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OCTOBER 2012 — In the gas and oil capital of West Texas, a drought couldn’t have come at a worse time. The City of Midland is experiencing a gas and oil boom which is filling hotels, creating a housing market comparable to New York City, occupying offices that have sat empty since the last boom, over-populating schools, and dropping the unemployment rate below 4%. This sudden influx in the economy has Midland running out of water. A city that has historically drawn its water from three nearby reservoirs has seen two dry up completely and the third drop below 12% capacity. With water lacking, Midland faces a dilemma: how do they support a rapidly growing community with a rapidly depleting water source? The solution is to bring groundwater from the T-Bar Ranch 65 miles west of town. In 1965, the City of Midland purchased this ranch, knowing that the Pecos Valley Alluvium flowed beneath the property.

To design and construct this $200 million project spanning three counties in less than 15 months, Garney joined an unrivaled design-build team. In late 2011, Garney joined forces with four industry leading companies, along with the Midland County Fresh Water Supply District, to help the City solve their water problems. Below is an outline of the team members and the roles they play:

• • Midland County Fresh Water Supply District No. 1 is a local water district with a bonding capacity of $475 million to supply water to Texas communities.

• • Garney Construction, along with Black & Veatch, formed a consortium as the General Contractor. Garney is responsible for installing nearly 500,000 LF of pipe, constructing a 5 MG elevated water tower, and other small structures.

• • Black & Veatch, along with Garney Construction, formed a consortium as the General Contractor. Black & Veatch is responsible for the design of 60 miles of the 48” transmission main as well as the high service pump station.

• • Overland Contracting is the construction entity of Black & Veatch, constructing the wells, ground storage tank at the well field, intermediate ground storage tank, and terminus facility.

• • Parkhill Smith and Cooper is the Design Engineer responsible for designing the wells, well field collection piping, ground storage tanks, elevated water tower, and five miles of the 48” transmission main.

• • Hilliard Energy is a key player in acquiring the needed right-of-way for the pipeline to bring the water from the T-Bar Ranch to Midland.

• • Southwest Water Company holds the responsibility of operating and maintaining the T-Bar pipeline for the next 40 years.

The project can be broken down into three components:

Well Field Collection System: The well field sits on the T-Bar Ranch and will be comprised of 40 to 45 production wells, a 2 MG ground storage tank, and a high service pump station. The wells vary from 350 to 700 feet deep and will produce between 250 and 650 gallons per minute. The 22 miles of well field collection piping is primarily PVC pipe, with the exception of the 36” bar wrapped C303 trunk pipeline. The high service pump station is designed to push 20 million gallons of water a day to Midland.

Transmission Main: This pipeline is 60 miles long consisting of both 48” steel pipe and 48” bar wrapped C303 pipe. The first 25 miles of the line gradually climbs 500 feet in elevation to the top of the cap rock north of Notrees, Texas. Atop the cap rock will sit a 2 MG ground storage tank and the site for a future twin tank for expansion of the line. From the intermediate tank site, the 48” transmission main is gravity fed 35 miles, dropping 500 feet in elevation toward Midland, where a pressure reducing terminus facility will be constructed and the 191 Extension project begins. The pipeline has been designed to bring as much as 38 MGD to Midland with the future expansion of the well field, tanks and facilities. The pipe material is being supplied by three different pipe suppliers: Hanson Pressure Pipe, Northwest Pipe, and Ameron International, all of with whom Garney has strong relationships.

191 Extension Project: On the same site as the terminus structure, the 191 Extension Project begins with a 5 MG elevated water tower and a chlorination facility. From the water tower, an additional five miles of 48” bar wrapped pipe will be installed and will tie directly into the City’s water system. In addition, approximately eight miles of 16” PVC distribution pipe will be installed. This extension project is being designed by Parkhill Smith and Cooper, constructed by Garney, and will ultimately be owned, operated and maintained by the City of Midland.

There are a number of significant challenges that made this group of companies the right team for the project:

• • Right-of-Way Acquisition: The need to acquire 65 miles of easement across private land while on an extremely condensed schedule provided quite a challenge, but Hilliard Energy got the job done. The important task at hand for the remainder of the project is building and maintaining relationships with the landowners to ensure a smooth delivery of the project.

• • Rock Trenching: With more than 35 miles of the project being solid caliche, Garney has subcontracted with one of the top trenching firms in the country. TekRock has mobilized five trenchers to the project in order to keep up with the aggressive schedule. Of these five trenchers, two of them are Trencor 1860 HDs, the world’s largest trencher.

• • Tunnel Bores: With the transmission main traversing three counties, the project will require 13 tunnel bores under state and county highways.

• • Design: Due to the transmission main winding through the heart of three major oil fields, the design was critical. To have the project designed under the time crunch is a testament to the high quality team that was assembled.

• • Maximizing on the Design-Build Method: While the design-build process allows for a project to be designed and constructed more quickly than traditional design-bid-build, this project had to be completed at an even faster pace than the design-build method typically allows. To meet the needs of this project, ingenuity and teamwork was required from everyone involved.

• • Resources: In order for Garney to construct this project on time, nine crews and more than 50 pieces of equipment have been brought in from all over the country to make it happen.

The project is currently underway and is projected to be completed by May 2013.

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Garney Holding Company announced its latest expansion with the acquisition of Weaver General Construction, based out of Englewood, Colorado. Weaver specializes in the construction of water and wastewater facilities with an emphasis in Construction Management (CM) based delivery. Acquiring Weaver will boost Garney’s CM capabilities while gaining access to several important customers with whom Weaver has strong relationships. The new entity will be known as Weaver Construction Management, Inc., a wholly owned subsidiary of Garney Holding Company.

In addition to Weaver’s CM strengths and client relationships, Garney was attracted to their culture, which closely mimics the strong culture and core values at Garney. Wes Weaver, founder and principal of the company, will remain on board to transition his operations and customer relationships over to the new company.

“All employee-owners here at Garney welcome the Weaver folks into the family,” said Mike Heitmann, Garney President and CEO. “We are fortunate to have acquired a dedicated, hard-working team of people at Weaver and we look forward to tackling new opportunities with our combined forces. We now have an opportunity to learn from Weaver’s strengths as well as show them the strengths of Garney, thereby enabling both organizations to continue leading the water and wastewater industry.”

Weaver and its predecessor companies have been in business since 1951. Throughout their 60-year history, Weaver has successfully completed numerous treatment facilities, industrial plants, educational facilities, and office buildings throughout the Western United States. Weaver has performed work for numerous repeat clients who substantiate their quality of work. They are a hometown company in the Denver area and their great reputation is the key determinant of their past success.

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Mike Heitmann has been named President and CEO of Garney Construction. He will oversee company-wide strategic planning and business development from its headquarters in Kansas City. Heitmann has spent his entire career at Garney, starting at the company after graduating from the University of Kansas more than 20 years ago. He most recently led the development of Garney’s water and wastewater capabilities in the private and industrial markets.

Garney leaders appreciate Heitmann’s loyalty to and vision for the company. “Garney started as a family company, and even though we’ve expanded considerably, we’re still a family of more than 700 employee-owners,” said Charles Garney, who started the company in 1961 and now serves on its Board of Directors. “A key moment in our history was my interview with Mike Heitmann and his decision to join Garney back in 1990. It has been a real pleasure watching him develop over the years, and I am very proud of his latest achievement being named President and CEO.”

Heitmann’s selection is the culmination of a three-year transition to a new generation of senior leadership at Garney. “The resulting new organizational structure was built on proven performers at Garney with an eye on future market opportunities and a strong desire to continue a legacy of consensus management,” said Board Chairman Robert Millwee. “The current Officer Team has worked well together during the transition and is positioned for continued success.”

Heitmann believes Garney’s greatest strength lies in its 100 percent employee ownership. “Garney is a very unique organization and I am proud to be a part of it,” he said. “Employee ownership has created a culture of honesty, integrity and excellence. It is a great honor to be a member of the leadership team and to work with such dedicated and loyal employee-owners.”

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