Mr. Garnet Amundson reports

ESSENTIAL ENERGY SERVICES ANNOUNCES THIRD QUARTER RESULTS, DIVIDEND REDUCTION AND 2016 CAPITAL SPENDING BUDGET

Essential Energy Services Ltd. had third-quarter revenue, and earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDAS) (1) of $47.8-million and $8.5-million, respectively, compared with $96.1-million and $22.7-million in the third quarter of 2014. While revenue was impacted by pricing pressure and customer activity, Essential's focus on cost control and pro-active steps taken in the first quarter of 2015 enabled the company to protect operating margins despite significant revenue declines.

During the third quarter of 2015, well completions in the Western Canadian sedimentary basin, a key driver of Essential's services, decreased 48 per cent compared with the same period in 2014. Essential's masted coil tubing and pumping outperformed industry activity with utilization of 70 per cent and 57 per cent, respectively, as key customers remained active in the Bakken, Montney and Duvernay regions during the quarter. Activity declines in service rigs, downhole tools and rentals were comparable with the industry-wide decreases in drilling and well completions.

																								 	SELECTED INFORMATION
  (in thousands of dollars except per-share, percentages and fleet data)

                                     Three months ended     Nine months ended
                                               Sept. 30,             Sept. 30,
                                        2015       2014      2015        2014

Revenue                           $   47,824 $   96,136 $ 142,233  $  252,618
Gross margin                          11,927     27,515    27,809      60,064
Gross margin %                            25%        29%       20%         24%
EBITDAS (1)                            8,503     22,657    16,530      45,604
EBITDAS % (1)                             18%        24%       12%         18%
Net income (loss)                      2,996     10,777    (4,403)     15,501
Per share -- basic                      0.02       0.09     (0.03)       0.12
Per share -- diluted                    0.02       0.08     (0.03)       0.12
Total assets                         346,564    454,745   346,564     454,745
Total long-term debt                  34,738     65,043    34,738      65,043
Utilization
Masted coil tubing rigs                   70%       105%       62%         85%
Service rigs                              24%        48%       26%         49%
Equipment fleet
Masted coil tubing rigs                   19         17        19          17
Service rigs                              48         54        48          54
                                                                            
(1) Non-international financial reporting standards measure

Outlook and dividend

There was significant deterioration in the industry outlook during the third quarter of 2015. Evolving world events and deteriorating oil price fundamentals increased the uncertainty of a near-term oil price recovery. The decline in oil prices resulted in an increasingly negative industry outlook, and "lower for longer" became the industry mantra. At this point, the duration and extent of the downturn remain highly uncertain, with many industry experts not seeing an oil field services reprieve until late 2016 or in 2017. Unique to Canada, the industry is subject to incremental barriers, given pending policy decisions on carbon taxes, royalties, oil export pipelines and the slow progression of liquefied natural gas export terminals.

The Canadian oil field services industry has experienced significant service price deterioration during the year. Management anticipates additional price reductions as the landscape for Essential's services remains very competitive.

Facing this industry uncertainty and a number of cash-constrained customers that are financially unable to continue with drilling, completion and production programs, management has taken steps to reduce all significant elements of cash outflow. Protecting Essential's strong balance sheet continues to be at the forefront of decisions. This is reflected in the company's reduced 2016 capital spending budget, cost-management initiatives and the dividend strategy.

Essential announces a modest 2016 capital budget of $9-million, including $4-million for growth capital and $5-million for maintenance capital. This allows for completion of the Generation IV masted coil tubing capital build program in 2016. Upon completion, Essential will have 10 new Generation III/IV masted coil tubing rigs. Through the downturn, the masted coil tubing rigs have maintained strong utilization in a shrinking well completions market. Essential has a relatively new equipment fleet that is suited to the current industry direction of long-reach horizontal wells. Upon completion of the build program in 2016, the company will have spent approximately $52-million on new masted coil tubing rigs in the past few years. This will position Essential with an advanced fleet, allowing the company to take advantage when the industry improves.

Essential has been an industry leader in disciplined cost management. Cost management has become engrained in the company's culture. Cost-reduction steps taken earlier in the year have allowed for the reasonably strong margins reported this quarter, despite a significant reduction of revenue. Essential is on track to realize annualized fixed cost savings of $10-million. The bulk of these cost reductions have been personnel and compensation related, with employee headcount decreasing by approximately 40 per cent, or 420 employees, since the beginning of 2015. With that in mind, continual review and monitoring of the cost structure are required. Despite significant cost cutting and headcount reductions, Essential remains focused on investing in key personnel during the downturn so the business is ready to benefit when the market turns around.

Essential's board of directors reviews the dividend on a quarterly basis. Given the current industry outlook, the Board has determined that a further dividend reduction is prudent. Starting with the Nov. 4, 2015, dividend announcement, the quarterly dividend will be 0.3 cent per share, resulting in annualized savings of $6-million.

In the near term, activity for the fourth quarter is expected to be slower than the third quarter of 2015 and significantly below the fourth quarter of 2014, as exploration and production companies reach their 2015 capital budget limits and cash flow remains constrained. Essential has reduced its 2015 capital spending plans by $3-million and expects to have annual capital spending in 2015 of $18-million.

Since year-end 2014, Essential has reduced its debt by $21-million while nearing completion of its large-scale masted coil tubing build program. At this point, Essential maintains one of the strongest balance sheets in the Canadian oil field services sector. Maintaining that strength through timely and prudent spending, and a dividend reduction, underpins the company's strength and future viability as it continues to navigate the downturn. At Nov. 4, 2015, Essential had $32.3-million of debt outstanding and reported debt to EBITDAS (1) of 0.9 times at the end of the third quarter.

Dividend declaration

The cash dividend for the period Oct. 1, 2015, to Dec. 31, 2015, has been set at 0.3 cent per share. The dividend will be paid on Jan. 15, 2016, to shareholders of record on Dec. 31, 2015. The ex dividend date is Dec. 29, 2015. This dividend is an eligible dividend for Canadian income tax purposes.

Segment results -- well servicing

Despite industry fundamentals, coil well service performance was strong, with third-quarter 2015 revenue decreasing 38 per cent due to activity and pricing, compared with a 48-per-cent decrease in industry well completions. Masted coil tubing and pumping utilization were 70 per cent and 57 per cent, respectively. In this low-activity environment, management is pleased with the activity of the coil well service business. This is, in part, attributable to continued work by key customers, and Essential's high-quality equipment and service. Competitive pricing pressure resulted in revenue per hour declining approximately 15 per cent in the third quarter of 2015 compared with the same period in 2014.

Service rigs continued to be impacted by the industry downturn, with revenue 65 per cent lower than the third quarter of 2014. Activity and pricing decreases both contributed to the revenue decline. Service rigs in the Grande Prairie and Fort St. John regions had relatively strong utilization in comparison with industry utilization of 31 per cent. However, the company's overall service rig utilization was offset by lower activity in central and southern Alberta. In the third quarter, service rig revenue per hour declined approximately 10 per cent compared with the same period in 2014.

Well servicing gross margin as a percentage of revenue for the third quarter of 2015 was higher than the prior year. Both the coil well service and service rig operations were profitable, as Essential benefited from significant cost-reduction initiatives. Pricing reductions have been offset by lower labour, repairs and maintenance costs, and a reduction of discretionary spending.

On a year-to-date basis, well servicing gross margin as a percentage of revenue was higher than prior year as Essential benefited from cost-reduction measures implemented earlier in the year. These measures offset the year-over-year revenue decline that was driven by lower activity, particularly in Essential's service rig operations, and a reduction in revenue per hour for all services.

Segment results -- downhole tools and rentals

Downhole tools and rentals' third-quarter 2015 revenue decreased 55 per cent from the same quarter of 2014. Activity in Tryton MSFS tools, conventional tools and rentals decreased due to industry declines for drilling, well completions and production services. This business continues to be negatively impacted by aggressive competition, reduced activity from certain key customers and pricing pressure. United States revenue was less impacted, but remains a small part of the business. Third quarter 2015 experienced pricing reductions of up to 20 per cent compared with 2014.

Downhole tools and rentals' gross margin as a percentage of revenue was 23 per cent in the third quarter of 2015, compared with 37 per cent for the same period in 2014. In spite of significant cost reductions implemented earlier in 2015, margins are lower due to a decline in pricing and lower contribution from the higher-margin rentals business.

Gross margin as a percentage of revenue for the nine months ended Sept. 30, 2015, decreased compared with the prior year due to a decline in downhole tools activity and pricing, as well as lower contribution from the higher-margin rentals business.

General and administrative

General and administrative (G&A) expenses comprise wages, professional fees, office space and other administrative costs incurred at corporate and operational levels. G&A expenses for the three and nine months ended Sept. 30, 2015, were lower than the same period in 2014 due primarily to reductions in employee headcount, salaries, and incentive and benefit plans in 2015. G&A as a percentage of revenue increased from the same periods in 2014 due to the significant revenue declines.

Other (income) expenses

Loss on disposal and writedown of assets relates to the sale or retirement of equipment that is no longer used in operations. The weakening Canadian dollar in relation to the U.S. dollar resulted in higher foreign exchange gains in the first nine months of 2015 compared with the same period in 2014.

Income tax

For the nine months ended Sept. 30, 2015, there is a current income tax recovery compared with an expense in 2014 due to the decline in earnings before income taxes. Two thousand fifteen losses will be applied to recover taxes paid in previous years.

For the nine months ended Sept. 30, 2015, deferred income tax expense increased compared with 2014 due to legislation that was enacted during the second quarter 2015 to increase the Alberta provincial corporate income tax rate from 10 per cent to 12 per cent effective July 1, 2015. This resulted in the revaluation of the deferred income tax liability.

Financial resources and liquidity

Working capital (1)

The accounts receivable portion of working capital typically grows through the first, third and fourth quarters of the year when activity is greater. The inventory component comprises downhole tools and coil tubing inventory, which does not fluctuate as much with activity. Essential uses its revolving credit facility to meet the variable nature of its working capital needs, as collection periods for accounts receivable are longer than payment cycles to vendors and employees. In periods of higher activity, debt initially tends to increase, and in periods of lower activity debt initially declines.

Essential's capital budget for 2015 has been reduced from $21-million to $18-million. The $18-million comprises $14-million in growth capital and $4-million of maintenance capital. Growth capital consists primarily of costs related to building one Generation III and four Generation IV masted coil tubing rigs. The Generation III masted coil tubing rig went into service early in the fourth quarter, and the company's third Generation IV masted coil tubing rig is expected in service later in the fourth quarter. The $4-million decrease in maintenance capital is due to lower industry activity and Essential's equipment requiring less maintenance with reduced utilization.

2016 capital budget

Given the industry outlook, Essential is announcing a very modest 2016 capital budget of $9-million, comprising $4-million of growth capital and $5-million of maintenance capital. The growth capital will be used to complete the remaining three Generation IV masted coil tubing rigs. One rig is expected to be in service in each of the second, third and fourth quarters of 2016.

Essential's long-term capital build program will increase the size and depth capacity of its masted coil tubing fleet. To date, the company has added four Generation III and two Generation IV masted coil tubing rigs. Upon completion in 2016, Essential will have spent approximately $52-million on this program. Essential will have four Generation III and six Generation IV masted coil tubing rigs in service. At Sept. 30, 2015, Essential has spent $45-million on this program. The Generation III and Generation IV masted coil tubing rigs have the capability to work on long-reach horizontal wells and are well-suited to work in deep, high-pressure regions including the Montney, Bakken and Duvernay. With a coil diameter of 2-3/8 inches, the Generation III masted coil tubing rigs can reach 6,300 metres, and the Generation IV masted coil tubing rigs can reach 7,900 metres.

The attached table shows the expected in-service dates of the major equipment as at Nov. 4, 2015.

                                    No. rigs    No. rigs            Expected
Masted coil tubing rigs           in program  in service    in-service dates

Generation III                             4           4                   -
Generation IV                              6           2    Q4 2015, 2016 (i)

(i) One Generation IV masted coil tubing rig is expected to go into service 
    in each of Q2 2016, Q3 2016 and Q4 2016.                                          

The management's discussion and analysis, and financial statements are available on Essential's website and on SEDAR.

2015 third-quarter financial results conference call and webcast

Essential has scheduled a conference call and webcast at 10 a.m. MT (12 p.m. ET) on Nov. 5, 2015.

The conference call dial-in numbers are 416-340-2217 or 866-696-5910, passcode 4076876.

An archived recording of the conference call will be available approximately one hour after completion of the call until Nov. 19, 2015, by dialling 905-694-9451 or 800-408-3053, passcode 1095856.

A live webcast of the conference call will be accessible on Essential's website by selecting investors, and events and presentations. Shortly after the live webcast, an archived version will be available for approximately 30 days.

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