Download Roadshow Presentation March 2017

Roadshow Presentation
March 2017
Important Notice
A preliminary prospectus and amended and restated preliminary prospectus containing important information relating to the securities described in this presentation has been filed with the securities regulatory
authorities in Québec and each of the provinces and territories of Canada, respectively. A copy of the preliminary prospectus and amended and restated preliminary prospectus, and any amendment thereto
(collectively, the “preliminary prospectus”), is required to be delivered with this presentation. The preliminary prospectus is still subject to completion. There will not be any sale or acceptance of an offer to buy the
securities until a receipt for the final prospectus has been issued. This presentation does not provide full disclosure of all material facts relating to the securities offered. Investors should read the preliminary
prospectus, the final prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.
The information contained in this presentation does not purport to be all‐inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to conduct their own
analysis and review of the Company (as defined in the preliminary prospectus) and Source (as defined in the preliminary prospectus) and of the information contained in this presentation. Without limitation,
prospective investors should read the entire preliminary prospectus and final prospectus, and any amendments thereto, consider the advice of their financial, legal, accounting, tax and other professional advisors and
such other factors they consider appropriate in investigating and analyzing Source. An investor should rely only on the information contained in the final prospectus relating to the Offering (as defined in the preliminary
prospectus), which will include this presentation, and is not entitled to rely on parts of the information contained in the final prospectus to the exclusion of others. None of the Company, the Selling Shareholders (as
defined in the preliminary prospectus) or the Underwriters (as defined in the preliminary prospectus) has authorized anyone to provide investors with additional or different information, and any such information,
including statements in media articles about Source, should not be relied upon.
Certain capitalized terms and abbreviations not otherwise defined herein have the meaning assigned to them in the preliminary prospectus.
There is currently no market through which the Common Shares may be sold and purchasers may not be able to resell Common Shares purchased under the final prospectus. This may affect the
pricing of the Common Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Common Shares and the extent of issuer regulation. An investment in the
Common Shares is speculative and involves a high degree of risk that should be considered by potential purchasers. The Company’s business is subject to the risks normally encountered in the frac
sand industry and the Company’s business of mining, processing and transporting of frac sand. An investment in the Common Shares is suitable only for those purchasers who are willing to risk a
loss of some or all of their investment and who can afford to lose some or all of their investment. See “Risk Factors” in the preliminary prospectus.
Scientific and Technical Information
The scientific and technical information in this presentation that relates to the Sumner Facility and the Blair Facility was estimated as of December 16, 2015 and as of February 12, 2017, respectively, and has been
approved by D. Roy Eccles, M. Sc P. Geol and Steven Nicholls, BA.Sc, MAIG, each full time employees of APEX and independent QPs, as set out in the Sumner APEX Report and the Blair APEX Report. Reference
should be made to the full text of the Sumner APEX Report and the Blair APEX Report, which are available under the Company’s profile at www.sedar.com. See “Scientific and Technical Information” in the
preliminary prospectus.
The scientific and technical information in this presentation has been updated with current information, where applicable. Unless otherwise indicated, all Mineral Resource estimates contained in such scientific and
technical information have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System “Estimation of Mineral Resources and Mineral Reserves
Best Practice Guidelines” dated November 23, 2003 and CIM amended and adopted “Definition Standards for Mineral Resources and Mineral Reserves” dated May 20, 2014. Without limiting the foregoing, such
scientific and technical information uses terms that comply with reporting standards in Canada and certain estimates are made in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.
Source has not based its production decisions and ongoing mine production on Mineral Reserve estimates, preliminary economic assessments, pre-feasibility studies or feasibility studies. As a result,
there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery and historically projects without any Mineral Reserves have increased
uncertainty and risk of failure.
Non-IFRS Measures
In addition to using financial measures prescribed by IFRS, references are made in this presentation to “Adjusted EBITDA”, “EBITDA” and “Adjusted Gross Margin” which are measures that do not have any
standardized meaning as prescribed by IFRS. Accordingly, Source’s use of such terms may not be comparable to similarly defined measures presented by other entities. For further details on these non-IFRS
financial measures, see “IFRS and Non-IFRS Measures” in the preliminary prospectus.
United States Matters
The securities of the Company referred to herein have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), as amended, and may only be offered, and this presentation may
only be made, to persons within the United States that are “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act. The Company does not have a class of securities registered with the
Securities and Exchange Commission (the “SEC”). Source prepares its disclosure in accordance with the requirements of applicable securities laws in effect in Canada, which differ significantly from the requirements
of U.S. securities laws.
2
Disclaimer
Forward-Looking Statements
Certain statements contained in this presentation constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of applicable Canadian and
United States securities laws 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 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 presentation contains forward-looking statements pertaining, but not limited, to: the completion, size, expenses and timing of the offering of common shares by
Source and the use of proceeds therefrom; the characteristics of the Blair Facility and the benefits of its acquisition; changes to laws and regulations affecting Source’s business; expectations regarding the price of
proppants and sensitivity to changes in such prices; outlook for operations; expectations respecting future competitive conditions; industry activity levels; industry conditions pertaining to the frac sand industry; and
Source’s objectives, strategies and competitive strengths.
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 presentation, 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, and levels of activity in the oil and gas industry in the areas in which
Source operates; the timing for receipt of regulatory and stock exchange approvals and the execution of ancillary agreements in connection with the offering of common shares; Source’s ability to successfully
complete and integrate the Blair Facility and the anticipated benefits of acquiring the Blair Facility; the continued availability of timely and safe transportation for Source’s products, including without limitation, rail
accessibility; 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; Source’s ability to obtain financing on acceptable terms; and, where applicable, each of those
assumptions set forth in the footnotes provided herein in respect of particular forward-looking statements.
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; possible failure to realize the anticipated benefits of the acquisition of the Blair Facility; inability to complete the acquisition of the Blair
Facility on the terms specified or at all; potential undisclosed liabilities associated with the acquisition of the Blair Facility; 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 and unexpected costs of complying with government
regulations; liabilities resulting from Source’s operations; the results of litigation or regulatory proceedings that may be brought against us; 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; the geographic and
customer concentration of Source; 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; and the use and suitability of Source’s accounting estimates and judgments.
Statements relating to Mineral Resources are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the Mineral Resources described
exist in the quantities predicted or estimated and that the Mineral Resources described might be able to be profitably produced in the future.
Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in its forward-looking statements, there may be other factors 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 presentation 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 presentation. 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.
3
Presenting Executives
Brad Thomson
Chief Executive Officer





Derren Newell
Chief Financial Officer




Scott Melbourn
Chief Operating Officer



25+ years of leadership experience
Previously Chief Financial Officer and Principal of the Northridge Group of Companies
Spearheaded creation of TransCanada Power LP
Previous director of CCS Income Fund, CE Franklin and Bruce Power
CPA, CA, ICD.D Designation
20+ years of senior financial responsibility in energy, commodity, sales & distribution
businesses in Canada and the U.S.
Previous CFO of CE Franklin
Senior member of Superior Plus finance team
CA
16+ years of BD, M&A and senior operations responsibilities in energy services and
telecommunications in Canada and the U.S.
Previous Director of Business Development & Strategy (for the Concord Well Services
division at CCS Corporation)
CFA
4
Investment Highlights
 Western Canada drilling activity expected to increase significantly(1)
Attractive Proppant
Market Fundamentals
 Growing proppant intensity is enhancing well performance and increasing the volume of sand used
 Tightening proppant market is a positive indicator for pricing, but a challenge for the industry
 Largest proppant terminal network in the WCSB; est. >50% of terminal capacity in key resource plays(2)
Market Leading
Logistics Advantage
 Network of facilities within key basins enables Source to meet demand and creates cost advantage
 Wembley Terminal in heart of the Montney provides unit train unloading capability
Integrated Business
Model Enhances
Margin
 Integrated proppant provider from mine to wellsite captures margin across supply chain
 Wisconsin mines have Inferred Mineral Resources of 94 mm and 25 mm metric tonnes, respectively(3)
 Source’s leading “last mile” logistics capabilities enhance customer experience
 Strong capital position to weather the oilfield cycles
Strong Balance Sheet
 Ample capacity to fund identified and permitted organic growth opportunities(4)
 Well positioned to capitalize on strategic acquisitions as opportunities arise
Proven Management
and Board of Directors
 Over 75 years of collective relevant experience at diversified energy companies
 Long-standing customer relationships and deep operational expertise
1, 2, 3, 4 – Slide Notes
5
Source is a Leading Fully Integrated
Proppant Logistics Company in Canada
1 – Slide Notes
> SOURCE IS BUILT TO SOLVE CANADA’S PROPPANT CHALLENGES
6
Cost of Proppant Delivered to the
Montney and Duvernay
% Delivered Cost
~80%
Logistics
~20%
Mining &
Processing
> SOURCE PARTICIPATES IN EACH COMPONENT OF PROPPANT SUPPLY CHAIN
7
Why Do Customers Choose Source?
Canadian Industry Challenge
Processing Capabilities
 Inefficient mines
 Seasonality impact
SOURCE’S ADVANTAGE

Large scale, Northern White sand mine connected to processing and rail

Enclosed, year-round plants with 54,000 metric tonnes of on-site finished
product storage(1)

Source developed the Wembley Terminal; capable of unloading a
100 car unit train in under 24 hours

Full mine to wellsite solution embeds Source with clients

Owned and operated high capacity transloads

Current terminal storage capacity of over 90,000 metric tonnes

Advantaged terminal locations in key plays

Source terminals are purpose built and operated to service the 24/7
needs of the oilfield

Sahara: Proprietary, custom mobile wellsite storage units reduce
logistics issues, wait time, trucking costs and product damage

Reduces silica dust and quieter than pneumatic systems
Rail Shipping
 Inefficient manifest rail shipping
 Disjointed supply chain
Terminals
 Capacity inadequate for large fracs
 Truck loading times / demurrage charges
 Distance to the wellsite
 24/7 demand
Wellsite “Last Mile”
 Inefficient sand storage at wellsite
 Environmental and safety
1 – Slide Notes
> SOURCE’S BEST-IN-CLASS PROPPANT DELIVERY ENHANCES CUSTOMER EXPERIENCE
8
I. Compelling Industry
Fundamentals
Drivers of Increasing
Proppant Demand
Established Industry Trends Result in
Increased Proppant Demand
Canadian Proppant Demand is Expected
to Grow
3.2mm MT
5.9mm MT
2018E Midpoint
2015
(see slide 15 for details)
Increasing
Proppant per Stage
Tighter
Stage Spacing
Longer Laterals
Increasing Horizontal
Well Count
Increased proppant intensity driving improved economics
Stages per well have increased >40%
basin-wide since 2013(1)
Industry moving to longer laterals to improve rate &
recovery via increased reservoir contact
Capex forecasted to increase by approximately 55%
from 2016 – 2017 for key Canadian resource plays(2)
1, 2 – Slide Notes
10
Canadian Plays Compete on
Rate of Return
North American Play Ranking by IRR(1)(2)(3)
Montney and Duvernay IRRs are
Supported by Diluent Demand
Permian
(Midland
Wolfcamp)
Duvernay
Eagle Ford
US Bakken
Montney
Permian
(Delaware
Wolfcamp)
SCOOP/
STACK
Marcellus
Utica
Permian
(Delaware
Bone
Spring)
Deep Basin
1, 2, 3 – Slide Notes
> CANADIAN PLAYS SHOULD CONTINUE TO ATTRACT CAPITAL
11
Diluent Demand Enhances Canadian
Shale Economics
Alberta Diluent Supply & Demand(1)(2)
Crude Oil and Bitumen Production(1)
0.6
6.0
0.4
0.3
Oil sands require
diluent (C5+) for
blending in order to
ship to market
4.0
3.0
0.2
2.0
0.1
1.0
0.0
0.0
2013
2016 AB Diluent Supply (C5+)
Bitumen
5.0
Canada is net short
diluent resulting in
premium pricing
Oil & Bitumen (mmbbl/d)
Diluent Supply / Demand (mmbbl/d)
0.5
Crude Oil
2016 AB Diluent Demand
2015
2017
2019
2021
2023
2025
1, 2 – Slide Notes
> CANADA IS NET SHORT DILUENT SUPPORTING ATTRACTIVE NGL PRICING
12
Key Canadian Plays are Growing
Wells Drilled by Higher Frac Intensity Plays(1)(2)(3)(4)
Canadian Production by Key Play(6)
Number of Horizontal Wells Rig Released
boe/d
1,200,000
3,000
Montney
Montney
Duvernay
Duvernay
Deep Basin
Deep Basin
1,000,000
Capex forecasted
to increase 55% in
2017(5)
2,032
2,000
1,754
1,501
1,462
1,442
1,500
943
1,000
Barrels of oil equivalent per day
2,500
800,000
600,000
400,000
200,000
500
Duvernay is Emerging
0
2013
2014
2015
2016
2017E
2018E
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
1, 2, 3, 4, 5, 6 – Slide Notes
> ACTIVITY EXPECTED TO INCREASE IN KEY CANADIAN PLAYS
13
Increasing Proppant Intensity
Proppant Intensity Per Well by Play(1)
Metric Tonnes Per Horizontal Well
 Top E&P companies are the leading indicator for
proppant intensity growth trends in the WCSB
- Indicates Source is a leading proppant provider to this market
 The Montney, Duvernay and Deep Basin
are amongst the most economic plays in
North America
 Canadian plays have historically lagged proppant
intensity trends established in key
U.S. plays
 Proppant intensity has nearly doubled in the Montney
and Duvernay from 2013 to 2016
1 – Slide Notes
> PROPPANT INTENSITY CONTINUES TO INCREASE IN KEY CANADIAN PLAYS
14
Canadian Proppant Demand
is Increasing
Estimated Canadian Proppant Demand by Play(1)(2)(3)(4)
Million Metric Tonnes
90th Percentile
Proppant Intensity
(Q1 2016 Data)
Flat
Proppant Intensity
(Q1 2016 Data)
Higher Frac Intensity
Montney
Duvernay
Deep Basin
Lower Frac Intensity
Viking
Cardium
Bakken/Torquay
Midale/Shaunavon
1, 2, 3, 4 – Slide Notes
> PROPPANT DEMAND POISED TO INCREASE DUE TO INCREASED FRAC INTENSITY
AND WELL COUNT
15
II. Mine to Wellsite Proppant Solution
Source’s Unique Integrated Platform
Mining &
Processing
 Northern White
resource base
 Closed-loop wet plants
can operate year
round(1)
 Annual production
capacity of over three
million metric tonnes(1)
 Strategically located on
Canadian National
Railway Network
Rail
Shipping
Transload
Storage
 Fleet of over 900 railcars  Owned and operated
 Unit train capable
 Largest WCSB network
 CN origin-destination
 3.3 million metric
paired
 Only Source railcars in
fleet – does not manage
customer railcars
tonnes of throughput
capacity in WCSB
 Identified expansion
opportunities of 1.5
million metric tonnes of
throughput capacity
Delivery
 Logistics team
manages third party
trucking companies to
coordinate deliveries
 Active dispatch
monitoring to minimize
load times and preloading of trailers
 Captures additional
Wellsite
 Sahara provides capability to
ship and store inventory
directly at the wellsite
 Source field solutions team
provides wellsite logistics and
quality control
 Presence at the wellsite
provides additional revenue
opportunities
margins for logistics
services
1 – Slide Notes
> SOURCE IS A LEADING FULLY INTEGRATED CANADIAN PROPPANT PROVIDER
17
Strategically Located Wisconsin Mines
and Processing Facilities
Northern White
Resources

Two owned and operated Northern White sand mines in Wisconsin(1)

Sumner Facility (commenced operations in 2013)
 Approximately 94 million metric tonnes of Inferred Mineral Resources(2)

Blair Facility(1) (expected to commence operations in 2017)
 Approximately 25 million metric tonnes of Inferred Mineral Resources(2)
Wet Processing
Facilities
Dry Processing
Facilities

Two facilities located in Sumner, WI and Blair, WI(1)

Three washing circuits vs. most plants producing 1 or 2

Environmentally friendly closed-loop water system avoids settling ponds

Sumner Facility: completely enclosed facilities capable of year round operations

Capacity of over three million metric tonnes per year (with low-cost expansion
available)(1)

Capable of loading a unit train (100+ cars) in under 24 hours

~54,000 metric tonnes of on-site finished product storage to accommodate any
order(3)

Over 5 miles of rail on-site at each facility
1, 2, 3 – Slide Notes
1, 2 – Slide Notes
> CONNECTED FROM ORIGIN TO DESTINATION VIA THE CN RAIL NETWORK
18
Leading Terminal Platform with
Significant Throughput Capacity
Source Terminals Well Positioned in Key Plays
Terminals By Capacity(1)
Source has over half the
terminal capacity by
throughput in the
Montney, Duvernay and
Deep Basin
1 – Slide Notes
Note: Lampman, SK terminal not pictured
> SOURCE HAS AN EXTENSIVE LOGISTICS PLATFORM WITH LEADING TERMINAL CAPACITY
19
Wembley: Industry Leading Terminal
Servicing the Heart of the Montney
 Largest proppant transloading terminal in the WCSB
Wembley Terminal
 Operations commenced in 2014
 Approximately 1.6 million metric tonnes of annual capacity
 Most active terminal in Source’s network
 Unit train capability
 Significant efficiency gains with unit train shipping
 Unit train capacity of ~10,000 metric tonnes across 100+
cars
 Ability to receive and unload unit train in 24 hour period
 Significantly faster transport time than manifest
> WEMBLEY IS THE HIGHEST THROUGHPUT SAND TERMINAL IN CANADA
20
Sahara: The Ideal Solution for Today’s
High Intensity Fracs
 A more efficient wellsite
 Large quantity of sand at location reduces risk of truck demurrage; Sahara
capable of storing ~1,800 metric tonnes of sand
 Significantly faster truck unloading times than traditional pneumatic systems
 12 separate storage towers allow for storage of up to 12 different proppant
types and sizes simultaneously
 A safer wellsite
 Reduces truck traffic at the wellsite
 Recognized for ability to reduce silica dust
 Extremely quiet operations
 Stores significantly more product than sand tanks in a smaller footprint,
allowing more room for equipment to safely maneuver around the well pad
 A better well
 Features a gravity-assisted handling system that eliminates frac sand
damage typically caused by pneumatic handling systems used by Source’s
competitors
> PROPRIETARY WELLSITE STORAGE SOLUTION WITH SIGNIFICANT COMPETITIVE ADVANTAGES 21
Moving the Point of Sale to the Wellsite
Percentage of Frac Sand Sold In-Basin(1)(2)
 Source’s differentiated business model enables
substantially all product to be sold in-basin
Source sells substantially all product
in-basin whereas others sell at mine
 Selling proppant in-basin enables Source to
capture additional value throughout the
proppant supply chain
 Presence on the wellsite creates opportunities
for value-added services and products
Substantially
all frac sand
sold at mine
1, 2 – Slide Notes
> SOURCE’S BREADTH OF SERVICES ENABLES IT TO SELL SUBSTANTIALLY ALL OF ITS SAND IN-BASIN
22
Source’s Customer Base
E&P Companies
Service Companies
> SOURCE’S CUSTOMERS ARE THE LEADING UPSTREAM AND SERVICES BUSINESSES IN THE WCSB
23
III. Uniquely Positioned to
Capitalize on Frac Sand Growth
Uniquely Positioned to Capture
Greater Market Share
Estimated Market Share of Frac Sand in the WCSB(1)
Growth Strategies
Acquire Rail
Connected Sand
Resource and
Processing Capacity
Match Integrated
Supply with Demand
Grow Terminal
Network
Organic and M&A
Growth
Increase Wellsite
Services Market
Share
Grow Sahara Fleet
Leverage Existing
Assets to Provide
Additional Services
Complementary
Consumables and
Logistics Services
1 – Slide Notes
> EXPANDING PRESENCE THROUGHOUT VALUE CHAIN
25
Matching Proppant Supply with
Demand at In-Basin Terminals
Premium Assets
 Acquiring Sand Products Wisconsin, LLC
 Consideration of US$45 million
Wet Plant
Dry Plant
Storage & Load Out
Rail & Logistics
 Source expects to complete the acquisition in
connection with or immediately following
Closing of the Offering
 Highly Strategic Transaction
 Adds over one million metric tonnes per
annum of sand capacity
 CN unit train capable origin is complementary
to operations
> SIGNIFICANTLY INCREASES SOURCE’S ANNUAL PROCESSING CAPACITY
26
Organic Terminal Growth in Key Plays
Source Terminals Well Positioned in Key Plays(1)
New Terminal Projects
 Edson II
 Unit train capable
 30,000 metric tonnes of storage
 Capacity: 600,000 metric tonnes/yr
 Taylor
 Unit train capable
 Capacity: 265,000 metric tonnes/yr
 Fox Creek
 Unit train capable
 30,000 metric tonnes of storage
 Capacity: 600,000 metric tonnes/yr
1) Lampman, SK terminal not pictured
> SOURCE IS GROWING ITS EXTENSIVE TERMINAL PLATFORM
27
IV. Financial Overview and
Offering Summary
Select Historical Financials
and 2017 Capex
Source Historical Financial Summary(1)(2)
Commentary
Stated in thousands of Canadian dollars unless otherwise noted
2014A
Sand Sales Volume (Metric Tonnes)
2015A
2016A
727,213
821,482
832,435
$118,755
$139,574
$112,962
Well Site Solutions Revenue
$11,782
$6,208
$21,261
Terminal Services Revenue
$15,969
$7,353
$4,976
$146,506
$153,135
$139,199
Cost of Sales
$95,504
$116,364
$123,257
Adjusted Gross Margin
$51,002
$36,771
$15,942
$420
$1,796
$4,859
$18,913
$18,183
$23,866
Foreign exchange loss/(gain)
($64)
($1,255)
$2,059
Add: Infrequent transaction and professional fees
$229
$746
$926
$32,802
$22,385
($4,198)
$163
$170
$136
$70
$45
$19
$46,391
$29,638
$7,903
$64
$36
$10
$45,390
$38,901
$6,405
Sand Revenue
Sales
 Strong margin per tonne potential demonstrated
in quarters leading up to the downturn
 Source facilities brought online throughout 2014
resulted in peak historical Adjusted Gross Margin per
Tonne of $78 in Q4/14
 Significant margin upside potential as frac sand
industry fundamentals tighten
Other Income
Operating and G&A Expenses
 Source increased volumes and market share
through the downturn
 Anticipated 2017E capital spending program of
approximately $28.7 million
Adjusted EBITDA
Sand Revenue / Metric Tonne ($ / MT)
Adjusted Gross Margin / Metric Tonne ($ / MT)
Gross Margin
Gross Margin / Metric Tonne ($ / MT)
Capex
 $15 million terminal expansion/improvements
 $5 million wellsite solutions
 $2 million production expansion
 $6.7 million on Blair Facility Improvements
1, 2 – Slide Notes
> DEMONSTRATED ABILITY TO GENERATE ATTRACTIVE MARGINS
29
Record January Volumes
Change in Sand Volumes
Thousand Metric Tonnes
Year-over-Year
Commentary
 Activity levels have increased in Q1/17
consistent with customer spending plans
 Source’s January volumes have increased
year-over-year
 Strong activity levels are expected to continue
through the remainder of the year
> RECORD JANUARY VOLUMES INDICATE STRONG RECOVERY UNDERWAY
30
Pro Forma Capitalization
As of December 31, 2016
Actual
Pro Forma
($000)
($000)
-
86,195
Credit Facilities
12,291
12,291
Notes
110,171
80,578
Finance lease obligations and other long-term debt
1,889
1,889
Shareholder Loans
36,770
-
Sand Royalty Loan
4,599
-
Preferred Shares Obligation
70,513
-
236,233
94,758
(59,219)
-
-
243,777
Cash and Equivalents
Debt
Subtotal
Shareholder's Equity
Partner's Equity
Shareholder's Equity
> SOURCE WILL BE WELL CAPITALIZED TO FUND ORGANIC AND M&A GROWTH OPPORTUNITIES
31
Building Blocks of Proppant Sales
3,000
Wells Drilled by Higher Frac Intensity Plays(1)
Proppant Intensity Per Well by Play(2)
Number of Horizontal Wells Rig Released
Metric Tonnes Per Horizontal Well
Montney
Duvernay
2,500
Deep Basin
2,032
2,000
1,754
1,501
1,462
1,442
1,500
943
1,000
500
0
2013
2014
2015
2016
2017E
2018E
Estimated Canadian Proppant Demand by Play(3)
=
Estimated Market Share of Frac Sand in the WCSB(4)
Million Metric Tonnes
90th Percentile
Proppant Intensity
(Q1 2016 Data)
Flat Proppant Intensity
(Q1 2016 Data)
Higher Frac Intensity
Montney
Duvernay
Deep Basin
Lower Frac Intensity
Viking
Cardium
Bakken/Torquay
Midale/Shaunavon
1, 2, 3, 4 – Slide Notes
32
Gross Margin Performance
Source Gross Margin per Metric Tonne | Estimated Annual Canadian Proppant Demand(1)
$250
Adjusted Gross Margin / MT
Gross Margin / MT
10.0
Estimated Canadian Proppant Demand
Estimated Range of
Canadian Proppant Demand
90th Percentile
Proppant Intensity
(Q1 2016 Data)
8.0
$ per Metric Tonne
$150
6.0
Flat
Proppant Intensity
(Q1 2016 Data)
$100
4.0
$50
2.0
$0
0.0
($50)
Million Metric Tonnes
$200
-2.0
Q1/14
Q2/14
Q3/14
2014
Q4/14
Q1/15
Q2/15
Q3/15
2015
Q4/15
Q1/16
Q2/16
Q3/16
2016
Q4/16
Q1/17E Q2/17E Q3/17E Q4/17E Q1/18E Q2/18E Q3/18E Q4/18E
2017E
2018E
1 – Slide Notes
33
A Premier Supplier and Distributor of
Proppant in a Growing Market
Attractive Proppant Market Fundamentals

Market Leading Logistics Advantage

Integrated Business Model Enhances Margin

Strong Balance Sheet

Proven Management and Board of Directors

34
Offering Summary
1)
2)
3)
Issuer:
Source Energy Services Ltd. (“Source” or the “Company”)
Offering Amount:
$300 million ($275 million treasury, $25 million secondary)
Price Range:
$17 - $20 per Common Share
Offering Size:
15.0 – 17.6 million Common Shares
Pro Forma Shares Outstanding:
46.2 million Common Shares(1)
Over-Allotment Option:
15% of Offering Amount granted by the Selling Shareholders on a pro rata basis
Ticker / Exchange:
SHLE / Toronto Stock Exchange(2)
Selling Shareholders:
TriWest Capital Partners (“TriWest”), Jim McMahon (board member) and entities controlled by Source management.
Following closing TriWest will own 28.0% of the outstanding shares, Jim McMahon will own 17.0% and Source
management will own 10.6% (excluding over-allotment option)(3)
Use of Proceeds:
Source intends to use the net proceeds of the Treasury Offering to fund the purchase price related to the Blair
Facility Acquisition and associated transaction costs, exercise and pay for the Blair Option Exercise, reduce
outstanding indebtedness, pay the Prior EEPP Unit Holders Payment, fund the Company’s ongoing capital
expenditure program and for general corporate purposes.
Lock-up:
180 days for all pre-IPO shareholders, subject to certain exceptions set out in the Preliminary Prospectus
Offering Basis:
Public offering in Canada / 144A in U.S. / private placement internationally
Expected Pricing:
Week of March 20, 2017
Joint Bookrunners:
Scotiabank, Morgan Stanley, BMO Capital Markets
Basic shares outstanding do not include dilutive securities assuming the Offering is priced at the midpoint of the Price Range.
Source has applied to have the Common Shares listed on the Toronto Stock Exchange (“TSX”) under the symbol “SHLE”. Listing of the Common Shares on the TSX is subject to approval by the TSX of the
Company’s listing application and fulfillment by the Company of all of the initial requirements and conditions of the TSX. The TSX has not conditionally approved the listing of the Common Shares and there is no
assurance that the TSX will approve the Company’s listing application. The closing of the Offering is subject to listing the Common Shares on the TSX.
Assumes the Offering is priced at the midpoint of the Price Range.
35
Advisory
In accordance with Section 13.7(4) of National Instrument 41-101 – General Prospectus Requirements, all the information relating to Source’s comparables and any disclosure relating to
the comparables, which is contained in the presentation to be provided to potential investors, has been removed from this template version for the purposes of its filing on the System for
Electronic Document Analysis and Retrieval (SEDAR).
36
Appendix: Supporting Materials
Proppant 101
Proppant Qualities
High “sphericity” and
high “roundness” are
key attributes that
promote higher
conductivity and flow
rates
 Materials used as proppant in hydraulic fracturing processes come in a variety of
sizes and forms, each with varying attributes that are measured to standards set
by the American Petroleum Institute (“API”). Proppant is comprised of either
natural sands, resin-coated natural sands, or manufactured artificial sands
 The most sought after properties for proppant are crush resistance, sphericity
(roundness), and acid solubility. These attributes allow the proppant to keep the
fracture open and the hydrocarbons to flow most easily through the largest
possible spaces
 The latter dynamic is referred to as “conductivity.” The proppant that provides
the highest conductivity results in the highest production rates
Low Quality Sand
NorthernWhite Sand
Northern White Sand from Wisconsin is considered to be the best available
natural frac sand as its purity, shape, and strength are superior relative to
other naturally occurring sands.
38
Value Chain
Integration
Source Energy Services - Evolution
Logistics
Network
Mine Site
Mine to Wellsite
Solution
The “Last Mile”
Best in class terminals & rail /
trucking logistics platform
Develops frac sand production
and processing capability
Fully integrated proppant
delivery solution
Wellsite delivery and storage
(Sahara) with a leading safety
record
• Source continues to expand its
WCSB distribution and terminal
network
1998 – Source opens terminal in Red Deer, AB
2007 – Source expands into frac sand mining
• Source begins distributing its own sand
through existing terminal network
Corporate History
– Develops first mine in Wisconsin
2010 – Source begins development of Sumner
and Weyerhaeuser Facility
1998 to
2013
• Source adds additional wellsite
services and adapts “last mile”
model
• Source opens second frac sand mine
2014
Q1
2013
Q4
• Existing management team structures
management buy-out, TriWest Capital Partners
entities become majority common unitholder of
Source
2014
Q3
2015 Present
• Source increases total sand capacity to
~2.0 mm metric tonnes per year
• Acquisition of Sand Products
Wisconsin, LLC(1)
• Opens WCSB unit train facilities
• Adds Wisconsin mine with additional
current sand capacity of over one
million metric tonnes per year(1)
• Source rolls out Sahara frac sand system
1) Source expects to complete the acquisition in connection with or immediately following Closing of the Offering
39
Management and Board
Brad Thomson
CEO & Director
Derren Newell
CFO
Scott Melbourn
COO
Joe Jackson
SVP, Commercial Development




BOARD OF DIRECTORS
MANAGEMENT TEAM




25+ years of leadership experience
Previously Chief Financial Officer and
Principal of the Northridge Group of
Companies
Spearheaded creation of
TransCanada Power LP (now Capital
Power Corp.)
Previous director of CCS Income
Fund, CE Franklin and Bruce Power
CPA, CA, ICD.D Designation



20+ years of senior financial
responsibility in energy, commodity,
sales & distribution businesses in
Canada and the U.S.
Previous CFO of CE Franklin
Senior member of Superior Plus
finance team
CA


16+ years of BD, M&A and senior
operations responsibilities in energy
services and telecommunications in
Canada and the U.S.
Previous Director of Business
Development & Strategy (for the
Concord Well Services division at CCS
Corporation)
CFA


10+ years of BD and M&A
experience in energy services in
Canada and the U.S.
Previously responsible for
mergers and acquisitions function
at CCS in the United States
CFA
Cody Church
Chairman
Brad Thomson
CEO & Director
Jeff Belford
Director
Jim McMahon
Director
Marshall L. McRae
Proposed Director
Neil Cameron
Proposed Director
Stew Hanlon
Proposed Director
 Co-founder and
 See Above
 Senior Managing
 Former Owner,
 Former CFO of
 President and CEO
 President, CEO
Executive Vice
President, Director
and Secretary of
Source
 Prior to joining
Source, was VP
Business
Development for
CCS (Tervita)
CCS Inc.
 Director of
Athabasca Oil
Corp., Black
Diamond Group
Ltd. and Gibson
Energy Inc.
Senior Managing
Director, TriWest
Director, TriWest
of NSC Minerals
Ltd. a leading
supplier in de-icing
products in Western
Canada
> EXPERIENCED AND ALIGNED MANAGEMENT AND BOARD
and Director of
Gibson Energy Inc.
40
Tightening Proppant Market is a
Positive Indicator for Pricing
Industry Commentary
Price Increases Underway in the United States
Industry Capacity-Constrained for Fine Grade Sands
“In the first quarter, the price increases that we're seeing in basin are
anywhere from 15% to 20%, sometimes a little bit higher than that as
far as price increases go. So we're really seeing a ramp-up in the
pricing and it's been happening since about the middle of January.
So it's been a very recent trend.”
“many operators have converted to 30/50, and even some 20/40,
because the industry is capacity constrained on the fine grade sands.
In fact, we're currently sold out of our 100 mesh and [40/70] products,
until our Wisconsin mines resume production in the spring”
- February 27, 2017
- February 22, 2017
Supply and Demand Tightening
Service Providers Expecting Proppant Pricing Increases
“I think we'll see some pretty substantial increases in price as we go
through Q1 here. And I would expect based on everything that we're
seeing that the market is going to continue to tighten in terms of
supply and demand over the coming quarters.”
“We do expect that given the tightness of the sand market that we will
see changes to sand pricing by year end this year or early next year.
Clearly we're going to have to manage that with our customers, but
we would expect that we would pass those costs on to our
customers, just given our state of profitability.”
- February 23, 2016
- November 4, 2016
> PROPPANT PRICES ARE INFLUENCED BY U.S. DEMAND AND ARE STRENGTHENING
41
Slide Notes
Slide 5 (Investment Highlights)-------------------------------------------------1)
Based on the increase in the estimated average annual capital
expenditures of the Higher Frac Intensity Companies (as defined
below) as estimated by Bloomberg using the consensus median
capital expenditures estimate. The “Higher Frac Intensity
Companies” means Advantage Oil & Gas Ltd., ARC Resources
Ltd., Bellatrix Exploration Ltd., Birchcliff Energy Ltd., Bonavista
Energy Corporation, Crew Energy Inc., Encana Corporation, Kelt
Exploration Ltd., NuVista Energy Ltd., Painted Pony Petroleum
Ltd., Paramount Resources Ltd., Peyto Exploration and
Development Corp., Seven Generations Energy Ltd., Tourmaline
Oil Corp. and Trilogy Energy Corp.
2)
Key resource plays mean the Montney, Duvernay and Deep Basin
and terminal capacity is measured in terms of throughput.
3)
Assumes the Blair Facility Acquisition is completed and according
to the Sumner APEX Report and the Blair APEX Report.
4)
Assumes completion of the Offering.
Slide 6 (Source is a Leading Fully Integrated…)---------------------------1)
Assumes completion of the Blair Facility Acquisition.
Slide 8 (Why do Customers Choose Source?)-----------------------------1)
On-site sand storage assumes the Blair Facility Acquisition is
completed which adds approximately 9,000 metric tonnes to
Source’s existing storage capacity of approximately 45,000 metric
tonnes.
Slide 10 (Drivers of Increasing Proppant Demand)-----------------------1)
Increase in fracture stages per well calculated as the average
number of fracture stages pumped per well in Q1 2016 divided by
the average number of fracture stages pumped per well in 2013,
based on data provided by the Well Completions & Frac
Database.
2)
Based on the increase in the estimated average annual capital
expenditures of the Higher Frac Intensity Companies as estimated
by Bloomberg using the consensus median capital expenditures
estimate.
Slide 11 (Canadian Plays Compete on Rate of Return)------------------1)
The figure reflects estimates of internal rate of return for a single
well in each respective play.
2)
Data provided via Wood Mackenzie Global Economic Model
(GEM) as accessed on February 7, 2017. Pre-tax IRR using the
Wood Mackenzie BASE price scenario (as described below)
based on the following sub-plays:
a)
Permian (Midland Wolfcamp) indicates the Wood
Mackenzie defined sub-play ZS_Type Well MID
Wolfcamp Deep Basin Hz SHO TX State;
b)
Duvernay indicates the Wood Mackenzie defined subplay ZS_Type Well Duvernay Kaybob AB;
c)
Eagle Ford indicates the Wood Mackenzie defined
sub-play ZS_Type Well GFC Eagle Ford Karnes
Trough SHG TX Fee;
d)
US Bakken indicates the Wood Mackenzie defined
sub-play ZS_Type Well WLN Bakken Fort Berthold Hz
SHO ND Fee;
e)
Montney indicates the Wood Mackenzie defined subplay ZS_Type Well Montney Karr Resthaven AB;
f)
Permian (Delaware Wolfcamp) indicates the Wood
Mackenzie defined sub-play ZS_Type Well DEL
Wolfcamp Reeves Core Hz SHO TX Fee;
g)
SCOOP/STACK indicates the Wood Mackenzie
defined sub-play ZS_Type Well ADK STACK Oil
Mississippian Hz SHO OK Fee;
h)
Marcellus indicates the Wood Mackenzie defined subplay ZS_Type Well APP Marcellus Susquehanna Core
Hz SHG PA Fee;
i)
Utica indicates the Wood Mackenzie defined sub-play
ZS_Type Well APP Utica Lean Gas Core Choked Hz
SHG OH Fee;
j)
Permian (Delaware Bone Spring) indicates the Wood
Mackenzie defined sub-play ZS_Type Well DEL Bone
Spring Western Fairway Hz SHO NM Fee; and
k)
Deep Basin indicates the Wood Mackenzie defined
sub-play ZS_Type Well Deep Basin Glauconite AB
3)
The Wood Mackenzie BASE price scenario assumed the following
price and forecasts:
a)
WTI (US$/bbl): $49.00, $51.00, $61.48, $71.98 for
2017, 2018, 2019, and 2020, grown at 2% annually
thereafter; and
b)
Henry Hub (US$/Mcf): $3.19, $3.08, $3.36, $3.62 for
2017, 2018, 2019, and 2020, respectively, grown at
2% annually thereafter.
Slide 12 (Diluent Demand Enhances Canadian Shale Economics)--1)
Alberta Energy Regulator ST98-2016: Alberta’s Energy Reserves
2015 and Supply/Demand Outlook 2016-2025; as of January 25,
2017.
2)
C5+ satisfies the majority of diluent demand in Alberta.
Slide 13 (Key Canadian Plays are Growing)---------------------------------1)
Historical number of horizontal wells drilled by play is based on
data provided by geoSCOUT.
2)
The number of wells forecast to be drilled in each of the Montney,
Deep Basin and Duvernay plays identified above for 2017E and
2018E (the “Higher Frac Intensity Well Count Forecast” for each
such play) is calculated as the product of (A) the estimated
average annual capital expenditures by the Higher Frac Intensity
Companies, expressed as a percentage of average annual capital
expenditures by the Higher Frac Intensity Companies in the
previous year, as estimated by Bloomberg using the consensus
median capital expenditures estimate, multiplied by (B) the
number of wells drilled in that play in the previous year. This
forecast is based on the assumption that the “Higher Frac
Intensity Companies” means those companies included in the
definition in Note 1 to Slide 5.
3)
Although Source believes the above assumptions and forecasts to
be reasonable, there can be no assurance that these assumptions
and forecasts are accurate, and, as such, undue reliance should
not be placed thereon. See “Forward-Looking Statements” and
“Risk Factors” in the preliminary prospectus.
4)
The forecast set out in note 2) above is based on the assumption
that an increase in producers’ overall capital expenditures will
yield a proportional increase in the numbers of wells drilled.
However, the actual increase in wells drilled could differ from the
increase in capital expenditures in the event of a relatively greater
increase in non-drilling capital expenditures, such as facility
construction or maintenance.
5)
Based on the increase in the estimated average annual capital
expenditures of the Higher Frac Intensity Companies as estimated
by Bloomberg using the consensus median capital expenditures
estimate.
6)
Production history by play is based on data provided by
geoSCOUT.
42
Slide Notes
Slide 14 (Increasing Proppant Intensity)-------------------------------------1)
Proppant intensity per well in Canadian plays defined as the
average amount of proppant pumped per well, by play, in the
indicated year based on data provided by the Well Completions &
Frac Database with the exception of 2016 which uses data for the
first quarter of 2016 to calculate proppant intensity due to more
complete data. Proppant intensity per well in U.S. plays defined as
the average amount of proppant pumped per well, by play, in the
indicated year based on data provided from DrillingInfo. Eagle
Ford data is as of December 28, 2016 and Permian data is as of
January 18, 2017.
Slide 15 (Canadian Proppant Demand is Increasing)--------------------1)
The number of wells forecast to be drilled in each of the Lower
Frac Intensity plays identified above for 2017E and 2018E (the
“Lower Frac Intensity Well Count Forecast” for each such play) is
calculated as the product of (a) the estimated average annual
capital expenditures by the Lower Frac Intensity Companies
(defined below), expressed as a percentage of annual capital
expenditures by the Lower Frac Intensity Companies in the
previous year, as estimated by Bloomberg using the consensus
median estimate, multiplied by (b) the number of wells drilled in
that play in the previous year. The “Lower Frac Intensity
Companies” means Bonterra Energy Corp., Cardinal Energy Ltd.,
Crescent Point Energy Corp., Penn West Petroleum Ltd., Raging
River Exploration Inc., Surge Energy Inc., Tamarack Valley
Energy Ltd., TORC Oil & Gas Ltd., Vermilion Resources Ltd. and
Whitecap Resources Inc.
2)
The demand for proppant from 2013 to 2016 is estimated by
multiplying the historical number of wells drilled based on data
provided by geoSCOUT in each play by the average amount of
proppant pumped per well, by play, in the indicated year with the
exception of 2016 which uses data for the first quarter of 2016 to
calculate proppant intensity due to more complete data (based on
data provided by the Well Completions & Frac Database).
3)
The potential range of aggregate demand for proppant in the
Higher Frac Intensity plays and Lower Frac Intensity plays
identified above for 2017E and 2018E is calculated as the sum,
for each such play, of the product of (A) the relevant Higher Frac
Intensity Well Count Forecast or Lower Frac Intensity Well Count
Forecast, as applicable, for the relevant play multiplied by (B)
Historical Completion Intensity for such play (as defined below)
(shown as “Flat Proppant Intensity” in the slide exhibit) and by
Modern Completion Intensity for such play (as defined below)
(shown as “90th Percentile Proppant Intensity” in the slide exhibit).
Proppant per well forecast by play assuming “Historical
Completion Intensity” means the amount of frac sand utilized as
proppant pumped per well that is equal to the level for an average
well in the first quarter of 2016 for the indicated play; and
proppant per well forecast by play assuming “Modern Completion
Intensity” means the amount of frac sand utilized as proppant
pumped per well that is equal to the level for a well in the 90th
percentile in the first quarter of 2016 for the indicated play, in each
case based on data provided by the Well Completions & Frac
Database.
4)
Although Source believes the above assumptions and forecasts to
be reasonable, there can be no assurance that these assumptions
and forecasts are accurate, and, as such, undue reliance should
not be placed thereon. See “Forward-Looking Statements” and
“Risk Factors” in the preliminary prospectus.
Slide 17 (Source’s Unique Integrated Platform)----------------------------1)
Assumes the Blair Facility Acquisition is completed.
Slide 18 (Strategically Located Wisconsin Mines….)--------------------1)
Assumes the Blair Facility Acquisition is completed.
2)
According to the Sumner APEX Report and the Blair APEX
Report.
3)
On-site sand storage assumes the Blair Facility Acquisition is
completed which adds approximately 9,000 metric tonnes to
Source’s existing storage capacity of approximately 45,000 metric
tonnes.
Slide 19 (Leading Terminal Platform with Significant)-------------------1)
Management Estimates.
Slide 22 (Moving the Point of Sale to the Wellsite)-----------------------1)
Peers include Emerge Energy Services LP, Fairmount Santrol
Holdings Inc., Hi-Crush Partners LP, Smart Sand, Inc. and U.S.
Silica Holdings Inc.
2)
In-basin sales and percentages derived from the related issuers’
public filings available from the Electronic Data Gathering,
Analysis and Retrieval system maintained by the United States
Securities and Exchange Commission and the Fairmount Santrol
Holdings Inc. Investor Presentation dated December 2016.
Slide 25 (Uniquely Positioned to Capture Greater Market Share)----1)
Estimated market share of the total frac sand market in the WCSB
is based on Source’s historical sand sales volumes in metric
tonnes divided by the total market for sand estimated as follows:
historical well count by play, based on data provided by
geoSCOUT and the Well Completions & Frac Database, multiplied
by the average amount of proppant pumped per well, by play, in
the indicated year based on data provided by the Well
Completions & Frac Database with the exception of 2016, which
uses data for the first quarter of 2016 to calculate proppant
intensity due to more complete data.
Slide 29 (Select Historical Financials and 2017 Capex)-----------------1)
Cost of Sales excludes depreciation.
2)
See “IFRS and Non-IFRS Measures” in the preliminary
prospectus.
Slide 32 (Building Blocks of Proppant Sales)-------------------------------1)
See notes 1, 2, 3 and 4 to Slide 13 .
2)
See Note 1 to Slide 14.
3)
See Notes 1, 2, 3, and 4 to Slide 15.
4)
See Note 1 to Slide 25.
Slide 33 (Gross Margin Performance)---------------------------1)
See Notes 1, 2, 3, and 4 to Slide 15.
43