Cathedral Energy Services provides 2007 tax information



    /NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

    CALGARY, March 7 /CNW/ - Cathedral Energy Services Income Trust (the
"Trust" - TSX: CET.UN) is pleased to provide the following information to
assist Canadian and U.S. holders of trust units ("Unitholders") of the Trust
in the preparation of their income tax returns. This information is of a
general nature only and is not intended to be, nor should it be construed to
be, legal or tax advice to any Unitholder, or potential Unitholder of the
Trust. Unitholders and potential Unitholders should consult with their own tax
advisors with respect to their particular circumstances.

    Canadian

    The following information provided by the Trust is intended to assist
Canadian resident Unitholders who are individuals in reporting distributions
from the Trust for preparation of their 2007 T1 Personal Income Tax Return.
Distributions declared by the Trust for 2007 will be comprised of a
combination of taxable trust income (97.25714%) and capital gains (2.74286%),
except as described below. No portion of the declared 2007 distributions is
considered a return of capital.
    The information contained herein is based on the Trust's understanding of
the Income Tax Act (Canada) ("Act") and the regulations there under, and is
provided for general information only. Unitholders are advised to consult
their personal tax advisors with respect to their particular circumstances.
    The Trust qualifies as a mutual fund trust under the Act and as such,
trust units are qualified investments for registered retirement savings plans
("RRSPs"), registered retirement income funds ("RRIFs"), registered education
savings plans ("RESPs"), and deferred profit sharing plans ("DPSPs"), all as
defined in the Act. Unitholders who hold their trust units in a RRSP, RRIF,
RESP, or DPSP need not report any income related to trust unit distributions
on their 2007 Income Tax Return.
    A Unitholder that does not hold his or her trust units in an RRSP, RRIF,
RESP or DPSP, must report taxable amounts allocated by the Trust in 2007 to
the Unitholder in the Unitholder's 2007 Income Tax Return. This taxable amount
will be reported on a "T3 - Statement of Trust Income and Allocations and
Designations" ("T3 Slip") that should have been issued and mailed to all
Unitholders on or before March 31, 2008. Canadian Unitholders who hold their
trust units through a stockbroker or other intermediary should receive tax
reporting information from that stockbroker or other intermediary.
    During 2007, taxable distributions (based upon Record Date) totalled
$0.84 per trust unit and all distributions were paid in cash.

    United States

    The following information is being provided to assist U.S. individual
Unitholders in reporting distributions received from the Trust during 2007 on
their Internal Revenue Service ("IRS") Form 1040, "U.S. Individual Income Tax
Return" ("Form 1040").
    This summary is of a general nature only and is not intended to be legal
or tax advice to any particular holder or potential holder of the Trust trust
units. Holders or potential holders of the Trust's trust units should consult
their own legal and tax advisors as to their particular tax consequences of
holding the Trust's trust units.

    Qualified Dividends
    -------------------
    In consultation with its U.S. tax advisors, the Trust believes that its
trust units should be properly classified as equity in a corporation, rather
than debt, and that dividends paid to individual U.S. unitholders should be
"qualified dividends" for U.S. federal income tax purposes. As such, the
portion of the distributions made during 2007 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.
    The Trust has not received an IRS letter ruling or a tax opinion from its
tax advisors on these matters.

    Trust Units Held Outside a Qualified Retirement Plan
    ----------------------------------------------------
    With respect to cash distributions paid during the year to U.S.
individual Unitholders, 100% percent should be reported as "qualified
dividends" and no amount should be reported as a return of capital.
    The portion of the distributions treated as "qualified dividends" should
be reported on Line 9b of Form 1040, unless the fact situation of the U.S.
individual Unitholder determines otherwise. Commentary on page 19 of the Form
1040 Instruction Booklet for 2007 with respect to "qualified dividends"
provides examples of individual situations where the dividends would not be
"qualified dividends". Where, due to individual situations, the dividends are
not "qualified dividends", the amount should be reported on Schedule B -
Part II - Ordinary Dividends and Line 9a of Form 1040.
    U.S. Unitholders are encouraged to utilize the Qualified Dividends and
Capital Gain Tax Worksheet of Form 1040 to determine the amount of tax that
may be otherwise applicable.
    The taxable portion (for Canadian income tax purposes) of the
distributions is subject to a minimum 15% Canadian withholding tax that is
withheld prior to any payments being distributed to Unitholders. Where trust
units are held in a cash account, we believe the full amount of the
withholding tax should be creditable, subject to numerous limitations, for
U.S. tax purposes in the year in which the withholding tax is withheld. Where
trust units are held in qualified retirement account, the same withholding tax
applies but the amount is not creditable for U.S. tax purposes.
    The amount of Canadian tax withheld should be reported on Form 1116,
"Foreign Tax Credit (Individual, Estate, or Trust)". Information regarding the
amount of Canadian tax withheld in 2007 should be determined from your own
records and is not available from the Trust. Amounts over withheld, if any,
from Canada should be claimed as a refund from the Canada Revenue Agency no
later than two years after the calendar year in which the payment was paid and
should not be claimed as a credit against your U.S. tax liability.
    Investors should report their dividend income in accordance with this
information and subject to advice from their tax advisors. U.S. individual
Unitholders who hold their trust units through a stockbroker or other
intermediary should receive tax reporting information from their stockbroker
or other intermediary. We expect that the stockbroker or other intermediary
will issue a Form 1099-DIV, "Dividends and Distributions" or a substitute form
developed by the stockbroker or other intermediary. The Trust is not required
to furnish such Unitholders with Form 1099-DIV. Information on the Forms
1099-DIV issued by the brokers or other intermediaries may not accurately
reflect the information in this notice for a variety of reasons. Investors
should consult their brokers and tax advisors to ensure that the information
presented here is accurately reflected on their tax returns. Brokers and/or
intermediaries may or may not be required to issue amended Forms 1099-DIV.

    Trust Units Held Within a Qualified Retirement Plan
    ---------------------------------------------------
    No amounts are required to be reported on a Form 1040 where the trust
units are held within a qualified retirement plan.

    -------------------------------------------------------------------------
    Certain statements in this news release including (i) statements that may
contain words such as "anticipate", "could", "expect", "seek", "may" "intend",
"will", "believe", "should", "project", "forecast", "plan" and similar
expressions, including the negatives thereof, (ii) statements that are based
on current expectations and estimates about the markets in which the
Trust/Cathedral operates and (iii) statements of belief, intentions and
expectations about developments, results and events that will or may occur in
the future, constitute "forward-looking statements" and are based on certain
assumptions and analysis made by the Trust/Cathedral. Forward-looking
statements in this news release include, but are not limited to, statements
with respect to future capital expenditures, including the amount, nature and
timing thereof; oil and natural gas prices and demand; other development
trends within the oil and natural gas industry; business strategy; expansion
and growth of the Trust's/Cathedral's business and operations and other such
matters. Such forward-looking statements are subject to important risks and
uncertainties, which are difficult to predict and that may affect the
Trust's/Cathedral's operations, including, but are not limited to: the impact
of general economic conditions; industry conditions; government and regulatory
developments; oil and natural gas product supply and demand; competition; and
the Trust's/Cathedral's ability to attract and retain qualified personnel. The
Trust's/Cathedral's actual results, performance or achievements could differ
materially from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if
any of them do transpire or occur, what benefits the Trust/Cathedral will
derive therefrom. Subject to applicable law, the Trust disclaims any intention
or obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
    All forward-looking statements contained in this document are expressly
qualified by this cautionary statement. Further information about the factors
affecting forward-looking statements is available in the Trust's current
Annual Information Form and Annual Report which have been filed with Canadian
provincial securities commissions and are available on www.sedar.com.

    %SEDAR: 00018316E




For further information:

For further information: Mark L. Bentsen, President and Chief Executive
Officer or P. Scott MacFarlane, Chief Financial Officer, Cathedral Energy
Services Ltd., 1700, 715 - 5th Avenue S.W., Calgary, Alberta, T2P 2X6,
Telephone: (403) 265-2560, Fax: (403) 262-4682,
www.cathedralenergyservices.com


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