Enerflex (EFX.TO) late on Wednesday said it has sent a formal notice of termination to the customer of its modularized cryogenic natural gas processing facility in Kurdistan following an incident near the facility that prompted the company to declare force majeure.
In the second quarter, Enerflex suspended activity at the facility, demobilized its personnel and provided the customer with notice of force majeure following a fatal drone attack at an adjacent facility. The ongoing force majeure and circumstances made it impossible for the company to fulfill its obligations under the contract with the customer.
The customer has commenced arbitration proceedings against Enerflex. The company is disputing the customer's claims, saying they were "baseless and unsubstantiated."
Following the termination, Enerflex will seek to recover amounts owed connected to the facility. At the end of the third quarter, the net asset position associated with the facility was $161 million.
About $75 million of work associated with the facility was included in the company's Engineered Systems backlog at the end of the third quarter. With the termination, Enerflex expects to reverse this amount in the fourth quarter.
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