Mr. Garnet Amundson reports

ESSENTIAL ENERGY SERVICES ANNOUNCES 2013 CAPITAL SPENDING BUDGET AND COIL WELL SERVICE REBRANDING

Essential Energy Services Ltd.'s 2013 capital spending budget of $45-million comprises $18-million of newly announced growth capital, $14-million to complete previously announced growth capital projects and $13-million of maintenance capital. Spending is primarily focused on the high-demand deep coil tubing fleet and further developing Essential's service rig fleet. This spending is expected to be financed from operating cash flow and the existing credit facility. Essential will monitor industry conditions in 2013 and may adjust the capital program if appropriate.

Essential expects 2012 capital spending to be approximately $50-million. In mid-December, Essential took delivery of its most recent conventional deep coil tubing rig and expects commissioning to be completed prior to Dec. 31. This brings Essential's deep coil tubing fleet to 27, which is Canada's largest deep coil tubing well service fleet.

In December, 2012, Essential put its first coil tubing reel trailer into service. The reel trailer is a stand-alone unit that carries the coil tubing reel and works alongside a deep coil tubing rig. Distributing the weight between the coil tubing rig, which can travel with or without the coil tubing reel, and the reel trailer provides greater versatility for transportation. The reel trailer can carry up to 6,000 metres of 2.875-inch-diameter coil. The addition of large-diameter coil depth capacity using this reel trailer expands the work capability of a coil tubing rig up to the limits of its injector. Successful design and implementation of the innovative technology required for this large-capacity reel trailer is a critical step as Essential designs and builds the next generation of deeper masted mobile coil tubing rigs.

Effective Jan. 1, 2013, Essential will be rebranding its entire fleet of coil tubing rigs, and supporting fluid and nitrogen pumpers, to "Essential Coil Well Service." At this time, the Technicoil brand will no longer be used for Essential's operations.

At Dec. 19, 2012, long-term debt outstanding was $32-million.

Growth capital spending for 2013

The $32-million of growth spending is expected to consist of the following:

New growth spending ($18-million) will consist of:

• One masted deep coil tubing rig and one nitrogen pumper;
• Three mobile free-standing all-period double-service rigs;
• Other ancillary equipment.

Spending on the completion of previously announced projects ($14-million) will consist of:

• The completion of five masted deep coil tubing rigs, the conversion of one intermediate coil tubing rig to a deep coil tubing rig and one nitrogen pumper;
• The completion of two mobile free-standing all-period double-service rigs.

Three of the five previously announced masted deep coil tubing rigs were expected to be constructed by a fabrication company that is having significant issues meeting delivery deadlines. This has already caused delivery delays of approximately 10 months. One of the rigs is approximately 50-per-cent complete and at this point Essential hopes to take delivery of this rig in the third quarter of 2013. Meaningful assembly of the other two rigs has not begun so timing of the delivery of these rigs is difficult to assess. Fortunately, Essential is using a number of different fabricators for its growth program and only has three rigs impacted by this fabricator's delays.

Equipment count

Essential anticipates an equipment count after completion of the 2013 capital spending budget as shown in the attached table.

                               Forecast   Budgeted                            Forecast   
                          Dec. 31, 2012  additions  Timing of additions  Dec. 31, 2013

Coil tubing -- deep (1)              27          5   Q1, Q3 (2), Q4 (2)             32      
Coil tubing -- other (2)             21         (1)                  Q1             20      
Coil tubing -- total                 48          4                                  52      
Nitrogen pumpers                     15          2               Q1, Q4             17      
Fluid pumpers                        18          0                                  18      
Service rigs                         57          5   Q1 (2), Q2, Q3 (2)             62      
                                                                            
Notes:
(1) The equipment count excludes the two deep masted coil tubing rigs with uncertain 
    delivery dates.                                               
(2) Coil tubing (other) is a conversion of an intermediate-depth coil tubing rig to a
    deep coil tubing rig.                                                             

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