Mr. James Horvath reports

LONESTAR WEST ANNOUNCES Q1 2016 FINANCIAL RESULTS

Lonestar West Inc. has released the financial results for the three-month period ended March 31, 2016.

The results for the quarter ended March 31, 2016, reflect the 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 that have higher demand and implementing cost-saving measures by streamlining operations.

Highlights for the three months ended March 31, 2016, are as follows:

• Revenues were $11,919,783 for the quarter ended March 31, 2016, compared with $13,312,981 for the prior-year comparable quarter;
• Gross margin was 19.3 per cent, compared with 25.8 per cent for the prior-year comparable quarter;
• Normalized earnings before interest, income taxes, depreciation, amortization and change in estimated acquisition earnout payables (EBITDAC) were $891,813, compared with $2,242,707 for the prior-year comparable quarter;
• Normalized EBITDAC per basic share was three cents, compared with eight cents for the prior-year comparable quarter;
• A non-cash, non-reoccurring impairment charge of $107,974 was recorded with respect to intangible assets;
• Loss before taxes was $1,053,137, as compared with net income before taxes of $378,227 for the prior-year comparable quarter;
• Net loss for the period was $2,271,552, as compared with net income of $210,965 for the prior year comparable quarter.

"All Lonestar employees and their families are safe following the wildfires that began on May 3, 2016, and are ongoing in and around our Fort McMurray, Alta., location. Lonestar has not suffered any equipment or facility damage to date, and we are working with the municipality and our customers in the area to ensure we are prepared to assist in restoring services and rebuilding infrastructure," commented James Horvath, president and chief executive officer of Lonestar. "In the first quarter of fiscal 2016 the company has capitalized on the opportunity provided by the downturn in the oil and gas markets to improve the bench strength of our management team, to better position Lonestar for long-term growth and success. The first quarter was adversely impacted by weather and depressed energy markets, so management is focused on increasing business development efforts and repositioning operations to areas less sensitive to the fluctuations in energy prices."

The company is continuing to intensify its focus on cost control, while maintaining superior service to its customer base. In addition, the company is continually assessing the location of its fleet and redeploys assets to areas less impacted by the energy markets.

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

We seek Safe Harbor.