PowerWell Services Acquires Majority Stake in Petrotech

PowerWell Services Holdings LLC, through its Norwegian subsidiary, has signed an agreement to acquire 93.61% of Petrotech ASA, a Norwegian well testing technology and service company.

Combining Petrotech with PowerWell Services' extensive international network enables a significant potential for international sales growth of Petrotech's products and services and offers the ability to expedite the commercialization of newly developed products and services.

Under the agreement entered into by eight shareholders representing 93.61% of the share capital of Petrotech, PowerWell Services will pay NOK 21 per share outstanding in Petrotech, valuing the company at NOK 145 million.

Following closing of the transaction on or about January 31, 2005, PowerWell Services intends to set forward an offer on similar terms to all Petrotech shareholders as soon as practical after closing.

Petrotech builds on unique technologies to provide well testing and related products and services to the oil and gas industry. Petrotech offers a wide range of well testing products and services both in the exploration and the production phase, onshore and offshore.

The company offers specialized fluid sampling, on-site analysis, metering and interpretation services dedicated to reservoir and process engineering requirements. Following more than 20 years of operation, the company has a very strong position within the well testing market in selected geographical markets globally.

Haugesund will continue to be the headquarters location for Petrotech and the company will operate under the same name. Based on the strong R&D capability within Petrotech, the company will act as an R&D center for the combined group.

Petrotech's 2004 revenues amounted to NOK 68m of which approximately 82% were generated in markets outside Norway. Since 1998, Petrotech has led a joint industry project for the development of a new generation of zero emission, environmentally friendly, and cost efficient well testing products and services, which are now about to be released into the market.

"PowerWell Services brings financial resources and operational expertise for the next step in the development of Petrotech's business.

"We have proven our ability to develop and commercialize innovative technology, and we have built a strong position among the major operators.

"As an integral part of PowerWell Services, we will further broaden our international presence as well as strengthen our efforts in the development of our current services and products as well as promising new technologies," says Bjorn Dybdahl, Petrotech's Managing Director.

"Petrotech is a perfect fit for our stated strategy of acquiring high performing niche players and exporting their capabilities globally," says David Reamer, CEO of PowerWell Services.

"Petrotech has a broad array of product and services that complement the surface well testing business acquired from Halliburton Company in 2004. PowerWell Services provides the means to expand the offering of Petrotech products and services to new geographical market segments and customers.

Additionally, the technical expertise in oilfield chemistry and sensor design, existing within Petrotech, will enhance the product design capability for future well testing products and services for both the Power Well Testing and Power Chokes divisions. We are committed to advancing the knowledge gained from the information collected during the well test and Petrotech will enhance our ability to deliver critical information to the customer."

Enskilda Securities has acted as financial advisor to Petrotech's major shareholders in relation to the agreement with PowerWell Services.