of period)
Pumping
horsepower
(000s) 319 255 25
Coiled tubing
units (No.) 18 18 -
Cementing
units (No.) 20 17 18
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Operating income is defined as net income (loss) plus depreciation,
interest, equity share of net income from long-term investments,
foreign exchange gains or losses, gains or losses on disposal of
capital assets, income taxes and non-controlling interest. 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 generally
accepted accounting principles ("GAAP") and, accordingly, may not be
comparable to similar measures used by other companies.
(2) Funds provided by operations is defined as cash provided by operating
activities before the net change in non-cash operating assets and
liabilities. Funds provided by operations is a measure that provides
shareholders and potential investors with additional information
regarding the Company's liquidity and its ability to generate funds
to finance its operations. Management utilizes this measure to assess
the Company's ability to finance operating activities and capital
expenditures. Funds provided by operations is a measure that does not
have any standardized meaning prescribed under GAAP and, accordingly,
may not be comparable to similar measures used by other companies.
(3) EBITDA is defined as net income (loss) before interest, taxes,
depreciation, amortization and non-controlling interest. EBITDA is
presented because it is frequently used by securities analysts and
others for evaluating companies and their ability to service debt.
EBITDA is a measure that does not have any standardized meaning
prescribed under GAAP and, accordingly, may not be comparable to
similar measures used by other companies.
PRESIDENT'S MESSAGE
I am pleased to present Calfrac's operating and financial highlights for
the three and six months ended June 30, 2009 and discuss our prospects for the
remainder of the year. During the second quarter, our Company:
- achieved record levels of fracturing and coiled tubing activity in
Western Siberia with increased revenue and improved margins;
- commenced fracturing operations in the Chicontepec region of Mexico;
- experienced strong levels of fracturing and cementing activity in the
Fayetteville shale play in Arkansas;
- continued to improve its strong Environment, Health and Safety (EH&S)
system through the introduction of several new safety initiatives
such as the Job Safety Analysis program;
- received an award for outstanding safety performance by a major oil
and natural gas producer in southern Alberta;
- concluded a thorough assessment of the workforce in order to assemble
and retain the strongest possible teams;
- suspended primary cementing operations in western Canada and began
redeploying equipment and personnel to the United States and Mexico
during the third quarter; and
- completed cost reduction measures in Canada and the United States
through workforce planning which resulted in additional restructuring
costs of $0.6 million in the second quarter and a total reduction in
Canadian and United States personnel of approximately 30 percent with
an estimated cost savings in excess of $2.0 million per month.
Financial Highlights
-------------------------------------------------------------------------
For the three months ended June 30, 2009, the Company generated:
- revenue of $104.7 million, an increase of 11 percent from the second
quarter of 2008;
- operating income of $4.1 million versus an operating loss of
$1.0 million in the comparable period in 2008; and
- a net loss of $14.8 million or $0.39 per share compared to
$15.5 million or $0.41 per share in the same period in 2008.
For the six months ended June 30, 2009, the Company's results included:
- revenue of $285.1 million, an increase of 19 percent from 2008;
- a net loss of $9.2 million or $0.24 per share compared to
$1.2 million or $0.03 per share in the same period in 2008;
- funds provided by operations of $22.8 million or $0.61 per share
versus $28.8 million or $0.77 per share in the same quarter of 2008;
and
- working capital of $111.9 million and $60.0 million of unutilized
credit facilities at the end of the quarter.
Overall Calfrac continues to benefit from its solid presence in several
key North American unconventional resource plays, where drilling activity
remains relatively strong and revenue per job is high, as well as the positive
momentum achieved in its international markets.
Operational Highlights
-------------------------------------------------------------------------
Canada
During the second quarter, the Company's fracturing and coiled tubing
activity in western Canada was concentrated in the Horn River unconventional
natural gas resource play located in northeast British Columbia. The low
natural gas price environment plus normal spring break-up weather conditions
significantly reduced shallow gas and coalbed methane activity levels in
central and southern Alberta. In April, Calfrac suspended its primary
cementing operations in Canada and commenced transferring equipment and
personnel to other international operating regions. The cost rationalization
measures instituted early in the second quarter helped to mitigate the
financial impact of the market slowdown.
United States
Fracturing and cementing activity levels in Arkansas remained strong
during the second quarter; however, competitive pricing pressures negatively
impacted operating income on a sequential quarterly basis. The low price
environment for natural gas continued to significantly impact fracturing
activity levels in the Rocky Mountain region. In response to these
deteriorating market conditions, the Company transferred personnel and
equipment into Arkansas, after having realigned its cost structure during the
first quarter.
Russia
In Russia, fracturing and coiled tubing activity levels reached record
levels, which resulted in strong financial performance from this geographic
segment. The reported Canadian dollar financial results, however, were
negatively impacted by a 15 percent decline in the value of the Russian rouble
from the second quarter of 2008. The five annual contracts signed during the
first quarter are expected to sustain the current high level of equipment
utilization throughout the remainder of the year.
Mexico
The completion of a greater number of larger and more technically
demanding jobs in the Burgos field and the commencement of fracturing
operations in the Chicontepec region during May, where the Company began
introducing a new technology to Pemex, resulted in a significant improvement
in year-over-year financial performance in Mexico. The Company expects this
positive momentum to continue throughout the year.
Argentina
During the second quarter, activity levels for the Company's cementing
operations in Argentina reached record levels, resulting in improved financial
performance from this geographic market. The Company used a conservative
approach in entering this new market during the second quarter of 2008 and
continues to develop new market opportunities as the Argentina business
environment improves.
Corporate
The Company continued to focus on improving its strong EH&S systems by
introducing several initiatives to enhance safe work practices such as Job
Safety Analysis. This program is aligned with the EH&S programs of some of our
major customers and mandates a review of potential site hazards before any job
is performed. During the second quarter, Calfrac was recognized by a major oil
and natural gas producer for its long-standing superior safety performance.
Calfrac's People Strategy places a strong emphasis on workforce planning,
as understanding current and future staffing needs is essential to meeting
customer expectations. In the second quarter, Calfrac conducted a thorough
assessment of its workforce. Its aim was to assemble and retain the strongest
possible teams as we managed through the current economic downturn. The result
was a workforce reduction in Canada and the United States of approximately 30
percent. Since this reduction, our turnover rate has declined to a very low
level and the quality of our service has continually improved. Additionally,
we recently launched a new benefits plan for Canadian employees to provide
more choice and enhanced coverage for them and their families on a cost
neutral basis to the Company.
Outlook and Business Prospects
-------------------------------------------------------------------------
The global economic recession has lowered the demand for oil and natural
gas which has led to a significant decline in drilling activity as well as
increased price competition for pressure pumping services in Canada and the
United States. North American natural gas prices are anticipated to remain low
for the near term. In response to these adverse market conditions, the Company
thoroughly realigned its cost structure through significant workforce
reductions in Canada and the United States, wage and retirement contribution
rollbacks as well as cuts to discretionary operating expenses. The Company
also suspended primary cementing operations in the Canadian market during
April and is currently redeploying a good portion of these assets into more
active international markets. These measures have contributed to maintaining
the Company's strong financial foundation entering the third quarter,
including a 19 percent year-over-year increase in working capital to
approximately $112 million.
Fracturing and coiled tubing activity levels in Canada are highly
uncertain but are anticipated to improve as the year progresses. To date in
the third quarter of 2009, activity levels in northwest Alberta, northeast
British Columbia and southeast Saskatchewan are increasing as certain oil and
natural gas producers increase their focus on unconventional drilling in the
Montney, Horn River and Bakken resource plays. Most recently the Company
completed a large scale operation for a major oil and natural gas company in
the Horn River region as the general contractor employing an array of multiple
services in record time with major cost savings to the customer. These wells
are typically drilled horizontally and require multiple fractures and large
pumping horsepower. Each such well has many times the revenue impact to
Calfrac as compared to conventional well completion methods.
In the United States, fracturing and cementing activity in the
Fayetteville shale play of Arkansas is expected to remain relatively strong
throughout the remainder of 2009, thanks to strong rates of return on these
highly productive wells. While the Company has experienced significant pricing
pressure in this market, Calfrac believes that pricing has stabilized.
Fracturing activity in the Rocky Mountains region is expected to remain low
until natural gas prices increase significantly due to the typically
higher-cost nature of the natural gas pools drilled in this region.
Consequently, Calfrac reduced its workforce in Colorado and redeployed
equipment and certain key personnel to our operations district in Beebe,
Arkansas. Additional cementing assets were transferred to this region with the
demand increase for the Company's cementing technologies.
As a result of annual contracts signed with two of Russia's largest oil
and natural gas companies, Calfrac expects that its fracturing and coiled
tubing equipment fleet will remain highly utilized throughout 2009. The higher
equipment utilization has resulted in increased operating efficiencies which
are expected to maintain Calfrac's financial performance in this region at
strong levels of operating income as a percentage of revenue.
In May, the Company commenced fracturing operations in Poza Rica, Mexico
servicing the Chicontepec oil and natural gas field for Pemex. During the
third quarter, Calfrac commenced cementing operations by redeploying four
cementing crews including bulk transportation and mixing plant equipment with
related infrastructure from Canada into the Chicontepec region, thus
diversifying its pressure pumping operations in Mexico. This expansion is
anticipated to lead to higher levels of overall equipment utilization and to
improve this geographic segment's financial performance.
In Argentina, Calfrac plans to add a third cementing unit during the
third quarter of 2009 to meet increasing customer demand in this market. The
Company's Latin America management team will continue to evaluate
opportunities to broaden the scale of these operations and continue to support
the growth in Mexico.
Calfrac is pleased to announce that the Company recently entered into an
agreement to purchase the fracturing assets of a U.S. competitor, Pure Energy
Services, for a total purchase price of approximately $42.8 million. This
price represents a discount to net book value and replacement cost. The assets
include approximately 45,000 of pumping horsepower, high-rate blenders, and
related sand handling equipment. The Company will also acquire certain land
and a rail spur associated with these operations. In addition to this
acquisition, Calfrac is also pleased to announce that its Board of Directors
has approved a $26 million increase to the 2009 capital budget for a revised
total of $41 million. The total approved capital budget for 2009, including
$20 million of carryforward capital from 2008, is now $61 million. The
combination of this asset acquisition and the increment to the capital budget
will allow Calfrac to further expand its geographical footprint in the U.S.
pressure pumping market as well as supplement the Company's fracturing and
coiled tubing equipment fleet for its growing markets within Canada, Russia
and Mexico. In Canada, Calfrac will augment its horsepower capabilities and
expand its deep coiled tubing equipment fleet as the Company continues to gain
a larger presence servicing Canada's unconventional natural gas resource
plays. The increase in the 2009 capital program will also focus on further
expansion opportunities in both Russia and Mexico. The capital allocated to
Russia will target expanding our coiled tubing fleet while Mexican capital
will facilitate the commencement of cementing operations as well as increase
Calfrac's presence in the Mexican fracturing market. These additional capital
expenditures are expected to be funded from the Company's cash on hand, funds
provided by operations and available credit facilities.
The Company is currently in negotiations with its lenders regarding its
credit facilities. The Company expects to conclude this process in the next
few weeks.
Overall, short-term demand for pressure pumping services remains
uncertain, particularly in North America. Calfrac's long-term outlook for the
pressure pumping industry, however, remains strong. Calfrac has extensively
rationalized its cost structure and improved its operating efficiencies.
Calfrac's geographical diversification continues to benefit the Company. The
Company believes that the improving financial performance of its international
segments can be extended. The Company is confident that it can maintain its
strong balance sheet and will strive to best execute its strategy through
these difficult market conditions. Calfrac believes that the strengths of its
business model and its conservative approach to the current economic
challenges leave it well-positioned to capitalize on future opportunities.
On behalf of the Board of Directors,
Douglas R. Ramsay
President & Chief Executive Officer
August 6, 2009
2009 Overview
-------------------------------------------------------------------------
In the second quarter of 2009, the Company:
- increased revenue by 11 percent to $104.7 million from $94.7 million
in the second quarter of 2008;
- reported a net loss of $14.8 million or $0.39 per share compared to a
net loss of $15.5 million or $0.41 per share in the comparable 2008
period;
- suspended primary cementing operations in Canada and began
redeploying a significant portion of this equipment into the United
States and Latin America during the third quarter;
- completed cost reduction measures in Canada and incurred an
additional $0.6 million of restructuring costs during the second
quarter of 2009; and
- recorded a foreign exchange loss of $0.5 million versus a foreign
exchange gain of $0.1 million in the comparable period of 2008.
For the six months ended June 30, 2009 the Company:
- increased revenue by 19 percent to $285.1 million from $240.3 million
in the comparative period in 2008;
- reported a net loss of $9.2 million or $0.24 per share compared to a
net loss of $1.2 million or $0.03 per share in the comparable 2008
period;
- incurred capital expenditures of $25.7 million primarily to bolster
the Company's fracturing equipment fleet;
- combined Calfrac's Mexico and Argentina operations under an
experienced management team to form a new Latin America division;
- initiated cost reduction measures in Canada and the United States
through workforce planning which resulted in restructuring costs of
$1.5 million during the first six months of 2009 and a 30 percent
reduction in personnel; and
- incurred a foreign exchange loss of $2.1 million versus a foreign
exchange gain of $1.5 million in the comparable period of 2008.
Financial Overview - Three Months Ended June 30, 2009 Versus 2008
-------------------------------------------------------------------------
Canada
-------------------------------------------------------------------------
Three Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 26,529 32,231 (18)
Expenses
Operating 25,632 38,744 (34)
Selling, General and
Administrative (SG&A) 2,217 2,299 (4)
-------------------------------
27,849 41,043 (32)
-------------------------------
Operating loss(1) (1,320) (8,812) 85
Operating loss (%) -5.0% -27.3% 82
Fracturing revenue per job ($) 153,680 60,792 153
Number of fracturing jobs 143 444 (68)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Revenue
Revenue from Calfrac's Canadian operations during the second quarter of
2009 decreased by 18 percent to $26.5 million from $32.2 million in the
comparable three-month period of 2008. Canadian fracturing revenue for the
quarter totalled $22.0 million, a decrease of 19 percent from the $27.0
million generated in the corresponding quarter of 2008. The Company completed
143 Canadian fracturing jobs for average revenue of $153,680 per job in the
second quarter of 2009 compared to 444 jobs for average revenue of $60,792 per
job in the comparable period of 2008. The higher average revenue per job was
primarily due to an increase in the proportion of larger jobs completed in the
Horn River unconventional resource plays located in northeast British
Columbia, combined with fewer lower-revenue fracturing jobs being completed in
the shallow gas market of southern Alberta.
Revenue from the Company's coiled tubing operations in western Canada
increased by $0.4 million from the comparable period in 2008 to $3.8 million
in the second quarter of 2009. During this period Calfrac completed 147 jobs
for average revenue of $25,661 per job compared to 275 jobs for average
revenue of $12,374 per job in the comparable quarter of 2008. The increase in
the average revenue per job was due primarily to an increase in activity in
the deeper reservoirs of western Canada which generates fewer but
higher-revenue jobs, as well as to a reduction in coiled tubing activity in
the shallow gas-producing regions of southern Alberta, which normally generate
a high number of lower-revenue jobs.
Calfrac's Canadian cementing operations during the second quarter of 2009
realized revenue of $0.8 million, a decrease of 57 percent from the $1.8
million recorded in the corresponding quarter of 2008. For the three months
ended June 30, 2009, the Company completed 38 jobs for average revenue of
$20,556 per job, compared to 166 jobs for average revenue of $11,062 per job
in the comparative period of 2008. The increase in average revenue per job was
due primarily to a higher proportion of jobs being completed in the deeper
basins of western Canada, offset slightly by competitive pricing pressures.
The steep decline in the number of jobs completed was due mainly to the
Company suspending its primary cementing operations in Canada during April
2009.
Operating Expenses
Operating expenses in Canada decreased by 34 percent to $25.6 million
during the second quarter of 2009 from $38.7 million in the same period of
2008. The decrease in Canadian operating expenses was mainly due to higher
than normal equipment repair, transportation and personnel expenses during the
second quarter of 2008 offset partially by restructuring costs of $0.6 million
in 2009.
SG&A Expenses
SG&A expenses for Calfrac's Canadian operations were $2.2 million during
the second quarter of 2009 versus $2.3 million in the corresponding period of
2008.
United States
-------------------------------------------------------------------------
Three Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 42,954 41,767 3
Expenses
Operating 41,792 29,810 40
SG&A 1,595 1,688 (6)
-------------------------------
43,387 31,498 38
-------------------------------
Operating income (loss)(1) (433) 10,269 (104)
Operating income (loss) (%) -1.0% 24.6% (104)
Fracturing revenue per job ($) 78,911 56,820 39
Number of fracturing jobs 497 693 (28)
Cdn$/US$ average exchange rate(2) 1.1670 1.0080 16
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Revenue from Calfrac's United States operations increased during the
second quarter of 2009 to $43.0 million from $41.8 million in the comparable
quarter of 2008. In the second quarter of 2009, the Company completed 497
fracturing jobs in the United States for average revenue of $78,911 per job
compared to 693 jobs for average revenue of $56,820 per job in the second
quarter of 2008. The increases in United States revenue and revenue per job
were due primarily to higher fracturing activity levels and larger job sizes
in Arkansas combined with the appreciation in the value of the United States
dollar, offset partially by lower fracturing activity levels in Colorado and
competitive pricing pressures.
During the second quarter of 2009, revenue from Calfrac's cementing
operations in the United States was $3.7 million, an increase of 56 percent
from the corresponding quarter of 2008. For the three months ended June 30,
2009, the Company completed 207 jobs for average revenue of $18,046 per job,
compared to 187 jobs for average revenue of $12,785 per job in the comparative
period of 2008. The increase in average revenue per job was due primarily to
the completion of a higher proportion of long-string cementing jobs in
Arkansas and the appreciation of the U.S. dollar.
Operating Expenses
Operating expenses in the United States were $41.8 million for the second
quarter of 2009, an increase of 40 percent from the comparative period in 2008
primarily due to the impact of the higher value of the United States dollar,
increased usage of proppant resulting from the completion of larger fracturing
jobs, higher equipment repair expenses as well as higher operating costs
related to the increased scale and activity levels of the Company's cementing
operations in Arkansas.
SG&A Expenses
SG&A expenses in the United States during the second quarter of 2009
decreased by 6 percent from the comparable period in 2008 to $1.6 million
primarily due to lower personnel costs, offset partially by the appreciation
in the value of the United States dollar.
Russia
-------------------------------------------------------------------------
Three Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 19,193 15,057 27
Expenses
Operating 11,719 11,009 6
SG&A 881 1,019 (14)
-------------------------------
12,600 12,028 5
-------------------------------
Operating income(1) 6,593 3,029 118
Operating income (%) 34.4% 20.1% 71
Fracturing revenue per job ($) 76,419 135,997 (44)
Number of fracturing jobs 157 59 166
Cdn$/rouble average exchange rate(2) 0.0363 0.0427 (15)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
During the second quarter of 2009, the Company's revenue from Russian
operations increased by 27 percent to $19.2 million from $15.1 million in the
corresponding three-month period of 2008. Fracturing revenue in the second
quarter of 2009 was $12.0 million versus $8.0 million in the corresponding
quarter of 2008. In the second quarter of 2009, the Company completed 157
Russian fracturing jobs for average revenue of $76,419 per job compared to 59
jobs for average revenue of $135,997 per job in the comparable period of 2008.
Revenue from the Company's coiled tubing operations in Western Siberia
during the second quarter of 2009 increased slightly to $7.2 million from $7.0
million in the comparable period of 2008. During this period, Calfrac
completed 156 jobs for average revenue of $46,124 per job compared to 119 jobs
for average revenue of $59,102 per job in the comparable quarter of 2008.
In Russia, fracturing and coiled tubing revenue per job for the three
months ended June 30, 2009 decreased from the comparable period in 2008 mainly
due to smaller job sizes, lower annual contract pricing and the depreciation
of the Russian rouble by 15 percent versus the Canadian dollar. Total revenue
during the second quarter of 2009 was higher than the comparative three-month
period in 2008 primarily due to the impact of the above-noted items being
offset by higher fracturing and coiled tubing activity levels.
Operating Expenses
Operating expenses in Russia in the second quarter of 2009 were $11.7
million compared to $11.0 million in the corresponding period of 2008. The
increase in operating expenses was primarily due to higher personnel costs
offset partially by the depreciation in the Russian rouble against the
Canadian dollar.
SG&A Expenses
SG&A expenses in Russia were $0.9 million for the three-month period
ended June 30, 2009 versus $1.0 million in the same quarter of 2008. The
decrease was primarily due to the depreciation of the Russian rouble.
Latin America
-------------------------------------------------------------------------
Three Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s, except operational information) ($) ($) (%)
(unaudited)
Revenue 16,051 5,602 187
Expenses
Operating 12,257 6,115 100
SG&A 645 237 172
-------------------------------
12,902 6,352 103
-------------------------------
Operating income (loss)(1) 3,149 (750) 520
Operating income (loss) (%) 19.6% -13.4% 246
Cdn$/Mexican peso average
exchange rate(2) 0.0876 0.0969 (10)
Cdn$/Argentine peso average
exchange rate(2) 0.3088 0.3173 (3)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
(2) Source: Bank of Canada.
Revenue
Calfrac's Latin America operations generated total revenue of $16.1
million during the second quarter of 2009 versus $5.6 million in the
comparable three-month period in 2008. For the three months ended June 30,
2009 and 2008, revenue generated through subcontractors was $3.0 million and
$2.0 million, respectively. The increase in revenue was primarily due to
higher fracturing activity and the completion of larger jobs in Mexico as well
as higher cementing activity levels in Argentina.
Operating Expenses
Operating expenses in Latin America for the three months ended June 30,
2009 doubled from the comparative period in 2008 to $12.3 million. This
increase was due primarily to higher fracturing activity and higher product
costs related to the completion of larger fracturing jobs in Mexico combined
with incremental expenses related to the Company's operations in Argentina
which began during the second quarter of 2008.
SG&A Expenses
SG&A expenses in Latin America increased by $0.4 million from the
comparable quarter of 2008 to $0.6 million in the second quarter of 2009
primarily due to the Company's expanded scale of operations in Mexico and
Argentina.
Corporate
-------------------------------------------------------------------------
Three Months Ended June 30, 2009 2008 Change
-------------------------------------------------------------------------
(000s) ($) ($) (%)
(unaudited)
Expenses
Operating 630 557 13
SG&A 3,307 4,187 (21)
-------------------------------
3,937 4,744 (17)
Operating loss(1) (3,937) (4,744) 17
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Refer to "Non-GAAP Measures" on page 16 for further information.
Operating Expenses
Operating expenses primarily relate to manufacturing and R&D personnel
located in the Corporate headquarters who directly support the Company's
global field operations. The 13 percent increase in Corporate operating
expenses from the second quarter of 2008 is mainly due to an increase in the
number of personnel directly supporting the Company's broader scale of
operations.
SG&A Expenses
For the three months ended June 30, 2009, Corporate SG&A expenses
decreased by 21 percent from the comparable 2008 period to $3.3 million,
mainly due to lower stock-based compensation expenses.
Interest and Depreciation Expenses
The Company's net interest expense of $3.5 million for the second quarter
of 2009 represented an increase of $0.8 million from $2.7 million in the
comparable period of 2008.
