CALGARY, Feb. 20, 2019 /CNW/ – Source Energy Services Ltd. (“Source” or the “Company”) announces changes to its Board of Directors. Mr. A.S. (Stew) Hanlon has been appointed as Chairman of the Board of Directors, while Mr. Cody Church has resigned from the Board of Directors and will be replaced by Mr. Michael (Mick) MacBean, under the terms of the TriWest Capital Partners (“TriWest”) Nomination Agreement with Source. Mr. MacBean will hold office until the earlier of the close of the next annual meeting of the shareholders of the Corporation or until his successor is elected or appointed.
Mr. Hanlon has been a Director and Chair of the Compensation and Corporate Governance Committee since Source’s initial public offering in April 2017. Mr. Hanlon was CEO (retired) of Gibson Energy (“Gibson”). In his 26-year tenure with Gibson he filled senior roles in finance, business development and operations, culminating in him serving as President and CEO from April 2009 until 2017. Mr. Hanlon is a Chartered Accountant, serves on the board of directors of Hammerhead Resources Inc., and Questor Technologies, and is on the Dean’s Advisory Council of the Edwards School of Business, University of Saskatchewan.
Mr. MacBean is a Senior Managing Director of TriWest and brings a wealth of operations, governance and financial experience to Source’s Board of Directors. Prior to joining TriWest in 2010, Mr. MacBean was founder and CEO of Diamond Energy Services LP, a Saskatchewan-based energy services firm. Mr. MacBean is a Chartered Accountant and currently serves on the board of directors of a number of private and public companies.
Source wishes to thank Mr. Church for his dedication, guidance and support over the last five years. Mr. Church joined the Board of Directors of Source when TriWest Capital invested in Source in the fall of 2013 and was an important part of the Board of Directors as Source went from a private company to a public company. Source wishes Mr. Church well in his future endeavors.
FOURTH QUARTER OPERATIONAL UPDATE
Source’s sand sales volumes for the fourth quarter of 2018 were 373,000 metric tonnes (“MT”). Approximately 85% of these sales were made through Source’s Canadian distribution network and the majority utilized Source’s last mile logistics services where Source delivered sand directly to customers’ wellsites. This brings Source’s 2018 sand sales volumes to 2,561,000 MT.
Sand sales volumes for the fourth quarter of 2018 were significantly impacted by a reduction in exploration and production (E&P) activity in Western Canada. This was primarily driven by budget exhaustion of E&P companies witnessed in Q4.
Sand sales volumes as reported in this announcement consist of a combination of sales made through Source’s Canadian distribution chain, at customers’ wellsites and at Source’s mines. Source cautions that in addition to the location of sand sales, numerous other factors can impact Source’s operating results and that a particular trend in total sales volumes may, or may not, indicate a trend in, or be indicative of, Source’s financial performance.
Turning to 2019, Source’s activity levels picked up significantly from the fourth quarter of 2018. As a result, Source expects first quarter 2019 activity levels to be in line with activity levels seen in the first quarter of 2018. While some of Source’s customers have provided guidance on their planned activities beyond the first quarter, Source recognizes capital programs and activity levels could be impacted by commodity price fluctuations, and uncertainty of near-term condensate demand. Accordingly, Source is discontinuing the practice of providing updates on sales volumes shortly after the end of each quarter.
As E&P companies continue to shift into manufacturing mode, the trend towards direct-sourcing continues and Source is pleased to now be working directly with five E&P customers under contracts. These contracted sales are in addition to sales to other E&P companies that wish to direct-source sand on a less formal basis, as well as traditional sales to pressure pumping customers. Beyond 2019, we are excited by the industry prospects that will arise from improved egress and the longer-term impacts of LNG export facilities on WCSB activity levels.
As we enter 2019, Source has cash on hand and significant unutilized borrowing capacity that will provide us flexibility to succeed during all stages of the cycle. We remain committed to ensuring that our capital expenditures in 2019 are funded from operating cashflows.
FOURTH QUARTER RESULTS RELEASE AND CONFERENCE CALL
Source is also pleased to announce that its fourth quarter financial results for the period ending December 31, 2018, will be released following the Toronto Stock Exchange market close on March 14, 2019.
A conference call to discuss Source’s fourth quarter financial results has been scheduled for 7:30 am MT (9:30 am ET) on March 15, 2019, for interested analysts, investors and media representatives.
The conference call dial-in details are:
The call will be recorded and available for playback approximately 2 hours after the meeting end time, until April 15, 2019, using the following dial-in:
ABOUT SOURCE ENERGY SERVICES
Source is a fully integrated producer, supplier and distributer of high quality Northern White frac sand primarily to the WCSB. Source provides its customers with a full end-to-end solution through its mines, processing facilities, rail assets, strategically located terminal network and “last mile” logistics operations. In addition, Source provides storage and logistics services for other bulk oil and gas well completion materials that are not produced by Source. Source’s full-service approach allows customers to rely on its logistics capabilities to increase reliability of supply and to ensure the timely delivery of their growing requirements for frac sand and other bulk completion materials.
Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to future events, which include statements regarding results of operations and Source’s future performance (both operational and financial) and business prospects. In certain cases, forward-looking statements can be identified by the use of words such as “expects”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, “plans”, “seeks”, “projects” or variations of such words and phrases, or state that certain actions, events or results “may” or “will” be taken, occur or be achieved. Such forward-looking statements reflect Source’s beliefs, estimates and opinions regarding its future growth, results of operations, future performance (both operational and financial), and business prospects and opportunities at the time such statements are made, and, except as may be required by law, Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change. Forward-looking statements are necessarily based upon a number of estimates and assumptions made by Source that are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Forward-looking statements are not guarantees of future performance. In particular, this press release contains forward-looking statements pertaining, but not limited, to: its outlook for operations and sales volumes; and industry activity levels. By their nature, forward-looking statements involve numerous current assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Source to differ materially from those anticipated by Source and described in the forward-looking statements. With respect to the forward-looking statements contained in this press release, assumptions have been made regarding, among other things: proppant market prices; future oil, natural gas and natural gas liquids prices; future global economic and financial conditions; future commodity prices, demand for oil and gas and the product mix of such demand; levels of activity in the oil and gas industry in the areas in which Source operates; the continued availability of timely and safe transportation for Source’s products, including without limitation, rail accessibility; the maintenance of Source’s key customers and the financial strength of its key customers; the maintenance of Source’s significant contracts or their replacement with new contracts on substantially similar terms and that contractual counterparties will comply with current contractual terms; operating costs; that the regulatory environment in which Source operates will be maintained in the manner currently anticipated by Source; future exchange and interest rates; geological and engineering estimates in respect of Source’s resources; the recoverability of Source’s resources; the accuracy and veracity of information and projections sourced from third parties respecting, among other things, future industry conditions and product demand; demand for horizontal drilling and hydraulic fracturing and the maintenance of current techniques and procedures, particularly with respect to the use of proppants; Source’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which Source conducts its business and any other jurisdictions in which Source may conduct its business in the future; future capital expenditures to be made by Source; future sources of funding for Source’s capital program; Source’s future debt levels; the impact of competition on Source; and Source’s ability to obtain financing on acceptable terms. A number of factors, risks and uncertainties could cause results to differ materially from those anticipated and described herein including, among others: the effects of competition and pricing pressures; risks inherent in key customer dependence; effects of fluctuations in the price of proppants; risks related to indebtedness and liquidity, including Source’s leverage, restrictive covenants in Source’s debt instruments and Source’s capital requirements; risks related to interest rate fluctuations and foreign exchange rate fluctuations; changes in general economic, financial, market and business conditions in the markets in which Source operates; changes in the technologies used to drill for and produce oil and natural gas; Source’s ability to obtain, maintain and renew required permits, licenses and approvals from regulatory authorities; the stringent requirements of and potential changes to applicable legislation, regulations and standards; the ability of Source to comply with unexpected costs of government regulations; liabilities resulting from Source’s operations; the results of litigation or regulatory proceedings that may be brought against Source; the ability of Source to successfully bid on new contracts and the loss of significant contracts; uninsured and underinsured losses; risks related to the transportation of Source’s products, including potential rail line interruptions or a reduction in railcar availability or the impact of weather; the geographic and customer concentration of Source; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labour disputes and work stoppages and risks related to employee health and safety; general risks associated with the oil and natural gas industry, loss of markets, consumer and business spending and borrowing trends; limited, unfavourable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; and the use and suitability of Source’s accounting estimates and judgments. Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in its forward-looking statements, there may be other factors, including those described under the heading “Risk Factors” in the AIF, that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will materialize or prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Readers should not place undue reliance on forward-looking statements. These statements speak only as of the date of this press release. Except as may be required by law, Source expressly disclaims any intention or obligation to revise or update any forward-looking statements or information whether as a result of new information, future events or otherwise.
SOURCE Source Energy Services