Faced with significant demand growth, Calfrac Well Services Ltd. (OTC: CFWFF, TO: CFW.TO) updated its 2014 capital budget by about 71%, to $360 million including carryover capital, the company said July 3.

Calfrac said it will add 155,000 horsepower (hp) to meet increased demand in the United States, Canada and Argentina by increasing its capital budget $150 million from $210 million.

Calfrac’s move is consistent with rising appetite for frack hp, said Jeff Dietert, managing director, head of research, Simmons & Co. International.

The majority of the capital program increase will go toward construction of two fracturing fleets totaling 80,000 hp for Calfrac's United States operations, a 35,000 hp fracturing fleet for Canada and a 40,000 hp fracturing fleet that will operate in the Vaca Muerta Shale in Argentina.

Dietert said Calfrac is the latest North American frack company to increase its spending.

Simmons had forecast that frack hp orders would continue rise in 2014.

“Delivery of this equipment is expected to begin in early 2015, thus we still see 2014 net North American horsepower additions in the range of 1.6 million to 1.7 million,” Dietert said.

The company will also add two new twin cementing units for Calfrac's Argentina operations.

Delivery of the equipment is expected to begin in early 2015.

About $38 million of the spending increase will go toward support and maintenance to optimize fleet utilization in North America and Latin America.

Calfrac Market Share, April 30

Region

HHP

Crews

Mkt. Share Rank by HHP

Marcellus/Utica

262,950

5

3

Eagle Ford

157,500

3

8

Fayetteville

87,750

2

1

Rockies Area

89,750

2

5

U.S. Bakken

76,500

3

8

U.S. Total

674,450

15

Source: PacWest Consulting Partners

Calfrac is the seventh-largest company by hp in North America, and in the United States has 674,450 hydraulic hp, 18 cementing crews and seven coiled tubing crews.

The company also operates in Russia.

A portion of the increased capital spending is expected to occur in 2015. The incremental capital spending will be funded by Calfrac's existing credit facilities and cash flow.

As of June 30, Calfrac had approximately $247 million available under its existing credit facilities.