TERRAVEST INCOME FUND
TSX : TI.UN

TERRAVEST INCOME FUND

September 01, 2005 07:00 ET

TerraVest Announces Acquisition Agreement With Diamond Energy Services Inc.

EDMONTON, ALBERTA--(CCNMatthews - Sept. 1, 2005) - TerraVest Income Fund (TSX:TI.UN) today announced that it will acquire up to an 87% interest in Diamond Energy Services Inc., an oil and natural gas well servicing company headquartered in Swift Current, Saskatchewan. The acquisition by TerraVest is subject to a number of conditions, including approval of the transaction by Diamond's shareholders at a meeting to be held on September 30, 2005 and through the tendering of their shares to an offering forming part of the transaction.

Approval of the transaction has been unanimously recommended by Diamond's Board of Directors. Additionally, Diamond's senior managers and other significant shareholders have entered into pre-tender agreements in respect of approximately 43% of Diamond's shares.

TerraVest will invest $33.7 million for its interest in Diamond using existing financial resources and debt facilities. Diamond is privately owned by individual and institutional investors, who have provided the resources to finance Diamond's rapid growth since it was founded in 1996. TerraVest is acquiring all equity interests of shareholders who are not active in the business and a portion of the management team's ownership interest. The management team will retain ownership of approximately 13% of the business. TerraVest anticipates closing the transaction shortly after shareholder approval is received.

With 130 employees, Diamond had revenue and EBITDA of $20.8 million and $5.9 million respectively for the 12 months ended July 2005.

Since its establishment with one service rig in 1996, Diamond has become a market leader in providing well servicing to the oil and natural gas sector in southwestern Saskatchewan, with a growing presence in Alberta. It operates through two divisions:

- Diamond Sage Well Services, which operates seventeen oil and gas well servicing rigs and one swabbing unit from facilities in Swift Current, Saskatchewan and Red Deer, Alberta

- Diamond Coiled Tubing, which operates six coiled tubing units from facilities in Swift Current, Saskatchewan and Medicine Hat, Alberta

Service rigs and coiled tubing units are used throughout the life cycle of producing oil and natural gas wells for new well completions, maintenance, work-overs and abandonments.

"Diamond meets all of our investment criteria. This includes the ability to provide an immediate increase in our cash distributions, which we currently expect will be between four and six cents per share. Our Trustees will finalize the amount of the actual increase in distributions when the transaction closes, shortly after Diamond's shareholder vote," said Dale Laniuk, TerraVest's Chief Executive Officer. "Diamond has a diversified customer base, a strong track record of profitable growth in the energy services sector, an excellent market position and a skilled professional team."

"Its history of growth in revenues, sustainable cash flow, strong market position and the organic growth opportunities in the energy services sector make it an excellent fit with the investments now in the TerraVest portfolio."

Further information about Diamond can be obtained at the TerraVest web site: http://www.terravestindustries.com or at http://www.diamondenergy.ca.

TerraVest and Diamond management will provide further information about this acquisition in a conference call to be held today at 3:30 p.m.. Eastern Standard Time (Call-in details follow this release).

TerraVest is a publicly traded income trust with a portfolio of diversified
businesses and whose stated objective is to provide stable and increasing cash returns to its unitholders. The Fund has increased per unit distributions more than 21% since its inception in July, 2004. Its mandate is to build a diversified portfolio of 6-8 high quality, mid-sized companies over a 2-3 year period for outstanding growth in per unit distributions and income stability.

Information about TerraVest Income Fund

The Fund has four other portfolio companies:

- RJV is one of the largest providers of wellhead processing equipment for the Canadian natural gas industry.

- Stylus is one of Canada's leading made-to-order upholstered furniture manufacturers.

- Don Park is one of Canada's leading manufacturers and suppliers of heating and ventilation equipment.

- Ezee-On manufactures heavy duty equipment for large acreage grain farms and livestock operations.

Note: TerraVest management (and Mick MacBean, CEO of Diamond Energy) will hold a conference call today (September 1,, 2005) at 3:30 p.m. EST to provide investors with an opportunity to hear further details about this transaction.



For live conference access:

Local access: 416-695-9714
Toll-free access: 1 (877) 323-2093

For replays up to September 14:

Local access: 416-695-5275
Toll-free access: 1 (888) 509-0081

A transcript will be posted at www.terravestindustries.com

DIAMOND ENERGY SERVICES INC.
Fact Sheet

- Company founded in 1996

- Chief Executive Officer is Michael MacBean, who joined Diamond in
1998; President is Michael Gering, Diamond's founder

- Diamond has become a market leader in providing well servicing to both
the oil and natural gas sectors in Southwestern Saskatchewan, with a
growing presence in Alberta

- Operates two divisions:

- Diamond Sage Well Services operates seventeen oil and gas well
servicing rigs and one swabbing unit from facilities in Swift
Current, Saskatchewan and Red Deer, Alberta
- Diamond Coiled Tubing operates six coiled tubing units from
facilities in Swift Current, Saskatchewan and Medicine Hat,
Alberta

- Service rigs and coiled tubing units are used throughout the life of
producing oil and natural gas wells for completions, maintenance,
work-overs and abandonments

- Diamond had revenue and EBITDA for the 12 months ended July 2005 of
$20.8 million and $5.9 million respectively

- 130 employees

- Diamond is privately owned by individual and institutional investors

- TerraVest will purchase all equity owned by investors who are not
active in Diamond's day-to-day business along with a portion of the
management team's investment

- Diamond's key managers will retain an ownership interest in the
partnership

- Markets served by Diamond are strong because of increased oil and gas
extraction activity driven by strong commodity prices and increased
levels of shallow gas and coal bed methane activity in Diamond's key
operational areas


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