Trican Well Service Ltd.
TSX : TCW

Trican Well Service Ltd.

August 05, 2009 19:27 ET

Trican-2009 Second Quarter Results

CALGARY, ALBERTA--(Marketwire - Aug. 5, 2009) - Trican Well Service Ltd. (TSX:TCW):



Financial Review

------------------------------------------------
($ millions, except Three months ended Six months ended
per share amounts; June 30, June 30, March 31, June 30, June 30,
unaudited) 2009 2008 2009 2009 2008
----------------------------------------------------------------------------
Revenue $136.3 $162.3 $266.9 $403.2 $406.5
Operating income /
(loss) (i) (12.7) 3.4 38.1 25.4 48.3
Net income / (loss)
before stock-based
compensation (i) (22.8) (11.8) 12.7 (10.1) 12.9
Net income / (loss)
before stock-based
compensation per
share (i) (basic) $(0.18) $(0.10) $ 0.10 $(0.08) $ 0.10
(diluted) $(0.18) $(0.10) $ 0.10 $(0.08) $ 0.10
Net income / (loss) (25.5) (14.4) 9.6 (15.9) 6.8
Net income / (loss)
per share (basic) $(0.20) $(0.12) $ 0.08 $(0.13) $ 0.06
(diluted) $(0.20) $(0.12) $ 0.08 $(0.13) $ 0.05
Funds provided by /
(used in )
operations(i) (13.9) 9.8 11.6 (2.3) 32.4
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(i) Trican makes reference to operating income/(loss), net income/(loss)
before stock-based compensation and funds provided by/(used in)
operations. These are measures that are not recognized under Canadian
Generally Accepted Accounting Principles (GAAP). Management believes
that, in addition to net income/(loss), operating income/(loss), net
income/(loss) before stock-based compensation and funds provided by/
(used in) operations are useful supplemental measures. Operating
income/(loss) provides investors with an indication of earnings before
depreciation, taxes and interest. Net income/(loss) before stock-based
compensation expense provides investors with information on net income
excluding the non-cash effect of stock-based compensation expense. Funds
provided by/(used in) operations provides investors with an indication
of cash available for capital commitments, debt repayments and other
expenditures. Investors should be cautioned that operating income/
(loss), net income/(loss) before stock-based compensation expense, and
funds provided by/(used in) operations should not be construed as an
alternative to net income/(loss) determined in accordance with GAAP as
an indicator of Trican's performance. Trican's method of calculating
operating income/(loss), net income/(loss) before stock-based
compensation expense and funds provided by/(used in) operations may
differ from that of other companies and accordingly may not be
comparable to measures used by other companies.


SECOND QUARTER HIGHLIGHTS

Trican's consolidated revenue decreased 16% for the three months ended June 30, 2009 compared to the second quarter of 2008. The net loss for the quarter was $25.5 million compared to net loss of $14.4 for the same period in 2008, and diluted net loss per share increased to $0.20 from $0.12. Funds used in operations was $13.9 million in the second quarter compared to funds provided by operations of $9.8 million in the second quarter of 2008.

Our second quarter results reflect a weak operating environment across our Canadian and US regions, partially offset by strength in our Russian region. Low natural gas prices have impacted North American results as drilling activity has dropped significantly since the second quarter of 2008. Rig count in Canada has dropped 48% and rig count in the US has dropped 52% from levels of one year ago. The majority of work performed in Russia is on oil wells, and given the moderate recovery in oil prices, activity levels in Russia have declined less than they have in North America.

The typical seasonal activity slowdown associated with spring break-up negatively impacted the second quarter financial results in Canada. In addition, the lower year-over-year well count led to a 27% decrease in revenue and a 21% reduction in job count compared to second quarter of 2008. Our declines in revenue and job count in Canada were less severe than the decrease in industry rig count, as activity from the fracturing intensive unconventional gas plays partially mitigated the drop in well count. In light of reduced industry activity and a competitive pricing environment, we are focused on cost control initiatives. Cost cutting measures implemented in the first quarter have resulted in cost savings of approximately $6 million during the second quarter. We expect additional savings of approximately $16.5 million to be achieved during the remainder of the year.

Russian revenue decreased 18% in the second quarter compared to the same period in 2008 largely due to an 18% decline in the value of the ruble. However, the ruble exchange rate stabilized during the second quarter at levels generally consistent with first quarter rates. Activity levels for our coiled tubing and nitrogen service lines continue to increase, which has contributed to the 3% increase in job count for the second quarter compared to the same period in 2008. Operating margins are continuing to improve within our Russian region as cost control initiatives implemented during the second half of 2008 have improved the 2009 operating margins.

Second quarter revenue in the US increased 10% compared to the same period in 2008 as a 14% increase in the US dollar was partially offset by significant pricing reductions. Low commodity prices and a highly competitive pricing environment continue to create challenges in the US market. Despite these conditions, our job count decreased by only 4% compared to the first quarter of 2009. Cost control has been a focus in the US, and we realized $2 million in cost savings in the second quarter. We expect an additional $8.3 million in savings during the remainder of 2009.

Trican incurred an operating loss of $12.7 million in the second quarter of 2009 compared to operating income of $3.4 million for the same period last year. In Canada, lower activity levels decreased operational leverage on our fixed cost structure and pricing pressures led to margin contraction. In the US, a highly competitive pricing environment has also reduced pricing and contracted margins. Cost cutting initiatives in Canada and the US have partially offset these impacts. Operating income reductions in Canada and the US have been offset by improved results in Russia as cost control measures implemented in 2008 have led to improved margins.

Cash provided by operations, including the release of working capital, was $60.9 million for the three months ended June 30, 2009. $39.3 million of the cash provided by operations has been used to repay debt during the quarter bringing total debt repayments for the first half of the year to $68.3 million. As at June 30, 2009, Trican has approximately $183 million in cash and available debt to fund its operations and future obligations. Despite the reduced industry activity, our conservative capital spending program and our focus on cost control measures has maintained our strong balance sheet. We expect to continue to sustain this balance sheet strength in the future.

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis (MD&A) should be read in conjunction with the unaudited interim consolidated financial statements of Trican as at, and for, the three and six months ended June 30, 2009 and 2008 and should also be read in conjunction with the audited consolidated financial statements and MD&A contained in Trican's annual report for the year ended December 31, 2008. The interim consolidated financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). This MD&A is dated August 5, 2009. Additional information, including the Company's Annual Information Form is available on SEDAR at www.sedar.com.

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.



COMPARATIVE QUARTERLY INCOME STATEMENTS
----------------------------------------------------------------------------
($ thousands, Quarter-
unaudited) Over-
Three months ended % of % of Quarter %
June 30, 2009 Revenue 2008 Revenue Change Change
----------------------------------------------------------------------------

Revenue 136,286 100.0% 162,342 100.0% (26,056) -16%
Expenses
Materials and
operating 136,146 99.9% 147,861 91.1% (11,715) -8%
General and
administrative 12,808 9.4% 11,088 6.8% 1,720 16%
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Operating income(1) (12,668) -9.3% 3,393 2.1% (16,061) -473%
Interest expense 2,483 1.8% 3,791 2.3% (1,308) -35%
Depreciation and
amortization 22,452 16.5% 22,212 13.7% 240 1%
Foreign exchange
(gain) / loss 2,542 1.9% (728) -0.4% 3,270 449%
Other income (1,272) -0.9% (1,267) -0.8% (5) 0%
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Loss before income
taxes and
non-controlling
interest (38,873) -28.5% (20,615) -12.7% (18,258) -89%
Provision for income
taxes (13,371) -9.8% (6,508) -4.0% (6,863) -105%
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Loss before
non-controlling
interest (25,502) -18.7% (14,107) -8.7% (11,395) -81%
Non-controlling
interest (42) 0.0% 283 0.2% (325) -115%
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Net loss (25,460) -18.7% (14,390) -8.9% (11,070) -77%
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(1) See first page of this report


CANADIAN OPERATIONS

----------------------------------------------------------------------------
Three months ended,
($ thousands, June 30, % of June 30, % of March 31, % of
unaudited) 2009 Revenue 2008 Revenue 2009 Revenue
----------------------------------------------------------------------------
Revenue 46,992 64,029 149,731
Expenses
Materials and
operating 52,366 111.4% 64,022 100.0% 117,613 78.6%
General and
administrative 4,524 9.6% 4,274 6.7% 5,616 3.8%
-------- -------- ---------
Total expenses 56,890 121.1% 68,296 106.7% 123,229 82.3%
Operating income /
(loss)(1) (9,898) -21.1% (4,267) -6.7% 26,502 17.7%
Number of jobs 2,490 3,140 5,325
Revenue per job 18,383 19,697 27,820
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(1) See first page of this report


Sales Mix
----------------------------------------------------------------------------
Three months ended, June 30, June 30, March 31,
($ thousands, unaudited) 2009 2008 2009
----------------------------------------------------------------------------
% of Total Revenue
Fracturing 46% 46% 57%
Cementing 20% 27% 23%
Industrial Services 11% 7% 2%
Coiled Tubing 10% 6% 6%
Acidizing 5% 5% 3%
Nitrogen 4% 6% 6%
Other 4% 3% 3%
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Total 100% 100% 100%
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Operations Review

Activity in the second quarter fell from first quarter levels due to spring break-up as road weight restrictions and reduced accessibility to remote areas limited oil field activity. In addition to this expected annual decrease in activity resulting from spring break-up, continued weakness in natural gas prices has led to reduced industry activity. The number of active drilling rigs decreased 48% during the quarter compared to the same period in 2008, reflecting the sharp drop in natural gas prices.

In response to the reduced industry activity, we focused on cost cutting initiatives during the first quarter as staffing levels were reduced and wage roll-backs were implemented. We have begun to see the results of these measures as salaries decreased by 23% compared to the first quarter of 2009. As well, we achieved additional cost reductions through supplier discounts and discretionary expenses. The cost control measures implemented to date have resulted in cost savings of approximately $6 million during the second quarter and we expect additional savings of approximately $16.5 million to be achieved during the remainder of the year. Cost control will remain an area of focus during the challenging economic times and we will continue to review our expenditure levels relative to current industry activity levels to ensure the future profitability of Canadian Operations.

We continue to focus on maintaining and strengthening our market position, particularly in the unconventional oil and gas plays. These plays are typically more economic for the producer at lower commodity prices, and benefit pressure pumping companies as they are typically more fracturing intensive than conventional oil and gas plays. The activity growth in unconventional plays, our stable customer relationships, and our technical strength will enable us to withstand the current reduced industry activity levels and will position Trican for growth as market conditions improve.

Current Quarter versus Q2 2008

Revenue for the quarter decreased 27%, to $47 million, reflecting the overall decrease in activity caused by lower commodity prices and high natural gas storage levels.

A 48% decline in the average number of active drilling rigs from 2008 levels caused a reduction in Trican's job count of 650 or 21%. Our job count did not drop as much as the industry-wide rig count because of greater fracturing activity in the unconventional gas plays as well as an increase in industrial services work. Revenue per job decreased 7% in the quarter as a competitive pricing environment has required us to negotiate higher discounts with our customers. Discounts increased by 580 basis points compared to the second quarter of 2008.

Materials and operating expenses increased as a percentage of revenue to 111% compared to 100% for the same period in 2008. Lower activity levels decreased operational leverage on our fixed cost structure and pricing pressures led to margin contractions. These factors were partially offset by cost control measures implemented during the first half of the year and lower fuel costs.

Current Quarter versus Q1 2009

As expected, revenue during the second quarter was significantly lower than the first quarter. Drilling activity is typically highest in Canada during the first quarter and activity declines substantially during the second quarter as spring thaws result in seasonal road bans.

The number of active drilling rigs decreased by 70% compared to the first quarter, which led to a 53% decrease in job count. Revenue per job decreased 34% as discounts increased by 760 basis points and the proportion of fracturing jobs in our sales mix declined.

Materials and operating expenses increased as a percentage of revenue to 111% compared to 79% for the first quarter of 2009 because of lower utilization and reduced operating leverage. These factors were partially offset by cost control measures including a significant decrease in employee costs as staffing levels were reduced by 20%. General and administrative expenses decreased 19% due to lower employee costs including salaries and stock compensation expenses.




RUSSIAN OPERATIONS

----------------------------------------------------------------------------
Three months ended,
($ thousands, June 30, % of June 30, % of March 31, % of
unaudited) 2009 Revenue 2008 Revenue 2009 Revenue
----------------------------------------------------------------------------
Revenue 55,772 67,833 63,082
Expenses
Materials and
operating 45,387 81.4% 58,690 86.5% 50,440 80.0%
General and
administrative 2,332 4.2% 1,662 2.5% 1,634 2.6%
-------- -------- ---------
Total expenses 47,719 85.6% 60,352 89.0% 52,074 82.5%
Operating income(1) 8,053 14.4% 7,481 11.0% 11,008 17.5%
Number of jobs(2) 878 850 850
Revenue per job(2) 62,010 80,762 72,985
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(1) See first page of this report

(2) prior period figures have been adjusted to reflect our revised
methodology for determining job count and revenue per job data for
coiled tubing and nitrogen.


Sales Mix
----------------------------------------------------------------------------
Three months ended, June 30, June 30, March 31,
($ thousands, unaudited) 2009 2008 2009
----------------------------------------------------------------------------
% of Total Revenue
Fracturing 80% 83% 84%
Coiled Tubing 14% 10% 8%
Cementing 5% 7% 5%
Nitrogen 1% 0% 3%
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Total 100% 100% 100%
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Operations Review

The seasonal thaw of ice roads impacted the quarter's activity levels for our Russian Operations, as access to several well locations was restricted or difficult in April and May. Strong June activity partially mitigated the lower activity levels earlier in the quarter. Two significant new customers were added in the quarter which strategically enhances our Russian Operations; although one of these customers supplies the proppant for their fracturing work reducing the total revenue per job compared to fracturing jobs performed for other customers. The outlook remains positive with customers continuing to indicate that activity levels will increase throughout the remainder of the year. A number of customers have increased or are considering increasing activity in 2009 contracts, or issuing additional tenders for 2009.

The ruble stabilized during the second quarter of 2009 and remained consistent with rates seen at the end of the first quarter. Year over year the devaluation of the ruble significantly affected operating results as the ruble weakened by 18% relative to the second quarter of 2008.

Our Russian Operations produced stronger operating margins during the quarter relative to the previous year due primarily to significant cost control initiatives implemented in 2008, lower fuel costs and changes to our service line mix. In particular, we saw a more significant contribution from the coiled tubing service line as activity levels for coiled tubing increased during the first half of 2009 and are expected to continue to rise.

Late in the quarter a second base was opened in Kazakhstan following a successful fracturing tender. This base is located in one of the main Kazakhstan operating areas, which provides significant opportunities for further expansion in this area. Algeria continues to be an area of opportunity and growth as revenue increased by 24% compared to the first quarter, despite low equipment utilization relative to our other operating areas. Along with the increase in revenue, Algeria produced positive operating margins during the quarter.

Current Quarter versus Q2 2008

Revenue from our Russian operations for the quarter decreased 18% from a year earlier to $56 million. Most of this decrease can be attributed to an 18% reduction in the value of the ruble compared to the second quarter of 2008. Excluding the exchange rate impact, revenues declined approximately 2% due to lower fracturing and cement activity offset in part by improved contributions from the coiled tubing and nitrogen service lines. The fracturing activity decline was mainly caused by significant and unusually high activity by one customer during the 2008 second quarter that was not repeated this year, as well as a base closure in late 2008 as a cost saving initiative. While this base was relatively busy during the 2008 second and third quarters, it typically produced lower margins than our other operating bases. Cementing services have also declined with lower drilling activity in Russia.

As a percentage of revenue, materials and operating expenses decreased during the quarter compared to the same period in 2008. Cost control programs implemented in 2008, lower raw material costs, reduced headcount, and a reduction in fuel prices have resulted in improved margins. General and administrative costs have increased in the quarter because of an increase in the bad debt provision.

Current Quarter versus Q1 2009

Revenue from Russian operations decreased 12% compared to the first quarter as declines in fracturing revenue were partially offset by increases in coiled tubing and nitrogen revenue. Cement revenue was relatively unchanged. The decline in fracturing revenue is explained primarily by reductions of approximately 8% in average job size and 4% in the number of jobs performed. The smaller average job size is largely caused by a single customer that performed more work in an area requiring smaller fracturing treatments. Despite the decrease in the fracturing job count, increased coiled tubing and nitrogen work caused the overall job count to increase by 3%.

Revenue per job decreased 15% due to smaller average fracturing job sizes, work from a new customer that supplies its own proppant and a higher proportion of coiled tubing jobs in the service line mix.

Materials and operating expenses increased slightly as a percentage of revenue due to fixed operating costs not decreasing in line with revenue reductions and higher repairs and maintenance costs following a busy March. General and administrative expense increased as a result of an increase in the bad debt provision.



UNITED STATES OPERATIONS

----------------------------------------------------------------------------
Three months ended,
($ thousands, June 30, % of June 30, % of March 31, % of
unaudited) 2009 Revenue 2008 Revenue 2009 Revenue
----------------------------------------------------------------------------
Revenue 33,522 30,480 54,090
Expenses
Materials and
operating 36,644 109.3% 23,686 77.7% 45,034 83.3%
General and
administrative 2,562 7.6% 2,385 7.8% 2,971 5.5%
-------- -------- ---------
Total expenses 39,206 117.0% 26,071 85.5% 48,005 88.8%
Operating income /
(loss)(1) (5,684) -17.0% 4,409 14.5% 6,085 11.2%
Number of jobs 434 380 450
Revenue per job 77,349 80,212 120,398
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----------------------------------------------------------------------------

(1) See first page of this report


Operations Review

Operating conditions in the US were challenging during the second quarter as low natural gas prices depressed industry activity levels and excess equipment capacity resulted in significant pricing pressure. The US rig count has remained below 1,000 throughout the second quarter, which is 50% lower than the peak rig counts of August 2008. Pricing continues to drop as discounts increased 430 basis points compared to the first quarter of this year.

The competitive marketplace and continued pricing erosion since the beginning of the year caused an operating loss in the second quarter. Given the challenging operating environment, we are focused on cost control initiatives. Efforts to date drove cost savings of approximately $4.2 million during the first half of the year and we anticipate an additional $8.3 million in savings during the remainder of 2009.

Our strategy to date in our US operating regions has been to preserve our market position by continuing to provide superior service to our customers and remaining price competitive in the market. We have also focused on maintaining a lean and efficient cost structure that does not sacrifice service quality to our customers. We believe that activity levels and pricing are starting to stabilize in our operating regions. In the short term, we will continue to monitor activity and market conditions, pricing and our financial results. We will manage our business by balancing our long term market position with the near term financial results of our US operations.

Current Quarter versus Q2 2008

US revenue for the quarter increased 10% over the second quarter of 2008. This increase can be attributed to a 14% strengthening of the US dollar offset by significant pricing reductions, as revenue per job decreased by 16% in US dollar terms. A competitive pricing environment significantly increased discounts relative to the same period in 2008. However, our US job count increased 14% as we continue to increase our market presence in the cementing, acidizing and nitrogen services lines.

Materials and operating expenses as a percentage of revenue were 109% in the quarter compared to 78% in the prior year. The increase is due to significant margin contraction from increased discounts, although the impact of higher discounts was partially offset by cost savings achieved during the first half of the year. General and administrative expenses increased $0.2 million from the same period in 2008 due to a strengthening US dollar.

Current Quarter versus Q1 2009

Revenue from US operations decreased by $20.6 million, or 38%, on a sequential basis. While a portion of this decrease relates to an 8% weakening of the US dollar during the quarter, the larger factor was the significant increase in discounts that caused a 36% reduction in revenue per job. The job count was only marginally lower than the first quarter, reflecting our strategy to preserve our market position.

As a percentage of revenue, materials and operating expenses increased by 26% due to increased margin contraction resulting from higher discounts offered to customers. The margin contraction was partially mitigated by cost savings generated by our cost control initiatives. In US dollar terms, general and administrative expenses were consistent with the previous quarter as the decrease in Canadian dollar terms was largely caused by the weakening US dollar.



CORPORATE DIVISION

----------------------------------------------------------------------------
Three months ended,
($ thousands, June 30, % of June 30, % of March 31, % of
unaudited) 2009 Revenue 2008 Revenue 2009 Revenue
----------------------------------------------------------------------------
Expenses
Materials and
operating 1,750 1.3% 1,463 0.9% 2,086 0.8%
General and
administrative 3,389 2.5% 2,767 1.7% 3,438 1.3%
-------- -------- ---------
Total expenses 5,139 3.8% 4,230 2.6% 5,524 2.1%
Operating loss(1) (5,139) (4,230) (5,524)
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----------------------------------------------------------------------------

(1) See first page of this report


Corporate Division expenses consist of salary expenses, stock-based compensation and office costs related to corporate employees, as well as public company costs.

Current Quarter versus Q2 2008

Corporate Division expenses increased $0.9 million from the same quarter last year primarily from higher deferred share unit expenses and increases in other non-discretionary expenses.

Current Quarter versus Q1 2009

Corporate Division expenses decreased by $0.4 million as a decrease in profit sharing and salary expenses was partially offset by an increase in deferred share unit expenses.

OTHER EXPENSES AND INCOME

Interest expense decreased by $1.3 million relative to the comparable quarter in 2008 as a result of lower average debt balances and lower interest rates on consolidated debt facilities.

During the second quarter of 2009, approximately 10% of the Canadian Operations property and equipment was temporarily removed from service, which resulted in a decrease to depreciation of $1.0 million. However, depreciation and amortization expenses remained consistent with the second quarter of 2008 as the reduction caused by equipment removed from service and ruble devaluation was offset by increases caused by capital additions and a strengthening US dollar.

Foreign exchange losses increased by $3.3 million as a 14% strengthening of the US dollar resulted in losses on our US dollar denominated debt.

Other income of $1.3 million consisted of $2.2 million in payments received on the loan from an unrelated third party, which was partially offset by a one-time $1.0 million write-off of leasehold improvements from a facility leased by our US operations. The prior period amount of $1.3 million consisted largely of interest income on the loan to an unrelated third party.

INCOME TAXES

An income tax recovery of $13.4 million was recorded in the second quarter of 2009 compared to a recovery of $6.5 million for same period last year. The increased recovery was caused by an increase in net loss before income taxes.

OTHER COMPREHENSIVE INCOME

The consolidated statement of other comprehensive income for the quarter includes $13.5 million in unrealized losses on translating the financial statements of our self-sustaining foreign operations. The change related to translating the net assets of our US and Russian operations using the current rate method, given that the subsidiaries are considered self-sustaining for Canadian GAAP purposes. The Canadian dollar remained consistent with the Russian ruble during the second quarter but strengthened by 8% against the U.S. dollar. This resulted in a decrease to our net asset position in our US subsidiaries in Canadian dollar terms.



COMPARATIVE YEAR-TO-DATE INCOME STATEMENTS
----------------------------------------------------------------------------
($ thousands; unaudited) Year-
Over-
Six months ended % of % of Year %
June 30, 2009 Revenue 2008 Revenue Change Change
----------------------------------------------------------------------------

Revenue 403,189 100.0% 406,524 100.0% (3,335) -1%
Expenses
Materials and
operating 351,319 87.1% 333,256 82.0% 18,063 5%
General and
administrative 26,467 6.6% 24,977 6.1% 1,490 6%
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Operating income(1) 25,403 6.3% 48,291 11.9% (22,888) -47%
Interest expense 5,701 1.4% 7,187 1.8% (1,486) -21%
Depreciation and
amortization 48,058 11.9% 41,453 10.2% 6,605 16%
Foreign exchange
(gain)/loss 4,514 1.1% (7,259) -1.8% 11,773 162%
Other income (3,547) -0.9% (1,941) -0.5% (1,606) -83%
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Income / (loss)
before income taxes
and non controlling
interest (29,323) -7.3% 8,851 2.2% (38,174) -431%
Provision for/
(recovery of)
income taxes (13,327) -3.3% 1,939 0.5% (15,266) -787%
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Income / (loss)
before
non-controlling
interest (15,996) -4.0% 6,912 1.7% (22,908) -332%
Non-controlling
interest (169) 0.0% 66 0.0% (235) -356%
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Net income / (loss) (15,827) -3.9% 6,846 1.7% (22,673) -331%
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(1) See first page of this report


CANADIAN OPERATIONS
----------------------------------------------------------------------------
Year-Over-
Six months ended June 30, % of % of Year
($ thousands, unaudited) 2009 Revenue 2008 Revenue Change
----------------------------------------------------------------------------
Revenue 196,723 220,594 -11%
Expenses
Materials and
operating 169,979 86.4% 172,990 78.4% -2%
General and
administrative 10,141 5.2% 9,800 4.4% 3%
--------- ---------
Total expenses 180,120 91.6% 182,790 82.9% -1%
Operating income(1) 16,603 8.4% 37,804 17.1% -56%
Number of jobs 7,815 11,019 -29%
Revenue per job 24,813 19,570 27%
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(1) See first page of this report


For the six months ended June 30, 2009, revenue decreased 11% and job count decreased 29% compared to the same period in 2008. These decreases can be attributed to lower industry activity caused by lower commodity prices as the average number of active drilling rigs decreased by 38%. Average revenue per job increased 27% due to larger fracturing jobs performed in unconventional oil and gas plays. This increase was partially offset by higher discounts as reduced industry activity continues to place downward pressure on pricing.

As a percentage of revenue, materials and operating expenses increased to 86% from 78% for the comparable period in 2008. The increase was due to higher pricing discounts, reduced operating leverage on our fixed cost structure and higher salaries and related expense. These increases were partially offset by cost control measures implemented during the first half of the year and lower fuel costs.




RUSSIAN OPERATIONS

----------------------------------------------------------------------------
Year-Over-
Six months ended June 30, % of % of Year
($ thousands, unaudited) 2009 Revenue 2008 Revenue Change
----------------------------------------------------------------------------
Revenue 118,854 135,375 -12%
Expenses
Materials and operating 95,827 80.6% 117,340 86.7% -18%
General and administrative 3,966 3.3% 3,546 2.6% 12%
--------- ---------
Total expenses 99,793 83.9% 120,886 89.3% -17%
Operating income(1) 19,061 16.0% 14,489 10.7% 32%
Number of jobs 1,728 1,578 10%
Revenue per job 67,393 85,607 -21%
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----------------------------------------------------------------------------

(1) See first page of this report

(2) prior period figures have been adjusted to reflect our revised
methodology for determining job count and revenue per job data for
coiled tubing and nitrogen.


The revenue decrease of 12% can be attributed to a 14% weakening of the ruble compared to the prior year. A 10% increase in job count was a result of a higher amount of nitrogen and coiled tubing jobs partially offset by a reduction in fracturing and cementing work. The devaluation of the ruble and a lower proportion of fracturing jobs led to the 21% decrease in revenue per job.

Materials and operating costs have declined as a percentage of revenue due to cost control programs implemented in 2008 which resulted in significantly lower headcount and lower raw material costs, as well as a reduction in fuel prices. In dollar terms, general and administrative costs have increased because of an increase in the bad debt provision.



UNITED STATES OPERATIONS

----------------------------------------------------------------------------
Year-Over-
Six months ended June 30, % of % of Year
($ thousands, unaudited) 2009 Revenue 2008 Revenue Change
----------------------------------------------------------------------------
Revenue 87,612 50,555 73%
Expenses
Materials and operating 81,678 93.2% 39,582 78.3% 106%
General and administrative 5,533 6.3% 4,770 9.4% 16%
--------- ---------
Total expenses 87,211 99.5% 44,352 87.7% 97%
Operating income(1) 401 0.5% 6,203 12.3% -94%
Number of jobs 884 585 51%
Revenue per job 99,263 86,427 15%
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----------------------------------------------------------------------------


For the six months ending June 30, 2009, revenue increased 73% compared to the same period in 2008. Operations in early 2008 were impacted by sand supply issues that reduced activity in the early part of 2008. Also contributing to the increase was a 14% strengthening of the US dollar and expansion of our cementing, nitrogen and acidizing service lines. Revenue per job remained consistent in US dollar terms as pricing reductions were offset by larger fracturing jobs performed in the Haynesville region.

Materials and operating costs increased as a percentage of revenue due to increased discounts offered to customers. The margin contraction resulting from increased discounts was partially offset by cost savings generated by our cost control initiatives. The increase in general and administrative expenses was caused by the strengthening of the US dollar.




CORPORATE DIVISION

----------------------------------------------------------------------------
Six months ended June 30, % of % of Y-Over-Y
($ thousands, unaudited) 2009 Revenue 2008 Revenue Change
----------------------------------------------------------------------------
Expenses
Materials and operating 3,836 1.0% 3,344 0.8% 15%
General and administrative 6,827 1.7% 6,861 1.7% 0%
--------- ---------
Total expenses 10,663 2.6% 10,205 2.5% 4%
Operating loss(1) (10,663) (10,205) 4%
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) See first page of this report


Corporate Division expenses increased $0.5 million compared to last year as lower deferred share unit expenses were more than offset by small increases in professional fees, computer expenses and research and development costs.

OTHER EXPENSES AND INCOME

Interest expense decreased $1.5 million relative to the comparable period in 2008 as higher average debt balances were more than offset by decreases in the effective average interest rate on the consolidated debt facilities.

Depreciation and amortization increased by $6.6 million compared to 2008. The majority of this increase was in the US, where depreciation and amortization rose because of a 14% increase in the value of the US dollar combined with the addition of equipment and operations facilities in all of our operating regions within the last year.

Foreign exchange losses of $4.5 million have been recognized in 2009, due primarily to foreign exchange losses on US denominated debt caused by a 14% increase in the value of the US dollar.

Other income increased $1.6 million as payments received on a loan to an unrelated third party was partially offset by the one-time write-off of leasehold improvements from a facility leased by our US operations.

INCOME TAXES

An income tax recovery of $13.3 million was recorded for the six months ended June 30, 2009 compared to income tax expense of $1.9 million for the same period in 2008. The decrease in tax expense is largely attributable to lower earnings. Also contributing to the decrease are non-taxable foreign exchange gains in the US and lower non-deductible expenses in Russian.

OTHER COMPREHENSIVE INCOME

The consolidated statement of other comprehensive income for the first six months includes $33.4 million in unrealized losses on translating the financial statements of our self-sustaining foreign operations. The change related to translating the net assets of our U.S. and Russian operations using the current rate method, given that the subsidiaries are considered self-sustaining for Canadian GAAP purposes. The Canadian dollar strengthened 5% and 13% respectively against the U.S. dollar and the Russian ruble, decreasing the value of our net asset position in these subsidiaries in Canadian dollar terms.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Funds used in operations during the quarter was $14 million compared to funds provided by operations of $9.8 million in the second quarter of last year. This decrease was primarily a result of lower earnings.

The net change in non-cash working capital from operations provided $75 million and $86 million during the quarter and six months ended June 30, 2009, respectively. This release of working capital is primarily a result of lower operating activity and from management of our accounts receivable, inventory and accounts payable balances.

Investing Activities

Capital expenditures for the quarter totaled $8.2 million compared with $28 million for the same period in 2008. The majority of this investment was in equipment and infrastructure within our Russian region.

$1.4 million was paid during the first quarter to the existing shareholder of R-Can Services Limited (R-Can) to increase Trican's ownership interest in R-Can by 0.6% to 99.4%. R-Can holds the investment in the Company's Russian operations. We also paid $1.5 million in cash and issued 50,852 shares to the former owners of CBM Solutions relating to deferred and contingent payments.

At June 30, 2009, we had certain ongoing capital projects and estimate that $16.5 million of additional investment will be required to complete them.

Financing Activities

During the quarter, Trican obtained a signed commitment letter to obtain a $35 million credit facility with Export Development Canada. The facility bears interest at CAD-BA-CDOR, LIBOR or EURIBOR plus 250 to 350 basis points, dependant on certain of Trican's financial ratios. The facility is unsecured and is subject to financial and non-financial covenants that are typical for this type of arrangement. Any draws under this facility are restricted to financing international operations. At June 30, 2009, this facility had not been utilized.

During 2009, our debt balances have decreased by $76 million due primarily to $68 million in payments made on our long-term debt and bank loan facilities. The remaining $8 million decrease was caused by the devaluation of the US dollar.

As at August 5, 2009, Trican had 125,637,419 common shares and 6,351,975 employee stock options outstanding.

BUSINESS RISKS

A complete discussion of business risks faced by Trican may be found under the "Risk Factors" section of our Annual Information Form dated March 31, 2009, which is available under Trican's profile at www.sedar.com.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING DURING SECOND QUARTER 2009

There have been no changes in Trican's internal controls over financial reporting during the period ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

INTERNATIONAL FINANCIAL REPORTING STANDARDS UPDATE FOR THE SECOND QUARTER 2009

The Canadian Accounting Standards Board has confirmed that use of International Financial Reporting Standards (IFRS) will be required for years beginning on or after January 1, 2011 for profit-oriented publicly accountable entities. Trican has developed a project plan to complete the transition to IFRS by January 1, 2011, including the preparation of required comparative information.

The project plan consists of three phases: impact assessment, detailed assessment and design, and implementation. We have completed the impact assessment phase, which included:

- Developing a detailed conversion timeline

- Assessing resource and training needs

- Identifying differences between Canadian GAAP and IFRS that have the greatest potential impact to Trican considering the most significant impact on the financial statements and greatest risk in terms of complexity to implement; such areas identified to date include property & equipment, impairment testing, financial statement disclosures and stock based compensation.

- Assessing the impact on Trican's IT systems

We have made progress on the detailed assessment and design phase focusing on the key areas listed above. To date we have:

- Drafted a set of full IFRS financial statements, including draft IFRS accounting policies applicable to Trican

- Carried out initial assessments of significant components of our property & equipment

- Analyzed accounting policy alternatives and implementation options including the first time adoption exemptions detailed in IFRS 1

We expect to complete the detailed assessment and design phase of the project during the remainder of 2009. This phase will require further comprehensive analysis of the impact of all differences identified in the initial scoping assessment.

During the implementation phase, we will execute the required changes to business processes, financial systems, accounting policies, and internal controls over financial reporting.

We will continue to monitor our IFRS changeover plan and make the necessary modifications to reflect new and amended accounting standards issued by the International Accounting Standards Board. We will also participate with our peers in any related industry initiatives as appropriate.

At this time, the impact of the transition to IFRS on Trican's financial statements is not reasonably determinable.

OUTLOOK

Our second quarter financial results reflect continued weak North American demand for services. Rig counts in both Canada and the United States have slowly begun increasing since the second quarter. That being said, industry activity levels remain at historically low levels for this time of year and are generally expected to continue to remain low in the near term. The timing of a significant turnaround in activity remains difficult to predict as it is predicated on the pace of recovery in the North American economy, a supply response in oil and gas production levels to activity declines, and a meaningful decline in natural gas inventory levels.

While the Canadian rig count has increased from the seasonal lows experienced during the second quarter, it remains historically low for this time of year. Pressure pumping activity in the unconventional resource plays is partially mitigating the overall decrease in pressure pumping activity resulting from the significant decline in rig count.

The Canadian market will continue to be challenging until natural gas prices improve and our customers respond by significantly increasing activity. The Canadian Operations financial results for the first half of 2009 have been significantly impacted by the slowdown in activity. We expect activity to remain at historically low levels in the near term and our financial results will continue to be negatively impacted. However, Trican's Canadian business is well positioned to withstand the impact of this weak operating environment given our technical focus, our long-term customer relationships, our focus on cost control and our strong presence in the unconventional resource plays.

The US market also remains challenging in light of the sharp decline in rig count and significant pricing pressure experienced to date. However, the US rig count has recently increased above 900 rigs and pricing pressures appear to be moderating. The keys to a US activity turnaround are a natural gas production supply response, increasing North American demand for natural gas and a reduction in the amount of equipment operating in the US market.

With the current depressed activity levels and pricing pressure, we continue to expect weak near term financial results for our US operations. The cost control initiatives undertaken to date will partially mitigate the impact of the activity declines and pricing pressure. We are committed to the US markets we service; however, management will continue to monitor the operating environment and will reduce expenditures as necessary to appropriately minimize the impact of the current operating conditions.

Our Russian operations continue to outperform our North American operations as the oil-based Russian market is experiencing higher industry activity and work programs under our 2009 contract awards continue to be executed as planned. As a result, our Russian operations have experienced reasonable activity levels and achieved decent financial results during the first half of the year. Our customers have indicated that they are considering increasing activity levels throughout 2009 as a result of higher than expected oil prices. The outlook for the Russian operations for the second half of 2009 remains positive.

Our balance sheet remains healthy with cash and available debt of approximately $183 million. During the first half of 2009, we have increased our cash and available debt position by over $50 million and repaid over $75 million in debt. We have always focused on maintaining a healthy balance sheet and we will continue to do so in the future.

We continue to believe Trican is well positioned to manage through this economic downturn with strong market positions in each of our geographic regions, our focus on our customers' needs and our prudent financial management. As a result, we also believe Trican is able to take advantage of any strategic market opportunities that may emerge during the downturn. We remain optimistic that the company will be in a stronger market position as the industry recovers from the bottom of the current economic cycle.



Summary of Quarterly Results ($ millions, except per share amounts;
unaudited)

2009 2008 2007
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
----------------------------------------------------------------------------
Revenue 136.3 266.9 322.8 286.7 162.3 244.2 195.8 228.7
Net income / (loss) (25.5) 9.6 (95.3) 18.1 (14.4) 21.2 18.2 37.6
Earnings / (loss) per
share
Basic (0.20) 0.08 (0.76) 0.14 (0.12) 0.16 0.15 0.31
Diluted (0.20) 0.08 (0.76) 0.14 (0.12) 0.16 0.15 0.30
----------------------------------------------------------------------------


NON-GAAP DISCLOSURE

Net income / (loss) before stock-based compensation does not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. The following is a reconciliation of net income / (loss) before stock-based compensation, as used in this report, to net income, being the most directly comparable measure calculated in accordance with GAAP. The reconciling items have been presented net of tax.



Three Months Three Months Six Months Six Months
($ thousands, Ended June Ended June Ended June Ended June
unaudited) 30, 2009 30, 2008 30, 2009 30, 2008
----------------------------------------------------------------------------

Net income / (loss)
before stock-based
compensation (22,838) (11,813) (10,111) 12,851
Deduct:

Stock- based
compensation
expense 2,622 2,577 5,716 6,005
----------------------------------------------------------------------------
Net (loss)/ income
(GAAP financial
measure) (25,460) (14,390) (15,827) 6,846
----------------------------------------------------------------------------


Other non-GAAP measures include operating income and funds provided by operations. A calculation of operating income is shown in the consolidated statement of operations, while funds provided by operations is shown in the consolidated cash flow statement.

FORWARD-LOOKING STATEMENTS

This document contains statements that constitute forward-looking statements within the meaning of applicable securities legislation. These forward-looking statements include, among others, the Company's prospects, expected revenues, expenses, profits, expected developments and strategies for its operations, and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "achieve", "achievable," "believe," "estimate," "expect," "intend", "plan", "planned", and other similar terms and phrases. Forward-looking statements are based on current expectations, estimates, projections and assumptions that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks and uncertainties include: 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.



CONSOLIDATED BALANCE SHEETS

(restated -
note 1)
June 30, December 31,
(Stated in thousands of dollars; unaudited) 2009 2008
----------------------------------------------------------------------------
ASSETS
Current assets
Cash and short-term deposits $ 46,347 $ 56,281
Accounts receivable 115,705 231,636
Income taxes recoverable 2,942 12,599
Inventory 95,374 107,831
Prepaid expenses 16,843 20,062
----------------------------------------------------------------------------
277,211 428,409
Property and equipment 584,225 632,041
Intangible assets 33,654 38,543
Future income tax assets 98,733 86,206
Other assets 10,490 11,221
Goodwill (note 3) 36,916 35,556
----------------------------------------------------------------------------
$ 1,041,229 $ 1,231,976
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank loans (note 5) $ 31,353 $ 61,230
Accounts payable and accrued liabilities 66,630 117,450
Deferred consideration 1,685 1,572
Dividend payable 6,282 6,278
Current income taxes payable 15,193 -
Current portion of capital lease obligations 446 -
----------------------------------------------------------------------------
121,589 186,530

Long-term debt (note 6) 196,250 242,460
Capital lease obligations 937 -
Future income tax liabilities 52,899 82,036
Deferred consideration - 1,572
Non-controlling interest (note 3) 322 801
Shareholders' equity
Share capital (note 4) 246,764 246,357
Contributed surplus 24,300 18,584
Retained earnings 440,203 462,312
Accumulated other comprehensive income (42,035) (8,676)
----------------------------------------------------------------------------
669,232 718,577
----------------------------------------------------------------------------
$ 1,041,229 $ 1,231,976
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.


CONSOLIDATED STATEMENTS OF OPERATIONS

Three Three Six Six
Months Months Months Months
(Stated in thousands, except Ended Ended Ended Ended
per share amounts; June 30, June 30, June 30, June 30,
unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------

Revenue $136,286 $162,342 $403,189 $406,524
Expenses
Materials and operating 136,146 147,861 351,319 333,256
General and administrative 12,808 11,088 26,467 24,977
----------------------------------------------------------------------------
Operating income/(loss) (12,668) 3,393 25,403 48,291
Interest expense on
long-term debt and bank
loans 2,483 3,791 5,701 7,187
Depreciation and
amortization 22,452 22,212 48,058 41,453
Foreign exchange (gain)/loss 2,542 (728) 4,514 (7,259)
Other income (1,272) (1,267) (3,547) (1,941)
----------------------------------------------------------------------------
Income/(loss) before income
taxes and non-controlling
interest (38,873) (20,615) (29,323) 8,851
Provision for/(recovery of)
current income taxes (1,190) (6,285) 26,612 16,741
Recovery of future income
taxes (12,181) (223) (39,939) (14,802)
----------------------------------------------------------------------------
Income/(loss) before
non-controlling interest (25,502) (14,107) (15,996) 6,912
Non-controlling interest (42) 283 (169) 66
----------------------------------------------------------------------------
Net income/ (loss) $(25,460) $(14,390) $(15,827) $ 6,846
----------------------------------------------------------------------------
Earnings/(loss) per share
Basic $ (0.20) $ (0.12) $ (0.13) $ 0.06
Diluted $ (0.20) $ (0.12) $ (0.13) $ 0.05
----------------------------------------------------------------------------
Dividend per share $ 0.05 $ 0.05 $ 0.05 $ 0.05
----------------------------------------------------------------------------
Weighted average shares
outstanding - basic 125,623 124,324 125,593 123,696
Weighted average shares
outstanding - diluted 125,623 124,324 125,593 125,191
----------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(Stated in thousands of dollars; June 30, June 30, June 30, June 30,
unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------

Net income/(loss) $ (25,460) $ (14,390) $ (15,827) $ 6,846
Other comprehensive income
Unrealized gains/(losses) on
translating financial statements
of self-sustaining foreign
operations (13,458) (5,135) (33,359) 13,501
----------------------------------------------------------------------------
Other comprehensive income $ (38,918) $ (19,525) $ (49,186) $ 20,347
----------------------------------------------------------------------------
----------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS AND ACCUMULATED OTHER
COMPREHENSIVE INCOME

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(Stated in thousands of dollars; June 30, June 30, June 30, June 30,
unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------
Retained earnings, beginning of
period $ 471,945 $ 567,447 $ 462,312 $ 546,211
Dividend (6,282) (6,259) (6,282) (6,259)
Net income/(loss) (25,460) (14,390) (15,827) 6,846
----------------------------------------------------------------------------
Retained earnings, end of period $ 440,203 $ 546,798 $ 440,203 $ 546,798
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Accumulated other comprehensive
income, beginning of period $ (28,577) $ (60,746) $ (8,676)$ (79,382)
Unrealized gains /(losses) on
translating financial statements
of self sustaining foreign
operations (13,458) (5,135) (33,359) 13,501
----------------------------------------------------------------------------
Accumulated other comprehensive
income, end of period $ (42,035) $ (65,881) $ (42,035) $(65,881)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.


CONSOLIDATED CASH FLOW STATEMENTS

Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(Stated in thousands of dollars; June 30, June 30, June 30, June 30,
unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------
Cash Provided By/(Used In):
Operations
Net income/(loss) $ (25,460) $ (14,390) $ (15,827) $ 6,846
Charges to income not involving
cash:
Depreciation and amortization 22,452 22,212 48,058 41,453
Future income tax recovery (12,181) (223) (39,939) (14,802)
Non-controlling interest (42) 283 (169) 66
Stock-based compensation 2,622 2,577 5,716 6,005
Loss on disposal of property and
equipment 560 53 572 12
Loss/(gain) on revaluation of
deferred consideration 191 - (293) -
Unrealized foreign exchange
loss/(gain) 135 (658) 4,093 (7,216)
Recovery on writedown of other
assets (2,186) - (4,509) -
----------------------------------------------------------------------------
Funds provided by operations (13,909) 9,854 (2,298) 32,364
Net change in non-cash working
capital from operations 74,764 (26,619) 85,438 (26,393)
----------------------------------------------------------------------------
Net cash provided by operating
activities 60,855 (16,765) 83,140 5,971

Investing
Purchase of property and
equipment (8,196) (28,353) (20,603) (67,938)
Proceeds from the sale of
property and equipment 1,500 17 1,529 122
Purchase of other assets - - - (1,319)
Issuance of loan to unrelated
third party - (6,337) - (12,961)
Payments received on loan to
unrelated third party 2,186 - 4,509 -
Business acquisitions - (5,861) (1,670) (10,453)
Net change in non-cash working
capital from investing
activities (1,140) 2,167 (2,087) 2,058
----------------------------------------------------------------------------
(5,650) (38,367) (18,322) (90,491)

Financing
Net proceeds from issuance of
share capital 55 22,744 407 29,142
(Repayment)/issuance of bank
loans (9,305) 5,400 (28,280) 4,101
Issuance of long-term debt - 10,234 - 50,772
Repayment of long-term debt (30,000) - (40,000) -
Partnership distribution - (1,046) - (1,046)
Dividend paid - - (6,278) (6,123)
----------------------------------------------------------------------------
(39,250) 37,332 (74,151) 76,846

Effect of exchange rate changes
on cash (307) (222) (601) 194
----------------------------------------------------------------------------
-
Increase/(decrease) in cash and
short-term deposits 15,648 (18,022) (9,934) (7,480)
Cash and short-term deposits,
beginning of period 30,699 33,912 56,281 23,370
----------------------------------------------------------------------------
Cash and short-term deposits,
end of period $ 46,347 $ 15,890 $ 46,347 $ 15,890
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental information
Income taxes paid 4,630 10,763 11,419 17,806
Interest paid 7,696 1,875 9,737 5,667
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2009 (Unaudited)

The Company's interim financial statements do not conform in all respects to the requirements of generally accepted accounting principles for annual financial statements. The Company's interim financial statements should be read in conjunction with the most recent annual financial statements. The Company's interim financial statements follow the same accounting policies and methods of their application as of the most recent annual financial statements, except where any change has been noted in the interim financial statements.

The Company's Canadian operations and to a lesser extent Russian operations are seasonal in nature with the highest activity in the winter months (first and fourth fiscal quarters) and the lowest activity during spring break-up (second fiscal quarter) due to road weight restrictions and reduced accessibility to remote areas.

NOTE 1 - ACCOUNTING POLICIES

Accounting policies changes

Goodwill and Intangible Assets

In February 2008, the Canadian Institute of Chartered Accountants (CICA) approved Handbook section 3064 ''Goodwill and Intangible Assets''. Effective January 1, 2009, this new standard replaces section 3062 ''Goodwill and Other Intangible Assets'' and section 3450 ''Research and Development Costs''. This standard changes the criteria for asset recognition in the financial statements and the ability to defer costs. In accordance with the transitional provisions, the revised guidance requires the company to expense $1.0 million of other assets that were previously capitalized. This change in accounting policy has been accounted for retrospectively, and the comparative statements for 2008 have been restated. As a result, other assets and retained earnings on the 2008 balance sheet have decreased by $1.0 million.

Accounting standards pending adoption

International Financial Reporting Standards (IFRS)

In February 2008, the Canadian Accounting Standards Board confirmed that effective January 1, 2011, all publicly accountable enterprises will be required to report under IFRS as issued by the International Accounting Standards Board (IASB). On January 1, 2011, these standards will apply to the Company. The impact of IFRS on the Company's financial statements is not determinable at this time.

Business Combinations, Consolidated Financial Statements and Non-controlling interests

Effective January 1, 2011, these standards will amend previously existing standards on accounting for and reporting business acquisitions and non-controlling interests. The new standards change the recognition of assets and liabilities in purchase price allocations and require expensing of certain acquisition related costs. The impact of these standards on the Company's financial statements will depend on the nature of any future acquisitions.

NOTE 2 - SEGMENTED INFORMATION

The Company operates in three geographic regions: Canada, Russia (which includes Kazakhstan and Algeria), and the United States. Each geographic region has a general manager that is responsible for the operation and strategy of their region's business. Personnel working within the particular geographical region report to the General Manager; the General Manager reports to the corporate executive.

The Company provides a comprehensive array of specialized products, equipment, services and technology to customers through three operating divisions:

- Canadian Operations provides cementing, fracturing, coiled tubing, nitrogen, geological, and acidizing services which are performed on new and existing oil and gas wells, and industrial services.

- Russian Operations provides cementing, fracturing, deep coiled tubing, and nitrogen services which are performed on new and existing oil and gas wells.

- United States Operations provides fracturing, cementing and nitrogen services which are performed on new and existing oil and gas wells.

Corporate Division expenses consist of salary expenses, stock-based compensation and office costs related to corporate employees, as well as public company costs.



United
(Stated in Canadian Russian States
thousands) Operations Operations Operations Corporate Total
----------------------------------------------------------------------------
Three months ended
June 30, 2009
----------------------------------------------------------------------------
Revenue $ 46,992 $ 55,772 $ 33,522 $ - $ 136,286
Operating
income/(loss) (9,898) 8,053 (5,684) (5,139) (12,668)
Interest expense - - - 2,483 2,483
Depreciation and
amortization 8,488 5,659 8,298 7 22,452
Assets 405,117 242,940 320,929 72,243 1,041,229
Goodwill 22,690 14,226 - - 36,916
Property and
equipment 298,836 105,657 179,478 254 584,225
Capital expenditures 1,726 5,689 752 29 8,196
Goodwill expenditures - - - - -
----------------------------------------------------------------------------
Three months ended
June 30, 2008
----------------------------------------------------------------------------
Revenue $ 64,029 $ 67,833 $ 30,480 $ - $ 162,342
Operating
income/(loss) (4,267) 7,481 4,409 (4,230) 3,393
Interest expense - - - 3,791 3,791
Depreciation and
amortization 10,091 6,251 5,840 30 22,212
Assets 444,786 293,631 365,175 38,096 1,141,688
Goodwill 22,436 13,120 142,834 - 178,390
Property and
equipment 295,001 129,994 148,273 22,204 595,472
Capital expenditures 14,616 9,608 4,095 34 28,353
Goodwill expenditures - - 3,410 - 3,410
----------------------------------------------------------------------------

The corporate division incurred an operating loss of $5.1 million (2008 -
$4.2 million) of which 96% (2008 - 95%) was incurred in Canada as this is
where corporate head office is located.

United
(Stated in Canadian Russian States
thousands) Operations Operations Operations Corporate Total
----------------------------------------------------------------------------
Six months ended
June 30, 2009
----------------------------------------------------------------------------
Revenue $ 196,723 $ 118,854 $ 87,612 $ - $403,189
Operating
income/(loss) 16,603 19,061 401 (10,662) 25,403
Interest expense - - - 5,701 5,701
Depreciation and
amortization 18,367 11,849 17,829 13 48,058
Capital expenditures 9,320 7,412 3,671 200 20,603
Goodwill expenditures 254 1,106 - - 1,360
----------------------------------------------------------------------------
Six months ended
June 30, 2008
----------------------------------------------------------------------------
Revenue $ 220,594 $ 135,375 $ 50,555 $ - $ 406,524
Operating
income/(loss) 37,804 14,489 6,203 (10,205) 48,291
Interest expense - - - 7,187 7,187
Depreciation and
amortization 19,862 11,057 10,460 74 41,453
Capital expenditures 21,871 18,754 27,143 170 67,938
Goodwill expenditures 301 2,988 3,479 - 6,768
----------------------------------------------------------------------------


The corporate division incurred an operating loss of $10.7 million (2008 - $10.2 million) of which 95% (2008 - 95%) was incurred in Canada as this is where corporate head office is located.

Canadian operations include $27.9 million of property and equipment that was not depreciated during the second quarter of 2009.

NOTE 3 - ACQUISITIONS

During the first quarter ended March 31, 2009 and pursuant to an agreement amended in March 2007, the Company increased its ownership interest in R-Can Services Limited by 0.6% to 99.4%. The Company paid $1.4 million for this acquisition, increasing goodwill by $1.1 million and reducing non-controlling interest by $0.3 million.

During the first quarter ended March 31, 2009 and pursuant to an agreement dated March 2007, the Company paid $0.3 million of contingent consideration in connection with its acquisition of CBM Solutions Ltd. All of the contingent consideration was recorded as goodwill.

NOTE 4 - SHARE CAPITAL

Authorized:

The Company is authorized to issue an unlimited number of common shares and preferred shares, issuable in series.



Issued and Outstanding - Common Shares:
----------------------------------------------------------------------------
(stated in thousands, except share amounts) Number of Shares Amount
----------------------------------------------------------------------------
Balance, December 31, 2008 125,562,767 $ 246,357

Issuance out of treasury, net of share
issuance costs 50,852 352
Exercise of stock options 23,800 55
----------------------------------------------------------------------------
Balance, June 30, 2009 125,637,419 $ 246,764
----------------------------------------------------------------------------

The shares issued out of treasury relate to the deferred consideration on
the CBM Solutions Ltd. acquisition.

The securities convertible into common shares of the Company are as follows:

June 30, December 31,
2009 2008
----------------------------------------------------------------------------
Securities convertible into common shares:
Employee stock options 7,945,716 9,303,132
----------------------------------------------------------------------------

NOTE 5 - BANK LOANS

(Stated in thousands) June 30, December 31,
2009 2008
----------------------------------------------------------------------------
Demand revolving facilities:
U.S.$30 million held by U.S subsidiary 25,575 36,738
U.S.$20 million held by Russian subsidiary 5,778 24,492
$35 million held in Canada - -
----------------------------------------------------------------------------
$ 31,353 $ 61,230
----------------------------------------------------------------------------

NOTE 6 - LONG-TERM DEBT

(Stated in thousands) June 30, December 31,
2009 2008
----------------------------------------------------------------------------
Notes payable $ 116,250 $ 122,460
Equipment and acquisition facility 80,000 120,000
EDC facility - -
----------------------------------------------------------------------------
$ 196,250 $ 242,460
----------------------------------------------------------------------------


At June 30, 2009, the Company had $40 million of additional financing available under the equipment and acquisition facility.

During the quarter, the Company obtained a $35 million credit facility with Export Development Canada (EDC). The facility bears interest at CAD-BA-CDOR, LIBOR or EURIBOR plus 250 to 350 basis points, dependant on certain financial ratios of the Company. The facility is unsecured and is subject to financial and non-financial covenants that are typical for this type of arrangement. Any draws under this facility are restricted to financing international operations. At June 30, 2009, this facility had not been utilized.



NOTE 7 - INCOME TAXES

(Stated in thousands)
Six months ended June 30, June 30,
2009 2008
----------------------------------------------------------------------------
Provision for current income taxes $ 6,612 $ 16,741
Provision for future income taxes (39,939) (14,802)
----------------------------------------------------------------------------
$ (13,327) $ 1,939
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The net income tax provision differs from that expected by applying the
combined federal and provincial income tax rate of 29.28% (2008 - 29.75%) to
income before income taxes for the following reasons:

Six months ended June 30, June 30,
2009 2008
----------------------------------------------------------------------------
Expected combined federal and provincial
income tax $ (8,587) $ 2,633
Statutory and other rate differences (5,916) (6,186)
Non-deductible expenses 1,679 3,181
Translation of foreign subsidiaries (565) 2,158
Future income tax rate reduction (105) (348)
Capital and other foreign tax 474 360
Other (307) 141
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$ (13,327) $ 1,939
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The Company will host a conference call on Thursday, August 6, 2009 at 9:00 a.m. MT (11:00 a.m. ET) to discuss the Company's results for the Second Quarter 2009.

To listen to the webcast of the conference call, please enter: http://events.onlinebroadcasting.com/trican/080609/index.php in your web browser or visit the Investor Information section of our website at www.trican.ca.

To participate in the Q&A session, please call the conference call operator at 1-877-677-0837 (North America) or 416-695-6616 (outside North America) 15 minutes prior to the call's start time and ask for the "Trican Well Service Ltd. - Second Quarter 2009 Conference Call".

A replay of the conference call will be available until August 13, 2009 by dialing 1-800-408-3053 (North America) or 416-695-5800 (outside North America). Playback passcode: 1746506.

The conference call will be archived on Trican's website at www.trican.ca.

Contact Information

  • Trican Well Service Ltd.
    Dale Dusterhoft
    Chief Executive Officer
    (403) 266-0202
    (403) 237-7716 (FAX)
    Email: ddusterhoft@trican.ca
    or
    Trican Well Service Ltd.
    Michael Baldwin
    Vice President, Finance and Chief Financial Officer
    (403) 266-0202
    (403) 237-7716 (FAX)
    Email: mbaldwin@trican.ca
    or
    Trican Well Service Ltd.
    2900, 645 - 7th Avenue S.W.
    Calgary, Alberta T2P 4G8
    Website: www.trican.ca