IPEC Announces Acquisitions and Closing of Lime Rock Investment

3/4/1999

CALGARY, March 4, 2001 – IPEC Ltd. (ASE:IPE) is pleased to announce the completion of the acquisitions of Band-Jo Oilfield Services Ltd. and Silverdale Welding Ltd. as well as the previously-reported acquisition of Commanche Construction Ltd. Each of these acquisitions is expected to be accretive, and together they form an integral part of IPEC’s strategy of growth through the acquisition, consolidation and integration of profitable oilfield services companies.

Band-Jo Oilfield Services Ltd. of Brooks, Alberta is a pipeline construction company which also manufactures separator and dehydrator packages and prepares and constructs battery and compressor sites.

Silverdale Welding Ltd. of Lloydminster, Alberta specializes in small diameter pipeline construction, facilities installation and fabrication of oil and gas processing plants, steam generation plants, separator and dehydrator packages and lease and road construction.

Commanche Construction Ltd. of Redcliff, Alberta is primarily involved in pipeline, battery and compressor station construction as well as pressure vessel, processing system and custom equipment fabrication.

Together, these three companies broaden the scope of IPEC’s service offerings, and provide a foundation for future growth opportunities relating to small diameter pipeline installation and gathering systems, compression, processing and facilities construction.

On a proforma basis, the three acquired companies generated normalized revenues of $32.5 million and earnings before interest, taxes, depreciation and amortization of $7.4 million in 1998. The aggregate purchase price for the shares of the three acquisitions was approximately $18.5 million. In addition, IPEC assumed $2.3 million of long term debt obligations.

The purchases were financed as to approximately $13.4 million in cash and the issuance of approximately 4.85 million IPEC common shares. Part of the cash portion of the purchase price of Band-Jo and Silverdale, as well as the refinancing of the interim bank facility for the acquisition of Commanche, was financed through the private placement of 9,523,810 common shares to Riverside Investments, LLC (“Riverside”), which is advised by Lime Rock Management LP of Westport, Connecticut, and 405,000 common shares to other investors at a price of $1.05 per share. The remaining portion of the cash component of the purchase price was financed in part through newly arranged banking facilities with Hongkong Bank of Canada totaling $20 million. IPEC has also agreed to provide Riverside with a right of first refusal to purchase up to $10 million of additional common shares in the future as IPEC issues additional equity or pursues further acquisition opportunities.

Following completion of the equity private placement and the acquisitions, Riverside owns approximately 23% of the current outstanding shares of the Company. The acquisition of shares by Riverside was for investment purposes. John Reynolds of Westport, Connecticut and John Clarkson of Calgary, Alberta, nominees of Riverside, have been appointed to the Board of Directors of IPEC.

As well, V. Frank Pottow has resigned from the Board, and management and the Board of Directors of IPEC wish to acknowledge Mr. Pottow’s exemplary service to the Company during his tenure as a director.

IPEC is looking forward to a long partnership with both Lime Rock and Hongkong Bank of Canada, and to executing its growth strategy with the benefit of these financial partners who specialize in energy industry growth capital. These financial partnerships firmly position the Company to benefit from an expected multi-year increase in gas-directed activity in western Canada.

IPEC Ltd. is an oilfield services company headquartered in Calgary, Alberta. The Company’s current operations involve oilfield and small diameter pipeline construction, the domestic and international distribution of OCTG tubing and casing, drill pipe, line pipe, green tubes and structural steel products; the design, engineering and manufacture of oilfield surface equipment and the design and manufacture of downhole production optimization tools.

The Alberta Stock Exchange has neither approved nor disapproved the content of this Press Release.

 

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