Calfrac Weighs Entry Into Big Oil Regions Such As Saudi, Permian

(Bloomberg) -- Calfrac Well Services Ltd., the Canadian oilfield services provider, is considering expansion opportunities into two of the world’s largest producing regions.

Saudi Arabia and the U.S. Permian Basin are two oil producing areas attracting Calfrac for potential investment, Chief Executive Officer Fernando Aguilar said on Tuesday. The Calgary-based company wants to be in important markets where output is around 10 million barrels a day, he said by phone after a Bloomberg TV Canada interview with Pamela Ritchie.

“Saudi is an idea, a project,” Aguilar said. “We continue exploring those markets with potential for us to be present where we are not operating today, like the Permian, like Saudi Arabia.”

Calfrac provides services including hydraulic fracturing, also known as fracking, in parts of Canada, the U.S., Russia, Mexico and Argentina, and is looking for opportunities to grow as a two-year crude market slump shows signs of stabilizing. In the U.S., Calfrac is active in the Bakken, Marcellus, Rockies, Utica and Eagle Ford, according to an investor presentation last week.

Balance sheet concerns have been raised by analysts including Kurt Hallead at RBC Capital Markets in Austin, who in a research note last week flagged Calfrac’s higher debt levels than peers and negative projected free cash flow through this year and next. Oilfield services activity isn’t poised to increase materially until U.S. crude prices consistently trade higher than $50 a barrel, Hallead said.

West Texas Intermediate crude has risen about 70 percent since a February low and closed at $44.90 a barrel on Tuesday. Aguilar expects global oil market supply and demand balancing later this year, he said in the TV interview.

“We are interested and exploring those possibilities as we continue moving forward with the options for the company,” Aguilar said. “But, of course, that’s going to take some time.”

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Aaron Clark, Ramsey Al-Rikabi

Copyright 2016 Bloomberg News.

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