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Layne Christensen Company (Layne Christensen) provides drilling and construction services and related products in three principal markets: water resources, mineral exploration and geoconstruction, as well as being a producer of unconventional natural gas for the energy market. Layne Christensen's customers include municipalities, investor-owned water utilities, industrial companies, global mining companies, consulting and engineering firms, heavy civil construction companies, and oil and gas companies located principally in the United States, Canada, Mexico, Australia, Africa and South America. It also provides construction of wastewater and surface water treatment plants, water and wastewater pipelines, and sewer rehabilitation, including trenchless cured-in-place pipe technologies. On November 20, 2006, the Company completed the acquisition of American Water's Underground Infrastructure Group (UIG), a provider of cured-in-place pipe services for sewer line rehabilitation in the United States. On June 16, 2006, it acquired Collector Wells International, Inc. (CWI), a specialty water services company that designs and constructs water supply systems.

Company Overview

Water and Wastewater Infrastructure

Layne Christensen is a provider of ground water systems and potable water treatment facilities. The Company offers, on a turnkey basis, a range of services required to provide designed, constructed and maintained municipal, industrial and agricultural water well pumping systems. Water resources segment is the Company's largest business segment.

The Company offers its customers every feature of a water system, including test hole drilling, well construction, well development and testing, pump selection, equipment sales, and installation and pipeline construction. The division provides water well drilling services in most regions of the United States. Layne Christensen's target groundwater drilling market consists of high-volume water wells drilled principally for municipal and industrial customers. These wells have more stringent design specifications and are typically deeper and larger in diameter than low-volume residential and agricultural wells.

Layne Christensen offers complete diagnostic repair and maintenance services for existing wells, pumps and related equipment through a network of local offices throughout its geographic markets in the United States. In addition to its well service rigs, the Company has equipment capable of conducting downhole closed circuit televideo inspections, one of the effective methods for investigating water well problems, enabling it to diagnose and respond to well and maintenance problems. The Company also has the capability and inventory to repair, in its own machine shops, water well pumps, regardless of manufacturer, as well as to repair well screens, casings and related equipment, such as chlorinators, aerators and filtration systems.

For the design and construction of integrated water treatment facilities and the sale of products, Layne Christensen focuses on its traditional customer base served in its water well service businesses. The Company offers complete water treatment solutions for various groundwater contaminants and impurities, such as volatile organics, nitrates, iron, manganese, arsenic, radium and radon. In addition, to its traditional products, it is expanding its offerings and expertise in membrane filtration technologies.

The Company has the capability to provide a range of rehabilitation services through traditional pipeline replacement or trenchless, cured-in-place pipe (CIPP) technologies through its Inliner product line. Customers use the Company's environmental drilling services to assess, investigate, monitor and characterize water quality, and aquifer parameters. Layne Christensen offers a range of environmental drilling services, including investigative drilling, installation and testing of monitoring wells to determine the extent of groundwater contamination, installation of recovery wells that extract contaminated groundwater for treatment, which is known as pump and treat remediation, and specialized site safety programs associated with drilling at contaminated sites.

Mineral Exploration

Global mining companies hire Layne Christensen to extract samples from a site that the mining companies analyze for mineral content before investing in development. The Company's drilling services require a level of expertise and technical competence because the samples extracted must be free of contamination and reflect the underlying mineral deposit. The mineral exploration division is Christensen's second largest business segment. The division conducts above ground and underground drilling activities, including all phases of core drilling, diamond, reverse circulation, dual tube, hammer and rotary air-blast methods. Its service offerings include both exploratory and definitional drilling.

Layne Christensen's services are used primarily by major gold, silver, and copper producers and to a lesser extent, iron ore producers. Work for gold mining customers generates approximately half of the Company's mineral exploration business. Layne Christensen's primary markets are in the western United States, Alaska, Mexico, Australia and Africa. The Company also has ownership interests in foreign affiliates operating in Latin America that form its primary presence in this market.

Energy

Layne Christensen's main energy operations include the acquisition, development and production of unconventional natural gas. The Company has developed expertise in the complex geology and engineering techniques needed to effectively develop multi-zone wells in the Cherokee Basin in Kansas and Oklahoma, where it has approximately 230,000 gross acres under lease and has 361 net producing wells. Layne Christensen has utilized to date approximately 30% of its acreage under lease. Production from these wells increases more slowly than conventional natural gas wells, but their life span is longer than conventional natural gas wells. The Company estimates that the average life span of its current wells is approximately 15 to 20 years. In addition, it continues to lease acreage for purposes of expanding its development potential.

References

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