Enerflex Ltd. Updates on EH Cryo Project Status
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Enerflex Ltd. Provides Update on EH Cryo Project
CALGARY, Alberta — Enerflex Ltd. (TSX: EFX) (NYSE: EFXT) today provided an update of a modularized cryogenic natural gas processing facility known as the EH Cryo project.
Recent Developments
As previously announced, Enerflex suspended activity at the project site following a drone attack that resulted in fatalities at an adjacent facility. The company has collaborated with its customer to evaluate the situation and explore ways to complete the project despite security concerns.
Status of Contract and Construction
Enerflex has recently been notified by its customer of an intention to terminate the EH Cryo project contract. The company views this termination as an invalid attempt to bypass its rights to suspend work while the site remains unsafe, a position supported by expert security input. Enerflex plans to dispute this termination and protect its interests regarding the EH Cryo project.
Current Progress
Construction of the EH Cryo project was approximately 85% complete as of the end of June 2024. Revenue related to this project is recognized within Enerflex’s Engineered Systems product line, with unbilled revenue from the project amounting to about $160 million at the end of the second quarter. The project represents around 6% of Enerflex’s Engineered Systems backlog.
Financial Commitments
The company has issued a $31 million Letter of Credit supporting its obligations for the EH Cryo project, funded by its Revolving Credit Facility. Enerflex considers any drawing from this financial security under the current circumstances improper.
Company's Focus
Enerflex is dedicated to resolving this issue while prioritizing the interests of the company and its stakeholders. It will continue to keep stakeholders informed as necessary.
About Enerflex
Enerflex is a leading global provider of energy infrastructure and energy transition solutions focused on natural gas and sustainable practices. With a dedicated team of over 4,500 professionals, Enerflex aims to transform energy for a sustainable future while upholding a strong commitment to the role of natural gas in global energy needs.
Contact Information
For investor and media inquiries, please reach out to:
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 developed by Enerflex.
What prompted the suspension of the EH Cryo project?
The project was suspended due to a drone attack near the site, which led to safety concerns.
What does Enerflex intend to do regarding the contract termination?
Enerflex plans to dispute the termination of the contract, viewing it as an improper attempt by the customer to escape contractual responsibilities.
How much of the project was completed as of June 30, 2024?
As of June 30, 2024, construction of the EH Cryo project was about 85% complete.
How does the EH Cryo project impact Enerflex's financials?
The project impacts Enerflex’s financials significantly, representing about 6% of the Engineered Systems backlog and comprising unbilled revenue of approximately $160 million.
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