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Source Energy Services Reports Increased Sand Sales


Source Energy Services Ltd. announced its 2019 first quarter financial results, including:

•    Sand sales of 698,347 metric tons (mt) and sand revenue of $91.1 million, an increase of 9% and 5%, respectively, quarter-over-quarter.
•    Achieved 17% growth in sales volumes in the Western Canadian Sedimentary basin (WCSB).
•    Distributed total volumes of 732,722 mt, which includes third party sand and other products, distributed through Source’s WCSB terminal network.
•    Extended an existing contract with a leading WCSB E&P to 2021.
•    Substantially completed its 2019 growth capex program including the expansion at its Fox Creek terminal to support the previously announced Shell contract.
•    Deployed a second Sahara unit into the Marcellus.
•    Advanced its diversification initiatives by obtaining permits to ship crude by rail from its Wembley terminal.

“Our customers’ activity levels in the first quarter of 2019 increased significantly from the fourth quarter of 2018,” the company stated. “Source is expecting its 2019 sales volumes to be substantially in line with 2018, despite the expectation of lower capital spending throughout the WCSB. The growth in direct source exploration and production contracts year-over-year is expected to lead to increased market share, which should help maintain Source's sales volumes. Customer capital programs, and, demand for frac sand, could be impacted by several factors, including: timing of spring breakup in the WCSB, commodity price fluctuations and condensate demand in the WCSB. As E&P companies continue to shift into manufacturing mode the trend towards direct sourcing continues and Source is pleased to be working directly with five E&P customers under these types of contractual arrangements. These contracted sales are in addition to sales to other E&P companies that wish to direct source sand on a non-contract basis, as well as traditional sales to pressure pumping customers. Beyond 2019, we are excited by the industry prospects with anticipated improved pipeline and other transportation capacity and the longer-term impacts of increased demand for liquefied natural gas on WCSB activity levels. In addition, Source deployed a second Sahara unit to the Marcellus. These units represent an important step for Source as we diversify our revenue streams into additional basins in North America.”