Mr. John Barkhouse reports

NEWALTA REPORTS FOURTH QUARTER AND YEAR END 2016 RESULTS

Newalta Corp. has released results for the three and 12 months ended Dec. 31, 2016.

                                          FINANCIAL HIGHLIGHTS (1)
                                       ($000s except per-share data)                      

                                           Three months ended Dec. 31,    12 months ended Dec. 31,        
                                                   2016          2015          2016          2015
Continuing operations
Revenue                                         $63,707       $64,665      $205,449      $327,584
General and administrative                        7,690        10,659        31,060        45,464
Net (loss)                                      (75,346)     (116,697)     (158,476)     (166,027)
Per share ($), basic and diluted                  (0.85)        (2.08)        (2.02)        (2.95)
Adjusted EBITDA (2)                              11,486         6,175        21,852        54,614
Per share ($)                                      0.13          0.11          0.28          0.97
Maintenance capital expenditures (2)              4,097         1,557         8,152        11,900
Growth capital expenditures (2) (3)               2,969         5,277         6,683        63,047
Dividends declared                                    -         3,515             -        24,600
Per share ($) (2)                                     -         0.063             -         0.438
Dividends paid                                        -         7,029         3,515        26,809
                                                 ------       -------       -------       -------              
Combined operations
Revenue                                          63,707        64,665       205,449       369,692
Net (loss)                                      (75,346)     (126,364)     (158,465)     (183,056)
Per share ($), basic and diluted                  (0.85)        (2.25)        (2.02)        (3.25)
                                                 ------       -------       -------       -------

(1) Refer to Newalta's management's discussion and analysis and consolidated financial 
statements for further information. References to generally accepted accounting 
principle are synonymous with international financial reporting standards, and 
references to consolidated financial statements and notes are synonymous with 
financial statements.               
(2) These financial measures do not have any standardized meaning prescribed by GAAP 
and are therefore unlikely to be comparable with similar measures presented by other
issuers. Non-GAAP financial measures are identified and defined in the company's 
management's discussion and analysis.
(3) Growth capital expenditures are net of 2015 and 2016 contributions from a 
mid-stream joint venture partner for its interest in a modular processing facility.

Management commentary

"Fourth quarter results continued the momentum of sequential quarterly improvements in 2016 and represents the first year-over-year improvement since the beginning of the downturn, with adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] increasing by 86 per cent over 2015," said John Barkhouse, president and chief executive officer. "Our cost savings initiatives continue to drive bottom-line performance, while stabilizing commodity prices and improving industry activity are beginning to increase demand for our services.

"Results for the quarter were also positively impacted by the improvements we've made in our drilling services business with our focus on enhanced customer value creation and increased contributions from heavy oil facilities, particularly our Fort McMurray facility.

"We are well positioned with the capacity inherent in our business model to leverage significant upside in a recovery environment. With the actions taken over the past two years to protect our balance sheet, including the removal of more than $60-million in annualized costs from 2014 levels, we have aligned our cost base to activity levels. Our objective, which is to maintain the current cost structure, will underpin meaningful profitability improvements as our markets recover.

"In Q1 2017, we expect to continue the trend of year-over-year increases in performance, based on improving commodity prices and increases in drilling activity over prior year.

"For the year, we continue to anticipate annual adjusted EBITDA of between $40-million and $55-million, based on a WTI forecast of $45 to $60 per barrel. Our outlook is underpinned by the assumption that relative oil price stability will result in improvements in activity levels. We expect to be within a range of cash flow neutrality for 2017, which is the key determinant to financial sustainability and the springboard to the positive cash flow model we envision in future years."

Fourth quarter and year-end results:

• Fourth quarter revenue of $63.7-million was flat to prior year.
• Revenue for the year was $205.4-million, a decrease of 37 per cent from the prior year. The decline was primarily driven by reduced production waste volumes in oil field facilities and a decline in mining contributions in heavy oil on site.
• Net loss in the quarter decreased 35 per cent to $75.3-million compared with the prior year. The decrease in loss was primarily driven by reduced impairment in 2016. Lower finance charges, operating expenses, restructuring and other related costs, and savings in general and administrative from the company's rationalization initiatives were partially offset by an increase in depreciation and amortization.
• Net loss for the year was reduced 5 per cent to $158.5-million compared with the prior year, driven by the same factors as the quarter and partially offset by an increase in stock-based compensation expense.
• Adjusted EBITDA for the quarter was $11.5-million compared with $6.2-million in the prior year, representing the first quarterly year-over-year improvement since the beginning of the downturn, and the third sequential quarter-over-quarter improvement in the year. The year-over-year increase was driven by divisional EBITDA improvements of $2.3-million and G&A savings of $3.0-million, primarily due to savings from cost rationalization initiatives.
• Adjusted EBITDA for the year was $21.9-million, down $32.8-million over the prior year driven by a $47.2-million decrease in divisional EBITDA partially offset by G&A savings of $14.4-million. Factors at play throughout the latter half of 2015 carried through 2016, with producers shutting in wells, minimizing maintenance activities, and deferring projects and capital spending.
• In 2016, $27.0-million of the $32.8-million year-over-year change in adjusted EBITDA was driven by a decline in production-driven waste volumes at the company's heavy oil and oil field facilities. The rest of the decline was primarily driven by reduced contributions from mining projects and the decline in drilling activity, partially offset by cost savings realized.
• The company's contract model continued to provide steady, predictable cash flow. These contracts generally are not tied directly to commodity price changes or drilling activity and provide a solid foundation for the company's business, particularly in depressed markets. In 2016, contracts represented 22 per cent of the company's revenue.

Actions taken to protect profitability and the company's balance sheet:

• In 2016, the company completed cost rationalization actions which drove $21-million in annualized adjusted EBITDA savings ($15-million in 2016) by eliminating approximately 90 positions across G&A and operations and consolidating office space. These actions, combined with the company's 2015 initiatives, have driven in excess of $60-million in annualized savings over 2014 levels.
• The company reduced capital spending by approximately $60-million compared with 2015 levels.
• Effective Oct. 31, 2016, the company amended the company's credit facility to include a precautionary waiver on its interest coverage covenant for the fourth quarter of 2016 and reduced the principal borrowing amount by $10-million to $150-million. Management sought the one-time waiver as a precautionary measure given the lack of visibility to oil prices and activity levels in the near term. The company was in compliance with the threshold established in the March 1, 2016, amendment and did not require the waiver in fourth quarter.
• The company exercised an option pursuant to its credit facility to waive the minimum interest coverage covenant threshold for the third quarter of 2016.
• On April 20, 2016, the company closed the company's bought deal and private placement equity financings. The public and private offerings of common shares raised total gross proceeds of $54.2-million (net proceeds of $51.2-million). The net proceeds were used to reduce the amount drawn on the company's credit facility.
• Effective March 1, 2016, the company amended the terms of the company's credit facility to extend the waiver of the company's total debt to EBITDA covenant to first quarter 2018, and revised the senior debt to covenant EBITDA and interest coverage thresholds to provide improved flexibility in the current economic environment.
• The company suspended its quarterly dividend following the dividend paid to shareholders on Jan. 15, 2016.

Heavy oil:

• In the fourth quarter, heavy oil revenue declined by 9 per cent to $26.5-million, and net earnings before taxes decreased to a loss of $42.2-million compared with the prior year driven by on-site operations and asset impairment. Divisional EBITDA increased by 8 per cent over the prior year to $11.6-million due to gains in cost efficiencies and improved contributions from facilities offset by on-site contributions.
• The fourth quarter represents the first year-over-year divisional EBITDA improvement in heavy oil since the downturn began. Further, divisional EBITDA margins improved by seven percentage points over the prior year.
• In 2016, heavy oil revenues decreased 38 per cent to $90.0-million, and net earnings before taxes decreased by $63.0-million to a loss of $36.9-million compared with the the prior year. These declines were driven by the same factors as the quarter. Divisional EBITDA decreased by 39 per cent over the prior year to $33.7-million due to reduced contributions from on site.

Oil field:

• In the fourth quarter, oil field revenue increased by 5 per cent to $37.2-million, and net loss before taxes decreased by 90 per cent to $9.5-million compared with the prior year. Divisional EBITDA increased by 24 per cent over the prior year to $7.6-million. Improved performance was driven by drilling services, partially offset by reduced contributions from oil field facilities. Net loss before taxes improved due to impairment in 2015.
• In 2016, oil field revenue decreased 37 per cent to $115.5-million compared with the prior year primarily due to declines in production-driven waste volumes and drilling activity. Net loss before taxes decreased by 76 per cent to $20.4-million compared with the prior year due to impairment in 2015. Divisional EBITDA declined 57 per cent over the prior year to $19.2-million driven by lower contributions from both the oil field facilities and the drilling services business units, primarily due to reduced production waste volumes and drilling activity.

Corporate and other:

• For the three months and year ended Dec. 31, 2016, G&A decreased 28 per cent and 32 per cent to $7.7-million and $31.1-million, respectively. The year-over-year improvement reflects the impact of the company's cost rationalization initiatives.
• Restructuring and other related costs were in a recovery position of $500,000 in the fourth quarter, composed of a $1.9-million non-cash recovery in onerous contracts partially offset by employee termination and other costs. For the year, $23.9-million in restructuring and other related costs was composed of $14.7-million of non-cash onerous contracts and $9.2-million of employee termination and other costs.
• Capital expenditures for the three months and year ended Dec. 31, 2016, were $7.1-million and $14.8-million, respectively.
• Impairment for the quarter and the year ended Dec. 31, 2016, was $56.0-million and $60.7-million, respectively, primarily due to impairment of certain heavy oil assets. The company is actively pursuing opportunities to redeploy these assets to other projects or within the company's facility network; however, due to lack of certainty regarding the timing of redeployment, these assets were impaired in the quarter. This impairment in no way restricts the operating leverage opportunity available as demand for the company's on-site services returns.

Outlook and operating leverage

The company's performance over the last two years was significantly impacted by the decline in oil prices and activity levels in the oil and gas industry. Inherent in the company's business model is the capacity to leverage significant upside with recovery in oil pricing and activity levels with minimal capital investment. In a sustained $60 WTI environment with associated activity levels, the company would expect adjusted EBITDA to be in the range of $100-million to $140-million.

The company's view is that recovery, in the form of increased activity (whether drilling, completions or production), will be driven by stability in oil and gas prices, which will enable the company's customers to make capital decisions to invest in the drilling and completion of new wells and reactivation of shut-in wells. As the company sees activity levels recover, this will translate into increased production waste volumes being generated. Timing of recovery will vary among plays based on their cost profile.

The company's operating leverage is driven by the following factors:

Crude oil prices:

• Crude oil prices directly impact the value of the products the company recovers from waste.
• Commodity price stabilization generates confidence amongst producers, impacting their capital budgets, which in turn drives increased activity.

Drilling activity:

• Recovery of drilling activity will be determined by the speed at which producers deploy their capital budgets.
• Drill site performance is driven by active rigs and is the first business line to respond to changes in activity.
• Wells drilled and completed in the areas the company serves drive waste volumes into the company's facilities.
• The company anticipates the drilling activity in the areas where the company operates to recover at different rates depending on the cost profile of the play, with shale play activity increasing first and cold heavy oil production with sand (CHOPS) being the last to recover.

Step change

Step -- production is primarily composed of the net impact of production waste volumes and shifts in waste mix, and to a lesser extent, customer pricing and operational efficiencies.

• The company expects to see a lag in recovery of production waste volumes depending on the speed at which producers deploy their budgets, including turnarounds and workovers.
• The composition of waste volumes impacts the degree of processing complexity and the amount of recoverable oil.
• CHOPS waste volumes are also dependent on the drilling of new wells to replace production volumes lost by their naturally steep decline curves.
• Steam-assisted gravity drainage (SAGD) waste volumes are dependent on the number, timing and length of event-based upsets occurring in the normal course of SAGD facility operations.
• The company continues to manage its operational cost structure and collaborate with customers to provide enhanced value solutions to mitigate the impact of pricing pressure.

Step -- other is composed of the net impact of contributions from mining contracts and returns from growth capital.

• Mining contributions are expected to be slower to return as producers focus on quantifying their tailing inventory and developing mitigation plans required to meet the tailings management framework. The company continues to work with producers to develop solutions to meet these requirements.
• As activity recovers, the company expects to realize improving returns on capital investments made in 2014 and 2015.

Savings from cost rationalization:

• The company's various initiatives to rightsize the organization, streamline cost structures and business processes, and rationalize office space have established a lower-cost structure capable of supporting meaningful improvement in profitability in a recovery environment.
• Cost rationalization actions taken by management throughout the downturn removed in excess of $60-million in costs on an annualized basis from 2014 levels.

2017 outlook

In 2017, the company expects to see a return toward normalized quarterly seasonality. The company's 2017 outlook is based on the following assumptions:

• Improving commodity prices with less volatility than 2016;
• Increased customer capital budgets over 2016 levels, driving drilling activity;
• Recovery of the $4.5-million lost in 2016 from the Fort McMurray wildfires and a modest improvement in production-driven waste volumes over the prior year;
• Carry-over of savings from cost rationalization actions taken in 2016.

The company's first quarter and full-year 2017 guidance ranges are:

• Revenue of $45-million to $55-million for the first quarter and $200-million to $275-million for the full year;
• Adjusted EBITDA of $8-million to $10-million for the first quarter and $40-million to $55-million for the full year.

Total debt, capital and cash flow management

Throughout the downturn, the company pro-actively structured its business model for a lower-for-longer environment. The company's equity financing, rationalization initiatives, amended credit facility, reduced capital spend and suspension of dividends provided us the liquidity and flexibility to operate in the sustained downturn.

The company will continue to manage cash flows to ensure its financing obligations are met and spending is minimized wherever possible. Over the last two years, management has focused on moving toward a positive cash flow model. The company has made significant progress in moving toward this target through pro-active management of operating cash flows and cost rationalization initiatives. In 2017, the company will maintain its focus on this target and expects to be within a range of cash flow neutrality for the year, subject to opportunities that may arise. Management will exercise prudent judgment in managing the company's capital expenditures for the year, aligned with the company's longer-term cash flow target.

Its amendments to certain covenants under its credit facility provide with the company with flexibility to continue to manage its balance sheet as the company transitions through recovery. Managing debt leverage and use of cash and capital is the company's highest priorities. The company will remain within its debt covenants throughout 2017.

Management's discussion and analysis and financial statements

The consolidated financial statements and management's discussion and analysis, which contain additional notes and disclosures, are available on SEDAR or the company's website under investor relations/financial reports.

Quarterly conference call

Management will hold a conference call on Feb. 24, 2017, at 11 a.m. (ET), to discuss Newalta's performance for the quarter. To participate in the teleconference, please call 647-427-7450 or toll-free 1-888-231-8191. To access the simultaneous webcast, please visit the Newalta website. For those unable to listen to the live call, a taped broadcast will be available at the Newalta website and, until midnight on March 3, 2017, by dialling 855-859-2056 and using the passcode 60570847.

About Newalta Corp.

Newalta is a leading provider of innovative engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production waste streams. The company simplifies the critical challenges of sustainable environmental practices through the use of advanced processing capabilities deployed through a differentiated business model. The company serves customers on site directly at their operations and through a network of locations throughout North America. The company's proven processes and excellent record of safety make the company the first-choice provider of sustainability-enhancing services for oil and gas customers.

We seek Safe Harbor.