Wellco Energy Services Trust

Wellco Energy Services Trust

November 17, 2005 08:01 ET

Wellco Announces Execution of Letters of Intent to Acquire Production Testing Businesses

CALGARY, ALBERTA--(CCNMatthews - Nov. 17, 2005) - Kenneth M. Bagan, President & CEO, is pleased to announce that Wellco Energy Services Trust (TSX:WLL.UN), through its subsidiary, Wellco Energy Services Inc. ("Wellco" or the "Company") has executed Letters of Intent to acquire all of the issued and outstanding shares of Arctic Energy Systems Inc, Arctic Incinerators Inc., as well as certain related assets from a third company, (collectively, "Arctic"). Arctic is a privately owned company based in Grande Prairie, Alberta, engaged in production testing and related businesses. The transaction has received approval of Wellco's Board of Directors, and is now subject only to the completion of due diligence, regulatory approval and the completion of formal documentation. Closing is schedule for Dec 2, 2005.

The total purchase price, before transaction costs, will be $6.1 million, comprised of 156,571 Wellco trust units at $9.74/unit and $4.575 million in cash (subject to working capital and long-term debt adjustments). Wellco will make use of its current debt facilities to finance the cash portion of the transaction.

For the fiscal year ended April 30, 2005, Arctic generated $1.5 million of cash flow before tax on revenues of $4.9 million, and for the fiscal year ending April 30, 2006 Arctic was on track to generate cash flow of approximately $2.0 million on $6.0 million in revenues.

The Arctic acquisition adds 10 production testing units to our current fleet of 27 units. With the two units being built as part of our 2005 capital program, Wellco will operate a fleet total of 39 units. Arctic also expands the geographic coverage of our production testing business, and strengthens our position as a major service provider in northern Alberta and northeastern British Columbia.

This transaction further evidences Wellco's focus on becoming a major player in our selected product lines. As with all Wellco acquisitions, the Arctic assets will be integrated into our regionally managed business structure. Key personnel from Arctic will be contracted to remain with Wellco following the closing of this transaction.

Wellco Energy Services Trust is a growth oriented income trust that provides a diversified suite of oilfield services to the Canadian energy industry.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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