CALGARY, May 7, 2019 /CNW/ - Calfrac Well Services Ltd.
("Calfrac") (TSX-CFW) provides this update concerning the
action commenced by Calfrac on May 30,
2018 against Wilks Brothers, LLC ("Wilks Brothers") in the
Alberta Court of Queen's
Bench.
As described below, in a decision released on May 7, 2019, the Alberta Court of Queen's Bench found that
Wilks Brothers breached its confidentiality agreement with Calfrac
and dismissed Wilks Brothers' motion for summary judgment.
Calfrac's action will continue in relation to damages issues.
Wilks Brothers' Competing Agenda
Wilks Brothers competes against Calfrac through its ownership of
a U.S.-based fracturing business, Profrac Services, LLC
("Profrac"). To advance its commercial agenda, starting in
late 2017, Wilks Brothers pressured Calfrac to sell or "spin-off"
its U.S. business, the division that generates the majority of
Calfrac's revenues and earnings.
While Wilks Brothers claimed that spinning off Calfrac's U.S.
business would unlock value for Calfrac's shareholders, Wilks
Brothers also expressed interest in purchasing or in financing the
purchase of Calfrac's U.S. business.
The Confidentiality Agreement
In an effort to constructively engage with Wilks Brothers,
Calfrac recommended that Wilks Brothers enter into a
confidentiality agreement, which would allow for a candid exchange
of views, including about Calfrac's U.S. business.
Calfrac and Wilks Brothers executed a confidentiality agreement
in February 2018, following which
Calfrac shared confidential information with Wilks Brothers,
including about Calfrac's U.S. business.
Wilks Brothers' Press Release
When Calfrac refused to accede to Wilks Brothers' demands that
it take steps toward separating its U.S. business, Wilks Brothers
withheld votes at Calfrac's May 8,
2018 annual meeting, and issued a press release the
following day.
Calfrac believes that Wilks Brothers' May
9, 2018 press release, which was issued hours after Calfrac
announced a then unpriced debt financing, increased Calfrac's
borrowing costs to the detriment of all Calfrac
shareholders.
Calfrac then sued Wilks Brothers, alleging that Wilks Brothers'
May 9, 2018 press release breached
the confidentiality agreement.
Motions for Summary Judgment
After exchanging pleadings, Wilks Brothers and Calfrac brought
competing motions for summary judgment.
In a decision released on May 7,
2019, the Alberta Court of
Queen's Bench dismissed Wilks Brothers' motion for summary judgment
to dismiss the action.
In the same decision, the Court found that Wilks Brothers
breached the confidentiality agreement by certain of the
disclosures made by Wilks Brothers in its May 9, 2018 press release. As a result of
the Court's decision, Calfrac's action against Wilks Brothers will
now continue on the issues of quantum and causation in relation to
damages.
"We are pleased with the Court's finding that Wilks Brothers
breached the confidentiality agreement" said Ronald Mathison, Chairman of Calfrac.
"From the outset, we have been determined to seek redress for our
shareholders arising from that breach. We will now press
ahead with the damages issues that remain outstanding."
Calfrac's common shares are publicly traded on the Toronto Stock
Exchange under the trading symbol "CFW". Calfrac provides
specialized oilfield services to exploration and production
companies designed to increase the production of hydrocarbons from
wells drilled throughout western Canada, the United
States, Argentina and
Russia.
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information or statements.
More particularly and without limitation, this press release
contains forward-looking statements and information relating to the
continuance of Calfrac's action against Wilks Brothers.
These forward-looking statements and information are based on
certain key expectations and assumptions made by Calfrac in light
of its experience and perception of historical trends, current
conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances,
including, but not limited to, the following: the economic and
political environment in which Calfrac operates; Calfrac's
expectations for its customers' capital budgets and geographical
areas of focus; the effect unconventional oil and gas projects have
had on supply and demand fundamentals for oil and natural gas;
Calfrac's existing contracts and the status of current negotiations
with key customers and suppliers; and the likelihood that the
current tax and regulatory regime will remain substantially
unchanged.
Although Calfrac believes that the expectations and assumptions
on which such forward looking statements and information are based
are reasonable, undue reliance should not be placed on the
forward-looking statements and information as Calfrac cannot give
any assurance that they will prove to be correct. Since
forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to, risks associated with:
global economic conditions; the level of exploration, development
and production for oil and natural gas in Canada, the United
States, Argentina and
Russia; 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; the availability of capital on
satisfactory terms; restrictions resulting from compliance with
debt covenants and risk of acceleration of indebtedness; direct and
indirect exposure to volatile credit markets, including credit
rating risk; sourcing, pricing and availability of raw materials,
component parts, equipment, suppliers, facilities and skilled
personnel; excess oilfield equipment levels; regional competition;
currency exchange rate risk; risks associated with foreign
operations; dependence on, and concentration of, major customers;
liabilities and risks, including environmental liabilities and
risks, inherent in oil and natural gas operations; uncertainties in
weather and temperature affecting the duration of the service
periods and the activities that can be completed; liabilities
relating to legal and/or administrative proceedings; operating
restrictions and compliance costs associated with legislative and
regulatory initiatives relating to hydraulic fracturing and the
protection of workers and the environment; changes in legislation
and the regulatory environment; failure to maintain Calfrac's
safety standards and record; liabilities and risks associated with
prior operations; the ability to integrate technological advances
and match advances from competitors; intellectual property risks;
third party credit risk; failure to realize anticipated benefits of
acquisitions and dispositions; and the effect of accounting
pronouncements issued periodically. The forward-looking
statements and information contained in this press release are made
as of the date hereof and Calfrac does not undertake any obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
SOURCE Calfrac Well Services Ltd.