Secure Announces 40% Increase in EBITDA for the Third Quarter of 2014 and A 20% Dividend Increase

CALGARY, ALBERTA--(Marketwired - Nov 6, 2014) - Secure Energy Services Inc. ("Secure" or the "Corporation") (SES.TO) today announced financial and operational results for the three and nine months ended September 30, 2014. The following should be read in conjunction with the management's discussion and analysis ("MD&A"), the condensed consolidated financial statements and notes of Secure which are available on SEDAR at www.sedar.com.

FINANCIAL AND OPERATIONAL HIGHLIGHTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2014

Oil and gas activity in Western Canada for the quarter remained robust despite the drop in the price of crude oil in the later part of the third quarter. During the third quarter, horizontal wells drilled increased 8% combined with a 6% increase in meters drilled per well supporting the continued trend for drilling deep, complex and more technically challenging wells. In addition, producer capital spending plans have tracked 13% above levels in the prior year comparative period. Overall, these increases and higher customer demand translated into all three divisions generating a significant increase to revenue (excluding oil purchase and resale) and EBITDA for the quarter of 36% and 40% over the prior year comparative period.

During the quarter, the Corporation completed a strategic acquisition for $104.6 million for three operational rail sites to supplement the Rycroft rail site which provides Secure an immediate rail terminal network to expand and complement its existing pipeline connected facilities. In addition to the strategic acquisition, the Corporation also announced an increase to its capital program by $50.0 million to $275.0 million, for additional PRD facilities. Following these announcements, the Corporation strengthened its financial position by increasing the Corporation's revolving credit facility from $400.0 million to $700.0 million. As a result of the strong performance for the nine months ended September 30, 2014, a strong balance sheet, and stable cashflows, the board of directors have approved an increase to the dividend of $0.04 per share to $0.24 per share on an annualized basis, effective January 1, 2015.

The operating and financial highlights for the three and nine month periods ending September 30, 2014 can be summarized as follows:

REVENUE INCREASES

		Three Months Ended September 30,			Nine Months Ended September 30,
($000's except share and per share data)		2014	2013	% change	2014	2013	% change
Revenue (excludes oil purchase and resale)		208,743	153,868	36	570,065	386,520	47
Oil purchase and resale		390,671	289,892	35	1,123,500	718,071	56
Total revenue		599,414	443,760	35	1,693,565	1,104,591	53
EBITDA (1)		58,229	41,542	40	155,313	95,504	63
	Per share ($), basic	0.49	0.38	29	1.31	0.89	47
	Per share ($), diluted	0.47	0.37	27	1.27	0.87	46
Net earnings		14,756	12,036	23	44,309	27,418	62
	Per share ($), basic	0.12	0.11	9	0.37	0.26	42
	Per share ($), diluted	0.12	0.11	9	0.36	0.25	44
Funds from operations (1)		58,746	33,069	78	156,058	85,672	82
	Per share ($), basic	0.49	0.30	63	1.32	0.80	65
	Per share ($), diluted	0.47	0.30	57	1.28	0.78	64
Cash dividends per common share		0.05	0.04	25	0.14	0.06	133
Capital Expenditures (1)		149,878	75,656	98	298,953	160,601	86
Total assets		1,428,857	962,836	48	1,428,857	962,836	48
Long term borrowings		333,935	210,489	59	333,935	210,489	59
Total long term liabilities		435,402	420,082	4	435,402	420,082	4
Common Shares - end of period		121,199,763	108,909,620	11	121,177,329	108,909,620	11
Weighted average common shares
	basic	120,048,665	108,648,873	10	118,601,288	106,750,533	11
	diluted	123,736,572	111,500,617	11	121,988,685	109,537,459	11
(1)Refer to "Non GAAP measures and operational definitions" and "Additional GAAP measures" for further information

• REVENUE FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 INCREASED 36% AND 47%

  • PRD division revenue (excluding oil purchase/resale) for the three and nine months ended September 30, 2014 increased $22.3 million and $72.1 million respectively, from the 2013 comparative periods. Processing and disposal volumes increased significantly over the prior year comparative periods as higher activity resulted in increased demand for services and the addition of seven new facilities that were completed and commissioned after the third quarter of 2013 that all contributed to the increase. Recovery revenues increased due to a 62% and 50% increase in throughput at the Corporation's facilities, the ability of the Corporation to capitalize on crude oil marketing opportunities both at its pipeline connected FSTs and rail transloading facilities, and as a result of higher recovery of oil through waste processing;
    
    

  • DS division revenue for the three and nine months ended September 30, 2014 increased $15.9 million and $67.9 million respectively, from the 2013 comparative periods. Drilling fluids revenue increased 13% and 23% as a result of achieving a market share of 33% and 32% for the three and nine months ended September 30, 2014 combined with an increase in meters drilled per well by the Corporation's customers. As the meters drilled per well increases, wells become more technically challenging requiring the use of specialty drilling fluids increasing the amount and type of products used, and driving the increased revenue per operating day of 5% and 18% to $7,137 and $7,435 for the three and nine months ended September 30, 2014, from the 2013 comparative periods;
    
    

  • OS division revenue for the three and nine months ended September 30, 2014 increased $16.7 million and $43.6 million from the 2013 comparative periods. The acquisition of a private oilfield service company in the third quarter in the integrated fluids solutions ("IFS") service line provided additional customers and expanded geographic presence in Central Alberta, the acquisition completed in the second quarter to add a new customer base to the projects service line, and the two acquisitions completed in the first quarter of 2014, accounted for the increase in addition to strong industry activity experienced both on a quarter and year to date basis; and
    
    

  • Oil purchase and resale revenue in the PRD division for the three and nine months ended September 30, 2014 increased 35% and 56% respectively, from the 2013 comparative periods. Increased pipeline capacity added at the Judy Creek FST in the third quarter of 2013, increased oil throughput at the Corporation's pipeline connected FSTs, and increasing crude oil volumes shipped via rail all contributed to the increase.
    
    

• EBITDA INCREASES 40% AND 63% FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014

  • For the three and nine months ended September 30, 2014, the increase in EBITDA is attributable to overall strong demand for the Corporation's services and products in all three operating divisions; the addition of new facilities in the PRD division, increased volumes at existing facilities and the ability to capitalize on crude oil marketing opportunities through pipeline and rail infrastructure; the increase in revenue per operating day in the DS division as wells drilled continue to be more technically complex; and continued solid performance of the OS division as favourable weather conditions facilitated the completion of projects in addition to the newly acquired assets from four acquisitions executed for the nine months ended September 30, 2014.
    
    

• FUNDS FROM OPERATIONS INCREASES 78% AND 82% FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014

  • The 78% and 82% increase for the three and nine month periods ended September 30, 2014 is directly attributable to the solid results achieved in all three of the Corporation's divisions driven by increased demand, completion of seven strategic acquisitions and robust industry conditions experienced through the first nine months of 2014.
    
    

• 2014 ORGANIC CAPITAL BUDGET UPDATE

  • In the third quarter of 2014, the Corporation announced the increased 2014 capital expenditure budget of $275.0 million which includes $20.0 million of carry over capital from 2013 projects related to the Kindersley, Edson, and Keene FSTs. Secure has a focused strategy of constructing and expanding facilities in key under-serviced capacity constrained markets and to capitalize on market opportunities. Secure increased the 2014 capital budget to take advantage of the market opportunities that exist today. Total capital expenditures for the nine months ended September 30, 2014 totaled $204.8 million for both growth and expansion capital. Major expenditures for the nine months ended September 30, 2014 included:
    
    

    • 2013 carry over capital of the Kindersley FST that was completed and operational during the first quarter, and the Edson and Keene FSTs that were completed and operational during the second quarter;
      
      

    • Growth capital consisting of three SWD conversions to FSTs and four new PRD facilities with construction commencing or to be completed in 2014:
      
      

      • Three SWD conversions to FSTs: Conversion of the Stanley, Brazeau and 13 Mile SWDs to FSTs. Stanley was completed and commissioned in the third quarter of 2014, Brazeau is anticipated to be commissioned and operational late in the fourth quarter, and 13 Mile in the first quarter of 2015;
        
        

      • Two Full Service Rail ("FSR") facilities: Rycroft and Kindersley FSRs are the Corporation's first organic oil rail facilities. The Rycroft FSR will offer treating, storage, disposal and transloading services. It is expected that Rycroft will be commissioned and operational in the first quarter of 2015 and Kindersley in the second quarter of 2015;
        
        

      • One FST and one Landfill: Tulliby Lake FST and Landfill is the Corporation's first heavy oil and production sand treating, and landfill facility. It is expected the Landfill will be commissioned and operational near the end of the fourth quarter of 2014 and the FST in the first quarter of 2015;
        
        

    • Construction and completion of an oil based mud blending plant in Fox Creek with operations commencing in July 2014; and
      
      

    • Various rental equipment, equipment for onsite projects, and long leads for upcoming 2015 projects.
      
      

  • Expansion capital expenditures included the following:
    
    

    • Landfill cells at South Grande Prairie, Saddle Hills, and 13 Mile. The additional cell capacity will be available for the fourth quarter of 2014;
      
      

    • Waste expansion at the South Grande Prairie FST that was completed in the third quarter;
      
      

    • Additional disposal wells at both the Obed and Drayton Valley FSTs are currently under construction and will be commissioned in the fourth quarter of 2014;
      
      

    • Additional treater is being constructed at the Kindersley FST and will be commissioned in the fourth quarter;
      
      

    • Purchase of an office in Grande Prairie to accommodate growth of the Corporation and consolidate all three divisions into one space; and
      
      

    • Completion of the DS division's new state of the art laboratory facility that opened in July 2014.
      
      

• STRATEGIC ACQUISTIONS

  • On August 15, 2014, Secure closed the acquisition of the assets of Predator Midstream Ltd. ("Predator") for total consideration of $104.6 million comprised of cash and common shares, and the assets of a private oilfield services company. Predator is a private midstream company that owns and operates three rail transloading terminals in Alberta. Predator transloads crude oil from truck to rail, where rail cars are aggregated and subsequently sold to refineries. The acquisition will add three operational rail sites and, combined with Secure's current construction of the Rycroft FSR, will provide an immediate rail terminal network from which to build on. The other acquisition specializes in providing water pumping and frac pond setup services, and provides miscellaneous equipment for rent. The acquisition will expand the service area and assets of the OS division.
    
    

• SOLID BALANCE SHEET

  • During the third quarter, Secure entered into an amended and restated $700.0 million syndicated credit facility (the "Credit Facility") that consists of a $675.0 million extendible revolving term credit facility and a $25.0 million revolving operating facility. The Syndicated Facility can be expanded to $800.0 million through the exercise of an additional $100.0 million accordion feature, available upon request by the Corporation subject to review and approval by the lenders.
    
    

  • Secure's debt to trailing twelve month EBITDA ratio was 1.83 as of September 30, 2014 compared to 1.38 as of December 31, 2013.
    
    

  • As at September 30, 2014, the Corporation had $335.1 million available under its credit facility.
    
    

  • Secure's board of directors approved a 20% dividend increase effective January 1, 2015.
    
    

PRD DIVISION OPERATING HIGHLIGHTS

		Three Months Ended Sept 30,					Nine Months Ended Sept 30,
($000's)		2014		2013		% Change	2014		2013		% Change
Revenue
	Processing, recovery and disposal services (a)	69,713		47,439		47	199,860		127,757		56
	Oil purchase and resale service	390,671		289,892		35	1,123,500		718,071		56
Total PRD division revenue		460,384		337,331		36	1,323,360		845,828		56
Operating Expenses
	Processing, recovery and disposal services (b)	25,968		17,214		51	76,191		47,527		60
	Oil purchase and resale service	390,671		289,892		35	1,123,500		718,071		56
	Depreciation, depletion, and amortization	18,062		12,003		50	47,045		30,858		52
	Total operating expenses	434,701		319,109		36	1,246,736		796,456		57
General and administrative		8,970		6,560		37	23,498		17,265		36
Total PRD division expenses		443,671		325,669		36	1,270,234		813,721		56
Operating Margin (1) (a-b)		43,745		30,225		45	123,669		80,230		54
Operating Margin (1) as a % of revenue (a)		63	%	64	%		62	%	63	%
(1) Refer to "Non GAAP measures and operational definitions" and "Additional GAAP measures" for further information

Highlights for the PRD division included:

• Processing: For the three and nine months ended September 30, 2014, processing volumes increased 35% and 103% respectively, from the comparative periods in 2013. The increase in volumes and revenue is a result of an increase in overall demand for the PRD division's services and the addition of new facilities and expansions at current facilities subsequent to the third quarter of 2013 which include: completion of the Kindersley FST in December 2013, Edson and Keene FSTs in April 2014, and Stanley FST in July 2014.
  
  

• Recovery: Revenue from recovery for the three and nine months ended September 30, 2014 increased by 44% and 53% respectively, from the comparative periods in 2013. The increase in recovery revenue for the three and nine months ended September 30, 2014 is a result of the Corporation's ability to capitalize on crude oil marketing opportunities at its pipeline connected FSTs and rail transloading facilities, and increased throughput at Secure facilities.
  
  

• Disposal: Secure's disposal volumes for the three and nine months ended September 30, 2014 increased by 86% and 100% respectively, from the comparative periods of 2013. The increase in volumes is related to increased demand and the addition of new facilities subsequent to the third quarter of 2013 which include: completion of the 13 Mile Landfill in North Dakota in October 2013; Saddle Hills Landfill in November 2013; and the Keene SWD in North Dakota in November 2013.
  
  

• Oil purchase/resale service: Revenue from oil purchase and resale services for the three and nine months ended September 30, 2014 increased 35% and 56% to $390.7 million and $1,123.5 million from $289.9 million and $718.1 million in the comparative periods of 2013. The increase in the period is due to increased pipeline capacity added at the Judy Creek FST in the third quarter of 2013, increased oil throughput at the Corporation's pipeline connected FSTs, and increased crude oil volumes shipped via rail. The revenue from this service line will fluctuate monthly based on the factors described above.
  
  

• Operating margin as a percentage of revenue for the three and nine months ended September 30, 2014 was 63% and 62% compared to 64% and 63% in the comparative periods of 2013. The 1% decrease for the three months ended September 30, 2014 is a direct result of the increased trucking costs as a result of moving crude oil from FSTs that are not pipeline connected to pipeline connected facilities, move crude oil to rail terminals, higher disposal volumes that result in increased solids transferred from the Corporation's FSTs to Landfills, and a disposal well at one of the Corporation's FSTs was temporarily shut down resulting in trucking costs incurred to move volumes received to a nearby facility. The 1% decrease for the nine months ended is a result of the increased trucking charges and non-recurring maintenance costs for liner repairs at the Corporation's Landfill that began in the fourth quarter of 2013 and were substantially complete in the third quarter.
  
  

• General and administrative ("G&A") expenses for the three and nine months ended increased 37% and 36% to $9.0 million and $23.5 million from $6.6 million and $17.3 million in the comparative periods of 2013. Major drivers for the three and nine months ended September 30, 2014 over the prior year comparative periods are an increase relating to additional employees to support the opening of new facilities and organic growth at existing facilities both in Canada and the US, additional office space, and an increase in costs related to Secure's rebranding initiative in the second quarter.
  
  

DS DIVISION OPERATING HIGHLIGHTS

		Three Months Ended Sept 30,					Nine Months Ended Sept 30,
($000's)		2014		2013		% Change	2014		2013		% Change
Revenue
	Drilling services (a)	103,481		87,622		18	289,737		221,873		31
Operating expenses
	Drilling services (b)	77,465		63,729		22	217,290		167,894		29
	Depreciation and amortization	5,623		5,184		8	16,005		12,658		26
	Total DS division operating expenses	83,088		68,913		21	233,295		180,552		29
General and administrative		9,097		6,609		38	23,923		17,571		36
Total DS division expenses		92,185		75,522		22	257,218		198,123		30
Operating Margin (1) (a-b)		26,016		23,893		9	72,447		53,979		34
Operating Margin % (1)		25	%	27	%		25	%	24	%
(1) Refer to "Non GAAP measures and operational definitions" and "Additional GAAP measures" for further information

Highlights for the DS division included:

• The increase in revenue for the three months ended September 30, 2014 is the result of a shorter than normal spring break-up resulting in higher drilling activity to start the third quarter as customers were able to return earlier than usual with favourable weather and pricing through a significant portion of the third quarter with the average rig count increasing 8% in conjunction with a 6% increase in meters drilled per well from the comparative period. This led to a combined 13% increase in the drilling fluids service line and a 34% increase for the equipment rentals service line from the comparative period in 2013.
  
  

• The increase in revenue for the nine months ended September 30, 2014 is the result of a combined 23% increase in the drilling fluids service line revenue and 78% increase in revenue for the equipment rentals service line from the comparative period in 2013. The shorter than normal spring break-up resulted in higher drilling activity from a prolonged winter drilling season allowing customers to stay in the field longer and return earlier than usual, and an increase in pad drilling which occurs throughout spring break-up which was a key factor influencing the year to date results. The average rig count for the nine months ended September 30, 2014 increased 9% in conjunction with a 7% increase in meters drilled per well.
  
  

• The DS division market share in Canada for the three and nine months ended September 30, 2014 was 33% and 32%, a decrease of 1% for the three and nine month comparative periods. Meters drilled per well by the DS division's customers increased by 2% and 6% respectively, over the comparative periods of 2013. Additionally, the number of wells drilled that used oil based mud increased by 24% and 25% respectively, over comparative periods of 2013 as a result of an increase in horizontal and directional drilling in which these muds are utilized. Oil based muds contribute higher revenue that drives increases in revenue per operating day. Revenue per operating day increased to $7,137 and $7,435 for the three and nine months ended September 30, 2014 from $6,807 and $6,278 in the comparative periods of 2013.
  
  

• Operating margins for the three months ended September 30, 2014 decreased to 25% from 27% in the 2013 comparative period. The decrease in margin is a direct result of a higher proportion of sales volume relating to the purchase and sale of low margin oil based stock used in oil based drilling. In periods of rising oil stock prices or increased activity in oil based drilling fluids, revenue and product costs increase accordingly resulting in decreased margins on a percentage basis. On an absolute basis, operating margins remain in line with management expectations.
  
  

• Operating margins for the nine months ended September 30, 2014 increased to 25% from 24% in the 2013 comparative period. As described above, higher activity levels and increased revenue associated with the prolonged winter drilling season as well as equipment rentals both contributed to higher operating margins on a year to date basis. Equipment rentals make up a significant portion of the growth in revenues from the 2013 comparative period due to organic growth of the rental fleet which has inherently higher margins. This, combined with the increased drilling fluids revenue, has driven the 1% increase in operating margin over the comparative period of 2013.
  
  

• G&A expense for the three and nine months ended September 30, 2014 increased 38% and 36% to $9.1 million and $23.9 million from $6.6 million and $17.6 million in the comparative periods of 2013. Major drivers for the three and nine months ended September 30, 2014 over the prior year comparative periods are an increase in staffing costs to support the two strategic acquisitions executed in Canada since the third quarter of 2013 and to support the organic growth in both drilling fluids and rentals in Canada and US, and increased costs related to Secure's rebranding initiative in the second quarter.
  
  

OS DIVISION OPERATING HIGHLIGHTS

		Three Months Ended Sept 30,					Nine Months Ended Sept 30,
($000's)		2014		2013		% Change	2014		2013		% Change
Revenue
	Onsite services (a)	35,549		18,807		89	80,468		36,890		118
Operating expenses
	Onsite services (b)	24,966		13,739		82	58,534		29,675		97
	Depreciation and amortization	2,896		1,241		133	7,422		2,595		186
	Total OS division operating expenses	27,862		14,980		86	65,956		32,270		104
General and administrative		2,185		1,647		33	5,680		4,300		32
Total OS division expenses		30,047		16,627		81	71,636		36,570		96
Operating Margin (1) (a-b)		10,583		5,068		109	21,934		7,215		204
Operating Margin % (1)		30	%	27	%		27	%	20	%
(1) Refer to "Non GAAP measures and operational definitions" and "Additional GAAP measures" for further information

Highlights for the OS division included:

• Projects revenue for the three and nine months ended September 30, 2014 increased due an increase in remediation and reclamation projects, and demolition projects completed that contributed to increased revenues combined with higher utilization of equipment as a result of favourable weather conditions and robust industry activity from the comparative periods of 2013. Additionally, the acquisition completed in April 2014 added a new geographic area and increased customer base.
  
  

• IFS revenue increased for the three and nine months ended September 30, 2014 as a direct result of high equipment utilization, addition of new customers, and the increased offering of complimentary and in demand services, has positively impacted IFS. As the drilling season was extended due to a late spring break-up, demand for an integrated fluids solutions package was strong for both the second and third quarters. As well, the acquisition completed in the first quarter of 2014 and a complimentary acquisition completed in August 2014 added a new geographic area, and an increased customer base.
  
  

• Environmental services revenue increased for the three and nine months ended September 30, 2014 as the CleanSite waste container services was in the start-up phase in the 2013 comparative periods. The increase in the available fleet and customer demand has driven the growth in this service line.
  
  

• For the three and nine months ended September 30, 2014, operating margins increased to 30% and 27% from 27% and 20% in the 2013 comparative periods. The operating margin for the OS division is expected to fluctuate depending on the volume and type of projects undertaken and the blend of business between remediation and reclamation projects, demolition projects, pipeline integrity projects, site clean-up, and other services in any given period. The increase in margins over the 2013 comparative periods is a result of an increase in remediation and reclamation projects, and demolition projects which contribute higher margins combined with the acquisition of two rentals based business' in the first and third quarters of 2014, which inherently achieve higher margins.
  
  

• G&A expenses for the three and nine months ended September 30, 2014 increased to $2.2 million and $5.7 million from $1.6 million and $4.3 million in the comparative periods of 2013. G&A expenses increased due to the four acquisitions completed since the third quarter of 2013, an overall increase in activity and operations in the division, increased costs related to Secure's rebranding initiative in the second quarter, and costs associated with moving to a new OS division office. G&A is expected to fluctuate based on the growth of the division.
  
  

OUTLOOK

The fourth quarter began with a retreat in commodity prices and narrowing of the heavy oil differentials between world and North American pricing. Given the recent volatility in a very short span, producers have had little time to adjust to the current economic outlook. It is expected producer reactions will be cautious for the remainder of the year, refining 2015 capital budgets which potentially includes adjusting capital moderately for 2015 to allow greater flexibility to manage during a period of lower commodity pricing.

During the fourth quarter, the Corporation expects to open its new Tulliby Lake Landfill. In addition, the Corporation plans on commissioning its new Rycroft FSR facility and Tulliby Lake FST by early 2015. These new facilities are located in key underserviced markets and will be well supported by customer demand in the area. The Corporation has currently spent $204.8 million of its recently increased capital program of $275.0 million. It is expected the majority of the capital will be spent by the end of the year with a portion of the capital program carrying over into 2015 for the Rycroft and Kindersley FSR's, and the Tulliby Lake FST. The current year capital program is funded by Secure's cashflow from operations and the recent increase to the Credit Facility to $700.0 million. Following this increase, the Corporation has adequate sources of capital available to carry out its capital plan, while maintaining operational growth, and payment of dividends so as to sustain future development of the business. Maintaining a strong balance sheet and managing growth in a prudent manner has always been a priority for the Corporation allowing flexibility to execute on its strategy.

Secure's acquisition of Predator in the third quarter provides the Corporation's customers increased market access bypassing pipeline constraints and tapping into the North American rail network. As Secure executes on the Corporation's largest organic capital program in history, including the addition of two FSRs at Rycroft and Kindersley, these facilities will complement the acquisition providing additional access points to the rail network. The introduction of rail as a service offering will allow Secure to optimize crude oil market access between pipelines and rail, and further increase the value chain of services provided to continue to meet and exceed customer expectations.

Secure is dedicated to investing in research and development projects to provide innovative solutions to its customers in order to reduce waste in the drilling and completions process. The water recycling technology piloted at the South Grande Prairie FST is now in the early stages of being able to produce recycled fluids. Development of the solids processing technology for the recovery of hydrocarbons used in the drilling process has continued through the third quarter and results to date have been positive. Secure will continue developing these key innovative technologies through the remainder of the year.

FINANCIAL STATEMENTS AND MD&A

The condensed consolidated financial statements and MD&A of Secure for the three and nine months ended September 30, 2014 are available immediately on Secure's website at www.secure-energy.com. The condensed consolidated 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: corporate strategy; goals; general market conditions; the oil and natural gas industry; activity levels in the oil and gas sector, including market fundamentals, drilling levels, commodity prices for oil, natural gas liquids ("NGLs") and natural gas; industry fundamentals for the second half of 2014; capital forecasts and spending by producers; demand for the Corporation's services; expansion strategy; the amount of the increased 2014 capital budget; the amounts of the PRD, DS and OS divisions' proposed 2014 capital budgets and the intended use thereof; debt service; capital expenditures; completion of facilities; the impact of new facilities on the Corporation's financial and operational performance; future capital needs; access to capital; acquisition strategy; anticipated commissioning of the Rycroft and Kindersley FSRs; anticipated commissioning of the water recycling at South Grande Prairie FST; completion of the Stanley and Brazeau FSTs, and the Tulliby Lake FST and Landfill.

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 and the United States, 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 favourable 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 subsidiaries' 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 subsidiaries' services including demand for oilfield services for drilling and completion of oil and natural gas wells, that 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, 2013. 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

1. 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.

ABOUT SECURE ENERGY SERVICES INC.

SECURE is a TSX publicly traded energy services company that provides safe and environmentally responsible fluids and solids solutions to the oil and gas industry.

The Corporation operates three divisions:

Processing, Recovery and Disposal Division ("PRD"): The PRD division owns and operates midstream infrastructure that provides processing, storing, shipping and marketing of crude oil, oilfield waste disposal and recycling. Specifically these services are clean oil terminalling and rail transloading, custom treating of crude oil, crude oil marketing, produced and waste water disposal, oilfield waste processing, landfill disposal, and oil purchase/resale service. Secure currently operates a network of facilities throughout western Canada and in North Dakota, providing these services at its full service terminals, landfills, stand-alone water disposal facilities, and rail transloading facilities.

Drilling Services Division ("DS"): The DS division provides equipment and chemicals for building, maintaining, processing and recycling of drilling and completion fluids. The drilling fluids service line comprises the majority of the revenue for the division which includes the design and implementation of drilling fluid systems for producers drilling for oil, bitumen and natural gas. The DS division focuses on providing products and systems that are designed for more complex wells, such as medium to deep wells, horizontal wells and horizontal wells drilled into the oil sands.

On Site Division ("OS"): The operations of the OS division include environmental services which provide pre-drilling assessment planning, drilling waste management, remediation and reclamation assessment services, laboratory services, and "CleanSite" waste container services; integrated fluid solutions which include water management, recycling, pumping and storage solutions; and projects which include pipeline integrity (inspection, excavation, repair, replacement and rehabilitation); demolition and decommissioning and reclamation and remediation of former wellsites, facilities, commercial and industrial properties.