Wellco Energy Services Trust

Wellco Energy Services Trust

March 28, 2006 15:30 ET

Wellco Energy Services Trust: 2005 U.S. Tax Information

CALGARY, ALBERTA--(CCNMatthews - March 28, 2006) - The information that follows is being provided to assist U.S. individual unitholders of Wellco Energy Services Trust (TSX:WLL.UN) ("Wellco") in reporting distributions received from Wellco on their Internal Revenue Service ("IRS") Form 1040, U.S. Individual Income Tax Return for the calendar year 2005. This information is of a general nature only and is not intended to be legal or tax advice.

In consultation with its U.S. tax advisors, Wellco believes that its trust units should be properly classified as equity in a corporation, rather than debt, and that dividends paid to U.S. individual unitholders should be "qualified dividends" for U.S. federal income tax purposes. As such, the portion of the distributions made during 2005 that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to long-term capital gains. However, the individual taxpayer's situation must be considered before making this determination.

Wellco has not received an IRS letter ruling or a tax opinion from its tax advisors on these matters.

With respect to cash distributions paid during the year to U.S. individual unitholders who held their units outside a qualified retirement plan, 7.1 percent should be reported as a return of capital (to the extent of a U.S. individual unitholder's U.S. tax basis) and 92.9 percent should be reported as "qualified dividends". If the return of capital portion of distributions received exceeds a U.S. individual unitholder's tax basis, the excess should be reported as capital gain.

For further information on taxability of 2005 distributions for both Canadian and U.S. unitholders paid by Wellco, please refer to the Investor Relations / IR Overview section of our website at www.wellcoenergy.com and consult your qualified tax advisor.

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