STEP Energy Services Ltd. has announced its 2025 capital budget, provided updates on operations and financial performance, and addressed the impact of recent market conditions.
2025 Capital Budget
STEP’s 2025 capital budget is set at $78.9 million, including $46.7 million allocated for optimization and $32.2 million for sustaining capital. Key initiatives include:
- Trialing Canada’s first fully natural gas-powered hydraulic fracturing pump.
- Electrification of select assets.
- Expansion of sand logistics capabilities.
- Refurbishing assets nearing the end of their lifecycle.
This represents a reduction from the $91.2 million budget allocated in 2024, reflecting a disciplined approach to capital spending.
Operational Update and Q1 2025 Outlook
STEP experienced softer fracturing activity in Q4 2024 due to high natural gas storage levels and uncertain commodity prices, which led operators to prioritize fiscal discipline. Highlights include:
- Canada: Lower Q4 utilization and reduced returns as operations shifted to less intensive projects.
- U.S.: Fracturing activity was limited, with only one crew active early in Q4 and scheduled to resume operations in early 2025. Coiled tubing operations saw year-over-year declines.
For Q1 2025, Canadian fracturing and coiled tubing activity is expected to rebound, with U.S. operations maintaining steady utilization for one fracturing crew. Preparations during Q4 downtime are anticipated to support high-intensity operations starting in January.
Financial Update
STEP expects to close Q4 2024 with net debt between $60 million and $65 million, continuing a significant deleveraging trend from $310 million in 2018. Despite competitive pressures leading to margin compression, STEP’s Canadian operations are projected to achieve record annual revenue and Adjusted EBITDA in 2024.
The company also returned $8 million to shareholders through its Normal Course Issuer Bid in 2024. Adjusted EBITDA for Q4 is expected to hover near breakeven, impacted by soft utilization and one-time costs associated with a recent take-private transaction.
President and CEO Steve Glanville remarked:
“While the year ended with challenges, I’m incredibly proud of the record performance from our Canadian operations in 2024. Despite a difficult U.S. market, our coiled tubing division has shown resilience and innovation. I extend my gratitude to our team for their dedication and wish everyone a Merry Christmas and Happy New Year.”
