Deepwell receives regulatory approval of expansion at Rycroft facility, provides update on growth opportunities and Grande Cache operations, and announces March 2007 distribution



    /NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
    THE UNITED STATES/

    CALGARY, March 19 /CNW/ - Deepwell Energy Services Trust (the "Trust")
(TSX:DWL.UN) and its operating subsidiary, Deepwell Energy Services LP
("Deepwell") are pleased to announce the following update on current expansion
opportunities and operations, in conjunction with the Trust's March
distribution:

    Rycroft Expansion:
    ------------------

    Deepwell is pleased to announce that it has received approval from the
Alberta Energy and Utilities Board (EUB) for a second Class Ib disposal well
at its Rycroft facility. A second well adds significant capacity without
requiring an immediate increase in staff, or a significant investment in
infrastructure at the facility site. Tests indicate that the well will
increase injection capacity at Rycroft by approximately 40 percent.
Construction of a 1.2 km pipeline to the well will commence as soon as crews
and equipment are available. Costs to complete the project are estimated at
approximately $900,000. Assuming completion of the pipeline and that the
expanded Rycroft facility operates at full capacity, Deepwell estimates that
the increase in capacity provided by the second well will result in additional
annualized earnings before interest, taxes, depreciation and amortization
(EBITDA) of $800,000.

    Claresholm Expansion:
    ---------------------

    Deepwell is also in the final stages of the EUB approval process for its
fourth facility, near Claresholm, Alberta. Deepwell believes that it is
nearing approval of the facility, although no date for approval has been
provided by the EUB. Construction commencement cannot be confirmed at this
time, but Deepwell remains optimistic that construction of the facility will
be completed during 2007.

    Future Plant Expansion:
    -----------------------

    In addition, Deepwell owns rights to a location and disposal well for
future expansion after Claresholm, and anticipates that an application for
approval of this facility may be submitted to the EUB in the second quarter of
2007.

    Grande Cache Facility Operations
    --------------------------------

    Deepwell previously reported that on December 7, 2006 a fire occurred at
its Grande Cache facility. The fire caused non-life-threatening injuries to
one Deepwell employee and one third-party employee and damage to the
facility's vacuum-truck unloading system. The facility resumed operations for
unloading tanker trucks on December 14, 2006 and Deepwell's employee returned
to work on December 22, 2006. On February 1, 2007, vacuum-truck unloading
resumed at the facility, bringing it back to full operating capability. The
estimated cost to repair the fire damage is approximately $1,185,000 and
Deepwell expects the damages to be covered by insurance.
    In addition, Deepwell received approval from the EUB to increase the
operating pressure at the second well at this facility, which was put into
service in 2006. The increase in maximum operating pressure will improve the
facility's capacity. The cost to upgrade equipment for the increased operating
pressure is estimated at approximately $100,000, and the upgrades are expected
to be in-service in early April 2007. Assuming that the upgraded Grande Cache
facility operates at full capacity, Deepwell estimates that the increase in
capacity will result in additional annualized EBITDA of approximately
$400,000.

    March 2007 Distribution:
    ------------------------

    Upon review of these and other opportunities for growth, the Trustees
believe that retention of more cash to provide capital for growth is
appropriate. A reduction in the cash distribution will provide greater
financial flexibility to exploit Deepwell's high-return growth opportunities,
while continuing to provide adequate shelter to minimize cash taxes within the
Trust.
    The Trust announces today that the cash distribution for the period of
March 1, 2007 to March 31, 2007 has been set at $0.06 per Trust unit. The cash
distribution is payable on April 13, 2007 to unitholders of record on
March 30, 2007.

    Deepwell's operations
    ---------------------

    Deepwell implemented an overall price increase of approximately
10 percent on January 1, 2007 and thus far in 2007, demand for services at all
its facilities has remained strong. Management is encouraged by the strong
demand for oilfield waste management services, and believes there is market
need for expansion of capacity at existing facilities, as well as expansion
into new market areas.

    Additional information about the Trust and Deepwell is available at
www.sedar.com and on the Trust's website at www.deepwellenergy.com.

    EBITDA is not a financial measure recognized by Canadian generally
accepted accounting principles (GAAP) and, therefore, may not be comparable to
similar measures presented by other issuers.

    Certain statements in this press release constitute forward-looking
statements that involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of the
Trust or Deepwell, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward looking statements. When used in this press release, forward-looking
statements use such words as "may", "will", "intend", "should", "expect",
"believe", "plan", "anticipate", "estimate", "predict", "potential",
"continue" or the negative of these terms or other similar terminology. These
statements reflect current expectations regarding future events and operating
performance and speak only as of the date of this press release.
    Forward-looking statements involve significant risks and uncertainties,
should not be read as guarantees of future performance or results, and will
not necessarily be accurate indications of whether ("such results will be
achieved. A number of factors could cause actual results to differ materially
from the results discussed in the forward looking statements. In particular,
the estimates regarding the increases in annualized EBITDA could be affected
by the following:

    
    1.  Failure, for any reason, of a facility to operate at full capacity;

    2.  Increased labour costs or requirements;

    3.  Competitive pressures lowering the price for Deepwell's services;

    4.  Increases to the price of other costs and inputs; and

    5.  Decreases in commodity prices.
    

    Although the forward-looking statements contained in this press release
are based upon what management believes are reasonable assumptions, the Trust
cannot assure investors that actual results will be consistent with these
forward-looking statements. These forward-looking statements are made as of
the date of this press release. The Trust does not assume any obligation to
update or revise them to reflect new events or circumstances, except as
required by applicable securities legislation. For a more detailed examination
of risk factors encountered by the Trust and Deepwell, please refer to the
Trust's prospectus, dated August 18, 2006.





For further information:

For further information: Deepwell Energy Services Trust, Tel: (403)
508-6000, Email: investing@deepwellenergy.com, Robert Dodds, President and
CEO, Or: Scott Gerecke, Vice-President Finance and CFO

Organization Profile

DEEPWELL ENERGY SERVICES TRUST

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890