Source Energy Services Ltd. (SHLE) Earnings Call Transcript & Summary

Hello, and welcome to the 2024 Annual Meeting of Shareholders of Source Energy Services Limited. Please note that this meeting is being recorded. Registered shareholders and proxy holders may submit questions via the message tab at the top left of your screen by typing your message, then clicking the send icon to the right of the message box. It is my pleasure to introduce the Chair of Source Energy Services Limited, Mr. Chris Johnson. Mr. Johnson, the floor is yours.

Thank you, and hello, everyone. I'd like to welcome everyone to the Annual Meeting of the Shareholders of Source Energy Services. My name is Chris Johnson. I'm the Chair of the Board of Directors of Source Energy. In accordance with Source's bylaws, I'll preside as Chair of the meeting. Ms. Chantell Dukeshire, will act as Secretary of the meeting. Today's meeting is being held as a completely virtual meeting, which is being conducted via live audio webcast. This format will provide all shareholders regardless of geographic location an equal opportunity to participate at the meeting and engage with directors of Source and management as well as other shareholders. Registered shareholders received a control number on their proxy form and shareholders who have validly appointed their own proxy holder to vote at this virtual meeting by following the proxy appointment process were given a control number by Odyssey Trust Company, Source's transfer agent. These control numbers will act as your login credentials for this meeting for voting purposes, the procedure for voting will be discussed shortly. All others attending as guests are able to listen but are not able to submit questions or vote at the meeting. Today's meeting of shareholders is being held to consider a vote only for those specific matters set forth in the management information circular previously mailed to the company's shareholders of record as of March 26, 2024. Okay. I now call the formal part of the meeting to order. In order to expedite the meeting, I've asked certain shareholders to make certain motions at the appropriate times. This is not intended to preclude shareholder discussion, but only to assist the progress of the meeting. I welcome questions or comments from shareholders at any time. I appoint Nazim Nathoo a representative of Odyssey Trust Company to active scrutineer of the meeting. I've received a declaration as to the distribution of the notice of the meeting, together with the management information circular and proxy form to all registered shareholders of record as of the close of business on the record date of the meeting. This declaration will be filed with the minutes of the meeting. I have received the report of the scrutineer, which indicates that we have a quorum for the meeting. I hereby adopt the report of the scrutineer and declare that there is a quorum of shareholders present at the meeting. Based upon scrutineer's report and the quorum being present, I declare that this meeting is duly constituted for transaction of business. I'll direct the scrutineers' report on the attendance be annexed to the minutes of the meeting. We will conduct the votes on matters considered at the meeting by online ballot. As explained earlier, registered shareholders received a control number on their proxy form and shareholders who have validly appointed their own proxy holder vote at this meeting rather than by voting in advance of this meeting by proxy by following the proxy appointment process, were required to obtain a control number prior to the meeting from Odyssey Trust Company. These control numbers are required in order to vote at this meeting. If you did not receive a control number, you'll be -- you will not be able to vote at this meeting and you're only able to attend as a guest. Voting is open and will close when indicated by me at the end of the formal part of the meeting. Participants will see the resolutions we will be voting on today, together with the voting options. Please cast your vote promptly. The polls are made open until the polls are closed. During this time, you can vote your shares. If you've previously voted and are voting the same shares today, your previous votes will be null and void. While the resolutions are brought forward, we will open up the meeting for discussion on the resolutions, which will be done by way of submitting online questions to the Chair of the meeting. Participants can only ask questions at a time during the meeting by selecting the chat bubble at the top of your screen, typing your question and submitting it. Please note that all questions are moderated before going to the Chair in order to eliminate repeated questions and to ensure a normal meeting protocol for appropriateness as applied. As your question may be similar in nature to that of another participant, please be aware that the question may be presented to the meeting in a more generic form. If you intend to submit a question, you're invited to do so now. Any questions that are unrelated to the motion before the meeting are out of order and will not be addressed by the Chair. We will now proceed with the first item of business and present the annual financial statements of Source for the fiscal year ended December 31, 2023, and the auditor's report thereon. Shareholders do not need to take any action regarding the financial statements, and we'll now move on to the second item of business. The next item of business is to fix the number of directors of Source to be elected at the meeting. I asked Scott Melbourn for a motion that the number of directors to be elected at the meeting to be fixed at 5.

I move that the number of directors to be elected at the meeting be fixed at 5.

May I please have someone second the motion?

I second the motion.

As previously mentioned, voting is open and will close when indicated. The next item of business is the election of directors. The closed nominees are Jeff Belford, Chris Johnson, Carrie Lonardelli, Steven Sharpe and Scott Melbourn. If elected, these individuals will hold office until the next Annual Meeting of the Shareholders or until their successors are duly elected or appointed. I ask Derren Newell for a motion that each of the proposed nominees be nominated for election as directors of Source.

I move that each of the proposed nominees be elected as directors of Source to hold the office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed.

May I please have someone second the nomination.

I second the nominations.

As previously mentioned, voting is open and will close when indicated. The next item of business is the appointment of the auditors of Source for the current year. I ask Scott Melbourn for a motion to appoint Ernst & Young LLP as auditor of Source.

I move that Ernst & Young LLP be appointed as auditor of Source and that their compensation as such, be fixed by the Board of Directors.

May I please have someone second the motion?

I second that motion.

As previously mentioned, voting is open and will close when indicated. The next item of business is the approval of Source's 2024 long-term incentive plan. The 2024 long-term incentive plan is a renewal of the 2021 long-term incentive plan that allows restricted share units or RSUs and preferred share units or PSUs to be settle either in cash or in common shares issued from treasury or purchased on the secondary market. The 2024 long-term incentive plan contains amendments to align certain definitions with TSX requirements, which are deemed to be of a housekeeping nature, and therefore, do not require shareholder approval. The 2024 long-term incentive plan has been described in detail and the Information Circular provided to shareholders in connection with this meeting. And a copy of the plan is attached as Appendix B to that circular. Under the policies of the TSX, the ability to settle RSUs and PSUs with treasury-issued shares triggers a TSX requirement that the plan must be approved by the shareholders to be effective. The maximum number of common shares reserved for issuance under the 2024 long-term incentive plan and all other securities -- security-based compensation arrangements to Source may not exceed 10% of the then issued and outstanding common share calculated on a nondiluted basis. The Board of Directors approved the 2024 long-term incentive plan on March 6, 2024, subject to shareholder approval. The full text of the ordinary resolution being put forward to the approval by shareholders at this meeting has been set forth on Page 42 of the Information Circular. I asked Scott Melbourn for a motion to approve the 2024 long-term incentive plan.