CALGARY — Companies whose services are needed for hydraulic fracturing or “fracking” of oil and gas wells are reporting tough times thanks to a slowdown in drilling in Western Canada in the fourth quarter.
Shares in both Trican Well Service Ltd. and Source Energy Services Ltd. trended lower Thursday after the Calgary-based companies reported lower sales in the last three months of 2018.
Fracking involves injecting water, sand and chemicals under high pressure to crack tight rock formations deep underground and allow trapped oil and gas to flow into the well to be produced.
Trican, whose crews step in after a well is drilled to make it ready for production, reported a fourth-quarter net loss from continuing operations of $159 million (including a $134-million goodwill impairment charge), compared with a net profit of $14 million a year earlier.
It says revenue dropped by 40 per cent to $168 million from $280 million in the same period of 2017 as its total job count fell by 30 per cent to 2,054 from 2,909.
Source Energy, which supplies the specialized sand used in fracking, reported in an operational update that sales fell by 33 per cent to 373,000 tonnes in the fourth quarter from 557,000 tonnes in the same quarter in 2017.
The Petroleum Services Association of Canada said last month it expects 5,600 wells to be drilled in the country this year, down from 6,948 in 2018, due to what it calls deteriorating investor confidence in Canada.
Companies mentioned in this article: (TSX:TCW, TSX:SHLE)
The Canadian Press