Source Energy Services Ltd. announced its financial results for the three and 12 months ended Dec. 31, 2021.
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 included the following:
• Realized sand sales volumes of 2,483,362 metric tons (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 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 United States through the entire fourth quarter of the year.
• Realized gross margin of $39.3 million and Adjusted Gross Margin of $60.4 million.
• Reported net loss of $24.4 million, an improvement of $161.1 million from the same period last year.
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 U.S. dollar denominated costs.