NEXT GENERATION OIL AND GAS TRACER CORPORATE SUMMARY 2020 Legal Disclaimer This presentation is strictly confidential and is intended for authorized recipients only and must be held strictly confidential. This presentation includes confidential, proprietary, and trade secret information of DSO, and is presented for discussion purposes only. Any unauthorized copying, disclosure or distribution of the material in this presentation is strictly forbidden without the express written consent of DSO. Statements in this presentation are made as of May 2018 unless stated otherwise, are subject to change, and will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing or changes occurring after such date. The delivery of this presentation at any time shall not under any circumstances create an implication that the information contained herein is correct as of any time after such date. This presentation is for information purposes only and is not intended as investment advice, or to form the basis of any investment decision, or as an offer or solicitation with respect to the purchase or sale of any security. This presentation also contains forward looking statements. The opinions, forecasts, projections or other statements, other than statements of historical fact, are forward-looking statements. Due to various risks and uncertainties, actual events or results or the actual performance may differ materially from those reflected or contemplated in such forward looking statements. Prospective investors should pay close attention to the assumptions underlying the analyses and forecasts contained in this presentation. The analyses and forecasts contained in this presentation are based on assumptions believed to be reasonable in light of the information presently available. Such assumptions (and the resulting analyses and forecasts) may require modification as additional information becomes available and as economic and market developments warrant. Any such modification could be either favorable or adverse. Nothing contained in this presentation may be relied upon as a guarantee, promise, assurance or a representation as to the future. These forward looking statements have not been reviewed by anyone outside of DSO and while DSO believes these statements are reasonable, they do involve a number of assumptions, risks and uncertainties. In considering any performance data contained herein, you should bear in mind that past or targeted performance is not indicative of future results, and there can be no assurance that DSO will achieve comparable results or that target returns will be met. Nothing contained herein should be deemed to be a prediction or projection of future performance of DSO. Prospective investors should make their own investigations and evaluations of the information contained herein. Each prospective investor should consult its own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning the information contained herein. Table of Content 1. Tracer Market – Traditional Versus DSO Advantage • Traditional Offering • Market Share • DSO Advantage 2. DSO Technology – Reservoir, Completions, Water/CO2 Flood, and Midstream • DSO Revenue Diversity 3. DSO Manufacturing, R&D, Field Operations, and Analytics • Dripping Springs, TX – R&D / Product Manufacturing • Midland, TX – Corporate / Field Operations / Analytics 4. Executive Team • Management and Technology 5. DSO Corporate Client Focus and Philosophy • DSO Client Relationships Oil And Gas Tracer Market 4 1. Core Laboratories – Protechnics • ~$90 mm per year in annual sales • ~50% EBITDA margins 2. STS Tracer Services • 2nd leader in NAM tracer market • 2017 transaction to NCS Multistage for ~$80mm 3. ResMetrics • Start Up backed by CSL Capital Management • Tracer data analytics and delivery platform 4. Tracerco • ~$30 mm per year in annual sales • Division of Johnson Matthey PLC • Midcap independent provider of conventional tracer technology 5. Renegade Wireline • Regional player • limited tracer market Oil And Gas Tracer Market Share 5 Significant underserved market opportunity. Current Technology Available 6 Limitations Of Current Technology • Current technology limitations allow for no more than 60 tracers. • Limited number of stages may be traced. More stages and clusters increase the impact of this limitation. • Adjacent operations can not use the same tracer due to risk of cross contamination. • Many currently used tracers are depleted through adsorption on rock formations requiring a significant excess of tracer to be employed for adequate signal. • Limitations of mass spectrometer analysis due to high background and other recovered molecules with similar mass weight. • Due to environmental concerns, radioactive tracers are no longer preferred. 7 The Industry Problem • E&P operators need more information about the underground realities of completions and production. • Where hydrocarbons and completion fluids come from, how they move, and where they go. • Current technology does not provide a detailed view of what is happening at depth. • Understanding the complexities of the underground fluid movement will improve the efficiency, cost effectiveness and success of completions and production. • Knowledge of underground geology and reservoir properties will be instrumental in directing future drilling operations in a field. 8 The DSO SOLUTION 9 • DSO tracers are used to quantify and profile frac fluid, clean-up and flow-back efficiency. • They are also employed to track fluid movement through the reservoir and fracture from treatment well to nearby offset well for informed well spacing decisions. In addition, this technology provides many more capabilities to understand the actual flow-back of sub-stages in multiple well completions of an entire field. • DSO’s services involve injecting individual, patented nanoparticles with encapsulated synthetic oligonucleotides at very low concentrations into different frac stages, sub- stages, and segments of a single or multi-stage stimulation procedure. • Subsequent flow-back samples from treatment and offset wells are analysed providing precise flow-back profiles and offset well interference recognition. • DSO DNA is used as a marker during an oil recovery operation is readily recoverable and identifiable using proprietary methods and state of the art technology. The DSO SOLUTION • Groundbreaking nanoparticle-sized DNA oligonucleotide frac tracers • This technology utilizes encapsulated DNA within particles that are added to frac fluids at low concentrations and injected into your well within various frac stages, sub-stages, and segments of a single or multi-stage stimulation procedure • There are virtually unlimited numbers of unique tracers available • A silica encapsulation process protects the oligonucleotides from degradation until they are recovered from your well. After recapture, the protection is removed, and the returned DNA can be analyzed using proprietary methods in our laboratory. • We use technology that reports results in linear format instead of logarithmic • We can “multiplex” hundreds of timepoints and hundreds of tracers per test. Can even multiplex multiple wells per test. • Powerful and statistically relevant replication is built into the system • Run-to-run variability is not a problem since all samples are analyzed simultaneously Benefits of DSO Tracers Technology • Synthesizing DNA is routine and inexpensive • An almost infinite number of possible tracers • 4 different nucleotides (nt) make up DNA therefore 4n is the number of different combinations possible. Where ‘n’ is the length of the DNA oligonucleotide. DSO has started with an 80 mer. • DSO’s DNA strand is 80nt long, 480 = a number of possible combinations greater than will ever be required. • DNA combinations can be created so that they do not match any known organism. • Contamination from bacteria down-hole or even the lab technician is impossible. • Modern molecular biology tools have been developed for analyzing DNA and the technology continues to become more sophisticated as the science of personalized medicine fuels progress • DNA is non-toxic, biodegradable (when not protected) and environmentally safe. • Safe to transport, handle, store, and dispose Benefits of DSO Tracer Technology • We can “multiplex” hundreds of timepoints and hundreds of tracers per test. Can even multiplex multiple wells per test. • Powerful and statistically relevant replication is built into the system • Run-to-run variability is not a problem since all samples are analyzed simultaneously LATE MIDDLE EARLY Typical formation porosity 1 mM = 1,000,000 nM Benefits of DSO Tracer Technology DSO’s Tracer Nanopores Dendrimers Quantum dots DSO’s Nanoparticle Technology DSO holds several US patents protecting this technology • US patent 9,267,371 • Grant patent in oil or gas bearing formations using plural unique oligonucleotide markers. • US patent 9,194,226 • Grant patent for the use of using DNA sequencing in Frac Fluid • US patent 9,206,683 • Grant patent for the use of using DNA sequencing in Frac Fluid • Exclusive rights to US patent 9,675,953 • Grant patent for the use of using DNA sequencing in Frac Fluid • 3 Additional patents in process • Manufacturing of tracer • Protection of DNA downhole DSO Intellectual Property 14 DSO Well Lifecycle Solutions The use of DNA will allow for: • A greater number of data points available through better technology and enough tracers to adequately evaluate each stage and phase of every well. • Significantly lower margin of error. • Broader application of tracer technology to include: § Drilling Mud § Completion Fluids § Sand / Proppant § Water Flood / CO2 Injection § Oil § Midstream Transportation What and Where 1. Completion Fluids 2. Oil 3. Proppant 4. Water DSO Tracer Solution for Reservoir Inter-well tracers can be used to identify matrix, such as: • Thief zones • Natural fractures • High permeability conduits within the reservoir. • These ‘short-circuits’ cause the process to become virtually ineffective and limit the recovery of hydrocarbons within the reservoir. DSO Tracer Solution for Reservoir Commonly referred to as a tracer survey, chemical tracers are deployed into target injection wells and sampled at pattern and off- pattern producers, yielding specific qualitative information about the reservoir such as: • Direct Communication Between Injector and Producer • Exact Breakthrough Times Between Injector and Producer • Identification of Natural Fractures, Thief Zones and Faults • Extent of Formation Layering • Swept Pore Volume and Sweep Efficiency • Conformance Gel Treatment Volume Estimation Critical Completion Data Ø Zonal Flow-back Profile in Multi-Stage Completions Ø Zonal Flow-back Profile in Multi-Sub-Stage Completions Ø Quantifiable Zonal Flow-back Efficiency Ø Inter-well/Offset Fluid Communication and Interference Ø Formation Ion Profile (Na, Ca, K, Mg, Cl) Direct measurement of chemical response in treatment offset wells provide the only means to determine many completion factors and is routinely used for optimizing: Ø Fluid Flow-back Procedures Ø Completion Strategy Ø Stimulation Fluid Design Ø Well Production Ø Well Spacing Ø Sub-Stage Spacing Ø Zonal Contribution Ø Zonal Isolation Ø Intelligent Well Performance DSO Tracer Solution for Completions Standard stage and cluster design New spacing and cluster design DSO provides enough tracers to address the growing need for modern completion designs. Longer laterals, less space between stages, more stages per well, and the advent of multiple clusters per stage necessitate an exponential increase in the number of tracers required that only DSO can provide. DSO Tracer Solution for Completions Direct measurement of chemical response in treatment and offset wells provide the only means to determine many completion factors, and is routinely used for optimizing: • Fluid Flowback Procedures • Completion Strategy • Stimulation Fluid Design • Well Production • Well Spacing • Zonal Contribution • Zonal Isolation • Intelligent Well Performance DSO Advantage and Benefits • Maximize Well Completion Design • Lower Cap X Cost per Well • Provide Data to Client for Future Decision • Track Oil, Water and Prop variables during the well completion process DSO Tracer Solution for Completions • Zonal Flowback Profile in Multi-Stage Completions • Quantifiable Zonal Flowback Efficiency • Inter-well/Offset Fluid Communication and Interference • Inter-stage/Offset Fluid Communication and interference. • Formation Ion Profile (Na, Ca, K, Mg, Cl) Competitive Matrix FBA Radioactive Tritiated Water DNA >60 Tracers Environmental Risk Diagnostic Limitations Dilution Issues Reservoir Plating Issues Mass Balance Concerns Substage Diagnostic Frac Zone Contamination Well to Well Connectivity CoreLabs Y Y Y N N Y Y Y Y Y N Y Limited Spectrum Tracer Y Y N N N Y Y Y Y Y N Y Limited Tracer Co Y Y N N N Y Y Y Y Y N Y Limited ResMetrics Y N N N N Y Y Y Y Y N Y Limited Renegade Y Y N N N Y Y Y Y Y N Y Limited Bantek N N N Y Y N N N N N Y N No Limits In the current competitive landscape, DSO’s technology resolves all the key issues faced by producers. DSO Advantage 1. Unlimited number of sequences available 2. Zero environmental risk 3. Significant data mining and data clarity advantages DSO DSO Trade Names • DST– name of the individual tracer sequence. • DSOO – Oil Tracer • DSOW – Water Tracer • DSOP – Proppant • DSTS – analysis and reports • DSOD – Data • DSOA – Analytics • DSOR - Reporting DSO DST DSTS DSO Field Deployment Capabilities ADVANTGES 1. Small Footprint on location 2. Minimal Capital Equipment needed 3. Mobility 4. Automated and Digital product deployment 5. Zero risk hazardous product on location 6. One Technician per job per tour 7. No data connectivity needed to pump job in conjunction with Frac Equipment DSO Product Deployment Equipment 1. Light Duty Truck and Trailer needed 2. Full job trailer stocked for entire well 3. Multi Manifold Pump set up 4. Low pressure injection into Frac Pump 5. All equipment AC powered – Low Risk Location Exposure DSO Field Deployment Capabilities Job Structure • Mobilize on location • Spot on low side of the manifold • Establish pump schedule from client • Pump tracer into frac pump per schedule • Complete job • Sign Field Ticket and Post Job report • Demobilize off location DSO spots on the low pressure side of the frac pump and manifold DSO Field Deployment Capabilities Water Flood and CO2 Projects Project 1. DSO can slug tracer on a case by case basis 2. DSO can inject tracer in your waterflood / CO2 3. In a WAG or SWEEP efficiency based injection process Continuous 1. DSO has capabilities of setting up continuous tracer drip pumps and tanks for ongoing field evaluation 1. All tank set ups are secondary contained 2. All tank set ups are solar powered 3. All continuous field evaluations are monitored on a daily, weekly, monthly basis DSO Product Manufacturing PCR – DNA and tagger manufacturing process 1. Magnetite Core 2. Functionalize the particle 3. Energize 4. Attach DNA 5. Encapsulate and Protect the particle from the environment. DSO Oligo Manufacturing OILIGO Machine • DNA synthesizer delivers the world's fastest and most efficient • High quality oligonucleotide / dna synthesis in high throughput, medium throughput and custom configurations. • Oligonucleotide synthesis is the chemical synthesis of sequences of nucleic acids. • The process has been automated since the late 1970s and can be used to form desired genetic sequences as well as for other uses in medicine and molecular biology. DSO NANO Manufacturing NANO Reactor Process Chemistry • Nanoparticles are formed through the natural or human mediated disintegration of larger structures or by controlled assembly processes. • The associated processes occur either in the gas phase, in a plasma, in a vacuum phase or in the liquid phase, eventually followed by the intentional or unintentional transfer into one or more relevant fluid media and then to an individual receptor in an exposure setting. DSO Production Manufacturing Digital Emulsifying Manufacturing Pot • This equipment required for manufacture of DSO’s tracer is suitable for emulsification of the pharmaceutical, cosmetic, and fine chemical products. • Used to coat the DNA chain with silica and ferrous metals to protect against downhole temperature, pressure, rate, and contaminants, and enable ease of recapture. DSO Product Manufacturing TEM/SEM Microscope • (TEM) is a technique used to observe the features of very small specimens. • The technology uses an accelerated beam of electrons, which passes through a very thin specimen to enable a scientist the observe features such as structure and morphology. • (SEM) is a type of electron microscope that produces images of a sample by scanning the surface with a focused beam of electrons. • The electrons interact with atoms in the sample, producing various signals that contain information about the sample's surface topography and composition. DSO Sample Collection Sample Collection Time Variables Flowback Hourly – Daily Initial Production Daily – Weekly On Going Production Weekly - Monthly DSO Sample Collection Flowback Initial Production Continuous Production Flowback Initial Production Continuous Production DSO Analytics Reporting Ion Torrent • Ion TorrentTM technology directly translates chemically encoded information (A, C, G, T) into binary digital information (0, 1) on a semiconductor chip. • This approach marries simple chemistry to proprietary semiconductor technology; The result is a sequencing technology that is simpler, faster, more cost effective and scalable than any other technology available. • The semiconductor has transformed every industry it has touched. Just as the microprocessor enabled desktop computing to displace the mainframe, semiconductor technology will enable DSO to efficiently process thousands of samples simultaneously. QPCR – Quanitative Polymerase Chain Reaction • Nucleic acid amplification and detection techniques are among the most valuable tools in biological research today. • Real-time PCR can be used for both qualitative and quantitative analysis of DSO’s tracers. Methods for DSO data capture and reporting. DSO Automated Analytics ION CHEF • Work flow manufacturing. • Automated library preparation for Tagger manufacturing • The Ion Chef System provides automated library preparation, template preparation, and chip loading for users at any experience level. • In less than 15 minutes of up-front hands-on time and with the use of pre-packaged library preparation reagent kits, The automated workflow supports Ion AmpliSeq one- and two- pool designs. • Compared to the four hours of hands-on time required with the Ion OneTouch 2 System • Ion Chef System enables significantly higher productivity. Again, in less than 15 minutes of hands-on time, the fully automated template preparation provides two chips ready for sequencing. Sample of DSO Reporting All reporting will be customized to the client’s specifications per KPI. Key >200 150 to 200 100 to 150 70 to 100 50 to 70 35 to 50 25 to 35 17 to 25 12 to 17 8 to 12 5 to 8 3 to 5 2 to 3 1 to 2 0.05 to 1 Stage 1 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Stage 8 Stage 10 Lab Number Well Name Flowback Sample Date Sample Type BNTK 1000 BNTK 1100 BNTK 1200 BNTK 1300 BNTK 1400 BNTK 1500 BNTK 1600 BNTK 1700 CFT Total ppb Sodium Potassium Calcium Magnesium Total Chlorides (calculated) 1 100001 GBU 8-41BH 09/13/12 11:00 Water (Pre-Frac) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 3969 52 175 32 6576 2 100002 GBU 8-41BH 09/15/12 08:00 Water (Pre-Frac) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 3967 55 113 15 6416 3 100003 GBU 8-41BH 182 09/16/12 04:00 Water (Produced) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 5079 209 1238 118 10567 4 100004 GBU 8-41BH 399 09/16/12 16:00 Water (Produced) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.1 10 6415 353 3832 280 17823 5 100005 GBU 8-41BH 1083 09/17/12 04:00 Water (Produced) 0.0 0.0 0.0 0.0 0.0 0.0 1.0 21.4 22 4068 320 642 104 8009 6 100006 GBU 8-41BH 2839 09/18/12 04:00 Water (Produced) 0.0 0.0 0.0 0.0 0.0 68.7 69.3 17.6 156 4298 207 2065 191 11036 7 100007 GBU 8-41BH 4631 09/19/12 04:00 Water (Produced) 0.0 0.0 0.0 0.0 1.1 33.4 35.3 17.8 88 4239 205 2465 205 11690 8 100008 GBU 8-41BH 5865 09/20/12 04:00 Water (Produced) 1.3 0.4 0.4 1.0 23.1 31.4 29.5 23.9 111 2791 144 231 36 4951 9 100009 GBU 8-41BH 6572 09/21/12 04:00 Water (Produced) 4.8 34.9 45.7 9.6 4.3 8.8 0.5 6.2 115 3781 150 221 48 6502 10 100010 GBU 8-41BH 9943 09/25/12 04:00 Water (Produced) 4.1 19.4 16.2 6.8 7.0 12.8 12.8 10.4 89 3403 159 326 61 6150 11 100011 GBU 8-41BH 10864 09/27/12 04:00 Water (Produced) 4.0 19.4 27.4 6.3 6.0 13.4 7.1 7.9 92 3426 134 303 63 6129 Avg ppb 1.6 8.2 10.0 2.6 4.6 18.7 17.3 12.8 76 4167 209 1258 123 9206 % total ppb from Stage 2.1% 10.9% 13.1% 3.5% 6.1% 24.7% 22.8% 16.9% 100.0% % total ppb @ last sample 4.4% 21.2% 29.9% 6.8% 6.6% 14.7% 7.8% 8.6% C hemical Frac Tracer C oncentration, ppb C ation C oncentration, ppm Sample of DSO Reporting 1. All reports are client KPI driven 2. DSO will analyze all data variables applicable to client needs 3. DSO can not only provide tracer analytics but has the capability to provide 1. Fingerprinting 2. Carbon chain analysis 3. All water elements – including bacteria 4. Cold Finger oil analysis 5. ICP water analysis 6. Mass Spec / Mass Balance 7. H2S gas tubes DSO Analytics Reporting DSTS • The DSTS (DSO Spectral) services involves injecting individual, patented nanoparticles with encapsulated synthetic oligonucleotides (BNTs) at very low concentrations into different frac stages, sub-stages, and segments of a single or multi-stage stimulation procedure. • Subsequent flow-back samples from treatment and offset wells are analyzed providing precise flow-back profiles and offset well interference recognition. • DSTS tracers are routinely used to quantify and profile frac fluid, clean-up and flow-back efficiency over a time frame of 30 days until there are no traces of BNTs. DSTS is also employed to track fluid movement through the reservoir and fracture from treatment well to nearby offset well for informed well spacing decisions. • In addition, this technology provides many more capabilities to understand the actual flow-back of sub-stages in multiple well completions of an entire field. DSO Analytics Reporting • Samples are collected according to a pre-determined sampling schedule to provide a chronological analysis of flow- back. • These samples are analyzed at DSO’s state of the art Chemical Tracer Laboratory in Midland, TX using proprietary procedures. • Our analytical process is capable of tracer detection to the low ppq (part per quadrillion) range. • Stringent quality control measures are in place to ensure the highest level of accuracy of all sample analyses. • DSO NTs are compatible with commonly used stimulation fluids and are: • Health, Safety, and Environmentally Friendly • Safe to Transport, Handle, Store, and Dispose DSO Executive Team Founder and CEO Tyler Blair • Founder and Visionary behind the Tracer Technology. • Tyler Has 15 Years experience in both Wireline and Pressure Pumping • Tyler founded the company that is known today as Diagnostic Stimulation Optimization Inc. • Tyler currently holds 4 U.S. patents with approximately 3 more patents pending. He is a member of the Society of Petroleum Engineers. • Midland based client relationships for over 15 years DSO Completions Opportunities 1. Diamondback Energy – Completes ~50 wells per month 2. Concho Resources – Completes ~100 wells per month 3. Apache – Midland Basin and Delaware basin Tagger opportunity 4. Energen Resources – Technology driven E&P Operator 5. Anadarko Petroleum – Large Permian position currently tracing 6. Jagged Peak Energy – Mid Cap independent currently tracing 7. EnCana Oil and Gas – Technology driven operator currently completing ~ 50 wells per month 8. Matador Resources – Stable NM operator looking for technology solutions Permian Client Opportunity Set DSO Waterflood Opportunities DSO EHS Cornerstones • Health, Safety, and the Environment (HSE) is a core value for business operations daily. • DSO believes that all incidents can be prevented and holds management and all employees responsible for: • Their own safety and the safety of those around them • Accountability in Preventing incidents • Completing the required regulatory compliance training and any additional Valor specific training necessary to perform their job functions safely and efficiently • Everyone is Responsible • Stop work if the risk is not being properly managed • “10 Principle Rules” DSO EHS “10 Principle Rules” 1. High Risk Situations 2. Traffic 3. Body Mechanics and Tools 4. Personal Protective Equipment 5. Lifting Operations 6. Powered Systems 7. Work Permits 8. Evacuation Work 9. Change Management 10. Multi Activity Operations 10 Principle Rules Permian Basin State of Affairs • The Permian Basin is key to the US 2020 supply outlook. Our ~2mmbpd of growth in the Permian between 2017-2020 is 70% of US oil growth • Associated natural gas growth of ~7bcfd by 2020 is 40% of total US natural gas growth • Midstream needs to build significant oil & natural gas pipelines out of the Permian to achieve these growth numbers • Integrateds – The big boys have joined the party, natural consolidators of the basin given lower cost of capital and ability to invest in technology Permian Basin State of Affairs Data Highlights Permian Basin State of Affairs • US crude exports important for inland differentials • For 2018-19, WTI Midland has a premium vs. WTI Cushing as Permian has excess pipe capacity • Strong Gulf Coast crude exports ramp in US crude oil exports since ban lifted in late 2015 • YTD ‘17 total US exports averaging nearly 920mbd through June as compared to 465mbd in 2015 (see top chart). • Asian buyers come to the forefront in 2017 on arbitrage opening Asian refiners buying more US crude, driven by an open arbitrage resulting from the OPEC supply cuts. We note that the price spread between WTI-Midland and Dubai crude has tightened from over $4.00/bbl (WTI premium to Dubai) to under ($2.00/bbl) (WTI discount to Dubai), and correspondingly a sharp acceleration of exports to Asia with US light crude barrels pricing cheaper than Dubai mediums (see bottom chart). As long as the OPEC cuts are in place, we expect strong pulls on Permian barrels which could keep WTI-Midland prices at elevated levels. DSO Executive Summary • DSO has solved for the needed large number of robust underground fluid tracers for oil and gas recovery operations. • DSO has developed a DNA-based tracing system to overcome the limitations of current technology. • DNA makes an excellent tracer after it has been protected from harsh underground environments • Current oil and gas recovery efforts are growing at a pace not seen since the 1970s. • Patents: DSO holds patents and exclusive technology rights for this new generation technology. These secure our position as the uncontested leader of nanoparticles DNA technology.