PHOENIX CODE OF CONDUCT AND ETHICS

1.0     INTRODUCTION

PHX Energy Services Corp. and its subsidiaries (" Phoenix" or the “ Corporation”) requires the highest standards of professional and ethical conduct from our directors, officers, employees, and consultants (collectively referred to as “ Personnel”).   Our reputation among our shareholders for honesty and integrity is key to the success of our business.   Personnel will not be permitted to achieve results through violations of laws or regulations, or through unethical dealings. References herein to the "Board of Directors" refer to the board of directors of Phoenix.

This Code reflects our commitment to a culture of honesty, integrity, and accountability, and outlines the basic principles and policies with which all personnel are expected to comply.   Please read this Code carefully.

In addition to following this Code in all aspects of your business activities, you are expected to seek guidance in any case where there is a question about compliance with both the letter and spirit of our policies and applicable laws.   This Code sets forth general principles and does not supersede the specific policies and procedures that are covered in the specific policies statements, such as the Disclosure, Confidentiality and Trading Policy.    Violation of these policies may result in disciplinary actions up to and including discharge from the Corporation.

Your cooperation is necessary to the continued success of our business and the cultivation and maintenance of our reputation as a good corporate citizen.

 

2.0     CODES OF CONDUCT AND ETHICS

2.1.    Conflicts of Interest

A conflict of interest occurs when an individual's private interest interferes, or appears to interfere, in any way with the interests of the Corporation.  A conflict situation can arise when personnel take action or have interests that may make it difficult to perform his or her work effectively.  Conflicts of interest also arise when personnel, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Corporation.  Loans to, or guarantees of obligations of, such persons are likely to pose conflicts of interest, as are transactions of any kind between the Corporation and any other organization in which you or any member of your family have an interest.

Activities that could  give  rise to  conflicts of interest are  prohibited unless specifically approved in advance by the Board of Directors; provided that the foregoing shall not apply to directors of the Corporation acting as directors of other public or private companies who shall comply with the provisions of the Business Corporations Act (Alberta) in respect thereof and shall advise the Chairman of the Board of the holding of such directorships.  It is not always easy to determine whether a conflict of interest exists, so any potential conflicts of interest must be reported immediately to senior management.

 

2.2.     Corporate Opportunities

Personnel are prohibited from taking for themselves personally opportunities that arise through the use of corporate property, information or position and from using corporate property, information or position for personal gain.  Personnel are also prohibited from competing with the Corporation; provided that the foregoing shall not apply to directors solely as a result of them acting as directors or officers of other companies which they do not control.

 

2.3.    Confidentiality

Personnel must maintain the confidentiality of information entrusted to them by the Corporation or that otherwise comes into their possession in the course of their employment, except when disclosure is authorized or legally mandated. The obligation to preserve confidential information continues even after you leave the Corporation.

Confidential information includes all non-public information, and information that suppliers and customers have entrusted to us.

 

2.4.    Protection and Proper Use of Corporation Assets

All personnel should endeavor to protect the Corporation's assets and ensure their efficient use.  Theft, carelessness and waste have a direct impact on the Corporation's profitability.  Any suspected incidents of fraud or theft should be immediately reported for investigation.

The Corporation’s assets such as funds, products, or computers may only be used for legitimate business purposes or other purposes approved by management. Corporation assets may never be used for illegal purposes.

The obligation to protect Corporation assets includes proprietary and confidential information. Proprietary information includes any information that is not generally known to the public or would be helpful to our competitors.  Examples of proprietary information are intellectual property, acquisition plans and prospects, business and marketing plans and employee information. The obligation to preserve proprietary information continues even after you leave the Corporation.

 

2.5.    Insider Trading

Insider trading is unethical and illegal.  Personnel are not allowed to trade in securities of a company while in possession of material non-public information regarding that company. It is also illegal to "tip" or pass on inside information to any other person who might make an investment decision based on that information or pass the information on further.  The Corporation has a Disclosure, Confidentiality and Trading Policy, which sets forth your obligations in respect of trading in the Corporation's securities.

 

2.6.    Fair Dealing

Personnel should not take unfair advantage of customers, suppliers, competitors or other personnel through illegal conduct, manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing practice.

 

2.7.    Compliance with Laws, Rules and Regulations

Compliance with both the letter and spirit of all laws, rules and regulations applicable to our business is critical to our reputation and continued success.   All personnel must respect and obey the laws of the cities, provinces/states and countries in which we operate and avoid even the appearance of impropriety.

 

2.8.    Compliance with Environmental Laws

The Corporation is sensitive to the environmental, health and safety consequences of its operations. Accordingly, the Corporation is in strict compliance with all applicable Federal, Provincial and State environmental laws and regulations.  If personnel have any doubt as to the applicability or meaning of a particular environmental, health or safety regulation, he or she should discuss the matter with a member of the Corporation's senior management.

 

2.9.    Discrimination and Harassment

We value the diversity of our personnel and are committed to providing equal opportunity in all aspects of employment.   Abusive, harassing or offensive conduct is unacceptable, whether verbal, physical or visual.  Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.    Personnel are encouraged to speak out when a co-worker's conduct makes them uncomfortable, and to report harassment when it occurs.

 

2.10.  Social Media

What we publish on social media networks is a reflection on the Phoenix brand and can impact our reputation.  We are expected to be familiar with and follow the policies and procedures found in the Human Resources and Corporate Manuals, including the Social Media Policy, Disclosure, Confidentiality, Trading Policy, Data Security Policy and other IT policies, which are available through Human Resources and online at KOP.

 

2.11.  Safety and Health

We are all responsible for maintaining a safe workplace by following safety and health rules and practices.  The Corporation is committed to keeping its workplaces free from hazards.  Please report any accidents, injuries, unsafe equipment, practices or conditions immediately to a supervisor or other designated person. Threats or acts of violence or physical intimidation are prohibited.

In order to protect the safety of all personnel, the environment, and third parties, personnel must report to work free from the influence of any substance that could prevent them from conducting work activities safely and effectively.

 

2.12.  Accuracy of Corporation Records and Reporting

Honest and accurate recording and reporting of information is critical to our ability to make responsible business decisions.    The Corporation's accounting records are relied upon to produce reports for the Corporation's management, shareholders, creditors, governmental agencies and others.   Our financial statements and the books and records on which they are based must accurately reflect all corporate transactions and conform to all legal and accounting requirements and our system of internal controls.

All personnel have a responsibility to ensure that the Corporation's accounting records do not contain any false or intentionally misleading entries.    We do not permit intentional misclassification of transactions as to accounts, departments or accounting periods.   All transactions must be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period.

Business records and communications often become public through legal or regulatory investigations or the media.    We should avoid exaggeration, derogatory remarks, legal conclusions or inappropriate characterizations of people and companies.  This applies to communications of all kinds, including email and informal notes or interoffice memos.   Records should be retained and destroyed in accordance with appropriate business practices and applicable laws.

 

2.13.  Use of E-Mail and Internet Services

E-Mail systems and Internet services are provided to help us do work. Incidental and occasional personal use is permitted, but never for personal gain or any improper purpose.  Also remember that "flooding" our systems with junk mail and trivia hampers the ability of our systems to handle legitimate company business and is prohibited.

Your messages (including voice mail) and computer information are considered Company property and you should not have any expectation of privacy.  Unless prohibited by law, the Corporation reserves the right to access your e-mail communication, and disclose this information as necessary for business purposes.  Use good judgment, and do not access, send messages or store any information on your work computer that you would not want to be seen or heard by other individuals.

 

2.14.  Political Activities and Contributions

We respect and support the right of our personnel to participate in political activities.  However, these activities should not be conducted on Corporation time or involve the use of any Corporation resources. Personnel will not be reimbursed for personal political contributions.

We may occasionally express our views on local and national issues that affect our operations.  In such cases, Corporation funds and resources may be used, but only when permitted by law and by our strict Corporation guidelines.    The Corporation may also make limited contributions to political parties or candidates in jurisdictions where it is legal and customary to do so.  The Corporation may pay related administrative and solicitation costs for political action committees formed in accordance with applicable laws and regulations.    No personnel may make or commit to political contributions on behalf of the Corporation without the approval of the Chief Executive Officer or Chief Financial Officer.

 

2.15.  Illicit Payments

Unlawful or unethical behaviour in the Corporation's workforce is not tolerated, including soliciting, accepting, or paying bribes or other illicit payments for any purpose.  Situations where judgment might be influenced or appears to be influenced by improper considerations must be avoided.    Payment or acceptance of any "kickbacks" from a contractor or other external party is prohibited.   Additional information can be found in the Anti-Corruption Policy.

 

2.16.  Payments to Officials and Contractors

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 behaviour on the part of any of our personnel, and third parties with whom we conduct business. 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.  Violations of these laws can lead to serious reputational damage and criminal consequences for the Corporation and our personnel.

The Corporation’s Anti-Corruption Policy prohibits all forms of improper payments (including bribes, kickbacks and facilitation payments) made directly or indirectly to public officials and other third parties. Our Anti-Corruption Policy is intended to ensure that we do not receive an improper advantage in our business dealings and that all payments and expenses are properly recorded in our financial books and records.

The Anti-Corruption Policy also covers procedures for certain high risk areas such as gifts, hospitality and travel, engaging and managing contractors who will be liaising with public officials on our behalf, and accurate financial record keeping.  All personnel and third parties with whom we do business must familiarize themselves with and follow the Corporation’s Anti-Corruption Policy.

 

2.17.  Reporting of any Illegal or Unethical Behaviour

We have a strong commitment to conduct our business in a lawful and ethical manner.  Personnel are encouraged to talk to supervisors, managers or other appropriate personnel when in doubt about the best course of action in a particular situation and to report violations of laws, rules, regulations or this Code. The Whistleblower line is an avenue available for all personnel to ensure anonymity.  We prohibit retaliatory action against any personnel who, in good faith, reports a possible violation. It is unacceptable to file a report knowing it to be false.

 

2.18.  Directors Role in the Code of Business Conduct and Ethics

To the extent that management is unable to make a determination as to whether a breach of this Code has taken place, the Board of Directors will review any alleged breach of the Code to determine if a breach has occurred.

Any waiver of this Code for Executive Officers or Directors will be made only by the Board of Directors or a committee of the Board of Directors and conduct by a Director or Executive officer which constitutes a material departure from this Code may be promptly disclosed if required by law or stock exchange regulation.

 

2.19.  Compliance Procedures

This Code cannot, and is not intended to, address all of the situations you may encounter.  There will be occasions where you are confronted by circumstances not covered by policy or procedure and where you must make a judgment as to the appropriate course of action. In those circumstances we encourage you to use your common sense, and to contact your supervisor, manager or a member of human resources for guidance.

If you do not feel comfortable discussing the matter with your supervisor, manager or human resources, please call any of the following:

 

CONTACT

POSITION

PHONE NUMBER

Whistleblower Hotline                                  Whistleblower@phxtech.com                                                                                                 403-930-9047

John Hooks                                               Chief Executive Officer                                                                                                         403-930-9050

Mike Buker                                                President                                                                                                                            403-930-9015

Cameron Ritchie                                        Senior Vice President, Finance & Chief Financial Officer                                                          403-930-9013

Myron Tetreault                                         Lead Director                                                                                                                       403-294-1042

Doug Webb                                              Global QHSE Manager & Corporate Compliance Officer                                                             403-930-9029

Koula Pearson                                          Payroll & Human Resources Manager                                                                                      403-930-9004


 

3.0     CODE OF ETHICS FOR SENIOR OFFICERS

3.1.    Introduction

This  Code  of  Ethics  for  senior  officers  is  applicable  to  the  Corporation's  senior  officers,  the Corporation's principal Financial Officers and Controller or principal Accounting Officer, or any person performing similar functions.  References in this Code of Ethics to the "Corporation" mean PHX Energy Services Corp. and its subsidiaries, as applicable.

While we expect honest and ethical conduct in all aspects of Corporation business from all personnel, we expect the highest possible standards from our senior officers.   You are setting an example for other personnel and we expect you to foster a culture of transparency, integrity and honesty. Compliance with this Code and the Code of Business Conduct and Ethics is a condition to your employment and any violations will be dealt with severely.  In conjunction with this Code of Ethics, you will be required to complete and execute the attached Compliance Affirmation on an annual basis.

 

3.2.    Conflicts of Interest

A conflict of interest occurs when your private interests interfere, or appears to interfere, in any way, with the interests of the Corporation as a whole.  A conflict situation can arise when you take action or have interests that may make it difficult for you to perform your work effectively.  Conflicts of interest also arise when you, or a member of your family, receive improper personal benefits as a result of your position in the Corporation.  Loans to, or guarantees of obligations of, any employees, officers, directors or any of their family members are likely to pose conflicts of interest, as are transactions of any kind between the Corporation and any other organization in which you or any member of your family have an interest. Engaging in any conduct that represents a conflict of interest are prohibited.

A s a senior officer of the Corporation, it is imperative that you avoid any investment, interest or association which interferes, might interfere, or might be thought to interfere, with your independent exercise of judgment in the Corporation's best interest.  Any potential conflicts of interests must be reported immediately to the Corporation's Chief Executive Officer.

  

3.3.    Accurate Periodic Reports

As you are aware, full, fair, accurate, timely and understandable disclosure in our periodic reports is required by securities regulators and essential to the success of our business.  Please exercise the highest standard of care in preparing such reports in accordance with the guidelines set forth below.

  • All Corporation accounting records, as well as reports produced from those records, must be kept and presented in accordance with the laws of each applicable jurisdiction.
  • All records must fairly and accurately reflect the transactions or occurrences to which they relate.
  • All records must fairly and accurately reflect in reasonable detail the  Corporation's assets, liabilities, revenues, and expenses.
  • The Corporation's accounting records must not contain any false or intentionally misleading entries.
  • No transactions will be intentionally misclassified as to accounts, departments or accounting periods.
  • All transactions must be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period.
  • No information will be concealed from the internal auditors or the independent auditors.
  • Compliance with Generally  Accepted  Accounting Principles and the  Corporation's system of internal accounting controls is required at all times.

4.0 COMPLIANCE WITH LAWS

You are expected to comply with both the letter and spirit of all applicable governmental rules and regulations. If you fail to comply with this Code, the Code of Business Conduct and Ethics and applicable laws you will be subject to disciplinary measures, up to and including discharge from the Corporation.

I ACKNOWLEDGE that I have read and considered the Code of Business Conduct and Ethics of PHX Energy Services Corp. and agree to conduct myself in accordance with the Code.

COMPLIANCE AFFIRMATION FOR DIRECTORS AND SENIOR OFFICERS


1.0 Affirmation of Compliance

The undersigned certifies that he or she has received and read, in the case of Directors the above Code of Business Conduct and Ethics and, in the case of senior officers, the Code of Business Conduct and Ethics as well as the above Code of Ethics for Senior Officers and agrees to abide by the policies summarized therein.

2.0 Affirmation of Legal and Ethical Business Conduct

By signing this form, the undersigned confirms that, to the best of his or her knowledge and belief, each dealing or transaction to which he or she has been party, directly or indirectly, on behalf of this Corporation:

  • was characterized by honesty and integrity;
  • complies with applicable laws and regulations;
  • did not involve any unethical dealings, unbooked fees, special favours, benefits or contributions to any private party, government or government agency;
  • did not involve any unlawful arrangements with competitors; and
  • was recorded and properly described on the Corporation's books.

  • If there are any exceptions, please describe them on the reverse side.

    3.0 Conflict of Interest Questionnaire

    Please answer "Yes" or "No" to the following questions. If the answer to any question is "Yes," full details must be given on the reverse side.

    A. Have you or, to your knowledge, has any member of your immediate family, at any time during the period since the later of: (i) the last time you completed the Compliance Affirmation for Directors and Senior Officers; and (ii) the earliest date you became a Director and/or Senior Officer of the Corporation: