Cathedral Energy Services Ltd. provides 2009 tax information

/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

CALGARY, March 3 /CNW/ - Cathedral Energy Services Ltd. (the "Company"/"Cathedral" -TSX: CET) is pleased to provide the following information in relation to distributions by its predecessor, Cathedral Energy Services Income Trust (the "Trust") to assist former Canadian and U.S. holders of trust units ("Unitholders") of the Trust, in the preparation of their income tax returns. This information is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any former Unitholder of the Trust. Former Unitholders should consult with their own tax advisors with respect to their particular circumstances.

Canadian

The following information provided by the Company is intended to assist Canadian resident former Unitholders who are individuals in reporting distributions from the Trust for preparation of their 2009 T1 Personal Income Tax Return. Distributions declared by the Trust for 2009 will be comprised of a combination of: i) taxable trust income (64.79677%); ii) taxable foreign non-business income (28.72581%); and iii) capital gains (9.35161%) less foreign non-business tax paid (2.87419%), except as described below. No portion of the declared 2009 distributions is considered a return of capital.

The information contained herein is based on the Company's understanding of the Income Tax Act (Canada) ("Act") and the regulations there under, and is provided for general information only. Former Unitholders are advised to consult their personal tax advisors with respect to their particular circumstances.

The Trust qualified as a mutual fund trust under the Act and as such, trust units are qualified investments for registered retirement savings plans ("RRSPs"), registered retirement income funds ("RRIFs"), registered education savings plans ("RESPs"), and deferred profit sharing plans ("DPSPs"), all as defined in the Act. Former Unitholders who held their trust units in a RRSP, RRIF, RESP, or DPSP need not report any income related to trust unit distributions on their 2009 Income Tax Return. A former Unitholder that did not hold his or her trust units in an RRSP, RRIF, RESP or DPSP, must report taxable amounts allocated by the Trust in 2009 to the former Unitholder in the former Unitholder's 2009 Income Tax Return.

This taxable amount will be reported on a "T3 - Statement of Trust Income and Allocations and Designations" ("T3 Slip") that should be issued and mailed to all Unitholders on or before March 31, 2010. Canadian Unitholders who hold their trust units through a stockbroker or other intermediary should receive tax reporting information from that stockbroker or other intermediary.

During 2009, taxable distributions (based upon Record Date) totaled $0.31 per trust unit and all distributions were paid in cash.

United States

The following information is being provided to assist U.S. individual Unitholders in reporting distributions received from the Trust during 2009 on their Internal Revenue Service ("IRS") Form 1040, "U.S. Individual Income Tax Return" ("Form 1040").

This summary is of a general nature only and is not intended to be legal or tax advice to any particular Unitholder or potential Unitholder. Unitholders or potential Unitholders should consult their own legal and tax advisors as to their particular tax consequences of holding the Trust's units.

The Trust has not received an IRS letter ruling or a tax opinion from its tax advisors on these matters.

Qualified Dividends

In consultation with its U.S. tax advisors, the Trust believes that its trust units should be properly classified as equity in a corporation, rather than debt, and that dividends paid to U.S. individual Unitholders should be "qualified dividends" for U.S. federal income tax purposes. As such, the portion of the distributions made during 2009 that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to long-term capital gains. However, the individual taxpayer's situation must be considered before making this determination.

Trust Units Held Outside a Qualified Retirement Plan

With respect to cash distributions paid during the year to U.S. individual Unitholders, 100% percent should be reported as "qualified dividends".

The portion of the distributions treated as "qualified dividends" should be reported on Line 9b of Form 1040, unless the fact situation of the U.S. individual Unitholder determines otherwise. Commentary on page 22 of the Form 1040 Instruction Booklet for 2009 with respect to "qualified dividends" provides examples of individual situations where the dividends would not be "qualified dividends". Where, due to individual situations, the dividends are not "qualified dividends", the amount should be reported on Schedule B - Part II - Ordinary Dividends and Line 9a of Form 1040.

U.S. Unitholders are encouraged to utilize the Qualified Dividends and Capital Gain Tax Worksheet of Form 1040 to determine the amount of tax that may be otherwise applicable.

The taxable portion (for Canadian income tax purposes) of the distributions is subject to a minimum 15% Canadian withholding tax that is withheld prior to any payments being distributed to Unitholders. Where trust units are held in a cash account, we believe the full amount of the withholding tax should be creditable, subject to numerous limitations, for U.S. tax purposes in the year in which the withholding tax is withheld. Where Trust units are held in qualified retirement account, the same withholding tax applies but the amount is not creditable for U.S. tax purposes.

The amount of Canadian tax withheld should be reported on Form 1116, "Foreign Tax Credit (Individual, Estate, or Trust)". Information regarding the amount of Canadian tax withheld in 2009 should be determined from your own records and is not available from the Trust. Amounts over withheld, if any, should be claimed as a refund from the Canada Revenue Agency no later than two years after the calendar year in which the payment was paid and should not be claimed as a credit against your tax liability.

Investors should report their dividend income in accordance with this information and subject to advice from their tax advisors. U.S. individual Unitholders who hold their Trust units through a stockbroker or other intermediary should receive tax reporting information from their stockbroker or other intermediary. We expect that the stockbroker or other intermediary will issue a Form 1099-DIV, "Dividends and Distributions" or a substitute form developed by the stockbroker or other intermediary. The Trust is not required to furnish such Unitholders with Form 1099-DIV. Information on the Forms 1099-DIV issued by the brokers or other intermediaries may not accurately reflect the information in this notice for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns. Brokers and/or intermediaries may or may not be required to issue amended Forms 1099-DIV.

Trust Units Held Within a Qualified Retirement Plan

No amounts are required to be reported on a Form 1040 where the Trust units are held within a qualified retirement plan.

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For further information: Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer, Cathedral Energy Services Ltd., 1700, 715 - 5th Avenue S.W., Calgary, Alberta, T2P 2X6, Telephone: [phone], Fax: [phone], www.cathedralenergyservices.com