CALGARY, ALBERTA--(Marketwired - May 5, 2016) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ("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 American-focused, energy services company, today announced its financial results for the three months ended March 31, 2016. All amounts are stated in Canadian dollars unless otherwise noted.

SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:

• First quarter adjusted EBITDA⁽¹⁾ of $0.4 million decreased 94% compared to $7.1 million for the same period in 2015. Adjusted EBITDA excluding restructuring and other non-recurring items⁽²⁾ would otherwise be $1.0 million;
• First quarter (loss) earnings per share was $(0.08) compared to $0.01 for the same period in 2015. First quarter loss per share excluding restructuring and other non-recurring items,⁽²⁾ would otherwise be $(0.07);
• First quarter revenue of $15.3 million decreased 56% compared to $34.4 million for the same period in 2015;
• Reduced total funded debt⁽³⁾ by $4.8 million to $14.8 million since December 31, 2015;
• Total funded debt⁽³⁾ to EBITDA⁽⁴⁾ ratio was 1.1 to 1.0 at the end of the first quarter of 2016; and
• Capital additions totaled $0.4 million during the first quarter of 2016.

Notes:

1. Earnings before interest, taxes, depreciation and amortization and other adjustments ("adjusted EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation".
2. Restructuring and other non-recurring items include severance costs related to staff reductions.
3. Funded debt includes bank indebtedness plus long-term debt plus current and long-term obligations under finance lease less cash.
4. EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus additional one time charges.

"Our first quarter results reflect the challenging market environment facing the industry and the continued decline in activity levels in response to low commodity prices," said Andy Pernal, President and CEO of Strad. "We continue to focus on our strategy of pursuing energy infrastructure opportunities and other non-traditional markets across North America as well as tightly managing our cost structure and balance sheet to enable us to weather low activity levels in 2016 and position our business to take advantage of opportunities as they arise."

"During the first quarter, we continued to manage our cost structure in response to activity declines and made further headcount reductions across our entire business," said Michael Donovan, Chief Financial Officer of Strad. "Our proactive and disciplined approach to managing our cost structure resulted in a further repayment of $4.8 million of debt during the first quarter. We will continue to remain focused on managing costs and repaying debt in order to maintain our strong financial position in 2016."

FIRST QUARTER FINANCIAL HIGHLIGHTS

(in thousands of Canadian Dollars, except per share amounts)	Three months ended March 31,
	2016		2015		% Chg.
Revenue	15,258		34,370		(56	)
Adjusted EBITDA(1)	398		7,057		(94	)
Adjusted EBITDA as a % of revenue	3	%	21	%
Per share ($), basic	0.01		0.19		(95	)
Per share ($), diluted	0.01		0.19		(95	)
Net (loss) income	(2,994	)	204
Per share ($), basic	(0.08	)	0.01
Per share ($), diluted	(0.08	)	0.01
Funds from operations(2)	1,093		7,387		(85	)
Per share ($), basic	0.03		0.20		(85	)
Per share ($), diluted	0.03		0.20		(85	)
Capital expenditures(3)	421		6,959		(94	)
Total assets	154,960		234,522		(34	)
Long-term debt	15,500		31,500		(51	)
Total long-term liabilities	22,111		46,706		(53	)
Common shares - end of period ('000's)	37,280		37,280
Weighted avg common shares ('000's)
Basic	36,944		36,908
Diluted	36,944		37,335

Notes:

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

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

(3) Includes assets acquired under finance lease and purchases of intangible assets.

FINANCIAL POSITION AND RATIOS

	As at March 31,
($000's except ratios)	2016	2015
Working capital(1)	13,571	21,352
Funded debt(2)	14,815	39,371
Total assets	154,960	234,522
Funded debt to EBITDA(3)	1.1 : 1.0	0.7 : 1.0

Notes:

(1) Working capital is calculated as current assets less current liabilities, excluding assets held for sale.

(2) Funded debt includes bank indebtedness plus long-term debt plus current and long-term obligations under finance lease less unrestricted cash.

(3) EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus additional one time charges. See "Non-IFRS Measures Reconciliation".

FIRST QUARTER RESULTS

Strad reported a decrease in revenue of 56% and a decrease in adjusted EBITDA of 94% during the three months ended March 31, 2016, compared to the same period in 2015. Decreased revenue during the first quarter was a result of reduced equipment utilization and pricing in both Canada and the United States ("U.S.") and lower Product Sales due to a significant decline in rig activity levels year-over-year. Adjusted EBITDA margin percentage in the first quarter of 2016 decreased to 3% compared to 21% in the prior year, due to the decrease in overall revenue during the quarter.

Strad's Canadian Operations reported a decrease in revenue of 52% and adjusted EBITDA of 54% during the three months ended March 31, 2016, compared to the same period in 2015. Decreased revenue was a result of lower pricing and utilization of the surface equipment and matting fleets as a result of a 65% decline in the average drilling rig count to 81 rigs during Q1 2016 compared to 232 for the same period in 2015.

Rig counts in Strad's targeted U.S. resource plays were also significantly lower year-over-year during the first quarter of 2016 compared to the same period in 2015. Rig counts in the Bakken, Rockies and Marcellus regions decreased by 66%, 65%, and 58%, respectively, year-over-year. The rig count declines resulted in a 66% decrease in revenue during the first quarter of 2016 compared to 2015. As a result of lower revenue, adjusted EBITDA decreased 111% and adjusted EBITDA as a percentage of revenue decreased to (9)% during the first quarter of 2016 compared to 30% in the first quarter of 2015.

During the first quarter of 2016, capital expenditures were $0.1 million in Canada and $0.3 million in the U.S. Strad's 2016 capital budget of $7.3 million includes $4.5 million of maintenance capital expenditures and will be evaluated during the year based on affordability and activity levels.

RESULTS OF OPERATIONS

Canadian Operations

	Three months ended March 31,
($000's)	2016		2015		% chg.
Revenue	8,575		17,898		(52	)
Operating expenses	5,814		12,150		(52	)
Selling, general and administrative	1,076		2,068		(48	)
Net income	440		811		(46	)
Adjusted EBITDA(1)	1,685		3,680		(54	)
Adjusted EBITDA as a % of revenue	20	%	21	%
Capital expenditures(2)	83		5,252		(98	)
Gross capital assets	114,108		122,449		(7	)
Total assets	74,779		114,220		(35	)

Notes:

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

(2) Includes assets acquired under finance lease and purchases of intangible assets.

Revenue for the three months ended March 31, 2016, of $8.6 million decreased 52% compared to $17.9 million for the same period in 2015. Decreased revenue during the quarter was primarily a result of lower rental revenue from the surface equipment and matting fleets. In addition to price declines, utilization levels for surface equipment declined by 45% during the first quarter of 2016, compared to the same period in 2015, due to a 65% decline in average rig count in the WCSB over the same time period. Low commodity prices continued to cause the decline in rig count during the first quarter of 2016 as Strad's customers reduced capital spending.

During the first quarter, revenue from Strad's matting rental fleet decreased due to lower pricing. Strad's Canadian matting fleet slightly increased to approximately 48,800 pieces as at March 31, 2016, compared to approximately 48,600 pieces as at March 31, 2015. Utilization remained consistent due to increased energy and infrastructure related projects during the first quarter of 2016, compared to the first quarter of 2015, despite the rig count decline in the WCSB and due to the diversification related to the expansion into energy infrastructure.

Adjusted EBITDA for the three months ended March 31, 2016, of $1.7 million, decreased 54% compared to $3.7 million for the same period in 2015. Adjusted EBITDA as a percentage of revenue, for the three months ended March 31, 2016, decreased to 20% compared to 21% for the same period in 2015. The relative consistency in the margin, in the face of significant declines in revenue year-over-year, is due to the active management of costs and restructuring activities undertaken by management in 2015 and 2016.

Operating expenses for the three months ended March 31, 2016, of $5.8 million decreased 52% compared to $12.2 million for the same period in 2015. The decline in operating expenses during the first quarter of 2016 is a result of lower activity levels.

Selling, general and administration costs ("SG&A") for the three months ended March 31, 2016, of $1.1 million decreased 48% compared to $2.1 million for the same period in 2015. SG&A costs decreased due to cost reductions implemented by management including staff reductions, wage roll backs and reductions in discretionary spending.

U.S. Operations

	Three months ended March 31,
($000's)	2016		2015		% chg.
Revenue	4,786		14,087		(66	)
Operating expenses	4,130		8,050		(49	)
Selling, general and administrative	1,092		1,880		(42	)
Net (loss)	(1,910	)	(1,004	)	90
Adjusted EBITDA(1)	(436	)	4,157		(110	)
Adjusted EBITDA as a % of revenue	(9	)%	30	%
Capital expenditures(2)	296		1,629		(82	)
Gross capital assets	142,458		139,829		2
Total assets	82,491		118,565		(30	)

Notes:

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

(2) Includes assets acquired under finance lease and purchases of intangible assets.

Revenue for the three months ended March 31, 2016, decreased 66% to $4.8 million from $14.1 million for the same period in 2015. The decline in revenue is due to a combination of lower rental fleet utilization rates and average pricing, offset with an increase in the size of the rental fleets and a strengthening U.S. dollar. During the first quarter of 2016, utilization rates for Strad's U.S. matting, surface equipment and solids control fleets declined by 55%, 49%, and 61%, respectively, compared to the same period in 2015. Pricing pressure in Q1 2016 contributed further to revenue declines. Both utilization and price declines year-over-year are the result of a decline in rig counts across all Strad's targeted resource plays in the U.S. Average rig counts declined in the Bakken, Rockies and Marcellus regions by 66%, 65%, and 58%, respectively, during the first quarter of 2016 compared to the same quarter in 2015.

A slight increase in the surface equipment and solids control rental fleets year-over-year offset declines in utilization rates and average pricing. The U.S. surface equipment fleet increased by 24 pieces of equipment to 2,016 pieces as at March 31, 2016, compared to 1,992 pieces as at March 31, 2015. Strad's U.S. solids control fleet increased by 3 centrifuges to a total of 55 as at March 31, 2016, compared to 52 centrifuges as at March 31, 2015. The U.S. matting fleet decreased by 256 pieces to 12,554 as at March 31, 2016, compared to 12,810 pieces as at March 31, 2015. Finally, a strengthening U.S. dollar from Q1 2016 to Q1 2015 helped offset a portion of the revenue decline.

Adjusted EBITDA for the three months ended March 31, 2016, decreased 110% to $(0.4) million compared to $4.2 million for the same period in 2015. Adjusted EBITDA as a percentage of revenue, for the three months ended March 31, 2016, was (9)% compared to 30% for the same period in 2015. The decrease in both adjusted EBITDA and adjusted EBITDA as a percentage of revenue is primarily due to the decline in revenue compared to the same period in 2015.

Operating expenses for the three months ended March 31, 2016, of $4.1 million decreased 49% compared to $8.1 million for the same period in 2015. The decline in operating expenses during the first quarter of 2016 is a result of lower activity levels. A portion of the Company's operating expenses are fixed, thus the percentage decline is lower for operating expenses compared to revenue.

SG&A costs for the three months ended March 31, 2016, of $1.1 million decreased 42% compared to $1.9 million for the same period in 2015. SG&A costs decreased due to cost reductions implemented by management including staff reductions, wage roll backs and reductions in discretionary spending.

Product Sales

	Three months ended March 31,
($000's)	2016		2015		% chg.
Revenue	1,897		2,385		(20	)
Operating expenses	1,845		2,504		(26	)
Selling, general and administrative	-		43		(100	)
Net (loss) income	(294	)	34		(965	)
Adjusted EBITDA(1)	51		(162	)	(131	)
Adjusted EBITDA as a % of revenue	3	%	(7	)%
Total assets	67		290		(77	)

Notes:

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

(2) Includes assets acquired under finance lease and purchases of intangible assets.

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.

Revenue for the three months ended March 31, 2016, decreased 20% to $1.9 million from $2.4 million for the same period in 2015, resulting primarily from lower sales of in-house manufactured products sold to external customers and third party equipment sales. During the first quarter, Product Sales consisted of $0.4 million of in-house manufactured products, $0.1 million of third party equipment sales and $1.4 million of rental fleet sales compared to $1.3 million, $0.9 million and $0.2 million, respectively, during the same period in 2015. Sales in the quarter were impacted by a significant decrease in demand, typical in the business when drilling activity levels decline.

Adjusted EBITDA for the three months ended March 31, 2016, increased 131% to $0.1 million compared to $(0.2) million for the same period in 2015. Adjusted EBITDA as a percentage of revenue, for the three months ended March 31, 2016, was 3% compared to (7)% for the same period in 2015. The increase in adjusted EBITDA was due to lower operating expenses during the first quarter of 2016 compared to the same period in the prior year.

Operating expenses for the three months ended March 31, 2016, of $1.8 million decreased 26% compared to $2.5 million for the same period in 2015. Operating expenses were removed from the business as activity levels declined.

OUTLOOK

Commodity prices continue to be well below pricing levels from 2014. WTI crude oil prices continued to decline throughout 2015 and into 2016 but have recovered from lows below US$30/bbl to above US $40/bbl. Pricing at these levels continues to negatively impact activity. Henry Hub natural gas prices have remained below $US 3.00/mcf for most of 2015 and dipped below $US 2.00/mcf in 2016.

Low commodity prices continued to produce a marked decline in industry drilling rig activity across all basins in North America. Year-over-year rig count declines continue to increase each quarter. Declines in activity have extended to all operating regions impacting both oil and natural gas producing regions, which resulted in pricing pressures across all regions in the first quarter of 2016 as producers seek to reduce drilling costs.

In the WCSB, active drilling rigs in the first quarter of 2016 were down approximately 65% over the prior year, averaging 81 compared to 232 for the same period in 2015. In the U.S., drilling rig activity continued to vary by region, with the total active U.S. rig count decreasing by 56% on a year-over-year basis and 25% sequentially. The majority of Strad's U.S. fleet continues to operate in the Bakken and Marcellus resource plays. Both the Bakken and Marcellus regions experienced a decline similar to the WCSB. The active rig count in the Bakken averaged 40 rigs in the first quarter of 2016, down 66% from 117 in the prior year. In the gas-weighted Marcellus and Utica plays, the active rig count averaged 45 during the first quarter of 2016, 58% lower than 108 during the prior year period.

Bakken operations are in close proximity to the Rockies region, consisting of Colorado, Wyoming, and Utah, where an average of 33 rigs were drilling during the first quarter, representing a decline of 65% from rigs in the previous period.

A continued focus, initiated in 2014, has been Management's expansion of the Company's service offerings to the energy infrastructure market, including pipeline construction, power transmission construction and energy facilities construction. This has diversified the business into markets that are expected to be less commodity price sensitive in the near term. Matting demand has been reasonably strong in Canada as several infrastructure related projects continue to progress despite the weak commodity price environment.

Overall, Strad's diversification across geographies in Canada and the U.S., exposure to both crude oil and natural gas activity, product line diversification, blue chip and well capitalized customer base, and exposure to energy infrastructure projects collectively, is expected to serve to insulate the business to some degree from the decline in drilling activity levels.
Management continued to actively manage costs and cash flow during the first quarter in response to lower activity levels. In addition to staff layoffs, reduction of labour hours, company wide wage rollbacks, and reductions in discretionary expenditures discussed previously, further reductions of direct labour and SG&A staff have been completed to align the cost structure to the level of activity present in the business. Since the end of 2014, Strad has reduced its employee headcount by 244 staff or 70%.

Management expects activity levels to remain low until such time that commodity prices stabilize resulting in increased producer capital spending. There continues to be little visibility regarding producer capital spending and as a result, management expects drilling activity to be significantly lower year-over-year through spring breakup and into the summer. Management's strategy continues to reflect a prudent and measured approach with a focus on cash preservation, debt paydown and maintaining flexibility to be able to respond to opportunities that are presented when the market does recover. The maintenance capex requirement in 2016 continues to be modest and is anticipated to be managed at or below $5 million per year in this environment.

The business continued to produce positive cash flow even at significantly reduced revenue and adjusted EBITDA levels this quarter. Outstanding debt was reduced by an additional $4.8 million during the first quarter, bringing total debt reduction to $24.6 million since March 31, 2015. Total funded debt was $14.8 million at March 31, 2016 and the total funded debt to adjusted EBITDA ratio was 1.1 to 1.0.

ANNUAL MEETING OF SHAREHOLDERS

Strad looks forward to meeting with shareholders at its annual meeting to be held on Thursday, June 2, 2016 in Calgary, Alberta (the "Meeting"). A copy of Strad's information circular and proxy statement in respect of matters to be considered at the Meeting has been filed under the Company's profile on SEDAR at www.sedar.com.

Strad is pleased to announce that Mr. Craig F. Hruska has agreed to stand for election at the Meeting to the Company's Board of Directors. Mr. Hruska is a professional engineer whose career spans nearly 30 years in the oil and gas industry. Since 1998, Mr. Hruska has held key leadership roles as President, Chief Executive Officer, as well as director with several exploration and production companies, including Enercapita Energy Ltd, Scollard Energy Inc. and Addison Energy Inc. Prior to his executive leadership roles, Mr. Hruska held positions of increasing responsibility in production, exploitation and reservoir engineering with Gulf Canada Resources Ltd, Archer Resources Ltd. and Stellarton Energy Corp. Mr. Hruska is a graduate of the University of Alberta and a Professional Engineer and member of APEGGA. Mr. Hruska currently serves as a director of several private oil and gas companies.

Strad also announces that Mr. Barry R. Giovanetto and Mr. Henry van der Sloot are retiring from Strad's Board of Directors as of the date of the Meeting. Strad would like to thank both retiring directors for their long standing service to the Company and wish them the best with their future endeavors.

LIQUIDITY AND CAPITAL RESOURCES

($000's)	March 31, 2016	December 31, 2015
Current assets	20,795	25,035
Current liabilities	7,224	12,632
Working capital(1)	13,571	12,403
Banking facilities
Operating facility	0	2,874
Syndicated revolving facility	15,500	15,500
Total facility borrowings	15,500	18,374
Total credit facilities(2)	70,000	70,000
Unused credit capacity	54,500	51,626

Notes:

(1) Working capital is calculated as current assets less current liabilities, excluding assets held for sale.

(2) Facilities are subject to certain limitations on accounts receivable, inventory, and net book value of fixed assets and are secured by a general security agreement over all of the Company's assets. As at March 31, 2016, Strad had access to $70 million of credit facilities.

As at March 31, 2016, working capital was $13.6 million compared to $12.4 million at December 31, 2015. The change in current assets is a result of a 34% decrease in accounts receivable to $11.1 million for the first quarter of 2016 compared to $16.8 million for the fourth quarter of 2015. Accounts receivable decreased due to the 31% decline in revenue during the first quarter of 2016 compared to the fourth quarter of 2015. Additionally, inventory decreased by 7% to $4.8 million for the first quarter of 2016 from $5.2 million for the fourth quarter of 2015, as prepaid expenses remained consistent at $1.4 million. Inventory decreased due to the decline in Product Sales during Q1 2016 compared to Q4 2015.
The change in current liabilities is a result of a 25% decrease in accounts payable and accrued liabilities to $6.6 million for the first quarter of 2016 compared to $8.9 million at year end. Increase in cash of $1.6 million at the end of the first quarter compared to bank indebtedness of $2.9 million for the fourth quarter of 2015. Accounts payable decreased due to a decline in activity and operating expenses during Q1 2016 compared to Q4 2015.

Funds from operations for the three months ended March 31, 2016, decreased to $1.3 million compared to $7.4 million for the three months ended March 31, 2015. Capital expenditures totaled $0.4 million for the three months ended March 31, 2016. Strad's total facility borrowing decreased by $2.9 million for the three months ended March 31, 2016. Management monitors funds from operations and the timing of capital additions to ensure adequate capital resources are available to fund Strad's capital program.

The Company's syndicated banking facility consists of an operating facility with a maximum principal amount of $10.0 million CAD and $7.0 million USD, and an $53.0 million syndicated revolving facility, both of which are subject to certain limitations on accounts receivable, inventory and net book value of fixed assets and are secured by a general security agreement over all of the Company's assets. As at March 31, 2016, the Company has access to the maximum credit facilities. The syndicated banking facility bears interest at bank prime plus a variable rate, which is dependent on the Company's funded debt to EBITDA ratio. The Company's syndicated banking facility matures on September 29, 2018.

Based on the Company's funded debt to EBITDA ratio of 1.1 to 1.0 at the end of the first quarter of 2016, the interest rate on the syndicated banking facility is bank prime plus 1.25% on prime rate advances and at the prevailing rate plus a stamping fee of 2.25% on bankers' acceptances. For the three months ended March 31, 2016, the overall effective rates on the operating facility and revolving facility were 3.71% and 2.97%, respectively. As of March 31, 2016, $nil was drawn on the operating facility and $15.5 million was drawn on the revolving facility. Required payments on the revolving facility are interest only.

As at March 31, 2016, the Company was in compliance with all of the financial covenants under its credit facilities.

The relevant definitions of financial debt covenant ratio terms as set forth in the Company's syndicated banking facility are as follows:

• Funded debt includes bank indebtedness plus long-term debt plus current and long-term obligations under finance lease less cash.
• EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus additional one time charges.
• Interest expense ratio is calculated as the ratio of trailing twelve months adjusted EBITDA plus share based payments to trailing twelve months interest expense on loans and borrowings.

The above noted definitions are not recognized under IFRS and are provided strictly for the purposes of the financial debt calculation.

Financial Debt Covenants	As at March 31, 2016	As at December 31, 2015
Funded debt to EBITDA ratio (not to exceed 3.0:1.0)
Funded debt	14,815	19,592
EBITDA	13,749	20,264
Ratio	1.1	1.0
EBITDA to interest coverage ratio (no less than 3.0:1.0)
EBITDA	13,749	20,264
Interest expense	1,372	1,625
Ratio	10.0	12.5

NON-IFRS MEASURES RECONCILIATION

Certain supplementary measures in this press release do not have any standardized meaning as prescribed under IFRS 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 measure. However, they should not be used as an alternative to IFRS, because they may not be consistent with calculations of other companies. These measures are further explained below.

Earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") is not a recognized measure under IFRS. Management believes that in addition to net income, adjusted 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. Adjusted EBITDA is calculated as net income plus interest, finance fees, taxes, depreciation and amortization, loss on disposal of property, plant and equipment, loss on foreign exchange, less gain on foreign exchange and gain on disposal of property, plant and equipment. Segmented adjusted EBITDA is based upon the same calculation for defined business segments, which are comprised of Canadian Operations, U.S. Operations and Product Sales.

Funds from operations are cash flow from operating activities excluding changes in working capital and share-based payments. 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, cash forecasting and banking facilities are used by Management to ensure funds are available to finance growth opportunities.

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

Reconciliation of EBITDA and Funds from Operations
($000's)

	Three months ended March 31,
	2016			2015
Net (loss) income	$	(2,994	)	$	204
Add:
Depreciation and amortization		5,149			7,045
Gain on disposal of PP&E		(193	)		(45	)
Impairment		0			-
Goodwill impairment		0			-
Share-based payments		41			89
Deferred income tax (recovery) expense		(1,201	)		(449	)
Financing fees		47			47
Interest expense		244			496
Funds from operations		1,093			7,387
Add:
Gain on foreign exchange		(437	)		(135	)
Current income tax (recovery) expense		(217	)		(106	)
Subtotal		439			7,146
Deduct:
Share-based payments		41			89
Adjusted EBITDA		398			7,057

Reconciliation of quarterly non-IFRS measures
($000's)

	Three months ended
	Mar 31, 2016			Dec 31, 2015			Sep 30, 2015			Jun 30, 2015
Net (loss) income	$	(2,994	)	$	(8,316	)	$	(20,362	)	$	(1,887	)
Add:
Depreciation and amortization		5,149			7,126			9,616			7,020
Gain on disposal of PP&E		(193	)		(99	)		(30	)		(80	)
Gain on foreign exchange		(437	)		216			380			(81	)
Current income tax (recovery) expense		(217	)		(677	)		(432	)		(18	)
Deferred income tax (recovery) expense		(1,201	)		(4,033	)		(2,776	)		(1,541	)
Interest expense		244			427			311			391
Impairment loss		-			7,822			17,277			-
Finance fees		47			34			37			50
Adjusted EBITDA		398			2,500			4,021			3,854

	Three months ended
	Mar 31, 2015			Dec 31, 2014			Sep 30, 2014			Jun 30, 2014
Net income	$	204		$	6,125		$	7,968		$	4,763
Add:
Depreciation and amortization		7,045			7,543			5,799			5,739
Loss (gain) on disposal of PP&E		(45	)		(16	)		665			(241	)
Loss on disposal of assets held for sale		-			(11	)		-			161
(Gain) loss on foreign exchange		(135	)		47			(181	)		236
Current income tax expense (recovery)		(106	)		850			967			(81	)
Deferred income tax expense (recovery)		(449	)		2,092			2,042			1,025
Interest expense		496			495			543			599
Impairment loss		-			406			-			-
Finance fees		47			40			32			99
Adjusted EBITDA		7,057			17,571			17,835			12,300

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements and information contained in this press release constitute forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "plan", "continue", "estimate", "anticipate", "potential", "targeting", "intend", "could", "might", "should", "believe", "may", "predict", or "will" and similar expressions are intended to identify forward-looking information or statements. More particularly, this press release contains forward-looking statements concerning future capital expenditures of the Company and funding thereof, anticipated cash flow, debt, demand for the Company's products and services, drilling activity in North America, pricing of the Company's products and services, introduction of new products and services and the potential for growth and expansion of certain components of the Company's business, anticipated benefits from cost reductions and timing thereof, and expected exploration and production industry activity including the effects of industry trends on demand for the Company's products. These statements relate to future events or to the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this press release. The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements. In addition to other material factors, expectations and assumptions which may be identified in this press release and other continuous disclosure documents of the Company referenced herein, assumptions have been made in respect of such forward-looking statements and information regarding, among other things: the Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current industry conditions; anticipated financial performance, business prospects, impact of competition, strategies, the general stability of the economic and political environment in which the Company operates; exchange and interest rates; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services and the adequacy of cash flow; debt and ability to obtain financing on acceptable terms to fund its planned expenditures, which are subject to change based on commodity prices; market conditions and future oil and natural gas prices; and potential timing delays. Although Management considers these material factors, expectations and assumptions to be reasonable based on information currently available to it, no assurance can be given that they will prove to be correct.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with the Canadian Securities Regulatory Authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Company's website. The forward-looking statements and information contained in this press release are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

This press release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this press release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

FIRST QUARTER EARNINGS CONFERENCE CALL

Strad Energy Services Ltd. has scheduled a conference call to begin promptly at 8:00 a.m. MT (10:00 a.m. ET) on Friday, May 6, 2016.

The conference call dial in number is 1-866-225-2055 / 1-416-340-2218

The conference call will also be accessible via webcast at www.stradenergy.com

A replay of the call will be available approximately one hour after the conference call ends until Friday, May 13th, 2016, at 11:59pm ET. To access the replay, call 1-800-408-3053, followed by pass code 2810936

Strad Energy Services Ltd.
Interim Consolidated Statement of Financial Position
(Unaudited)

(in thousands of Canadian dollars)
	As at March 31, 2016		As at December 31, 2015
	$		$
Assets
Current assets
Cash	1,601		-
Trade receivables	11,116		16,754
Inventories	4,808		5,193
Prepaids and deposits	1,448		1,484
Income taxes receivable	1,822		1,604
	20,795		25,035
Non-current assets
Property, plant and equipment	130,172		140,977
Intangible assets	652		800
Long term assets	2,024		2,184
Deferred income tax assets	1,317		210
Total assets	154,960		169,206
Liabilities
Current liabilities
Bank indebtedness	-		2,874
Accounts payable and accrued liabilities	6,638		8,881
Deferred revenue	-		94
Current portion of obligations under finance lease	586		783
Dividend payable	-		-
	7,224		12,632
Non-current liabilities
Long-term debt	15,500		15,500
Obligations under finance lease	143		228
Deferred income tax liabilities	6,468		6,536
Total liabilities	29,335		34,896
Equity
Share capital	118,459		118,401
Contributed surplus	12,053		12,012
Accumulated other comprehensive income	24,363		30,153
Retained earnings (deficit)	(29,250	)	(26,256)
Total equity	125,625		134,310
Total liabilities and equity	154,960		169,206

Strad Energy Services Ltd.
Interim Consolidated Statement of Income and Comprehensive Income
For the three months ended March 31, 2016 and 2015
(Unaudited)

(in thousands of Canadian dollars, except per share amounts)
	Three Months Ended
	March 31,
	2016			2015
	$			$
Revenue		15,258			34,370
Expenses
Operating expenses		11,789			22,705
Depreciation		4,944			6,876
Amortization of intangible assets		181			147
Amortization of long term assets		24			22
Selling, general and administration		3,030			4,519
Share-based payments		41			89
Gain on disposal of property, plant and equipment		(193	)		(45	)
Foreign exchange gain		(437	)		(135	)
Finance fees		47			47
Interest expense		244			496
Loss before income tax		(4,412	)		(351	)
Income tax (recovery) expense		(1,418	)		(555	)
Net (loss) income for the period		(2,994	)		204
Other comprehensive income (loss)
Items that may be reclassified subsequently to net income (loss)
Cumulative translation adjustment		(5,790	)		8,956
Total comprehensive income (loss) for the period		(8,784	)		9,160
Earning (loss) earnings per share:
Basic	$	(0.08	)	$	0.01
Diluted	$	(0.08	)	$	0.01

Strad Energy Services Ltd.
Interim Consolidated Statement of Cash Flow
For the three months ended March 31, 2016 and 2015
(Unaudited)

(in thousands of Canadian dollars)
	2016		2015
Cash flow provided by (used in)	$		$
			0
Operating activities
Net (loss) income for the period	(2,994	)	204
Adjustments for items not affecting cash:
Depreciation and amortization	5,149		7,045
Deferred income tax (recovery) expense	(1,201	)	(449	)
Share-based payments	41		89
Interest expense and finance fees	291		543
Unrealized foreign exchange (gains) losses	(455	)	21
Gain on disposal of property, plant and equipment	(193	)	(45	)
Changes in items of non-cash working capital	3,509		2,775
Net cash generated from operating activities	4,147		10,183
Investing activities
Purchase of property, plant and equipment	(379	)	(6,959	)
Proceeds from sale of property, plant and equipment	1,710		791
Purchase of intangible assets	(42	)	(75	)
Changes in items of non-cash working capital	(3	)	(3,143	)
Net cash used in investing activities	1,286		(9,386	)
Financing activities
Proceeds on issuance of long-term debt	3,000		-
Repayment of long-term debt	(3,000	)	(4,500	)
Repayment of finance lease obligations (net)	(178	)	(334	)
Issuance of shareholder loan (net of repayments)	58		10
Interest expense and finance fees	(291	)	(543	)
Payment of dividends	-		(2,609	)
Changes in items of non-cash working capital	(2	)	(1	)
Net cash used in financing activities	(413	)	(7,977	)
Effect of exchange rate changes on cash and cash equivalents	(545	)	1,778
Increase (decrease) in cash and cash equivalents	4,475		(5,402	)
Cash and cash equivalents (including bank indebtedness) - beginning of year	(2,874	)	(826	)
Cash and cash equivalents (including bank indebtedness) - end of period	1,601		(6,228	)
Cash paid for income tax	-		1,600
Cash paid for interest	262		435

ABOUT STRAD ENERGY SERVICES LTD.

Strad is a North American energy services company that focuses on providing well-site infrastructure solutions to the oil and natural gas industry. Strad focuses on providing complete customer solutions in well-site-related oilfield equipment for producers active in unconventional resource plays.

Strad is headquartered in Calgary, Alberta, Canada. Strad is listed on the Toronto Stock Exchange under the trading symbol "SDY".