Source Energy Services Ltd. has announced its financial results for the second quarter of 2026, revealing substantial decreases in both sand revenue and total revenue. Generated sand revenue for the quarter was $107.8 million, reflecting a 33% decline from the previous year, while total revenue reached $137.1 million, down 32% compared to Q2 2025.
The company reported a realized gross margin of $17.4 million and an Adjusted Gross Margin of $29.8 million, marking decreases of 53% and 39%, respectively, compared to the same period last year. A net loss of $5.6 million was recorded, showing a reduction of $19.2 million from Q2 2025. Significant operational difficulties, particularly at the Peace River mining facility, contributed to lower production volumes and higher costs, impacting overall margins.
Source experienced a 24% decline in sand sales volumes, totaling 831,234 metric tonnes for the quarter. The decrease was attributed to moderated customer activity levels influenced by ongoing economic uncertainty and lower natural gas prices, which impacted capital spending in the Western Canadian Sedimentary Basin (WCSB). Lower activity also led to a shift in the sales mix to mine gate sand, which typically commands a lower price.
On July 29, 2026, Source appointed Mr. Jeffrey Bowers to its Board of Directors. Mr. Bowers brings over 25 years of experience in the energy sector, previously serving in senior roles at various companies. Looking ahead, Source anticipates stronger customer activity levels in the latter part of 2026, despite acknowledging that geopolitical risks and commodity price volatility may affect near-term performance.
For the second quarter of 2026, Source Energy Services reported generated sand revenue of $107.8 million and total revenue of $137.1 million, marking decreases of 33% and 32% respectively compared to the same quarter in 2025. Additionally, the company experienced a realized gross margin of $17.4 million and an Adjusted Gross Margin of $29.8 million, both representing significant declines from the prior year. The net loss recorded was $5.6 million, a reduction of $19.2 million from Q2 2025.
In Q2 2026, Source Energy Services experienced a reduction in the average price of sand sold, with a decrease of $17.87 per metric tonne (MT) compared to Q2 2025. This was attributed to a shift in product sales mix, notably selling more domestic mine gate sand which typically commands lower prices than other types.
Source Energy's revenues were adversely affected by ongoing economic uncertainty, which led to reduced capital spending by customers in the Western Canadian Sedimentary Basin (WCSB). Lower natural gas prices were also cited as contributing factors to the decreased sand revenue during the quarter, leading to diminished activity levels compared to the previous year.
During Q2 2026, Source Energy Services faced operational challenges at its Peace River mining facility that contributed to lower production volumes and higher than expected costs. The slower than anticipated ramp-up in production capabilities required additional northern white sand to meet domestic commitments, impacting overall operational efficiency.
Source Energy Services anticipates that customer activity levels will improve for the remainder of 2026, although it expects full-year activity levels to be slightly below those observed in the previous year. This expectation is contingent upon several factors, including geopolitical uncertainties and fluctuations in commodity prices.
On July 29, 2026, Mr. Jeffrey Bowers was appointed to the Board of Directors of Source Energy Services. He brings more than 25 years of experience in the energy industry, having held various leadership roles and successfully contributing to the growth of multiple companies in the sector.
Source reported sand sales volumes of 831,234 metric tonnes (MT) for Q2 2026, reflecting a 24% decrease from the same quarter in 2025. This decline is indicative of the overall reduced customer activity levels and changing market conditions affecting demand.
The ongoing geopolitical uncertainties, such as the impacts from the Russia-Ukraine conflict, may lead to fluctuations in customer activity and demand for Source Energy Services. The company has indicated that such factors could influence operational performance and financial outcomes in the near term.