Update on the EH Cryo Project from Enerflex Ltd.
CALGARY, Alberta — Enerflex Ltd. (TSX: EFX) (NYSE: EFXT) has shared the latest developments regarding its modularized cryogenic natural gas processing facility, known as the EH Cryo project.
Latest Developments
As previously reported, Enerflex halted activities at the project site after a drone attack occurred nearby, resulting in fatalities at an adjacent facility. The company is working closely with its customer to assess the situation and identify potential paths forward to complete the project, despite ongoing security concerns.
Contract and Construction Status
Recently, Enerflex received notice from its customer about an intention to terminate the contract for the EH Cryo project. The company believes this termination is an invalid attempt to circumvent its rights to suspend work while the site remains unsafe, a viewpoint backed by expert security assessments. Enerflex intends to contest this termination to safeguard its interests related to the EH Cryo project.
Current Construction Progress
As of the end of June 2024, construction on the EH Cryo project was approximately 85% complete. Revenue from this project is included in Enerflex’s Engineered Systems product line, with unbilled revenue totaling around $160 million at the conclusion of the second quarter. This project accounts for roughly 6% of Enerflex’s Engineered Systems backlog.
Financial Obligations
The company has issued a $31 million Letter of Credit to support its commitments for the EH Cryo project, which is financed through its Revolving Credit Facility. Enerflex considers any draw from this financial security to be inappropriate under the current circumstances.
Company's Commitment
Enerflex is focused on resolving this situation while prioritizing the interests of the company and its stakeholders. The company will continue to provide updates to stakeholders as necessary.
About Enerflex
Enerflex is a prominent global provider of energy infrastructure and energy transition solutions, with a focus on natural gas and sustainable practices. With a dedicated workforce of over 4,500 professionals, Enerflex is committed to transforming energy for a sustainable future while emphasizing the importance of natural gas in meeting global energy demands.
Contact Information
For inquiries from investors and the media, please contact:
Marc Rossiter
President and Chief Executive Officer
E-mail: MRossiter@enerflex.com
Preet S. Dhindsa
Senior Vice President and Chief Financial Officer
E-mail: PDhindsa@enerflex.com
Jeff Fetterly
Vice President, Corporate Development and Investor Relations
E-mail: JFetterly@enerflex.com
Frequently Asked Questions
What is the EH Cryo project?
The EH Cryo project is a modularized cryogenic natural gas processing facility being developed by Enerflex.
What led to the suspension of the EH Cryo project?
The project was suspended due to a drone attack near the site, which raised significant safety concerns.
What actions will Enerflex take regarding the contract termination?
Enerflex plans to challenge the termination of the contract, viewing it as an improper move by the customer to evade contractual obligations.
What was the completion status of the project as of June 30, 2024?
As of June 30, 2024, the construction of the EH Cryo project was approximately 85% complete.
What is the financial impact of the EH Cryo project on Enerflex?
The project has a significant financial impact on Enerflex, representing about 6% of the Engineered Systems backlog and consisting of unbilled revenue of roughly $160 million.
