Stoneham Drilling Trust
TSX : SDG.UN

Stoneham Drilling Trust

January 31, 2011 08:20 ET

Stoneham Drilling Trust (TSX:SDG.UN) to Repurchase Up to 300,000 of Its Units Through a Substantial Issuer Bid

CALGARY, ALBERTA--(Marketwire - Jan. 31, 2011) - Stoneham Drilling Trust ("Stoneham" or the "Trust") (TSX:SDG.UN) today announced a substantial issuer bid, pursuant to which the Trust will offer to purchase for cancellation up to 300,000 of its Class A Trust Units (each, a "Unit") at a price per Unit of CDN$17.50 (the "Purchase Price"). Assuming the offer is fully subscribed, the Trust will purchase $5,250,000 of Units under the offer. The Trust will fund the maximum purchase of $5,250,000 and the payment of related fees and expenses from available cash on hand and its existing credit facilities.

"Our board of directors is of the belief that the recent market price of the Trust's units does not fully reflect the value of the Trust and its future prospects," stated Bruce Jones, President and Chief Executive Officer of Stoneham Administration Inc., the administrator of the Trust. "This offer represents an equitable and efficient means of returning capital to our unitholders and allows the Trust to continue to pursue its foreseeable business opportunities."

The offer is expected to commence on Febuary 7, 2011, and expire at 5:00 p.m. (Calgary time) on March 14, 2011, unless withdrawn or extended by the Trust. If more than 300,000 Units are tendered to the offer, the Trust will purchase the Units on a pro rata basis according to the number of Units deposited by unitholders, with fractions rounded down to the nearest whole Unit.

The Units trade on the Toronto Stock Exchange under the symbol SDG.UN. As of January 28, 2011, there were 7,981,359 Units outstanding.

In accordance with applicable securities laws, the Trust has suspended purchases of its Units pursuant to its normal course issuer bid announced on December 16, 2010 until the expiration date of the substantial issuer bid.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell the Trust's Units. The solicitation and the offer to buy the Units will only be made pursuant to a separate offer to purchase and issuer bid circular. The offer to purchase and issuer bid circular, with the terms of the offer and instructions for tendering Units, will be mailed to unitholders and filed with Canadian provincial securities regulators. The Trust advises its unitholders to read the offer to purchase and issuer bid circular, when they are available, as they contain important information.

The Trust has retained FirstEnergy Capital Corp. to provide a liquidity opinion in connection with the offer.

ABOUT STONEHAM:

Stoneham Drilling Trust is an income trust that provides contract drilling services to oil and natural gas exploration and production companies operating in the Western Canada Sedimentary Basin and select basins in the U.S., with one rig currently operating onshore in western Newfoundland. With its modern, innovative fleet of drilling rigs, Stoneham is an industry leader in operational performance, safety and rig utilization. Stoneham trades on the TSX under the symbol SDG.UN. Visit our website at www.stonehamdrilling.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes certain forward-looking statements. These forward-looking statements include, but are not limited to, the Trust's plans, objectives, expectations and intentions, including the Trust's expectations regarding the launch and terms of the proposed substantial issuer bid, and other statements contained in this release that are not historical facts. These statements may be identified by their use of words such as "expects", "anticipates", "intends", "plans", "believes", "estimates" or words of similar meaning. These statements are based on the Trust's current beliefs or expectations, including the Trust's assumptions, beliefs and expectations regarding market conditions. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of management of the Trust. The Trust's actual results may differ materially from those expressed or implied by such forward-looking statements, including as a result of changes in global, political, economic, business, competitive, market and regulatory factors, and other risks. Other than as required by applicable laws, the Trust undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

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