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Calgary, Alberta – May 8, 2018 – STEP Energy Services Ltd. (the "Company" or "STEP") is pleased to announce its financial and operating results for the three months ended March 31, 2018. This news release should be read in conjunction with Management's Discussion and Analysis ("MD&A"), condensed unaudited consolidated interim financial statements and notes thereto as at and for the three months ended March 31, 2018 and the MD&A, Annual Information Form and audited consolidated financial statements as at and for the year ended December 31, 2017. The above documents are available on STEP's website at t www.stepenergyservices.com or on SEDAR at www.sedar.com.

Q1 2018 FINANCIAL AND OPERATING HIGHLIGHTS

A hallmark of the first three months of 2018 was STEP's announcement of the U.S.$275 million strategic acquisition of Tucker Energy Services Holdings, Inc. ("Tucker"). The transaction provides an efficient entry into the U.S. fracturing market, reduces commodity concentration risk and increases capital allocation flexibility. In addition to the acquisition, the Company continued to post strong performance, including increased operating days across all business segments, as well as record first quarter revenue.

  • Generated consolidated revenue of $187.6 million compared to $118.0 million during the same period of 2017. The increase is primarily attributable to the growth in deployed equipment, as well as improved utilization and pricing.
  • Revenue per operating day for fracturing services of $247,779 increased by 13% relative to the same period in 2017, while coiled tubing revenue per operating day increased 6% to $45,102.
  • Operating days increased 43% for fracturing and 47% for coiled tubing over the first quarter of 2017, largely due to additional deployed equipment combined with strong demand for STEP's services.
  • Adjusted EBITDA1 increased 98% over the same period in 2017 to $41.8 million (or 22%), primarily attributable to strong utilization of an expanded fleet, cost control and operating efficiencies.
  • Generated net income of $18.4 million, a 105% increase over $9.0 million for the same period in 2017.
  • Exited the quarter with working capital of $128.1 million (including cash and cash equivalents of $40.3 million) and an undrawn $100.0 million credit facility.

HIGHLIGHTS SUBSEQUENT TO QUARTER END

  • On April 2, 2018 STEP closed the Tucker acquisition, increasing our geographic diversification with an efficient and strategic entry into the U.S. fracturing market in key high-growth basins, including access to existing long-tenured clients holding large acreage positions and multi-year drilling inventories. The acquisition was funded with a combination of cash on hand and net proceeds from a previously announced equity financing, with the balance funded from borrowings under the new credit facilities.
  • Commensurate with the closing of the Tucker transaction, STEP secured a new $330 million revolving syndicated credit facility, a $10 million operating facility and a U.S.$7.5 million operating facility. The new credit facilities mature April 2, 2021 and may be extended for a period of up to 3 years with syndicate approval.

(1) See Non-IFRS Measures. "Adjusted EBITDA" is a financial measure not presented in accordance with IFRS and is equal to net income before finance costs, depreciation and amortization, loss (gain) on disposal of property and equipment, impairment, current and deferred income tax, share-based compensation, transaction costs, unrealized foreign exchange forward contracts (gain) loss and foreign exchange (gain) loss.

CONSOLIDATED HIGHLIGHTS

The Company's consolidated first quarter financial and operating highlights are presented below.

Q1 2018_Financial Highlights

OPERATIONS REVIEW

STEP's first quarter results reflect continued robust operational performance and expanded capacity with the deployment of an additional fracturing spread in Canada and two coiled tubing spreads in the U.S. Extreme weather conditions and third party sand delivery interruptions impacted some operations during the quarter, yet demand for STEP's services drove higher equipment utilization relative to the same period in 2017. This stronger demand contributed to a 46% increase in total combined operating days relative to Q1 of 2017 and supported stronger pricing outcomes. Cost and operating efficiency improvements across the organization supported STEP generating record first quarter Adjusted EBITDA1.

Canadian Segment

STEP took delivery of its eighth fracturing spread during the first quarter of 2018. At quarter-end, the Company's Canadian operations were comprised of 297,500 fracturing HP, of which eight fracturing spreads representing 225,000 HP and 13 purpose-built coiled tubing spreads were all staffed for 24-hour operations. Since the end of Q1 2017 STEP has activated 80,000 HP along with three deep capacity coiled tubing spreads.

The combined impact of additional capacity, improved utilization and higher pricing resulted in revenue increasing 50% during the first quarter of 2018 over the comparable period in 2017. Jobs that combined STEP's coiled tubing and fracturing services represented approximately 32% of revenue for the three months ended March 31, 2018, higher than the 27% represented in Q4 2017, a reflection of the increased value realized by clients leveraging our integrated services.

The Canadian segment generated first quarter Adjusted EBITDA1 of $34.2 million (or 21%) versus $20.4 million (or 19%) in the comparable period the prior year, despite being impacted by extreme weather and issues with sand delivery. The improvements are primarily attributable to improved pricing and utilization over an expanded fleet of deployed equipment, supported by cost containment measures and operating efficiencies.

U.S. Segment

As at March 31, 2018, STEP had eight active coiled tubing spreads in the U.S. servicing an expanding client list in the Permian and Eagle Ford basins in Texas and the Haynesville shale in Louisiana. STEP plans to take delivery of our ninth U.S. coiled tubing spread late in the second quarter, and two additional coiled tubing spreads during the second half of the year.

Continuing demand in completions activity in the U.S. since Q1 2017 has allowed STEP to deploy four deep-capacity coiled tubing spreads, including two in Q1 2018. Compared to the same period in 2017, revenue increased 174% in Q1 2018 supported by our growing client base and strong demand for units across all operating districts. This was complemented by a strengthening U.S. dollar which amplified realized corporate revenue per day by approximately 3%.

The U.S. segment generated Adjusted EBITDA1 of $7.6 million (or 34%) compared to $0.7 million (or 8%) in Q1 2017. The increase is attributable to strong utilization over a larger fleet of deployed equipment, improved pricing fundamentals and operating efficiencies.

1 See Non-IFRS Measures. "Adjusted EBITDA" is a financial measure not presented in accordance with IFRS and is equal to net income before finance costs, depreciation and amortization, loss (gain) on disposal of property and equipment, impairment, current and deferred income tax, share-based compensation, transaction costs, unrealized foreign exchange forward contracts (gain) loss and foreign exchange (gain) loss.

OUTLOOK

STEP's completions commitments remain strong through Q2 2018, although management is anticipating that work deferrals may occur stemming from extended wet conditions related to the high amounts of winter snowfall. Through the back half of 2018, STEP's outlook is positive with expectations of strong utilization for current active equipment.

Management anticipates Canadian drilling activity in 2018 will remain more focused on oil and liquids-rich gas plays given the strengthening of oil prices and the impact of continued weakness in natural gas prices in Canada. This reinforces STEP's strategy to construct fit-for-purpose equipment to target shallow, oil-weighted areas where capital programs are anticipated to remain intact or expand. Should client drilling budgets expand, management anticipates there could be a shortage of pressure pumping equipment to service the incremental demand in Canada.

In the U.S., the market for completions activity remains robust and client inquiries continue to be supportive of deploying additional equipment to meet demand. The Company anticipates that our coiled tubing and recently acquired fracturing assets will experience strong utilization through 2018. Management believes that the impact of increased activity on fracturing demand could be compounded by labour constraints, attrition of older equipment and supply chain limitations which could extend the lead-time for construction, delivery and deployment of new capacity.

The demand for supply chain inputs is expected to drive modest cost inflation, specifically wage inflation for labour in the U.S. STEP will maintain our disciplined focus on operational efficiencies to assist with driving our financial performance. In addition, we will continue to monitor conditions in real-time to assess and anticipate the market's ability to absorb new capacity and adjust our activities accordingly.

ANNUAL GENERAL MEETING

STEP will hold its annual general meeting on June 25, 2018 at 10:00am MDT in the Bow Valley Club located at 250 6 Ave SW, Calgary, Alberta.

NON-IFRS MEASURES

Please see the discussion in the Non-IFRS Measures section of the MD&A for the reconciliation of non-IFRS items to IFRS measures.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "should", "believe", "plans" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this document contains forwardlooking information and statements pertaining to the following: commissioning and staffing of equipment; the ability to deploy additional equipment; utilization; monitoring of client capital budgets; pricing thresholds in the current commodity environment; cost inflation; maintenance costs; market conditions and industry activity levels; and the amount of capital expenditures in 2018.

The forward-looking information and statements contained in this document reflect several material factors and expectations and assumptions of the Company including, without limitation: that the Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes; the impact of seasonal weather conditions; the Page 5 May 8, 2018 Company's ability to deploy equipment; and certain cost assumptions. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

The forward-looking information and statements included in this document are not guarantees of future performance and should not be unduly relied upon. 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 including, without limitation: changes in the demand for or supply of the Company's services; unanticipated operating results; market uncertainty; the ability to access key components and shop capacity; the ability to attract and retain qualified personnel; changes in tax or environmental laws, or other regulatory matters; changes in the development plans of third parties; increased debt levels or debt service requirements; limited, unfavourable or a lack of access to capital markets; increased costs; the impact of competitors; and reliance on industry partners.

The forward-looking information and statements contained in this document speak only as of the date of the document, and none of the Company or its subsidiaries assumes any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. The reader is cautioned not to place undue reliance on forward-looking information

ABOUT STEP

STEP Energy Services is an oilfield service company founded in 2011 that provides fully integrated coiled tubing and fracturing solutions. STEP's combination of modern, fit-for-purpose fracturing and coiled tubing equipment has differentiated it in plays where wells are deeper, have longer laterals, and higher pressure.

Initially operating only in Canada as a specialized, deep capacity coiled tubing provider, STEP's service offering has expanded to include fully integrated coiled tubing and fracturing solutions in Canada and in the U.S. STEP operates in the Montney, Duvernay, and Viking in Canada, and in the Anadarko, Arkoma, Permian, Eagle Ford, and Haynesville in the U.S. STEP's track record of safety, efficiency and execution drives repeat business from its bluechip exploration and production clients.

For more information please contact:

Regan Davis

President & Chief Executive Officer

Telephone: 403-457-1772
Email: This email address is being protected from spambots. You need JavaScript enabled to view it. .
Web: www.stepenergyservices.com