TriWest-backed Source Energy wraps up $100 mln asset buy

Source Energy Services Ltd (TSX: SHLE) has closed its acquisition of a Northern White proppant mine in Wisconsin, two frac sand terminals located in British Columbia, and exploration rights to more than 3,600 acres of land in the Peace River Valley of Alberta from Preferred Proppants LLC. The deal had a total consideration of about $100 million (US$80 million). Source, a Calgary-based producer, supplier and distributor of frac sand, also wrapped up private and public offerings that generated $93.8 million to help fund the deal. Source, backed by Canadian private equity firm TriWest Capital Partners since 2013, went public this year, raising $175 million.

PRESS RELEASE

Source Energy Services Ltd. Announces Completion of the Acquisition of Preferred Sands’ Wisconsin Mine, Processing Facility and Canadian Frac Sand Assets and Related Financings Including Exercise of Underwriters Over-Allotment Option

CALGARY, ALBERTA–(Marketwired – Nov. 7, 2017) –

Source Energy Services Ltd. (the “Company” or “Source”) (TSX:SHLE) is pleased to announce that it has completed its previously announced acquisition (the “Acquisition”) of a Northern White proppant mine in Blair, Wisconsin, two frac sand terminals located in Chetwynd, and Fort Nelson, British Columbia and exploration rights to more than 3,600 acres of land in the Peace River Valley of Alberta, from certain affiliates of Preferred Proppants, LLC, for total consideration of U.S.$80 million (approximately $100 million) cash, subject to post-closing adjustments.

Source has completed its previously announced public and private offerings of common shares (the “Offerings”), raising gross proceeds of $93.8 million (net proceeds of approximately $88.1 million) to partially finance the Acquisition. Source has concurrently increased its revolver limit under its credit facilities from $35 million to $70 million and has added The Bank of Nova Scotia as one of its lenders and drawn approximately $22.2 million thereunder (resulting in a total draw of approximately $39.0 million as of November 7, 2017). Approximately $105.9 million of the aggregate net proceeds of the Offerings and the borrowing under the credit facilities was used to fund the Acquisition and its related fees, expenses and taxes and the remaining $4.4 million is expected to be used to fund the Company’s ongoing capital investment program and for general corporate purposes.

The Offerings include 3,450,000 common shares sold on a bought deal basis to the public (the “Public Offering”) at a price of $8.35 per common share underwritten by a syndicate of underwriters including Scotiabank as sole bookrunner, and BMO Capital Markets as co-lead underwriter for gross proceeds of $28.8 million. The Public Offering includes 450,000 common shares issued pursuant to the exercise in full of the over-allotment option granted to the underwriters. The Offerings also included 7,785,000 common shares sold by way of private placement to certain accredited investors at a price of $8.35 per share for gross proceeds of $65.0 million.

The securities offered under the Offerings have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or pursuant to an available exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws. This news release does not constitute or form a part of any offer to sell or the solicitation of any offer to buy any securities in the United States or any other jurisdiction outside of Canada nor will there be any sale of securities in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under applicable securities laws.

Advisors
Scotiabank acted as exclusive financial advisor to Source in connection with the Acquisition. Norton Rose Fulbright Canada LLP and Norton Rose Fulbright US LLP acted as Source’s legal advisors in connection with the Acquisition. Stikeman Elliott LLP acted as Source’s legal advisor in connection with the Offerings. Blake, Cassels & Graydon LLP acted as legal advisor to Scotiabank and the other Underwriters and agents in connection with the Offerings. Ernst and Young LLP was also engaged by Source in the conduct of its due diligence activities.

ABOUT SOURCE ENERGY SERVICES
Source is a fully integrated producer, supplier and distributer of high quality Northern White frac sand primarily to the Western Canadian Sedimentary Basin. Source provides its customers with a full end-to-end solution through its Wisconsin mine, processing facilities, rail assets, strategically located terminal network and its “last mile” logistics operations. In addition, Source provides storage and logistics services for other bulk oil and gas well completion materials that are not produced by Source. 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 growing requirements for frac sand and other bulk completion materials.

CONTACT INFORMATION
Source Energy Services Ltd.
Brad Thomson
Chief Executive Officer
(403) 262-1312 (ext. 225)

Source Energy Services Ltd.
Derren Newell
Chief Financial Officer
(403) 262-1312 (ext. 233)

Photo courtesy of Source Energy Sources Ltd