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  Comparison with Comparable Publicly Traded Companies. Schroder Wertheim
compared selected financial data of Energy Industries with certain data
relating to selected publicly traded companies engaged in businesses which
Schroder Wertheim deemed to be reasonably comparable to that of Energy
Industries (the "Public Comparables"). Specifically, Schroder Wertheim included
in its review BJ Services Company, Dreco Energy Services, Ltd., Enerflex
Systems, Ltd., Energy Ventures, Inc., EnServ Corporation, Production Operators
Corporation, Tidewater Inc. and Weatherford International Incorporated (pro
forma for its acquisition of Enterra Corporation). Such financial information
included market valuation, operating performance and implied trading multiples
based on the ratio of the Adjusted Market Value (equity market value plus
latest reported total debt, capitalized leases, preferred stock and minority
interest, minus cash and cash equivalents) as a multiple of revenue, operating
income (or EBIT) and EBITDA. Schroder Wertheim compared the LTM and projected
operating statistics and implied trading multiples of the Public Comparables to
the LTM and projected operating statistics (based on management's estimates)
and implied trading multiples for Energy Industries based on the terms of the
Energy Industries Sale Proposal. In this review, Schroder Wertheim noted that
the proposed purchase price implies multiples of LTM and projected EBIT and
EBITDA which exceed comparable mean implied multiples for the Public
Comparables. Such analysis showed that on the basis of multiples of LTM EBIT
and EBITDA, the proposed purchase price implied multiples of 18.5x and 9.9x,
respectively, for Energy Industries versus 13.3x and 7.9x, respectively, for
the Public Comparables.
 
  Leveraged Buyout Analysis. A leveraged buyout ("LBO") analysis is a valuation
methodology used to derive a theoretical maximum valuation of an enterprise to
a purchaser which seeks to optimize the expected financial returns of an
acquisition through the use of a high percentage of debt in the capital
structure. The LBO analysis was generated based upon operating, capital
expenditure, and balance sheet assumptions for future fiscal periods provided
by or developed with the assistance of Energy Industries management. As the LBO
analysis generated value based only on Energy Industries' projected results of
operations on a stand-alone basis, the analysis would not necessarily reflect
the value which a strategic buyer would place on the enterprise. The analysis
indicated a LBO valuation for Energy Industries which was significantly below
the proposed sale price. The theoretical LBO valuation was reasonably
consistent with one of the bids received by the Company for Energy Industries
in a proposed LBO involving the current Energy Industries management team and a
large energy company.
 
  Discounted Cash Flow Analysis. A discounted cash flow analysis is a
traditional valuation methodology used to derive a valuation of a corporate
entity by capitalizing the estimated future earnings and calculating the
estimated future free cash flows of such corporate entity and discounting such
aggregated results back to the present. Schroder Wertheim performed a
discounted cash flow analysis of Energy Industries based on operating, capital
expenditure and balance sheet assumptions for future periods provided by or
developed with the assistance of Energy Industries management. Using such
information, Schroder Wertheim calculated such estimated "free cash flow" based
on projected unleveraged net income (earnings before interest and after taxes;
"EBIAT") adjusted for: (i) certain projected non-cash items (i.e. depreciation
and amortization); (ii) projected capital expenditures; and (iii) projected
changes in non-cash working capital investment. Schroder Wertheim discounted
the stream of free cash flows provided in such projections back to the present
using discount rates ranging from 12.0% to 16.0%. To estimate the terminal
value of Energy Industries at the end of the forecast period, Schroder Wertheim
applied a range of terminal multiples from 7.0x to 9.0x to the projected fiscal
2002 EBITDA and discounted such value estimates back to the present using
discount rates ranging from 12.0% to 16.0%. Schroder Wertheim then summed the
present values of the free cash flows and the present values of the terminal
values to derive a range of implied enterprise values for Energy Industries of
approximately $89.0 million to $136.8 million, after adjusting for total cash
and cash equivalents.
 
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
 
  THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE
"FOR" THE ENERGY INDUSTRIES SALE PROPOSAL.
 
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