Peak Energy Services Trust Announces Intention to Convert to a Corporation

TSX SYMBOL: PES.UN

CALGARY, Sept. 27 /CNW/ - Peak Energy Services Trust ("Peak" or the "Trust") announces its intention to convert to a growth-oriented corporation (the "Conversion") pursuant to a plan of arrangement under the Business Corporations Act (Alberta). Peak will be seeking approval from unitholders at a special meeting of unitholders (the "Meeting") and expects to complete the Conversion by January 1, 2011.

On October 31, 2006, the Department of Finance announced the Specified Investment Flow-Through Trust ("SIFT") income and distribution tax, which effectively eliminated the benefits of Peak's income trust structure by introducing additional income taxes to be imposed on income trusts (generally) for taxation years commencing January 1, 2011. In order to qualify under legislation for a tax-deferred conversion, Peak must convert to a corporation before the end of 2013. Having considered these legislative changes, the current challenging economic and industry environment as well as the opportunities arising in such environment to execute on Peak's strategic plan, Peak believes that it is in its best interests to proceed with the Conversion at this time.

    
    Furthermore:

    -   the Conversion is important to broadening the scope of potential
        investors in Peak;

    -   access to capital markets for income trusts may become more limited
        in 2011;

    -   the Conversion removes the restriction on non-resident ownership
        imposed on income trusts;

    -   the Conversion is expected to be a tax deferred event for unitholders
        of Peak resident in Canada;

    -   the Conversion removes the growth limitations imposed by the SIFT
        legislation;

    -   the Arrangement provides for an effective and efficient method of
        converting from a SIFT to a corporation; and

    -   the Conversion will lead to a simplified and more efficient corporate
        structure that will reduce overhead and administrative costs.
    

The proposed Conversion will be completed in compliance with the exchange method provided for under the Income Tax Act (Canada). The Conversion requires a Meeting whereby Peak will be seeking the approval of Peak's unitholders, as well as customary court and regulatory approvals. Materials will be mailed to Peak unitholders in due course in connection with the Meeting. Further details about the timing and mechanics of the Conversion will be communicated as they become available.

About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization operating in western Canada and the United States of America. Through its various operating divisions, Peak provides drilling and production services to its customers both in the conventional and unconventional oil and natural gas industry as well as the oil sands regions of western Canada. The Trust also provides water technology solutions to a variety of customers throughout North America.

Peak's units are listed on the Toronto Stock Exchange under the symbol "PES.UN"

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

FORWARD-LOOKING INFORMATION

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

As a result, you are cautioned not to place undue reliance on these forward-looking statements. These statements are based on certain assumptions and analysis made by the Trust in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Trust's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Trust's expectations. Such risks and uncertainties include, but are not limited to the failure to receive approval of the Conversion from the unitholders, the court or other regulatory authorities or to realize the anticipated benefits of the Conversion.

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

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For further information: Peak Energy Services Trust: Mr. Curt Whitteron, President and Chief Executive Officer, [phone], [phone] (FAX); Peak Energy Services Trust: Mr. Monty Balderston, Chief Financial Officer, [phone], [phone] (FAX)