Peak Energy Services Trust
TSX : PES.UN

Peak Energy Services Trust

August 13, 2007 17:10 ET

Peak Energy Services Trust Reports Its Financial Results for the Three and Six Months Ended June 30, 2007

CALGARY, ALBERTA--(Marketwire - Aug. 13, 2007) - Peak Energy Services Trust (TSX:PES.UN) -



Financial Highlights

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Three months Six months
ended June 30 ended June 30
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(in '000 of CAD, % %
except otherwise noted) 2007 2006 Change 2007 2006 Change
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Revenue 17,791 23,470 -24% 53,942 65,242 -17%
Net income (loss) (657) 3,289 -120% 4,691 13,906 -66%
Per unit - diluted (0.02) 0.12 -117% 0.17 0.52 -67%
EBITDA (1) (545) 1,961 -128% 12,422 20,440 -39%
Per unit - diluted (0.02) 0.07 -127% 0.45 0.77 -41%
Funds from (used in)
operations (1) (1,717) 1,436 -220% 9,815 19,131 -49%
Per unit - diluted (0.06) 0.05 -215% 0.35 0.72 -51%
Distributions declared 4,985 7,173 -31% 10,802 14,192 -24%
Per unit 0.180 0.270 -33% 0.390 0.535 -27%
% of funds from
operations N/C (2) 500% 110% 74%
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(1) Refer to the "Non-GAAP Measures" section for further details.
(2) Not calculatable (N/C) as funds were used in operations.


Financial Summary

During the second quarter of fiscal 2007, natural gas prices continued to show near-term weakness driven primarily by the larger than historical norm of natural gas inventory in North America. The positive variance between the current United States natural gas inventory level and the five year historical average narrowed in the first quarter, however recently the positive variance has not been narrowing as many have anticipated. In fact it has increased to similar levels achieved by this time in 2006. The Western Canadian Sedimentary Basin ("WCSB") recent year's drilling activities have been between 60 and 70 percent natural gas oriented, hence depressed natural gas prices have had a significant adverse impact on drilling activities. Furthermore, it is not expected that Producers will be motivated to increase their natural gas directed drilling programs until natural gas prices improve significantly, which is now not anticipated to occur until the later part of 2008. Conversely, oil prices have shown relative strength and this has motivated some Producers to focus their efforts towards oil related activities and is partially offsetting the lack of natural gas related activities.

As mentioned in the first quarter report of this year, break-up started in mid March and extended significantly longer than what the industry has experienced for the past few years. This was driven by a higher snow melt in certain areas, poor weather conditions and depressed natural gas prices working in concert. For the second quarter of 2007, drilling rig operating days were down 47 percent or 11,832 days as compared to the prior year period. Furthermore, service rig utilization decreased from 51 percent in the second quarter of 2006 to 38 percent for the second quarter this year. Peak's revenue for the three months ended June 30, 2007, as compared to the prior year period, decreased by $5.7 million or 24 percent to $17.8 million. For the second quarter of 2007, as compared to the prior year period, EBITDA decreased $2.5 million or 128 percent to negative $0.5 million and as a percentage of revenue decreased to negative 3 percent, while funds from operations decreased $3.2 million or 220 percent to negative $1.7 million. Meanwhile, Peak recorded a net loss and comprehensive loss of $0.7 million (loss of $0.02 per Unit diluted) for the three months ended June 30, 2007, a decrease of $3.9 million or 120 percent over the prior year period.

Year-to-date, drilling rig operating days were down 28 percent or 22,400 days as compared to the prior year period. Furthermore, service rig utilization decreased from 67 percent for the first half of fiscal 2006 to 55 percent for the first half of this year. Peak's revenue for the six months ended June 30, 2007, as compared to the prior year period, decreased by $11.3 million or 17 percent to $53.9 million. For the first half of fiscal 2007, as compared to the prior year period, EBITDA decreased $8.0 million or 39 percent to $12.4 million and as a percentage of revenue decreased to 23 percent, while funds from operations decreased $9.3 million or 49 percent to $9.8 million. Meanwhile, Peak recorded a net income and comprehensive income of $4.7 million ($0.17 per Unit diluted) for the six months ended June 30, 2007, a decrease of $9.2 million or 66 percent over the prior year period.

Distributions declared to Unitholders were $10.8 million (2006 - $14.2 million) or $0.390 per Unit (2006 - $0.535 per Unit), which represented 110 percent (2006 - 74 percent) of funds from operations for the six months ended June 30, 2007.

Total assets decreased $10.5 million or 4 percent from $271.7 million at December 31, 2006 to $261.2 million at June 30, 2007. Total liabilities decreased $5.1 million or 5 percent from $109.0 million at December 31, 2006 to $103.9 million at June 30, 2007. Unitholders' equity decreased $5.4 million or 3 percent from $162.7 million at December 31, 2006 to $157.2 million at June 30, 2007.

Revenue

For the three months ended June 30, 2007, Peak generated revenue of $17.8 million compared to $23.5 million for the prior year period, representing a decrease of 24 percent compared to a 47 percent decrease in drilling rig operating days and a 25 percent decrease in service rig activity over this time period. Total drilling rig operating days for the second quarter of 2007 were 13,343 days compared to 25,175 days for the prior year period. Meanwhile service rig utilization was 38 percent for the three months ended June 30, 2007, compared to 51 percent for the same period of 2006.

For the six months ended June 30, 2007, Peak generated revenue of $53.9 million compared to $65.2 million for the prior year period, representing a decrease of 17 percent compared to a 28 percent decrease in drilling rig operating days and a 18 percent decrease in service rig activity over this time period. Total drilling rig operating days for the first half of 2007 were 58,749 days compared to 81,149 days for the prior year period. Meanwhile service rig utilization was 55 percent for the six months ended June 30, 2007, compared to 67 percent for the same period of 2006.

Drilling Services' revenue decreased by $4.6 million or 32 percent as it generated $9.7 million in revenue or 54 percent of the Trust's total revenue for the three months ended June 30, 2007, compared to $14.3 million or 61 percent for the prior year period. The decrease in revenue was better than the 47 percent decrease in drilling rig operating days. The primary reason for Peak's revenue variance not being as drastic as the industry activity level decline, was the significant net capital expenditures made throughout fiscal 2006 to expand Peak's drilling equipment product offerings more than offsetting the decrease in overall equipment utilization.

Year-to-date Drilling Services' revenue decreased by $8.7 million or 22 percent as it generated $31.5 million in revenue or 58 percent of the Trust's total revenue, compared to $40.1 million or 62 percent for the prior year period. Consistent with the current quarter, the revenue decrease was slightly better than the 28 percent decrease in drilling rig operating days. The same current quarter factors attributed to the less significant decrease in revenue as compared to the industry activity level.

Production Services' revenue decreased by $1.1 million or 12 percent as it contributed $8.1 million in revenue or 46 percent of the Trust's total revenue for the three months ended June 30, 2007, compared to $9.2 million or 39 percent for the prior year period. Consistent with the drilling services' revenue variance, the decrease in revenue was not as drastic as the 25 percent decrease in service rig activity and was the result of significant net capital expenditures made throughout fiscal 2006 to expand Peak's production equipment product offerings more than offsetting the decrease in overall equipment utilization.

For the first half of fiscal 2006, Production Services' revenue decreased by $2.6 million or 10 percent as it generated $22.5 million in revenue or 42 percent of the Trust's total revenue, compared to $25.1 million or 38 percent for the prior year period. Consistent with the current quarter, the revenue decrease was slightly better than the 18 percent decrease in service rig activity. The same current quarter factors attributed to the less drastic decrease in revenue as compared to the industry activity level.

Expenses

Operating expenses - For the three months ended June 30, 2007, operating expenses were lower than the comparable prior year period by $2.6 million or 17 percent. However as a percentage of revenue, operating expenses were 70 percent compared to the prior year period of 64 percent. The primary drivers of the net increase in operating expenses as a percentage of revenue were:

- the lower revenue performance in the second quarter of fiscal 2007 not offsetting the relatively high fixed portion of Peak's operating expenses;

- an increase in heavy truck and equipment fuel costs, as a percentage of revenue, primarily driven by a significant increase in revenue activities related to longer distance fluids handling work;

- an increase in light vehicle and related costs, as a percentage of revenue, as a result of an increase in the average cost of the vehicle leases; and

- an increase in employee related compensation costs, as a percentage of revenue, incurred as a result of the western Canada (especially Alberta) wide increase in demand for skilled employees placing upward pressure on these costs.

Partially offsetting the net increase in operating expenses, as a percentage of revenue, was lower repairs and maintenance ("R&M") costs. Management has implemented a selective R&M program, whereby equipment identified as not likely to be utilized in the near-term, due to lower industry activity levels, are having their required R&M deferred until the equipment is expected to be utilized.

For the six months ended June 30, 2007, operating expenses were lower than the comparable prior year period by $3.1 million or 10 percent. However as a percentage of revenue, operating expenses were 55 percent compared to the prior year period of 50 percent. In addition to the factors detailed above, severance costs incurred late in the first quarter of fiscal 2007 to adjust the number of employees required to support operations at near-term industry activity levels anticipated contributed to the net increase in operating expenses as a percentage of revenue.

General and administrative expenses - For the second quarter of fiscal 2007, general and administrative expenses (G&A) were $0.5 million or 8 percent lower than the comparable prior year period. As a percentage of revenue, G&A increased to 33 percent for the current quarter as compared to 27 percent for the second quarter of 2006. The primary contributors to the net dollar decrease were:

- lower advertising and promotion costs, as management focused on reducing these cost to be consistent with revenue levels being achieved;

- lower variable compensation (bonuses) costs, as a result of the current year's weaker financial performance; and

- lower employee relations costs, as the second quarter of fiscal 2006 had certain non-recurring costs associated with celebrating Peak's 10th year anniversary.

Partially offsetting the net decrease were increased facility rental costs resulting from the recent build out of "super shops" in Grande Prairie, Alberta and Leduc, Alberta to support Peak's operations.

For the first six months of 2007, G&A costs were $0.2 million or 2 percent lower than the comparable prior year period. As a percentage of revenue, G&A increased to 22 percent for the current year period as compared to 19 percent for the prior year period. The contributing factors to the net dollar decrease were consistent with the factors detailed for the second quarter of this year.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") - EBITDA decreased $2.5 million or 128 percent to negative $0.5 million for the three months ended June 30, 2007. EBITDA as a percentage of revenue, was a negative 3 percent for the current quarter as compared to 8 percent for the comparable prior year quarter. The primary drivers of the quarter-over-quarter percentage of revenue decrease are detailed above.

EBITDA decreased $8.0 million or 39 percent to $12.4 million for the six months ended June 30, 2007. EBITDA as a percentage of revenue, was 23 percent for the current year period as compared to 31 percent for the prior year period. The primary drivers of the year-over-year percentage of revenue decrease are detailed above.

Depreciation and amortization expenses - For the three months ended June 30, 2007, depreciation and amortization expenses were lower than the prior year period by $0.4 million or 10 percent. For the six months ended June 30, 2007, depreciation and amortization expenses were lower than the prior year period by $0.5 million or 5 percent.

Interest on long-term debt expense - Interest on long-term debt expense increased to $1.2 million for the three months ended June 30, 2007, representing an increase of $0.5 million or 80 percent over the second quarter of 2006. Meanwhile it increased to $2.2 million for the six months ended June 30, 2007, representing an increase of $1.0 million or 80 percent over the first half of fiscal 2006. Of the debt facility currently outstanding, $30.0 million is at a fixed rate of 5.8 percent, $10.0 million is at a fixed rate of 6.7 percent with the remaining $30.8 million at a floating rate tied to the bank prime lending rate.

Loss on sale of equipment - For the three and six months ended June 30, 2007, the gain/loss on sale of equipment amounted to a gain of $0.3 million and a loss of $0.5 million, respectively. The primary transaction contributing to the year-to-date loss related to the disposal of access matting assets that were no longer able to generate rental revenue.

Provision for income taxes - The current tax expense of $11,000 and future tax reduction of $4.6 million, resulted in a net income tax recovery of $4.6 million and an effective income tax rate of 88 percent for the three months ended June 30, 2007. Meanwhile, for the six months ended June 30, 2007, the current income tax expense of $0.4 million and future income tax reduction of $4.1 million, resulted in a net income tax recovery of $3.7 million and an effective income tax rate of negative 358 percent. Contributing to the significant future income tax reduction in the second quarter of 2007 was the impact of the federal government's approval of a reduction in the general tax rate for fiscal 2011, along with changes in management's estimate of effective tax rates applied to recognize certain future income tax assets and liabilities on "temporary differences" (differences between the accounting basis and the tax basis of the entities assets and liabilities). The effective income tax rate differs significantly from the statutory corporate rate of 32 percent as the result of the Trust's legal structure. As a mutual fund trust for purposes of the Income Tax Act (Canada), the Trust is currently only subject to statutory income taxes on taxable income not distributed to Unitholders. The distributions for the first half of 2007 were $10.8 million resulting in a tax sheltering of $3.3 million.

The federal government's announced intentions to require income trusts to pay income taxes at rates consistent with corporations has effectively been enacted into law during June 2007. Commencing in fiscal 2011, Peak will be required to pay a tax of 31.5 percent on distributions it makes to Unitholders. This change in the tax laws will materially reduce the cash available to distribute to Unitholders. This has had a significant impact on existing trusts', including Peak's, enterprise values and their ability to access debt and equity financing at previously experienced levels. Despite this, Peak's underlying business activities remain the same and management is evaluating its options to determine the optimal capital structure for the Trust on a go-forward basis.

To date, the Trust has not recognized any future income tax assets or liabilities on its temporary differences in the Trust. As the new trust distribution tax is now considered substantively enacted, the Trust is required to recognize future income tax assets and liabilities on temporary differences at the effective rate expected to be enacted when the temporary difference reverses. Management has assessed the impact of the Trust's temporary differences and the expected period that they will reverse and has recognized the associated future income tax assets and liabilities at the appropriate effective tax rate. The impact to the Trust's financial statements was nil.

Net Income - For the three months ended June 30, 2007, net income and comprehensive income decreased 120 percent to a net loss and comprehensive loss of $0.7 million (loss of $0.02 per Unit diluted) compared to net income and comprehensive income of $3.3 million ($0.12 per Unit diluted) for the prior year period.

For the six months ended June 30, 2007, net income and comprehensive income decreased 66 percent to $4.7 million ($0.17 per Unit diluted) compared to net income and comprehensive income of $13.9 million ($0.52 per Unit diluted) for the prior year period.

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 $21.1 million, net debt (defined as interest bearing debt less cash and cash equivalents) of $58.9 million on tangible assets of $204.1 million and Unitholders' equity of $157.2 million at June 30, 2007.

Cash Flow

Funds used in operations were $1.8 million ($0.06 per Unit diluted) for the three months ended June 30, 2007. Meanwhile funds from operations for the six months ended June 30, 2007 were $9.8 million ($0.35 per Unit diluted). The $3.2 million or 220 percent decrease over the second quarter of 2006 and the $9.3 million or 49 percent decrease over the first half of fiscal 2006 was directly related to income before non-cash items experienced during the periods. Meanwhile, for the second quarter of 2007 and fiscal 2007 year-to-date, net cash provided by operating activities was $13.6 million (2006 - $13.4 million) and $22.5 million (2006 - $27.5 million), respectively.

Net cash used in investing activities for the second quarter of fiscal 2007 was $2.4 million (2006 - $12.9 million) and year-to-date was $6.8 million (2006 - $20.8 million). For the six months ended June 30, 2007, the activities were the result of $4.3 million of net equipment purchases including proceeds on sale of equipment of $4.9 million and a $2.5 million net working capital decrease in accounts payable and accruals.

Net cash used in financing activities for the three months ended June 30, 2007 was $5.0 million (2006 - net cash provided by financing activities was $4.5 million) and year-to-date was $7.7 million (2006 - $2.4 million). For the six months ended June 30, 2007, the activities were the result of an increase in long-term debt of $3.0 million used to fund internal capital expenditures the issuance of Trust Units in the amount of $1.0 million associated with the Trust's Distribution Reinvestment Plan ("DRIP") and Premium DRIP and the payment of $11.6 million in Trust distributions to Unitholders.



Capital Expenditure Program

For the first six months of fiscal 2007 the Trust expended the following,
by segment, on capital related items:

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Six months ended June 30, 2007 Drilling Production
(in '000 of CAD) Services Services Total
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Growth 640 1,801 2,441
Maintenance 303 99 402
Infrastructure - - 6,341
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943 1,900 9,184
Proceeds on sale of equipment (4,927)
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4,257
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Trust Distributions

The Trust declared distributions of $0.390 per Unit for a total of $10.8 million, for the first half of fiscal 2007. Distributions declared represented 110 percent (2006 - 74 percent) of funds from operations (this does not take into account the impact of maintenance capital expenditures) over the time period. The Trust's Indentures (for both Peak and Peak Commercial Trust) govern the amounts that the Trustee and the Administrator, Peak Energy Services Ltd. ("PESL"), can distribute to Unitholders. These Indentures give management the latitude to withhold reasonable reserves for operations. Management's long-term objective is to pay in the range of 50 to 60 percent of the Trust's funds from operations on an annual basis. Management believes that this distribution ratio level will allow it to fulfill its vision and execute on its strategy, while maintaining a stable financial position that will insulate the Trust from any short-term fluctuations in anticipated industry activity levels without having to reduce or eliminate the current distribution amount per Unit. The current distribution ratio is significantly above management's long-term objective of 50 to 60 percent, due to seasonality of the Trust's operations and the current downturn in industry activity levels adversely impacting the Trust's financial results. Management and the Board of Directors closely monitor the distribution ratio and will make adjustments to the monthly distributions declared based on its expectations of the Trust's forecasted financial performance. It should be noted that there can be no absolute assurances made that the Trust will make any future distributions.

Corporate Governance

The regulatory and statutory compliance environment in Canada is rapidly evolving to ensure effective corporate governance frameworks exist within publicly held entities. These standards involve ensuring more timely, accurate and complete financial reporting and disclosures. Of the recently added compliance requirements, the most significant expenditure of resources for the Trust has and will involve the requirements of National Instrument ("NI") 52-109. Peak's CEO and CFO have filed the necessary certifications to June 30, 2007.

Outlook

The downward trend in levels of activity experienced in the first quarter of 2007 continued into the second quarter of the year, with the industry experiencing its lowest level of second quarter drilling activity since 1999. Drilling activity, based on drilling operating days, was down 47 percent during the second quarter and 28 percent for the first six months of 2007 compared to the same periods of 2006. Rig utilization averaged 17 percent during the second quarter of 2007 compared to 42 percent for the same period in 2006 and 39 percent year-to-date, compared to 66 percent for the first six months of 2006. Peak performed reasonably well in this environment, experiencing a reduction in overall revenue of 24 percent for the second quarter of 2007 and 17 percent year-to-date, relative to the same periods in 2006. There has been a higher seasonal recovery in drilling rig activity during the early stages of the third quarter than management anticipated as rig utilization has increased to approximately 45 percent mid-way through the third quarter, representing a significant improvement over the activity levels experienced during the second quarter. This being said, management concurs with industry analysts that the downturn in industry activity levels will likely extend throughout the remainder of 2007 given the continuation of the overhang in natural gas inventory levels that North America is currently experiencing.

As a result of the foregoing, Peak continues to proactively manage its business by focusing internally. Management continues to believe strongly in its fiduciary responsibility to act in a fiscally responsible manner on behalf of all its stakeholders, as evidenced by the Trust's strategy to lower distributions early in the first quarter of 2007 and by its decision to reduce its workforce by approximately 18 percent over the past several months. In addition to these initiatives, Peak's operational team continues to ensure that Peak's fleet of assets are in top condition as they return to work, maintaining Peak's solid reputation of providing its customers with "Superior Equipment" and "Exceptional Service" which ultimately drives equipment utilization.

In the short term, high levels of natural gas inventory are having a negative impact on natural gas prices and significantly reducing industry activity levels. Having said this, Peak maintains its belief that the outlook for the oil and gas industry in North America remains very positive for the longer term and expects that strong demand fundamentals for natural gas over the longer term will improve pricing and ultimately be a catalyst for a return to higher levels of drilling rig activity in western Canada sometime in fiscal 2008. Management remains confident that the significant growth capital of $105.7 million it has deployed over the previous two years and its reduced cost structure leaves the Trust in a position of strength to capitalize on these increased levels of activity over the longer term.

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 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.

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 operating activities, funds from operations is a useful supplemental measure as it provides an indication of funds generated by operations before working capital adjustments. Readers should be cautioned that funds from operations should not be construed as an alternative to cash flow provided by operating activities, determined in accordance with Canadian GAAP, as an indicator of the Trust's performance. Peak's method of calculating funds from operations, 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. MT (11:30 a.m. ET) on August 14, 2007. To participate, please dial 1-800-525-6384. 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 August 21, 2007 by dialing 1-416-695-5800 or 1-800-408-3053, verbal pass code 3231713.

Financial Results

The following selected financial information summarizes Peak's consolidated financial results for the three and six months ended June 30, 2007. Peak's quarterly report, including the consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2007 and 2006 will be available at www.sedar.com on or about August 14, 2007.



CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE
INCOME (LOSS) AND DEFICIT
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Three months ended Six months ended
ended June 30, ended June 30,
---------------------------------------------

(in thousands of CAD, except
per Unit amounts) (unaudited) 2007 2006 2007 2006
----------------------------------------------------------------------------

Revenue $ 17,791 $ 23,470 $ 53,942 $ 65,242

Expenses:
Operating 12,480 15,124 29,421 32,510
General and administrative 5,856 6,385 12,099 12,292
Depreciation and amortization 3,848 4,283 8,702 9,188
Interest on long-term debt 1,161 645 2,221 1,231
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23,345 26,437 52,443 55,221

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Income (loss) before other items (5,554) (2,967) 1,499 10,021

Other items:
Loss (gain) on sale of
equipment (281) (225) 474 (100)
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(281) (225) 474 (100)

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Income (loss) before income
taxes and non-controlling
interest (5,273) (2,742) 1,025 10,121

Provision for income taxes:
Current (recovery) 11 (58) 386 191
Future (reduction) (4,627) (5,990) (4,052) (4,046)
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(4,616) (6,048) (3,666) (3,855)

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Income (loss) before
non-controlling interest (657) 3,306 4,691 13,976

Income attributable to
non-controlling interest - 17 - 70
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Net income (loss) and
comprehensive income (loss) (657) 3,289 4,691 13,906

Retained earnings (deficit),
beginning of period

Opening balance (26,033) 3,761 (25,192) 163

Change in method of accounting
for deferred financing costs - - (372) -
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As restated (26,033) 3,761 (25,564) 163

Distributions declared to
Unitholders (4,985) (7,173) (10,802) (14,192)

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Deficit, end of period $(31,675) $ (123) $ (31,675) $ (123)
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Earnings (loss) per Unit:
Basic $ (0.02) $ 0.12 $ 0.17 $ 0.52
Diluted $ (0.02) $ 0.12 $ 0.17 $ 0.52

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CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three months ended Six months ended
ended June 30, ended June 30,
---------------------------------------------
(in thousands of CAD,
unaudited) 2007 2006 2007 2006
----------------------------------------------------------------------------

Operating activities:
Net income (loss) $ (657) $ 3,289 $ 4,691 $ 13,906
Add (deduct) items not
affecting cash:
Amortization of deferred
financing costs - 62 113
Depreciation and amortization 3,848 4,283 8,702 9,188
Loss (gain) on sale of
equipment (281) (225) 474 (100)
Future income taxes
(reduction) (4,627) (5,990) (4,052) (4,046)
Income attributable to
non-controlling interest - 17 - 70
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(1,717) 1,436 9,815 19,131
Changes in non-cash working
capital items 15,327 11,917 12,666 8,415
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13,610 13,353 22,481 27,546

Investing activities:
Purchase of equipment (5,357) (13,197) (9,184) (18,358)
Proceeds on sale of equipment
and equipment held for sale 3,692 1,404 4,927 2,106
Business acquisition - (4,106) - (4,106)
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(1,665) (15,899) (4,257) (20,358)

Changes in non-cash working
capital items (759) 3,019 (2,521) (465)
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(2,424) (12,880) (6,778) (20,823)

Financing activities:
Increase in long-term debt - 10,000 3,000 10,000
Repayment of obligations under
capital lease - (14) (103) (28)
Issue of Trust Units, net of
costs - 1,871 1,041 1,871
Increase in deferred financing
costs - (164) - (168)
Distributions paid to
Unitholders (4,985) (7,159) (11,612) (14,045)
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(4,985) 4,534 (7,674) (2,370)
Increase in cash and cash
equivalents 6,201 5,007 8,029 4,353
Cash and cash equivalents,
beginning of period 5,684 5,172 3,856 5,826
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Cash and cash equivalents,
end of period $ 11,885 $ 10,179 $ 11,885 $ 10,179
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CONSOLIDATED BALANCE SHEETS
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June 30, December 31,
(in thousands of CAD, unaudited) 2007 2006
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ASSETS
Current assets:
Cash and cash equivalents $ 11,885 $ 3,856
Accounts receivable 18,635 31,652
Income taxes recoverable - 283
Prepaid expenses 1,089 872
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31,609 36,663

Property and equipment 204,090 207,849

Deferred financing costs - 547

Intangibles 9,902 11,063

Goodwill 15,559 15,559

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$ 261,160 $ 271,681
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LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 8,695 $ 11,769
Distributions payable 1,662 2,472
Income taxes payable 136 -
Current portion of long-term debt 878 3,213
Current portion of obligations under capital
lease - 56
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11,371 17,510

Long-term debt 69,872 64,537

Obligations under capital lease - 47

Future income tax 22,669 26,897

Unitholders' equity:
Trust Unit capital 187,440 186,399
Contributed surplus 1,483 1,483
Deficit (31,675) (25,192)
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157,248 162,690

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$ 261,160 $ 271,681
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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 the mid-west United States of America. Peak Energy Services Trust units are listed 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. Curtis W. Whitteron
    President and Chief Operating 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