Yahoo Finance

Selected Quarterly Financial Information
(unaudited)

Excerpt from Management's Discussion and Analysis
for the twelve months ended December 31, 2015

OUTLOOK

In the fourth quarter oilfield service activity continued to deteriorate as the active rig count in the US decreased by 17% from the third quarter and ended 2015 at 698 operating rigs. Through the end of February 2016 it has fallen to 502 working rigs, or a decrease of almost 1,200 from year ago levels. This rapid decrease in drilling activity has forced contractors to compete aggressively on price. In most resource plays spot day rates are down 35% to 45% from 18 months ago.

Despite the significant decrease in drilling rig activity, US oil production levels remained resilient through 2015. Total lower 48 production ended the year at 8.7 million barrels per day which was down from the June peak of 9.2 million barrels of production per day. The slower than forecast decrease in production has led to record levels of oil in storage and a further leg down in oil prices. As such, customer capital budgets have been decreased significantly in 2016 with most announcements in the range of 40% to 50% reductions from 2015 levels. This should lead to faster production declines in 2016 and the potential for a bottoming in oil prices. Oilfield service activity levels will likely remain depressed in 2016 with the potential for increased utilization in 2017. However, it is likely that pricing will remain down even after utilization begins to increase due to the large over supply of drilling and completion equipment.

Xtreme management moved quickly to decrease the Company's operating cost structure at the first sign of slowing activity levels in 2014. This early action along with subsequent measures helped to position the Company for the prolonged nature of the current downturn. The focus in 2016 will be to further solidify the balance sheet and maximize liquidity. As this cycle lingers liquidity will be even more important and could open up opportunities to acquire distressed assets or companies. When activity levels begin to improve it is clear that asset quality will be paramount. The drilling market has made what appears to be a fundamental shift to tier 1 rigs. According to industry sources the AC tier 1 rig count now stands at 257 active rigs or 60% of the total rig count. This is an all-time high market share for AC rigs and evidence that increased efficiency drives value. In most unconventional basins rig efficiency has significantly decreased well costs and allowed operators to drill up to 50% more wells per year than just three years prior. Xtreme's entire fleet of 21 drilling rigs are highly efficient AC electric tier 1 rigs.

In the Company's core US coiled tubing markets of the Eagle Ford and the Permian, customer preference has clearly shifted to larger diameter coiled tubing. This represents a complete change in mindset from 2012 when Xtreme first introduced 2 5/8" coil in Texas and 2" and smaller coil units dominated the market. The Company has now completed over 1,200 jobs and 82,000,000 round trip running feet over the past 3.5 years; the most of any large coil provider in the Eagle Ford or Permian. Due to the challenged environment it is likely that utilization and pricing will remain weakened as the rig count in the Eagle Ford has fallen by 129 rigs to just 29 currently operating. In addition, it is estimated that a drilled but uncompleted inventory of 3,000 wells currently exists in the Eagle Ford and West Texas. This has compounded the reduction in completion activity. However, as the industry begins to stabilize it is likely that most companies will initially focus on completing the significant inventory of drilled but uncompleted wells. These have the quickest cash conversion and lowest amount of capital outlay. For this reason we believe Xtreme's coiled tubing activity should increase before the Company's drilling activity.

Internationally the push for increased technology is expected to continue. Most international operators have not deployed the level of technology and thus achieved the same levels of efficiency as many US operators. The push in Saudi Arabia is for greater efficiency through the integration of technology across the service spectrum. The underbalanced coiled tubing drilling project that Xtreme is currently working on continues to produce outstanding performance and results. The Company is working harder than ever to leverage this success into increased revenue in Saudi and throughout the region.

Overall, Xtreme's leadership team has managed through both upswings and down markets. We understand the importance of cost management and a strong balance sheet in challenging times. The recent extension of the Company's credit facility provides the Company with continued balance sheet stability. In addition, the Company's leverage ratios are among the lowest in the industry, particularly as compared to similar sized competitors. Finally the industry leading XSR coil technology and 100% AC electric XDR drilling fleet is among the highest spec asset base in the industry. These factors should allow Xtreme to weather the current downturn and emerge as a stronger Company in the next up cycle.

Conference Call Details

Tom Wood, Chief Executive Officer, will host the conference call with participation from Matt Porter, President and Chief Financial Officer, and will answer questions from analysts and investors on Friday, March 11, 2016, beginning promptly at 9:00 am MT (10:00 am CT, 11:00 am ET).

To participate in the conference call, please dial in as follows approximately ten minutes before the start time in your time zone.

+1 800-952-6845 (North America Toll-Free) or +1 416-340-8527 (Alternate)

Webcast link: http://www.gowebcasting.com/7269

An audio replay of the call will be available until Friday, March 18, 2016. To access the replay, call +1 800-408-3053 or +1 905-694-9451 and enter pass code 9246719.

Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Financial Position
At December 31, 2015 and December 31, 2014

(in thousands of Canadian dollars)
(unaudited)

Xtreme Drilling and Coil Services Corp.
Consolidated Statements of (Loss) Income
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars, except share and per share data)
(unaudited)

Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Comprehensive (Loss) Income
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars)
(unaudited)

Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars)
(unaudited)

Xtreme Drilling and Coil Services Corp.
Consolidated Statements of Cash Flows
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars)
(unaudited)

Xtreme Drilling and Coil Services Corp.
EBITDA and Adjusted EBITDA
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars)
(unaudited)

Reader Advisory

This news release contains forward-looking statements ("FLS"). The use of the words "may", "believe", "could", "would", "might", "will be taken", "occur" or "be achieved" and similar expressions identify FLS. More particularly, this news release contains statements that may relate to contracting, marketing, financing, construction, modifications, deployment, operation, utilization of drilling rigs in the Company's current and future fleet. Although Xtreme believes expectations reflected in these FLS are reasonable, readers should not place undue reliance on them because Xtreme can give no assurance they will prove to be correct. There are many factors that could cause FLS not to be correct, including risks and uncertainties inherent in the Company's business.

These statements are based on certain factors and assumptions including, but not limited to: the assessment of current and projected future operations; ongoing and future strategic business alliances, negotiations and opportunities to enter new, extend or complete existing contracts; the availability and cost of financing; foreign currency exchange rates; timing and magnitude of capital expenditures; expenses and other variables affecting rig operation, modification and construction; the ability and commitment of vendors to provide rig component equipment, services and supplies, including labor, in a cost-effective and timely manner; the issuance of applied-for patents; changes in tax rates; and government regulations. Although Xtreme considers the assumptions used to prepare this news release reasonable, based on information available to management as of March 10, 2016, ultimately the assumptions may prove to be incorrect.

Forward-looking statements are also subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from management's current expectations. These factors include, but are not limited to: the cyclical nature of drilling market demand, foreign currency exchange rates, and commodity prices; access to credit and to equity markets; the availability of qualified personnel; vendor-provided rig components; and, competition for customers.

Management's assumptions considered the following: compliance with the terms of the Company's current and proposed new credit facility; ongoing access to key supplies and components required to continue operating and maintaining equipment, including fuel; continued successful performance of drilling and related equipment; expectations regarding gross margin; recruitment and retention of qualified personnel; continuation or extension of existing long-term or multi-well contracts; revenue expectations related to shorter-term drilling opportunities; willingness and ability of customers to remit amounts owing to Xtreme in accordance with normal industry practices; and management of accounts receivable in direct relation to revenue generation.

In preparing this news release, management considered the following risk factors: fluctuations in crude oil and natural gas prices, supply and demand; fluctuation in foreign currency exchange and interest rates; financial stability of Xtreme's customers; current and future applications for Xtreme's proprietary technology; competition from other drilling contractors; regulatory and economic conditions in regions where Xtreme operates; environmental constraints; changes to government legislation; international trade barriers or restrictions; and, where appropriate, global political and military events.

Financial outlook information contained in this news release about prospective results of operations, financial position or cash provided by operating activities is based on assumptions about future events, including economic conditions and proposed courses of action, and on management's assessment of relevant information currently available. Readers are cautioned such financial outlook information contained in this news release is not appropriate for purposes other than for which it is disclosed here. Readers should not place undue importance on FLS and should not rely on this information as of any other date. Except as required pursuant to applicable securities laws, Xtreme disclaims any intention, and assumes no obligation, to update publicly or revise FLS to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such FLS or otherwise, or to explain any material difference between subsequent actual events and such FLS.

About Xtreme

Xtreme Drilling and Coil Services Corp. ("XDC" on the Toronto Stock Exchange) designs, builds, and operates a fleet of high specification drilling rigs and coiled tubing well service units featuring leading-edge proprietary technology including AC high capacity coil injectors, deep re-entry drilling capability, modular transportation systems and continuous integration of in-house advances in methodologies.

Currently Xtreme operates two service lines: Drilling Services (XDR) and Coil Services (XSR) under contracts with oil and natural gas exploration and production companies and integrated oilfield service providers in Canada, the United States, and Saudi Arabia. For more information about the Company, please visit www.xtremecoil.com.