CES Energy Solutions Corp. — Interim / Quarterly Report 2021

Aug 12, 2021

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Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020

Condensed Consolidated Statement of Financial Position (unaudited) (stated in thousands of Canadian dollars)

CES Energy Solutions Corp.

	As at
	June 30, 2021 December 31,2020
ASSETS Current assets Cash Accounts receivable Income taxes receivable Inventory Prepaid expenses and deposits	11,869 18,251 203,837 159,113 960 1,192 191,533 178,558 19,718 16,425
Property and equipment (note 4) Right of use assets (note 5) Intangible assets Deferred income tax asset Other assets Goodwill	427,917 373,539 255,018 274,159 37,784 40,280 39,232 46,913 51,968 57,424 14,856 14,831 49,395 50,742
	876,170 857,888
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities Financial derivative liability Income taxes payable Currentportion of lease obligations	109,795 79,979 43 1,111 889 885 15,551 19,152
Long-term debt (note 6) Lease obligations Deferred income tax liability Other long-term liabilities(note 10)	126,278 101,127 284,306 284,685 15,670 13,260 2,201 2,322 962 831
	429,417 402,225
Commitments (note 11) Shareholders' equity Common shares (note 9) Contributed surplus Deficit Accumulated other comprehensive income	662,033 663,275 32,796 38,052 (379,891) (391,680) 131,815 146,016
	446,753 455,663
	876,170 857,888

The accompanying notes are an integral part of these condensed consolidated financial statements.

Second Quarter Report • 2

CES Energy Solutions Corp.

Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Loss (unaudited) (stated in thousands of Canadian dollars, except per share amounts)

	Three Months Ended June 30, Six Months Ended June 30,
	2021 2020 2021 2020
Revenue Cost of sales(note 8)	253,605 159,493 514,231 508,940 193,718 138,411 396,748 420,191
Gross margin General and administrative expenses	59,887 21,082 117,483 88,749 44,048 39,021 88,241 92,086
Operating profit Finance costs Impairment of goodwill Othergain	15,839 (17,939) 29,242 (3,337) 6,012 6,150 11,755 12,483 — — — 248,905 (28) (12) (91) (574)
Income (loss) before taxes Current income tax expense Deferred income tax expense(recovery)	9,855 (24,077) 17,578 (264,151) 853 627 1,753 966 2,335 207 4,036 (14,486)
Net income(loss)	6,667 (24,911) 11,789 (250,631)
Other comprehensive income (loss) (items that may be subsequently reclassified to profit and loss): Unrealized foreign exchange (loss) gain on translation of foreign operations Change in fair value of other assets,net of tax	(7,610) (25,089) (14,350) 41,222 302 642 149 350
Comprehensive loss	(641) (49,358) (2,412) (209,059)
Net income (loss) per share (note 9) Basic Diluted	0.03 (0.09) 0.05 (0.95) 0.03 (0.09) 0.04 (0.95)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Second Quarter Report • 3

Condensed Consolidated Statements of Changes in Equity (unaudited) (stated in thousands of Canadian dollars)

CES Energy Solutions Corp.

	Six Months Ended June 30,
	2021 2020
COMMON SHARES Balance, beginning of period Issued pursuant to stock-based compensation (note 10) Issued pursuant to stock settled director fees Common shares repurchased and canceled through NCIB(note 9)	663,275 660,174 8,988 12,720 32 30 (10,262) (4,805)
Balance, end ofperiod	662,033 668,119
CONTRIBUTED SURPLUS Balance, beginning of period Reclassified pursuant to stock-based compensation (note 9) Stock-based compensation expense(note 10)	38,052 42,686 (8,988) (12,720) 3,732 6,053
Balance, end ofperiod	32,796 36,019
DEFICIT Balance, beginning of period Net income (loss) Dividends declared	(391,680) (165,829) 11,789 (250,631) — (2,948)
Balance, end ofperiod	(379,891) (419,408)
ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of period Unrealized foreign exchange (loss) gain on translation of foreign operations Change in fair value of other assets, net of tax	146,016 142,279 (14,350) 41,222 149 350
Balance, end ofperiod	131,815 183,851
	446,753 468,581

The accompanying notes are an integral part of these condensed consolidated financial statements.

Second Quarter Report • 4

CES Energy Solutions Corp.

Condensed Consolidated Statements of Cash Flows (unaudited) (stated in thousands of Canadian dollars)

	Three Months Ended June 30, Six Months Ended June 30,
	2021 2020 2021 2020
CASH PROVIDED BY (USED IN): OPERATING ACTIVITIES: Net income (loss) Adjustments for: Depreciation and amortization Stock-based compensation (note 10) Other non-cash loss Deferred income tax expense (recovery) Gain on disposal of assets Gain on repurchase of senior unsecured notes Impairment of goodwill Change in non-cash workingcapital(note 12)	6,667 (24,911) 11,789 (250,631) 16,742 19,632 34,300 39,684 2,005 2,479 3,731 6,053 809 3,193 1,067 15,486 2,335 207 4,036 (14,486) (5,467) (188) (6,078) (74) — (120) (12) (120) — — — 248,905 (6,325) 103,736 (37,849) 71,548
	16,766 104,028 10,984 116,365
FINANCING ACTIVITIES: Repurchase of senior unsecured notes Repayment of lease obligations Decrease in Senior Facility Shareholder dividends Common shares repurchased and cancelled through NCIB(note 9)	— (880) (988) (880) (4,860) (6,077) (10,042) (12,097) (4,443) (93,479) (40) (79,269) — (328) — (4,268) (788) — (10,262) (4,805)
	(10,091) (100,764) (21,332) (101,319)
INVESTING ACTIVITIES: Investment in property and equipment Investment in intangible assets Investment in other assets Deferred acquisition consideration Proceeds on disposal of assets	(4,393) (5,552) (7,078) (18,349) (380) (340) (663) (740) — — — 276 — — — (150) 9,939 2,628 11,679 3,917
	5,166 (3,264) 3,938 (15,046)
Effect of foreign exchange on cash CHANGE IN CASH Cash,beginningofperiod	28 — 28 — 11,869 — (6,382) — — — 18,251 —
Cash,end ofperiod	11,869 — 11,869 —
SUPPLEMENTARY CASH FLOW DISCLOSURE Interest paid Income taxes paid	10,376 10,417 10,961 12,741 998 233 1,481 1,777

The accompanying notes are an integral part of these condensed consolidated financial statements.

Second Quarter Report • 5

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

1. The Company

CES Energy Solutions Corp. (the “Company” or “CES”) is a company domiciled in Canada and was incorporated under the Canada Business Corporations Act on November 13, 1986. CES’ principal place of business is located at Suite 1400, 332 – 6[th] Avenue SW, Calgary, Alberta, Canada T2P 0B2. The condensed consolidated financial statements of the Company as at and for the three and six months ended June 30, 2021 and 2020 comprise the accounts of the Company and its subsidiaries (together referred to as the “Company” or “CES”).

CES’ core business is to design, implement, and manufacture technically advanced consumable fluids and specialty chemicals for the North American oil and gas industry. CES operates under the following trade names and brands: AES Drilling Fluids, Jacam Catalyst, Superior Weighting Products, Canadian Energy Services, PureChem Services, StimWrx Energy Services, Sialco Materials Ltd, and Clear Environmental Solutions.

2. Basis of Presentation

Statement of Compliance

These condensed consolidated financial statements have been prepared by management of the Company in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These condensed consolidated financial statements include all necessary disclosures required for interim financial statements but do not include all disclosures required for annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the most recent audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2020. These condensed consolidated financial statements were authorized for issue by the Company’s Board of Directors on August 12, 2021.

3. Significant Accounting Policies, Estimates and Judgments

These condensed consolidated financial statements have been prepared following the same accounting principles and methods of computation as outlined in the Company’s consolidated financial statements for the year ended December 31, 2020. A description of accounting standards and interpretations that have been adopted by the Company can be found in the notes of the annual consolidated financial statements for the year ended December 31, 2020.

The preparation of the condensed consolidated financial statements requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. These condensed consolidated financial statements include estimates, which by their nature, are uncertain. These assumptions and associated estimates are based on historical experience and other factors that are considered to be relevant. While there has been increased economic optimism in the first six months of 2021 as the global economy continued to show signs of recovery from the impacts of the COVID-19 pandemic, current market conditions may result in additional uncertainties, risks and complexities in management’s determination of the estimates and assumptions used to prepare CES’ financial results. As the COVID-19 pandemic continues, management cannot reasonably estimate the length or severity of the impact on CES. As such, actual results may differ from estimates and the effect of such differences may be material.

4. Property and Equipment

4. Property and Equipment
Balance at December 31, 2020	274,159
Additions	7,294
Transfers	690
Disposals, net of amortization	(3,500)
Amortization	(18,521)
Effect of movements in exchange rates	(5,104)
Balance at June 30, 2021	255,018

Second Quarter Report • 6

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

5. Right of Use Assets

5. Right of Use Assets
Balance at December 31, 2020	40,280
Additions	9,196
Transfers	(690)
Disposals, net of amortization	(1,968)
Amortization	(8,446)
Effect of movements in exchange rates	(588)
Balance at June 30, 2021	37,784

6. Long-Term Debt The Company’s long-term debt is comprised of the following balances:

	As at
	June 30, 2021 December 31,2020
Senior Facility Senior unsecured notes due Oct 21, 2024 bearing interest at 6.375% payable semi-annually ("Senior Notes")	— — 287,954 288,954
Less: unamortized debt issue costs	287,954 288,954 (3,648) (4,269)
Long-term debt	284,306 284,685

Senior Facility

The Company has a syndicated senior facility (the “Senior Facility”), which is comprised of a Canadian facility of $170,000 and US facility of US$50,000. The Senior Facility matures on September 28, 2022, subject to certain terms and conditions, and the Senior Facility may be extended by one year upon agreement of the lenders and the Company.

As at June 30, 2021, the Company had a net cash balance of $11,869 (December 31, 2020 - net cash balance of $18,251). As at June 30, 2021, the maximum available draw on the Senior Facility was $170,000 on the Canadian facility and US$50,000 on the US facility.

The covenant calculations as at June 30, 2021 and December 31, 2020, are as follows:

	As at
	June 30, 2021 December 31,2020
Net Senior Debt EBITDA for the fourquarters ended	7,316 2,456 96,787 92,327
Ratio Maximum	0.076 0.027 2.500 2.500
EBITDA for the four quarters ended Interest Expense for the fourquarters ended	96,787 92,327 20,337 22,155
Ratio Minimum	4.759 4.167 2.500 2.500

Senior Notes

During the six months ended June 30, 2021, the Company repurchased and canceled $1,000 of its Senior Notes for an aggregate purchase price of $988 resulting in a gain of $12 recorded against finance costs. As at June 30, 2021, the Company had $287,954 of remaining outstanding principal on its Senior Notes due October 21, 2024. The Senior Notes incur interest at a rate of 6.375% per annum and interest is payable semi-annually on April 21 and October 21. The Senior Notes are unsecured, ranking equal in right of payment to all existing and future unsecured indebtedness, and have been guaranteed by the

Second Quarter Report • 7

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

Company’s current and future subsidiaries. The Senior Notes contain certain early redemption options, whereby the Company can choose to redeem all of or a portion of at various redemption prices, which include the principal amount plus any accrued and unpaid interest to the applicable redemption date. The Company has the ability to redeem all of its outstanding Senior Notes on or after October 21, 2021. Certain restrictions exist relating to items such as making restricted payments and incurring additional debt.

As at June 30, 2021, the Company was in compliance with the terms and covenants of its lending agreements. For the three and six months ended June 30, 2021, the Company recorded $5,559 and $11,014, respectively (2020 - $6,028 and $12,905, respectively) in interest expense related to its long-term debt and lease balances, including the amortization of debt issue costs.

Scheduled principal payments on the Company’s long-term debt at June 30, 2021, are as follows:

2021	- 6 months	—
2022		—
2023		—
2024		287,954
2025		—
2026	and thereafter	—
		287,954

7. Government Grants

During the three and six months ended June 30, 2021, the Company qualified for the Canada Emergency Wage Subsidy ("CEWS") program and recognized $3,117 and $4,831, respectively (2020 - $6,277 and $6,277, respectively) as a reduction to wage expense. During the three and six months ended June 30, 2021, $1,715 and $2,629, respectively (2020 - $3,288 and $3,288, respectively) was allocated to cost of sales and $1,402 and $2,202 was allocated to general and administrative expenses, respectively (2020 - $2,989 and $2,989, respectively).

During the three months ended June 30, 2021, the Company qualified for the Canada Emergency Rent Subsidy ("CERS") program which relates to eligible expenses such as rent and operating costs for the Company's leased properties, most of which are capitalized as ROU assets. During the three months ended June 30, 2021, the Company recognized $348 (2020 - $nil) as a reduction to Finance Costs as part of the CERS program.

8. Cost of Sales

Included in cost of sales for the three and six months ended June 30, 2021, is a gain of $4,444 on the sale and leaseback of specific real estate assets for proceeds of $8,100.

9. Share Capital

a) Authorized

The Company is authorized to issue an unlimited number of common shares.

Second Quarter Report • 8

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

b) Issued and outstanding

A summary of the changes to common share capital is presented below:

Common Shares	Six Months Ended June 30, 2021 Year Ended December 31,2020 Number of Shares Amount Number of Shares Amount
Balance, beginning of period Issued pursuant to stock-based compensation Contributed surplus related to stock-based compensation Issued pursuant to stock settled director fee Common shares repurchased and canceled through NCIB	258,264,857 663,275 263,956,291 660,174 4,073,733 — 3,699,275 — — 8,988 — 14,302 22,311 32 49,868 50 (6,835,526) (10,262) (9,440,577) (11,251)
Balance,end ofperiod	255,525,375 662,033 258,264,857 663,275

Normal Course Issuer Bid (“NCIB”)

On July 16, 2020, the Company announced the renewal of its previous NCIB, which ended on July 16, 2020, to repurchase for cancellation up to 19,025,236 common shares, being 7.5% of the public float of common shares at the time of renewal. The renewed NCIB terminated on July 20, 2021. Since the July 16, 2020 commencement of this NCIB program, the Company repurchased 13,950,826 common shares up to June 30, 2021, at an average price of $1.20 per share for a total amount of $16,708. Since inception of the Company's NCIB programs on July 17, 2018, and up to June 30, 2021, the Company has repurchased 26,877,706 common shares at an average price of $2.02 per share for a total amount $54,191. For the six months ended June 30, 2021, the Company repurchased 6,835,526 common shares at an average price of $1.50 for a total amount of $10,262.

Subsequent to June 30, 2021, the Company renewed the existing NCIB to repurchase for cancellation up to 11,754,973 common shares, being 7.5% of the public float of common shares at the time of renewal. The renewed NCIB will terminate on July 20, 2022, or such earlier date as the maximum number of common shares are purchased pursuant to the NCIB or the NCIB is completed or is terminated at the Company's election.

Subsequent to June 30, 2021, the Company repurchased 734,000 additional shares at a weighted average price of $1.67 for a total of $1,227.

c) Net income per share

In calculating the basic and diluted net income (loss) per share for the three and six months ended June 30, 2021 and 2020, the weighted average number of shares used in the calculation is shown in the table below:

	Three Months Ended June 30, Six Months Ended June 30,
	2021 2020 2021 2020
Net income (loss) Weighted average number of shares outstanding: Basic shares outstanding Effect of dilutive shares	6,667 (24,911) 11,789 (250,631) 254,890,507 263,715,927 255,066,702 263,213,649 8,913,181 — 8,707,093 —
Diluted shares outstanding	263,803,688 263,715,927 263,773,795 263,213,649
Net income (loss) per share - basic Net income(loss) per share - diluted	$0.03 ($0.09) $0.05 ($0.95) $0.03 ($0.09) $0.04 ($0.95)

Excluded from the calculation of dilutive shares for the three and six months ended June 30, 2021 are 4,778,545 and 5,054,716, respectively (2020 - 7,935,399 and 8,812,372, respectively) of Share Rights that are considered anti-dilutive.

10. Stock-Based Compensation

For the three and six months ended June 30, 2021, stock-based compensation expense of $3,868 and $7,265, respectively (2020 – $2,479 and $6,053, respectively), was recorded in general and administrative expenses relating to the Company’s stock-based

Second Quarter Report • 9

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

compensation plans. As at June 30, 2021, a total of 12,776,269 common shares were reserved for issuance under the Company’s Restricted Share Unit Plan and Stock Settled Director Fee Program, of which 4,550,361 common shares remained available for grant.

a) Restricted Share Unit (“RSU”) Plan

CES’ RSU Plan provides incentives to eligible employees, officers, and directors of the Company through the issuance of RSUs. The RSUs generally vest from one year, and up to three years, on the anniversary from the date of grant, subject to other such vesting schedules or conditions as determined by the Board of Directors. Throughout the vesting period, holders of Restricted Shares will be entitled to the dividend equivalents in the form of additional Restricted Shares on each dividend payment date, to be held in the RSU account until such time as the awards have vested.

A summary of changes under the RSU plan is presented below:

	Six Months Ended June 30, Year Ended December 31,2020 Restricted Share Units Average Price Restricted Share Units Average Price
Balance, beginning of period Granted during the period Reinvested during the period Vested during the period Forfeited duringtheperiod	8,432,088 $1.77 6,411,540 $3.79 3,924,642 1.91 5,941,372 0.93 — — 72,224 3.52 (4,073,733) 2.21 (3,699,275) 3.87 (57,090) 2.69 (293,773) 3.63
Balance,end ofperiod	8,225,907 $1.62 8,432,088 $1.77

The stock-based compensation costs for RSUs granted are based on the five day volume weighted average share price at the date of grant.

b) Phantom Share Unit ("PSU") Plan

Effective June 23, 2020, the Company implemented the PSU Plan, which provides cash-settled incentives to eligible nonexecutive employees and consultants of the Company through the issuance of PSUs. The PSUs generally vest over three years, on the anniversary from the date of grant, subject to other such vesting schedules or conditions as determined by the Plan Administrator. Throughout the vesting period, holders of PSUs will be entitled to the dividend equivalents in the form of additional PSUs on each dividend payment date, to be held in the PSU account until such time as the awards have vested.

A summary of changes under the PSU plan is presented below:

	Six Months Ended June 30, 2021 Year Ended December 31,2020 Phantom Share Units Phantom Share Units
Balance, beginning of period Granted during the period Vested during the period Forfeited during the period	4,726,795 — 13,275 4,829,781 (1,525,101) — (151,398) (102,986)
Balance,end ofperiod	3,063,571 4,726,795

Included in the stock-based compensation expense for the three and six months ended June 30, 2021 is an expense of $1,863 and $3,534, respectively (2020 - $nil) relating to the Company’s PSU Plan. As at June 30, 2021, $1,489 was included in accounts payable and accrued liabilities and $962 was included in other long-term liabilities for outstanding PSUs.

Second Quarter Report • 10

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

11. Commitments

The Company has commitments related to short-term leases, leases of low-value assets, variable payments associated with long-term leases, and capital commitments with payments due as follows:

Less than 1 year	2,909
1-5 years	45
5+years	—
Total	2,954

Payments denominated in foreign currencies have been translated using the June 30, 2021 exchange rate

The Company is involved in litigation and disputes arising in the normal course of operations. Management is of the opinion that any potential litigation will not have a material adverse impact on the Company’s financial position or results of operations and, therefore, the commitment table does not include any provisions for outstanding litigation and potential claims.

12. Supplemental Information

The changes in non-cash working capital were as follows:

	Three Months Ended June 30, Six Months Ended June 30,
	2021 2020 2021 2020
(Increase) decrease in current assets Accounts receivable(1) Inventory Prepaid expenses and deposits Increase (decrease) in current liabilities Accounts payable and accrued liabilities(2) Effects of movement in exchange rate	16,867 161,592 (44,492) 106,074 (11,952) 12,603 (12,975) 11,976 (5,451) 11,608 (3,293) 11,150 (2,097) (72,538) 29,950 (73,935) (3,616) (10,021) (6,668) 15,355
	(6,249) 103,244 (37,478) 70,620
Relating to: Operating activities Investingactivities	(6,325) 103,736 (37,849) 71,548 76 (492) 371 (928)

1Includes income taxes receivable

2Includes income taxes payable and other long-term liabilities relating to the cash-settled PSU plan

For the three and six months ended June 30, 2021 and 2020, changes in non-cash working capital relating to investing activities have been included in “Investment in property and equipment” on the Condensed Consolidated Statements of Cash Flows.

Second Quarter Report • 11

CES Energy Solutions Corp. Notes to the Condensed Consolidated Financial Statements (unaudited) (stated in thousands of Canadian dollars, except for share and per share amounts)

13. Geographical Information

Geographical information relating to the Company’s activities is as follows:

	Revenue	Revenue
	Three Months Ended June 30,	Six Months Ended June 30,
	2021 2020	2021 2020
United States Canada	175,257 121,819 78,348 37,674	343,304 349,777 170,927 159,163
	253,605 159,493	514,231 508,940
		Long-Term Assets(1)
		June 30, 2021 December 31,2020
United States Canada		272,168 295,722 124,117 131,203
		396,285 426,925

1Includes: Property and equipment, right of use assets, intangible assets, other assets and goodwill

14. Related Parties

During the three and six months ended June 30, 2021, CES paid rent of $13 and $48, respectively (2020 - $nil and $27, respectively) to an executive officer of the Company for use of a temporary rental property. These transactions have been accounted for at the exchange amount being the amount agreed to by the related parties, which approximates the arm’s length equivalent fair value.

15. Subsequent Events

On August 12, 2021, the Company's Board of Directors approved the reinstatement of its dividend on a quarterly basis. Accordingly, CES will pay a cash dividend of $0.016 per share on October 15, 2021 to the shareholders of record at the close of business on September 30, 2021.

Second Quarter Report • 12

CES Energy Solutions Corp. Information

STOCK EXCHANGE LISTINGS

The Toronto Stock Exchange Trading Symbol: CEU

OTC Trading Symbol: CESDF

LEGAL COUNSEL

Stikeman Elliot, LLP, Calgary, AB Crowe & Dunlevy, Oklahoma City, OK

REGISTRAR & TRANSFER AGENT

Computershare Investor Services Inc. Calgary, AB and Toronto, ON

BOARD OF DIRECTORS

Philip J. Scherman[1] Chairman

John M. Hooks[2] Spencer D. Armour III[1,2,3] Kyle D. Kitagawa[1,2] Stella Cosby[2,3]

Thomas J. Simons

¹Member of the Audit Committee 2Member of the Compensation, Corporate Governance and Nominating Committee 3Member of the Health, Safety and Environment Committee

CORPORATE OFFICE

Suite 1400, 332 – 6[th] Avenue SW Calgary, AB T2P 0B2 Phone: 403-269-2800 Toll Free: 1-888-785-6695 Fax: 403-266-5708

US BUSINESS UNITS

AES Drilling Fluids Suite 230, 11767 Katy Freeway Houston, TX 77079 Phone: 281-556-5628 Fax: 281-589-7150

Jacam Catalyst LLC 11999 East Highway 158 Gardendale, TX 79758 Phone: 432-563-0727 Fax: 432-224-1038

EXECUTIVE OFFICERS

Thomas J. Simons President & Chief Executive Officer

Anthony M. Aulicino Chief Financial Officer

Kenneth E. Zinger Chief Operating Officer & President, Canadian Operations

Richard Baxter President, US Drilling Fluids

Vernon J. Disney President, US Production Chemicals

CORPORATE SECRETARY

Matthew S. Bell

AUDITORS

Deloitte LLP Chartered Professional Accountants, Calgary, AB

CANADIAN BUSINESS UNITS

Canadian Energy Services and PureChem Services Suite 1400, 332 – 6[th] Avenue SW Calgary, AB T2P 0B2 Phone: 403-269-2800 Toll Free: 1-888-785-6695 Fax: 403-266-5708

Sialco Materials Ltd. 6605 Dennett Place Delta, BC V4G 1N4 Phone: 604-940-4777 Toll Free: 1-800-335-0122 Fax: 604-940-4757

Clear Environmental Solutions Suite 720, 736 – 8th Avenue SW Calgary, AB T2P 1H4 Phone: 403-263-5953 Fax: 403-229-1306

www.cesenergysolutions.com

BANKERS

Scotiabank Canada, Calgary, AB

Second Quarter Report • 13