FOSSIL FUEL PRODUCED WATER: ASSET OR WASTE?

JUNE 24-25, 2013

MITCH BURROUGHS, PRESIDENT & DIRECTOR

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In 2010 the US produced between 7 – 10 barrels (bbl's) of associated production water with each barrel of oil produced. The water oil ratio is expected to dramatically increase due to: Advances in drilling techniques Development of unconventional hydrocarbon plays that need fracking to be able to produce Maturing of Oil and Gas fields In 2010 the US produced 21 billion barrels of associated production water which required treatment and/or disposal. Recent advances in fracking e!ciency have energized the onshore US market. Fracking requires a large amount of water per well, on average more than 150,000 bbl’s per frack job. More than 15,000 wells were fracked in 2010 resulting in a water usage of more than 2.2 billion barrels. On average each well produces 40% “flow-back frack water” that needs treatment and/or disposal.

Source: DOE and US EIA 2009 & 2010 reports and industry knowledge

Produced Water : Waste or Asset ? There’s a lot of it about …and more coming

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Produced Water : Waste or Asset ? A matter of perspective & balance

Stakeholder Waste Asset

Oil & Gas Company ✔✔✔

Oilfield Services Company ✔✔ ✔

Environmental Company ✔✔✔

Trucking Company ✔✔ ✔

Water Treatment Company ✔ ✔✔

Disposal Company ✔✔ ✔

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Produced Water: Waste or Asset? Current models focus on waste

Haulage & Transport companies feel threatened Disposal well companies have no incentive to convert to treatment … where’s the ROI? Companies selling fresh water have no incentive to convert to treatment Long legislative processes to get permits Liability inconsistencies across states Risk concerns for the oil & gas company, what will I do with my production water if the treatment plant doesn’t function according to plan? Treatment cost vs market price . Finding the right balance

Driving the change from waste to asset requires an integrated service approach to economically re-purpose produced water in an e!cient and e"ective manner

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A water-cycle solutions focus Restore the balance in the water cycle

Produced Water

Drilling/Fracking/Production Process

•  Recycles water for perpetual use •  Converts produced water into an asset •  Integrated solution that reduces costs while

monetizing waste streams to suit local needs.

Armada’s Disposal Wells

< 10% Disposal

Armada’s Treatment Train

Clean Water

Armada’s Transport & Logistics

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What sort of integrated approach?

Transportation Polyline Deployment Pit Lining Pad Remediation

Contracting Services Well Pressure Testing

Water Trucks Pneumatic Trucks Poly Pipe Trucks Backhoe

Roustabout Trucks

Logistics Sales Treatment Disposal

Liquid Waste Water

2* Class-II disposal wells in Utah 2* SWD wells in Permian Basin

Production Water Brackish Water FrackFlowback Water

Production Water Treatment facility in Utah, Production Water treatment facility in Permian basin

Fresh Water Sales

Fresh Water facility Barstow, W-Texas Fresh Water facility DJ Basin, Colorado

Serv

ices

As

sets

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Unique approach in that technology components will be adapted to treat various types of water. A project pilot study will define final treatment train configuration Propriety Treatment Train will consist of four modules;

Module-1 Module-2 Module-3 Module-4

Oil Water Separator Aeration Walnut Shell filter VOC removal Oil Para!n Asphaltines

Electro Coagulation Electro Precipitation Chemical Precipitation Metals Gels Bacteria

Ceramic Filters Carbon Filter Solids Heavy Metals Rare Minerals Chlorine removal

Reverse Osmosis Micro Filter Desalting Dissolved Organic Na removal

REM

OVA

L U

NIT

Armada Treatment Train System

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Replace disposal wells and evaporation pits with their associated risks and regulatory challenges. Convert production water into an incremental fresh water source at an up to 90% yield. Reduce water disposal costs by up to 60%. Reduce trucking costs and carbon emissions Allow energy companies to easily and a"ordably recycle their produced water. (Disposal & Re-use) Modular plant designs allow for small foot-print and in-place scalability

Armada converts a waste stream into an asset stream Armada applies proven technology in innovative ways Armada builds business models to ensure win-win client-company relationship Armada’s integrated systems are scalable at commercial levels

Armada’s Strategic Advantage

THANK YOU