Market Overview

Strad Energy Services Announces 2011 Year-End Results

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CALGARY, ALBERTA--(Marketwire - March 1, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

The news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.

Strad Energy Services Ltd., ("Strad" or the "Company") (TSX: SDY), a North America-focused, energy services company, today announced its financial results for the three and 12 months ended December 31, 2011. In early 2012, Strad announced the sale of its Production Services business. For 2011, the Company is reporting the results from the Production Services business as discontinued operations. On that basis, comparative results have been restated to reflect the impact of operations that have been classified as discontinued during 2011. Refer to note 18 of the audited consolidated financial statements of Strad for the year ended December 31, 2011. All amounts are stated in Canadian dollars unless otherwise noted.

SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:



-- Fourth quarter and 2011 EBITDA(1)from continuing operations of $17.2
million and $52.3 million, a 142% and 121% increase, respectively,
compared with $7.1 million and $23.7 million for the same periods in
2010;
-- Including discontinued operations, fourth quarter and 2011 revenue of
$78.7 million and $254.2 million, and fourth quarter and 2011
EBITDA(1)of $18.5 million and $56.9 million;
-- Capital expenditures of $21.0 million, net of disposals, in the fourth
quarter. Total capital expenditures of $79.7 million in 2011 for
continuing operations;
-- Continued deployment of assets to high growth resource plays in the
United States (U.S.). United States 2011 revenues of $63.9 million
increased 113% compared with 2010. Total gross capital assets based in
the U.S. now comprise 48% of total Company gross capital assets compared
with 35% at the end of 2010;
-- Ongoing success in the development of new products, including solids
control and waste management, composite matting and satellite
communications equipment with $21.2 million spent on new products in
2011;
-- Total funded debt to trailing EBITDA ratio of 0.7 at the end of 2011;
and
-- Accretive divestiture of Production Services Division in January 2012
for consideration of $17.4 million aimed at streamlining the Company's
focus on core competencies.



Notes:

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous Generally Accepted Accounting Principles in Canada ("GAAP"); see "Non-IFRS Measures Reconciliation" in this press release.

"Strad's 2011 results marked an all time high for the Company thanks to our commitment to growing not only our asset base but also our level of integration with our customers. This facilitated year-end EBITDA that eclipsed 2010 levels by more than 120 percent," said Henry van der Sloot, Chief Executive Officer of Strad. "2011 was an excellent year from a strategic perspective as our focus on operational flexibility yielded positive returns against an altering industry backdrop. With natural gas prices remaining at depressed levels and oil and natural gas liquids pricing remaining more robust, Strad was able to quickly and effectively adjust by re-deploying its assets regionally to higher activity resource plays focused on these commodity types. This operational flexibility is a key differentiator for Strad and one that we continue to emphasize as we move forward."

"Our focus in 2012 will remain on drill-site infrastructure and product innovation," said Andy Pernal, President of Strad. "We were recently able to sharpen our Company's focus with the accretive divestiture of our Production Services division. In late 2011, we officially launched Strad Innovations - an R&D focused group that is charged with enhancing our current suite of products, developing new customer solutions, and responding to broader technological opportunities presented by the industry."

FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2011

Effective January 1, 2011, Strad began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"). Prior year comparative amounts were changed to reflect results as if Strad had always prepared its financial results using IFRS. Please see additional discussion regarding IFRS later in this news release.

With the divestiture of the Production Services business, Strad will be reporting operational and financial results for its core drill-site infrastructure business along geographic lines with a separate segment for product sales. Product Sales are comprised of Strad manufactured products sold to external customers, third party equipment sales to existing customers, and sales of equipment from Strad's existing fleet to customers. Results are segmented between Canadian Operations, U.S. Operations and Product Sales to better distinguish between the Company's core operating business and product sales, which can vary widely on a quarter to quarter basis.

SELECTED FINANCIAL AND OPERATING HIGHLIGHTS

($000's, except per share amounts)



Three months ended December 31, Years ended December 31,
---------------------------------------------------------
2011 2010 2011 2010
---------------------------------------------------------

Revenue from
continuing
operations 62,098 27,462 188,272 89,484
----------------------------------------------------------------------------

EBITDA from
continuing
operations (1) 17,169 7,068 52,309 23,737
Per share ($),
basic 0.47 0.27 1.43 1.11
Per share ($),
diluted 0.47 0.24 1.41 0.98
----------------------------------------------------------------------------
Net income (loss)
from continuing
operations (2) 7,661 1,818 19,827 5,997
Per share ($),
basic 0.21 0.07 0.54 0.28
Per share ($),
diluted 0.21 0.06 0.54 0.26
----------------------------------------------------------------------------
Funds from
operations from
continuing
operations (3) 16,057 7,536 49,943 23,994
Per share ($),
basic 0.44 0.28 1.36 1.12
Per share ($),
diluted 0.43 0.25 1.35 0.99
----------------------------------------------------------------------------
Capital
Expenditures from
continuing
operations (4) 21,039 11,661 79,695 40,345
Total assets 227,111 191,468 227,111 191,468
Long term debt(5) 26,782 5,282 26,782 5,282
Total long term
liabilities 40,448 15,744 40,448 15,744
----------------------------------------------------------------------------
Common Shares - end
of period 37,246,384 37,246,384 37,246,384 37,246,384
Weighted average
Common Shares
basic 36,692,058 26,487,929 36,692,058 21,405,667
diluted 36,919,005 29,980,913 36,997,563 24,252,939



FINANCIAL POSITION AND RATIOS



December 31,
---------------
($000's except ratios) 2011 2010
------- -------

Working Capital (6) 16,629 33,575
Funded Debt (7) 36,734 1,528
Cash - 8,416
Total Assets 227,111 191,468
Funded Debt to EBITDA(7) 0.7 0.1



Notes:

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".

(2) Net income (loss) from continuing operations excludes income attributable to the non-controlling interests.

(3) Funds from operations is cash flow from operating activities before changes in working capital. Funds from operations is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".

(4) Includes assets acquired under finance lease and intangible assets.

(5) Excluding current portion; includes long term portion of finance lease obligations and convertible debentures.

(6) Working capital is calculated as current assets less current liabilities. See "Non-IFRS Measures Reconciliation".

(7) Funded debt includes bank indebtedness plus current and long-term portion of debt plus current and long-term obligations under finance lease plus convertible debentures less cash. EBITDA is based on trailing twelve months. See "Non-IFRS Measures Reconciliation".

SEGMENTED INFORMATION

For the years ended December 31,

($000's, except per share amounts)



Three months ended December 31,
-----------------------------------------
($000's) 2011 2010 % chg.
-----------------------------------------

Canadian Operations
Revenue 19,182 10,995 74.5
EBITDA (1) 6,672 4,393 51.9
EBITDA % 34.8% 40.0%
Capital Expenditures (2) 7,902 5,345
Gross Capital Assets 83,453 54,894
Total Assets 108,818 80,231

U.S. Operations
Revenue 21,883 8,200 166.9
EBITDA (1) 8,851 3,016 193.5
EBITDA % 40.4% 36.8%
Capital Expenditures (2) 12,147 6,183
Gross Capital Assets 77,601 29,363
Total Assets 91,717 39,636

Product Sales
Revenue 21,033 8,268 154.4
EBITDA (1) 2,625 281 834.2
EBITDA % 12.5% 3.4%
Capital Expenditures (2) 703 24

Corporate
EBITDA(1) (979) (622) 57.4
Capital Expenditures (2) 287 109

Total EBITDA from continuing
operations 17,169 7,068 142.9
Total Capital Expenditures (2) 21,039 11,661
Return on Average Total Assets (3) 36.3% 27.5%

Years ended December 31,
-----------------------------------------
($000's) 2011 2010 % chg.
-----------------------------------------

Canadian Operations
Revenue 58,021 37,414 55.1
EBITDA (1) 21,845 14,569 49.9
EBITDA % 37.7% 38.9%
Capital Expenditures (2) 30,895 14,525
Gross Capital Assets 83,453 54,894
Total Assets 108,818 80,231

U.S. Operations
Revenue 63,860 30,002 112.9
EBITDA (1) 24,712 9,449 161.5
EBITDA % 38.7% 31.5%
Capital Expenditures (2) 46,813 25,382
Gross Capital Assets 77,601 29,363
Total Assets 91,717 39,636

Product Sales
Revenue 66,391 22,068 200.8
EBITDA (1) 9,123 2,606 250.1
EBITDA % 13.7% 11.8%
Capital Expenditures (2) 924 130

Corporate
EBITDA(1) (3,371) (2,887) 16.8
Capital Expenditures (2) 1,063 308

Total EBITDA from continuing
operations 52,309 23,737 120.4
Total Capital Expenditures (2) 79,695 40,345
Return on Average Total Assets (3) 33.9% 28.4%



Notes:

(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".

(2) Includes assets acquired under finance lease. Segmented information does not include capital expenditures for the corporate and product sales segments of Strad as they are minimal. Capital expenditures are net of rental asset disposals.

(3) Return on average total assets is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".

RESULTS OF OPERATIONS

The exceptional revenue and EBITDA results from continuing operations for the year ended December 31, 2011, are due to the successful execution of Strad's 2010 and 2011 capital programs. During the year, Strad increased its 2011 capital expenditure program to $86.5 million (from $66.5 million), of which $79.7 million was deployed in continuing operations by December 31, 2011. Fourth quarter and 2011 EBITDA from continuing operations were $17.2 million and $52.3 million, a 142% and 121% increase, respectively, compared with $7.1 million and $23.7 million for the same periods in 2010. Had Production Services not been reclassified as discontinued operations for 2011, fourth quarter and full year EBITDA would have been $18.5 million and $56.9 million, respectively.

With the divestiture of the Production Services business, Strad now reports its results between Canadian Operations, U.S. Operations and Product Sales. As is indicated below, results were favourable in all three areas. The growing trend towards horizontal drilling and multi-stage fracing, in both the U.S. and Canada, has continued to drive demand in all three business segments. Industry's shift toward these more technologically complex initiatives has translated into a growing requirement for turn-key solutions providers that offer integrated, technologically- advanced, and complete solutions. Strad continues to benefit from this by focusing its resources on client integration and product innovation. Strad's capital resources are distributed evenly between its U.S. Operations and Canadian Operations, as the Company views this as an important diversifier of overall risk.

Consolidated revenue generated from continuing operations for the year ended December 31, 2011, increased 110% to $188.3 million compared with $89.5 million for the same period in 2010. Higher equipment and service utilization, additional capital expenditures and increased product sales contributed to the significant increase in revenue compared with 2010. Had Production Services not been reclassified as discontinued operations for 2011, fourth quarter and full year revenue would have been $78.7 million and $254.2 million, respectively.

Canadian Operations

Revenues generated by the Company's Canadian Operations segment for the year ended December 31, 2011, increased 55% to $58.0 million versus $37.4 million for the same period in 2010. The increase is primarily due to capital additions to the surface equipment fleet during 2011 and the second half of 2010. During 2011, the Canadian Operations segment added $30.9 million of capital additions with $7.9 million being added in the fourth quarter.

U.S. Operations

Revenue generated by U.S. Operations for the year ended December 31, 2011, increased 113% to $63.9 million from $30.0 million for the same period in 2010. The increase is due to $46.8 million in capital additions to the surface equipment fleet during 2011. The increase is also due to higher utilization rates during 2011 in the North Dakota Bakken resource play, continued focus on expanding the customer base and market share in the U.S. and increased traction from new product deployment including solids control and waste management, communications and composite mats.

Strad also made further in-roads into the American market this year by opening regional offices in Houston, Texas and Pittsburgh, Pennsylvania. By establishing a presence in these two regions, Strad aims to capture increased market share by locating in key-decision making and operational centres. This remains part of the Company's ongoing efforts to position itself as a North American-focused services provider.

Product Sales

Revenue generated by the Company's Product Sales segment for the year ended December 31, 2011, was $66.4 million compared with $22.1 million in 2010. Product sales are comprised of in-house manufactured products sold to external customers, third party equipment sales to existing customers, and sales of equipment from Strad's existing fleet to customers.

Sale of Production Services

On January 13, 2012, Strad announced the sales of its Production Services Division. The sale was comprised of two separate transactions with the successful purchasers led by employees of the Company. The combined consideration received on the sale of the Division was $17.4 million which was comprised of $13.1 million in cash, $3.0 million in Promissory Notes, and $1.3 million in the assumption of long term debt. In 2011, the Division contributed $4.6 million in EBITDA, excluding any allocation of corporate overhead. The Company recorded a total loss from discontinued operations of $29.9 million for the year ended December 31, 2011, compared with income of $1.3 million for the same period in 2010. Included in the loss in 2011, is an impairment of goodwill and intangible assets of $24.6 million recognized on the announcement of the Company's intent to dispose of the Production Services Division. With the sale, the Company expects a significant improvement in reported margins and an increased focus on its most profitable business segment.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2011, Strad's principal sources of liquidity include working capital of $16.6 million, a decrease of $16.9 million compared with December 31, 2010, a syndicated banking facility of $100.0 million consisting of a $15.0 million operating facility of which $5.6 million was drawn; and a revolving facility of $85.0 million of which $23.5 million was drawn as of December 31, 2011.

OUTLOOK

Industry conditions remained strong in the fourth quarter, despite ongoing concerns regarding the global macro- economic picture and its potential effect on the North American economy. In the WCSB (Western Canadian Sedimentary Basin), drilling utilization of 54.8% for the fourth quarter of 2011 was up from 49% in the fourth quarter of last year; well permits for the fourth quarter of 2011 increased 15% over the fourth quarter of 2010; and average well depth continued to grow with the number reaching 1,862 metres in 2011 versus 1,679 metres in 2010, an increase of nearly 11%. Positive industry-specific indicators were also present in the United States where the annual rig count increased by nearly 18% over year end 2010 levels. U.S. land well permitting levels also increased with the 2011 total rising 5% from 2010. It is estimated that approximately 65% of U.S. land-based drilling is focused on oil and natural gas liquids.

Low dry natural gas pricing continues to shape exploration activity with industry players shifting their budgets towards those plays that offer exposure to oil and natural gas liquids. In keeping with this trend, Strad has deployed the majority of its asset base to these more active market segments. Overall, demand for Strad's services remained robust throughout 2011, which was reflected in a year over year EBITDA increase of 120%, net of the Company's divested Production Services business. Management anticipates drilling activity to remain steady for the foreseeable future and intends to focus the majority of its resources on the more profitable oil and natural gas liquids segment.

The trend towards horizontal drilling and multi-stage fracing continued on both sides of the border where the industry continued to access both unconventional resource plays and mature conventional plays. In 2011, 58% of U.S. rig activity was focused on horizontal drilling techniques, compared with 56% in 2010. In Canada, 56% of total wells drilled in 2011 were horizontal, compared with 41% in 2010. This shifting focus towards horizontal drilling and multi-stage fracing has allowed Strad to leverage the corresponding demand for greater amounts of equipment at individual sites and the expertise that these increasingly complex operations present. This was ultimately reflected in Strad's 2011 revenue per rig results. On a year over year basis, Strad's revenue per rig in Canada increased from $293,000 to $476,000; while the U.S. saw similar gains, rising from $454,000 in 2010 to $691,000 in 2011. In 2011, Strad equipment and services supported 28% of Canadian active rigs, whereas in the U.S. the Company supported 5% of the active rig count. This percentage in Canada was in line with 2010 levels but increased in the U.S. That said, more rigs were active in 2011 highlighting the increasing reliance of exploration companies on Strad's suite of products and services. In 2011, Strad supported 118 rigs in Canada and 92 in the United States versus 95 and 43, respectively, in 2010.

Associated with this increase in horizontal drilling is the greater attention being paid to the environmental and safety issues associated with these operations. Management remains cognizant of the market opportunity this represents for the Company and has acted proactively over the past year to deploy a host of new product offerings including composite matting, communication systems, and solids control and waste management solutions. Due in part to the successful market acceptance of these new products, the Company officially launched Strad Innovations in the fourth quarter. Strad Innovations streamlines the company's current R&D efforts and focuses a dedicated team on new product development, customer solutions, and business development related activities. Strad Innovations is already in the advanced stages of several new product offerings, including those targeted at meeting the growing focus on frac-water storage and usage. Management views this new initiative as an important catalyst for future revenue streams and is anticipating going to market by mid-2012.

Capital expenditures for the year, totalled $30.9 million in Canada and $46.8 million in the U.S., which represented year over year increases of 113% and 84%, respectively. Strad continues to deploy its capital on a roughly equal basis between its U.S. and Canadian Operations with its $72.0 million capital program for 2012. The Company recently unveiled an additional 20,000 square feet of manufacturing and design facilities in Nisku, Alberta, doubling its manufacturing capacity. The Company views its strong manufacturing capabilities as an important differentiator that allows it to mitigate risk by increasing its capability to scale its asset offerings up or down as industry conditions dictate.

From a macro-level perspective, Management remains aware of the continuing market volatility and its potential to undermine North American crude and natural gas liquids pricing. As such, flexibility and the ability to adjust quickly to fluctuating market conditions remains a key focus for the Company. Management believes this need for flexibility is best served by maintaining a strong balance sheet and nimble operations. The Company remains well capitalized through strong cash flows and funds raised during its initial public offering in November, 2010. Management views funded debt to EBITDA as an important tool in the prudent management of its balance sheet and intends to continue carefully allocating capital. At December 31, 2011, the funded debt to EBITDA ratio for continuing operations was 0.7.

NON-IFRS MEASURES RECONCILIATION

Certain supplementary measures in this Press Release do not have any standardized meaning as prescribed under IFRS and previous GAAP and, therefore, are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent IFRS or previous GAAP measure. However, they should not be used as an alternative to IFRS or previous GAAP, because they may not be consistent with calculations of other companies. These measures are further explained below.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS and previous GAAP. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDA is calculated as net income from continuing operations plus interest, taxes, depreciation and amortization, non-controlling interest, loss on disposal of property, plant and equipment, finance costs, loss on foreign exchange, less gain on foreign exchange and gain on disposal of property, plant and equipment. Segmented EBITDA is based upon the same calculation for defined business segments, which are comprised of Canadian Operations, U.S. Operations, Product Sales and Corporate.

Funds from operations are cash flow from operating activities excluding changes in working capital. It is a supplemental measure to gauge performance of the Company before non-cash items. Working capital is calculated as current assets minus current liabilities. Working capital is used by Management to gauge what banking facilities are available for reinvestment in the business.

Return on average total assets for the year ended December 31, 2011, is calculated as year to date EBITDA divided by the average of total assets over 2011, including a three month lag. The three month lag represents the time between the purchase of capital assets and when they are deployed in the field and earning revenue. In 2011, the return on average total assets calculation was adjusted to include total Company assets, where as prior calculations included total drilling services assets only.

Funded debt is calculated as bank indebtedness plus current and long-term portion of debt plus current and long- term portion of finance lease obligations less cash.

Reconciliation of EBITDA and Funds from Operations

Reconciliation of non-IFRS measures

($000's)


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