Mr. James Horvath reports

LONESTAR WEST ANNOUNCES 2014 YEAR END FINANCIAL RESULTS

Lonestar West Inc. has released its financial results for the year ended Dec. 31, 2014.

Highlights for the year ended Dec. 31, 2014, include:

• Revenues were $47,252,647 for the year ended Dec. 31, 2014, compared with $17,581,642 in the six-month fiscal year ended Dec. 31, 2013.
• Gross margin (1) was 23.0 per cent for the year ended Dec. 31, 2014, compared with 17.9 per cent in the six-month fiscal year ended Dec. 31, 2013.
• Normalized EBITDAC (defined as earnings from continuing operations before interest, income taxes, depreciation, amortization) (2) was $6,545,264 or 13.9 per cent for the year ended Dec. 31, 2014, compared with $1,332,084 or 7.6 per cent in the six-month fiscal year ended Dec. 31, 2013.
• Normalized EBITDAC (3) per basic share was 25 cents for the year ended Dec. 31, 2014, compared with six months in the six-month fiscal year ended Dec. 31, 2013.
• Income before taxes was $1,448,974 for the year ended Dec. 31, 2014, compared with a loss before taxes of $289,353 in the six-month fiscal year ended Dec. 31, 2013.
• Net income for the year ended Dec. 31, 2014, was $1,072,537, compared with a net loss of $188,295 in the six-month fiscal year ended Dec. 31, 2013.

The company also reported results for the quarter ended Dec. 31, 2014, highlights include:

• Revenues increased 41.8 per cent to $13,161,175 from $9,281,102 in the previous-year equivalent period.
• Gross margin (1) increased to 21.4 per cent from 16.2 per cent in the previous-year equivalent period.
• Normalized EBITDAC (2) increased 178.1 per cent to $1,168,960 from $420,304 in the previous-year equivalent period.
• Normalized EBITDAC (3) per basic share increased 300 per cent to four cents from one cent in the previous-year equivalent period.
• Loss before taxes was $514,974, a decrease of $103,140 in comparison with the $411,834 loss before taxes in the previous-year equivalent period.
• Net loss for the period were $400,423, a $120,147 decrease in comparison with the $280,276 net loss in the previous-year equivalent period.

The company has been successful in executing its planned growth strategy over the last 24 months with two transformational acquisitions and organic expansion throughout the southern United States, which has positioned Lonestar as a major Hydrovac and vacuum services provider in North America. This growth has resulted in the company achieving record revenues and EBITDAC for fiscal 2014.

The company achieved gross margins of 21.4 per cent for the quarter ended Dec. 31, 2014, which is a significant improvement from 16.2 per cent for the prior-year comparable quarter. This improvement was a result of management's diligence in monitoring housing and travel, and repair and maintenance costs. In addition, the company has been successful in capitalizing on efficiencies resulting from the infrastructure implemented as part of the planned growth strategy.

"The company is pleased with the results for fiscal 2014 and the growth it has achieved with record revenues for 2014," commented James Horvath, president and chief executive officer of Lonestar. "We have continued our focus on growth and utilization, as well as cost control, which has resulted in a 5-per-cent increase in our year-end gross margin of 23 per cent. Our U.S. expansion is a key factor in our growth strategy as the market is, in our belief, still in its developmental stage. The weaker Canadian dollar continues to work in our favour as well. Lonestar is proud of our efforts diversifying our fleet into utility and infrastructure applications so that we are not as dependant on the price of oil."

With the recent decline in the energy markets, the company is continuing to intensify its focus on cost control while maintaining superior service to its customer base. In addition, the company will continue to assess the location of its fleet and deploy assets to areas less impacted by the energy markets. This is possible due to management's successful efforts to expand and diversify its business over the last two years.

The company believes that the U.S. market for Hydrovac services is still in its early stages of development. Lonestar believes that increasing acceptance of the Hydrovac technology across numerous sectors throughout the United States will continue and that the company is well positioned to capitalize on these opportunities.

In addition, late in 2014, the company expanded to Eastern Canada by opening a Toronto, Ont., base. This area of Canada has increased demand for Hydrovac and vacuum services, and this area is less sensitive to the fluctuations in the oil and natural gas prices.

Subsequent to Dec. 31, 2014, the company added 15 units to its fleet for a total of 153 units as of the date of this press release.

(1) Gross margin is calculated as gross profit as a percentage of revenues.

(2) This news release contains the term normalized EBITDAC as presented and does not have any standardized meaning prescribed by international financial reporting standards (IFRS), and therefore it may not be comparable with the calculation of similar measures for other entities. Management uses normalized EBITDAC to analyze the operating performance of the business. Normalized EBITDAC as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. It is defined as earnings before interest, taxes, depreciation, amortization and stock-based compensation, excluding foreign exchange gains or losses, which are primarily related to the U.S. dollar activities of the company and can vary significantly depending on exchange rate fluctuations, which are beyond the control of the company.

(3) Normalized EBITDAC is calculated as normalized EBITDAC divided by the weighted average shares outstanding for the period.

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