PrimeWest Energy Trust and Shiningbank Energy Income Fund Announce Merger

PrimeWest Energy Trust ("PrimeWest") (TSX: PWI.UN)(TSX: PWX)(TSX: PWI.DB.A)(TSX: PWI.DB.B)(TSX: PWI.DB.C)(NYSE: PWI) and Shiningbank Energy Income Fund ("Shiningbank") (TSX: SHN.UN) are pleased to announce that their respective Boards of Directors have unanimously approved an agreement providing for the merger (the "Merger") of PrimeWest and Shiningbank into a single trust ("New PrimeWest") to be managed by a combination of the respective management and directors of both trusts. The new entity will continue to operate under the name PrimeWest Energy Trust.

Under the terms of the Merger, each Shiningbank trust unit will be exchanged for 0.62 of a PrimeWest trust unit on a tax-deferred rollover basis with the filing of appropriate election forms. Based on the May 9, 2007 closing price on the Toronto Stock Exchange of PrimeWest trust units, the exchange ratio reflects a value of $14.60 for each Shiningbank trust unit. Based on the 30 day weighted average trading prices on the Toronto Stock Exchange of PrimeWest and Shiningbank trust units, the exchange ratio reflects a 4.2% premium for each Shiningbank trust unit.

The transaction is subject to stock exchange, court and regulatory approval and other conditions that are typical of transactions of this nature, including approval by the holders of at least 66 2/3% of Shiningbank trust units represented in person or by proxy at a Shiningbank unitholder meeting and at least 66 2/3% of PrimeWest trust units represented in person or by proxy at a PrimeWest unitholder meeting.

A joint information circular regarding the Merger is expected to be mailed to unitholders of both PrimeWest and Shiningbank in early June 2007 for meetings expected to take place in mid July. The Merger is expected to close on or about July 11th, 2007 after the meetings, but no later than the anticipated first distribution record date of New PrimeWest on July 20th, 2007.

As a result, PrimeWest unitholders of record on June 22nd, 2007 will be entitled to receive the June PrimeWest distribution, expected to be payable on July 13th, 2007. Shiningbank unitholders of record on June 30th, 2007 will be eligible to receive the June Shiningbank distribution, expected to be payable on July 15th, 2007. Former unitholders of both PrimeWest and Shiningbank who are holders of record of New PrimeWest on July 20th, 2007 will receive the first distribution of New PrimeWest, expected to be payable August 15th, 2007.

Based on the combined first quarter results of PrimeWest and Shiningbank, New PrimeWest would have had production of approximately 66,000 BOE per day. Currently, PrimeWest and Shiningbank are each marketing the sale of approximately 1,000 BOE per day of non-core production and, with the completion of the Merger, approximately 2,000 BOE per day of additional production is planned for disposition, with the proceeds used to reduce debt and fund ongoing development activities.

BENEFITS OF THE MERGER

The proposed Merger is expected to be accretive upon closing to PrimeWest unitholders on a cash flow and production per unit basis, while providing Shiningbank unitholders an increase in reserves per unit, a 3.3% increase in monthly cash distributions and a longer reserve life index (RLI) increased to 11.5 years from 9.8 years.

The proposed Merger will create a larger gas-weighted trust positioned for development of a well-diversified asset base.

As one of the largest publicly traded oil and gas trusts, New PrimeWest will generate the following opportunities and benefits for unitholders of both PrimeWest and Shiningbank:

- New PrimeWest will have a larger suite of diversified natural gas and light oil assets, with a large portfolio of internal development opportunities:

-- Based on first quarter 2007 results, production of approximately 66,000 BOE per day allocated 70% to natural gas and 30% to crude oil and natural gas liquids;

-- Combined proved plus probable reserves of approximately 280 million BOE, excluding the impact of 2007 production, and development activities and acquisition and disposition activities;

-- Following the closing of the transaction, the combined entity will have an undeveloped land base of more than 1.1 million net acres, one of the largest undeveloped land bases in the oil and gas trust sector;

-- A multi-year suite of development opportunities now in excess of C$1.4 billion, reflecting the potential in the combined asset bases; and

-- Total 2007 capital expenditures for New PrimeWest of approximately C$250 million will be deployed to pursue attractive development drilling prospects and opportunities from both asset bases. This C$250 million does not include capital spent by Shiningbank prior to completion of the merger, which is forecast to be approximately $60 million by that time.

- Projected funds flow from operations, DRIP proceeds, and proceeds from dispositions are expected to be sufficient to adequately fund development activities for 2007 without the need for incremental debt, assuming a payout ratio of 60 to 75% of funds flow from operations. This transaction moves New PrimeWest towards a business model where future development capital spending and distributions are expected to be financed with funds flow from operations.