Mr. Garnet Amundson reports

ESSENTIAL ENERGY SERVICES ANNOUNCES 2017 CAPITAL BUDGET

Essential Energy Services Ltd. has set its 2017 capital budget at $11-million, composed of $4-million growth capital and $7-million maintenance capital. The growth capital consists primarily of pumping support equipment, the cost to recertify and prepare for work the four coil tubing rigs and four pumpers acquired in December, 2016, and the purchase of rental drill pipe for the company's downhole tools and rentals division. The increase in maintenance capital compared with 2016 reflects expectations that the fleet will be more active in 2017.

Essential's 2016 capital spending is expected to be $12-million, as previously announced. This includes $9-million for growth capital and $3-million for maintenance capital.

As previously announced, on Nov. 6, 2016, Essential entered into a settlement agreement and terminated its build contract for the two remaining Generation 4 rigs with Option Industries Inc. On Nov. 9, 2016, Option filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act. Essential and Option are in a legal dispute related to Option not fulfilling the terms of the settlement agreement, and accordingly the remaining settlement funds owing to Option have not been released. Given the current status of the legal dispute, the cost to complete each of the remaining rigs and the recent acquisition of four Generation 3 rigs in December, 2016, Essential does not intend to complete the two remaining Generation 4 rigs in 2017. Essential intends to park one rig and will consider completing it at a future date, when market demand increases. Essential will retain the second, less complete rig as inventory for future use and plans to redeploy the usable components amongst its existing fleet or future rig builds.

The Generation 3 and Generation 4 rigs have the capability to work on complex, long-reach horizontal wells in the Montney, Bakken and Duvernay regions. With a coil diameter of 2-3/8ths of an inch, the Generation 3 rigs can reach 6,300 metres, and the Generation 4 rigs can reach 7,900 metres. Essential believes with its current fleet of eight Generation 3 and four Generation 4 rigs, including the four Generation 3 rigs acquired in December, 2016, it is well positioned to meet anticipated 2017 market demand.

About Essential Energy Services Ltd.

Essential provides oil field services to oil and natural gas producers, primarily in Western Canada. Essential offers completion, production and abandonment services to a diverse customer base. Services are offered with coil tubing, fluid and nitrogen pumping, and the sale and rental of downhole tools and equipment. Essential offers the largest coil tubing fleet in Canada.

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