Calfrac revenue misses forecasts on mild winter
(Reuters) - Calfrac Well Services Ltd CFW.TO reported a higher-than-expected quarterly profit on strong drilling activity in North America, although revenue missed market forecasts as mild winter weather in Canada hampered the movement of equipment.
Calfrac shares were down 6 percent at C$23.97 on Wednesday on the Toronto Stock Exchange.
"An early breakup caused the company to complete 1,037 Canadian frac jobs versus our 1,363 estimate," National Bank Financial analyst Greg Colman said.
Drillers and well service companies such as Calfrac and Precision Drilling Corp (PD.TO: Quote) rely on frozen ground to move heavy gear across boggy terrain in winter.
Precision Drilling, which reported last month, missed analysts' profit expectations.
However, Calfrac said the early spring breakup in Canada, combined with below-average snowfall over the winter, could minimize the seasonal impact of road restrictions on activity during the remainder of the second quarter.
Increased use of hydraulic fracturing has resulted in strong profits for service companies in recent years but has created a natural-gas glut that has driven prices to decade lows.
The low prices have forced energy companies to move to liquids-rich regions in Canada and the United States.
Calfrac's larger North American rivals, including Halliburton Co (HAL.N: Quote), Precision Drilling and Schlumberger Ltd (SLB.N: Quote), have said the movement out of natural gas basins will hit the industry in the near term as drilling costs rise. Continued...