Peak Energy Services Trust Reports Its Financial Results for the Three and Nine Months Ended September 30, 2008

Peak Energy Services Trust ("Peak" or the "Trust") (TSX:PES.UN) - 



Financial Highlights

                                      Three months              Nine months
                                ended September 30       ended September 30
(in '000 of CAD,      ------------------------------------------------------
 except otherwise noted)       2008    2007 Change     2008    2007  Change
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Revenue                      42,451  27,504     54% 107,973  81,446      33%
EBITDA (1)                    7,786   6,769     15%  13,250  19,191     -31%
 Per unit - diluted            0.16    0.24    -33%    0.31    0.69     -55%
 As a percentage of revenue      18%     25%             12%     24%
Net income (loss)             1,334 (13,413)   110%  (4,232) (8,722)     51%
 Per unit - diluted            0.03   (0.48)   106%   (0.10)  (0.32)     69%
Adjusted distributable
 cash (1)                    17,212   4,628    272%  10,226  16,562     -38%
 Per unit - diluted            0.36    0.17    112%    0.24    0.60     -60%
Distributions declared            -   3,878   -100%       -  14,680    -100%
 Per unit                         -    0.14   -100%       -    0.53    -100%
Payout ratio (1)(2)
 Adjusted distributable cash      -%     84%              -%     89%
Drilling rig operating
 days (3)                    38,898  31,371     24%  99,980  90,120      11%
Service rig utilization (3)      58%     58%     -       53%     56%     -5%
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(1) Refer to the "Non-GAAP Measures" section for further details.
(2) Payout ratio is calculated as distributions declared divided by
    adjusted distributable cash.
(3) (Sources: Canadian Association of Oilwell Drilling Contractors 
    ("CAODC"), the Daily Oil Bulletin ("DOB") and Petroleum Services 
    Association of Canada) ("PSAC").



This press release focuses on key information and statistics from Peak Energy
Services Trust's ("Peak" or the "Trust") interim consolidated financial
statements and oilfield service industry which contains known and unknown risks
and uncertainties. Furthermore, certain statements contained in this press
release are forward-looking. Please review the discussion of these statements in
the "Forward-Looking Information" section of this press release.


Throughout this press release certain measures are used that are not recognized
measures under Canadian generally accepted accounting principles ("GAAP").
Specific measures used are earnings before interest, taxes, depreciation,
amortization and other certain items ("EBITDA"), adjusted EBITDA, adjusted
income (loss), standardized distributable cash ("SDC"), adjusted distributable
cash ("ADC"), payout ratio of ADC and SDC, working capital, current ratio,
funded debt, net debt and long-term debt to equity ratio. Please review the
discussion of these measures in the "Non-GAAP Measures" section of this press
release.


INDUSTRY ACTIVITY

For the third quarter of 2008, industry activity levels played out better than
what management expected as Canadian drilling rig operating days were 24 percent
higher than the prior year period. Meanwhile Canadian service rig utility was
flat at 58 percent quarter-over-quarter. On a year-to-date basis, Canadian
drilling rig operating days were 11 percent higher than the prior year period
and Canadian service rig utility was down slightly at 53 percent.


Although Canadian drilling rig operating days increased for both the third
quarter and year-to-date period as compared to the same periods of 2007, the
number of wells drilled decreased 3 percent and 9 percent for the three and nine
months ended September 30, 2008, respectively. The decrease in wells drilled is
reflective of the industry's shift in focus of both provincial jurisdiction and
resource target. This shift in focus has translated into the average days/well
increasing to 8.3 days/well year-to-date, as compared to 6.8 days/well for the
prior year period. The general trend for Alberta has been a greater focus on
deeper natural gas targets as technology advancements and the new Alberta
royalty rates that take effect in 2009 provide certain types of rate relief to
this type of activity that continue to make these targets attractive. The
offsetting Alberta casualty has been shallow natural gas as the new Alberta
royalty rates that take effect in 2009 have negatively impacted the returns on
these targets. Meanwhile, technology advancements and neutral government
intervention have made targets in Saskatchewan (Bakken play) and British
Columbia (Horn River and Montney plays) very attractive. This trend bodes well
for the Trust's Drilling Services reporting segment as it has a geographical
presence in all of these areas and its Surface Rentals operating division assets
are more likely to be utilized with these types of activities.


Although activities have increased for the third quarter and year-to-date
periods as compared to the same periods of 2007, Canadian drilling rig operating
days are still significantly below their all time highs in 2006. This has been
the result of:


- near-term weakness in natural gas pricing driven primarily by the larger than
historical norm of natural gas inventory in North America. The Western Canadian
Sedimentary Basin ("WCSB") recent years' drilling activity has been between 60
and 70 percent natural gas oriented;


- significant appreciation in value of the Canadian dollar against the American
dollar as hydrocarbon commodities produced in Canada are primarily priced in
American dollars, hence negatively impacting Peak's customers' revenues; and


- the Alberta provincial government's decision to increase the Alberta royalty
rates paid by producers effective January 1, 2009. The increased royalty rates
will reduce producers' return on Alberta related investments. Historically,
approximately 75 percent of Canadian drilling rig operating days have been
generated in Alberta.


Partially offsetting the above negative factors was that recent oil prices were
at all time highs and this motivated some producers to focus their efforts
towards oil related activities, partially offsetting the lack of focus on
natural gas related activities.


Unprecedented global market instability in the past few months has had an
adverse impact on effectively all industries around the world. The oil and gas
industry is no exception and has been materially impacted as the global credit
crisis has created such significant instability that near-term equity and debt
financing is currently very difficult to obtain and has increased the likelihood
that more countries will, if not already, experience a recession of some depth
and length. These market conditions and indicators have materially impacted oil
prices which have retreated from their all time highs which were in excess of
$140 USD/Bbl. in July 2008 to recent lows of below $70 USD/Bbl. in October 2008.


North American natural gas pricing has also experienced a similar retreat to oil
as pricing is essentially flat with 2007. Effectively, all of the recent pricing
gains achieved since February 2008, that increased optimism that natural gas
directed activities in Canada were going to rebound from recent low levels of
activity evaporated in the third quarter. As mentioned in the first and second
quarter MD&A, concerns regarding the near-term supply / demand fundamentals and
the market conditions and indicators driven by the global credit crisis has put
negative pressure on natural gas pricing. Natural gas storage injections are
occurring at a much more rapid pace than previously expected and have largely
been driven by the aggressive natural gas drilling activities that have occurred
in the United States of America over the past few years. This has more that
offset the decline in Canadian natural gas directed activities over the past 18
to 24 months.


Partially cushioning the commodity price declines has been the devaluation of
the Canadian dollar against the American dollar which has retreated relatively
in step with the commodity price deterioration. The immediate impact of the
above events have not been significant to recent industry activity levels as
programs have, for the most part, been set and are likely funded by past
financing initiatives, however the commodity devaluation and credit instability
will likely adversely impact activity levels for 2009 as programs will be
re-evaluated given current market conditions. It is unclear as to the full
magnitude of the impact to industry activity levels, however players that are in
the development stage will be more adversely impacted as their reliance on
financing to fund operations is very significant.


For 2009, industry analysts are predicting a decrease of 5 to 10 percent in
Canadian drilling rig operating days with the current trend of a lower number of
wells with a longer duration for each well being drilled continuing as the
underlying economic motivations already discussed have not changed. However,
until all of the major producers announce their 2009 capital programs, the full
impact to future activity levels as a result of the current market events and
conditions is uncertain.


Equity and debt financing is particularly relevant to large scale oil sand
projects which require significant up front investment during the
development/construction stage as they typically do not generate cash flow until
they reach the operational stage which may take a number of years. Recent
announcements by entities with oil sands projects support the negative near-term
impact to activity levels as most have made decisions to defer some near-term
spending on oil sand projects in response to current conditions. This does not
suggest all oil sand activity has stopped, just that its development is
proceeding at lower near term levels than previously expected.


Management believes the outlook for the oil and gas industry in North America
remains very positive over the longer term. Nonetheless, for at least the near
term it will continue to experience lower levels of activity as compared to the
5 year average, until the instability within the global markets subside and the
underlying oil and natural gas supply and demand fundamentals firm up over a
sustained period of time.


FINANCIAL SUMMARY

For the third quarter of 2008, Canadian drilling rig operating days were higher
than the same quarter of 2007 at 38,898 days, representing an increase of 24
percent. Quarter-over-quarter Canadian drilling rig utilization increased 24
percent to 48 percent. Saskatchewan contributed 48 percent (Alberta 28 percent;
British Columbia 16 percent) of the overall increase for the quarter as drilling
rig operating days within the province increased 75 percent (Alberta 9 percent;
British Columbia 33 percent). The geographical shift in activity is a direct
reflection of the producers' reaction to the Alberta royalty rate changes that
take effect in 2009. Furthermore, third quarter activity has been focused on
deeper / longer wells as 5,292 wells were drilled (2007 - 5,468 wells) with the
average days/well increasing to 7.4 days/well (2007 - 5.7 days/well). Meanwhile,
Canadian service rig utility was flat quarter-over-quarter with overall
utilization of 58 percent.


For the three months ended September 30, 2008, Peak:

- generated revenue of $42.5 million which was a 54 percent or $14.9 million
increase over the 2007 third quarter revenue of $27.5 million;


- realized EBITDA of $7.8 million ($0.16 per Unit diluted or 18 percent of
revenue), an increase of 15 percent or $1.0 million over EBITDA for the prior
year period of $6.8 million ($0.24 per Unit diluted or 25 percent of revenue);


- posted an adjusted income of $1.3 million ($0.03 per Unit diluted), which was
a decrease of 14 percent or $0.2 million as compared to an adjusted income for
the third quarter of 2007 of $1.5 million ($0.06 per Unit diluted);


- posted a net income of $1.3 million ($0.03 per Unit diluted), which was an
increase of 110 percent or $14.7 million as compared to a net loss for the third
quarter of 2007 of $13.4 million (loss of $0.48 per Unit diluted); and


- completed the acquisition of a fluids handling business (referred to as
"Amwest") on August 15, 2008.


Year-to-date, Canadian drilling rig operating days increased 11 percent from the
same period of 2007 at 99,980 days. Year-over-year Canadian drilling rig
utilization increased 9 percent to 41 percent. Saskatchewan contributed 55
percent (Alberta 17 percent; British Columbia 14 percent) of the overall
increase year-to-date as drilling rig operating days within the province
increased 44 percent (Alberta 3 percent; British Columbia 11 percent). The
geographical shift in activity is a direct reflection of the producers' reaction
to the Alberta royalty rate changes that take effect in 2009. Furthermore,
year-to-date activity has been focused on deeper / longer wells as 12,010 wells
were drilled (2007 - 13,270 wells) with the average days/well increasing to 8.3
days/well (2007 - 6.8 days/well). Meanwhile, Canadian service rig utility
decreased by 5 percent year-over-year with overall utilization of 53 percent.


For the nine months ended September 30, 2008, Peak:

- generated revenue of $108.0 million which was a 33 percent or $26.5 million
increase over the 2007 year-to-date revenue of $81.4 million;


- realized EBITDA of $13.3 million ($0.31 per Unit diluted or 12 percent of
revenue), a decrease of 31 percent or $5.9 million over EBITDA for the prior
year period of $19.2 million ($0.69 per Unit diluted or 24 percent of revenue);


- realized adjusted EBITDA of $15.3 million ($0.35 per Unit diluted or 14
percent of revenue), a decrease of 21 percent or $3.9 million over EBITDA for
the nine months ended September 30, 2007 of $19.2 million ($0.69 per Unit
diluted or 24 percent of revenue);


- posted an adjusted loss of $2.7 million (loss of $0.06 per Unit diluted),
which was a decrease of 144 percent or $9.0 million as compared to an adjusted
income for the first nine months of 2007 of $6.2 million ($0.23 per Unit
diluted);


- posted a net loss of $4.2 million (loss of $0.10 per Unit diluted), which was
an improvement of 51 percent or $4.5 million as compared to a net loss for the
first nine months of 2007 of $8.7 million (loss of $0.32 per Unit diluted);


- generated adjusted distributable cash of $10.2 million or $0.24 per Unit
diluted (2007 - $16.6 million or $0.60 per Unit diluted), of which zero
distributions ($0.00 per Unit) were made to Unitholders during the current
year-to-date period resulting in a payout ratio of zero percent (2007 - $14.7
million ($0.53 per Unit) or 89 percent);


- completed a public merger with Wellco on March 12, 2008. Included in the
year-to-date results of Peak are the activities subsequent to March 12, 2008 of
the former Wellco entity as a result of the merger. Management estimates that if
the merger had occurred on December 31, 2007 the pro forma combined financial
results after adjusting for merger related costs would have generated revenue of
$134.8 million, EBITDA of $21.8 million ($0.45 per unit diluted or 16 percent of
revenue) and net income of $0.6 million ($0.01 per unit diluted). Since the
merger, Peak has made significant progress on integrating the pre-merged
entities and estimates it has realized on over $4.5 million in annualized merger
synergies. Management expects the annualized merger synergies to increase in the
future to approximately $5.5 million as certain merger strategies that take
longer to implement take effect;


- signed an agreement to provide camp, catering and wastewater services (which
are part of the Camp and Catering and Remote Waste Water Systems operating
divisions) for 600 workers over the next two winter drilling seasons commencing
December 2008 for a major leaseholder in the oil sands region of northeastern
Alberta. This agreement is expected to generate approximately $18.0 million in
revenue over the two year term of the agreement ($9.0 million per year); and


- divested of its electric line (part of the Wireline Services operating
division) and access matting (part of the Surface Rentals operating division)
product lines which were deemed non-core assets to Peak for gross proceeds of
$9.3 million. This was part of the Trust's ongoing asset rationalization
program, whereby non-core assets identified as not generating an appropriate
rate of return are earmarked for disposal, giving the Trust the opportunity to
reinvest the proceeds in assets that are expected to generate improved returns
on invested capital.


As compared to December 31, 2007, Peak:

- increased working capital by $13.2 million to $32.0 million;

- increased tangible capital assets by $28.8 million to $230.8 million;

- increased funded debt by $14.5 million to $83.7 million; and

- increased Unitholders' equity by $35.7 million to $174.4 million.

POST MERGER INTEGRATION

On March 12, 2008, Peak completed a public merger transaction with Wellco,
however this was only the first of many significant steps to successfully merge
the two entities. Since this date, Peak has been aggressively working on
integrating the people, processes and systems of the two pre-merged entities to
achieve the expected synergies of the merger. Peak has accomplished several key
milestones in this regard. The more significant achievements are:


- physically moved all of the former head office Wellco employees to Peak's head
office;


- subleased the former Wellco head office space;

- completed certain subsidiary legal restructuring for tax and operating
efficiencies;


- realigned Peak's operating divisions;

- realigned the operational and support employee reporting structure;

- migrated all of the former Wellco legacy systems, processes and data to Peak's
Enterprise Resource Planning system (ERP System); and


- renegotiated and consolidated the pre-merged entities insurance policies.

Certain of the expected synergies are difficult to quantify with certainty due
to their nature, however management believes it is significantly down the path
of achieving the expected $5.5 million in synergies as a result of the merger.
Management currently estimates it has achieved, on an annualized basis, over
$4.5 million in merger synergies that it can directly measure and expects this
amount to increase once certain merger strategies that take longer to implement
are put into place.


RESULTS OF OPERATIONS

Revenue

For the three months ended September 30, 2008, Peak generated revenue of $42.5
million compared to $27.5 million for the prior year period representing an
increase of 54 percent compared to a 24 percent increase in Canadian drilling
rig operating days and no change in Canadian service rig activity over this time
period. Total Canadian drilling rig operating days for the third quarter of 2008
were 38,898 days compared to 31,371 days for the third quarter of 2007.
Meanwhile, Canadian service rig utilization remained flat at 58 percent for
third quarter of 2008 and 2007.


For the nine months ended September 30, 2008, Peak generated revenue of $108.0
million compared to $81.4 million for the prior year period representing an
increase of 33 percent compared to an 11 percent increase in Canadian drilling
rig operating days and a 5 percent decrease in Canadian service rig activity
over this time period. Total Canadian drilling rig operating days for the first
nine months of 2008 were 99,980 days compared to 90,120 days for the same period
of 2007. Meanwhile, Canadian service rig utilization was 53 percent for the
first nine months of 2008, compared to 56 percent for the prior year period.


A significant portion of Peak's revenue is generated in the first quarter of the
year, as this is when industry activity is typically at its highest level for
the year. Due to the timing of the merger with Wellco, a significant portion of
the merged entities activities for fiscal 2008 are not reflected in Peak's
current year-to-date results. Management estimates that if the merger had
occurred on December 31, 2007, the pro forma combined financial results, after
adjusting for merger related items, would have generated revenue of $134.8
million for the first nine months of 2008. This represents an increase in
revenue of $53.3 million or 65 percent over the prior year period.


Drilling Services' revenue increased by $10.1 million or 61 percent as it
generated $26.6 million in revenue or 63 percent of the Trust's total revenue
for the three months ended September 30, 2008, compared to $16.5 million or 60
percent for the prior year period. The increase in excess of the increase in
Canadian drilling rig operating days was the result of the revenue generated by
the former Wellco assets and Surface Rentals operating division (particularly
the solids control product line) more than offsetting lower utilization and
pricing experienced by all operation divisions.


Year-to-date, Drilling Services' revenue increased by $16.7 million or 35
percent as it generated $64.6 million in revenue or 60 percent of the Trust's
total revenue, compared to $47.9 million or 59 percent for the prior year
period. Consistent with the current quarter, the revenue increase was more
significant than the increase in Canadian drilling rig operating days. In
addition to the current quarter factors, revenue generated by Peak USA more than
offset lower utilization and pricing experienced by all operating divisions and
attributed to the year-to-date positive variance.


Production Services' revenue increased by $1.0 million or 11 percent as it
contributed $10.1 million in revenue or 24 percent of the Trust's total revenue
for the three months ended September 30, 2008, compared to $9.1 million or 33
percent for the prior year period. The revenue increase was significantly better
than the flat quarter-over-quarter Canadian service rig activity and was the
result of the business acquisition of Amwest and strong growth in activity
within the Trust's Fluids Handling operating division more than offsetting the
decrease in the Wireline operating division as a result of the disposal of its
electric line units and lower utilization and pricing experienced during the
period.


For the first nine months of fiscal 2008, Production Services' revenue increased
by $1.8 million or 7 percent as it generated $29.5 million in revenue or 27
percent of the Trust's total revenue, compared to $27.6 million or 34 percent
for the prior year period. Consistent with the current quarter, the revenue
increase was significantly better than the 5 percent decrease in service rig
activity. In addition to the current quarter factors, the Surface Rentals
operating division had strong activity on a year-to-date basis which more than
offset the decrease within the Wireline operating division as detailed above.


Oil Sands' revenue increased by $2.6 million or 136 percent as it contributed
$4.6 million in revenue or 11 percent of the Trust's total revenue for the three
months ended September 30, 2008, compared to $1.9 million or 7 percent for the
prior year period. The increase was primarily the result of strong activity
within the Fluid Handling operating division and the Wellco merger, as the
increase represents activities from the Camps and Catering and Remote Waste
Water Systems operating divisions. Management expects this reporting segment to
be a significant area of focus and growth for Peak in the future.


Year-to-date, Oil Sands' revenue increased by $4.6 million or 78 percent as it
generated $10.5 million in revenue or 10 percent of the Trust's total revenue,
compared to $5.9 million or 7 percent for the prior year period. The same
current quarter factors were the direct contributors to the year-to-date
increase.


Water Technology revenue was $1.2 million or 3 percent of the Trust's total
revenue for the three months ended September 30, 2008. For the first nine months
of fiscal 2008, revenue was $3.4 million or 3 percent of the Trust's total
revenue. There was no revenue for the comparative prior year periods as this
reporting segment was a direct result of the Wellco merger and represents the
activities of the Water Technology operating division.


Expenses

Operating expenses - For the three months ended September 30, 2008, operating
expenses were higher than the prior year period by $11.7 million or 82 percent.
As a percentage of revenue, operating expenses were 61 percent compared to the
prior year period of 52 percent. The primary drivers of the increase in
operating expenses as a percentage of revenue were:


- direct costs associated with the Camps and Catering and Water Technology
operating divisions, that were acquired as a result of the merger with Wellco,
have lower operating margins than Peak's historical operating divisions for the
prior year comparative period. Improving these margins is a key area of focus as
management has seen several opportunities for improvement since acquiring these
operating divisions in March 2008, however the major strategies to take
advantage of these opportunities take longer to implement and for their effects
to impact the financial results;


- employee compensation costs continue to be a challenge for the industry and
Trust which has adversely impacted operating expenses. Management has reviewed
and implemented, where required, more lucrative incentive programs to retain
staff in this very competitive environment;


- an increase in repairs and maintenance ("R&M") costs, as a percentage of
revenue, as the prior year's selective R&M program deferred certain R&M costs
until the equipment was utilized during the current period; and


- an increase in both heavy and light truck fuel costs, as a percentage of
revenue, primarily driven by a significant increase in the cost of fuel and
revenue activities related to longer distance fluids handling work.


For the nine months ended September 30, 2008, operating expenses were higher
than the prior year period by $23.6 million or 54 percent. As a percentage of
revenue, operating expenses were 62 percent compared to the prior year period of
54 percent. The same current quarter factors were the direct contributors to the
year-to-date increase as a percentage of revenue.


General and administrative expenses - For the third quarter of 2008, general and
administrative expenses (G&A) were $2.2 million or 35 percent higher than the
prior year period. As a percentage of revenue, G&A decreased to 20 percent for
the current quarter of 2008 as compared to 23 percent for the prior year period.
The primary factors impacting G&A were:


- $0.6 million in increased facility costs (rent, utilities and property taxes)
resulting from additional field facilities added with the Wellco merger;


- $0.9 million in increased employee related costs primarily the result of the
Wellco merger, as certain support functions of Peak required additional
employees to support the post merged operational activities; and


- $0.6 million reduction in variable compensation as previously accrued market
based variable compensation was reversed in the third quarter due to the weak
performance of Peak's Units.


For the first nine months of 2008, G&A expenses were $8.9 million or 48 percent
higher than the prior year period. As a percentage of revenue, G&A increased to
25 percent for the current year-to-date period as compared to 23 percent for the
prior year period. The primary factors impacting G&A were:


- $3.3 million in increased facility costs (rent, utilities and property taxes)
resulting from additional field facilities added with the Wellco merger and the
recent build out of a "super shop" in Red Deer, Alberta, new shops in Slave
Lake, Alberta and Estevan, Saskatchewan and head office in Calgary, Alberta to
support Peak's operations;


- $2.5 million in increased employee related costs primarily the result of the
Wellco merger, as certain support functions of Peak required additional
employees to support the post merged operational activities;


- $1.3 million in severance resulting from the implementation of Peak's
succession plan associated with the post Wellco merger senior management team
structure; and


- $0.7 million in financing costs directly associated with restructuring the
Trust's debt to complete the Wellco merger.


Exclusive of the succession planning and financing costs that were indirectly
related to the closing of the Wellco merger but not included as transaction
costs of the merger for accounting purposes, adjusted G&A increased $6.9 million
or 37 percent to $25.4 million and adjusted G&A as a percentage of revenue was
24 percent.


EBITDA - EBITDA increased $1.0 million or 15 percent to $7.8 million for the
three months ended September 30, 2008, meanwhile EBITDA as a percentage of
revenue, was 18 percent for the current fiscal period as compared to 25 percent
for the comparative prior year period. The primary drivers of the
quarter-over-quarter decrease are detailed above.


EBITDA decreased $6.0 million or 31 percent to $13.3 million for the nine months
ended September 30, 2008, meanwhile EBITDA as a percentage of revenue, was 12
percent for the current year-to-date period as compared to 24 percent for the
comparative prior year period. The primary drivers of the year-over-year
decrease are detailed above. Exclusive of the succession planning and financing
costs that were indirectly related to the closing of the Wellco merger but not
included as transaction costs of the merger for accounting purposes, adjusted
EBITDA decreased $3.9 million or 21 percent to $15.3 million ($0.35 per unit
diluted) and adjusted EBITDA as a percentage of revenue was 14 percent.


A significant portion of Peak's EBITDA is generated in the first quarter of the
year, as this is when industry activity is typically at its highest level for
the year. Due to the timing of the merger with Wellco, a significant portion of
the merged entities activities for fiscal 2008 are not reflected in Peak's
current year-to-date results. Management estimates that if the merger had
occurred on December 31, 2007, the pro forma combined financial results, after
adjusting for merger related costs, would have generated an EBITDA of $21.8
million ($0.45 per unit diluted or 16 percent of revenue) for the first nine
months of 2008. This represents an increase in EBITDA of $2.6 million or 13
percent over the prior year period.


Depreciation and amortization expenses - For the three months ended September
30, 2008, depreciation and amortization expenses increased $0.2 million over the
prior year period. For the nine months ended September 30, 2008, depreciation
and amortization expenses were $1.1 million higher than the prior year period.


Interest on long-term debt expense - Interest on long-term debt expense
increased to $1.3 million for the three months ended September 30, 2008,
representing an increase of $0.1 million or 8 percent over the same period of
2007. Interest on long-term debt expense increased to $3.9 million for the nine
months ended September 30, 2008, representing an increase of $0.4 million or 12
percent over the same period of 2007.


Loss (gain) on sale of equipment - For the three months ended September 30,
2008, the gain on sale of equipment amounted to nine thousand dollars compared
to a loss of $0.8 million for the prior year period. For the nine months ended
September 30, 2008, the loss on sale of equipment amounted to $0.5 million
compared to a loss of $1.3 million for the prior year period. Included in the
year-to-date loss were the dispositions of Peak's electric line and access
matting product lines for gross proceeds of $9.3 million. As previously
disclosed, the Trust has continued with its asset rationalization program,
whereby equipment identified during the period as not generating an appropriate
rate of return were disposed of with the proceeds being positioned for
reinvestment in equipment that is expected to generate improved returns on
invested capital.


Provision for income taxes - The current tax expense of nine thousand dollars
and future tax expense of $0.9 million, resulted in a net income tax expense of
$0.9 million and an effective income tax rate of 39 percent for the three months
ended September 30, 2008. Meanwhile, the current tax expense of $0.4 million and
future tax recovery of $1.2 million resulted in a net income tax recovery of
$0.7 million and an effective income tax rate of 15 percent for the nine months
ended September 30, 2008.


Income

Net income (loss) and comprehensive income (loss) - For the three months ended
September 30, 2008, net income and comprehensive income increased 110 percent to
a net income and comprehensive income of $1.3 million ($0.03 per Unit diluted)
compared to net loss and comprehensive loss of $13.4 million (loss of $0.48 per
Unit diluted) for the prior year period.


Exclusive of the succession plan and financing costs that were indirectly
related to the closing of the Wellco merger but not included as transaction
costs of the merger for accounting purposes, the adjusted loss for the first
nine months of 2008 decreased $9.0 million or 144 percent over the prior year
period to a loss of $2.7 million (loss of $0.06 per Unit diluted). Meanwhile,
for the nine months ended September 30, 2008, net income and comprehensive
income increased 51 percent to a net loss and comprehensive loss of $4.2 million
(loss of $0.10 per Unit diluted) compared to net loss and comprehensive loss of
$8.7 million ($0.32 per Unit diluted) for the prior year period.


A significant portion of Peak's income is generated in the first quarter of the
year, as this is when industry activity is typically at its highest level for
the year. Due to the timing of the merger with Wellco, a significant portion of
the merged entities activities for fiscal 2008 are not reflected in Peak's
current year-to-date results. Management estimates that if the merger had
occurred on December 31, 2007, the pro forma combined financial results, after
adjusting for merger related costs, would have generated income of $0.6 million
($0.01 per unit diluted) for the first nine months of 2008. This represents an
increase in income $9.3 million or 107 percent over the prior year period.


LIQUIDITY

Operating activities - For the third quarter of 2008, cash provided by operating
activities was $2.6 million or $0.05 per Unit diluted (2007 - $1.9 million or
$0.07 per Unit diluted). Meanwhile, year-to-date cash provided by operating
activities was $21.1 million or $0.49 per Unit diluted (2007 - $24.4 million or
$0.88 per Unit diluted). Net cash provided by operating activities are heavily
dependent on the generation of sufficient income before non-cash items. As such,
changes in the level of industry drilling activities will significantly affect
net cash provided by operating activities. Management expects that if the lower
industry activity level transpires as the analysts are forecasting that the
Trust's cash provided by operating activities for fiscal 2009 will likely be
higher than the current year. A significant portion of Peak's cash flow from
operating activities is generated in the first quarter of the year, as this is
when industry activity is typically at its highest level for the year. Due to
the timing of the merger with Wellco, a significant portion of the merged
entities activities for fiscal 2008 are not reflected in Peak's current
year-to-date results. The addition of former Wellco activities for a full fiscal
period will likely more than offset the negative impact of the overall expected
decrease in activity.


Investing activities - Net cash used in investing activities for the third
quarter of 2008 was $8.6 million (2007 - $5.4 million) and year-to-date was $2.1
million (2007 - $12.2 million).


For the nine months ended September 30, 2008, the activities were the result of:

- the merger with Wellco Energy Services Trust ("Wellco") for total
consideration of $31.6 million, which was comprised of $1.6 million in cash and
the issuance of 16,565,851 Trust Units with a fair market value of $30.0
million. The merger was accomplished by way of a plan of arrangement (the
"Arrangement") under the Business Corporations Act (Alberta) where by Wellco
unitholders received 0.9 of a Trust Unit of Peak for each unit of Wellco held.
Wellco provides camps and catering, well-site accommodations, remote waste water
systems, surface rentals and water technology services.


- the business acquisition of 942857 Alberta Ltd., 942859 Alberta Ltd., and
Amwest Transport Ltd. (collectively referred to as "Amwest") for a total
consideration of $7.4 million which included cash of $0.2 million. Based in
Calgary, Alberta, Canada, Amwest provides fluid handling services throughout
central and southern Alberta. Included in the business acquisition was $4.2
million in land and building that Peak is in the process of selling and leasing
back. These assets have been classified as property held for sale as management
has committed to a formal plan to sell these assets.


Peak accounted for the Wellco and Amwest transactions as business acquisitions
for which the total consideration was allocated as follows:




----------------------------------------------------------------------------
----------------------------------------------------------------------------
(in '000 of CAD)                                 Wellco    Amwest     Total
----------------------------------------------------------------------------
Equipment                                        41,517     1,901    43,418
Property                                              -     4,200     4,200
Intangibles
 Customer relationships                               -       340       340
 Non-compete covenants                                -        80        80
 Proprietary technology                           1,000         -     1,000
Goodwill                                              -     1,068     1,068
Working capital                                  24,024       500    24,524
Future income taxes                               8,483      (723)    7,760
Debt assumed                                    (43,457)        -   (43,457)
----------------------------------------------------------------------------
Net assets acquired                              31,567     7,366    38,933
----------------------------------------------------------------------------
----------------------------------------------------------------------------



- $8.3 million of gross equipment purchases and a net disposal of $6.1 million
including proceeds on sale of equipment of $14.4 million.


Financing activities - Net cash provided by financing activities for the third
quarter of 2008 was $9.2 million (2007 - net cash used of $4.4 million) and
year-to-date net cash used was $17.4 million (September 30, 2007 - $12.1
million).


For the nine months ended September 30, 2008, the activities were the result of:

- a net increase in long-term debt of $47.0 million from a new syndicated
extendable term revolving acquisition loan facility used to partially retire the
former debt facilities detailed below;


- the $74.4 million repayment of long-term debt associated with the former $30.8
million extendable term revolving acquisition loan facility and the former debt
facility of $43.5 million assumed on closing of the Wellco merger; and


- the issuance of 4,133,859 Trust Units for net proceeds of $9.9 million used to
partially retire the former debt facilities detailed above.


Working capital - The Trust had net working capital of $32.0 million at
September 30, 2008, compared to $18.8 million at December 31, 2007. The increase
in net working capital was the result of the Wellco merger. The Trust's current
ratio remained strong over the period, decreasing slightly to 2.51 to 1.00 at
September 30, 2008 from 2.66 to 1.00 at December 31, 2007.


CAPITAL RESOURCES

Capital Expenditures

During the first nine months of fiscal 2008, the Trust expended a total of $55.9
million on gross tangible asset additions and $41.5 million on net tangible
asset additions (includes mergers, business acquisitions and purchase of
equipment, net of proceeds on the sale of equipment) compared to $14.9 million
and $9.5 million, respectively, for the prior year period. Included in the net
asset additions is the Wellco merger whereby Peak paid total consideration of
$31.6 million, which was comprised of $1.6 million in cash and the issuance of
16,565,851 Trust Units with a fair market value of $30.0 million in exchange of
all of the issued and outstanding trust units of Wellco.


By operating segment, the expenditures were:



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Nine months
ended September 30, 2008   Drilling Production                Water
(in '000 of CAD)           Services   Services Oil Sands Technology   Total
----------------------------------------------------------------------------
Growth                        1,810      2,226     1,317          -   5,353
Maintenance                     869        604         -          -   1,473
Infrastructure                    -          -         -          -   1,450
----------------------------------------------------------------------------
                              2,679      2,830     1,317          -   8,276
Proceeds on sale of
 equipment                                                          (14,413)
----------------------------------------------------------------------------
                                                                     (6,137)
Wellco merger impact         30,064      1,152    10,046        255  41,517
Amwest acquisition impact         -      6,101         -          -   6,101
----------------------------------------------------------------------------
Net asset additions          32,743     10,083    11,363        255  41,481
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Peak's capital expenditure program for fiscal 2008 has changed from what was
disclosed in the 2007 Annual Report.

By reporting segment the Trust now intends to expend the following for 
fiscal 2008:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
Fiscal 2008 capital
 expenditure program       Drilling Production                Water
(in '000 of CAD)           Services   Services Oil Sands Technology   Total
----------------------------------------------------------------------------
Growth                        6,534      2,286     9,000          -  17,820
Maintenance                   2,401        938        60          -   3,399
Infrastructure                    -          -         -          -   2,075
----------------------------------------------------------------------------
                              8,935      3,224     9,060          -  23,294
Proceeds on sale of
 equipment                                                          (18,613)
----------------------------------------------------------------------------
                                                                      4,681
Wellco merger impact         30,064      1,152    10,046        255  41,517
Amwest acquisition impact         -      6,101         -          -   6,101
----------------------------------------------------------------------------
Net asset additions          38,999     10,477    19,106        255  52,299
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Long-term debt

The Trust's long-term debt (including current portion) increased to $86.8
million at September 30, 2008, as compared to $70.8 million at December 31,
2007. Funded debt was $83.7 million at September 30, 2008 as compared to $69.1
million at December 31, 2007. Meanwhile, net debt was $51.7 million at September
30, 2008 as compared to $50.3 million at December 31, 2007. The long-term debt
to equity ratio decreased to 0.50 to 1.00 at September 30, 2008 (December 31,
2007 - 0.51 to 1.00). Of the Trust's $140.0 million long-term debt facilities at
September 30, 2008, $56.3 million was available for use by the Trust for future
capital expenditures and strategic business acquisitions at the sole discretion
of the lender and subject to certain lending ratios being maintained.
Considering the current credit conditions and related negative impact on the oil
and gas industry, management is relatively comfortable with its current and
near-term forecast for its long-term debt level. It should be noted that given
the current environment that the Trust may experience more difficulty expanding
its credit facilities materially above current levels and if required for
operations this would adversely impact the Trust's liquidity.


All covenants were satisfied at September 30, 2008 and all banking requirements
were up to date.


Unitholders' equity

Unitholders' equity increased $35.7 million to $174.4 million at September 30,
2008 from $138.8 million at December 31, 2007. The increase over the prior
year-end was the result of:


- a net loss of $4.2 million incurred;

- the issuance of 4,133,859 Trust Units for net cash proceeds of $9.9 million; and

- the issuance of 16,565,851 Trust Units with a fair market value of $30.0
million for all of the issued and outstanding trust units of Wellco.


Considering the current equity market conditions and related negative impact on
the oil and gas industry it is not probable that management can rely heavily on
equity financing as the market appetite is extremely weak and it would be very
dilutive for existing Unitholders at current Unit market pricing.


Peak had 48,398,097 Trust Units outstanding at September 30, 2008, compared to
27,698,386 Trust Units at December 31, 2007. As of November 4, 2008, the number
of Trust Units outstanding was 48,398,097.


DISTRIBUTABLE CASH

Standardized distributable cash - Standardized distributable cash is defined as
cash flow from operating activities less adjustments for total capital
expenditures, as reported in the Canadian GAAP financial statements, and
restrictions on distributions arising from compliance with financial covenants
restrictive as of the date of the calculation.


The following was the Trust's standardized distributable cash and associated
payout ratio of distributions declared:




----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                        Nine months ended
                                                           September 30
                                                     -----------------------
(in '000 of CAD, except otherwise noted)                2008           2007
----------------------------------------------------------------------------
Cash flow from operating activities                   21,072         24,401
Less adjustments for:
 Business acquisitions                                (8,740)             -
 Purchase of equipment                                (8,276)       (14,931)
 Distribution restrictions caused by
  financial covenant                                   2,802              -
----------------------------------------------------------------------------
Standardized distributable cash                        6,858          9,470
Distributions declared to Unitholders                      -        (14,680)
----------------------------------------------------------------------------
Distribution surplus                                   6,858         (5,210)
----------------------------------------------------------------------------
Payout ratio of standardized
 distributable cash                                        -%           155%
Standardized distributable cash
 Per unit - basic                                       0.16           0.34
 Per unit - diluted                                     0.16           0.34
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Adjusted distributable cash - Adjusted distributable cash is defined as
standardized distributable cash adjusted for business acquisitions, growth and
infrastructure capital expenditures and seasonal changes in non-cash working
capital. Adjusted distributable cash is used by management to measure the
Trust's ability to generate the cash necessary to make distributions, repay debt
or fund future growth through capital investment.


It is management's strategy to fund business acquisitions, growth and
infrastructure capital expenditures from additional long-term debt or equity
financing as these activities are enhancing the Trust's overall productive
capacity. Furthermore, management's non-cash working capital strategy is to
maintain a consistent long-term balance, however non-cash working capital is
subject to seasonal fluctuations. As a result of these strategies, the
aforementioned items are adjusted for in determining adjusted distributable
cash.


Effectively, adjusted distributable cash is the same as the Trust's former
disclosed measure of funds from operations less maintenance capital
expenditures. Management views maintenance capital expenditures as an operating
expenditure required to maintain the Trust's productive capacity, hence it does
not adjust for maintenance capital expenditures in determining adjusted
distributable cash.


The following was the Trust's adjusted distributable cash and associated payout
ratio of distributions declared:




----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                        Nine months ended
                                                           September 30
                                                     -----------------------
(in '000 of CAD, except otherwise noted)                2008           2007
----------------------------------------------------------------------------
Standardized distributable cash                        6,858          9,470
Adjusted for:
 Business acquisitions                                 8,740              -
 Growth capital expenditures                           5,353          3,355
 Infrastructure capital expenditures                   1,450         10,545
 Seasonal change in non-cash
  working capital                                    (12,175)        (6,808)
----------------------------------------------------------------------------
Adjusted distributable cash                           10,226         16,562
Distributions declared to Unitholders                      -        (14,680)
----------------------------------------------------------------------------
Distribution surplus (deficit)                        10,226          1,882
----------------------------------------------------------------------------
Payout ratio of adjusted
 distributable cash                                        -%            89%
Adjusted distributable cash
 Per unit - basic                                       0.24           0.60
 Per unit - diluted                                     0.24           0.60
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The adjusted distributable cash payout ratio was zero percent (2007 - 89
percent) for the nine months ended September 30, 2008. The distribution surplus
between adjusted distributable cash and distributions declared was $10.2 million
(2007 - $1.9 million) for the first nine months of fiscal 2008 and was used to
fund capital expenditures and the Amwest business acquisition. The Trust's
Indentures (for both Peak and Peak Commercial Trust) govern the amounts that the
Trustee and the Administrator, Peak Energy Services Ltd. ("PESL"), can
distribute to Unitholders. These Indentures give management the latitude to
withhold reasonable reserves for operations. Management's long-term objective
has been to pay in the range of 65 to 75 percent of the Trust's adjusted
distributable cash on an annual basis. Formerly, management disclosed its
objective was to distribute 50 to 60 percent of fund from operations. Adjusted
distributable cash is effectively funds from operations less maintenance capital
expenditures, hence the increase in the percentage range is to reflect the
impact of maintenance capital expenditures.


Since the changes in tax laws regarding trusts was announced by the federal
government in late 2006, it has become increasingly more difficult to raise
equity capital as a trust. In addition, the current downturn in industry
activity levels has adversely impacted the Trust's adjusted distributable cash.
Consequently, management has shifted its financing strategy to using its
adjusted distributable cash to reduce the Trust's core long-term debt to create
additional facilities to be available for when future business acquisitions and
growth capital expenditure opportunities present themselves. Commencing with the
December 2007 distribution period, Peak ceased distributions for an indefinite
period. Management believes that this financing strategy will allow it to
fulfill its vision and execute on its corporate strategy, while maintaining a
stable financial position. It should be noted that there can be no absolute
assurances made that the Trust will make any future distributions.


CORPORATE GOVERNANCE

The regulatory and statutory compliance environment in Canada is rapidly
evolving to ensure effective corporate governance frameworks exist within
publicly held entities. These standards involve ensuring more timely, accurate
and complete financial reporting and disclosures. Of the recently added
compliance requirements, the most significant expenditure of resources for the
Trust has and will involve the requirements of Multilateral Instrument ("MI")
52-109. Peak's CEO and CFO have filed the necessary certifications to September
30, 2008.


NON-GAAP MEASURES

EBITDA and adjusted EBITDA are defined as earnings before interest, taxes,
depreciation and amortization and other items. EBITDA is not a recognized
measure under Canadian GAAP. Management believes, in addition to net income,
EBITDA is a useful supplemental measure as it provides an indication of the
results generated by Peak's principle business activities prior to consideration
of how these activities are financed or how the results are taxed in various
jurisdictions. Readers should be cautioned that EBITDA should not be construed
as an alternative to net income determined in accordance with Canadian GAAP as
an indicator of the Trust's performance. Peak's method of calculating EBITDA may
differ from other companies and, accordingly, EBITDA may not be comparable to
measures used by other companies.


Adjusted income (loss) is defined as net income (loss) adjusted for financing
and succession planning costs indirectly associated with the merger with Wellco
and impairment loss on goodwill. Adjusted income (loss) is not a recognized
measure under Canadian GAAP. Management believes, in addition to net income
(loss), adjusted income (loss) is a useful supplemental measure as it provides
an indication of income (loss) before unusual items. Readers should be cautioned
that adjusted income (loss) should not be construed as an alternative to net
income (loss) determined in accordance with Canadian GAAP as an indicator of the
Trust's performance. Peak's method of calculating adjusted income (loss) may
differ from other companies and, accordingly, adjusted income (loss) may not be
comparable to measures used by other companies.


Standardized distributable cash is defined as cash flow from operating
activities less adjustments for total capital expenditures, as reported in the
GAAP financial statements, and restrictions on distributions arising from
compliance with financial covenants restrictive as of the date of the
calculation. Standardized distributable cash is not a recognized measure under
Canadian GAAP, however standardized distributable cash is in accordance with the
recommendations provided by the CICA's publication "Standardized Distributable
Cash in Income Trusts and Other Flow-Through Entities: Guidance on Preparation
and Disclosure". Readers should be cautioned that standardized distributable
cash should not be construed as an alternative to cash flow from operating
activities, as an indicator of the Trust's performance. Peak's method of
calculating standardized distributable cash may differ from other companies and,
accordingly, standardized distributable cash may not be comparable to measures
used by other entities.


Adjusted distributable cash is defined as standardized distributable cash
adjusted for business acquisitions, growth and infrastructure capital
expenditures and seasonal changes in non-cash working capital. Adjusted
distributable cash is not a recognized measure under Canadian GAAP. Management
believes, in addition to standardized distributable cash, adjusted distributable
cash is a useful supplemental measure as it demonstrates the Trust's ability to
generate the cash necessary to make distributions, repay debt or fund future
growth through capital investment. Readers should be cautioned that adjusted
distributable cash should not be construed as an alternative to standardized
distributable cash, determined in accordance with the recommendations provided
by the CICA's publication "Standardized Distributable Cash in Income Trusts and
Other Flow-Through Entities: Guidance on Preparation and Disclosure", as an
indicator of the Trust's performance. Peak's method of calculating adjusted
distributable cash may differ from other companies and, accordingly, adjusted
distributable cash may not be comparable to measures used by other entities.


Payout ratios are defined as distributions declared divided be either
standardized distributable cash or adjusted distributable cash. Payout ratios
are not recognized measures under Canadian GAAP. Management believes these
ratios provide an indication of the amount of cash either retained or
distributed that could be utilized for future growth opportunities, debt
repayment or incremental future distributions to Unitholders. The Trust's method
of calculating payout ratios may differ from those used by other entities and,
accordingly, payout ratios may not be comparable to measures used by other
entities.


Working capital is defined as current assets less current liabilities excluding
current portion of long-term debt. Current ratio is defined as current assets
divided by current liabilities excluding current portion of long-term debt.
Working capital and current ratio are not recognized measures under Canadian
GAAP. Management believes working capital and current ratio provide an
indication of the current liquidity available to the Trust before considering
long-term debt facilities or equity financing considerations. The Trust's method
of calculating working capital or current ratio may differ from those used by
other entities and, accordingly, may not be comparable to measures used by other
entities.


Funded debt is defined as long-term debt including current portion of long-term
debt less cash and cash equivalents. Net debt is defined as long-term debt
including current portion of long-term debt less working capital. Funded debt
and net debt are not recognized measures under Canadian GAAP. Management
believes funded debt and net debt provide an indication of the Trust's debt
position after consideration for assets and liabilities that are considered
relatively liquid in nature. The Trust's method of calculating funded debt and
net debt may differ from those used by other entities and, accordingly, may not
be comparable to measures used by other entities.


Long-term debt to equity ratio is defined as long-term debt including current
portion of long-term debt divided by Unitholders' equity. Long-term debt to
equity ratio is not a recognized measure under Canadian GAAP. Management
believes the long-term debt to equity ratio provides an indication of how the
Trust's operations are financed. The Trust's method of calculating long-term
debt to equity ratio may differ from those used by other entities and,
accordingly, may not be comparable to measures used by other entities.


FORWARD-LOOKING INFORMATION

This MD&A contains forward looking information within the meaning of applicable
Canadian securities legislation ("Forward-looking Information") 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. 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.


In particular, Forward-looking Information includes the following statements
within this MD&A: the increased royalty rates will reduce producers' return on
Alberta related investments; has increased the likelihood that more countries
will, if not already, experience a recession of some depth and length; however
the commodity devaluation and credit instability will likely adversely impact
activity levels for 2009; players that are in the development stage will be more
adversely impacted as their reliance on financing to fund operations is very
significant; for 2009, industry analysts are predicting a decrease of 5 to 10
percent in Canadian drilling rig operating days with the current trend of a
lower number of wells with a longer duration for each well being drilled
continuing; typically do not generate cash flow until they reach the operational
stage which may take a number of years; most have made decisions to defer some
near-term spending on oil sand projects; 

management believes the outlook for the oil and gas industry in North America
remains very positive over the longer term; for at least the near term it will
continue to experience lower levels of activity as compared to the 5 year
average, until the instability within the global markets subside and the
underlying oil and natural gas supply and demand fundamentals firm up over a
sustained period of time; estimates it has realized on over $4.5 million in
annualized merger synergies; management expects the annualized merger synergies
to increase in the future to approximately $5.5 million; this agreement is
expected to generate approximately $18.0 million in revenue over the two year
term of the agreement ($9.0 million per year); management expects this reporting
segment to be a significant area of focus and growth for Peak in the future;
major strategies to take advantage of these opportunities take longer to
implement and for their effects to impact the financial results; it is
management's strategy to fund business acquisitions, growth and infrastructure
capital expenditures from additional long-term debt or equity financing;
management's non-cash working capital strategy is to maintain a consistent
long-term balance; management has shifted its financing strategy to using its
adjusted distributable cash to reduce the Trust's core long-term debt to create
additional facilities to be available for when future business acquisitions and
growth capital expenditure opportunities present themselves; management believes
that this financing strategy will allow it to fulfill its vision and execute on
its corporate strategy, while maintaining a stable financial position; changes
in the level of industry drilling activities will significantly affect net cash
provided by operating activities; management expects that if the lower industry
activity transpire as the analysts are forecasting (see discussion in Industry
Activity) that the Trust's cash provided by operating activities for fiscal 2009
will likely be higher than the current year; the Trust now intends to expend the
following for fiscal 2008; management is relatively comfortable with its current
and near-term forecast for its long-term debt level; in the current environment
that the Trust may experience more difficulty expanding its credit facilities
materially above current levels; it is not probable that management can rely on
equity financing; management also believes that the mid term outlook may not be
as positive due to the current instability of the global economic environment
and believes that industry activity levels could suffer as a result of these
conditions; the underlying strength in the supply and demand fundamentals for
oil and natural gas supply should once again be a catalyst for higher commodity
prices and more robust levels of activity over the longer term.


These statements include, but are not limited to, statements as to seasonal and
weather conditions affecting the Canadian oil and natural gas industry and the
demand for the Trust's services. 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: fluctuations in the price and demand for oil
and natural gas; currency fluctuations; fluctuations in the level of oil and
natural gas exploration and development activities; fluctuations in the demand
for oilfield services that the Trust provides; the effects of weather conditions
on operations; the existence of competition from other oilfield service
entities; general economic, market or business conditions; public market
volatility and the related ability to access sufficient capital to fund
activities; availability to access debt financing to fund activities; government
policy changes; changes in laws or regulations, including taxation and
environmental regulations; the lack of availability of qualified personnel or
management; and other unforeseen conditions which could impact the use of
services supplied by the Trust.


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.


OUTLOOK

The third quarter of 2008 played out somewhat better than management expected
which has resulted in solid third quarter results being posted by Peak despite
industry activity levels being well below the record levels achieved in 2006.
The Trust generated record revenue of $42.5 million for the three months ended
September 2008 which represents an increase of 54 percent as compared to the
prior year period while drilling rig utilization increased by 24 percent for the
corresponding period. These results were directly related to the commitment that
management has made in terms of growth throughout the Trust's twelve year
history. The Wellco merger that closed on March 12, 2008 along with its
successful integration and the acquisition of Amwest on August 15, 2008 are
further testaments of management's continuing commitment to grow and manage the
Trust for the benefit of all stakeholders. The geographic diversity incorporated
into the Trust's infrastructure has also made a significant, positive impact on
Peak's results through the re-deployment of assets prior to and during the third
quarter of 2008 to regions of greater political stability and higher activity
levels. To this point, we have seen a significant number of assets leaving
Alberta and being relocated to Peak facilities in British Columbia, Saskatchewan
and Rock Springs, Wyoming to meet the demands of our customer base within these
regions.


For the first nine months of 2008, Peak generated record revenue of $108.0
million which represents an increase of 33 percent as compared to the prior year
period while Canadian drilling rig operating days increased just 11 percent for
the corresponding period. Although the Trust's organic growth plan was cut back
substantially in 2007 due to lower industry activity levels, an aggressive
capital expenditure program over the previous two fiscal years combined with its
2008 merger and acquisition activity has allowed Peak's top line to strengthen
substantially on a year-over-year basis as compared to the drop in Canadian
drilling rig operating days for the corresponding period. Pricing for our
equipment and services has also contributed positively to the Trust's reasonably
strong revenue performance year to date as it has remained relatively firm for
the period.


With Peak's top line showing significant growth in the third quarter, the
Trust's margins are now beginning to show marked improvement as well, increasing
from a negative 15 percent during the second quarter of 2008 to a positive 18
percent during the third quarter and 12 percent year-to-date. Over the previous
two years Peak has focused on expanding its infrastructure; this larger enhanced
infrastructure allows the Trust to capitalize on managing its current asset base
more efficiently as well as accommodate future growth opportunities such as they
may be encountered. The combination of Peak's larger asset base and management's
continued commitment to focusing internally leave the Trust well positioned as
industry moves forward into the historically busier winter drilling season. To
date, the fourth quarter has seen industry activity levels much as anticipated
and consistent with those realized in the third quarter.


Management believes that the long term outlook for the oil and natural gas
industry in North America remains very positive. Having said this, management
also believes that the mid term outlook may not be as positive due to the
current instability of the global economic environment and believes that
industry activity levels could suffer as a result of these conditions. As this
instability subsides, the underlying strength in the supply and demand
fundamentals for oil and natural gas supply should once again be a catalyst for
higher commodity prices and more robust levels of activity over the longer term.


CONFERENCE CALL

Management will hold a conference call to discuss the quarter end results at
9:30 a.m. MT (11:30 a.m. ET) on Wednesday November 5, 2008. To participate,
please dial 1 [phone] or 1 [phone]. Participants are asked to call
at least 10 minutes before the start of the call. For those unable to
participate in the live call, a replay will be available until Wednesday
November 12, 2008 by dialing 1 [phone] or 1 [phone], verbal pass
code 3274170.


FINANCIAL RESULTS

The following selected financial information summarizes Peak's consolidated
financial results for the three and nine months ended September 30, 2008. Peak's
quarterly report, including the consolidated interim financial statements and
management's discussion and analysis for the quarters ended September 30, 2008
and 2007 will be available at www.sedar.com on or about November 10, 2008.




CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME (LOSS)
AND DEFICIT
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                          Nine months ended
                                   Three months ended             September
                                --------------------------------------------
(in thousands of CAD, except
 per Unit amounts)(unaudited)        2008       2007        2008       2007
----------------------------------------------------------------------------

Revenue                         $  42,451  $  27,504  $  107,973  $  81,446

Expenses:
 Operating                         25,978     14,288      67,297     43,709
 General and administrative         8,687      6,447      27,426     18,546
 Depreciation and amortization      4,424      4,262      14,091     12,964
 Interest on long-term debt         1,301      1,202       3,850      3,423
 ---------------------------------------------------------------------------
                                   40,390     26,199     112,664     78,642

----------------------------------------------------------------------------
Income (loss) before other items    2,061      1,305      (4,691)     2,804

Other items:
 Impairment loss on goodwill            -     15,559           -     15,559
 Loss (gain) on sale of equipment      (9)       787         533      1,261
 Foreign exchange gain               (122)         -        (252)         -
 ---------------------------------------------------------------------------
                                     (131)    16,346         281     16,820

----------------------------------------------------------------------------
Income (loss) before income taxes   2,192    (15,041)     (4,972)   (14,016)

Provision for income taxes:
 Current                                9        451         437        837
 Future (reduction)                   849     (2,079)     (1,177)    (6,131)
 ---------------------------------------------------------------------------
                                      858     (1,628)       (740)    (5,294)

----------------------------------------------------------------------------
Net income (loss) and
 comprehensive income (loss)        1,334    (13,413)     (4,232)    (8,722)

Deficit, beginning of period

 As previously reported           (55,752)   (31,675)    (50,186)   (25,192)

 Change in method of accounting
  for deferred financing costs          -          -           -       (372)
 ---------------------------------------------------------------------------

As restated                       (55,752)   (31,675)    (50,186)   (25,564)

Distributions declared to
 Unitholders                            -     (3,878)          -    (14,680)

----------------------------------------------------------------------------
Deficit, end of period          $ (54,418) $ (48,966) $  (54,418) $ (48,966)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Earnings (loss) per Unit:
 Basic                          $    0.03  $   (0.48) $    (0.10) $   (0.32)
 Diluted                        $    0.03  $   (0.48) $    (0.10) $   (0.32)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                          Nine months ended
                                  Three months ended              September
                                --------------------------------------------
(in thousands of CAD)(unaudited)     2008       2007        2008       2007
----------------------------------------------------------------------------

Operating activities:
 Net income (loss)              $   1,334  $ (13,413) $   (4,232) $  (8,722)
 Add (deduct) items not
  affecting cash:
  Depreciation and amortization     4,424      4,262      14,091     12,964
  Impairment loss on goodwill           -     15,559           -     15,559
  Loss (gain) on sale of
   equipment                           (9)       787         533      1,261
  Unrealized foreign exchange
   loss (gain)                        (68)         -         215          -
  Future income taxes                 849     (2,079)     (1,177)    (6,131)
 ---------------------------------------------------------------------------
                                    6,530      5,116       9,430     14,931

Changes in non-cash working
 capital items                     (3,967)    (3,196)     11,642      9,470
 ---------------------------------------------------------------------------

                                    2,563      1,920      21,072     24,401

Investing activities:
 Business acquisition              (7,157)         -      (8,740)         -
 Purchase of equipment             (5,476)    (5,747)     (8,276)   (14,931)
 Proceeds on sale of equipment      3,399        467      14,413      5,394
 ---------------------------------------------------------------------------
                                   (9,234)    (5,280)     (2,603)    (9,537)

Changes in non-cash working
 capital items                        605       (141)        533     (2,662)
 ---------------------------------------------------------------------------

                                   (8,629)    (5,421)     (2,070)   (12,199)

Financing activities:
 Increase of operating line of
  credit                              (78)         -           -          -
 Increase in long-term debt         9,550          -      74,118      3,000
 Repayment of long-term debt         (250)         -    (101,482)         -
 Repayment of obligations under
  capital lease                         -          -           -       (103)
 Issue of Trust Units, net of
  costs                                 -          -       9,923      1,041
 Distributions paid to
  Unitholders                           -     (4,432)          -    (16,044)
 ---------------------------------------------------------------------------
                                    9,222     (4,432)    (17,441)   (12,106)

Foreign exchange gain on cash
 held in foreign currency               7          -         (15)         -
----------------------------------------------------------------------------

Increase (decrease) in cash and
 cash equivalents                   3,163     (7,933)      1,546         96
Cash and cash equivalents,
 beginning of period                    -     11,885       1,617      3,856
----------------------------------------------------------------------------

Cash and cash equivalents, end
 of period                      $   3,163  $   3,952  $    3,163  $   3,952
----------------------------------------------------------------------------
----------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                September 30,   December 31,
(in thousands of CAD) (unaudited)                       2008           2007
----------------------------------------------------------------------------
ASSETS
Current assets:
 Cash and cash equivalents                   $         3,163  $       1,617
 Accounts receivable                                  46,098         27,041
 Prepaid expenses                                      2,663          1,477
 Inventory                                             1,296              -
 ---------------------------------------------------------------------------
                                                      53,220         30,135

Property and equipment                               226,585        201,980

Equipment held for sale                                4,200              -

Intangibles                                            8,417          8,797

Goodwill                                               1,068              -
----------------------------------------------------------------------------
                                             $       293,490  $     240,912
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued liabilities    $        20,577  $      11,056
 Income taxes payable                                    441             63
 Current portion of long-term debt                     3,513          3,562
 Current portion of deferred lease
  inducements                                            201            201
 ---------------------------------------------------------------------------
                                                      24,732         14,882

Long-term debt                                        83,330         67,188

Deferred lease inducements                             1,973          2,124

Future income taxes                                    9,043         17,981

Unitholders' equity:
 Trust Unit capital                                  227,347        187,440
 Contributed surplus                                   1,483          1,483
 Deficit                                             (54,418)       (50,186)
 ---------------------------------------------------------------------------
                                                     174,412        138,737
                                             $       293,490  $     240,912
----------------------------------------------------------------------------
----------------------------------------------------------------------------



About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization
operating in western Canada and the mid-west United States of America. Through
its various operating divisions, Peak provides drilling and production services
to its customers both in the conventional oil and 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".