PEG Completes Acquisition of U.S. Wireline Company, Expands Market Coverage and Service Offering



    HOUSTON, TX, March 5 /CNW/ - Production Enhancement Group, Inc.
(TSX: WIS) ("PEG" or the "Company") has closed its acquisition of Wireline
Specialists of Louisiana, Inc. ("WSL"). WSL is a private well services company
with 21 offshore wireline units, 8 land wireline units, and service locations
in Louisiana and Texas. WSL becomes an operating division of WISE(*) Well
Intervention Services, Inc. ("WISE Well Intervention"), PEG's operating
subsidiary.
    The acquisition increases the number of WISE service locations from four
to seven, adding Shreveport, Louisiana, and Yoakum and Kingsville, Texas to
PEG's current locations in Lafayette, Louisiana; Laurel, Mississippi; and
Rosharon, Texas. WSL also adds wireline capabilities to PEG's existing WISE
coiled tubing, nitrogen, and pressure pumping services. PEG will expand WISE
coiled tubing and nitrogen services into the areas served by the three new
locations, leveraging WSL's facilities and customer base. The Company plans to
manufacture six new WISE patented multifunction well intervention units
specifically for deployment to these markets.
    The operations management and employees of WSL are expected to remain
with the company. Randy Block, who was Chief Operating Officer with WSL, has
been named Senior Vice President, Wireline Services, for WISE Well
Intervention. He is responsible for all wireline sales and operations and will
oversee the expansion of wireline services throughout WISE Well Intervention's
market areas. Jim Hutchison, formerly Chairman and CEO of WSL, will assist
WISE Well Intervention management as senior advisor for market development.
    "This is a very favorable acquisition for our company," said Philip
Crawford, PEG's CEO. "WSL brings a great reputation and outstanding people and
equipment, and its solid performance is immediately accretive to our revenue,
earnings and cash flow from operations. The acquisition also adds wireline to
our services portfolio, making us a full-line well intervention company, and
opens three new geographic markets for our services. We are excited about this
important step in our company's growth, and we welcome WSL to the WISE Well
Intervention team."
    Pursuant to the terms of the letter of intent the companies signed on
September 22, 2006, PEG assumed and refinanced WSL's existing debt of
approximately USD 2.1 million and paid net consideration to the selling
shareholders of approximately USD 3 million in cash and 1.2 million PEG common
shares ("Common Shares"). A portion of the cash requirements was financed by
the sale of 6,666,667 units ("Units") consisting of one Series A Preferred
Share and three-quarters of a warrant for Common Shares (see the PEG press
release of February 28, 2007 for specific details of the Units). The remainder
of the proceeds necessary to refinance the assumed indebtedness and pay the
selling shareholders of WSL was provided by a USD 4 million increase in term
loans provided by GE Energy Finance. Up to an additional USD 450,000 of cash
and up to an additional 780,463 Common Shares may be issued following
April 30, 2007 if the former WSL operations generate up to USD 1.8 million of
adjusted EBITDA for the trailing 12 month period ending on such date.

    About Production Enhancement Group
    Production Enhancement Group, a Houston-based energy services company
incorporated in Alberta, Canada, trades on the TSX under the symbol WIS. PEG
owns patented WISE multifunction well intervention systems through its wholly
owned subsidiary WISE Well Intervention Services, Inc., and markets a full
range of coiled tubing and pressure pumping services.

    (*)WISE is a trademark of Production Enhancement Group, Inc.

    The TSX does not accept responsibility for the adequacy or accuracy of
    this release.

    Forward-Looking Statements
    This release and PEG's website referenced in this release contain
forward-looking statements, including expectations of future components of
cash flow and earnings. Investors are cautioned that assumptions used in the
preparation of such information may prove to be incorrect. Events or
circumstances may cause actual results to differ materially from those
predicted, a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of PEG. These risks
include, but are not limited to the risks associated with the oil and gas
industry, commodity prices, and exchange rate changes. Industry related risks
could include, but are not limited to operational risks in exploration,
development, and production, delays or changes in plans, and health and safety
risks, including, without limitation, costs and expenses. The risks outlined
above should not be construed as exhaustive. Investors are cautioned not to
place undue reliance on any forward-looking information. PEG undertakes no
obligation to update or revise any forward-looking statements.





For further information:

For further information: visit www.productionenhancement.com or contact:
Chester J. Jachimiec, EVP, Finance & Acquisitions, Production Enhancement
Group, Inc., (281) 282-1812, cjachimiec@wisewellintervention.com; Ken
Wetherell, Investor Relations, Iradesso Communications Corp., (403) 503-0144
x224, kwetherell@iradesso.com

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PRODUCTION ENHANCEMENT GROUP, INC.

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