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Press release from Marketwire

Trican Well Service Ltd. Q2 2012 Update and Outlook

Tuesday, July 03, 2012

Trican Well Service Ltd. Q2 2012 Update and Outlook18:42 EDT Tuesday, July 03, 2012CALGARY, ALBERTA--(Marketwire - July 3, 2012) - Trican Well Service Ltd. (TSX:TCW) anticipates that consolidated financial results for the second quarter will fall below our expectations based on management's preliminary review of our second quarter operating results. We estimate earnings per share and operating income for the second quarter to be as follows: Diluted loss per share$0.32 to $0.42Consolidated Operating Income/(Loss)$(24) million to $(34) millionThese estimates are subject to completion and approval of our second quarter interim financial report by our Audit Committee, which we expect to release on July 30, 2012. Our Audit Committee has reviewed the financial outlook and information provided in this document. Canadian OperationsWet weather in May and June led to lower industry activity levels throughout Western Canada and had a negative impact on our second quarter Canadian results. In addition, a large Horn River project was initially expected to start in early June but was delayed until the end of June due to wet weather, which also contributed to second quarter Canadian results that were below expectations. As some customers have reduced their budgets and new pressure pumping equipment enters the Canadian market, we expect pricing to decline in the second half of 2012 relative to the first quarter of 2012 and lead to reduced operating margins in Canada. However, we expect demand to remain strong and support solid utilization levels and operating margins for our Canadian operations during the second half of 2012. We will continue to monitor the capital budgets and cash flows of our customers in light of low gas prices and the recent weakness in oil prices. We expect that any additional reductions in capital spending by our customers will decrease Canadian rig count and place further pricing pressure on the Canadian pressure pumping market.US Operations We expect our U.S. operations to incur an operating loss during the second quarter due largely to pricing declines and continued increases in guar costs. Second quarter pricing has decreased by approximately 10% sequentially as new pressure pumping equipment continues to enter the U.S. market and equipment from dry gas regions migrates to oil and liquids-rich gas plays. In addition, average guar costs increased sequentially in the second quarter and we were largely unable to pass these costs on to our customers due to the competitive pricing environment. We have initiated a number of cost cutting measures that are expected to reduce our product costs but we do not expect to see the benefit from these measures until the second half of 2012. These measures include the introduction of a new hybrid fluid system that is expected to reduce guar usage. We have started to see a reduction in guar prices and we expect guar prices to continue to decrease throughout the remainder of 2012 as a result of the development of hybrid systems and guar substitutes, and the new guar crop that is expected to increase supply later in 2012. Given the current weakness in the U.S. pressure pumping market, we are currently evaluating our options and will consider parking crews that are experiencing low utilization and low operating margins. We expect to have better visibility on this matter when we release our second quarter financial and operating results on July 30, 2012.International Operations Second quarter results for our International operations are expected to be below our expectations due to delays in our Russian customers' work programs. We expect operating results to improve in the second half of 2012 but annual results for our International operations are expected to be slightly below expectations due to weaker-than-expected results during the first half of the year. FORWARD-LOOKING INFORMATIONThis document contains information that constitutes forward-looking information and financial outlook within the meaning of applicable securities legislation. This forward-looking information and financial outlook is identified by the use of terms and phrases such as "anticipate," "achieve", "achievable," "believe," "estimate," "expect," "intend", "plan", "planned", and other similar terms and phrases. This outlook and information speaks only as of the date of this document and other than the update in respect of our second quarter earnings per share and operating income that will be provided upon the release of our complete financial results for the second quarter 2012, we do not undertake to publicly update the forward-looking information contained in this document except in accordance with applicable securities laws. This forward-looking information and financial outlook includes, among others:Expectation that consolidated second quarter financial results will fall below our expectations; Expectations that diluted loss per share will be between $0.32 and $0.42 and our consolidated operating income/(loss) will be between $(24) million and $(34) million; Expectation that our complete financial results will be released on July 30, 2012; Expectation that Canadian pricing will decline in the second half of 2012 relative to the first quarter of 2012 and lead to reduced operating margins in Canada; Expectation that Canadian demand will remain strong and support solid utilization levels and operating margins for our Canadian operations during the second half of 2012; Expectation that further reductions in our customers' capital spending would decrease Canadian rig count and place further pricing pressure on the Canadian pressure pumping market; Expectation that our U.S. operations will incur an operating loss during the second quarter due largely to pricing declines and continued increases in guar costs; Expectation that cost cutting measures will reduce our product costs but that we will not see the benefit from these measures until the second half of 2012; Expectation that the introduction of our new hybrid fluid system will reduce guar usage; Expectation that with the development of guar substitutes and the new guar crop that is expected to increase supply later in 2012, guar prices will decrease throughout the remainder of 2012; Expectation that we will have better visibility on our options in the U.S. when we release our second quarter financial and operating results on July 30, 2012; Expectation that our second quarter results for our International operations will be slightly below expectations; and Expectation that operating results for our International operations will improve in the second half of 2012 but that annual results for our International operations will be slightly below expectations due to the weaker-than-expected first half of the year. Forward-looking information and financial outlook is based on current expectations, estimates, projections and assumptions, which we believe are reasonable but which may prove to be incorrect and therefore such forward-looking information and financial outlook should not be unduly relied upon. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: industry activity; the general stability of the economic and political environment; effect of market conditions on demand for the Company's products and services; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; the timing and costs of capital expenditures; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products and services. Trican has provided financial outlook regarding its second quarter earnings per share and operating income for the purpose of updating investors in respect of the potential impacts of recent changes in market conditions on Trican's 2012 second quarter and annual financial results. Readers are cautioned that this financial outlook may not be appropriate for other purposes. Forward-looking information and financial outlook is subject to 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; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining issued patents; the potential development of competing technologies by market competitors; and availability of products, qualified personnel, manufacturing capacity and raw materials. In addition, actual results could differ materially from those anticipated in the forward-looking information and financial outlook provided herein as a result of the risk factors set forth under the section entitled "Business Risks" in our Annual Information Form dated March 22, 2012.Additional information regarding Trican including Trican's most recent Annual Information Form is available under Trican's profile on SEDAR (www.sedar.com).Headquartered in Calgary, Alberta, Trican has operations in Canada, the United States, Russia, Kazakhstan, Australia 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.FOR FURTHER INFORMATION PLEASE CONTACT: Dale DusterhoftTrican Well Service Ltd.Chief Executive Officer(403) 266 - 0202(403) 237 - 7716 (FAX)ddusterhoft@trican.caORMichael BaldwinTrican Well Service Ltd.Vice President, Finance & CFO(403) 266 - 0202(403) 237 - 7716 (FAX)mbaldwin@trican.caORGary SummachTrican Well Service Ltd.Director of Reporting and Investor Relations(403) 266 - 0202(403) 237 - 7716 (FAX)gsummach@trican.caOR2900, 645 - 7th Avenue S.W.Trican Well Service Ltd.Calgary, Alberta T2P 4G8www.trican.ca