CALGARY, March 27, 2020 /CNW/ - Calfrac Well Services
Ltd. ("Calfrac" or the "Company") (TSX-CFW) is announcing
reductions to its 2020 capital program and North American operating
footprint as a result of the rapid and unforeseen deterioration in
business conditions resulting from the COVID-19 global pandemic and
the oil price war among OPEC+ members. These global events have
caused a significant decline in oil prices globally, resulting in
reductions in the planned spending of many of Calfrac's
clients.
In response to the reduced demand for Calfrac's services, the
board of directors of Calfrac has approved a reduction of the
Company's previously announced 2020 capital program of
approximately $100.5 million down to
approximately $55.0
million. Calfrac has also reduced the number of crews
being deployed in its North American operations from 19 fleets to
nine, which will result in an aggregate reduction of approximately
40% of the Company's North American workforce.
In addition, Calfrac's board of directors and senior management
have taken the following actions to reduce the Company's fixed
costs:
- Reduced Calfrac's board compensation by 25%;
- Reduced Executive officer salaries by 10%
- Eliminated retirement savings matching contributions, which
previously represented up to 6% of base salary;
- Reduced staff employee salaries by 5 – 10%;
- Modified work schedules to provide increased flexibility to
respond to fluctuating demand for the Company's services, while
reducing personnel costs;
- Reduced or eliminated several compensation programs and
bonuses; and
- Restricted discretionary spending and suspended all
non-emergency travel.
It is difficult to predict how the COVID-19 pandemic and OPEC+
oil price war will continue to affect the demand for Calfrac's
services. However, Calfrac's management and board of directors will
continue to monitor and assess the evolving circumstances to
determine if further measures will need to be taken to mitigate the
impacts to the Company of these unprecedented challenges.
The safety of Calfrac's employees, vendors, clients and their
families, as well as the communities where the Company works, is of
foundational importance. Against this backdrop, and in accordance
with the Company's Pandemic Crisis Management Plan, Calfrac has
reduced staffing levels to essential personnel only at all
locations, and has implemented remote work procedures for the
majority of office staff as part of its business continuity plan.
Calfrac is committed to working with all of its stakeholders
to meet the challenges presented by these unprecedented market and
societal upheavals.
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
future capital expenditures and mitigation measures that may be
required in response to the COVID-19 global pandemic and OPEC+ oil
price war.
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; the effectiveness of cost
reduction measures instituted by Calfrac; 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; pandemics, natural disasters or other
unanticipated events, such as cyberattacks, fires, terrorist
attacks or railway blockades; excess oilfield equipment levels;
regional competition; 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;
currency exchange rate risk; risks associated with foreign
operations; 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; 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 and risks associated with prior
operations; liabilities relating to legal and/or administrative
proceedings; failure to maintain Calfrac's safety standards and
record; failure to realize anticipated benefits of acquisitions and
dispositions; the ability to integrate technological advances and
match advances from competitors; intellectual property risks; third
party credit risk; 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.