PHOENIX ANTI-CORRUPTION POLICY

1 PURPOSE

  1. Our Anti-Corruption Policy is intended to ensure that PHX Energy Services Corp. and its subsidiaries (“Phoenix” or the “Company”) does not receive an improper advantage in our business dealings and that all payments and expenses are properly recorded in our financial books and records.
  2. As a global business, we are committed to complying with anti-corruption laws that apply to our worldwide operations prohibiting bribery of both foreign and domestic public officials.
  3. Violations of these laws can lead to serious reputational damage and criminal consequences for our Company and Employees, which may include debarment, forfeiture, major fines and imprisonment.
  4. We believe in ethical and fair practices for conducting domestic and international business and are committed to a zero-tolerance stance towards bribery and any other form of corrupt behavior on the part of any of our employees, officers, directors, and third parties with whom we conduct business.

2 GENERAL

  1. Our Anti-Corruption Policy is a risk management tool within our Management System and applies to all Employees and all Contractors with whom we conduct business.
  2. This Policy is supplemented by a training program, auditing procedures and ongoing implementation to support and guide our Employees and Contractors to make ethical decisions wherever we operate.
  3. Additional documents that support this policy include:
    • Applicable laws including those set out in Section 1.2 of this Policy
    • Code of Business Conduct and Ethics
    • Whistle Blowing Procedures
    • Accounting Policies
  4. This Policy provides guidance in the following areas where corruption situations may be encountered or where preventative measures need to be taken to avoid corruption:
    • Improper payments including bribes, kickbacks and facilitation payments
    • Engaging and managing high risk contractors
    • Joint ventures, mergers, acquisitions and minority interests
    • Gifts, hospitality and travel
    • Political and charitable contributions and sponsorships
    • Employment of public officials
    • Financial recordkeeping
    • Reporting violations and suspected violations
  5. In situations where this Policy does not provide sufficient guidance or clarity, approval should be sought from the Compliance Officer or the Company’s Legal Counsel prior to acting.

3 DEFINITIONS

  1. “Bribe” means giving, offering, promising or authorizing a payment, gift, reward, loan, or benefit of any kind, either directly or through an Intermediary:
    • to a Public Official, or any other person for the benefit of a Public Official, as consideration for any decision or act by such Public Official in the course of his or her duties or function;
    • to a Public Official, or any other person for the benefit of a Public Official, in order to induce such Public Official to improperly influence any decision or act of the state, public agency, public enterprise or public international organization for which such Public Official performs duties or functions; or
    • to any other person, including an employee or representative of a private enterprise, to induce that person to perform improperly a Relevant Function, or to reward that person for the improper performance of a Relevant Function (often called “commercial” or “private-to-private” bribery).
  2. “Compliance Officer” means the Company’s Global QHSE Manager.
  3. “Contractor” means any third party individual or entity authorized to assist the Company in some aspect of our business. Contractors can include agents, advisors (including professional advisors), consultants, logistics providers, suppliers, distributors, subcontractors and any number of similar individuals or entities.
  4. “Corruption Risk Assessment” means a written due diligence assessment carried out to ascertain the corruption risk associated with a particular mandate, contract, or project, as applicable. Examples of factors to be evaluated include location of the activity or property concerned, frequency and nature of interactions with Public Officials, reputation of High Risk Contractors involved, level of control over the actions and decisions of High Risk Contractors involved, and the monetary value of the project or property concerned.
  5. “Direct Relative” when used in the context of this Policy, means a spouse, parent, sibling, child, grandparent, grandchild, or spouse of any of the foregoing.
  6. “Employee” when used in the context of this Policy, means all permanent, temporary or contract employees of the Company, and includes the Company’s officers and directors.
  7. “Facilitation Payment” means a small one-off payment made solely to expedite or secure the performance of a routine act by a Public Official where the act is already a part of the Public Official’s duties or functions (often called “grease payments”). Some examples include small payments to Public Officials for:
    • issuing licenses, permits and other official documents to qualify to do business in a foreign country;
    • processing governmental papers, such as visas and work permits;
    • providing or obtaining police protection, telephone service, utilities, and mail service; or
    • loading or unloading cargo, inspection of goods and protecting perishable goods from deteriorating.
  8. “High Risk Contractor” means a Contractor or proposed Contractor being engaged to supply goods or services in a country other than Canada or the United States and who meets any one or more of the following criteria:
    • is a Public Official or a close relative or business associate of a Public Official;
    • is likely to interact with Public Officials on the Company’s behalf to:
      • promote the Company or develop business with a state or a state-owned or controlled entity;
      • represent the Company at meetings or introductions with a state or a state- owned or controlled customer;
      • directly liaise with or provide services to a state or a state-owned or controlled entity;
      • lobby;
      • seek permits, licenses, authorizations or certifications; or
      • facilitate importing and exporting, immigration or tax matters;
    • is going to facilitate general logistics or entry into a new market, or expanding business in an existing market;
    • is going to have the authority to legally represent the Company in a foreign country; or
    • where there exists any other circumstance indicating an elevated corruption risk (e.g., where the Contractor has been recommended to the Company by a Public Official).
  9. “Improper Payment” means a Bribe, Kickback or Facilitation Payment.
  10. “Intermediary” means any third party, whether authorized or not, acting as a direct or indirect liaison between the Company and a Public Official or a person performing a Relevant Function.
  11. “Kickback” means giving, offering, promising or authorizing, directly or through an Intermediary, a portion of contract value to a Public Official, or an employee or other representative of a private entity, in order to secure a contract with a state, public entity or private entity. This includes the improper utilization of sub-contracts, purchase orders, consulting agreements or gifts to channel kickback payments.
  12. “Partner” means any corporation or other entity with which the Company enters into a joint venture agreement or other similar partnership or business relationship.
  13. “Policy” means this Anti-Corruption Policy.
  14. “Public Official” means:
    • a person who holds a legislative, administrative or judicial position of a state or instrument of a state;
    • a person who performs public duties or functions for:
      • a state;
      • any public agency (including a person employed by a board or commission established to perform a duty or function on behalf of a state);
      • any public enterprise or state-owned or controlled corporation (including national oil companies and their affiliates, subsidiaries and joint ventures).
    • an official or agent of a public international organization (such as the United Nations);
    • elected officials, candidates for public office, political parties, and officers, employees, representatives and agents of political parties;
    • members of royal families and honorary government officials;
    • a chief or an official of a First Nations band council, a Native American band council, or an equivalent body or authority; and
    • Direct Relatives of any of the foregoing;
  15. “Relevant Function” means a function or activity that a person is expected to perform in good faith and impartially, including any activity connected with a business or performed in the course of a person’s employment.

4 OVERSIGHT

  1. The Company’s Board of Directors has designated the Global QHSE Manager as Compliance Officer for the purpose of this Policy.
  2. The Compliance Officer oversees this Policy and reports directly to the Company’s Board of Directors.
  3. The Company’s Board of Directors will review compliance with this Policy on an annual basis.

5 RESPONSIBILITIES OF THE COMPLIANCE OFFICER

  1. The Compliance Officer is responsible for:
    • establishing and maintaining the practices and procedures necessary to implement this Policy and prevent any violation of its provisions;
    • disseminating this Policy to all relevant Employees;
    • implementing and maintaining a training program on the substance of this Policy to be completed by all such Employees and High Risk Contractors as the Compliance Officer deems appropriate;
    • procuring, from all relevant Employees, on an annual basis, a Certification of Compliance, substantially in the form of Exhibit A to this Policy;
    • disseminating the Company’s Whistle Blowing Procedures to all relevant Employees for the reporting, including anonymously if preferred, of violations of this Policy; and
    • reviewing Corruption Risk Assessments, based on criteria deemed relevant by the Compliance Officer, including Transparency International’s Corruption Perceptions Index, and the factors listed at the definition of Corruption Risk Assessment at Section 3.4.

6 IMPROPER PAYMENTS

  1. The Company, its Employees and Contractors shall not:
    • either directly or through an Intermediary, give, offer, promise or authorize an Improper Payment;
    • act as an Intermediary for the purpose of channeling an Improper Payment; or
    • accept or solicit an Improper Payment.

7 FACILITATION PAYMENTS

  1. The Company prohibits the making of Facilitation Payments.

8 DURESS PAYMENTS

  1. The prohibition on Improper Payments does not apply to payments necessary to protect the health or safety of an Employee. Where the Employee believes his or her health or safety to be at risk and believes the payment to be necessary to preserve his or her health or safety, the Employee may make the payment in response to such duress. The amount and purpose of the payment must be properly documented and immediately reported to the Compliance Officer, who will in turn provide a half yearly report of such payments to the Company’s Board of Directors.

9 DUE DILIGENCE ON HIGH RISK CONTRACTORS

  1. It is important that we properly vet High Risk Contractors that we are seeking to do business with so that we are comfortable that they conduct business with integrity and will not make Improper Payments on our behalf.
  2. Prior to the Company engaging a High Risk Contractor, proper due diligence, checks and research must be carried out by the Employee proposing to engage the High Risk Contractor based on the results of a Corruption Risk Assessment. The reputation, affiliations, background, qualifications and past performance of the prospective High Risk Contractor, as appropriate, must be clearly documented in writing.

10 CONTRACTS WITH HIGH RISK CONTRACTORS

  1. The Company shall only retain a High Risk Contractor using a written agreement that includes those contract provisions set out in Exhibit B that are appropriate for the proportionate degree of risk presented by the nature and sensitivity of the role to be performed by the High Risk Contractor and in consideration of the completed Corruption Risk Assessment.
  2. The Compliance Officer must approve a High Risk Contractor before being accepted and retained by the Company.

11 MANAGING HIGH RISK CONTRACTORS

  1. After a High Risk Contractor is retained, the Company shall take measures reasonably within its power to ensure that:
    • any payment made to a High Risk Contractor represents no more than the amount outlined in the written agreement with the High Risk Contractor and is an appropriate remuneration for legitimate services rendered by such High Risk Contractor;
    • the High Risk Contractor is not permitted to sub-contract or otherwise delegate any aspect of the performance of the services without the prior written consent of the Company unless otherwise specifically permitted in the contract between the Company and the High Risk Contractor. In the event that the Company provides such written consent, the High Risk Contractor shall maintain a record of the names and contract terms for all sub-agents and sub-contractors who are retained by it in connection with transactions with Public Officials in relation to the Company’s business; and
    • on every one year anniversary from the date he or she was hired, the High Risk Contractor will promptly complete and provide the Employee responsible for the High Risk Contractor’s engagement or supervision a report on the services performed for the period, including interactions with Public Officials in rendering those services. Upon review, the responsible Employee shall forthwith forward the report with his or her written comments on the High Risk Contractor’s compliance with this Policy to the Compliance Officer for further review and subsequent reporting to the Company’s Board of Directors as required under this Policy.

12 JOINT VENTURES, MERGERS, ACQUISITIONS AND MINORITY STAKES

  1. Joint Ventures
    • The Company shall only enter into joint ventures or other similar partnerships or business arrangements with entities that share our values on conducting business with integrity. As such, any joint venture agreement or similar-type agreement which we enter into for a project or undertaking shall only be entered into after completing a Corruption Risk Assessment of the Partner, and shall include provisions addressing corruption-related matters as appropriate, which may include those contract provisions set out in Exhibit D.
  2. Mergers, Acquisitions and Minority Stakes
    • The Company shall complete and consider a Corruption Risk Assessment prior to merging with or acquiring another company, or a minority stake in another company. Where appropriate, anti-corruption provisions, representations and warranties shall be included in the agreement effecting the merger or acquisition.

13 GIFTS, HOSPITALITY AND TRAVEL

  1. General Guidelines
    • The offer and acceptance of legitimate and reasonable gifts, hospitality and travel is acceptable as a normal part of business development. However, in certain circumstances the provision of gifts, hospitality and travel may be construed as an Improper Payment. The guidelines in this Section are to help ensure that the offer and acceptance of gifts, hospitality and travel is conducted ethically.
    • The offer and acceptance of gifts, hospitality and travel must at all times be in compliance with applicable anti-corruption laws, the Company’s Code of Business Conduct and Ethics, and this Policy.
    • The use of fraud, misrepresentation or oppression or carrying out unethical acts in connection with the offering of any gift, hospitality or travel is prohibited. Gifts and hospitality, including meals and entertainment, may be offered or accepted where it is reasonable, in good faith and serves a legitimate business purpose.
    • Travel expenses for third parties may be reimbursed by the Company in limited circumstances where the travel expenses are preapproved by a Manager, and are legitimate, reasonable, and directly related to the promotion, demonstration or explanation of our services.
    • In cases where there is any doubt as to whether a gift, hospitality or travel meets the above criteria, clarification must be sought from the Compliance Officer or Company’s Legal Counsel.
  2. Gifts and Hospitality to Public Officials
    • Gifts or hospitality offered to Public Officials requires even greater care and scrutiny given the likelihood that such gifts or hospitality may be perceived as a bribe to influence an act or decision by the Public Official.
    • Any gift or hospitality offered to a Public Official requires the preapproval of the Compliance Officer. Gifts or hospitality offered to a person known to be a Direct Relative of a Public Official is subject to the same reviews and approvals as would be required for a gift or hospitality to the Public Official.
  3. Travel Expenses for Public Officials
    • Travel expenses for Public Officials must meet the general requirements set out above and the following guidelines:
      • All arrangements to reimburse the travel expenses of a Public Official require the written preapproval of the Compliance Officer or CFO.
      • Where possible, travel expenses should be reimbursed to the state, public agency or public enterprise rather than directly to the Public Official, or paid directly to the travel service provider.
      • All reimbursable travel expenses must be supported by proper receipts or invoices.
      • Per diems for travel cannot be paid directly to a Public Official; they are only permitted pursuant to a written agreement between the Company and the state, public agency or public enterprise for which the Public Official performs duties or functions.
      • The Company will not pay for any non-business related travel including side-trips or the travel expenses of a Public Official’s spouse, children or other relatives.

14 CHARITABLE AND POLITICAL DONATIONS AND SPONSORSHIPS

  1. Charitable Donations
    • Phoenix is proud to contribute to several charities and to the communities where we conduct business. However, we have to be wary of potential corruption risks where a third party may benefit from such contributions. A Public Official could be tied to a particular charity, and sometimes illegitimate charities are established as a front to conceal Improper Payments. Any suspicion of corrupt behavior with respect to a charitable donation being made with Company funds must be immediately reported to the Compliance Officer.
    • Charitable donations made with Company funds:
      • must be pre-approved by the Company’s Chief Financial Officer or Chief Executive Officer;
      • must be transparent and aligned with our values;
      • may only be made to non-profit organizations; and
      • must not serve to directly or intentionally influence official action.
  2. Sponsorships
    • Sponsorships carry similar risks to charitable donations and thus must be treated with caution. The guidelines set out above for charitable donations must also be followed for sponsorships made with Company funds.
  3. Political Contributions
    • Political contributions made with Company funds are not permitted where they are made for the purpose of, or are likely to, improperly influence official action.
    • Refer to the Code of Business Conduct and Ethics for additional requirements and guidance on political contributions.
15 EMPLOYMENT OF PUBLIC OFFICIALS
  1. No Public Official shall be employed or retained by the Company, unless:
    • the Compliance Officer is satisfied that such employment or retainer is lawful in the country concerned;
    • the Compliance Officer has determined that the services to be rendered to the Company do not conflict in any manner with the official duties or function of such Public Official;
    • where reasonably possible, an ethics opinion from the Public Official’s government employer has been obtained; and
    • the Company’s Chief Executive Officer approves such hiring.

16 BOOKS AND RECORDS

  1. All Employees involved in making and keeping the Company’s books, records and accounts must:
    • follow the Company’s system of internal accounting controls to ensure that transactions are executed in accordance with management’s general or specific authorization;
    • use the highest professional standards of accuracy and consistency in properly and fairly recording, in reasonable detail, all of the Company’s domestic and foreign financial transactions and the disposition of its assets;
    • keep the Company’s books, records and accounts available for inspection by the Company’s internal and external auditors.
  2. Neither the Company, nor Employees nor its Contractors shall do any of the following for the purpose of giving, offering, promising, authorizing or hiding an Improper Payment:
    • establish or maintain accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and auditing standards;
    • make transactions that are not recorded in those books and records or that are inadequately identified in them;
    • record non-existent expenditures in those books and records;
    • enter liabilities with incorrect identification of their object in those books and records;
    • knowingly use false documents; or
    • intentionally destroy accounting books and records earlier than permitted by law.
  3. These requirements are applicable to all joint ventures which the Company controls in fact or in which the Company’s ownership interest is 50% or more.
  4. The Compliance Officer should be consulted where there is any doubt regarding how to act according to these principles when making and keeping the Company’s books, records and accounts.

17 AUDIT

  1. The Company’s Internal Audit Department shall promptly inform the Compliance Officer and the Board of Directors of every potential or suspected Improper Payment or violation of this Policy that comes to their attention and shall recommend procedures to attempt to prevent the recurrence of any potential or suspected violations.

18 REPORTING AND VIOLATIONS

  1. Duty to Report
    • All Employees and Contractors have an individual responsibility to report in good faith any activity that appears to violate this Policy or anti-corruption laws. If you believe that any Employee or Contractor has violated a provision of this Policy or anti-corruption laws, it is critical that you bring the matter to the attention of your Manager or the Compliance Officer, or report the matter anonymously using the Whistle Blowing Procedures.
    • If you are a Manager and someone reports to you any violation or suspected violation of this Policy, you must report it to the Compliance Officer.
  2. Investigation process
    • If you report any violation or suspected violation of this Policy, you will be safe from any threats, reprisals, dismissal or other form of sanction or retaliation directly relating to your reporting, unless you yourself initiated or participated in the violation or suspected violation, in which case your decision to report will have no impact on the scope of the disciplinary measures you might be subject to.
    • An Employee who takes reprisals against another Employee or Contractor for reporting a violation under this Policy will be subject to disciplinary measures up to and including dismissal.
    • Whether the violation or suspected violation is reported in person or anonymously, all reports will be handled on a confidential basis and will be kept confidential.
    • Although the disclosure of your identity might help with the investigation of the complaint, your identity will be kept confidential, unless you expressly authorize its disclosure, or unless required by law or our internal policies, or unless maintaining confidentiality might not be in the Company’s best interests. If your identity were to be disclosed, such disclosure would be limited strictly to the individuals who would need to know so that a proper investigation can be made.
  3. Violations
    • In the case of a violation, the following disciplinary actions may be applied:
      • Termination of employment;
      • Contract termination; or
      • Other legal action such as seeking damages.

19 CONTACTS AND RESOURCES

  1. Doug Webb, Compliance Officer, Global QHSE Manager:
    • Direct: 403.930.9029
    • Mobile: 403.589.9001
    • Email: dwebb@phxtech.com
EXHIBIT A
PHOENIX EMPLOYEE ANNUAL CERTIFICATION OF COMPLIANCE







EXHIBIT B
PHOENIX CONTRACTOR ANNUAL CERTIFICATION OF COMPLIANCE



PHX Energy Services Corp. and its subsidiaries (“Phoenix”) has implemented a policy (“Anti-Corruption Policy”) to ensure compliance in our worldwide operations with anti-bribery laws that prohibit, either directly or indirectly, giving, offering, promising or authorizing an Improper Payment (Bribes, Kickbacks and Facilitation Payments). These laws include Canada’s Corruption of Foreign Public Officials Act (“CFPOA”), the United States’ Foreign Corrupt Practices Act (“FCPA”), and the local anti-corruption laws of each country where we conduct business (“Anti-Corruption Laws”). As a Phoenix Contractor, you are required to comply with Phoenix’s Anti-Corruption Policy and Anti-Corruption Laws.