Bri-Chem Corp. TSXV: BRY - May 2013

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Canada’s Fastest Growing Oil & Gas Drilling Fluids and Steel Pipe Supplier

Bri-Chem Corp. (BRY-TSXV) is a leading Canadian-based wholesale distributor of oil & gas drilling fluids and steel pipe and piping products. Growth will be achieved by expanding North American market presence in the drilling fluids and steel pipe wholesale distribution markets. Bri-Chem will continue to seek out strategic acquisitions with an emphasis on USA expansion and chemical blending opportunities. Bri-Chem expects to be manufacturing large diameter seamless pipe.

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Bri-Chem Corp. TSXV: BRY - May 2013

  1. 1. June 2012Corporate PresentationDon Caron, Chief Executive OfficerJason Theiss, Chief Financial Officer TSX: BRY www.brichem.com
  2. 2. Forward-Looking Statement TSX: BRY June 2012Certain statements set forth in this presentation are forward looking statements. Although Bri-Chem Corp. management believetheir expectations are based on reasonable assumptions, they give no assurance that expected results will be achieved. Thereare numerous risks and uncertainties that can effect the outcome and timing of such events, including many factors beyond thecontrol of Bri-Chem Corp.’s management.These factors include, but are not limited to, economic and political conditions, government regulation, commodity prices for oiland gas, steel commodity prices, fluctuations in the level of oil and gas, the need to effectively integrate acquired businesses,uncertainties as to Bri-Chem’s ability to implement its business strategy effectively in Canada and the United States, Bri-Chem’sability to attract and retain key personnel, currency fluctuations and other factors that affect demand for the Company’s product.Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the actual resultsand plans for fiscal 2012 and beyond could differ materially from those expressed in the forward looking statements. Additionalinformation on these and other factors and uncertainties are described under the heading “Risk Factors” in the Company’s mostrecent Annual Information Form (“AIF”) and other continuous disclosure materials filed by the Company with Canadiansecurities regulators, which are available to the public at www.sedar.com.Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it isexpressed. The Company does not undertake to update or revise any forward-looking information, whether as a result of newinformation, future events or otherwise, except as required by law.Furthermore, certain measures we use are not recognized measures under International Financial Reporting Standards(“IFRS”). Specific measures used are earnings before interest, taxes, depreciation, amortization and non-cash stock basedcompensation (“EBITDA”). We strongly recommend the participants review the discussion of these statements in the“Management’s Discussion and Analysis – Non-IFRS Measures and Reconciliations” section of our 2011 Annual Report and2012 Interim First Quarter Report. 2
  3. 3. Company Overview TSX: BRY June 2012Business Divisions:  Drilling Fluids  Distribution – 350 Products  Proprietary Blending & Packaging  Steel Pipe  Distribution – Seamless Pipe  Manufacturing – Large Diameter Industry:  Oil and Gas Geographic markets:  Canada  USA 3
  4. 4. Q1 Company Highlights TSX: BRY June 2012Q1 Financial Achievements: Q1 Milestones:  Revenues: $53M  Manufactured First 30”  4% YOY increase Seamless Steel Pipe in North America  EBITDA: $5.3M  USA Fluids Expands to 8th  21% YOY increase and 9th Warehouse Location  Earnings: $2.9M  Manufacturing Facility  10% YOY increase Receives API Certification 4
  5. 5. Market Data TSX: BRY June 2012As of June 5, 2012Exchange Toronto Stock Exchange Shareholder BreakdownShares Outstanding 17.2M/FD18.0MShare Price $3.40 Management52 Week High/Low $4.35/$2.20 Retail Directors and Insiders 42% 38%Market Capitalization $58.5 millionP/E (1) 5.5 XEBITDA (1) $17.3M Institutional (1) 20%EV/EBITDA 6.9 XEarnings per FD share (1) $0.61EBITDA per FD share (1) $1.00Book Value per FD share (1) $2.73(1) For the TTM March 31, 2012 5
  6. 6. Drilling Fluids - Market TSX: BRY June 2012Trend Wholesale Oilfield Chemical Demand (est. $1.0B CAN, USA $9.1B)North America continues to drill deeper and longer reachhorizontal wells which are completed utilizing multi-stagefracturing which consumes more:  Drilling Fluids Other Types, 12%  Liquid Mud  Cementing Additives Cementing, 7%  Acidizing Additives Production Chemicals, 12%  Frac ChemicalsCanada  Estimated at $1.0B(1) Drillings Fluids, 34%  Largest Independent Supplier of Drilling Fluids in Canada  Targeting Stimulation Fluids SegmentUSA Stimulation Chemicals, 35%  Estimated at $9.1B(1)  Currently focused on Drilling Fluids Segment  No Dominate National Independent Supplier (1) Company Estimate 6
  7. 7. Drilling Fluids - Cdn Market TSX: BRY June 2012 Horizontal Wells Meterage 18,000 160,000 30,000 160,000 16,000 140,000 140,000 25,000 14,000 120,000 120,000 12,000 20,000 Revenues (000s) 100,000 100,000 Revenue (000s) Wells DrilledWells Drilled 10,000 15,000 80,000 80,000 8,000 60,000 60,000 10,000 6,000 40,000 40,000 4,000 5,000 20,000 2,000 20,000 0 - 0 - 2008 2009 2010 2011 2012F 2008 2009 2010 2011 2012F Year Year Total Wells Total Meters (in 000s) Horizontal Total Wells Bri-Chem Revenues Avg m/Well Bri-Chem Revenues 2008 2009 2010 2011 2012F 2008 2009 2010 2011 2012F Total Wells 16,934 8,514 12,148 12,917 13,150 Total Wells 16,934 8,514 12,148 12,917 13,150 Horizontal 3,049 2,459 4,968 7,130 7,233 Meters Drilled (000s) 26,979 12,704 20,445 24,067 24,000 Bri-Chem Revenue $83,434 $62,126 $118,188 $151,945 Avg meter/well 1,593 1,492 1,683 1,863 1,825 Bri-Chem Revenue $83,434 $62,126 $118,188 $151,945 Source PSAC - Canada 7
  8. 8. Drilling Fluids - Canada TSX: BRY June 2012Distribution Q1 2012 Canadian Drilling Fluids  >50% market share – drilling fluids Revenue $40 million segment(1) 45,000  Early Spring Breakup 40,000 35,000Blending 30,000  <10% market share – stimulation 25,000 fluids segment(1) $ 20,000 Blend/Pack Drilling Fluids  Targeted Growth Area 15,000Key Customers 10,000 5,000  -28% -  -22% 2008 2009 2010 2011 2012 Year  - 2% (1) Company Estimate 8
  9. 9. Distribution Network - Canada TSX: BRY June 2012 Distribution Warehouses1 - High Level, AB2 - Grande Prairie, AB3 - Slave Lake, AB 94 - Edson, AB5 - Blackfalds, AB6 - Consort, AB 10 17 - Brooks, AB8 - Lloydminster, AB9 - Fort Nelson, BC10 - Fort St. John, BC11 - Swift Current, SK 212 - Estevan, SK 3 Blending & Sales13 - Acheson, AB 4 13(Blending & Distribution) 14 814 - Camrose, AB(Packaging & Distribution) 515 - Calgary, AB 6(Sales office) 15 Legend 7 Strategic Stock Point 11 Office / Blending & Warehouse 12 9
  10. 10. Drilling Fluids - USA TSX: BRY June 2012Acquisition:  Completed Stryker acquisition May 2011 Q1 2012 USA Drilling Fluids Revenue $3.0 million  Denver, CO Head Office  Acquired Fluid and Transportation sales of $6.5M  Sales increasing to $3M per Quarter 3,500,000 3,000,000Distribution:  Aggressively expanding: 2,500,000  3 to 9 Warehouses 2,000,000 $  6 to 10 Trucks 1,500,000  1 to 4 National sales reps 1,000,000  Additional Warehouse expansion plans  Establish liquid mud blending facility 500,000 - Q2 11 Q3 11 Q4 11 Q1 12Opportunity: Quarters  Capture a >10% of $3.4B Drillings Fluids Market  Establish the dominate independent drilling Supply Trans fluids distribution network for the USA 10
  11. 11. Distribution Network - USA TSX: BRY June 2012Warehouses1 – Denver, CO2 – Ulster, PA3 – Leetsdale, PA4 – Grande Junction, CO5 – Alice, TX6 – Tyler, TX7 – Casper, WY8 – Myton, UT9 - Bakersfield, CAProposed1 – North Dakota2 – Oklahoma3 – OklahomaLegend Current StrategicStock Point ProposedStock Point 11
  12. 12. Steel Pipe - Distribution TSX: BRY June 2012 Wholesale distributor of steel pipe for the Q1 2012 Steel Pipe Distribution energy industry Revenue $7 million Pipe size ranging from ½ to 36 inch: 15,000  Gas Line pipe Millions of $ 10,000  Fluid Transmission pipe Sales 5,000 Gross Margin Shifted Product Mix:  Carry Less Inventory -  Higher Inventory Turns 2009 2010 2011 2012  Increased Margins (2012-15.1% 2011-12.3%) Year  Synergistic Distributor of Large Diameter Source Steel Pipe from:  North America  Asia  India  Vietnam Master Distributors: 12
  13. 13. Steel Pipe - Manufacturing TSX: BRY June 2012 Large Diameter Seamless Pipe Production 14” – 36” TPE(1) Process Exclusive to North America QA/CDA 2011 Total Capital Investment $6M Completion of commissioning phase Q1 2012 2012 Estimated Production Ramp-up(2) Q1 – 1000MT Q2 – 2000MT 24hr production shifts x 4 days Q3 – 3500MT Q4 – 4500MT Average Market Selling Price(2) $2K per MT Target Market Energy Fluid and Gas Line Pipe Estimated Production at Full Capacity(2) 24K – 30K MT American Petroleum Institute Mill Certification May 2012(1) Thermal Pipe Expansion(2) Company Estimate 13
  14. 14. 2012 Sales Drivers TSX: BRY June 2012 Canada 2012 Wells Drilled Forecast(1) 13,150 up 2% 2012 Average Active Rig Forecast(2) 398 down 4% 2012 Current Rigs Operating –Spring breakup (2) 226 USA 2012 Wells Drilled Forecast 47,918 up 6.7% 2012 Average Active Rig Forecast (4) 2,019 up 7.6% 2012 Current Rigs Operating (3) 1,982 North America Oil and Gas Prices Approved Exploration Expenditures(1) PSAC Forecast as of April 25, 2012(2) CAODC Forecast as of May 25, 2012(3) Baker Hughes as of June 8, 2012(4) World Oil Report as of February 2012 14
  15. 15. Q1 Sales Breakdown TSX: BRY June 2012 5% Q1 2012 Consolidated 2011 13% Revenue $52.6M – 1% 2011 – 14% 12% 2011 – 14% 4% Steel Dist 2011 – 0% Steel Manuf CDN Fluids Blending/Packaging US Fluids 66% 2011 – 71% Trans 15
  16. 16. 5 Year Q1 Financial Performance TSX: BRY June 2012 $6,000 $60,0002012 EBITDA toSales – 10.0% $5,000 $50,000 EBITDA& Earnings (000’s)EBITDAPer share – $0.30 $4,000 $40,000 Revenue(000s) $3,000 $30,000 $2,000 $20,000 $1,000 $10,000 $0 $0 2008 2009 2010 2011 2012 EBITDA Earnings Revenue Quarter Ended 2008 2009 2010 2011 2012 Revenue $ 22,201 $ 30,331 $ 43,965 $50,647 $52,566 EBITDA 2,576 2,443 4,216 4,400 5,300 Net Earnings 1,265 860 2,539 2,632 2,894 Earnings per Share $0.10 $0.06 $0.18 $0.18 $0.18 16
  17. 17. Balance Sheet Strength TSX: BRY June 2012 As of March 31, 2012 Available Credit ($80M ABL) $18.1M Net working capital $35.2M Inventory $60.6M Inventory Turnover 3.0 Total Assets $132.5M Long-term Debt $0.6M Shareholders Equity $46.9M Return on Assets 7.3% Return on Equity 20.7% Capital Expenditures $0.7M Free Cash Flow (Q1) $2.8M 17
  18. 18. Successful Acquisitions TSX: BRY June 2012Acquisition Criteria Current Focus Structure  Accretive  Production Chemicals  70% Cash / 30% Shares  Profitable  USA Liquid Mud Operations  50% of cash paid at closing  Experienced Management  Stimulation Chemicals  50% of Cash paid over 3  Complementary Fit  Small Diameter Steel years  Opportunity for Growth Manufacturing  Shares Escrowed for 3  Geographic Expansion  Threading & Upsetting years  Retain Key Management  Non-Competition Agreement 2007 2008 2009 2010 2011 18
  19. 19. Scalability TSX: BRY June 2012Revenue to Employee Count 200,000 100 March 31 TTM 180,000 Total Revenue Per 15 90 Employee (86): 160,000 80 $2.2 million (1) 140,000 70 120,000 60 Employee Count (000s C$) 100,000 17 50 8 80,000 40 60,000 30 40,000 20 20,000 10 - 0 2007 2008 2009 2010 2011 TTM 2012 Fluids sales Steel sales employees Based on core business, additional 38 employees for steel manufacturing division 19
  20. 20. Growth Strategy TSX: BRY June 2012 Drilling Fluids Division  USA Drilling Fluids Market Segment - $3.4B ► Stryker Acquisition – 9 Warehouses ► Establish Additional Warehouse Locations ► Establish Liquid Mud Service Facilities  Canada - Expand Chemical Blending Capacity - $350M ► Production ► Stimulation ► Cementing Steel Pipe Division  Ramping up Production of Manufacturing Facility  Explore additional Micro Mill opportunities 20
  21. 21. Positioned for Growth TSX: BRY June 2012Strengths Bri-Chem Tomorrow – Strong Balance Sheet – Profitable North – Experienced Management American Leader – Proven Business Model – Acquisition Strategy New High Margin Steel Manufacturing USA Sales Geographic Fluid Market Strong Core Expansion Business Platform Bri-Chem Today 21 21
  22. 22. Contacts TSX: BRY June 2012Contacts BRI-CHEM CORP. Don Caron Jason Theiss Chief Executive Officer Chief Financial Officer 53016 Highway 60, Unit #15 53016 Highway 60, Unit #15 Acheson, Alberta Acheson, Alberta T7X 5A7 T7X 5A7 Email: dcaron@brichem.com Email: jtheiss@brichem.com Ph: 780.420.6885 Ph: 780.455.8667x237 22
  23. 23. TSX: BRY June 2012 Appendix – Board of Directors & Management Bios Don Caron  Director of Edmonton based Private Equity Firm. Chief Executive  Founder of International Technologies Inc. which merged to create CCS Income Trust. (1992) Officer & Director  Founder of CFE Industries Inc. which merged to create Commercial Solutions Inc. (2002)  Founder of mBase Inc. which merged to create Bri-Chem Corp. (2007)  Former Chief Executive Officer of Altus Geomatics, partnership residing under Altus Group Income Fund. (TSX: AIF.UN) Albert Sharp  Retired Trustee of Altus Group Income Fund. Director  Member of: The Canadian Institute of Geomatics; The International Right of Way Association; and, The Alberta Association of Surface Land Agents. Eric Sauze  Former Chief Operating Officer and Chief Financial Officer of Commercial Solutions Inc. (TSX:CSA) Director & Chair  Chartered Accountant and Chartered Financial Analyst. of Audit Committee  Chief Financial Officer of Western Canadian based oil and gas valve company. Brian Campbell  Over 25 Years of field and management experience in the drilling fluids industry. Director  Founded Bri-Chem in 1985.  Former President of Bri-Chem Fluids division. Trent Abraham  Over 20 years experience in the drilling fluids industry, oversees the day to day operations President of Fluids Division  Former owner of Millennium Technologies which was purchased by Bri-Chem (2007). Jason Theiss  Chartered Accountant. Chief Financial  Prior, controller of private income trust, and senior auditor with public accounting firm. Officer  Joined Bri-Chem in 2007. Neil Rasmussen  President of Bri-Steel Corporation and Bri-Steel Manufacturing with over 15 years of steel industry experiencePresident of Steel Division  Founded Bri-Steel Corporation. 23

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