Wellco Energy Services Trust

Wellco Energy Services Trust

May 02, 2007 17:54 ET

Wellco Closes Acquisition of Water and Wastewater Treatment Company

CALGARY, ALBERTA--(CCNMatthews - May 2, 2007) - Wellco Energy Services Trust (TSX:WLL.UN) ("Wellco" or the "Trust") is pleased to announce that it has completed the acquisition of Sanitherm Engineering Ltd. ("Sanitherm") which was originally announced on April 16, 2007. Sanitherm is a Vancouver, British Columbia based company engaged in the design and assembly of both permanent and portable water and wastewater treatment systems around the world. The purchase price of $9.75 million was paid in cash, utilizing our credit facility, with the final purchase price subject to working capital adjustments. The Vendors have agreed to allocate 20% of their proceeds to the purchase of Wellco units on the open market over the next four months.

"For Wellco, this acquisition is a natural extension of our very successful wastewater treatment rental business," comments Kenneth M. Bagan, Wellco's President and Chief Executive Officer. "It ensures our access to, and reduces the cost of, additions to our fleet of wastewater units for the oilfield business; it provides us with the ability to access this business on a larger scale, especially into the Alberta oil sands, and it represents our entry point into the global water and wastewater treatment business."

Sanitherm has been in business for approximately 60 years, the last 16 of which have been under the ownership of Rick Smyth and David Botwright. Both have agreed to remain with Wellco for at least the next three years and we look forward to working with them on expanding the market for our water and wastewater systems.

We expect Sanitherm to contribute $1.0 to $1.5 million in cash flow to the Trust in the next 12 months. This cash flow excludes the savings that will be recognized when we build additional water and wastewater treatment systems for our own fleet. The annual cash flow is expected to increase as we expand the business into new markets.

Wellco Energy Services Trust provides the following products and services:

- Accommodations (both camps and wellsite trailers)

- Full service catering

- Wastewater treatment rental

- Surface equipment rentals

- Production testing and frac blow-back tanks

- Service rigs

- Water and Wastewater treatment design and fabrication

This press release may contain forward-looking statements based on the interpretation of industry indicators, reliance upon which involves substantial and unknown risk and uncertainty. These risks and uncertainties are beyond the control of Wellco Energy Services Trust, and no assurance can be given that any of these events or outcomes anticipated by these statements will transpire, or that Wellco Energy Services Trust will benefit therefrom.

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

Contact Information