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

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



Financial Highlights 

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                                 Three months ended        Six months ended
                                            June 30                 June 30
(in '000 of CAD,            ------------------------------------------------
except otherwise noted)        2008    2007  Change    2008    2007  Change
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Revenue                      27,655  17,791      55% 65,522  53,942      21%
EBITDA (1)                   (4,227)   (545)   -676%  5,464  12,422     -56%
 Per unit - diluted           (0.09)  (0.02)   -350%   0.14    0.45     -69%
 As a percentage of revenue     -15%     -3%              8%     23%
Net income (loss)            (8,697)   (657) -1,224% (5,566)  4,691    -219%
 Per unit - diluted           (0.18)  (0.02)   -800%  (0.14)   0.17    -182%
Adjusted distributable
 cash (1)                   (12,948) (1,069) -1,111% (6,986) 11,934    -159%
 Per unit - diluted           (0.27)  (0.04)   -575%  (0.17)   0.43    -140%
Distributions declared            -   4,985    -100%      -  10,802    -100%
 Per unit                         -    0.18    -100%      -    0.39    -100%
Payout ratio (1)(2)
 Adjusted distributable cash      -%    N/C               -%     91%
Drilling rig operating
 days (3)                    15,744  13,343      18% 61,082  58,749       4%
Service rig utilization (3)      38%     38%      -      51%     55%     -7%
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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").



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.


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.


INDUSTRY ACTIVITY

For the second quarter of 2008, industry activity levels played out as
management expected with a lower Canadian drilling rig utility of 19 percent as
compared to the past five year second quarter range of 17 percent to 42 percent.
Canadian service rig utility experience a similar decline with a current quarter
utility level of 38 percent as compared to the past five year second quarter
range of 38 percent to 59 percent. On a year to date basis, the trend was
consistent with the second quarter as Canadian drilling rig utility was 38
percent (five year range of 38 percent to 66 percent) and Canadian service rig
utility was 51 percent (five year range of 51 percent to 71 percent). During
late 2007, when producers were finalizing their programs the following negative
factors were adversely influencing their decisions which translated into the
activity levels experienced:


- 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 are
at all time highs and this has motivated some producers to focus their efforts
towards oil related activities, partially offsetting the lack of natural gas
related activities.


From the industry's perspective, North American natural gas inventory levels and
related natural gas pricing have improved from 2007. However, most of the
pricing gains achieved since February 2008 have evaporated in recent weeks. As
mentioned in the first quarter MD&A, concerns regarding the near-term supply /
demand fundamentals have increased and are reflected in the recent retreat in
natural gas pricing. Natural gas storage injections are occurring at a much more
rapid pace than 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 couple of years. This has more that offset the decline in Canadian
natural gas directed activities over the past 18 to 24 months.


Despite the near-term weakness in natural gas pricing, the industry has seen
some marginal increases in previously announced 2008 capital programs and
industry analysts that had recently increased their well count forecasts for
fiscal 2008 and 2009 have not significantly changed their forecasts in light of
the recent events. Management believes the outlook for the oil and gas industry
in North America remains very positive for the mid and longer term, however for
at least the third quarter of 2008 it will continue to experience lower levels
of activity as compared to the five year average, until the underlying natural
gas fundamentals firm up over a more sustainable period.


FINANCIAL SUMMARY

For the second quarter of 2008, Canadian drilling rig operating days were higher
than the same quarter of 2007 at 15,744 days. Although Canadian drilling rig
operating days increased 18 percent, Canadian drilling rig utilization only
increased from 17 percent for the second quarter of 2007 to 19 percent for the
current quarter translating to 10 percent increase. Meanwhile, Canadian service
rig utility was flat quarter-over-quarter with overall utilization of 38
percent. Inclement wet weather throughout the second quarter held back activity
levels as road bans limited the ability to access lease locations in the WCSB.


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

- generated revenue of $27.7 million which was a 55 percent or $9.9 million
increase over the 2007 second quarter revenue of $17.8 million;


- realized EBITDA of negative $4.2 million (negative $0.09 per Unit diluted or
negative 15 percent of revenue), a decrease of 676 percent or $3.7 million over
EBITDA for the prior year period of negative $0.5 million (negative $ 0.02 per
Unit diluted or negative 3 percent of revenue);


- posted a net loss of $8.7 million (loss of $0.18 per Unit diluted), which was
a decrease of 1,224 percent or $8.0 million as compared to net loss for the
second quarter of 2007 of $0.7 million (loss of $0.02 per Unit diluted);


- 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 north-eastern
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.


Year-to-date, Canadian drilling rig operating days increased 4 percent from the
same period of 2007 at 61,082 days. Despite the increase in drilling rig
operating days, the year-over-year Canadian drilling rig utilization was flat at
38 percent. Meanwhile, Canadian service rig utility decreased by 7 percent
year-over-year with overall utilization of 51 percent.


For the six months ended June 30, 2008, Peak:

- generated revenue of $65.5 million which was a 21 percent or $11.6 million
increase over the 2007 year-to-date revenue of $53.9 million;


- realized EBITDA of $5.5 million ($0.14 per Unit diluted or 8 percent of
revenue), a decrease of 56 percent or $7.0 million over EBITDA for the prior
year period of $12.4 million ($0.45 per Unit diluted or 23 percent of revenue);


- realized EBITDA adjusted for financing and succession planning costs
indirectly associated with the closing of the merger with Wellco of $7.5 million
($0.19 per Unit diluted or 11 percent of revenue), a decrease of 40 percent or
$5.0 million over EBITDA for the six months ended June 30, 2007 of $12.4 million
($0.45 per Unit diluted or 23 percent of revenue);


- posted a loss adjusted for financing and succession planning costs indirectly
associated with the closing of the merger with Wellco of $4.1 million (loss of
$0.10 per Unit diluted), which was a decrease of 187 percent or $8.8 million as
compared to a net income for the first six months of 2007 of $4.7 million ($0.17
per Unit diluted);


- posted a net loss of $5.6 million (loss of $0.14 per Unit diluted), which was
a decrease of 219 percent or $10.3 million as compared to a net income for the
first six months of 2007 of $4.7 million ($0.17 per Unit diluted);


- generated adjusted distributable cash of negative $7.0 million or negative
$0.17 per Unit diluted (2007 - $11.9 million or $0.43 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 -
$10.8 million ($0.39 per Unit) or 91 percent); and


- completed a public merger with Wellco Energy Services Trust ("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 $92.3 million, EBITDA of $14.0 million
($0.29 per unit diluted or 15 percent of revenue) and a net loss of $0.7 million
(loss of $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 $3.6 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.


As compared to December 31, 2007, Peak:

- increased working capital by $6.3 million to $25.1 million;

- increased tangible capital assets by $24.4 million to $226.4 million;

- increased funded debt by $8.5 million to $77.6 million; and

- increased Unitholders' equity by $34.3 million to $173.1 million.

POST MERGER INTEGRATION

On March 12, 2008, Peak completed the 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; and

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


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
$3.6 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 June 30, 2008, Peak generated revenue of $27.7
million compared to $17.8 million for the prior year period representing an
increase of 55 percent compared to an 18 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 second quarter of
2008 were 15,744 days compared to 13,343 days for the second quarter of 2007.
Meanwhile, Canadian service rig utilization was 38 percent for second quarter of
2008, compared to 38 percent for the prior year period.


For the six months ended June 30, 2008, Peak generated revenue of $65.5 million
compared to $53.9 million for the prior year period representing an increase of
21 percent compared to a 4 percent increase in Canadian drilling rig operating
days and a 7 percent decrease in Canadian service rig activity over this time
period. Total Canadian drilling rig operating days for the first half of 2008
were 61,082 days compared to 58,749 days for the same period of 2007. Meanwhile,
Canadian service rig utilization was 51 percent for the first six months of
2008, compared to 55 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 $92.4
million for the first half of 2008. This represents an increase in revenue of
$38.4 million or 71 percent over the prior year period.


Drilling Services' revenue increased by $2.2 million or 23 percent as it
generated $11.9 million in revenue or 43 percent of the Trust's total revenue
for the three months ended June 30, 2008, compared to $9.7 million or 54 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 Peak USA activities more than offsetting lower
utilization and pricing experienced by all operation divisions.


Year-to-date, Drilling Services' revenue increased by $2.7 million or 9 percent
as it generated $34.1 million in revenue or 52 percent of the Trust's total
revenue, compared to $31.5 million or 59 percent for the prior year period.
Consistent with the current quarter, the revenue increase was slightly better
than the increase in Canadian drilling rig operating days. The same current
quarter factors attributed to the year-to-date positive variance.


Production Services' revenue increased by $0.6 million or 11 percent as it
contributed $6.7 million in revenue or 24 percent of the Trust's total revenue
for the three months ended June 30, 2008, compared to $6.0 million or 34 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 strong growth in activity within the Trust's Fluids Handling operating
division.


For the first half of fiscal 2008, Production Services' revenue increased by
$0.8 million or 4 percent as it generated $19.3 million in revenue or 30 percent
of the Trust's total revenue, compared to $18.5 million or 34 percent for the
prior year period. Consistent with the current quarter, the revenue increase was
significantly better than the 7 percent decrease in service rig activity. In
addition to the current quarter factor of strong growth within the Fluids
Handling operating division, the Surface Rentals operating division had strong
activity on a year-to-date basis which more than offset the decrease in activity
and increase in pricing discounts from book pricing within the Wireline
operating division.


Oil Sands' revenue increased by $5.2 million or 250 percent as it contributed
$7.2 million in revenue or 26 percent of the Trust's total revenue for the three
months ended June 30, 2008, compared to $2.1 million or 12 percent for the prior
year period. The increase of $5.2 million was primarily the result of 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 $5.9 million or 149 percent as it
generated $9.9 million in revenue or 15 percent of the Trust's total revenue,
compared to $4.0 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 $1.9 million or 7 percent of the Trust's total
revenue for the three months ended June 30, 2008. For the first half of fiscal
2008, revenue was $2.2 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 June 30, 2008, operating
expenses were higher than the prior year period by $9.9 million or 79 percent.
As a percentage of revenue, operating expenses were 81 percent compared to the
prior year period of 70 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. With anticipation of
higher activity levels in the second half of fiscal 2008 and fiscal 2009 and the
western Canada wide increase in demand for skilled employees, Peak has retained
employees that traditionally it would have laid off due to low activity levels.
Furthermore, management is reviewing and implementing, 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 six months ended June 30, 2008, operating expenses were higher than the
prior year period by $11.9 million or 40 percent. As a percentage of revenue,
operating expenses were 63 percent compared to the prior year period of 55
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 second quarter of 2008, general
and administrative expenses (G&A) were $3.7 million or 63 percent higher than
the prior year period. As a percentage of revenue, G&A increased to 34 percent
for the current quarter of 2008 as compared to 33 percent for the prior year
period.


The primary factors negatively impacting G&A were:

- $1.7 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 "super shops" in Red Deer, Alberta, new shops in Slave Lake,
Alberta and Estevan, Saskatchewan and head office in Calgary, Alberta to support
Peak's operations;


- $0.8 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


- $0.5 million in increased professional, consulting and related costs primarily
associated with effecting the merger with Wellco.


For the first half of 2008, G&A expenses were $6.6 million or 55 percent higher
than the prior year period. As a percentage of revenue, G&A increased to 29
percent for the current year-to-date period as compared to 22 percent for the
prior year period. The primary factors negatively impacting G&A were:


- $2.7 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 "super shops" in Red Deer, Alberta, new shops in Slave Lake,
Alberta and Estevan, Saskatchewan and head office in Calgary, Alberta to support
Peak's operations;


- $1.1 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;


- $0.5 million in increased professional, consulting and related costs primarily
associated with effecting the merger with Wellco;


- $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 $4.6 million
or 38 percent to $16.7 million and adjusted G&A as a percentage of revenue was
26 percent.


EBITDA - EBITDA decreased $3.7 million or 676 percent to negative $4.2 million
for the three months ended June 30, 2008, meanwhile EBITDA as a percentage of
revenue, was a negative 15 percent for the current fiscal period as compared to
a negative 3 percent for the comparative prior year period. The primary drivers
of the quarter-over-quarter decrease are detailed above.


EBITDA decreased $7.0 million or 56 percent to $5.5 million for the six months
ended June 30, 2008, meanwhile EBITDA as a percentage of revenue, was 8 percent
for the current year-to-date period as compared to 23 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 $5.0 million or 40 percent to $7.5 million ($0.19 per unit
diluted) and adjusted EBITDA as a percentage of revenue was 11 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 $14.0
million ($0.29 per unit diluted or 15 percent of revenue) for the first half of
2008. This represents an increase in EBITDA of $1.6 million or 13 percent over
the prior year period.


Depreciation and amortization expenses - For the three months ended June 30,
2008, depreciation and amortization expenses increased $1.0 million over the
prior year period. For the six months ended June 30, 2008, depreciation and
amortization expenses were $1.0 million higher than the prior year period.


Interest on long-term debt expense - Interest on long-term debt expense
increased to $1.4 million for the three months ended June 30, 2008, representing
an increase of $0.2 million or 18 percent over the same period of 2007. Interest
on long-term debt expense increased to $2.5 million for the six months ended
June 30, 2008, representing an increase of $0.3 million or 15 percent over the
same period of 2007.


Of the debt facility currently outstanding, $30.0 million is at a fixed rate of
6.3 percent, $10.0 million is at a fixed rate of 7.2 percent with the remaining
$37.5 million at a floating rate tied to the bank prime lending rate.


Loss (gain) on sale of equipment - For the three months ended June 30, 2008, the
loss on sale of equipment amounted to $0.7 million compared to a gain of $0.3
million for the prior year period. For the six months ended June 30, 2008, the
loss on sale of equipment amounted to $0.5 million compared to a loss of $0.5
million for the prior year period. Included in the second quarter of 2008, were
the dispositions of Peak's electric line and access matting product lines for
gross proceeds of $9.3 million. The quarter and year-to-date loss was the result
of the Trust's ongoing 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 $0.2 million and future
tax recovery of $2.7 million, resulted in a net income tax recovery of $2.5
million and an effective income tax rate of 22 percent for the three months
ended June 30, 2008. Meanwhile, the current tax expense of $0.4 million and
future tax recovery of $2.0 million resulted in a net income tax recovery of
$1.6 million and an effective income tax rate of 22 percent for the six months
ended June 30, 2008.


The effective income tax rate differs significantly from the statutory corporate
rate of 29.5 percent as the result of the Trust's legal structure. As a mutual
fund trust for purposes of the Income Tax Act (Canada), the Trust is only
subject to statutory income taxes on taxable income not distributed to
Unitholders.


The federal government's announced intentions to require income trusts to pay
taxes at rates consistent with corporations was enacted into law during June
2007. Commencing in fiscal 2011, Peak will be required to pay a tax of 28
percent on distributions it makes to Unitholders. This change in the tax laws
will materially reduce the cash available to distribute to Unitholders. This has
had a significant impact on existing trusts', including Peak's, enterprise
values and their ability to access debt and equity financing at previously
experienced levels. Despite this, Peak's underlying business activities remain
the same and management is evaluating its options to determine the optimal
capital structure for the Trust on a go-forward basis.


Income

Net income (loss) and comprehensive income (loss) - For the three months ended
June 30, 2008, net income and comprehensive income decreased 1,224 percent to a
net loss and comprehensive loss of $8.7 million (loss of $0.18 per Unit diluted)
compared to net loss and comprehensive loss of $0.7 million (loss of $0.02 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
half of 2008 decreased $8.8 million or 187 percent over the prior year period to
a loss of $4.1 million (loss of $0.10 per Unit diluted). Meanwhile, for the six
months ended June 30, 2008, net income and comprehensive income decreased 219
percent to a net loss and comprehensive loss of $5.6 million (loss of $0.14 per
Unit diluted) compared to net income and comprehensive income of $4.7 million
($0.17 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 a loss of $0.7 million
(loss of $0.01 per unit diluted) for the first half of 2008. This represents a
decrease in income $5.4 million or 116 percent over the prior year period.


LIQUIDITY

Operating activities - For the second quarter of 2008, cash generated by
operating activities was $12.1 million or $0.25 per Unit diluted (2007 - $13.6
million or $0.49 per Unit diluted). Meanwhile, year-to-date cash provided by
operating activities was $18.5 million or $0.46 per Unit diluted (2007 - $22.5
million or $0.81 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.


Investing activities - Net cash provided by investing activities for the second
quarter of 2008 was $8.0 million (2007 - net cash used in investing activities
was $2.4 million) and year-to-date was $6.6 million (2007 - net cash used in
investing activities was $6.8 million).


For the six months ended June 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.


Peak accounted for the Wellco merger as a business acquisition for which the
total consideration was allocated as follows:




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(in '000 of CAD)                                                      Total
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Equipment                                                            41,517
Proprietary technology                                                1,000
Future income taxes                                                   8,483
Working capital                                                      24,024
Debt assumed                                                        (43,457)
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Net assets acquired                                                  31,567
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Consideration was comprised of the following:

----------------------------------------------------------------------------
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(in '000 of CAD)                                                      Total
----------------------------------------------------------------------------
Fair value of Trust Units issued                                     29,984
Transaction costs                                                     1,583
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Total consideration                                                  31,567
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- $2.8 million of gross equipment purchases and a net disposal of $8.2 million
including proceeds on sale of equipment of $11.0 million.


Financing activities - Net cash used in financing activities for the second
quarter of 2008 was $23.7 million (2007 - $5.0 million) and year-to-date was
$26.7 million (June 30, 2007 - $7.7 million).


For the six months ended June 30, 2008, the activities were the result of:

- a net increase in long-term debt of $37.7 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 $25.1 million at June 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, increasing slightly to 2.78 to 1.00 at June 30,
2008 from 2.66 to 1.00 at December 31, 2007.


CAPITAL RESOURCES

Capital Expenditures

During the first half of fiscal 2008, the Trust expended a total of $44.3
million on gross asset additions and $33.3 million on net asset additions
(includes mergers, business acquisitions and purchase of equipment, net of
proceeds on the sale of equipment) compared to $9.2 million and $4.9 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:



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months
 ended June 30, 2008       Drilling Production                Water
(in '000 of CAD)           Services   Services Oil Sands Technology   Total
----------------------------------------------------------------------------
Growth                          128      1,086         -          -   1,214
Maintenance                     414        280         -          -     694
Infrastructure                    -          -         -          -     892
----------------------------------------------------------------------------
                                542      1,366         -          -   2,800
----------------------------------------------------------------------------
Proceeds on sale of
 equipment                        -          -         -          - (11,014)
----------------------------------------------------------------------------
                                  -          -         -          -  (8,214)
Wellco merger impact         30,064      1,152    10,046        255  41,517
----------------------------------------------------------------------------
Net asset additions          30,606      2,518    10,046        255  33,303
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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                        6,487      1,599     1,653          -   9,739
Maintenance                   2,274        693        60          -   3,027
Infrastructure                    -          -         -          -   1,858
----------------------------------------------------------------------------
                              8,761      2,292     1,713          -  14,624
Proceeds on sale of
 equipment                        -          -         -          - (12,014)
----------------------------------------------------------------------------
                                  -          -         -          -   2,610
Wellco merger impact         30,064      1,152    10,046        255  41,517
----------------------------------------------------------------------------
Net asset additions          38,825      3,444    11,759        255  44,127
----------------------------------------------------------------------------
----------------------------------------------------------------------------



In addition to the planned capital expenditures for fiscal 2008, the Trust
intends on continuing to identify, evaluate and acquire oil and gas service
companies and/or assets that complement Peak's business model. The Trust plans
to use cash generated from operating activities to fund maintenance capital
expenditures and to utilize its existing debt and equity facilities outlined
below to fund growth capital expenditures and any strategic business
acquisitions contemplated for fiscal 2008.


Long-term debt

The Trust's long-term debt (including current portion) increased to $77.5
million at June 30, 2008, as compared to $70.8 million at December 31, 2007.
Funded debt was $77.6 million at June 30, 2008 as compared to $69.1 million at
December 31, 2007. Meanwhile, net debt was $52.5 million at June 30, 2008 as
compared to $50.3 million at December 31, 2007. The long-term debt to equity
ratio decreased to 0.45 to 1.00 at June 30, 2008 (December 31, 2007 - 0.51 to
1.00). Of the Trust's $140.0 million long-term debt facilities at June 30, 2008,
$62.4 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.


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


Unitholders' equity

Unitholders' equity increased $34.3 million to $173.1 million at June 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 $5.6 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.


Peak had 48,398,097 Trust Units outstanding at June 30, 2008, compared to
27,698,387 Trust Units at December 31, 2007. As of August 6, 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:




----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                         Six months ended
                                                             June 30
                                                   -------------------------
(in '000 of CAD, except otherwise noted)                2008           2007
----------------------------------------------------------------------------
Cash flow from operating activities                   18,509         22,481
Less adjustments for:
 Business acquisitions                                (1,583)             -
 Purchase of equipment                                (2,800)        (9,184)
 Distribution restrictions caused by
  financial covenant                                  (9,264)             -
----------------------------------------------------------------------------
Standardized distributable cash                        4,862         13,297
Distributions declared to Unitholders                      -        (10,802)
----------------------------------------------------------------------------
Distribution surplus                                   4,862          2,495
----------------------------------------------------------------------------
Payout ratio of standardized
 distributable cash                                        -%            81%
Standardized distributable cash
 Per unit - basic                                       0.12           0.48
 Per unit - diluted                                     0.12           0.48
----------------------------------------------------------------------------
----------------------------------------------------------------------------



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. 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 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:




----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                         Six months ended
                                                            June 30
                                                   -------------------------
(in '000 of CAD, except otherwise noted)                2008           2007
----------------------------------------------------------------------------
Standardized distributable cash                        4,862         13,297
Adjusted for:
 Business acquisitions                                 1,583              -
 Growth capital expenditures                           1,214          2,441
 Infrastructure capital expenditures                     892          6,341
 Seasonal change in non-cash
  working capital                                    (15,537)       (10,145)
----------------------------------------------------------------------------
Adjusted distributable cash                           (6,986)        11,934
Distributions declared to Unitholders                      -        (10,802)
----------------------------------------------------------------------------
Distribution surplus (deficit)                        (6,986)         1,132
----------------------------------------------------------------------------
Payout ratio of adjusted
 distributable cash                                        -%            91%
Adjusted distributable cash
 Per unit - basic                                      (0.17)          0.43
 Per unit - diluted                                    (0.17)          0.43
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The adjusted distributable cash payout ratio was zero percent (2007 - 91
percent) for the six months ended June 30, 2008. The distribution deficit
between adjusted distributable cash and distributions declared was $7.0 million
(2007 - surplus $1.1 million) for the first half of fiscal 2008 and was funded
by Peak's change in working capital. 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 increasing 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 June 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.
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 press release focuses on key information and statistics from the Trust's
interim consolidated financial statements and oilfield services industry which
contains known and unknown risks and uncertainties. This press release should
not be considered all-inclusive, as it does not incorporate all changes that
could occur in the geopolitical, economic or environmental conditions. In
addition, certain statements contained in this press release includes words such
as "looks forward", "anticipate", "continue", "estimate", "may", "project",
"could", "should", "expect", "believe", "will", "intends", "plan" and similar
expressions and statements relating to matters that are not historical facts are
forward-looking statements. By their nature, forward-looking statements are
subject to numerous risks and uncertainties, some of which are beyond Peak's
control, including the impact of general economic conditions, government policy
changes, industry conditions, competition from other industry participants,
volatility of commodity prices, currency fluctuations, environmental risks, the
lack of availability of qualified personnel or management, stock market
volatility and ability to access sufficient capital from internal and external
sources. Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be placed on
forward-looking statements. Peak's actual results, performance or achievement
could differ materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurance can be given that any
of the events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that will derive there from.


OUTLOOK

The low level of industry activity for the second quarter of 2008 was as
management expected and was relatively consistent with the same period of 2007.
The industry activity levels were reflected in Peak's second quarter financial
results. Recently announced increases to producer's 2008 capital budgets,
improved drilling rig counts in July and industry analyst's drilling activity
forecasts for 2008 and 2009 are indicators that suggest that the oil and gas
services industry may now be experiencing its first signs of recovery from the
somewhat protracted downturn in drilling activity that has been lingering since
the late summer of 2006. Management concurs with this growing consensus and is
cautiously preparing itself for anticipated higher industry activity levels in
the near future.


As with the two previous downturns that Peak has experienced, management has
continued to pro actively manage its business by focusing internally on its
systems and cost structure through this most recent low point in the cycle.
Acting in a fiscally responsible manner on behalf of all of its stakeholders
remains a high priority at Peak. Since its inception, Peak's management team has
created a reputation of growing its business at the low point in the business
cycle and realizing value at the high points.


Attracting and retaining employees in western Canada and within the oil and gas
services industry is a major challenge facing the entire industry, including
Peak. Management continues to review and enhance its strategies to be successful
on this front. Furthermore, fuel input costs have increased significantly in
recent months. Management is focused on improving Peak's margins where
opportunities present themselves to be more cost efficient, with particular
focus on our Camps and Catering and Remote Waste Water Systems operating
divisions and has implemented a price increase on certain services effective
August 1, 2008.


With most of the key post Wellco merger milestones achieved, management is
focused on actively growing its operating divisions that demonstrate
opportunities of significant returns on invested capital. A good example of
execution on this growth is the recent signing of an agreement with a major
leaseholder in the oil sands region to provide camp, catering and waste water
services (which are part of the Camp and Catering and Remote Waste Water Systems
operating divisions) for 600 workers that will generate approximately $18.0
million in revenue over two years. Conversely, management continues to evaluate
product lines within its operating divisions and has divested of non-core
electric line (part of the Wireline operating division) and access matting (part
of the Surface Rentals operating division) assets that were identified as not
generating an appropriate return on invested capital to avail the Trust the
opportunity to reinvest the $9.3 million in proceeds towards future growth
opportunities.


Although the near term industry environment is still somewhat jaded by the
uncertainty created by the Alberta Government's "New Royalty Framework" that was
announced on October 25, 2007; Peak believes that the outlook for the oil and
gas service industry in North America remains very positive for the mid and
longer term. Management believes the recent retreat in natural gas prices will
likely be short-lived, however the underlying natural gas fundamentals will need
to firm up over a more sustainable period before pricing improves over the
longer term. Improved commodity prices and strengthened industry fundamentals
should be a catalyst for a return to more robust levels of drilling activity in
western Canada for the later part of 2008 and in to 2009. Management believes
that the significant growth and critical mass realized through its recent merger
with Wellco; the significant growth capital of $160.0 million for the combined
entities over the previous two years along with its reduced cost structure
leaves the Trust in a position of strength and poised to take advantage as
industry activity levels continue to improve over the long-term. Management will
remain vigilant and believes that the remainder of 2008 and 2009 could hold
further opportunities for growth and consolidation within the oil and gas
services industry.


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 Thursday, August 7, 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 Thursday, August 14, 2008 by
dialing 1 [phone] or 1 [phone], verbal pass code 3267455.


FINANCIAL RESULTS

The following selected financial information summarizes Peak's consolidated
financial results for the three and six months ended June 30, 2008. Peak's
quarterly report, including the consolidated interim financial statements and
management's discussion and analysis for the quarters ended June 30, 2008 and
2007 will be available at www.sedar.com on or about August 12, 2008.




CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME (LOSS) AND
DEFICIT

                                   Three months ended      Six months Ended
                                              June 30,              June 30,
                                 -------------------------------------------
(in thousands of CAD, except per
 Unit amounts) (unaudited)            2008       2007       2008       2007
----------------------------------------------------------------------------
Revenue                          $  27,655  $  17,791  $  65,522  $  53,942

Expenses:
 Operating                          22,349     12,480     41,319     29,421
 General and administrative          9,533      5,856     18,739     12,099
 Depreciation and amortization       4,876      3,848      9,667      8,702
 Interest on long-term debt          1,373      1,161      2,549      2,221
 ---------------------------------------------------------------------------
                                    38,131     23,345     72,274     52,443

----------------------------------------------------------------------------
Income (loss) before other items   (10,476)    (5,554)    (6,752)     1,499
Other items:
 Loss (gain) on sale of equipment      664       (281)       542        474
 Foreign exchange loss (gain)           19          -       (130)         -
 ---------------------------------------------------------------------------
                                       683       (281)       412        474
----------------------------------------------------------------------------
Income (loss) before income
 taxes                             (11,159)    (5,273)    (7,164)     1,025

Provision for income taxes:
 Current                               178         11        428        386
 Future (reduction)                 (2,640)    (4,627)    (2,026)    (4,052)
 ---------------------------------------------------------------------------
                                    (2,462)    (4,616)    (1,598)    (3,666)

----------------------------------------------------------------------------
Income (loss) before
 non-controlling interest           (8,697)      (657)    (5,566)     4,691

Net income (loss) and
 comprehensive income (loss)        (8,697)      (657)    (5,566)     4,691

Deficit, beginning of period

 As previously reported            (47,055)   (26,033)   (50,186)   (25,192)

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

As restated                        (47,055)   (26,033)   (50,186)   (25,564)

Distributions declared to
 Unitholders                             -     (4,985)         -    (10,802)

----------------------------------------------------------------------------
Deficit, end of period           $ (55,752) $ (31,675) $ (55,752) $ (31,675)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Earnings (loss) per Unit:
 Basic                           $   (0.18) $   (0.02) $   (0.14) $    0.17
 Diluted                         $   (0.18) $   (0.02) $   (0.14) $    0.17
----------------------------------------------------------------------------
----------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                  Three months ended       Six months ended
                                             June 30,               June 30,
                               ---------------------------------------------
(in thousands of CAD)
 (unaudited)                         2008       2007        2008       2007
----------------------------------------------------------------------------

Operating activities:
 Net income (loss)              $  (8,697) $    (657) $   (5,566) $   4,691
 Add (deduct) items not
  affecting cash:
  Depreciation and amortization     4,876      3,848       9,667      8,702
  Loss (gain) on sale of
   equipment                          664       (281)        542        474
  Unrealized foreign exchange
   loss (gain)                        (51)         -         283          -
  Future income taxes              (2,640)    (4,627)     (2,026)    (4,052)
 ---------------------------------------------------------------------------

                                   (5,848)    (1,717)      2,900      9,815

 Changes in non-cash working
  capital items                    17,958     15,327      15,609     12,666
 ---------------------------------------------------------------------------

                                   12,110     13,610      18,509     22,481

Investing activities:
 Business acquisition                   -          -      (1,583)         -
 Purchase of equipment             (1,697)    (5,357)     (2,800)    (9,184)
 Proceeds on sale of equipment      9,759      3,692      11,014      4,927
 ---------------------------------------------------------------------------

                                    8,062     (1,665)      6,631     (4,257)
 Changes in non-cash working
  capital items                       (98)      (759)        (72)    (2,521)
 ---------------------------------------------------------------------------

                                    7,964     (2,424)      6,559     (6,778)

Financing activities:
 Increase of operating line of
  credit                               78          -          78          -
 Increase in long-term debt           300          -      64,568      3,000
 Repayment of long-term debt      (24,125)         -    (101,232)         -
 Repayment of obligations under
  capital lease                         -          -           -       (103)
 Issue of Trust Units, net of
  costs                                 -          -       9,923      1,041
 Distributions paid to
  Unitholders                           -     (4,985)          -    (11,612)
 ---------------------------------------------------------------------------
                                  (23,747)    (4,985)    (26,663)    (7,674)

Foreign exchange gain on cash
 held in foreign currency             (10)         -         (22)         -

Increase (decrease) in cash and
 cash equivalents                  (3,683)     6,201      (1,617)     8,029
Cash and cash equivalents,
 beginning of period                3,683      5,684       1,617      3,856
----------------------------------------------------------------------------

Cash and cash equivalents, end
 of period                            $ -  $  11,885  $        -  $  11,885
----------------------------------------------------------------------------
----------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                     June 30,   December 31,
(in thousands of CAD) (unaudited)                       2008           2007
----------------------------------------------------------------------------

ASSETS
Current assets:
 Cash and cash equivalents                        $        -  $       1,617
 Accounts receivable                                  35,471         27,041
 Prepaid expenses                                      2,603          1,477
 Inventory                                             1,160              -
 ---------------------------------------------------------------------------
                                                      39,234         30,135

Property and equipment                               226,401        201,980

Intangibles                                            8,619          8,797

----------------------------------------------------------------------------
                                                  $  274,254  $     240,912
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY
Current liabilities:
 Operating line of credit                         $       78  $           -
 Accounts payable and accrued liabilities             13,369         11,056
 Income taxes payable                                    489             63
 Current portion of long-term debt                       716          3,562
 Current portion of deferred lease inducements           201            201
----------------------------------------------------------------------------
                                                      14,853         14,882

Long-term debt                                        76,827         67,188

Deferred lease inducements                             2,024          2,124

Future income taxes                                    7,472         17,981

Unitholders' equity:
 Trust Unit capital                                  227,347        187,440
 Contributed surplus                                   1,483          1,483
 Deficit                                             (55,752)       (50,186)
 ---------------------------------------------------------------------------
                                                     173,078        138,737

----------------------------------------------------------------------------
                                                  $  274,254  $     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".