Enerflex Systems Income Fund

Enerflex Systems Income Fund

July 06, 2005 23:59 ET

Enerflex Systems Ltd. Completes Acquisition HPS Group Limited.

CALGARY--(CCNMatthews - July 6) - Calgary-based Enerflex Systems Ltd. (TSX:EFX) announced today that it has entered into an agreement with the shareholders of HPS Group Limited ("HPS Group") whereby Enerflex will acquire 100% of the issued and outstanding common shares of HPS Group, of Perth, Australia. The total purchase consideration is $25.8 million Australian, comprised of $22.8 million in cash and $3.0 million to be paid by the issuance of 122,176 common shares of Enerflex Systems Ltd. Subject to the achievement of various performance measures and future earnings targets a maximum contingent consideration of $5.0 million Australian could be paid in July of 2006.

HPS Group is a specialized engineering, contracting and project management organization servicing customers in a wide range of industries, including oil & gas, mining, infrastructure, power and manufacturing. Current consolidated revenue for HPS Group's June 30, 2005 year end is approximately $54 million (CDN), with a forecast for the year ended June 30, 2006 of approximately $79 million (CDN) which is supported by a current order backlog of $79 million (CDN). Earnings before interest and income taxes for the year end June 30, 2005 will be approximately $5.3 million (CDN). Since its inception in 1988, HPS Group has completed approximately $500 million worth of projects.

HPS Group's products and services include business lines that compliment Enerflex's existing production and processing activities. These include fabrication, construction and project management with respect to:

- Turnkey gas compressor installation and upgrade;

- Process plant construction;

- Petrochemical and mining fabrication;

- Gas metering station construction;

- Engineering and construction management;

- Fabrication of air pollution control packages including dust collectors and odor scrubbers; and

- Specialized and general fabrication including pressure vessels, process skids, flare tips and acoustics management packages.

Mr. P. John Aldred, Chairman and CEO of Enerflex stated, "This is a tremendous development for our organization. HPS Group has situated itself in the market by focusing on projects between $5 and $30 million in size. These projects are ideally suited to our combined businesses and together we believe larger projects up to $50 million will be within our capabilities." Mr. Aldred added, "We firmly believe HPS Group has established a strong market presence, a solid infrastructure and an excellent reputation in its market. Combining these capabilities with Enerflex's resources, infrastructure and geographic presence, HPS Group will continue to grow its business by targeting the ever increasing number of mid-size energy development projects."

Mr. J. Blair Goertzen, President & COO of Enerflex stated, "This acquisition has significantly advanced our strategy of expanding our existing businesses into complimentary markets and positioning ourselves to meet the worldwide needs of our global customers." Mr. Goertzen further stated, "We now have a solid platform in the Australasia region with annual revenues of approximately $100 million. This strong market presence will position us to more fully service our existing customer relationships and expand our products and services in the region."

Enerflex Systems Ltd. is a leading supplier of products and services to the global oil and gas production industry. Our core expertise lies between the wellhead and the pipeline. Enerflex provides natural gas compression, power generation and process equipment for sale or lease, hydrocarbon production and processing facilities, electrical, instrumentation and controls services and a comprehensive package of field maintenance and contracting capabilities. Through our ability to provide these products and services in an integrated manner, or as standalone offerings, Enerflex offers its customers a unique value proposition.

Headquartered in Calgary, Canada, the Company has approximately 2,200 employees and operations in Canada, Australia, the Netherlands, Germany, the United States, Pakistan and Indonesia.

The Company's shares trade on the Toronto Stock Exchange under the symbol EFX.

Forward-Looking Statements

This document contains forward-looking statements. The words "anticipate", "expect", "project" and similar expressions identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining to operating performance, economic conditions and other factors. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

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