2003 Annual Report - Enerflex

Enerflex is a market leader in Canada and maintains anextensive branch network, as proximity to customer locationsis key to earning business.Outlook for markets and competitionAs a Canadian-based provider of equipment and services to the global oil and gas industry, Enerflex’s businessprospects are influenced by several market factors. These include the business outlook for oil and gas producers,prospects for natural gas infrastructure development, as well as the business outlook and competitive environmentwithin the natural gas compression industry.Industry outlook – oil and gas producersWhile Enerflex continues to build its international presence, the Company’s fortunes are largely tied to naturalgas capital and operating expenditures in western Canada. Almost 20,000 wells were completed in 2003, ofwhich approximately 70% were natural gas wells. In 2004, industry analysts forecast that capital expenditureson plant and equipment will remain strong, but lower than in 2003. Many forecasters expect that, in theabsence of significant discoveries, North American conventional natural gas production will decrease. Sustainingor increasing production volumes is progressively more dependent upon development of tight gas and coal bedmethane, both of which require more compression than traditional reservoirs, and expansion in frontier regionssuch as the Northwest Territories. Higher natural gas prices than thoseexperienced in the 1990s will be required to support gas development inthese areas.Crude Oil (WTI US$/barrel)Natural Gas (AECO “C” Hub C$/mcf)oil & naturalgas pricesaverage30.2925.91 26.1531.03Boh McLeanBranch ManagerSyntech5.59 5.774.116.2600 01 02 03Enerflex 2003 Annual Report49