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Divestco Reports Q3 2012 Results

CALGARY, ALBERTA -- (Marketwire) -- 11/30/12 -- Divestco Inc. (TSX VENTURE:DVT) ("Divestco" or the "Company") announces its operating results for the three and nine months ended September 30, 2012.

Three months ended September 30, 2012

Divestco generated a net loss for the third quarter of 2012 of $1.1 million ($0.02 per share - basic and diluted) compared to net income of $255,000 ($nil per share - basic and diluted) for the same period in 2011. EBITDA was $356,000 in Q3 2012, a $1.3 million (79%) decrease from $1.7 million for the same period in 2011. The Company generated funds from operations of $191,000 ($nil per share - basic and diluted) for the third quarter of 2012, a decrease of $1.4 million (88%) as compared to $1.6 million ($0.03 per share - basic and diluted) for the same period in 2011. EBITDA and funds from operations do not include capital expenditures of $567,000, mainly comprised of leasehold improvements during the three months ended September 30, 2012.

During Q3 2012, Divestco generated revenue of $6.4 million compared to $9.6 million in Q3 2011, a decrease of $3.2 million (33%). Revenue in the Seismic Data segment decreased by $3.2 million (85%) attributable to the timing of multi-client surveys. In Q3 2011, the Company was in the process of acquiring a new survey while in Q3 2012 there were no surveys in progress or completed. Revenue in the Software and Data segment increased by $1.9 million (82%) due to a large data transaction completed during Q3 2012. Revenue in the Services segment decreased by $1.9 million (53%) as demand for seismic processing land management services was weaker while demand for geomatics was slightly stronger.

Operating expenses decreased by $1.9 million (24%) to $6 million in Q3 2012 from $7.9 million in Q3 2011. Salaries and wages were down $177,000 (4%) due to a slightly lower headcount and lower severance costs. G&A expenses were down $1.7 million (46%) as occupancy costs decreased by $1.1 million (91%) due to the Company surrendering a portion of its office space lease in 2011. Professional fees decreased by $171,000 (33%), bad debt expense decreased by $107,000 (653%) and direct selling costs decreased by $331,000 (87%). Depreciation and amortization increased by $11,000 (1%) mainly due to lower depreciation on property and equipment offset by higher amortization on deferred development costs.

Nine months ended September 30, 2012

Divestco generated net income for the first nine months of 2012 of $2.5 million ($0.04 per share - basic and diluted) compared to a net loss of $3.8 million ($0.06 per share - basic and diluted) for the same period in 2011. EBITDA was $12.1 million, a $9.3 million (331%) increase from $2.8 million for the same period in 2011. The Company generated funds from operations of $11.7 million ($0.17 per share - basic and diluted) for the first nine months of 2012, an increase of $8.9 million (311%) as compared to $2.8 million ($0.05 per share - basic and diluted) for the same period in 2011. EBITDA and funds from operations do not include capital expenditures of $10.4 million, mainly comprised of the cost of acquiring new seismic surveys data during the nine months ended September 30, 2012.

During the first three quarters of 2012, Divestco generated revenue of $32.4 million compared to $29 million during the same period in 2011, an increase of $3.4 million (12%). Revenue in the Seismic Data segment increased by $3.4 million (37%) as the Company completed three seismic participation surveys and a large data library sale, as well as entered into a settlement agreement concerning one of its legal actions. Revenue in the Software and Data segment increased by $1.6 million (23%) primarily due to a significant data transaction completed in 2012. Revenue in the Services segment decreased by $1.6 million (12%) as demand for geomatics was stronger, while demand for seismic processing and land management services was weaker.

Operating expenses decreased by $6 million (23%) to $20.2 million in the first nine months of 2012 from $26.2 million during the same period in 2011. Salaries and wages were down $1.2 million (8%) due to lower headcounts and a significant decrease in severance costs. G&A expenses were down $4.8 million (41%) as occupancy costs decreased by $3.8 million (54%) due to the Company surrendering a portion of its office space lease in 2011. Communication expenses were down $148,000 (41%), professional fees decreased by $400,000 (24%) and direct selling costs decreased by $747,000 (71%), partially offset by an increase in bad debt expense by $111,000. Depreciation and amortization increased by $3.3 million (54%) mainly due to the completion of three seismic participation surveys in during the nine months ended September 30, 2012, partially offset by lower depreciation on property and equipment.

Working Capital

As at September 30, 2012, Divestco had a working capital deficit of $2.9 million (excluding deferred revenue of $2.8 million) compared to working capital of $297,000 (excluding deferred revenue of $4.6 million) as at December 31, 2011. The decline in working capital from the end of 2011 was primarily due to an unpredictably slow summer which directly impacted the Services segment and delayed the signing and delivery of several contracts. While the Company has significantly reduced its payables since the end of 2011, receivables fell as well. In addition, $1.4 million of the subordinated loan was reclassified from long-term to current liabilities as compared to December 31, 2011 as the loan matures on April 30, 2013. The Company's funded debt to equity ratio at September 30, 2012 was 0.60:1 (December 31, 2011 - 0.64:1), with the improvement due to better operating results for the year offset by slightly higher debt.

Seismic Update

During the first nine months of 2012, Divestco completed three 3D seismic participation surveys (Brazeau, Big Valley and Ante Creek), covering an area of approximately 389 square kilometers. Total cost for the three seismic surveys was $14.3 million, with $5.1 million incurred in 2011.

Mr. Stephen Popadynetz, CEO, President and CFO: "Over the last two years Divestco has made great strides to improve its efficiencies and cut costs. Unfortunately, in the third quarter of 2012, we saw an unexpected slowdown in the industry which resulted in a net loss. As activity levels in the fourth quarter return to more traditional levels for this time of year and with other additional cost cutting measures, mostly centered on lease optimization set to take effect in January 2013, the Company expects to return back to profitability. As well, Divestco remains committed to strengthening its financial position and balance sheet. We are also pleased with the progress we have made towards rebuilding our seismic data library. To date, we have added more than 770 square kilometers of seismic to our library. Overall demand for seismic data and general activity levels in the industry is trending positively and Divestco is currently reviewing a number of new seismic programs for the coming year. With the strong cost cutting measures taken over the last two years in place, Divestco is on a well positioned path for sustained profitability and growth. We look forward to continue delivering positive earnings and better results for our shareholders."

Additional GAAP Measures

The Company's condensed consolidated interim financial statements have been prepared in accordance with IFRS. Certain measures in this document do not have any standardized meaning as prescribed by IFRS and are considered additional GAAP measures. While these measures may not be comparable to similar measures presented by other issuers, they are described and presented in this MD&A to provide shareholders and potential investors with additional information regarding the Company's results, liquidity, and its ability to generate funds to finance its operations. These measures include:

Earnings before interest, taxes, depreciation and amortization ("EBITDA")

Divestco uses EBITDA as a key measure to evaluate the performance of its segments and divisions as well as the Company overall, with the closest IFRS measure being net income or loss. EBITDA is a measure commonly reported and widely used by investors as indicators of the Company's operating performance and ability to incur and service debt, and as a valuation metric. The Company believes EBITDA assists investors in comparing the Company's performance on a consistent basis without regard to financing decisions and depreciation and amortization, which are non-cash in nature and can vary significantly depending upon accounting methods or non-operating factors such as historical cost.

EBITDA is not a calculation based on IFRS and should not be considered an alternative to net income or loss in measuring the Company's performance. As well, EBITDA should not be used as an exclusive measure of cash flow, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions and other sources and uses of cash, which are disclosed in the consolidated statements of cash flows. While EBITDA has been disclosed herein to permit a more complete comparative analysis of the Company's operating performance and debt servicing ability relative to other companies, investors should be cautioned that EBITDA as reported by Divestco may not be comparable in all instances to EBITDA as reported by other companies. Investors should also carefully consider the specific items included in Divestco's computation of EBITDA.

The following is a reconciliation of EBITDA with net income (loss):


----------------------------------------------------------------------------
                                   Three Months Ended     Nine Months Ended 
                                         September 30          September 30 
----------------------------------------------------------------------------
(Thousands)                           2012       2011       2012       2011 
----------------------------------------------------------------------------
                                                                            
Net Income (Loss)                $  (1,080) $     255  $   2,505  $  (3,842)
Income Tax Expense                     (51)        (4)       (51)        61 
Finance Costs                          309        303        280        507 
Depreciation and Amortization        1,178      1,167      9,354      6,081 
----------------------------------------------------------------------------
EBITDA                           $     356  $   1,721  $  12,088  $   2,807 
----------------------------------------------------------------------------

Funds from operations

Divestco reports funds from operations because it is a key measure used by management to evaluate its performance and to assess the ability of the Company to finance operating and investing activities. Funds from operations excludes certain working capital changes and other sources and uses of cash, which are disclosed in the consolidated statements of cash flows.

Funds from operations is not a calculation based on IFRS and should not be considered an alternative to the consolidated statements of cash flows. Funds from operations is a measure that can be used to gauge Divestco's capacity to generate discretionary cash flow. Investors should be cautioned that funds from operations as reported by Divestco may not be comparable in all instances to funds from operations as reported by other companies. While the closest IFRS measure is cash from operating activities, funds from operations is considered relevant because it provides an indication of how much cash generated by operations is available before proceeds from divested assets and changes in certain working capital items.

The following reconciles funds from operations with cash from operating activities:


----------------------------------------------------------------------------
                                   Three Months Ended     Nine Months Ended 
                                         September 30          September 30 
----------------------------------------------------------------------------
(Thousands)                           2012       2011       2012       2011 
----------------------------------------------------------------------------
                                                                            
Cash from Operating Activities   $   2,162  $   2,238  $  15,047  $   5,090 
Changes in non-cash Working                                                 
 Capital Balances Related to                                                
 Operating Activities               (2,007)      (548)    (3,323)    (2,292)
Interest Paid                          273        250        155        391 
Income Taxes Refunded                 (237)      (301)      (215)      (352)
----------------------------------------------------------------------------
Funds from Operations            $     191  $   1,639  $  11,664  $   2,837 
----------------------------------------------------------------------------

Working capital

Working Capital is calculated as current assets minus current liabilities (excluding deferred revenue). Working capital provides a measure that can be used to gauge Divestco's ability to meet its current obligations.


Financial Highlights                                                        
                                                                            
----------------------------------------------------------------------------
Financial Results (Thousands, Except Per Share Amounts)                     
----------------------------------------------------------------------------
                                            Three Months Ended September 30 
----------------------------------------------------------------------------
                                     2012        2011    $ Change  % Change 
----------------------------------------------------------------------------
                                                                            
Revenue                         $   6,409   $   9,565   $  (3,156)      -33%
                                                                            
Operating Expenses                  6,013       7,873      (1,860)      -24%
                                                                            
Other Loss (Income)                    40         (29)         69       N/A 
----------------------------------------------------------------------------
                                                                            
EBITDA                                356       1,721      (1,365)      -79%
                                                                            
Finance Costs                         309         303           6         2%
                                                                            
Depreciation and Amortization       1,178       1,167          11         1%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Income (Loss) before Income                                                 
 Taxes                             (1,131)        251      (1,382)      N/A 
                                                                            
Income Tax Expense                    (51)         (4)        (47)      N/A 
----------------------------------------------------------------------------
                                                                            
Net Income (Loss)               $  (1,080)  $     255   $  (1,335)      N/A 
 Per Share - Basic and Diluted      (0.02)          -       (0.02)      N/A 
----------------------------------------------------------------------------
                                                                            
Funds from Operations           $     191   $   1,639   $  (1,448)      -88%
 Per Share - Basic and Diluted          -        0.03       (0.03)     -100%
----------------------------------------------------------------------------
                                                                            
Shares Outstanding                 66,717      59,903         N/A       N/A 
                                                                            
Weighted Average Shares                                                     
 Outstanding                                                                
 Basic                             66,715      59,785         N/A       N/A 
 Diluted                           66,715      59,785         N/A       N/A 
----------------------------------------------------------------------------
                                                                            

                                             Nine Months Ended September 30 
----------------------------------------------------------------------------
                                     2012        2011    $ Change  % Change 
----------------------------------------------------------------------------
                                                                            
Revenue                         $  32,358   $  29,017   $   3,341        12%
                                                                            
Operating Expenses                 20,229      26,237      (6,008)      -23%
                                                                            
Other Loss (Income)                    41         (27)         68       N/A 
----------------------------------------------------------------------------
                                                                            
EBITDA                             12,088       2,807       9,281       331%
                                                                            
Finance Costs                         280         507        (227)      -45%
                                                                            
Depreciation and Amortization       9,354       6,081       3,273        54%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Income (Loss) before Income                                                 
 Taxes                              2,454      (3,781)      6,235       N/A 
                                                                            
Income Tax Expense                    (51)         61        (112)      N/A 
----------------------------------------------------------------------------
                                                                            
Net Income (Loss)               $   2,505   $  (3,842)  $   6,347       N/A 
 Per Share - Basic and Diluted       0.04       (0.06)       0.10       N/A 
----------------------------------------------------------------------------
                                                                            
Funds from Operations           $  11,664   $   2,837   $   8,827       311%
 Per Share - Basic and Diluted       0.17        0.05        0.12       240%
----------------------------------------------------------------------------
                                                                            
Shares Outstanding                 66,717      59,903         N/A       N/A 
                                                                            
Weighted Average Shares                                                     
 Outstanding                                                                
 Basic                             66,657      59,535         N/A       N/A 
 Diluted                           66,657      59,535         N/A       N/A 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Financial Position (Thousands)                                              
----------------------------------------------------------------------------
                                       Balance at    Balance at   Balance at
                                           Sep 30        Dec 31       Dec 31
----------------------------------------------------------------------------
                                             2012          2011         2010
----------------------------------------------------------------------------
                                                                            
Total Assets                             $ 39,258     $  43,761    $  34,984
Working Capital (Deficit) (1)              (2,910)          297        3,599
Long-Term Financial Liabilities (2)         8,068         8,610        3,907
----------------------------------------------------------------------------

1.  Excludes the current portion of deferred revenue of $2.8 million
    (December 31, 2011: $4.6 million; December 31, 2010: $3.9 million) 
2.  Includes long-term debt obligations, deferred rent obligations, sublease
    loss provision and other long-term liabilities. The long-term debt
    obligations are comprised of the Company's subordinated debt,
    shareholder loans and finance leases 

Segment Review Summary                                                      
                                                                            
----------------------------------------------------------------------------
For the three months ended September 30, 2012 (Thousands)                   
----------------------------------------------------------------------------
                     Software               Seismic  Corporate &            
                     and Data   Services       Data        Other      Total 
----------------------------------------------------------------------------
Revenue             $   4,203  $   1,643  $     563    $       -  $   6,409 
EBITDA                  2,571     (1,028)      (207)        (980)       356 
Finance costs                                                               
(income)                    -          -         (2)         311        309 
Depreciation and                                                            
Amortization              772        223         62          121      1,178 
Income (loss)                                                               
 before income                                                              
 taxes                  1,799     (1,251)      (267)      (1,412)    (1,131)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
For the three months ended September 30, 2011 (Thousands)                   
----------------------------------------------------------------------------
                                                     Corporate &            
                     Software   Services       Data        Other      Total 
----------------------------------------------------------------------------
Revenue             $   2,309  $   3,464  $   3,792    $       -  $   9,565 
EBITDA                    966        122      2,942       (2,309)     1,721 
Finance costs                                                               
 (income)                   -         (1)        (1)         305        303 
Depreciation and                                                            
Amortization              710        241         29          187      1,167 
Income (loss)                                                               
 before income                                                              
 taxes                    256       (118)     2,914       (2,801)       251 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
For the nine months ended September 30, 2012 (Thousands)                    
----------------------------------------------------------------------------
                                                     Corporate &            
                     Software   Services       Data        Other      Total 
----------------------------------------------------------------------------
Revenue             $   8,423  $  11,446  $  12,489    $       -  $  32,358 
EBITDA                  3,524      1,890      9,802       (3,128)    12,088 
Finance costs                                                               
 (income)                   -         (1)        (8)         289        280 
Depreciation and                                                            
Amortization            2,363        672      5,877          442      9,354 
Income (loss)                                                               
 before income                                                              
 taxes                  1,161      1,219      3,933       (3,859)     2,454 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
For the nine months ended September 30, 2011 (Thousands)                    
----------------------------------------------------------------------------
                                                     Corporate &            
                     Software   Services       Data        Other      Total 
----------------------------------------------------------------------------
Revenue             $   6,848  $  13,070  $   9,099    $       -  $  29,017 
EBITDA                  2,398      2,435      6,685       (8,711)     2,807 
Finance costs                                                               
 (income)                   -         (2)        (5)         514        507 
Depreciation and                                                            
Amortization            2,747        805      1,001        1,528      6,081 
Income (loss)                                                               
 before income                                                              
 taxes                   (349)     1,632      5,689      (10,753)    (3,781)
----------------------------------------------------------------------------

Divestco Inc.

Condensed Consolidated Interim Statements of Financial Position


----------------------------------------------------------------------------
                                                September 30    December 31 
----------------------------------------------------------------------------
(Thousands - Unaudited)                                 2012           2011 
----------------------------------------------------------------------------
                                                                            
Assets                                                                      
                                                                            
Current Assets                                                              
 Cash                                              $   2,966      $   1,547 
 Funds held in trust                                     108             40 
 Accounts receivable                                   5,584         11,810 
 Prepaid expenses, supplies and deposits                 312            235 
 Income taxes receivable                                  81            110 
 Asset held for sale                                       -          2,500 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Total current assets                                  9,051         16,242 
                                                                            
Investment in affiliated company                         143            141 
Participation surveys in progress                          -          5,108 
Property and equipment                                 4,529          4,147 
Intangible assets                                     25,535         18,123 
----------------------------------------------------------------------------
                                                                            
Total assets                                       $  39,258      $  43,761 
----------------------------------------------------------------------------
                                                                            
Liabilities and Shareholders' Equity                                        
                                                                            
Current Liabilities                                                         
 Bank indebtedness                                 $   4,350      $   3,700 
 Accounts payable and accrued liabilities              4,911         10,669 
 Deferred revenue                                      2,793          4,561 
 Current loss on sublease loss provision                 326            320 
 Current portion of long-term debt obligations         2,252          1,143 
 Current portion of tenant inducement                    122            113 
----------------------------------------------------------------------------
 Total current liabilities                            14,754         20,506 
                                                                            
Deferred rent obligations                                421          1,124 
Long-term debt obligations                             3,982          4,591 
Sublease loss provision                                1,087          1,332 
Tenant Inducements                                     1,420          1,397 
Other long-term liabilities                                -            100 
----------------------------------------------------------------------------
Total liabilities                                     21,664         29,050 
----------------------------------------------------------------------------
                                                                            
Shareholders' Equity                                                        
 Equity instruments                                    9,069         76,431 
 Contributed surplus                                   6,020          5,663 
 Deficit                                               2,505        (67,383)
----------------------------------------------------------------------------
 Total shareholders' equity                           17,594         14,711 
----------------------------------------------------------------------------
                                                                            
Total liabilities and shareholders' equity         $  39,258      $  43,761 
----------------------------------------------------------------------------

Divestco Inc.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)


----------------------------------------------------------------------------
                                   Three Months Ended     Nine Months Ended 
                                         September 30          September 30 
----------------------------------------------------------------------------
(Thousands, Except Per Share                                                
 Amounts - Unaudited)                 2012       2011       2012       2011 
----------------------------------------------------------------------------
                                                                            
Revenue                           $  6,409   $  9,565   $ 32,358   $ 29,017 
----------------------------------------------------------------------------
                                                                            
Operating expenses                                                          
 Salaries and benefits               4,054      4,231     13,314     14,497 
 General and administrative          1,845      3,588      6,555     11,686 
 Stock compensation expense            114         54        360         54 
----------------------------------------------------------------------------
 Total operating expenses            6,013      7,873     20,229     26,237 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Finance costs                          309        303        280        507 
                                                                            
Depreciation and amortization        1,178      1,167      9,354      6,081 
                                                                            
Other loss (income)                     40        (29)        41        (27)
----------------------------------------------------------------------------
                                                                            
Income (loss) before income taxes   (1,131)       251      2,454     (3,781)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Income taxes                                                                
 Current                               (51)        (4)       (51)        61 
----------------------------------------------------------------------------
                                                                            
Net income (loss) and                                                       
 comprehensive income (loss) for                                            
 the period                         (1,080)       255   $  2,505   $ (3,842)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income (loss) per share                                                 
 Basic and Diluted                $  (0.02)  $      -   $   0.04   $  (0.06)
                                                                            
Weighted average number of shares                                           
 Basic and Diluted                  66,715     59,785     66,657     59,535 
----------------------------------------------------------------------------

Divestco Inc.

Condensed Consolidated Interim Statements of Changes in Equity


                          Number of                  Number of              
                             Shares        Share      Warrants              
(Thousands - Unaudited)      Issued      Capital        Issued      Warrants
----------------------------------------------------------------------------
                                                                            
Balance as at January 1,                                                    
 2011                        58,938   $   73,445        15,825    $    1,808
                                                                            
Net loss and comprehensive                                                  
 loss for the period                                                        
                                                                            
Transactions with owners,                                                   
 recorded in equity                                                         
 contributions by and                                                       
 distributions to owners:                                                   
 Issue of Class A common                                                    
  shares                        965          129           455            52
 Share-based payment                                                        
  transactions                                                              
 Share issue costs                            (1)                           
----------------------------------------------------------------------------
                                                                            
Balance as at September                                                     
 30, 2011                    59,903   $   73,573        16,280    $    1,860
                                                                            
Balance as at January 1,                                                    
 2012                        66,610   $   74,571        16,280    $    1,860
                                                                            
Reduction of stated                                                         
 capital and deficit                     (67,383)                           
                                                                            
Net income and                                                              
 comprehensive income for                                                   
 the period                                                                 
                                                                            
Transactions with owners,                                                   
 recorded in equity                                                         
 contributions by and                                                       
 distributions to owners:                                                   
 Issue of Class A common                                                    
  shares                         87           18                            
 Issue on exercise of PSUs       20            3                            
 Reclassification on                                                        
  exercise of PSUs                                                          
 Share-based payment                                                        
  transactions                                                              
----------------------------------------------------------------------------
                                                                            
Balance as at September                                                     
 30, 2012                    66,717   $    7,209        16,280    $    1,860
----------------------------------------------------------------------------

                                                        Retained            
                               Equity    Contributed    Earnings      Total 
(Thousands - Unaudited)   Instruments        Surplus    (Deficit)    Equity 
--------------------------------------------------------------------------- 
                                                                            
Balance as at January 1,                                                    
 2011                      $   75,253   $      5,590  $  (62,773)  $ 18,070 
                                                                            
Net loss and comprehensive                                                  
 loss for the period                                      (3,842)   (3,842) 
                                                                            
Transactions with owners,                                                   
 recorded in equity                                                         
 contributions by and                                                       
 distributions to owners:                                                   
 Issue of Class A common                                                    
  shares                          181                                   181 
 Share-based payment                                                        
  transactions                                    54                     54 
 Share issue costs                 (1)                                   (1)
--------------------------------------------------------------------------- 
                                                                            
Balance as at September                                                     
 30, 2011                  $   75,433   $      5,644  $  (66,615)  $ 14,462 
                                                                            
Balance as at January 1,                                                    
 2012                      $   76,431   $      5,663  $  (67,383)  $ 14,711 
                                                                            
Reduction of stated                                                         
 capital and deficit          (67,383)                    67,383            
                                                                            
Net income and                                                              
 comprehensive income for                                                   
 the period                                                2,505      2,505 
                                                                            
Transactions with owners,                                                   
 recorded in equity                                                         
 contributions by and                                                       
 distributions to owners:                                                   
 Issue of Class A common                                                    
  shares                           18                                    18 
 Issue on exercise of PSUs          3                                     3 
 Reclassification on                                                        
  exercise of PSUs                                (3)                    (3)
 Share-based payment                                                        
  transactions                                   360                    360 
--------------------------------------------------------------------------- 
                                                                            
Balance as at September                                                     
 30, 2012                  $    9,069   $      6,020  $    2,505   $ 17,594 
--------------------------------------------------------------------------- 

Divestco Inc.

Condensed Consolidated Interim Statements of Cash Flows


----------------------------------------------------------------------------
                                                          Nine months ended 
                                                               September 30 
----------------------------------------------------------------------------
(Thousands - Unaudited)                                   2012         2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cash from (used in) operating activities                                    
Net income (loss) for the period                     $   2,505    $  (3,842)
Items not affecting cash:                                                   
Equity investment income                                   (16)         (21)
Depreciation and amortization                            9,354        6,081 
Sublease loss                                                -         (607)
Amortization of tenant inducements                         (86)        (113)
Deferred rent obligations                                 (703)         638 
Income taxes                                               (51)          61 
Unrealized foreign exchange loss                             3           (2)
Non-cash employment benefits                                18           81 
Share-based payments                                       360           54 
Finance costs (income)                                     280          507 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Funds from operations                                   11,664        2,837 
                                                                            
Changes in non-cash working capital balances             3,323        2,292 
Interest received (paid)                                  (155)        (391)
Income taxes refunded (paid)                               215          352 
----------------------------------------------------------------------------
Net cash from operating activities                      15,047        5,090 
----------------------------------------------------------------------------
                                                                            
Cash from (used in) financing activities                                    
Bank indebtedness                                          650        1,050 
Advances to affiliated company                              14            - 
Issue of common shares (net of related costs)                -           99 
Repayment of long-term debt obligations                 (1,657)        (321)
Deferred financing costs                                     -         (153)
Proceeds received from long-term debt obligations                           
 (net of committed revolver repayments)                  2,060        5,000 
----------------------------------------------------------------------------
Net cash from (used in) financing activities             1,067        5,675 
----------------------------------------------------------------------------
                                                                            
Cash from (used in) investing activities                                    
Additions to intangible assets                         (14,460)      (2,465)
Decrease (increase) in participation surveys in                             
 progress                                                5,108       (4,610)
Purchase of property and equipment                      (1,054)      (5,562)
Additions to tenant inducements                            118        3,424 
Payments towards sublease loss provision                  (268)        (488)
Investment in affiliates                                     -          (29)
Deferred development costs                              (1,770)      (1,883)
Changes in non-cash working capital balances            (2,369)      (1,759)
----------------------------------------------------------------------------
Net cash from (used in) investing activities           (14,695)     (13,372)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Increase (decrease) in cash                              1,419       (2,607)
                                                                            
Cash, beginning of period                                1,547        3,696 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cash, end of period                                  $   2,966    $   1,089 
----------------------------------------------------------------------------

About the Company

Divestco is an exploration services company that provides a comprehensive and integrated portfolio of data, software, and services to the oil and gas industry. Through continued commitment to align and bundle products and services to generate value for customers, Divestco is creating an unparalleled set of integrated solutions and unique benefits for the marketplace. Divestco's breadth of data, software and services offers customers the ability to access and analyze the information required to make business decisions and to optimize their success in the upstream oil and gas industry. Divestco is headquartered in Calgary, Alberta, Canada and trades on the TSX Venture Exchange under the symbol "DVT".

This press release contains forward-looking information related to the Company's capital expenditures, projected growth, view and outlook with respect to future oil and gas prices and market conditions, and demand for its products and services. Statements that contain words such as "could', "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning applicable by Canadian securities legislation. Although management of the Company believes that the expectations reflected in such forward-looking information are reasonable, there can be no assurance that such expectations will prove to have been correct because, should one or more of the risks materialize, or should the assumptions underlying forward-looking statements or forward-looking information prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Readers should not place undue reliance on forward-looking statements or forward-looking information. All of the forward-looking statements and forward-looking information of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement. Except where required by law, the Company does not assume any obligation to update these forward-looking statements or forward-looking information if conditions or opinions should change.

In particular, this press release contains forward-looking statements pertaining to the following: Company's ability to keep debt and liquidity at acceptable levels, improve/maintain its working capital position and maintain profitability in the current economy; availability of external and internal funding for future operations; relative future competitive position of the Company; nature and timing of growth; oil and natural gas production levels; planned capital expenditure programs; supply and demand for oil and natural gas; future demand for products/services; commodity prices; impact of Canadian federal and provincial governmental regulation on the Company; expected levels of operating costs, finance costs and other costs and expenses; future ability to execute acquisitions and dispositions of assets or businesses; expectations regarding the Company's ability to raise capital and to add to seismic data through new seismic shoots and acquisition of existing seismic data; treatment under tax laws; and new accounting pronouncements.

These forward-looking statements are based upon assumptions including: future prices for crude oil and natural gas; future interest rates and future availability of debt and equity financing will be at levels and costs that allow the Company to manage, operate and finance its business and develop its software products and various oil and gas datasets including its seismic data library, and meet its future obligations; the regulatory framework in respect of royalties, taxes and environmental matters applicable to the Company and its customers will not become so onerous on both the Company and its customers as to preclude the Company and its customers from viably managing, operating and financing its business and the development of its software and data; and that the Company will continue to be able to identify, attract and employ qualified staff and obtain the outside expertise as well as specialized and other equipment it requires to manage, operate and finance its business and develop its properties.

These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including: general economic, market and business conditions; volatility in market prices for crude oil and natural gas; ability of Divestco's clients to explore for, develop and produce oil and gas; availability of financing and capital; fluctuations in interest rates; demand for the Company's product and services; weather and climate conditions; competitive actions by other companies; availability of skilled labour; failure to obtain regulatory approvals in a timely manner; adverse conditions in the debt and equity markets; and government actions including changes in environment and other regulation.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contacts:
Divestco Inc.
Mr. Stephen Popadynetz
CEO, President and CFO
587-952-8152

Divestco Inc.
Mr. Danny Chiarastella
Vice President, Finance
587-952-8027
www.divestco.com

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