Wellco Energy Services Trust

Wellco Energy Services Trust

January 15, 2007 11:44 ET

Wellco Energy Services Trust Declares January Distribution, Announces the 2007 Capital Expenditure Program and a New Long-Term Incentive Plan

CALGARY, ALBERTA--(CCNMatthews - Jan. 15, 2007) - Wellco Energy Services Trust (TSX:WLL.UN) (the "Trust") has declared a cash distribution of $0.09 per unit for the period January 1, 2007 to January 31, 2007 to be paid on February 15, 2007 to unitholders of record on January 31, 2007. The ex-distribution date is January 29, 2007. The Trust's trailing 12-month cash distributions, including the February 15, 2007 payment will total $1.065 per trust unit.

The Trust's Board of Directors has recently approved a capital budget of $7.7 million for 2007 reflecting current industry conditions. Approximately $1.8 million reflects sustaining capital, $1.4 million is for infrastructure capital with the remaining $4.5 million directed towards growth capital mainly in our accommodations and catering product line. The 2007 capital expenditures will be financed predominately with internally generated funds from operations and our credit facility, if required.

In addition the Trust has instituted a long-term incentive plan (the "Plan") for management, senior employees and directors which will include awards of both deferred Plan units and performance Plan units based on certain criteria. The number of Plan units reserved for issuance under the Plan will not exceed 5% of the aggregate number of issued and outstanding Trust units. We anticipate that the initial grant of units under the plan will be approximately 2.5% of the aggregate number of issued and outstanding Trust units. Granted units will vest as to 50% on the 18th month and 50% on 36th month following the date of the grant. Vesting of performance units will be additionally based on attainment of performance criteria. Over the three year term the units will attract distributions. The Trust is currently obligated to settle its Plan obligations in cash.

At its upcoming Annual General Meeting the Trust will seek unitholder approval to provide it with the option of settling its obligations under the Plan in Trust units issued from treasury.

The Trust had been working on implementing this plan before the Government announced the new tax legislation on October 31, 2006 as it had been concluded by both management and the Board of Directors that the Trust's existing unit option plan was ineffective from a compensation and retention standpoint.

The Trust does not anticipate granting additional options to purchase units under the existing trust unit option plan. As of December 31, 2006 the unit option plan had 1,307,692 options issued and outstanding at an average exercise price of approximately $9.75 per unit.

Wellco Energy Services Trust provides the following products and services:

- Accommodations (both camps and wellsite trailers)

- Full service catering

- Wastewater treatment

- Surface equipment rentals

- Production testing and frac blow-back tanks

- Completion, work-over and abandonment services through a fleet of service rigs

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