HispanicBusiness

Outlook

Q4 2012 was a difficult quarter for CES with a number of events as described above that contributed to weaker quarterly results. However, with a shift in activity in the US to new work in the Eagle Ford; the addition of significant work in the Mississippi Lime as a result of the Mega Fluids acquisition; and a pick-up of activity in the other regions the US drilling fluids business is back on track. In Canada a combination of the ProDrill acquisition and a pick-up of activity in the traditionally robust winter drilling season has Canadian drilling fluids also back on track. With respect to the production and specialty chemical business, PureChem closed out 2012 with annual sales of approximately $24 million and has begun to make a positive EBITDAC contribution. In the US, the Company has made a significant break-through into the market with the JACAM Acquisition.

Taking into consideration the JACAM Acquisition, and based on the premise that 2013 drilling activity as a whole across the Canadian and US markets will remain fairly consistent with activity levels achieved in 2012, CES' expected range of consolidated gross revenue for 2013 will be approximately $580 million to $620 million and expected consolidated EBITDAC will be approximately $95 million to $105 million.

Going forward, CES sees significant growth opportunities in the production and specialty chemical space through both its PureChem and JACAM divisions. CES has vertically integrated manufacturing capabilities with unutilized throughput at both its Carlyle and Sterling plants. CES has a full suite of technically advanced solutions for completions and stimulations, production chemicals for consumption at the wellhead or pump-jack, and specialty chemicals for the pipeline and mid-stream market. These markets are all growing on a year-over-year basis and CES believes over time it can grow its market share within each of these sub-segments.

In the Company's drilling fluids business, Q4 2012 results reflect the decrease in activity over the comparable period in 2011. Despite the slowdown the drilling fluids segment, on a year-over-year basis, it has experienced increases in revenue per day as the industry trend to drill more complex, deeper, and longer horizontal wells continues. CES has benefited from this trend as these types of wells require more fluids in general, but also more technically advanced fluids in order to be successfully drilled and cased. The result is the drilling fluids portion of the typical well cost has increased, while the average well cost has also increased. Based on the reported well economics of the different North American play types and the reported drilling plans of operators, this trend looks to continue. CES' strategy is to utilize its patented and proprietary technologies and superior execution to increase market share in North America. As a larger percentage of the wells being drilled require more complex drilling fluids to best manage down hole conditions, drilling times, and costs, CES will leverage its superior customer service and its unique products to demonstrate its superior performance. CES believes that its unique value proposition in this increasingly complex drilling environment makes it the premier independent drilling fluids provider in North America.

The Clear Environmental Solutions division continues to complement CES' core drilling fluids business and has maintained consistently strong results. The Environmental Services division has focused on expanding its operational base in the WCSB and is pursuing opportunities in the oil sands and horizontal drilling markets.