SYS-CON MEDIA Authors: Carmen Gonzalez, Sean Houghton, Glenn Rossman, Ignacio M. Llorente, Xenia von Wedel

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Essential Energy Services Announces Second Quarter Results and Declares Quarterly Dividend

CALGARY, ALBERTA -- (Marketwired) -- 08/06/14 -- Essential Energy Services Ltd. (TSX: ESN) ("Essential" or the "Company") announces second quarter results.


SELECTED INFORMATION
                                    Three months ended      Six months ended
                                              June 30,              June 30,
(Thousands of dollars, except per
 share, percentages and fleet          2014       2013       2014       2013
 data)
----------------------------------------------------------------------------

Revenue                          $   52,752 $   38,417 $  156,482 $  158,936

Gross margin                          5,222    (1,310)     32,549     36,521
  Gross margin %                        10%       (3)%        21%        23%
EBITDAS(1) from continuing
 operations                             440    (5,171)     22,947     28,254
  EBITDAS % (1)                          1%      (13)%        15%        18%

Net income (loss) attributable
 to shareholders of Essential       (5,425)   (11,501)      4,724      7,126
  Per share-basic and diluted        (0.04)     (0.09)       0.04       0.06

Total assets                        408,964    380,728    408,964    380,728
Total long-term debt                 38,433     14,592     38,433     14,592

Utilization
    Deep coil tubing rigs               27%        18%        52%        64%
    Service rigs                        34%        28%        50%        48%

Equipment fleet
  Masted deep coil tubing rigs           17         14         17         14
  Conventional deep coil tubing
   rigs                                  12         11         12         11
  Service rigs                           55         56         55         56
----------------------------------------------------------------------------
(1) Refer to Non-IFRS Measures section for further information

SECOND QUARTER 2014 OVERVIEW

Revenue for the second quarter of 2014 was $52.8 million, 37% higher than the second quarter of 2013. The strong second quarter was due to increased customer demand, supported by a less severe spring break-up compared to the prior quarter.


--  Coil Well Service - Coil well service revenue increased 84% from the
    prior quarter with a significant improvement in masted deep coil tubing
    utilization quarter-over-quarter at 42% compared to 19% in 2013. The
    Company's masted deep coil tubing fleet experienced increased customer
    demand, in particular, there was strong demand for the two Generation
    III masted deep coil tubing rigs.
--  Service Rigs - Service rigs performed well in the quarter with
    utilization at 34% compared to 28% in the prior quarter.
--  Downhole Tools & Rentals - Essential's downhole tools & rentals revenue
    increased in the quarter due to strong demand for conventional downhole
    tools, continued growth of Essential's United States ("U.S.") operation
    and increased rental revenue.

EBITDAS for the second quarter of 2014 was $0.4 million, a significant improvement of $5.6 million from 2013. The increase was driven by improved activity across both segments and lower operating expenses as a percentage of revenue. Operating expenses associated with training and retaining key personnel and maintaining equipment are typically higher in the second quarter when equipment is restricted from travelling to customer locations during spring break-up. Revenue increases in the second quarter of 2014 offset these expenditures and improved margins.

In the second quarter of 2014, Essential took delivery of its first state-of-the-art Generation IV masted deep coil tubing rig.

YEAR-TO-DATE 2014 OVERVIEW

Revenue for the six months ended June 30, 2014 was $156.5 million, slightly lower than the same period in 2013. EBITDAS for six months ended June 30, 2014 was $22.9 million, a decrease of $5.3 million compared to the same period in 2013. The EBITDAS impact of lower revenue during the first quarter 2014 was somewhat offset by improved revenue and activity in both well servicing and downhole tools & rentals during the second quarter. Tryton Multi-Stage Fracturing System ("MSFS®") revenue for the first half of 2014 was lower than the prior year. The margin impact of this revenue shortfall has been partially offset within the segment by growth in conventional downhole tools and higher margin rentals operations. EBITDAS during the first half of 2014 was also impacted by increased fuel costs in well servicing and increased labour costs in coil well service. Incremental labour costs in coil well service relates to additional costs incurred in the first quarter to retain crews on location during specific short- term periods of inactivity, that was brought on by extremely cold weather, and costs incurred to hire and train additional crews in anticipation of the delivery of the new Generation III and Generational IV masted deep coil tubing rigs.

INDUSTRY OVERVIEW

Industry activity in the second quarter is typically the slowest quarter of the year due to the onset of spring break-up. Compared to 2013, the second quarter of 2014 benefitted from a less severe spring break-up in western Canada, and improved demand from exploration and production ("E&P") companies as a result of stronger commodity prices and access to capital. Drilling rig utilization increased 35%, well completion count increased 4% and the number of wells drilled increased by 29% for the second quarter 2014 compared to the prior quarter. These are indicators of overall oilfield activity in the Western Canadian Sedimentary Basin ("WCSB").

Well service activity in the WCSB continues to be driven by horizontal drilling, completion and stimulation of oil and liquids-rich natural gas wells. Horizontal wells typically require more investment capital and increased rig time per well due to their depth and complexity compared to vertical wells.


SEGMENT RESULTS - WELL SERVICING
--------------------------------
                                    Three months ended      Six months ended
                                              June 30,              June 30,
(Thousands of dollars, except
 percentages, fleet and hours)         2014       2013       2014       2013
----------------------------------------------------------------------------

Revenue
  Coil Well Service (i)          $   17,398 $    9,433 $   58,897 $   59,054
  Service Rigs                       16,437     14,732     48,936     48,288
----------------------------------------------------------------------------

Total revenue                        33,835     24,165    107,833    107,342

Operating expenses                   34,389     28,298     88,650     83,340
----------------------------------------------------------------------------

Gross margin                     $    (554) $  (4,133) $   19,183 $   23,002
  Gross margin %                       (2)%      (17)%        18%        21%
----------------------------------------------------------------------------

Utilization (ii)
--------------------------------
  Deep coil tubing rigs
    Utilization                         27%        18%        52%        64%
    Operating hours                   6,972      4,125     26,103     28,890

  Service rigs
    Utilization                         34%        28%        50%        48%
    Operating hours                  16,907     14,234     49,523     48,598

Equipment fleet (iii)
--------------------------------
  Masted deep coil tubing rigs           17         14         17         14
  Conventional deep coil tubing
   rigs                                  12         11         12         11
  Service rigs                           55         56         55         56
  Nitrogen pumpers                       14         15         14         15
  Fluid pumpers                          18         18         18         18
----------------------------------------------------------------------------

(i) Includes revenue from coil tubing rigs, nitrogen and fluid pumpers and other ancillary equipment.

(ii) Utilization is calculated using a 10 hour day.

(iii) Fleet data represents the number of units at the end of the period.

Coil well service second quarter revenue increased 84% from the prior quarter due to improved customer demand for Essential's masted deep coil tubing fleet and, in particular, the two Generation III masted deep coil tubing rigs that went into service in the fourth quarter 2013 and first quarter 2014, respectively. With increased customer demand, supported by a less severe spring break-up, Essential's masted deep coil tubing utilization was 42% compared to 19% in prior quarter. The two Generation III masted deep coil tubing rigs performed well achieving 72% utilization during the quarter. Essential's fluid and nitrogen pumper revenue also increased significantly as this equipment supports the masted deep coil tubing fleet.

Conventional deep coil tubing utilization was down quarter-over-quarter due to competition in the less technical smaller diameter conventional coil tubing market.

Service rig utilization was 34% compared to 28% in the prior quarter due to milder spring break-up conditions in 2014. Essential's utilization was particularly strong in the Grande Prairie, Fort St. John, southern Alberta areas and for the rigs working in steam-assisted gravity drainage ("SAGD").

Gross margin for well servicing in the second quarter of 2014 improved from the prior quarter due to higher revenue and activity. However, costs related to training and retaining key staff, seasonal maintenance work, and fixed costs associated with maintaining service locations and infrastructure resulted in negative gross margin for the segment during the quarter.

On a year-to-date basis, well servicing revenue is similar to the prior year as strong nitrogen and fluid pumper utilization offset lower conventional deep coil tubing utilization. Masted deep coil tubing utilization was 75% on a year-to-date basis, compared to 83% in the prior year. Gross margin for the six months ended June 30, 2014 was adversely impacted by increased fuel and labour costs in coil well servicing. Incremental labour costs were incurred to retain crews on location during specific short term periods of inactivity during the first quarter, that was brought on by extremely cold weather, and costs incurred to hire and train additional crews in anticipation of the delivery of the new Generation III and Generational IV masted deep coil tubing rigs. Revenue per hour for coil well service and service rigs was consistent with the prior quarter.


SEGMENT RESULTS - DOWNHOLE TOOLS &
 RENTALS
----------------------------------
                                    Three months ended      Six months ended
                                              June 30,              June 30,
(Thousands of dollars, except
 percentages)                          2014       2013       2014       2013
----------------------------------------------------------------------------

Revenue                          $   19,521 $   14,252 $   49,807 $   51,594

Operating expenses                   12,910     10,641     34,138     35,015
----------------------------------------------------------------------------

Gross margin                     $    6,611 $    3,611 $   15,669 $   16,579
  Gross margin %                        34%        25%        31%        32%

Downhole Tools & Rentals revenue
 - revenue % of total
  Tryton MSFS®                        25%        40%        34%        54%
  Conventional Tools & Rentals          75%        60%        66%        46%
----------------------------------------------------------------------------

Downhole tools & rentals second quarter revenue increased 37% from the same period in 2013 primarily due to strong performance of the conventional tools and rentals operations. Tryton MSFS® revenue was lower than the prior quarter as Essential continues to adjust its MSFS® product offerings to meet changing customer demands. Gross margin increased significantly as a result of improved conventional tool activity and greater contributions from the higher margin rentals business.

Revenue from conventional tools and rentals increased by 71% from the prior quarter. Growth in conventional tools was generated by both Canadian operations and U.S. conventional tools. Tryton's role as a dominant conventional tools service provider offers growth opportunities and insights into customer well completion preferences and requirements. Higher rentals revenue was primarily due to increased rental of specialty drill pipe and pressure control equipment as second quarter sales continued to demonstrate the benefits of an evolving sales and product strategy. Management anticipates continued growth in the conventional tools and rentals businesses in the second half of 2014.

Tryton MSFS® revenue in the second quarter included revenue from Essential's Canadian and U.S. operations. In Canada, the second quarter is typically a slower period for MSFS® products as fracturing activity is reduced during spring break-up. Demand for Tryton's Canadian MSFS® products historically has been exclusively "ball & seat" technology, using standard or dissolvable balls. In response to customer demand for alternative completion techniques when conducting a multi-stage fracture, Essential continued its efforts to develop and test new MSFS® products. These products include the development of coil-actuated Viking sliding-sleeve technology which offers unlimited stages without balls or seats. In the second quarter, Essential also experienced early success in the U.S. with its Tryton MaxFrac® tool, a new packer design that provides a consistently large inner diameter sleeve that eliminates the mill-out phase of "plug-and-perf" completions. In the second half of 2014, management expects that "ball & seat" products will continue to form the core of its Tryton MSFS® product line. The introduction of new tools and additional growth in U.S. Tryton MSFS® revenue are also expected to contribute to MSFS® revenue.

On a year-to-date basis, downhole tools & rentals revenue and margin was similar to the prior year due to growth in conventional downhole tools and higher margin rentals operations, which was offset by lower Tryton MSFS® revenue for the first half of 2014.

On April 30, 2014, Essential acquired all of the issued and outstanding shares of Sam's Packer & Supply LLC, a private downhole tool company that provides conventional tool sales, rentals and services to a diversified customer base in Oklahoma, Kansas and Texas. The purchase price was US$5.1 million plus working capital adjustments.


GENERAL AND ADMINISTRATIVE
--------------------------------
                                    Three months ended      Six months ended
                                              June 30,              June 30,
(Thousands of dollars, except
 percentages)                          2014       2013       2014       2013
----------------------------------------------------------------------------

General and administrative
 expenses                        $    4,782 $    3,861 $    9,602 $    8,267
  As a % of revenue                      9%        10%         6%         5%
----------------------------------------------------------------------------

General and administrative expenses are comprised of wages, professional fees, office space and other administrative costs incurred at corporate and operational levels. General and administrative expense for the three and six months ended June 30, 2014 increased compared to the same period in 2013 due to employee costs, facility lease costs and legal fees.


FINANCIAL RESOURCES AND LIQUIDITY

WORKING CAPITAL
--------------------------------------
                                            As at      As at
                                                    December
                                          June 30         31
(Thousands of dollars, except ratios)        2014       2013
------------------------------------------------------------

Current assets                         $   85,227 $  107,945
Current liabilities, excluding current
 portion of long-term debt               (32,780)   (45,419)
------------------------------------------------------------

Working capital (1)                    $   52,447 $   62,526
------------------------------------------------------------

Working capital ratio (1)                   2.6:1      2.4:1
------------------------------------------------------------

EQUIPMENT EXPENDITURES AND FLEET
 ADDITIONS
----------------------------------
                                   Three months ended      Six months ended
                                             June 30,              June 30,
(Thousands of dollars)                2014       2013       2014       2013
----------------------------------------------------------------------------

  Well Servicing                 $   6,350  $  10,365  $  13,157  $  16,508
  Downhole Tools & Rentals           1,600      1,297      5,316      1,741
  Corporate                            175        218        699        455
----------------------------------------------------------------------------
Total equipment expenditures         8,124     11,880     19,172     18,704
----------------------------------------------------------------------------

Less proceeds on disposal of
 property
and equipment                       (1,037)      (186)    (1,902)      (726)
----------------------------------------------------------------------------
Net equipment expenditures(1)    $   7,087  $  11,694  $  17,269  $  17,978
----------------------------------------------------------------------------

During the second quarter, Essential took delivery of its first state-of-the-art Generation IV masted deep coil tubing rig.

Essential classifies its equipment expenditures as growth capital(1) and maintenance capital(1):


                                    Three months ended      Six months ended
                                              June 30,              June 30,
(Thousands of dollars)                 2014       2013       2014       2013
----------------------------------------------------------------------------
  Growth capital(1)              $    5,675 $    8,576 $   14,214 $   13,352
  Maintenance capital(1)              2,449      3,304      4,958      5,352
----------------------------------------------------------------------------
Total equipment expenditures     $    8,124 $   11,880 $   19,172 $   18,704
----------------------------------------------------------------------------

Essential's 2014 capital budget of $53 million is comprised of $36 million in growth capital and $17 million of maintenance capital. Growth capital consists primarily of expenditures to expand Essential's masted deep coil tubing fleet and to purchase additional rental equipment.

Essential has established a long-term build program intended to increase the depth and coil diameter capability of its masted deep coil tubing fleet. Customers are demanding coil tubing rigs that can operate beyond 6,000 meters with large diameter coil. Given the limited number of builders that are qualified to build this type of equipment, and the long lead time required to secure build spots and fabricate the equipment, Essential selected two companies to manufacture its Generation III and Generation IV equipment. Essential expects to spend approximately $63 million through to 2016 to build a total of four Generation III and eight Generation IV masted deep coil tubing rigs. To date, Essential has spent approximately $27 million on this capital program and has taken delivery of two Generation III and one Generation IV masted deep coil tubing rigs.

The Company believes that it has access to sufficient funds through internally generated cash flows and from the Credit Facility to meet current spending needs.

The following table shows the expected in-service dates of the major equipment:


                                                                Expected In-
                                    Total Rigs  Total Rigs           Service
                                   Being Built  In-Service             Dates
----------------------------------------------------------------------------

Masted deep coil tubing rigs:
Generation III                               4           2      Q4'14, H2'15
Generation IV                                8           -      Q3'14, Q4'14
                                                             Q1'15, Q3'15(2)
                                                                     2016(3)
----------------------------------------------------------------------------

OUTLOOK

Heading into the last half of 2014, there is a sense of renewed optimism within the energy services sector as E&P companies, bolstered by strong oil prices, improved access to capital markets and, in some instances, merger and acquisition activity, continue to execute their 2014 capital programs. Increases in key industry metrics including second quarter drilling activity, a backlog of well completion work heading into the last half of the year and an increase in the number and total depth of horizontal wells drilled in western Canada, support a strong industry environment for oilfield service companies in the last half of 2014.

Essential believes that it is well positioned to benefit from the anticipated increase in demand for well completion services in the last half of the year, particularly as the industry continues to shift towards deeper, longer reach horizontal wells.

Essential's masted deep coil tubing fleet, which achieved 109% utilization in the first quarter of 2014, is expected to continue to experience strong demand as customers execute their drilling, fracturing and completion programs. Essential also expects to benefit from the expanded service capacity of its masted deep coil tubing fleet with the recent delivery of two Generation III and one Generation IV rigs.

Essential also expects further growth in its downhole tools and rentals segment as year-to-date growth in the conventional downhole tools and rentals operations is expected to continue throughout the back half of the year. Management expects that "ball & seat" products will continue to form the core of its Tryton MSFS® product line. The introduction of new tools and additional growth in U.S. Tryton MSFS® revenue are also expected to contribute to MSFS® revenue.

Essential continues to execute its $53 million capital equipment program. As mentioned above, during the first half of 2014, Essential took delivery of its second Generation III masted deep coil tubing rig. The Generation III rigs that are in-service have seen strong utilization in the first half of 2014, even during break-up. In the second quarter, Essential took delivery of its first Generation IV masted deep coil tubing rig. One additional Generation III rig and one additional Generation IV rig is expected to be in-service later in the year.

Essential has a strong balance sheet with $49.4 million of debt outstanding on August 6, 2014 and a debt to EBITDAS ratio of 0.8x.

QUARTERLY DIVIDEND

The cash dividend for the period July 1, 2014 to September 30, 2014 has been set at $0.03 per share. The dividend will be paid on October 15, 2014 to shareholders of record on September 30, 2014. The ex-dividend date is September 26, 2014. This dividend is an eligible dividend for Canadian income tax purposes.

The Management's Discussion and Analysis and Financial Statements are available on Essential's website at www.essentialenergy.ca and on SEDAR at www.sedar.com.

(1)Non-IFRS Measures

Throughout this news release, certain terms that are not specifically defined in IFRS are used to analyze Essential's operations. In addition to the primary measures of net earnings and net earnings per share in accordance with IFRS, Essential believes that certain measures not recognized under IFRS assist both Essential and the reader in assessing performance and understanding Essential's results. Each of these measures provides the reader with additional insight into Essential's ability to fund principal debt repayments, capital programs and pay dividends. As a result, the method of calculation may not be comparable with other companies. These measures should not be considered alternatives to net earnings and net earnings per share as calculated in accordance with IFRS.

EBITDAS(Earnings before finance costs, income taxes, depreciation, amortization, transaction costs, non- controlling interest earnings, losses or gains on disposal of equipment, foreign exchange gains or losses, results of discontinued operations and share-based compensation, which includes both equity-settled and cash-settled transactions) - These adjustments are relevant as they provide another measure which is considered an indicator of Essential's ability to generate funds flow in order to fund required working capital, service debt, capital programs and pay dividends.

EBITDAS % - This measure is considered an indicator of Essential's ability to generate funds flow as calculated by EBITDAS divided by revenue.

Funds flow or funds flow provided by (used in) operations - This measure is an indicator of Essential's ability to generate funds flow in order to fund working capital, principal debt repayments, capital programs and pay dividends. Funds flow or funds flow from operations is defined as cash flow from operations before changes in non-cash operating working capital. This measure is useful in assessing Essential's operational cash flow as it provides cash generated in the period excluding the timing of non-cash operating working capital. This reflects the ability of the operations of Essential to meet the above noted funding requirements.

Working capital - Working capital is calculated as current assets less current liabilities, excluding the current portion of long-term debt.

Growth capital - Growth capital is capital spending which is intended to result in incremental increases in revenue. Growth capital is considered to be a key measure as it represents the total expenditures on equipment expected to add incremental revenues and funds flow to Essential.

Maintenance capital - Equipment additions that are incurred in order to refurbish or replace previously acquired equipment less proceeds on the disposal of retired equipment. Such additions do not provide incremental increases in revenue. Maintenance capital is a key component in understanding the sustainability of Essential's business as cash resources retained within Essential must be sufficient to meet maintenance capital needs to replenish the assets for future cash generation.

Net equipment expenditures - This measure is equipment expenditures less proceeds on the disposal of equipment. Essential uses net equipment expenditures to assess net cash flows related to the financing of Essential's oilfield services equipment.


SUMMARY OF QUARTERLY DATA


(Thousands of dollars, except per share   Jun 30,  Mar 31,  Dec 31, Sept 30,
amounts, percentages and fleet data)         2014     2014     2013     2013
----------------------------------------------------------------------------

Well Servicing:
  Coil Well Service                        17,398   41,499   36,150   33,037
  Service Rigs                             16,437   32,499   25,593   23,870
  Other (i)                                     -        -        -        -
----------------------------------------------------------------------------
Total well servicing                       33,835   73,998   61,743   56,907

Downhole Tools & Rentals                   19,521   30,286   31,560   28,185

Inter-segment eliminations                  (604)    (554)    (480)    (582)
----------------------------------------------------------------------------

Total revenue                              52,752  103,730   92,823   84,510
----------------------------------------------------------------------------

Gross margin                                5,222   27,327   25,332   21,414
  Gross margin %                              10%      26%      27%      25%
EBITDAS(1)                                    440   22,507   20,705   17,132
  EBITDAS %(1)                                 1%      22%      22%      20%

Continuing operations
  Net income (loss)                       (5,425)   10,149    9,478    4,292
  Per share - basic and diluted           $(0.04)    $0.08    $0.07    $0.03

Net income (loss) attributable
to shareholders of Essential              (5,425)   10,149   11,126    3,843
  Per share - basic and diluted           $(0.04)    $0.08    $0.09    $0.03

Total assets                              408,964  439,745  423,963  409,613
Total long-term debt                       38,433   50,821   39,027   40,484
----------------------------------------------------------------------------

Utilization (ii)
  Deep coil tubing rigs                       27%      77%      74%      73%
  Pumpers                                     34%      69%      55%      47%
  Service rigs                                34%      66%      53%      50%

Operating Hours
  Deep coil tubing rigs                     6,972   19,131   18,257   17,724
  Pumpers                                   9,861   19,995   16,612   14,418
  Service rigs                             16,907   32,616   26,557   25,084

Downhole Tools & Rentals - revenue % of
 total
  Tryton MSFS®                              25%      39%      55%      55%
  Conventional Tools & Rentals                75%      61%      45%      45%
----------------------------------------------------------------------------

Equipment fleet (iii)
  Coil tubing rigs:
    Masted deep                                17       16       15       15
    Conventional deep                          12       12       12       12
    Conventional other                         18       18       18       18
  Service rigs                                 55       55       55       54
  Nitrogen pumpers                             14       14       14       15
  Fluid pumpers                                18       18       18       18
  Rod rigs                                     13       13       13       12
----------------------------------------------------------------------------

SUMMARY OF QUARTERLY DATA


(Thousands of dollars, except per share   Jun 30,  Mar 31,  Dec 31,  Sep 30,
amounts, percentages and fleet data)         2013     2013     2012     2012
----------------------------------------------------------------------------

Well Servicing:
  Coil Well Service                         9,433   49,621   41,228   33,857
  Service Rigs                             14,732   33,556   26,012   20,552
  Other (i)                                     -        -      786    2,762
----------------------------------------------------------------------------
Total well servicing                       24,165   83,177   68,026   57,171

Downhole Tools & Rentals                   14,252   37,342   27,989   26,342

Inter-segment eliminations                      -        -        -        -
----------------------------------------------------------------------------

Total revenue                              38,417  120,519   96,015   83,513
----------------------------------------------------------------------------

Gross margin                              (1,310)   37,832   27,039   23,012
  Gross margin %                             (3)%      31%      28%      28%
EBITDAS(1)                                (5,171)   33,426   22,368   19,261
  EBITDAS %(1)                              (13)%      28%      23%      23%

Continuing operations
  Net income (loss)                       (8,958)   19,205    8,050    8,343
  Per share - basic and diluted           $(0.07)    $0.15    $0.06    $0.07

Net income (loss) attributable
to shareholders of Essential             (11,501)   18,627      678    8,660
  Per share - basic and diluted           $(0.09)    $0.15    $0.01    $0.07

Total assets                              380,728  436,301  406,853  415,653
Total long-term debt                       14,592   35,603   35,563   50,474
----------------------------------------------------------------------------

Utilization (ii)
  Deep coil tubing rigs                       18%     110%      95%      79%
  Pumpers                                     14%      73%      57%      50%
  Service rigs                                28%      69%      54%      45%

Operating Hours
  Deep coil tubing rigs                     4,125   24,765   22,777   18,301
  Pumpers                                   4,241   20,481   15,328   11,919
  Service rigs                             14,234   34,364   27,310   22,632

Downhole Tools & Rentals - revenue % of
 total
  Tryton MSFS®                              40%      60%      51%      52%
  Conventional Tools & Rentals                60%      40%      49%      48%
----------------------------------------------------------------------------

Equipment fleet (iii)
  Coil tubing rigs:
    Masted deep                                14       14       16       16
    Conventional deep                          11       11       11       10
    Conventional other                         19       19       19       19
  Service rigs                                 56       56       55       55
  Nitrogen pumpers                             15       13       13       10
  Fluid pumpers                                18       18       18       16
  Rod rigs                                     14       14       14       14
----------------------------------------------------------------------------

(i) Other revenue included revenue from Essential's drilling operation until its disposal in November 2012.

(ii) Utilization is calculated using a 10 hour day.

(iii) Fleet data represents the number of units at the end of the period.


ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
                                                         As at         As at
                                                       June 30   December 31
(Thousands)                                               2014          2013
----------------------------------------------------------------------------

Assets
Current
  Trade and other accounts receivable            $      47,489 $      76,640
  Inventories                                           34,033        27,979
  Prepayments                                            3,705         3,326
----------------------------------------------------------------------------
                                                        85,227       107,945
----------------------------------------------------------------------------

Non-current
  Property and equipment                               235,566       230,292
  Intangible assets                                     30,227        30,712
  Goodwill                                              57,944        55,014
----------------------------------------------------------------------------
                                                       323,737       316,018
----------------------------------------------------------------------------

Total assets                                     $     408,964 $     423,963
----------------------------------------------------------------------------

Liabilities
Current
  Bank indebtedness                              $       1,199 $       2,112
  Trade and other accounts payable                      27,807        36,161
  Dividends payable                                      3,774         3,765
  Income taxes payable                                       -         3,381
  Current portion of long-term debt                          -         7,603
----------------------------------------------------------------------------
                                                        32,780        53,022
----------------------------------------------------------------------------

Non-current
  Long-term debt                                        38,433        31,424
  Deferred taxes                                        26,810        26,360
----------------------------------------------------------------------------
                                                        65,243        57,784
----------------------------------------------------------------------------

Total liabilities                                       98,023       110,806
----------------------------------------------------------------------------

Equity
  Share capital                                        263,062       262,177
  Retained earnings                                     43,804        46,622
  Other reserves                                         4,075         4,358
----------------------------------------------------------------------------
Total equity                                           310,941       313,157
----------------------------------------------------------------------------


Total liabilities and equity                     $     408,964 $     423,963
----------------------------------------------------------------------------

ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)
                                  For the three months    For the six months
                                                 ended                 ended
                                               June 30               June 30
(Thousands, except per share
 amounts)                              2014       2013       2014       2013
----------------------------------------------------------------------------

Revenue                         $    52,752 $   38,417 $  156,482 $  158,936

Operating expense                    47,530     39,727    123,933    122,415
----------------------------------------------------------------------------
Gross margin                          5,222    (1,310)     32,549     36,521

General and administrative
 expenses                             4,782      3,861      9,602      8,267
----------------------------------------------------------------------------
                                        440    (5,171)     22,947     28,254

Depreciation and amortization         6,576      6,006     13,361     13,050
Share-based compensation                678        269      1,329        612
Other expense                            98        187        853         53
----------------------------------------------------------------------------
Operating profit (loss) from
 continuing operations              (6,912)   (11,633)      7,404     14,539

Finance costs                           481        402        914        778
----------------------------------------------------------------------------
Income (loss) before income tax
from continuing operations          (7,393)   (12,035)      6,490     13,761

Current income tax expense
 (recovery)                         (1,466)      (969)      1,316      3,456
Deferred income tax expense
 (recovery)                           (502)    (2,108)        450         58
----------------------------------------------------------------------------
Total income tax expense
 (recovery)                         (1,968)    (3,077)      1,766      3,514
----------------------------------------------------------------------------

Net income (loss) from
 continuing operations          $   (5,425) $  (8,958) $    4,724 $   10,247
----------------------------------------------------------------------------

Loss from discontinued
 operations, net of tax                   -    (2,678)          -    (3,285)
----------------------------------------------------------------------------
Net income (loss)               $   (5,425) $ (11,636) $    4,724 $    6,962
----------------------------------------------------------------------------

Unrealized foreign exchange loss
 from continuing operations            (80)          -      (166)          -
Unrealized foreign exchange loss
 from discontinued operations             -      (156)          -      (187)
----------------------------------------------------------------------------
Other comprehensive loss               (80)      (156)      (166)      (187)
----------------------------------------------------------------------------

Comprehensive income (loss)     $   (5,505) $ (11,792) $    4,558 $    6,775
----------------------------------------------------------------------------

Net income (loss) attributable
 to:
  Shareholders of Essential     $   (5,425) $ (11,501) $    4,724 $    7,126
  Non-controlling interest                -      (135)          -      (164)
----------------------------------------------------------------------------
                                $   (5,425) $ (11,636) $    4,724 $    6,962
----------------------------------------------------------------------------

Comprehensive income (loss)
 attributable to:
  Shareholders of Essential     $   (5,505) $ (11,650) $    4,558 $    6,947
  Non-controlling interest                -      (142)          -      (172)
----------------------------------------------------------------------------
                                $   (5,505) $ (11,792) $    4,558 $    6,775
----------------------------------------------------------------------------

Net income (loss) per share from
 continuing operations
  Basic and diluted,
   attributable to shareholders $    (0.04) $   (0.07) $     0.04 $     0.08
   of Essential

Net income (loss) per share
  Basic and diluted,
   attributable to shareholders $    (0.04) $   (0.09) $     0.04 $     0.06
   of Essential

Comprehensive income (loss) per
 share
  Basic and diluted,
   attributable to shareholders $    (0.04) $   (0.09) $     0.04 $     0.06
   of Essential
----------------------------------------------------------------------------


ESSENTIAL ENERGY SERVICES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                    For the six months ended
                                                                     June 30
(Thousands)                                               2014          2013
----------------------------------------------------------------------------

Operating activities:

Net income from continuing operations            $       4,724 $      10,247

Non-cash adjustments to reconcile net income for
 the period to operating cash flow:
  Depreciation and amortization                         13,361        13,050
  Deferred income tax expense                              450            58
  Share-based compensation                                 400           612
  Provision for impairment of trade accounts
   receivable                                              225           280
  Finance costs                                            914           778
  Loss on disposal and retirement of assets                848            64
----------------------------------------------------------------------------
Operating cash flow before changes in non-cash
 working capital                                        20,922        25,089
Change in non-cash operating working capital:
  Trade and other accounts receivable before
   provision                                            32,374        31,326
  Inventories                                          (5,520)       (4,218)
  Prepayments                                            (379)           547
  Trade and other accounts payable                     (4,540)       (6,156)
  Current income taxes payable                         (6,102)       (1,374)
----------------------------------------------------------------------------
Net cash provided by operating activities from
 continuing operations                                  36,755        45,214
----------------------------------------------------------------------------

Investing activities:
  Purchase of property, equipment and
   intangibles                                        (19,172)      (18,704)
  Business acquisition, net of cash acquired           (5,533)             -
  Non-cash investing working capital in trade
   and other accounts payable                          (4,349)         (546)
  Proceeds on disposal of equipment                      1,902           726
----------------------------------------------------------------------------
Net cash used in investing activities from
 continuing operations                                (27,152)      (18,524)
----------------------------------------------------------------------------

Financing activities:
  Issuance of long-term debt                             (594)      (20,971)
  Proceeds from exercise of share options                  871         2,187
  Repurchase of shares                                   (500)         (421)
  Dividends paid                                       (7,534)       (6,227)
  Finance costs                                          (914)         (778)
----------------------------------------------------------------------------
Net cash used in financing activities from
 continuing operations                                 (8,671)      (26,210)
----------------------------------------------------------------------------

Foreign exchange (gain) loss on cash held in a
 foreign currency                                         (19)            17
----------------------------------------------------------------------------

Net increase in cash                                       913           497
Bank indebtedness, beginning of period                 (2,112)       (1,835)
----------------------------------------------------------------------------

Bank indebtedness, end of period                 $     (1,199) $     (1,338)
----------------------------------------------------------------------------

Supplemental cash flow information
Cash taxes paid                                  $       7,434 $       4,830
Cash interest and standby fees paid              $         794 $         645
----------------------------------------------------------------------------

2014 SECOND QUARTER EARNINGS CONFERENCE CALL AND WEBCAST

Essential has scheduled a conference call and webcast at 10:00 am MT (12:00 pm ET) on August 7, 2014.

The conference call dial in numbers are 416-340-2217 or 866-696-5910, passcode 8406362.

An archived recording of the conference call will be available approximately one hour after completion of the call until August 23, 2014 by dialing 905-694-9451 or 800-408-3053, passcode 5383943.

A live webcast of the conference call will be accessible on Essential's website at www.essentialenergy.ca by selecting "Investors" and "Events and Presentations". Shortly after the live webcast, an archived version will be available for approximately 30 days.

ABOUT ESSENTIAL

Essential is a growth-oriented, dividend paying corporation that provides oilfield services to producers in western Canada for producing wells and new drilling activity. Essential operates the largest coil tubing well service fleet in Canada with 47 coil tubing rigs and a fleet of 55 service rigs. Essential also sells, rents and services downhole tools and equipment including the Tryton MSFS®. Further information can be found at www.essentialenergy.ca.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This news release contains forward-looking statements and forward-looking information (collectively the "Forward-Looking Statements") within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "may", "will", "believe", "intends", "budget" and similar expressions are intended to identify Forward-Looking Statements. In particular, this news release contains forward-looking statements, including, among other things, expectations regarding: capital spending, in-service timing and the timing of completion and delivery of new equipment, customer demands and the demand for new equipment and the possible implications on results, development of new products, demand for new products, growth opportunities and sources of such growth opportunities, future cash flow and earnings, access to sufficient funding, the NCIB, the level and type of drilling activity, completion activity, work-over activity, production activity, fracturing activity and required oilfield services in the WCSB, the business, operations, revenues and margins of the Company in addition to general economic conditions, Essential's ability to meet the changing needs of the WCSB market, Essential's positioning for the future, the future operations of the coil well service and downhole tools & rentals segments, Essential's ability to overcome competitive industry pressure for the MSFS® and the Company's belief that the Packers Plus Energy Services Inc. claim is without merit. In addition, this new release contains Forward-Looking Statements, including expectations regarding: the Company's outlook for the second half of 2014 including: oilfield service activity and demand, Essential's improved service capacity, the Company's segment growth and revenue growth, the MSFS® product line, price expectations, and financial resource or liquidity issues restricting Essential's future operating, investing or financing activities.

Although the Company believes that the expectations and assumptions on which such Forward-Looking Statements are reasonable, undue reliance should not be placed on the Forward-Looking Statements because the Company can give no assurance that such statements and information will prove to be correct. Since Forward-Looking Statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.

Actual performance and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: known and unknown risks, including those set forth in the Company's annual information form ("AIF") (a copy of which can be found under Essential's profile on SEDAR at www.sedar.com); the risks associated with the oilfield services sector (e.g. demand, pricing and terms for oilfield services; current and expected oil and natural gas prices; exploration and development costs and delays; reserves discovery and decline rates; pipeline and transportation capacity; weather, health, safety and environmental risks); integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation, including but not limited to tax laws, royalties, incentive programs and environmental regulations; stock market volatility and the inability to access sufficient capital from external and internal sources; the ability of the Company's subsidiaries to enforce legal rights in foreign jurisdictions; general economic, market or business conditions; global economic events; changes to Essential's financial position and cash flow; the availability of qualified personnel, management or other key inputs; currency exchange fluctuations; changes in political and security stability; risks and uncertainty related to distribution and pipeline constraints; and other unforeseen conditions which could impact the use of services supplied by the Company. Accordingly, readers should not place undue reliance on the Forward-Looking Statements. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website at www.sedar.com for the Company. The forward-looking statements and information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The TSX has neither approved nor disapproved the contents of this news release.

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