Mr. James Horvath reports

LONESTAR WEST ANNOUNCES 2015 YEAR END FINANCIAL RESULTS

Lonestar West Inc. has released its financial results for the year ended Dec. 31, 2015.

Highlights for the year ended Dec. 31, 2015, include:

• Revenues were $50,304,204 for the year ended Dec. 31, 2015, compared with $47,252,647 for the prior-year comparable period.
• Gross margin (1) was 20.2 per cent for the year ended Dec. 31, 2015, compared with 23.0 per cent for the prior-year comparable period.
• Normalized earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDAC) (2) was $4,400,657 or 8.7 per cent for the year ended Dec. 31, 2015, compared with $6,545,264 or 13.9 per cent for the prior-year comparable period.
• Normalized EBITDAC (3) per basic share was 15 cents for the year ended Dec. 31, 2015, compared with 25 cents for the prior-year comparable period.
• A non-cash, non-reoccurring impairment charge of $5,673,544 was recorded with respect to goodwill and intangible assets.
• Loss before taxes was $8,586,326 for the year ended Dec. 31, 2015, compared with net income before taxes of $1,448,974 for the prior-year comparable period.
• Net loss for the year ended Dec. 31, 2015, was $6,372,370 compared with net income of $1,072,537 for the prior-year comparable period.

The company also reported results for the quarter ended Dec. 31, 2015. Highlights include:

• Revenues were $12,224,243 for the quarter ended Dec. 31, 2015, compared with $13,161,175 for the prior-year comparable quarter.
• Gross margin (1) was 10.0 per cent compared with 21.4 per cent for the prior-year comparable quarter.
• Normalized EBITDAC (2) was $11,107 compared with $1,168,960 for the prior-year comparable quarter.
• Normalized EBITDAC (3) per basic share was nil compared with four cents for the prior-year comparable quarter.
• A non-cash, non-reoccurring impairment charge of $5,673,544 was recorded with respect to goodwill and intangible assets.
• Loss before taxes was $7,581,098 as compared with $530,374 for the prior-year comparable quarter.
• Net loss for the period was $5,297,834 as compared with $415,823 for the prior-year comparable quarter.

The results for the quarter and year ended Dec. 31, 2015, reflect increasingly challenging North American industry conditions due to continued low oil and natural gas prices, which, in turn, have resulted in substantially lower industry activity levels. This has resulted in significant pricing pressure in areas exposed to low commodity prices, due to reduced customer demand and heightened competition for non-energy-related projects. To the extent possible, the company will attempt to mitigate these factors through the diversification of revenues, increased utilization of existing assets through relocation to geographical areas with higher demand and implementing cost-saving measures by streamlining operations.

"The company is pleased with the revenue growth for fiscal 2015 to set a new record in this challenging environment is certainly positive," commented James Horvath, president and chief executive officer of Lonestar. "We have continued our focus on maximizing utilization, as well as cost control, which has allowed us to achieve a year-end gross margin of 20 per cent despite increased pricing pressures. Lonestar is proud of its efforts to diversify its fleet into utility and infrastructure applications, so as to be less dependent on the price of oil."

With the extended 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.

The company believes that the United States market for hydrovac services is still in its early stages of development. Lonestar forecasts 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.

(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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