Mr. Nikolaus Kiefer reports

PETROWEST CORPORATION ANNOUNCES REFINANCING UPDATE; CORPORATE REVIEW UPDATE; AND 2016 ANNUAL AND FOURTH QUARTER FINANCIAL RESULTS

Petrowest Corp. has provided an update on its refinancing initiatives and its corporate review process, and has released its consolidated financial results for the quarter and year ended Dec. 31, 2016.

Refinancing update

Petrowest continues to work toward a refinancing of its existing bank loans and has received proposals from numerous financial sources. The company is currently in negotiations with two lenders, one of which is a Canadian chartered bank, for separate facilities that combined would provide sufficient financing to retire the existing bank loans and provide additional working capital. The existing bank syndicate has agreed in principal to extend the waiver period past March 31, 2017, subject to formal approvals and documentation. Subject to credit committee approvals and final documentation, Petrowest anticipates closing the refinancing in April, 2017.

Corporate review update

In response to financial results in 2016 that were unacceptable, the board has approved a strategic plan developed by management under the guidance of a new president and a new chief financial officer.

The strategic planning process was initiated with an assessment of current and expected conditions in the two heavy construction markets the company serves -- namely oil and gas and infrastructure. In the oil and gas sector, it appears the dramatic downturn witnessed in 2015 and 2016 is giving way to a recovery driven by improving commodity prices. In the infrastructure market, based in part on announced plans by all levels of government, it is expected that spending will be robust over the coming years.

Within the context of this broader market outlook, Petrowest has assessed its core competencies and competitive position, which include: (1) a large fleet of well-maintained heavy earthmoving equipment with an appraised value of over $100-million, (2) excellent customer relationships built over many years of providing quality service, and (3) a favourable market position in the Edmonton, Alta., to Fort St. John, B.C., corridor, where a significant portion of Canada's oil and gas activity and spending are focused.

Sami Saad, president and chief operating officer, stated: "Our analysis has concluded Petrowest is well positioned competitively in its markets. However, the company needs to improve its profitability through a three-pronged approach, including: (1) optimizing equipment utilization, (2) reducing costs and (3) expanding its service offerings aligned with our corporate strategy."

Fundamental to the long-term profitability of a heavy construction company is the efficient utilization of its equipment. Petrowest has identified opportunities to improve upon the measurement and analysis of actual revenue hours generated by each major piece of equipment. This will allow for better information, such as the existence and extent of surplus equipment, and ensure that the fleet, once rightsized, will generate acceptable returns above the cost of capital.

On the cost reduction front, Petrowest has reduced general and administrative costs, where possible, and has negotiated facility rent reductions. In addition, a full review of the company's buildings, workshops and yards has been completed, and consolidation opportunities identified, some of which can be implemented in 2017 and others when leases expire.

A key element of the corporate review process was a thorough analysis of Petrowest's divisional operations to assess the contribution of each to the consolidated financial performance. In addition to profitability measures based on adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) levels and gross margins, the analysis was extended to include free cash flow generation (adjusted EBITDA (1) less maintenance capital spending), as well as working capital requirements. Each division was also assessed in terms of cross-divisional synergies and how it complemented the longer-term strategic plan.

On considering the results of the divisional analysis, the go-forward business plan and the company's current financial position, the company has determined to monetize a number of non-core assets and to sell the R Bee Crushing division (RB). RB operates Western Canada's largest fleet of rock-crushing equipment that provides a custom-sized aggregate for use primarily in road construction and the production of concrete and asphalt.

Mr. Saad summarized by stating: "While RB is a market leader and operates a very strong business, it is also a capital intensive business, which is a challenge for the company, given our current debt levels. While both a difficult and transformative decision, Petrowest believes the sale of RB will accomplish the goal of reducing debt to a manageable and sustainable level. Thereafter, the company can focus exclusively on improving operational efficiencies, increasing profitability and undertaking accretive growth initiatives."

Ernst & Young Orenda has been retained to solicit offers for both RB and the non-core assets, and the process is under way.

2016 financial results

In the three months ended Dec. 31, 2016, compared with the same quarter in 2015, the company:

• Reported revenue of $34.0-million, a decrease of $6.3-million compared with the same quarter in 2015;
• Reported adjusted EBITDA (1) loss of $2.4-million compared with adjusted EBITDA of $100,000 for the same quarter in 2015;
• Reported adjusted EBITDA loss margin percentage (1) of 7.0 per cent compared with a gain of 0.3 per cent for the same quarter in 2015;
• Realized $5.7-million in EBITDA from the 25-per-cent ownership interest in Peace River Hydro Partners for the year ended Dec. 31, 2016 ($10.0-million total adjusted EBITDA (1) for the year ended Dec. 31, 2016).

(1) See non-international financial reporting standard measures and additional information in Petrowest's management's discussion and analysis for the year ended Dec. 31, 2016, available under Petrowest's profile on the SEDAR website.

                                             FINANCIAL HIGHLIGHTS
                                                     ($000s) 

                                                          Three months ended Dec. 31,               Year ended Dec. 31,
                                                               2016             2015             2016             2015

Revenue                                                     $34,001          $40,339         $148,881         $186,351
Operating expense                                            34,568           40,012          139,902          170,697
                                                          ---------        ---------        ---------        ---------
Gross margin (1)                                              (567)              327            8,979           15,654
General and administrative                                    1,814              191            4,641            4,901
                                                          ---------        ---------        ---------        ---------
Adjusted EBITDA (1)                                          (2,381)             136            4,338           10,753
Amortization of property and equipment                        5,070            7,717           23,437           30,835
Amortization of intangible assets                                60              172              430              606
Impairment                                                    7,800                -            7,800                -
Share-based compensation                                         59              648              856            2,043
(Gain) loss on disposal of property and equipment               608             (432)          (1,548)            (781)
Foreign exchange (gain) loss                                      1               (1)              17              (81)
                                                          ---------        ---------        ---------        ---------
Operating (loss)                                            (15,979)          (7,968)         (26,654)         (21,869)
Gain on equity investment in PRHP                            (1,031)               -           (1,598)               -
Net finance expense                                           2,545            2,170            7,460            5,778
                                                          ---------        ---------        ---------        ---------
Net (loss) and comprehensive (loss)
before income tax                                           (17,493)         (10,138)         (32,516)         (27,647)
Current income tax (recovery) expense                             -              (58)              22              259
Deferred income tax (recovery) expense                        9,316           (2,700)           6,215           (7,238)
                                                          ---------        ---------        ---------        ---------
Net and comprehensive (loss)                                (26,809)          (7,380)         (38,753)         (20,668)
                                                          ---------        ---------        ---------        ---------

(1) See non-IFRS measures and additional information in Petrowest's management's discussion
and analysis for the year ended Dec. 31, 2016, available under Petrowest's profile on the
SEDAR website.

Industry overview and outlook

Two thousand sixteen provided significant weather challenges in Western Canada, including early spring forest fires and heavy summer and fall rains, the latter resulting in unprecedented fall road bans. In aggregate, Petrowest lost approximately 500 operating days in 2016. Nevertheless, the ramp-up of major projects in 2016 and the recent stability in commodity prices have strongly positioned Petrowest entering 2017.

Activity levels in the energy sector across Western Canada remained significantly impacted by the slowdown in drilling activity by the oil and natural gas industry due to the low commodity prices in 2016. Entering 2017, industry activity levels have seen a significant increase year over year with the stability of commodity prices. As of March 1, 2017, the active rig count in Western Canada has increased to about 55 per cent, which compares with about 20 per cent at the same time last year. In addition to rising capital programs in the exploration and production sector to date in 2017, significant pipeline expansions and mid-stream work have been publicly announced. Petrowest has maintained key relationships in the energy sector throughout the downturn and remains strategically positioned to benefit from increased drilling activity.

The Alberta government progressed with the development of additional infrastructure projects in 2016, reaffirming that 2016 marked the commencement of a multiyear infrastructure development buildout in Western Canada. The rollout of additional infrastructure projects was slower than industry expected in 2016; however, the Alberta budget was reconfirmed on March 16, 2017, including $3.0-billion for roads and bridges from 2017 to 2022, of which $900-million is expected in 2017.

Peace River Hydro Partners

BC Hydro provides construction bulletin updates biweekly on-line. In addition, BC Hydro provides quarterly updates on the project. As of March 17, 2016, BC Hydro disclosed that the main civil works are well under way on both the north and south banks, including the south bank drainage tunnel, cofferdam and approach channel. Petrowest has been a key contributor to the Peace River Hydro Partners to accelerate production in the second half of 2016 and into 2017. Petrowest currently has approximately 60 pieces of equipment rented to the Peace River Hydro Partners.

Selected financial information and non-international financial reporting standard measures

Selected financial information for the year ended Dec. 31, 2016, and 2015, is set out herein and includes the following non-IFRS financial measures: gross margin, gross margin percentage, adjusted EBITDA, adjusted EBITDA margin percentage, total adjusted EBITDA, funds from (used in) operations. These terms do not have standardized meanings as prescribed by IFRS, and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. This information should be read in conjunction with the consolidated financial statements for the year ended Dec. 31, 2016, and the company's management's discussion and analysis, available under the company's profile on the SEDAR website. Further information respecting the non-IFRS financial measures is contained in the company's MD&A.

About Petrowest Corp.

Petrowest is a diversified infrastructure company with primary operations based in northeastern British Columbia and Alberta. Petrowest's operations are focused on industrial and civil infrastructure projects, gravel crushing and hauling activities, as well as predrilling and postcompletion energy services.

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