Preferred Sands Announces Sale of Blair Facility to Source Energy Services Ltd. of Canada

Preferred Proppants, LLC (“Preferred Sands” or “Preferred” or the
“Company”) today announced that it has entered into a definitive
agreement for the sale of its Blair, Wisconsin facility and its Canadian
assets (collectively, the “Blair” transaction) to Source Energy Services
Ltd. (“Source”) (TSX: SHLE) for USD $80 million in cash, subject to
closing and post-closing adjustments, and entering into a production
payment agreement in respect of certain exploration rights in the Peace
River Valley of Alberta.

The Blair, Wisconsin sand mine and plant consists of approximately 29
million tons of northern white sand reserves with associated wet and dry
plant facilities that currently have finished goods capacity of
approximately 1.1 million tons of sand per year. Additionally, Preferred
will be selling its two owned rail frac sand terminals, Chetwynd and
Fort Nelson, in British Columbia, Canada, as well as exploration rights
on over 3,600 acres in the Peace River Valley of Alberta

Commenting on the Blair transaction, Founder and CEO Michael O’Neill
said, “This is a positive transaction for both parties. Source is able
expand their Northern White frac sand processing capacity and integrated
terminal network by getting first-class assets and people. For
Preferred, the sale will provide capital to further strengthen our
balance sheet as we continue to expand on our in-basin and regional sand
strategy.”

The consideration for the Blair transaction includes USD $80 million in
cash, subject to normal closing and post-closing adjustments. In
addition, the parties are entering into a production payment agreement
whereby any production from the exploration rights in the Peace River
Valley of Alberta commencing on commercial production by Source would be
subject to a production payment. Closing is expected to occur in
November 2017, subject to the satisfaction of closing conditions
customary in transactions of this nature.

With strategic plant locations in Arizona and Nebraska, as well as
several new Texas plants expected in early 2018, Preferred services
exploration & production and oilfield service companies throughout North
America and is continuously recognized for its environmental
responsibility and achievements in health and safety as an
industry-leading operator.

For more information about Preferred Sands, visit www.PreferredSands.com.

About Preferred Sands

Preferred
Sands is one of North America’s leading manufacturers and providers
of high-quality sand and innovative proppant technologies. With a focus
on in-basin and regional sand, Preferred currently has fully operational
plants strategically located in Arizona, Nebraska and Wisconsin, as well
as in Texas expected in early 2018. Preferred’s innovative proppant
technology solutions include Preferred
Polymeric Proppants, the most advanced downhole coated proppant
technology designed for maximum production efficiency; FloPRO
PTT™, proppant transport technology designed for superior proppant
distribution; and DustPRO™,
the first dust prevention technology designed to reduce airborne
particles during all sand transfer points. These pioneering products
have earned Preferred world-wide recognition as a leader in innovative
and sustainable technologies throughout the oil and gas, chemical, and
technology industries.

The company’s various awards include a finalist for the World Petroleum
Council’s Technological Development recognition in 2017; 2014 CPI
Polyurethane Innovation Award for Improving Oil Productivity; 2014 R&D
100 Award for Improving Oil Productivity; 2013 Oil & Gas Awards for
Environmental Initiative of the Year, Industry Supplier of the Year, and
Excellence in Environmental Stewardship; and 2012 Ernst & Young
Entrepreneur of the Year in Energy, Cleantech, and Natural Resources.

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