Source Energy Services Announces Contracts with Two Key E&P Companies Operating in the Montney

Calgary, Alberta (July 7, 2021) TSX:SHLE

Source Energy Services Ltd. (“Source”) is pleased to announce that it has entered into a new contract with Pipestone Energy Corp. (“Pipestone”) and has extended and expanded its relationship with a major Montney Producer. These contracts include proppant supply, as well as logistics and well site services.

“As the leading supplier of proppant in the Western Canadian Sedimentary Basin (“WCSB”), we are proud to partner with these valued customers as they ramp-up their completions programmes,” said Brad Thomson, Chief Executive Officer of Source. “Our ability to provide certainty of both supply and logistics to their well sites means we are able to ensure smooth, continuous operations.

MAJOR PRODUCER EXTENDS CONTRACT UNTIL 2024 

The major Montney Producer has extended its relationship with Source by entering into a new contract commencing on January 1, 2022. The agreement will see Source provide proppant and related logistics services, as well as field solutions for this Producer’s Montney assets in Northeast British Columbia and Northwest Alberta. The revised agreement will continue until May 2024.

“By the end of this contract extension, Source and this Producer will have been working together to set a new standard of completion efficiency in the WCSB for over a decade,” commented Scott Melbourn, Chief Operating Officer of Source. “We are excited to continue this partnership and drive the next level of completion efficiency.”

NEW PIPESTONE CONTRACT

Source is excited to enter into a new contract with Pipestone that will see Source supplying proppant, logistics services, and field solutions using Source’s industry-leading Sahara well site proppant storage unit. The contract runs until the end of 2022.

Due to the proximity of Pipestone’s well sites to Source’s Wembley terminal, Source can ensure short cycle times and a reduced number of trucks on the road, resulting in numerous ESG benefits for Pipestone’s completion program.

“We are thrilled that two of the leading operators in the WCSB have trusted Source for their proppant and related services,” commented Mr. Thomson. “These contracts are once again a testament to Source’s unmatched service offering in the Montney. The Montney continues to be Canada’s leading development region and will see increasing activity levels in 2022 and beyond.”

ABOUT SOURCE ENERGY SERVICES

Source is a company that focuses on the supply and distribution of high quality Northern White frac sand. Source provides its customers with a full end-to-end solution supported by its Wisconsin mines and processing facilities, its Western Canadian terminal network and its “last mile” logistics capabilities. In addition to its industry leading frac sand transload terminal network and in-basin frac sand storage capabilities, Source also provides storage and logistics services for other bulk oil and gas well completion materials that aren’t produced by Source. Source has also developed Sahara, a proprietary well site mobile sand storage and handling system.

Source’s full-service approach allows customers to rely on its logistics capabilities to increase reliability of supply and to ensure the timely delivery of their requirements for frac sand and other bulk completion materials at the well site. For more information about Source, please visit www.sourceenergyservices.com.

ABOUT PIPESTONE ENERGY CORP.

Pipestone is an oil and gas exploration and production company focused on developing its large contiguous and condensate-rich Montney asset base in the Pipestone area near Grande Prairie. Pipestone shares trade under the symbol PIPE on the TSX. For more information about Pipestone, visit www.pipestonecorp.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, results of operations and Source’s future performance (both operational and financial) and business prospects. In certain cases, forward-looking statements can be identified by the use of words such as “expects”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, “plans”, “seeks”, “projects” or variations of such words and phrases, or state that certain actions, events or results “may” or “will” be taken, occur or be achieved. Such forward-looking statements reflect Source’s beliefs, estimates and opinions regarding its future growth, results of operations, future performance (both operational and financial), and business prospects and opportunities at the time such statements are made, and, except as may be required by law Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change. Forward-looking statements are necessarily based upon a number of estimates and assumptions made by Source that are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Forward-looking statements are not guarantees of future performance. In particular, this press release contains forward-looking statements pertaining, but not limited, to: expectations regarding demand for and sales volumes of sand beyond 2021, in light of the COVID-19 pandemic; expectations regarding improved egress and associated increased demand for LNG; expectations regarding the price of proppants and sensitivity to changes in such prices; outlook for operations and sales volumes; expectations respecting future competitive conditions; industry activity levels; expectations regarding market share; industry conditions pertaining to the frac sand industry; rail service; expectations regarding customer relationships and counterparty risk; drilling and well completion activity in 2021; expectations regarding the impact of direct-source contracts; sand sales volumes and sand spot pricing in 2021; and Source’s objectives, strategies and competitive strengths; expectations regarding future working capital and capital expenditures; the ability to secure future funding; expectations regarding fluctuations in foreign currency; expectations regarding the severity and outcome of legal claims and proceedings; expectations regarding insurance coverage and proceeds; expectations regarding the impact of climate change; risks associated with information systems and cyber security and operational risks. By their nature, forward-looking statements involve numerous current assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of Source to differ materially from those anticipated by Source and described in the forward-looking statements.

With respect to the forward-looking statements contained in this press release, assumptions have been made regarding, among other things: proppant market prices; future oil, natural gas and natural gas liquids prices; future global economic and financial conditions; future commodity prices, demand for oil and gas and the product mix of such demand; levels of activity in the oil and gas industry in the areas in which Source operates; the continued availability of timely and safe transportation for Source’s products, including without limitation, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; the maintenance of Source’s key customers and the financial strength of its key customers; the maintenance of Source’s significant contracts or their replacement with new contracts on substantially similar terms and that contractual counterparties will comply with current contractual terms; operating costs; that the regulatory environment in which Source operates will be maintained in the manner currently anticipated by Source; future exchange and interest rates; geological and engineering estimates in respect of Source’s resources; the recoverability of Source’s resources; the accuracy and veracity of information and projections sourced from third parties respecting, among other things, future industry conditions and product demand; demand for horizontal drilling and hydraulic fracturing and the maintenance of current techniques and procedures, particularly with respect to the use of proppants; Source’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which Source conducts its business and any other jurisdictions in which Source may conduct its business in the future; future capital expenditures to be made by Source; future sources of funding for Source’s capital program; Source’s future debt levels; the impact of competition on Source; and Source’s ability to obtain financing on acceptable terms.

A number of factors, risks and uncertainties could cause results to differ materially from those anticipated and described herein, including, among others: the effects of competition and pricing pressures; risks inherent in key customer dependence; effects of fluctuations in the price of proppants; risks related to indebtedness and liquidity, including Source’s leverage, restrictive covenants in Source’s debt instruments and Source’s capital requirements; risks related to interest rate fluctuations and foreign exchange rate fluctuations; changes in general economic, financial, market and business conditions in the markets in which Source operates; changes in the technologies used to drill for and produce oil and natural gas; Source’s ability to obtain, maintain and renew required permits, licenses and approvals from regulatory authorities; the stringent requirements of and potential changes to applicable legislation, regulations and standards; the ability of Source to comply with unexpected costs of government regulations; liabilities resulting from Source’s operations; the results of litigation or regulatory proceedings that may be brought against Source; the ability of Source to successfully bid on new contracts and the loss of significant contracts; uninsured and underinsured losses; risks related to the transportation of Source’s products, including potential rail line interruptions or a reduction in rail car availability or the impact of weather; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labour disputes and work stoppages and risks related to employee health and safety; general risks associated with the oil and natural gas industry, loss of markets, consumer and business spending and borrowing trends; limited, unfavourable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; and the impact of information systems and cyber security breaches.

Although Source has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in the forward-looking statements, there may be other factors, including those described under the heading “Risk Factors” in the AIF, that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will materialize or prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Readers should not place undue reliance on forward-looking statements. These statements speak only as of the date of this press release. Except as may be required by law, Source expressly disclaims any intention or obligation to revise or update any forward-looking statements or information whether as a result of new information, future events or otherwise.