Secure Energy Services has demonstrated robust performance in 2025, navigating a volatile market with strategic investments and strong financial management, while setting an optimistic tone for 2026 with continued focus on shareholder returns and infrastructure development.
Navigating Market Dynamics: Secure Energy Services' Resilience and Strategic Growth
Solid Financial Performance in the Fourth Quarter and Full Year 2025
Secure Energy Services (TSE:SES) announced impressive financial results for the fourth quarter of 2025 and the entire fiscal year. Despite facing headwinds from fluctuating commodity prices and a slowdown in exploration activities, the company achieved higher profitability and consistent full-year growth. A key highlight was the substantial return of capital to shareholders, alongside significant progress on contracted infrastructure initiatives.
Leadership's Commentary on Strategic Resilience and Operational Success
Allen Gransch, President and CEO, underscored the company's robust waste management and energy infrastructure capabilities, which proved crucial in 2025. He noted a 5% year-over-year increase in pro forma adjusted EBITDA, reaching CAD 501 million, attributed to robust infrastructure earnings, disciplined pricing strategies, operational efficiencies, and the integration of new assets.
Key Financial Metrics for Q4 and Full-Year 2025
For the fourth quarter, the company reported a 10% revenue increase to CAD 372 million and a 15% rise in adjusted EBITDA to CAD 135 million, translating to a 24% per share increase. Funds flow from operations stood at CAD 118 million, with discretionary free cash flow at CAD 84 million. Chad Magus, CFO, highlighted full-year funds flow from operations at CAD 378 million and discretionary free cash flow at CAD 273 million, noting its industry-leading conversion rate despite higher interest and tax expenses.
Commitment to Shareholder Returns and Balance Sheet Strength
Management emphasized its dedication to capital returns, distributing CAD 373 million to shareholders in 2025 through dividends and share repurchases, including the buyback of nearly 19 million shares. The company maintained a strong balance sheet, ending 2025 with a total debt to adjusted EBITDA ratio of 2.1x (1.8x excluding leases). A significant refinancing of CAD 300 million in senior unsecured notes due in 2032 further enhanced financial flexibility.
2026 Outlook: Dividend Growth and Continued Share Repurchases
Looking ahead to 2026, Secure Energy Services plans to increase its annualized dividend by 5% to CAD 0.42 per share, starting in the second quarter. The company also intends to continue opportunistic share buybacks, having already repurchased 1.1 million shares at an average price of CAD 17.10 since renewing its Normal Course Issuer Bid (NCIB) in December.
Strategic Investments in Organic Growth and Infrastructure Development
Customer demand prompted Secure Energy Services to exceed its initial 2025 investment plans, deploying CAD 138 million in organic growth capital. These investments primarily focused on produced water infrastructure in the Montney region, industrial waste processing, and optimizing metal recycling operations. A notable achievement was the commissioning of two fully contracted produced water disposal facilities in Montney, designed for long-term infrastructure support.
Capital Allocation Priorities and Operational Enhancements for 2026
For 2026, the company has earmarked CAD 75 million for organic growth projects, with potential for increased spending as new ventures are approved. Planned initiatives include expanding water disposal capacity at existing Montney sites, network optimization projects, and a pre-shredding investment at the Edmonton metal recycling facility to boost efficiency. These capital expenditures are largely directed towards the waste management sector, with about CAD 10 million allocated to metal-related improvements.
Operational Performance Across Diverse Business Segments
Corey Higham, COO, reported consistent and reliable performance across the company's 80-location network in 2025. Annual operational volumes included approximately 95,000 barrels per day of produced water disposal, 38,000 barrels per day of liquid waste processing, 1 million barrels of recovered oil, and 3.2 million tons of solid waste disposal. The energy infrastructure segment handled over 133,000 barrels per day of crude oil through 13 terminals and three pipelines, with modest increases driven by the Clearwater terminal expansion and emulsion treating capabilities.
Impact of Oil Prices and Challenges in Metal Recycling
Weaker oil prices influenced exploration-linked service lines, leading to stable produced water volumes but declines in waste processing, oil recovery, and landfill volumes due to reduced exploration activity and customer discretionary spending. The metal recycling business faced challenges in 2025 following a 50% U.S. tariff on finished steel, which impacted Canadian domestic demand. The company successfully re-positioned over 90% of scrap volumes to U.S. markets, despite logistical hurdles, and expects inventory levels to normalize by mid-2026.
Pricing Strategies and Accounting Policy Adjustments
Customer discussions on pricing concluded in Q4, with Secure Energy Services adopting a selective approach by service line, without immediate plans for further pricing actions. Additionally, the company implemented a voluntary accounting policy change in Q4, presenting realized and unrealized gains and losses from physically settled commodity contracts and related derivatives on a net basis within revenue. This adjustment has no impact on net income, adjusted EBITDA, cash flow, or the balance sheet, and prior periods were restated for comparability. The company aims to reclassify its industry positioning with S&P and MSCI to reflect its focus as a waste infrastructure business.
2026 Financial Projections and Litigation Update
For 2026, SECURE projects adjusted EBITDA between CAD 520 million and CAD 550 million, anticipating incremental improvements later in the year from new project contributions and enhanced metal recycling performance. The guidance considers uncertainties in metals operations and field activity levels, and does not include any potential acquisitions. Management also provided an update on ongoing litigation with CES, confirming a Supreme Court ruling in SECURE's favor regarding patent ownership, with potential future claims of CAD 100 million to be determined by the courts. The company's specialty chemicals business, particularly in paraffin and wax removal, continues to perform well.
