Source Energy Services Ltd. has announced its financial results for the second quarter of 2026, indicating substantial declines in both sand and total revenue. Compared to the same period in 2025, the company reported generated sand revenue of $107.8 million and total revenue of $137.1 million, reflecting decreases of 33% and 32%, respectively.
The realized gross margin for the quarter reached $17.4 million, while the Adjusted Gross Margin was $29.8 million, both showing significant reductions of 53% and 39% compared to Q2 2025. Furthermore, the company reported a net loss of $5.6 million and an Adjusted EBITDA of $18.5 million, down $16.7 million from the previous year.
The decline in revenue can be attributed to slower activity levels in the Western Canadian Sedimentary Basin (WCSB). Economic uncertainties and lower natural gas prices prompted customers to scale back their capital spending. A shift in the sales mix also impacted revenue, as Source sold more lower-priced mine gate sand compared to the previous year.
Additionally, the reduction in customer activity was noted in the "last mile" logistics segment, which suffered a revenue drop of $10.9 million compared to the second quarter of 2025. Although total sands sold increased slightly with over 831,234 metric tonnes shipped, this was not enough to offset the overall downturn in sales value.
Looking ahead, Source anticipates improved customer activity levels in the latter part of 2026, although overall expectations for this year remain slightly below those of last year. The company aims to leverage its existing infrastructure to meet increasing demand for proppant materials, primarily driven by liquefied natural gas (LNG) projects under development in Western Canada.
Operational improvements at the Peace River facility are expected to enhance production volumes in the coming months, potentially supporting revenue recovery. Nevertheless, ongoing geopolitical and commodity price volatilities could impact near-term demand.
During the same quarter, Source Energy Services appointed Mr. Jeffrey Bowers to its Board of Directors. Bowers, a seasoned executive with over 25 years in the energy sector, brings extensive experience in finance and corporate governance, having played a significant role in developing companies within the industry. His addition is seen as a strategic move to enhance the company's leadership as it navigates current market challenges.
Source Energy Services reported a Q2 2026 revenue decrease of 33% in sand revenue and 32% in total revenue compared to the same period in 2025.
Realized Adjusted EBITDA fell by $16.7 million to $18.5 million, reflecting lower customer activity and operational challenges.
The company expects improved customer activity in the second half of 2026, although full-year revenues are projected to remain below last year’s levels.
Mr. Jeffrey Bowers was appointed to the Board of Directors, bringing valuable experience to the leadership team.
In Q2 2026, Source Energy Services reported generated sand revenue of $107.8 million and total revenue of $137.1 million, down 33% and 32% respectively from Q2 2025. The realized gross margin decreased to $17.4 million and the Adjusted Gross Margin was $29.8 million, representing decreases of 53% and 39% from the previous year. The company experienced a net loss of $5.6 million and Adjusted EBITDA fell by $16.7 million to $18.5 million compared to the same period in 2025.
Revenue in Q2 2026 was affected by slower activity levels in the Western Canadian Sedimentary Basin (WCSB). Lower natural gas prices and ongoing economic uncertainty led customers to moderate capital spending, impacting both sand revenue and logistics volumes. Additionally, a change in product sales mix resulted in a $17.87 reduction in the average sand price realized, as the company sold significantly more mine gate sand than in the previous year.
In Q2 2026, cost of sales, excluding depreciation, decreased by $46.0 million compared to the same quarter in 2025, primarily due to lower sales volumes. This was offset partly by higher production costs at the Peace River facility and increased capital expenditures. The company also benefited from lower production costs at its Wisconsin mining facilities and reduced third-party sand purchases.
Source anticipates stronger customer activity levels for the remainder of 2026, expecting full-year customer activity levels to be slightly below those of the previous year. Although ongoing geopolitical uncertainties may cause fluctuations in demand, Source believes it is well positioned to capitalise on increasing proppant demand driven by liquefied natural gas (LNG) projects in Western Canada.
The appointment of Mr. Jeffrey Bowers, an experienced energy executive with a background in finance and corporate governance, to the Board of Directors may be seen as a strategic move by Source Energy Services to enhance its leadership and oversight capabilities in navigating industry challenges and opportunities. Mr. Bowers brings over 25 years of experience, which could support the company's objectives moving forward.
In Q2 2026, Source Energy Services achieved a 60% utilisation rate across its eleven-unit Sahara fleet, while operating units in the United States experienced full 100% utilisation. This indicates varying demand levels across different regions and highlights the operational capacity of the fleet during the reported period.
Source Energy Services faces several potential risks including ongoing geopolitical instability, commodity price volatility, competition pressures, and operational challenges at its facilities. These factors may lead to fluctuations in customer demand and could impact revenue performance. Additionally, regulatory changes and concerns over environmental compliance present ongoing uncertainties for the business.
A conference call to discuss Source Energy Services' Q2 2026 financial results is scheduled for 7:30 am MST (9:30 am ET) on Thursday, July 30, 2026. Participants are required to register to obtain dial-in information.