Source Energy Services Launches Strategic Share Buyback Plan
Source Energy Services Initiates Normal Course Issuer Bid
Source Energy Services Ltd. (“Source”) has received approval from the Toronto Stock Exchange (TSX) to proceed with a Normal Course Issuer Bid (NCIB). This initiative is set to enhance shareholder value by allowing the company to repurchase its common shares.
Details of the Normal Course Issuer Bid
As of the end of April, the company has reported approximately 13.5 million common shares outstanding. Under the terms of the NCIB, Source plans to repurchase either $5 million worth of common shares or a total of 750,000 shares. The average daily trading volume over the last six months was around 29,156 shares, which enables Source to buy back a maximum of 7,289 shares each day due to TSX regulations. Additionally, the company can conduct one block purchase per week that exceeds this daily limit.
Repurchase Timeline and Process
The repurchase program is slated to commence on May 13, 2025, and will continue until May 12, 2026, or until the maximum number of shares has been repurchased. All share purchases will be conducted through the TSX or Canadian alternative trading systems and will occur at the market price at the time of the transaction. Any shares acquired under this bid will be subsequently canceled.
Automatic Securities Purchase Plan Implementation
To facilitate share repurchases, Source intends to establish an Automatic Securities Purchase Plan (ASPP) with Acumen Capital Finance Partners Limited. This plan will allow for share buybacks at times when restrictions may otherwise prevent purchases, ensuring that transactions can occur during Blackout Periods. The ASPP will dictate the timing and quantity of shares purchased without direct input from Source, ensuring compliance with regulatory standards while permitting flexibility in executing the NCIB.
Rationale Behind the NCIB
The decision to initiate an NCIB reflects Source's belief that its current share prices do not accurately mirror the underlying value of the company. By reducing the number of outstanding shares, Source aims to allocate capital effectively, increasing shareholder value with this strategic move.
Factors Influencing Repurchase Decisions
Management will make decisions regarding the timing and size of purchases based on several factors, including the company's financial health, operational performance, and the prevailing market conditions. It’s important to note that the NCIB does not obligate Source to repurchase a specific amount of shares, allowing for adjustments as needed based on market dynamics.
About Source Energy Services
Source Energy Services is a leader in the integrated production and distribution of frac sand and related materials. The company supports its customers with a complete solution that encompasses production from its Wisconsin and Peace River mines, an extensive terminal network in Western Canada, and advanced logistics capabilities. These capabilities include a proprietary mobile sand storage and handling system known as Sahara, which enhances delivery efficiency and reliability for its customers.
Source prides itself on a full-service approach, helping clients ensure timely and dependable access to frac sand and bulk completion materials necessary for their operations.
Frequently Asked Questions
What is the purpose of Source's Normal Course Issuer Bid?
The NCIB aims to enhance shareholder value by allowing the company to repurchase its shares, which they believe are undervalued in the market.
How many shares can Source buy back each day?
Based on the average daily trading volume, Source can repurchase up to 7,289 common shares daily under the NCIB.
When does the Normal Course Issuer Bid start?
The NCIB is scheduled to commence on May 13, 2025, and will conclude on May 12, 2026, or when the maximum number of shares is purchased.
What role will Acumen Capital Play in the repurchase?
Acumen Capital will manage the Automatic Securities Purchase Plan, determining the timing and number of shares to purchase during specific periods without input from Source.
Why is Source confident in conducting the NCIB?
Source's management believes that the current market pricing of their shares does not reflect the company's true value, making the NCIB a valuable strategy for improving share price and overall value.
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