ENERFLEX SYSTEMS LTD. ANNUAL INFORMATION FORM For the ...

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ENERFLEX SYSTEMS LTD. – ANNUAL INFORMATION FORM The Company’s operations are structured along three business segments – Service, Fabrication and Leasing, allowing Enerflex to meet customers’ needs in the following distinct ways: Service Enerflex is an international provider of mechanical, and electrical, instrumentation and controls services to the oil and gas production industry through an extensive network of locations in Canada, the United States, Germany, the Netherlands, Australia and Indonesia. These services are offered through two divisions, namely Mechanical Service and Syntech. Mechanical Service Enerflex is the Waukesha distributor in key markets around the world including Canada (operating as Pamco and Jiro), parts of Europe (operating as Landré Ruhaak bv and in Germany through its 51% owned joint venture S & L Energie Projekte GmbH) and Australia/Indonesia (operating as Gas Drive Systems and PT Gas Drive Systems Indonesia). The Mechanical Service Unit provides repair and maintenance services, equipment optimization and maintenance programs, manufacturer warranties, exchange components and technical services. The division operates through an extensive network of branch offices and often provides its services at the customers well site locations using trained technicians and mechanics. Mechanical Service maintains a Canadian $26 million inventory of genuine parts from key manufacturers. Syntech Enerflex is the largest open-shop electrical and instrumentation provider based in western Canada, with approximately 540 hourly tradesmen strategically located through the Western Canadian Sedimentary basin. Through Syntech, the Company provides a wide range of expertise including electrical products and services, focusing on construction at plant sites and ongoing maintenance of those systems, instrumentation products and services for both maintenance and new construction projects, and control technology expertise in design and technical services and automation. Fabrication Enerflex’s fabrication business segment engineers and assembles standard and custom-designed compression packages, production and processing equipment and facilities, and power generation systems. These products are offered through three divisions, namely: Compression Enerflex’s Compression division designs, manufactures and installs a wide variety of new natural gas compression packages for customers around the world. Packages are engineered and assembled at three locations: Calgary and Stettler, Alberta, and Odessa, Texas. These packages are standard-built or custom-designed with major components supplied by leaders and innovators within the global industry. The Company offers compression packages from 5 horsepower to 6,000 horsepower and ranging from low specification field compressors to high specification process compressors for onshore and offshore applications. The Company’s Compression facilities presently provide approximately 370,000 square feet of shop floor space and during 2004, the Company estimates, based on the theoretical plant capacity, these facilities operated at 58% utilization based on labor hours. Enerflex provides re-engineering and refurbishment of existing compression equipment both in a Calgary facility and at customer field locations. Production and Processing Enerflex’s Production and Processing division is a fully integrated engineering, design and fabrication group which custom-builds oil and gas processing equipment. Complete oil and gas processing facilities are designed through our Presson business unit, located in Nisku, Alberta, in modules enabling transportation anywhere in the world. Enerflex, through its Mactronic business unit, located in Red Deer, Alberta, is a recognized industry leader in the design and fabrication of flare systems and combustionrelated equipment for onshore and offshore applications. The Company’s Production and Processing facilities presently provide approximately 100,000 square feet of shop floor space and the Company estimates these facilities operated at 89.1% utilization based on labor hours in 2004. Power Enerflex’s Power division designs, manufactures and installs sub 10-megawatt power generation packages worldwide. These custom or standardized packages are designed and assembled in the Company’s primary compression fabrication facility located in Calgary, Alberta. The Company offers turbine-drive generators, gas-fired reciprocating packages and diesel-fired reciprocating packages. PAGE 6
ENERFLEX SYSTEMS LTD. – ANNUAL INFORMATION FORM Leasing Enerflex offers customers flexible and innovative financing alternatives, through which oil and natural gas producers and electricity generators can lease the use of a broad range of compression, production and power generation equipment. Leasing options include short-term rentals, long-term capital and operating leases and full-service contract operations. The Company’s lease fleet is located principally in western Canada. Expansion in international markets commenced during 2004, and is being executed on a selective basis to minimize the risk from these new markets. Enerflex Leasing contributes significantly to overall earnings as it is a significant customer of our compression fabrication business as almost all of its equipment is purchased from Fabrication. Service benefits as the majority of Leasing customers use Pamco and Jiro Service to perform routine maintenance over the life of the lease. Leasing expects continued growth in demand for its products in Canada, and has targeted specific geographic regions for expansion in the United States and abroad. Leasing does not generally increase the capital invested in its fleet unless it has lease contracts. Growth in the lease fleet is expected to be the largest investment opportunity for the Company in 2005. The following chart is an overview of the Enerflex structure: FABRICATION LEASING SERVICE COMPRESSION FABRICATION POWER PRODUCTION & PROCESSING LEASING LEASING ELECTRICAL, INSTRUMENTATION & CONTROLS SERVICE MECHANICAL SERVICE Compression Services EFX Compression COMPRESSION EFX Compression USA Jiro Compression Services EFX Compression EFX Compression USA Jiro Compression POWER SEGMENT Division SEGMENT Mactronic Presson Presson-Descon PRODUCTION & International PROCESSING Ltd. (46.5%) Mactronic Presson Business Presson-Descon Unit International Ltd. (46.5%) Division Business Unit LEASING Syntech ELECTRICAL, INSTRUMENTATION & CONTROLS Syntech Pamco Jiro Service Gas Drive MECHANICAL Systems SERVICE PT Gas Drive Systems Indonesia Landré Ruhaak Pamco S&L Energie Projekte Jiro Service GmbH (51%) Gas Drive Systems PT Gas Drive Systems Indonesia Landré Ruhaak S&L Energie Projekte GmbH (51%) PAGE 7
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ENERFLEX SYSTEMS LTD. ANNUAL INFORMATION FORM For the ...

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