<PAGE>
 
                               ENERGY INDUSTRIES
 
            NOTES TO THE COMBINED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 7. DEBT
 
  Energy Industries debt consisted of the following (in thousands):
 

<TABLE>
<CAPTION>
                                                       JUNE 30, SEPTEMBER 30,
                                                         1995       1995
                                                       -------- -------------
      <S>                                              <C>      <C>
      Texas Commerce Bank revolving/term credit
       facility, interest at prime or Eurodollar
       rates, 7.75% at September 30, 1994, due in
       quarterly installments beginning in 1997
       through 1999, collateralized by certain
       compression assets............................. $26,800     $15,000
      Other debt at approximately 8%..................   1,192         200
                                                       -------     -------
        Total debt....................................  27,992      15,200
      Less current maturities.........................     429          94
                                                       -------     -------
        Long-term debt................................ $27,563     $15,106
                                                       =======     =======
</TABLE>

 
  At September 30, 1994, Energy Industries maintained a line of credit with
Texas Commerce Bank. This credit agreement provides Energy Industries with a
$30 million revolving credit facility that converts after two years to a three
year amortizing term loan. The debt bears interest at a variable rate, adjusted
periodically based on prime or Eurodollar interest rate.
 
  Pursuant to the credit agreement, Energy Industries has agreed to maintain
certain financial covenants and to limit additional indebtedness, dividends,
dispositions and acquisitions. The amount of restricted net assets for Energy
Industries at September 30, 1994 was approximately $65.0 million. Additionally,
Energy Industries' ability to transfer funds to the Company was limited to $5.0
million at September 30, 1994.
 
  The estimated fair value of total long-term debt at June 30, 1995 and
September 30, 1994 approximates book value.
 
 Annual Maturities
 
  The annual maturities of long-term debt for the five years ending September
30, 1999 are as follows (in thousands):
 

<TABLE>
<CAPTION>
      1995            1996                    1997                     1998                     1999
      ----            ----                    ----                     ----                     ----
      <S>             <C>                    <C>                      <C>                      <C>
      $94             $105                   $5,001                   $5,000                   $5,000
</TABLE>

 
NOTE 8. CASH FLOW INFORMATION
 
  For purposes of the statement of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents.
 
  Net cash provided by operating activities reflects cash payments of interest
and income taxes.
 
  Cash paid during the eleven months ended September 30, 1994 for interest was
$70,000.
 
NOTE 9. INCOME TAXES
 
  Energy Industries' method of accounting for income taxes recognizes deferred
tax assets and liabilities based on the expected future tax consequences of
existing temporary differences between the financial reporting and tax
reporting basis of assets and liabilities, and operating loss and tax credit
carryforwards for tax purposes.
 
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