August 10, 2012 / 11:21 AM / 6 years ago

UPDATE 1-Calfrac Well posts loss on higher guar prices

Aug 10 (Reuters) - Calfrac Well Services Ltd, a provider of specialized oilfield services, reported a second-quarter loss on higher prices of guar, a key component o f hydraulic fracturing fluids used for drilling.

The company said it expects the increase in guar prices could hurt third-quarter operating income.

Halliburton Co, the world’s second-largest oilfield services company, had warned in June that a shortage of guar beans in India would depress margins at its pressure pumping operations in shale fields.

Farmers in dominant guar producer India are scrambling to meet the demand for their crop and prices are expected to ease by 2013.

Calfrac, which derives almost 80 percent of its revenue from North America, said it expects to continue to focus on development of unconventional oil and gas fields in North America for the remainder of 2012 and beyond.

Larger rivals Schlumberger Ltd and Halliburton posted quarterly profits that topped Wall Street forecasts on higher activity outside North America.

Calfrac provides services like hydraulic fracturing, coiled tubing, and other well stimulation services in Canada, United States, Russia, Mexico, Argentina and Colombia.

Net loss attributable to shareholders was C$11.9 million, or 27 Canadian cents per share, for the April-June quarter, from a profit of C$12.1 million, or 27 Canadian cents per share, a year earlier.

Revenue rose 25 percent to C$335.8 million.

Operating income for the quarter fell on higher product costs, most notably the cost of guar, and an extended spring break-up in Canada, the company said in a statement.

Drillers and well service companies such as Calfrac and Precision Drilling Corp rely on frozen ground to move heavy gear across boggy terrain in winter.

Calfrac reaffirmed its 2012 capital budget of C$271 million.

Precision, Canada’s largest oil and gas drilling contractor, reported a rise in quarterly profit last month, but cut its adjusted capital expenditure plan for the year.

Shares of Calfrac, which has a market value of $1.11 billion, closed at C$24.96 on Thursday on the Toronto Stock Exchange.

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