BlackWatch Energy Services Trust

BlackWatch Energy Services Trust

November 14, 2006 07:00 ET

BlackWatch Energy Services Trust Reports Results for Initial 58-Day Period Ended September 30, 2006 and Announces November Distribution

CALGARY, ALBERTA--(CCNMatthews - Nov. 14, 2006) - BlackWatch Energy Services Trust (TSX:BWT.UN) ("BlackWatch" or the "Trust") announces the release of its third quarter 2006 financial and operating results, which include the results of 58 days of business operations from August 4, 2006 to September 30, 2006. BlackWatch's unaudited financial statements, notes and MD&A are filed on SEDAR and can also be accessed on BlackWatch's website. All figures are reported in Canadian dollars unless otherwise stated.

Highlights from the period include:

- On August 4, 2006, BlackWatch completed the acquisitions of Austin's Transport (1990) Ltd., Strata Completions Limited, Ammonite Assets Inc., Caliber Energy Services Corp., Brantford's Consolidated Inc. and Brantford's Consolidated Ltd. These companies formed the foundation for five operating divisions - Drilling, Transport, Production Services, Coil Tubing and Completion Services. Our sixth division, Rentals and Leasing, commenced operations on October 6, 2006 as noted below.

- A $29 million bridge financing facility was established with Roynat Capital to facilitate the initial acquisitions.

- Management is in the process of establishing a revolving debt facility with a group of major Canadian banks. This facility will replace the bridge facility and will provide additional capacity for internal growth and strategic growth through acquisitions.

- On August 11, 2006, the Trust completed its initial public offering ("IPO") and began trading on the Toronto Stock Exchange under the symbol BWT.UN. Subsequent to the IPO, we have been able to maintain a very strong balance sheet with low net debt levels.

- The Trust implemented monthly distributions of $0.0916 per unit ($1.10 annualized) with the first distribution paid to our unitholders on September 15, 2006.

- Excluding non-recurring costs related to the creation of the Trust and the consolidation of the acquired companies, we were able to achieve an Adjusted EBITDA of $2.6 million and Adjusted Funds from Operations of $2.3 million in the first 58 days of operations.

- Effective October 6, 2006, the Trust acquired Elite Oilfield Rentals ("Elite"), based in Valleyview Alberta. This was our first corporate acquisition as a publicly traded trust. Elite is engaged in oilfield equipment leasing and rental services. This acquisition led to the creation of our new Rental and Leasing Division and allowed us to expand our presence in the northwest sector of the province.

- We continued our market-driven organic growth program with $4.9 million in expenditures on new equipment throughout our operating divisions.

- A formal integration plan for the acquired companies was developed and has been implemented, encompassing all aspects of the ongoing operation. As of the date of this report, all key management positions have been filled, including the recent addition of our Vice President of Operations and General Sales Manager.

- We launched our inaugural website in late October. The website provides comprehensive operations, investor and employment information and can be found at

- Development and implementation continues on our wireless service ticketing system that will be deployed throughout the Trust and will significantly improve the timing of cash flows and overall customer service levels.

- On October 31, 2006, the Canadian government announced its intention to amend the Income Tax Act (Canada) to apply a Distribution Tax on distributions from publicly traded income trusts. Under the proposal, newly formed trusts would be subject to tax in 2007, while existing trusts such as BlackWatch would benefit from a four year transition period and would not be subject to the new measures until the 2011 taxation year. BlackWatch intends to proactively respond to the tax law amendments to support the interests of our unitholders and other stakeholders. We strongly encourage our Unitholders to express their views to their Members of Parliament and to the Minister of Finance. The contact information for your Member of Parliament is available through the Canadian Association of Income funds ('CAIF') website at:

Financial & Operating Highlights

The table below provides a summary of BlackWatch's financial and operating results for the 58 operating days ended September 30, 2006.

($thousands, except per Trust unit amounts)

58 day Operating Period Ended
September 30
2006 (2)

Revenue $ 11,141

Gross Margin $ 3,020

EBITDA (1) $ 1,408
Per Trust unit - basic $ 0.06
Per Trust unit - diluted $ 0.06

Net Loss (1) $ (1,233)
Per Trust unit - basic $ (0.05)
Per Trust unit - diluted $ (0.05)

Funds From Operations (1) $ 1,114
Per Trust unit - basic $ 0.05
Per Trust unit - diluted $ 0.05

Net Debt $ 4,902

Unitholders' equity $ 233,468

Distributions declared $ 4,436
Per Trust unit - basic $ 0.18

Weighted average Trust units - basic 24,129
Weighted average Trust units - diluted 24,129
Trust units, end of period 24,206

(1) EBITDA refers to earnings of the Trust before interest, taxes and
depreciation and amortization.
Readers are cautioned that EBITA does not have a standardized meaning
prescribed by GAAP and therefore may not be comparable to similar
measures presented by other issuers.
The EBITDA, Net Loss and Funds From Operations line items as per above,
all include approximately $1.2 million of non-recurring costs related
to the initiation of the Trust and consolidation of the acquired
companies, including commitment fees for the Trust's bridge debt
facility, early payout fees on pre-existing debt facilities, insurance
cancellation fees and recruitment costs for key management personnel.
Excluding these non-recurring costs, Adjusted EBITDA would amount to
$2.6 million, the Net Earnings result for the period would approximate
break-even and the Adjusted Funds From Operations would be $2.3

(2) The Trust was created on June 23, 2006, but did not commence operations
until August 4, 2006.

The Trust also announces today that the November cash distribution of $0.0916 per trust unit will be payable to unit holders of record as at November 30, 2006. The distribution will be paid on December 15, 2006.


BlackWatch Energy Services Trust is a growth-oriented income trust that provides a range of services to its customers operating in the Western Canadian Sedimentary Basin including drilling, wireline services, rig transportation and hauling, coil tubing well servicing, production services and oilfield equipment rentals and leasing. The units of BlackWatch trade on the Toronto Stock Exchange under the symbol "BWT.UN".

This press release may contain forward-looking statements subject to various risk factors and uncertainties, which may cause the actual results, performance or achievements of BlackWatch to be materially different from results, performance or achievements expressed or implied by forward-looking statements. Such factors include, but are not limited to fluctuations in the market for oil and gas and related products and services, political and economic conditions, the demand for BlackWatch's services, competition and BlackWatch's ability to attract and retain customers and employees.

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

Contact Information

  • BlackWatch Energy Services Trust
    Earl Connors
    President and Chief Executive Officer
    (403) 225-3879
    (403) 366-2066 (FAX)
    BlackWatch Energy Services Trust
    Paul Partlo
    Vice President and Chief Financial Officer
    (403) 225-3879
    (403) 366-2066 (FAX)
    BlackWatch Energy Services Trust
    300, 855 - 8 Avenue SW
    Calgary, Alberta T2P 3P1