Mr. Kevin Roycraft reports

AVEDA TRANSPORTATION AND ENERGY SERVICES ANNOUNCES SOLID RESULTS FOR THE FIRST QUARTER OF 2015 DESPITE CHALLENGING INDUSTRY CONDITIONS

Aveda Transportation and Energy Services Inc. has released solid results for the three months ended March 31, 2015.

2015 business highlights:

• Despite the significant slowdown experienced in the oil and gas sector due to the drastic decline in the price of oil and natural gas, revenue for the three months ended March 31, 2015, grew by $1.2-million to $36.6-million, compared with revenue of $35.5-million for the same period in 2014. U.S. revenue increased by 27.9 per cent, while Canadian revenue decreased by 55.6 per cent, which resulted in an overall revenue increase of 3 per cent;
• Generated adjusted earnings before interest, taxes, depreciation and amortization for the quarter ended March 31, 2015, of $4.4-million, a decrease of $2.2-million compared with adjusted EBITDA of $6.6-million for the same period in 2014;
• Generated net loss for the quarter ended March 31, 2015, of $1.1-million, compared with $2.5-million of net income for the same period in 2014. Loss per share was six cents, compared with basic earnings per share of 15 cents in the comparative period;
• Completed the repurchase of 844,462 shares via the company's normal course issuer bid (NCIB) for total net cash outlay of $1.8-million;
• After making an earn-out payment of $1.5-million, tax payment in the United States of $600,000 and purchasing shares of $1.8-million under the NCIB, the company repaid loans and borrowings of $10.3-million in the quarter from internally generated cash flow. The resulting debt-to-EBITDA ratio at the end the quarter was 1.92, the best ratio in over a year;
• The company ended the quarter with $9.9-million in working capital with a working capital ratio of 1.7:1;
• Completed the restructuring of the North Dakota rig moving operations commenced in 2014 with the recruitment of a new regional manager and a new rig-moving manager. The restructuring has returned the North Dakota operation to profitability;
• The company has implemented wage rollbacks across the organization to reduce costs;
• The company has consolidated its Alice, Tex., yard with its Pleasanton, Tex., branch due to the proximity of its geographic location in order to reduce travel time needed to reach job sites.

"During the first quarter, our customers continue to seek ways to reduce spending and capital budgets in this low commodities environment," said Kevin Roycraft, president and chief executive officer of Aveda. "We have delivered these results despite fierce competition and downward pricing pressure. We have been able to mitigate the full impact of the industry slowdown by increasing market share in certain regions and diligently managed our costs. At the same time, we have strengthened our balance sheet and repurchased our undervalued shares in the open market. We are positioning the company to be even stronger and more profitable when the industry environment improves."

The company also announces that Jason McCormick has resigned as the company's corporate secretary. The company thanks Mr. McCormick for this contributions, and Douglas McCartney will take over the role of the company's corporate secretary.

The company will host its first-quarter fiscal 2015 results conference call on Monday, June 1, 2015, at 9 a.m. ET. Executive chairman David Werklund, president and CEO Mr. Roycraft, and vice-president, finance, and chief financial officer Bharat Mahajan will discuss Aveda's financial results for the quarter and then take questions from securities analysts.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. A live audio webcast of the conference call will be available on-line.

The conference call webcast will be archived and available on the company's website until June 30, 2015.

The company's consolidated financial statements, and management's discussion and analysis are available on the company's website and the SEDAR website.

    
                        FINANCIAL OVERVIEW
        (in thousands, except per-share and ratio amounts)          
                                                                            
                                                  Three       Three
                                                 months      months
                                                  ended       ended
                                               March 31,   March 31,
                                                   2015        2014

Revenue                                         $36,636     $35,455
Gross profit (5)                                  4,088       7,541
Gross margin                                       11.2%       21.3%
Gross profit (5) excluding depreciation and
amortization                                      8,560      10,289
Gross margin excluding depreciation and
amortization                                       23.4%       29.0%
Adjusted EBITDA (1)                               4,386       6,572
Adjusted EBITDA (1) as a percentage of
revenue                                            12.0%       18.5%
Net income                                       (1,139)      2,544
Net income as a percentage of revenue              -3.1%        7.2%
Adjusted EBITDA (1) per share                      0.22        0.38
Earnings per share -- basic                       (0.06)       0.15
Earnings per share -- diluted                     (0.06)       0.15
Current ratio (2)                                  1.66        1.77
Debt to equity ratio (3)                           0.57        0.56
Debt to EBITDA ratio (3,4)                         1.92        2.20

(1) This news release contains the term adjusted EBITDA. Adjusted EBITDA as
    presented 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 adjusted EBITDA to analyze the operating
    performance of the business. Adjusted EBITDA 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 and amortization 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, and writedowns of
    intangible assets, goodwill impairment, financing costs, gains or losses
    on disposal of assets, stock-based compensation, fees and expenses on
    settlement of debt, and losses on extinguishment of debt.
(2) Current ratio calculated as current assets divided by current
    liabilities.
(3) Debt includes loans and borrowings as per their carrying amounts on the
    balance sheet.
(4) EBITDA used is adjusted EBITDA for the trailing 12 months.
(5) Gross profit calculated as revenue less direct operating expense.                                                                            

Outlook

Aveda earns revenue primarily by providing specialized transportation services to companies engaged in the exploration, development and production of petroleum resources. As a result, demand for Aveda's transportation services are generally linked to the economic conditions of the energy industry and the level of drilling activity in the Western Canadian sedimentary basin and United States.

In recent history, total drilling activity in the WCSB and U.S. has been negatively impacted due to lower average oil and natural gas prices. This has largely been the result of increased supply in both the U.S. and other oil-producing countries with a reduction in usage, as large economies such as China start to slow and traditional economies such as Europe are still in difficulty. This led to oil stockpiles at their highest level in over 50 years.

Although the oil price remains depressed compared with the high levels it experienced in mid-2014, the last few weeks have seen a firming of the price of West Texas Intermediate (WTI) hovering around $60.0 per barrel in the early part of May as stockpiles of oil in storage being drawn down. Significant uncertainty still remains as to the magnitude and timing of any future recovery in oil and natural gas prices, and the potential impact to the oil and gas service industry. If prices do stabilize, many commentators believe that investment could start again in third or fourth quarter of 2015, at which point service companies will need to be able to react quickly to the increase in work.

The current climate presents both challenges and opportunities for Aveda; the outstanding results from 2014 allowed the company to strengthen its balance sheet, and, despite the drop in revenues in the early part of 2015, Aveda has still managed to pay down debt to reduce leverage. Whilst workload has reduced and price pressures are impacting revenues, the company has implemented cost controls, including wage rollbacks and requesting price reductions from key suppliers that will reduce the cost base of the organization. The company still managed to generate positive adjusted EBITDA in the first quarter whilst many of its competitors were generating a loss.

Opportunities are available for the company to continue to increase its market share as competitors exit the industry, and, because of the strength of its balance sheet, Aveda is in a prime position to be able to make targeted, strategic acquisitions and will continue to evaluate these opportunities as they arise.

Aveda will continue to review its operations in both Canada and the U.S.; the restructure of the North Dakota operations has resulted in a return to profitability for this operation despite the reduction in rig counts in the Williston area. The merging of the Alice, Tex., and Pleasanton, Tex., branches is expected to result in cost savings both in overhead and operational costs. Additionally, the closure of the Slave Lake, Alta., branch in April will reduce costs whilst the continuing work can be handled by other Alberta branches, and the merger of the Heavy Haul and Hotshot branches will result in economies of scale and a more coherent service offering to the company's customers.

Both Pennsylvania and West Virginia branches have experienced lower pricing pressures than other U.S. branches as the rig counts have not reduced as dramatically, key competitors have left the region reducing overcapacity in the market and allowing Aveda to increase market share.

Over all, the company expects the next two quarters to be especially challenging. The company expects additional competitors to gradually exit the market. As the competitors leave the market, the pricing pressure may ease as the company gains additional market share. Over the long term, the company is well positioned to thrive, with a strong balance sheet and a dedicated work force, Aveda is well positioned to maximize on opportunities that may be presented to it, and emerge from the current downturn stronger and more profitable.

We seek Safe Harbor.