Essential Energy Services Announces Its 2018 Capital Budget and Provides a Patent Litigation Update

CALGARY, Alberta, Jan. 15, 2018 (GLOBE NEWSWIRE) -- Essential Energy Services Ltd. (TSX:ESN) (“Essential” or the “Company”) announces its 2018 capital budget of $13 million and provides an update with regard to patent litigation.

2018 Capital Budget

Essential’s 2018 capital budget is $13 million, comprised of $5 million of growth capital and $8 million of maintenance capital. Growth capital consists of costs to retrofit one Generation IV coil tubing rig, the addition of one nitrogen pumper, coil support equipment and $1.5 million of carryover capital to complete the two quintuplex fluid pumpers started in 2017.

Patent Litigation Update

As previously disclosed, on November 3, 2017, the Federal Court of Canada (the “Court”) rendered a decision in Essential’s favour with regard to a patent infringement proceeding commenced by Packers Plus Energy Services Inc. (“Packers Plus” or “Packers”), ruling that the patent being asserted by them was not valid and that Essential did not infringe the patent (the “Decision”). The Court released its written judgment on December 6, 2017.

Packers Plus has recently filed an appeal of the trial judge’s rulings on validity and infringement (the “Appeal”). On January 12, 2018, Essential received a copy of Packers Plus’ Notice of Appeal that it had filed with the Court. The filing of an appeal from a trial judgment is very common and does not diminish the significance of the Decision.

In order to have any claim of damages against Essential, Packers Plus must successfully overturn all of the following elements of the Decision:

1. The asserted patent is invalid due to prior disclosure; and
2. The asserted patent is invalid due to prior art/obviousness; and
3. Essential did not infringe the patent.

Based on the findings made by the trial judge, the strength of the written judgment in support of the Decision, and specifically with reference to the points noted below, Essential believes the Appeal is without merit.

In the written judgment dated December 6, 2017, the trial judge noted:

1. On the matter of invalidity based on prior disclosure by Packers Plus more than one year before it filed its patent application, the trial judge held: “The evidence simply does not support Packers’ position on prior disclosure.”
2. On the matter of invalidity based on obviousness of the subject matter of the patent, the trial judge ruled: “The ball-drop system combined with packers suitable for the use in open hole was known in the prior art, or was an obvious variation on prior art methods.”
3. On the matter of infringement, Packers Plus was not able to establish any of the theories upon which it argued there had been infringement, namely direct infringement, induced infringement and infringement through acting in concert. The trial judge ruled that: “Packers has not produced evidence of direct infringement by anyone”, he disagreed with the Packers Plus position that Essential induced others to infringe the patent and noted that in terms of liability for acting in concert with others, “…there is simply no evidence showing any such agreement between Essential and the other companies with whom it acted - operating companies, drilling companies, or fracturing companies.”

Subject to timing set by the Court for the hearing of the Appeal and the release of its decision, the Appeal process could take up to two years.