Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Calfrac Well Services Ltd (CFWFF, Financial) achieved a record safety performance with a TRIF of 0.92, down from 1.05 in 2023, highlighting a strong safety culture.
- The company is advancing its fleet modernization program, ending the year with 66 Tier IV pumps and planning to operate five Tier IV fleets in North America by the end of Q1 2025.
- Calfrac Well Services Ltd (CFWFF) is expanding its operations in Argentina, deploying a second large fracturing fleet into the Vaca Muerta shale play ahead of schedule.
- The company has a capital budget of $135 million for 2025, with $50 million dedicated to expanding operations in Argentina, funded locally by cash flow.
- Calfrac Well Services Ltd (CFWFF) maintained a strong balance sheet with $273.9 million in working capital and $44 million in cash at the end of Q4 2024.
Negative Points
- Revenue from continuing operations decreased by 10% in Q4 2024 compared to the same period in 2023, primarily due to lower activity and pricing in the United States.
- Adjusted EBITDA declined by 45% year-over-year in Q4 2024, impacted by lower utilization in North America and unplanned downtime in Argentina.
- The company reported a net loss of $6.4 million in Q4 2024, affected by a $12.7 million write-off of obsolete fracturing assets and a $12.2 million impact on depreciation expense.
- Calfrac Well Services Ltd (CFWFF) faces challenges from tariffs impacting the cost of imported items such as sand and chemicals, with uncertainty around potential exemptions.
- The company experienced a slow start to the year in North Dakota, with a planned reduction in activity impacting early 2025 performance.
Q & A Highlights
Q: Can you provide more detail on what you're seeing in Argentina, particularly regarding the two large fleets working in the Vaca Muerta? What utilization do you expect, and what types of contracts are these fleets under?
A: Contracts in Argentina are quite dynamic. Our first fleet is mostly contracted, while the second fleet initially picked up spot work due to early deployment. We are confident that the second fleet will be well-utilized as we are deep in the contract process, despite some fluctuations in agreements.
Q: Can you discuss the pricing situation in the US, especially with your success in the Marcellus? Has pricing hit a bottom, and is it starting to rebound?
A: We believe pricing has likely hit a bottom and should trend higher, although this is difficult to predict due to competitor actions. The focus is on transitioning to Tier IV fleets to improve pricing and utilization, which are both critical.
Q: How many Tier IV pumps do you expect to have by the end of the year, and what is the plan for upgrading?
A: We aim to end the year with about 95 next-generation pumps. This transition is crucial for maintaining competitive pricing and utilization.
Q: Regarding your operations in Appalachia, is this new demand or are you taking business from competitors? When were these negotiations held?
A: The move to Appalachia is likely due to incremental demand rather than displacing competitors. Negotiations gained traction in the fourth quarter, allowing us to start the year there. The agreement is based on pricing rather than a contract, with significant work expected through the third quarter.
Q: How will Q1 2025 track for your US business in terms of revenue and profitability compared to last year?
A: We expect a 10% decrease in revenue year-over-year due to changes in customer mix and commodity revenue. However, profitability should be slightly better than last year, although not substantially.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
