Our Calgary office acted as legal advisor to Source Energy Services Canada LP (“Source”) in all aspects of the transaction whereby Source assumed all operations, distribution and sale of domestic frac sand at the Peace River mining facility from Canadian Silica Industries Inc. and Contractor’s Leasing Corp. (collectively, “CSI”). Frac sand gets its name from its use in hydraulic fracturing, a method used to produce natural gas, natural gas liquids, and oil from unconventional sources such as shale.

Source entered into an operating lease, mining services agreement and silica sand purchase agreement with CSI that, among other things includes:

i.   Adding 400,000 metric tonnes of domestic frac sand production capability to Source’s existing portfolio of Northern White frac sand and other products.

 

ii. Consolidating CSI’s existing Peace River mining facility with Source’s adjacent mineral resource exploration rights, enabling production efficiencies coupled with a long-life resource.

 

iii. Facilitating the integration of Peace River frac sand into Source’s leading distribution network to enable production efficiencies, resulting in low-cost domestic production with significant logistical advantages.

 

iv. Providing a supply of frac sand that is not rail dependent, reducing the risk of disruptions due to rail outages.

The transaction is important for Source as it adds important domestic frac sand supply to Source that, along with Source’s supply of Northern White frac sand, enhances Source’s ability to effectively and efficiently serve its clients.

 

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