Thank you for standing by. This is the conference operator. Welcome to the Source Energy Services Q3 2022 results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Scott Melbourn, CEO. Mr. Melbourn, please proceed. Thank you, operator. Good morning and welcome to Source Energy Services Q3 2022 conference call. My name is Scott Melbourn. I'm the CEO of Source. I'm joined today by Derren Newell, our CFO. Today I'll cover the formal part of the call and Derren and I will be available to answer any questions you may have. Before I get started, I would like to refer everyone to the financial statements and the MD&A that was posted to SEDAR and the company's website last night and remind you of the advisory on forward-looking information found in our MD&A and press release. On this call, Source's numbers are in Canadian dollars and metric tons, and we will refer to Adjusted Gross Margin and Adjusted EBITDA, which are non-IFRS measures as described in our MD&A. Subject to the items just mentioned, our financial information is prepared in accordance with IFRS. For the Q3 of 2022, we recorded 753,000 tons of sand sales, which was slightly lower than anticipated due to delayed completion programs in Northeast BC, as ongoing permitting issues were prevalent throughout the quarter and weaker summer AECO pricing due to pipeline maintenance. Total volumes for the quarter were higher than the Q1 of 2022, however slightly lower than the sales volume realized in the Q2 of 2022. We recorded 84,000 tons of Mine Gate Sales, which were slightly lower in the quarter as there were less outlets available in the US for certain mesh sizes. Compared to the Q3 of 2021, while total sales volumes were flat, revenues increased by 23% due to improved pricing. In the Q3 of 2022, we realized Adjusted EBITDA of CAD 16.3 million, excluding the CAD 9.7 million realized on the settlement of outstanding foreign exchange contracts. The 16.3 million of operational EBITDA is an increase of 44% from the Q3 of 2021, and a 10% increase from the Q2 of 2022 despite lower volumes. We recorded net income of CAD 5.9 million for the Q3 of 2022. Sand revenue for the quarter was CAD 97.2 million, an increase of 22% over the Q3 of 2021. Compared to the Q3 last year, the increase in sand revenue was due to a 28% increase in average realized sand price, excluding the impact of Mine Gate Sales. Strong activity levels from non-contracted customers during the quarter as well as pricing improvements with contracted customers created the improved pricing and gross margin realized during the quarter. Well site revenue was CAD 21.7 million for the Q3, an increase of 24% or CAD 4.2 million compared to the Q3 of 2021. Despite lower volumes, well site revenue was higher due to the impact of longer hauls from terminals to the well site and improved pricing. Total truck volumes during the quarter were impacted by customer delays and the permitting issues in BC. Compared to the same period last year, Sahara-related revenue increased 53% on a quarter-over-quarter basis. Sahara Units were 87% utilized, a 52% increase in days utilized across the 9-unit fleet. During the quarter we added two new customers for our Sahara Units. We continue to see strong interest in the Sahara Units from both Canada and the U.S. Cost of sales in the Q3 were impacted by higher costs for transportation and freight due to increased fuel prices, a tighter trucking market and the increased cost of third-party sand purchases. These costs, along with higher labor costs and no Canada Emergency Wage Subsidy or CEWS receipts, were partially offset by Source's continued focus on streamlining production. The weaker Canadian dollar on our US denominated cost increased costs by CAD 3.51 per ton compared to the same period as last year. Offsetting this increase at the Adjusted EBITDA line was the gains realized on settling the foreign exchange contracts previously entered into to help manage the foreign currency exposure in the Q3 of 2022. Excluding gross margin from Mine Gate Sales, Adjusted Gross Margin per ton was CAD 30.27, which was favorably impacted by improved pricing. Compared to the Q3 last year, Adjusted Gross Margin for the Q3 of 2022 did not benefit from a stronger Canadian dollar, certain production credits or proceeds from the CEWS program. If these items were excluded from the Q3 of 2021, the Q3 of 2022 Adjusted Gross Margin per ton has increased by 55%. For the three months ending September 30, 2022, Adjusted Gross Margin per ton increased by 3% compared to the Q2 of 2022 due to higher prices. For the Q3 of 2022, total operating and general and administrative expenses were consistent with the same period last year. Operating expenses had increased royalty costs as well as higher repairs and maintenance expense that were offset by lower variable incentive compensation expense compared to the same period last year. For the Q3 of this year, G&A expense decreased by CAD 100,000 from prior year due to lower professional fees and bad debt provision. Due to the mechanics of our new ABL facility and a change in currency of customer contracts, we wound up our foreign exchange hedges during the Q3 of 2022 and recognized a foreign exchange gain of CAD 9.7 million. Of this gain, 3.3 million relates to normal course operations for the Q4 of 2022, and the remaining 6.4 million relates to contracts due to mature in 2023. In the quarter, Source also realized a 2.1 million FX gain related to activity in the Q3 of 2022 as part of its normal course operation, which was partially offset by FX losses from translating our US dollar-denominated working capital balances. For 2023 and beyond, we are anticipating being in a naturally balanced FX position. However, we will continue to monitor our FX exposure and actively manage if required. Subsequent to the quarter end, on October 14, 2022, we closed a new revolving asset-backed senior credit facility with a syndicate comprised of FCI Worldwide and CIT Northbridge Credit. The new facility provides access to funding of $55 million or approximately CAD 75 million, and provides Source with a lower cost of borrowing, less restrictive covenants, which will allow Source to focus on the generation of free cash flow and the reduction of debt. The details of our new facility are outlined in our MD&A. Due to the fact that we closed the new ABL facility subsequent to quarter end, we are required to classify our debt as current at September 30. When we closed our new facility on October 15th and made the outstanding interest payment to the noteholders, the debt reverted back to being reported as long term. On September 30th, the principal balance outstanding on our notes was CAD 163.5 million, and the balance outstanding on our term loan was CAD 10.5 million. Source had CAD 3.3 million drawn under its ABL facility. The ABL facility was also being used to support CAD 10.7 million letters of credit, leaving CAD 13.5 Million available liquidity. Net debt was CAD 177.3 million, a reduction of CAD 17.2 million. As business performance improves in 2023, with the rollover of long-term contracts, we will continue to focus on reducing debt levels and ensuring we have a capital structure that can withstand the peaks and valleys of our industry. Source's capital expenditures for the Q3 were CAD 4.5 million, an increase of CAD 2.6 million compared to the same period last year. The increase in expenditures were primarily related to costs associated with maintenance activities at the Peace River facility and overburden removal for mining operations. Those capital expenditures for the quarter were related to permitting additional lands at the Peace River mine. As we look at the full year for 2022, we expect net capital expenditures to be approximately CAD 10 million-CAD 13 million, with a year-over-year increase driven by overburden expenditures in Wisconsin and Peace River maintenance capital. We are anticipating a similar capital program for next year, with the largest component of the program focused on overburden removal. Now, as we look ahead, we anticipate the demand for oil and natural gas globally will remain strong. This operating environment is expected to result in drilling and completions programs in 2023 and beyond to remain robust. With the increased activity levels across North America, the frac sand supply and demand fundamentals have been and are expected to remain tight for the foreseeable future. These fundamentals, coupled with Source's leading service offering and logistics capability, has translated into pricing gains for 2022, a trend that is expected to continue for the balance of the year and into next year with contract renewals. We also expect that the impact of ongoing permitting issues in BC will be resolved and that activity that has been postponed in the area will proceed. When the backlog of activity is coupled with already strong industry fundamentals, there is an expectation of a continuation of improved business performance for Source into 2023. In the longer term, Source believes the increased demand for natural gas driven by the conversion of coal-fired power generation facilities, increased natural gas pipeline export capabilities, and LNG exports will drive incremental demand for Source's services in the WCSB. Source continues to see increased demand from customers that are primarily focused on the development of natural gas properties in the Montney, the Duvernay, and the Deep Basin. This trend is consistent with our view that natural gas will be an important transitional fuel that's critical for the success in a movement to a less carbon-intensive world. In support of the move to a less carbon-intensive world, Source has begun focusing on exploring opportunities which transition from traditional fossil fuels to less carbon-intensive energy solutions. As a pathway to diversifying our business and to participate in the decarbonization of the economy, Source is advancing opportunities in our own operation as well as new service offerings at the well site and at our terminals. Source continues to focus on increasing its involvement in logistics services for additional oil field services and other industries to diversify our revenue stream and further utilize the Western Canadian terminals. Over the longer term, it's anticipated these opportunities will be a meaningful part of Source's business. Thank you for your time this morning. That concludes the formal portion of our call. We will now ask the operator to open the lines up for questions. Thank you. We will now begin the question-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from John Gibson with BMO Capital Markets. Please go ahead. Good morning, guys, and apologies if I missed this. I was wondering if you could give a sense of what percentage of your volumes were maybe under those previous contract regimes versus what you expect them to be into 2023. Yeah. Good morning, John. So maybe I'll start off and Darren will dive in with additional details. You know, I think for Q3, we were probably about 60%-70% of our volumes were under the long-term contracts, and 30%-40% were on spot volumes or on our shorter-term contracts. You know, looking forward, you know, as those contracts roll off, and we either renew or we don't renew some of those contracts, we expect to probably be, you know, for 2023, closer to 50% under contract and probably 50% under spot volumes. Yeah, I don't have anything to add. I guess maybe can you talk about your expectations for average pricing now versus kinda when those contracts roll off? Yeah. You know, I think as we've indicated before, you know, some of those contracts are well below our you know what the market pricing, what the spot pricing is right now. You know, we expect a large pickup in pricing and in gross margin as we cycle into 2023, and we expect another step change in business performance for the company in 2023. You know, most of those contracts and actually all of those contracts will be renewed by the end of Q1 of 2023. We're expecting much higher pricing going into 2023. Great. Thanks. Last one, I guess, but how are you seeing volume shape up in Q4? I mean, I know there's typically a seasonal slowdown. Are you seeing that? Then also what are you seeing for demand in Q1 of 2023? Yeah. You know, I think you nailed it. We're seeing our seasonal slowdown in Q4. We expect that volumes of course are gonna be slightly lower than Q3. You know, there's still an opportunity for customers to pull capital into Q4 and the volumes to pick up a little bit, but nonetheless, we expect a regular seasonal slowdown to hit in Q4. In Q1, you know, we're seeing some pretty robust customer demand right now. You know, I think we're probably at a much higher level than what we saw in 2022 in Q1. However, a little caution, you know, budgets haven't been finalized and programs haven't been finalized, and so, you know, early look, it looks pretty robust going into the beginning of 2023, but there's still some work to do to finalize a schedule. Great. Appreciate the color. I'll turn it back to you. Thanks, John. The next question comes from Josef Schachter with SER. Please go ahead. Good morning guys. Rod and Derren, thanks for taking my call and questions. Contract, as you mentioned, we'll review in Q1. Is there the thought process of changing the timeline of how long contracts last so that if there's issues of a rail strike and prices that you have to push through or other you know cost pressures that it'd be easier to pass through than waiting till the contract expires? You know, how are you thinking, and what is the contract terms that you are now versus are you thinking of changing it to a shorter term? Yeah. Good morning, Josef, and excellent question. You know, I think as we're thinking about the sort of the environment coming up and, you know, maybe the next three years to five years, you know, we continue to be very bullish on activity level in the Western Canadian Sedimentary Basin. That's really gonna drive our thinking on, you know, the term of the contract as we renew. You know, as we sit today, you know, we would probably wouldn't be looking at going, you know, any longer term than maybe one or two years. That's always gonna be dependent on, you know, the ultimate details of the contract we're entering into. If we feel it is an advantageous contract for Source for three years, we may entertain a contract length of three years. In terms of the other items, you know, I think I think over the years, we've become more and more efficient at structuring our contracts so that when these, you know, one-time items, whether it be rail related or whether it be other items that are out of the control of Source, are a pass through. So you know are an immediate pass through versus a you know having to break the contract or having to sort of bear costs for the length of the contract. You know, we'll certainly be looking to make sure that we're covered off and we're protected any contracts that we enter into. From what we've seen from the media, it looks like a couple of the unions in the rails are not accepting the Biden negotiated deal. If there is a strike for even any length of time, do you have prepositioned inventories enough in Canada that you won't really be impacted, if say, in Q4 or Q1 that a strike does take place? Yeah. You know, we're watching closely to see. You know, I think we are of the belief that if any strike does happen, it won't carry on for a long time given the impact to the U.S. economy and actually the impact to the North American economy. You know, that's one thing that I think sets Source apart from others is our ability to source sand in the basin and our ability to withstand sort of short-term outages. You know, we have approximately 200,000 tons of storage throughout the basin that we can utilize. You know, we will make sure that it is as full as possible, you know, leading up to any sort of work stoppage or any rail outages that we may anticipate. Super. That's it for me. Thanks very much. Thanks, Josef. The next question comes from John Barone with Canaccord Genuity. Please go ahead. Hey, good morning, gentlemen. Good morning, John. Hey, just wondering if you could share with us your thoughts at the field level in terms of, you know, proppant intensity in the basin. I guess with, you know, BC issuing licenses again, you know, does that have a meaningful tailwind on the business here next year? Yeah. I'll start off and maybe Derren can dive in with anything I miss. You know, proppant intensity, you know, I think is slowly continuing to trend up. You know, I wouldn't. It's nothing like what we saw maybe five or six years ago where we saw sort of step changes in completion programs. But I still think we see a trend of increased proppant loading, you know, kind of across our customer set and across, you know, the areas that we operate in. And so I still see a continuation of the trend of more proppant per well. And we certainly haven't seen any indications of a trend of less proppant per well. And so I think, you know, that's trending favorably. In terms of the permits in Northeast B.C., we're, you know, we absolutely think that creates a tailwind. We also think there's just a backlog of activity, that, you know, is gonna happen, and is gonna happen in the, you know, the early part of 2023 as our customers and some other E&Ps get to areas that they haven't been able to get to in 2022. You know, I think the landscape of additional permits, you know, the macro backdrop is setting up nicely for Source in, you know, certainly in the beginning of 2023 and for the balance of 2023. I would just jump in and add, John, you know, don't forget the impact of LNG in Canada as it keeps chugging along. You know, we're excited about what that does. You know, the basin's going to keep creating stability over the next couple years or so. Great. Great color. As you think about potential demand growth, how are you positioned in terms of your mine operations and your, you know, your rail lease cars in terms of maybe needing, you know, potentially higher volumes here going forward? Yeah, I think we're feeling pretty comfortable, you know, in terms of our position or our ability to produce additional product and ship additional product. You know, we also feel pretty comfortable about our position in Peace River. You know, we spent sort of the balance of this 2022 getting that facility ready to produce a portion of the proppant that we'll send out. You know, given our ability to grow some production at the mine, given Peace River, you know, we feel like we're in a comfortable position to be able to fulfill customer demand as it grows. I think we're gonna be very careful, you know, about spending any additional money on growing any additional production capacity until we see that the market will bear it. You know, we certainly don't wanna repeat any oversupply situation. You know, we're cautiously optimistic that the demand will bear it within the next couple, three years. We'll be looking at adding additional production. Great. Appreciate the color, gentlemen. That's it for me. Okay. Thanks, John. Once again, if you have a question, please press star then one. As there are no further questions, this concludes the question and answer session. I would like to turn the conference back over to Scott Melbourn for any closing remarks. Thank you everyone for joining Source Energy's conference call. If you have any follow-on questions, as always, myself and Derren are available. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.