Pulse Seismic : For the Three and Twelve Months Ended December 31, 2021

(a) These non-GAAP financial measures are defined, calculated and reconciled to the nearest GAAP financial measures in the Management’s Discussion and Analysis.

of Financial Condition And Results Of Operations

Year Ended December 31, 2021

The Annual Meeting of Shareholders of Pulse Seismic Inc. will be held on Thursday, April 21, 2022 at 3:00 p.m. MDT at the Calgary Petroleum Club, located at 319 – 5th Avenue S.W., Calgary, Alberta.

The following Management’s Discussion and Analysis (MD&A) of the financial condition and results of operations of Pulse Seismic Inc. (“Pulse” or the “Company”) for the year ended December 31, 2021 was prepared taking into consideration information available to February 17, 2022 and is supplemental to the audited consolidated financial statements and related notes for the year ended December 31, 2021. Throughout this MD&A reference will be made in the text and tables to “2021”, which refers to the year ended December 31, 2021, and to “2020”, which refers to the year ended December 31, 2020.

The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) with comparative figures for the prior year. Certain comparative figures were reclassified to conform to the current year’s presentation. The consolidated financial statements and the MD&A were reviewed by Pulse’s Audit and Risk Committee and approved by Pulse’s Board of Directors. All financial information is reported in Canadian dollars. This MD&A discusses matters which Pulse’s management considers material. Management determines whether information is material based on whether it believes a reasonable investor’s decision whether or not to buy, sell or hold shares in the Company would likely be influenced or changed if the information were omitted or misstated. Readers should also read the cautionary statement in “Forward-Looking Information”.

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The application of such technologies is intended to increase the attractiveness and range of uses of Pulse’s seismic dataset for existing and potential new customers. These include companies in emerging energy-transition projects such as lithium, carbon capture and sequestration, and geothermal, as well as helium resource extraction and Pulse’s traditional core focus of oil and natural gas development. The Company recently increased its in-house technical capability to support this initiative, which will not require material capital investment. Pulse is partnering with third parties to evaluate the range of potential applications with the intention to enhance its sales and marketing activities.

Current seismic processing and visualization software allows historical 2D and 3D data to be reprocessed and reinterpreted, thereby maintaining the technical usefulness and marketability of historical data and, through repeated licensing sales, generating recurring revenue. The Company is continuously seeking and evaluating opportunities to expand its data library by acquiring high-quality 2D and 3D datasets that cover some of western Canada’s most prospective current exploration regions, are complementary to its current library, and are available at favourable valuations.

Pulse’s strategy is to pursue growth opportunities that meet its financial and technical criteria while maintaining a low cost structure.

ECONOMIC ENVIRONMENT AND SEISMIC INDUSTRY

Pulse has been successful throughout prior commodity price cycles, due to its low cost structure, access to capital for funding growth initiatives and ability to generate a high level of shareholder free cash flow relative to revenue. Shareholder free cash flow is a non-GAAP measure that the Company considers important in evaluating its financial performance.

Pulse’s success depends on its ability to provide seismic coverage over the geographical areas associated with certain geological development areas or “play types” that the exploration and development sector focuses on in a given period. Activity in various plays is driven by commodity prices, geological understanding, the economic application of available and improving technologies and the availability of oil and natural gas processing and transportation egress (“take-away”) capacity at reasonable cost. Pulse has worked diligently through the years to enlarge its coverage.

The oil and natural gas exploration and development industry currently is mainly targeting natural gas reservoirs that are high in natural gas liquids and light crude oil, lying in unconventional shale and less-permeable or tight formations. 2D and 3D seismic data are important tools for these plays. 2D seismic data is used to map the regional faults in shale gas prospects and 3D seismic data is used to map the exact contours of variable reservoirs, as well as small-scale fractures in shale formations, to plan accurate paths for horizontal wells.

Pulse’s business results depend to a large extent on the level of capital spending on exploration activities by oil and natural gas companies. A sustained increase or decrease in the price of natural gas or crude oil, therefore, which could have a material impact on exploration activities, could also materially affect the Company’s revenue, financial position, results of operations, cash EBITDA and shareholder free cash flow. The relationship is not direct, however, and the Company has generated high revenue in periods of weak oil and natural gas prices and vice-versa.

COVID-19 Impact on the Company’s Operations and Risks

Ongoing uncertainty caused by the global pandemic continues to influence global oil and natural gas demand and commodity pricing. These factors may continue affecting business conditions for the Company.

If these conditions persist for an extended period, there may continue to be adverse impacts on the Company, including but not limited to:

• Declines in revenue and cash flows as the Company’s customers, which are concentrated in the oil and natural gas industry, reduce capital budgets and field activities; and

The situation surrounding COVID-19 evolved significantly in 2021 with the widespread availability of vaccines. The Company continues to monitor administrative and operating expenses and capital spending plans closely. As noted above, the Company also received government subsidies under both the wage and rent subsidy programs in 2021 and 2020.

Since March 2020, Pulse has consistently encouraged its employees to follow the guidance of health authorities, and it has maintained compliance with the Government of Alberta’s COVID-19 public health restrictions. The restrictions, including limiting person-to-person contact in the office setting, have shifted over time to align with government efforts to manage hospital capacity. Pulse’s business is supplying licences to a digitally-based product, seismic data and, as a result, the hybrid work situation has supported business continuity. The Company’s top priorities continue to be the safety of its employees and generating data sales while keeping costs low and improving the balance sheet as Pulse continues to navigate uncertain times.

Corporate Update

On December 21, 2021, the Company announced it had renewed its revolving credit facility and extended the maturity date for two years to January 15, 2025. The facility’s available borrowing amount remains at $25.0 million and all other major terms, including financial covenants, are unaffected by the renewal.

At the end of 2020 Pulse owed a total of $28.0 million in long-term debt, consisting of $18.0 million owing on the senior revolving credit facility and $10.0 million in subordinated debt to a third party. In June 2021, the subordinated debt was fully repaid. The majority of the remaining balance on the revolving facility was repaid in the fourth quarter. In January 2022, the revolving facility balance was fully repaid.

On November 29, 2021 the Company made $2.8 million in dividend payments including a $0.04 per share special dividend and the first of a $0.0125 reinstated regular quarterly dividend.

Also, on October 29, 2021, the Company received TSX approval for a normal course issuer bid (NCIB) to purchase up to 3,097,433 common shares from November 2, 2021 to November 1, 2022. Management believes that its common shares may from time to time be undervalued and that such purchases are in the interests of the Company and its shareholders. The NCIB is an integral part of Pulse’s capital allocation strategy.

Key Performance Indicators

The key performance indicators used by Pulse’s management to analyze business results are seismic data library sales, net earnings, cash EBITDA and shareholder free cash flow. The definitions, calculations and reconciliations of cash EBITDA and shareholder free cash flow to the nearest GAAP financial measures are provided in “Non-GAAP Financial Measures and Reconciliations”.

Results for the key performance indicators for the three months and year ended December 31, 2021, with comparative figures for 2020, are set out in the following table:

2021 Year-End Financial Report