Increased drilling activity in the Montney, Duvernay and Deep Basin plays in Western Canada is driving significantly improved financial performance for Source Energy Services.
The company, which delivers Source White frac sand to the Western Canada Sedimentary Basin from Wisconsin, reported a 255 percent increase in sand sales in the third quarter of 2017 compared to the previous year.
The company sold 510,446 metric tonnes of sand in the third quarter of 2017, compared to 157,210 metric tons in the third quarter of 2016.
This generated $62.2 million in sand revenue in the third quarter of 2017, up from $19.1 million in the third quarter of 2016, contributing to Source’s 2017 third quarter net income of $3.0 million, compared to a a net loss of $12.3 million in the previous year period.
“Average Canadian well completion sand intensities continue to lag the average US well completion sand intensities; however, the Canadian average is rising as US style completions are being gradually adopted by Canadian exploration and production companies,” Source said in its earnings statement.
“Provided that commodity prices remain at similar levels to what they are today, and that exploration and production companies continue with their previously announced capital plans, significant improvement in sand sales compared to 2016 is expected to continue through the remainder of 2017. Source also expects that activity levels and sand intensity levels will continue to rise in 2018.”
The company has also “taken critical steps behind the scenes to meet growing proppant requirements,” noted CEO Brad Thomson. This includes the recent purchase of the company’s third Northern White Wisconsin mine and processing facility.
“As an organization, it's important that we continue to expand our ability to produce and distribute more northern white proppant,” Thomson said.
“Standing still is not an option."