Q2 2025 MDA

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June 30, 2025 (Expressed in Canadian Dollars)

This Management's Discussion and Analysis ("MD&A") of Bri-Chem Corp. ("Bri-Chem" or the "Company") was prepared as at August 13, 2025 for the quarter ended June 30, 2025 and should be read in conjunction with the Company's December 31, 2024 audited annual consolidated financial statements. The Company's consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") and include the results of Bri-Chem Corp. and its subsidiaries, Bri-Chem Supply Ltd., Sodium Solutions Inc., Solution Blend Service Ltd., Bri-Corp USA, Inc., including its three subsidiaries Bri-Chem Supply Corp, LLC, Sun Coast Materials, LLC and Bri-Chem Logistics, LLC. All amounts presented in this MD&A are in Canadian dollars, except as otherwise noted. Readers are encouraged to review the "Cautionary Statement Regarding Forward-Looking Information and Statements" and "Non-IFRS Measures" at the end of this document.

Bri-Chem, headquartered in Edmonton, Alberta, Canada, has established itself, through a combination of strategic acquisitions and organic growth, as a North American industry leader for the distribution and blending of oilfield drilling, completion, stimulation and production chemical fluids. We sell, blend, package and distribute a full range of drilling fluid products from 23 strategically located warehouses throughout Canada and the United States. Bri-Chem has been operating in Canada since 1985, and we expanded into the United States in 2011 where we have successfully established 12 warehouse locations that are strategically located in major drilling regions throughout the USA. Bri-Chem's main business activity is to provide 24/7 coverage of oilfield chemicals in a wide variety of weights and clays, loss circulation materials and oil mud products to mud engineering companies who sell directly to drilling firms engaged by the oil and gas companies. Much of Bri-Chem's competitive advantage is attributed to its comprehensive network of 23 strategically placed and fully stocked warehouses throughout North America as mud engineering companies and drilling companies prefer to use one supplier of drilling fluids for all their widely dispersed drilling rig locations. Additional information about Bri-Chem is available at https://www.sedarplus.ca or at Bri-Chem's website at https://www.brichem.com.

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A summary of the Company's distribution network is as follows:

Weather conditions can affect the sale of the Company's products and services. The ability to move heavy equipment in the Canadian oil and natural gas fields is dependent on weather conditions. As a result, there are three cycles of drilling activity in the Western Canada: Winter drilling season from November to mid-March is the period when most of the drilling activity takes place as much of the ground is frozen allowing equipment to move into hard to reach regions during colder periods. Spring break up traditionally occurs between mid-March to mid-May and is the period when drilling activity is at its lowest as regions thaw and have road bans making heavy equipment difficult to move. Summer and fall drilling season operates from mid-May to end of October which focuses on areas not accessible during the winter drilling season. Spring break-up has a direct impact on the Company's activity levels. The timing of freeze-up and spring break-up affects the ability to move equipment in and out of these areas. As a result, late March through May is traditionally the Company's slowest period in Canada.

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1. Refer to the "Non-IFRS Measures" section for a definition of non-GAAP terms as well as reconciliations for Adjusted EBITDA and Adjusted Net (Loss) Earnings).

   Key Q2 2025 highlights include:

   • Consolidated sales for the three months ended June 30, 2025 were $20.5 million, representing a 7% increase from the prior year. The increase is primarily due to increased sales in the fluid distribution division in the USA Rockies region.

   • Consolidated gross margin for the three months ended June 30, 2025 decreased by $151 thousand compared to the same period last year. The gross margin dollar decrease is primarily related to the unfavorable change in product mix in the fluid blending and packaging division.

   • Adjusted EBITDA for the second quarter 2025 was $1.0 million compared to $706 thousand for Q2 2024 representing an increase of $338 thousand when compared to the same period in the prior year and operating earnings increased by $152 thousand for the three months ended June 30, 2025 compared to the prior year due to a decrease in bad debt expense.

   • Adjusted net earnings per diluted share for the three months ended June 30, 2025 was $0.01 per share compared to adjusted net loss of $0.02 per diluted share for same period last year.

   • Working capital, as at June 30, 2025, was $11.1 million compared to $14.1 million on June 30, 2024, a decrease of 21%. The decrease in working capital relates to a significant decrease in accounts receivables and inventory which was offset by decreased bank indebtedness.

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Consolidated sales for the three months ended June 30, 2025 were $20.5 million compared to $19.1 million for the same period in 2024, representing a $1.4 million increase over the comparable period. Revenue was impacted by higher fluid distribution sales, driven by higher sales of select commodity items within the USA Rockies region.

Bri-Chem's Canadian drilling fluids distribution division generated sales of $1.7 million for the three months ended June 30, 2025, which was higher to the comparable prior period by $611 thousand. The number of Canadian active operating land rigs in Q2 2025 averaged 127, compared to 133 in the same period last year representing a decrease of approximately 5% (Source: Baker Hughes). Bri-Chem's United States drilling fluids distribution division generated sales of $12.3 million for the three months ended June 30, 2025, compared to sales of $11.4 million for the comparable period in 2024, representing a quarterly increase of 7%. The active number of US operating land rigs in Q2 2025 averaged 556, compared to a 2024 Q2 average of 582 representing a decrease of approximately 4% (Source: Baker Hughes).

Bri-Chem's Canadian blending and packaging division generated sales of $3.9 million for the three months ended June 30, 2025, compared to Q2 2024 sales of $4.3 million, representing a quarterly decrease of $358 thousand. The slight decrease in sales relates to lower cementing and stimulation activities in Western Canada. US blending and packaging sales for the three months ended June 30, 2025 were $2.5 million compared to $2.2 million in the prior year. The $332 thousand increase is due to an increase in cementing activities in the California region.

Operating earnings for the three months ended June 30, 2025 was $772 thousand which is an increase from earnings of $620 thousand in the same period in the prior year. Adjusted EBITDA was $1.0 million for Q2 2025 compared to $706 thousand for Q2 2024. The increase is primarily driven by the foreign exchange gain. Adjusted EBITDA as a percentage of sales was 5% for the quarter, which is an increase from 4% in Q2 2024.

As Bri-Chem enters the second half of 2025, the Company continues to navigate a challenging operating environment shaped by ongoing commodity price volatility, cautious capital spending by customers, and evolving political and regulatory developments in both Canada and the United States. These external pressures have contributed to a measured pace of drilling and completion activity across North America.

According to the latest forecast from Baker Hughes, rig activity in both Canada and the United States is expected to remain relatively flat or slightly decline through the remainder of the year, with the potential for a gradual recovery beginning in early 2026. In Canada, activity is projected to follow historical seasonal trends but remain below recent-year averages due to macroeconomic uncertainty and project delays. In the United States, the rig count is expected to stabilize following a moderate decline in the first half of the year, supported by targeted investments in high-yield basins and continued operational discipline by U.S. producers.

In this context, Bri-Chem anticipates that Canadian drilling fluids demand will remain relatively soft through the third quarter, with some recovery possible in the fourth quarter as customers begin preparing for 2026 drilling programs. U.S. fluid distribution sales are expected to remain stable, buoyed by sustained activity in key regions such as the Permian Basin and gradual improvement in areas like California and the Rockies.

Bri-Chem remains committed to managing its business with a disciplined focus on working capital efficiency, cost control, and margin preservation. The Company's ability to maintain adequate liquidity during periods of reduced market activity reflects its proactive financial management and strong banking relationships, ensuring operational stability even in uncertain conditions. Management will continue to monitor macroeconomic and industry trends closely, ensuring that Bri-Chem remains agile and responsive to both risks and opportunities.

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