Source Energy Services Ltd. reported first-quarter volumes of 762,322 million metric tons (Mt) and revenue between CAD$93 million and CAD$98 million for the quarter.
In order to address the current market challenges as a result of the global pandemic and collapse of commodity prices, Source has undertaken a number of measures to reduce operational costs including lowering the level of operational staff and operating hours, and implementing board, executive and salaried staff wage and benefit rollbacks throughout the organization.
Source continues to examine all areas of its operations and expects to achieve additional fixed cost reductions throughout the organization in the second quarter of 2020.
In addition to reducing costs, Source has implemented a COVID-19 program to protect the health and well-being of its employees and “are pleased to announce that we have been able to continue uninterrupted operations with these enhanced safety measures in place,” the company stated.
The COVID-19 pandemic and related economic repercussions have created extraordinary volatility, uncertainty and turmoil in the oil and gas industry in general but especially in the Western Canadian Sedimentary Basin. Oil demand has significantly deteriorated as a result of the virus outbreak and corresponding preventative measures taken around the world to mitigate the spread of the virus.
The impacts of the COVID-19 pandemic have been further impacted by actions taken by the Organization of Petroleum Exporting Countries. The convergence of these events has created the unprecedented dual impact of a decline in global oil demand coupled with the risk of a substantial increase in oil supply.
These events have negatively impacted and are expected to continue to negatively impact Source’s business. Demand for the company’s products and services is declining as its customers revise their capital budgets downwards and adjust their operations in response to the rapid decline in oil prices.
Given the dynamic nature of these events, Source cannot reasonably estimate the period of time that adverse business conditions will persist, the impact they will have on the company’s business, liquidity, consolidated results of operations and consolidated financial condition, or the pace of any subsequent recovery.
“While our financial results for the first quarter of 2020 were not materially impacted by these events, the company expects a decline in revenue and profitability for the remainder of 2020,” it stated.