Avenir Diversified Income Trust

Avenir Diversified Income Trust

March 28, 2006 17:55 ET

Avenir Diversified Income Trust Acquires Kodiak Coil Tubing Ltd. and Updates Oilfield Service Activity

CALGARY, ALBERTA--(CCNMatthews - March 28, 2006) -

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

Avenir Diversified Income Trust (the "Trust") (TSX:AVF.UN) is pleased to announce that it has entered into an acquisition agreement to purchase 90% of the shares of Kodiak Coil Tubing Ltd. ("Kodiak") for total consideration of $23.65 million less debt and working capital, funded both from existing credit facilities and the issuance of 729,438 units of the Trust. Further, the Trust may pay an additional contingent amount based on a predetermined multiple, if the earnings before interest, depreciation and taxes exceeds $5.2 million for 2006. The acquisition is scheduled to close March 31, 2006.

Kodiak provides essential production related services to the oil and gas industry with a fleet of 10 coiled tubing rigs. Kodiak is based in Brooks, Alberta and provides services across southern Alberta from operational bases in Brooks, Medicine Hat and Three Hills, Alberta. Kodiak has one of the most up to date fleets in the industry and its operations are very complimentary to the Trust's current operations.

The Trust is also pleased to announce that Terry Vanak, Mike Deobald, Mike Drever and Sharlene Vanak will be remaining with Kodiak to manage the day to day operations. The acquisition is accretive to the Trust's cash flow and further adds to the Trust's Energy Service portfolio of companies providing essential production services to the oil and gas industry from southwest Saskatchewan through Alberta to northeast British Columbia.

Since December of 2005 the Trust has acquired four other oil and gas service companies for aggregate consideration of $20.1 million less debt and working capital.

In February 2006 the Trust closed the acquisition of HK Well Service Ltd. ("HK") of Medicine Hat. HK operates a fleet of 5 swab rigs and one flush-by unit. HK's operations will be managed by Dennis Drescher and Trevor Kurtz. In December 2005 the Trust closed the acquisition of Richmound Energy Services L.P. ("Richmound") based in Richmound, Saskatchewan. Richmound provides fluid hauling services and vacuum truck services to the oil and gas industry of southwest Saskatchewan and southeast Alberta with a fleet of 20 vehicles. Also in December 2005 the Trust acquired Ken's Steaming located in Swan Hills, Alberta and Brian's Hot Oiling in Fort St. John, British Columbia.

These acquisitions are accretive to the Trust's cash flow and fit with the Trust's strategy of focusing on acquiring well run, profitable businesses that provide essential production related services to the oil and gas industry. The Trust is also expanding the fleets of all its current operating service companies including an additional service rig for Millard Oilfield in Medicine Hat, a new coil tubing rig for Endless Tubing Services in Medicine Hat and three new flush-by units for Cardinal Well Service in Brooks, Alberta.

The Trust is a diversified royalty and business trust which combines the cash flow streams from the three business segments of Energy, Financial Services and Real Estate with a target payout ratio of 75% to 80% in order to provide sustainable distributions.

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 regarding Avenir Diversified Income Trust set forth in this document, including management's assessment of the Trust's 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 the Trust's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of reserve estimates, 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. The Trust's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward looking statements and accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward looking statements will provide what, if any benefits to the Trust.

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

Contact Information

  • Avenir Diversified Income Trust
    William Gallacher
    President & CEO
    (403) 237-9949
    Avenir Diversified Income Trust
    Gary Dundas
    Vice President & CFO
    (403) 237-9949
    Avenir Diversified Income Trust
    Suite 300, 808 - Street S.W.
    Calgary, Alberta T2P 1M9