CALGARY, ALBERTA–(Marketwired – May 23, 2017) – Ceiba Energy Services Inc. (“Ceiba” or the “Company”) (TSX VENTURE:CEB) is pleased to announce its first quarter financial results. Ceiba has filed its Financial Statements and related Management’s Discussion and Analysis for the period ended March 31, 2017 on the Company’s profile at www.sedar.com.

In Q1 2017, Ceiba recorded revenue of $2.3 million, an increase of 44% compared to Q1 2016 and an increase of 53% from Q4 2016. The increase in revenue is attributed to the increase in activity and pipeline access at the Gordondale and Silver Valley facilities. Adjusted EBITDA for Q1 2017 was $320 thousand, an improvement of $285 thousand from $35 thousand in Q1 2016 and an improvement of $608 thousand from negative $288 thousand in Q4 2016.

At March 31, 2017, the Company had a working capital deficit of $2.7 million compared to a working capital deficit of $6.9 million as at December 31, 2016. The improvement in working capital is due to the reclassification of $4.3 million of bank debt as long term as the result of the Company being compliant with its credit facility financial covenant at March 31, 2017 as compared to being non-compliant at December 31, 2016.

Ceiba has plans to increase disposal injection rates at its Obed facility. Plans to remediate the disposal well at the Kaybob facility are currently on hold. Ceiba expects to achieve overall revenue growth in 2017 from contributions from its newly opened facilities as well as a return to higher utilization levels at existing facilities, particularly Gordondale, Silver Valley and Obed.

All tabular amounts are in CDN$ thousands except for per share amounts and where otherwise noted.

FIRST QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS

Q1 2017 Operating and Financial Highlights

• Revenue for Q1 2017 increased $0.7 million (44%) to $2.3 million as compared to $1.6 million in Q1 2016. Revenue in Q1 2017 also increased $0.9 million (59%) as compared to Q4 2016.
• Revenue for Q1 2017 as compared to Q1 2016 increased as a result of increased activity levels at the Silver Valley, Gordondale and Obed facilities despite a $0.5 million revenue decline at the Chamberlain facility. The Kaybob facility, which opened in Q4 2017 contributed $0.1 million in revenue.
• The increase in revenue from Q4 2016 to Q1 2017 is almost entirely attributable to increased activity and pipeline accessibility at the Gordondale and Silver Valley facilities.
• Gross margin for Q1 2017 increased $297 thousand from $572 thousand to $869 thousand. Silver Valley, Gordondale and Obed increased $670 thousand and Chamberlain decreased $235 thousand. The Kaybob facility which opened in Q4 2016 had a negative margin of $225 thousand.
• Gross margin in Q1 2017 increased $650 thousand as compared to Q4 2016 as a result of increased activity and pipeline accessibility at Silver Valley and Gordondale offset by negative margins at Kaybob and the Central Alberta facilities.
• Adjusted EBITDA for Q1 2017 was $0.3 million, an increase from $35 thousand in Q1 2016 and ($0.3 million) in Q4 2016.
• During the quarter, it was determined that the disposal zone that the Kaybob facility was completed into was unsuitable for sustained water disposal. Operations at the Kaybob facility are temporarily suspended.

Strategic Review

On September 9, 2016 the Company initiated a process to identify, examine and consider a range of strategic alternatives available to the Company with a view to enhance shareholder value.

On May 14, 2017, Ceiba and Secure Energy Services Inc. (“SECURE”) entered into an arrangement agreement (the “Arrangement Agreement”) whereby SECURE will acquire all the shares of Ceiba for $0.205 for each share, to be paid in cash or by the issuance of 0.02115 of a SECURE common share, at Ceiba shareholders’ election, provided that a maximum of approximately 1.3 million SECURE common shares will be issued (representing approximately 50% of the consideration to be paid to Ceiba shareholders) (the “Transaction”). The Transaction will require approval by at least 66 2/3 percent of holders of the Ceiba common shares and Ceiba warrants, voting together as a single class, at a special meeting to be called to consider the Transaction. The Transaction is expected to be completed in the third quarter of 2017 and is subject to TSX, TSX Venture Exchange and Alberta Court of Queen’s Bench approval, regulatory approvals and the satisfaction of other customary closing conditions. The Arrangement Agreement contains customary terms and conditions for a transaction of this nature, including a prohibition upon Ceiba from soliciting or initiating any discussion concerning any other business combination or similar transaction, subject to compliance with fiduciary duties, the right of SECURE to match any unsolicited superior proposal received by Ceiba, and a termination fee of $1.0 million payable to SECURE in certain circumstances.

NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS

Certain supplementary measures in this news release do not have any standardized meaning as prescribed under GAAP and, therefore, are considered non-GAAP measures. These measures are described and presented in order to provide 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 GAAP measure. However, they should not be used as an alternative to GAAP measures because they may not be consistent with calculations of other companies. These non-GAAP measures, and certain operational definitions used by the Company, are further explained below.

Gross Margin and Gross Margin %

Gross margin is calculated as revenue less royalties and operating expenses that include direct product costs for services, but excludes depreciation, depletion and amortization and general and administrative expenses. Management analyzes gross margin as a key indicator of cost control and operating efficiency. Gross margin % is calculated as gross margin as a percentage of revenue.

EBITDA and Adjusted EBITDA

EBITDA refers to net income before finance costs, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before costs associated with non-recurring business acquisition costs and share-based compensation. These measures do not have standardized definition prescribed by GAAP and therefore may not be comparable to similar captioned terms presented by other users.

Management believes that EBITDA and Adjusted EBITDA are key indicators for the results generated by the Company’s core business activities as they eliminate non-recurring items, certain non-cash items and the impact of finance and tax structure variables that exist between entities.

Net Working Capital

Net Working Capital is calculated as total current assets less total current liabilities. Management analyzes net working capital as a measure of its ability to settle short-term liabilities with currently available assets.

Reader Advisory

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.

Forward-looking statements

Certain information regarding Ceiba in this news release, including statements pertaining to strategies for remediation of the Kaybob Waste Fluid Facility, the Company’s 2017 outlook, and the Company’s available liquidity may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with its ability to raise capital, risks associated with obtaining the necessary approvals and rights, risks associated with facility construction and oilfield services operations, risks associated with availability of frac and drilling crews, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward‐looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Ceiba’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward‐looking statements or information contained in this news release are made as of the date hereof and Ceiba does not undertake any obligation to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Ceiba Energy Services Inc.
Peter Cheung
CFO and Corporate Secretary
403-262-2783