Enterprise Group Signs Agreement to Acquire the Canadian Operations of FlexEnergy Solutions
St. Albert, Alberta--(May 1, 2025) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), emphasizes technologies that mitigate, reduce, or eliminate CO2 and Green House Gas (GHG) and other harmful emissions for small local and Tier One resource clients, announces the signing of a Purchase and Sale Agreement to acquire 100% of the shares of Flex Leasing Power and Service ULC ("FlexEnergy Canada") from Flex Leasing Power and Service LLC ("FlexEnergy Solutions") for a purchase price of Cdn$20 million, subject to certain adjustments. Enterprise and FlexEnergy USA are finalizing the necessary documentation and anticipate closing the acquisition within the next few days. The acquisition will be financed using existing cash reserves and our new credit facility.
With this strategic transaction, Enterprise will become the exclusive supplier for FlexEnergy turbines in Canada, further solidifying its market leadership and positioning Enterprise at the forefront of addressing the growing demand for reliable and efficient natural gas to electric power solutions across Canada and various industries.
The acquisition comes at a critical time as the North American power grid faces widespread challenges due to inadequate maintenance, with increasing societal and industrial electricity demands leading to more frequent power disruptions. Enterprise's acquisition of FlexEnergy Canada, a leader in natural gas turbine technology, significantly enhances its capability to provide energy solutions that are both efficient and environmentally responsible.
FlexEnergy Solutions' turbine technology, renowned for its efficiency, low-emission performance, and industry-leading fuel tolerance, has been a proven solution in Canada's most demanding, extreme environments. The technology's robust performance is critical for industries ranging from remote power requirements, manufacturing, to AI data centers, which are increasingly relying on natural gas due to its rapid growth and sustainability as a power source.
With this acquisition, it not only expands its fleet by adding 17 turbine generators but also establishes a platform from which to add FlexEnergy Solutions' innovative 2.0-megawatt unit that meets the highest standards of power generation efficiency. Additionally, the acquisition includes several long-term lease and service contracts, ensuring a steady stream of recurring revenue.
The integration of FlexEnergy Canada into Enterprise Group will enhance the Company's offerings significantly. Not only will Enterprise continue to meet temporary and project-based power needs, but it will also provide permanent installation solutions with long-term lease options catering to a wider range of customer needs across all industries.
The acquisition also includes a team of highly trained specialists, ensuring continued excellence in turbine technology and operations. This expansion aligns with the growing trend towards mobile, temporary natural gas power solutions, which offer a more cost-effective and environmentally friendly alternative to traditional diesel.
"We are thrilled about the possibilities this acquisition presents to us," said Leonard D. Jaroszuk, CEO & Chairman of Enterprise Group, Inc. "With the expanded capabilities and resources, we are now better positioned to scale our aggressive natural gas-to-electricity expansion strategy across Canada and into new markets. We are committed to leading the transition to more sustainable energy solutions."
Enterprise Group's enhanced product line and expertise position the Company to capitalize on the expanding opportunities across all industrial sectors, providing reliable, efficient, and sustainable solutions to an ever-growing client base.
"We are excited about the potential of the Canadian power generation market and have found a great distribution partner in Enterprise Group, Inc. and their group of companies," says Doug Baltzer, CEO of FlexEnergy Solutions. "This team brings broad operational expertise and deep customer relationships to the market, and we look forward to supporting them as they grow. FlexEnergy Solutions has grown a strong team and a robust asset base in Canada over the past ten years. We are proud that this team will continue to support the market as part of Enterprise Group, Inc."
Enterprise Group Announces Normal Course Issuer Bid
St. Albert, Alberta--(March 31, 2025) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), announces that the Toronto Stock Exchange ("TSX") has accepted its notice of intention to commence a normal course issuer bid to purchase outstanding common shares of the Company ("Shares") on the open market in accordance with the rules of the TSX.
The Company is authorized to purchase up to 5,624,649 Shares under the normal course issuer bid, representing 10% of its public float, as of March 19, 2025. As of that date, there were 77,531,187 Shares issued and outstanding. The average daily trading volume of the Shares for the six months ended February 28, 2025, calculated in accordance with the rules of the TSX, was 437,486 Shares. Enterprise is subject to a daily repurchase limit of 25% of such volume, being 109,371 Shares, except where such purchases are made in accordance with the block purchase exemption under TSX rules.
Enterprise intends to commence the normal course issuer bid effective April 2, 2025 and continue the bid until April 1, 2026 or such earlier time as the bid is completed or terminated at the option of the Company. All Shares purchased under this bid will be purchased in the open market through the facilities of the TSX or alternative Canadian trading systems at the prevailing market price at the time of such transaction. Shares acquired under the bid will be cancelled.
Enterprise's Board of Directors has authorized the normal course issuer bid as it is believed that the purchase of the Shares pursuant to the normal course issuer bid is in the best interest of shareholders as the Shares may become available at prices that make an attractive investment and appropriate use of the Company's funds.
Q1 2025 - Enterprise Group results are out today. The numbers are strong.
This is a service business attached to the cyclical oil and gas sector. As such, comparing quarters is not very helpful. It's important to look at the overall trends.
Average revenue for the three preceding years is ~$30m. After the first quarter of 2025 the company has already achieved one third of that at over $10m.
The LNG revolution in Canada is about to start in the coming weeks, see: https://rockandturner.substack.com/p/the-canadian-lng-gold-rush . Demand for the services offered by Enterprise is increasing sharply, so the rest of this year should be equally strong, if not stronger.
The company continued investing heavily, acquiring $5.9 million in capital assets to expand its natural gas power systems and diversify its rental fleet. The major strategic development was the $20 million acquisition of FlexEnergy Canada, making Enterprise the exclusive Canadian supplier and service provider for FlexEnergy turbines. This move strengthens Enterprise’s leadership in natural gas-to-electric power solutions and creates new recurring revenue streams through long-term leasing and maintenance contracts. The acquisition positions the company for future growth, with access to higher-capacity turbines and expanded market opportunities.
On the financial side, Enterprise refinanced its debt with a new lending facility from the Bank of Montreal, consolidating borrowings at a lower interest rate (prime + 2%) and reducing interest expenses. The previous loan was paid off with a negotiated discount, further lowering costs.
Trade policy developments, including tariffs, have not materially impacted operations. Canadian energy exports remain protected under the USMCA, and tariffs on U.S.-manufactured equipment have not disrupted procurement or project timelines. The company continues to source critical equipment from the U.S. without significant cost or supply issues.
The underlying business remains strong, with a focus on long-term growth.
Thanks for the write-up and for sharing this idea.
This might be a basic question, but if you—or any other reader—can point me toward further resources to help me better understand and explore the question below, I’d really appreciate it:
I understand that EPP holds exclusive rights to FlexEnergy’s Flex Turbines for short-term applications over the next few years. That said, what would prevent FlexEnergy’s competitors (such as Capstone Green Energy, for example) from offering a comparable alternative? From what I’ve gathered, Enterprise/FlexEnergy’s solution appears to be well-suited for remote or rugged terrains and harsh climates. But if this market is so attractive, what would stop Capstone from developing a similarly optimized offering?
Capstone is in a different business. They conduct risk analysis, well integrity testing. etc.
Enterprise is purely in the ancillary equipment rental business.
It is important to remember that when drilling for oil and gas, the cost of renting the ancillary equipment is pretty insignificant in the grand scheme of things for the oil and gas company.
However, it this equipment is mission critical. Oil and gas wells can't be turned on and off. Once drilled, they flow without interruption. If the ancillary equipment supplying heat, light and power fails, the loss is huge as oil and gas are wasted.
So these oil and gas companies are not concerned about price. They need a supplier that they can rely upon.
By analogy, if you were having brain surgery, would you select the cheapest surgeon or the one that you know has an impeccable record for reliability and success?
This means that the service is sticky. The switching cost is the risk that bringing someone else in to supply this equipment may result in operational issues? Why take that risk? The cost saving will be insignificant.
Historically, Enterprise didn't supply everything, but they were great at what they did supply. Then they acquired Evolution enabling them to offer the full stack of equipment. They became a one stop shop. This also makes them attractive - why bring in 3 or 4 subcontractors, when 1 can do it all?
So Evolution have an entrenched position.
The Flex Turbines are the best available and help the oil and gas company reduce operating costs and also to reduce greenhouse gas emissions. Since Enterprise has an exclusivity on these, that strengthens their moat still further.
The Enterprise acquisition and Flex exclusivity deal are really pivotal for Enterprise. It is in a position of real strength with others unable to compete.
Perhaps a silly question, but the transcript mentions several times that North American LNG is cheaper. But why is North American/Canadian LNG cheaper than, for example, LNG from Qatar or other suppliers? Is this likely to be a cost advantage in the long term? Is the subsoil better for extraction, or is it simply the assumption that the volume will drive down the world market price and thus force other producers out of the market? I haven't been able to find a satisfactory answer by Googling so far. Gemini says that Qatar will probably continue to have a cost advantage over Canada thanks to its conventional gas fields and proximity to Asia, but couldn't provide any concrete figures or percentages. Unfortunately, Statista doesn't have any data on this either.
Canada is a cost-effective LNG producer for several reasons:
(1) Lower Ambient Temperatures: British Columbia's cooler climate reduces the energy required for liquefaction, making the process more efficient. This provides an energy efficiency advantage of 34% over Australia, 32% over Qatar, and 26% over the U.S. Gulf Coast.
(2) Shorter Shipping Distances: Canada's West Coast LNG facilities, such as Kitimat, are geographically closer to key markets in Asia than competitors like Qatar or the U.S. Gulf Coast. For example, Kitimat is approximately 7,698 km from Japan's Himeji port, compared to Qatar's 11,773 km. This translates to lower shipping costs - 96 cents per mmbtu from Canada versus $2.22 per mmbtu from the U.S. Gulf Coast.
(3) Abundant Low-Cost Natural Gas: Western Canada has vast natural gas reserves with high productivity rates and low feedstock costs. AECO-C natural gas prices in Canada have historically traded at a significant discount compared to Henry Hub prices in the U.S., further reducing LNG production costs.
(4) Competitive Fiscal Environment: Canada offers favourable tax policies for LNG developers, including accelerated capital cost allowances and reduced corporate tax rates. These measures help lower overall project costs.
All of these factors will propel Canada into a major player on the global stage in the supply of LNG.
There's been a lot of criticism over them dilluting shareholders with a raise and now deciding to buy back shares only 4 months later. Some PMs are calling this a 2026 story now
In December they closed a 15 million share placement at $1.90/share. This is because there is an LNG revolution taking place and they have already been notified by customers that 2025 and beyond will see an uptick in business with the services offered by Enterprise being in high demand. So they needed to invest in expanding their fleet of equipment.
Having raised the capital, on February 28, 2025, the Company repaid its bank loan facility by way of a cash payment of $15,675,574 which included a negotiated settlement discount from the lender in the amount of $1,500,000. They seemed to believe that an equity for debt swap made economic sense.
They have also been investing in expanding their stock of rental equipment - turbines, etc.
Q1 2025 has been really good so far by all accounts. After a disappointing Q4 2024 (largely expected), Q1 has started strong. The really interesting part is that Q1 2024 was extraordinarily good, yet the first quarter of 2025 looks like it will be close to a year earlier - which is great news.
The Canadian LNG flows (at Kitimat) start mid-2025 which are anticipated to cause huge demand in the second half of this year. So this year looks like it may be a record year.
For me, not only is the investment thesis in tact, but the shares are ‘on sale’ in the market at the moment.
The shares are now $1.25 for two reasons:
(1) First is that the entire Canadian market has been marked down on the back of Trump tariffs, although Enterprise has no cross border busines so will be unaffected.
(2) The second is that average holding periods for equities are so short these days that the market prices equities off short-term numbers. In the U.S. during the 1950s, the average holding period for corporate stocks was 8 years. Fast-forward to 2020 and it’s a mere 167 days. Equities are being treated more like lottery tickets than stakes in tangible businesses., The Q4 earnings were soft - as was expected - but since the market prices stocks off quarterly earnings, the share price was hit.
Both of these things create a buying opportunity in my mind.
So you can’t blame the management for seeking permission to buy up to 10% of the equity over the next 12 months if they consider the shares to be trading well below intrinsic value.
Given that the share placement in December was over subscribed by institutional buyers who had conducted due diligence, we can conclude that they also viewed intrinsic value above $1.90 then, and so well above the $1.35 today. Raymond James initiated coverage of Enterprise in February this year with a price target well over $3.50.
The NCIB to repurchase up to 10% of the shares outstanding is great news for shareholders. Having sold equity at $1.90, they can now buy it back for $1.35. This is straight out of the Henry Singleton playbook and speaks to the competence of management. In any event, the company is not using the money raised from the equity raise for the repurchases, it anticipates being able to fund repurchases from cash flows over the year.
Des O'Kell, President of Enterprise, said to me "Our approach to Capital Allocation remains largely unchanged. Customer demand and fleet maintenance continue to be dominant, supporting a strong commitment to CapEx. The NCIB represents a new initiative, prompted by the recent significant decline in our share price. We believe it's important to provide support when the stock is trading at what we view as depressed valuations. While we don’t anticipate repurchasing the full amount authorized under the NCIB, we intend to utilize the program opportunistically... particularly during periods like now, where we believe the current price presents such an opportunity."
Enterprise Group is supplying services and infrastructure to companies involved in the LNG market which promises to accelerate the company's growth.
Canada is set to enter the global LNG market with its first shipments expected in mid-2025, marking a significant milestone for the country's energy sector. The LNG Canada project, led by Shell and involving partners such as Petronas, PetroChina, Mitsubishi Corp., and Korea Gas Corp., will be the primary driver of this entry.
This marks Canada's first opportunity to export natural gas to markets other than the United States, opening up new trade possibilities, particularly with Asian countries.
The success of LNG Canada could pave the way for additional LNG projects in the country, with several other facilities in various stages of development.
Global demand for liquefied natural gas (LNG) is forecast to rise by around 60% by 2040, largely driven by economic growth in Asia, emissions reductions in heavy industry and transport as well as the impact of artificial intelligence.
Enterprise Group Announces $20 Million Bought Deal Public Offering
St. Albert, Alberta--(November 27, 2024) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of services to the energy sector that is focused primarily on specialized equipment rental is pleased to announce that it has entered into an amended agreement with a syndicate of underwriters led by Canaccord Genuity Corp. and Raymond James Ltd. (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 13,157,900 common shares of the Company ("Offered Shares") at a price of $1.90 per Offered Share (the "Issue Price") for gross proceeds to the Company of approximately $25.0 million (the "Offering").
The Company has also granted the Underwriters an over-allotment option (the "Over-Allotment Option"), exercisable for a period of 30 days from the date of the closing of the Offering, to purchase up to an additional 15% of the aggregate common shares to be sold pursuant to the Offering. In the event the Over-Allotment Option is exercised in full, the aggregate gross proceeds of the Offering will be $28.8 million.
The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes. This funding initiative will support the Company's continued expansion plans, enabling it to capitalize on the robust growth opportunities currently in the burgeoning natural gas turbine power sector, while reinforcing its position as the leading player in the space. With robust activity fueling the current quarter and a strong pipeline of projects supporting future expansion, the Company believes it is well-positioned to continue delivering strong results going forward underscoring its commitment to creating shareholder value while driving sustained, long-term growth.
Closing of the Offering is expected to occur on or about December 12, 2024, or such other date as may be agreed upon by the Company and the Underwriters, subject to customary closing conditions, including required approvals of the Toronto Stock Exchange.
The shares to be issued under the Offering will be offered by way of a short form prospectus in each of the Provinces of Canada, except Quebec, and may be offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws, and certain other jurisdictions outside of Canada and the United States.
This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and such securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in the U.S. Securities Act), absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Leonard Jaroszuk, CEO and co-founder, provided commentary, “Turbines cost $800,000 - $900,000 each. The cabling and distribution panels to power the site cost another $250,000 on average. Based on the rates being charged by Enterprise, the turbines pay for themselves in 16-18 months, while the cabling and distribution panels pay for themselves in 90 days. So these investments are highly accretive generating strong cash flows for the business. The idea is that the more that we deploy, the more cash we can generate. Market penetration is currently 16-18% of the addressable market, with many more new opportunities coming over the hill, so the growth potential is huge.... The turbines have a 20 to 25 year life span."
With these kinds of dynamics, it makes sense to max out investment.
Enterprise Group Announces Successful Flare Gas Application for New Client
St. Albert, Alberta--(November 20, 2024) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), emphasizes technologies that mitigate, reduce, or eliminate CO2 and Green House Gas (GHG) and other harmful emissions for small local and Tier One resource clients, along with its wholly owned subsidiary, Evolution Power Projects ("EPP"), is pleased to announce the early success of an ongoing flare gas utilization project in North Central Alberta with a new client.
Desmond O'Kell, President of Enterprise Group, emphasized the significance of this achievement, noting, "Firstly, it allows us to support a client in leveraging excess natural gas production in areas restricted by minimal infrastructure. Secondly, our advanced turbine technology offers Operators and Midstreamers a novel method to meet stringent flaring and emissions standards effectively." This initiative showcases our commitment to providing environmentally friendly, low-emission mobile power systems, demonstrating their efficacy in delivering cost-effective and advanced solutions for remote power needs. This project adds to our expanding portfolio of clients who prioritize efficient and sustainable energy solutions.
EPP's mobile turbine power generation units, known for their significant fuel tolerance, are now utilizing the client's excess gas production to generate about 1 megawatt of continuous power. This power is now readily available for various on-site applications, including production enhancement, further field development, and other local infrastructure needs.
Enterprise views this flare gas solution as highly beneficial for the industry, especially as regulations on flaring have become much stricter in recent years. EPP is compiling daily operational performance data to be used in marketing and business development efforts, which the company expects will boost demand for its mobile turbine equipment as this project site is currently utilizing approximately 13% of EPP's natural gas power fleet.
Enterprise Group continues to advance its position as the sole provider of low emission site electrification power systems to the Canadian energy industry. Canadian energy producers who are enthusiastic about emission reductions, efficiency, safety and drastically lowering their fuel costs are turning to Enterprise's methods by displacing diesel and utilizing natural gas on their project sites. On the majority of project sites, natural gas produced locally by the client is powering the turbine power generators, thus eliminating third party fuel costs.
Q3 figures have resulted in a draw down presenting an interesting entry opportunity today.
While the quarter was softer than the corresponding period last year, the nine-months to September were better than last year. Quarterly cyclicality in the oil and gas sector is nothing new.
The investment thesis still looks very much in tact.
Key points I pulled out of the quarterly release:
(a) Third quarter saw a reduction in activity... for two primary reasons. First was apprehension and preparation for a potentially severe forest fire season, leading some customers to delay the execution of planned projects to the end of the forest fire season. The second reason was some customers took advantage of the summer months to allow employees extended time off to prepare employees for the up coming demands of another year of busy field activity
(b) The increasing demand for natural gas power generation systems indicates a shift towards lower emission alternatives, and going forward, market conditions remain favourable for the energy sector, resulting in increased drilling, completion, and infrastructure projects. These factors are expected to continue for the remainder of 2024 and 2025.
(c) During the nine months ended September 30, 2024, the Company acquired $13,452,761 of capital assets, primarily for natural gas power generation equipment and facilities, upgrading existing equipment, and meeting specific requests from customers.
(d) Enterprise announced a new five year exclusivity agreement with FlexEnergy Solutions... The agreement positions Enterprise... as the sole provider of short-term turbine and microturbine applications across all commercial and industrial sectors in Alberta and British Columbia.
My take away from this are:
1. Low activity in Q3 will very likely translate to higher activity in the quarters to follow
2. Both customers and Enterprise are gearing up for an acceleration in activity
3. We still have the LNG revolution happening from 2025 in Canada
4. The company is still expanding into adjacent industries and expanding its territorial reach
Press Release -1st May 2025
Enterprise Group Signs Agreement to Acquire the Canadian Operations of FlexEnergy Solutions
St. Albert, Alberta--(May 1, 2025) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), emphasizes technologies that mitigate, reduce, or eliminate CO2 and Green House Gas (GHG) and other harmful emissions for small local and Tier One resource clients, announces the signing of a Purchase and Sale Agreement to acquire 100% of the shares of Flex Leasing Power and Service ULC ("FlexEnergy Canada") from Flex Leasing Power and Service LLC ("FlexEnergy Solutions") for a purchase price of Cdn$20 million, subject to certain adjustments. Enterprise and FlexEnergy USA are finalizing the necessary documentation and anticipate closing the acquisition within the next few days. The acquisition will be financed using existing cash reserves and our new credit facility.
With this strategic transaction, Enterprise will become the exclusive supplier for FlexEnergy turbines in Canada, further solidifying its market leadership and positioning Enterprise at the forefront of addressing the growing demand for reliable and efficient natural gas to electric power solutions across Canada and various industries.
The acquisition comes at a critical time as the North American power grid faces widespread challenges due to inadequate maintenance, with increasing societal and industrial electricity demands leading to more frequent power disruptions. Enterprise's acquisition of FlexEnergy Canada, a leader in natural gas turbine technology, significantly enhances its capability to provide energy solutions that are both efficient and environmentally responsible.
FlexEnergy Solutions' turbine technology, renowned for its efficiency, low-emission performance, and industry-leading fuel tolerance, has been a proven solution in Canada's most demanding, extreme environments. The technology's robust performance is critical for industries ranging from remote power requirements, manufacturing, to AI data centers, which are increasingly relying on natural gas due to its rapid growth and sustainability as a power source.
With this acquisition, it not only expands its fleet by adding 17 turbine generators but also establishes a platform from which to add FlexEnergy Solutions' innovative 2.0-megawatt unit that meets the highest standards of power generation efficiency. Additionally, the acquisition includes several long-term lease and service contracts, ensuring a steady stream of recurring revenue.
The integration of FlexEnergy Canada into Enterprise Group will enhance the Company's offerings significantly. Not only will Enterprise continue to meet temporary and project-based power needs, but it will also provide permanent installation solutions with long-term lease options catering to a wider range of customer needs across all industries.
The acquisition also includes a team of highly trained specialists, ensuring continued excellence in turbine technology and operations. This expansion aligns with the growing trend towards mobile, temporary natural gas power solutions, which offer a more cost-effective and environmentally friendly alternative to traditional diesel.
"We are thrilled about the possibilities this acquisition presents to us," said Leonard D. Jaroszuk, CEO & Chairman of Enterprise Group, Inc. "With the expanded capabilities and resources, we are now better positioned to scale our aggressive natural gas-to-electricity expansion strategy across Canada and into new markets. We are committed to leading the transition to more sustainable energy solutions."
Enterprise Group's enhanced product line and expertise position the Company to capitalize on the expanding opportunities across all industrial sectors, providing reliable, efficient, and sustainable solutions to an ever-growing client base.
"We are excited about the potential of the Canadian power generation market and have found a great distribution partner in Enterprise Group, Inc. and their group of companies," says Doug Baltzer, CEO of FlexEnergy Solutions. "This team brings broad operational expertise and deep customer relationships to the market, and we look forward to supporting them as they grow. FlexEnergy Solutions has grown a strong team and a robust asset base in Canada over the past ten years. We are proud that this team will continue to support the market as part of Enterprise Group, Inc."
Press Release | March 31, 2025
Enterprise Group Announces Normal Course Issuer Bid
St. Albert, Alberta--(March 31, 2025) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), announces that the Toronto Stock Exchange ("TSX") has accepted its notice of intention to commence a normal course issuer bid to purchase outstanding common shares of the Company ("Shares") on the open market in accordance with the rules of the TSX.
The Company is authorized to purchase up to 5,624,649 Shares under the normal course issuer bid, representing 10% of its public float, as of March 19, 2025. As of that date, there were 77,531,187 Shares issued and outstanding. The average daily trading volume of the Shares for the six months ended February 28, 2025, calculated in accordance with the rules of the TSX, was 437,486 Shares. Enterprise is subject to a daily repurchase limit of 25% of such volume, being 109,371 Shares, except where such purchases are made in accordance with the block purchase exemption under TSX rules.
Enterprise intends to commence the normal course issuer bid effective April 2, 2025 and continue the bid until April 1, 2026 or such earlier time as the bid is completed or terminated at the option of the Company. All Shares purchased under this bid will be purchased in the open market through the facilities of the TSX or alternative Canadian trading systems at the prevailing market price at the time of such transaction. Shares acquired under the bid will be cancelled.
Enterprise's Board of Directors has authorized the normal course issuer bid as it is believed that the purchase of the Shares pursuant to the normal course issuer bid is in the best interest of shareholders as the Shares may become available at prices that make an attractive investment and appropriate use of the Company's funds.
Q1 2025 - Enterprise Group results are out today. The numbers are strong.
This is a service business attached to the cyclical oil and gas sector. As such, comparing quarters is not very helpful. It's important to look at the overall trends.
Average revenue for the three preceding years is ~$30m. After the first quarter of 2025 the company has already achieved one third of that at over $10m.
The LNG revolution in Canada is about to start in the coming weeks, see: https://rockandturner.substack.com/p/the-canadian-lng-gold-rush . Demand for the services offered by Enterprise is increasing sharply, so the rest of this year should be equally strong, if not stronger.
The company continued investing heavily, acquiring $5.9 million in capital assets to expand its natural gas power systems and diversify its rental fleet. The major strategic development was the $20 million acquisition of FlexEnergy Canada, making Enterprise the exclusive Canadian supplier and service provider for FlexEnergy turbines. This move strengthens Enterprise’s leadership in natural gas-to-electric power solutions and creates new recurring revenue streams through long-term leasing and maintenance contracts. The acquisition positions the company for future growth, with access to higher-capacity turbines and expanded market opportunities.
On the financial side, Enterprise refinanced its debt with a new lending facility from the Bank of Montreal, consolidating borrowings at a lower interest rate (prime + 2%) and reducing interest expenses. The previous loan was paid off with a negotiated discount, further lowering costs.
Trade policy developments, including tariffs, have not materially impacted operations. Canadian energy exports remain protected under the USMCA, and tariffs on U.S.-manufactured equipment have not disrupted procurement or project timelines. The company continues to source critical equipment from the U.S. without significant cost or supply issues.
The underlying business remains strong, with a focus on long-term growth.
Thanks for the write-up and for sharing this idea.
This might be a basic question, but if you—or any other reader—can point me toward further resources to help me better understand and explore the question below, I’d really appreciate it:
I understand that EPP holds exclusive rights to FlexEnergy’s Flex Turbines for short-term applications over the next few years. That said, what would prevent FlexEnergy’s competitors (such as Capstone Green Energy, for example) from offering a comparable alternative? From what I’ve gathered, Enterprise/FlexEnergy’s solution appears to be well-suited for remote or rugged terrains and harsh climates. But if this market is so attractive, what would stop Capstone from developing a similarly optimized offering?
Capstone is in a different business. They conduct risk analysis, well integrity testing. etc.
Enterprise is purely in the ancillary equipment rental business.
It is important to remember that when drilling for oil and gas, the cost of renting the ancillary equipment is pretty insignificant in the grand scheme of things for the oil and gas company.
However, it this equipment is mission critical. Oil and gas wells can't be turned on and off. Once drilled, they flow without interruption. If the ancillary equipment supplying heat, light and power fails, the loss is huge as oil and gas are wasted.
So these oil and gas companies are not concerned about price. They need a supplier that they can rely upon.
By analogy, if you were having brain surgery, would you select the cheapest surgeon or the one that you know has an impeccable record for reliability and success?
This means that the service is sticky. The switching cost is the risk that bringing someone else in to supply this equipment may result in operational issues? Why take that risk? The cost saving will be insignificant.
Historically, Enterprise didn't supply everything, but they were great at what they did supply. Then they acquired Evolution enabling them to offer the full stack of equipment. They became a one stop shop. This also makes them attractive - why bring in 3 or 4 subcontractors, when 1 can do it all?
So Evolution have an entrenched position.
The Flex Turbines are the best available and help the oil and gas company reduce operating costs and also to reduce greenhouse gas emissions. Since Enterprise has an exclusivity on these, that strengthens their moat still further.
The Enterprise acquisition and Flex exclusivity deal are really pivotal for Enterprise. It is in a position of real strength with others unable to compete.
I hope this helps.
Perhaps a silly question, but the transcript mentions several times that North American LNG is cheaper. But why is North American/Canadian LNG cheaper than, for example, LNG from Qatar or other suppliers? Is this likely to be a cost advantage in the long term? Is the subsoil better for extraction, or is it simply the assumption that the volume will drive down the world market price and thus force other producers out of the market? I haven't been able to find a satisfactory answer by Googling so far. Gemini says that Qatar will probably continue to have a cost advantage over Canada thanks to its conventional gas fields and proximity to Asia, but couldn't provide any concrete figures or percentages. Unfortunately, Statista doesn't have any data on this either.
Canada is a cost-effective LNG producer for several reasons:
(1) Lower Ambient Temperatures: British Columbia's cooler climate reduces the energy required for liquefaction, making the process more efficient. This provides an energy efficiency advantage of 34% over Australia, 32% over Qatar, and 26% over the U.S. Gulf Coast.
(2) Shorter Shipping Distances: Canada's West Coast LNG facilities, such as Kitimat, are geographically closer to key markets in Asia than competitors like Qatar or the U.S. Gulf Coast. For example, Kitimat is approximately 7,698 km from Japan's Himeji port, compared to Qatar's 11,773 km. This translates to lower shipping costs - 96 cents per mmbtu from Canada versus $2.22 per mmbtu from the U.S. Gulf Coast.
(3) Abundant Low-Cost Natural Gas: Western Canada has vast natural gas reserves with high productivity rates and low feedstock costs. AECO-C natural gas prices in Canada have historically traded at a significant discount compared to Henry Hub prices in the U.S., further reducing LNG production costs.
(4) Competitive Fiscal Environment: Canada offers favourable tax policies for LNG developers, including accelerated capital cost allowances and reduced corporate tax rates. These measures help lower overall project costs.
All of these factors will propel Canada into a major player on the global stage in the supply of LNG.
There's been a lot of criticism over them dilluting shareholders with a raise and now deciding to buy back shares only 4 months later. Some PMs are calling this a 2026 story now
In December they closed a 15 million share placement at $1.90/share. This is because there is an LNG revolution taking place and they have already been notified by customers that 2025 and beyond will see an uptick in business with the services offered by Enterprise being in high demand. So they needed to invest in expanding their fleet of equipment.
Having raised the capital, on February 28, 2025, the Company repaid its bank loan facility by way of a cash payment of $15,675,574 which included a negotiated settlement discount from the lender in the amount of $1,500,000. They seemed to believe that an equity for debt swap made economic sense.
They have also been investing in expanding their stock of rental equipment - turbines, etc.
Q1 2025 has been really good so far by all accounts. After a disappointing Q4 2024 (largely expected), Q1 has started strong. The really interesting part is that Q1 2024 was extraordinarily good, yet the first quarter of 2025 looks like it will be close to a year earlier - which is great news.
The Canadian LNG flows (at Kitimat) start mid-2025 which are anticipated to cause huge demand in the second half of this year. So this year looks like it may be a record year.
For me, not only is the investment thesis in tact, but the shares are ‘on sale’ in the market at the moment.
The shares are now $1.25 for two reasons:
(1) First is that the entire Canadian market has been marked down on the back of Trump tariffs, although Enterprise has no cross border busines so will be unaffected.
(2) The second is that average holding periods for equities are so short these days that the market prices equities off short-term numbers. In the U.S. during the 1950s, the average holding period for corporate stocks was 8 years. Fast-forward to 2020 and it’s a mere 167 days. Equities are being treated more like lottery tickets than stakes in tangible businesses., The Q4 earnings were soft - as was expected - but since the market prices stocks off quarterly earnings, the share price was hit.
Both of these things create a buying opportunity in my mind.
So you can’t blame the management for seeking permission to buy up to 10% of the equity over the next 12 months if they consider the shares to be trading well below intrinsic value.
Given that the share placement in December was over subscribed by institutional buyers who had conducted due diligence, we can conclude that they also viewed intrinsic value above $1.90 then, and so well above the $1.35 today. Raymond James initiated coverage of Enterprise in February this year with a price target well over $3.50.
The NCIB to repurchase up to 10% of the shares outstanding is great news for shareholders. Having sold equity at $1.90, they can now buy it back for $1.35. This is straight out of the Henry Singleton playbook and speaks to the competence of management. In any event, the company is not using the money raised from the equity raise for the repurchases, it anticipates being able to fund repurchases from cash flows over the year.
Des O'Kell, President of Enterprise, said to me "Our approach to Capital Allocation remains largely unchanged. Customer demand and fleet maintenance continue to be dominant, supporting a strong commitment to CapEx. The NCIB represents a new initiative, prompted by the recent significant decline in our share price. We believe it's important to provide support when the stock is trading at what we view as depressed valuations. While we don’t anticipate repurchasing the full amount authorized under the NCIB, we intend to utilize the program opportunistically... particularly during periods like now, where we believe the current price presents such an opportunity."
I hope this helps.
Enterprise Group is supplying services and infrastructure to companies involved in the LNG market which promises to accelerate the company's growth.
Canada is set to enter the global LNG market with its first shipments expected in mid-2025, marking a significant milestone for the country's energy sector. The LNG Canada project, led by Shell and involving partners such as Petronas, PetroChina, Mitsubishi Corp., and Korea Gas Corp., will be the primary driver of this entry.
This marks Canada's first opportunity to export natural gas to markets other than the United States, opening up new trade possibilities, particularly with Asian countries.
The success of LNG Canada could pave the way for additional LNG projects in the country, with several other facilities in various stages of development.
Global demand for liquefied natural gas (LNG) is forecast to rise by around 60% by 2040, largely driven by economic growth in Asia, emissions reductions in heavy industry and transport as well as the impact of artificial intelligence.
This is the Shell LNG Outlook report 2025 which is worth a read: https://bit.ly/41y59pd
UPDATE
Press Release | November 27, 2024
Enterprise Group Announces $20 Million Bought Deal Public Offering
St. Albert, Alberta--(November 27, 2024) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of services to the energy sector that is focused primarily on specialized equipment rental is pleased to announce that it has entered into an amended agreement with a syndicate of underwriters led by Canaccord Genuity Corp. and Raymond James Ltd. (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 13,157,900 common shares of the Company ("Offered Shares") at a price of $1.90 per Offered Share (the "Issue Price") for gross proceeds to the Company of approximately $25.0 million (the "Offering").
The Company has also granted the Underwriters an over-allotment option (the "Over-Allotment Option"), exercisable for a period of 30 days from the date of the closing of the Offering, to purchase up to an additional 15% of the aggregate common shares to be sold pursuant to the Offering. In the event the Over-Allotment Option is exercised in full, the aggregate gross proceeds of the Offering will be $28.8 million.
The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes. This funding initiative will support the Company's continued expansion plans, enabling it to capitalize on the robust growth opportunities currently in the burgeoning natural gas turbine power sector, while reinforcing its position as the leading player in the space. With robust activity fueling the current quarter and a strong pipeline of projects supporting future expansion, the Company believes it is well-positioned to continue delivering strong results going forward underscoring its commitment to creating shareholder value while driving sustained, long-term growth.
Closing of the Offering is expected to occur on or about December 12, 2024, or such other date as may be agreed upon by the Company and the Underwriters, subject to customary closing conditions, including required approvals of the Toronto Stock Exchange.
The shares to be issued under the Offering will be offered by way of a short form prospectus in each of the Provinces of Canada, except Quebec, and may be offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws, and certain other jurisdictions outside of Canada and the United States.
This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and such securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in the U.S. Securities Act), absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Leonard Jaroszuk, CEO and co-founder, provided commentary, “Turbines cost $800,000 - $900,000 each. The cabling and distribution panels to power the site cost another $250,000 on average. Based on the rates being charged by Enterprise, the turbines pay for themselves in 16-18 months, while the cabling and distribution panels pay for themselves in 90 days. So these investments are highly accretive generating strong cash flows for the business. The idea is that the more that we deploy, the more cash we can generate. Market penetration is currently 16-18% of the addressable market, with many more new opportunities coming over the hill, so the growth potential is huge.... The turbines have a 20 to 25 year life span."
With these kinds of dynamics, it makes sense to max out investment.
Press Release | November 20, 2024
Enterprise Group Announces Successful Flare Gas Application for New Client
St. Albert, Alberta--(November 20, 2024) - Enterprise Group, Inc. (TSX: E) (OTCQB: ETOLF) (the "Company" or "Enterprise"), a consolidator of energy services (including specialized equipment and services to the energy/resource sector), emphasizes technologies that mitigate, reduce, or eliminate CO2 and Green House Gas (GHG) and other harmful emissions for small local and Tier One resource clients, along with its wholly owned subsidiary, Evolution Power Projects ("EPP"), is pleased to announce the early success of an ongoing flare gas utilization project in North Central Alberta with a new client.
Desmond O'Kell, President of Enterprise Group, emphasized the significance of this achievement, noting, "Firstly, it allows us to support a client in leveraging excess natural gas production in areas restricted by minimal infrastructure. Secondly, our advanced turbine technology offers Operators and Midstreamers a novel method to meet stringent flaring and emissions standards effectively." This initiative showcases our commitment to providing environmentally friendly, low-emission mobile power systems, demonstrating their efficacy in delivering cost-effective and advanced solutions for remote power needs. This project adds to our expanding portfolio of clients who prioritize efficient and sustainable energy solutions.
EPP's mobile turbine power generation units, known for their significant fuel tolerance, are now utilizing the client's excess gas production to generate about 1 megawatt of continuous power. This power is now readily available for various on-site applications, including production enhancement, further field development, and other local infrastructure needs.
Enterprise views this flare gas solution as highly beneficial for the industry, especially as regulations on flaring have become much stricter in recent years. EPP is compiling daily operational performance data to be used in marketing and business development efforts, which the company expects will boost demand for its mobile turbine equipment as this project site is currently utilizing approximately 13% of EPP's natural gas power fleet.
Enterprise Group continues to advance its position as the sole provider of low emission site electrification power systems to the Canadian energy industry. Canadian energy producers who are enthusiastic about emission reductions, efficiency, safety and drastically lowering their fuel costs are turning to Enterprise's methods by displacing diesel and utilizing natural gas on their project sites. On the majority of project sites, natural gas produced locally by the client is powering the turbine power generators, thus eliminating third party fuel costs.
Q3 figures have resulted in a draw down presenting an interesting entry opportunity today.
While the quarter was softer than the corresponding period last year, the nine-months to September were better than last year. Quarterly cyclicality in the oil and gas sector is nothing new.
The investment thesis still looks very much in tact.
Key points I pulled out of the quarterly release:
(a) Third quarter saw a reduction in activity... for two primary reasons. First was apprehension and preparation for a potentially severe forest fire season, leading some customers to delay the execution of planned projects to the end of the forest fire season. The second reason was some customers took advantage of the summer months to allow employees extended time off to prepare employees for the up coming demands of another year of busy field activity
(b) The increasing demand for natural gas power generation systems indicates a shift towards lower emission alternatives, and going forward, market conditions remain favourable for the energy sector, resulting in increased drilling, completion, and infrastructure projects. These factors are expected to continue for the remainder of 2024 and 2025.
(c) During the nine months ended September 30, 2024, the Company acquired $13,452,761 of capital assets, primarily for natural gas power generation equipment and facilities, upgrading existing equipment, and meeting specific requests from customers.
(d) Enterprise announced a new five year exclusivity agreement with FlexEnergy Solutions... The agreement positions Enterprise... as the sole provider of short-term turbine and microturbine applications across all commercial and industrial sectors in Alberta and British Columbia.
My take away from this are:
1. Low activity in Q3 will very likely translate to higher activity in the quarters to follow
2. Both customers and Enterprise are gearing up for an acceleration in activity
3. We still have the LNG revolution happening from 2025 in Canada
4. The company is still expanding into adjacent industries and expanding its territorial reach