HispanicBusiness

Funds from operations per share - diluted is calculated using the treasury stock method whereby deemed proceeds on the exercise of the share options are used to reacquire common shares at an average share price. The calculation of funds from operations per share on a dilutive basis does not include anti-dilutive options.

About PHX Energy Services Corp.

The Corporation, through its subsidiary entities, provides horizontal and directional technology and drilling services to oil and natural gas producing companies in Canada, the US, Albania, Peru, Russia, and Colombia. PHX Energy develops and manufactures its E-360 EM and P-360 positive pulse MWD technologies that are made available for internal operational use.

PHX Energy's Canadian operations are conducted through Phoenix Technology Services LP. The Corporation maintains its corporate head office, research and development, Canadian sales, service and operational centers in Calgary, Alberta. In addition, PHX Energy has a facility in Estevan, Saskatchewan. PHX Energy's US operations, conducted through the Corporation's wholly-owned subsidiary, Phoenix Technology Services USA Inc. ("Phoenix USA"), is headquartered in Houston, Texas. Phoenix USA has sales and service facilities in Houston, Texas; Traverse City, Michigan; Casper, Wyoming; Denver, Colorado; Fort Worth, Texas; Midland, Texas; Buckhannon, West Virginia; Pittsburgh, Pennsylvania; and Oklahoma City, Oklahoma. Internationally, PHX Energy has sales offices and service facilities in Albania, Peru, Russia, and Colombia, and an administrative office in Nicosia, Cyprus

Consolidated Statements of Financial Position(unaudited)                                          March 31, 2013   December 31, 2012--------------------------------------------------------------------------------------------------------------------------------------------------------ASSETSCurrent assets:  Cash and cash equivalents          $         6,263,644 $         4,329,969  Trade and other receivables                 72,543,463          67,189,884  Inventories                                 24,851,791          21,833,051  Prepaid expenses                             4,019,848           3,476,559  Assets held for sale                        11,449,144           9,436,462----------------------------------------------------------------------------  Total current assets                       119,127,890         106,265,925Non-current assets:  Drilling and other equipment               151,349,161         144,370,109  Goodwill                                     8,876,351           8,876,351  Equity-accounted investees                   4,990,239           5,010,292----------------------------------------------------------------------------  Total non-current assets                   165,215,751         158,256,752----------------------------------------------------------------------------Total assets                         $       284,343,641 $       264,522,677--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:  Operating facility                 $         7,664,897 $         5,897,711  Trade and other payables                    42,296,869          38,165,118  Dividends payable                            1,643,538           1,626,287  Current tax liabilities                      1,687,555              97,020  Loans and borrowings                        15,000,000          15,000,000----------------------------------------------------------------------------  Total current liabilities                   68,292,859          60,786,136Non-current liabilities:  Loans and borrowings                        85,088,500          80,000,000  Deferred tax liabilities                     9,810,761           8,641,858----------------------------------------------------------------------------  Total non-current liabilities               94,899,261          88,641,858Equity:  Share capital                              100,536,116          99,101,118  Contributed surplus                          7,814,573           7,860,658  Retained earnings                           12,967,903           9,764,748  Accumulated other comprehensive   income                                      (167,071)         (1,631,841)----------------------------------------------------------------------------  Total equity                               121,151,521         115,094,683----------------------------------------------------------------------------Total liabilities and equity         $       284,343,641 $       264,522,677--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Statements of Comprehensive Income(unaudited)                                        Three-month periods ended March 31,                                                    2013               2012--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue                                $      92,666,815  $      79,768,829Direct costs                                  70,965,559         61,663,456----------------------------------------------------------------------------Gross profit                                  21,701,256         18,105,373--------------------------------------------------------------------------------------------------------------------------------------------------------Expenses:  Selling, general and administrative   expenses                                   10,484,830          8,504,391  Research and development expenses              535,913            553,103  Finance expense                              1,093,627            555,631  Other income                                (2,038,836)        (1,155,977)----------------------------------------------------------------------------                                              10,075,534          8,457,148Share of loss of equity-accounted investee (net of tax)                           220,054                  -----------------------------------------------------------------------------Earnings before income taxes                  11,405,668          9,648,225--------------------------------------------------------------------------------------------------------------------------------------------------------Provision for income taxes  Current                                      1,794,991          1,713,615  Deferred                                     1,304,832             16,345----------------------------------------------------------------------------                                               3,099,823          1,729,960----------------------------------------------------------------------------Net earnings                                   8,305,845          7,918,265--------------------------------------------------------------------------------------------------------------------------------------------------------Other comprehensive income  Foreign currency translation                 1,464,770           (935,899)----------------------------------------------------------------------------Total comprehensive income for the period                                $       9,770,615  $       6,982,366--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings attributable to:  Equity holders of the Corporation    $       8,305,845  $       7,972,780  Non-controlling interests                            -            (54,515)----------------------------------------------------------------------------Net earnings                           $       8,305,845  $       7,918,265--------------------------------------------------------------------------------------------------------------------------------------------------------Comprehensive income attributable to:  Equity holders of the Corporation    $       9,770,615  $       7,014,446  Non-controlling interests                            -            (32,080)----------------------------------------------------------------------------Total comprehensive income for the period                                $       9,770,615  $       6,982,366--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings per share - basic             $            0.29  $            0.28Earnings per share - diluted           $            0.29  $            0.28--------------------------------------------------------------------------------------------------------------------------------------------------------Consolidated Statements of Cash Flows(unaudited)                                        Three-month periods ended March 31,                                                   2013                2012--------------------------------------------------------------------------------------------------------------------------------------------------------Cash flows from operating activities:Net earnings                         $        8,305,845  $        7,918,265Adjustments for:Depreciation and amortization                 5,829,609           4,834,224Provision for income taxes                    3,099,823           1,729,960Unrealized foreign exchange loss                198,453            (282,750)Gain on disposition of drilling equipment                                   (2,340,535)           (994,638)Share-based payments                            327,037             797,092Finance expense                               1,093,627             555,631Share of loss of equity-accounted investee                                       220,054                   -Change in fair value of investment in equity securities                                 -             190,095Change in non-cash working capital           (1,979,158)         (9,462,278)----------------------------------------------------------------------------Cash generated from operating activities                                  14,754,755           5,285,601Interest paid                                (1,271,814)           (530,542)Income taxes paid                              (180,752)           (679,061)----------------------------------------------------------------------------Net cash from operating activities           13,302,189           4,075,998----------------------------------------------------------------------------Cash flows from investing activities:Proceeds on disposition of drilling equipment                                    3,596,968           3,344,445Acquisition of drilling and other equipment                                  (13,495,246)        (17,559,785)Investment in equity-accounted investee                                      (200,000)           (910,455)Change in non-cash working capital           (4,000,360)         (7,602,858)----------------------------------------------------------------------------Net cash used in investing activities                                 (14,098,638)        (22,728,653)----------------------------------------------------------------------------Cash flows from financing activities:Proceeds from issuance of share capital                                      1,061,876             557,544Dividends paid to shareholders               (5,085,438)         (3,372,476)Proceeds on loans and borrowings              4,986,500           9,000,000Proceeds on operating facility                1,767,186           8,185,605----------------------------------------------------------------------------Net cash from financing activities            2,730,124          14,370,673----------------------------------------------------------------------------Net decrease in cash and cash equivalents                                  1,933,675          (4,281,982)Cash and cash equivalents, beginning of period                                    4,329,969           8,376,344----------------------------------------------------------------------------Cash and cash equivalents, end of period                              $        6,263,644  $        4,094,362--------------------------------------------------------------------------------------------------------------------------------------------------------