Mr. John Hooks reports

PHX ENERGY ANNOUNCES RECORD SECOND QUARTER FINANCIAL AND OPERATING RESULTS, AND INCREASES ITS 2014 CAPITAL EXPENDITURES BUDGET

PHX Energy Services Corp. achieved record levels of revenue, operating days, EBITDA (earnings before interest, taxes, depreciation and amortization) and funds from operations for a second quarter.

For the three-month period ended June 30, 2014, the corporation generated consolidated revenue of $100.5-million as compared with $65.5-million in the 2013 period, a 53-per-cent increase. In addition, despite the usual effects of spring breakup in Canada, the level of the corporation's profitability increased. EBITDA of $7.8-million was achieved in the second quarter of 2014, compared with $400,000 in the 2013 period. As a percentage of revenue, EBITDA was 8 per cent in the 2014 quarter, compared with 1 per cent in the corresponding 2013 quarter. This level of EBITDA was primarily the result of solid activity growth and improved profitability realized in the United States. In addition, margins were positively impacted by the continuing strategy to implement cost reduction initiatives, continuously improve reliability and gain operational efficiencies related to the utilization of PHX Energy's technologies.

All-time record quarterly revenue and operating days were attained in the U.S. and, as a percentage of the 2014 quarter's consolidated revenue, this segment represented 66 per cent as compared with 62 per cent in the 2013 quarter. Albania also achieved the highest level of quarterly revenue and operating days in its history, and the international segment represented 13 per cent of consolidated revenue in the second quarter of 2014 (2013, 20 per cent). The Canadian segment in the second quarter of 2014 achieved new quarterly revenue and operating day milestones.

PHX Energy has increased its 2014 capital expenditure budget from $63.3-million to $76.4-million, in light of strong growth realized and anticipated future activity levels. During the second quarter of 2014, $11.1-million in capital expenditures were incurred, and an additional $26.1-million is currently on order and is expected to be received within the remainder of 2014.

In the 2014 quarter, the corporation paid dividends of $7.3-million or 21 cents per share. As at June 30, 2014, PHX Energy had long-term debt of $90.3-million and working capital of $77.8-million.

During the second quarter of 2014, PHX Energy's job capacity increased by five concurrent jobs to 212 through the addition of five E-360 electromagnetic (EM) measurement while drilling (MWD) systems. As at June 30, 2014, the corporation's MWD fleet consisted of 140 P-360 positive pulse MWD systems and 72 E-360 EM MWD systems. Of these, 100 MWD systems were deployed in Canada, 94 in the United States, nine in Russia, six in Albania, and three in Peru. The process of closing the Peruvian operations is still in progress and assets are being reallocated to other locations. In addition, during the second quarter of 2014, the corporation ceased all activities in Colombia and initiated the closure of its Colombian entity. All assets have been transferred to North America to support the increased drilling activities.

During the remainder of the year, the corporation expects to add 12 P-360 and 2 E-360 MWD systems. As a result, by the end of 2014, the corporation expects to have a fleet of 226 MWD systems, which would comprise 152 P-360 MWD systems and 74 E-360 MWD systems. In addition, the corporation expects to increase its worldwide resistivity while drilling (RWD) job capacity from 17 at the end of the second quarter to 18 by the end of 2014.

                                                                    
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                            
                      Three-month periods ended     Six-month periods ended
                                        June 30,                    June 30,
                             2014          2013          2014          2013 

Revenue              $100,484,150  $ 65,482,975  $229,614,660  $158,149,790 
Direct costs           86,333,058    62,051,464   186,976,870   133,017,023 
Gross profit           14,151,092     3,431,511    42,637,790    25,132,767 
Expenses
Selling, general                                                           
and administrative                                                        
expenses               14,523,261     8,443,769    29,127,887    18,928,599 
Research and                                                               
development                                                               
expenses                  660,226       456,068     1,497,470       991,981 
Finance expense           861,744     1,181,287     1,892,041     2,274,914 
Other income           (1,360,839)     (257,647)   (2,136,085)   (2,296,483)
                       14,684,392     9,823,477    30,381,313    19,899,011 
Share of loss of                                                           
equity-accounted                                                          
investee (net of                                                          
tax)                            -       446,514             -       666,568 
Earnings (loss)                                                             
before income taxes      (533,300)   (6,838,480)   12,256,477     4,567,188 
Provision for                                                               
(recovery of)                                                              
income taxes                                                               
Current                 1,926,514       833,711     2,586,179     2,628,702 
Deferred               (1,397,394)   (2,937,048)    1,919,616    (1,632,216)
                          529,120    (2,103,337)    4,505,795       996,486 
Net earnings (loss)    (1,062,420)   (4,735,143)    7,750,682     3,570,702 
Other comprehensive                                                         
income                                                                     
Foreign currency                                                            
translation            (2,103,649)      830,863      (677,895)    2,295,633 
Total comprehensive                                                         
income (loss) for                                                          
the period           $ (3,166,069) $ (3,904,280) $  7,072,787  $  5,866,335 
Earnings (loss) per                                                         
share, basic         $      (0.03) $      (0.16) $       0.22  $       0.13 
Earnings (loss) per                                                         
share, diluted       $      (0.03) $      (0.16) $       0.22  $       0.13 

We seek Safe Harbor.