Investor Relations Presentation October 2010

8/8/2019 Investor Relations Presentation October 2010

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Investor Relations Presentation - October 2010

Investor Relations PresentationOctober 2010

TSX: PLK

Jay B. SimmonsChairman & CEO


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COMPANY FORMATION

Plan of Arrangement - June 2010

1. Palko Environmental formed through the combination of PalkoEnergy of Midale, Saskatchewan and Deepwell Energy Services

2. $3 million private placement by Gibson Energy ULC

4. New company: Palko Environmental Ltd.

5. New Trading Symbol: TSX: PLK

6. Market capitalization: $25 million


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RECENT HISTORYAug. 16, 2010: Q2 2010 FINANCIAL & OPERATING HIGHLIGHTS

Revenues increased Q/Q by 64%, and Y/Y by 63%

Operating margins in Q2 were 25%, and YTD were 33%

EBITDA* $0.09/share vs. $0.04 for Q2 2009 (increase of 125%)

Sept. 15, 2010: COREY ZAHN STEPS IN AS NEW CFO

11 yrs. in VP Finance and CFO roles with private and public oilfieldservice companies; 9 years as Sr. Manager with KPMG

Oct. 6, 2010: ADDITION OF NEW FACILITY IN MIDALE, SK

Excess custom treating capacity, pipeline access and water disposal

through an arrangement with a producer owner and operator

Oct. 12, 2010: FORMATION OF TECHNICAL ADVISORY GROUP

Innovation forum in support of assessing and applying leading edgetreatment technologies and processes to oilfield wastes.

Composed of four faculty members of the Schulich School ofEngineering at the University of Calgary

* Before one-time restructuring and reorganization costs of $322,900 associated with the Plan of Arrangement.


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PALKO FACILITIES


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WATER INTENSITY


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ENERGY STORY is a WATER STORY

Source: GeoScout : AB, BC and SK figures combined

0.9x 1.5x2.6x 3.7x


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WATER MANAGEMENT About 75% of Albertas oil production (conventional, in-situ and

mining) is water assisted.

In-situ oilsands projects recycle greater than 90% of the water usedin their production process.

Hydraulic fracturing operations for shale and tight gas are waterintensive.

Operators are looking for strategies to reduce water intensityincluding the processing and recycling of recovered drilling and fracfluids.

Water optimization efforts include treating water for reuse.

Source: Responsible Water Management in Canadas Oil and Gas Industry Canadian Association of Petroleum Producers, June 2010


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REGULATORY COMPLEXITY


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ERCB REGULATORY PROCESS


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WHICH EXPANDS FURTHER


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REGULATIONS KEEP CHANGING

JUL 2010: Amendment to B.C. Water Act

APR 2010: Amendments to B.C. Environmental Mgmt. Act

MAR 2010: Amendment to B.C. Water Act

JAN 2010: Amendment to B.C. Water Act

DEC 2009: Amendment to B.C. Greenhouse Gas Reduction Act

MAR 2009: Amendment to B.C. Environmental Assessment Act

MAR 2009: Amendment to B.C. Oil & Gas Commission Act

In Progress at ERCB:

Directive 047: Waste Reporting Requirements for Oilfield WasteManagement Facilities

Directive 051: Injection and Disposal Wells


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ISSUES = OPPORTUNITY


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THE OPPORTUNITYWater Intensity

Water treatment, recycling, reuse, increasing demand for water

Demand for technology and innovation

Producers establishing water teams

Regulatory Environment Increasing complexity and amount of regulation - not core business for producers

Market Size Producers hold 66% of $1.5 billion market - opportunity to take on more

Palko Position In the middle of all the opportunity - geographically, active sale organization, organic growth,

application of innovative technology

Past solutions wont work in the future as water issues and regulation intensifies


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Palko Environmental Ltd. operates six (6)waste management and disposal facilities:

Mayerthorpe, Alberta

full service waste management facility

Rycroft, Alberta

waste water disposal facility

Grande Cache, Alberta


Claresholm, Alberta


Midale, Saskatchewan

full service waste management facility a second custom oil treatment facility with

pipeline access and waste water disposal


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WASTE MANAGEMENT FACILITY


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INJECTION WELL


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GIBSON ENERGY ULC

Gibson owns 39% of Palko Environmental

Palko is Gibsons water strategy

Gibson is Palkos midstream strategy

Gibson touches 20% of all the oil produced in Canada

Single shipper and marketer agreement

Increase in oil emulsion and custom treating volumes

Potential future pipeline connectivity


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GIBSONS FOOTPRINT


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INDUSTRY WASTE STREAMS

CHEMICAL SOUP

(Composed of Oil, Water & Solids)

OIL EMULSIONS Frac Fluids

Produced WaterWASTE WATERMILSHAKE MUDSDrilling Fluids

Completions PIPELINE SLUDGEFLOWBACK WATERChemical Spills Tank Sludge


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Elements include


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ENVIRONMENTAL STRATEGY

Commercialization of existing treatment technology

Water treatment technology Oil treatment technology

Pilot projects taken to date

Implementation at existing Palko facilities

Implementation at customer sites (on-site services)

Establishment of Palko Technical Advisory Group


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TECHNICAL ADVISORY GROUP

Innovation forum for leading edge waste, water and oiltreatment technologies and processes

Development of solutions that are environmentallysound, technically feasible and economically attractive

Members are:

Dr. Anil K. Mehrotra, Ph.D., P.Eng. is a Professor at, and the Interim Dean of, theSchulich School of Engineering, as well as the Director of the Centre forEnvironmental Engineering Research and Education (CEERE). Dr. Mehrotrasresearch expertise includes the transport and thermophysical properties of crude oilsand bitumens, the kinetics and mechanism of solids deposition and fouling, and theremediation of contaminated soils and methane oxidation by biofiltration.


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TECHNICAL ADVISORY GROUP (contd)

Dr. Thomas G. Harding, Ph.D., P.Eng. is a Professor, and the Associate Head ofUndergraduate Studies, at the Schulich School of Engineering. Dr. Harding joined theUniversity of Calgary's Schulich School of Engineering in January 2004 after a 28-year

career in the petroleum industry and has varied engineering experience related to heavyoil, conventional oil and gas production operations both domestic and international.

Dr. Maen Husein, Ph.D., P.Eng. is an Associate Professor, and currently the AssociateHead of Graduate Studies, in the Department of Chemical Engineering at the SchulichSchool of Engineering. Dr. Huseins research focus is on the energy and environmentand application of nanotechnology to optimize energy recovery from primary sourceswhile reducing the associated environmental impact.

Dr. Nader Mahinpey, Ph.D., P.Eng., MCIC is an Associate Professor at the SchulichSchool of Engineering. His research activities focus on promoting research programs inthe areas of clean energy and green engineering.


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TOP CUSTOMER RELATIONSHIPS

Encana Corporation

ConocoPhilips Canada

Connacher Oil and Gas

Canadian Natural Resources

ARC Resources

Nexen Inc.

Crescent Point Energy

Petrobakken Energy Ltd.

Cenovus Energy Inc.

Talisman Energy

Birchcliff Energy

MEG Energy Corp.


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MARKET SHARE 2009 waste and water disposal market approximately $1.5

billion in size

Estimate of water and waste volumes processed in 2009:22%

7%

3%

2%66%

CCS

Newalta

Secure

PALKOProducers

Source: GeoScout at April 30, 2010 - Aggregate 2009 data (OGC, ERCB, SIR databases)


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Q2 2010 FINANCIAL HIGHLIGHTSFigures in $000s exceptper share amounts 2010 2009 Change 2010 2009 Change

Revenue 3,521 2,150 64% 8,835 5,416 63%

Operating expenses 2,630 1,628 62% 5,913 3,882 52%Operating margin 892 522 71% 2,923 1,535 90%

Operating margin (%) 25% 24% 33% 28%

General & Administrative 804 543 48% 1,595 1,263 26%

EBITDA (before restructuring costs) 87 (21) 1,327 272 388%

Per share, basic and diluted $0.01 $0.00 $0.09 $0.04 125%

Net income (loss) (1,008) (1,729) (919) (2,678)

Per share, basic and diluted ($0.07) ($0.24) ($0.06) ($0.37)

Weighted average units 15,420 7,200 15,379 7,200outstanding (000s)

Three months ended June 30 Six months ended June 30


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OPERATING MARGINFor the years ended December 31:

2006 2007 2008 2009

($000s) ($000s) ($000s) ($000s)

Revenues 9.65 14.12 18.65 11.55Operating Margin 5.05 7.49 7.9 3.4

Operating Margin % 52% 53% 42% 29%

For the six months ended June 30 (unaudited):

2007 2008 2009 2010

($000s) ($000s) ($000s) ($000s)

Revenues 6.96 9.87 5.42 8.84

Operating Margin 3.85 4.29 1.53 2.92

Operating Margin % 55% 43% 28% 33%


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CAPITALIZATIONAt October 8, 2010:

TSX symbol: PLK

Shares outstanding: 23 million

Closing share price: $1.07

Market capitalization at Aug. 27: $24.4 million

Insider ownership*: 66% (Gibson 39%)

Public float: 34% or 7.8 million shares

52 week price range: $0.75 - $1.70

* Includes Manvest Inc.


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SENIOR MANAGEMENT TEAM

Jay B. Simmons, CA, Chairman & Chief Executive OfficerPresident, Simmons Financial Holdings Corporation.

Steven Peterson, PresidentCo-founder of Palko Energy in Spring 2008, over 35 years in oilfield production, construction, maintenance,consulting and management, including four years on the Board of Weyburn Inland Terminal.

Corey Zahn, CGA, CA, Vice President Finance & Chief Financial OfficerJoined in October 2010, has over 20 years of corporate financial experience including 11 yrs. in VP Financeand CFO roles with private and public oilfield service companies and 9 years as Sr. Manager with KPMG LLP.

Niels Versfeld, B.Sc. (Hons), MBA, Vice President Corporate DevelopmentJoined in 2009, environmental consulting background, 4 years at CCS in regulatory development.

Don Johnson, RET, Vice President OperationsJoined in 2006, over 23 years of oilfield experience with 14 years in waste management operations andconstruction including six years at Anadime Processing and four years at Newalta.

Brian Johnson, Vice President Sales & MarketingJoined in 2006 in business development role, has over 22 years of oilfield waste management experienceincluding leading sales and marketing for CCS, and six as facility owner and operator for private firm.


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BOARD OF DIRECTORSJay B. Simmons, ChairmanPresident, Simmons Financial Holdings Corporation

Steven PetersonPresident, Palko Environmental Ltd.

A. Stewart HanlonPresident and Chief Executive Officer, Gibson Energy ULC

Rick M. WiseSenior Vice President, Operations, Gibson Energy ULC

Sam ParrottaChief Financial Officer, Onni Group of Companies

William P. RobinsonPresident, Manvest Inc.


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INVESTMENT SUMMARY

1. Excellent market! Large and growing in complexity

2. Well positioned

Geographic locations

Customer driven demand

Active sales force

3. Meeting demand for technology & innovation


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THANK YOU

www.palko.com

Documents

Investor Relations Presentation October 2010