Source Energy Services Ltd.

In Q2 2026, Source reported revenue of $137.1 million, down from Q2 2025 on lower customer activity. Total sales volume was 831,000 tonnes, a 24% decrease year over year. Gross margin was $17.4 million, adjusted gross margin was $29.8 million, and adjusted EBITDA was $18.5 million, which was $16.7 million below the prior-year quarter. On the revenue mix, sand revenue was $107.8 million and well site solutions revenue was $28.3 million. For the quarter, management said Canadian activity should improve in the second half, while strong Lower 48 mine-gate sales are expected to continue; full-year capital expenditures are expected to be in the $30 million to $40 million range, likely toward the middle to upper end.

Scott Melbourn said the quarter reflected slower natural gas-based completion activity in Western Canada, but he expects a busier second half with more demand for wet and dry domestic northern white sand. He emphasized that mine-gate sales in the U.S. are strong and that Source is quoting volumes into 2027. His tone was constructive but measured, noting customer budget flexibility, commodity-price uncertainty, and some play-specific cancellations and M&A-related uncertainty.

Derren Newell said sand revenue was $107.8 million and well site solutions revenue was $28.3 million, with the latter down $10.9 million year over year due to lower last-mile volumes. He noted the average realized sand price fell $17.87 versus last year, largely because mine-gate sales lowered the average price by $12.34 per tonne, and adjusted gross margins excluding mine-gate were $38.81 versus $44.49 in Q2 2025. He also said available liquidity was $27 million at quarter-end and that net CapEx excluding Taylor and customer-funded equipment was $13.6 million, with full-year CapEx expected at $30 million to $40 million.

Analysts focused on the wet-sand opportunity, asking whether more jobs are in the pipeline and how wet-sand margins compare with dry sand; management said several wet-sand jobs are coming and that margins are fairly similar, with the main advantage being lower future capital needs at Peace River if growth comes via wet sand. Questions also centered on Peace River’s weaker production, which management attributed to a slower-than-anticipated start after winter maintenance work, and they said the ramp issues should fade. Analysts asked about 2027 customer capital plans and basin demand, and management said it is too early for firm 2027 customer commitments but believes basin sand demand could rise from roughly 8 million to 9 million tonnes today to 15 million to 16 million tonnes over the next five years if LNG, pipeline, and power demand materialize.