Press Release 1.04.05

Caledus Limited, the rapidly growing oil and gas service sector business established during 2003 in Aberdeen, announces its second acquisition.

On this occasion Caledus has acquired a precision engineering, manufacturing, repair and fabrication business located just outside Aberdeen. Johnshaven Precision Engineering, known as JPE, was established in 1986, originally located in Johnshaven before moving to new premises in Inverbervie in 1995. The site and existing buildings are housed on 5 acres and staffed by 15 highly skilled and experienced employees. The business provides products and services to a number of premium customers. The subcontract manufacturing and fabrication will continue and it is intended that the capacity and capability of the machine shop and fabrication shop will be enlarged in the months and years ahead, and that the current customers of JPE will be maintained and the customer base expanded. At least 2 new customers have been attracted to JPE in the last two weeks. The business has installed a new long bed CNC (DSG) lathe since the acquisition occurred, already improving its capability. Caledus intends to move all of it’s product manufacture, assembly and testing onto the site in due course, adding a number of skilled employees to service the tools and equipment.

As previously announced Caledus is about to launch and commercialise an evolutionary well construction technology called SlimWELL™, and has identified the need to have control over manufacturing volume and quality as it is anticipated that after the early runs of the new system the worldwide demand will be high. The acquired manufacturing business will go on to trade as CaledusJPE and is already accredited to ISO9001-2000 standards.

The combination of Caledus and CaledusJPE brings the total staff and full time contractor numbers above 35; a significant enlargement bearing in mind that Caledus employed 4 people in January of 2004. Bill Nelson, a highly regarded QHSE Manager has just been recruited by Caledus to ensure that all the necessary systems are in place and grow alongside the rest of the business. Revenue is expected to exceed £3m this year due to domestic growth and early internationalisation. Caledus opened its first international office in Calgary during January of this year, and already significant sales have been achieved with the previously acquired product-line RotoTEC® in Canadian drilling applications. It is expected that several staff will in added to the Canadian business shortly. Caledus is also contemplating opening offices in Malaysia and Australia before mid-year.

"The current up-turn in activity here and aboard, due to high oil prices, has come at just the right time for our business. We are a highly focused service sector business, able to react quickly, and supply quality products to our customers, who in turn are moving from well to well quickly and need the support and piece of mind that a service focused and proactive SME can provide. In fact this week we informed one of our customers that an order he placed with us, for in excess of £30,000, had been manufactured and shipped more than 3 weeks ahead of schedule, taking the pressure off of his drilling team who expected the rig being made available earlier than previously expected, and not having vital casing installation equipment available if drilling got ahead of the curve." reported Derek McLeod, Financial Director.