Trican Well Service Ltd.
TSX : TCW

Trican Well Service Ltd.

January 17, 2008 18:44 ET

Trican Well Service Ltd. Q4 2007 Update and 2008 Capital Budget and Outlook

CALGARY, ALBERTA--(Marketwire - Jan. 17, 2008) - Trican Well Service Ltd. (TSX:TCW) is pleased to provide an update on our operations for the fourth quarter of 2007, our 2008 capital budget and our outlook for our major operating areas.

2007 Results

Based on our preliminary review of the fourth quarter, results for the quarter fell below our expectations. Comments relating to each of our areas of operations are provided below. We anticipate earnings for the quarter and the year on a diluted per share basis will be as follows:



Q4 2007
------------------ -------------------
including SBC (ii) from $ 0.10 to $ 0.15 from $ 0.86 to $ 0.91

excluding SBC (ii) from $ 0.12 to $ 0.17 from $ 0.96 to $ 1.01

(ii) Stock based compensation expense


Fourth quarter results benefited from a revaluation of our future tax liability as a result of future income tax rate reductions substantially enacted during the quarter. The impact of these reductions increased fourth quarter earnings by approximately $0.05 per share.

We expect to release our complete financial results for the fourth quarter and 2007 in late February, 2008. The aforementioned estimates are subject to completion of final review by management and of the 2007 external audit.

Canadian Operations

Revenue for the quarter fell marginally compared with the third quarter as a result of normal seasonal slow downs at the end of the year and the completion of CBM programs midway through the quarter which impacted results for our CBM and deep coil service lines. These programs recommenced early in 2008. Also impacting operating performance for the quarter was a sharp increase in sales discounts. During our third quarter conference call, we noted that discounts had increased sharply at the end of Q3. Discounts for the fourth quarter continued at these higher levels and are expected to continue at these levels until overall demand for services increases relative to available equipment capacity.

Russian Operations

Revenue for the quarter fell marginally compared with the third quarter due to a slow down primarily in our Nefteugansk operations relating to onset of winter conditions and the completion of some of the 2007 work programs.

U.S. Operations

Operations for the quarter were significantly impacted by a shortage of high quality fracturing proppant first reported with our third quarter results. This shortage forced the cancellation of jobs and increased the cost of sand purchased. Management continues to work to secure stable supplies of sand and expects to have sufficient volumes available to support ongoing operations early in the first quarter of 2008.

2008 Capital Budget and Update

The Board of Directors met in December and approved Trican's 2008 Capital Budget. The Budget for 2008 has been set at $109.7 million. Comments relating to the Budget and asset transfers by operating region are as follows:

Canadian Operations

The 2008 capital budget for Canadian operations will total $14.6 million and will comprise the following:



- $ 5.5 million Expansion capital expenditures
- $ 3.4 million Maintenance capital expenditures
- $ 5.7 million Infrastructure and other


The expansion capital will be primarily directed to our Industrial Services group. Much of the remaining expenditures will be directed toward maintaining the Canadian operating fleet and infrastructure.

Equipment Continuity

The following table sets out our current plans for equipment capacity for our Canadian operations for 2008.



Transfers &
Number of Units - Canada Current Dispositions Additions Ending (A)
----------------------------------------------------------------------------

Fracturing Crews
Conventional 18 0 0 18
CBM 4 0 0 4
Cement Pumpers (B) 54 (8) 0 46
Deep Coiled Tubing Units (C) 18 (3) 0 15
Intermediate Coiled Tubing Units 8 0 0 8
Nitrogen Pumpers (D) 28 (7) 0 21
Acidizing Units (E) 12 (1) 0 11
----------------------------------------------------------------------------

A - expected capacity based on approved capital budget which is subject to
change.
B - 2 pumpers will be transferred to Russia, 4 units to the U.S. and 2
units to Algeria.
C - 2 coil units will be transferred to Russia and 1 unit to Algeria.
D - 2 units will be transferred to Russia, 4 units to the U.S. and 1 unit
to Algeria.
E - 1 unit will be transferred to Algeria.


Activity has increased sharply with the onset of the winter drilling season and is expected to continue at high levels until the completion of the winter programs. The outlook for the balance of the year is unclear at this point and will likely depend upon natural gas inventory levels at the end of the winter heating season and the resultant natural gas commodity prices for the balance of the year. Expectations for activity levels for 2008 are varied, however, most industry watchers expect activity to decrease relative to 2007.

Russian Operations

The Capital Budget for the Russian operations is $35.3 million for new assets with an additional $14.9 million of assets being transferred from Canadian operations which will bring a total of just over $50 million of additional capital into these operations.

Equipment Continuity

The following table sets out our current plans for equipment capacity for our Russian operations for 2008.



Transfers &
Number of Units - Russia Current Dispositions Additions Ending (A)
----------------------------------------------------------------------------

Fracturing Crews
Conventional 11 0 0 11
Cement Pumpers (B) 6 0 3 9
Deep Coiled Tubing Units 3 2 0 5
Nitrogen Pumpers 4 2 2 8
Acidizing Units 0 0 1 1
----------------------------------------------------------------------------

A - expected capacity based on approved capital budget which is subject to
change.
B - 2 units will be transferred from Canadian operations to replace 2 units
which will be retired.


Activity has recently increased after the normal slow period related to the Christmas season which occurs in early January. As has been discussed in various reports and conference calls, Russia is a growing pressure pumping market that is well serviced by a number of well established companies. Many of our international competitors have recognized the strategic importance of this market and have begun to focus their attention on entering the market or expanding their operations. This produced a very competitive round of bidding for 2008 work. However the Company is pleased to report that based upon contracted work awards, and expected expansion on these awards based on past experience and discussions with customers, we expect both activity and revenue growth over 2007. Fracturing activity is expected to increase relative to 2007. Trican deployed its 11th fracturing crew in late 2007 which will provide additional operating capacity to service this additional work. Due to some pricing pressure and smaller expected average job size, fracturing revenue is expected to stay relatively consistent with 2007 levels. However, strong growth is expected from our cementing and coiled tubing operations which is expected to drive overall revenue growth.

Trican was also awarded a new fracturing contract in the Purpay region of Western Siberia. This contract will result in the Company opening a new base of operations north of its Nizhnevartovsk operations from which it will provide fracturing services. This base will provide support to Trican's eastern Siberian initiative on Rosneft's Vankor project which commences operations in Q1 2008. This base will also provide the Company with access to the northern gas fields in the western Siberian basin which are expected to become a growing pressure pumping market in the future.


U.S. Operations

The Capital Budget for the US operations is $56.6 million for new assets with an additional $15.3 million of assets being transferred from Canadian operations which will bring a total of $71.9 million of additional capital into these operations. The Company will begin offering cementing and nitrogen services in addition to the fracturing services already offered.

Equipment Continuity

The following table sets out our current plans for equipment capacity for our U.S. operations for 2007.



Number of Units - U.S. Current Transfers Additions Ending (A)
----------------------------------------------------------------------------

Fracturing Crews
Conventional 10 (B) 0 2 12
Cementing Units 0 4 0 4
Nitrogen Pumpers 0 4 0 4
----------------------------------------------------------------------------

A - expected capacity based on approved capital budget which is subject to
change.
B - current capacity includes units currently under construction under the
2007 capital program. Final delivery of these units expected in Q1 2008.


Algerian Operations

Trican commenced operation in Algeria in October under a previously announced contract. The Capital Budget for these operations is $1.5 million for new assets with an additional $9.5 million of assets being transferred from Canadian operations which will bring a total of $11.0 million of additional capital into these operations in 2008. Subject to contract awards, the Company will expand its coiled tubing and nitrogen services and begin offering cementing and acidizing services.



Number of Units - Algeria Current Transfers Additions Ending (A)
----------------------------------------------------------------------------

Cement Pumpers 0 2 0 2
Deep Coiled Tubing Units 1 1 0 2
Nitrogen Pumpers 1 1 0 2
Acidizing Units 0 1 0 1
----------------------------------------------------------------------------
A - expected capacity based on approved capital budget which is subject to
change.


Forward-Looking Statements

This document contains forward-looking statements concerning, among other things, the Company's prospects, expected revenues, expenses, profits, developments and strategies for its operations, all of which are subject to certain risks, uncertainties and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "achievable," "believe," "expect," "estimate," and other similar terms and phrases. These statements are based on certain assumptions and analysis made by the Company in light of its experience and its perception of known trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to many external variables including fluctuating prices for crude oil and natural gas, changes in drilling activity, general global economic, political and business conditions, weather conditions, regulatory changes, and availability of products, qualified personnel, manufacturing capacity and raw materials. If any of these uncertainties materialize, or if assumptions are incorrect, actual results may vary materially from those expected.

Headquartered in Calgary, Alberta, Trican has operations in Canada, Russia, the US and North Africa. Trican provides a comprehensive array of specialized products, equipment and services that are used during the exploration and development of oil and gas reserves.

Contact Information

  • Trican Well Service Ltd.
    Murray Cobbe
    President and CEO
    (403) 266-0202
    (403) 237-7716 (FAX)
    Email: mcobbe@trican.ca
    or
    Trican Well Service Ltd.
    Michael Kelly
    Vice President, Finance & Administration and CFO
    (403) 266-0202
    (403) 237-7716 (FAX)
    Email: mkelly@trican.ca
    or
    Trican Well Service Ltd.
    2900, 645 - 7th Avenue S.W.
    Calgary, Alberta T2P 4G8
    Website: www.trican.ca