Mr. James Horvath reports

LONESTAR WEST ANNOUNCES Q3 2016 FINANCIAL RESULTS

Lonestar West Inc. has released the financial results for the three- and nine-month periods ended Sept. 30, 2016.

Highlights for the three months ended Sept. 30, 2016, include:

• Revenues decreased by 27.2 per cent to $10,277,917 from $14,123,380 in the previous-year equivalent period.
• Gross margin (1) decreased to 14.1 per cent from 25.0 per cent in the previous-year equivalent period.
• Normalized EBITDAC (earnings before interest, taxes, depreciation, amortization and stock-based compensation, excluding foreign exchange gains or losses) (2) decreased 95.3 per cent to $74,014 from $1,562,412 in the previous-year equivalent period.
• Normalized EBITDAC (3) per basic share decreased to 0.3 cent from five cents in the previous-year equivalent period.
• Loss before taxes was $1,621,228, a decrease of $911,515, in comparison with loss before taxes of $709,713 in the previous-year equivalent period.
• Net loss for the period was $1,614,900, a decrease of $1,111,369, in comparison with a net loss of $503,531 in the previous-year equivalent period.

The company achieved normalized EBITDAC (2) of $74,041 for the quarter ended Sept. 30, 2016, which is a decrease from $1,562,412 for the prior-year equivalent period. The normalized EBITDAC margin was 0.7 per cent for the quarter ended Sept. 30, 2016, as compared with 11.1 per cent for the prior-year comparable period. The decrease in normalized EBITDAC is due primarily to a significant decrease in revenue offset by a marginal decrease in operating expenses. In the third quarter, the operating costs did not decrease with revenue as there were start-up costs to redeploy assets and obtain local crews.

Highlights for the nine months ended Sept. 30, 2016, include:

The company achieved normalized EBITDAC (2) of $2,126,002 for the nine-month period ended Sept. 30, 2016, which is a decrease from $4,389,551 for the prior-year equivalent period. The normalized EBITDAC margin was 6.5 per cent for the nine-month period ended Sept. 30, 2016, as compared with 11.5 per cent for the prior-year comparable period. The decrease in normalized EBITDAC for the nine-month period ended Sept. 30, 2016, is related primarily to a lower gross margin in the first quarter of 2016 due to decreased pricing resulting from a more competitive operating environment. The other contributing factor to the decreased normalized EBITDAC for the nine-month period ended Sept. 30, 2016, is related to the decreased revenue, start-up costs and costs to redeploy assets in the third quarter of 2016.

"Results for the third quarter were disappointing. As a result, we have taken a number of steps to effect stronger cost controls and reduce overhead," commented James Horvath, president of Lonestar. "Our goal is to return the business to its historical operating and profit margins. The company has taken steps to optimize the number and location of our bases in both Canada and the U.S., and we will continue to direct our business development activities on expanding in our most profitable locations."

About Lonestar West

Based in Sylvan Lake, Alta., Lonestar West operates a fleet of 151 hydrovac, vacuum and auxiliary units throughout Western Canada, Ontario, California and the southern United States. It is focused on profitably growing its HVAC (heating, ventilation and air conditioning) services to become a major competitor in the North American market.

Notes:

(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, 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 per share is calculated as normalized EBITDAC divided by the weighted-average shares outstanding for the period.

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