A FOUNDATION OF STEEL

EPS's second subsidiary, M&M Engineering Limited, is an industrial mechanical contracting and steel fabrication company based in Newfoundland, Canada. Over the past three decades, M&M has earned an outstanding reputation for quality and reliability. M&M Engineering's highly skilled labor force, numbering up to 1,000, fabricates and installs the processing pipe, storage tanks, structural steel and industrial equipment vital to the resource industry.

With a reputaton for quality and dependability spanning over three decades, this internationally recognized firm stands as the cornerstone of the EPS Group. This recognition of excellence has translated into an impressive client base for the company, as M & M continues to service companies such as Abitibi Price Inc., Corner Brook Pulp & Paper. North Atlantic Refining Ltd. and the Iron Ore Company of Canada.

EPS's 100 percent owned M&M Engineering subsidiary faces a bright future because of the economic renaissance under way in Newfoundland. With a population of only 600,000, a harsh climate and natural resources that are difficult to extract, Newfoundland's economy has languished for years. Now, with oil production underway at the mammoth offshore Hibernia oil field project and a second offshore field called Terra Nova, things are looking up for the region.

Founded in 1968, M&M Engineering offers a wide array of specialized technical and industrial services, including the fabrication and installation of process piping, storage tanks and industrial equipment. The company also provides high-pressure and specialized welding services, as well as boiler and pressure vessel alteration and repair services. Through a wholly owned subsidiary called M&M Offshore Limited, the company offers a broad range of specialized services for the olfshore oil industry. Over the years, M&M has earned an outstanding reputation for quality and reliability.

The development of Canada's Atlantic offshore oil resources is creating a dramatic increase in demand for the kind of expert services that M&M provides. Hibernia, the first of the area's oil fields, has been undergoing development since 1994 and is now on-line. During its expected 18-year operating life, this 3 billion barrel, C$7.9 billion project will require constant maintenance services that should generate millions of dollars for companies like M&M Engineering. In fact, through the formation. of a joint venture with four other companies, M&M Engineering has created the Newfoundland Service Alliance (NSA) to address the onshore maintenance demands of the Hibernia installation.

The second of Canada's offshore fields, Terra Nova was discovered in 1984 and is located closer to Newfoundland than the Hibernia field, and is therefore subject to tighter regulation by provincial authorities. Newfoundland's govemment is exercising its authority to require natural resource companies, at Terra Nova as well as elsewhere in the province, to use local contractors wherever possible , a requirement that was not imposed during the development of Hibernia. The construction phase of Terra Nova began in 1997 and will cost C$2 billion.

The development of Newfoundland's offshore oil industry, coupled with new provincial legislation requiring natural resource companies to use Newfoundland-based contractors, presents M&M with the potential for a significant increase in its business.

Hibernia and Terra Nova, together with other fields that will be developed later, will create an offshore oil industry on the Grand Banks similar to the European North Sea development that began in the 1960s. The Grand Banks industry will require a host of ancillary services and developments, including storage facilities onshore and new power plants to meet the increased demand for electricity. All of these related projects require the kind of expertise that M&M possesses, and the company's early success in working on Hibernia, together with its new NSA operation, and its status as a local contractor, should give it an inside track in competing for contracts in the future.