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

Canadian Energy Services L.P.

March 16, 2009 17:10 ET

Canadian Energy Services L.P. Announces Cash Distribution Expiry of the Subordination Period and Resignation of a Director

CALGARY, ALBERTA--(Marketwire - March 16, 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") and per Class B subordinated limited partnership unit ("Subordinated Class B Unit") on April 15, 2009 in respect of operations for the period from March 1, 2009 to March 31, 2009 to Unitholders of record on March 31, 2009.

In addition, the Partnership will pay a cash distribution of $0.1584 per Subordinated Class B Unit on April 15, 2009 in respect of operations for the period from January 1, 2009 to February 28, 2009 to Subordinated Class B Unitholders of record as of February 28, 2009. The $0.1584 distribution per Subordinated Class B Unit is in respect of the two month period prior to the expiry of the subordination provisions applicable to such units, as discussed further below.

Subordination Period Expiry

The subordination period relating to the Subordinated Class B Units expired on March 1, 2009, pursuant to the terms of the Amended and Restated Limited Partnership Agreement dated March 2, 2006 (the "LP Agreement"), a copy of which can be found on www.sedar.com. The Subordinated B Units are exchangeable for Class A Units of the Partnership and were subject to certain distribution and exchange restrictions during the subordination period from March 2, 2006 to March 1, 2009. Upon the expiration of the subordination period, distributions to the holders of the Subordinated Class B Units and Class A Units will be made monthly on a proportionate basis commencing on the March 31, 2009 record date, subject to the terms of the LP Agreement and at the discretion of the Board of Directors of the general partner of Canadian Energy Services. The Subordinated Class B Units can be exchanged, on a one for one basis, for Class A Units at any time after March 1, 2009. Following March 1, 2009 1,075,743 Subordinated Class B Units were exchanged for an equivalent number of Class A Units. The Subordinated Class B Units are held by the former owners of the drilling fluid systems businesses which were acquired by the Partnership in connection with the Partnership's initial public offering on March 2, 2006.

Resignation of Director

Effective March 6, 2009, Alan Archibald has resigned from the Board of Directors of Canadian Energy Services Inc., the general partner of the Partnership. The Board of Directors and the management of the Partnership would like to thank Mr. Archibald for all his contributions.

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.

Certain matters set forth in this news release, including words such as "expects", "projects", "plans" and similar expressions, are forward-looking information that represents management of Canadian Energy Services' internal projections, expectations or beliefs concerning, among other things, future performance of Canadian Energy Services. The projections, estimates and beliefs contained in such forward-looking information necessarily involve known and unknown risks and uncertainties, which may cause Canadian Energy Services' actual performance to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, those described in Canadian Energy Services' filings with the Canadian securities authorities. Accordingly, holders of Canadian Energy Services units and potential investors are cautioned that events or circumstances could cause results to differ materially from those predicted.

In particular, this press release contains forward-looking information pertaining to future distributions on the Partnerships Units. The Partnership's distribution levels in the future could differ materially from those anticipated in the forward-looking information as a result of several factors, including of the following: general economic conditions in Canada, the US and internationally; demand for oilfield services for drilling and completion of oil and natural gas wells; volatility in market prices for oil, natural gas and natural gas liquids and the effect of this volatility on the demand for oilfield services generally; competition; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, and skilled management, technical and field personnel; ability to integrate technological advances and match advances of competitors; availability of capital; uncertainties in weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; changes in legislation and the regulatory environment, including uncertainties with respect to programs to reduce greenhouse gas and other emissions, taxation of trusts, public partnerships and other flow-through entities, and changes to the royalty regimes applicable to entities operating in Canada and the US; access to capital and the liquidity of debt markets; fluctuations in foreign exchange and interest rates and the other factors considered under "Risk Factors" in the Partnership's Annual Information Form for the year ended December 31, 2008 and "Risks and Uncertainties" in the Partnership's MD&A for the year ended December 31, 2008. Without limiting the foregoing, the forward-looking information contained in this press release is expressly qualified by this cautionary statement.

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.

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
    Website: www.CanadianEnergyServices.com