Mr. Stephen Popadynetz reports

DIVESTCO REPORTS Q3 2013 RESULTS

Divestco Inc. has released its financial and operating results for the three and nine months ended Sept. 30, 2013.

               FINANCIAL HIGHLIGHTS
 (in thousands of dollars, except per-share amounts) 

                                    Three months ended 
                                              Sept. 30,      
                                       2013       2012

Revenue                           $   4,883  $   6,409
Operating expenses                    5,219      6,013
Other loss (income)                     (24)        40
EBITDA(1)                              (312)       356
Finance costs                           301        309
Depreciation and amortization         1,372      1,178
Income (loss) before income taxes    (1,985)    (1,131)
Income tax expense (reduction)            -        (51)
Net income (loss)                 $  (1,985) $  (1,080)
Per share -- basic and diluted        (0.03)     (0.02)
Funds from (used in) operations   $    (291) $     191
Per share -- basic and diluted            -          -


                                     Nine months ended
                                              Sept. 30,
                                       2013       2012

Revenue                           $  23,584  $  32,358
Operating expenses                   17,822     20,229
Other loss (income)                   1,666         41
EBITDA                                4,096     12,088
Finance costs                           792        280
Depreciation and amortization         5,435      9,354
Income (loss) before income taxes    (2,131)     2,454
Income tax expense (reduction)            -        (51)
Net income (loss)                 $  (2,131) $   2,505
Per share -- basic and diluted        (0.03)      0.04
Funds from (used in) operations   $   6,093  $  11,664
Per share -- basic and diluted         0.09       0.17

(1) EBITDA means earnings before finance costs, taxes, 
    and depreciation and amortization.

Divestco had a net loss of $2-million for the third quarter of 2013 (three cents per share -- basic and diluted), compared with a net loss of $1.1-million (two cents per share -- basic and diluted) for the same period in 2012. For the nine months ended Sept. 30, 2013, the company had a net loss of $2.1-million (three cents per share -- basic and diluted), compared with net income of $2.5-million (four cents per share -- basic and diluted) for the same period in 2012. The loss for the third quarter of 2013 was due to lower revenues and higher depreciation, partially offset by lower operating costs. The loss for the nine months ended Sept. 30, 2013, included an accounting loss of $1-million and an impairment charge of $700,000 related to an asset sale and a leasehold improvement writedown, respectively. Excluding the loss and the impairment, the company would have had a net loss of $400,000 (one cent per share -- basic and diluted) for the nine months ended Sept. 30, 2013.

For the third quarter of 2013, Divestco generated revenue of $4.9-million, compared with $6.4-million in the third quarter of 2012, a decrease of $1.5-million (24 per cent). Revenues in the services segment improved due to stronger results from seismic processing and land management services, while the seismic data and software and data segments were weaker. For the nine months ended Sept. 30, 2013, the company generated revenue of $23.6-million, compared with $32.4-million for the same period in 2012, a decrease of $8.8-million (27 per cent), due primarily to lower speculative seismic survey activity.

Operating expenses decreased by $800,000 (13 per cent) to $5.2-million in the third quarter of 2013 from $6-million in the third quarter of 2012. Operating expenses decreased by $2.4-million (12 per cent) to $17.8-million for the nine months ended Sept. 30, 2013, from $20.2-million during the same period in 2012. On both a quarterly and a year-to-date basis, salaries and wages were down due to lower head count, and occupancy costs were lower as the company surrendered a floor of office space effective Jan. 1, 2013, and another floor effective June 1, 2013.

Depreciation and amortization increased from the third quarter of 2012 to the third quarter of 2013, mainly due to higher depreciation on seismic data, offset by lower amortization of deferred development costs. For the nine months ended Sept. 30, depreciation and amortization decreased due to lower depreciation on seismic data as the company acquired more data in 2012 as compared with 2013.

Operating highlights for the nine months ended Sept. 30, 2013, included:

• Reduction of $2.4-million (12 per cent) in operating expenses;
• Surrendered 44,000 square feet of office space for a cost savings of $200,000 per month (22,000 square feet effective Jan. 1, 2013, and 22,000 square feet effective June 1, 2013);
• Completed $2.2-million in seismic data library sales and completed an 89-square-kilometre seismic data survey;
• Completed $900,000 of a $1.3-million seismic processing project for a major client.

Financial position

As at Sept. 30, 2013, Divestco had a working capital deficit of $20,000 (excluding deferred revenue of $4.1-million), compared with a deficit of $7.5-million at Dec. 31, 2012 (excluding deferred revenue of $2.4-million). The improvement in working capital from the end of 2012 was as a direct result of debt restructuring, strong seismic cash sales and significant reductions in operating costs. This allowed the company to significantly reduce its payables. The company's financed-debt-to-equity ratio was 0.74 to 1 at Sept. 30, 2013, compared with 0.64 to 1 at Dec. 31, 2012.

Operations update

Divestco has filled key leadership positions to further enhance corporate development and to better align its people with its business strategy. The company is realizing significant success in its international expansion efforts and has secured several multiyear contracts. Although the outlook for 2014 is somewhat uncertain, management believes its debt-restructuring and cost-reduction initiatives have positioned the company to focus on revenue growth to maximize cash flows. With the last major occupancy cost reduction having been completed with the surrender of 22,000 square feet of office space effective June 1, 2013, Divestco believes 2014 will realize sustained profitability and increased shareholder value through improved focus and operational alignment.

Stephen Popadynetz, chief executive officer, commented: "During times when the Western Canadian oil and gas industry is in contraction, we at Divestco must be ever vigilant of our costs. We can't increase the industry activity levels, but we can continue to be efficient with our resources. Despite the challenging economic environment, Divestco's working capital position is substantially improved from the end of fiscal 2012. This has been achieved through the restructuring of the company's debt, our dedication to cost control and realizing the value of its assets. Our seismic inventory sales in the first nine months of 2013 remained strong and, despite the softness in our services segment as we entered 2013, we are seeing increased activity levels internationally and domestically, which should result in improved results going forward. Additionally, our software and data segment is rapidly developing new products which are about to hit the marketplace, which we believe will lead to significant growth early next year. With all of these positive growth catalysts, we remain optimistic that Divestco will continue to strengthen its balance sheet and reward our shareholders with significant appreciation in our underlying assets."

We seek Safe Harbor.