Mr. Rene Amirault reports

SECURE ANNOUNCES 2023 SECOND QUARTER RESULTS

Secure Energy Services Inc. has released the corporation's financial and operating results for the three and six months ended June 30, 2023.

"Results in the second quarter reflected the recurring nature of volumes handled across our infrastructure network, demonstrating the resiliency of our operations," said Rene Amirault, chief executive officer of Secure. "We achieved strong adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $119-million, equal to 40 cents per basic share, despite the impact of temporary facility shut-ins and lower customer production due to widespread wildfires across Western Canada. Secure would like to extend our gratitude to emergency responders, staff and industry partners for their hard work in protecting our communities in the midst of the wildfire situation.

"We are also pleased with the significant progress made in delivering on our capital allocation priorities during the quarter. We have returned $175-million in the first half of the year to shareholders through our quarterly 10-cent-per-share dividend and strategic share repurchases. In addition, we invested $67-million in capital expenditures year to date to advance previously announced infrastructure projects that are backed by strong commercial agreements, providing consistent cash flows to the corporation throughout all business cycles. All this was achieved while continuing to maintain a solid total debt to EBITDA covenant ratio of less than two times.

"On June 19, 2023, our appeal of the Competition Tribunal's March 3, 2023, decision ordering the divestiture of certain facilities acquired in connection with the 2021 merger with Tervita Corp. was heard by the Federal Court of Appeal, where we were able to present our arguments of both errors of law and errors of fact in the decision. Our team holds a strong sense of optimism regarding the success of the appeal arguments. We anticipate the issuance of the Federal Court of Appeal decision to be later this year."

Second quarter financial highlights:

• Generated revenue (excluding oil purchase and resale) of $353-million, consistent with the second quarter of 2022.
• Recorded net income of $34-million or 11 cents per basic share, a 35-per-cent decrease from the second quarter of 2022. The decrease was primarily due to an adjustment in the prior-year period resulting in lower than typical quarterly depreciation expense.
• Achieved adjusted EBITDA of $119-million or 40 cents per basic share, down slightly from adjusted EBITDA of 41 cents per basic share in the second quarter of 2022.
• Recorded an adjusted EBITDA margin of 34 per cent, down from 36 per cent in the second quarter of 2022, due to service mix and higher weather-related operating costs, partially offset by the full run rate of realized synergies in the quarter.
• Generated funds flow from operations of $80-million, consistent with the second quarter of 2022.
• Generated $42-million of discretionary free cash flow, a 36-per-cent decrease from the second quarter of 2022 due to higher sustaining capital investments for capacity expansion at Secure's landfills and replacement of key equipment in its metal recycling to achieve efficiency gains.
• Maintained a total debt to EBITDA covenant ratio of 1.9 times.

Second quarter strategic highlights:

• Incurred $31-million of growth capital related primarily to the expansion of water disposal infrastructure in connection with the previously announced Montney water disposal and Clearwater oil pipeline and terminalling infrastructure projects.
• Paid a quarterly dividend of 10 cents per common share, resulting in a dividend payout ratio1 on a trailing 12-month basis of 34 per cent. At Secure's current share price, the annual dividend provides an attractive yield of 6 per cent on its common shares.
• Repurchased and cancelled 7,270,800 common shares at a weighted average price per share of $6.40 for a total of $47-million. In total, the corporation has repurchased 5.5 per cent of outstanding common shares this year.
• Released the company's 2022 sustainability report and inaugural Task Force on Climate-Related Financial Disclosures (TCFD) reports, demonstrating Secure's continuing commitment to transparent reporting.
• Received an upgraded issuer rating from B+ (stable) to BB- (stable) from Fitch Ratings to reflect Secure's better-than-expected financial performance following the July 2, 2021, merger with Tervita driving strong free cash flow and debt reduction capacity.

Outlook

Throughout the remainder of 2023, Secure continues to expect the current macro environment in both the industrial and energy sectors to remain strong. Energy industry activity is robust as producer discipline, balance sheet strength, cost optimization efforts and operational efficiency strategies facilitate continuing development. Secure's infrastructure network continues to have significant capacity to help customers with increased volumes requiring processing, disposal, recycling, recovery and terminalling with minimal incremental fixed costs or additional capital. Over all, Secure has a constructive outlook for volumes, activity levels and demand for Secure's infrastructure for the remainder of 2023.

The rapid growth in the Montney and Clearwater regions has provided opportunities to partner with the company's customers where infrastructure and additional capacity are required to keep up with production growth. The $100-million of growth capital anticipated for 2023 provides Secure with long-term contracted volumes in these areas, and provides its customers with cost-effective, reliable solutions for growth volumes, allowing them to free up resources to focus on other corporate initiatives.

Secure's appeal of the decision of the Competition Tribunal of Canada dated March 3, 2023, was heard by the Federal Court of Appeal on June 19, 2023. While a decision from the Federal Court of Appeal is not anticipated until later in 2023, the partial stay received with respect to the divestiture order allows the corporation to operate status quo, providing strong cash flows during this period of uncertainty.

The corporation remains optimistic that the appeal will be successful. However, if the tribunal's decision stands after all appeals are exhausted and Secure is required to sell the assets it has been ordered to sell by the Tribunal, the company expects these asset sales to yield strong proceeds. The initial priority will be to use the proceeds of disposition to pay down debt, strengthening the corporation's financial position and reducing interest expenses. Subsequently, Secure expects to reinvest the proceeds to grow the business and direct toward additional shareholder returns, creating shareholder value.

2023 expectations:

• Growth capital expenditures of approximately $100-million, primarily related to the Clearwater oil pipeline and terminal and Montney water pipeline and disposal infrastructure. Both projects are on budget and expected to be in service in the fourth quarter of 2023.
• Sustaining capital expenditures of approximately $85-million, inclusive of landfill expansions, to meet current activity levels and in anticipation of increased abandonment spend obligations driven from government regulations.
• Asset retirement obligation expenditures of approximately $20-million.
• Annualized base dividend of 40 cents per share, which equates to a total of approximately $120-million for the year based on current issued and outstanding shares.
• Continued opportunistic share repurchases under the corporation's normal course issuer bid, balanced with other capital allocation opportunities.
• Maintain a total debt to EBITDA covenant ratio of approximately two times.
• Continued strong margins as Secure focuses on optimizing the business, targeting additional operating efficiencies and continually improving operating cash flow. The wildfires did have a temporary impact on the company's margins in May, 2023, due to short-term and intermittent facility closures. Although Secure currently has no facility closures, there continues to be significant fire risk across Western Canada and Secure will continue to work closely with the provincial authorities and support the communities where it operates.

Secure remains committed to operational excellence and positioning itself for growth in the environmental waste management infrastructure and energy infrastructure markets. Secure thanks its customers and its employees for their exceptional effort every day making Canada a global environment, social and governance (ESG) leader.

Financial statements and MD&A

The corporation's consolidated financial statements and notes thereto and management's discussion and analysis for the three and six months ended June 30, 2023, and 2022, are available on Secure's website and on SEDAR.

Second quarter 2023 conference call

Secure will host a conference call Thursday, July 27, 2023, at 9 a.m. MST to discuss the second quarter results. To participate in the conference call, dial 416-764-8650 or toll free 1-888-664-6383. To access the simultaneous webcast, please visit Secure's website. For those unable to listen to the live call, a taped broadcast will be available on Secure's website and, until midnight MST on Thursday, Aug. 3, 2023, by dialling 1-888-390-0541 and using the pass code 249248.

About Secure Energy Services Inc.

Secure is a leading environmental and energy infrastructure business headquartered in Calgary, Alta. The corporation's extensive infrastructure network located throughout Western Canada and North Dakota includes waste processing and transfer facilities, industrial landfills, metal recycling facilities, crude oil and water gathering pipelines, crude oil terminals, and storage facilities. Through this infrastructure network, the corporation carries out its principal business operations, including the processing, recovery, recycling and disposal of waste streams generated by its energy and industrial customers and gathering, optimization, terminalling and storage of crude oil and natural gas liquids. The solutions the corporation provides are designed not only to help reduce costs, but also lower emissions, increase safety, manage water, recycle byproducts and protect the environment.

We seek Safe Harbor.