CALGARY, Alberta--(BUSINESS WIRE)--October 17, 2025-- 

Further to its news release of September 25, 2025 announcing receipt of a non-binding offer from ARC Financial Corp., STEP Energy Services Ltd. ("STEP" or the "Company") (TSX: STEP) is pleased to announce that it has entered into a definitive arrangement agreement (the "Arrangement Agreement") with 2659160 Alberta Ltd. and the limited partnerships comprising ARC Energy Fund 8 (a private equity fund advised by ARC Financial Corp.) (collectively, "ARC") to take the Company private in an all-cash transaction.

Under the terms of the Arrangement Agreement, ARC will acquire all of the issued and outstanding common shares of STEP (the "Shares") that ARC (and the limited partnerships comprising ARC Energy Fund 6) does not currently own or control or direct, directly or indirectly, (the "Minority Shares") for cash consideration of $5.50 per Share by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (Alberta) (the "Act").

The Arrangement, which has been unanimously approved by the members of STEP's board of directors (the "Board") entitled to vote thereon, will be subject to shareholder approval, including the approval of the holders of the Minority Shares (the "Minority Shareholders"), court approval, and customary closing conditions. The Arrangement is expected to close in December 2025.

Steve Glanville, President and CEO of STEP, commented, "A year ago, when STEP was pursuing a similar corporate transaction, I expressed our pride at the Company's development into one of the best-in-class energy services companies in North America and of our commitment to our clients, communities, and our dedicated employees, who we call professionals. The proposed transaction represents the culmination of the avenues we have explored to maximize value for our shareholders. Again, I would like to thank STEP shareholders for their support over the years."

Highlights Of the Arrangement

   --  Significant Premium 
 
          --  The purchase price represents a premium of approximately 29% to 
             STEP's September 24, 2025 closing price on the TSX (being the last 
             trading day prior to the announcement of the non-binding offer 
             from ARC). 
 
 
   --  Significant Minority Shareholder Support 
 
          --  ARC has entered into voting support agreements with Minority 
             Shareholders holding, in aggregate, approximately 32.11% of the 
             Shares and approximately 71.71% of the Minority Shares, pursuant 
             to which such Minority Shareholders have agreed, subject to the 
             provisions thereof, to vote in favour of the resolutions approving 
             the Arrangement at the special meeting of holders of Shares to be 
             called and held to approve the Arrangement (the "STEP Meeting"). 
 
 
 
   --  All Cash Consideration 
 
          --  The purchase price payable to Minority Shareholders upon closing 
             of the Arrangement will be paid in cash. 
 
 
   --  Independent Valuation 
 
          --  In connection with the Arrangement, STEP obtained a formal 
             valuation of the Shares as at October 14, 2025 from Ernst & Young 
             LLP ("EY"), an independent valuator. The purchase price is in the 
             fair market value range of $4.80 to $5.70 per Share, as determined 
             by EY. 
 
 
   --  Unanimous Board Approval 
 
          --  The members of the Board entitled to vote on the Arrangement 
             unanimously support the Arrangement, and recommend that the 
             Minority Shareholders vote in favour of the Arrangement resolution 
             at the STEP Meeting. 
 
 
   --  No Financing Condition 
 
          --  The Arrangement is not conditional on ARC obtaining financing. 
 
 
 

Special Committee and Board Recommendation

As previously announced, the Board formed a special committee of independent directors (the "Special Committee") to consider the non-binding offer from ARC to acquire all of the Shares held by Minority Shareholders, as well other alternatives available to STEP, and, if deemed advisable, to negotiate with ARC a proposed transaction for ARC to acquire all of the Minority Shares. Following a comprehensive review of the ARC proposal, the receipt of the formal valuation from EY as to the fair market value of the Shares, the receipt of advice from its financial and legal advisors and Michael Kelly, advisor to the Special Committee, negotiations between the Special Committee and ARC as to the terms of the Arrangement Agreement, the receipt of a fairness opinion from EY in respect of the fairness, from a financial point of view, of the consideration to be received by the Minority Shareholders under the Arrangement, and receipt of copies of the voting support agreements entered into among ARC and certain Minority Shareholders, the Special Committee unanimously determined that the Arrangement is in the best interests of STEP and recommended that the Board approve the execution and delivery of the Arrangement Agreement and recommend that Minority Shareholders vote in favour of the Arrangement.

After considering, among other things, the unanimous recommendation of the Special Committee and the receipt of advice from its legal advisors, the Board (with Mr. Jeremy Gackle and Ms. Jacqueline Forrest, representatives of ARC, abstaining) unanimously determined that the Arrangement is in the best interests of STEP and is fair to the Minority Shareholders, approved the execution and delivery of the Arrangement Agreement, and recommends that the Minority Shareholders vote in favour of the Arrangement resolution at the STEP Meeting.

Opinion and Formal Valuation

In connection with its review of the Arrangement, the Special Committee retained EY as its independent valuator and requested that EY prepare a formal valuation of the Shares in accordance with Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In addition to its formal valuation of the Shares, EY has also delivered a fairness opinion as of October 17, 2025, stating that, subject to the assumptions, limitations and qualifications set forth in EY's written fairness opinion, the consideration to be received by the Minority Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Minority Shareholders.

Lock-up Agreements

STEP has received from ARC copies of voting support agreements entered into by ARC with: (a) MMCAP International Inc. SPA ("MMCAP") on September 24, 2025, in respect of approximately 22.50% of the outstanding Shares; (b) each of XIB Arbitrage Master Fund and XIB International Master Fund, by their advisor XIB Asset Management Inc. (collectively, "XIB") on October 7, 2025, in respect of an aggregate of approximately 6.35% of the outstanding Shares; and (c) Groundlayer Capital Inc. ("Groundlayer") on October 9, 2025, in respect of an aggregate of approximately 1.64% of the outstanding Shares pursuant to which they have agreed, subject to the provisions thereof, to vote in favour of the resolution approving the Arrangement at the STEP Meeting and otherwise support the Arrangement.

Concurrently with the execution of the Arrangement Agreement, all members of the Board and STEP's officers (together with MMCAP, XIB and Groundlayer, the "Locked-up Shareholders"), who collectively own directly or indirectly or exercise control or direction over approximately 1.61% of the outstanding Shares, and ARC Energy Fund 6, which exercises control or direction over approximately 18.65% of the outstanding Shares, have entered into voting support agreements pursuant to which they have agreed, subject to the provisions thereof, to vote in favour of the resolution approving the Arrangement at the STEP Meeting and otherwise support the Arrangement.

Shares held by the Locked-up Shareholders represent approximately 71.71% of the "minority shareholders", being all outstanding Shares excluding the 40,243,000 Shares collectively held by ARC Energy Fund 8 and ARC Energy Fund 6. On a combined basis, the Shares held by ARC Energy Fund 8, ARC Energy Fund 6 and the Locked-up Shareholders represent approximately 87.33% of the Shares.

Arrangement Details

The Arrangement is subject to customary TSX and court approvals and the following approvals at the STEP Meeting: (a) the approval of at least 66 2/3% of the votes cast by holders of the Shares (the "Shareholders"); and (b) the approval of at least a majority of the votes cast by Shareholders, excluding votes of ARC (and ARC Energy Fund 6) and any other holders of Shares whose votes are required to be excluded for the purposes of such vote under MI 61-101. For the purposes of this "majority of the minority" approval requirement under MI 61-101, 40,243,000 Shares controlled, directly or indirectly, by ARC and ARC Energy Fund 6 will be excluded from voting.

The STEP Meeting is expected to be held on December 12, 2025. Additional information regarding the Arrangement and how Shareholders can participate in and vote at the STEP Meeting will be provided in a STEP information circular (the "Circular"), which is expected to be filed and sent to Shareholders on or before November 10, 2025. EY's formal valuation report and fairness opinion will be included in the Circular. EY believes that its report and opinion must be read in their entirety to understand the valuation process and valuation results and fairness opinion.

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October 17, 2025 18:02 ET (22:02 GMT)