Avenir Diversified Income Trust

Avenir Diversified Income Trust
Essential Energy Services Trust

Essential Energy Services Trust

May 31, 2006 08:30 ET

Avenir Diversified Income Trust and Essential Energy Services Trust Announced Completion of Oilfield Services Reorganization and Creation of Essential Energy Services Trust

CALGARY, ALBERTA--(CCNMatthews - May 31, 2006) -

Not for Distribution to U.S. Newswire Services or for Dissemination in the United States.

Avenir Diversified Income Trust (TSX:AVF.UN) ("Avenir") and Essential Energy Services Trust ("Essential") (TSX:ESN.UN) are pleased to announce they have completed their previous announced plan of creating a new publicly traded oilfield services trust called Essential Energy Services Trust, which now owns the entire Energy Services Division of Avenir.

The creation of Essential and the distribution of the trust units of Essential to existing unitholders of Avenir was accomplished through a plan of arrangement pursuant to which the Unitholders of Avenir have received one (1) trust unit of Essential Energy Trust for each two (2) trust units of Avenir formerly held. Trust units of Avenir are now trading on a basis which reflects the distribution of all of the Energy Services assets of Avenir to Essential. The Essential Energy Services Trust will commence trading as a stand-alone entity at the open of markets on the TSX on May 31, 2006 under the symbol ESN.UN.

In June, 2006, the distributions of Avenir will decrease from $0.12 per trust unit per month to $0.083 per trust unit per month. As well, Essential will pay approximately $0.083 per trust unit per month in distributions. Accordingly, for each Avenir trust unit held prior to the spin-out, a Unitholder will receive an aggregate of $0.1245 per month in distributions versus $0.12 per trust unit before the spin-out. In aggregate, the combined distribution represents an increase of approximately 4% over the former Avenir monthly distribution.

As a result of the spin-out of its Energy Services division, Avenir continues its diversification strategy with a portfolio of businesses that are now approximately 40% energy and 60% financial services and real estate.

Essential combines the energy services division of Avenir with the service rig business of Classic Well Servicing Partnership and three smaller private energy service companies. The energy service division of Avenir completed its first acquisition in June of 2004 and in less than two years has grown to become a stand-alone Energy Services Trust with nine wholly-owned operating divisions under management.

Essential provides production services to the oil and gas industry in western Canada from Fort Nelson in northeast British Columbia through Alberta into southwest Saskatchewan. The name Essential characterizes the services provided by the operating entities as they are essential to maintaining, enhancing and supporting the ongoing production of the oil and gas industry. Management believes that the services provided, and the revenue and cash flow derived through these services, should be significantly less volatile than that derived from services such as drilling and seismic. Essential will follow a business plan that remains focused on these particular essential services and will pursue growth through additional accretive acquisitions, organic growth of the operating entities and the exploitation of synergies among the operating entities.

Essential currently provides services through the following wholly-owned operating entities:

Cascade Services - based in Fort Nelson and Fort St. John, B.C. and Grande Prairie and Spirit River, Alberta: Cascade provides vacuum truck, steamer, hot oil, pressure truck, hydrovac and tank truck services with a fleet of 68 operational units.

Westvac Energy Services - based in Pelican Lake and Swan Hills, Alberta; Westvac provides vacuum truck, steamer, hot oil, pressure truck, hydrovac and tank truck services with a fleet of 35 units.

Richmound Energy Services - based in Richmound, Saskatchewan; Richmound provides vacuum truck and tank truck services with a fleet of 20 trucks.

Classic Well Servicing - based in Slave Lake and Nisku, Alberta; Classic operates a fleet of nine mobile service rigs (4 doubles and 5 singles) throughout Alberta.

Millard Oilfield Service - based in Medicine Hat, Alberta; operates a fleet of six mobile service rigs in southern Alberta.

Kodiak Coil Tubing - based in Brooks, Three Hills and Medicine Hat, Alberta; operates ten coil tubing rigs in southern Alberta.

Endless Tubing Services - based in Medicine Hat Alberta; operates 9 coil tubing units in southeast Alberta and has one additional rig scheduled for delivery in the third quarter.

Cardinal Well Services - based in Brooks, Taber, Drayton Valley and Red Deer, Alberta; Cardinal operates nine "flush-by" units and has 3 additional new units on order for delivery through the balance of 2006. A "flush-by" is a small, light service rig that specializes in servicing pumping oil wells.

HK Well Services - based in Medicine Hat Alberta; operates nine swab rigs and one flush-by.

Essential is led by an experienced management team based in Calgary consisting of James Burns, P. Geol., MBA, President and Chief Executive Officer; Duncan Au, C.A,. CFA, Vice President Business Development and Chief Financial Officer; Ken Wagner, Vice-President Operations (Transport) and Stuart King, C.A,. Controller. The Board of Directors will be made up of Bill Gallacher, Chairman; Gary Dundas, Dennis Balderston, Neil MacKenzie and Jeff Scott.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Forward-Looking Statements

Certain information set forth in this press release, including a discussion of future plans and operations, contains forward looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond management's control, including but not limited to, the ability of Avenir to obtain all required approvals to proceed with the proposed transaction on a timely basis, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks industry competition, availability of qualified personnel and management, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. Actual results, performance or achievement could differ materially from those expressed in or implied by these forward-looking statements.

The TSX Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Avenir Diversified Income Trust
    William M. Gallacher
    Chief Executive Officer
    (403) 237-9949 ext 223
    Avenir Diversified Income Trust
    Gary Dundas
    Chief Financial Officer
    (403) 237-9949 ext 259
    Avenir Diversified Income Trust
    Suite 300, 808 - 1st Street S.W.
    Calgary, Alberta, T2P 1M9
    Essential Energy Services Trust
    James Burns
    President and Chief Executive Officer
    (403) 781-1968
    Essential Energy Services Trust
    Duncan Au
    Chief Financial Officer
    (403) 263-6778
    Essential Energy Services Trust
    Suite 950, 330 - 5th Avenue SW
    Calgary, Alberta, T2P 0L4