<PAGE>
Competition. The principal competitive factors in natural gas compression
markets are price, service, availability and delivery time. Energy Industries
operates in a highly competitive environment and competes with a large number
of companies, some of which are larger and have greater resources than Energy
Industries.
Facilities and Real Estate. Energy Industries own facilities and related real
estate in Houston, Midland and Corpus Christi, Texas, Oklahoma City, Oklahoma
and Lafayette, Louisiana. The main fabrication facility is in Corpus Christi,
Texas, and the other properties are currently being used for branch offices.
Other branch facilities are leased from third parties.
NATURAL GAS SERVICES--GATHERING, PROCESSING AND MARKETING
This segment of the Company's natural gas services operations involves two
major categories of business activities: the gathering and processing of
natural gas and its constituent products and the marketing and trading of
natural gas liquids ("NGL"). The Company purchased all of the stock of Cimarron
in November 1992 for $3.8 million, consisting of $2.5 million in cash and
437,333 shares of Common Stock. For purposes of recording the acquisition, the
stock consideration was valued at $1.3 million. Two of the three sellers remain
as officers of Cimarron, and all of the Cimarron employees became employees of
the Company.
In September 1993, Cimarron acquired the interests of Stellar, a group of
companies engaged in natural gas gathering and processing, for an aggregate
purchase price of $16.4 million. The purchase price included $6.3 million in
cash, the redemption of $3.7 million of notes payable to former Stellar
shareholders and the assumption of $6.4 million of indebtedness of Stellar.
The following table shows revenues and operating results for the two major
categories of business activities for fiscal 1994 and 1993 (in thousands):
<TABLE>
<CAPTION>
OPERATING
REVENUES INCOME (LOSS)
----------------- ----------------
1994 1993 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Gathering and Processing............. $ 22,867 $ 11,671 $ 718 $ 427
NGL Marketing........................ 133,274 174,620 703 1,345
Selling and Administrative........... (2,484) (2,324)
-------- -------- ------- -------
Total.............................. $156,141 $186,291 $(1,063) $ (552)
======== ======== ======= =======
</TABLE>
Gathering and Processing. Following the acquisition of Stellar and the
construction of the Elm Grove gathering system in Oklahoma, Cimarron owns and
operates approximately 487 miles of natural gas gathering systems in West Texas
and Oklahoma and a gas processing plant in Sutton County, Texas. The systems
gather approximately 50 MMcf (million cubic feet) of natural gas per day and
the Sutton plant is capable of processing 25 MMcf of natural gas per day
following the expansion of the plant's capacity during 1994.
Cimarron's other gathering and processing activities consist of ownership
interests in two natural gas gathering systems, one in Smith County, Texas, and
one in Texas and Beaver Counties, Oklahoma, and ownership interests in related
gas processing plants. The gathering system in Smith County includes
approximately eight miles of eight-inch gathering lines with capacity of about
30 MMcf per day. Five wells owned by others are currently connected to the
system. The related skid-mounted cryogenic gas processing plant, which began
operations in August 1992, has a throughput capacity of approximately 23 MMcf
per day. The gathering system in Oklahoma includes approximately 170 miles of
four- to ten-inch gathering lines with capacity of about 25 MMcf per day. That
system is connected to 34 wells owned by third parties. The related turbo
expander plant, with a throughput capacity of approximately 14 MMcf per day,
began operations in 1979.
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