petrowest energy services trust announces $94.2 million of ... - BMIR

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During the most recent fiscal year of the companies to be acquired by Petrowest, the combined AdjustedEBITDA acquired by Petrowest aggregates approximately $24.3 million. Giving effect to the benefit of theworking capital accruing to Petrowest for the period from January 1, 2007 to closing and the cashbalances acquired, the net total purchase price paid represents an average multiple of the aggregateAdjusted EBITDA for the last fiscal year of approximately 3.6 times. The acquisitions are anticipated tobe accretive to Petrowest's revenue, EBITDA and cash flow on a per unit basis"Each of the companies to be acquired is well established with a significant operating history, experiencedand proven management and a business that will provide synergies with Petrowest's existingcompetencies, clients, industries, work activities and geographic region", said Kenneth N. Drysdale,President and Chief Executive Officer of Petrowest. "Not only do these acquisitions bring an accretivefinancial contribution, but they strengthen Petrowest in our target geographic region. The operators thatwill join Petrowest as part of the acquisitions, Ray Wardill, Jim Moffatt, Rick Serhan, Rick Quigley andDave Hall are experienced operators who will fit well with Petrowest's corporate culture and we arepleased to have them as part of Petrowest. Overall, we are excited with this first step in the execution ofour acquisitions strategy and look forward to working with the new members of the Petrowest group ofcompanies".The agreements contemplate that the acquisitions are effective as of January 1, 2007 and Petrowest willreceive the benefit of the earnings of these companies from that date. Consistent with Petrowest'sphilosophy, the agreements are conditional upon key management entering into employment agreementswith Petrowest. The agreements include customary representations, warranties and indemnities in favourof Petrowest as well as condition precedents in favour of both Petrowest and the companies to beacquired and their shareholders which must be satisfied prior to closing. Petrowest anticipates thatclosing will occur on or about May 18, 2007.Cutbank Trucking Ltd. and Cutbank Transportation Ltd. are operated together as one business andspecialize in hauling logs and gravel and the provision of log loading equipment in Grande Prairie,Alberta. Cutbank Trucking Ltd. was formed in 1972 by Pat Garrett and Cutbank Transportation Ltd. wasformed in 1997 by Ray Wardill.Jim Moffatt Construction Ltd. is one of the larger lease and road building companies operating in northernAlberta. Jim Moffatt Construction Ltd. was formed in 1992 by Jim and Lois Moffatt and operates from itsbase in Worsley, Alberta. This acquisition will expand Petrowest's geographical footprint north toRainbow Lake and High Level in northern Alberta. In addition to lease and road building, Jim MoffattConstruction Ltd. operates a 250-man camp permanently located in Worsely.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 relationshipwith the Woodland Cree First Nation in providing services to oil sand developers operating on thetraditional lands of the Woodland Cree First Nation.Quigley Contracting Ltd. is one of the larger lease and road building companies in Fort St. John, BritishColumbia. Quigley Contracting Ltd. was formed in 1990 by Rick Quigley. The acquisition of QuigleyContracting Ltd. will expand Petrowest's geographical footprint into the northern regions of BritishColumbia.Tri-Dave Gravel Sales Ltd. is a mid size gravel crushing operation that operates throughout Alberta. Tri-Dave Gravel Sales Ltd. was formed in 1984 by David Hall. Tri-Dave Gravel Sales Ltd. will provideadditional capacity to Petrowest's crushing operations conducted by R. Bee Crushing which are fullycommitted through 2008.- 2 -
STRATEGIC ALLIANCEPetrowest has entered into a memorandum of understanding with the WCFN pursuant to which Petrowestand the WCFN will enter into a joint venture to provide services to oil sands developers operating on thetraditional lands of the WCFN which encompass a significant portion of the Peace River Oil Sands. Asnoted above, the memorandum of understanding also contemplates the purchase by Petrowest ofconstruction equipment from Woodland Cree Industries Ltd. Implementation of the strategic alliance issubject to completion of a formal joint venture agreement, expected to occur by July 1, 2007. In theinterim Petrowest will operate as a subcontractor to a wholly owned subsidiary of the WCFN to meetcurrent client demands for services.DISTRIBUTION REINVESTMENT PLAN (“DRIP”)Petrowest has recently implemented a DRIP program which provides the opportunity for unitholders toreinvest their cash distributions towards the purchase of additional units from treasury at a price equal to95% of the average market price based on weighted average trading price for the ten days prior to thedistribution payment date. Details of the program are available in Petrowest's Information Circular datedApril 30, 2007 filed on SEDAR. Petrowest has implemented the plan, effective immediately, to maintain astrong balance sheet and finance profitable growth in the future. As an indication of their confidence inPetrowest’s future their active founding vendors have indicated that they will initially participate in theDRIP program at an average 75% take up rate on their tradable units. The active founding vendorscurrently hold approximately 46% of the trust’s tradable units, before giving effect to the acquisitionsdescribed herein.FIRST QUARTER 2007 FINANCIAL HIGHLIGHTSFirst quarter 2007 financial results reflect the realities of a significant weakening of energy sector activityconsistent with the decline in activity in the fall of 2006. (Petrowest current infrastructure services areapproximately 65% drilling related and 35% industrial). Commodity price uncertainty impactedPetrowest’s customers who lowered their drilling plans for at the first quarter of 2007.Selected financial highlights for the first quarter include:RevenueEBITDANet Gain (Loss)Working CapitalDebt FacilityLong Term Debt$32.9 million$5.8 million($2.2 million)$25.0 million$60.0 million$25.8 millionDistributions Per Unit $0.30Payout Ratio 153%- 3 -
Page 1: PETROWEST ENERGY SERVICES TRUST ANN
Page 5 and 6: for the period ended December 31, 2
Page 7 and 8: DESCRIPTION OF BUSINESSPetrowest is
Page 9 and 10: or negotiations on work tied to a n
Page 11 and 12: SUMMARY OF RESULTS- QUARTERLY ANALY
Page 13 and 14: The Transportation segment costs in
Page 15 and 16: RECONCILIATION OF NET EARNINGS TO E
Page 17 and 18: PROPERTY AND EQUIPMENT EXPENDITURES
Page 19 and 20: The Trust has no financial instrume
Page 21 and 22: Management and the Board of Directo
Page 23 and 24: Petrowest Energy Services TrustCons
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Page 27 and 28: Petrowest Energy Services TrustNote

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