Peak Energy Services Trust
TSX : PES.UN

Peak Energy Services Trust

August 09, 2005 16:30 ET

Peak Energy Services Trust Reports its Financial Results for the Three and Six Months Ended June 30, 2005

CALGARY, ALBERTA--(CCNMatthews - Aug. 9, 2005) - Peak Energy Services Trust (TSX:PES.UN) ("Peak" or the "Trust") posted revenue of $16.1 million, EBITDA of $2.7 million ($0.11 per Unit diluted), funds from operations of $2.4 million ($0.10 per Unit diluted) and net income of $1.1 million ($0.05 per Unit diluted) for the second quarter of 2005. Meanwhile, Peak posted revenue of $41.2 million, EBITDA of $13.6 million ($0.57 per Unit diluted), funds from operations of $12.9 million ($0.54 per Unit diluted) and net income of $7.5 million ($0.32 per Unit diluted) for the first half of fiscal 2005.

Financial Summary

For the second quarter of 2005, an early spring break-up and dry conditions in May facilitated strong drilling rig activity. Drilling rig operating days increased by 14 percent for the second quarter of 2005 and on a year-to-date basis increased by 5 percent, relative to the comparable periods of 2004. Having said this, the second quarter could have been stronger with June being hindered by wet weather conditions and flooding in the southern areas of the Western Canadian Sedimentary Basin ("WCSB").

Peak capitalized on the strong drilling rig activity level with positive financial results for the quarter. Revenue increased by $4.8 million or 42 percent to $16.1 million for the three months ended June 30, 2005 as compared to the prior year period. For the current quarter, EBITDA increased to $2.7 million or as a percentage of revenue was 17 percent (2004 - 12 percent), representing an increase of $1.3 million or 92 percent over the same quarter of 2004. Meanwhile, funds from operations increased $4.3 million or 221 percent to $2.4 million for the three months ended June 30, 2005, as compared to the prior year period. Net income for the second quarter of 2005 was $1.1 million ($0.05 per Unit diluted) compared to a net loss of $1.8 million (loss of $0.10 per Unit diluted) for the prior year period, representing an increase of $2.9 million or 163 percent.

For the six months ended June 30, 2005, Peak's revenue increased by $11.2 million or 37 percent to $41.2 million as compared to the prior year period. For the first half of fiscal 2005, EBITDA increased to $13.6 million or as a percentage of revenue was 33 percent (2004 - 30 percent), representing an increase of $4.6 million or 51 percent over the first half of fiscal 2004. Meanwhile, funds from operations increased $8.5 million or 194 percent to $12.9 million for the six months ended June 30, 2005, as compared to the prior year period. Net income for the first half of fiscal 2005 was $7.5 million ($0.32 per Unit diluted) compared to a net income of $1.1 million ($0.05 per Unit diluted) for the prior year period, representing an increase of $6.4 million or 613 percent.

Distributions paid and declared to Unitholders for the first half of fiscal 2005 were $11.0 million or $0.48 per Unit, which represented 85 percent of funds from operations for the six months ended June 30, 2005.

Total assets increased by $22.3 million or 11 percent from $205.7 million at December 31, 2004 to $228.0 million at June 30, 2005. Total liabilities increased by $23.7 million or 37 percent from $64.5 million at December 31, 2004 to $88.2 million at June 30, 2005. Meanwhile, Unitholders' equity decreased by $1.4 million or 1 percent from $141.1 million at December 31, 2004 to $139.7 million at June 30, 2005.

Revenue

For the three months ended June 30, 2005, Peak generated revenue of $16.1 million compared to $11.3 million for the same period of 2004, representing an increase of 42 percent compared to an increase of 14 percent in drilling rig operating days over this time period. Meanwhile, service rig utilization decreased by 19 percent during the second quarter of 2005 as compared to the prior year period. Year-to-date, Peak generated revenue of $41.2 million compared to $30.0 million for the same period of 2004, representing an increase of 37 percent compared to an increase of 5 percent in drilling rig operating days over this time period. Lastly, service rig utilization decreased by 11 percent during the six months ended 2005 as compared to the prior year period.

Drilling Services Revenue

The Drilling Services operating segment increased revenue by $3.7 million or 51 percent as it generated $11.1 million in revenue or 69 percent of the Trust's total revenue for the three months ended June 30, 2005, compared to $7.4 million or 65 percent for the prior year period. In comparison to the second quarter increase of 14 percent in drilling rig operating days, Peak's Drilling Services operating segment produced strong results.

For the six months ended June 30, 2005, Peak increased drilling services revenue by $9.0 million or 42 percent as it generated $30.2 million in revenue or 73 percent of the Trust's total revenue, compared to $21.2 million or 71 percent for the prior year period. In comparison to the first half increase of 5 percent in drilling rig operating days, Peak's Drilling Services operating segment produced positive results.

Production Services Revenue

The Production Services operating segment improved revenue by $1.0 million or 27 percent as it contributed $5.0 million in revenue or 31 percent of the Trust's total revenue for the three months ended June 30, 2005, compared to $3.9 million or 35 percent for the prior year period. The quarter-over-quarter increase of 27 percent compares favorably to the 19 percent decrease in service rig utilization.

Year-to-date, Peak improved production services revenue by $2.2 million or 25 percent as it contributed $11.0 million in revenue or 27 percent of the Trust's total revenue, compared to $8.8 million or 29 percent for the prior year period. The year-over-year increase of 25 percent compares favorably to the 11 percent decrease in service rig utilization.

Relative to the industry activity levels experienced, Peak's incremental increase in revenue was attributed to the revenue generated by both the strategic business acquisitions and significant capital expenditures made during fiscal 2004 and enhanced rental equipment day rates realized during the period.

Expenses

Operating expenses - For the three months ended June 30, 2005, operating expenses were higher than the prior year period by $2.4 million or 35 percent. However, as a percentage of revenue, operating costs were 58 percent compared to the prior year period of 61 percent. For the six months ended June 30, 2005, operating expenses were higher than the prior year period by $4.5 million or 30 percent. However, as a percentage of revenue, operating costs were 47 percent compared to the prior year period of 50 percent. The primary driver of the improvement in the operating expenses as a percentage of revenue was the economies of scale realized by the Trust associated with the significant business acquisitions and capital expenditures made during fiscal 2004.

General and administrative expenses - General and administrative expenses (G&A) were $1.1 million or 36 percent higher for the three months ended June 30, 2005 as compared to the same period of 2004. For the first half of fiscal 2005, G&A was $2.0 million or 33 percent higher than the prior year period. For both the current quarter and year-to-date periods the increase was the result of higher employee costs, commission based compensation and facility rental costs resulting from the business acquisition and capital expenditure activities in 2004. In addition, higher uncollectible accounts receivable and professional consulting fees associated with the Trust's regulatory compliance activities contributed to the additional G&A. As a percentage of revenue, G&A was relatively consistent with the prior year periods at 26 percent (2004 - 27 percent) and 20 percent (2004 - 20 percent) for the three and six months ended June 30, 2005, respectively.

Depreciation and amortization expenses - For the three months ended June 30, 2005, depreciation and amortization expenses were higher than the prior year period by $0.2 million or 10 percent. For the six months ended June 30, 2005, depreciation and amortization expenses were higher than the prior year period by $0.7 million or 16 percent.

Interest on long-term debt expense - Interest on long-term debt expense for the second quarter of 2005 increased from the prior year period by $48,000 or 22 percent. Year-to-date, interest on long-term debt expense decreased from the prior year period by $0.1 million or 18 percent. The interest cost (expressed as a percentage of the average long-term debt outstanding during the period) was 4.9 percent and 4.7 percent for the three and six months ended June 30, 2005, respectively, compared to 6.7 percent and 7.7 percent for the comparable periods of 2004.

Loss (gain) on sale of equipment held for sale - For the three months ended June 30, 2005, loss on sale of equipment held for sale was $18,000 compared to a loss of $2,000 for the prior year period. Meanwhile for the six months ended June 30, 2005, gain on sale of equipment held for sale was $24,000 compared to a loss of $21,000 for the prior year period. The individual gains and losses incurred on the equipment when it was sold were insignificant and demonstrates that the impairment loss recognized in prior fiscal periods addressed the over valuation of the specific assets sold. At June 30, 2005, less than $0.1 million of equipment held for sale remained and it is expected that these assets will be disposed of during the current fiscal period, however the specific timing of the disposals is not determinable.

Loss on sale of equipment - For the three months ended June 30, 2005, the loss on sale of equipment amounted to $0.4 million compared to a loss of $0.2 million for the prior year period. For the six months ended June 30, 2005, the loss on sale of equipment amounted to $0.9 million compared to a loss of $0.6 million for the prior year period. The loss was the result of the Trust's ongoing asset rationalization program, whereby equipment identified during the period that was not generating an appropriate rate of return were sold and the proceeds were reinvested in equipment that is expected to generate improved returns on invested capital.

Impairment loss on equipment - During the first quarter of fiscal 2005, the Trust incurred an impairment loss on equipment of $0.1 million which is reflected in the results for the six months ended June 30, 2005. The loss relates to the Trust's anchor services assets which were sold in their entirety on April 29, 2005 to a third party. Management evaluated and determined that these assets were non-core to its existing operations and it would be more beneficial to exit this market segment. The carrying value of the assets related to the sale exceeded the purchase price, hence an impairment loss was recognized to reduce the assets' carrying value to their fair value. These assets were classified as Production Services for segmented information purposes.

Provision for income taxes - The current tax provision of $0.1 million and future tax provision reduction of $1.6 million, resulted in a net income tax provision reduction of $1.5 million and an effective income tax rate of negative 464 percent for the three months ended June 30, 2005. Meanwhile, the current tax provision of $0.2 million and future tax provision reduction of $1.1 million, resulted in a net income tax provision reduction of $0.9 million and an effective income tax rate of negative 12 percent for the six months ended June 30, 2005. The three and six months ended June 30, 2005 variance of $1.4 million and $3.2 million, respectively, in the provision from the expected federal and provincial statutory income tax rate of 34 percent was primarily driven by the reduction in the provision resulting from Trust distributions to Unitholders.

Non-controlling interest - The non-controlling interest in income was $44,000 and $0.3 million for the three and six months ended June 30, 2005, respectively. The non-controlling interest is the result of the retroactive adoption of the guidance from the Emerging Issues Committee ("EIC") of the Canadian Institute of Chartered Accountants ("CICA") EIC-151 "Exchangeable Securities Issued by Subsidiaries of Income Trusts". The non-controlling interest on the consolidated statement of operations represents the respective period income or loss attributed to the non-controlling interest holders during the period.

Net income - For the three months ended June 30, 2005 and 2004, income before reorganization costs was $1.1 million ($0.05 per Unit diluted) and $0.8 million ($0.04 per Unit diluted), respectively. This translated into a year-over-year increase of 41 percent. For the six months ended June 30, 2005 and 2004, income before reorganization costs was $7.5 million ($0.32 per Unit diluted) and $3.7 million ($0.20 per Unit diluted), respectively. This translated into a year-over-year increase of 105 percent. Meanwhile, net income increased 163 percent to $1.1 million ($0.05 per Unit diluted) compared to a net loss of $1.8 million (loss of $0.10 per Unit diluted) for the same period of 2004. For the six months ended June 30, 2005, net income increased 613 percent to $7.5 million ($0.32 per Unit diluted) compared to net income of $1.1 million ($0.05 per Unit diluted) for the same period of 2004.

Balance Sheet

The Trust's balance sheet remains strong with working capital (defined as current assets less current liabilities excluding current portion of long-term debt) of $23.3 million, net debt (defined as interest bearing debt less cash and cash equivalents) of $36.3 million on tangible assets of $149.5 million and unitholders' equity of $139.7 million at June 30, 2005.

Cash Flow

Funds from operations was $2.4 million ($0.10 per Unit diluted) for the second quarter of fiscal 2005 and $12.9 million ($0.54 per Unit diluted) for the first half of fiscal 2005. The 221 percent second quarter increase and 194 percent six month increase when compared to the respective prior year periods was directly attributed to the higher revenues realized and associated income before non-cash items experienced during the first half of 2005.

Net cash used in investing activities during the three months ended June 30, 2005 was $27.7 million (2004 - $6.6 million) and year-to-date was $30.2 million (2004 - $14.7 million). These activities were the result of the following:

- funds placed in trust associated with the business acquisition on July 1, 2005, of all the issued and outstanding shares of Competition Wireline Ltd. and 1177868 Alberta Ltd. (collectively referred to as "Competition") for consideration of $26.0 million in cash and the equivalent of $6.5 million in Trust Units (0.6 million Trust Units were issued), subject to a one year earn-out of between nil and $6.0 million payable in either cash or Trust Units (refer to "Subsequent Events" section for further details);

- the business acquisition of the operating assets of Sandman Rentals Inc. ("Sandman") on February 15, 2005 for cash consideration of $0.7 million. Sandman provides high capacity flow-back tanks and related transportation services within the production services side of the oil and gas industry; and

- the $3.5 million of net equipment purchases (includes proceeds on sale of equipment).

Net cash provided by financing activities during the three months ended June 30, 2005 was $22.4 million (2004 - $7.7 million used in) and year-to-date was $19.1 million (2004 - $8.1 million). These activities were the result of the payment of $11.0 million in Trust distributions to Unitholders and an increase in long-term debt of $30.3 million used to fund business acquisitions and internal capital expenditures.

Trust Distributions

The Trust declared distributions of $0.48 per Unit for a total of $11.0 million, of which $1.9 million was paid on July 15, 2005, in respect of earnings to June 30, 2005. Distributions declared represented 85 percent of funds from operations (this does not take into account the impact of maintenance capital expenditures) for the six months ended June 30, 2005. Currently, the Trust plans on distributing in the range of 60 to 65 percent of its cash flow on an annual basis.

The holders of Exchangeable Shares do not receive distributions declared by the Trust. Rather, on each distribution payment date, the number of Trust Units which one Exchangeable Share is exchangeable into is increased on a cumulative basis in respect of the distributions. At June 30, 2005, the Exchangeable Share exchange ratio was one Exchangeable Share to 1.12343 Trust Units.

Subsequent Events

Competition Wireline Business Acquisition

Effective July 1, 2005, Peak acquired all of the issued and outstanding shares of Competition Wireline Ltd. and 1177868 Alberta Ltd. (collectively referred to as "Competition") for consideration of $32.5 million, subject to a one year earn-out adjustment of between nil and $6.0 million payable in either cash or Trust Units. The consideration of $32.5 million was paid with $26.0 million in cash and the equivalent of $6.5 million in Trust Units (0.6 million Trust Units were issued). Peak utilized its existing $60.0 million extendable term revolving acquisition loan facility to fund the cash portion of the transaction.

Competition provides production and completion wireline services to oil and gas producers in the northwest and central areas of the WCSB. Production wireline services are used for the ongoing maintenance and optimization of existing producing wells, whereas completion related wireline services are geared toward assisting in initializing production in new wells drilled.

Competition represents an excellent opportunity for Peak to further diversify its operations by adding a significant new product line to its Production Services operating segment. It is expected that the Competition acquisition will provide improved revenue balance for Peak between its Drilling and Production Services operating segments. The post Competition acquisition projected revenue ratio between Drilling and Production Services is expected to be in the range of approximately 55 percent to 45 percent (currently 75 percent to 25 percent), respectively.

Based on Competition's current results it is expected that for the second half of fiscal 2005 Competition will incrementally add $14.0 million in revenue, EBITDA of between $6.0 million and $7.0 million and funds from operations of between $5.0 million and $6.0 million.

Debt Facilities Increase

Pursuant to an agreement dated August 3, 2005, the Trust negotiated a financing agreement for two term loan facilities of $30.0 million and $20.0 million that is intended to be utilized to fund capital expenditures and acquisitions as required. Effective on the closing date, the term loan of $30.0 million will be drawn down and utilized to repay outstanding advances on the extendable term revolving acquisition loan facility. The term loan facility of $20.0 million is available to be drawn down until December 31, 2005. The terms of both facilities are no set principal payments during the seven year term determined from the date of the respective advances, bearing interest at the Government of Canada bond yield plus 2.15 percent determined at the time of the advances. The facilities are secured by a general securities agreement and Inter-Lender agreement.

Capital Expenditure Plan Update

Peak's capital expenditure program for fiscal 2005 has been increased by approximately $4.2 million to $14.6 million. The additions to the program are essentially all Growth in nature of which approximately $2.0 million was allocated for Drilling Services and approximately $2.2 million was allocated for Production Services. The additions to the program were the result of Management identifying opportunities to further expand its existing product offerings and to increase the size of the fleet for the newly acquired wireline product line in efforts to take advantage of areas with high customer demand. In addition to the planned capital expenditures for fiscal 2005, the Trust intends on continuing to identify, evaluate and acquire oil and gas service companies and/or service assets that complement Peak's business model. The Trust plans to use cash generated from operating activities to fund maintenance capital expenditures and to utilize its existing debt and equity facilities outlined in following paragraphs to fund new capital expenditures and any new business acquisitions contemplated for fiscal 2005.

Outlook

The outlook for the second half of fiscal 2005 appears to be very positive based on continuing high hydrocarbon pricing for the foreseeable future and indications of positive customer demand for services. Based on these conditions, Peak expects to continue to realize strong results for the balance of the fiscal year as the benefits of the implementation of Peak's strategic plan to come to fruition.

Peak's management team continues to execute on the strategic plan that was outlined in the Letter to Unitholders in the 2004 Annual Report. The acquisition of Competition on July 1, 2005 was key example of this, as this acquisition will generate significant additional revenue, EBITDA and funds from operations, along with creating a more equitable balance between drilling services and production related services that Peak offers. In light of this acquisition and financial outlook for Peak, the Board of Directors ("Board") approved a 6.3 percent increase to the planned monthly Trust Unit distribution. The distribution for the month of July 2005, payable on August 15, 2005, was approved by the Board at the new distribution amount of $0.085 per Trust Unit. After incorporating the Trust distribution increase and Competition acquisition, Peak expects the distributions as a percentage of funds from operations to decrease to approximately 60 to 65 percent in fiscal 2005. This further demonstrates the on-going execution of the strategic plan of increasing distributions while reducing Peak's distributions as a percentage of funds from operations and enhancing the return on capital to unitholders.

With a strong balance sheet and increased debt facility of $110.0 million, Peak will continue to expand its existing businesses to meet customer demand as well as seek out additional opportunities in complementary service lines.

Non-GAAP Measures

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and other items. EBITDA is not a recognized measure under Canadian generally accepted accounting principles ("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. Investors should be cautioned, however, that EBITDA, should not be construed as an alternative to net income determined in accordance with 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.

Funds from operations is defined as funds generated from operating activities before changes in non-cash working capital balances. Funds from operations is not a recognized measure under Canadian GAAP. Management believes, in addition to cash flow provided by (used in) operating activities, funds from operations is a useful supplemental measure as it provides an indication of funds generated by operations before working capital adjustments. Investors should be cautioned, however, that funds from operations should not be construed as an alternative to cash flow provided by (used in) operating activities, determined in accordance with Canadian GAAP, as an indicator of the Trust's performance. Peak's method of calculating funds from operating activities, may differ from other companies and, accordingly, funds from operations may not be comparable to measures used by other companies.

Conference Call

Management will hold a conference call to discuss the quarter end results at 9:30 a.m. MDT (11:30 a.m. EDT) on Wednesday, August 10, 2005. To participate, please dial 1 (877) 888-4210 or 1 (416) 695-5259. Participants are asked to call at least 15 minutes before the start of the call. For those unable to participate in the live event, a rebroadcast will be available until August 18, 2005 by dialing 1 (888) 509-0081 or 1 (416) 695-5275.

Financial Results

The following selected financial information summarizes Peak's consolidated financial results for the three and six months ended June 30, 2005. Peak's second quarter report, including the consolidated interim financial statements and management's discussion and analysis for the three and six months ended June 30, 2005 and 2004 will be available at www.sedar.com on or about August 11, 2005.



CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED EARNINGS
------------------------------------------------------------------------

(in thousands of CAD, 3 months 6 months
except per Unit amounts) ended June 30, ended June 30,
(unaudited) 2005 2004 2005 2004
------------------------------------------------------------------------
(restated) (restated)
Revenue $ 16,070 $ 11,280 $ 41,178 $ 30,013

Expenses:
Operating 9,280 6,852 19,415 14,904
General and administrative 4,124 3,040 8,145 6,111
Depreciation and amortization 2,327 2,123 5,179 4,464
Interest on long-term debt 271 223 498 608
------------------------------------------------------------------------
16,002 12,238 33,237 26,087
------------------------------------------------------------------------

Income (loss) before other items 68 (958) 7,941 3,926

Other items:
Loss (gain) on sale of
equipment held for sale 18 2 (24) 21
Loss on sale of equipment 376 198 944 628
Impairment loss on equipment - - 100 -
Reorganization costs - 3,927 - 3,927
------------------------------------------------------------------------
394 4,127 1,020 4,576
------------------------------------------------------------------------
Income (loss) before
income taxes (326) (5,085) 6,921 (650)

Provision for income taxes:
Current 72 364 223 1,403
Future (reduction) (1,584) (3,489) (1,083) (2,943)
------------------------------------------------------------------------
(1,512) (3,125) (860) (1,540)
------------------------------------------------------------------------

Income (loss) before
non-controlling interest 1,186 (1,960) 7,781 890

Non-controlling interest 44 (161) 285 (161)
------------------------------------------------------------------------

Net income (loss) 1,142 (1,799) 7,496 1,051

Accumulated earnings,
beginning of period
As previously reported 18,529 8,710 11,830 6,179
Change in method of accounting
for non-controlling interest (742) - (397) -
Change in method of accounting
for stock-based compensation - - - (319)
------------------------------------------------------------------------
As restated 17,787 8,710 11,433 5,860

Reorganization costs - (2,118) - (2,118)

------------------------------------------------------------------------
Accumulated earnings,
end of period $ 18,929 $ 4,793 $ 18,929 $ 4,793
------------------------------------------------------------------------

Earnings (loss) per Unit:
Basic $ 0.05 $ (0.10) $ 0.33 $ 0.06
Diluted $ 0.05 $ (0.10) $ 0.32 $ 0.05
------------------------------------------------------------------------
------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of CAD, except per Unit amounts)
(unaudited)
3 months 6 months
ended June 30, ended June 30,
2005 2004 2005 2004
------------------------------------------------------------------------
(restated) (restated)
Operating activities:
Net income (loss) 1,142 (1,799) 7,496 1,051
Add (deduct) items not
affecting cash:
Non-controlling interest 44 (161) 285 (161)
Stock based compensation - 29 - 119
Amortization of deferred
financing costs 29 45 48 106
Depreciation and amortization 2,327 2,123 5,179 4,464
Reorganization costs - 1,114 - 1,114
Loss (gain) on sale of
equipment held for sale 18 2 (24) 21
Loss on sale of equipment 376 198 944 628
Impairment loss on equipment - - 100 -
Future income taxes (reduction) (1,584) (3,489) (1,083) (2,943)
------------------------------------------------------------------------
2,352 (1,938) 12,945 4,399

Changes in non-cash working
capital items 10,784 8,449 4,891 5,544
------------------------------------------------------------------------

13,136 6,511 17,836 9,943

Investing activities:
Business acquisition (7) (3,513) (665) (3,513)
Funds held in trust for
future acquisition (26,000) - (26,000) -
Purchase of equipment (2,907) (5,729) (5,994) (14,843)
Proceeds on sale of equipment
and equipment held for sale 1,183 2,701 2,495 3,743
Increase in loan receivable - (20) - (110)
------------------------------------------------------------------------
(27,731) (6,561) (30,164) (14,723)
Financing activities:
Repayment of operating line
of credit - - - (2,078)
Distributions to Unitholders (5,504) (1,333) (11,008) (1,333)
Increase in long-term debt 28,000 11,750 30,250 11,750
Repayment of long-term debt - (14,726) - (20,773)
Issue of Trust Units,
net of costs 60 967 60 967
Issue of share capital,
net of costs - 28 - 23,987
Increase in deferred financing
costs (170) (97) (170) (172)
Cancellation of stock option plan - (4,268) - (4,268)
------------------------------------------------------------------------
22,386 (7,679) 19,132 8,080

Increase (decrease) in cash
and cash equivalents 7,791 (7,729) 6,804 3,300
Cash and cash equivalents,
beginning of period 6,208 11,029 7,195 -
------------------------------------------------------------------------

Cash and cash equivalents,
end of period 13,999 3,300 13,999 3,300
------------------------------------------------------------------------

Supplemental information:
Interest paid 265 223 492 608
Income taxes paid 18 120 70 169
------------------------------------------------------------------------
------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------
June 30, December 31,
(in thousands of CAD) 2005 2004
------------------------------------------------------------------------
(unaudited) (audited)
(restated)
ASSETS
Current assets:
Cash and cash equivalents $ 13,999 $ 7,195
Accounts receivable 15,160 24,583
Income taxes recoverable - 153
Prepaid expenses 1,533 845
-----------------------------------------------------------------------
30,692 32,776

Funds held in trust 26,000 -

Property and equipment 149,464 150,327

Equipment held for sale 42 517

Deferred financing costs 298 176

Intangibles 4,381 5,022

Goodwill 17,100 16,836

------------------------------------------------------------------------
$ 227,977 $ 205,654
------------------------------------------------------------------------
------------------------------------------------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 5,499 $ 9,550
Distributions payable 1,852 1,834
Income taxes payable 56 -
Current portion of long-term debt 1,499 2,381
Trust capital payable - 1,736
-----------------------------------------------------------------------
8,906 15,501

Long-term debt 48,751 17,619

Future income taxes 25,839 26,904

Non-controlling interest 4,736 4,525

Unitholders' equity:
Trust Unit capital 141,852 139,682
Contributed surplus 1,483 1,483
Accumulated earnings 18,929 11,433
Accumulated cash distributions (22,519) (11,493)
-----------------------------------------------------------------------
139,745 141,105

------------------------------------------------------------------------
$ 227,977 $ 205,654
------------------------------------------------------------------------
------------------------------------------------------------------------


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 throughout western Canada and mid-western United States of America. 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 of the Board and Chief Executive Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Mr. Matthew J. Huber
    Chief Financial Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Suite 1800, 530-8th Avenue SW
    Calgary, Alberta
    T2P 3S8