Source Energy Services (SHLE) Q3 2025 earnings summary

Executive summary

• Q3 2025 saw a slowdown in completions activity and a 30–31% drop in sand sales volumes and revenue due to weaker oil and natural gas prices, economic uncertainty, and deferred projects.

• Total revenue for Q3 2025 was $125.3 million, a decrease of $57.7 million year-over-year, with a net loss of $6.2 million.

• Infrastructure investments continued, including nearing completion of the Peace River mine expansion and Taylor terminal becoming fully operational.

• Acquisition of sand processing assets positions the company for future expansion, supported by customer contracts and LNG export capacity growth.

• Achieved 62% utilization across the Sahara fleet, with 11 units operational in Canada and the US.

Financial highlights

• Sand sales volumes were 665,006–665,000 tons, down 30–31% year-over-year, with sand revenue at $100.3 million (CAD 100.3 million), a decrease of $42 million.

• Adjusted EBITDA was $20.3 million, a decrease of $15.1 million from Q3 2024.

• Adjusted gross margin for Q3 2025 was $30.3 million, down 30% year-over-year; gross margin was $19.6 million, down 42%.

• Well site solutions revenue was CAD 23.9 million, down CAD 16 million year-over-year.

• Free cash flow for Q3 2025 was negative $12.7 million, compared to $20.1 million in Q3 2024.

Outlook and guidance

• Anticipates a strong rebound in Q4 2025, with full-year prop demand similar or slightly ahead of 2024.

• Expects 2026 to be a strong year for completion activity, driven by LNG Canada ramp-up and additional export capacity.

• Initial view for 2026 and 2027 is for continued growth in sand volumes.

• Capital expenditures for 2025 projected at CAD 44–50 million.

• Customer contracts and investments have backed expansion of domestic production capabilities to 1 million tonnes in 2025.