Peak Energy Services Trust reports its financial results for the three months
ended March 31, 2010

CALGARY, May 11 /CNW/ -

    
    Financial and Industry Highlights (unaudited)
    -------------------------------------------------------------------------
                                                 Three months ended March 31
    (in '000 of CAD,                         --------------------------------
    except otherwise noted)                       2010       2009     Change
    -------------------------------------------------------------------------
    Revenue                                     38,945     47,465       -18%
    EBITDA(1)                                    6,427     12,309       -48%
      Per unit - diluted                          0.07       0.25       -72%
      As a percentage of revenue                   17%        26%
    Net income (loss)                           (1,218)     5,421      -122%
      Per unit - diluted                         (0.01)      0.11      -109%
    Funds from operations(1)                     5,343     10,881       -51%
      Per unit - diluted                          0.06       0.22       -73%
    Trust Units outstanding (thousands)        172,383     48,398       256%
    Industry activity(2)
      Drilling rig operating days               38,399     28,244        36%
      Service rig utilization                      58%        48%        21%
    -------------------------------------------------------------------------
    (1) Refer to the "Non-GAAP Measures" section for further details.
    (2) Sources: Canadian Association of Oilwell Drilling Contractors
        ("CAODC"), the Daily Oil Bulletin ("DOB") and Petroleum Services
        Association of Canada ("PSAC").
    

This News Release focuses on key information and statistics from Peak Energy Services Trust's ("Peak" or the "Trust") consolidated financial statements and oilfield services industry which contains known and unknown risks and uncertainties. Furthermore, certain statements contained in this News Release are forward-looking. Please review the discussion of these statements in the "Forward-Looking Information" section of this News Release.

Throughout this News Release certain measures are used that are not recognized measures under Canadian generally accepted accounting principles ("GAAP"). Specific measures used are earnings before interest, taxes, depreciation, amortization and other certain items ("EBITDA"), funds from operations, working capital, funded debt, net debt and long-term debt to equity ratio. Please review the discussion of these measures in the "Non-GAAP Measures" section of this News Release.

INDUSTRY ACTIVITY

For the first three months of 2010, industry activity levels were higher than management's initial expectations with Canadian drilling operating days being 36 percent higher than the prior year period. Wells drilled in Canada for the first quarter of 2010 were at 3,664 wells, which compares negatively with the ten year average of 5,316 wells. Average days/well increased to 10.5 days/well for the current quarter versus 9.5 days/well for the first quarter of 2009.

The decrease as compared to the ten year average has been the result of the global economic down-turn and its impact on demand for oil and natural gas and liquidity within the capital markets; an over supply of natural gas which has resulted in downward pressure on natural gas prices; and government policy changes in Alberta through amendments made to royalty rates collected increasing the uncertainty within the oil and natural gas industry.

Adding to the decrease in oil and natural gas industry activity, significant downward pricing pressure has and will continue to be a challenge, as oilfield service organizations are competing for a smaller market of activity. Coupled with low natural gas prices which ultimately drives a significant portion of cash flows for producers and their incentive to add production, the impact of the global economic recession on debt and equity markets is further challenging oil and natural gas industry activity as players that are in the development stage are more adversely impacted since their reliance on financing to fund operations is very significant.

SELECTED FINANCIAL AND OPERATING INFORMATION

    
    For the three months ended March 31, 2010, Peak:
    -   generated revenue of $38.9 million which was an 18 percent or $8.5
        million decrease over first quarter 2009 revenue of $47.5 million.
        The primary drivers of the decrease were significant pricing pressure
        as well as decreased utilization levels in the Camps and Catering
        operating division within the Oil Sands reporting segment. Price
        discounts have had a dramatic negative impact on Peak's revenue.
        Management estimates that if pricing in the current quarter was at
        first quarter 2009 levels, the Trust would have generated
        approximately $52.1 million in revenue, representing an increase of
        10 percent over the first quarter of 2009;
    -   realized EBITDA of $6.4 million ($0.07 per Unit diluted or 17 percent
        of revenue), a decrease of 48 percent or $5.9 million over EBITDA for
        the prior year period of $12.3 million ($0.25 per Unit diluted or 26
        percent of revenue). On a margin basis, the primary negative impact
        was the significant decrease in across the board overall pricing for
        services. Management estimates that if pricing in the current quarter
        was at first quarter 2009 levels, the Trust would have generated
        approximately $19.6 million in EBITDA, representing an increase of 59
        percent over the first quarter of 2009. This demonstrates the success
        of the cost reductions achieved quarter-over-quarter, unfortunately
        significant negative pricing pressure has more than offset cost
        savings achieved on a margin basis;
    -   recognized a loss on sale of equipment of $3.1 million. The loss was
        the result of the current negative market conditions;
    -   realized a net loss of $1.2 million (loss of $0.01 per Unit diluted),
        which was a decrease of 122 percent or $6.6 million as compared to a
        net income for the same prior year period of $5.4 million ($0.11 per
        Unit diluted);
    -   generated funds from operations of $5.3 million or $0.06 per Unit
        diluted (2009 - $10.9 million or $0.22 per Unit diluted);
    -   negotiated amendments to its long-term debt agreements resulting in
        total debt facility capacity of $65.0 million, subject to certain
        conditions being met; and
    -   issued 124.0 million Trust Units for net proceeds of $23.6 million.

    CAPITAL RESOURCES

    As compared to December 31, 2009, Peak:
    -   increased working capital by $17.7 million to $27.8 million;
    -   decreased tangible capital assets by $7.0 million to $198.5 million;
    -   decreased funded debt by $21.0 million to $39.6 million; and
    -   increased Unitholders' equity by $22.5 million to $173.2 million.
    

LONG-TERM DEBT

The Trust's long-term debt (including current portion) decreased to $49.1 million at March 31, 2010, as compared to $60.5 million at December 31, 2009. Funded debt was $39.6 million at March 31, 2010, as compared to $60.5 million at December 31, 2009. Meanwhile, net debt was $21.2 million at March 31, 2010, as compared to $50.4 million at December 31, 2009. The long-term debt to equity ratio decreased to 0.28 to 1.00 at March 31, 2010 (December 31, 2009 - 0.40 to 1.00).

The negative economic environment and its impact on the financial markets, lending institutions, hydrocarbon commodity prices, and oil and natural gas industry activity levels is providing a very challenging operating environment for the oil and natural gas services industry. Management has taken several steps to proactively manage its cash flow and related funded debt level through these uncertain times. As previously discussed, Peak ceased making distributions to Unitholders to focus cash flows towards debt repayment. Furthermore, during 2009 management implemented a significant restructuring plan which has reduced Peak's cost structure to be consumerate with activity and pricing levels, has a minimal capital expenditure program and is aggressively pursuing its asset rationalization program, with a primary focus on further reducing the funded debt outstanding, in light of expected near-term lower industry activity levels.

As at December 31, 2009, and through a portion of the first quarter of 2010, the Trust was in breach of its financial covenants under its long-term debt agreements. The lenders agreed to waive all existing defaults and events of default under the long-term debt agreements and during the first quarter of 2010 the lenders agreed to amend their respective agreements, subject to certain conditions, which as of March 30, 2010, have been satisfied. As at March 31, 2010, the Trust was in compliance with all of its lender covenants.

The Trust's available and utilized long-term debt facilities consist of:

    
    -   a senior secured $10.0 million term loan facility with a maturity
        date of August 15, 2012, and a senior secured $15.0 million revolving
        credit facility (nil drawn at March 31, 2010) with a maturity date of
        February 28, 2011. Both facilities have no set principal payments
        during the term, bearing interest at bank prime rate plus 5.0
        percent.
    -   a senior secured term debt facility of $30.0 million with a maturity
        of August 31, 2012, and terms of no set principal payments during the
        seven year term bearing interest at 7.8 percent.
    -   a senior secured term debt facility of $10.0 million with a maturity
        of June 26, 2013, and terms of no set principal payments during the
        seven year term bearing interest at 8.7 percent.
    

Financial covenants within the long-term debt agreements have also been amended. The funded net debt to 12 month trailing EBITDA ratio has been waived until June 30, 2011 and the fixed charge coverage ratio which requires the Trust to maintain a specified cash flow to principal debt repayment ratio has been adjusted to be not less than 2.50 to 1.00, except during the period April 1, 2010 to February 28, 2011, where the ratio varies between 0.75 to 1.00 and 2.25 to 1.00.

UNITHOLDERS' EQUITY

Unitholders' equity increased $22.4 million to $173.2 million at March 31, 2010, from $150.7 million at December 31, 2009. The increase over the prior year-end was the result of a net loss of $1.2 million incurred and 124.0 million Trust Units issued for net proceeds of $23.6 million.

On February 16, 2010, the Trust closed a $16.0 million private placement financing for 80.0 million Trust Units at $0.20 per Unit. Net proceeds of the private placement were used to reduce indebtedness outstanding. Management recognized that the private placement financing was very dilutive to existing Unitholders and therefore believed a follow-on rights offering was the most appropriate vehicle to provide existing Unitholders with the opportunity to participate in the realignment of the Trust's capital resources. On March 30, 2010, the Trust closed the rights offering financing generating $8.8 million in proceeds by issuing 44.0 million Trust Units at $0.20 per Unit. Net proceeds of the rights offering financing, will be used for general purposes of the Trust, which may include prepayment of existing secured indebtedness of the Trust and/or to fund future growth opportunities.

The Trust relied on the Toronto Stock Exchange's ("TSX") financial hardship exemption rules to obtain all necessary regulatory approvals to complete the equity financing. Reliance on the financial hardship exemption rules automatically result in a TSX de-listing review to confirm that the Trust continues to meet TSX listing requirements. On January 29, 2010, the Trust received notice that the TSX is reviewing the Trust's eligibility for continued listing on the TSX. The Trust is being reviewed under the remedial review process and has been granted 120 days to comply with all requirements for continued listing. If the Trust cannot meet all requirements on or before May 28, 2010, the Trust will be de-listed 30 days from such date. The Trust believes that it complies with applicable TSX listing requirements, however no absolute assurances can be made in this regard. If the Trust's securities are de-listed from the TSX it could adversely impact the Trust's future access to equity capital.

SUBSEQUENT EVENT

On April 21, 2010 the Trust granted an additional 2.4 million options with an exercise price of $0.23 per unit to its officers and key employees under the Trust's existing Trust Unit option plan. One third of these options vested immediately, one third will vest one year from the grant date, and one third will vest two years from grant date.

OUTLOOK

The industry has experienced a significant ramp up in activity for the first quarter of 2010 with Canadian drilling rig utilization reaching a high water mark of approximately 70 percent in February. While the increased level of drilling activity during the first quarter was not unexpected, activity has been higher than what Peak had originally forecast, year-to-date. As expected, Peak is currently experiencing a traditional slow second quarter and anticipates to see a ramp-up in activity of some magnitude during the second half of 2010. Although, industry consensus for wells to be drilled in the Western Canadian Sedimentary Basin ranges from 8,500 wells to 12,000 wells for 2010, Peak is still comfortable with its forecast of 9,500 wells for 2010 which would represent an increase in activity of approximately 12 percent over 2009.

Peak expects to see the continuation of more activity in oil focused resource plays, such as the Cardium (Alberta), Bakken (Saskatchewan and North Dakota) and the Oil Sands (Alberta) regions as confidence grows that oil prices will be sustainable above $75 per barrel. The number of opportunities to bid on project work within these regions is starting to increase fairly significantly. Peak has taken advantage of these more active oil related areas by re-deploying assets into these oil focused regions.

The propensity to continue to drill prolific shale natural gas resource plays throughout certain areas of North America has facilitated market share growth into regions for Peak, as evidenced by our significant growth in market share in the US where our revenue more almost doubled quarter-over-quarter. The majority of this growth was realized in the Marcellus shale region of Pennsylvania and other US regions are currently being explored as possible growth areas for several of Peak's product offerings during the current fiscal year. With this expected growth profile and our current run rate, Peak expects to see our US operation to more than double in size, to more than $20.0 million in revenue for 2010 as compared to 2009.

Despite the continued near term uncertainty in terms of activity for the second and third quarters of 2010, management remains bullish on the longer term fundamentals of our industry. With time, we believe that commodity prices will increase for both oil and natural gas which will result in higher levels of activity throughout North America, including the more conventional plays that currently remain very stagnant.

With Peak's recently completed equity financing of $23.6 million (net proceeds), combined with our more flexible debt structure and re-negotiated bank covenants, management believes that Peak is in a much improved position of strength in that it has satisfied all of the requirements of the Trust's senior lenders and improved its financial position. The Trust's operating line is currently undrawn putting Peak in a net positive cash position. Post closing of the equity financing, Peak has a net debt of approximately $21.2 million. This debt level is backed by a tangible asset base of approximately $198.5 million. The reduced and more flexible debt structure will allow management to increase its focus on looking for further opportunities of growth including the addition of new assets in select products offerings and regions along with the continued re-deployment of under-utilized assets to regions of higher levels of activity.

Financial discipline remains at the forefront of priorities for the management of the Trust during 2010. Peak continues to look for opportunities to further reduce its infrastructure cost to augment the significant reductions already achieved over the past 15 months. Management is focused on formulating a sound pricing strategy, whereby increased pricing will allow the Trust to take advantage of the significant leverage that it will enjoy when the combination of reduced costs and higher pricing kicks in. We are seeing some indications, in certain markets, that we may have some opportunities in terms of pricing traction in the second half of this year.

Management is cautiously optimistic at this time that both the global economy and the oil and natural gas industry are starting to show some signs of a possible recovery. We believe that at the very least we are on the bottom of this cycle and that we now have the resources and opportunities to once again prosper and grow as the climate in our industry continues to improve.

NON-GAAP MEASURES

EBITDA is defined as earnings before interest, taxes, depreciation and amortization and other items (non-cash expenses, gains / losses and non-operating items). EBITDA is not a recognized measure under Canadian GAAP. Management believes, in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by Peak's principle business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions. Readers should be cautioned that EBITDA should not be construed as an alternative to net income determined in accordance with Canadian GAAP as an indicator of the Trust's performance. Peak's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other entities.

Funds from operations is defined as cash flow from operating activities, as reported in the Canadian GAAP financial statements, before non-cash changes in working capital and funds from discontinued operations. Funds from operations is not a recognized measure under Canadian GAAP. Management believes funds from operations is a useful supplemental measure as it provides an indication of the Trust's cash generating abilities from continuing operations before consideration of capital impacts. Readers should be cautioned that funds from operations should not be construed as an alternative to cash flow from operating activities, as an indicator of the Trust's performance. Peak's method of calculating funds from operations may differ from other companies and, accordingly, funds from operations may not be comparable to measures used by other entities.

Working capital is defined as current assets less current liabilities excluding current portion of long-term debt. Working capital is not a recognized measure under Canadian GAAP. Management believes working capital provides an indication of the current liquidity available to the Trust before considering long-term debt facilities or equity financing considerations. The Trust's method of calculating working capital may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

Funded debt is defined as long-term debt including current portion of long-term debt less cash and cash equivalents. Net debt is defined as long-term debt including current portion of long-term debt less working capital. Funded debt and net debt are not recognized measures under Canadian GAAP. Management believes funded debt and net debt provide an indication of the Trust's debt position after consideration for assets and liabilities that are considered relatively liquid in nature. The Trust's method of calculating funded debt and net debt may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

Long-term debt to equity ratio is defined as long-term debt including current portion of long-term debt divided by Unitholders' equity. Long-term debt to equity ratio is not a recognized measure under Canadian GAAP. Management believes the long-term debt to equity ratio provides an indication of how the Trust's operations are financed. The Trust's method of calculating long-term debt to equity ratio may differ from those used by other entities and, accordingly, may not be comparable to measures used by other entities.

FORWARD-LOOKING INFORMATION

This news release contains forward-looking information within the meaning of applicable Canadian securities legislation regarding expected future events and financial and operating results of the Trust. By its nature, forward-looking information requires the Trust to make assumptions and is subject to numerous inherent risks and uncertainties. There is significant risk that assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking information as a number of factors could cause actual future results, conditions, actions or events to differ materially from expectations, estimations or intentions expressed in the forward-looking information. The Trust disclaims any intention or otherwise to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. It is the current policy of the Trust to evaluate its past forward-looking information and where it deems appropriate, provide updates subject to requirements by law. The forward-looking statements contained in this news release are made as of the date hereof. Additionally, the Trust undertakes no obligation to comment on expectations of, or statements made by, third parties in respect of this news release.

In particular, forward-looking information includes the following statements within this news release regarding the expectations of: oil and natural gas industry activity levels; type/orientation of drilling activities; completion and timing of and when the Trust will convert to a corporation; the geopolitical and global economic future; improvement in future oil and natural gas industry activity levels, hydrocarbon supply/demand balance and associated hydrocarbon commodity pricing; the cyclical and seasonal nature of activity within the oil and natural gas industry; the future provision of Peak's services and its impact on equipment utility, pricing, forecasted financial performance and ability to continue as a going concern; management's business plan, including the fiscal 2010 plan and expectations for Peak's operations and cash flows provided by continuing operations; the Trust's ability to increase market share in various geographical regions; the future financial impact of Peak's cost restructuring initiatives; Peak's future capital expenditures; access to and affordability of debt, including the associated interest cost, and equity capital markets for Peak and its customers; the realignment of Peak's capital resources will improve liquidity and financial flexibility; the Trust's financing strategy and compliance with debt covenants; Peak's working capital changes; and management's financing strategy for managing Peak's liquidity and capital resources.

As a result, you are cautioned not to place undue reliance on these forward-looking statements. These statements are based on certain assumptions and analysis made by the Trust in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Trust's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Trust's expectations. Such risks and uncertainties include, but are not limited to: fluctuations in the price and demand for oil and natural gas; currency fluctuations; fluctuations in the level of oil and natural gas exploration and development activities; fluctuations in the demand for oilfield services that the Trust provides; the effects of weather conditions on operations; the existence of competition from other oilfield service entities; general economic, market or business conditions including the consequences of the current global economic recession; public market volatility and the related ability to access sufficient capital to fund activities; availability to access debt financing to fund activities; government policy changes; changes in laws or regulations, including taxation and environmental regulations; liabilities inherent in the oil and natural gas field services business; the lack of availability of qualified personnel or management; and other unforeseen conditions which could impact the use of services supplied by the Trust.

Consequently, all of the forward-looking information made in this document are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Trust will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Trust or its business or operations.

CONFERENCE CALL

Management will hold a conference call to discuss the quarter end results at 9:30 a.m. MT (11:30 a.m. ET) on Wednesday, May 12, 2010. To participate, please dial 1 (888) 231-8191 or 1 (647) 427-7450. Participants are asked to call at least 10 minutes before the start of the call. The call is also available by webcast by going to Peak's website at www.peak-energy.com or by directly going to http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3056680. For those unable to participate in the live call, a replay will be available until Wednesday, May 19, 2010, by dialing 1 (800) 642-1687 or 1 (416) 849-8033, pass code 71777570. The replay will also be available by webcast at the URL's indicated above.

FINANCIAL RESULTS

The following selected financial information summarizes Peak's consolidated financial results for the three months ended March 31, 2010. Peak's quarterly report is available at www.sedar.com or www.peak-energy.com.

    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                                                       March 31, December 31,
    (in thousands of CAD) (unaudited)                      2010         2009
    -------------------------------------------------------------------------
    ASSETS
    Current assets:
      Cash and cash equivalents                      $    9,483   $        -
      Accounts receivable                                35,550       23,394
      Income taxes recoverable                              475          726
      Prepaid expenses                                    2,549        2,172
      Inventory                                           1,029        1,425
      -----------------------------------------------------------------------
                                                         49,086       27,717

    Property and equipment                              198,481      205,524

    Intangibles                                           1,782        1,943

    -------------------------------------------------------------------------
                                                     $  249,349   $  235,184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND UNITHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities       $   21,039   $   16,335
      Bridge loan                                             -        1,000
      Current portion of long-term debt                       -       10,856
      Current portion of deferred lease inducements         201          201
      -----------------------------------------------------------------------
                                                         21,240       28,392

    Long-term debt                                       49,071       49,692

    Deferred lease inducements                            1,672        1,723

    Future income taxes                                   4,190        4,664

    Unitholders' equity:
      Trust Unit capital                                250,970      227,347
      Contributed surplus                                 1,912        1,854
      Deficit                                           (79,706)     (78,488)
      -----------------------------------------------------------------------
                                                        173,176      150,713

    -------------------------------------------------------------------------
                                                     $  249,349   $  235,184
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
    -------------------------------------------------------------------------
                                                          Three months ended
                                                               March 31,
    (in thousands of CAD, except                    -------------------------
     per Unit amounts) (unaudited)                         2010         2009
    -------------------------------------------------------------------------
                                                                   (restated)

    Revenue                                          $   38,945   $   47,465

    Expenses:
      Operating                                          24,206       26,807
      General and administrative                          8,217        8,444
      Unit-based compensation                                58            -
      Depreciation and amortization                       3,748        3,743
      Interest on long-term debt                          1,265        1,133
      Foreign exchange loss (gain)                           95          (95)
      -----------------------------------------------------------------------
                                                         37,589       40,032
    -------------------------------------------------------------------------
    Income before other items from continuing operations  1,356        7,433

    Other items:
      Loss on sale of equipment                           3,057           23
      -----------------------------------------------------------------------
                                                          3,057           23
    -------------------------------------------------------------------------
    Income (loss) before income taxes from continuing
     operations                                          (1,701)       7,410
    Provision for income taxes:
      Current                                                 2            5
      Future (reduction)                                   (485)       2,021
      -----------------------------------------------------------------------
                                                           (483)       2,026
    -------------------------------------------------------------------------
    Net income (loss) from continuing operations         (1,218)       5,384
    Net income from discontinued operations                   -           37
    -------------------------------------------------------------------------
    Net income (loss) and comprehensive income (loss)    (1,218)       5,421
    Deficit, beginning of period                        (78,488)     (55,013)
    -------------------------------------------------------------------------
    Deficit, end of period                           $  (79,706)  $  (49,592)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per Unit from continuing
     operations:
      Basic                                          $    (0.01)  $     0.11
      Diluted                                        $    (0.01)  $     0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per Unit from discontinued operations:
      Basic                                          $        -   $        -
      Diluted                                        $        -   $        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per Unit:
      Basic                                          $    (0.01)  $     0.11
      Diluted                                        $    (0.01)  $     0.11
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                                          Three months ended
                                                               March 31,
                                                    -------------------------
    (in thousands of CAD) (unaudited)                      2010         2009
    -------------------------------------------------------------------------
                                                                   (restated)

    Operating activities:
      Net income (loss) from continuing operations   $   (1,218)  $    5,384
      Add (deduct) items not affecting cash:
        Unit-based compensation                              58            -
        Depreciation and amortization                     3,748        3,743
        Amortization of long-term debt financing fees        72            -
        Unrealized foreign exchange (gain) loss             111         (290)
        Loss on sale of equipment                         3,057           23
        Future income taxes (reduction)                    (485)       2,021
      -----------------------------------------------------------------------
                                                          5,343       10,881

      Changes in non-cash working capital items          (7,563)      (8,455)
      -----------------------------------------------------------------------
                                                         (2,220)       2,426

      Discontinued operations:
        Funds provided by discontinued operations             -          620
        Changes in non-cash working capital items
         of discontinued operations                           -        2,191
      -----------------------------------------------------------------------
                                                              -        2,811
      -----------------------------------------------------------------------
                                                         (2,220)       5,237

    Investing activities:
      Purchase of equipment                                (932)        (972)
      Proceeds on sale of equipment                       1,332          310
      Proceeds on sale of property held for sale              -        3,580
      -----------------------------------------------------------------------
                                                            400        2,918

      Changes in non-cash working capital items             249         (852)
      -----------------------------------------------------------------------
                                                            649        2,066

      Discontinued operations:
        Funds used in discontinued operations                 -          (97)
      -----------------------------------------------------------------------
                                                              -          (97)
      -----------------------------------------------------------------------
                                                            649        1,969

    Financing activities:
      Increase in bridge loan                             1,000            -
      Repayment of bridge loan                           (2,000)           -
      Repayment of long-term debt                       (10,856)      (9,017)
      Long-term debt financing costs                       (694)           -
      Issuance of Trust Units                            24,797            -
      Trust Units issue cost                             (1,175)           -
      -----------------------------------------------------------------------
                                                         11,072       (9,017)
    Foreign exchange gain on cash held in foreign
     currency                                               (18)         (38)
    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash equivalents      9,483       (1,849)
    Cash and cash equivalents, beginning of period            -        8,565
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period         $    9,483   $    6,716
    -------------------------------------------------------------------------
    

About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization operating in western Canada and the United States of America. Through its various operating divisions, Peak provides drilling and production services to its customers both in the conventional oil and gas industry as well as the oil sands regions of western Canada. The Trust also provides water technology solutions to a variety of customers throughout North America. Peak's units are listed on the Toronto Stock Exchange under the symbol "PES.UN".

The TSX have neither approved nor disapproved the information contained herein.

For further information: For further information: Peak Energy Services Trust, Mr. Curtis W. Whitteron, President and Chief Executive Officer, Livingston Place, South Tower, Suite 900, 222 - 3rd Avenue SW, T2P 0B4, Tel: (403) 543-7325, Fax: (403) 543-7335, or Peak Energy Services Trust, Mr. Monty R. Balderston, Chief Financial Officer, Livingston Place, South Tower, Suite 900, 222 - 3rd Avenue SW, T2P 0B4, Tel: (403) 543-7325, Fax: (403) 543-7335

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PEAK ENERGY SERVICES LTD.

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