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Increased Demand for Services Contributes to Solid Second Quarter Financial Results for Secure Energy

CALGARY, ALBERTA--(Marketwire - Aug. 13, 2012) - Secure Energy Services Inc. ("Secure" or the "Corporation") (SES.TO) today announced financial and operational results for the three and six months ended June 30, 2012. The following should be read in conjunction with the management's discussion and analysis ("MD&A"), the condensed consolidated interim financial statements and notes of Secure which are available on SEDAR at www.sedar.com.

SECOND QUARTER AND YEAR-TO-DATE 2012 HIGHLIGHTS

Three Months Ended June 30, Six Months Ended June 30,

($000's except

share and per

share data) % %

(unaudited)(1) 2012 2011 Change 2012 2011 Change

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Revenue

(excludes oil

purchase and

resale) 68,906 24,541 181 184,333 44,964 310

Oil purchase and

resale 154,756 69,203 124 317,042 116,778 171

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Total revenue 223,662 93,744 139 501,375 161,742 210

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EBITDA (2) 13,789 5,824 137 46,348 16,560 180

Per share ($),

basic 0.15 0.08 88 0.51 0.25 104

Per share ($),

diluted 0.15 0.08 88 0.49 0.23 113

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Profit for the

period 1,087 10 - 16,064 4,240 279

Per share ($),

basic 0.01 0.00 100 0.18 0.07 157

Per share ($),

diluted 0.01 0.00 100 0.17 0.06 183

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Capital

Expenditures 48,631 84,823 (43) 84,464 101,458 (17)

Total assets 618,736 399,772 55 618,736 399,772 55

Long term

borrowings 135,109 16,539 717 135,109 16,539 717

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Common Shares -

end of period 91,805,351 86,942,806 6 91,805,351 86,942,806 6

Weighted average

common shares

basic 91,527,556 71,207,964 29 91,092,801 67,539,221 35

diluted 94,210,135 75,851,337 24 94,194,889 71,875,475 31


(1) Certain amounts were reclassified to conform with current period presentation

(2) Refer to "Non GAAP measures and operational definitions"

-- Increased earnings before interest, taxes, depreciation and amortization

("EBITDA") per share (diluted) significantly by 88% and 113% for the

three and six months ended June 30, 2012 compared to the same periods of

2011. The Corporation achieved record EBITDA of $13.8 million and $46.3

million for the three and six months ended June 30, 2012 compared to

$5.8 million and $16.6 million for the three and six months ended June

30, 2011. EBITDA increased significantly by 137% and 180% for the three

and six months ended June 30 as a result of the establishment of the

drilling services ("DS") division, increased demand, improved operating

margins, the new facilities, acquisitions and the added expansion

services in the processing, recovery and disposal ("PRD") division added

during the last half of 2011;

-- Increased total profit for the six months ended June 30, 2012

substantially by 279% to $16.1 million compared to the six months ended

June 30, 2011;

-- Reported solid revenue (excluding oil purchase and resale) of $68.9

million and $184.3 million for the three and six months ended June 30,

2012 compared to $24.5 million and $45.0 million in the comparable

periods of 2011. Revenue has increased significantly over the prior

period as a result of increased demand and expansion of the Corporations

offerings. The PRD division second quarter disposal volumes increased by

52% and processing and terminalling volumes increased by 157%,

respectively, as compared to the second quarter of 2011. The PRD

division also continued to benefit from higher throughput and increased

demand from Drayton Valley FST, Silverdale FST and Dawson FST. The Wild

River SWD also commenced operations in May adding to the division's

processing and disposal volumes. The DS division (acquired June 1, 2011)

had a strong second quarter performance with revenue per operating day

of $7,073 compared to $4,919 in the first quarter of 2012. The DS

division also realized a 27% market share in western Canada compared to

28% in the first quarter of 2012;

-- Recorded oil purchase and resale revenue of $154.8 million and $317.0

million for the three and six months ended June 30, 2012 versus $69.2

million and $116.8 million in the comparable periods of 2011. The

substantial increase is a result of Secure becoming a single shipper at

the Drayton Valley FST in January 2012, single shipper at the La Glace

FST in the fourth quarter of 2011, single shipper at the Dawson FST in

June 2012, and due to increased throughput at all pipeline connected

facilities;

-- Invested capital for the three and six months ended June 30, 2012 of

$48.6 million and $84.5 million, respectively. Capital expenditures for

the first six months of 2012 are summarized as follows:

-- Wild River SWD (permanent facility);

-- Phase III (oil treating and terminalling) at Dawson FST;

-- Oil based mud ("OBM") blending plant at the Drayton Valley FST;

-- Judy Creek FST and Rocky Mountain House ("Rocky") FST;

-- Obed and Dawson FST expansions;

-- Saddle Hills and Fox Creek landfills;

-- Rental equipment & long lead equipment (centrifuges, tanks,

treaters);

-- New West Drilling Fluids Inc. ("New West") acquisition;

-- Subsequent to the second quarter:

-- The Corporation entered into a joint venture agreement (the "JV

agreement") with Pembina Midstream Limited Partnership ("Pembina")

for 50% of the treating, terminalling and crude oil marketing

operations of the Judy Creek FST. The Corporation will be the

operator of the facility. In addition, the assets associated with

waste processing at the Judy Creek FST are excluded from the JV

agreement;

-- On July 2, 2012, the Corporation closed an asset purchase agreement

(the "acquisition") with DRD Saltwater Disposal LLC ("DRD") to

acquire the operating assets of DRD for total cash and share

consideration of US$29.9 million. The operating assets acquired

include two recently constructed fully operational SWD facilities

serving the Bakken oil play. The acquisition of DRD allows the

Corporation to expand its geographical presence of its PRD division

into North Dakota, and to continue to expand on the

Corporation's growth strategy in underserviced markets. The

Corporation paid US$20.9 million in cash and issued 1,168,519 common

shares of the Corporation at a closing price per share of $7.90 for

consideration of US$9.0 million. Prior to June 30, 2012, the

Corporation made a deposit of $21.2 million for the acquisition. The

deposit was drawn from the Corporation revolving credit facility;

-- The Corporation increased the 2012 capital budget by $50.0 million

expanding it from approximately $116.0 million to approximately

$166.0 million. The $50.0 million addition to the 2012 capital

budget will be allocated to the PRD Division; $30.0 million will be

used for additional growth capital and $20.0 million for expansion

capital. The growth capital will be used to purchase existing

facilities, long lead items required for facilities to be

constructed in 2013 and the construction of additional SWD

facilities in 2012. The expansion capital relates to Obed and Dawson

FST expansions and for the construction of an additional cell at the

Pembina Area Landfill. The expansion projects at Obed and Dawson FST

commenced prior to June 30, 2012 and are anticipated to be completed

in the third quarter. The expanded capital budget excludes the DRD

acquisition.

-- On July 24, 2012, the Corporation announced a bought deal financing

(the "Offering") issuing 9,554,141 shares at $7.85 for total

proceeds of $75.0 million. In addition, the Corporation will grant

the underwriters an over-allotment option, exercisable for a period

of 30 days following closing of the Offering, to purchase up to

1,433,121 additional common shares at the offering price which if

exercised in full would result in additional gross proceeds of

approximately $11.2 million. The underwriters have given notice that

the over-allotment will be exercised in full after the closing of

the Offering. The proceeds of the Offering will initially be used to

repay the Corporation's revolving credit facility, however it is

management's intention to redraw on the revolving credit facility to

fund a portion of the increased 2012 capital expenditure program,

and for working capital and general corporate purposes;

-- On August 13, 2012, the board of directors approved an asset

purchase agreement to acquire the operating assets of a private

drilling fluids company (the "Company") for US$7.0 million and a

series of earn out payments that, in aggregate, range from US$2.7

million to US$8.0 million for total maximum consideration of US$15.0

million. The Company operates in Greeley, Colorado, and specializes

in drilling fluids in Colorado, predominately in the Niobrara and

Cordell Shale plays.

PRD DIVISION OPERATING HIGHLIGHTS

Three Months Ended Six Months Ended June

June 30, 30,

% %

($000's) (unaudited) (1) 2012 2011 Change 2012 2011 Change

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Revenue

Processing, recovery and

disposal services (a) 25,015 15,035 66 59,082 35,458 67

Oil purchase and resale

service 154,756 69,203 124 317,042 116,778 171

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Total PRD division revenue 179,771 84,238 113 376,124 152,236 147

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Operating Expenses

Processing, recovery and

disposal services (b) 11,268 8,037 40 23,128 15,339 51

Oil purchase and resale

service 154,756 69,203 124 317,042 116,778 171

Depreciation, depletion, and

amortization 6,340 3,826 66 12,891 8,009 61

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Total operating expenses 172,364 81,066 113 353,061 140,126 152

General and administrative 2,776 1,985 40 5,842 4,032 45

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Total PRD division expenses 175,140 83,051 111 358,903 144,158 149

Operating Margin (2) (a-b) 13,747 6,998 96 35,954 20,119 79

Operating Margin (2) as a % of

revenue (a) 55% 47% 17 61% 57% 7

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(1) Certain amounts were reclassified to conform with current period presentation (see note below)

(2) Refer to "Non GAAP measures and operational definitions"

Note: In the prior year, the Corporation completed the acquisition of Marquis Alliance Energy Group Inc. and its wholly owned subsidiaries ("Marquis Alliance") and XL Fluids Systems Inc. ("XL Fluids"), creating the DS division. In 2012, Secure has reclassified certain costs previously included in the PRD division, including segregating out costs associated with Corporate overhead. Accordingly, any reclassifications in 2012 were adjusted in the prior year to conform to current period presentation.

Highlights for the PRD division included:

-- For the three and six months ended June 30, 2012, revenue from

processing, recovery and disposal increased to $25.0 million and $59.1

million from $15.0 million and $35.5 million in the comparable periods

of 2011. Processing volumes increased 157% and 178% for the three and

six months ended June 30, 2012 compared to the same periods of 2011.

Increased demand and the added facilities and expansions completed in

2011 and 2012 are the primary reasons for the revenue growth. Added

facilities and expansions include Drayton Valley FST and Silverdale FST

facilities becoming operational in the fourth quarter of 2011, the

completion of the Obed and South GP waste expansions subsequent to the

first quarter of 2011 and the addition of crude oil treating to the

Dawson FST in June of 2012. Secure's disposal volumes increased by 52%

and 39% for the three and six months ended June 30, 2012 compared to the

same periods of 2011;

-- Operating expenses from processing, recovery and disposal services for

the three and six months ended June 30, 2012 increased to $11.3 million

and $23.1 million from $8.0 million and $15.3 million in the comparative

periods of 2011. Operating expenses have increased as a result of higher

variable costs (trucking, utilities, etc.) associated with higher demand

and the 66% and 67% increase in revenue (excluding oil purchase/resale)

for both three and six months ended June 30 2012, respectively, compared

to the three and six months of June 30, 2011. Operating expenses are

also higher as a result of the added facilities and expansions completed

in 2011 and 2012 as mentioned above; and

-- Operating margin as a percentage of revenue from processing, recovery

and disposal services for the three and six months ended June 30, 2012

was 55% and 61%, respectively, up from 47% and 57% in the same periods

of 2011. Operating margins increased by 8% for the second quarter of

2012. Road maintenance, site, and leachate disposal costs were down $0.6

million and repairs and maintenance costs were down $0.2 million from

last year. In the prior year, extremely heavy rainfall experienced

during the second quarter of 2011 significantly impacted operating costs

and the operating margin. The strong operating margin in the second

quarter of 2012 has also positively impacted the operating margin year

to date. Operating margins are in line with management expectations.

DS DIVISION OPERATING HIGHLIGHTS

Three Months Ended June Six Months Ended June

30, 30,

($000's) (unaudited)

(1) 2012 2011 % Change 2012 2011 % Change

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Revenue

Drilling services (a) 43,891 9,506 362 125,251 9,506 1,218

Operating expenses

Drilling services (b) 34,449 6,593 423 95,113 6,593 1,343

Depreciation and

amortization 2,924 850 244 5,708 850 572

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Total DS division

operating expenses 37,373 7,443 402 100,821 7,443 1,255

General and

administrative 6,110 1,143 435 12,838 1,143 1,023

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Total DS division

expenses 43,483 8,586 406 113,659 8,586 1,224

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Operating Margin (2)

(a-b) 9,442 2,913 224 30,138 2,913 935

Operating Margin % (2) 22% 31% (29) 24% 31% (23)

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(1) Includes DS division from its acquisition on June 1, 2011.

(2) Refer to "Non GAAP measures and operational definitions"

Highlights for the DS division included:

-- Revenue from the DS division for the three and six months ended June 30,

2012 was $43.9 million and $125.3 million compared to $9.5 million in

the comparative periods of 2011. The 2011 results for the three and six

months ended June 30, 2011 are not comparative as the DS division was

acquired on June 1, 2011 and only represents activity for a one month

period. The DS division revenue in the first quarter of 2012 was $81.4

million; therefore the $43.9 million in the second quarter of 2012

represents a 46% decrease. The quarter over quarter decrease is a direct

result of reduced activity across all service lines due to spring

breakup;

-- The drilling fluids service line estimated Canadian market share over

the second quarter of 2012 was 27% compared to 28% in the first quarter

of 2012. The market share percentage was based on the CAODC's average

monthly rig count for Western Canada of 178 rigs for the second quarter

of 2012, compared to 540 rigs through the first quarter (refer to "Non-

GAAP measures and Operational Definitions"). Average monthly rig count

in the second quarter of 2012 decreased by 67% from the first quarter of

2012, driven by the slowdown in industry activity associated with spring

breakup;

-- Second quarter operating days for the Canadian drilling fluids service

line were 4,396 operating days compared to 13,875 operating days in the

first quarter of 2012. The 68% decrease in operating days is a result of

the slowdown in drilling activity associated with spring breakup as road

bans go into effect limiting access to lease sites. The number of

operating days is higher in the first quarter due to additional drilling

rigs operating during the active winter drilling season as certain

drilling activities are dependent on cold weather to freeze access roads

and lease sites. Revenue per operating day for the second quarter of

2012 was $7,073 compared to $4,919 in the first quarter of 2012. The

substantial increase in revenue per operating day to $7,073 was a result

of a small number of wells drilled in the second quarter where lost

circulation occurred, requiring more drilling fluid. Accordingly,

revenue per operating day was higher because of the additional drilling

fluid sold and due to the lower number of rigs operating in the second

quarter; and

-- For the three months ended June 30, 2012 operating margins were $9.4

million or 22% of revenue compared to $20.7 million or 25% of revenue

for the first three months of 2012. The second quarter 2011 operating

margin of 31% is not comparable as it only represents one month of

activity and does not include the impact on the operating margin during

April and May. The decrease in the operating margin percentage of 3%

from the first quarter of 2012 to the second quarter of 2012 relates to

more oil based drilling and a change in the products used that have

lower margins. Oil based stock is an expensive, low margin and high

volume commodity. Therefore, in periods of rising oil based stock prices

or increased activity in oil based drilling fluids, revenue and product

costs will increase accordingly, resulting in decreased margins on a

percentage basis.


OUTLOOK

The seasonality created by spring break up, combined with wet weather in May and June, resulted in lower industry activity levels throughout western Canada. Secure is not immune to the impact of these conditions but due to the base of production related revenue, the Corporation performed well during the second quarter. Continuous rain and cool temperatures combined to suppress the typical rebound in activity levels after spring breakup causing a delay in some drilling programs which will likely be pushed into the third quarter. The Corporation closely monitors changes to capital budgets and cash flows of customers and despite the announcement of some reductions in capital budgets of the Corporation's customers, Secure expects demand to remain relatively strong during the second half of 2012. Driving this demand is an increase in meters drilled as a result of more complex drilling, a move to horizontal wells and greater lengths/depths being pursued by operators. This move to horizontal wells positively impacts drilling and drilling related activities for both of the Corporation's divisions. The level of drilling activity has a greater impact on the DS division than the PRD division, as the operating activities of the PRD division are more heavily weighted to the production cycle, specifically processing, treating, terminalling and marketing of crude oil.

The Corporation is exploring a number of opportunities to expand Secure through additional service lines, organic growth, and/or through strategic acquisitions in key market areas in both Canada and the United States. On July 2, 2012 Secure expanded its PRD business into North Dakota through the acquisition from DRD Saltwater Disposal, LLC of two recently constructed operating SWD facilities serving the Bakken oil play. The acquisition provides the foundation upon which Secure will look to expand its PRD services at the existing locations and potential future locations. Following this acquisition, Secure announced on July 24, 2012 it was expanding its 2012 organic capital expenditures by $50.0 million to approximately $166.0 million. The expanded capital budget allows Secure to take advantage of additional growth opportunities, including opportunities in North Dakota, some of which are already underway.

In the PRD division, construction continued on the new Rocky FST and the Judy Creek FST. Secure expects these new FSTs to commence operations in early 2013. Secure has commenced construction of a landfill in Fox Creek and is expecting construction to start in late third quarter on a landfill in Saddle Hills, AB to service the Montney production area. During the third quarter, the PRD division will commission an OBM blending facility at its existing Drayton Valley FST to reduce costs associated with logistics, to develop recycling opportunities and to support the ongoing activities in the DS division.

The DS division continues to perform well in Western Canada and is now beginning to gain momentum in the U.S., primarily through its field operations in Williston, North Dakota and marketing office in Denver, Colorado. Complementing this organic growth is the proposed asset acquisition of IDF. The acquisition of IDF, located in Greeley, Colorado, represents Marquis Alliance's first exposure to the developing Niobrara oil shale market of Northern Colorado.

The accomplishments in the first six months are a direct result of the hard work and dedication of Secure's employees, consultants and industry partners. The Corporation continues to add employees that have a strong entrepreneurial attitude and the desire to work as a team in assisting the Corporation's customers.

Based on Secure's available debt capacity, the announced equity financing and cash flow from operations, the Corporation is well positioned to execute on its newly expanded 2012 capital program and take advantage of additional future growth opportunities.

INTERIM FINANCIAL STATEMENTS AND MD&A

The condensed consolidated interim financial statements and MD&A of Secure for the three and six months ended June 30, 2012 are available immediately on Secure's website at www.secure-energy.ca. The condensed consolidated interim financial statements and MD&A will be available tomorrow on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute "forward-looking statements" and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as forward-looking statements). When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions, as they relate to Secure, or its management, are intended to identify forward-looking statements. Such statements reflect the current views of Secure with respect to future events and operating performance and speak only as of the date of this document. In particular, this document contains forward- looking statements pertaining to: general market conditions; the oil and natural gas industry; activity levels in the oil and gas sector, including drilling levels; demand for the Corporation's services and the factors contributing thereto; expansion strategy; the expanded 2012 capital budget, the allocation between the PRD and DS divisions and the intended use thereof; debt service; capital expenditures; completion of facilities; future capital needs; access to capital; acquisition strategy; the Corporation's capital spending on the new Rocky Mountain House and Judy Creek, Alberta full service terminals and the timing of completion thereof; oil purchase and resale revenue; the construction of landfills at Saddle Hills and Fox Creek, Alberta and the timing for completion thereof; the timing for completion of expansion at the Obed and Dawson FSTs; the timing for completion of the Drayton Valley blending plant; the timing of closing of the $75 million bought deal offering and the use of proceeds therefrom; the amount of the Corporation's asset retirement obligations and the timing thereof; and the closing of the acquisition of Imperial Drilling Fluids Engineering Inc.

Forward-looking statements concerning expected operating and economic conditions are based upon prior year results as well as the assumption that increases in market activity and growth will be consistent with industry activity in Canada, United States, and internationally and growth levels in similar phases of previous economic cycles. Forward-looking statements concerning the availability of funding for future operations are based upon the assumption that the sources of funding which the Corporation has relied upon in the past will continue to be available to the Corporation on terms favorable to the Corporation and that future economic and operating conditions will not limit the Corporation's access to debt and equity markets. Forward-looking statements concerning the relative future competitive position of the Corporation are based upon the assumption that economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest rates, the regulatory framework regarding oil and natural gas royalties, environmental regulatory matters, the ability of the Corporation and its subsidiary to successfully market their services and drilling and production activity in North America will lead to sufficient demand for the Corporation's services and its subsidiary's services including demand for oilfield services for drilling and completion of oil and natural gas wells, tha t the current business environment will remain substantially unchanged, and that present and anticipated programs and expansion plans of other organizations operating in the energy service industry will result in increased demand for the Corporation's services and its subsidiary's services. Forward-looking statements concerning the nature and timing of growth are based on past factors affecting the growth of the Corporation, past sources of growth and expectations relating to future economic and operating conditions. Forward-looking statements in respect of the costs anticipated to be associated with the acquisition and maintenance of equipment and property are based upon assumptions that future acquisition and maintenance costs will not significantly increase from past acquisition and maintenance costs.

Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to those factors referred to and under the heading "Business Risks" and under the heading "Risk Factors" in the Corporation's annual information form ("AIF") for the year ended December 31, 2011. Although forward-looking statements contained in this document are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this document are expressly qualified by this cautionary statement. Unless otherwise required by law, Secure does not intend, or assume any obligation, to update these forward-looking statements.

Non GAAP Measures and Operational Definitions

(2) The Corporation uses accounting principles that are generally accepted in Canada (the issuer's "GAAP"), which includes, International Financial Reporting Standards ("IFRS"). These financial measures are Non- GAAP financial measures and do not have any standardized meaning prescribed by IFRS. These non-GAAP measures used by the Corporation may not be comparable to a similar measures presented by other reporting issuers. See the management's discussion and analysis available at www.sedar.com for a reconciliation of the Non-GAAP financial measures and operational definitions. These non-GAAP financial measures and operational definitions are included because management uses the information to analyze operating performance, leverage and liquidity. Therefore, these non-GAAP financial measures and operational definitions should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.