Our Center of Gravity | May 2022

N S T O P P A B L E N E W S F R O M G R A V I T Y

It Was A Good Plan

Growing up in Austin, I envisioned myself as a professional baseball player or a professional fishing guide I had a plan to become a stud pitcher, earn a college baseball scholarship, get drafted, make millions in the MLB, and enjoy life. And if that didn't work, I could always fall back on my second childhood passion, fishing on the coast. (I would get someone to pay me to do what I loved. How could this go wrong?)

Everything felt on track in my junior year at Austin Anderson High School I was undefeated on the mound, colleges and local scouts showed interest, and I was making good grades. When free time allowed, I was still going down to the coast with friends and family to keep up my fishing.

Then, in my senior year, I blew out my pitching arm. Zero starts as a pitcher and no interest from colleges. Then another gut punch – professional fishing guides only make about $100/day after expenses. Devastated

TRACE HIGHT

Chief Commercial OfficerGravity Water Midstream

Yikes. On to Plan C – go to College and figure out something else to do with my life. At least I had good grades, right? I applied to Duke; they said no. I applied to Virginia; they said no I applied to Stanford; also, no I would have to rely on my backup school, University of Texas, who said yes, and I was accepted into the Engineering School.

I recalled thinking Petroleum Engineering sounded fascinating. I didn't know anything about Oil & Gas, but I was a Texan, damn it – I would learn. The wisest man I know, my dad, told me, "Son, I don't think that's a good idea. There is something called Peak Oil. We are already running out of it, and there is not much future for Petroleum Engineers." Yikes again. Well, Aviation sounded interesting, so I chose Aerospace Engineering.

It didn't take long before I realized I didn't like Aerospace Engineering (or engineering in general), and I didn't want to be stuck behind a desk. I wanted to shake hands and make deals happen as a salesman or an entrepreneur Why not both?

After graduating from the University of Texas, I was offered my first job as the Director of Sales for a small environmental data and oil & gas consulting company called The Banks Group. Shortly after that, I started killing it in my sales role. By 2004 I was promoted to Vice President, and in 2006, I was promoted to the CEO of Banks. I also got married to my best friend, Ashley.

CEA

Over the next six years, CEA became recognized as the Saltwater Disposal Well Investment Banking Experts. (Who knew this was a thing?) We did 30+ deals in the Barnett, Haynesville, Bakken, Eagle Ford, and Permian. (Also, Ashley and I had four kids!)

My ambition grew to do more for my ever-expanding family. A private equity group out of New York asked me, "Trace, why don't you start your own SWD business?" Out of that came my idea for a company, On Point, a new SWD company focused on a new trend, piped volumes instead of trucked volumes. Simple enough. This had to work.

On Point

I left CEA in 2015 to pursue On Point. Within a couple of weeks, I had a $50 million equity commitment from that same private equity firm in New York. My first targets were to acquire existing SWDs from my customers in Eagle Ford, build pipelines to our customers, and grow EBITDA. My previous customers were signing Letters of Intent to sell their SWDs to me, and some wanted equity in On Point and to join me in expanding.

During our first acquisition, I noticed something. Produced water volumes were falling off quickly on their decline curve. Would there be enough new wells from a single customer pad or section to justify the expense of a new pipeline to this SWD?

that I wanted to halt the transactions and study this data further, and the investors agreed.

A week or two later, I decided to pause on our Eagle Ford acquisitions and ensure there wasn't a better opportunity for On Point in another basin. (Hello Permian!)

My friends in Eagle Ford were pissed at me because I wouldn't buy their SWDs anymore, so I had to find a new operations partner. I had no clue how to operate an SWD and needed to find someone who knew what they were doing. I called an old customer named McCabe Turner, who had sold his SWD company, Moxie, a couple of years prior. Luckily, he was bored and ready to get back into the SWD game and joined me as COO.

On to Permian

Now focused on Permian, we needed to find the right deal. Just one problem –We had no assets, no revenue, and no income. How long could I live off my savings until we could find the right deal to acquire? Thankfully, Ashley and my kids continued to support On Point through this shift, even though I wasn't making any money.

In 2016 we found Henderson & Erickson. We quickly decided to expand their business with more pipelines. McCabe and I realized that we needed more capital than $50 million to make this work. I went back to our private equity group in New York with what I thought was an easy solution. But, they had no more capital available for On Point.

We were stuck. Our choices were to stick with the $50 million commitment from New York or stay with our H&E transaction in Midland and find new capital. We decided to walk away from the New York group and find new private equity investors that could back us. Fortunately, there was a lot of interest in On Point, and White Deer Energy provided us with a $100 million equity commitment.

Eventually, in 2016, On Point successfully acquired H&E and grew into the largest SWD company by volumes in the Midland Basin over the next three years.

Our Vision Today

My vision has not changed. I still see an incredible opportunity to create value and improve all shareholders' and stakeholders' lives by growing our water business and expanding our market share as the dominant leader in the Midland Basin. Our core assets are ideally located in the core drilling area of one of the largest active oilfields in the world at a time when global demand is increasing.

We will be quickly passing 500,000 bbls/d in our water midstream systems, and I am already thinking about how to position ourselves on a path to 1 million bbls/d.

With the addition of our Produced Water recycling programs, we are also improving our ESG profile and finding creative ways to help our E&P customers manage their water needs as they produce hydrocarbons from the world-class rock we lie upon. We are absolutely on our way to becoming the dominant water midstream company in the Midland Basin (if we aren't already), and I enjoy leading our group down that path with all the new twists and turns we find each month.

h my family, constantly keeping up with all rts and school are in downtime, our family o the mountains of Colorado, where we all golfing, and fly fishing.

Trace Hight

Eric Palma

Mechanic - Equipment Odessa

Guillermo Giner

Chemical Account Manager Odessa - PC

William Britt Winch Truck Operator Artesia

Christopher Norby SWD Operator Watford City

Jose Lopez Blend Plant Manager Midland Blend Plant

Jacqueline Jaques Accounting Associate II Midland Corporate Office

Guadalupe Garcia

Senior Account Manager

Levelland - PC

Carlos Delatorre Jr.

Mechanic - NG Generator Dickinson - PR

Miklo Ramirez Sr. Tank Technician Artesia

Jason Emmert

Branch Manager Douglas - PR

Ben Hernandez Chemical Account Manager Odessa - PC

Daniel Soto Winch Truck Operator Pecos

Monica Hernandez Equipment Specialist Snyder Business Office

Phillip Lopez Coordinator Odessa

Trevor Waddell HSE Ops Support Manager Dickinson - PR

Cody Munden Chemical Field Technician Odessa - PC

Edward Rodriguez Treating Truck Driver Odessa - PC

Chad Smrstick Field Technician w/ CDL Douglas - PR

Phillip Gonzales Service Tech Perryton - PC

Leonardo Perez Director of IT Infrastructure + Support Lubbock Business Office

20

Danene Hogan

Regional Ops System Manager

Lubbock Business Office

Cody Patton Truck Supervisor Odessa

Heather Diamond Branch Manager Cleburne - CRF

Brian Ford

Midstream Finance Analyst Houston Business Office

Jim Conner Area Manager Odessa - PC

Skyler Smith Inventory Coordinator Tech Mgmt - Corporate

David Gutierrez Business Manager Pecors - PC

Jason Hopper Corporate Sales Specialist Midland Corporate Office

Gregory Prieto Mechanic Pecos

Nicolas Reid Field Technician I Dickinson - PR

Trisha Sherry

Director of FP&A Houston Business Office

Anthony Garza III Chemical Field Technician Odessa - PC

Patty Avila - Eady Corporate Controller Corporate: Houston

Krystle Albarez

Director of HR Snyder Business Office 29

Josh Wilson Business Manager Odessa - PC

Lauren Fasnacht Regional Ops Systems Manager Main Corporate - MidCon

Heather Hathcock Chemical Administrative Associate Tech Mgmt - Corporate

Oscar Gonzalez Field Technician II Dickinson - PR

Todd Thurman Director of Water Infrastructure Watford City

Joe Griesel Business Development Manager Watford City 30

Chad Engle Regional Sales Manager Permian Region

Debra Otto Equipment Specialist Midland Corporate Office

Timothy Mancha Treating Truck Driver Odessa - PC

Benjamin Gonzales

Natural Gas Field Technician Douglas - PR 31

Chad Thies Chemical Account Manager Perryton - PC

Joseph Chavez Chemical Account Manager Artesia - PC

FEATURED BRANCH

NM Tech Management

This month,

we're taking you to our New Mexico Tech Management Branch. Located in Artesia, our Tech Management team covers a vast area to care for our customers.

Taking the Lead in Community Relations

Chase Foundation Scholarship Golf Tournament: Hosting and cooking to help the Chase Foundation raise money for area high school seniors to go to college.

Spur Energy Scholarship Golf Tournament: Helps support the Changing Lives Coalition and to fund local scholarships in the community.

Artesia Band Booster Clay Shoot: Supports the Artesia High School Band competition trips.

Hobbs High School Baseball: Supports and helps fundraise for their baseball program.

Eunice High School Baseball: Supports the annual Eunice Cardinal Classic Baseball Tournament.

Lovington Chamber of Commerce 4th of July Fishing Derby: Donates prizes for Fishing Derby, teaching youth how to fish.

WHERE TO EAT

J-Bar-M BBQ, Houston, TX

This month, we bring you Texas Barbecue out of Houston; about 20 minutes from our Houston Business Office. J-Bar-M Barbecue is a local favorite and very well known. Just east of downtown Houston, J-Bar-M Barbecue offers contemporary craft barbecue and an expansive beer garden and patio overlooking the downtown skyline.

Located in the EaDo neighborhood just east of downtown Houston, J-Bar-M Barbecue offers contemporary craft barbecue and an expansive beer garden and patio overlooking the downtown skyline.

Weekly Features

Tuesday: Gumbo, 11 AM

Wednesday: Smoked Burger, 11 AM

Thursday: Prime Rib, 6 PM

Friday: Fish Fry, 11 AM

This month’s Spotlight Employee takes us to Odessa, Texas. John Mosley will be celebrating 4 years with Gravity this December

Meet John Mosely

MMy father worked for El Paso Natural Gas in Kermit, Tx when I was born. I had two older brothers and a younger sister. My mom and dad lived in a company-owned house in a company camp until my dad retired from "The Company" after 35 years of employment.

El Paso Natural Gas was a great com in a to ra the each a fa the prov cour and El Pa com in a to ra the each a fa the kids had plenty to do and provided tennis and basketball courts, p and plen

We mov Utah wa some of rough a lived les Juan River.

My brothers and I, along with many of the other kids in the camp, spent a lot of time exploring the canyons, washes, and river basin of the San Juan. Our exploration territory expanded greatly when my brothers were old enough to get motorcycles. We spent a lot of time fishing for catfish in the San Juan River and trout in nearby mountain lakes. The camp was on the Navajo Reservation, and most of the kids I went to elementary school with were from the Reservation.

When I was ten, my dad moved the family to Andrews, Texas; Actually, we moved to Frankel City, Texas, which is about 20 miles west of Andrews. Again, we lived in a remote camp far from town, but it was a great place to grow up. The Fullerton Camp at Frankel City was smaller than the camp in Utah, but it was closer to town and family in Jal, NM, and Alvord, Tx. I spent a lot of time riding motorcycles, playing games with the other camp kids, hunting rabbits and doves, and swimming.

My mom and dad believed in hard work, and while my dad worked for El Paso Natural Gas, my mom owned and managed a restaurant. My dad would also sometimes take on extra jobs as a carpenter; his dad was a carpenter, and my dad grew up learning that trade. After a summer or two of washing dishes at the café, I realized I didn't like it, so I tried to find other jobs as soon as I was old enough. During high school, I worked for a gas station, a construction company, a local farmer, and a cotton gin.

After high school, I took the big step of leaving my country roots and moving to the big city of Odessa,Texas, to start my college career. I worked for El Paso Natural Gas, United Services Roustabout Services, and Schlumberger Wireline Services in the summers. I mowed yards during the school year, moved furniture for House of Furniture, and worked on rigs, roustabouting, Manchester tank, and TG&Y warehouseman. I received my Associate's Degree from Odessa College and transferred to Texas Tech University in Lubbock, Texas, where I received my Bachelor's degree in Geology with a minor in Geophysics. When I graduated from Texas Tech, I wanted to work for the exploration department in one of the major oil companies, but the oil industry was in a "bust," and the country was in a recession. There was a position available with Amoco Chemicals, so I took it, expecting to transfer into exploration later. But now, I'm very glad that I decided to stay in the Production Chemical industry. The production chemical business is one of the most stable businesses in the oil field, whether "bust" or "boom."

I met my wife, Beth, in high school when she was 15 and I was 17. We dated in high school and during college and were married shortly after graduation. Beth and I had two children, Jared and Matt. Both boys did baseball, soccer, basketball, and football.

The boys and I were also in Indian Guides for several years and had a great time camping out with the Blackfoot Tribe. Both graduated from Midland High School in the top 10% of their class. Beth was the Director of Human Resources for the City of Midland and was a great mom to the two boys. She passed away from stomach cancer when Jared was in his first year at Texas Tech and Matt was at Midland Freshman School.

I married Diana a few years after my first wife passed away. Diana is a pharmacist raised in Levelland, Tx. We both have similar backgrounds, experiences, and values, and we enjoy many of the same things. We occasionally clash when Texas Tech is playing Texas, and she is rooting for her alma mater. I'm blessed with my family, friends, and a long career in the production chemical business.

Jared graduated from Texas Tech University with a degree in Education. Jared lives in San Antonio and is a teacher. Matt also graduated from Texas Tech University with a degree in Biochemistry. Matt's wife Lindsey is a nurse but recently took a sabbatical during pregnancy. Matt and Lindsey just gave birth to our first Grandbaby, Miley Beth.

Email John Nichols John.Nichols@gvty.com