Creating value and efficiency for heavy oil resources

Corporate Presentation June 2013

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Disclaimer

Confidential Business Summary

THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATIONS IN SUCH JURISDICTION.

The Confidential Business Summary is being supplied to you solely for your information. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of Fractal Systems Inc. (Fractal) as to the accuracy or completeness of the information or opinions contained in the attached document.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of Fractal.

Information for U.S. Residents This document is confidential and has been prepared and submitted for use in the United States solely in

connection with the consideration of the possible investment by a limited group of sophisticated United States accredited investors. The use of this document for any other purpose is not authorized and this document may not be reproduced, transferred to any other person or used without the consent of Fractal.

The contents of this document should not be considered to constitute legal or tax advice and each prospective investor should consult with its own legal counsel and advisers as to all matters concerning an possible investment in Fractal. Each investor must rely on its own evaluation of the investment, including the merits and risks involved, in making an investment decision. An offer will only be made when a purchaser properly completes and executes a subscription agreement.

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Investment highlights Fractal Systems Inc.

Developing field solutions to heavy oil challenges Canadian company - offices in Calgary, Alberta & Sherbrooke, Qubec Currently commercializing first technology JetShear Developing new, value creating technologies for heavy oil

JetShear Technology

A proprietary technology that has a significant cost advantage over alternatives in the transportation of extra heavy oil

Technology has been successfully piloted in Canada; also operated 1,000 bpd capacity facility in 2012 on heavy oil site in eastern Alberta

Received product patent in May 2011 and process patent in January 2012 Completed feasibility study on large capacity, commercial plant for SAGD

with multi-national producer in 2012

Executed technology development agreement with major oil sands producer in January 2013; commercial demo agreement executed in May 2013

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Investment highlights (contd)

Experienced team with proven track record Joe Gasca, CEO

30+ years of industry experience, most recently serving as CEO of Ivanhoe Energy

21 years in major leadership positions at Texaco Dr. Esteban Chornet, Founder

Inventor of JetShearTM technology Professor of Chemical Engineering at Universit de Sherbrooke (Qubec,

Canada), affiliation with NREL Michel Chornet, VP Engineering

14+ years of engineering and technology development experience in the oil & gas and renewable energy sectors

Shell and H-Power Marcel Matte, VP-Projects/Operations

23 years of process engineering and project management experience Most recently established and led Calgary office for Fransen Engineering

Committed investors with energy domain experience Rho Ventures and Braemar Energy Ventures

Bitumen and heavy oil challenges 1. Difficult to transport to market due to high viscosity

Once the oil is to the surface, it cools and the high viscosity becomes a challenge; producers use diluent (very light oil; typically condensate) to blend with the heavy oil

2. Priced lower than conventional (light) oil Due to the heavier, longer chain molecules in heavy oil, it is

more costly to refine into products such as gasoline and jet fuel

3. Difficult to get out of the ground due to high viscosity

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The Bottom Line Netback to producer Cost of gas for steam generation (challenge 3) Other operating costs Royalties to Canadian govt Transportation expense (challenge 1) Heavy oil differential (challenge 2)

Excerpt from Alberta Oil Sands Presentation July 2011

Basis WTI = $89/barrel

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Focus of JetShear Technology Challenge 1 Difficult to transport Diluent* required for transportation of heavy oil is expensive

DilBit - sold

@ blend price less tariff

Bitumen/ Heavy oil - produced

Diluent - purchased @ C5+ price plus tariff

* Diluent is a light hydrocarbon (typically a natural gas liquid or condensate C5+) that is used to dilute the heavy oil in order to improve its transportation characteristics (lower viscosity)

Bitumen & Heavy Oils are dense (

0200

400

600

800

1000

1200

Without Jetshear With JetShear

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16.5

17

17.5

18

18.5

19

19.5

20

20.5

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API Gravity Viscosity

Pipeline Specifications

May 2010 Monthly Average Results

cSt

density (inverse)

7.5 API feedstock, 70 API ~25% blending ratio

~2.5 API increase ~91%

reduction

Bitumen-Diluent blend provided by a SAGD producer

Results from pilot facility bitumen Dramatic reduction in viscosity

JetShear reduces diluent by ~40%

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The image cannot be displayed. Your computer may not have enough memory to open the

oil sands mine

blending terminal

refinery

truckers

integrated upgrader

Pipeline Key Bitumen/HO Diluent Upgraded oil

Heavy oil industry value chain

blending terminal heavy oil producer

Integrated producer/upgrader

heavy oil producer

Upstream Midstream Downstream

JetShear application

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Lloydminster/Provost Heavy Oil Region

Athabasca Oil Sands Region

Cold Lake Oil Sands Region

Peace River Oil Sands Region

SAGD Projects (currently 13)

Thermal Oil Sands in-situ

Conventional Heavy Oil (cold)

Mining Projects (currently 4)

Edmonton

Hardisty

Fort McMurray

Thermal Oil Sands in-situ

Conventional Heavy Oil (cold)

The Canadian heavy oil market

8-9 API

10 API

12+ API

10 API

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Canada - A growing oil sands market Target volume to more than double in 5 years

From Canadian Assoc. of Petroleum Producers June 2012

Bitumen blend is primary target of business development

Upgraded oil does not need Fractal technology

There are a limited number of potential opportunities in the conventional heavy oil market

* - 2012 avg. diluent (condensate) price in Canada = $100.79/barrel

Leads to growing diluent demand Nearly C$10 billion* market in 2012

000

barr

els

per

day Enbridge Forecast

July 2011

Supplied from Canadian natural gas industry

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A very simple system Process utilizes heat + cavitation

Simplified process flow diagram

Heavy Oil Pump

Heater

Diluent Pump

Flue Gas

Fuel

Air

Filter to Pipeline

Heat Recovery

Transfer Pump

Heavy Oil

Diluent

Jet NozzleAssembly

Densitometer Viscometer

Flowmeter TemperatureCooler

Transfer Pump

Various pictures 1000 bpd DEMO

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Commercializing JetShear Demonstrating progress

Facility cap

acity (barrels o

il per d

ay)

10

100

1,000

10,000

100,000

1,000 bopd Commercial Demo Operations during

1H 2012

300 bopd Pilot Facility Successfully validated lab results (Aug 09); processed bitumen

blend (May-June 10)

3-30 bopd Lab Facility in

Sherbrooke

Time

Typical commercial

opportunities

Completed preliminary

designs

Feasibility Study

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Value of reducing diluent Simplified value proposition assuming 50% reduction

Sell DilBit

@ LLB price less tariff

Produce Bitumen or Heavy Oil

Purchase Diluent

@ C5+ price plus tariff

+

7 barrels 3 barrels 10 barrels

7 barrels 1.5 barrels 8.5 barrels

Conventional blending

JetShear (50% diluent reduction)

Three components of value add: Diluent savings per bbl ={1.5 barrels x (cost of diluent per bbl price of dilbit)}/7 Tariff savings per bbl = {(1.5 barrels x dilbit tariff) + (1.5 barrels x cond tariff)}/7 Savings reduced by JetShear opex

Assuming: Dilbit = $60.00/bbl1; Diluent = $80.00/bbl2; Dilbit tariff = $2.00/bbl; Diluent tariff = $1.00/bbl; JetShear opex = $0.80/bbl

Diluent savings = {1.5 x (80.00 60.00)}/7 = $ 4.29/bbl Tariff savings = {(1.5 x 2.00) + (1.5 x 1.00)}/7 = $ 0.64/bbl Less JetShear opex = ($0.80/bbl) Value add per bbl = $ 4.13/bbl

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Fractal is a private Canadian corporation with offices in Calgary, Alberta and Sherbrooke, Qubec

JetShearTM process adds value by Improving viscosity Improving density Scalable, cost-effective

JetShearTM commercialization on target Pilot facility successfully operated in field Commercial demo in field Technology and demo agreement with large oil sands

producer Feasibility study completed on large commercial project with

large producer

R&D program developing new, value adding technologies New developments to expand on benefits of JetShear

Summary

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Appendix

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Heavy Oil

Destructured Heavy Oil

JetShear process Using complex technology

* Solvation * Temperature - facilitates molecular mobility * Cavitation - liberates kinetic energy to chemical energy

* Near sonic velocities * High shear forces

Conventional Blend

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Protecting and enhancing value

Two JetShear patents: Patent No. US 8,105,480 issued January 2012

Process for treating heavy oils Patent No. US 7,943,035 B2 issued May 2011

Treated oils having reduced densities and viscosities

Filing countries: Canada and USA National Filings

Brazil, Ecuador, Colombia, Mexico, EU, Oman, China PCT application

Work underway for new patent(s)