Essential Energy Services Trust
TSX : ESN.UN

Essential Energy Services Trust

June 07, 2006 18:47 ET

Essential Energy Services Trust Announces Acquisition

CALGARY, ALBERTA--(CCNMatthews - June 7, 2006) - Essential Energy Services Trust (the "Trust" or "Essential") (TSX:ESN.UN) is pleased to announce the acquisition of certain assets by Essential's Westvac Services Partnership ("Westvac") from a private company in the Pelican Lake area of Alberta. The assets include four rod rigs, or "flush-by's" as well as a 100 man camp, a shop facility and several assorted tank trucks and other vehicles. Westvac has retained all staff required to operate these assets and will manage the operations. The acquisition closed on June 7, 2006 with an effective date of May 31, 2006. Total consideration was $5.6 million in cash drawn from available lines of credit and the assets are expected to add approximately $1.5 - $1.7 million in incremental annual EBITDA. This acquisition is accretive to the Trust's cash flow and further expands the Trust's energy service operations.

The Pelican Lake acquisition is an important step in establishing Westvac as a comprehensive energy service provider in this active and growing area of north central Alberta. The four flush-by's expand Essential's fleet to a total of 14 with 3 more currently under construction. The camp facilities are a valuable asset in the remote area of Pelican Lake. Westvac currently operates a small camp for its employees and the acquisition will provide efficiencies, additional revenue and cash flow as well as enhancing employee retention. Essential does not currently plan further camp acquisitions but this particular camp is a key component in the execution of Westvac's strategy to expand in the remote and busy Pelican Lake area.

In addition to the 3 flush-by's currently under construction for Essential's Cardinal Well Service division, based in Brooks, Alberta, Essential is also building a new coil tubing rig for it's Endless Tubing Division based in Medicine Hat. The Trust also has 10 additional trucks on order for delivery in 2006 for its Transport division. These equipment acquisitions are largely paid for and the incremental EBITDA expected to be realized from this latest acquisition, and the ongoing build out of new equipment, should result in the lowering of Essential's EBITDA payout ratio to its target of 60% - 65%.

Essential is an energy service trust that provides a range of essential production services to oil and gas producers across western Canada from northeast British Columbia to southwest Saskatchewan including service rigs, coil tubing, rod rigs, swab rigs, vacuum truck, pressure truck, tank truck, hydro-vac, steaming and hot oiling along with other related services. Essential focuses on post drilling production maintenance and enhancement services to ensure stable cash flows for Essential's unitholders.

Forward-Looking Statements: Certain information set forth in this press release, including a discussion of 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 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, 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. Actual results, performance or achievement could differ materially from those expressed in or implied by these forward-looking statements.


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

Contact Information

  • Essential Energy Services Trust
    James Burns
    Chief Executive Officer
    (403) 263-6778
    (403) 263-6737 (FAX)
    or
    Essential Energy Services Trust
    Duncan Au
    Chief Financial Officer
    (403) 263-6778
    (403) 263-6737 (FAX)