Peak Energy Services Trust
TSX : PES.UN

Peak Energy Services Trust

September 15, 2005 17:51 ET

Peak Energy Services Trust Acquires the Operating Assets of Source Oilfield Rentals Inc.

CALGARY, ALBERTA--(CCNMatthews - Sept. 15, 2005) - Peak Energy Services Trust (TSX:PES.UN) ("Peak" or the "Trust") has acquired all of the operating assets of Source Oilfield Rentals Inc. ("Source") for $9.5 million. As partial consideration in this transaction, Peak issued 252,313 trust units to Source, based on $3.0 million worth of trust units using the 10 day weighted average trading price of $11.89 calculated on the September 15, 2005 closing date.

Source represents a very good opportunity for Peak to further diversify its operations by adding new complimentary solids control products to its Drilling Services segment. The assets acquired include specialized invert recovery units coupled with auxiliary pumps, wash guns and tankage (high wall and regular wall shale bins) for the purposes of aiding in the cleaning of hydrocarbon based drilling fluid from the drill cuttings on location.

During the first eight months of 2005, Source generated revenue of $2.85 million and normalized Earnings Before Interest, Depreciation and Taxes ("EBITDA") of approximately $1.85 million. For the year ended December 31, 2005, Source is on pace to generate total revenue of approximately $4.8 million and EBITDA of approximately $3.2 million. In 2006, the Source assets are expected to generate revenue of approximately $5.2 million and EBITDA of $3.5 million excluding any potential internal growth opportunities with this product line. In addition to adding an immediate cash flow stream to the Trust, this acquisition enables Peak to further diversify its product offerings within the solids control area, expanding its presence in the invert drilling marketplace.

Source offers a strong customer base with the majority of its revenue generated by six of the major producers in the industry.

Peak will utilize its existing acquisition facility to finance the cash portion of this acquisition. After this transaction, Peak will have net debt of approximately $48 million, working capital of $33 million, tangible assets of $208 million and trust equity of $153 million.

These assets will be integrated into the Trust's existing infrastructure and will provide Peak with an immediate cash flow stream, a new product line with significant growth opportunities and key operating personnel. Upon closing, all of Source's operating personnel will become valuable members of the Peak team with the prior three owners staying involved with Peak in their current roles for a minimum two year term to ensure the earnings potential from this business is maximized. This acquisition is further testament to Peak's commitment of being a dominant supplier of oilfield rental equipment and related services throughout all of the regions in which it operates.

About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization providing oilfield equipment and related services to the energy industry in western Canada. Peak Energy Services Trust units are list on the Toronto Stock Exchange under the symbol "PES.UN".

Certain information set forth in this document, including management's assessment of Peak's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond these parties' control, including the impact of general economic conditions, industry conditions, currency fluctuations, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Peak'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 by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Peak will derive there from. Peak disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The TSX have neither approved nor disapproved the information contained herein.

Contact Information

  • Peak Energy Services Trust
    Mr. Christopher E. Haslam
    Chairman & Chief Executive Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    Suite 1800, 530-8th Avenue SW
    Calgary, Alberta T2P 3S8
    or
    Peak Energy Services Trust
    Mr. Matt J. Huber
    Chief Financial Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    Suite 1800, 530-8th Avenue SW
    Calgary, Alberta T2P 3S8