Source Energy Services Reports Q3 2026 Results

CALGARY, AB / ACCESS Newswire / November 5, 2026 / Source Energy Services Ltd. ("Source" or the "Company") is pleased to announce its financial results for the three and nine months ended September 30, 2026.

Q3 2026 HIGHLIGHTS

As anticipated, customer activity levels increased during the third quarter, driven by planned completion activities in the back half of 2026. For the three months ended September 30, 2026, Source achieved the following results:

• realized sand sales volumes of 1,027,659 metric tonnes ("MT"), a 55% increase from the third quarter of 2025;
• generated sand revenue of $143.8 million and total revenue of $188.0 million, increases of 43% and 50%, respectively, compared to the third quarter of 2025;
• realized gross margin of $22.3 million and Adjusted Gross Margin⁽¹⁾ of $37.5 million, representing increases of 14% and 24%, respectively, when compared to the three months ended September 30, 2025;
• reported net loss of $3.8 million compared to a net loss of $6.2 million for the third quarter of 2025;
• realized Adjusted EBITDA⁽¹⁾ of $26.9 million, a $6.6 million increase from the same period in 2025;
• achieved 67% utilization across the eleven-unit Sahara fleet, with operating units in the United States achieving 100% utilization during the third quarter; and
• executed a contract to build and operate a new twelfth Sahara unit in Alaska, expanding the Company's Sahara fleet, with construction costs fully reimbursed by the customer.

Note:

1. Adjusted Gross Margin (including on a per MT basis) and Adjusted EBITDA are not defined under IFRS (as defined herein) and might not be comparable to similar financial measures disclosed by other issuers, refer to ‘Non-IFRS Measures' below for reconciliations to measures recognized by IFRS. For additional information, please refer to Source's Management's Discussion and Analysis ("MD&A"), dated November 5, 2026, available online at www.sedarplus.ca.

RESULTS OVERVIEW

Notes:

1. One MT is approximately equal to 1.102 short tons.
2. The average Canadian to United States ("U.S.") dollar exchange rate for the three and nine months ended September 30, 2026 was $0.7146 and $0.7220, respectively (2025 - $0.7261 and $0.7149).
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 reconciliations to measures recognized by IFRS. For additional information, please refer to Source's MD&A available online at www.sedarplus.ca.

THIRD QUARTER 2026 RESULTS

Increased activity levels in the Western Canadian Sedimentary Basin ("WCSB") supported stronger demand for Source sand and well site solutions during the quarter. Increased frac intensities realized in certain Source customer completion programs also contributed to the increase in volumes for the quarter. Total revenue was $188.0 million for the three months ended September 30, 2026, an increase of $62.7 million or 50% compared to the third quarter last year. Source delivered sand volumes of 1,027,659 MT during the period, an increase of 362,653 MT compared to the third quarter of 2025. The higher activity levels also contributed to increased volumes delivered for "last mile" logistics and other well site services. Revenue for the third quarter continued to be impacted by a change in product sales mix, which contributed to a $10.80 per MT reduction in average sand price realized compared to the same period last year. The reduction in average sand price realized reflects a 90% increase in domestic dry and wet sand sales compared to the third quarter of 2025, a shift that reflects recent customer demand patterns and is expected to continue, as well as a higher proportion of lower-priced mine gate sales during the quarter.

Cost of sales, excluding depreciation, increased by $55.5 million compared to the third quarter of 2025, primarily reflecting the higher sales volumes realized. Source has incurred additional one-time costs associated with the rapid ramp-up in production at its Peace River operation; however, plans are under way to debottleneck and optimize these facilities prior to the commencement of next year's wash season. The challenges at Peace River have also resulted in incremental northern white sand volumes required to satisfy commitments during the quarter.

For the three months ended September 30, 2026, gross margin increased by $2.7 million compared to the prior year period, primarily due to higher sales volumes, as noted above. Excluding margin from mine gate sand volumes, Adjusted Gross Margin was $38.18 per MT for the quarter compared to $46.56 per MT for the third quarter of 2025. Adjusted Gross Margin per MT was impacted by performance at the Peace River mining facility, as described above. The reduction in Adjusted Gross Margin per MT was also attributed to an increase in fuel costs impacting logistics costs and operations at certain mining and terminal facilities. These impacts were partly offset by higher margin generated from sand trucking assets and strong "last mile" logistics performance compared to the third quarter in 2025.

Operating expense increased by $0.2 million compared to the third quarter of 2025, primarily due to higher selling and administrative costs, attributed to increased royalty expenses resulting from higher activity levels. General and administrative expense increased by $0.7 million compared to the third quarter of 2025, driven by higher people costs, IT related equipment purchases and additional IT storage and licensing costs.

Adjusted EBITDA increased by 32%, or $6.6 million, to $26.9 million for the three months ended September 30, 2026. The increase was primarily attributable to higher customer activity levels experienced during the third quarter and strong well site solutions performance. The weakening of the Canadian dollar favorably impacted Adjusted EBITDA by $0.6 million for the quarter, largely driven by the settlement of foreign exchange forward contracts and movement in exchange rates on repayments of long-term debt.

LIQUIDITY AND CAPITAL RESOURCES

Notes:

1. Adjusted EBITDA and Free Cash Flow are not defined under IFRS and might not be comparable to similar financial measures disclosed by other issuers, refer to ‘Non-IFRS Measures' below. The reconciliation to the comparable IFRS measure can be found in the table below. For additional information, please refer to Source's MD&A available online at www.sedarplus.ca.
2. Excludes capital expenditures related to the Taylor facility and customer-funded equipment purchases.

For the third quarter of 2026, Free Cash Flow increased by $22.3 million compared to the third quarter of 2025, primarily due to higher activity levels realized and a decrease in capital expenditures, as described below. Financing expense paid decreased on a quarter-over-quarter basis primarily due to the timing of interest paid on the five-year term loan, which moved from monthly installments during the third quarter of 2025 to a quarterly installment during the third quarter of 2026. An increase in interest expense incurred for the asset-backed credit facility, due to higher amounts drawn compared to the same period last year, partly offset the decrease in financing expense paid. Higher payments for lease obligations, attributed to additional heavy equipment due to the scaling of the Peace River facility and the replacement of expiring yellow iron leases at the Wisconsin mining facilities completed last year, partly offset the increase in Free Cash Flow for the third quarter of 2026 compared to the same period last year.

Capital expenditures, net of proceeds on disposals and reimbursements and excluding expenditures related to the Taylor facility and customer-funded equipment purchases, were $5.0 million for the three months ended September 30, 2026, a decrease of $13.5 million compared to the third quarter last year. Excluding construction for the Taylor facility and customer-funded equipment purchases, growth capital expenditures decreased by $15.2 million for the third quarter of 2026, reflecting lower capital spending related to enhancements made at the Peace River facility compared to last year, as well as a customer reimbursement related to the construction of a new Sahara unit. During the third quarter of 2025, Source acquired assets to support the future expansion at the Peace River facility. Maintenance and sustaining capital expenditures increased by $1.7 million for the third quarter of 2026, compared to the same period in 2025, primarily due to improvements made at the Peace River mining facility and an increase in overburden removal activities.

BUSINESS OUTLOOK

Following improved third quarter performance, Source expects customer activity to stabilize through the balance of 2026, with full-year activity levels below those achieved in 2025. While geopolitical uncertainty and weakening Canadian natural gas prices may continue to create periodic fluctuations in customer activity and near-term demand, Source's long-term outlook remains positive. Strong crude oil prices continued to support strong mine gate deliveries into the Lower 48 states during the third quarter, and Source expects this trend to continue in the near term. Despite ongoing challenges associated with scaling Source's domestic sand platform, operational performance has continued to improve as Source advances production and domestic sand volumes.

Over the medium to longer term, the outlook for natural gas development in the WCSB continues to strengthen. During the third quarter LNG Canada Phase 2 received a final investment decision which is expected to double the project's capacity and provide greater certainty regarding future natural gas production growth. In addition, the advancement of incremental crude oil pipeline capacity supports the long-term outlook for liquids-rich natural gas development in the Montney and Duvernay, as increased heavy oil production and pipeline throughput are expected to drive additional demand for condensate. Together with other LNG projects currently under review or development, these projects are expected to support incremental demand in the WCSB. Source believes it is well positioned to capitalize on the expected increase in demand within northeastern British Columbia and across the broader WCSB through its existing northern white sand franchise, terminal network and growing domestic sand production at Peace River.

Source believes that growing demand for natural gas, driven by LNG exports, increased heavy oil production and pipeline throughput, expanded natural gas pipeline export capacity and demand from power generation facilities will drive incremental demand for Source's services in the WCSB. Source continues to see increased demand from customers primarily focused on the developing natural gas properties in the Montney, Duvernay and Deep Basin.

Source remains focused on expanding its logistics and well site service offerings in response to customer demand. By leveraging its existing Western Canadian terminal network and infrastructure, growing domestic sand platform and northern white sand supply capabilities, Source is positioned to provide customers with integrated service solutions and additional supply chain support.

THIRD QUARTER CONFERENCE CALL

A conference call to discuss Source's third quarter financial results has been scheduled for 7:30 am Alberta Time (8:30 am ET) on Friday, November 6, 2026.

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 Q3 2026 Results Call

The call will be recorded and available for playback approximately two hours after the meeting end time, until December 6, 2026, using the following dial-in:

Toll-Free Playback Number: 1-855-669-9658

Playback Passcode: 1518229

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the integrated production and distribution of 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 and its "last mile" logistics capabilities, including its trucking operations, and Sahara, a proprietary well site 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 well site.

IMPORTANT INFORMATION

These results should be read in conjunction with Source's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2026 and 2025 and the audited consolidated financial statements for the years ended December 31, 2025 and 2024, 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, are available under the Company's SEDAR+ profile at www.sedarplus.ca. 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 "Free Cash Flow", "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 and gross margin, respectively, which represent the most directly comparable measures of financial performance as determined in accordance with IFRS.

Reconciliation of Adjusted EBITDA and Free Cash Flow to Net (Loss) Income

Notes:

1. Includes expenses and recoveries related to the incident at the Fox Creek terminal facility and other one-time expenses.
2. Excludes capital expenditures for the Taylor facility and customer-funded equipment purchases.

Reconciliation of Gross Margin to Adjusted Gross Margin

For additional information regarding non-IFRS measures, including their use to management and investors, their composition and discussion of changes to either their composition or label, if any, please refer to the ‘Non-IFRS Measures' section of the MD&A, which is incorporated herein by reference. Source's MD&A is available online at www.sedarplus.ca 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 "approach", "anticipates", "ensure", "expects", "project", "future", "intends", "improve", "position", "believes", "continues", "impact", "estimate", "grow", "focus", "could", "may", "should", "trend", "would", "position" or variations of such words and phrases, or statements 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 continued focus on the integrated production and distribution of frac sand and the distribution of other bulk completion materials not produced by Source; Source's full-service approach which 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 well site; expectations regarding the strengthening outlook for natural gas development in the WCSB, including that the final investment decision for LNG Canada Phase 2 is expected to double the project's capacity and provide greater certainty regarding future natural gas production growth, and that other LNG projects currently under review or development will support incremental demand in the WCSB; the expectation that the advancement of incremental crude oil pipeline capacity will support liquids-rich natural gas development in the Montney and Duvernay, and that increased heavy oil production and pipeline throughput will drive additional demand for condensate; the expectation that customer activity will stabilize through the balance of 2026, with full-year activity levels below those achieved in 2025; the expectation that geopolitical uncertainty and commodity price volatility may continue to create periodic fluctuations in customer activity and near-term demand, and Source's positive long-term outlook; the expectation that strong mine gate deliveries into the Lower 48 states will continue in the near term; expectations with respect to sand revenue and mine gate sand sales and associated costs; the expectation that the shift in product sales mix toward a higher proportion of domestic dry and wet sand sales will continue; the belief that growing demand for natural gas, driven by LNG exports, increased heavy oil production and pipeline throughput, expanded natural gas pipeline export capacity and demand from power generation facilities, will drive incremental demand for Source's services in the WCSB; the expectation that Source is anticipating improvement of Source's production efficiencies; continued increase in demand from customers primarily focused on the development of natural gas properties in Montney, Duvernay and Deep Basin; the belief that Source is well-positioned to capitalize on the increase in demand in northeastern British Columbia and take advantage of growing proppant demand and activity levels in the WCSB; expectations regarding the growing domestic sand production at the Peace River facility; Source's continued focus on increasing its involvement in the provision of logistic services for other items needed at the well site in response to customer requests to expand its service offerings and to further utilize its existing Western Canadian terminals to provide additional services; the benefits that Source's "last mile" services provide to customers; expectations respecting future conditions; and profitability.

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; the timely completion of LNG, natural gas pipeline and crude oil pipeline projects in Western Canada; future global economic and financial conditions, including the results of ongoing tariff and trade negotiations in North America, as well as globally; predictable inflationary pressures; 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; Source's ability to achieve anticipated production volumes and operating efficiencies at the Peace River mining facility; 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; Source's ability to maintain their information assets and critical infrastructure and cyber security; impacts of U.S. legislation and regulatory policies; 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 and continued compliance with debt covenants; 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; the risk of ongoing geopolitical instability, including the Russia-Ukraine conflict and the U.S.-Iran conflict and consequences resulting from the same; volatility in natural gas, liquefied natural gas and crude oil prices; changes in customer capital budgets and completion programs; risks inherent in key customer dependence; operational challenges in scaling production at the Peace River facility; 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, including with respect to tariff and trade policy in North America, as well as globally; 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 by or 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 extreme weather patterns and natural disasters; 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; the impact of inflation on capital expenditures; and risks and uncertainties related to pandemics, 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 Melbourn
Chief Executive Officer
(403) 262-1312
investorrelations@sourceenergyservices.com

Derren Newell
Chief Financial Officer
(403) 262-1312
investorrelations@sourceenergyservices.com

SOURCE: Source Energy Services Ltd.