Canadian Energy Services L.P.
TSX : CEU.UN

Canadian Energy Services L.P.

December 18, 2009 16:37 ET

Canadian Energy Services L.P. Announces Cash Distribution

CALGARY, ALBERTA--(Marketwire - Dec. 18, 2009) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Canadian Energy Services L.P. ("Canadian Energy Services" or the "Partnership") (TSX:CEU.UN) announced today that it will pay a cash distribution of $0.0792 per Class A Common limited partnership unit ("Class A Unit") on January 15, 2010 in respect of operations for the period from December 1, 2009 to December 31, 2009 to Unitholders of record on December 31, 2009.

Canadian Energy Services is organized in accordance with the terms and conditions of a limited partnership agreement which provides that only persons who are resident in Canada, or, if partnerships, are Canadian partnerships, in each case for purposes of the Income Tax Act (Canada) (the "Tax Act"), may own units of the Partnership. Units may not be purchased as a "tax shelter investment" for the purposes of the Tax Act or by any entity an interest in which is a tax shelter investment. The Partnership is not itself currently subject to tax under the Income Tax Act (Canada). Each limited partner of the Partnership generally is required to include in computing the partner's income for a particular taxation year the limited partner's pro rata share of the income of the Partnership for its fiscal year ending in, or coincidentally with, the partner's taxation year end, whether or not any of that income is distributed to the partner in the taxation year. Generally, the amount of income allocated to a limited partner may exceed (or be less than) the amount of cash distributed by the Partnership to such limited partner. 

As previously announced on November 11, 2009, the Partnership has entered into an arrangement agreement with Nevaro Capital Corporation ("Nevaro") to reorganize the business of the Partnership into a corporation (the "Conversion") to be renamed "Canadian Energy Services & Technology Corp." ("CESTC"). The special meetings of Unitholders of the Partnership and shareholders of Nevaro are scheduled to be held on December 22, 2009 to consider, and if thought fit, approve the Conversion. Assuming the requisite securityholder, court, regulatory and other approvals are obtained, it is anticipated the Conversion will become effective on or about January 1, 2010. As previously announced, Management of the Partnership expects that, following the completion of the Conversion, CESTC will declare monthly dividends of $0.06 per share ($0.72 per share on annualized basis) to its shareholders. Management and the Board of Directors of Canadian Energy Services review the appropriateness of distributions on a monthly basis taking into account industry conditions and, particularly, growth opportunities requiring expansion capital and management's forecast of cash available for distribution. Although at this time the Canadian Energy Services intends to continue to make cash distributions to Unitholders, and to make dividends to shareholders of CESTC following the Conversion as discussed in this press release, these distributions and dividends are not guaranteed. In addition, future expansion investments and acquisitions may be funded internally by withholding a portion of funds otherwise allocated for distributions or dividends in conjunction with or in replacement of external sources of capital such as debt or the issuance of equity. To the extent that Canadian Energy Services, or CESTC following completion of the Conversion, withholds cash to finance these activities, the amount of distributions or dividends to securityholders may be reduced.

Canadian Energy Services designs and implements drilling fluid systems for the oil and natural gas industry, in particular relating to drilling medium to deep vertical and directional wells and horizontal wells in western Canada and the United States through its subsidiary AES Drilling Fluids, LLC. Additional information about Canadian Energy Services is available at www.sedar.com or at the Partnership's website at www.CanadianEnergyServices.com.

Forward Looking Information

This press release contains certain forward-looking statements and forward-looking information ("forward-looking information") within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this press release includes forward-looking information relating to results of operations, completion of the Conversion, and anticipated future dividends of CESTC. Canadian Energy Services believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.

Forward-looking information is based on various assumptions. Those assumptions are based on information currently available to Canadian Energy Services, including information obtained from third party industry analysts and other third party sources and include the historic performance of Canadian Energy Services' businesses, current business and economic trends, completion of the Conversion and utilization of the tax basis, currency, exchange and interest rates, trading data and cost estimates. You are cautioned that the preceding list of assumptions is not exhaustive.

Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties some of which are described herein. Such forward-looking information necessarily involves known and unknown risks and uncertainties, which may cause Canadian Energy Services' actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include but are not limited to the risks identified in the Partnership's Annual Information Form for the year ended December 31, 2008 under the heading "Risk Factors" and in the Partnership's Management's Discussion and Analysis for the year ended December 31, 2008 under the heading "Risks and Uncertainties", and the risks associated with the availability and amount of the tax basis. Any forward-looking information is made as of the date hereof and, except as required by law, the Partnership assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Canadian Energy Services Inc.,
    the general partner of Canadian Energy Services L.P.
    Tom Simons, President and Chief Executive Officer
    (403) 269-2800
    or
    Canadian Energy Services Inc.,
    the general partner of Canadian Energy Services L.P.
    Craig F. Nieboer, CA, Chief Financial Officer
    (403) 269-2800
    www.CanadianEnergyServices.com