Oilfield Waterscape Navigating New Currents in Hydraulic Fracturing 1 Paul Pistono Senior Vice President Sales & Marketing Rockwater Energy Solutions

2 U.S. production expected to increase Source: U.S. Energy Information Administrations Annual Energy Outlook, 2013

3 Shale gas production in the U.S. is expected to increase Source: U.S. Energy Information Administrations Annual Energy Outlook, 2013

4 U. S. industries are going to use more energy - mostly, more natural gas. Source: U.S. Energy Information Administrations Annual Energy Outlook, 2013

5 International Outlook China, Argentina, and Algeria have larger shale gas deposits than U.S. Source: U.S. Energy Information Administrations Annual Energy Outlook, 2013

6 Commodity Price Outlook - Market 6 Crude Oil: Short and Long term trend around $90/Bbl since 2010 Natural Gas Short term trend now around $4.00/MMBtu and Long term trend now around $5.00/MMBtu Source: Goldman Sachs, Bloomberg market data as of 8/14/2013 WTI Crude Oil Natural Gas

7 Basin Breakeven Economics (1) TPH research, Sep (2) Simmons research, Nov Both sources assume 10% single-well IRR. Gas at $4.00/MMBtu puts 9 of the 26 gas plays inside breakeven. Nearly every play sees meaningful returns with oil at or above $80/bbl. $4.00 $

8 Rig Counts Are Not the Entire Story 8 Source: Johnson Rice Oilfield Services Weekly, Sep 18, Service Intensity vs Rig Count

9 Water Management FracTechnology Tremendous industry opportunity at the intersection of

Water Lifecycle 10 Water Management & Logistics Storage Flowback Water Treatment Production Hydraulic Fracturing & Completions

11 LogisticsStorageFracturingFlowbackProductionTreatment Transportation represents in the Bakken Source: SPE Oil & Gas Facilities, 2012

12 LogisticsStorageFracturingFlowbackProductionTreatment

13 GIS & Field Network Design Optimizing the placement of booster pumps to disperse and lower necessary line pressure and safely achieve desired flow rates. Pump Selection Pump Placement

14 of water are typically required for each well Source: Fracfocus.org LogisticsStorageFracturingFlowbackProductionTreatment

15 LogisticsStorageFracturingFlowbackProductionTreatment ASTs reduce cost and environmental footprint by compared to frac tanks

16 were completed in the U.S. in 2012* Source: API.org Quarterly Well Completions Report 2012 Summary of Estimated Completed Oil and Gas Wells LogisticsStorageFracturingFlowbackProductionTreatment

17 Gel Frac Linear Gel Frac Slickwater Frac Low Viscosity Low Viscosity Small Proppant Small Proppant Gas Wells Gas Wells Med Viscosity Med Viscosity Med Proppant Med Proppant Oil & Gas Wells Oil & Gas Wells High Viscosity High Viscosity Large Proppant Large Proppant Oil Wells Oil Wells Water Volumes LowerHigher

18 Frac Stages & Multi-well pads increasing Source: Morgan Stanley Research

19 Pressure Pumping Services Operating in North America in 1H13 Source: PacWest

20 Competition is increasing in oilfield services market Source: PacWest Smaller pressure pumping companies increased market share by over 10% from 11Q3 to 13Q2

21 “Adjustments to completion packages are not well managed in a timely manner due to insufficient information on make-up water and formation fluids, short lead-time, limited product lines of fracturing company/vendor, lack of knowledge, etc.” Source: 2012 Shale Gas Water Management Conference LogisticsStorageFracturingFlowbackProductionTreatment

22 LogisticsStorageFracturingFlowbackProductionTreatment Production Testing | Real-time data | Frac Flowback Support | Ventless Operations Field Water Analysis | Water Clarification Chemicals | Field Monitoring & Inventory Management

23 Transition from Flowback to Production Flowbac k Produced

24 Full Lifecycle Water Management The fluids network developed in the planning phase will streamline the movement and treatment of flowback or produced water, including those with high total dissolved solids. LogisticsStorageFracturingFlowbackProductionTreatment

25 Optimizing a Fluids Network Design Piping, Treatment & Minimal Trucking Water Treatment Centralized / Mobile Facility Pump Oil Wells Reserve Pit Water Frac Flowback Battery Hydraulic Fracturing Working Tanks

Optimizing a Fluids Network Design Piping, Treatment & Minimal Trucking Water Treatment Centralized / Mobile Facility

27 Fluids Conditioning Water Quality Treatment Cost Poor Low High Zirconium XL No Treatment Course Filtration With Dilution Chemical Treatment & Separation EO Treatment & Oxidant Generation EO Treatment & Clarification RO/FO/ Evaporation Optimizing Water Treatment SlickwaterLinear GelBorate X-Link

Technology Comparison Expense Speed of Treatment Small Footprint Effectiveness High Waste / Consumables Simplicity of Operation Short KillLegacy Kill TSS, Heavy Metals Media Filtration $slownomoderateyes n/a Flocculation $slownomoderateyes n/a Settling $slownomoderateyes n/a Electro-Oxidation $$fastyeshighnoyesn/a Bacterial Microbe Removal Chemical Remediation $$fastyeshighyes Electro-Oxidation $$fastyeshighnoyes Ozone $$$fastnohighno yesno

Solids Disposal 29 Full Lifecycle Water Costs Scenario Analysis – Rockies SourceStorageFracProductionDisposal $ 8.40 bbl $ 8.40 bbl SourceTreatmentStorageFracProduction $ 5.80 bbl $ 5.80 bbl 31% Savings in favor of treatment Costs and percent savings above represent a single case and may vary significantly depending multiple factors.

30 Summary Produced and Flowback water reuse can be cost effective and minimize waste streams Improvements in operational efficiency can be achieved by considering the lifecycle of oilfield water Growth potential across all shale plays will continue to drive demand for new technology