Primewest Energy Offers to Acquire Cypress Energy Inc. to Form Canada's Largest Gas-Weighted Royalty Trust

CALGARY, ALBERTA--(TSE: PWI.UN; TSE: CYZ.A; CDNX: CYZ.B) PrimeWest
Energy Trust (PrimeWest) and Cypress Energy Inc. (Cypress) today 
jointly announced that they have entered into an agreement whereby
PrimeWest will offer to purchase all of the issued and outstanding
common shares of Cypress.    

The offer will consist of cash of $14.00 per Cypress share up to a
maximum of $60 million, or, at the option of the Cypress 
shareholder, 1.45 PrimeWest trust units or 1.45 exchangeable 
shares of a subsidiary of PrimeWest (subject to a maximum of 5.44 
million exchangeable shares. PrimeWest will also assume all of 
Cypress' outstanding debt. The proposed transaction has a total 
enterprise value of approximately $700 million -- including the 
pending Ranchero Energy Inc. acquisition by Cypress -- consisting 
of $590 million in equity and $110 million (as at December 31, 
2000) in assumed net debt.  

Based on February 15, 2001 closing prices of $9.73 per trust unit 
for PrimeWest and $10.60 for each Cypress common share, the offer 
represents a 33-percent premium to Cypress's pre-offer closing 
price. PrimeWest estimates that the transaction is accretive by 
13% to 2001 distributable cash flow and by 5% to net asset value 
on an established basis.   

"This transaction is beneficial to both shareholders of Cypress 
and unitholders of PrimeWest," said PrimeWest Vice-chairman and 
CEO, Kent MacIntyre. "The Cypress assets being acquired are of the
highest quality and are exceptionally well suited to a royalty 
trust."   

"For PrimeWest unitholders, the resultant market capitalization of
more than $1 billion would enhance PrimeWest's liquidity and 
contribute to improved valuations.  We would be the largest 
gas-weighted royalty trust in Canada." 

Said Cypress President and Chief Executive Officer, Don Archibald,
"We are pleased to recommend this transaction.  For Cypress 
shareholders, the offer provides a substantial premium to the 
pre-offer share price and an opportunity to invest in a 
high-quality oil and gas royalty trust that pays cash 
distributions monthly - currently $0.20 per trust unit per month 
per trust unit ($0.29 per Cypress share). The potential synergies 
between the two companies are considerable, marrying Cypress' 
large inventory of development opportunities with PrimeWest's 
production optimization strength." 

The Cypress properties are currently producing at a rate of 18,200
BOE per day, (6:1), consisting  of 78 MMcf per day of natural gas 
and 5,200 barrels per day of crude oil and natural gas liquids. 

PrimeWest has also entered into a series of price hedging 
contracts on 8,300 BOE per day of gas production (6:1) and 4,500 
BOE per day of crude oil production.  

* The gas hedging instruments are 'swaptions', which will give 
PrimeWest the future right to enter into a swap transaction for a 
fixed price and term.  The benefit of a swaption is to provide a 
fixed price at which gas can be sold at a future date. The gas 
hedges have an effective term until the end of the 2002 summer 
season (October 2002). The floor price equates to approximately 
$7.25 per thousand cubic feet (Mcf). 

* The crude oil hedging transactions consist of a floor and a 
costless collar. The effect of the transactions is to secure a 
price above US$25.00 WTI per barrel for the term of April 2001 
through December 2001.  

The boards of directors of both of PrimeWest and Cypress have 
approved the proposed transaction, and the board of directors of 
Cypress has resolved unanimously to recommend to its shareholders 
that they accept the PrimeWest offer.  The offer is conditional on
the tendering of a minimum of 66 2/3 percent of all outstanding 
Cypress shares, as well as regulatory and other approvals.  
PrimeWest anticipates forwarding a take-over bid circular to 
Cypress shareholders on or before March 1, 2001.  TD Securities 
acted as financial advisors to PrimeWest. 

Certain officers and other shareholders of Cypress have executed 
lock-up agreements under which they agree to irrevocably deposit 
and not withdraw their shares under the offer. 

The board of directors of Cypress has agreed that it will not 
solicit or initiate discussions or negotiations with any third 
party concerning any sale of any material position or assets of 
Cypress, or any business combination involving Cypress. Cypress 
has agreed, under certain circumstances, to pay to PrimeWest a 
non-completion fee of $25 million.  PrimeWest also has a right of 
first refusal in certain circumstances to match any unsolicited 
competing bid.  Griffiths McBurney & Partners and Yorkton 
Securities are acting as financial advisors to Cypress and each of
them has agreed to provide a fairness opinion in connection with 
the proposed transaction. Among the attributes of Cypress:  

* A suite of operated, high-quality producing natural gas and 
light crude oil assets concentrated in Alberta and Saskatchewan, 
as well as 564,000 net acres of undeveloped lands.   

* A high leverage to natural gas -- on a 6:1 basis approximately 
60% based on anticipated 2001 production.  Combined, PrimeWest 
will be balanced 50% natural gas and 50% oil and natural gas 
liquids. 

* A low cost structure, with year-to-date third-quarter 2000 
operating costs averaging $3.13 per BOE (6:1). 



Acquisition multiples (6:1 gas conversion ratio) 

* Established reserve acquisition cost $10.25 per BOE 

* Production acquisition cost $36,000 per BOE per day 

* Cash flow multiple 2.9 times (gas: $7.55 per Mcf; WTI: US$26.73 
per bbl) 

* Recycle ratio 2.7 times  

PrimeWest is a Calgary-based conventional oil and gas royalty 
trust that acquires, develops, produces and sells crude oil, 
natural gas, and natural gas liquids for the generation of cash 
distributions to unitholders.  Trust units of PrimeWest are traded
on The Toronto Stock Exchange under the symbol "PWI.UN".  

Cypress is a Calgary-based oil and gas exploration company, whose 
Class A common shares trade on The Toronto Stock Exchange under 
the symbol CYZ.A and whose Class B common shares trade on the 
Canadian Venture Exchange under the symbol CYZ.B.   

The information in this news release contains forward-looking 
statements with respect to PrimeWest.  By their nature, these 
statements involve risks and uncertainties that could cause actual
results to differ materially from those contemplated.  These risks
and uncertainties include commodity prices and differentials and 
the number of Cypress shareholders tendering shares to the offer. 
 

This news release shall not constitute an offer to sell or the 
solicitation of an offer to buy any securities in any 
jurisdiction.  The trust units of PrimeWest offered will not be 
and have not been registered under the United States Securities 
Act of 1933 and may not be offered or sold in the United States 
absent registration or an applicable exemption from the 
registration requirements. 

-30-