Peak Energy Services Trust
TSX : PES.UN

Peak Energy Services Trust

August 06, 2009 16:40 ET

Peak Energy Services Trust Reports Its Financial Results for the Three and Six Months Ended June 30, 2009

CALGARY, ALBERTA--(Marketwire - Aug. 6, 2009) - Peak Energy Services Trust (TSX:PES.UN) -



Financial and Industry Highlights (unaudited)
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(in '000 of CAD, Three months ended June 30 Six months ended March 30
except otherwise -------------------------------------------------------
noted) 2009 2008 Change 2009 2008 Change
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Revenue 21,077 25,889 -19% 68,542 60,176 14%
EBITDA (1) (3,083) (3,502) 12% 9,226 5,741 61%
Per unit - diluted (0.06) (0.07) 14% 0.19 0.14 36%
As a percentage of
revenue -15% -14% 13% 10%
Net loss - continuing
operations (5,383) (7,660) 30% - (4,485) 100%
Per unit - diluted (0.11) (0.16) 31% 0.00 (0.11) 100%
Net loss - discontinued
operations (10,247) (1,037) -888% (10,209) (1,081) -844%
Per unit - diluted (0.21) (0.02) -950% (0.21) (0.03) -600%
Net loss (15,630) (8,697) -80% (10,209) (5,566) -83%
Per unit - diluted (0.32) (0.18) -78% (0.21) (0.14) -50%
Adjusted distributable
cash (1) 16,394 (12,948) 227 14,237 (6,986) 304%
Per unit - diluted 0.34 (0.27) 226 0.29 (0.17) 271%
Distributions
declared - - -% - - -%
Per unit - - -% - - -%
Industry activity (2)
Drilling rig operating
days 8,360 15,744 -47% 36,604 61,082 -40%
Service rig
utilization 28% 38% -26% 38% 51% -26%
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(1) Refer to the "Non-GAAP Measures" section for further details.
(2) Sources: Canadian Association of Oilwell Drilling Contractors ("CAODC"),
the Daily Oil Bulletin ("DOB") and Petroleum Services Association of
Canada ("PSAC").


This press release focuses on key information and statistics from Peak Energy Services Trust's ("Peak" or the "Trust") interim consolidated financial statements and oilfield service industry which contains known and unknown risks and uncertainties. Furthermore, certain statements contained in this press release are forward-looking. Please review the discussion of these statements in the "Forward-Looking Information" section of this press release.

Throughout this press release certain measures are used that are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Specific measures used are earnings before interest, taxes, depreciation, amortization and other certain items ("EBITDA"), standardized distributable cash ("SDC"), adjusted distributable cash ("ADC"), payout ratio of ADC and SDC, working capital, current ratio, funded debt, net debt and long-term debt to equity ratio. Please review the discussion of these measures in the "Non-GAAP Measures" section of this press release.

INDUSTRY ACTIVITY

As compared to the same period in the prior year, for the second quarter of 2009 Canadian drilling rig operating days were 47 percent lower and Canadian service rig utility was 26 percent lower. Meanwhile, year-to-date Canadian drilling rig operating days were 40 percent lower and Canadian service rig utility was 26 percent lower. Wells drilled year-to-date in Canada were at their lowest level in the past decade at 3,818 wells and compares very negatively with the ten year average of 8,912 wells.

The decrease has been the result of:

- unprecedented global economic instability that accelerated during the second half of 2008. This has had an adverse impact on effectively all industries around the world and the oil and natural gas industry in North America is no exception. The global economic downturn has created such significant instability and uncertainty that near-term equity and debt financing is more difficult to obtain at an economically feasible cost than historical norms;

- near-term weakness in natural gas pricing driven primarily by the larger than historical norm of natural gas inventory in North America. As mentioned in our annual MD&A for 2008, concerns regarding the near-term supply/demand fundamentals and the market conditions and indicators driven by the global economic recession has put negative pressure on natural gas pricing. Natural gas storage injections have largely been driven by the aggressive natural gas drilling activities that have occurred in the United States of America ("US") over the past few years. This has more than offset the decline in Canadian natural gas directed activities over the past few years. US natural gas drilling activities have materially declined recently in response to natural gas pricing and the global economic recession, however it will take a period of time for the impact of the decrease to impact storage injections. The Western Canadian Sedimentary Basin ("WCSB") recent years' drilling activity has been between 60 and 70 percent natural gas oriented; and

- the Alberta provincial government's decision to increase the Alberta royalty rates paid by producers effective January 1, 2009. Recently announced partially offsetting incentives by the Alberta government are welcomed by the industry, however it is unclear as to what the impact will be for activity levels in Alberta as it adds another layer of complexity to the overall Alberta royalty framework. Historically, approximately 75 percent of Canadian drilling rig operating days have been generated in Alberta.

The immediate negative impact of the above events did not translate into a noticeable decrease in industry activity until the second half of the fourth quarter of 2008. This negative trend has intensified significantly in 2009 as industry analysts, which management concurs with, are now forecasting a decrease of between 30 and 45 percent in Canadian industry activity over 2008, with the current trend of a lower number of wells with a longer duration for each well being drilled continuing. Adding to the decrease in industry activity, significant pricing pressure will amplify as oilfield service organizations are competing for a smaller market of activity. Coupled with low hydrocarbon commodity prices which ultimately drives cash flows of producers and their incentive to add production, the impact of the global economic recession on debt and equity markets is further intensifying the negative industry activity trend as players that are in the development stage are more adversely impacted since their reliance on financing to fund operations is very significant.

Equity and debt financing is particularly relevant to large scale oil sand projects which require significant up front investment during the development/construction stage as they typically do not generate cash flow until they reach the operational stage which may take a number of years. Recent announcements by entities with oil sands projects support the negative near-term impact to activity levels as most have made decisions to defer some near-term spending on oil sand projects in response to current conditions. This does not suggest all oil sand activity has stopped, just that its development is proceeding at a significantly lower near-term level than previously expected.

Management believes the outlook for the oil and natural gas industry in North America remains positive over the longer term. Nonetheless, for at least the near to mid-term we expect to continue to experience lower levels of activity as compared to the five year average, until the instability within the global economy subsides and the underlying oil and natural gas supply and demand fundamentals firm up over a sustained period of time.

SELECTED FINANCIAL AND OPERATING INFORMATION

For the three months ended June 30, 2009, Peak:

- generated revenue of $21.1 million which was a 19 percent or $4.8 million decrease over the 2008 second quarter revenue of $25.9 million. The decrease which was less than the decrease in industry activity was the result of the Camps and Catering operating division's drilling camps being more active during the current quarter as compared to the prior year period and strong growth in activity within the Trust's Fluids Handling operating division more than offsetting lower utilization and pricing experienced by the other operating divisions during the period.

- realized EBITDA of negative $3.1 million (negative $0.06 per Unit diluted or negative 15 percent of revenue), which was an improvement of 12 percent or $0.4 million over EBITDA for the prior year period of negative $3.5 million (negative $0.07 per Unit diluted or negative 14 percent of revenue);

- posted a net loss from continuing operations of $5.4 million (loss of $0.11 per Unit diluted), which was an improvement of 30 percent or $2.3 million as compared to a net loss for the second quarter of 2008 of $7.7 million (loss of $0.16 per Unit diluted);

- recognized a net loss from the discontinued operations of the Wireline operating division of $10.2 million (loss of $0.21 per Unit diluted) compared to a net loss for the second quarter of 2008 of $1.0 million (loss of $0.02 per Unit diluted). During the period, management identified that the Wireline operating division included in the Production Services reporting segment, be disposed of in order for Peak to focus on its core business operations. Peak completed the sale of the Wireline operating division on July 14, 2009 for gross cash proceeds of $5.8 million. The proceeds generated from the sale were significantly less than the book value of the assets for the division and an impairment loss of $12.3 million was realized in the current quarter; and

- realized a net loss of $15.6 million (loss of $0.32 per Unit diluted), which was a decrease of 80 percent or $6.9 million as compared to a net loss for the second quarter of 2008 of $8.7 million (loss of $0.18 per unit).

For the six months ended June 30, 2009, Peak:

- generated revenue of $68.5 million which was a 14 percent or $8.4 million increase over the 2008 year-to-date revenue of $60.2 million. The primary driver of the increase over the decrease in industry activity was the impact of Peak's merger with Wellco Energy Services Trust ("Wellco") which is not reflected for a significant portion of the 2008 comparative period as the merger occurred on March 12, 2008. Management estimates that if the merger had occurred on December 31, 2007, the pro forma combined financial results, after adjusting for merger related items, would have generated revenue of approximately $87.0 million for the first six months of 2008. Comparing the first two quarters of this year to the pro forma revenue from the prior period resulted in a decrease in revenue of $18.4 million or 21 percent which is significantly better than the respective decreases in Canadian drilling rig operating days and service rig activity;

- realized EBITDA of $9.2 million ($0.19 per Unit diluted or 13 percent of revenue), an increase of 61 percent or $3.5 million over EBITDA for the prior year period of $5.7 million ($0.14 per Unit diluted or 10 percent of revenue). Consistent with revenue, a significant portion of Wellco's EBITDA for the 2008 comparative period is not reflected in Peak's results as the merger occurred March 12, 2008. Management estimates that if the merger had occurred on December 31, 2007, the pro forma combined financial results, after adjusting for merger related costs, would have generated an EBITDA of $14.3 million ($0.30 per unit diluted or 16 percent of revenue) for the first six months of 2008. Comparing the second quarter of this year to the pro forma EBITDA from the prior period resulted in a decrease in EBITDA of $5.0 million or 35 percent which is relatively consistent with the decrease in industry activity. Year-to-date, on a margin basis, EBITDA was 13 percent for 2009 as compared to 16 percent for the pro forma prior year period. The erosion in the margin is primarily attributable to the fixed component of Peak's cost structure that is not possible to be mitigated without significant termination costs that make such potential actions not economically feasible;

- realized a net loss from continuing operations of nil (loss of $0.00 per Unit diluted), which was an improvement of 100 percent or $4.5 million as compared to a net loss for the first six months of 2008 of $4.5 million (loss of $0.11 per Unit diluted);

- recognized a net loss from the discontinued operations of the Wireline operating division of $10.2 million (loss of $0.21 per Unit diluted) compared to a net loss for the first half of 2008 of $1.1 million (loss of $0.03 per Unit diluted);

- realized a net loss of $10.2 million (loss of $0.21 per Unit diluted), which was a decrease of 83 percent or $4.6 million as compared to a net loss for the first six months of 2008 of $5.6 million (loss of $0.14 per unit);

- generated adjusted distributable cash of $14.2 million or $0.29 per Unit diluted (2008 - negative $7.0 million or negative $0.17 per Unit diluted), of which zero distributions ($0.00 per Unit) were made to Unitholders during the current year-to-date period resulting in a payout ratio of zero percent (2008 - zero distributions ($0.00 per Unit) or zero percent); and

- in light of materially lower industry activity levels anticipated for 2009, management implemented a significant restructuring plan commencing in February 2009. The major components of the plan include a reduction in permanent employee positions, temporary salary and wage reductions and suspension of certain employee benefit programs. It is expected that the restructuring plan will contain operating and G&A expenses as a percentage of revenue to a level that will allow the EBITDA percentage to be reasonably consistent with fiscal 2008 (post Wellco merger). Peak expects the restructuring plan will reduce its cost structure by at least $8.0 million to $10.0 million ($13.0 million on an annualized basis).

CAPITAL RESOURCES

As compared to December 31, 2008, Peak:

- decreased working capital by $14.3 million to $17.6 million;

- improved its current ratio to 2.69 to 1.00;

- decreased tangible capital assets by $16.8 million to $218.9 million;

- decreased funded debt by $17.1 million to $63.3 million;

- decreased net debt by $9.2 million to $47.8 million; and

- decreased Unitholders' equity by $10.0 million to $163.9 million.

LONG-TERM DEBT

The Trust's long-term debt (including current portion) decreased to $65.4 million at June 30, 2009, as compared to $89.0 million at December 31, 2008. Funded debt was $63.3 million at June 30, 2009 as compared to $80.4 million at December 31, 2008. Meanwhile, net debt was $47.8 million at June 30, 2009 as compared to $57.0 million at December 31, 2008. The long-term debt to equity ratio decreased to 0.40 to 1.00 at June 30, 2009 (December 31, 2008 - 0.51 to 1.00). Of the Trust's $105.0 million long-term debt facilities at June 30, 2009, $39.6 million was available for use by the Trust for future capital expenditures and strategic business acquisitions at the sole discretion of the lender and subject to certain lending ratios being maintained.

The current negative economic environment and its impact on the financial markets, lending institutions, hydrocarbon commodity prices, and oil and natural gas industry activity levels is presenting a very challenging operating environment for the oil and natural gas services industry. Management has taken several steps to proactively manage its cash flow and related funded debt level through these uncertain times. As previously discussed, Peak ceased making distributions to Unitholders to focus cash flows towards debt repayment. Since the merger with Wellco, exclusive of the equity financing which closed simultaneous with the merger, Peak has reduced its funded debt by $34.4 million. Furthermore, for 2009 Peak has implemented a significant restructuring plan which it expects will reduce its cost structure by approximately $8.0 million to $10.0 million ($13.0 million on an annualized basis), has a minimal capital expenditure program and is aggressively pursuing its asset rationalization program, such as the disposal of the Wireline operating division, with a primary focus on further reducing the funded debt outstanding in light of expected near-term lower industry activity levels.

The Trust has several covenants associated with its Debt Agreements. Of the covenants, currently the most sensitive one that may impact the Trust's liquidity and capital resources is the net funded debt to EBITDA financial covenant which is in breach if the ratio exceeds 2.75 to 1.00. Furthermore, this covenant decreases to 2.50 to 1.00 at December 31, 2009. The Trust is in compliance with all of its Debt Agreements' covenants at June 30, 2009, including net funded debt to EBITDA, which was 2.55 to 1.00.

The Trust has forecasted its financial results for the foreseeable future using its best estimates of industry activity levels and its associated operating conditions. Based on its forecast, Peak believes it will be able to continue as a going concern, in light of this very challenging operating environment. However, a decrease from the forecasted industry activity could adversely impact the Trust's liquidity and capital resources. Furthermore, it should be noted that given the current economic environment and the impact on industry activity and forecasted results that the Trust would likely experience significant difficulty expanding its funded debt materially above current levels and if required for operations this would adversely impact the Trust's liquidity and capital resources.

UNITHOLDERS' EQUITY

Unitholders' equity decreased $10.0 million to $163.9 million at June 30, 2009, from $173.8 million at December 31, 2008. The decrease over the prior year-end was the result of a net loss of $10.2 million.

Considering the current equity market conditions and related negative impact on the oil and natural gas industry it would be challenging for management to rely heavily on equity financing as the market appetite is weak and it would be very dilutive for existing Unitholders at current Unit market pricing.

OUTLOOK

Unfortunately, industry activity during the first half of 2009 was significantly less than the prior year period with 45 percent fewer wells being drilled. This reduced level of drilling activity during the first six months of 2009 was not unexpected given the challenges being experienced by the oil and natural gas industry. The worldwide economic recession has put significant downward pressure on hydrocarbon commodity prices due to the reduction in global oil demand and the demand for natural gas in North America. Tight credit from lending institutions coupled with a lack of equity capital, at an economically feasible cost, has made it increasingly difficult for our customers to support their drilling and production programs. All of the above factors have contributed to the reduced levels of activity year-to-date. Considering the slow start to the year and the lack of clear visibility going forward, Peak's outlook for the number of wells to be drilled in western Canada for 2009 is now in the 10,000 well range (previous expectations were 11,000 wells), representing a 41 percent reduction from the prior year. Furthermore, pricing will remain under significant pressure for the balance of 2009.

In February, Peak re-visited its internal operating plan for 2009, to ensure the Trust remains financially sound through what appears to be the continuation of a turbulent and protracted downturn. Peak has a history of being proactive when faced with these challenging situations that is once again being evidenced by the implementation of a number of significant restructuring initiatives which will enable the Trust to reduce its cost structure by at least $8.0 to $10.0 million for fiscal 2009 ($13.0 million on an annualized basis). If necessary, management will implement further restructuring initiatives to relatively maintain EBITDA margins as best it can in light of the current environment. In addition to the foregoing, the Trust has also significantly curtailed its capital expenditure plans for 2009 relative to prior years and is aggressively pursuing its asset rationalization program, such as the disposal of the Wireline operating division, to preserve cash flow, strengthen its balance sheet and better position itself to take advantage of opportunities that may present themselves.

Notwithstanding the current near to mid-term uncertainty surrounding the oil and natural gas industry in North America, management believes that the long-term outlook for the oil and natural gas industry in North America remains positive. As this current instability subsides, the underlying strength in the supply and demand fundamentals for oil and natural gas supply should once again be a catalyst for higher commodity prices and more robust levels of activity over the longer term.

NON-GAAP MEASURES

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and other items (non-cash expenses and gains / losses). EBITDA is not a recognized measure under Canadian GAAP. Management believes, in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by Peak's principle business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions. Readers should be cautioned that EBITDA should not be construed as an alternative to net income determined in accordance with Canadian GAAP as an indicator of the Trust's performance. Peak's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies.

Standardized distributable cash is defined as cash flow from operating activities less adjustments for total capital expenditures, as reported in the GAAP financial statements, and restrictions on distributions arising from compliance with financial covenants restrictive as of the date of the calculation. Standardized distributable cash is not a recognized measure under Canadian GAAP, however standardized distributable cash is in accordance with the recommendations provided by the CICA's publication "Standardized Distributable Cash in Income Trusts and Other Flow-Through Entities: Guidance on Preparation and Disclosure". Readers should be cautioned that standardized distributable cash should not be construed as an alternative to cash flow from operating activities, as an indicator of the Trust's performance. Peak's method of calculating standardized distributable cash may differ from other companies and, accordingly, standardized distributable cash may not be comparable to measures used by other entities.

Adjusted distributable cash is defined as standardized distributable cash adjusted for business acquisitions, growth and infrastructure capital expenditures and seasonal changes in non-cash working capital. Adjusted distributable cash is not a recognized measure under Canadian GAAP. Management believes, in addition to standardized distributable cash, adjusted distributable cash is a useful supplemental measure as it demonstrates the Trust's ability to generate the cash necessary to make distributions, repay debt or fund future growth through capital investment. Readers should be cautioned that adjusted distributable cash should not be construed as an alternative to standardized distributable cash, determined in accordance with the recommendations provided by the CICA's publication "Standardized Distributable Cash in Income Trusts and Other Flow-Through Entities: Guidance on Preparation and Disclosure", as an indicator of the Trust's performance. Peak's method of calculating adjusted distributable cash may differ from other companies and, accordingly, adjusted distributable cash may not be comparable to measures used by other entities.

Payout ratio are defined as distributions declared divided by adjusted distributable cash. Payout ratio is not a recognized measure under Canadian GAAP. Management believes this ratio provides an indication of the amount of cash either retained or distributed that could be utilized for future growth opportunities, debt repayment or incremental future distributions to Unitholders. The Trust's method of calculating the payout ratio may differ from those used by other entities and, accordingly, the payout ratio may not be comparable to measures used by other entities.

Working capital is defined as current assets less current liabilities excluding current portion of long-term debt. Current ratio is defined as current assets divided by current liabilities excluding current portion of long-term debt. Working capital and current ratio are not recognized measures under Canadian GAAP. Management believes working capital and current ratio provide an indication of the current liquidity available to the Trust before considering long-term debt facilities or equity financing considerations. The Trust's method of calculating working capital or current ratio may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

Funded debt is defined as long-term debt including current portion of long-term debt less cash and cash equivalents. Net debt is defined as long-term debt including current portion of long-term debt less working capital. Funded debt and net debt are not recognized measures under Canadian GAAP. Management believes funded debt and net debt provide an indication of the Trust's debt position after consideration for assets and liabilities that are considered relatively liquid in nature. The Trust's method of calculating funded debt and net debt may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

Long-term debt to equity ratio is defined as long-term debt including current portion of long-term debt divided by Unitholders' equity. Long-term debt to equity ratio is not a recognized measure under Canadian GAAP. Management believes the long-term debt to equity ratio provides an indication of how the Trust's operations are financed. The Trust's method of calculating long-term debt to equity ratio may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

FORWARD-LOOKING INFORMATION

This press release contains forward-looking information within the meaning of applicable Canadian securities legislation regarding expected future events and financial and operating results of the Trust. By its nature, forward-looking information requires the Trust to make assumptions and is subject to numerous inherent risks and uncertainties. There is significant risk that assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking information as a number of factors could cause actual future results, conditions, actions or events to differ materially from expectations, estimations or intentions expressed in the forward-looking information. The Trust disclaims any intention or otherwise to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. It is the current policy of the Trust to evaluate its past forward-looking information and where it deems appropriate, provide updates subject to requirements by law. The forward-looking statements made within this press release are made as of August 6, 2009. Additionally, Peak undertakes no obligation to comment on expectations of, or statements made by, third parties in respect of this press release.

Forward-looking information includes the following statements within this press release regarding the expectations of: the geopolitical and global economic future; future oil and natural gas industry activity levels, hydrocarbon supply/demand balance and associated hydrocarbon pricing; future oil sands activity and development; the cyclical and seasonal nature of activity within the oil and natural gas industry; industry trends regarding provincial activity levels and type of activity; the future provision of Peak's services and its impact on equipment utility, pricing, forecasted financial performance and ability to continue as a going concern; the future financial impact of Peak's cost restructuring initiatives; Peak's future capital expenditures; access to and affordability of debt, including the associated interest cost, and equity capital markets for Peak and its customers; Peak's ability to attract and retain key personnel; Peak's working capital changes; and management's financing strategy for managing Peak's liquidity and capital resources.

These statements include, but are not limited to, statements as to seasonal and weather conditions affecting the Canadian oil and natural gas industry and the demand for the Trust's services. These statements are based on certain assumptions and analysis made by the Trust in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Trust's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Trust's expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the price and demand for oil and natural gas; currency fluctuations; fluctuations in the level of oil and natural gas exploration and development activities; fluctuations in the demand for oilfield services that the Trust provides; the effects of weather conditions on operations; the existence of competition from other oilfield service entities; general economic, market or business conditions including the consequences of the current global economic recession; public market volatility and the related ability to access sufficient capital to fund activities; availability to access debt financing to fund activities; government policy changes; changes in laws or regulations, including taxation and environmental regulations; the lack of availability of qualified personnel or management; and other unforeseen conditions which could impact the use of services supplied by the Trust.

Consequently, all of the forward-looking information made in this document are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Trust will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Trust or its business or operations.

CONFERENCE CALL

Management will hold a conference call to discuss the quarter end results at 9:30 a.m. MT (11:30 a.m. ET) on Friday, August 7, 2009. To participate, please dial 1 (866) 225-2055 or 1 (416) 340-8410. Participants are asked to call at least 10 minutes before the start of the call. For those unable to participate in the live call, a replay will be available until Friday, August 14, 2009, by dialing 1 (800) 408-3053 or 1 (416) 695-5800, verbal pass code 5425427.

FINANCIAL RESULTS

The following selected financial information summarizes Peak's consolidated financial results for the three and six months ended June 30, 2009. Peak's quarterly report, will be available at www.sedar.com or www.peak-energy.com on or about August 13, 2009.



CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME AND DEFICIT
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Three months ended Six months ended
June 30, June 30,
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(in thousands of CAD,
except per Unit amounts)
(unaudited) 2009 2008 2009 2008
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Revenue $ 21,077 $ 25,889 $ 68,542 $ 60,176

Expenses:
Operating 15,943 20,465 42,750 37,068
General and administrative 7,919 8,907 16,363 17,497
Foreign exchange gain 298 19 203 (130)
Unit-based compensation 252 - 252 -
Depreciation and amortization 3,266 4,237 7,009 8,371
Interest on long-term debt 968 1,373 2,101 2,549
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28,646 35,001 68,678 65,355

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Loss before other items from
continuing operations (7,569) (9,112) (136) (5,179)

Other items:
Loss on sale of equipment 70 664 94 544
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70 664 94 544

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Loss before income taxes from
continuing operations (7,639) (9,776) (230) (5,723)

Provision for income taxes:
Current (recovery) (720) 178 (715) 428
Future (reduction) (1,536) (2,294) 485 (1,666)
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(2,256) (2,116) (230) (1,238)

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Net loss from continuing
operations (5,383) (7,660) - (4,485)

Net loss from discontinued
operations (10,247) (1,037) (10,209) (1,081)

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Net loss and comprehensive loss (15,630) (8,697) (10,209) (5,566)

Deficit, beginning of period (49,592) (47,055) (55,013) (50,186)

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Deficit, end of period $ (65,222) $ (55,752) $(65,222) $ (55,752)
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Loss per Unit from continuing
operations:
Basic $ (0.11) $ (0.16) $ - $ (0.11)
Diluted $ (0.11) $ (0.16) $ - $ (0.11)
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Loss per Unit from
discontinued operations:
Basic $ (0.21) $ (0.02) $ (0.21) $ (0.03)
Diluted $ (0.21) $ (0.02) $ (0.21) $ (0.03)
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Loss per Unit:
Basic $ (0.32) $ (0.18) $ (0.21) $ (0.14)
Diluted $ (0.32) $ (0.18) $ (0.21) $ (0.14)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three months ended Six months ended
June 30, June 30,
----------------------------------------------
(in thousands of CAD)
(unaudited) 2009 2008 2009 2008
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Operating activities:
Net loss $ (5,383) $ (7,660) $ - $ (4,485)
Add (deduct) items not
affecting cash:
Unit-based compensation 252 - 252 -
Depreciation and amortization 3,266 4,237 7,009 8,371
Loss on sale of equipment 70 664 94 544
Unrealized foreign exchange
loss (gain) (4) (51) (294) 283
Future income taxes (reduction)(1,536) (2,294) 485 (1,666)
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(3,335) (5,104) 7,546 3,047

Changes in non-cash working
capital items 14,594 17,597 8,872 15,653
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11,259 12,493 16,418 18,700

Discontinued operations:
Funds used in discontinued
operations (855) (744) (235) (147)
Changes in non-cash working
capital items of discontinued
operations 606 361 64 (44)
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(249) (383) (171) (191)
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11,010 12,110 16,247 18,509

Investing activities:
Business acquisition - - - (1,583)
Purchase of equipment (1,268) (1,601) (2,240) (2,667)
Proceeds on sale of equipment 253 9,759 563 11,003
Proceeds on sale of property
held for sale - - 3,580 -
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(1,015) 8,158 1,903 6,753

Changes in non-cash working
capital items (114) (98) (966) (72)
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(1,129) 8,060 937 6,681

Discontinued operations:
Funds used in discontinued
operations (71) (96) (168) (122)
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(71) (96) (168) (122)
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(1,200) 7,964 769 6,559

Financing activities:
Increase of operating line
of credit - 78 - 78
Increase in long-term debt - 300 - 64,568
Repayment of long-term debt (14,550) (24,125) (23,567) (101,232)
Issue of Trust Units,
net of costs - - - 9,923
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(14,550) (23,747) (23,567) (26,663)

Foreign exchange loss (gain)
on cash held in foreign
currency 100 (10) 62 (22)
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Decrease in cash and cash
equivalents (4,640) (3,683) (6,489) (1,617)
Cash and cash equivalents,
beginning of period 6,716 3,683 8,565 1,617
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Cash and cash equivalents,
end of period $ 2,076 $ - $ 2,076 $ -
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CONSOLIDATED BALANCE SHEETS
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June 30, December 31,
(in thousands of CAD) (unaudited) 2009 2008
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ASSETS
Current assets:
Cash and cash equivalents $ 2,076 $ 8,565
Accounts receivable 22,113 44,889
Prepaid expenses 2,389 2,175
Inventory 1,189 1,398
Assets of discontinued operations 278 659
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28,045 57,686

Property and equipment 213,595 218,306

Intangibles 2,398 3,113

Equipment held for sale - 3,580

Assets of discontinued operations 5,319 18,528

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$ 249,357 $ 301,213
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LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 10,007 $ 24,208
Income taxes payable 42 838
Current portion of long-term debt 1,001 9,012
Current portion of deferred lease inducements 201 201
Liabilities of discontinued operations 195 512
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11,446 34,771

Long-term debt 64,399 79,955

Deferred lease inducements 1,823 1,923

Future income taxes 7,829 10,747

Unitholders' equity:
Trust Unit capital 227,347 227,347
Contributed surplus 1,735 1,483
Deficit (65,222) (55,013)
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163,860 173,817

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$ 249,357 $ 301,213
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About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization operating in western Canada and the United States of America. Through its various operating divisions, Peak provides drilling and production services to its customers both in the conventional oil and gas industry as well as the oil sands regions of western Canada. The Trust also provides water technology solutions to a variety of customers throughout North America. Peak's units are listed on the Toronto Stock Exchange under the symbol "PES.UN".

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

Contact Information

  • Peak Energy Services Trust
    Mr. Curtis W. Whitteron
    President and Chief Executive Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Mr. Monty R. Balderston
    Chief Financial Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Livingston Place, South Tower
    Suite 900, 222 - 3rd Avenue SW T2P 0B4