Source Energy Services Announces Upcoming Earnings Release

Calgary, Alberta (June 29, 2022) TSX: SHLE

SECOND QUARTER RESULTS RELEASE AND CONFERENCE CALL

Source is pleased to announce that its second quarter financial results for the period ending June 30, 2022, will be released following the Toronto Stock Exchange market close on July 27, 2022.

A conference call has been scheduled for 7:30 am (Calgary time) on Thursday, July 28, 2022. Interested analysts, investors and media representatives are invited to register to participate in the call. Once you are registered, a dial-in number and passcode will be provided to you via email. The link to register for the call is on the Upcoming Events page of our website and as follows:

Click Below to Register for the Results Conference Call:

Source Energy Services Q2’22 Results Call

Results Conference Call Playback Access:

The call will be recorded and available for playback approximately 2 hours after the meeting end time, until August 28, 2022. Below are the details to access the call playback:

Playback Number: (Toll-Free) 1-800-319-6413

Playback Passcode: 9152

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Announces Receipt of Lender Waiver and Payment of Cash Interest

Calgary, Alberta (May 25, 2022) TSX: SHLE – Source Energy Services Ltd. (“Source” or the “Company”) announced today that it has successfully concluded its discussions with the syndicate of lenders under its senior secured credit facility (the “Credit Facility”) and obtained a waiver from such lenders to permit the Company to make the payment of cash interest on the Company’s outstanding 10.5% senior secured first lien notes due March 15, 2025 (the “Senior Notes”). As previously announced, the Company had elected to utilize the 30 day grace period (the “Grace Period”) under the indenture governing its Senior Notes (the “Indenture”) to permit the Company to obtain such waiver and, as the waiver has now been obtained from the Company’s lenders, the Company has deposited with the trustee under the Indenture, in cash, the CAD$4.2 million interest payment that was due on May 16, 2022 in connection with the Senior Notes (the “May Interest Payment”).

The Company remains current with all its suppliers, industry partners and contractors and intends to remain so. Neither the utilization of the Grace Period nor the terms of the waiver affected, or will affect, any of the Company’s operations, or commercial obligations.

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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”, “anticipates”, “believes”, “continues”, “focus” 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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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: Source’s expectation that it will remain current with all its suppliers, industry partners and contractors.

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 liquefied natural gas 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Announces Decision To Utilize Interest Payment Grace Period

Calgary, Alberta (May 16, 2022) TSX: SHLE – Source Energy Services Ltd. (“Source” or the “Company”) announced today that it has elected to utilize the 30-day grace period (the “Grace Period”) under the indenture governing its 10.5% senior secured first lien notes due March 15, 2025 (the “Senior Notes”). The Company is utilizing the Grace Period to permit the continuation and conclusion of discussions with the syndicate of lenders under its senior secured credit facility (the “Credit Facility”) to obtain a waiver from such lenders related to the payment of the cash interest payment due on May 16, 2022, in connection with the Senior Notes (the “May Interest Payment”). The Company does not expect to utilize the Grace Period in its entirety and anticipates concluding its discussions with the lenders imminently.

While the Company has not disbursed the CAD $4.2 million May Interest Payment, the Company has ample liquidity available to fund the disbursement, with $18.9 million of liquidity available as of the date of this release. The Company is current with all its suppliers, industry partners and contractors and intends to remain so. Neither the utilization of any portion of the Grace Period nor the terms of the waiver contemplated would affect any of the Company’s operations, or commercial obligations.

The election to not make the May Interest Payment on the scheduled date does not constitute an event of default under the indenture that governs the Senior Notes, or the credit agreement that governs the Credit Facility, until the expiry of the Grace Period.

ABOUT SOURCE ENERGY SERVICES
Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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”, “anticipates”, “believes”, “continues”, “focus” 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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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: Source’s discussions with its debtholders and lenders and Source’s expectation that it will remain current with all its suppliers, industry partners and contractors during the Grace Period.

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 liquefied natural gas 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Reports 2022 AGM Voting Results

Calgary, Alberta (May 6, 2022) TSX: SHLE

Source Energy Services Ltd. (“Source” or the “Company”) reports results from its annual meeting of shareholders held May 6, 2022 (the “Meeting”).

2022 AGM VOTING RESULTS

Election of Directors
All of the proposed nominees were elected to Source’s board of directors (the “Board”) by Shareholders present or represented by proxy at the Meeting. The voting results are as follows:

Name of Nominee

Votes For

Votes Withheld

 

Percent

Percent

Jeff Belford

99.95%

0.05%

Stewart Hanlon

99.98%

0.02%

Chris Johnson

99.95%

0.05%

Carrie Lonardelli

99.95%

0.05%

Scott Melbourn

99.98%

0.02%

Steven Sharpe

93.09%

6.91%

Shareholder Approval of Other Matters
Shareholders also voted at the Meeting to approve each of the other resolutions described in Source’s Notice of Annual Meeting of Shareholders and Management Information Circular, dated March 9, 2022, and the Supplement to the Information Circular, dated March 31, 2022 (together the “Information Circular”), as follows: (i) the ordinary resolution to fix the number of directors to be elected at the meeting at six (6) was approved by 99.97% of the votes cast by Shareholders; and (ii) the ordinary resolution approving the appointment of Ernst & Young LLP as the auditor of the Company was approved by 100% of the votes cast by Shareholders.

ABOUT SOURCE ENERGY SERVICES
Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Reports Q1 2022 Results

Calgary, Alberta (May 5, 2022) TSX: SHLE

Source Energy Services Ltd. (“Source” or the “Company”) is pleased to announce its financial results for the three months ended March 31, 2022.

Q1 2022 PERFORMANCE HIGHLIGHTS

Key achievements for the three months ended March 31, 2022 included the following:

  • realized sand sales volumes of 726,101 MT, a 12% increase from the first quarter of 2021, and sand revenue of $80.7 million, a 22% increase from the first quarter of 2021;
  • distributed 692,338 MT of proppants and chemicals through Source’s Western Canadian Sedimentary Basin (“WCSB”) terminal network;
  • realized a 13% increase in average realized sand price, excluding revenue from mine gate sales volumes;
  • deployed Source’s first ever high-capacity drive over Sahara unit, and deployed Source’s ninth Sahara unit in the US for a contract with a large exploration and production customer commencing in the second quarter;
  • achieved utilization for the Sahara fleet of 72%, and added one new Sahara customer during the quarter;
  • repaid $7.5 million on the senior secured term loan;
  • realized gross margin of $14.6 million and Adjusted Gross Margin(1) of $20.4 million;
  • reported net loss of $6.6 million;
  • realized Adjusted EBITDA(1) of $14.2 million, a 12% increase from the first quarter of 2021; and
  • subsequent to quarter end, closed a transaction with Canadian Silica Industries (“CSI”) to assume operations of CSI’s Peace River frac sand facility which will complement Source’s Northern White proppant resources.

Note:

  1. Adjusted Gross Margin (including on a per MT basis) and Adjusted EBITDA are not defined under IFRS, refer to ‘Non-IFRS Measures’ below. For additional information and reconciliations to measures recognized by IFRS, please refer to Source’s MD&A available online at www.sedar.com.

RESULTS OVERVIEW

 Three months ended March 31,
($000’s, except MT and per unit amounts)20222021
Sand volumes (MT)(1)726,101645,566
Sand revenue80,66166,115
Wellsite solutions15,41614,121
Terminal services8921,653
Sales96,96981,889
Cost of sales76,60363,619
Cost of sales – depreciation5,7937,582
Cost of sales82,39671,201
Gross margin14,57310,688
Operating expense4,3363,718
General & administrative expense2,4892,604
Depreciation2,6542,785
Income from operations5,0941,581
Total other expense11,7346,967
Net loss(2)(6,640)(5,386)
Net loss per share ($/share)(0.49)(0.40)
Diluted net loss per share ($/share)(0.49)(0.40)
Adjusted EBITDA(3)14,21712,674
Sand revenue sales/MT111.09102.41
Gross margin/MT20.0716.56
Adjusted Gross Margin(3)20,36618,270
Adjusted Gross Margin/MT(3)28.0528.30

Notes:

  1. One MT is approximately equal to 1.102 short tons.
  2. The average Canadian to United States (“US”) dollar exchange rate for the three months ended March 31, 2022 was $0.7898 (2021 – $0.7899).
  3. Adjusted EBITDA and Adjusted Gross Margin (including on a per MT basis) are not defined under IFRS, refer to ‘Non-IFRS Measures’ below. For additional information and reconciliations to measures recognized by IFRS, please refer to Source’s MD&A available online at www.sedar.com.

Q1 2022 RESULTS

Sustained strength in oil and gas commodity prices continued to buoy strong activity levels in the WCSB, generating $80.7 million of sand revenue, an increase of 22%, over the first quarter of 2021. Higher sand revenue generated was attributable to a 12% increase in sand sales volumes and a 13% increase in average realized sand price, or $13.66 per MT, excluding the impact of mine gate sand sales volumes, compared to the first quarter last year. Strong industry activity levels for the quarter drove a 141% increase in spot sales volumes on a quarter-over quarter basis, which benefited the average sand price realized, as spot sales prices improved significantly.

During the first quarter, cost of sales, excluding depreciation, was impacted by higher costs for transportation and freight, due to increased prices for fuel and a tighter trucking market, as well as terminal mix changes, compared to the same period last year. These costs were partially offset by Source’s continued focus on streamlining production, as improved production efficiencies mitigated cost pricing pressure realized during the quarter.

Excluding gross margin from mine gate volumes, Adjusted Gross Margin was $28.54 per MT, favorably impacted by improved spot market pricing and continued production efficiencies. Compared to the first quarter last year, Adjusted Gross Margin for the first quarter of 2022 did not benefit from proceeds from the Canada Emergency Wage Subsidy (“CEWS”) program, a favorable property tax adjustment or higher deferred terminal revenue. Excluding these items in the first quarter of 2021, the first quarter 2022 Adjusted Gross Margin per MT increased by 6.5% when compared to 2021. For the three months ended March 31, 2022, Adjusted Gross Margin per MT increased by 80% compared to the fourth quarter of 2021. Gross margin was favorably impacted by lower cost of sales – depreciation realized, attributed to lower rates of inventory depreciation per MT relative to the first quarter last year.

Higher selling costs, attributed to increased royalty expense, combined with no proceeds from the CEWS program (compared to $0.1 million for 2021), drove higher operating expense for the first three months of 2022, compared to the same period last year, while general and administrative expense was slightly lower on a quarter-over-quarter basis. Adjusted EBITDA was $14.2 million for the first quarter of the year, a reflection of the strong sand sales volumes and sand sales pricing realized, partially offset by the unfavorable impact of higher costs incurred for diesel and freight during the quarter.

Peace River Transaction

In April 2022, Source entered into a transaction with CSI to assume operation of its Peace River frac sand facility. The frac sand facility adds approximately 400,000 MT of annual production capability to Source’s existing production capabilities, and consolidates Source’s adjacent mineral resource exploration rights with the production facility. The transaction complements Source’s existing product and service offerings.

Liquidity and Capital Resources

The Company has a banking operating facility, comprised of an asset backed loan facility (“ABL”), a standby letter of Credit Facility and a senior secured term loan (collectively, the “Credit Facility”). As of March 31, 2022, Source had $24.0 million drawn under its ABL facility. The Credit Facility was also being used to support $9.8 million of letters of credit, leaving $16.2 million of available liquidity. Source is subject to externally imposed capital requirements for its Credit Facility and as of March 31, 2022, Source and its subsidiaries were compliant with all covenants of its credit facility. Source is focused on reducing its debt levels in 2022.

 Three months ended March 31,
($000’s)20222021
Terminal6213
Wellsite solutions315156
Production72191
Overburden removal1,197956
Other379
Capital expenditures2,0251,316
Growth capital530196
Maintenance and sustaining capital1,4951,120
Capital expenditures2,0251,316

Source’s capital expenditures for the first quarter of 2022 were $2.0 million, an increase of $0.7 million compared to the same period last year. The increase in expenditures for maintenance and sustaining capital was primarily related to higher expenditures associated with overburden removal for mining operations and the Sahara unit configuration. Growth capital expenditures for the quarter included costs related to assessments and the drilling program at the Peace River mine, as well as the completion of Source’s ninth Sahara unit, compared to the first quarter last year.

ESG UPDATE

Source is committed to operating in a sustainable manner and works closely with its stakeholders to go above and beyond current regulatory requirements through initiatives such as voluntary enrollment with the Department of Natural Resources Sustainable Growth Program and Managed Forest Program, as well as Source’s production water recycling process. Source is continually looking to implement efficiencies to lessen the impact of Source’s activities on the environment and specifically to reduce greenhouse gas emissions, and has several additional initiatives currently underway at its processing and terminal facilities to further reduce Source’s operational emissions.

Source is currently finalizing the results of its annual environment, social and governance (“ESG”) performance, which will benchmark Source’s 2022 ESG performance relative to the Sustainability Accounting Standards Board framework. Source’s 2022 ESG report is expected to be released in the second quarter of 2022.

To view Source’s 2021 ESG report, please visit www.sourceenergyservices.com.

BUSINESS OUTLOOK

With increased industry activity levels across North America, frac sand supply and demand fundamentals have improved and are expected to remain tight for 2022. These fundamentals, coupled with Source’s leading service offerings and logistics capabilities, have translated into meaningful pricing gains in the spot market in 2022, a trend that is expected to continue for the balance of the year. Despite increased activity levels as industry demand outpaces supply growth, Source’s sand sales volumes through the first quarter were somewhat slower than anticipated as customer programs were pushed out due to delays in having pads ready to complete and the impacts of cold weather. Source expects the expansion of capital programs will increase through the balance of the year, as Source customers signal increasing activity levels and growing confidence related to ongoing permitting issues in the northeastern British Columbia region, as well as continued strength in commodity pricing.

In the longer-term, Source believes the increased demand for natural gas, driven by the conversion of coal-fired power generation facilities, increased natural gas pipeline export capabilities and liquefied natural gas exports will drive incremental demand for Source’s services in the WCSB. Source continues to see increased demand from customers that are primarily focused on the development of natural gas properties in the Montney, Duvernay and Deep Basin. This trend is consistent with Source’s view that natural gas will be an important transitional fuel that’s critical for the successful movement to a less carbon intensive world.

In support of the move to a less carbon intensive world, Source has begun focusing on developing economic growth opportunities which transition from traditional fossil fuels to less carbon intense energy solutions. As a pathway to diversifying Source’s business, and to participate in the decarbonization of the economy, Source is advancing opportunities in its own operations as well as at the well site and at its terminals. Source also continues to focus on increasing its involvement in the provision of logistics services for other items needed at the wellsite in response to customer requests to expand its service offerings and to further utilize its existing Western Canadian terminals to provide additional services. Over the longer-term, it is anticipated that these opportunities will be a meaningful part of Source’s business.

FIRST QUARTER CONFERENCE CALL

A conference call to discuss Source’s first quarter financial results has been scheduled for 7:30 am MST (9:30 am ET) on Friday, May 6, 2022.

Interested analysts, investors and media representatives are invited to register to participate in the call. Once you are registered, a dial-in number and passcode will be provided to you via email. The link to register for the call is on the Upcoming Events page of our website and as follows:

Source Energy Services Q1 2022 Results Call

The call will be recorded and available for playback approximately 2 hours after the meeting end time, until June 6, 2022, using the following dial-in:

Playback Number: Toll-Free: 1-800-319-6413

Playback Passcode: 8749

2022 ANNUAL MEETING OF SHAREHOLDERS

Source’s 2022 Annual Meeting of Shareholders (the “AGM”) will be held on Friday, May 6, 2022 at 10:00 a.m. MST (12:00 pm ET) in a virtual, audio only, webcast format. Shareholder engagement is extremely important to Source and all shareholders will have equal opportunity to ask questions. Below are the details to attend the virtual-only AGM:

Log in: https://meetnow.global/MF4MCAX

If you experience technical or logistical issues related to accessing the virtual AGM, technical support is available:

1-800-564-6253 (toll-free in Canada and the United States)

514-982-7555 (long distance charges may apply)

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

IMPORTANT INFORMATION

These results should be read in conjunction with each of Source’s audited consolidated financial statements for the three months ended March 31, 2022 and 2021, together with the accompanying notes (the “Financial Statements”) and its corresponding MD&A for such periods. The Financial Statements and MD&A and other information relating to Source, including the Annual Information Form (“AIF”), are available under the Company’s SEDAR profile at www.sedar.com. The Financial Statements and comparative statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Unless otherwise stated, all amounts are expressed in Canadian dollars.

NON-IFRS MEASURES

In this press release Source has used the terms Adjusted Gross Margin and Adjusted EBITDA, including per MT, which do not have standardized meanings prescribed by IFRS and Source’s method of calculating these measures may differ from the method used by other entities and, accordingly, they may not be comparable to similar measures presented by other companies. These financial measures should not be considered as an alternative to, or more meaningful than, net income (loss) and gross margin, respectively, which represent the most directly comparable measures of financial performance as determined in accordance with IFRS. For additional information regarding non- IFRS measures, including their use to management and investors and reconciliations to measures recognized by IFRS, please refer to the ‘Non-IFRS Measures’ section of the MD&A, which is available online at www.sedar.com and through Source’s website at www.sourceenergyservices.com.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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”, “anticipates”, “believes”, “continues”, “focus” 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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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: our belief that the transaction with CSI complements Source’s existing product and service offerings; Source’s optimism that the trend of large volumes of frac sand being sold with higher margins will continue; our focus on reducing debt levels in 2022; investments in production equipment generating increased yields in Source’s sand processing activities; our belief that will have modest capital expenditures in 2022 and beyond; Source’s search for efficiencies to implement in order to lessen the impact of Source’s activities on the environment; expectations regarding our 2022 annual ESG performance report; our expectation that frac sand supply and demand will remain tight for 2022; our expectation that pricing gains in the spot market will continue for the remainder of 2022; our expectation that the expansion of capital programs will increase through the balance of 2022; increased demand for natural gas, increased natural gas pipeline export capabilities and liquefied natural gas exports will drive incremental demand for Source’s services in the WCSB; industry activity levels, including the continued increase in demand from customers primarily focused on the development of natural gas properties in Montney, Duvernay and Deep Basin; the Company’s view that natural gas is an important transitional fuel for the successful movement to a less carbon intensive world; our focus on exploring and developing, and advancement of economic growth opportunities related to the transition to less carbon intense energy solutions; our focus on and expectations regarding increasing Source’s involvement in the provision of logistics services for other wellsite items; outlook for commodity prices and sales volumes; expectations respecting future conditions; revenue and profitability; expectations regarding funding for capital expenditures; and the availability of any additional future funding.

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 liquefied natural gas 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

Source Energy Services Announces Upcoming Earnings Release and Annual General Meeting

Calgary, Alberta (April 14, 2022) TSX: SHLE

EARNINGS RELEASE AND CONFERENCE CALL

Source Energy Services Ltd. (“Source”) is pleased to announce that its first quarter financial results for the period ending March 31, 2022, will be released following the Toronto Stock Exchange market close on Thursday, May 5, 2022. A conference call has been scheduled for 7:30 am (Calgary time) on Friday, May 6, 2022. Interested analysts, investors and media representatives are invited to register to participate in the call. Once you are registered, a dial-in number and passcode will be provided to you via email. The link to register for the call is on the Upcoming Events page of our website and as follows:

Source Energy Services Q1 2022 Earning Results Call

The call will be recorded and available for playback approximately 2 hours after the meeting end time, until June 6, 2022. Below are the details to access the call playback:

Playback number: 1-800-319-6413 (toll-free in Canada and the United States)

Passcode: 8749

ANNUAL GENERAL MEETING

Source also wishes to announce that its 2022 Annual Meeting of Shareholders (the “AGM”) will be held on Friday, May 6, 2022, at 10:00 a.m. (Calgary time) in a virtual, audio only, webcast format. Shareholder engagement is extremely important to Source and all shareholders will have equal opportunity to ask questions. Below are the details to attend the virtual-only AGM:

Log in: https://meetnow.global/MF4MCAX

If you experience technical or logistical issues related to accessing the virtual meeting, technical support is available:

1-800-564-6253 (toll-free in Canada and the United States)
514-982-7555 (long distance charges may apply)

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
President and Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Enters into a Transaction with Canadian Silica Industries to Assume Operation of its Peace River Frac Sand Facility

Calgary, Alberta (April 12, 2022) TSX: SHLE

Source Energy Services Ltd. (“Source” or the “Company”) is pleased to announce that it has entered into agreements (the “Transaction”) with Canadian Silica Industries Inc. and Contractor’s Leasing Corp. (collectively, “CSI”) which will result in Source assuming all operations, distribution, and sale of domestic frac sand from CSI’s Peace River facility.

Transaction Highlights

    • adds 400,000 metric tonnes of domestic frac sand production capability to Source’s existing portfolio of Northern White frac sand and other products, broadening our offering to our customer base;
    • consolidates CSI’s production facility with Source’s adjacent 3,600 acres of mineral resource explorations rights in Peace River resulting in production efficiencies and extending the life of the contiguous resource;
    • provides Source access to domestic sand production that is both geographically closest to the Montney and not rail dependent;
    • integrates Peace River frac sand into Source’s leading distribution network resulting in low-cost production with significant logistical advantages; and
    • generates significant financial upside with minimal capital costs and balance sheet impacts while incorporating a flexible lease structure.

“This transaction with CSI adds critical domestic sand supply for Source,” said Scott Melbourn, Chief Executive Officer of Source. “It ensures that we have the most reliable supply of both Northern White and domestic sand, enhancing our ability to effectively and efficiently service our clients.”

Advisors

Alcedio Capital Inc. acted as financial advisor and Fasken Martineau DuMoulin LLP acted as legal advisor to CSI. Norton Rose Fulbright Canada LLP acted as legal advisor to Source.

FOR FURTHER INFORMATION PLEASE CONTACT:

Scott MelbournDerren Newell
President and Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality Northern White frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin and Peace River mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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”, “intends”, “anticipates”, “believes”, “continues”, “plans”, “predicts”, “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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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, production capability, production efficiency, lost saving and resource life expectations, future financial impacts of the Transaction, future demand and supply expectations, including reduced rail service outage impacts and the impact of the Transaction on Source’s abilities to provide enhanced services to its clients.

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 LNG 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

Source Energy Services Announces Appointment of Scott Melbourn as Director

Calgary, Alberta (March 31, 2022) TSX: SHLE

The Board of Directors of Source Energy Services Ltd. (“Source”) announced today that Mr. Scott Melbourn has been appointed as a member of the Board of Directors of Source to fill the vacancy created by the resignation of Mr. Brad Thomson.

A supplement to the Management Information Circular reflecting that Mr. Melbourn is a nominee for director, rather than Mr. Thomson, will be sent to shareholders and can be found on our website and on SEDAR at www.sedar.com.

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the production and distribution of high quality Northern White frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FOR FURTHER INFORMATION PLEASE CONTACT

Scott MelbournDerren Newell
President and Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

Source Energy Services Announces the Retirement of Brad Thomson and the Appointment of Scott Melbourn as President and Chief Executive Officer

Calgary, Alberta (March 30, 2022) TSX: SHLE

The Board of Directors of Source Energy Services Ltd. (“Source” or the “Company”) announced today that Mr. Brad Thomson has elected to retire as President and Chief Executive Officer and as a director of the Company. Mr. Scott Melbourn has been appointed President and Chief Executive Officer and will be appointed as a member of the Board. Mr. Thomson will continue in an advisory role until June 30, 2022, to ensure a seamless transition of duties and responsibilities to Mr. Melbourn.

The Board would like to thank Mr. Thomson for his leadership and contributions since joining the Company in 2012. Mr. Thomson led the Company from its early funding and growth of its asset base, through its initial public offering in April of 2017. Under his leadership, Source grew from a small regional provider of trucking and terminal services to an industry leading, fully integrated, provider of frac sand and associated logistics.

Mr. Melbourn, currently the Chief Operating Officer, has been with Source since 2011 and has been responsible for overseeing all aspects of the operations, sales, and business development. He has a deep understanding of the Company’s operations and, as a part of Source’s executive team, helped grow the business into what it is today. The Board has full confidence that under the leadership of Mr. Melbourn, and other members of the senior leadership team, the Company will continue to expand its offerings and capitalize on its leading market position in the Western Canadian Sedimentary Basin

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the production and distribution of high quality Northern White frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

FOR FURTHER INFORMATION PLEASE CONTACT

Scott MelbournDerren Newell
President and Chief Executive OfficerChief Financial Officer
(403) 262-1312 (ext. 222)(403) 262-1312 (ext. 233)
investorrelations@sourceenergyservices.cominvestorrelations@sourceenergyservices.com

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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 “anticipates”, “believes”, “continues” 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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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: the resignation and appointment of directors and the Company continuing to expand its offerings and capitalize on its leading market position in the Western Canadian Sedimentary Basin.

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 LNG 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

Source Energy Services Reports Q4 2021 and Year End Results

Calgary, Alberta (March 9, 2022) TSX: SHLE

Source Energy Services Ltd. (“Source” or the “Company”) is pleased to announce its financial results for the three and twelve months ended December 31, 2021.

2021 PERFORMANCE HIGHLIGHTS

Economic recovery in 2021 led to a rebound in the demand for crude oil and natural gas, driving strong commodity prices and increasing industry activity levels. As a result, Source approached record levels of activity for the year, nearly achieving its historical high for total sand sales volumes. Key achievements for the year ended December 31, 2021 included the following:

  • realized sand sales volumes of 2,483,362 MT and sand revenue of $258.5 million;
  • distributed 2,578,444 MT of proppants and chemicals through Source’s Western Canadian Sedimentary Basin (“WCSB”) terminal network;
  • executed three new customer contracts and secured contract extensions with two major Montney exploration and production (“E&P”) companies;
  • achieved multiple records including new service records that saw the largest daily and the largest monthly sand sales volume in Source’s history;
  • increased utilization of the Sahara fleet by 25%, resulting in overall utilization for the year of 65%, including the deployment of a Sahara unit in the US through the entire fourth quarter of the year;
  • realized gross margin of $39.3 million and Adjusted Gross Margin(1) of $60.4 million;
  • reported net loss of $24.4 million, an improvement of $161.1 million from the same period last year; and
  • realized Adjusted EBITDA(1) of $38.6 million.

Note:

  1. Adjusted Gross Margin (including on a per MT basis) and Adjusted EBITDA are not defined under IFRS, refer to ‘Non-IFRS Measures’ below. For additional information and reconciliations to measures recognized by IFRS, please refer to Source’s MD&A available online at www.sedar.com.

On the backdrop of an improved commodity price environment, there were clear indications that larger volumes of frac sand would again be sold with higher margins. This shift in our business environment has been a long time coming, and Source is optimistic that this trend will produce strong results in the near term.

RESULTS OVERVIEW

 Three months ended December 31,Year ended December 31,
($000’s, except MT and per unit amounts)2021202020212020
Sand volumes (MT)(1)528,977474,3452,483,3621,968,511
Sand revenue54,98948,936258,545210,021
Wellsite solutions11,9139,58257,62136,644
Terminal services6484513,6953,213
Sales67,55058,969319,861249,878
Cost of sales59,29042,650259,429193,033
Cost of sales – depreciation4,0715,25321,10232,188
Cost of sales63,36147,903280,531225,221
Gross margin4,18911,06639,33024,657
Operating expense4,1423,1986,51412,485
General & administrative expense1,9901,2039,2839,379
Depreciation2,4262,6479,87313,860
Income (loss) from operations(4,369)4,0183,660(11,067)
Total other expense (income)10,197(19,997)28,063143,049
Income (loss) before income taxes(14,566)24,015(24,403)(154,116)
Deferred tax expense31,350
Net income (loss)(2)(14,566)24,015(24,403)(185,466)
Net earnings (loss) per share ($/share)(1.08)4.58(1.80)(36.81)
Diluted net earnings (loss) per share ($/share)(1.08)4.58(1.80)(36.81)
Adjusted EBITDA(3)1,65612,16138,58737,721
Sand revenue sales/MT103.95103.17104.11106.69
Gross margin/MT7.9223.3315.8412.53
Adjusted Gross Margin(3)8,26016,31960,4326,845
Adjusted Gross Margin/MT(3)15.6234.4024.3328.88
  1. One MT is approximately equal to 1.102 short
  2. The average Canadian to United States (“US”) dollar exchange rate for the three and twelve months ended December 31, 2021 was $0.7935 and $0.7978, respectively (2020 – $0.7675 and $0.7454, respectively).
  3. Adjusted EBITDA and Adjusted Gross Margin (including on a per MT basis) are not defined under IFRS, refer to ‘Non-IFRS Measures’ For additional information and reconciliations to measures recognized by IFRS, please refer to Source’s MD&A available online at www.sedar.com.

2021 RESULTS

Despite ongoing challenges created by the COVID-19 pandemic that continued through much of 2021, oil and natural gas prices strengthened through the year with benchmark oil prices hitting the highest levels since 2014. This resulted in improved activity levels in the WCSB, allowing Source to set new daily and monthly sales records, add new customers and realize a 26% increase in sales volumes over 2020, generating $258.5 million of sand revenue. Total revenue from wellsite solutions and terminal services grew 54% over last year, as the demand for greater volumes of frac sand over shorter periods of time highlighted Source’s logistics capabilities and the importance of Sahara units in customer frac programs.

Cost of sales, excluding depreciation, benefited from the continuation of certain operational cost reduction initiatives implemented by Source last year, as well as a focus on maintaining lower costs and improving production efficiencies. However, Source’s results for the year were impacted by lower proceeds from the CEWS program of $0.7 million, the impact of sales mix changes and higher costs for transportation and freight, due to increased prices for fuel and a tighter trucking market. These costs were partially offset by the impact of a stronger Canadian dollar on US dollar denominated costs.

Gross margin was favorably impacted by lower cost of sales – depreciation realized, attributed to a lower asset base resulting from the impairment recognized early last year and the benefit realized from the renegotiation of certain lease contracts in 2020, while Adjusted Gross Margin on a per MT was impacted by higher cost of sales, as discussed above. The majority of Source’s sales continue to be under long-term contracts; however, strong activity levels also drove higher spot sale activities for the year which benefited average sand price realized, partially offsetting the impact of a stronger Canadian dollar on revenue denominated in US dollars.

An increase in employee compensation expense, the direct result of improved activity levels leading to higher incentive compensation, combined with lower proceeds from the CEWS program, drove higher operating expense for 2021 compared to last year, while general and administrative expense remained relatively flat to 2020. Adjusted EBITDA was $38.6 million for 2021, a reflection of the strong sand sales volumes realized; however, Adjusted EBITDA was unfavorably impacted by the higher costs incurred for diesel and freight, particularly in the latter half of the year.

Liquidity and Capital Resources

The Company has a banking operating facility, comprised of an asset backed loan facility (“ABL”), a standby letter of credit facility and a senior secured term loan (collectively, the “Credit Facility”). As of December 31, 2021, Source had $18.4 million drawn under its ABL facility. The Credit Facility was also being used to support $10.0 million of letters of credit, leaving $12.5 million of available liquidity. Source is subject to externally imposed capital requirements for its  Credit Facility and as of December 31, 2021, Source and its subsidiaries were compliant with all covenants of its Credit Facility. Source is focused on reducing its debt levels in 2022.

 Three months ended December 31,Year ended December 31,
($000’s)2021202020212020
Terminal23243
Wellsite solutions1,0219431,8961,613
Production4858919582
Overburden removal7911373,3301,341
Other140140104
Capital expenditures2,0001,1386,5173,683
Growth capital1,1131,0012,2201,722
Maintenance and sustaining capital8871374,2971,961
Capital expenditures2,0001,1386,5173,683

Capital expenditures for the fourth quarter of 2021 were $2.0 million, an increase from the same period last year driven by an increase in overburden removal for mining operations, resulting from increased sand sales volume. For the year ended December 31, 2021, capital expenditures increased by $2.8 million compared to the prior year, due to the higher overburden removal and expenditures for Sahara enhancements, providing increased unloading capacity. In 2021, Source also invested in production equipment that will generate increased yields in Source’s sand processing activities.

Source believes its previous investment in processing assets and logistics infrastructure will allow for modest capital expenditures through 2022 and beyond.

Q4 2021 RESULTS

Source sold sand volumes of 528,977 MT for the three months ended December 31, 2021, generating sand revenue of $55.0 million. Sand revenue was favorably impacted by higher sand volumes realized with other non-contracted E&P and pressure pumping customers, in addition to increased sand volumes resulting from new customer contracts, including the execution of a new contract in the fourth quarter of 2021. Average realized sand price, excluding mine gate sales and the impact of the strengthening Canadian dollar on US dollar denominated revenue, increased by $1.67 per MT for the fourth quarter compared to the same period last year.

Wellsite solutions revenue was $11.9 million for the fourth quarter of 2021, an increase of 24% or $2.3 million compared to the fourth quarter of 2020. The increase in wellsite solutions revenue was due to a 6% increase in sand volumes trucked to wellsite. Sahara-related revenue benefited from a 58% improvement in days utilized across the eight-unit fleet compared to the fourth quarter of 2020, including a fully utilized Sahara unit in the US.

Cost of sales, excluding depreciation, increased by $16.6 million for the three months ended December 31, 2021, compared to the same period last year, primarily driven by higher sand volumes realized. Cost of sales, excluding depreciation, was impacted by an increase in transportation and freight costs during the quarter, driven by higher volumes and increasing fuel costs, as noted above. Higher production costs were recorded during the fourth quarter of 2021, attributed to several factors including the impact of one-time repair costs and mine yield changes experienced during the year, as well as extreme weather during December which resulted in a slowdown in rail service, driving higher logistics costs and less operating time at production facilities, compared to the same period last year. A strengthening of the Canadian dollar on US dollar denominated components of cost of sales favorably impacted cost of sales for the quarter, partially offsetting the increases noted above. Lower proceeds received from the CEWS program of $0.3 million also increased cost of sales for the period, compared to the same period last year. The fourth quarter of 2020 benefited from warmer weather realized, resulting in increased efficiencies and lower energy costs for the period.

For the fourth quarter of 2021, total operating and general and administrative expense was $6.1 million, an increase of $1.7 million, or 39%, from the fourth quarter of 2020. Operating and general and administrative expense increased due to higher compensation resulting from increased activity levels and lower proceeds from the CEWS program. Selling costs increased due to higher royalty costs incurred driven by higher sand volumes sold compared to the fourth quarter of last year.

ESG OVERVIEW

Source is committed to operating in a sustainable manner, continually looking to implement efficiencies to lessen the impact of Source’s activities on the environment and specifically to reduce greenhouse gas emissions. Source works closely with its stakeholders to go above and beyond current regulatory requirements through initiatives such as voluntary enrollment with the Department of Natural Resources Sustainable Growth Program and Managed Forest Program, as well as Source’s production water recycling process.

Source has formally adopted the Sustainability Accounting Standards Board (“SASB”) framework that provides sector-specific guidelines against which Source will benchmark itself in environment, social and governance (“ESG”) categories. Late last year, Source completed its benchmarking and materiality assessment which will align the Company’s upcoming annual ESG performance report, expected to be released in spring of 2022, with the relevant SASB performance indicators.

To view Source’s complete 2021 ESG report, please visit www.sourceenergyservices.com.

BUSINESS OUTLOOK

The growing demand for oil and natural gas globally, coupled with the under investment in supply over the past few years, resulted in higher crude oil and natural gas prices in 2021 and into 2022. This operating environment allowed Source’s customers to generate strong 2021 cash flows which in turn is expected to result in expanded drilling and completion programs in 2022. With the increased activity levels across North America the frac sand supply and demand fundamentals have been, and are expected to remain, tight for 2022. These fundamentals, coupled with Source’s leading service offerings and logistics capabilities, have translated into meaningful pricing gains early in 2022, a trend that is expected to continue for the balance of the year.

In the longer-term, Source believes the increased demand for natural gas, driven by the conversion of coal-fired power generation facilities, increased natural gas pipeline export capabilities and liquefied natural gas (“LNG”) exports will drive incremental demand for Source’s services in the WCSB. Source continues to see increased demand from customers that are primarily focused on the development of natural gas properties in the Montney, Duvernay and Deep Basin. This trend is consistent with our view that natural gas will be an important transitional fuel that’s critical for the successful movement to a less carbon intensive world.

In support of the move to a less carbon intensive world, Source has begun focusing on exploring and developing economic growth opportunities which transition from traditional fossil fuels to less carbon intense energy solutions. As a pathway to diversifying our business, and to participate in the decarbonization of the economy, Source is advancing opportunities in our own operations as well as at the well site and at our terminals. Source also continues to focus on increasing its involvement of the provision of logistics services for other items needed at the wellsite in response to customer requests to expand its service offerings and to further utilize its existing Western Canadian terminals to provide additional services. Over the longer-term, it is anticipated that these opportunities will be a meaningful part of Source’s business.

UPDATED NI 43-101 TECHNICAL REPORTS FOR THE MINERAL PROJECTS IN WISCONSIN, UNITED STATES

Source is pleased to announce that it has filed with the applicable Canadian securities regulatory authorities updated National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) technical reports for each of its three mineral projects in Wisconsin, United States (collectively, the “Technical Reports”).

The Technical Reports have each been prepared with an effective date of December 31, 2021 and were updated as part of an annual assessment that accounts for conventional mining depletion of the mineral resources and include updated production records. The updated resources do not represent a 100% or greater change in the total mineral resources.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource will be converted into a mineral reserve. Source has not based its production decisions and ongoing mine production on mineral reserve estimates, preliminary economic assessments, prefeasibility studies or feasibility studies. As a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery and historically projects without any mineral reserves have increased uncertainty and risk of failure.

Further details with respect to the scientific and technical information contained in this press release are available in the Technical Reports, which are available under the Company’s SEDAR profile at www.sedar.com.

FOURTH QUARTER CONFERENCE CALL

A conference call to discuss Source’s fourth quarter financial results has been scheduled for 7:30 am MST (9:30 am ET) on Thursday, March 10, 2022.

Interested analysts, investors and media representatives are invited to register to participate in the call. Once you are registered, a dial-in number and passcode will be provided to you via email. The link to register for the call is on the Upcoming Events page of our website and as follows:

Registering for the Results Conference Call

Source Energy Services Q4 2021 Results Call

The call will be recorded and available for playback approximately 2 hours after the meeting end time, until April 10, 2022, using the following dial-in:

Playback Number: 1-800-319-6413 (Toll-Free)

Playback Passcode: 8401

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of high quality Northern White frac sand, as well as the distribution of other bulk completion materials not produced by Source. Source provides its customers with an end-to-end solution for frac sand supported by its Wisconsin mines and processing facilities, its Western Canadian terminal network, its “last mile” logistics capabilities and Sahara, a proprietary wellsite mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics platform to increase reliability of supply and to ensure the timely delivery of frac sand and other bulk completion materials at the wellsite.

IMPORTANT INFORMATION

These results should be read in conjunction with each of Source’s audited consolidated financial statements for the years ended December 31, 2021 and 2020, together with the accompanying notes (the “Financial Statements”) and its corresponding MD&A for such periods. The Financial Statements and MD&A and other information relating to Source, including the Annual Information Form (“AIF”), are available under the Company’s SEDAR profile at www.sedar.com. The Financial Statements and comparative statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Unless otherwise stated, all amounts are expressed in Canadian dollars.

NON-IFRS MEASURES

In this press release Source has used the terms Adjusted Gross Margin and Adjusted EBITDA, including per MT, which do not have standardized meanings prescribed by IFRS and Source’s method of calculating these measures may differ from the method used by other entities and, accordingly, they may not be comparable to similar measures presented by other companies. These financial measures should not be considered as an alternative to, or more meaningful than, net income (loss) and gross margin, respectively, which represent the most directly comparable measures of financial performance as determined in accordance with IFRS. For additional information regarding non- IFRS measures, including their use to management and investors and reconciliations to measures recognized by IFRS, please refer to the ‘Non-IFRS Measures’ section of the MD&A, which is available online at www.sedar.com and through Source’s website at www.sourceenergyservices.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, 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”, “anticipates”, “believes”, “continues”, “focus” 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 Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change unless required by applicable law. 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: Source’s optimism that the trend of large volumes of frac sand being sold with higher margins will continue; our focus on reducing debt levels in 2022; investments in production equipment generating increased yields in Source’s sand processing activities; our belief that will have modest capital expenditures in 2022 and beyond; Source’s search for efficiencies to implement in order to lessen the impact of Source’s activities on the environment; expectations regarding our 2022 annual ESG performance report; our expectation that strong cash flows among Source’s customers in 2021 will result in expanded drilling and completion programs in 2022; our expectation that frac sand supply and demand will remain tight for 2022; increased demand for natural gas, increased natural gas pipeline export capabilities and LNG exports will drive incremental demand for Source’s services in the WCSB; industry activity levels, including the continued increase in demand from customers primarily focused on the development of natural gas properties in Montney, Duvernay and Deep Basin; the Company’s view that natural gas is an important transitional fuel for the successful movement to a less carbon intensive world; our focus on exploring and developing, and advancement of economic growth opportunities related to the transition to less carbon intense energy solutions; our focus on and expectations regarding increasing Source’s involvement in the provision of logistics services for other wellsite items; outlook for commodity prices and sales volumes; expectations respecting future conditions; revenue and profitability; expectations regarding funding for capital expenditures; and the availability of any additional future funding.

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 LNG 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, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; 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 rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labor 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, unfavorable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; the impact of information systems and cyber security breaches; and risks and uncertainties related to COVID-19 or its variants, including changes in energy demand.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors 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.

Any financial outlook and future-oriented financial information contained in this press release regarding prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action based on management’s assessment of the relevant information that is currently available. Projected operational information contains forward-looking information and is based on a number of material assumptions and factors, as are set out above. These projections may also be considered to contain future oriented financial information or a financial outlook. The actual results of Source’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. Actual results will vary from projected results. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein. The forward-looking information and statements contained in this document speak only as of the date hereof and have been approved by the Company’s management as at the date hereof. The Company does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.

FOR FURTHER INFORMATION PLEASE CONTACT:

Media Inquiries:Investor Relations Inquiries:
Meghan SomersBrad Thomson
Communications AdvisorChief Executive Officer
(403) 262-1312 (ext. 295)(403) 262-1312 (ext. 225)
communications@sourceenergyservices.cominvestorrelations@sourceenergyservices.com