CWC Energy Services : Announces Second Quarter 2016 Operational and Financial Results and Record Second Quarter Service Rig Operating Hours

For Immediate Release: August 10, 2016

CWC ENERGY SERVICES CORP. ANNOUNCES SECOND QUARTER 2016 OPERATIONAL AND FINANCIAL RESULTS AND RECORD SECOND QUARTER SERVICE RIG OPERATING HOURS‌‌ CALGARY, ALBERTA - (TSXV: CWC) CWC Energy Services Corp. ("CWC" or the "Company") announces the release of its operational and financial results for the three months ended June 30, 2016.

"CWC is very pleased to report that despite the severe industry downturn, CWC had a record second quarter with 21,724 operating hours in our service rig division; the most for a second quarter in our eleven year history," said Duncan Au, President and Chief Executive Officer. "Continued strong operational and financial results in a challenging industry environment, an oversubscribed equity rights offering and the extension and amendment of our credit facilities until July 31, 2018, highlight the tremendous efforts by our Board of Directors, management team and employees during Q2 2016. These Q2 2016 operational and financial results reflect CWC's superior ability to manage through the current industry downturn with positive EBITDAS(1) and places CWC in a stronger position when the industry eventually rebounds."

The interim Financial Statements and Management Discussion and Analysis ("MD&A") for the three months ended June 30, 2016 are filed on SEDAR at www.sedar.com.

Highlights for the Three Months Ended June 30, 2016

• CWC's service rig fleet worked a record 21,724 operating hours in Q2 2016, the highest second quarter in the Company's eleven year history, despite a very challenging industry operating environment. The Company's industry leading service rig utilization of 37% in Q2 2016 (Q2 2015: 23%) was impressive given the seasonal quarterly slowdown in activity known as spring break-up in the Western Canadian Sedimentary Basin ("WCSB"). During Q2 2016, total industry operating hours (as reported by the Canadian Association of Oilwell Drilling Contractors ("CAODC")) declined 33% from Q2 2015. The strong demand for the Company's service rigs can be attributed to its modern fleet, exceptional sales and operational management, and experienced rig crews performing work safely and efficiently. Customer appreciation and acceptance of our outstanding service and safety performance and high quality and well maintained equipment are strong and has been a differentiating factor for CWC.

• CWC's drilling rig utilization of 9% in Q2 2016 (Q1 2015: 12%) exceeded the CAODC industry average of 7%. The lower activity level in Q2 2016 compared to Q2 2015 reflects the persistent pressure on our exploration and production ("E&P") customers from the ongoing commodity price uncertainty. The Q2 2016 average crude price, as measured by WTI, of US$45.46/bbl was 37% higher than Q1 2016.

• Revenue of $13.9 million, a 3% increase of $0.4 million compared to $13.5 million in Q2 2015. The increase from Q2 2015 is predominately due to increased service rig utilization offset by lower year-over-year rates charged to E&P customers resulting from lower commodity prices and continued declines in drilling rig activity.

• EBITDAS(1) of $1.0 million, a 29% increase of $0.2 million compared to $0.8 million in Q2 2015. Increased EBITDAS is a direct result of increased service rig activity and lower variable and fixed costs from the Company's cash saving initiatives offset by lower day and hourly rig rates.

• Net loss of $2.3 million, a 47% decrease of $2.0 million compared to a net loss of $4.3 million in Q2 2015. The year-over- year reduction in net loss is due to higher EBITDAS and a reduction in, deferred income tax, depreciation & amortization expenses and non-cash stock based compensation, offset by an increase in finance costs.

• On April 25, 2016, the Company extended its credit agreement with its banking syndicate to include, among other things, the following terms:

  • the maturity date of the credit facilities were extended to July 31, 2018;

  • the credit facilities were voluntarily reduced from $75.0 million to $65.0 million with the ability to increase the credit facilities by an additional $60.0 million through an accordion feature, subject to approval by the banking syndicate;

  • amendments to the quarterly financial covenants for Consolidated Debt to Consolidated EBITDA ratio; and

  • the inclusion of an equity cure provision which allows the Company to apply the proceeds of equity offerings in the calculation of Consolidated EBITDA towards the Consolidated Debt to Consolidated EBITDA ratio until March 31, 2018, subject to certain conditions as follows:

     an equity cure may be utilized in no more than two quarters during such period;

     an equity cure may not be utilized in consecutive quarters; and

     an equity cure utilized in any quarter is not to exceed the greater of 50% of total Consolidated EBITDA over the prior twelve month period or $15.0 million.

• On June 2, 2016, CWC announced the closing of its equity rights offering and the issuance of an additional 97.5 million common shares. The equity rights offering was oversubscribed and generated $14.6 million in gross proceeds. A portion of the proceeds are in a segregated account, $7.0 million was used to reduce long-term debt in July 2016.

  Highlights for the Six Months Ended June 30, 2016

• CWC's drilling rig utilization of 18% in the first six months of 2016 (2015: 28%) exceeded the CAODC industry average of 14%. The lower activity level in 2016 compared to 2015 persistent pressure on our customers from the ongoing commodity price uncertainty.

• Year-to-date, CWC's service rig utilization was 38% compared to 26% in 2015. The Company's increased market share can be attributed to its modern fleet of 74 service rigs, exceptional sales and operational management, and experienced rig crews performing work safely and efficiently. Customer appreciation and acceptance of our outstanding service and safety performance and high quality and well maintained equipment are strong and has been a differentiating factor for CWC.

• Revenue of $33.6 million, a decrease of $7.7 million (19%) compared to $41.3 million in the first six months of 2015. The decline from the previous year is predominately due to lower year-over-year rates charged to E&P customers resulting from lower commodity prices and a significant decline in drilling rig activity, partially offset by increased service rig utilization.

• EBITDAS(1) of $3.6 million, a decline of $2.5 million (41%) from the first six months of 2015. Lower EBITDAS is a direct result of lower day and hourly rig rates partly offset by increased service rig utilization and lower variable and fixed costs from the Company's cash saving initiatives.

• Net loss of $3.7 million, a 13% decrease of $0.5 million compared to a net loss of $4.3 million in the first six months of 2015.

(1) Please refer to the "Reconciliation of Non-IFRS Measures" section for further information.

Financial and Operational Highlights

Three months ended June 30,				Six months ended June 30,
$ thousands, except shares, per share amounts, margins and ratios	2016	2015	% Change	2016	2015	% Change
FINANCIAL RESULTS
Revenue
Contract drilling	1,414	2,640	(46%)	5,533	13,613	(59%)
Production services	12,470	10,868	15%	28,091	27,725	1%
EBITDAS (1)	13,884	13,508	3%	33,624	41,338	(19%)
	999	777	29%	3,556	6,031	(41%)
EBITDAS margin (%) (1)	7%	6%	11%	15%	(4%)
Funds from operations (1)	999	777	29%	3,556	6,031	(41%)
Net loss and comprehensive loss	(2,279)	(4,294)	(47%)	(3,709)	(4,256)	(13%)
Net loss and comprehensive loss margin (%)	(16%)	(32%)	16%	(11%)	(10%)	(1%)
Dividends declared	-	1,435	n/m(2)	-	2,856	n/m(2)
Per share information
Weighted average number of shares outstanding - basic	324,840,096	283,902,087	308,738,337	280,797,326
Weighted average number of shares outstanding - diluted	324,840,096	283,902,087	308,738,337	280,797,326
EBITDAS (1) per share - basic	$0.00	$0.00	$0.01	$0.02
EBITDAS (1) per share - diluted	$0.00	$0.00	$0.01	$0.02
Net loss per share - basic and diluted	($0.01)	($0.02)	($0.01)	($0.02)
Dividends declared per share	$0.000	$0.005	$0.00	$0.01

$ thousands, except ratios	June 30, 2016	December 31, 2015
FINANCIAL POSITION AND LIQUIDITY
Working capital (excluding debt) (1)	8,029	11,822
Working capital (excluding debt) ratio (1)	2.4:1	3:1
Total assets	212,440	222,428
Total long-term debt (including current portion)	32,235	52,241
Shareholders' equity	158,515	147,462

1. Please refer to the "Reconciliation of Non-IFRS Measures" section for further information.

2. Not meaningful.

Operational Overview Contract Drilling

CWC Ironhand Drilling, the Company's Contract Drilling segment has a fleet of nine telescopic double drilling rigs with depth ratings from 3,200 to 4,500 metres, eight of nine rigs have top drives and the rig fleet has an average age of seven years. In 2015, drilling rig #3 was upgraded to include a Pad Rig Walking System. All of the drilling rigs are well suited for the most active depths for horizontal drilling in the WCSB, including the Montney, Cardium, Duvernay and other deep basin horizons. Given the current downturn in the industry, at the beginning of 2016, CWC chose to park one of its drilling rigs and focus its sales and operational efforts on the remaining eight drilling rigs. CWC has now found a customer for its one inactive drilling rig and as such all nine drilling rigs will become active in Q3 2016.

Three months ended
OPERATING HIGHLIGHTS	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014
Drilling Rigs
Active drilling rigs, end of period	8	8	9	9	9	9	9	9
Inactive drilling rigs, end of period	1	1	-	-	-	-	-	-
Total drilling rigs, end of period	9	9	9	9	9	9	9	9
Revenue per operating day (1)	$21,754	$21,565	$24,996	$24,740	$26,661	$30,553	$29,305	$27,715
Drilling rig operating days	65	191	191	379	99	359	693	551
Drilling rig utilization % (2)	9%	26%	23%	46%	12%	44%	84%	75%
CAODC industry average utilization %	7%	20%	20%	24%	13%	34%	45%	46%

(1) Revenue per operating day is calculated based on operating days (i.e. spud to rig release basis). New or inactive drilling rigs are added based on the first day of field service.

(2) Drilling rig utilization is calculated based on operating days (i.e. spud to rig release basis) in accordance with the methodology prescribed by the CAODC.

Contract Drilling revenue of $1.4 million for Q2 2016 and $5.5 million for the first six months of 2016 was achieved with a utilization rate of 9% and 18% respectively, compared to the CAODC industry average of 7% and 14% for the same respective periods. Overall, revenue for Q2 2016 and the first six months of 2016 in the Contract Drilling segment was 46% and 59% lower respectively when compared to the same periods in the prior year as the impact of low commodity prices continues to reduce industry activity and pricing. Approximately 55% of the year-over-year reduction in revenue resulted from reduced activity (drilling rig operating days), while 45% is due to pricing, as measured by average revenue per day in 2016 of $21,613, which is 27% lower than the 2015 average price of $29,690.

The ongoing commodity price uncertainty continues to be driven by record global production levels, growing storage levels, and persistent demand concerns. This uncertainty has forced E&P companies to conserve cash resources by reducing wells drilled, amongst other measures, until commodity prices improve.

Production Services

CWC is the second largest service rig provider in the WCSB, based on our modern fleet of 74 service rigs as at June 30, 2016 which consists of 41 single, 27 double, and 6 slant rigs. CWC's fleet is amongst the newest in the WCSB and provides services which include completions, maintenance, workovers and abandonments with depth ratings from 1,500 to 5,000 metres. Given the current downturn in the industry, CWC has chosen to park nine of its service rigs and focus its sales and operational efforts on the remaining 65 service rigs.

CWC's Class I, II and III coil tubing units have depth ratings from 1,500 to 4,000 metres. As at June 30, 2016, the Company's fleet of nine coil tubing units consists of five Class I, three Class II and one Class III coil tubing units. In light of competitive challenges for CWC's Class III coil tubing unit, the Company has chosen to focus its sales and operational efforts on its eight Class I and II coil tubing units which are better suited at servicing SAGD wells, which are shallower in depth and more appropriate for these coil tubing operations.

Three months ended
OPERATING HIGHLIGHTS	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014
Service Rigs
Active service rigs, end of period	65	65	64	65	66	66	69	68
Inactive service rigs, end of period	9	9	10	9	8	7	3	3
Total service rigs, end of period	74	74	74	74	74	73	72	71
Operating hours	21,724	23,466	21,008	16,676	14,051	16,580	28,644	26,354
Revenue per hour	$548	$580	$615	$657	$668	$769	$790	$756
Service rig utilization % (1)	37%	40%	36%	27%	23%	29%	45%	42%
Coil Tubing Units
Active coil tubing units, end of period	8	8	8	8	8	8	9	9
Inactive coil tubing units, end of period	1	1	1	1	1	1	0	0
Total coil tubing units, end of period	9	9	9	9	9	9	9	9
Operating hours	1,147	3,034	1,665	1,048	2,111	4,351	2,631	2,056
Revenue per hour	$508	$662	$657	$771	$724	$885	$825	$894
Coil tubing units utilization % (2)	16%	42%	23%	14%	29%	60%	32%	29%