Source Energy Services (SHLE) Q2 2026 earnings summary

Executive summary

• Q2 2026 saw a 24% year-over-year decline in sand sales volumes to 831,234 MT and a 32% drop in total revenue to $137.1 million, reflecting weak Canadian natural gas activity and deferred customer projects.

• Net loss for Q2 2026 was $5.6 million, a $19.2 million reduction from Q2 2025, with Adjusted EBITDA down $16.7 million to $18.5 million.

• U.S. mine gate sales surged, offsetting some Canadian weakness, and Sahara fleet utilization reached 60% overall, with 100% utilization in the US.

• Canada’s largest wet sand job was completed, pumping over 71,000 MT in 23 days.

• Jeffrey Bowers was appointed to the board, bringing over 25 years of energy sector experience.

Financial highlights

• Total revenue for Q2 2026 was $137.1 million, down 32% year-over-year, with sand revenue at $107.8 million and adjusted EBITDA at $18.5 million.

• Gross margin was $17.4 million; adjusted gross margin was $29.8 million, both impacted by lower volumes and sales mix.

• Adjusted gross margin per MT was $35.85, down from $44.42 in Q2 2025.

• Free Cash Flow for Q2 2026 was negative $9.3 million, compared to positive $11.6 million in Q2 2025.

• Net debt as of June 30, 2026 was $174.3 million.

Outlook and guidance

• Stronger customer activity is anticipated for H2 2026, especially in liquids-rich plays, but full-year Canadian volumes are expected to be slightly below 2025 levels due to M&A uncertainty and canceled completions.

• Long-term outlook remains positive, driven by Western Canadian LNG projects, Montney development, and increased natural gas demand.

• CapEx guidance for 2026 remains in the $30–40 million range, with spending front-end loaded and lower in H2.

• Operational improvements at Peace River are expected to boost production volumes in H2 2026.

• Continued expansion of logistics and well site services is planned to meet customer needs.