Petrowest Energy Services Trust announces second quarter results



    CALGARY, Aug. 14 /CNW/ - Petrowest Energy Services Trust (TSX:PRW.UN)
announced today its financial results for the three and six months ended
June 30, 2007. During Q2 the Trust focused its business efforts on
infrastructure, logging, conventional oil exploration and oil sand
construction related projects. Management has achieved success with these in
its efforts in the month of June, with less reliance being placed on natural
gas exploration related projects in northern Alberta and British Columbia.
    Historically, Petrowest's current businesses have been comprised of
approximately two thirds oil and gas drilling related activities and one third
industrial and infrastructure activities. Financial performance of the Trust
in Q2 continued to be impacted by the ongoing weakness of the natural gas
energy sector that commenced in early 2007. Projects related to natural gas
exploration and development accounted for less than 7% of the Trust's total
revenues in Q2. In Q3 management has continued to focus on business
opportunities outside of the natural gas sector.
    During the second quarter, Petrowest successfully acquired five companies
to expand the Trust's geographical footprint, penetrate the Peace River oil
sands and position the Trust for better growth opportunities once natural gas
commodity prices improve.

    
    FINANCIAL HIGHLIGHTS AND OVERVIEW

    DISTRIBUTABLE CASH FLOW

    Q2 distributable cash flow was $464,000, representing a decrease of
$5,118,000 from Q1 results.

    Two major factors contributing to the decline included:

           -  Low equipment utilization rates with the decline in natural
              gas drilling activity impacted the Trust's Construction,
              Transportation and Rental's segments. Additionally, an extended
              spring breakup and unusually wet weather affected the demand
              for services in all divisions.

           -  Decreased margins due to fixed operating costs.

    Action taken to resolve challenges and strengthen financial position:

           -  Distributions reduced by 40% to $0.06 per unit effective for
              the month of July 2007.

           -  Distribution reinvestment plan ("DRIP") implemented April 27,
              2007.

           -  Acquisitions of five companies were completed on May 18, 2007
              for aggregate consideration of $93.1 million, strengthening and
              expanding the Trust's Civil, Construction and Transportation
              business segments and expanding the Trust's geographical
              footprint further north in Alberta to the Peace River, High
              Level, Rainbow Lake areas of the province and in British
              Columbia expansions north to Fort St. John and Fort Nelson.

           -  Business alliance with the Woodland Cree First Nation entered
              into and relationships expanded in Peace River oil sands
              development.

    NET LOSS AND NET LOSS PER UNIT

    Q2 Net loss of $21.1 million on the basis of the weighted average units
    outstanding - basic and fully diluted:

           -  Net loss per unit ($0.69) for the three months ending June 30,
              2007.
           -  Net loss per unit ($0.79) for the six months ending June 30,
              2007.

    Q2 loss was impacted by Future income tax charge required to be recorded
    in the period as a result of the enactment of the new SIFT taxation rule.
    Future income tax charge in Q2 was $11.97 million. The net loss excluding
    future income tax charges were as follows on the basis of the weighted
    average units outstanding, basic and fully diluted:

           -  Net loss per unit before income tax adjustment ($0.30) for the
              three months ending June 30, 2007.
           -  Net loss per unit before income tax adjustment ($0.38) for the
              six months ending June 30, 2007.

    OUTLOOK

    -   Efforts have been undertaken to improve the balance sheet,
        profitability, debt levels and payout ratios for year end 2007 by
        initiating cost cutting measures, additional equipment cross
        utilization and less reliance on natural gas exploration activity.

    -   The distribution cut of 40% to $0.06 per unit made in July, 2007 is
        expected to save approximately $7.5 million in cash over the balance
        of 2007 and facilitating a planned debt reduction of $5.0 million by
        year end. A Debt to EBITDA ratio below 2 to 1 is expected to be
        maintained.

    -   Projected annual average distribution to EBITDA payout ratio of
        approximately 100% for the year ended December 31, 2007.

    Financial measures and operational measures taken to date are expected to
result in the Trust exiting 2007 with an improved balance sheet and
sustainable payout ratio moving forward to 2008.

                                                         For the     For the
                                                    three months  six months
                                                           ended       ended
    $000's except per unit amounts,                      June 30,    June 30,
     margins and ratios                                     2007        2007
    -------------------------------------------------------------------------
    FINANCIAL RESULTS
    -------------------------------------------------------------------------

    Revenue                                               27,134      59,997

    EBITDA                                                 1,137       6,767

    EBITDA margin                                           4.2%       11.3%

    Future income tax adjustment                          11,969      11,969

    Net loss excluding future income tax adjustment       (9,102)    (11,327)

    Net earnings (loss)                                  (21,071)    (23,296)

    Net earnings (loss) per unit - basic and diluted      ($0.69)     ($0.79)

    Net earnings (loss) per unit - basic and diluted
     before Future Income Tax Adjustment                  ($0.30)     ($0.38)

    Total revolving bank term loan and obligations
     under capital leases (including current portion)     91,158      91,158

    Total Units outstanding                           32,730,381  32,730,381

    Weighted Average Units Outstanding -
     Basic and diluted                                30,355,805  29,321,197

    Distributions per unit                                 $0.30       $0.60

    Payout ratio - combined unitholders                     495%        343%

    Unit price - June 30, 2007                             $7.39       $7.39
    -------------------------------------------------------------------------
    

    CONFERENCE CALL

    Ken Drysdale, President and Chief Executive Officer, and John Paul, Chief
Financial Officer, will host a conference call to discuss the second quarter
results on Wednesday, August 15, 2007 at 9:00 a.m. MDT (11:00 a.m. EDT).
Interested parties are encouraged to participate by calling 800.590.1508 or
403.398.9531 (in Calgary, Alberta) at least ten minutes before the start of
the call in order to participate. For those unable to participate in the live
call, a replay will be available until Wednesday 22 August at 877.289.8525 or
416.640.1917 (in Toronto, Ontario) passcode 21243544 followed by the number
sign and on Petrowest's website (www.petro-west.com).

    This news release contains forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "achievable," "believe," "expect," "estimate," "plan," "intend,"
"project," "may," "should", "could", "predict", "may," "will," or similar
words suggesting future outcomes or language suggesting an outlook.
Forward-looking statements and information are based on Petrowest's current
beliefs as well as assumptions made by and information currently available to
Petrowest concerning anticipated business performance. Although management of
Petrowest considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect. Forward-looking
statements are subject to many external variables that are beyond Petrowest's
control, such as fluctuating prices for crude oil and natural gas, changes in
drilling activity, and general local and global economic, political, business
and weather conditions. If any of these, or other uncertainties, materialize
the actual results of Petrowest may vary materially from those expected.

    MANAGEMENT'S DISCUSSION AND ANALYSIS

    The following Management's Discussion and Analysis (MD&A) is dated
August 14, 2007. The MD&A should be read in conjunction with Petrowest Energy
Services Trust's ("Petrowest" or the "Trust") unaudited interim consolidated
financial statements as at and for the three and six months ended June 30,
2007, as well as the MD&A of the "Acquired Companies" contained in the Trust's
prospectus dated August 28, 2006, the MD&A of the Trust for the December 31,
2006 year end, the Trust's audited consolidated financial statements for the
period ended December 31, 2006 and the Trust's business acquisition report
filed on August 1, 2007. The Trust was formed on July 6, 2006, and commenced
trading on the TSX on September 7, 2006. This date should be viewed as the
effective start of commercial operations and consequently there are no
comparable periods included in these financial statements.

    
    FINANCIAL HIGHLIGHTS AND OVERVIEW

    DISTRIBUTABLE CASH FLOW

    Q2 distributable cash flow was $464,000, representing a decrease of
$5,118,000 from Q1 results.

    Two major factors contributing to the decline included:

           -  Low equipment utilization rates with the decline in natural gas
              drilling activity impacted the Trust's Construction,
              Transportation and Rental's segments. Additionally, an extended
              spring breakup and unusually wet weather affected the demand
              for services in all divisions.

           -  Decreased margins due to fixed operating costs.

    Action taken to resolve challenges and strengthen financial position:

           -  Distributions reduced by 40% to $0.06 per unit effective for
              the month of July 2007.

           -  Distribution reinvestment plan ("DRIP") implemented April 27,
              2007.

           -  Acquisitions of five companies were completed on May 18, 2007
              for aggregate consideration of $93.1 million, strengthening and
              expanding the Trust's Civil, Construction and Transportation
              business segments and expanding the Trust's geographical
              footprint further north in Alberta to the Peace River, High
              Level, Rainbow Lake areas of the province and in British
              Columbia expansions north to Fort St. John and Fort Nelson.

           -  Business alliance with the Woodland Cree First Nation entered
              into and relationships expanded in Peace River oil sands
              development.

    NET LOSS AND NET LOSS PER UNIT

    Q2 Net loss of $21.1 million on the basis of the weighted average units
    outstanding - basic and fully diluted:

           -  Net loss per unit ($0.69) for the three months ending June 30,
              2007.
           -  Net loss per unit ($0.79) for the six months ending June 30,
              2007.

    Q2 loss was impacted by Future income tax charge required to be recorded
    in the period as a result of the enactment of the new SIFT taxation rule.
    Future income tax charge in Q2 was $11.97 million. The net loss excluding
    future income tax charges were as follows on the basis of the weighted
    average units outstanding, basic and fully diluted:

           -  Net loss per unit before income tax adjustment ($0.30) for the
              three months ending June 30, 2007.
           -  Net loss per unit before income tax adjustment ($0.38) for the
              six months ending June 30, 2007.

    OUTLOOK

    -   Efforts have been undertaken to improve the balance sheet,
        profitability, debt levels and payout ratios for year end 2007 by
        initiating cost cutting measures, additional equipment cross
        utilization and less reliance on natural gas exploration activity.

    -   The distribution cut of 40% to $0.06 per unit made in July, 2007 is
        expected to save approximately $7.5 million in cash over the balance
        of 2007 and facilitating a planned debt reduction of $5.0 million by
        year end. A Debt to EBITDA ratio below 2 to 1 is expected to be
        maintained.

    -   Projected annual average distribution to EBITDA payout ratio of
        approximately 100% for the year ended December 31, 2007.

    Financial measures and operational measures taken to date are expected to
result in the Trust exiting 2007 with an improved balance sheet and
sustainable payout ratio moving forward to 2008.

                                                         For the     For the
                                                    three months  six months
                                                           ended       ended
    $000's except per unit amounts,                      June 30,    June 30,
     margins and ratios                                     2007        2007
    -------------------------------------------------------------------------
    FINANCIAL RESULTS
    -------------------------------------------------------------------------

    Revenue                                               27,134      59,997

    EBITDA                                                 1,137       6,767

    EBITDA margin                                           4.2%       11.3%

    Future income tax adjustment                          11,969      11,969

    Net loss excluding future income tax adjustment(1)    (9,102)    (11,327)

    Net earnings (loss)                                  (21,071)    (23,296)

    Net earnings (loss) per unit - basic and diluted      ($0.69)     ($0.79)

    Net earnings (loss) per unit - basic and diluted
     before Future Income Tax Adjustment(1)               ($0.30)     ($0.38)

    -------------------------------------------------------------------------
    FINANCIAL POSITION AND LIQUIDITY
    -------------------------------------------------------------------------

    Working capital                                       14,222      14,222

    Total revolving bank term loan and obligations
     under capital leases (including current portion)     91,158      91,158

    Total Units outstanding                           32,730,381  32,730,381

    Weighted Average Units Outstanding -
     Basic and diluted                                30,355,805  29,321,197

    Distributions per unit                                 $0.30       $0.60

    Payout ratio- combined unitholders                      495%        343%

    Unit price - June 30, 2007                             $7.39       $7.39
    -------------------------------------------------------------------------

    (1) The terms Net loss excluding future income tax adjustment and Net
        earnings (loss) per unit - basic and diluted before Future Income Tax
        Adjustment (note 11) are not measures recognized by Canadian
        generally accepted accounting principles ("GAAP") and do not have
        standardized meanings prescribed by GAAP. Net loss excluding future
        income tax adjustment is calculated by reducing net loss by the
        amount of the future income tax expense and Net earnings (loss) per
        unit - basic and diluted before Future Income Tax Adjustment refers
        to a fraction of which the numerator is Net loss excluding future
        income tax adjustment and the denominator is the Weighted Average
        Units Outstanding - Basic and diluted.
    


    BASIS OF PRESENTATION

    These financial statements are stated in Canadian dollars and have been
prepared by the management of Petrowest in conformity with Canadian generally
accepted accounting principles ("GAAP") following the same accounting policies
and methods of application as the audited consolidated financial statements of
the Trust for the fiscal year end December 31, 2006 except where noted.
    Accounting measurements at interim dates inherently involve greater
reliance on estimates than at year-end and the results of operations for the
interim periods shown in these statements are not necessarily indicative of
the results to be expected for the fiscal year. In the opinion of management,
the accompanying unaudited interim consolidated financial statements included
all adjustments (of a normal recurring nature) necessary to present fairly the
consolidated results of its operations and cash flows for the three and six
months.

    NON-GAAP MEASURES

    The financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("GAAP"). Certain supplementary
information and measures not recognized under GAAP are provided in this MD&A
where management believes they assist the reader in understanding the Trust's
results and where measures are believed to be used by many investors to
compare issuers on the basis of their ability to generate cash from operations
and sustain distributions.
    Accordingly, the Trust uses the term "EBITDA" to refer to earnings before
interest, income taxes and amortization of property and equipment and
amortization of intangible assets; the term "EBITDA Margin" to refer to a
fraction, the numerator of which is EBITDA and the denominator of which is
Revenue. Management believes that EBITDA and EBITDA Margin are useful
supplementary measures as they provide indications of operating results
without regard as to financing or taxation. The term "Net Debt" to refer to
the sum of total obligations under capital leases and revolving bank term
loan, less working capital. Management believes that this measure is useful as
it illustrates the actual debt position of the Trust after realization of
working capital net assets. The term "Funds From Operations Before Changes in
Non-Cash Working Capital" to refer to cash provided by operating activities
before changes to accounts receivable, prepaid expenses and other, inventory
and accounts payable and accrued liabilities and income taxes payable; the
term "Distributions Per Unit" to refer to a fraction, the numerator of which
is distributions paid or accrued to unitholders and the denominator of which
is the number of Trust units issued; the term "Funds From Operations Before
Changes in Non-Cash Working Capital Per Unit" to refer to a fraction of which
the numerator is Funds From Operations Before Changes in Non-Cash Working
Capital and the denominator is the number of Trust units issued; the term
"Cash Flow From Operating Activities Per Unit" to refer to a fraction of which
the numerator is cash flow from operating activities and the denominator is
the number of Trust units issued; the term "Distributable Cash" to refer to
the amount of cash that is expected to be available for distributions to the
unitholders; and the term "Payout Ratio" to refer to a fraction of which the
numerator is distributions paid or accrued to unitholders and the denominator
is Distributable Cash. Management believes that these measures provide useful
measures in determining the cash generated from operations adjusted for the
seasonal impacts of the operations and provide indications of the amounts of
cash retained for future growth opportunities, capacity maintenance and debt
repayment and ongoing distribution capability. The term "Net loss excluding
future income tax adjustment" is calculated by reducing net loss by the amount
of the future income tax expense and "Net earnings (loss) per unit - basic and
diluted before Future Income Tax Adjustment" refers to a fraction of which the
numerator is Net loss excluding future income tax adjustment and the
denominator is the Weighted Average Units Outstanding - Basic and diluted.
Management believes that these measures provide useful measures in determining
the loss from operations adjusted for the impacts of the new SIFT income tax
measures.
    The terms EBITDA, EBITDA Margin, Net Debt, Funds From Operations Before
Changes in Non-Cash Working Capital, Distributions per Unit, Funds From
Operating Activities Per Unit, Cash Flow from operating activities per unit,
Distributable Cash, Payout Ratio, Net loss excluding future income tax
adjustment and Net earnings (loss) per unit - basic and diluted before Future
Income Tax Adjustment are not measures recognized by "GAAP", do not have
standardized meanings prescribed by GAAP and therefore may not be comparable
to performance measures presented by others.
    Readers are cautioned that "EBITDA", "EBITDA Margin", "Net Debt", "Funds
From Operations Before Changes in Non-Cash Working Capital", "Distributions
per Unit", "Funds From Operations Before Changes in Non-Cash Working Capital
Per Unit", "Cash Flow From Operating Activities Per Unit" and "Distributable
Cash" "Payout Ratio" "Net loss excluding future income tax adjustment" and
"Net earnings (loss) per unit - basic and diluted before Future Income Tax
Adjustment" should not be considered as alternatives to net earnings, cash
flow from operating activities, net loss or other measures of financial
performance calculated in accordance with GAAP.

    DESCRIPTION OF BUSINESS

    Petrowest is an unincorporated, open-ended, limited purpose, mutual fund
Trust established under the laws of Alberta. Petrowest is involved in
pre-drilling and post-completion energy services, construction and hauling and
is based in the Grande Prairie area of northern Alberta. Approximately
two-thirds of the Trust's services are provided to the energy sector and the
remainder of services is provided to other industries. The ongoing operations
have been segregated into four limited partnerships and the assets and
operations are maintained within those partnerships. Petrowest does business
within the various partnerships under the trade operating names described
below:

    Petrowest Construction LP

    Petrowest Construction LP operates under the trade names of "Gordon Bros.
Construction", "Roy Larson Construction", "Wales Contractors" , "Jim Moffatt
Construction", "Quigley Contracting", and "Rick's Mechanical" and specializes
in the construction of oil and gas lease well site pads, road construction,
remediation of oil and gas well sites and civil infrastructure work for non
oil and gas clients. Petrowest Construction LP operates a fleet of heavy
equipment including dozers, tracked hoe excavators, articulated rock haulers,
compactors, graders, and scrapers as well as other ancillary support
equipment.

    Petrowest Transportation LP

    Petrowest Transportation LP operates under the trade names of "D&D Well
Services", "Murtron Hauling" and "Cutbank Trucking and Transport" and
specializes in the transportation of oil and gas drilling rigs, well site
equipment and heavy equipment as well as specialty hauling services including
log loading and hauling and gravel loading and hauling. The Transportation LP
operates a fleet of heavy transport trucks, trailers, jeeps, boosters, log and
gravel loading equipment as well as other ancillary support equipment.

    Petrowest Civil Services LP

    Petrowest Civil Services LP operates under the trade names of "R. Bee
Crushing", "Tri-Dave Gravel Sales" and "S.O.S. Oilfield Safety". The Civil
Services LP specializes in mobile aggregate rock crushing and sand screening
for gravel supply operations throughout Alberta and British Columbia operating
a fleet of cone and jaw crusher units, conveyor and sand stacker units,
loaders, dozers, tracked hoe excavators and articulated rock trucks. The Civil
Services LP also provides safety services including safety supervision and
rental of safety air units and wash units provide for safety support during
oil and gas drilling operations and plant turnarounds.

    Petrowest Rental Services LP

    Petrowest Rental Services LP operates under the new trade name of
"Nu-Northern Tractor Rentals" and specializes in heavy equipment rentals to
oil and gas companies, oil sand clients, and independent contractors working
in the oil and gas, mining, logging, pulp and paper and civil construction
industries. The Rental Services LP operates a fleet of heavy equipment
including dozers, tracked hoe excavators, articulated rock haulers, compactors
and side-boom pipelayers.

    The Trust's operations are primarily in the deep drilling market regions
of the Western Canadian Sedimentary Basin ("WCSB") with operations in northern
Alberta and northeastern British Columbia. The WCSB is one of the largest oil
and gas producing regions in North America. Much of the terrain in the WCSB is
considered rugged, resulting in access issues due to dense bush, muskeg,
bedrock and mountainous terrain all of which are complicated by the weather in
the region. Historically this region has been less impacted by cyclical swings
in market prices due to the longer lead times in access, drilling and
completion of planned wells. Oil and gas producers have generally taken a
longer term view of project work in the area with consistent growth in
drilling activity.
    Weather also has a direct impact on the operations of Petrowest. Oil and
gas drilling activity is generally stronger November through March as frozen
ground conditions allow for exploration in areas with muskeg conditions. Wet
weather in the spring and early summer months hinder activity. As frost comes
out of the ground, road conditions deteriorate and municipalities impose
temporary weight restrictions on road surfaces ("road bans"), thus restricting
access and trucking operations. Operations normally gain strength in late June
and continue through to the end of summer and fall. A short slowdown normally
exists in late fall until freezing conditions allow for winter work activity
to recommence.

    ACQUISITIONS

    (a) September 7, 2006 Acquisitions

    The Trust was formed by a deed of Trust dated July 6, 2006. Pursuant to a
prospectus dated August 28, 2006, the Trust issued units and used the
proceeds, through its subsidiaries, to acquire 100% of the outstanding shares
of the Acquired Companies. The estimated purchase price of the Acquired
Companies was approximately $258.0 million including post closing adjustments
for actual working capital acquired and the actual Acquired Companies' debt
balances retired on the acquisition. The purchase price was funded by payment
of approximately $107.6 million net cash payable to the vendors, $22.7 million
retirement of debt and the issuance of units by the Trust for proceeds of
$127.7 million. In conjunction with the acquisitions, all debt and capital
lease obligations were repaid by Petrowest through the use of proceeds from
the offering.
    There is a dispute with Northern Tractor associated with the valuation of
certain working capital items and the valuation of redundant assets retained
by the vendor. The total disputed amount is approximately $800,000. This
amount has been classified as a contingent gain and because collectability is
uncertain, has not been recognized for purposes of the calculation of the
purchase price adjustment. Arbitration of these amounts is expected to occur
prior to the end of the third quarter of 2007 and adjustments required to the
purchase price to reflect this contingent gain, if any, may be material.
    The transaction closed on September 7, 2006 and the Trust commenced
commercial operations on that date.

    (b) May 18, 2007 Acquisitions

    Petrowest entered into agreements to acquire all of the outstanding
shares and shareholder loans of Cutbank Trucking Ltd. and Cutbank Transport
Ltd. (collectively, "Cutbank"), Jim Moffatt Construction Ltd. and 921639
Alberta Ltd., (collectively, "Jim Moffatt Construction"), Quigley Contracting
Ltd, 529805 B.C. Ltd. and LMQ Enterprises Ltd., (collectively, "Quigley
Contracting Ltd."), Rick's Mechanical Services Ltd. and Tri-Dave Gravel Sales
Ltd (collectively, the "Newly Acquired Companies").
    Cutbank Trucking Ltd. and Cutbank Transportation Ltd. are operated
together as one business and specialize in hauling logs and gravel and the
provision of log loading equipment in Grande Prairie, Alberta. Cutbank
Trucking Ltd. was formed in 1972 and Cutbank Transportation Ltd. was formed in
1997.
    Jim Moffatt Construction Ltd. is a lease and road building company
operating in northern Alberta. Jim Moffatt Construction Ltd. was formed in
1992 and operates from its base in Worsley, Alberta. In addition to lease and
road building, Jim Moffatt Construction Ltd. also operates a 250-man camp
permanently located in Worsley.
    Rick's Mechanical Services Ltd. is a mid-size lease and road builder
based in Peace River, Alberta. Rick's Mechanical Services Ltd. was formed in
1993 and has achieved a positive working relationship with the Woodland Cree
First Nation in providing services to oil sand developers operating on the
traditional lands of the Woodland Cree First Nation.
    Quigley Contracting Ltd. is a lease and road building company operating
in Fort St. John, British Columbia. Quigley Contracting Ltd. was formed in
1990 by Rick Quigley. The acquisition of Quigley Contracting Ltd. will expand
Petrowest's geographical footprint into the northern regions of British
Columbia.
    Tri-Dave Gravel Sales Ltd. is a gravel crushing operation that operates
in the Edmonton area. Tri-Dave Gravel Sales Ltd. was formed in 1984. Tri-Dave
Gravel Sales Ltd. will provide additional capacity to Petrowest's crushing
operations conducted by R. Bee Crushing.
    The estimated purchase price including acquisition costs of the Newly
Acquired Companies was approximately $93.1 million.
    The May 18, 2007 acquisitions have been accounted for using the purchase
method with the assets acquired and liabilities assumed recorded at their
estimates of fair value. An allocation of the consideration is as follows:

    
    Net assets acquired $000's
      Cash acquired on acquisition                                     8,963
      Accounts receivable                                             12,235
      Prepaid expenses and other                                       2,412
      Inventories                                                        474
      Accounts payable and accrued liabilities                        (8,875)
      Income taxes payable                                              (986)
      Property and equipment                                          42,134
      Intangibles                                                     15,123
      Goodwill                                                        21,598
                                                                   ----------

      Total                                                           93,078
                                                                   ----------
                                                                   ----------
    Consideration paid
      Net cash to vendors                                             50,869
      Acquisition costs                                                  502
      Retirement of long-term debt and capital lease obligations       9,391
                                                                   ----------

                                                                      60,762
      Trust Units  (4,351,622 units issued)(1)                        32,316
                                                                   ----------

      Total                                                           93,078
                                                                   ----------
                                                                   ----------
    (1) For the purposes of calculation of the aggregate, the trust units
        have been attributed a value of $7.4261 each, the five day volume
        weighted average price before the closing date.
    


    (c) Business Alliance June 18, 2007

    On June 18, 2007 Petrowest signed agreements documenting a memorandum of
understanding effective May 1, 2007 with the Woodland Cree First Nations
("WCFN") providing Petrowest with the primary right to provide a combination
of services on a revenue sharing basis within the WCFN traditional lands for a
period of 5 years. In conjunction with the agreements, Petrowest purchased the
road construction equipment assets of the WCFN. The total cash consideration
paid or payable to the WCFN for the assets and the contractual rights was
$4,000,000. Petrowest paid $2,000,000 on closing, retired $1,424,623 of
equipment debt subsequent to the quarter end and the remaining $575,377 will
be paid once certain post closing conditions being met.
    The Trust also issued the WCFN 300,000 warrants to acquire Petrowest
units at a strike price of $7.47 per unit. The warrants expire May 1, 2008.
The valuation of the warrants has been calculated using a Black-Scholes
pricing model.
    In return for the consideration, Petrowest will be the primary supplier
of services that the Trust is capable of providing on all WCFN Treaty and
Traditional Lands for a period of 5 years.

    
    Petrowest has accounted for the transaction as follows:

                                                                      $000's

    Value of warrant consideration                                   $   270
    Initial cash consideration                                       $ 2,000
    Remaining purchase consideration payable                         $ 2,000
                                                                   ----------

                                                                     $ 4,270
                                                                   ----------

    Fair Value of Equipment                                          $ 1,926
    Value of business alliance                                       $ 2,344
                                                                   ----------

    Total Consideration                                              $ 4,270
                                                                   ----------
    

    The business alliance will be amortized on a straight-line basis over
5 years.
    In addition the Trust has agreed to provide services in kind valued at
market rates to assist in the potential construction and development of a
community centre subject to certain conditions being fulfilled and capped to a
maximum of $1,000,000.

    SUMMARY OF RESULTS - QUARTERLY ANALYSIS

    Petrowest commenced trading on the Toronto Stock Exchange on September 7,
2006, the day of commencement of commercial operations of the Trust.
Accordingly, the three and six month periods ending June 30, 2007 have no
comparative figures for the same period in the previous year, as the Trust was
not yet created. For comparative purposes only, Petrowest has provided certain
quarterly financial information considered meaningful on the basis that the
Acquired Companies had been acquired at January 1, 2006 as prepared by the
management of the Acquired Companies on a calendar year basis.
    In addition, management has prepared a split of revenue and operating
expenses by segment for the three months ended June 30, 2007 to reflect the
impact of the Newly Acquired Companies from the date of acquisition on May 18,
2007 to the end of Q2.

    
    -------------------------------------------------------------------------
               $000s
    except per unit amounts,                                         Q3-2006
     margins and ratios             Q2 2007    Q1 2007    Q4-2006   (Stub)(1)
    -----------------------------  ---------  ---------  ---------  ---------
    Revenue by segment
    Construction original             3,955      9,984     11,089      2,520
      Construction new                3,237
    Transportation original           3,503     11,307     11,954      3,726
      Transportation new              2,065
    Civil original                   10,920      9,951     10,124      3,697
      Civil new                         785
    -------------------------------------------------------------------------
    Rentals                           2,669      1,621      2,662        964
    -------------------------------------------------------------------------
    Total Revenue                    27,134     32,863     35,829     10,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating expenses by segment
    Construction original             4,353      7,663      7,820      1,857
      Construction new                2,766
    Transportation original           5,448      9,507      9,649      3,052
      Transportation new              1,574
    Civil original                    9,306      6,809      6,567      2,242
      Civil new                         492
    -------------------------------------------------------------------------
    Rentals                             529      1,367      1,051        604
    -------------------------------------------------------------------------
    Total operating expenses         24,468     25,346     25,087      7,755
    -------------------------------------------------------------------------
    Administrative Expenses           1,638      1,691      1,291        507
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings before other items       1,028      5,826      9,451      2,645
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gain (loss) on disposal of
     assets                              11       (246)        20         58
    Interest income                      98         50         82          5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA(2)                         1,137      5,630      9,553      2,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Income taxes                     11,969          -          -          -
    Amortization of property and
     equipment                        6,620      5,131      4,682      1,142
    Amortization of intangible
     assets                           2,517      2,180      2,113        672
    Interest                          1,102        544        141        132
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)             (21,071)    (2,225)     2,617        762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss) per unit
     basic and diluted               ($0.69)    ($0.08)     $0.09      $0.03
    -------------------------------------------------------------------------
    Notes
    (1) Q3-2006 Stub is for the period from September 7, 2006 to
        September 30, 2006.
    (2) The terms EBITDA and ADJUSTED EBITDA are not measures recognized by
        GAAP and do not have standardized meanings prescribed by GAAP.
    

    REVENUE

    Total revenue for the three and six months ended June 30, 2007 was
$27,133,851 and $59,996,757. This represents a decrease of 18% and 26%,
respectively, over the same periods in 2006. The decline is due to sharply
lower gas drilling activity as well as the adverse weather conditions, and
extended spring break up resulting from the heavy snowfalls in the Trust's
operating areas. While the Trust is diversified, and provides services to
commercial, infrastructure, logging and oil sands clients, oil and gas
conventional drilling historically has accounted for approximately two thirds
of the Trust's revenue. The Newly Acquired Companies contributed 22% of total
revenues in Q2.
    The Canadian Association of Oilwell Drilling Contractors ("CAODC")
estimates that wells drilled and completed in the WCSB will decline by
approximately 26% from 2006 levels to approximately 16,233 wells for 2007.
This projected decline is virtually identical to the current volume declines
experienced to the end of Q2.

    Construction Segment

    Q2 was extremely difficult for this division with significant declines
due to the effects of weather and lower gas exploration activity. The expected
busy winter months effectively peaked in November, declined in December due to
the holidays and rebounded slightly in January. The balance of the winter
declined sharply until an early spring shutdown and did not begin to pick up
again until late May. Excluding the contribution of the Newly Acquired
Companies, overall revenue declines were approximately 60% and 42% for the
three and six month periods to June 30, 2007 over the revenues of the
predecessor companies during the same period in 2006. The Newly Acquired
Companies generated approximately $3.2 million of the $7.2 million or 44% of
the Q2 revenue for this segment.
    Demand for services in the month of June rebounded strongly and barring
wet summer weather conditions, indications are that this segment has the
potential to perform strongly throughout Q3. The outlook for Q4 of 2007 and Q1
of 2008 is still uncertain but managements marketing initiatives focused on
work associated with the Peace River oil sands development, including the
business alliance established with the Woodland Cree First Nation, is expected
to offset the ongoing natural gas drilling downturn.

    Transportation Segment

    The transportation segment business has two main components. The first
being drilling rig mobilization and demobilization services and the second
being lighter hauling, primarily log hauling in the winter months and gravel
hauling in the summer. The rig moving operation has historically been the
largest single business operation in the Trust and was severely impacted by
the drilling downturn. Consequently, given its relative size, the downturn has
had a greater overall impact to the Trust.
    While log hauling activity was very strong, both operational units where
impacted by the above normal snowfalls in the first half of 2007. Excluding
the revenue contributions of the Newly Acquired Companies revenue declines
were approximately 63% and 53% for the three and six month periods to June 30,
2007 over the same period in 2006. In Q2, the Newly Acquired Companies
generated approximately $2.1 million of the $5.6 million or 38% of the Q2
revenue for this segment.

    Civil Segment

    The Civil segment has two main components. The first, oilfield safety
services, is tied to drilling activity and faced declining activity throughout
the winter. The second and largest component of this segment is gravel
crushing. The gravel crushing operations have contracts booked at or near
capacity to the end of 2008. In spite of the work volumes, winter months
generally result in lower production volumes due to cold conditions. Summer is
the peak time for this division.
    Excluding the revenue contributions of the Newly Acquired Companies,
revenue increased by approximately 5% and 15% for the three and six month
periods to June 30, 2007 over the revenue of the predecessor companies for the
same period in 2006. In Q2, the Newly Acquired Companies generated
approximately $785,000 of the $11.7 million or 7% of the year to date revenue
for this segment. It is anticipated that given the capacity increases added
over the winter months, and with the existing contracts that are in place that
have the operations at, or near capacity, the prime summer gravel crushing
months should result in increases to productivity.

    Rentals Segment

    Drilling slowdowns, delays to oil sand projects in Fort McMurray and a
slow pipeline sector resulted in reduced demand for rental equipment over the
winter months. The month of June returned to near record high levels and
indications are that utilization rates should be reasonably strong until at
least the end of Q4. Revenue declines were approximately 11% and 38% for the
three and six month periods to June 30, 2007.

    INTER SEGMENT REVENUES

    Eliminated from the financial statements are $1,584,683 and $3,955,426
for the three and six month periods ending June 30, 2007 of inter-segment
sales and the offsetting costs at the same value. These inter-segment sales
relate to the market value of activity between the various segments of the
Trust, including the Transportation segment hauling equipment on behalf of the
Construction and Civil segments, the Rentals segment supplying equipment to
the Civil segment and other cross utilization of manpower and equipment.

    OPERATING EXPENSES AND GROSS MARGIN

    Operating expenses on a consolidated basis for the three and six months
ended June 30, 2007 were approximately $24.5 million and $49.8 million,
respectively. The rapid and deep downturn that occurred early 2007 negatively
impacted operating expenses and gross margins. The following table outlines
the cost by segment and the changes and percentage changes over the
comparative period in 2006.

    
                  Three months ended June 30      Six months ended June 30
    -------------------------------------------------------------------------
    Operating
     Expense
     changes by                             %                             %
     Segment        2007    2006    $chg   chg    2007    2006    $chg   chg
    -------------------------------------------------------------------------
    Construction
     Segment       4,353   8,299  (3,946) (48%) 12,016  18,612  (6,596) (35%)
      Newly
       Acquired
       Companies   2,766     n/a     n/a   n/a   2,766     n/a     n/a   n/a
    Transportation
     Segment       5,448   7,293  (1,845) (25%) 14,955  22,594  (7,639) (34%)
      Newly
       Acquired
       Companies   1,574     n/a     n/a   n/a   1,574     n/a     n/a   n/a
    Civil Segment  9,306   7,170   2,136   30%  16,115  13,153   2,962   23%
      Newly
       Acquired
       Companies     492     n/a     n/a   n/a     492     n/a     n/a   n/a
    Rentals
     Segment         529   1,890  (1,361) (72%)  1,896   3,252  (1,356) (42%)
    -------------------------------------------------------------------------

    The revenue declines in all segments except the civil segment resulted in
total dollar cost declines as well. However while actual dollar costs
declined, as a percentage of revenue, costs in all segments except the rental
group increased resulting in and erosion of margins.

    -------------------------------------------------------------------------
    Total Operating
    Expense as % of
    Revenue                                 2007     2006     2007     2006
    -------------------------------------------------------------------------
    Total Operating costs as
     a % of Total Revenues                 24,468   24,652   49,814   57,611

                                             128%      75%      92%      71%
    -------------------------------------------------------------------------
    

    Major cost items that increased as a percentage of revenue, across all
segments, were labor, fuel and equipment rentals. It is expected that higher
fuel costs can eventually be passed on to the Trust's clients, but in the
current downturn, it is expected that there will be a timing difference before
pricing increases can be passed on.
    Productivity losses as a result of inclement weather and heavy snowfalls
impacted all segments. Labor costs increased in both quarters of 2007. In
addition, a minimum of 25% additional equipment capacity was added to each
business segment in conjunction with and shortly after the initial public
offering. The Trust's fixed cost infrastructure is capable of handling higher
levels of activity. The resulting underutilized capacity has an ongoing effect
to margins until volume of activity increases.
    In response to the current cost increases management is working to expand
cross utilization of existing equipment and reposition certain equipment
assets in the Trust's new geographical locations to minimize mobilization and
fuel costs. In addition, the Trust's rental segment is focusing marketing
efforts to rent underutilized assets within the other Trust's segments to
third parties. Finally management is in the process of implementing various
cost cutting measures. Management expects to realize benefits on these actions
by both increases in revenue and cost savings.

    GENERAL AND ADMINISTRATIVE

    General and administrative expenses for the three and six months ended
June 30, 2007 were $1,637,137 and $3,328,803 respectively, or 6% and 5.5 %,
respectively, of revenue. Costs included in this category are accounting and
administrative staff, additional consulting costs evaluating the impacts of
the federal tax announcements and staff training costs associated with the new
accounting and management system implemented in conjunction with the
integration of the Newly Acquired Companies.

    EBITDA

    EBITDA for the six months ended June 30, 2007 was $6,766,419.(1) This
represents an EBITDA margin of 11.3%.(2) In Q2, the Newly Acquired Companies
contributed $1,254,744 in EBITDA since the completion of the acquisitions on
May 18, 2007.

    
    (1)  EBITDA is calculated as net loss of $(23,296,579) plus interest
         expense of $1,645,861 plus amortization of property and equipment
         and amortization of intangible assets of $16,448,348 plus future
         income taxes of $11,968,789.
    (2)  EBITDA Margin is a fraction of which EBITDA of $6,766,419 is the
         numerator and revenue of $59,996,757 is the denominator.
    

    AMORTIZATION OF PROPERTY AND EQUIPMENT

    Amortization for the six months ending June 30, 2007 was $11,751,610.
Amortization is applied to reduce the book value of property and equipment to
its estimated residual value over its estimated useful life on a declining
balance basis annually or on an actual usage basis.

    AMORTIZATION OF INTANGIBLE ASSETS

    Intangible assets, consisting of acquired customer relationships,
business alliance, brand and trade names, and non-competition agreements are
recorded at cost and amortized over their useful lives, which is estimated to
be five years for business alliance, brand and trade names, and
non-competition agreements and ten years for customer relationships.
Intangible assets are regularly evaluated by comparing their applicable
estimated future net cash flows to the unamortized net book value of the
intangible asset. Any impairment would be charged to income in that period.

    INTEREST

    Interest expense reflects carrying costs on lease obligations, interest
on capital lease obligations and interest on the revolving bank term loan.

    INCOME TAXES

    Petrowest, and its operating entities, are taxable entities under the
Income Tax Act of Canada and are currently taxable only on income that is not
distributed or distributable to the unit holders. As the Trust currently
distributes all of its taxable income to the unit holders, no previous
provision for income taxes had been made.
    On June 12, 2007, the legislation implementing the new tax on publicly
traded income Trusts and limited partnerships (the "SIFT tax"), referred to as
"specified investment flow-through" ("SIFT") entities (Bill C-52) received
third reading in the House of Commons and on June 22, 2007, the Bill received
Royal Assent. As a result, the tax was considered to be enacted for accounting
purposes in June 2007. SIFTs are certain publicly traded income and royalty
Trusts and limited partnerships including Petrowest.
    For SIFTs in existence on October 31, 2006, the SIFT tax will be
effective in 2011 unless certain rules related to "undue expansion" are not
adhered to, in which case such rules would be applied at an earlier date.
Under the guidance provided, Petrowest can increase is total equity subject to
annual limits, to approximately $497.8 million by 2011 without prematurely
triggering the SIFT tax.
    Under the SIFT tax, distributions will not be deductible for income tax
purposes by SIFTs in 2011 and thereafter and any Trust level taxable income
will be taxed at a rate approximating the corporate income tax rate currently
estimated to be 31.5 percent. The resultant distributions will be considered
taxable dividends to unitholders, generally eligible for the dividend tax
credit. Distributions representing a return of capital for income tax purposes
will continue to be an adjustment to a unitholder's adjusted cost base of
Trust units.
    For accounting purposes, as the SIFT tax was enacted in the second
quarter of 2007, Petrowest recorded non-cash future income tax provisions that
resulted in a net charge of $11,968,789 to future income taxes to reflect the
temporary differences between the book and tax basis of assets and liabilities
expected to be remaining in the Trust in 2011. The majority of the temporary
differences at the Trust level relate to the timing differences associated
with property plant and equipment and intangibles acquired by the Trust on
September 7, 2006 and May 18, 2007.
    Our Board of Directors and Management continue to review the impact of
this tax on our business strategy. We expect future technical interpretations
and details will further clarify the legislation. At the present time,
Petrowest believes some or all of the following actions will or could result
due to the enactment of the SIFT tax:

    
    -   If structural or other similar changes are not made, the after-tax
        distribution yield in 2011 to taxable Canadian investors will remain
        approximately the same, however, the distribution yield in 2011 to
        tax deferred Canadian investors (RRSPs, RRIFs, pension plans, etc.)
        and foreign investors could fall.

    -   A portion of Petrowest's cash flow could be allocated to the payment
        of the SIFT tax, or other forms of tax, and would not be available
        for distribution or re-investment;

    -   Petrowest could convert to a corporate structure to facilitate
        investing a higher proportion or all of its cash flow in growth
        capital and potential acquisitions. Such a conversion and change to
        capital programs could result in a significant reduction to, or
        elimination of, distributions and/or dividends;

    -   Petrowest might determine that it is more economic to remain in the
        Trust structure and pay required distribution taxes when they come
        into effect in 2011 and utilizing available income tax strategies to
        minimize the impact of the tax.
    

    The Trust is reviewing all organizational structures and alternatives to
minimize the impact of the SIFT tax on our unitholders. While there can be no
assurance that the negative effect of the tax can be minimized or eliminated,
Petrowest and its advisors will assess the alternatives available and
implement a strategy that is in the best interest of the unitholders.

    NET LOSS

    Net loss for the three and six months ended June 30, 2007 was $21,072,241
and $23,296,580, respectively. This represents a net loss per unit of $0.69
and $0.79, respectively, basic and fully diluted.
    Included in the net loss is an adjustment for future income taxes as a
result of Bill C-52 which received third reading in the House of Commons on
June 12, 2007 and received Royal Assent on June 22, 2007. As a result, the tax
was considered to be enacted for accounting purposes in June 2007. Excluding
the impact of the future income tax adjustment net loss for the period would
be $9,103,452 and $11,327,791, respectively. This represents a net loss per
unit before future income tax adjustment of $0.30 and $0.38, respectively,
basic and fully diluted.

    
    RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO DISTRIBUTABLE
    CASH

    -------------------------------------------------------------------------
                                                        For the      For the
                                                   three months   six months
                                                     ended June   ended June
                      $000s                            30, 2007     30, 2007
    ------------------------------------------     ------------- ------------
    Cash flow from operating activities                   1,792           64

    Changes in non-cash working capital items            (1,426)       5,904
    -------------------------------------------------------------------------
                                                            366        5,968
    -------------------------------------------------------------------------
    Interest income                                          98          148
    -------------------------------------------------------------------------
    Distributable Cash                                      464        6,116
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total distributions paid or payable                   9,365       17,848
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributions funded from revolving
     bank term loan and DRIP                              8,901       11,732
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Payout ratio(1) - combined unitholders                 495%         343%
    -------------------------------------------------------------------------
    (1)  Payout ratio is a fraction of which distributions paid or payable to
         Trust and Subordinated Unitholders of $8,901 and 11,732,
         respectively, is the numerator and distributable cash of $464 and
         $6,116, respectively, is the denominator.
    

    Seasonal impacts on Cash Flow

    The Trust strives to fund distributions primarily from funds flow from
operations before changes in non cash working capital items. However,
Petrowest's business operations are seasonal by nature. Management expects
that the Trust will consume cash during periods of normally higher activity,
historically Q4 and Q1, and to a lesser extent in Q3. Typically in these
quarters, operations would increase receivable balances faster than collected.
In Q2, the impact of spring breakup will typically reverse this trend. To
reduce the impact on cash, the Trust has secured an operating line of credit
to finance the cyclical nature of its operations. Accordingly in the shorter
term, with reasonable evidence that cyclical trends reflect normal seasonal
indicators, the Trust may use the operating line of credit to fund
distributions during periods where working capital demands exceed funds flow
from operations before changes in non cash working capital items.

    Productive Capacity

    The Trust strives to fund maintenance capital expenditures from cash
flows. Growth capital expenditures would typically be funded by combinations
of debt and operating leases. Since inception Petrowest's productive capacity
has increased significantly. The Trust has added approximately $48 million in
additional equipment financed by debt and operating leases that have increased
the capacity of each segment by at least 25%. In addition the recent
acquisitions on May 18, 2007 have added an additional $42 million in capital
assets to the Trust, obtained from existing third party market capacity. The
acquisitions have expanded the geographical footprint of the Trust and opened
new markets for the Trust's services. The acquisitions have also increased
capacity in the Construction, Transportation and Civil LP's. The cost of the
Newly Acquired Companies has been financed by debt and the issue of Units of
the Trust.
    Property and equipment asset acquisitions incurred in the six months
ended June 30, 2007 were approximately $11.7 million. The acquisitions were
financed by an increase in the Trust's debt and were targeted to increase
capacity in the gravel crushing and hauling and log hauling operations.
    In light of the current significant weakening of the energy sector
activity and current lower overall equipment utilization, management believes
that the sizable capital expenditures incurred in the prior periods provide
the Trust with the capacity to sustain operations into 2008 without the need
for any additional maintenance capital expenditures.
    Further capital expenditures for the 2007 year, will be targeted toward
the gravel crushing operations that have confirmed work into 2008 that exceed
present capacity levels.
    It is anticipated that a return to higher levels of energy sector
activity will require a future expenditures for maintenance capital
expenditures in 2008 and beyond to replace older equipment. It is anticipated
that this provision will be in the range of $6.0 million to $10.0 million per
annum depending on future activity levels and equipment utilization.
    Due to the risks inherent in the oil and natural gas industry, there can
be no assurance that capital programs, whether limited to the excess of cash
flow over distributions or not, will be sufficient to maintain or increase
future productive capacity.

    Overall Distribution Capacity

    Distributable cash decreased by approximately $5,188,000 from Q1 of 2007.
While the majority of the decline is related to seasonal conditions, the
ongoing slowdown in oil and gas exploration activity has further negatively
impacted cash flows. In the first quarter management of the Trust believed
that the sector downturn would be short lived and accordingly elected to
maintain distributions until evidence to the contrary became persuasive. As
such, distributions occurring in late Q1 and Q2 were funded by the revolving
bank term loan and the DRIP. The Trust reduced distributions by 40% to $0.06
per unit with effective the month of July to a level consistent with
anticipated level of profitability of the Trust given current industry levels.
Long term distribution capacity is dependent on generation of positive cash
flows and due to the inherent risks in the oil and gas industry and current
lack of visibility with respect to the near term outlook, there can be no
assurance that distributions can be maintained at current levels in the
future.
    Since inception on September 7, 2006 the Trust has generated
approximately $19.9 million in EBITDA. Accumulated distributions to date are
approximately $28.5 million. The excess distributions over EBITDA, represent
an effective return of capital to investors of $8.6 million. This is
effectively one full quarter of distributions that have not been funded by
operational cash flows.

    
    DISTRIBUTIONS

    Actual distributions paid in the three and six month periods by the Trust
to unitholders are as follows:

    Distributions to Trust Unit Holders
    -------------------------------------------------------------------------
                                                            (1)        (1)
                                                Cash
                         Amount   Distrib-     Distrib-    DRIP        DRIP
     Record      Date      per     utions      utions      Value      Units
      Date       Paid     Unit    Declared      Paid     Exercised    issued
    --------   --------- ------- ----------- ----------- ----------  --------
    December   January
     31, 2006   15, 2007  $0.10  $2,676,509  $2,676,509      n/a       n/a
    January    February
     31, 2007   15, 2007  $0.10  $2,676,509  $2,676,509      n/a       n/a
    February   March 15,
     28, 2007   2007      $0.10  $2,676,509  $2,676,509      n/a       n/a
    March 31,  April 15,
     2007       2007      $0.10  $2,676,509  $2,676,509      n/a       n/a
    April 30,  May 15,
     2007       2007      $0.10  $2,677,509  $2,677,509      n/a       n/a
    May 31,    June 15,
     2007       2007      $0.10  $3,112,672  $2,429,816   $682,855    93,665
    June 30,   July 15,
     2007       2007      $0.10  $3,220,381  $2,333,146   $788,892   114,698
    -------------------------------------------------------------------------

    Distributions to Subordinated Unit Holders

       Record Date       Date Paid     Amount per Unit  Total Distributions
    -----------------  --------------  ---------------  -------------------
    December 31, 2006  March 23, 2007      $0.37667           $568,772

    (1) On April 27, 2007, Petrowest approved the implementation of a DRIP
    program which provides the opportunity for unitholders to reinvest the
    cash distributions towards the purchase of additional units from treasury
    at a price equal to 95% of the average market price based on weighted
    average trading prices for the ten days prior to distribution payment
    date.

    Future distributions will be at the discretion of the Board of Directors
of Petrowest Energy Services General Partner Ltd. and may vary depending on
the current and anticipated level of activity in the Trust as well as the
operational performance of the various partnerships.

    Distributions for the record date July 31, 2007 were reduced to $0.06 per
unit.

    LIQUIDITY

    Non Cash Working Capital
    -------------------------------------------------------------------------
                                                          As at        As at
                                                        June 30     December
                      $000s                                2007      31 2006
    -------------------------------------------------- ---------    ---------
    Accounts receivable                                  48,225       38,498
    Prepaid expenses and deposits                         4,316        1,517
    Inventory                                             3,729        3,454
    Accounts payable and accrued liabilities            (20,999)     (20,296)
    Income taxes payable                                   (934)           -
    Distributions payable                                (4,028)      (3,245)
    Purchase price adjustment payable                    (2,000)      (6,422)
    Current portion of revolving bank term loan         (15,000)           -
    Current portion of obligations under capital leases    (331)         (87)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Non Cash Working capital                             12,978       13,419
    -------------------------------------------------------------------------
    

    Non cash working capital at June 30, 2007 was approximately $13.0 million
representing a decline of approximately $0.4 million since December 31, 2006.
Excluding the impact of the classification of $15.0 million revolving bank
term loan, actual non cash working capital increased by approximately $14.6
million. Of this increase, approximately $3.0 million was acquired in the
acquisitions described in note 4(b) to the financial statements. The remaining
$11.6 million increase has evolved from increases in accounts receivable due
to volume increases in the month of June partially offset by the settlement of
the majority of purchase price adjustments and slower accounts receivable
collections.
    Working capital levels are believed to be adequate to support current
debt requirements and sustain business operations.
    On May 18, 2007, the Trust amended and restated its credit facility
available for growth capital, acquisitions and working capital needs to $120
million. Loan security is provided by a first charge debenture, a general
security agreement and a general assignment of book debts. The credit facility
has a one year revolving term ending in November of 2007 which may be extended
for an additional 364 days at the discretion of the lender on application by
the Trust. Principal is then repayable in twelve equal quarterly installments
over 36 months starting ninety days after the end of the revolving term.
Interest is payable monthly at floating rates between prime and prime + 1.0%
depending on the Trust's debt to trailing twelve month EBITDA ratio.
    The term "EBITDA" is determined in accordance with GAAP, and is defined
as: earnings before income taxes, interest expenses, amortization of property
and equipment and amortization of intangible assets and excluding non-cash
income and expenses and extraordinary items.
    Current EBITDA levels require payment of interest at prime.
    As at June 30, 2007, the Trust had drawn $90.0 million on its credit
facility of which approximately $64.3 million was utilized to meet the cash
requirements of the acquisitions of the Newly Acquired Companies. The
remainder of the drawn component of the facility has been utilized for the
purchase of equipment and working capital needs.
    If requested at the end of the term in November of 2007, the first
quarterly principal payment would not be due until February 2008 and
$15,000,000 has been reported as the current portion.

    
    The Trust's revolving bank term loan requires the Trust to maintain
certain financial covenants as follows:

    -   Working capital ratio, excluding facility debt, of greater than 1.35
        to one. The Trust's ratio at Q2 is 2.03 to 1.
    -   Funded debt to four quarter's trailing EBITDA ratio of not greater
        than 2.25 to 1. The Trust's ratio at Q2 is 1.94 to 1.
    -   Fixed Charge coverage of not less than 1 to 1. The Trust's ratio at
        Q2 is 1.7 to 1.
    -   Funded Debt to capitalization of not more than 0.5 to 1. The Trust's
        ratio is 0.27 to 1.
    

    In the event the Trust were to fail to meet any of the financial
covenants the implications to the Trust could include a requirement to repay
immediately the revolving bank term loan and could result in suspension of
future distribution payments.
    The Trust is compliant on all debt covenants and believes that the
reduction of distributions previously announce will allow the Trust to further
reduce its level of borrowings under the credit facility over time.


    
    CONTRACTUAL OBLIGATIONS - PAYMENTS DUE BY PERIOD

                                      As at June 30, 2007
                  -----------------------------------------------------------
                  (less than)
        $000s        1 year    1-3 Years   4-6 Years  Thereafter     Total
    ------------- ----------- ----------- ----------- ----------- -----------
    Bank
     Indebtedness     15,000      75,000           -           -      90,000

    Obligations
     under Capital
     leases              331         827           -           -       1,158
    Operating Leases
     on Equipment     10,116      14,568         565           -      25,249
    Operating Leases
     on Offices,
     Shop and yards    2,091       5,194       1,183           -       8,468
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    TOTAL             27,538      95,589       1,751           -     124,878
    -------------------------------------------------------------------------
    

    The Trust's credit facility is subject to renewal in November 2007. In
the event that facility is not renewed the indicated payments would be
required. It is the Trust's intent to request a renewal of the facility and we
believe we will be successful in renewing or replacing the facility.
    Operating and capital lease commitments are consistent with levels
previously retained within the individual companies prior to their acquisition
by Petrowest. It is management's belief that lease commitments can be met from
operating cash flows.

    UNITHOLDERS' EQUITY

    Unitholders' Capital

    
        Authorized

        The Trust is authorized to issue an unlimited number of Trust Units.
        Holders of Trust Units will be entitled to receive monthly
        distributions to the extent declared by the Board of Directors of the
        Trust's administrator, Petrowest Energy Services General Partner Ltd.
        in priority to any payments on the Subordinated Units.

    Issued
                                                                     $000's
    -------------------------------------------------------------------------
                                      Subordinated
                          Trust Units     Units        Total
                          Outstanding  Outstanding  Outstanding      Value

    Trust Units issued
     for cash net of
     issue costs           14,000,000                14,000,000      128,118
    Trust Units issued
     on the acquisition
     of the Acquired
     Companies
     (note 4(a))           12,765,094                12,765,094      127,651
                          ------------              ------------ ------------
      Total Units          26,765,094                26,765,094      255,769
    Subordinated Units
    Issued for cash                 -    1,510,000    1,510,000        1,510
    Issued for promissory
     notes                          -            -            -        3,020
    Less: Amount issued
     for promissory notes           -            -            -       (3,020)
                          ------------ ------------ ------------ ------------

    Balance at
     December 31, 2006     26,765,094    1,510,000   28,275,094      257,279

    Issued for services        10,000            -       10,000           72

    Issued to distribution
     reinvestment plan
     "DRIP"                    93,665            -       93,665          683

    Issued on the
     acquisition of the
     Newly Acquired
     Companies (note 4(b))  4,351,622            -    4,351,622       32,316
                          ------------ ------------ ------------ ------------

    Total units
     outstanding as at
     June 30, 2007         31,220,381    1,510,000   32,730,381      290,350
                          ------------ ------------ ------------ ------------
    Weighted average units
     outstanding three
     months ended June 30
     basic and diluted     28,845,805    1,510,000   30,355,805
                          ------------ ------------ ------------
    Weighted average units
     outstanding six
     months ended
     June 30 basic and
     diluted               27,811,197    1,510,000   29,321,197
                          ------------ ------------ ------------

    -------------------------------------------------------------------------
    

    On July 6, 2006, the Trust issued to various insiders an aggregate of
1,510,000 Subordinated Units at a price of $3.00 per Subordinated Unit,
$4,530,000 in the aggregate, to be satisfied by payment of $1.00 in cash and
$2.00 by way of a three-year promissory note that may be forgiven at the
option of the Trust over three years if the subscriber remains as a director,
officer or employee of Petrowest. No amounts have been forgiven to date.
    Holders of Subordinated Units have the right to convert into Priority
Units on a one-for-one basis at any time after the end of the first fiscal
year ending on or after December 31, 2008 if the Trust has earned EBITDA of at
least $47 million and paid distributions of at least $1.20 per Trust Unit for
such fiscal year.
    On June 27, 2007, the Trust issued 300,000 warrants at a strike price of
$7.47 per unit expiring May 1, 2008 for aggregate consideration of $270,000.
The Trust valued the warrants using the following assumptions in the
Black-Scholes model: average risk-free interest rate of 4.73%; average
expected life of 0.91 years; expected volatility of 30%.
    On April 27, 2007, Petrowest approved the implementation of a DRIP
program which provides the opportunity for unitholders to reinvest the cash
distributions towards the purchase of additional units from treasury at a
price equal to 95% of the average market price based on weighted average
trading prices for the ten days prior to distribution payment date.
    Future distributions and continuation of the DRIP program will be at the
discretion of the Board of Directors of Petrowest Energy Services General
Partner Ltd. and may vary depending on the current and anticipated level of
activity in the energy services industry as well as the operational
performance of the various partnerships.
    Units issued on the acquisition of the Acquired Companies and units
issued on the acquisition of the Newly Acquired Companies are held in escrow.
Escrowed shares are released as to 25% at the end of year one and the
remaining 75% at the end of year two.

    GOODWILL

    The Goodwill balance has arisen from the two sets of acquisitions.
Goodwill represents the excess of purchase price of the Acquired Companies
over the fair value of net assets acquired and liabilities assumed. The
goodwill balance is assessed for impairment annually at year-end or as events
occur that could result in permanent impairment. Impairment is charged to
earnings and is not tax affected, in the period in which it occurs. Goodwill
is stated at cost less impairment and is not amortized.

    RELATED PARTY TRANSACTIONS

    Petrowest paid rents for the three and six months ended June 30, 2007,
respectively, for office and shop space under leases entered into with certain
former vendors in the amount of $481,278 and $903,535. Future lease
commitments associated with the transactions are included in note 13.
Transactions were recorded at the exchange amount which is estimated to equal
fair market value.

    FINANCIAL INSTRUMENTS

    On January 1, 2007, the Trust adopted the new CICA Handbook sections 3855
- Financial Instruments - Recognition and Measurement, 1530 - Comprehensive
Income, and 3865 - Hedges. The financial instruments standard establishes the
recognition and measurement criteria of financial assets, financial
liabilities and derivatives. All financial instruments are required to be
measured at fair value on initial recognition of the instrument, except for
certain related party transactions. Measurement in subsequent periods depends
on whether the financial instrument has been classified as held-for-trading,
available-for-sale, held-to-maturity, loans and receivables, or other
financial liabilities as defined by the standard.
    Financial assets and financial liabilities held-for-trading are measured
at fair value with changes in those fair values recognized in net earnings
(loss). Financial assets available-for-sale is measured at fair value, with
changes in those fair values recognized in other comprehensive income (loss).
Financial assets held-to-maturity, loans and receivables and other financial
liabilities are measured at amortized cost using the effective interest method
of amortization. The methods used by the Trust in determining the fair value
of financial instruments are unchanged as a result of implementing the new
standard.
    The Trust has no financial instruments or activities that give rise to
other comprehensive income (loss). The Trust's cash and cash equivalents are
designated as held-for-trading and are measured at carrying value, which
approximates fair value due to the short-term nature of these instruments.
Accounts receivable are designated as loans and receivables. Accounts payable
and accrued liabilities, distribution payable, and the credit facility are
designated as other liabilities and are recorded at cost.

    CRITICAL ACCOUNTING ESTIMATES AND ACCOUNTING POLICIES

    Critical Accounting Estimates

    The unaudited interim consolidated financial statements for the quarter
ended June 30, 2007 have been prepared in accordance with the accounting
policies described in the notes to the annual audited financial statements
posted on SEDAR. As a normal part of the financial statement preparation
process, management is required to make estimates and assumptions based on
information available as at the financial statement date. These estimates and
assumptions affect the reported amounts of assets and liabilities, the
possible disclosure of contingent assets and liabilities at the date of the
financial statements and the amount of revenue and expense reported for the
period.
    Although estimates and assumptions must be made during the financial
statement preparation process, it is management's opinion that none of the
estimates or assumptions had a material effect on the financial statements at
the time they were made. The most significant estimates in Petrowest's
financial statements are the estimate for future income taxes, amortization
period for property and equipment, valuation of assets in the purchase
equation, assumptions used in the binomial valuation methodology and
recoverability of accounts receivable.

    KEY RISKS AND UNCERTAINTIES

    Material Debt

    The Trust's credit facility is subject to renewal in November 2007. In
the event that facility is not renewed the principal repayments would be
required quarterly over a three year period which could have a material impact
on the Trust's ability to continue distributions and retire the principal
obligations. While the Trust believes it will be successful in renewing or
replacing the facility there can be no assurance that it will be successful.

    Additional Risks are detailed in the Trust's annual information form
dated March 30, 2007 which is available in electronic form at www.sedar.com
and the Audited Consolidated Financial Statements and Management Discussion
and Analysis for the year ended December 31, 2006 which are available in
electronic form at www.sedar.com.

    FINANCIAL DISCLOSURES

    During the period ended June 30, 2007, no change occurred to Petrowest's
internal control over financial reporting that has materially affected or is
reasonably likely to materially affect Petrowest's internal control over
financial reporting.
    The Chief Executive Officer and the Chief Financial Officer continue to
evaluate the effectiveness of Petrowest's disclosure controls and procedures
taking into consideration the functions performed by its Disclosure Committee,
the review and oversight of all executive officers and the board, as well as
the process and systems in place for filing regulatory and public information.
Petrowest's established review process and disclosure controls are designed to
ensure that all required information, reports and filings required under
Canadian securities legislation are properly submitted and recorded in
accordance with those requirements over financial reporting as of June 30,
2007 pursuant to the requirements of Multilateral Instrument 52-109 of the
Canadian Securities Administrators.
    Petrowest integrated the nine private businesses described as the
September 7, 2006 acquisitions to Note 4(a) of the financial statements and
completed the data conversion of the existing accounting systems within the
Acquired Companies to a common accounting system platform. All nine entities
were live on the new accounting platform as at January 1, 2007.
    Petrowest has also integrated the additional five private businesses
described as the May 18, 2007 acquisitions to Note 4(b) of the financial
statements and completed the data conversion of the existing accounting
systems within the Newly Acquired Companies to a common accounting system
platform. The five new entities were live on the new accounting platform as at
May 18, 2007.
    As part of the Trust's transition from fourteen owner managed control
environments that existed in the Acquired Companies and the Newly Acquired
Companies to an acceptable public company control environment, the Trust
engaged third party consultants to assist with the design, documentation and
testing of original internal control systems, new proposed improvements,
interim measures during the conversion and planned implementation on
completion of the conversion. By their nature certain planned controls, or
controls that would exist on completion of the data conversion, could not be
tested because they were not fully operational at the time of testing.
    Based on the ongoing evaluations performed, the CEO and CFO have
concluded that the design and operation of the Trust's disclosure controls and
procedures were effective as at June 30, 2007 to ensure that information
required to be disclosed by the Trust in reports filed under Canadian
securities laws is gathered, recorded, processed, summarized and reported
within the time periods specified under Canadian securities laws and is
accumulated and communicated to management, including the CEO and CFO, to
allow timely decisions regarding required disclosure as required under
Canadian securities laws.
    Further, based on the Trust's mitigating procedures, the CEO and the CFO
have satisfied themselves that potential weaknesses in controls as described
in the 2006 year end management discussion and analysis, have not resulted in
material errors in the financial statements of the current quarter. Management
and the Board of Directors are committed to transparency and completeness of
financial reporting and disclosure. The existence of the identified control
weaknesses need not necessarily be interpreted as evidence of a lack of
integrity, of unsound business practices or of unacceptable risks to its
shareholders and other related parties.
    It should be noted that while Petrowest's principal executive officer and
principal financial officer believe that Petrowest's disclosure controls and
procedures provide a reasonable level of assurance that they are effective,
they do not expect that Petrowest's disclosure controls and procedures or
internal control over financial reporting will prevent all errors and fraud. A
control system, no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.
    Internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate

    ADDITIONAL CORPORATE INFORMATION

    Additional information relating to the Trust, including the Trust's
Annual Information Form, can be found on SEDAR at www.sedar.com and on the
Trust's website at www.petro-west.com

    FORWARD LOOKING STATEMENTS

    Certain information and statements contained in this MD&A constitute
forward-looking information, including the anticipated costs associated with
the purchase of capital equipment, expectations concerning the nature and
timing of growth within the various business units operated through affiliates
of the Trust, expectations respecting the competitive position of such
business units, expectations concerning the financing of future business
activities, statements as to future economic and operating conditions, oil
sands production and investment, oil sands reserves, revenues from oil and gas
and non-oil and gas activities, debt to EBITDA ratio and end of year payout
ratio. Readers should review the cautionary statement respecting
forward-looking information that appears below. Any forward statements are
made as of the date hereof and the Trust does not undertake to publicly update
and review such statements to reflect new events, subsequent events or
otherwise, except in circumstances where in light of intervening events and
absent further explanation the statements would be considered misleading.
    The information and statements contained in this MD&A that are not
historical facts are forward-looking statements. Forward-looking statements
(often, but not always, identified by the use of words such as "seek", "plan",
"continue", "estimate", "project", "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe", "expect", "may", "anticipate"
or "will" and similar expressions) may include plans, expectations, opinions,
or guidance that are not statements of fact. Forward-looking statements are
based upon the opinions, expectations and estimates of management as at the
date the statements are made and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or outcomes to
differ materially from those anticipated or implied by such forward-looking
statements. These factors include, but are not limited to, such things as
changes in industry conditions (including the levels of capital expenditures
made by oil and gas producers and explorers), the credit risk to which the
Trust is exposed in the conduct of its business, fluctuations in prevailing
commodity prices or currency and interest rates, the competitive environment
to which the various business units are, or may be, exposed in all aspects of
their business, the ability of the Trust's various business units to access
equipment (including parts) and new technologies and to maintain relationships
with key suppliers, the ability of the Trust's various business units to
attract and maintain key personnel and other qualified employees, various
environmental risks to which the Trust's business units are exposed in the
conduct of their operations, inherent risks associated with the conduct of the
businesses in which the Trust's business units operate, timing and costs
associated with the acquisition of capital equipment, the impact of weather
and other seasonal factors that affect business operations, availability of
financial resources or third-party financing and the impact of new laws or
changes in administrative practices on the part of regulatory authorities.
Forward-looking information respecting the anticipated costs associated with
the purchase of capital equipment are based upon historical prices for various
classes of equipment, expectations relating to the impact of inflation on the
future cost of such equipment and management's views concerning the
negotiating leverage of the Trust and its affiliates. Forward-looking
information concerning the nature and timing of growth within the various
business units is based on the current budget of the Trust (which is subject
to change), factors that affected the historical growth of such business
units, sources of historic growth opportunities and expectations relating to
future economic and operating conditions. Forward-looking information
concerning the future competitive position of the Trust's business units is
based upon the current competitive environment in which those business units
operate, expectations relating to future economic and operating conditions and
current and announced build programs and other expansion plans of other
organizations that operate in the energy service business. Forward-looking
information concerning the financing of future business activities is based
upon the financing sources on which the Trust and its predecessors have
historically relied and expectations relating to future economic and operating
conditions. Forward-looking information concerning future economic and
operating conditions is based upon historical economic and operating
conditions, opinions of third-party analysts respecting anticipated economic
and operating conditions. Although management of the Trust believes that the
expectations reflected in such forward looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Accordingly, readers should not place undue reliance upon any of the
forward-looking information set out in this MD&A. All of the forward looking
statements of the Trust contained in this MD&A are expressly qualified, in
their entirety, by this cautionary statement. The various risks to which the
Trust is exposed are described under "Key Risks and Uncertainties" herein and
under "Risk Factors" detailed in the Trust's prospectus dated August 28, 2006
and the Trust's Annual Information Form dated April 2, 2007.

    
    Petrowest Energy Services Trust
    Consolidated Balance Sheet (unaudited)
    -------------------------------------------------------------------------
                                                               $000's
    Assets                                              June 30, December 31,
                                                           2007         2006
    Current assets
    Cash and cash equivalents                             1,244        9,312
    Accounts receivable                                  48,225       38,498
    Prepaid expenses and other                            4,316        1,517
    Inventory                                             3,729        3,454
                                                    ------------ ------------
                                                         57,514       52,781

    Property and equipment (note 5)                     130,803       91,298

    Intangible assets (note 6)                           66,208       53,438

    Goodwill (note 7)                                   119,666       98,068

    Future income taxes (note 11)                         1,499            -
                                                    ------------ ------------

                                                        375,690      295,585
                                                    ------------ ------------
    Liabilities
    Current liabilities
    Accounts payable and accrued liabilities             20,999       20,296
    Corporate taxes payable                                 934            -
    Distributions payable                                 4,028        3,245
    Purchase consideration payable (note 4(a)
     and 4(c))                                            2,000        6,422
    Current portion of obligations under capital
     leases                                                 331           87
    Current portion of revolving bank term
     loan (note 8)                                       15,000            -
                                                    ------------ ------------
                                                         43,292       30,050

    Obligations under capital leases                        827          169
    Revolving bank term loan (note 8)                    75,000       15,000

    Future income taxes (note 11)                        13,468            -
                                                    ------------ ------------
                                                        132,587       45,219
                                                    ------------ ------------
    Unitholders' Equity
    Units (note 9)                                      290,350      257,279
    Warrants (note 9)                                       270            -
    Contributed surplus                                     898          358
    Accumulated (loss) earnings                         (19,917)       3,379
    Accumulated cash distributions to unitholders       (28,498)     (10,650)
                                                    ------------ ------------
                                                        243,103      250,366
                                                    ------------ ------------

                                                        375,690      295,585
                                                    ------------ ------------
    Commitments and contingency (notes 4(c) and 13)

    See accompanying notes to the interim unaudited consolidated financial
    statements


    Approved on behalf of the board:

    Ken Drysdale             Mark Schweitzer



    Petrowest Energy Services Trust
    Consolidated Statement of Loss, Comprehensive Loss and Accumulated
    Earnings
    -------------------------------------------------------------------------
    For the three and six months
     ended June 30, 2007                                   (Unaudited)
                                                              $000's
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2007         2007

    Revenue                                              27,134       59,997
                                                    ------------ ------------
    Expenses
    Operating expenses                                   24,468       49,814
    General and administrative                            1,638        3,329
    Interest                                              1,102        1,646
    Amortization of property and equipment                6,620       11,751
    Amortization of intangible assets                     2,517        4,697
                                                    ------------ ------------

                                                         36,345       71,237
                                                    ------------ ------------

                                                         (9,211)     (11,240)
                                                    ------------ ------------
    Other income
    Gain (loss) on disposal of property
     and equipment                                           11         (235)
    Interest income                                          98          148
                                                    ------------ ------------

    Net loss and comprehensive loss for the period
     before taxes                                        (9,102)     (11,327)

    Future income tax expense (note 11)                 (11,969)     (11,969)
                                                    ------------ ------------

    Net loss and comprehensive loss for the period      (21,071)     (23,296)

    Accumulated earnings - beginning of period            1,154        3,379
                                                    ------------ ------------

    Accumulated loss - end of period                    (19,917)     (19,917)
                                                    ------------ ------------

    Net loss per unit - basic and diluted (note 9)       ($0.69)      ($0.79)
                                                    ------------ ------------

    See accompanying notes to the interim unaudited consolidated financial
    statements



    Petrowest Energy Services Trust
    Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------
    For the three and six months
     ended June 30, 2007                                   (Unaudited)
                                                              $000's
                                                   Three Months   Six Months
                                                          Ended        Ended
                                                        June 30,     June 30,
                                                           2007         2007
    Cash provided by (used in)

    Operating activities
    Net loss for the period                             (21,071)     (23,296)
    Items not affecting cash
      Amortization of tangible assets                     6,620       11,751
      Amortization of intangible assets                   2,517        4,697
      Unit-based compensation                               342          612
      Future income taxes                                11,969       11,969
      (Gain) loss on disposal of property
       and equipment                                        (11)         235
                                                    ------------ ------------
                                                            366        5,968
    Changes in non-cash working capital
      Accounts receivable                                   606        2,508
      Prepaid expenses                                      338         (387)
      Inventory                                             475          199
      Accounts payable and accrued liabilities               59       (8,172)
      Income taxes payable                                  (52)         (52)
                                                    ------------ ------------
                                                          1,792           64
                                                    ------------ ------------
    Financing activities
      Unitholder distributions                           (8,462)     (16,382)
      Repayment of capital lease obligations               (253)        (253)
      Proceeds from revolving term bank loan             65,000       75,000
                                                    ------------ ------------
                                                         56,285       58,365
                                                    ------------ ------------
    Investing activities
      Acquisition of acquired companies net of and
       working capital adjustments and
       costs (note 4(b))                                (51,799)     (51,799)
      Business alliance                                  (2,000)         (74)
      Purchase of property and equipment                 (7,685)     (11,723)
      Proceeds on property and equipment disposals        2,767        1,521
      Purchase price adjustment                           2,000       (4,422)
                                                    ------------ ------------
                                                        (56,717)     (66,497)
                                                    ------------ ------------
    Increase (decrease) in cash and cash equivalents      1,360       (8,068)

    Cash and cash equivalents, beginning of period         (116)       9,312
                                                    ------------ ------------

    Cash and cash equivalents, end of period              1,244        1,244
                                                    ------------ ------------
    Supplementary information
    Interest paid                                         1,102        1,646
    Income taxes paid                                         -            -

    Non cash transactions
    Property and equipment financed by capital leases       565        1,155
    Units issued on acquisition (note 4(b))              32,316       32,316
    Warrants issued (note 9)                                270          270

    See accompanying notes to the interim unaudited consolidated financial
    statements



    Petrowest Energy Services Trust
    Notes to Interim Unaudited Consolidated Financial Statements
    -------------------------------------------------------------------------

    1   Nature of the Organization

        Petrowest Energy Services Trust ("Petrowest" or the "Trust") is an
        open-ended unincorporated mutual fund trust established under and
        governed by the laws of the Province of Alberta pursuant to the Deed
        of Trust dated July 6, 2006. Commercial operations of the Trust
        commenced on September 7, 2006 and Petrowest began publicly trading
        on the Toronto Stock Exchange on that same day under the trading
        symbol PRW.UN. As such, since the Trust was formed on July 6, 2006,
        there is no comparable quarter included in these financial
        statements.

    2   Accounting Policies

        These consolidated interim financial statements are stated in
        Canadian dollars and have been prepared by management in accordance
        with Canadian Generally Accepted Accounting Principles ("GAAP"). They
        follow the same accounting policies as the Trust's audited
        consolidated financial statements for the year ended December 31,
        2006, except as discussed below, and should be read in conjunction
        with these statements.

        Financial instruments

        On January 1, 2007, the Trust adopted the new CICA Handbook sections
        3855 - Financial Instruments - Recognition and Measurement, 1530 -
        Comprehensive Income, and 3865 - Hedges. The financial instruments
        standard establishes the recognition and measurement criteria of
        financial assets, financial liabilities and derivatives. All
        financial instruments are required to be measured at fair value on
        initial recognition of the instrument, except for certain related
        party transactions. Measurement in subsequent periods depends on
        whether the financial instrument has been classified as held-for-
        trading, available-for-sale, held-to-maturity, loans and receivables,
        or other financial liabilities as defined by the standard.

        Financial assets and financial liabilities held-for-trading are
        measured at fair value with changes in those fair values recognized
        in net earnings (loss). Financial assets available-for-sale is
        measured at fair value, with changes in those fair values recognized
        in other comprehensive income (loss). Financial assets held-to-
        maturity, loans and receivables and other financial liabilities are
        measured at amortized cost using the effective interest method of
        amortization. The methods used by the Trust in determining the fair
        value of financial instruments are unchanged as a result of
        implementing the new standard.

        The Trust has no financial instruments or activities that give rise
        to other comprehensive income (loss). The Trust's cash and cash
        equivalents are designated as held-for-trading and are measured at
        carrying value, which approximates fair value due to the short-term
        nature of these instruments. Accounts receivable are designated as
        loans and receivables. Accounts payable and accrued liabilities,
        distribution payable, obligations under capital leases and the
        revolving bank term loan are designated as other liabilities and are
        recorded at cost.

        Income taxes

        On June 12, 2007, the legislation implementing the new tax on
        publicly traded income trusts and limited partnerships (the "SIFT
        tax"), referred to as "specified investment flow-through" ("SIFT")
        entities (Bill C-52) received third reading in the House of Commons
        and on June 22, 2007, the Bill received Royal Assent. As a result,
        the tax was considered to be enacted for accounting purposes in June
        2007.

        Under the SIFT tax, distributions will not be deductible for income
        tax purposes by SIFTs in 2011 and thereafter and any trust level
        taxable income will be taxed at rates approximating the corporate
        income tax rate currently estimated to be 31.5 percent.

        For accounting purposes, as the SIFT tax was enacted in the second
        quarter of 2007, Petrowest recorded a non-cash charge to future
        income taxes to reflect the temporary differences between the book
        and tax basis of assets and liabilities expected to be remaining in
        the Trust in 2011.

    3   Seasonality

        Petrowest's operations are conducted in northern Alberta and
        northeast British Columbia and are susceptible to the impacts of the
        seasons. Quarter one is in the winter months and is subject to frozen
        conditions, periods of extreme cold and snow. This is typically one
        of the busiest quarters for Petrowest, as oil and gas exploration and
        development and drilling activity focuses on areas located in muskeg
        and swamp type conditions not normally accessible in a non-frozen
        state. Quarter two is generally the slowest quarter for Petrowest's
        operations. Spring time melt conditions result in soft, wet ground
        generally requiring the implementation of road bans which prevent
        heavy load transportation on roadways. Quarter three encompasses the
        summer months, and Petrowest's activity levels typically generate
        revenues that fall in the middle between Quarters one and two with
        work relating to oil and gas projects in areas that do not entail
        access through muskeg. Quarter four starts out similar to the summer
        activity and ramps up as the ground freezes and access is permitted.
        Depending of length of the fall Quarter four revenues can approximate
        or exceed quarter one revenues.

    4   Acquisitions

        (a) Acquisitions September 7, 2006

        Pursuant to a prospectus dated August 28, 2006, Petrowest issued
        Units of the Trust and used the proceeds, through its subsidiaries,
        to acquire 100% of the outstanding shares of Safetymaster Rentals
        Corporation, R Bee Crushing Ltd., Wales Contractors Ltd., Roy Larson
        Construction Ltd., Gordon Bros. Construction Ltd., 404434 Alberta
        Corporation, Murtron Hauling Ltd., Neuwest Equipment Rentals Inc,
        Northern Tractor Sales and Rentals Co. Ltd. and their affiliates
        ("Acquired Companies"). The acquisition of the acquired companies was
        completed September 7, 2006. The estimated purchase price of the
        Acquired Companies calculated as the base purchase price plus working
        capital less debt was $230,934,992, subject to post closing
        adjustments for actual working capital, debt obligations retired and
        the sale of redundant assets.

        The Acquired Companies have been accounted for using the purchase
        method with the assets acquired and liabilities assumed recorded at
        their estimates of fair value. An allocation of the consideration is
        as follows:

        Net assets acquired                                           $000's
          Cash acquired on acquisition                                 6,115
          Accounts receivable                                         37,648
          Prepaid expenses                                               680
          Inventories                                                  4,158
          Accounts payable and accrued liabilities                   (27,257)
          Income taxes payable                                          (215)
          Property and equipment                                      82,699
          Intangibles                                                 56,223
          Goodwill                                                    97,949
                                                                   ----------

          Total                                                      258,000
                                                                   ----------
                                                                   ----------

        Consideration paid
          Net cash to vendors                                        103,284
          Cash repayment of working capital adjustments               (2,055)
          Purchase price adjustment                                    6,422
          Retirement of long-term debt and capital lease
           obligations                                                22,698
                                                                   ----------

                                                                     130,349
          Trust Units  (12,765,094 units issued)                     127,651
                                                                   ----------

          Total                                                      258,000
                                                                   ----------
                                                                   ----------

        There is a dispute with Northern Tractor associated with the
        valuation of certain working capital items and the valuation of
        redundant assets retained by the vendor. The total disputed amount is
        approximately $800,000. This amount has been classified as a
        contingent gain and because collectability is uncertain, has not been
        recognized for purposes of the calculation of the purchase price
        adjustment. Arbitration of these amounts is expected to occur prior
        to the end of the third quarter of 2007 and adjustments required to
        the purchase price to reflect this contingent gain, if any, may be
        material.

        (b) Acquisitions May 18, 2007

        Petrowest entered into agreements to acquire all of the outstanding
        shares and shareholder loans of Cutbank Trucking Ltd. and Cutbank
        Transport Ltd. (collectively, "Cutbank"), Jim Moffatt Construction
        Ltd. and 921639 Alberta Ltd., (collectively, "Jim Moffatt
        Construction"), Quigley Contracting Ltd, 529805 B.C. Ltd. and LMQ
        Enterprises Ltd., (collectively, "Quigley Contracting Ltd."), Rick's
        Mechanical Services Ltd. and Tri-Dave Gravel Sales Ltd (collectively,
        the "Newly Acquired Companies"). The acquisition of the acquired
        companies was completed May 18, 2007.

        The estimated purchase price of the Newly Acquired Companies was
        $92,576,108.

        The Newly Acquired Companies have been accounted for using the
        purchase method with the assets acquired and liabilities assumed
        recorded at their estimates of fair value. An allocation of the
        consideration is as follows:

        Net assets acquired                                           $000's
          Cash acquired on acquisition                                 8,963
          Accounts receivable                                         12,235
          Prepaid expenses and other                                   2,412
          Inventories                                                    474
          Accounts payable and accrued liabilities                    (8,875)
          Income taxes payable                                          (986)
          Property and equipment                                      42,134
          Intangibles                                                 15,123
          Goodwill                                                    21,598
                                                                   ----------

          Total                                                       93,078
                                                                   ----------
                                                                   ----------

        Consideration paid
          Net cash to vendors                                         50,869
          Acquisition costs                                              502
          Retirement of long-term debt and capital lease
           obligations                                                 9,391
                                                                   ----------

                                                                      60,762
          Trust Units (4,351,622 units issued)(1)                     32,316
                                                                   ----------

          Total                                                       93,078
                                                                   ----------
                                                                   ----------

        (1) For the purposes of calculation of the aggregate, the trust units
        have been attributed a value of $7.4261 each, the five day volume
        weighted average price before the closing date.

        (c) Business Alliance June 18, 2007

        On June 18, 2007 Petrowest signed agreements documenting a memorandum
        of understanding effective May 1, 2007 with the Woodland Cree First
        Nations ("WCFN") providing Petrowest with the primary right to
        provide a combination of services on a revenue sharing basis within
        the WCFN traditional lands for a period of 5 years. In conjunction
        with the agreements, Petrowest purchased the road construction
        equipment assets of the WCFN. The total cash consideration paid or
        payable to the WCFN for the assets and the contractual rights was
        $4,000,000. Petrowest paid $2,000,000 in cash on closing, retired
        $1,424,623 of equipment debt subsequent to the quarter end and the
        remaining $575,377 will be paid on certain post closing conditions
        being met.

        The Trust also issued the WCFN 300,000 warrants to acquire Petrowest
        units at a strike price of $7.47 per unit. The warrants expire May 1,
        2008. The valuation of the warrants has been calculated using a
        Black-Scholes pricing model (note 9).

        Petrowest has accounted for the transaction as follows:
                                                                      $000's

        Value of warrant consideration                                   270
        Initial cash consideration                                     2,000
        Remaining purchase consideration payable                       2,000
                                                                   ----------

                                                                       4,270
                                                                   ----------

        Fair Value of Equipment                                        1,926
        Value of business alliance                                     2,344
                                                                   ----------

        Total Consideration                                            4,270
                                                                   ----------

        The business alliance will be amortized on a straight-line basis over
        5 years.

        In addition the Trust has agreed to provide services in kind valued
        at market rates to assist in the potential construction and
        development of a community centre subject to certain conditions being
        fulfilled and capped to a maximum of $1,000,000.

    5   Property and Equipment
                                                     $000's

                                                           June 30, December
                                                              2007  31, 2006

                                             Accumulated  Net Book  Net Book
                                      Cost  Amortization     Value     Value
        Buildings, portable
         buildings and fencing       6,681           457     6,224     3,284
        Heavy equipment            121,146        13,602   107,544    75,087
        Equipment under capital
         lease                       1,411           136     1,275       247
        Vehicles                     4,330           741     3,589     2,281
        Trailers                     8,948           863     8,085     7,427
        Equipment                    3,473           885     2,588     1,941
        Office furniture
         and equipment                 447            81       366       148
        Communications, computer
         hardware and software         857           298       559       420
        Leasehold improvements          47             2        45        46
                                   -------- ------------- --------- ---------
        Subtotal                   147,340        17,065   130,275    90,881
        Assets under construction      528             -       528       417
                                   -------- ------------- --------- ---------
                                   147,868        17,065   130,803    91,298
                                   -------- ------------- --------- ---------
                                   -------- ------------- --------- ---------

    6   Intangible Assets
                                                     $000's

                                                              June  December
                                                          30, 2007  31, 2006

                                             Accumulated  Net Book  Net Book
                                      Cost  Amortization     Value     Value

        Non Competition Agreements  35,213         4,127    31,086    25,098
        Business alliance (note 4)   2,344             -     2,344         -
        Brand and Trade Names        7,955           890     7,065     5,048
        Customer Relationships      27,505         1,792    25,713    23,292
                                   -------- ------------- --------- ---------

        Total                       73,017         6,809    66,208    53,438
                                   -------- ------------- --------- ---------

        Non competition agreements, business alliance and brand and trade
        names are amortized over 5 years on a straight line basis. Customer
        relationships are amortized over 10 years on a straight line basis.

    7   Goodwill

        Goodwill has arisen from the two sets of acquisitions described in
        note 4 plus costs of the acquisitions as follows:

                                                      June 30,   December 31,
                                                         2007           2006

        September 7, 2006 acquisitions                 97,949         97,949
        Additional settlement costs                       119            119
        May 18, 2007 acquisitions                      21,598              -
                                                     ---------  -------------

        Total                                         119,666         98,068
                                                     ---------  -------------

    8   Revolving Bank Term Loan

        On May 18, 2007, the Trust amended and restated its credit facility
        available for growth capital, acquisition and working capital needs
        to $120 million. Loan security is provided by a first charge
        debenture, a general security agreement and a general assignment of
        book debts. The credit facility has a one year revolving term ending
        in November of 2007 which may be extended for additional 364 days at
        the discretion of the lender on application by the trust. Principal
        is then repayable in twelve equal quarterly installments over 36
        months starting ninety days after the end of the revolving term.
        Interest is payable monthly at floating rates between prime and prime
        + 1.0% depending on the Trust's debt to trailing twelve month EBITDA
        ratio.

        The term "EBITDA" is determined in accordance with GAAP, and is
        defined as: earnings before income taxes, interest expenses,
        amortization of property and equipment and amortization of intangible
        assets and excluding non-cash income and expenses and extraordinary
        items.

        Current EBITDA levels require payment of interest at prime.

        Principal payments due over the next four years as at June 30, 2007
        are as follows:

                                                            $000's
              2007                                               -
              2008                                          15,000
              2009                                          30,000
              2010                                          30,000
              2011                                          15,000

    9   Unitholders' Capital

        Authorized

        The Trust is authorized to issue an unlimited number of Trust Units.
        Holders of Trust Units will be entitled to receive monthly
        distributions to the extent declared by the Trust's Board of Trustees
        in priority to any payments on the Subordinated Units.

        Issued                                    $000's

                                          Subordinated
                             Trust Units         Units        Total
                             Outstanding   Outstanding  Outstanding    Value

        Trust Units issued
         for cash net of
         issue costs          14,000,000                 14,000,000  128,118
        Issued on the
         acquisition of the
         Acquired Companies
         (note 4 (a))         12,765,094                 12,765,094  127,651
                             ------------ ------------- ------------ --------
          Total Units         26,765,094                 26,765,094  255,769
        Subordinated Units
        Issued for cash                -     1,510,000    1,510,000    1,510
        Issued for
         promissory notes              -             -            -    3,020
        Less: Amount issued
         for promissory notes          -             -            -   (3,020)
                             ------------ ------------- ------------ --------

        Balance at
         December 31, 2006    26,765,094     1,510,000   28,275,094  257,279

        Issued for services       10,000             -       10,000       72

        Issued to distribution
         reinvestment plan
         "DRIP"                   93,665             -       93,665      683

        Issued on the
         acquisition of the
         Newly Acquired
         Companies
         (note 4 (b))          4,351,622             -    4,351,622   32,316
                             ------------ ------------- ------------ --------

        Total units
         outstanding as at
         June 30, 2007        31,220,381     1,510,000   32,730,381  290,350
                             ------------ ------------- ------------ --------
        Weighted average
         units outstanding
         three months ended
         June 30 basic and
         diluted              28,845,805     1,510,000   30,355,805
                             ------------ ------------- ------------
        Weighted average
         units outstanding
         six months ended
         June 30 basic and
         diluted              27,811,197     1,510,000   29,321,197
                             ------------ ------------- ------------

        Prior to the IPO, the Trust issued to various insiders an aggregate
        of 1,510,000 Subordinated Units at a price of $3.00 per Subordinated
        Unit, $4,530,000 in the aggregate, to be satisfied by payment of
        $1.00 in cash and $2.00 by way of a three-year promissory note that
        may be forgiven at the option of the Trust over three years if the
        subscriber remains as a director, officer or employee of Petrowest.
        No amounts have been forgiven to date. Holders of Subordinated Units
        have the right to convert into Priority Units on a one-for-one basis
        at any time after the end of the first fiscal year ending on or after
        December 31, 2008 if the Trust has earned EBITDA of at least
        $47 million and paid distributions of at least $1.20 per Trust Unit
        for such fiscal year.

        On June 27, 2007 the Trust issued 300,000 warrants at a strike price
        of $7.47 per unit expiring May 1, 2008 as partial consideration for
        entering into the business alliance (note 4 (c)). The Trust valued
        the warrants at $270,000 using the following assumptions in the
        Black-Scholes model: average risk-free interest rate of 4.73%;
        average expected life of 0.91 years and expected volatility of 30%.

        On April 27, 2007, Petrowest approved the implementation of a DRIP
        program which provides the opportunity for unitholders to reinvest
        the cash distributions towards the purchase of additional units from
        treasury at a price equal to 95% of the average market price based on
        weighted average trading prices for the ten days prior to
        distribution payment date.

        Units issued on acquisitions and units issued on new acquisitions are
        held in escrow. Escrowed shares are released as to 25% at the end of
        year one and the remaining 75% at the end of year two.

    10  Stock Based Compensation

        Petrowest implemented a stock option plan whereby options to acquire
        Trust Units may be granted to directors, officers, employees and
        consultants.

        The aggregate number of Trust units issuable upon the exercise of
        options outstanding under the plan at any time may not exceed 10% of
        the issued and outstanding Trust Units. The period during which an
        option granted under the Plan is exercisable may not exceed five
        years from the date such option is granted. The options issued under
        the Plan vest 1/3 after one year, 1/3 after two years and 1/3 after
        three years.

        As at            Number of options        Weighted  Weighted average
        June 30, 2007          outstanding         average    exercise price
                                            remaining life
        Granted -
         September 7, 2006       2,605,000      4.19 years            $10.00
        Expired                          -                                 -
        ---------------------------------------------------------------------
        Outstanding,
         December 31, 2006
         and June 30, 2007       2,605,000      4.19 years            $10.00
        Exercisable,
         December 31, 2006
         and June 30, 2007               -                                 -
        ---------------------------------------------------------------------

        The Trust recorded non cash compensation expense and contributed
        surplus of $540,000 for the six months ended June 30, 2007.
        Compensation expense has been included in general and administrative
        expenses. On July 27, 2007, the Trust cancelled its existing option
        plan.

    11  Income taxes

        On June 12, 2007, the legislation implementing the new tax on
        publicly traded income trusts and limited partnerships (the "SIFT
        tax"), referred to as (Bill C-52) received third reading in the House
        of Commons and on June 22, 2007 the Bill received Royal Assent. As a
        result, the tax was considered to be enacted for accounting purposes
        in June 2007. SIFTs are certain publicly traded income and royalty
        trusts and limited partnerships including Petrowest.

        For SIFTs in existence on October 31, 2006, the SIFT tax will be
        effective in 2011 unless certain rules related to "undue expansion"
        are not adhered to. Under the guidance provided, Petrowest can
        increase is total equity subject to annual limits, to approximately
        $497.8 million by 2011 without prematurely triggering the SIFT tax.

        Under the SIFT tax, distributions will not be deductible for income
        tax purposes by SIFTs in 2011 and thereafter and any trust level
        taxable income will be taxed at a rate approximating the corporate
        income tax rate currently estimated to be 31.5 percent. The resultant
        distributions will be considered taxable dividends to unitholders,
        generally eligible for the dividend tax credit. Distributions
        representing a return of capital for income tax purposes will
        continue to be an adjustment to a unitholder's adjusted cost base of
        trust units.

        For accounting purposes, as the SIFT tax was enacted in the second
        quarter of 2007, Petrowest recorded non-cash future income tax
        provisions that resulted in a net charge of $11,968,789 to future
        income taxes to reflect the temporary differences between the book
        and tax basis of assets and liabilities expected to be remaining in
        the Trust in 2011. The majority of the temporary differences at the
        Trust level relate to the timing differences associated with property
        plant and equipment and intangibles acquired by the Trust on
        September 7, 2006 and May 18, 2007.

        The components of future income tax balances are as follows:

                                                                      $000's
          Asset
                    Share Issue Costs                               $  1,499
          Liability
                    Capital and intangible assets                   $ 13,468
                                                                    ---------

          Net non cash future income tax expense                    $ 11,969
                                                                    ---------

    12  Related Party Transactions

        Petrowest paid rent for the three and six months ended June 30, 2007
        respectively for office and shop space under leases entered into with
        certain former vendors in the amount of $481,278 and $903,535. Future
        lease commitments associated with the transactions are included in
        note 13. Transactions were recorded at the exchange amount which is
        estimated to equal fair market value.

    13  Commitments

        The Trust has entered into operating leases for office and shop
        premises and equipment that provide for minimum annual lease payments
        in the twelve month periods ending as follows:

                                                              $000's

              June 30, 2008                                   12,207
              June 30, 2009                                    9,778
              June 30, 2010                                    6,072
              June 30, 2011                                    3,912
              June 30, 2012                                    1,748

    14  Segmented Information

        The Trust determines its reportable segments based on the structure
        of its operations, which are primarily focused on four principal
        business segments - Construction, Transportation, Civil and Rentals.
        The following is selected financial information for each business
        segment.

        For the three months ended June 30, 2007        (unaudited)

                                            $000's
                         Constr-  Transpo-
                         uction   rtation   Civil  Rentals Corporate   Total

        Total Revenue     7,775    6,137   11,717    3,090            28,719

        Less inter-
         segment
         revenue           (583)    (569)     (12)    (421)           (1,585)
                        -----------------------------------------------------

        Revenue           7,192    5,568   11,705    2,669            27,134

        Operating and
         general and
         administrative   7,119    7,022    9,798      529    1,638   26,106

        Interest Expense    153        1        7        1      940    1,102

        Interest income      24       17        2        6       49       98

        (Gain) loss on
         disposal of
         equipment                    (1)      (7)       1       (4)     (11)

        Amortization      3,708    2,113    1,675    1,491      150    9,137
        Future income
         taxes                -        -        -        -   11,969   11,969
                        -----------------------------------------------------

        Net earnings
         (loss)          (3,764)  (3,550)     234      653  (14,644) (21,071)
                        -----------------------------------------------------
                        -----------------------------------------------------


        For the six months ended June 30, 2007            (unaudited)

                                            $000's
                         Constr- Transpo-
                         uction  rtation    Civil  Rentals Corporate   Total

        Total Revenue    18,436   18,369   21,693    5,455        0   63,953

        Less inter-
         segment revenue (1,260)  (1,494)     (37)  (1,165)       0   (3,956)
                        -----------------------------------------------------

        Revenue          17,176   16,875   21,656    4,290        0   59,997
                            29%      28%      36%       7%

        Operating and
         general and
         administrative  14,785   16,529   16,282    2,218    3,329   53,143

        Interest Expense    157        4       45        3    1,437    1,646

        Interest income      25       18        2        6       97      148

        (Gain) loss on
         disposal of
         equipment           83        2      153        1       (4)     235

        Amortization      6,017    3,929    3,172    3,012      318   16,448

        Future Income
         Taxes                -        -        -        -   11,969   11,969
                        -----------------------------------------------------

        Net earnings
         (loss)          (3,841)  (3,571)   2,006     (938) (16,952) (23,296)
                        -----------------------------------------------------
                        -----------------------------------------------------


        Selected Balance Sheet Items as at June 30, 2007

                                            $000's
                         Constr- Transpo-
                         uction  rtation    Civil  Rentals Corporate   Total

        Current Assets   24,875   16,395   23,502   (2,752)  (4,506)  57,514

        Property and
         equipment       58,217   25,468   26,067   17,296    3,755  130,803

        Intangibles      26,360   19,991    9,665    7,848    2,344   66,208

        Goodwill         47,798   31,590   26,220   13,569      489  119,666

        Future
         income tax         938      209      339        4        9    1,499
                        -----------------------------------------------------

        Total Assets    158,188   93,653   85,793   35,965    2,091  375,690
                        -----------------------------------------------------
                        -----------------------------------------------------

        All transactions between segments were initially recorded at
        approximate market rates. Transactions between segments have been
        eliminated on consolidation.


    EXECUTIVE MANAGEMENT TEAM                BANKERS

    Kenneth N. Drysdale                      TD Bank
      President, Chief Executive             Calgary Main Branch
      Officer & Director                     751 - 3rd Street SW
                                             Calgary, AB, T2P 3Y8
    John B. Paul, CA
      Chief Financial Officer                AUDITORS
                                             PriceWaterhouseCoopers LLP
    Keith D. Hudson, CFA                     3100, 111 - 5th Avenue SW
      Vice President, Business Development   Calgary, AB, T2P 3Y6

    BOARD OF DIRECTORS                       LEGAL COUNSEL

    D. Hugh Gillard                          Bennett Jones LLP
      Chairman of the Board                  4500, 855 - 2nd Street SW
                                             Calgary, AB, T2P 4K7
    Rene Amirault
      Director                               REGISTRAR AND TRANSFER AGENT
                                             Valiant Trust Company
    Walter DeBoni                            310, 606 - 4th Street SW
      Director                               Calgary, AB, T2P 1T1

    Gerald A. Romanzin, CA                   OFFICE LOCATIONS
      Director                               Grande Prairie (Head Office)
                                             Suite 204, 10605 Westside Drive
    Kenneth N. Drysdale                      Grande Prairie, AB, T8V 8E6
      Director                               P: 780.830.0881
                                             F: 780.830.0882
    Mark Schweitzer, CA                      E: info@petro-west.com
      Director                               W: www.petro-west.com
                                             Calgary (Corporate Office)
                                             1020, 407 - 2nd Street SW
                                             Calgary, AB, T2P 2Y3
                                             P: 403.237.0881
                                             F: 403.237.0880
    





For further information:

For further information: Kenneth N. Drysdale, President and Chief
Executive Officer, or John B. Paul, Chief Financial Officer, at (780) 830-0881
or info@petro-west.com

Organization Profile

PETROWEST ENERGY SERVICES TRUST

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