CES Energy Solutions Corp.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The following management’s discussion and analysis (“MD&A”) of the financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto of CES Energy Solutions Corp. (“CES” or the “Company”) for the years ended December 31, 2021 and 2020, and CES’ 2021 Annual Information Form. Readers should also refer to the “Forward-looking Information & Statements” legal advisory and the sections regarding “Non-GAAP Measures” and “Operational Definitions” at the end of this MD&A. This MD&A is dated March 10, 2022, and incorporates all relevant Company information to that date. Amounts are stated in Canadian dollars unless otherwise noted.

USE OF NON-GAAP MEASURES AND OTHER FINANCIAL MEASURES

This MD&A contains certain financial measures that are not recognized by Canadian generally accepted accounting principles (“GAAP”), and which are used by management to evaluate CES' financial performance, financial position and cash flow. These nonGAAP measures and other financial measures do not have a standardized meaning prescribed under International Financial Reporting Standards (“IFRS”), and therefore may not be comparable to similar measures presented by other entities. Securities regulations require that non-GAAP financial measures are clearly defined, qualified and reconciled with their most closely comparable GAAP measure. Please refer to the section titled NON-GAAP MEASURES AND OTHER FINANCIAL MEASURES on page 20 for further information on the definition, calculation and reconciliation of the non-GAAP measures and other financial measures contained in this MD&A.

DIVIDEND REINSTATEMENT

On August 12, 2021 the Company's Board of Directors approved a reinstatement of its dividend on a quarterly basis. Accordingly, CES declared total dividends of $0.032 per common share during the year ended December 31, 2021. CES' quarterly dividend returns additional value to shareholders while preserving the strength of the Company’s balance sheet and maintaining ample liquidity to fund capital allocation options including potential growth initiatives. Further discussion on the Company’s dividend is included in the Liquidity and Capital Resources section of this document.

BUSINESS OF CES

CES is a leading provider of technically advanced consumable chemical solutions throughout the life-cycle of the oilfield. This includes total solutions at the drill-bit, at the point of completion and stimulation, at the wellhead and pump-jack, and finally through to the pipeline and midstream market. At the drill-bit, CES’ designed drilling fluids encompass the functions of cleaning the hole, stabilizing the rock drilled, controlling subsurface pressures, enhancing drilling rates, and protecting potential production zones while conserving the environment in the surrounding surface and subsurface area. At the point of completion and stimulation, CES’ designed chemicals form a critical component of fracturing solutions or other forms of remedial well stimulation techniques. The shift to horizontal drilling and multi-stage fracturing with long horizontal well completions has been responsible for significant growth in the drilling fluids and completion and stimulation chemicals markets. At the wellhead and pump-jack, CES’ designed production and specialty chemicals provide down-hole solutions for production and gathering infrastructure to maximize production and reduce costs of equipment maintenance. Key solutions include corrosion inhibitors, demulsifiers, H2S scavengers, paraffin control products, surfactants, scale inhibitors, biocides and other specialty products. Further, specialty chemicals are used throughout the pipeline and midstream industry to aid in hydrocarbon movement and manage transportation and processing challenges including corrosion, wax build-up and H2S.

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

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CES operates in all major basins throughout the United States (“US”), including the Permian, Eagleford, Bakken, Marcellus and Scoop/Stack, as well as in the Western Canadian Sedimentary Basin (“WCSB”) with an emphasis on servicing the ongoing major resource plays: Montney, Duvernay, Deep Basin and SAGD. In the US, CES operates under the trade names AES Drilling Fluids (“AES”), Jacam Catalyst LLC (“Jacam Catalyst”) and Superior Weighting Products (“Superior Weighting”). In Canada, CES operates under the trade names Canadian Energy Services, PureChem Services (“PureChem”), StimWrx Energy Services Ltd. (“StimWrx”), Sialco Materials Ltd. (“Sialco”), and Clear Environmental Solutions (“Clear”).

Following a series of transformative acquisitions, including the purchase of Jacam Chemicals ("Jacam") in 2013 and Catalyst Oilfield Services ("Catalyst") in 2016, the Company has been focused on integrating these businesses into its existing operations and driving efficiencies and organic growth. On December 31, 2020, the Company completed an internal organization, which combined the retail businesses of Jacam and Catalyst to form Jacam Catalyst, LLC.

The Jacam Catalyst, PureChem, and Sialco brands are vertically integrated manufacturers of advanced specialty chemicals. In addition to being basic in the manufacture of oilfield chemicals, Jacam Catalyst and PureChem have expanded distribution channels into the oilfield. The StimWrx brand provides near matrix stimulation and remediation of oil, gas, and injection wells in Western Canada and the US. The Canadian Energy Services and AES brands are focused on the design and implementation of drilling fluids systems and completion solutions sold directly to oil and gas producers. The Superior Weighting brand custom grinds minerals including barite, which is the weighting agent utilized in most drilling fluid systems.

Clear is a complimentary business division that supports the operations and augments the product offerings in the WCSB. Clear is CES’ environmental division, providing environmental consulting, water management and water transfer services, and drilling fluids waste disposal services primarily to oil and gas producers active in the WCSB.

CES continues to invest in research and development of new technologies and in the top-end scientific talent that can develop and refine these technologies. CES operates nine separate lab facilities across North America: two in Houston, Texas; two in Midland, Texas; one in Sterling, Kansas; and one in each of Calgary, Alberta; Grande Prairie, Alberta; Carlyle, Saskatchewan; and Delta, British Columbia. In the US, CES’ main chemical manufacturing and reacting facility is located in Sterling, Kansas with additional low-temperature reacting and chemical blending capabilities just outside of Midland, Texas and chemical blending capabilities in Sonora, Texas. In Canada, CES has a chemical manufacturing and reacting facility located in Delta, British Columbia with additional chemical blending capabilities located in Carlyle, Saskatchewan, Nisku, Alberta, and Grande Prairie, Alberta. CES also leverages third party partner relationships to drive innovation in the consumable fluids and chemicals business.

Management’s Discussion and Analysis � 2

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS
($000s, except per share amounts)	Three Months Ended December 31, Year Ended December 31,
	2021 2020 %Change 2021 2020 %Change
Revenue United States(2) Canada(2)	233,842 137,262 70 % 774,112 600,898 29 % 133,952 75,552 77 % 422,308 287,149 47 %
Total Revenue	367,794 212,814 73 % 1,196,420 888,047 35 %
Net income (loss) per share – basic per share - diluted	24,723 40,453 (39) % 49,884 (222,903) nmf *0.10* 0.15 (38) % *0.20* (0.85) nmf *0.09* 0.15 (37)% *0.19* (0.85) nmf
Adjusted EBITDAC(3) Adjusted EBITDAC(3)% of Revenue	47,758 24,651 94 % 156,156 102,168 53 % *13.0 %* 11.6 % 1.4 % *13.1 %* 11.5 % 1.5 %
Cash provided by (used in) operating activities Funds Flow From Operations(4)	(39,506) 14 nmf (74,405) 156,679 (147) % 33,534 17,194 95 % 117,254 72,353 62 %
Capital expenditures Expansion Capital(2) Maintenance Capital(2)	8,648 1,559 455 % 17,900 14,885 20 % 3,470 832 317 % 11,465 8,063 42 %
Total capital expenditures	12,118 2,391 407 % 29,365 22,948 28 %
Dividends declared per share	4,061 — — % 8,139 2,948 176 % *0.0160* — — % *0.0320* 0.0113 184 %
Common Shares Outstanding End of period Weighted average - basic Weighted average - diluted	253,830,896 258,264,857 253,830,896 258,264,857 255,742,883 260,997,098 255,269,304 263,065,652 262,693,594 269,504,464 263,378,254 263,065,652
*Financial Position($000s)*		As at
		December 31, 2021 September 30,2021 %Change December 31,2020 %Change
Total assets Long-term financial liabilities(1) Total Debt, net of cash(5) Working Capital Surplus(5) Net Debt(5) Shareholders' equity		1,087,598 992,511 10 % 857,888 27 % 423,077 356,610 19 % 298,776 42 % 439,392 372,108 18 % 299,677 47 % 459,754 386,476 19 % 273,313 68 % (20,362) (14,368) 42 % 26,364 nmf 486,675 471,190 3 % 455,663 7 %

1Includes long-term portion of the Senior Facility, the Senior Notes, lease obligations and cash settled incentive obligations.

2Supplementary financial measure. Supplementary Financial Measures are provided in this MD&A because Management believes they assist the reader in understanding CES' results. Refer to “Non-GAAP Measures and Other Financial Measures” for further detail.

3Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Adjusted EBITDAC is Net income (loss). Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

4Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Funds flow from operations is Cash provided by (used in) operating activities. Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

5Non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Total Debt, net of cash, Net Debt and Working Capital Surplus is Long-term financial liabilities. Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

Management’s Discussion and Analysis � 3

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Highlights for the three and twelve months ended December 31, 2021 in comparison to the three and twelve months ended December 31, 2020 for CES are as follows:

Financial results for Q4 2021 represent a strong finish to the year with record high quarterly revenue, and another consecutive quarter of impressive Adjusted EBITDAC levels. Fourth quarter revenue of $367.8 million and Adjusted EBITDAC of $47.8 million compared to Q3 levels of $314.4 million and $42.0 million, respectively. Q4 financial results benefited from continued strength in energy demand and a constructive operating environment with rising activity levels relative to the comparative periods, representing increases of 72.8% and 93.7% over Q4 2020, respectively. CES realized improvements throughout its business lines amid strengthening industry conditions as it was able to leverage its established infrastructure, strong industry positioning, committed employees, and strategic investments in key raw materials. The continued positive momentum demonstrated in Q4 has been supported by improvements in rig activity, higher production volumes, pricing increases, and strategic procurement initiatives that are expected to continue in 2022. Q4 2021 and annual results were also both affected by the strengthening of the Canadian dollar relative to comparative periods, negatively impacting US dollar source revenue on translation.
The financial results reported for the quarter continue to reflect the importance of CES’ geographic positioning and strategic commitment to the US market, which generated 63.6% of the Company's overall revenue in Q4 2021. These results demonstrate the significance of CES' diversification through operating efficiencies and capitalizing on the completed infrastructure buildout in key areas in both the US and Canada. As activity levels increased significantly in Q4 2021 as compared to Q4 2020, CES continues to maintain and grow its commitment to a strong and high quality customer base in both operating regions, as outlined below.
In the fourth quarter, CES generated revenue of $367.8 million, an increase of $155.0 million or 72.8% compared to $212.8 million in revenue for Q4 2020 and a sequential increase of 17.0% compared to $314.4 million in revenue for Q3 2021. For the twelve months ended December 31, 2021, CES generated revenue of $1,196.4 million, an increase of $308.4 million or 34.7% from $888.0 million in 2020. As producers' capital spending increased and production levels improved, activity and industry rig counts have seen a significant uptick from the lows seen during the height of the COVID-19 pandemic in 2020 and are now approaching pre-pandemic levels.
Revenue generated in the US during Q4 2021 was $233.8 million, representing a sequential increase of $36.9 million or 18.7% from Q3 2021 and an increase of $96.5 million or 70.4% from the comparative period in 2020. US revenues were positively impacted by increased industry activity and the return toward pre-pandemic production levels, along with a significant increase in bulk product sales in the production chemicals division. US land drilling activity in Q4 2021 has improved by 83.8% from Q4 2020 and by 12.3% on a sequential quarterly basis. For the year ended December 31, 2021, revenue generated in the US increased by 28.8% to $774.1 million relative to 2020. CES continues its strong industry positioning, with a US Drilling Fluids Market Share of 17.6% for Q4 2021.
Revenue generated in Canada during Q4 2021 was $134.0 million, representing a sequential increase of $16.5 million or 14.1%, and an increase of $58.4 million or 77.3% from the 2020 comparative period. Canadian revenues benefited from increased rig counts on improvement in land drilling activity of 80.2% as compared to Q4 2020 and by 7.5% on a sequential quarterly basis, as well as from the reversal of temporary production shut-ins. For the year ended December 31, 2021, revenue generated in Canada increased 47.1% to $422.3 million relative to 2020.
CES achieved Adjusted EBITDAC of $47.8 million in Q4 2021, representing an increase of $23.1 million or 93.7% over $24.7 million in Q4 2020 and an increase of $5.8 million or 13.6% over $42.0 million in Q3 2021. Adjusted EBITDAC as a percentage of revenue of 13.0% achieved in Q4 2021 represented a significant improvement from the 11.6% recorded in Q4 2020 as the Company benefited from strong competitive positioning, pricing increases, improved production levels and increased drilling activity in both the US and Canada, and was in line with the 13.4% in Q3 2021 on account of rising costs associated with supply chain pressure. For the twelve months ended December 31, 2021, CES achieved Adjusted EBITDAC of $156.2 million, compared to $102.2 million in 2020 as a result of higher period over period revenues driven by the factors described above. Margins for both the three and twelve month periods experienced compression as product and labour costs increased, the impact of which was partially offset as a result of higher activity levels and the preservation of G&A at prudent levels.

Management’s Discussion and Analysis � 4

CES Energy Solutions Corp.

Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Net income for the three months ended December 31, 2021 was $24.7 million compared to $40.5 million in Q4 2020. Lower net income for the period was driven by a smaller deferred tax recovery in Q4 2021 of $9.2 million, as compared to $44.4 million in Q4 2020, partially offset by higher industry activity levels and associated revenues. CES no longer recognized a benefit from the Canada Emergency Wage Subsidy ("CEWS") program in Q4 2021, compared to $2.9 million in Q4 2020. Net income for the year ended December 31, 2021 was $49.9 million compared to a net loss of $222.9 million for the year ended December 31, 2020. Net loss for the year ended December 31, 2020 was impacted by $18.9 million of inventory valuation write-downs, additional bad debt allowances and restructuring costs recorded in light of the challenging global oilfield market, coupled with a $248.9 million goodwill impairment.
As at December 31, 2021, CES had a Working Capital Surplus of $459.8 million, which represents a significant increase from $386.5 million at September 30, 2021 and $273.3 at December 31, 2020 as CES has strategically used its balance sheet to finance investments in inventory beyond normal carrying volumes, in order to meet the increasing needs of existing and new customers, manage cost inflation, and mitigate the effects of global supply chain constraints. Accounts receivable also increased by 8.5% from September 30, 2021 and by 94.1% from December 31, 2020, to support significant increases in revenue and corresponding collection cycles. The Company continues to focus on working capital optimization and to benefit from the high quality of its customers and diligent internal credit monitoring processes.
CES generated $33.5 million in Funds flow from Operations in Q4 2021, compared to $34.9 million in Q3 2021 and $17.2 million in Q4 2020. For the year ended December 31, 2021, CES generated $117.3 million in Funds flow From Operations, compared to $72.4 million in the year ended December 31, 2020. Funds flow from Operations excludes the impact of working capital investment, and is reflective of strong surplus free cash flow generation amid continued improvements in market conditions in the quarter and the year relative to comparative periods.
On September 1, 2021, the Company completed an amendment and two year extension of its existing syndicated Senior Facility (the "Senior Facility"). The amendment took effect September 1, 2021 and will remain in effect until maturity on September 28, 2024, subject to certain terms and conditions, and the Senior Facility may be extended by one year upon agreement of the lenders and the Company. The Senior Facility is comprised of a Canadian facility of $145.0 million and a US facility of US$70.0 million. The principal amendment made to the Senior Facility was to shift availability to the US through an increase to the US facility from US$50.0 million to US$70.0 million and a corresponding reduction in the Canadian facility from $170.0 million to $145.0 million, for a total facility size of approximately C$ equivalent $232.5 million. The agreement also preserves the Company's ability to use proceeds under the Senior Facility to repurchase or redeem a portion of the Company's outstanding senior unsecured notes, subject to minimum liquidity requirements. Other terms and conditions from the amendment remain materially consistent with those of the previous Senior Facility. Subsequent to December 31, 2021 the company amended its Senior Facility to exercise $30.0 million of available accordion capacity, increasing the maximum amount available on the Canadian facility from $145.0 million to $175.0 million, for a total facility size of approximately C$ equivalent $262.5 million. All other terms and conditions remain unchanged.
As industry activity levels continued to improve, CES remained disciplined on capital expenditures during the quarter, retaining substantial liquidity. The Company made strategic use of its balance sheet to support higher accounts receivable levels associated with increasing revenue, financed key surplus raw materials purchases in a rapidly evolving supply chain environment to avoid constraints on key inputs and mitigate product cost inflation. CES exited the quarter with a net draw on its Senior Facility of $110.1 million (December 31, 2020 - net cash balance of $18.3 million) and Total Debt, net of cash, of $439.4 million (December 31, 2020 - $299.7 million), of which $288.0 million relates to Senior Notes which don't mature until October 21, 2024. At December 31, 2021, CES' Senior Facility had a maximum available draw of approximately C$ equivalent $232.5 million providing ample liquidity to support increasing business activity levels. The increases realized during the quarter were primarily driven by strategic investments in working capital to support strong sequential revenue growth and strategic purchases of key raw material inventories, along with the repurchase of 2.4 million common shares for $4.5 million, at an average price of 1.88 per share, under the Company's NCIB program, and dividends paid out during the quarter totaling $4.1 million. Working Capital Surplus exceeded Total Debt, net of cash, at December 31, 2021 by $20.4 million (December 31, 2020 - Net Debt of $26.4 million). As at the date of this MD&A, the Company had a net draw on its Senior Facility of approximately $133.0 million in support of working capital levels associated with strong revenue growth and continued strategic investment in surplus inventory levels.

Management’s Discussion and Analysis � 5

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

OUTLOOK

The global supply-demand balance for energy continues to be very constructive with demand approaching pre-COVID levels and tempered supply increases governed by healthy returns, particularly in CES’ North American target markets. As the global economic recovery continued to gain momentum, increased activity and demand have led to improving commodity prices, production levels and drilling activity. We expect the growth in activity to continue into 2022, moderated by ongoing challenges with availability of labour and supply chain constraints. CES is optimistic in its outlook for 2022 as it expects to benefit from elevated upstream activity and improved pricing across North America by capitalizing on its established infrastructure, industry leading positioning, vertically integrated business model, and strategic procurement practices. While the challenges surrounding the global supply chain market are expected to persist into 2022, CES remains confident that a combination of proactive inventory procurement practices, targeted pricing increases and working capital focus will help to mitigate the impact of the elevated cost environment.

CES believes it will continue to capitalize on its asset light, consumable chemical business model and its ability to maintain a prudent cost structure in this industry activity level environment. CES’ counter cyclical leverage model was tested during the pandemic and demonstrated its ability to remain resilient despite declines in industry activity. As industry activity has continued to improve, the Company has made strategic investments in working capital to manage global supply chain challenges, and will continue to focus on working capital optimization and balance sheet strength and liquidity as the year progresses.

CES has proactively managed both the duration and the flexibility of its debt. In September 2021, CES successfully amended and extended its Senior Facility to September 2024. In October 2017, CES successfully re-financed and reduced its coupon on its previously outstanding $300.0 million Senior Notes by issuing new 6.375% Senior Notes, which mature in October 2024.

CES expects 2022 capital expenditures to be approximately $40.0 million, of which $20.0 million is maintenance and $20.0 million is earmarked for expansion. CES plans to continue its disciplined and prudent approach to capital expenditures in 2022 and will adjust its plans as required to support growth throughout divisions.

CES’ underlying business model is capex light and asset light, enabling generation of significant surplus free cash flow. As our customers increasingly regulate their business models to maintain spending within cash flows, we believe that CES will be able to leverage its established infrastructure, business model, and nimble customer-oriented culture to deliver superior products and services to the industry. CES sees the consumable chemical market increasing its share of the oilfield spend as operators continue to: drill longer reach laterals and drill them faster; expand and optimize the utilization of pad drilling; increase the intensity and size of their fracs; and require increasingly technical and specialized chemical treatments to effectively maintain existing cash flow generating wells and treat growing production volumes and water cuts from new wells.

CES’ strategy is to continue to use its decentralized management model; its vertically integrated manufacturing model; its problem solving through science approach; its patented and proprietary technologies; and its superior people and execution to increase market share. By being basic in the manufacture of the consumable chemicals it sells, CES' vertically integrated business model enables it to be price competitive and a technology leader. Operators require increasingly technical solutions and deeper customer-centric coverage models to meet their needs. CES believes that its unique value proposition makes it the premier independent provider of technically advanced consumable chemical solutions to the North American oilfield. In its core businesses, CES will focus on profitably growing market share, controlling costs and managing working capital, developing or acquiring new technologies and making strategic investments as required to position the business to capitalize on current and future opportunities.

Management’s Discussion and Analysis � 6

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

RESULTS FOR THE PERIODS

Revenue and Operating Activities

Geographical revenue information relating to the Company’s activities and key operating metrics are as follows:

$000s	Revenue Three Months Ended December 31, Year Ended December 31, 2021 2020 % Change 2021 2020 % Change
United States(1) Canada(1)	233,842 137,262 70 % 774,112 600,898 29 % 133,952 75,552 77 % 422,308 287,149 47 %
	367,794 212,814 73 % 1,196,420 888,047 35 %

	KeyOperatingMetrics
	Three Months Ended December 31, Year Ended December 31,
	2021 2020 % Change 2021 2020 % Change
US Canada	27,495 29,548 (7) % 27,195 29,489 (8) % 7,194 6,653 8 % 6,722 6,389 5 %
Total Treatment Points(1)	34,689 36,201 (4)% 33,917 35,878 (5)%
US Canada	8,823 5,301 66 % 31,637 24,080 31 % 5,457 3,043 79 % 18,172 12,965 40 %
Total OperatingDays(1)	14,280 8,344 71 % 49,809 37,045 34 %
US Canada	96 58 66 % 87 67 30 % 59 33 79 % 50 36 39 %
Total Average RigCount(1)	155 91 70 % 137 102 33 %
US industry rig count(2) Canadian industryrigcount(3)	546 297 84 % 462 418 10 % 173 96 80 % 144 94 53 %
US DF Market Share(1) Canadian DF Market Share(1)	18 % 20 % (2) % 19 % 16 % 3 % 34 % 34 % — % 35 % 38 % (3)%

1 Refer to “Operational Definitions” for further detail.

2 Based on the monthly average of Baker Hughes published weekly land data for the United States in the referenced period.

3 Based on the monthly average of CAOEC published weekly data for Western Canada in the referenced period.

Industry activity levels during Q4 2021 showed another consecutive quarter of improvement driven by a constructive energy demand environment. CES has been able to capitalize on these positive developments, with revenues for the three months ended December 31, 2021 representing a 72.8% increase as compared to Q4 2020, partially offset by the negative impact of the depreciation of USD on US revenue. For the year ended December 31, 2021, revenue increased 34.7% over 2020 as activity levels in 2021 have significantly outpaced those seen in the prior year, despite a strong first quarter in the comparative period.

The US industry rig count increased by 83.8% from 297 rigs in Q4 2020 to 546 rigs in Q4 2021 as activity levels have increased substantially year over year. Correspondingly, CES' US average rig count increased 65.5% to 96 rigs in Q4 2021 compared to 58 rigs in Q4 2020, and US Operating Days were up 66.4% relative to Q4 2020. CES was able to participate in this improved drilling environment with US DF Market Share of 17.6% in the fourth quarter. Despite the slight decline in US Treatment Points, the production chemicals business saw an increase in production and frac related chemical sales, as well as bulk product sales in Q4 2021 from the comparative 2020 period as actual volumes and revenues realized per treatment point continued to increase.

The Canadian industry rig count increased by 80.2% from 96 rigs in Q4 2020 to 173 rigs in Q4 2021 as customers resume drilling and completions activity. Correspondingly, CES' Canadian average rig count increased 78.8% to 59 rigs in Q4 2021 compared to 33 rigs in

Management’s Discussion and Analysis � 7

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Q4 2020, and Canadian Operating Days were up 79.3% relative to Q4 2020. Canadian Treatment Points increased by 8.1% year over year as a result of the reversal of shut ins, and increased production volumes and frac related chemical sales.

Although absolute Treatment Points are a guiding indicator of activity levels for the production chemical business, these individual treated wells increasingly exhibit higher volumes of produced oil, natural gas, and associated water, which correspondingly requires higher volumes of production chemicals. These favourable characteristics are associated with increased measured depths and higher production volume attributes of many modern wells. As evidenced by the graphs below, until Q2 2020, Treatment Points have continued to generally trend upward since Q3 2016. However, as outlined above, Q2 2020 onwards has been negatively impacted by the economic effects of COVID-19, the lower commodity price environment seen throughout 2020, and the impact of extreme weather in the southern US in February 2021.

Quarterly Treatment Points

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Canadian Treatment Points US Treatment Points
9,000 35,000
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30,000
7,000
25,000
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5,000 20,000
4,000 15,000
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10,000
2,000
5,000
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0 0
Q4-16 Q4-17 Q4-18 Q4-19 Q4-20 Q4-21 Q4-16 Q4-17 Q4-18 Q4-19 Q4-20 Q4-21
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Included in revenue generated in Canada for the three and twelve months ended December 31, 2021 is $1.8 million and $6.3 million, respectively (2020 - $1.2 million and $4.6 million, respectively) of revenue generated by Clear, the Company’s Environmental Services segment. Clear’s business has evolved from being primarily levered to drilling activity to a vertically integrated environmental service provider. Clear provides environmental consulting, water management and water transfer services, as well as drilling fluids waste disposal services. Year over year, the increase in Clear's revenue is attributable to the improvement in industry drilling activity in Canada as a result of the strong commodity price environment. The financial results of Clear are otherwise not material and as such have been aggregated with the consolidated results of the Company throughout this MD&A.

CES’ top customers accounted for the following percentages of total revenue:

	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Topfive customers as a % of total revenue(1)	28 % 25 % 27 % 23 %
Topcustomer as a % of total revenue(1)	9 % 12 % 11 % 11 %

1 Supplementary financial measure. Supplementary Financial Measures are provided in this MD&A because Management believes they assist the reader in understanding CES' results. Refer to “Non-GAAP Measures and Other Financial Measures” for further detail.

Management’s Discussion and Analysis � 8

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Cost of Sales and Gross Margin

Gross Margin represents the operating profit earned on revenue after deducting the associated costs of sales including cost of products, operational labour, operational related depreciation, transportation, and all other operational related costs. Margins vary due to a change in the type of products sold, the relative product mix, well type, geographic area, and nature of activity (i.e. drilling fluids, production and specialty chemicals, environmental, trucking, etc.). Generally, labour costs, although a significant component of cost of sales, have less of an impact on CES’ margins than other cost elements such as product costs. Use of consultants and the variable component of compensation for employees provide CES with a means to manage seasonal activity swings as well as overall fluctuations in the demand for CES’ products and services.

The table below details the calculation of Adjusted Gross Margin relative to Gross Margin determined in accordance with IFRS. Adjusted Gross Margin is a non-GAAP measure calculated by excluding depreciation included in cost of sales as it relates to assets associated with operations and operating related activities, as well as adjusting for specific items that are considered to be nonrecurring in nature. Management believes that this metric assists in determining CES’ profitability prior to charges for depreciation and non-recurring items.

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 Change 2021 2020 Change
Gross Margin Gross Margin % of revenue(1)	75,549 44,484 31,065 261,077 165,615 95,462 21 % 21 % — % 22 % 19 % 3 %
Add back (deduct): Depreciation included in cost of sales Inventory valuation write-downs Restructuring costs Gain on sale of building	11,499 11,832 (333) 45,924 51,724 (5,800) — — — — 12,283 (12,283) — 146 (146) — 1,669 (1,669) — — — (4,444) — (4,444)
Adjusted Gross Margin(2) Adjusted Gross Margin(2)% of revenue	87,048 56,462 30,586 302,557 231,291 71,266 24 % 27 % (3)% 25 % 26 % (1)%

1Supplementary financial measure. Supplementary Financial Measures are provided in this MD&A because Management believes they assist the reader in understanding CES' results. Refer to “Non-GAAP Measures and Other Financial Measures” for further detail. 2Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Adjusted Gross Margin is Gross Margin. Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

For the three months and year ended December 31, 2021, Adjusted Gross Margin was $87.0 million and $302.6 million, respectively, an increase from $56.5 million and $231.3 million, respectively, for the comparative 2020 periods. The increase in both periods on an absolute basis is attributable to the increased industry activity over a partially fixed cost base, and includes the benefit of $nil and $2.9 million for the three months and year ended December 31, 2021, respectively ($1.5 million and $7.7 million for the three months and year ended December 31, 2020, respectively) from the CEWS program as an offset to compensation costs within cost of sales. As a percentage of revenue, Adjusted Gross Margin is lower for both the three and twelve months ended December 31, 2021 relative to the comparative periods as a result of pressure on margins due to rising product and labor costs driven by global supply chain constraints. While CES has been strategic in its procurement process and certain pricing increases have been realized, generally they are still lagging product cost increases.

General and Administrative Expenses (“G&A”)

The table below details the calculation of Adjusted General and Administrative Costs ("Adjusted G&A") relative to general and administrative expenses under IFRS, which management believes is a more meaningful measure of the general and administrative expenses affecting CES’ profitability. Adjusted G&A excludes stock-based compensation, which is not reflective of underlying operations, depreciation and amortization, and specific items that are considered to be non-recurring in nature.

Management’s Discussion and Analysis � 9

Management's Discussion and Analysis

Three and Twelve Months Ended December 31, 2021

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 Change 2021 2020 Change
General and administrative expenses G&A expenses % of revenue(1)	53,358 41,294 12,064 186,921 169,350 17,571 15 % 19 % (5)% 16 % 19 % (3)%
Deduct: Stock-based compensation Depreciation & amortization Additional bad debt allowance Restructuring costs Management transition costs	3,867 2,950 917 13,637 11,543 2,094 5,372 5,649 (277) 22,054 23,787 (1,733) — 668 (668) — 3,795 (3,795) — 216 (216) — 1,102 (1,102) 4,829 — 4,829 4,829 — 4,829
Adjusted General and Administrative Costs(2) Adjusted G&A costs(2)% of revenue	39,290 31,811 7,479 146,401 129,123 17,278 11 % 15 % (4)% 12 % 15 % (3)%

2Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Adjusted General and Administrative Costs is General and Administrative Expenses. Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

Adjusted General and Administrative Costs for the three and twelve months ended December 31, 2021 increased by $7.5 million and $17.3 million over the comparable 2020 periods which is reflective of increased activity levels and the reversal of certain compensation-related rollbacks that were implemented in the lows of 2020. As a percentage of revenue, Adjusted G&A has decreased for the three and twelve months ended December 31, 2021 as compared with the same periods in 2020, as the increase in revenue levels year over year have outpaced the increase in the fixed cost base. As activity levels and market conditions fluctuate, CES will continue to diligently manage its general and administrative cost base as needed. CES recorded a $nil and $2.5 million benefit for the three months and year ended December 31, 2021, respectively, from the CEWS program as an offset to compensation costs within Adjusted General and Administrative Costs ($1.4 million and $7.0 million for the three months and year ended December 31, 2020, respectively).

Stock-Based Compensation

Stock-based compensation expense increased by 31.1% and 18.1%, respectively, for the three and twelve months ended December 31, 2021 in comparison to the same periods in 2020, as a result of the timing of equity-based and cash-based grants under the Company's stock-based compensation plans and the increased price of the Company's common shares year over year.

Finance Costs

For the three and twelve months ended December 31, 2021 and 2020, finance costs were comprised of the following:

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Interest on debt, net of interest income Amortization of debt issue costs and premium Foreign exchange loss (gain) Financial derivative loss (gain) Gain on repurchase of senior unsecured notes Other finance costs	5,606 5,190 21,197 22,869 312 310 1,350 1,241 70 (1,386) 667 (1,579) (524) 2,274 181 2,515 — — (12) (182) (164) — (994) —
Finance costs	5,300 6,388 22,389 24,864

Interest expense

Finance costs for the three and twelve months ended December 31, 2021 include interest on debt, net of interest income, of $5.6 million and $21.2 million, respectively (2020 - $5.2 million and $22.9 million, respectively). Average draws on CES' Senior Facility have been higher throughout Q4 2021 relative to Q4 2020, with correspondingly higher interest expenses as a result. Included in these amounts is interest on the Company's Senior Notes in the amount of $4.6 million and $18.4 million for the three and twelve months

Management’s Discussion and Analysis � 10

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

ended December 31, 2021, respectively (2020 - $4.6 million and $18.4 million, respectively).

Foreign exchange gains and losses

Finance costs for the three and twelve months ended December 31, 2021 include realized and unrealized net foreign exchange losses of $0.1 million and $0.7 million, respectively (2020 - net gains of $1.4 million and $1.6 million, respectively), which are primarily related to the Company’s USD denominated cash held in Canada.

Financial derivative gains and losses

Finance costs for the three and twelve months ended December 31, 2021 include a realized and unrealized net derivative gain of $0.5 million and net loss of $0.2 million, respectively (2020 - net losses of $2.3 million and $2.5 million, respectively) relating to the Company’s foreign currency and equity derivative contracts. As of December 31, 2021, the Company had a $0.4 financial derivative asset relating to outstanding derivative contracts (December 31, 2020 - financial derivative liability of $1.1 million). CES has a Board approved hedging and derivative policy that sets out the guidelines and parameters management follows when approaching its risk management strategies.

At December 31, 2021, the Company had entered into the following foreign exchange USD forward purchase contracts to manage its exposure to upcoming USD denominated purchases pursuant to its Canadian and US operations:

	Notional Balance
Period	USD$000s	Contract Type	Settlement	Average USDCAD Exchange Rate
January 2022	US$2,000	Deliverable Forward	Physical Purchase	$1.2365
February 2022	US$2,000	Deliverable Forward	Physical Purchase	$1.2365
March 2022	US$2,000	Deliverable Forward	Physical Purchase	$1.2365
Total	US$6,000			$1.2365

In the fourth quarter of 2021, the Company entered into equity derivative contracts to mitigate equity price risk on the cash-based portion of the Company's stock-based compensation plan. The equity derivatives mitigate exposure to fluctuations in share price by fixing the future settlement cost on a portion of the cash-settled plan. During the three and twelve months ended December 31, 2021, the Company recognized an unrealized derivative gain of $221 (2020 - $nil for both periods) on equity derivative contracts due to the increase in the Company's share price at December 31, 2021.

The following table details the outstanding equity derivative contracts as of December 31, 2021 (2020 - nil):

	Price	Contract	Notional Principal	Number of Shares
June 2022	1.9472	Swap	$891	457,544
July 2022	1.9472	Swap	$903	463,569
June 2023	1.9472	Swap	$891	457,544
July 2023	1.9472	Swap	$903	463,569
July2024	1.9472	Swap	$903	463,569
Total	1.9472		$4,491	2,305,795

Management’s Discussion and Analysis � 11

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Current and Deferred Income Taxes

Income tax expense is related to taxable income in Canada, the US, Luxembourg, Hungary and Oman.

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Current income tax expense Deferred income tax recovery	1,705 740 4,282 2,342 (9,210) (44,360) (1,835) (56,240)
Total income tax expense(recovery)	(7,505) (43,620) 2,447 (53,898)

Current income tax expense increased for the three months and year ended December 31, 2021 primarily due to increased activity levels in Canada and in the US. The deferred income tax recovery decreased for the three months and year ended December 31, 2021 primarily due to the expected reversal of temporary differences based on increased activity in the current year. In addition, a significant tax benefit was recognized in the prior year due to a one time goodwill impairment charge recorded during the year ended December 31, 2020.

Working Capital Surplus and Net Debt

As a result of pervasive supply chain constraints and long lead times in the industry, especially as it relates to commodity items, CES made strategic use of its balance sheet during the quarter to finance surplus inventory purchases beyond normal carrying volumes, and manage product shortages and rising costs. CES continues to preserve strong liquidity, and focuses on optimizing working capital in the context of its broader capital structure and maturity schedule on its debt commitments. The Company had a Working Capital Surplus of $459.8 million as at December 31, 2021 compared to $386.5 million as at September 30, 2021, and $273.3 million as at December 31, 2020. Accounts receivable increased during the quarter as a result of higher activity levels and corresponding collection cycles, partially offset by the depreciation of USD working capital balances on translation as USDCAD depreciated from $1.2741 at September 30, 2021 to 1.2678 at December 31, 2021. As at December 31, 2021 CES' Working Capital Surplus of $459.8 million more than offset Total Debt, net of cash by $20.4 million as compared to Net Debt of $26.4 million at December 31, 2020. Refer to “NonGAAP Measures and Other Financial Measures” for further details on the calculation of Net Debt.

Total Long-Term Assets

Total long-term assets of CES decreased by $16.0 million to $468.4 million as at December 31, 2021 as compared to December 31, 2020. This decrease is primarily attributed to a combined decrease of $27.2 million in Property and equipment and Intangible assets as a result of amortization and asset disposals more than offsetting capital additions during the period. These were partially offset by increases of $6.2 million in Right of use assets, and $4.0 million in Other assets reflecting additional investments in CES' captive insurance entity made during the year.

Long-Term Financial Liabilities

CES had long-term debt, net of cash totaling $395.2 million as at December 31, 2021, compared to $266.4 million at December 31, 2020. The increase of $128.8 million was driven by strategic investments in working capital in light of cost inflation and supply chain concerns in the global market, as well as on higher activity levels generally. In addition, opportunistic share repurchases under the Company's NCIB totaled $16.2 million and dividends paid out during the year totaled $4.1 million, partially offset by proceeds of $8.1 million from the sale and leaseback of a building. Additional discussion relating to the Company’s Senior Facility and other long-term financial liabilities is included in the Liquidity and Capital Resources section of this MD&A.

Related Party Transactions

Included in general and administrative expenses is remuneration of the key management personnel of the Company, which includes directors and officers of the Company. For the year ended December 31, 2021, remuneration of $15.1 million (2020 - $11.1 million) included $9.7 million of salaries and cash-based compensation and $5.4 million of stock-based compensation costs (2020 – $6.2 million and $4.9 million, respectively). During the year ended December 31, 2021, the Company recorded general and administrative expenses of $4.8 million in respect of one-time management transition costs.

During the three months and year ended December 31, 2021, CES paid rent of $nil and $0.07 million, respectively (2020 - $nil and $0.03 million, 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.

Management’s Discussion and Analysis � 12

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

QUARTERLY FINANCIAL SUMMARY

The following is a summary of selected financial information of the Company for the last eight completed quarters:

	Three Months Ended
	Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Revenue United States(1) Canada(1)	233,842 196,966 175,257 168,047 137,262 113,859 121,819 227,958 133,952 117,429 78,348 92,579 75,552 52,434 37,674 121,489
Revenue Net income (loss) per share– basic per share– diluted Adjusted EBITDAC(2) per share– basic(2) per share– diluted(2) Dividends declared per share Shares Outstanding	367,794 314,395 253,605 260,626 212,814 166,293 159,493 349,447 24,723 13,372 6,667 5,122 40,453 (12,725) (24,911) (225,720) *0.10* 0.05 0.03 0.02 0.15 (0.05) (0.09) (0.86) *0.09* 0.05 0.03 0.02 0.15 (0.05) (0.09) (0.86) 47,758 42,035 32,005 34,358 24,651 18,212 8,173 51,132 *0.19* 0.16 0.13 0.13 0.09 0.07 0.03 0.19 *0.18* 0.16 0.12 0.13 0.09 0.07 0.03 0.19 4,061 4,078 — — — — — 2,948 *0.0160* 0.0160 — — — — — 0.0113
End of period Weighted average – basic Weighted average – diluted	253,830,896254,871,878 255,525,375 254,415,334 258,264,857 262,567,958 264,883,808 262,026,924 255,742,883255,194,323 254,890,507 255,244,854 260,997,098 264,841,429 263,715,927 262,711,372 262,693,594263,284,730 263,803,688 263,748,333 269,504,464 264,841,429 263,715,927 262,711,372

1 Supplementary financial measure. Supplementary Financial Measures are provided in this MD&A because Management believes they assist the reader in understanding CES' results. Refer to “Non-GAAP Measures and Other Financial Measures” for further detail. 2Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Adjusted EBITDAC is Net income (loss). Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

Seasonality of Operations

The Western Canadian drilling industry is subject to seasonality with activity usually peaking during the winter months in the first and last quarters of any given calendar year. As temperatures rise in the spring, the ground thaws and becomes unstable, resulting in government road bans, which severely restrict activity in the second quarter. These seasonal trends typically lead to quarterly fluctuations in Canadian operating results and working capital requirements, which should be considered in any quarter over quarter analysis of the Company. The overall seasonality of the Company’s operations has, and will continue to become less pronounced as a result of expansion in the US and increased diversification of operations away from the drill-bit.

Management’s Discussion and Analysis � 13

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

SELECTED ANNUAL INFORMATION

The following is a summary of selected annual financial information of the Company for the last three completed years:

($000s, except per share amounts)	Year Ended December 31,
	2021 % Change 2020 % Change 2019
Revenue United States(2) Canada(2)	774,112 29 % 600,898 (34) % 906,377 422,308 47 % 287,149 (23)% 370,880
Total revenue Income (loss) before taxes per share - basic per share - diluted Net income (loss) per share - basic per share - diluted Adjusted EBITDAC(3) per share - basic(3) per share - diluted(3) Dividends declared per share	1,196,420 35 % 888,047 (30) % 1,277,257 52,331 nmf (276,801) nmf 41,950 *0.21* nmf (1.05) nmf 0.16 *0.20* nmf (1.05) nmf 0.15 49,884 nmf (222,903) nmf 30,106 *0.20* nmf (0.85) nmf 0.11 *0.19* nmf (0.85) nmf 0.11 156,156 53 % 102,168 (39) % 167,127 *0.61* 58 % 0.39 (38) % 0.63 *0.59* 53 % 0.39 (36) % 0.61 8,139 176 % 2,948 (82) % 15,942 *0.0320* 184 % 0.0113 (81) % 0.0600
Financialposition($000s)	As at December 31,
	2021 % Change 2020 % Change 2019
Total assets Long-term financial liabilities(1) Total Debt, net of cash(4) Working Capital Surplus(4) Net debt(4) Shareholders' equity	1,087,598 27 % 857,888 (30) % 1,219,772 423,077 42 % 298,776 (23) % 385,865 439,392 47 % 299,677 (26) % 407,631 459,754 68 % 273,313 (26) % 369,628 (20,362) (177) % 26,364 (31) % 38,003 486,675 7 % 455,661 (33)% 679,310

1Includes long-term portion of the Senior Facility, the Senior Notes, lease obligations and cash settled incentive obligations.

4Non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. The most directly comparable GAAP measure for Total Debt, net of cash, Net Debt and Working Capital Surplus is Long-term financial liabilities. Refer to the section entitled "Non-GAAP Measures and Other Financial Measures" contained within this MD&A.

Management’s Discussion and Analysis � 14

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

LIQUIDITY AND CAPITAL RESOURCES

The Company’s long-term debt is comprised of the following balances:

$000s	As at
	December 31, 2021 December 31,2020
Senior Facility Senior unsecured notes due Oct 21, 2024 bearing interest at 6.375% payable semi-annually ("Senior Notes")	110,725 — 287,954 288,954
Less: net unamortized debt issue costs	398,679 288,954 (3,495) (4,269)
Long-term debt	395,184 284,685

Senior Facility

As at December 31, 2021, the Company had a net draw of $110.1 million on the Senior Facility (December 31, 2020 - net cash balance of $18.3 million), with capitalized transaction costs of $0.6 million (December 31, 2020 - $0.4 million). Transaction costs attributable to the Senior Facility are recorded as part of the Senior Facility and amortized to finance costs over the remaining term. As at December 31, 2021, the maximum available draw on the Senior Facility was $145.0 million on the Canadian facility and US$70.0 million on the US facility.

On September 1, 2021, the Company completed an amendment and two year extension of its existing syndicated Senior Facility (the "Senior Facility"). The amendment took effect September 1, 2021 and will remain in effect until maturity on September 28, 2024, subject to certain terms and conditions, and the Senior Facility may be extended by one year upon agreement of the lenders and the Company. The principal amendment made to the Senior Facility was to shift availability to the US through an increase to the US facility from US$50.0 million to US$70.0 million and a corresponding reduction in the Canadian facility from $170.0 million to $145.0 million, for a total facility size of approximately C$ equivalent $232.5 million. The agreement also preserves the Company's ability to use proceeds under the Senior Facility to repurchase or redeem a portion of the Company's outstanding senior unsecured notes, subject to minimum liquidity requirements. Other terms and conditions from the amendment remain materially consistent with those of the previous Senior Facility. Subsequent to December 31, 2021 the company amended its Senior Facility to exercise $30.0 million of available accordion capacity, increasing the maximum amount available on the Canadian facility from $145.0 million to $175.0 million, for a total facility size of approximately C$ equivalent $262.5 million. All other terms and conditions remain unchanged.

Amounts drawn on the Senior Facility incur interest at the bank’s prime rate or US base rate plus an applicable pricing margin ranging from 0.25% to 1.00% or the Canadian Bankers’ Acceptance rate or the LIBOR rate plus an applicable pricing margin ranging from 1.25% to 2.00%. The Senior Facility has a standby fee ranging from 0.25% to 0.40%. The applicable pricing margins are based on a sliding scale of Net Senior Debt to EBITDA ratio. The obligations and indebtedness under the Senior Facility are secured by all of the assets of CES and its subsidiaries.

Under the Senior Facility, CES is subject to the following financial covenants:

The ratio of Net Senior Debt to trailing EBITDA must not exceed 2.50:1.00 calculated on a rolling four-quarter basis; and
The ratio of EBITDA to interest expense must be greater than 2.50:1.00, calculated on a rolling four-quarter basis. At the Company’s option, CES may elect to reduce the EBITDA to interest expense covenant minimum to 1.50:1:00 for three consecutive quarters, and would be subject to an asset coverage test during this reduced interest coverage period if exercised.

The relevant definitions of key ratio terms as set forth in the Senior Facility agreement are as follows:

Net Senior Debt is defined as Total Net Debt, as defined below, minus the principal amount owing on the Company’s Senior Notes, any permitted vendor take-back debt, and all cash and cash equivalents.
EBITDA is defined as net income before interest, taxes, depreciation and amortization, gains and losses on disposal of assets, amortization of capitalized deferred financing costs, goodwill impairment, unrealized foreign exchange gains and losses, unrealized derivative gains and losses, stock-based compensation, and other gains and losses not considered reflective of underlying operations. EBITDA attributable to businesses acquired in the period are permitted to be added to EBITDA. EBITDA also includes all amounts recognized on account of wage and rent subsidy programs in connection with the COVID-19 pandemic, including the CEWS program and CERS program, provided that such amounts do not exceed the costs in which they are meant to offset, or are subject to any repayment obligation.

Management’s Discussion and Analysis � 15

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Total Net Debt is defined as all obligations, liabilities, and indebtedness excluding future income tax liabilities and deferred tax credits, office leases, other leases characterized as an operating lease, and accrued interest not yet due and payable. Total Net Debt is also reduced by any unencumbered cash and securities on deposit or invested with any of the members of the Company’s banking syndicate.

The above noted definitions are not recognized under IFRS and are provided strictly for the purposes of the Company’s Senior Facility covenant calculations.

The Company’s debt covenant calculations, as at December 31, 2021 and December 31, 2020, are as follows:

$000s	As at
	December 31, 2021 December 31,2020
Net Senior Debt EBITDA for the fourquarters ended	138,438 2,456 145,687 92,327
Ratio Maximum	0.950 0.027 2.500 2.500
EBITDA for the four quarters ended Interest Expense for the fourquarters ended	145,687 92,327 20,578 22,155
Ratio Minimum	7.080 4.167 2.500 2.500

Senior Notes

During the year ended December 31, 2021, the Company repurchased and canceled $1.0 million of its Senior Notes for an aggregate purchase price of $0.99 million resulting in a gain of $0.01 million recorded against finance costs and an associated annualized interest expense reduction of $0.01 million. At December 31, 2021, the Company had $288.0 million 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 on the Senior Notes semi-annually on April 21[st] and October 21[st] . The Senior Notes are unsecured, ranking equal in right of payment to all existing and future unsecured indebtedness, and have been guaranteed by the 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, 2020. Certain restrictions exist relating to items such as making restricted payments and incurring additional debt.

As at December 31, 2021, the Company was in compliance with the terms and covenants of its lending agreements. For the three and twelve months ended December 31, 2021, the Company recorded $6.0 million and $22.7 million, respectively (2020 - $5.6 million and $24.2 million, respectively) in interest expense related to its long-term debt and lease balances, including the amortization of debt issue costs.

Leases

The Company incurs lease payments under a number of lease arrangements for which the underlying leased assets secure the lease obligations. Leases are entered into and exited in coordination with specific business requirements, which includes the assessment of the appropriate durations for the related leased assets. The Company’s leases are for terms ranging from January 2022 through May 2033 with a weighted average interest rate of 5.11% (2020 - 5.57%).

Management’s Discussion and Analysis � 16

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021
$000s
As at December 31, 2020	32,412
Additions	28,994
Interest expense	1,677
Lease payments	(21,073)
Effects of movements in exchange rates	11
As at December 31,2021	42,021
Current portion of lease obligation	16,315
Long-termportion of lease obligation	25,706

Future minimum lease payments outstanding under the Company’s lease obligations at December 31, 2021 are as follows:

$000s
Less than 1 year	17,695
1-5 years	22,667
5+years	6,803
Total lease payments	47,165
Amount representingimplicit interest	(5,144)
Lease obligations	42,021

Payments recognized in the financial statements relating to short-term leases, variable lease payments, and leases of low-value assets for the year ended December 31, 2021 were $3.7 million (2020 - $3.5 million). The Company's short-term leases, variable lease payments, and leases of low-value assets consist of leases of information technology, office equipment, and short-term facility rentals.

Other Indebtedness

The following table details the remaining contractual maturities of the Company’s financial liabilities as of December 31, 2021:

$000s Accounts payable and accrued liabilities Dividends payable(2) Income taxes payable Senior Facility Senior Notes(3) Interest on Senior Notes Lease obligations(4) Commitments(5) Other long-term liabilities	Payments Due ByPeriod(1)
	Less than 3 months 3 months to 1year 1-2years 2-5years 5+years Total
	153,282 — — — — 153,282 4,061 — — — — 4,061 — 2,104 — — — 2,104 — — — 110,725 — 110,725 — — — 287,954 — 287,954 — 18,357 18,357 18,357 — 55,071 3,365 12,950 11,412 8,768 5,526 42,021 8,596 7,666 96 — — 16,358 8 3,190 1,946 241 — 5,385
	169,312 44,267 31,811 426,045 5,526 676,961

1Payments denominated in foreign currencies have been translated using the December 31, 2021 exchange rate.

2 Dividends declared as of December 31, 2021. 3 The Senior Notes are due on October 21, 2024. 4 Lease obligations reflect principal payments and excludes any associated interest portion. 5 Commitments include amounts relating to short-term leases, leases of low-value assets, variable payments associated with long-term leases, and capital commitments.

As of the date of this MD&A, management is satisfied that CES has sufficient liquidity and capital resources to meet the long-term payment obligations of its outstanding loans and commitments. CES assesses its requirements for capital on an ongoing basis and there can be no guarantee that CES will not have to obtain additional capital to finance the expansion plans of the business or to finance future working capital requirements. In the event that additional capital is required, based on the market conditions at the time,

Management’s Discussion and Analysis � 17

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

it may be difficult to issue additional equity or increase credit capacity and the cost of any new capital may exceed historical norms and/or impose more stringent covenants and/or restrictions on CES. CES continues to focus on evaluating credit capacity, credit counterparties, and liquidity to ensure its ability to be able to meet its ongoing commitments and obligations.

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

Summary of Statements of Cash Flows

The following table summarizes the Company’s Statements of Cash Flows for the three and twelve months ended December 31, 2021 and 2020:

$000's	Three Months Ended December 31, Year Ended December 31,
	2021 2020 Change 2021 2020 Change
Net cash provided by (used in) Operating Activities Investing Activities FinancingActivities	(39,506) 14 (39,520) (74,405) 156,679 (231,084) (6,238) (779) (5,459) (12,760) (16,885) 4,125 45,772 (9,643) 55,415 68,914 (120,135)189,049

Cash Flows from Operating Activities

For Q4 2021, cash flow used in operating activities totaled $39.5 million, compared to cash flow provided by operating activities of $0.01 million during the three months ended December 31, 2020, with the change being driven by investments in working capital in Q4 2021 on strategic inventory procurement and higher activity levels as compared to Q4 2020.

Cash Flows from Investing Activities

For Q4 2021, net cash flows used in investing activities totaled $6.2 million, compared to $0.8 million during Q4 2020, with the increase being driven by higher capital expenditures as a result of improved industry conditions in the fourth quarter of 2021.

Details of cash used for investment in property and equipment are as follows:

$000's	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Expansion Capital(1) Maintenance Capital(1)	8,648 1,559 17,900 14,885 3,470 832 11,465 8,063
Total investment in property and equipment Change in non-cash investingworkingcapital	12,118 2,391 29,365 22,948 (629) 541 (3,479) 1,627
Cash used for investment inpropertyand equipment	11,489 2,932 25,886 24,575

1 Supplementary financial measure. Supplementary Financial Measures are provided in this MD&A because Management believes they assist the reader in understanding CES' results. Refer to “Non-GAAP Measures and Other Financial Measures” for further detail.

Expansion Capital expenditures in Q4 2021 included $2.9 for the expansion of PureChem's Nisku plant capabilities and $3.4 million incurred for equipment and tanks to support increased activity levels in the quarter, particularly in the US. Maintenance Capital additions during Q4 2021 include: $1.9 million incurred for equipment and tanks, $0.6 million incurred for warehouse and facilities, and $0.5 million incurred for vehicles, trucks and trailers.

Historically, the long-term capital investments required for CES to execute its business plan are not significant in relation to the total revenue and EBITDAC generated by the Company and the majority of capital expenditures are made at the discretion of CES based on the timing and the expected overall return on the investment. CES expects 2022 capital expenditures, excluding amounts financed under lease arrangements, to be approximately $40.0 million, of which $20.0 million is maintenance and $20.0 million is earmarked for expansion.

Management’s Discussion and Analysis � 18

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Cash Flows from Financing Activities

For Q4 2021, cash flows provided by financing activities totaled $45.8 million compared to cash flows used in financing activities of $9.6 million in Q4 2020. This year over year change is primarily due to the Company's increased draw on the Senior Facility in Q4 2021. In addition, CES paid out a dividend of $4.1 million during Q4 2021, as compared to nil in Q4 2020.

Dividend Policy

The Company declared dividends to holders of common shares for the year ended December 31, 2021, as follows:

	Dividend	Dividend	Per Common
$000s except per share amounts	Record Date	Payment Date	Share	Total
September	Sep 30	Oct 15	$0.016	4,078
December	Dec 31	Jan 14	$0.016	4,061
Total dividends declared			$0.032	8,139

During Q4 2021, the Company's Dividend Payout Ratio averaged 16% as compared to nil in Q4 2020. Refer to “Non-GAAP Measures and Other Financial Measures” for further details on the calculation of Dividend Payout Ratio.

CES will continue to be protective of its balance sheet and provide liquidity to fund potential growth initiatives by being prudent with its cash dividend going forward. Through the course of the year, dividends declared as a proportion of net income and Distributable Earnings will vary based on the Company’s financial performance. During periods of relatively strong financial performance, typically associated with higher activity levels, dividends declared as a percentage of net income and Distributable Earnings will decrease, and likewise, during periods of relatively weaker financial performance dividends declared as a percentage of net income and Distributable Earnings will increase. Dividends are funded by cash provided by operating activities. During periods of insufficient cash availability, due to relatively weaker financial performance or changes in the level of working capital, dividends may be funded by available cash or through CES’ credit facilities.

Management and the Board of Directors review the appropriateness of dividends on a quarterly basis taking into account, among other considerations, the applicable solvency requirements under corporate legislation; current and anticipated industry conditions; and, particularly, growth opportunities requiring Expansion Capital, management’s forecast of Distributable Earnings, its forecasted Dividend Payout Ratio, and forecasted capital to be deployed under its NCIB. At this time, CES intends to continue to pay cash dividends to shareholders. In addition, future expansion, investments, acquisitions, or future share-buy backs under CES’ NCIB program may be funded internally by allocating a portion of cash flow in conjunction with, or in replacement of, external sources of capital such as debt or the issuance of equity. To the extent that CES deploys cash flow to finance these activities, the amount of cash dividends to shareholders may be affected. Alternatively, to the extent that CES’ sustainable operating after tax cash flow improves, the amount of cash dividends to shareholders may be increased. Over the long-term, CES’ business model has historically shown it can support a proportion of cash flow from operations being paid out as a dividend or through share-buy backs as the long-term Expansion Capital investments and Maintenance Capital expenditures required for CES to execute its business plan have not been significant in relation to the total revenue and EBITDAC generated. Refer to “Non-GAAP Measures and Other Financial Measures” for further details on the calculation of Distributable Earnings.

NCIB

On July 15, 2021, CES announced the renewal of its previous NCIB, which ended on July 20, 2021. Under the Company's renewed NCIB, effective July 21, 2021, the Company may 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.

Management’s Discussion and Analysis � 19

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

A summary of the Company's NCIB program for the three and twelve months ended December 31, 2021 and the year ended December 31, 2020 is as follows:

	Three Months Ended	Year Ended	Year Ended
$000s except for share andper share amounts	December 31, 2021	December 31,2021	December 31,2020
Number of shares	2,385,751	10,084,677	9,440,577
Cash outlay	4,478	16,169	11,251
Averagepriceper share	$1.88	$1.60	$1.19

Since the July 15, 2021 commencement of the Company's current NCIB program, the Company repurchased 2,917,951 common shares up to December 31, 2021, at an average price of $1.83 per share for a total amount of $5.3 million.

Since inception of the Company's NCIB programs on July 17, 2018, and up to December 31, 2021, the Company has repurchased 30,126,857 common shares at an average price of $1.99 per share for a total amount of $60.1 million.

Share Capital and Stock-Based Compensation Plans

A summary of the Company’s common shares and stock-based compensation plans outstanding is as follows:

	March 10,2022	December 31,2021	December 31,2020
Common shares outstanding	253,815,574	253,830,896	258,264,857
Restricted Share Unit Plan (“RSU”)	6,541,964	6,604,022	8,432,088
Phantom Share Unit Plan (“PSU”)	5,899,769	5,916,448	4,726,795
Share Rights Incentive Plan(“SRIP”)	2,312,400	2,378,400	5,344,400

NON-GAAP MEASURES AND OTHER FINANCIAL MEASURES

The accompanying consolidated financial statements have been prepared in accordance with IFRS. Certain supplementary information and measures not recognized under IFRS are also provided in this MD&A where management believes they assist the reader in understanding CES’ results. These measures are calculated by CES on a consistent basis unless otherwise specifically explained. These measures do not have a standardized meaning under IFRS and may therefore not be comparable to similar measures used by other issuers.

For the three and twelve months ended December 31, 2021 and 2020, the Company has not adjusted EBITDAC, Gross Margin, or General and Administrative Costs for any non-recurring items that would be considered to be a direct impact of the COVID-19 pandemic, such as increased costs of compliance with public health measures. The non-GAAP measures as calculated in the tables below for 2020 reflect certain non-recurring items that were related to the significant downturn in the oil and natural gas market and the resulting slowdown in industry activity. While this slowdown was directly related to the impact of the COVID-19 pandemic on oil and gas markets, these adjustments were not as a result of direct impacts of COVID-19 on our operations.

Non-GAAP financial measures and non-GAAP ratios have the definition set out in National Instrument 52-112 "Non-GAAP and Other Financial Measures Disclosure". The non-GAAP measures, non-GAAP ratios and supplementary financial measures used in this MD&A, with IFRS measures, are the most appropriate measures for reviewing and understanding the Company’s financial results. The non-GAAP measures and non-GAAP ratios are further defined for use throughout this MD&A as follows:

EBITDAC - is a non-GAAP measure that has been reconciled to net income (loss) for the financial periods, being the most directly comparable measure calculated in accordance with IFRS. EBITDAC is defined as net income before interest, taxes, depreciation and amortization, finance costs, other income (loss), stock-based compensation and impairment of goodwill, which are not reflective of underlying operations. EBITDAC includes government relief subsidies received to help mitigate the impact of the COVID-19 pandemic. EBITDAC is a metric used to assess the financial performance of an entity’s operations. Management believes that this metric provides an indication of the results generated by the Company’s business activities prior to how these activities are financed, how the Company is taxed in various jurisdictions, and how the results are impacted by foreign exchange and non-cash charges. This non-GAAP financial measure is also used by management as a key performance metric supporting decision making and assessing divisional results.

Management’s Discussion and Analysis � 20

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Adjusted EBITDAC - is a non-GAAP measure that is defined as EBITDAC noted above, adjusted for specific items that are considered to be non-recurring in nature. Management believes that this metric is relevant when assessing normalized operating performance.

Adjusted EBITDAC % of Revenue - is a non-GAAP ratio calculated as Adjusted EBITDAC divided by revenue. Management believes that this metric is a useful measure of the Company's normalized operating performance relative to its top line revenue generation and a key industry performance measure.

Adjusted EBITDAC per share (basic and diluted) - is a non-GAAP ratio calculated as Adjusted EBITDAC divided by the weighted average number of basic and diluted shares outstanding, respectively. Adjusted EBITDAC is a non-GAAP measure. Management believes it is a useful measure of the Company's normalized operating performance on a per share basis.

Readers are cautioned that EBITDAC and Adjusted EBITDAC should not be considered to be more meaningful than net income (loss) determined in accordance with IFRS. EBITDAC, Adjusted EBITDAC, Adjusted EBITDAC % of Revenue and Adjusted EBITDAC per share are calculated as follows:

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Net income (loss) Add back (deduct): Depreciation on property and equipment in cost of sales Depreciation on property and equipment in G&A Amortization on intangible assets in G&A Current income tax expense Deferred income tax recovery Stock-based compensation Finance costs Other income Impairment ofgoodwill	24,723 40,453 49,884 (222,903) 11,499 11,832 45,924 51,724 1,581 1,856 6,899 8,347 3,791 3,793 15,155 15,440 1,705 740 4,282 2,342 (9,210) (44,360) (1,835) (56,240) 3,867 2,950 13,637 11,543 5,300 6,388 22,389 24,864 (327) (31) (564) (703) — — — 248,905
EBITDAC	42,929 23,621 155,771 83,319
Add back (deduct): Inventory valuation write-downs Additional bad debt allowance Restructuring costs Management transition costs Gain on sale of building	— — — 12,283 — 668 — 3,795 — 362 — 2,771 4,829 — 4,829 — — — (4,444) —
Adjusted EBITDAC	47,758 24,651 156,156 102,168
Adjusted EBITDAC % of Revenue Adjusted EBITDAC per share - basic Adjusted EBITDACper share - diluted	*13.0 %* 11.6 % *13.1 %* 11.5 % *0.19* 0.09 *0.61* 0.39 *0.18* 0.09 *0.59* 0.39

Distributable Earnings - is a non-GAAP measure that is defined as cash provided by operating activities, adjusted for change in noncash operating working capital less Maintenance Capital and repayment of lease obligations. Distributable Earnings is a measure used by management and investors to analyze the amount of funds available to distribute to shareholders as dividends or through the NCIB program before consideration of funds required for growth purposes.

Dividend Payout Ratio - is a non-GAAP ratio that is defined as dividends declared as a percentage of Distributable Earnings. Management believes it is a useful measure of the proportion of available funds committed to being returned to shareholders in the form of a dividend relative to the Company's total Distributable Earnings.

Management’s Discussion and Analysis � 21

Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

CES Energy Solutions Corp.

Readers are cautioned that Distributable Earnings should not be considered to be more meaningful than cash provided by operating activities determined in accordance with IFRS. Distributable Earnings and Dividend Payout Ratio are calculated as follows:

	Three Months Ended December 31,	Year Ended December 31,
$000's	2021 2020	2021 2020
Cash provided by (used in) operating activities	(39,506) 14 (74,405) 156,679 73,040 17,180 191,659 (84,326) (3,470) (832) (11,465) (8,063) (4,966) (5,563) (19,361) (23,235)
Adjust for:
Change in non-cash operating working capital
Less: Maintenance Capital(1)
Less: Repayment of lease obligations
Distributable Earnings	25,098 10,799 86,428 41,055 4,061 — 8,139 2,948 16 % — % 9 % 7 %
Dividends declared
Dividend Payout Ratio

- Adjusted Gross Margin is a non-GAAP measure that has been reconciled to Gross Margin for the financial periods, being the most directly comparable measure calculated in accordance with IFRS. It represents Gross Margin under IFRS adjusted to exclude depreciation included in cost of sales as it relates to assets associated with operations and operating related activities, as well as adjusted for specific items that are considered to be non-recurring in nature. Management believes that this metric assists in determining CES’ profitability prior to charges for depreciation. This non-GAAP financial measure is also used by management to quantify the operating costs inherent in the Company’s business activities, prior to operational related depreciation.

Adjusted Gross Margin % of Revenue - is a non-GAAP ratio that is calculated as Adjusted Gross Margin divided by revenue. Management believes that this metric is a useful measure of the Company's normalized cost of sales relative to its top line revenue generation.

Readers are cautioned that Adjusted Gross Margin should not be considered to be more meaningful than Gross Margin determined in

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Gross Margin Gross Margin % of revenue	75,549 44,484 261,077 165,615 21 % 21 % 22 % 19 %
Add back (deduct): Depreciation included in cost of sales Inventory valuation write-downs Restructuring costs Gain on sale of building	11,499 11,832 45,924 51,724 — — — 12,283 — 146 — 1,669 — — (4,444) —
Adjusted Gross Margin Adjusted Gross Margin % of revenue	87,048 56,462 302,557 231,291 24 % 27 % 25 % 26 %

Adjusted General & Administrative Costs - is a non-GAAP measure that has been reconciled to General and Administrative expenses for the financial periods, being the most directly comparable measure calculated in accordance with IFRS. Adjusted G&A excludes stock-based compensation, which is not reflective of underlying operations, depreciation and amortization, as it relates to assets not associated with operations and operating related activities, and specific items that are considered to be non-recurring in nature. Management believes that Adjusted G&A and Adjusted G&A % or Revenue assist in demonstrating CES’ profitability.

Adjusted General & Administrative Costs % of Revenue - is a non-GAAP ratio that is calculated as Adjusted General and Administrative costs divided by revenue. Management believes that this metric is a useful measure of the Company's normalized G&A relative to its top line revenue generation.

Management’s Discussion and Analysis � 22

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Readers are cautioned that Adjusted G&A should not be considered to be more meaningful than G&A determined in accordance with IFRS. Adjusted G&A and Adjusted G&A costs % of Revenue are calculated as follows:

$000's	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
General and administrative expenses G&A expenses % of revenue	53,358 41,294 186,921 169,350 15 % 19 % 16 % 19 %
Deduct: Stock-based compensation Depreciation & amortization Additional bad debt allowance Restructuring costs Management transition costs	3,867 2,950 13,637 11,543 5,372 5,649 22,054 23,787 — 668 — 3,795 — 216 — 1,102 4,829 — 4,829 —
Adjusted General and Administrative Costs Adjusted G&A costs % of revenue	39,290 31,811 146,401 129,123 11 % 15 % 12 % 15 %

Funds Flow From Operations - is a non-GAAP measure that has been reconciled to Cash provided by (used in) operating activities for the financial periods, being the most directly comparable measure calculated in accordance with IFRS. Funds flow from operations is defined as cash flow from operations before changes in non-cash operating working capital and represents the Company’s after tax operating cash flows. This measure is not intended to be considered more meaningful than cash provided by operating activities, comprehensive income (loss), or other measures of financial performance calculated in accordance with IFRS. Funds Flow From Operations is used by management to assess operating performance and leverage, and is calculated as follows:

$000s	Three Months Ended December 31, Year Ended December 31,
	2021 2020 2021 2020
Cash provided by (used in) operating activities Adjust for: Change in non-cash operatingworkingcapital	(39,506) 14 (74,405) 156,679 73,040 17,180 191,659 (84,326)
Funds Flow From Operations	33,534 17,194 117,254 72,353

Working Capital Surplus - Working Capital Surplus is a non-GAAP measure that is calculated as current assets less current liabilities, excluding the current portion of finance lease obligations. Management believes that this metric is a key measure to assess operating performance and leverage of the Company and uses it to monitor its capital structure.

Net Debt and Total Debt - Net Debt and Total Debt are non-GAAP measures that Management believes are key metrics to assess liquidity of the Company and uses them to monitor its capital structure. Net debt represents Total Debt, which includes the Senior Facility, the Senior Notes, both current and non-current portions of lease obligations, non-current portion of cash settled incentive obligations, offset by the Company's cash position, less Working Capital Surplus.

Management’s Discussion and Analysis � 23

Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

CES Energy Solutions Corp.

Readers are cautioned that Total Debt, Working Capital Surplus, and Net Debt should not be construed as alternative measures to Long-term financial liabilities as determined in accordance with IFRS. Total Debt, Working Capital Surplus, and Net Debt are calculated as follows:

$000's	As at
	December 31, 2021 December 31,2020
Long-term financial liabilities(1) Currentportion of finance lease obligations	423,077 298,776 16,315 19,152
Total Debt Cash	439,392 317,928 — (18,251)
Total Debt, net of cash Deduct Working Capital Surplus: Current assets Current liabilities(2)	439,392 299,677 619,201 355,288 (159,447) (81,975)
WorkingCapital Surplus	459,754 273,313
Net Debt	(20,362) 26,364

1Includes long-term portion of the Senior Facility, the Senior Notes, lease obligations, and cash settled incentive obligations. 2Excludes current portion of lease liabilities.

Supplementary Financial Measures

A supplementary financial measure: (a) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Company; (b) is not presented in the financial statements of the Company; (c) is not a non-GAAP financial measure; and (d) is not a non-GAAP ratio. Supplementary financial measures found within this MD&A are as follows:

Revenue - United States - comprises a component of total revenue, as determined in accordance with IFRS, and is calculated as revenue recorded from the Company's US divisions.

Revenue - Canada - comprises a component of total revenue, as determined in accordance with IFRS, and is calculated as revenue recorded from the Company's Canadian divisions.

Top 5 customers as a % of total revenue - calculated as revenue recorded from the five customers comprising the largest individual components of revenue divided by total revenue, as determined in accordance with IFRS, for the period.

Top customer as a % of total revenue - calculated as revenue recorded from the one customer comprising the largest individual components of revenue divided by total revenue, as determined in accordance with IFRS, for the period.

Gross Margin % of Revenue - calculated as gross margin, as determined in accordance with IFRS, divided by revenue, as determined in accordance with IFRS, for the period.

General and Administrative Expenses % of Revenue - calculated as general and administrative expenses, as determined in accordance with IFRS, divided by revenue, as determined in accordance with IFRS, for the period.

Expansion Capital - comprises a component of total investment in property and equipment as determined in accordance with IFRS, and represents the amount of capital expenditure that has been or will be incurred to grow or expand the business or would otherwise improve the productive capacity of the operations of the business.

Maintenance Capital - comprises a component of total investment in property and equipment as determined in accordance with IFRS, and represents the amount of capital expenditure that has been or will be incurred to sustain the current level of operations.

Management’s Discussion and Analysis � 24

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

OPERATIONAL DEFINITIONS

Operational terms used throughout this MD&A include:

Canadian DF Market Share - CES estimates its market share in Canada for its drilling fluids operations by comparing, on a semiweekly basis, active rigs where CES was contracted to provide services to the total active rigs for Western Canada. The number of total active rigs for Western Canada is based on Canadian Association of Energy Contractors (“CAOEC”) published data for Western Canada.

US DF Market Share - CES estimates its market share in the US for its drilling fluids operations by comparing, on a semi-weekly basis, active rigs where CES was contracted to provide services to the total active land rigs in the United States. The number of total active rigs in the United States is based on the weekly land based Baker Hughes North American Rotary Rig Count.

Operating Days - For its drilling fluids operations, CES estimates its Operating Days, which are revenue generating days, by multiplying the average number of active rigs where CES was providing drilling fluid services by the number of days in the period.

Average Rig Count - For its drilling fluids operations, CES estimates its Average Rig Count, which is the average monthly number of active rigs where CES was providing drilling fluids in the referenced period.

Treatment Points - represents the average estimated number of unique wells or oilfield sites serviced monthly by CES in the referenced period with production and specialty chemicals.

CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

As a routine element of the financial statement preparation process, management is required to make estimates and assumptions based on information available as at the financial statement date. These estimates and assumptions affect the reported amounts of assets and liabilities, and the possible disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses for the period. Although estimates and assumptions must be made during the financial statement preparation process, it is management’s opinion that none of the estimates or assumptions were highly uncertain at the time they were made. Actual outcomes may differ from these estimates, which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

Management has made significant assumptions about the future and other sources of estimation uncertainty at the reporting date that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ. Assumptions made relate to, but are not limited to, the following:

Significant judgments

Determining CGUs

For the purpose of assessing impairment of non-financial assets, the Company must determine its CGUs. Assets and liabilities are grouped into CGUs at the lowest level of separately identified cash flows. Determination of what constitutes a CGU and the respective allocation of shared corporate carrying values is subject to management judgment. The asset composition of a CGU can directly impact the recoverability of assets included within the CGU. Management has determined that the appropriate CGUs for the Company are the Canadian Operations and the US Operations.

Leases

In determining the term of a lease, the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. The assessment is reviewed if a significant event or a significant change in circumstances occurs, which affects this assessment.

Significant estimates

Accounts receivable

The Company maintains an allowance for doubtful accounts to provide for receivables, which may ultimately be uncollectible. Accounts receivable are recorded at the estimated recoverable amount, which requires management to estimate uncollectible accounts, taking into consideration the customer’s payment history, their credit worthiness and the current economic environment in which the

Management’s Discussion and Analysis � 25

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

customer operates. The Company uses an expected credit loss model in determining provisions for trade and other receivables that measures lifetime expected credit losses. The primary input in CES’ expected credit loss model on trade receivables is historical credit losses incurred in the US and Canada, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. The Company’s historical bad debt expenses have not been significant and are usually limited to specific customer circumstances. However, given the cyclical nature of the oil and natural gas industry along with the current economic operating environment, a customer’s ability to fulfill its payment obligations can change suddenly and without notice.

Inventories

The Company evaluates its inventory to ensure it is carried at the lower of cost and net realizable value. Allowances are made against slow moving, obsolete, and damaged inventories and are charged to cost of sales. These allowances are assessed at each reporting date for adequacy. The reversal of any write-down of inventory arising from an increase in net realizable value shall be recognized as a reduction in cost of sales in the period in which the reversal occurred.

Property and equipment

Management estimates the useful lives and residual value of property and equipment based on the period during which the assets are expected to be available for use. The amounts and timing of recorded expenses for depreciation of property and equipment for any period are affected by these estimated useful lives. The estimates are reviewed at least annually and are updated if expectations change as a result of physical wear and tear, technical or commercial obsolescence, and legal or other limits to use. It is possible that changes in these factors may cause significant changes in the estimated useful lives of the Company’s property and equipment in the future.

Recoverability of asset carrying values

The Company assesses its property and equipment, including intangible assets and goodwill, for possible impairment at each reporting date or if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable. The recoverability of the Company’s asset carrying values is assessed at the CGU level. The determination of the CGUs is subject to management judgments taking into consideration: the nature of the underlying business operations, geographical proximity of operations, shared infrastructure, and exposure to market risk.

The assessment of any impairment of property and equipment, intangible assets and goodwill is dependent upon estimates of the recoverable amount that take into account factors such as economic and market conditions, timing of cash flows, the useful lives of assets, and their related salvage values. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is estimated using future cash flow projections, discounted to their present value, expected to arise from the CGU to which the goodwill relates. The required valuation methodology and underlying financial information that is used to determine value in use requires significant estimates to be made by management. These estimates include, but are not limited to, expected levels of activity within the oil and natural gas industry, long term projections of future financial performance and the selection of appropriate discount rates used to determine the present value of future cash flows. The estimated future cash flows are dependent upon a number of factors including, among others, future activity levels within the oil and natural gas industry, current economic and market conditions, and potential changes in government regulations. Future activity cannot be predicted with certainty and, as such, actual results may differ from these estimates. Changes to these estimates, including continued downward pressure on the global energy markets, may affect the recoverable amounts of the Company’s CGUs, which may then require a material adjustment to their related carrying values.

Purchase price allocations

The assets acquired and liabilities assumed are recognized at fair value on the date the Company obtains control of a business. The measurement of each business combination is based on the information available on the acquisition date. The estimate of fair value of the acquired intangible assets, including goodwill, property and equipment, other assets, and the liabilities assumed are based on assumptions. The measurement is largely based on projected cash flows, discount rates, and market conditions at the date of acquisition.

Derivatives

The fair value of outstanding derivatives is based on forward prices and forward foreign exchange rates as at the reporting date and may differ from what will eventually be realized. Changes in the fair value of the derivative contracts are recognized in net income. The actual gains and losses realized on eventual cash settlement will vary due to subsequent fluctuations in realized prices.

Stock-based compensation

Management’s Discussion and Analysis � 26

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

The fair value of Share Rights granted is measured using a Black-Scholes model. Measurement inputs include share price on measurement date, exercise price of the share right, expected volatility, actual and expected life of the Share Rights, expected dividends based on the dividend yield at the date of grant, anticipated forfeiture rate, and the risk-free interest rate. The Company estimates volatility based on historical trading excluding specific time frames in which volatility was affected by specific transactions that are not considered to be indicative of the Company’s normal share price volatility. The expected life of the Share Rights is based on historical experience and general option holder behaviour. Management also makes an estimate of the number of Share Rights, Restricted Share Units, and Phantom Share Units that will be forfeited and the rate is adjusted to reflect the actual number of share rights and restricted share units that vest. Consequently, the actual stock-based compensation expense associated with the Company’s share-based compensation plans may vary from the amount estimated.

Income taxes

Deferred income tax assets and deferred income tax liabilities are recognized for the estimated tax consequences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases used in the computation of taxable income, measured at the tax rates that are expected to apply in the period in which the liability is settled or asset is realized based on the enacted or substantively enacted future income tax rates in effect at the end of the reporting period. Timing of future revenue streams and future capital spending changes can affect the timing of any temporary differences, the expected usage of existing tax pools and credits, and accordingly affect the amount of the deferred income tax assets and liabilities calculated at a point in time. These differences could materially impact net income.

The Company and its various subsidiaries are subject to corporate and other taxation in various federal, provincial and state jurisdictions in Canada, the United States, Luxembourg, Hungary, and Oman. Corporate income tax and other returns are filed, and current income tax provisions are recorded, based upon the transactions entered into and recorded by the Company and are based on the estimates and calculations used by the Company during the normal course of business and in the preparation of these returns. For both the current and historical fiscal years, the Company’s and its subsidiaries’ income tax and other tax returns are subject to audit, which could result in adjustments and potential litigation by the tax authorities, which in turn could affect the Company’s tax provisions in future years. As applicable, the Company maintains provisions for uncertain tax positions that it believes are appropriate. These provisions are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors at the reporting period. The Company reviews the adequacy of these provisions at the end of each reporting period and adjusts them as required. However, it is possible that, at some future date, current income tax liabilities are in excess of the Company’s current income tax provisions as a result of these audits, adjustments, or litigation with tax authorities. These differences could materially impact net income.

Other Provisions & Contingencies

The determination of other provisions and contingent liabilities is a complex process that involves judgments about the outcomes of future events, estimates of timing and amount of future expenditures, the interpretation of laws and regulations, and discount rates. The amount recognized as a provision is management’s best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

SIGNIFICANT ACCOUNTING POLICIES

The Company's significant accounting policies can be found in Note 3 of the consolidated financial statements for the year ended December 31, 2021. There have been no new standards or interpretations issued during 2021 that significantly impact the Company.

CORPORATE GOVERNANCE

Disclosure Controls and Procedures (“DC&P”)

DC&P have been designed to provide reasonable assurance that information required to be reported by CES is gathered, recorded, processed, summarized and reported to senior management, including the President and Chief Executive Officer and Chief Financial Officer of CES, to allow timely decisions regarding required public disclosure by CES in its annual filings, interim filings, or other reports filed or submitted in accordance with Canadian securities legislation.

As at December 31, 2021, management, under the direction and supervision of the President and Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of CES’ disclosure controls and procedures, as detailed by National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings as required by Canadian securities laws. Based on that evaluation, the President and Chief Executive Officer and the Chief Financial Officer have concluded that, as at December 31, 2021, the disclosure controls and procedures were effective.

Management’s Discussion and Analysis � 27

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

Internal Controls over Financial Reporting (“ICFR”)

Management of CES is responsible for establishing and maintaining ICFR for CES to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with CES’ GAAP and includes those policies and procedures that (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of CES; (b) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the CES’ GAAP, and that receipts and expenditures of CES are being made only in accordance with authorizations of management and directors of CES; and (c) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the CES’ assets that could have a material effect on the annual financial statements or interim financial statements.

Management, under the direction and supervision of the President and Chief Executive Officer and the Chief Financial Officer and based on criteria set out in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, conducted an evaluation of the design and effectiveness of CES’ ICFR as at December 31, 2021. Based on their assessment, Management determined that ICFR were effective as at December 31, 2021.

There have been no changes to CES’ internal controls over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

While the President and Chief Executive Officer and Chief Financial Officer believe that CES’ DC&P and ICFR provide a reasonable level of assurance that they are effective, they do not expect that the DC&P or ICFR will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

For information regarding the corporate governance policies and practices of CES, the reader should refer to CES’ 2021 Annual Report, CES’ Annual Information Form dated March 10, 2022 in respect of the year ended December 31, 2021, and CES’ Information Circular in respect of the June 22, 2021 Annual General and Special Meeting of shareholders each of which are available on the CES’ SEDAR profile at www.sedar.com.

RISKS AND UNCERTAINTIES AND NEW DEVELOPMENTS

CES' 2021 financial results described herein demonstrated the Company's capabilities in the markets in which the Company operates along with a proven defensible balance sheet and business model. While oil and gas prices have improved significantly since Q2 2020, the North American oil and gas industry continues to face uncertainty as a result of the ongoing COVID-19 pandemic.

Throughout the COVID-19 pandemic, CES has remained committed to staying open and fully operational, has continued to ensure the ongoing safety of our employees and to maintain delivery of products and services to our customers while managing the impacts of the pandemic. We also continued to implement additional safety measures, which included social distancing protocols at all Company locations; restricting external visitors; restricting all non-essential business-related travel; enhancing our workplace cleaning practices; conducting virtual meetings with our customers, stakeholders, and external parties; and working from home strategies for employees where possible. Our health and safety teams across North America continue to closely monitor the rapidly changing situation and directions from government health authorities to ensure the safety of our employees and the public and the reliability of our operations.

CES’ customers are primarily North American oil and gas producers. Activity in the oil and gas industry is cyclical in nature. CES is directly affected by fluctuations in the level and complexity of oil and gas exploration and development activity carried on by its clients. In Canada, drilling activity is seasonal and, in turn, throughout North America it is directly affected by a variety of factors including: weather; natural disasters such as floods, tornadoes, and hurricanes; oil, natural gas, and natural gas liquids commodity prices; pipeline takeaway capacity; outcomes of major LNG projects; access to capital markets; government policies including, but not limited to, royalty, environmental, and industry regulations; and oil and natural gas demand fluctuations, which may be impacted by global political, military, economic, and social factors (such as the outbreak of a contagious disease or pandemic). Any prolonged or significant decrease in energy prices, economic activity or demand, or an adverse change in government regulations could have a significant negative impact on exploration and development drilling and completion activity in North America and, in turn, demand for CES’ products and services.

As a provider of technically advanced consumable chemical solutions throughout the life-cycle of the oilfield, the volatility in activity experienced at the drill-bit, fracturing and completion stages is somewhat muted by the long-term and less variable revenue generated

Management’s Discussion and Analysis � 28

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

by CES at the pump-jack and wellhead during the production stage and in the mid-stream, pipeline and transportation phases. As CES grows these facets of its business, the predictability of its earnings should also increase. The revenue and general market consumption of consumable chemicals in these market segments is more stable and predictable than the drilling fluids market, however a material reduction in the demand for oil and gas may impact the demand for consumable chemicals as operators shut-in production. In addition, CES is a relatively new entrant and is much smaller than the larger, more established competitors in this space. This presents opportunities as well as risks to the overall success CES may achieve in the production and specialty chemical space.

From mid-2014 to early 2016, oil and natural gas prices fell dramatically, resulting in a significant decrease in the level of industry activity in the WCSB and the US. While oil and natural gas prices improved from the first quarter of 2016 until early 2020, the COVID-19 pandemic and production level decisions amongst OPEC+ members in the spring of 2020 collectively resulted in a sharp decline in commodity prices. While oil and natural gas prices have made a significant recovery, rising to levels not seen since the commodity price collapse in 2014, the oil and gas industry continues to face uncertainty as a result of the ongoing COVID-19 pandemic. Although oil and gas operators have increased capital spending in response to improving prices, they continue to be cautious relative to previous market cycles and are increasingly focused on operating within cash flows and returning capital to shareholders. A retracement of oil and natural gas prices to levels seen in April 2020, would likely affect oil and natural gas production levels and therefore continue to reduce the demand for drilling and oilfield services by operators, which could have a material adverse effect on CES’ business, financial condition, results of operations and cash flows. In addition, in Canada many operators in the WCSB have been challenged by additional crude oil pricing differentials versus world benchmarks such as Brent and WTI, as well as government mandated production curtailments that were implemented to address these differentials. While there has been recent progress on pipeline projects in Canada, and in December 2020 government mandated production curtailments were suspended, there continues to be ongoing uncertainty around the ability for WCSB producers to reach markets given the status of several proposed pipeline projects, the potential for a change to US trade and climate policies, tax reform, and potential changes to the crude by rail industry in the face of several derailments. While price differentials have narrowed as demand for oil and gas recovers in North America, oilfield activity in Canada may continue to face headwinds compared to activity in the United States. In addition, a retracement of oil and gas commodity prices to the lows seen during the COVID-19 pandemic would result in a significant reduction in demand for drilling and oilfield services by Operators which could have a material adverse effect on CES’ business, financial condition, results of operations and cash flows.

The volatility in the financial markets has impacted the general availability of both credit and equity financing in the marketplace. World-wide political and economic risks seem to be intensifying and, although the US saw strong economic growth prior to COVID-19 disruptions, there are added risks and uncertainties around potential changes to US domestic and foreign policy as a result of the 2020 US election and the potential for significant global unrest relating to the recent conflict in Ukraine. Despite CES’ successful re-financing of its $300.0 million Senior Notes in October 2017, in general since the fall of 2014, and further emphasized by recent developments in global oil and gas markets, there has been a retreat in the energy capital markets as a result of low commodity prices and perception regarding government policy and regulations. As such it may prove to be difficult under future market conditions to issue additional equity, maintain or increase credit capacity, or re-finance existing credit without significant costs. CES is also reliant on its Senior Facility to fund working capital and other growth initiatives. In the event CES’ lenders are unable to, or choose not to continue to fund CES, it would impair CES’ ability to operate until alternative sources of financing were obtained, as access to the Senior Facility is critical to the effective execution of CES’ business plan. At December 31, 2021, CES is in compliance with terms and covenants of all of its lending agreements.

The ability of CES to sell and expand its services will also depend upon the ability to attract and retain qualified personnel as needed. As the industry recovered from the trough activity levels of 2016, the demand for skilled employees has been increasing and the supply of top quality, experienced talent has been limited. The unexpected loss of CES’ key personnel, the inability to retain or recruit skilled personnel, or potential disruptions to our employees' ability to perform their duties as a result of unforeseen events such as natural disasters or impacts from global pandemics like COVID-19, could have an adverse effect on CES’ results. CES addresses these risks by:

attracting well trained and experienced professionals;
offering competitive compensation at all levels;
providing a variety of tools and technologies to enable employees to work remotely;
ensuring a safe working environment with clearly defined standards and procedures; and
offering its employees both internal and external training programs.

CES takes its health, safety, and environmental responsibilities seriously and has standards, policies, and procedures to address these risks. In addition, CES maintains insurance policies with respect to its operations providing coverage over what it considers to be material insurable risks. Although the Company maintains insurance policies, such insurance may not provide adequate coverage in all circumstances, nor are all such risks insurable. There can also be assurance that the Company will be able to maintain adequate

Management’s Discussion and Analysis � 29

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

insurance in the future at rates it considers reasonable and commercially justifiable. It is possible that the Company’s insurance coverage will not be sufficient to address the costs arising out of the allocation of liabilities and risk of loss.

Significant changes in the oil and gas industry including economic conditions (including as a result of the COVID-19 pandemic), commodity prices, environmental regulations, government policy, pipeline takeaway capacity, and other factors may adversely affect CES’ ability to realize the full value of its accounts receivable. In addition, a concentration of credit risk exists in trade accounts receivable since they are predominantly with companies operating in the WCSB in Canada and in the Texas, Mid-continent, Rockies, and Northeast regions of the US. CES continues to attempt to mitigate the credit risk associated with its customer receivables by performing credit checks as considered necessary, managing the amount and timing of exposure to individual customers, reviewing its credit procedures on a regular basis, reviewing and actively following up on older accounts, and insuring trade credit risks where deemed appropriate. CES does not anticipate any significant issues in the collection of its customer receivables at this time outside of those which have already been provided for, but is closely monitoring in light of ongoing developments in global oil and gas markets. However, if a low oil and natural gas price environment persists or worsens, particularly with respect to pricing differentials affecting producers in the WCSB, and if access to capital markets remains weak for CES’ customers, there would be a risk of increased bad debts. It is not possible at this time to predict the likelihood, or magnitude, of this risk.

CES’ US footprint and size of operations continues to make up the majority of CES' business. US expansion provides CES with upside potential and reduces certain risks through diversification of operations. It also exposes the Company to additional specific risks including: integration risks of the acquired businesses; currency risk with added exposure to fluctuations in the USD; regulatory risks associated with environmental concerns; and the future impact of increased regulatory requirements.

The Company’s ability to provide services to its customers is also dependent upon the availability at reasonable prices of raw materials, which the Company purchases from various suppliers, most of whom are located in North America and increasingly from overseas. The availability and supply of materials has been consistent in the past; however as countries around the world emerge from the COVID-19 pandemic, there have been increasing supply chain issues and disruptions. Coupled with increasing demand from the Company's customers, periodic shortages of certain materials have been experienced and costs have been affected. Additionally, although the Company generally does not source materials from Eastern Europe, the recent conflict could also impact global supply chains and trade routes in ways which are not anticipated. Moreover, disruptions to transportation networks, impacts from pandemics, shortages of transportation infrastructure (including container availability), or other disruptions to global supply chains may impact the Company’s ability to deliver products and services to its customers. These disruptions, such as those seen generally as a result of the spread of COVID-19, may also impact global demand for oil and gas, which may in turn result in a reduction in drilling activity and production economics globally. CES continues to evaluate potential changes to customer activity levels and the potential impacts to our business.

The foregoing risks and uncertainties are not intended to be exhaustive. Reference should be made to CES’ Annual Information Form dated March 10, 2022 for the year ended December 31, 2021, and in particular to the heading “Risk Factors” for further risks associated with the business, operations, and structure of CES, which is available on CES’ SEDAR profile at www.sedar.com.

FORWARD-LOOKING INFORMATION & STATEMENTS

Certain statements in this MD&A may constitute forward-looking information or forward-looking statements (collectively referred to as “forward-looking information”), which involves known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of CES, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this MD&A, such information uses such words as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, and other similar terminology. This information reflects CES’ current expectations regarding future events and operating performance and speaks only as of the date of the MD&A. Forward-looking information involves significant risks and uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, but not limited to, the factors discussed below. Management of CES believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking information contained in this document speaks only as of the date of the document, and CES assumes no obligation to publicly update or revise such information to reflect new events or circumstances, except as may be required pursuant to applicable securities laws or regulations.

In particular, this MD&A contains forward-looking information pertaining to the following: the seasonality of CES’ business and the ability of CES to manage seasonal activity swings; the certainty and predictability of future cash flows and earnings; management’s

Management’s Discussion and Analysis � 30

CES Energy Solutions Corp. Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

proposed corporate strategy for the Company; ability of CES to manage overall fluctuations in demand for CES’ products and services; expectations regarding improving industry conditions and the Company’s ability to generate free cash flow to sustain the quarterly dividend; expectations regarding improving industry conditions and the Company’s ability to generate free cash flow to sustain the quarterly dividend; CES' ability to execute on financial goals relating to its balance sheet, liquidity, working capital and cost structure; expectations regarding the performance of CES' business model and counter cyclical balance sheet during downturns; expectations regarding CES' ability to qualify and participate in government support programs including but not limited to the Canadian Government's CEWS program; expectations regarding the impact of the COVID-19 pandemic on industry activity levels; expectations that CES will continue to remain open and fully operating during the COVID-19 pandemic; expectations regarding the availability and distribution of COVID-19 vaccines and the corresponding impact on government mandated travel and gathering restrictions, increased demand for fossil-fuels, improving commodity prices, increased production levels and drilling activity; the expectation that cash interest costs and maintenance capital will be funded from available cash or through CES' credit facilities; future estimates as to dividend levels; the business strategy regarding cash dividend payments in the future; the amount of cash to be conserved based on the suspension of the dividend and the ability to retain such cash to preserve the balance sheet and provide liquidity to fund future growth initiatives; the sufficiency of liquidity and capital resources to meet long-term payment obligations or other commitments not included as liabilities on its statement of financial position; potential M&A opportunities; the long-term capital investments required for CES to execute on its business plan; the amount of CES’ non-acquisition related capital expenditures in 2021, including maintenance capital and discretionary expansion capital and the anticipated timing for spending such capital; the repurchase of CES’ common shares pursuant to the NCIB; management’s opinion of the impact of any potential litigation or disputes; the application of critical accounting estimates and judgements; the timing of adoption of new accounting standards and the potential impact of new accounting standards on CES’ financial statements; the collectability of accounts receivable; the effectiveness of CES’ credit risk mitigation strategies; CES’ ability to increase or maintain its market share; expectations regarding the number of Treatment Points in Canada and the US; CES’ ability to leverage third party partner relationships to drive innovation in the consumable fluids and chemicals business; supply and demand for CES’ products and services, including expectations for growth in CES’ production and specialty chemical sales, expected growth in the consumable chemicals market, and the impact of such increased sales on operating leverage and cost structure; impact of new drilling techniques, longer reach laterals and the increased intensity and size of hydraulic fracturing; expectations that CES will rationalize its drilling fluids cost structure; industry activity levels including the impact of COVID-19 and divergence in activity levels between Canada and the US; commodity prices and related pricing pressure; any forward curves for commodity prices; treatment under governmental regulatory and taxation regimes; expectations regarding the impact of US tax reform; expectations regarding the impact of production curtailment policies in Alberta; expectations regarding the impact of governmental carbon pricing schemes; expectations regarding expansion of services in Canada and the US; development of new technologies; expectations regarding CES’ growth opportunities in Canada, the US and overseas; the effect of acquisitions on the Company; expectations regarding the performance or expansion of CES’ operations; expectations regarding end markets for production chemicals and drilling fluids in Canada and the US including anticipated volatility throughout 2021; expectations regarding the demand for oil and natural gas, reduced capital expenditures by CES' customers and the quantum of shut-in production by CES' customers as a result of the COVID-19 pandemic and production decisions from OPEC+ members and the corresponding impact on oil and natural gas prices; expectations regarding the impact of conflict and global unrest on commodity prices as well as CES’ business and operations; expectations regarding the diversification of operations away from the drill-bit; expectations regarding demand for CES’ services and technology; expectations that competitor consolidation and business failures will create opportunities for CES in a recovery; investments in research and development and technology advancements; access to debt and capital markets and cost of capital; CES’ ability to continue to comply with covenants in debt facilities; expectations regarding the impact of the refinancing of CES’ Senior Notes; and competitive conditions.

CES’ actual results could differ materially from those anticipated in the forward-looking information as a result of the following factors: general economic conditions in the US, Canada, and internationally; geopolitical risk; fluctuations in demand for consumable fluids and chemical oilfield services, downturn in oilfield activity; oilfield activity in the Permian, the WCSB, and other basins in which the Company operates; a decline in frac related chemical sales; a decline in operator usage of chemicals on wells; an increase in the number of customer well shut-ins; a shift in types of wells drilled; volatility in market prices for oil, natural gas, and natural gas liquids and the effect of this volatility on the demand for oilfield services generally; declines in prices for natural gas, natural gas liquids, and oil, and pricing differentials between world pricing, pricing in North America, and pricing in Canada; competition, and pricing pressures from customers in the current commodity environment; the degree and severity of the COVID-19 pandemic, including government laws and regulations implemented in response to the pandemic and the resulting impact on the demand for oil and natural gas; government support programs implemented in response to the COVID-19 pandemic and potential changes to the qualification criteria and amount of available support; conflict, war and political and societal unrest that may impact CES' operations as well as impact the market for oil and natural gas generally; currency risk as a result of fluctuations in value of the US dollar; liabilities and risks, including environmental liabilities and risks inherent in oil and natural gas operations; sourcing, pricing and availability of raw materials, consumables, component parts, equipment, suppliers, facilities, shipping containers, and skilled management, technical and field personnel; the collectability of accounts receivable; ability to integrate technological advances and match advances of competitors; ability to protect the Company’s proprietary technologies; availability of capital; uncertainties in

Management’s Discussion and Analysis � 31

Management's Discussion and Analysis Three and Twelve Months Ended December 31, 2021

CES Energy Solutions Corp.

weather and temperature affecting the duration of the oilfield service periods and the activities that can be completed; the ability to successfully integrate and achieve synergies from the Company’s acquisitions; changes in legislation and the regulatory environment, including uncertainties with respect to oil and gas royalty regimes, programs to reduce greenhouse gas and other emissions and regulations restricting the use of hydraulic fracturing; pipeline capacity and other transportation infrastructure constraints; changes to government mandated production curtailments; reassessment and audit risk and other tax filing matters; changes and proposed changes to US policies including tax policies or policies relating to the oil and gas industry; international and domestic trade disputes, including restrictions on the transportation of oil and natural gas and regulations governing the sale and export of oil, natural gas and refined petroleum products; the impact of climate change policies in the regions which CES operates; the impact and speed of adoption of low carbon technologies; potential changes to the crude by rail industry; changes to the fiscal regimes applicable to entities operating in the US and WCSB; access to capital and the liquidity of debt markets; fluctuations in foreign exchange and interest rates; CES’ ability to maintain adequate insurance at rates it considers reasonable and commercially justifiable; and the other factors considered under “Risk Factors” in CES’ Annual Information Form for the year ended December 31, 2021 and “Risks and Uncertainties” in this MD&A.

Without limiting the foregoing, the forward-looking information contained in this MD&A is expressly qualified by this cautionary statement.

MARKET AND INDUSTRY DATA

Unless otherwise indicated, the market and industry data contained in this MD&A is based upon independent industry publications and websites or was based on estimates derived from the same along with the knowledge of and experience of management in the markets in which the Company operates. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. None of these sources have provided any form of consultation, advice or counsel regarding any aspect of, or is in any way whatsoever associated with, CES. Actual outcomes may vary materially from those forecasted in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. While the Company believes this data can be reasonably relied on, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. The Company has not independently verified any of the data from third party sources referred to in this MD&A or ascertained the underlying assumptions relied upon by such sources.

ADDITIONAL INFORMATION

Additional information related to CES can be found on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. Information is also accessible on CES’ web site at www.cesenergysolutions.com.

Management’s Discussion and Analysis � 32

CES Energy Solutions Corp. Management's Discussion and Analysis 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] Ian Hardacre Joe Wright Kenneth E. Zinger

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

EXECUTIVE OFFICERS

Kenneth E. Zinger President & Chief Executive Officer

Anthony M. Aulicino Chief Financial Officer

Richard L. 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

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

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

Management’s Discussion and Analysis � 33

AI assistant

CES Energy Solutions Corp. — Management Reports 2022

43728_rns_2022-03-10_271c83d7-330f-4424-8d8f-3c9961ee239e.pdf

MANAGEMENT’S DISCUSSION AND ANALYSIS

USE OF NON-GAAP MEASURES AND OTHER FINANCIAL MEASURES

DIVIDEND REINSTATEMENT

BUSINESS OF CES

FINANCIAL HIGHLIGHTS

OUTLOOK

RESULTS FOR THE PERIODS

Revenue and Operating Activities

Quarterly Treatment Points

Cost of Sales and Gross Margin

General and Administrative Expenses (“G&A”)

CES Energy Solutions Corp.

Management's Discussion and Analysis

Three and Twelve Months Ended December 31, 2021

Stock-Based Compensation

Finance Costs

Interest expense

Foreign exchange gains and losses

Financial derivative gains and losses

Current and Deferred Income Taxes

Working Capital Surplus and Net Debt

Total Long-Term Assets

Long-Term Financial Liabilities

Related Party Transactions

QUARTERLY FINANCIAL SUMMARY

Seasonality of Operations

SELECTED ANNUAL INFORMATION

LIQUIDITY AND CAPITAL RESOURCES

Senior Facility

Senior Notes

Leases

Other Indebtedness

Summary of Statements of Cash Flows

Cash Flows from Operating Activities

Cash Flows from Investing Activities

Cash Flows from Financing Activities

Dividend Policy

NCIB

Share Capital and Stock-Based Compensation Plans

NON-GAAP MEASURES AND OTHER FINANCIAL MEASURES

CES Energy Solutions Corp.

CES Energy Solutions Corp.

Supplementary Financial Measures

OPERATIONAL DEFINITIONS

CRITICAL ACCOUNTING JUDGMENTS AND ESTIMATES

Significant judgments

Determining CGUs

Leases

Significant estimates

Accounts receivable

Inventories

Property and equipment

Recoverability of asset carrying values

Purchase price allocations

Derivatives

Stock-based compensation

Income taxes

Other Provisions & Contingencies

SIGNIFICANT ACCOUNTING POLICIES

CORPORATE GOVERNANCE

Disclosure Controls and Procedures (“DC&P”)

Internal Controls over Financial Reporting (“ICFR”)

RISKS AND UNCERTAINTIES AND NEW DEVELOPMENTS

FORWARD-LOOKING INFORMATION & STATEMENTS

CES Energy Solutions Corp.

MARKET AND INDUSTRY DATA

ADDITIONAL INFORMATION

STOCK EXCHANGE LISTINGS

LEGAL COUNSEL

BOARD OF DIRECTORS

EXECUTIVE OFFICERS

CORPORATE SECRETARY

AUDITORS

CORPORATE OFFICE

US BUSINESS UNITS

CANADIAN BUSINESS UNITS

www.cesenergysolutions.com

CES Energy Solutions Corp. Management Reports 2022