Aveda Transportation and Energy Services Announces Closing of Acquisition of North Dakota-Based Assets; Conversion of Subscription Receipts

CALGARY, ALBERTA--(Marketwired - Jan. 31, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Aveda Transportation and Energy Services Inc. ("Aveda" or the "Company") (TSX VENTURE:AVE), a leading provider of oilfield hauling services and equipment rentals to the energy industry, is pleased to announce that, through its operating subsidiary in the US, it has completed the acquisition of the operating assets (the "Acquisition") of Williston, North Dakota-based M&K Hotshot & Trucking, Inc. and M&K Rig Service, Inc. (collectively "M&K"). In connection with the Acquisition, Aveda acquired 170 pieces of oilfield hauling equipment, including 79 trailers, 15 conventional tractors, 14 winch trucks and three cranes, and 395 pieces of rental equipment with an estimated total fair market value of US$22.0 million, working capital estimated at US$5.5 million and other intangible assets. The initial purchase price will be finalized upon determination of post-closing adjustments and final 2013 financial results and is expected to be between US$38.0 million and US$42.0 million or 3.18 times 2013 EBITDA (expected to fall in the range of US$12.0 million and US$13.0 million), which includes the issuance of US$5.0 million common shares (1,551,528 common shares) of Aveda at a deemed price of $3.60 per share. An estimated US$9.0 million in additional consideration may be payable on an earnout basis over a period of three years if certain EBITDA levels are generated. The Acquisition has an effective date of January 1, 2014. For further information regarding the Acquisition, please see Aveda's news release dated December 24, 2013 which is available at www.sedar.com.

"With the completion of the Acquisition we can focus on growing our US business in a high activity, oil-focused basin where rig counts have remained fairly stable over the last few quarters," said Kevin Roycraft, President and CEO of Aveda. "As we work to integrate M&K's assets and team, we will look to rapidly realize operational synergies and benefit from our growing brand recognition and increased scale."

Per the terms of the $23.0 million bought deal private placement financing of 6,400,000 subscription receipts which was completed on December 23, 2013 (the "Offering") and concurrent with the closing of the Acquisition, all 6,400,000 subscription receipts issued under the Offering automatically converted into 6,400,000 common shares of the Company effective January 31, 2014. Pursuant to applicable securities laws, all securities issued pursuant to the Offering are subject to a statutory hold period expiring on April 24, 2014. Upon conversion of subscription receipts into common shares, the Company has approximately 19.9 million common shares outstanding. The register for the transfer of subscription receipts will be closed at 5:00 pm Calgary time on January 31, 2014. Any transfer of subscription receipts or common shares issued on conversion is subject to restrictions under applicable securities laws. For further information regarding the private placement, please see Aveda's news release dated December 23, 2013 which is available at www.sedar.com.

Between 2010 and 2012, M&K nearly tripled revenue from US$11.6 million (unaudited) to US$33.5 million and grew EBITDA from US$3.1 million (unaudited) to US$12.4 million. EBITDA margins between 2010 and 2012 ranged between 26.8% and 40.2% (unaudited). Fiscal 2013 revenue is estimated by management of the Company to be between US$38.0 million and US$41.0 million and normalized EBITDA is estimated to fall in a range between US$12.0 million and US$13.0 million. Investors are cautioned that historical financial information is not indicative of either expected or actual future performance.

In connection with the closing of the Acquisition, the former owners of M&K, Mark and Kelly Brunelle, officially joined the Aveda team along with current M&K management and nearly 90 staff to support ongoing operations and relationship continuity with key customers in the region.

The Company continues to evaluate other acquisition opportunities along with organic growth initiatives. Investors are cautioned that the ability of the Company to execute on any of these growth initiatives are subject to the risk factors outlined below.

About Aveda Transportation and Energy Services

Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Pennsylvania and North Dakota. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda's rental operations include the rental of tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.

Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Slave Lake, AB, Leduc, AB, Sylvan Lake, AB, Edson, AB, Mineral Wells, TX, Pleasanton, TX, Midland, TX, Williamsport, PA, Buckhannon, WV, and Williston, ND. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company's services and general industry activity level; the Company's growth opportunities; anticipated 2013 EBITDA; anticipated earnout consideration in respect of the Acquisition; and the expectation to maintain revenue and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

• the performance of Aveda's businesses, including M&K, current business and economic trends;
• the integration of M&K into Aveda's existing operations;
• oil and natural gas commodity prices and production levels;
• capital expenditure programs and other expenditures by Aveda and its customers;
• the ability of Aveda to retain and hire qualified personnel;
• the realization of the anticipated benefits of the Acquisition;
• the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;
• the ability of Aveda to maintain good working relationships with key suppliers;
• the ability of Aveda to market its services successfully to existing and new customers;
• the ability of Aveda to obtain timely financing on acceptable terms;
• currency exchange and interest rates;
• risks associated with foreign operations;
• changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and
• a stable competitive environment.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, risks associated with the realization of the anticipated benefits of the Acquisition; risks associated with the integration of M&K into Aveda's existing operations; the ability of Aveda to fund its substantial capital requirements and operations; and the risks identified in Aveda's annual information form and management discussion and analysis for the year ended December 31, 2012 (the "MD&A"). Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

This News Release contains the terms EBITDA and normalized EBITDA. EBITDA is defined in the MD&A. Normalized EBITDA is EBITDA adjusted for one-time costs as agreed to in the definitive agreement for the M&K acquisition. EBITDA and normalized EBITDA as discussed do not have any standardized meaning prescribed by international financial reporting standards (IFRS) and therefore may not be comparable with the calculation of similar measures for other entities. Management uses normalized EBITDA to analyze the operating performance of the M&K acquisition. Normalized EBITDA as discussed is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

Neither 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 accuracy of this release.