Gibson Energy Annual Report 2015

FY2015 Annual Report · Gibson Energy

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Rising to the
Challenge

Annual Report 2015

Our Business
Gibsons is a midstream energy company with operations in some of the
most hydrocarbon-rich basins in North America.

For over 60 years, Gibsons has provided market access to leading oil and gas companies in Western Canada.

By diversifying our service offerings and expanding geographically, we continue to meet our customers’ needs

in key hydrocarbon producing regions throughout North America. Our unparalleled service level is what sets

us apart from our competitors and we strive to provide hands-on service between the producer and end-user.

Gibsons’ diversified service offering includes terminals, storage, blending, processing, marketing and distri-

bution of crude oil, condensate, natural gas liquids and refined products. We also provide emulsion treating,

water disposal and oilfield waste management services.

Our integrated operations allow us to participate in the full midstream energy value chain. We transport

millions of barrels of energy products each year by pipeline, truck and rail through our strategically located

terminals in Hardisty and Edmonton, Alberta, Canada, our small Canadian terminals and our injection stations

in the United States.

Annual General Meeting Information

Wednesday, May 4, 2016, at 11:00 a.m. (Mountain Time)
The Metropolitan Conference Centre
333 - 4 Ave SW, Calgary, Alberta

Forward-Looking Statements
This annual report contains forward-looking statements.
Please refer to the caution on forward-looking information
on the inside back cover.

Table of Contents

1
3
8
40
41

2015 Results and Highlights
President & CEO’s Message
Management’s Discussion and Analysis
Independent Auditor’s Report
Consolidated Financial Statements for the
Year Ended December 31, 2015

46 Notes to the Consolidated Financial Statements
IBC Corporate Information

Our 2015 Highlights

Financial

Achieved record Terminal and Pipelines Segment Profit of $143 million, a 23% increase over 2014.

Delivered Adjusted EBITDA for the year of $386 million.

Executed growth capital expenditures of $346 million, primarily for the expansion of terminal storage and pipeline connectivity.

Declared total dividends of $161.0 million, or $1.28 per share, in the year, representing an 8% increase in total dividends

over 2014.

Ended the year with $83 million of cash on the balance sheet, $465 million of availability under our $500 million revolving

credit facility and a senior debt leverage ratio of 3.2 to 1.0.

Operations

Successfully commissioned two new tanks at the Hardisty Terminal, resulting in a 900,000 barrel, or 18%, increase in capacity.

Commissioned our connectivity enhancement project related to the twinning of the Cold Lake pipeline connection to the

Hardisty Terminal.

Completed the connectivity enhancement project at the Hardisty Terminal related to the twinning of the Athabasca

pipeline system.

Commenced construction on an additional 1.8 million barrels of storage capacity at Gibsons’ Hardisty Terminal to support

our customers’ growth plans.

Completed the integrations of two industrial propane companies, which were acquired in 2014.

Health, Safety, Security and Environment

Conducted 103 formal Safety Stand Down events throughout the year, engaging senior management and front line staff to

discuss ways we can continue to strengthen our health and safety commitment and improve our overall safety performance.

Expanded a unique One on One interview process which allows direct conversation between management and their

employees regarding HSS&E matters and continues to provide valuable insight for both management and employees

involved in the process.

Completed 34 internal HSS&E Management System Assessments across our operating units.

Continued our focus on emergency response planning and training with 180 emergency scenario drills.

Introduced a company-wide Learning Management System which allows for improved employee training tracking and

transparency across all functions of the organization.

Gibsons | 1

Our Commitment to
Creating Long-term Value

Trailing Twelve Month Adjusted EBITDA ($ Millions)

500

400

300

200

100

0.35

0.30

0.25

0.20

2011

2012

2013

2014

2015

Quarterly Dividend ($/share)

2011

2012

2013

2014

2015

Q1
2016

Growth Capital ($ Millions)

2009

2010

2011

2012

2013

2014

2015

100

200

300

400

Hardisty Storage Capacity (Millions of Barrels)

2009

2010

2011

2012

2013

2014

2015

$386MM

Adjusted
EBITDA in 2015

$161MM

Total Dividends
Declared in 2015
($1.28/share)

$346MM

Growth Capital
Expenditures
in 2015

6.0MMbbl

Storage Capacity at
Gibsons’ Hardisty
Terminal, Growing
to 8.9 MMbbl

Message from
Stewart Hanlon

Stewart Hanlon
President & CEO

2015 was a year of highs and lows marked by an oversup-

connectivity enhancement projects which serve to connect

plied energy market and massive declines in oil prices which

our Hardisty Terminal to both the Cold Lake and Athabasca

heralded a dramatic slowdown in activity in the energy

Pipeline twinning projects. And, we have “shovels in the

industry across North America. Without question, it has been

ground” for an additional 2.9 million barrels of crude oil

a period of uncertainty, volatility and challenge throughout

storage at Hardisty that are scheduled to come into service in

the global energy industry.

2016 and 2017.

These conditions affected Gibsons as well. But, at the same

At our Edmonton facility, we progressed the construction of a

time, this year confirmed the strength and resiliency of

300,000 barrel tank and an expansion of the rail loading rack.

our business. We emerged from 2015 strong and stable,

The project is on-track and will contribute to our 2016 cash

largely due to our commitment to sound business practices:

flow mid-way through the year.

maintaining a solid balance sheet, delivering a sustainable

dividend, focusing on our long-term strategy and ensuring a

In 2015, we also capitalized on opportunity.

conservative approach to capital allocation.

We acquired two small companies to enhance our logistics

In this environment, the toughest I’ve seen in my twenty-five

years with the company, Gibsons delivered. We achieved

annual adjusted EBITDA of $386 million—a decrease of

only 15% from our record 2014 results.

capabilities. Littlehawk Enterprises, a Western Canadian

business that specializes in hydro excavation, pressure

testing and water hauling for the construction and energy

industries, and T&R Transport, a crude and water hauling

business that services the Bakken and Three Forks plays.

We also benefited from a slowdown in construction activities

Both acquisitions complement, and are vertically integrated

in Alberta as we progressed on our 2015 capital program,

with, our existing services.

with expenditures primarily directed toward growing our infra-

structure at our Hardisty and Edmonton terminals in Alberta.

Disciplined Capital Allocation

In 2015, we supported our customers’ oil volume growth by

committing to long-term storage contracts. We also success-

fully commissioned two new tanks on the east side of our

Hardisty Terminal, resulting in a capacity increase of

900,000 barrels. We saw the successful completion of our

We also saw the successful completion of our new

Edmonton facility that was built to consolidate and optimize

our Canadian trucking operations. The facility brings the

business closer to our fleet operations, while minimizing

waste and reducing costs. Longer-term, the move allows

Gibsons to use the valuable strategic land vacated by

the trucking group for future tank construction at our

Edmonton terminal.

Gibsons | 3

“As an integrated

midstream company,

we are well-positioned to

weather oil price volatility

through the long-term

infrastructure contracts on

our terminal assets.”

Protecting our Balance Sheet and
Ensuring Dividend Sustainability

Clearly, when the price of oil drops as dramatically as it has,

it’s necessary to look at things differently and to take action

accordingly. In 2014, we made adjustments and continued

to do so throughout 2015. We progressed the rebalancing of

our portfolio towards fee-based infrastructure; we realigned

our cost structures; and we took a disciplined and flexible

approach to capital allocation.

As an integrated midstream company, we are well-positioned

to weather oil price volatility through the long-term infra-

structure contracts on our terminal assets. Our 2015 capital

growth program, focused on our terminals and pipelines

business, is largely backed by long-term, take-or-pay con-

tracts that average 10 years or more with large and strong

customers. This shields an ever-growing proportion of our

cash flow from fluctuations in oil prices, providing increased

predictability and stability for our shareholders and increased

support for our dividend.

Making Communities Stronger

We take pride in knowing that our community contri-
butions serve community needs, harness our employees’
interests and align with our business goals. In 2015, we
invested in our communities through the following efforts:
Supporting the new Moose Jaw Hospital with state-

of-the-art medical equipment. We donated $500,000
toward specialized x-ray equipment to diagnose and
evaluate many conditions.

Investing in a wide range of emergency service

programs in our operating communities.

Contributing over $320,000 (employee donations
plus Gibsons’ match) to organizations, like the
United Way and St. Jude’s Hospital, through our
employee giving program.

Partnering with business, government and Texas A&M
University to support the Produced Water Irrigation
Project in Texas. Gibsons provided water storage for
this unique cotton-growing project that uses recycled
produced water from oil and natural gas activity in
the Delaware Basin to irrigate a cotton crop.

4 | Gibsons

Gibsons’ annual truck-pull event kicks off
our 2015 employee giving campaign

We also looked at the impact of the changing environment

through our customers’ eyes. That perspective evolved into a

doubling-down of our commitment to outstanding customer

service and operational excellence. Now, more than ever, we

need to ensure that we react quickly to changing market

conditions and customer needs, while working efficiently and

collaboratively as one strong team to solve our customer’s

challenges. To do this, we must continue to adjust our cost

structures to ensure that our services remain cost-competitive.

Most importantly, we must continue to operate safely

and responsibly.

To give credit, where credit is due, our success would not

be possible without the efforts of our people—the women

and men who work with our customers every day to provide

innovative midstream solutions. They have risen to the

challenge this year and I would like to thank them for that.

Their efforts helped us end 2015 with solid financial results

and a strong position for the future. I would also like to thank

our Board of Directors. Their guidance and governance have

been invaluable over the past year.

Our Strategic
Priorities

Strive for leadership in HSS&E and
operational performance

Provide a leading integrated
portfolio of services

Be responsive and adaptable to
a continuously changing business
environment

But to emerge from this cycle as a more valuable company

also requires a commitment to execute on our long-term

strategy: to provide midstream solutions that capitalize on

growth trends in North American oil and liquids production.

Be a superb business partner by
providing innovative, cost-effective
solutions for all of our stakeholders

Focused on Our Long-term Strategy

In 2015, we had several senior executives announce their

retirements. Rodney Bantle, Senior Vice President of Truck

Transportation decided to retire after 20 years of service and

Warren Osatiuk, Senior Vice President of Refining announced his

retirement after 15 years with Gibsons. I want to thank them for

their dedication and leadership. And last, but by no means least,

after 23 years with Gibsons, Don Fowlis, Chief Financial Officer

will retire in 2016. Don is one of the longest-serving members

of our senior management team and his leadership has played

a major role in shaping our company into what it is today. I wish

them all well and look forward to working with the newest

member of our senior executive team, Sean Brown, who joined

Gibsons as Chief Financial Officer early in 2016.

Ensure our workforce is highly
engaged and customer solution
focused

Be a socially responsible organization
that is valued by the communities in
which we do business

Endeavor to be an outstanding
investment for our shareholders

Gibsons | 5

Looking ahead to 2016 and 2017, we see strong growth in

We believe in the value of our North American footprint.

our Terminals and Pipelines segment where we will direct the

We remain competitive, and healthy, in those basins where

majority of our capital at a range of $200 and $300 million

activity levels are currently depressed, but where we expect

each year. For 2016, the $200 million low-end in growth cap-

to see a rebound in shale production when we see improve-

ital spending primarily represents projects currently underway

ment in crude oil pricing. To that end, we continue to review

within our Terminals and Pipelines segment, the majority of

and address costs to ensure that we are well-positioned to be

which are underpinned by long-term take-or-pay contracts.

successful this year and for years to come.

The $300 million high-end incorporates an additional $100

million for projects that are either currently being negotiated

or are under consideration. We expect to have greater

visibility to the remaining, uncommitted capital spending as

we progress through 2016.

“We remain confident

in the near, and medium
term, that oil sands
production will continue to
grow given the resiliency
of our customers’ project
development plans and
their financial strength.”

2015 was a tough year for our customers and we expect

2016 may be even tougher. While we are cautious and

conservative about conditions over the near term, we remain

positive about the prospects for our business. Our consis-

tent financial strength, sound management and diversified

business mix have enabled us to deliver value to both our

customers and shareholders, and we believe that they will

continue to do so well into the future.

For investors looking to 2016 and beyond, there are many

reasons why Gibsons represents a compelling investment:

we continue to strengthen the quality of our cashflows;

we have a strong balance sheet and liquidity to fund our

growth capital program; and

we offer an attractive and sustainable total shareholder return.

My thanks go out to all investors who continue to support

our efforts.

We’ve been in the midstream business for more than six

decades. And while we’ve seen cycles in our industry before,

it’s difficult to predict how this pricing cycle will evolve. We do

know that conditions will improve at some point in the future.

I’m proud of what we’ve accomplished in 2015, and I am

These projects are underpinned by highly visible production

confident that the steps we have taken will enable us to rise to

from specific oil sands projects that are currently under de-

the challenges and position us for an exciting future.

velopment or in a production ramp-up phase. Despite today’s

challenging oil price environment, our key oil sands customers

take a long-term view on oil prices due to the nature of their

reserve profile, and we remain confident in the near, and

medium term, that oil sands production will continue to grow

given the resiliency of our customers’ project development

plans and their financial strength. In the interim, they are

Stewart Hanlon

President & CEO

realizing material operating and capital cost efficiencies in the

current deflationary environment, just as we are at Gibsons.

6 | Gibsons

LEGEND

Gibsons’
locations

Major Oil
Export Pipelines

Selected Oil
Gathering
Pipelines

Major
North American
Oil Plays

Our Strategic Footprint

Gibsons’ strategic footprint spans some of the most
hydrocarbon-rich basins in North America. Our diversified
business model serves customers across Western Canada
and in the oil-rich regions of the United States. Our
significant presence in these key basins provides our
customers with flexible midstream solutions while giving us
a competitive advantage.

Gibsons | 7

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Management’s Discussion and Analysis

The following Management’s Discussion and Analysis (“MD&A”) was prepared and approved by the Company’s Board of
Directors as of March 1, 2016 and should be read in conjunction with the audited consolidated financial statements and related
notes of Gibson Energy Inc. (“Gibsons” or the “Company”) for the years ended December 31, 2015 and 2014, which were prepared
under International Financial Reporting Standards (“IFRS”) as set out in the Handbook of the Canadian Institute of Chartered
Professional Accountants and as issued by the International Accounting Standards Board (IASB). Amounts are stated in Canadian
dollars unless otherwise noted.

This MD&A contains forward-looking statements and non-GAAP measures and readers are cautioned that this MD&A should be
read in conjunction with the Company’s disclosure under “Forward-Looking Statements” and “Non-GAAP Financial Measures”
included at the end of this MD&A. Non-GAAP measures contained in this MD&A include EBITDA, Adjusted EBITDA, Pro Forma
Adjusted EBITDA, and distributable cash flow.

EXECUTIVE OVERVIEW

Gibsons is a large independent integrated service provider to the oil and gas industry with operations across major producing regions
throughout North America. Gibsons is engaged in the movement, storage, blending, processing, marketing and distribution of crude
oil, condensate, natural gas liquids (“NGLs”), water, oilfield waste, and refined products. The Company transports energy products
by utilizing its integrated network of terminals, pipelines, storage tanks, and trucks located throughout western Canada and through
its significant truck transportation and injection station network in the United States. The Company also provides emulsion treating,
water disposal and oilfield waste management services through its network of processing, recovery and disposal facilities in Canada
and the United States and is the second largest industrial propane distribution company in Canada. The Company’s integrated
operations allow it to participate across the full midstream energy value chain, from the hydrocarbon producing regions in Canada
and the United States, through the Company’s strategically located terminals in Hardisty and Edmonton, Alberta and injection
stations and terminals in the United States, to the end user or refineries of North America.

Gibsons has provided market access to leading oil and gas industry participants in western Canada for over 60 years. The Company
has grown by diversifying its service offerings to meet customers’ needs and by expanding geographically to provide its service
offerings to key hydrocarbon producing regions throughout the United States.

The Company’s integrated segments can be broken down as follows: (1) Terminals and Pipelines, (2) Environmental Services, (3)
Truck Transportation, (4) Propane and NGL Marketing and Distribution, (5) Processing and Wellsite Fluids and (6) Marketing.
The Company believes its competitive advantage is driven by its geographic presence in the majority of hydrocarbon-rich basins in
North America, its footholds in strategic market hubs, its ability to capture value throughout the midstream energy value chain, its
diversified, integrated, synergistic service offerings, its ability to source and successfully execute internal growth projects, its proven
track record of sourcing, executing and successfully integrating business acquisitions, its leading health, safety, security and
environment record, its experienced management team with a proven history of successful operations and strong industry reputation
and its conservative risk management policies. The Company is continuously focused on improving its operations across all
segments by utilizing the Company’s integrated asset base to capture inter segment synergies and to expand the Company’s network
of assets, and to increase the Company’s margins by providing additional value added services along the midstream energy value
chain.

1
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Gibson Energy Inc.
TSX: GEI

Highlights

2015 Year End Report

The key highlights for the year ended December 31, 2015 were as follows:

• Despite challenging industry conditions, overall segment profit only decreased by 14% to $418.8 million in the year ended

December 31, 2015 compared to $487.1 million in the year ended December 31, 2014;

•

Segment profit for the Terminal and Pipelines segment increased by 23% in the year ended December 31, 2015, compared to
the year ended December 31, 2014;

Pro Forma Adjusted EBITDA for the year ended December 31, 2015 was $389.9 million, down 15% from the year ended
December 31, 2014;

• Adjusted EBITDA for the year ended December 31, 2015 decreased by 15% to $386.3 million compared to $453.1 million in

the year ended December 31, 2014;

• Revenue decreased by 35% in the year ended December 31, 2015 compared to the year ended December 31, 2014. The decrease
was primarily driven by lower product revenue as a result of lower commodity prices and also lower service revenues that
exhibited a reduction of 20% in the year ended December 31, 2015;

• During the year ended December 31, 2015, management reduced costs within the Company resulting in lower overall headcount
of approximately 15%, after adjusting for the impact of acquisitions. Management is committed to cost control and will continue
to proactively work to align costs in light of overall economic conditions;

• The Company declared a dividend of $0.32 per common share in the fourth quarter of 2015. Total dividends declared were
$161.0 million in the year ended December 31, 2015, representing an 8% increase over the $148.6 million declared in the year
ended December 31, 2014;

• On August 6, 2015, the Company suspended, until further notice, Gibsons’ Dividend Reinvestment Plan (“DRIP”) and Stock
Dividend Program (“SDP”) as the Company believes that the continuation of these programs would result in unwarranted
dilution of its shareholders;

•

For the year ended December 31, 2015, distributable cash flow was $219.5 million resulting in a gross dividend payout ratio
of 73% and a net dividend payout ratio of 64% based on declared dividends paid in cash;

• Capital expenditures were $392.6 million for the year ended December 31, 2015, of which $345.8 million related to growth
capital. Growth capital expenditures are primarily related to the construction of tankage and pipeline connections at the
Company’s facilities, in particular at the Hardisty and Edmonton terminals. At December 31, 2015, the Company had capital
expenditures totaling $290.6 million included in work in progress;

•

In February and March 2015, the Company successfully commissioned two new tanks on the east side of the Hardisty Terminal
resulting in a 900,000 barrel increase in capacity. In addition, the Company successfully commissioned its connectivity
enhancement project related to the twinning of the Cold Lake pipeline connection to the Hardisty Terminal;

• On April 13, 2015, the Company announced its intention to construct 900,000 barrels of additional crude oil storage capacity
at the Hardisty Terminal, comprised of a 400,000 barrel storage tank and a 500,000 barrel storage tank, that are expected to be
commissioned in mid-2017;

• On April 27, 2015, the Company announced that it will build and operate an additional 900,000 barrels of storage capacity at
Gibsons’ Hardisty West Terminal. The expansion is intended to support Suncor Energy’s (“Suncor”) growth plans. The
Hardisty West Terminal was developed in 2011 as a joint venture with Suncor involving the construction of four storage tanks
totaling 1.2 million barrels. The terminal is an important part of Suncor’s logistics infrastructure that is designed to facilitate
the transportation of its crude oil production and manage the quality of its proprietary commodity streams. The expansion of
the Hardisty West Terminal will support growth in Suncor’s oil sands operations and increase total storage capacity at the
Hardisty West Terminal by 75% to 2.1 million barrels. The new storage capacity is expected to be in-service by the third quarter
of 2017;

2
9

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

• On July 1, 2015, the Company acquired all of the issued and outstanding ownership interests of Ross Eriksmoen, Inc., GWCC,
LLC, and Frontier Ventures, LLC (collectively doing business as “T&R Transport”) for approximately $34.9 million. T&R
transports water and oil field waste and provides related transportation services to customers in the oil, gas, and petrochemical
industry throughout the Bakken region in North Dakota;

• On December 1, 2015, the Company successfully commissioned its connectivity enhancement project related to the twinning

of the Athabasca pipeline connection to the Hardisty Terminal; and

On March 1, 2016, the Board declared a quarterly dividend of $0.33 per common share for the three months ended March 31, 2016
on its outstanding common shares. The dividend is payable on April 15, 2016 to shareholders of record at the close of business on
March 31, 2016.

Trends affecting the Company’s business

Gibsons periodically evaluates its long-range strategic plan in order to assess the implications of emerging industry trends, including
organic growth and potential acquisition opportunities, in the energy midstream sector. Some of the key industry trends that will
affect Gibson’s business and prospects over the short-term (2 years or less) and the medium to long-term (two to five years) are:

•

Increased oil production in North America over the last number of years has increased demand for many facets of the
midstream energy value chain including storage, transportation, distribution, processing, refining and environmental and
production services, all of which are activities the Company participates in. However, the recent decline in crude oil prices has
caused many North American oil producers, who form a significant part of Gibsons’ customer base, to lower their near term
capital spending plans. This is expected to negatively impact North American production over the short-term. Over the medium
to long-term, as crude oil supply and demand rebalances and crude oil prices realign with global cost structures, the Company
anticipates a return to increased activity and production levels and a continued demand for midstream value chain assets;

• Over the medium to long-term, the growing supply of Canadian heavy crude oil from the oil sands will result in an increasing
demand for diluent in the Western Canada Sedimentary Basin (the “WCSB”). This should result in increased movements of
diluent through the Edmonton and Alberta heartland area, pipeline and terminal infrastructure and may generate increased
opportunities for Gibsons’ services;

• Crude oil pricing, location and quality disconnects, combined with a shortage of pipeline takeaway capacity from the WCSB,
have created demand for crude by rail as a solution for export market access. While the recent decline in crude oil prices has
negatively impacted the economics of this transportation alternative, the Company expects that if oil prices rise or export
pipeline access becomes a barrier to reach markets, opportunities for the Company to increase its service offering to include
more crude oil rail movements will arise;

• The Keystone XL and Energy East pipeline projects are crucial initiatives that should help provide the growing supply of
Canadian crude oil access to the large refining markets in the United States, Eastern Canada and other foreign markets. The
recent denial of presidential permit to Keystone XL by the U.S. Department of State in November, 2015, as well as continued
delays to the approval of Energy East, the starting point for both pipelines which would be adjacent to the Company’s Hardisty
Terminal, defers the prospects of increased opportunities for the Company’s terminalling services that are anticipated from
these projects, but brings to fore the likelihood of an increased usage of the Company’s crude oil rail transportation
infrastructure, in the near term;

• Enbridge’s expansion of its Line 67 that went into operation in July 2015 and the replacement of its Line 3 will help the growing
supply of Canadian crude oil gain access to the largest refining markets in the United States and Eastern Canada. The
replacement of Line 3, if approved, could provide incremental capacity by 2018. Gibsons’ Hardisty Terminal is connected to
deliver to both of these pipelines and these expansions should provide increased opportunities for the Company’s terminalling
services at Hardisty;

• When completed, Enbridge’s twinning of the southern section of its Athabasca pipeline which should provide for incremental
volumes into the Gibson Hardisty terminal and increased opportunities for the Company’s terminalling services at Hardisty;

•

Price fluctuations between crude oil types can create incremental margin opportunities in multiple areas of the Company’s
operations. While current price differentials have compressed in response to the recent decline in benchmark crude oil prices,
the Company remains attentive to opportunities as this trend continues to evolve;

• The growing supply of propane, butane and other natural gas liquids in North America related to higher liquids rich natural gas
development has resulted in declining propane and butane prices in North America. This may result in increased volumes and
potential margin improvement related to the Propane and NGL Marketing and Distribution segment;

3
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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

• The recent reduction in the value of the Canadian dollar relative to the U.S. dollar highlights added foreign currency volatility
which could result in both positive and negative impacts for the Company. A weakening Canadian dollar should result in
increased profit contributions from the Company’s U.S. business. In addition, it could result in increased revenues and cost of
sales for the Company’s Canadian operations that transact in U.S. dollars. Furthermore, a weakening Canadian dollar will result
in an increase in foreign exchange losses with respect to the Company’s U.S. dollar denominated debt and an increase in foreign
exchange gains with respect to the Company’s U.S. denominated assets;

• The lifting of the U.S. crude oil export ban in December, 2015, may further advance demand for the utilization of midstream
assets to enable an increasing volume of crude oil to access tidewater export locations. Gibsons’ U.S. presence and extensive
footprint offer an important growth platform and that should prove advantageous to the Company’s North America-wide core
midstream infrastructure development plan;

• The weak oil price and capital market conditions are expected to adversely impact many energy industry participants in North
America, some of which are either customers or competitors. In the ensuing period, the Company anticipates increasing credit
risk within certain segments of its customer base. Offsetting this, the Company expects a moderation in valuation expectations
for midstream asset and corporate transactions;

• Over the medium to long-term the Company expects new technology for drilling and well completion methodology to be
deployed towards conventional and unconventional production within the industry which should further enhance the viability
and resilience of the specific basins Gibsons has strategically chosen to operate in; and

• Over the medium to long-term, the Company expects that increased oil and natural gas production in North America should
also translate to a significant increase in produced water and other oilfield waste. This increase in oilfield waste, together with
increased regulatory scrutiny, should increase demand for the Company’s Environmental Services solutions.

The Company believes the collective impact of these trends and developments, many of which are beyond the Company’s control,
will result in an increasingly volatile business environment and a crude oil market that is subject to more frequent short-term swings
in market prices and grade differentials and shifts in market structure. Over the short-term, the Company anticipates that lower
crude oil prices may create a challenging environment for some of the Company’s services, however, over the medium to long-term
the Company believes that both the demand for its growing portfolio of high quality infrastructure assets, and the value proposition
of its integrated midstream solutions, should remain strong.

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Gibson Energy Inc.
TSX: GEI

Capital expenditures

2015 Year End Report

The following table summarizes growth capital and upgrade and replacement capital (in thousands):

2015
Growth capital .............................................................................................................................. $ 345,791
Upgrade and replacement capital ..................................................................................................
46,775
$ 392,566

2014
$ 352,487
59,035
$ 411,522

Total expenditures for growth and upgrade and replacement capital were $392.6 million and $411.5 million in the year ended
December 31, 2015 and 2014, respectively. In the year ended December 31, 2015 and 2014, $376.5 million and $391.2 million,
respectively, were included as additions to property, plant and equipment and $16.1 million and $20.3 million, respectively, were
included as additions to intangible assets.

Year ended December 31,

Growth capital

The following table summarizes the Company’s growth capital by segment (in thousands):

2015
Terminals and Pipelines(1) ............................................................................................................ $ 243,057
Environmental Services(2) ............................................................................................................
45,935
Truck Transportation(3) ................................................................................................................
27,755
Propane and NGL Marketing and Distribution (4) ........................................................................
2,032
Processing and Wellsite Fluids(5) .................................................................................................
18,471
Other (6) ........................................................................................................................................
8,541
Total............................................................................................................................................. $ 345,791

2014
$ 220,916
68,430
22,164
12,131
13,979
14,867
352,487

Year ended December 31,

(1) Expenditures in the year ended December 31, 2015 and 2014 relate to a number of construction and expansion projects
including the construction of additional tanks and related infrastructure at the Hardisty and Edmonton terminals. Expenditures
in the year ended December 31, 2015 also include the purchase of small terminals in the United States. Expenditures in the
year ended December 31, 2014 includes the related infrastructure to connect the unit rail facility to the Hardisty Terminal.

(2) Expenditures in the year ended December 31, 2015 and 2014 relate to the expansion of existing and construction of new
emulsion and waste treatment and salt water disposal facilities in both Canada and the United States and also the addition of
equipment and rolling stock.

(3) Expenditures in the year ended December 31, 2015 and 2014 largely represent the costs for constructing a new office and

maintenance facility in Edmonton, Alberta, including the purchase of land in the Edmonton area.

(4) Expenditures in the year ended December 31, 2015 mainly represent the addition of tanks and generators in key market areas.
Expenditures in the year ended December 31, 2014 mainly represent the addition of trucks, tanks and generators in key market
areas and the expansion of rail infrastructure at a Company facility.

(5) Expenditures in the year ended December 31, 2015 largely relate to increasing truck and rail capabilities at the facility in
Moose Jaw. Expenditures in the year ended December 31, 2014 largely relates to increasing throughput capacity and rail
capabilities at the facility in Moose Jaw.

(6) Expenditures in the year ended December 31, 2015 mainly relate to costs associated with the Company’s information and
operational systems. Expenditures in the year ended December 31, 2014 mainly includes the purchase of land in Strathcona
County in Alberta’s Industrial Heartland as well as equipment and software related to information and operational systems.

Upgrade and replacement capital

Upgrade and replacement capital includes improvement projects that extend the physical life of an asset, while replacement capital
includes purchases that replace existing assets as necessary to maintain current service levels or replace assets that no longer have
a useful economic life. Upgrade and replacement capital decreased 21% in the year ended December 31, 2015 compared to the year
ended December 31, 2014 primarily due to a reduction in spending relating to the replacement of the truck and trailer fleet within
the Truck Transportation segment.

5
12

Gibson Energy Inc.
TSX: GEI

Acquisitions

2015 Year End Report

On February 1, 2015, the Company acquired all of the issued and outstanding shares of Littlehawk Enterprises Ltd. (“Littlehawk”)
for approximately $11.5 million. Littlehawk operates hydrovac units and specializes in hydro excavation, pressure testing and water
hauling for the construction and energy industries. These services can be internalized by the Company and also offered as
complimentary services to the Company’s environmental services offerings.

On July 1, 2015, the Company acquired all of the issued and outstanding ownership interests of T&R Transport for approximately
$34.9 million. T&R Transport transports water and oil field waste and provides related transportation services to customers in the
oil, gas, and petrochemical industry throughout the Bakken region in North Dakota. These services complete an integrated business
model centered around the Company’s new Bakken Process Recovery Disposal and Landfill commissioned in the fourth quarter of
2014.

Seasonality

The Company believes that seasonality does not have a material impact on its combined operations and segments. However, certain
of the Company’s individual segments are impacted by seasonality. Generally, the Company’s second quarter results are impacted
by road bans and other restrictions which impact overall activity levels in the WCSB and the northern United States, and therefore
negatively impact the Company’s trucking, propane and wellsite fluids businesses in Canada and certain operations within
Environmental Services in Canada and the United States.

Within the Company’s Processing and Wellsite Fluids segment, certain products are impacted by seasonality. Canadian road asphalt
activity is affected by the impact of weather conditions on road construction. Road asphalt demand peaks during the summer months
when most of the road construction activity in Canada takes place. In the off peak demand months for road asphalt, the demand for
roofing flux continues. Demand for wellsite fluids is dependent on overall well drilling and completion activities, with activity
normally the busiest in the winter months. As a result, the Company’s Processing and Wellsite Fluids segment’s sales of road
asphalt peak in the summer and sales of wellsite fluids peak in the winter.

The Company’s Propane and NGL Marketing and Distribution segment is characterized by a high degree of seasonality driven by
the impact of weather on the need for heating and the amount of propane required to produce power for oil and gas related
applications. Therefore, volumes are low during the summer months relative to the winter months. Operating profits are also
considerably lower during the summer months. Most of the annual segment profit is earned from October to March each year.

Within the Company’s Environmental Services segment, certain services and geographical regions are impacted by seasonality
including the impact of weather and daylight hours. Due to exposure to weather, activity is generally the lowest in the winter months
and shorter daylight hours during the winter months also result in lower overall service activity.

SELECTED ANNUAL FINANCIAL MEASURES

Year ended December 31,

2015

2014

2013

Revenue .......................................................................................................
Net income (loss) ........................................................................................

$ 5,591,982

(in thousands except per share amounts)
$ 8,573,529
91,941

$ 6,940,669
103,816

(280,656)

Earnings (loss) per share
Basic ...........................................................................................................
Diluted........................................................................................................

(2.23)
(2.23)

0.74
0.73

0.86
0.84

Dividends declared per common share ........................................................

1.28

1.20

1.10

Total assets ...................................................................................................
Total non-current liabilities ..........................................................................

2015
$ 3,282,986
1,606,425

As at December 31,
2014
$ 3,573,029
1,507,876

2013
$ 3,049,382
1,058,582

6
13

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

SEGMENTED RESULTS OF OPERATIONS

The Company’s senior management evaluates segment performance based on a variety of measures depending on the particular
segment being evaluated, including profit, volumes, operating expenses, profit per barrel and upgrade and replacement capital
requirements. The Company defines segment profit as revenues less cost of sales (excluding depreciation and amortization expense)
and operating expenses. Revenues presented by segment in the table below include inter-segment revenue, as this is considered
more indicative of the level of each segment’s activity. Profit by segments excludes depreciation, amortization, accretion,
impairment charges, stock based compensation and corporate expenses, as senior management looks at each period’s earnings
before corporate expenses and non-cash items such as depreciation, amortization and stock based compensation, as one of the
Company’s important measures of segment performance.

The following is a discussion of the Company’s segmented results of operations for the year ended December 31, 2015 and 2014
and the following table sets forth revenue and profit by segment for those periods:

Year ended December 31,

2015
(in thousands)

2014

Segment revenue
Terminals and Pipelines ............................................................................................................... $ 184,179
Environmental Services ................................................................................................................
334,449
445,969
Truck Transportation ....................................................................................................................
924,111
Propane and NGL Marketing and Distribution .............................................................................
395,787
Processing and Wellsite Fluids .....................................................................................................
Marketing ......................................................................................................................................
4,330,978
Total segment revenue ..................................................................................................................
6,615,473
Revenue—inter-segmental ............................................................................................................
(1,023,491)
Total revenue—external ................................................................................................................
5,591,982
Segment profit
Terminals and Pipelines ................................................................................................................
Environmental Services ................................................................................................................
Truck Transportation ....................................................................................................................
Propane and NGL Marketing and Distribution .............................................................................
Processing and Wellsite Fluids .....................................................................................................
Marketing ......................................................................................................................................
Total segment profit ......................................................................................................................
General and administrative ...........................................................................................................
Depreciation ..................................................................................................................................
Amortization .................................................................................................................................
Impairment of goodwill ................................................................................................................
Stock based compensation ............................................................................................................
Foreign exchange loss ...................................................................................................................
Net interest expense ......................................................................................................................
Income (loss) before income tax ...................................................................................................
Income tax provision (recovery) ...................................................................................................

142,796
57,257
52,034
94,192
37,207
35,271
418,757
39,569
195,438
87,554
175,959
20,379
108,180
79,022
(287,344)
(6,688)

$ 157,969
431,153
557,735
1,352,741
667,793
7,005,045
10,172,436
(1,598,907)
8,573,529

116,524
100,273
83,178
70,271
51,675
65,180
487,101
37,385
154,934
54,991
-
13,977
31,519
66,766
127,529
35,588
91,941

Net income (loss) .......................................................................................................................... $ (280,656) $

The exclusion of depreciation and amortization expense could be viewed as limiting the usefulness of segment profit as a
performance measure because it does not take into account in current periods the implied reduction in value of the Company’s
capital assets (such as rolling stock, tanks, pipelines, plant and equipment and disposal wells) caused by use, aging and wear and
tear. Repair and maintenance expenditures that do not extend the useful life, improve the efficiency or expand the operating capacity
of the asset are charged to operating expense as incurred.

The Company’s segment analysis involves an element of judgment relating to the allocations between segments. Inter-segment
sales, cost of sales and operating expenses are eliminated on consolidation. Transactions between segments and within segments
are valued at prevailing market rates. The Company believes that the estimates with respect to these allocations and rates are
reasonable.

7
14

Gibson Energy Inc.
TSX: GEI

Terminals and Pipelines

2015 Year End Report

The following tables set forth the operating results from the Company’s Terminals and Pipelines segment:

Volumes (barrels in thousands)
Terminals

Year ended December 31,

2015

2014

Hardisty Terminal .....................................................................................................................
Edmonton Terminal ...................................................................................................................
Injection stations .......................................................................................................................
Total terminals ..............................................................................................................................

208,292
14,510
40,511
263,313

184,519
16,822
47,154
248,495

Year ended December 31,

2015
(in thousands)

2014

Revenues ....................................................................................................................................... $ 184,179
Operating expenses and other .......................................................................................................
41,383
Segment profit............................................................................................................................... $ 142,796

$ 157,969
41,445
$ 116,524

Volumes, revenues and cost of sales. Hardisty Terminal volumes increased by 13% in the year ended December 31, 2015 compared
to the year ended December 31, 2014, as a result of increased throughput volumes from customers with dedicated tank usage
partially offset by lower volumes to the crude oil unit train loading facility located close to the Hardisty Terminal. Revenue at the
Hardisty Terminal increased by $29.4 million in the year ended December 31, 2015 compared to the year ended December 31,
2014. The increase was largely driven by the increase in revenue from customers with dedicated tank usage that are subject to fixed
fee arrangements and additional revenue from the commissioning of the connectivity enhancement projects related to the twinning
of the Cold Lake and Athabasca pipeline connections to the Hardisty Terminal. Also, the increase in revenue was due to the
additional revenue from the Company’s share of a full year of operations at the crude oil unit train rail loading facility compared to
a half year of operations in 2014, with these customers being subject to minimum volume charges. The increase in revenue and
volumes from customers with dedicated tank usage that are subject to fixed monthly rental fees, primarily relate to the impact of
the four new tanks at the east side of the Hardisty Terminal that were commissioned in the fourth quarter of 2014 and the first
quarter of 2015.

Edmonton Terminal volumes decreased by 14% in the year ended December 31, 2015 compared to the year ended December 31,
2014 mainly due to a decrease in diesel receipt volumes through the terminal from a customer that is subject to minimum volume
charges, and the impact of tanks temporarily being taken out of service to facilitate the current expansion of the facility that is
expected to be completed in late 2016. Revenue decreased by $1.4 million in the year ended December 31, 2015 compared to the
year ended December 31, 2014 primarily due to the impact of the tanks being temporarily being taken out of service as revenue on
other volumes remained relatively stable as they are subject to minimum volume charges.

Injection station volumes decreased by 14% in the year ended December 31, 2015 compared to the year ended December 31, 2014
due to a decrease in activity with a major customer. As a result, revenue decreased by $0.4 million in the year ended December 31,
2015 compared to the year ended December 31, 2014.

Operating expenses and other. Overall operating expenses and other was consistent in the year ended December 31, 2015 compared
to the year ended December 31, 2014.

Segment profit. Segment profit in the year ended December 31, 2015 increased by $26.3 million, or 23%, compared to the year
ended December 31, 2014. The increase was primarily due to the impact of the crude oil unit train rail loading facility and the
additional revenues from the commissioning of four new dedicated tanks in late 2014 and early 2015 and also new pipeline
connections completed during the year.

8
15

Gibson Energy Inc.
TSX: GEI

Environmental Services

2015 Year End Report

The following tables set forth operating results from the Company’s Environmental Services segment:

Year ended December 31,

2015
(in thousands)

2014

Revenues

Environmental services and fluid handling ............................................................................... $ 261,820
39,087
Production services ...................................................................................................................
33,542
Other services ...........................................................................................................................
334,449
Total revenues ...............................................................................................................................
Cost of sales ..................................................................................................................................
214,286
Operating expenses and other .......................................................................................................
62,906
Segment profit............................................................................................................................... $
57,257

$ 312,806
66,344
52,003
431,153
256,990
73,890
$ 100,273

Revenues and cost of sales. Environmental services and fluid handling revenues decreased by 16% in the year ended December 31,
2015 compared to the year ended December 31, 2014. The decrease was primarily driven by the reduction in oilfield drilling and
completion activity in the United States and Canada resulting in a reduction in the fluid handling services business in the United
States and a decrease in volumes processed at the Canadian environmental processing facilities, partially offset by additional
revenues from the acquisition of T&R Transport.

Production services revenue decreased by 41% in the year ended December 31, 2015 as compared to the year ended December 31,
2014. The decrease was primarily due to the impact of lower overall activity in the Bakken and Eagleford regions of the United
States.

Other services revenue decreased by 35% in the year ended December 31, 2015 as compared to the year ended December 31, 2014.
The decrease was primarily due to a reduction in exploration support services revenue that was due to a reduction in overall seismic
activity compared to the prior year.

The overall decrease in revenue was partially offset by the favorable impact of the change in foreign exchange rates on translating
revenue denominated in U.S. dollars from the Company’s United States operations.

Cost of sales decreased by 17% in the year ended December 31, 2015 as compared to the year ended December 31, 2014. The
decrease was primarily due to the decline in total revenue of 22% in the year, with margins showing a slight decline due to the
impact of lower rates. The decrease in cost of sales was partially offset by the unfavorable impact of translating costs denominated
in U.S. dollars.

Operating expenses and other. Operating costs decreased by $10.9 million in the year ended December 31, 2015 as compared to
the year ended December 31, 2014, mainly due to a decrease in payroll related and administrative costs, and a lower bad debt
provision of $1.2 million compared to the prior year. These declines were partially offset by additional operating expenses from the
T&R Transport acquisition and the unfavorable impact of translating operating costs denominated in U.S. dollars.

Segment profit. Segment profit decreased by $43.0 million in the year ended December 31, 2015 as compared to the year ended
December 31, 2014, largely due to the impact of the decline in revenue, offset in part by a decrease in overall operating expenses.

9
16

Gibson Energy Inc.
TSX: GEI

Truck Transportation

2015 Year End Report

The following tables set forth the operating results from the Company’s Truck Transportation segment:

Volumes (barrels in thousands)

2015

Barrels hauled ................................................................................................................................

111,525

2014

131,998

Year ended December 31,

2015
(in thousands)

2014

Revenues ........................................................................................................................................ $ 445,969
Cost of sales ...................................................................................................................................
293,839
152,130
100,096
52,034

Operating expenses and other ........................................................................................................
Segment profit................................................................................................................................ $

$ 557,735
376,685
181,050
97,872
83,178

Volumes, revenues and cost of sales. For the year ended December 31, 2015, barrels hauled decreased by 16% compared to the year
ended December 31, 2014. The decrease was mainly due to the impact of lower crude oil prices resulting in lower production and
drilling activity in the Company’s service areas. However, this was partially offset by strong demand for sulphur hauling during the
year. Revenue decreased by 20% in the year ended December 31, 2015 as compared to the year ended December 31, 2014 due
mainly to the impact of the lower overall volume, but also the impact of lower hauling rates in certain of the Company areas.

Cost of sales is primarily comprised of payments to owner-operators and lease operators. Cost of sales decreased by 22% in the
year ended December 31, 2015 compared to the year ended December 31, 2014 due to the overall decrease in volumes and overall
activity levels.

Operating expenses and other. Overall operating expenses increased by $2.2 million, or 2%, in the year ended December 31, 2015
compared to the year ended December 31, 2014, mainly due to the additional costs from the acquisition of Littlehawk, increased
owner-operator operational costs in the U.S. operations and the unfavorable impact of translating operating costs denominated in
U.S. dollars, partially offset by lower payroll related costs.

Segment profit. Segment profit decreased by $31.1 million, or 37%, in the year ended December 31, 2015 compared to the year
ended December 31, 2014, primarily due to lower hauling activity and an increase in operating costs.

10
17

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Propane and NGL Marketing and Distribution

The following tables set forth operating results from the Company’s Propane and NGL Marketing and Distribution segment:

Volumes
Sales volumes—Industrial (litres in thousands)

Oil and gas ..................................................................................................................................
Commercial ................................................................................................................................
Automotive .................................................................................................................................
Residential ..................................................................................................................................
Other ...........................................................................................................................................

Year ended December 31,

2015

2014

248,970
157,926
21,166
41,184
40,002
509,248

250,173
126,448
20,786
39,292
34,899
471,598

Sales volumes—wholesale (barrels in thousands)

Propane .......................................................................................................................................

3,807

3,129

Other NGLs

Butane .....................................................................................................................................
Condensate ..............................................................................................................................
U.S. division ............................................................................................................................

Revenues

Industrial

4,650
3,168
5,131
12,949

2,986
3,864
3,220
10,070

Year ended December 31,

2015
(in thousands)

2014

Propane...................................................................................................................................
Other ......................................................................................................................................
Total industrial ...........................................................................................................................
Wholesale

Propane...................................................................................................................................
Other NGLs ............................................................................................................................
Total wholesale ..........................................................................................................................
Total revenues ...............................................................................................................................
Cost of sales ..................................................................................................................................
Operating expenses and other ........................................................................................................
Segment profit ...............................................................................................................................

$ 157,099
29,820
186,919

$ 248,776
29,721
278,497

117,182
620,010
737,192
924,111
745,093
84,826
94,192

228,771
845,473
1,074,244
1,352,741
1,206,361
76,109
70,271

Volumes, revenues and cost of sales. Industrial volumes increased by 8% in the year ended December 31, 2015 compared to the
year ended December 31, 2014 as a result of higher commercial, automotive, residential, and other volumes which were created by
an increase in volumes from the Cal-Gas Inc. (‘Cal-Gas’) and Stittco Energy Limited (‘Stittco’) acquisitions completed during the
prior year. However, despite the increase, overall volumes were negatively impacted by warmer weather in Western Canada, earlier
spring break up in the year and lower overall oilpatch activity.

Despite the increase in volumes, industrial propane revenues decreased by 37% in the year ended December 31, 2015 as compared
to the year ended December 31, 2014, as a result of the significant decline in overall rack price of propane. Other revenue relates to
equipment sales, service labour and rental and delivery charges. Other revenue was consistent in the year ended December 31, 2015
compared to the year ended December 31, 2014.

Wholesale propane volumes increased by 22% in the year ended December 31, 2015 compared to the year ended December 31,
2014. The increase in volumes was largely driven by higher propane demand by certain customers and also the positive contribution
due to the Company’s expansion of its rail car fleet. Wholesale propane revenues decreased by 49% in the year ended December
31, 2015 compared to the year ended December 31, 2014 due to lower propane prices during the year.

Other NGLs volumes increased by 29% in the year ended December 31, 2015 as compared to the year ended December 31, 2014,
primarily as a result of higher demand from internal and external customers and also the positive impact of having access to a larger

11
18

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

rail car fleet. Despite the increase in volumes, other NGLs revenues decreased by 27% in the year ended December 31, 2015 as
compared to the year ended December 31, 2014 due to lower commodity prices.

Cost of sales decreased 38% in the year ended December 31, 2015 compared to the year ended December 31, 2014 primarily driven
by the impact of lower price levels.

Operating expenses and other. Overall operating expenses increased by $8.7 million, or 11%, in the year ended December 31, 2015
compared to the year ended December 31, 2014, primarily due to the full year impact of the operating costs from the Cal-Gas and
Stittco acquisitions in the current year compared to a partial period in the prior year.

Segment profit. The Propane and NGL Marketing and Distribution segment profit increased in the year ended December 31, 2015
by $23.9 million, or 34%, compared to the year ended December 31, 2014 largely as a result of higher wholesale propane and NGL
margins and the full year impact of the Cal-Gas and Stittco acquisitions that occurred during the prior year.

Processing and Wellsite Fluids

The following tables set forth operating results from the Company’s Processing and Wellsite Fluids segment:

Volumes (barrels in thousands)
Roofing flux ..................................................................................................................................
Road asphalt ..................................................................................................................................
Frac oils (Gibson Clear and light straight run distillate) ...............................................................
Distillate (D822) ...........................................................................................................................
Tops ..............................................................................................................................................
Other .............................................................................................................................................
Total sales volumes .......................................................................................................................

2015
1,702
540
282
591
1,871
253
5,239

2014
1,830
470
539
754
2,117
222
5,932

Year ended December 31,

2015
(in thousands)

2014

Revenues

Road asphalt and roofing flux ...................................................................................................
Frac oils (Gibson Clear and light straight run distillate) ...........................................................
Distillate (D822) ........................................................................................................................
Tops ...........................................................................................................................................
Other ..........................................................................................................................................
Total revenues ...............................................................................................................................
Cost of sales ..................................................................................................................................
Operating expenses and other ........................................................................................................
Segment profit ...............................................................................................................................

185,830
26,892
57,285
100,697
25,083
395,787
342,571
16,009
37,207

247,423
77,897
110,914
192,512
39,047
667,793
594,331
21,787
51,675

Volumes, revenue and cost of sales. Sales volumes for road asphalt increased by 15% in the year ended December 31, 2015
compared to the year ended December 31, 2014, due to a strong paving season as a result of favorable activity levels and good
weather in Western Canada and increased demand in the Northern United States. Sales volumes for roofing flux decreased by 7%
in the year ended December 31, 2015 compared to the year ended December 31, 2014 due to a decrease in customer demand and
also an increase in road asphalt volumes. Road asphalt and roofing flux revenue decreased by 25% in the year ended December 31,
2015 compared to year ended December 31, 2014 mainly due to the impact of lower crude oil prices.

Frac oils volumes decreased 48% in the year ended December 31, 2015 compared to the year ended December 31, 2014 largely due
to an overall decrease in customer demand from lower drilling activity in the Company’s markets. As a result of lower volumes and
selling prices, frac oils revenue decreased by 65% in the year ended December 31, 2015 compared to the year ended December 31,
2014.

Sales volumes for distillate decreased 22% in the year ended December 31, 2015 compared to the year ended December 31, 2014
due to lower customer demand as a result of lower drilling activity in the Company’s markets. As a result of lower volumes and
selling prices, distillate revenue decreased by 48% in the quarter ended December 31, 2015, compared to the year ended December
31, 2014.

12
19

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Tops volumes decreased 12% in the year ended December 31, 2015 as compared to the year ended December 31, 2014 due to lower
opening inventories at the start of the year and the impact of more production of Combined Vacuum Gas Oil (“CVGO”). Tops
revenues decreased by 48% in the year ended December 31, 2015 compared to the year ended December 31, 2014 due to lower
volumes and the decline in crude oil prices.

Other volumes include the sale of CVGO, oil based mud product (“OBM”) and solvents. Other volumes increased by 14% in the
year ended December 31, 2015 as compared to the year ended December 31, 2014, largely driven by new sales of the Company’s
CVGO. Other revenue decreased by 36% in the year ended December 31, 2015 as compared to the year ended December 31, 2014
due to the decrease in selling prices.

The overall cost per barrel for the suite of products sold by the Processing and Wellsite Fluids segment decreased by 35% due to
the decrease in crude oil costs.

Overall margins decreased by $20.2 million, or 28%, in the year ended December 31, 2015 as compared to the year ended December
31, 2014. The decrease was largely due to decreased margins for frac oils, distillate, tops, and OBM offset in part by higher overall
margins for road asphalt and roofing flux.

Operating expenses and other. Operating expenses and other decreased by $5.8 million, or 27%, in the year ended December 31,
2015 as compared to the year ended December 31, 2014. Operating expenses and other decreased mainly due to an incremental
foreign exchange gain of $4.2 million on realizing U.S. dollar denominated revenue in the year compared to the prior year and also
the impact of lower salaries and benefit costs.

Segment profit. The Processing and Wellsite Fluids segment profit decreased in the year ended December 31, 2015 by $14.5 million,
or 28%, as compared to the year ended December 31, 2014, primarily due to decreased overall margins for frac oils, distillate, tops,
offset in part by higher overall margins for asphalt and roofing flux and lower operating costs.

Marketing

The following tables set forth the operating results from the Company’s Marketing segment:

Volumes (barrels in thousands)
Sales Volumes

Year ended December 31,

2015

2014

Crude and diluent ......................................................................................................................

112,824

120,676

Year ended December 31,

2014
(in thousands)

2014

Revenues ..................................................................................................................................... $ 4,330,978
4,289,086
Cost of sales .................................................................................................................................
Operating expenses and other ......................................................................................................
6,621
Segment profit ............................................................................................................................
35,271

$ 7,005,045
6,931,758
8,107
65,180

The following tables set forth the monthly average NYMEX benchmark price of West Texas Intermediate crude oil (U.S.$):

Calendar Period
2014
January .................................................................................................................................................................
February ...............................................................................................................................................................
March ...................................................................................................................................................................
April .....................................................................................................................................................................
May ......................................................................................................................................................................
June ......................................................................................................................................................................
July .......................................................................................................................................................................
August ..................................................................................................................................................................
September ............................................................................................................................................................
October ................................................................................................................................................................
November ............................................................................................................................................................
December .............................................................................................................................................................

94.86
100.68
100.51
102.03
101.79
105.15
102.39
96.08
93.03
84.34
75.81
59.29

13
20

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

2015
January .................................................................................................................................................................
February ...............................................................................................................................................................
March ...................................................................................................................................................................
April .....................................................................................................................................................................
May ......................................................................................................................................................................
June ......................................................................................................................................................................
July .......................................................................................................................................................................
August ..................................................................................................................................................................
September ............................................................................................................................................................
October ................................................................................................................................................................
November ............................................................................................................................................................
December .............................................................................................................................................................

Average for the year ended December 31, 2015 ..................................................................................................
Average for the year ended December 31, 2014 ..................................................................................................

47.33
50.72
47.85
54.63
59.37
59.83
50.93
42.89
45.47
46.29
42.92
37.33

48.80
92.99

Volumes, revenues and cost of sales. Sales volumes for crude and diluent decreased by 7% in the year ended December 31, 2015
due to a decrease in buy/sell transactions in the current year. Revenue decreased by 38% in the year ended December 31, 2015
compared to the year ended December 31, 2014 due to lower crude oil prices and lower volumes, offset in part by the revenue
impact of buy/sell transactions that are recorded on a net basis and tighter crude oil price differentials.

Cost of sales decreased by 38% in the year ended December 31, 2015 compared to the year ended December 31, 2014 mainly due
to the reduction in crude oil prices.

Operating expenses and other. Operating expenses decreased by $1.5 million, or 18%, in the year ended December 31, 2015
compared to the year ended December 31, 2014 primarily due to lower payroll related costs.

Segment profit. The Marketing segment profit decreased by $29.9 million, or 46%, in the year ended December 31, 2015 as
compared to the year ended December 31, 2014. In addition to the impact of a strong first quarter in 2014, the year ended December
31, 2015 was negatively impacted by the decrease in crude oil prices, the impact of tightening crude oil price differentials during
the year, supply disruptions as a result of wildfires in Northern Alberta in the second quarter of 2015 and the decline in the demand
for crude by rail, partially offset by a decrease in operating costs.

General and administrative and other, excluding depreciation and amortization

General and administrative expense (“G&A”) is comprised of costs incurred for executive services, commercial development,
accounting, finance, treasury, legal, human resources, investor relations and communications that are incurred at a corporate level
and are not related to a specific segment. G&A expense was $39.6 million in the year ended December 31, 2015, compared to
$37.4 million in the year ended December 31, 2014. The increase in the year ended December 31, 2015 was largely driven by the
incurrence of severance costs of $2.9 million in the year and a loss on equity financial instruments of $5.4 million. These equity
financial instruments were entered into in the first quarter of 2015 to help manage the exposures relating to the Company’s stock
based compensation programs. These were partially offset by an increase in other income and also lower general G&A costs of $1.3
million, with the decline partly due to lower salary and benefit costs and despite the inclusion of commercial development costs in
G&A for the first time in 2015 and also higher rent costs due to expansion of head office space.

Depreciation

Depreciation expense was $195.4 million in the year ended December 31, 2015 compared to $154.9 million in the year ended
December 31, 2014. The increase was largely due to the additional depreciation related to the increase in the Company’s assets
resulting from the completion of capital projects and the completion of the Cal-Gas and Stittco acquisitions in 2014 as well as the
Littlehawk and T&R Transport acquisitions that were completed in 2015. In addition, included in depreciation expense in the year
ended December 31, 2015 are impairment charges related to the Company’s property, plant and equipment of $13.5 million. These
impairment charges largely related to assets within the Company’s Environmental Services segment.

14
21

Gibson Energy Inc.
TSX: GEI

Amortization

2015 Year End Report

Amortization expense was $87.6 million in the year ended December 31, 2015 compared to $55.0 million in the year ended
December 31, 2014. The increase was largely due to the additional amortization related to the completion of the Cal-Gas and Stittco
acquisitions in 2014 as well as the Littlehawk and T&R Transport acquisitions that were completed in 2015. In addition, included
in amortization expense in the year ended December 31, 2015 is additional amortization of $30.5 million relating to a revision in
the useful lives of certain intangible assets within the Company’s Environmental Services segment.

Impairment of goodwill

In the year ended December 31, 2015, a goodwill impairment loss within the Environmental Services segment of $176.0 million
was recorded. During the fourth quarter of 2015, the Company completed its annual impairment review and compared the calculated
recoverable value of each segment to the carrying value to determine if there was any goodwill impairment. As a result of this
process, it was determined that the recoverable value of the Environmental Services segment was less than the carrying value and
therefore an impairment loss was recorded. No impairment of goodwill existed in any other segment.

There was no impairment of goodwill recorded in the year ended December 31, 2014.

Stock based compensation

Stock based compensation expense was $20.4 million in the year ended December 31, 2015, respectively, compared to $13.9 million
in the year ended December 31, 2014, respectively. The increase was primarily due to the additional non-cash expense from the
granting of stock awards in the year ended December 31, 2015, due in part to the cumulative impact of the conversion of the long-
term incentive plan from a cash plan to an equity based plan over the last two years.

Foreign exchange loss not affecting segment profit

In the year ended December 31, 2015 and 2014, the Company recorded a foreign exchange loss of $108.2 million and $31.5 million,
respectively.

The gains and losses recorded are primarily driven by the movement in exchange rates on the translation of the Company’s U.S.
dollar denominated long-term debt and related financial instruments. In the year ended December 31, 2015 and 2014, a loss of
$123.1 million and $52.0 million, respectively, was recorded due to the unfavorable movement in exchange rates on the translation
of Company’s U.S. dollar denominated long-term debt. In the year ended December 31, 2015 and 2014, the loss was partially offset
by a gain of $10.0 million and $16.6 million, respectively, related to the change in mark-to-market value of U.S. dollar denominated
forward contracts and options used to mitigate the currency risk associated with the Company’s U.S. dollar denominated long-term
debt.

In the first quarter of 2015, the Company settled its forward contracts and options used to mitigate the currency risk associated with
the Company’s U.S. dollar denominated long-term debt and as a result, received net cash of $36.6 million on the settlement of U.S.
dollar forward contracts for a notional amount of U.S.$250.0 million and U.S dollar options for a notional amount of U.S.$250.0
million.

Net interest expense

Net interest expense was $79.0 million in the year ended December 31, 2015, compared to $66.7 million in the year ended December
31, 2014. The increase was primarily due to an increase in interest charges as a result of the increase in outstanding debt balance
following the issuance of incremental debt of $300.0 million and U.S.$50.0 million in June 2014. The increase was also related to
the unfavorable foreign exchange impact which increased the U.S. denominated interest when expressed in Canadian dollars.

Income tax provision (recovery)

Income tax recovery was $6.7 million in the year ended December 31, 2015 compared to an income tax provision of $35.6 million
in the year ended December 31, 2014. The effective tax rate was 2.3% during the year ended December 31, 2015 compared to
27.9% in the year ended December 31, 2014. The main reasons for the income tax recovery and the change in the effective rate was
the loss before income tax in the current year period of $287.3 million compared to income before tax of $127.5 million in the prior
year and also the increase in the impact of non-deductible amounts relating to the impairment of goodwill as well as net capital
losses relating to foreign exchange movements on the Company’s U.S. dollar denominated long-term debt. In addition, as a result
of the increase in the Alberta corporate tax rate, the income tax amount in the year ended December 31, 2015 includes a $6.8 million
charge relating to the impact of the higher tax rate on the valuation of the Company’s net deferred tax liabilities. In order to lessen
the future impact of the increase in the Alberta corporate tax rate, the Company elected in its 2014 tax returns to settle the provincial

15
22

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

portion of an existing partnership deferral that would have been taxed in 2015 and 2016, resulting in an additional $11.0 million in
income tax being paid during the year ended December 31, 2015. In addition, income tax expense in the year ended December 31,
2015 includes approximately $4.6 million of additional current tax expense relating to the net realized gain on the settlement of the
U.S. dollar forward contracts and U.S dollar options in the first quarter of 2015.

Fourth Quarter Results

Three months ended December 31,

2015
(in thousands)

2014

49,353
81,710
97,496
237,473
83,340
938,186
1,487,558
(211,335)
1,276,223

44,087
115,185
144,097
383,265
162,253
1,502,860
2,351,747
(375,282)
1,976,465

40,378
11,400
10,912
30,504
7,044
11,860
112,098
10,790
57,437
44,168
175,959
5,662
23,186
19,406
(224,510)
(12,290)
$ (212,220) $

34,020
28,097
22,743
15,524
14,807
14,332
129,523
10,984
44,632
13,706
-
3,827
15,269
19,273
21,832
8,426
13,406

Segment revenue
Terminals and Pipelines ...............................................................................................................
Environmental Services ...............................................................................................................
Truck Transportation ...................................................................................................................
Propane and NGL Marketing and Distribution ............................................................................
Processing and Wellsite Fluids ....................................................................................................
Marketing .....................................................................................................................................
Total segment revenue .................................................................................................................
Revenue – inter-segmental ...........................................................................................................
Total revenue – external ..............................................................................................................
Segment profit
Terminals and Pipelines ...............................................................................................................
Environmental Services ...............................................................................................................
Truck Transportation ...................................................................................................................
Propane and NGL Marketing and Distribution ............................................................................
Processing and Wellsite Fluids ....................................................................................................
Marketing .....................................................................................................................................
Total segment profit .....................................................................................................................
General and administrative ..........................................................................................................
Depreciation .................................................................................................................................
Amortization ................................................................................................................................
Impairment of goodwill ...............................................................................................................
Stock based compensation ...........................................................................................................
Foreign exchange loss ..................................................................................................................
Net interest expense .....................................................................................................................
Income (loss) before income tax ..................................................................................................
Income tax provision (recovery) ..................................................................................................
Net income (loss) ........................................................................................................................

16
23

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Segment revenue decreased by $700.2 million in the three months ended December 31, 2015 compared to the three months ended
December 31, 2014. Changes in segment revenue were as follows:

•
Terminals and Pipelines revenue increased in the three months ended December 31, 2015 by $5.3 million compared to the three
months ended December 31, 2014. The increase was largely driven by increased revenue at the Hardisty Terminal due to an
increase in revenue from customers with dedicated tank usage that are subject to minimum fixed fee arrangements and
additional revenue from the commissioning of the connectivity enhancement projects related to the twinning of the Cold Lake
and Athabasca pipeline connections to the Hardisty Terminal;

•
Environmental Services revenue decreased by $33.5 million in the three months ended December 31, 2015 as compared to the
year ended December 31, 2014 mainly due to the reduction in oilfield drilling and completion activity in the United States and
Canada that resulted in lower volumes at the Company’s Canadian environmental services facilities and a decrease in the U.S.
fluid disposal and production services business, partially offset by the favorable foreign exchange impact of translating revenue
denominated in U.S. dollars from the Company’s United States operations;

•
Truck Transportation revenue decreased by $16.6 million mainly as a result of the impact of lower crude oil prices resulting in
lower production and drilling activity in the Company’s service areas. As a result of this reduction in volumes and also in rates,
revenue decreased, which was partially offset by the favorable foreign exchange impact of translating revenue denominated in
U.S. dollars from the Company’s United States operations;

• Propane and NGL Marketing and Distribution revenue decreased by $145.8 million due to the impact of lower prices for
propane and other NGL products, and also lower overall industrial propane volumes. Lower volumes for propane were
generally related to warmer weather patterns over the quarter in 2015 which reduced overall demand;

• Processing and Wellsite Fluids revenue decreased by $78.9 million due to a decrease in demand for products which was largely
driven by lower customer demand as a result of lower drilling activity in the Company’s markets. The decline was also driven
by the impact of lower crude oil prices; and

• Marketing revenue decreased by $564.7 million which was driven by the impact of lower crude oil prices and volumes.
Segment profit decreased by $17.4 million, or 13%, in the three months ended December 31, 2015 compared to the three months
ended December 31, 2014. The changes in segment profit were as follows:
• Terminals and Pipelines segment profit increased by $6.4 million, largely due to increased revenues at the Hardisty terminal
from the commissioning of four new dedicated tanks in late 2014 and early 2015 and pipeline connections during the year and
also lower operating costs;

• Environmental Services segment profit decreased $16.7 million largely as a result of the decline in revenues partially offset by

lower operating expenses;

• Truck Transportation segment profit decreased by $11.8 million due to the decline in revenues partially offset by lower

operating expenses;

•
Propane and NGL Marketing and Distribution segment profit increased by $15.0 million due mainly to increased margins
within the Wholesale and NGL Marketing and Distribution business as a result of higher overall volumes that was driven in
part by access to a larger rail car fleet in 2015. The increase was also driven by a reduction in operating expenses and in
particular lower payroll related costs. These positive impacts to segment profit were partially offset by the impact of lower
industrial propane volumes;

•
Processing and Wellsite Fluids segment profit decreased by $7.8 million, primarily as a result of lower margins on frac oils,

distillate and OBM products in the quarter, partially offset by higher tops and asphalt margins; and

•
Marketing segment profit decreased by $2.5 million mainly due to the impact of both lower volumes and crude oil prices on

margins.

Net loss was $212.2 million in the three months ended December 31, 2015 compared to net income of $13.4 million in the three
months ended December 31, 2014. Net income declined to a net loss due mainly to lower segment profit and the impact of higher
depreciation and amortization, impairment and stock based compensation costs and also an increase in foreign exchange losses,
partially offset by the recovery of income taxes.

17
24

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

SUMMARY OF QUARTERLY RESULTS

The following table sets forth a summary of the Company’s quarterly results for each of the last eight quarters:

Three months ended
(in thousands)
Revenues ........................
Net income (loss)............
EBITDA(1) ......................
Adjusted EBITDA(2) ......
Earnings (loss) per share
Basic ...........................
Diluted ........................

December 31 September 30

June 30 March 31

December 31 September 30

June 30 March 31

2015

2014

$1,276,223
(212,220)
(103,464)
100,961

$1,348,990 $1,574,427 $1,392,342
(20,500)
64,652
114,573

(41,195)
39,224
95,107

(6,741)
74,816
75,643

$1,976,465
13,406
100,001
119,302

$2,360,007 $2,126,365 $2,110,692
46,155
125,981
136,945

8,542
89,272
114,134

23,838
89,798
82,684

(1.69)
(1.69)

(0.33)
(0.33)

(0.05)
(0.05)

(0.16)
(0.16)

0.10
0.10

0.07
0.07

0.19
0.19

0.38
0.37

(1) EBITDA is not a measure recognized under IFRS and does not have standardized meanings prescribed by IFRS. EBITDA

consists of net income (loss) before interest expense, income taxes, depreciation, and amortization.

(2) Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation, amortization, other non-
cash expenses and charges deducted in determining consolidated net income (loss), including movement in the unrealized gains
and losses on the Company’s financial instruments, stock based compensation expense, impairment of goodwill and intangible
assets, and asset writedowns. It also removes the impact of foreign exchange movements in the Company’s U.S. dollar
denominated long-term debt, debt extinguishment expenses and adjustments that are considered non-recurring in nature.

The Company presents EBITDA because it considers it to be an important supplemental measure of the Company’s performance
and believes this measure is frequently used by securities analysts, investors and other interested parties in the evaluation of
companies in industries with similar capital structures. EBITDA has limitations as an analytical tool, and readers should not consider
this item in isolation, or as a substitute for an analysis of the Company’s results as reported under IFRS. Some of these limitations
are:

- EBITDA:

-
-

excludes certain income tax payments that may represent a reduction in cash available to the Company;

does not reflect the Company’s cash expenditures, or future requirements, for capital expenditures or contractual
commitments;

does not reflect changes in, or cash requirements for, the Company’s working capital needs; and

does not reflect the significant interest expense, or the cash requirements necessary to service interest payments on the
Company’s debt, including the Senior Unsecured Notes and the Revolving Credit Facility;

- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be

replaced in the future and EBITDA does not reflect any cash requirements for such replacements; and

- Other companies in the industry may calculate EBITDA differently than the Company does, limiting its usefulness as a

comparative measure.

18
25

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to the Company to
invest in the growth of the Company’s business. The Company compensates for these limitations by relying primarily on the
Company’s IFRS results and using EBITDA only supplementally. The following table reconciles consolidated net income (loss) to
EBITDA:

Three months ended
(in thousands)
Net income (loss) .........
Depreciation and
amortization .................
Interest expense(1) .........
Income tax expense
(recovery) .....................
EBITDA .......................

2015
December 31 September 30

June 30 March 31

December 31 September 30

June 30 March 31

2014

$(212,220)

$ (41,195)

$ (6,741) $ (20,500)

$ 13,406

8,542

$ 23,838

$ 46,155

101,605
19,441

61,010
19,471

62,007
20,206

58,370
20,462

58,338
19,831

53,510
18,774

49,264
15,331

48,813
13,662

(12,290)
$(103,464)

(62)
$ 39,224

(656)
$ 74,816

6,320
$ 64,652

8,426
$ 100,001

8,446
$ 89,272

1,365
$ 89,798

17,351
$ 125,981

(1) Interest expense includes the impact of the change in net unrealized gains or losses attributable to movement in the mark-to-

market valuation of financial instruments relating to interest expense.

Adjusted EBITDA and Pro Forma Adjusted EBITDA are presented in the table below because the Company believes it facilitates
investors’ use of operating performance comparisons from period to period and company to company by backing out potential
differences caused by variations in capital structures (affecting relative interest expense and foreign exchange differences on the
Company’s long-term debt), the book amortization of intangibles (affecting relative amortization expense) and the age and book
value of property, plant and equipment (affecting relative depreciation expense). The Company also presents Adjusted EBITDA
and Pro Forma Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested
parties as a measure of financial performance. Adjusted EBITDA and Pro Forma Adjusted EBITDA as presented herein are not
recognized measures under IFRS and should not be considered as an alternative to operating income or net income as measures of
operating results or an alternative to cash flows as measures of liquidity. Adjusted EBITDA differs from the term EBITDA as it is
commonly used. Adjusted EBITDA is defined as consolidated net income (loss) before interest expense, income taxes, depreciation,
amortization, other non-cash expenses and charges deducted in determining consolidated net income (loss), including movement in
the unrealized gains and losses on the Company’s financial instruments, stock based compensation expense, impairment of goodwill
and intangible assets, and asset writedowns. It also removes the impact of foreign exchange movements in the Company’s U.S.
dollar denominated long-term debt, debt extinguishment expenses and other adjustments that are considered non-recurring in nature.
Pro Forma Adjusted EBITDA differs from the term Adjusted EBITDA in that it also includes the pro forma effect of acquisitions
that took place in each fiscal year as if the acquisitions took place at the beginning of the fiscal year in which such acquisition
occurred. Pro Forma Adjusted EBITDA is also used in calculating the Company’s covenant compliance under the Company’s debt
agreements.

The Company’s calculation of Adjusted EBITDA and Pro Forma Adjusted EBITDA may not be comparable to such calculations
used by other companies. In calculating Pro Forma Adjusted EBITDA, the Company makes certain adjustments that are based on
assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating Adjusted EBITDA and Pro Forma
Adjusted EBITDA, readers should be aware that in the future the Company may incur expenses similar to those eliminated in the
presentation herein.

19
26

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

The following tables reconcile EBITDA to Adjusted EBITDA for each of the last eight quarters and Pro Forma Adjusted EBITDA
for the year ended December 31, 2015 and 2014:

Three months ended

December 31,
2015

September 30,
2015

June 30,
2015

March 31,
2015

EBITDA ...................................................................................... $ (103,464) $ 39,224
Unrealized foreign exchange loss (gain) on long-term debt(1) .....
50,600
Net unrealized loss (gain) from financial instruments(2) ..............
82
Stock based compensation(3) .......................................................
5,135
Impairment of goodwill (4) ..........................................................
-
Acquisition related costs (5) .........................................................
66
Adjusted EBITDA ...................................................................... $ 100,961 $ 95,107
Pro forma impact of acquisitions (6) ............................................
Pro Forma Adjusted EBITDA .....................................................

24,530
(1,726)
5,662
175,959
-

(in thousands)

$ 74,816
(11,495)
7,206
5,116
-
-
$ 75,643

$ 64,652
59,510
(14,066)
4,466
-
11
$ 114,573

EBITDA ......................................................................................
Unrealized foreign exchange loss (gain) on long-term debt (1) ....
Net unrealized loss (gain) from financial instruments (2) .............
Stock based compensation (3) ......................................................
Acquisition related costs (5) .........................................................
Adjusted EBITDA ......................................................................
Pro forma impact of acquisitions (6) ............................................
Pro Forma Adjusted EBITDA .....................................................

Three months ended

December 31,
2014

September 30,
2014

June 30,
2014

March 31,
2014

$ 100,001

21,615
(6,141)
3,827
-

$ 119,302

(in thousands)
89,272 $ 89,798 $ 125,981
20,850
(19,725)
29,260
(13,014)
9,064
(8,361)
3,128
3,380
3,642
-
167
321
$ 114,134 $ 82,684 $ 136,945

Year ended
December 31,
2015

75,228
123,145
(8,504)
20,379
175,959
77
$ 386,284
3,611
$ 389,895

Year ended
December 31,
2014

405,052
52,000
(18,452)
13,977
488
453,065
5,129
458,194

(1) Non-cash adjustment representing the unrealized foreign exchange loss (gain) on long-term debt, as a result of the movement

in exchange rates in the periods.

(2) Reflects the exclusion of the movement in the mark-to-market valuation of financial instruments used in risk management
activities. The Company uses crude oil and NGL priced futures, options and swaps to manage the exposure to commodities
price movements and foreign currency forward contracts and options to manage foreign exchange risks, although the Company
does not formally designate these financial instruments as hedges for accounting purposes. Accordingly, the unrealized gains
or losses on these financial instruments are recorded directly to the income statement. Management believes that this
adjustment better correlates the effect of risk management activities to the underlying operating activities to which they relate.

(3) Represents the non-cash stock based compensation relating to the Company’s equity incentive plan.
(4) Represents the non-cash impairment of goodwill charge recorded in the three months ended December 31, 2015.

(5) Represents transaction fees that were expensed in connection with acquisitions made by the Company.

(6) Reflects the pro forma impact of acquisitions on the Company’s Adjusted EBITDA as if the acquisitions that took place in the
twelve months period occurred on January 1 of each twelve month period. The pro forma impact of acquisitions is calculated
on the same basis as Adjusted EBITDA.

20
27

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary liquidity and capital resource needs are to fund ongoing capital expenditures, growth opportunities and
acquisitions and to fund its targeted dividend level. In addition, the Company must service its debt, including interest payments and
finance working capital needs. The Company relies on its cash flow from operations, debt and equity financings and borrowings
under the Company’s Revolving Credit Facility for liquidity.

The Company’s operating cash flow has historically been affected by the overall profitability of sales within the Company’s
segments, the Company’s ability to invoice and collect from customers in a timely manner and the Company’s ability to efficiently
implement the Company’s growth strategy and manage costs. The Company’s cash, cash equivalents and cash flow from operations
have historically been sufficient to meet the Company’s working capital, capital expenditure and debt servicing requirements.

The following table summarizes the Company’s sources and uses of funds for the year ended December 31, 2015 and 2014:

Year ended December 31,

2015
(in thousands)

2014

Statement of Cash Flows
Cash flows provided by (used in):
Operating activities ................................................................................................................... $ 458,067
Investing activities ....................................................................................................................
Financing activities ...................................................................................................................

(372,628)
(141,862)

$ 336,228
(495,015)
188,199

Cash provided by operating activities

The primary drivers of cash flow from operating activities are the collection of amounts related to sales of products such as crude
oil, propane, NGLs, asphalt and other products and fees for services provided associated with the Company’s Truck Transportation,
Terminals and Pipelines and Environmental Services segments. Offsetting these collections are payments for purchases of crude oil
and other products and other expenses. Other expenses primarily consist of owner-operator and lease-operator payments for the
provision of contract trucking services, field operating expenses and G&A expenses. Historically, the Marketing and the Processing
and Wellsite Fluids segments have been the most variable with respect to generating cash flows due to the impact of crude oil price
levels and the volatility that price changes and crude oil grade basis changes have on the cash flows and working capital requirements
of these segments.

Cash provided by operations in the year ended December 31, 2015 was $458.1 million compared to $336.2 million in the year ended
December 31, 2014. The increase was due to a decline in working capital that resulted in a generation of $74.3 million in cash in
the year ended December 31, 2015 compared to a use of cash to fund working capital of $105.3 million in the year ended December
31, 2014. This increase was offset in part by the decline in segment profit.

Cash used in investing activities

Cash used in investing activities consists primarily of capital expenditures and business acquisitions.

Cash used in investing activities was $372.6 million in the year ended December 31, 2015, compared to $495.0 million in the year
ended December 31, 2014. Cash used in investing activities largely relates to capital expenditures and acquisitions. For a summary
of capital expenditures and acquisitions, see “Acquisitions and Capital expenditures” included in this MD&A.

Cash provided by (used in) financing activities

Cash used in financing activities was $141.8 million in the year ended December 31, 2015 compared to cash provided by financing
activities of $188.2 million in the year ended December 31, 2014. The change was primarily due to the net proceeds from a debt
issuance totaling $300.0 million and U.S.$50 million completed in June 2014. The change was also due to the payment of net
interest and cash dividends of $84.1 million and $129.0 million in the year ended December 31, 2015 compared to net interest and
cash dividends of $62.1 million and $108.2 million in the year ended December 31, 2014, partially offset by the net proceeds on
the settlement of financial instruments of $36.6 million, and the net proceeds from credit facilities of $35.0 million. The increase in
dividends paid was driven by the $0.02 per share increase effective in the first quarter of 2015 resulting in a $13.1 million increase
in cash dividend paid and also the impact of the suspension of the DRIP during the year resulting in a $7.7 million increase in cash
dividend paid.

21
28

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Liquidity sources, requirements and contractual cash requirements and commitments

The Company believes that cash on hand, together with cash from operations and borrowings under the Revolving Credit Facility,
will be adequate to meet its working capital needs, upgrade and replacement capital expenditures, currently sanctioned growth
capital projects, debt service, targeted dividend level and other cash requirements for at least the next twelve months. The Company
had unrestricted cash of $82.8 million and $432.3 million available under the Revolving Credit Facility as at December 31, 2015.

The Company’s ability to make interest payments on the Company’s indebtedness, to pay targeted dividends and to fund the
Company’s other liquidity requirements will depend on the Company’s ability to generate cash in the future. In the three months
ended December 31, 2015, the Company declared a dividend of $0.32 per share for a total dividend of $40.4 million, of which the
entire amount was paid in cash on January 15, 2016. The declaration of dividends is considered on a quarterly basis and is at the
sole discretion of the Board and will be determined on the basis of earnings, financial requirements for operations and a solvency
calculation.

Capital expenditures amounted to $392.6 million in the year ended December 31, 2015. As previously announced, the Company
has approved a 2016 growth capital expenditure budget ranging between $200.0 million and $300.0 million and an additional $50.0
million allocated to upgrade and replacement capital expenditures. While the Company anticipates that these planned capital
expenditures will occur, certain projects are subject to general economic, financial, competitive, legislative, regulatory and other
factors, some of which are beyond the Company’s control.

In addition to anticipated capital expenditures, the Company may engage in strategic acquisitions and additional capital expenditures
as opportunities arise that benefit the Company’s existing operations by expanding the Company’s reach in existing markets or by
providing platforms by which to enter new markets. Any such acquisition or capital expenditure could be material and could have
a material effect on the Company’s liquidity, cash flows and capital commitments and resources. Any future acquisitions, capital
expenditures or other similar transactions may require additional capital and there can be no assurance that such capital will be
available to the Company on acceptable terms, or at all.

As of December 31, 2015, the Company had total outstanding Senior Unsecured Notes, excluding debt discount and the issuance
costs, of U.S.$550.0 million bearing fixed interest of 6.75% per annum due July 15, 2021, $250.0 million bearing fixed interest of
7.00% per annum due July 15, 2020 and $300.0 million bearing fixed interest of 5.375% per annum due July 15, 2022 (collectively
the “Notes”). Interest is payable semi-annually on January 15 and July 15 of each year the Notes are outstanding.

The Notes agreements contain certain redemption options whereby the Company can redeem all or part of the Notes subject to
certain premiums if such prepayment occurs prior to the dates specified in the agreements. In addition, the Note holders have the
right to require the Company to redeem the Notes or a portion thereof, at the redemption prices set forth in the agreements in the
event of change in control or in the event certain asset sale proceeds are not re-invested in the time and manner specified in the
agreements.

The Revolving Credit Facility of $500.0 million, the proceeds of which are available to provide financing for working capital and
other general corporate purposes, has an accordion feature whereby the Company can increase the Revolving Credit Facility to
$750.0 million subject to obtaining incremental lender commitments. The Revolving Credit Facility has an extendible term of five
years, expiring on August 15, 2020. The Revolving Credit Facility provides sub-facilities for letters of credit, swingline loans and
borrowings in Canadian dollars and U.S. dollars. Borrowings under the Revolving Credit Facility bear interest at a rate equal to
Canadian Prime Rate or U.S. Base Rate or U.S. LIBOR or Canadian Bankers Acceptance Rate as the case may be plus an applicable
margin. The applicable margin for borrowings under the Revolving Credit Facility is subject to step up and step down based on the
Company’s total debt leverage ratio. In addition, the Company must pay a standby fee on the unused portion of the Revolving Credit
Facility and customary letter of credit fees equal to the applicable margins determined in a manner similar to the interest. In addition,
the Company has three bilateral demand letter of credit facilities totaling $150.0 million.

At December 31, 2015, the Company had $35.0 million drawn under the Revolving Credit Facility, had no restricted cash, and had
issued letters of credit totaling $32.6 million.

The terms of the Company’s Revolving Credit Facility require the Company to maintain certain covenants including a consolidated
senior debt leverage ratio of no greater than 4.0 to 1.0 until June 30, 2017 and 3.5 to 1.0 thereafter, a consolidated total debt leverage
ratio of no greater than 4.0 to 1.0 and an interest coverage ratio of no less than 2.5 to 1.0. The consolidated senior debt ratio
represents the ratio of all senior debt obligations to Pro Forma Adjusted EBITDA. The consolidated total debt ratio represents the
ratio of total debt, letters of credit and capitalized leases to Pro Forma Adjusted EBITDA. The consolidated interest coverage ratio
represents the ratio of Pro Forma Adjusted EBITDA to consolidated cash interest expense. As at December 31, 2015, the Company
was in compliance with the financial ratios with the senior debt leverage ratio at 3.2 to 1.0, total debt leverage ratio at 3.2 to 1.0,

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

and the interest coverage ratio at 4.6 to 1.0. If the Company fails to comply with the financial covenants, the lenders may declare
an event of default. An event of default resulting from a breach of a financial covenant may result, at the option of lenders holding
a majority of the loans, in an acceleration of repayment of the principal and interest outstanding and a termination of the Revolving
Credit Facility.

Subsequent to year end, the Company reached an agreement with its bank syndicate to amend its $500M revolving credit facility
maturing in August 2020. These amendments included an increase to the maximum consolidated senior and total debt leverage ratio
covenants from 4.0:1.0 to 4.85:1.0 until December 31, 2017, with such threshold decreasing to 4.25:1.0 for the period beginning
January 1, 2018 and ending on March 31, 2018, and decreasing thereafter to 4.0:1.0 for total debt and 3.5:1.0 for senior debt.

The Notes and the Revolving Credit Facility contain non-financial covenants that restrict, subject to certain thresholds, some of the
Company’s activities, including the Company’s ability to dispose of assets, incur additional debt, pay dividends, create liens, make
investments and engage in specified transactions with affiliates. The Notes and the Revolving Credit Facility also contain customary
events of default, including defaults based on events of bankruptcy and insolvency, non-payment of principal, interest or fees when
due, breach of covenants, change in control and material inaccuracy of representations and warranties, subject to specified grace
periods. As of December 31, 2015, the Company was in compliance with all of its covenants under the Notes and the Revolving
Credit Facility.

Contingencies

The Company is currently undergoing various tax related audits. While the final outcome of such audits cannot be predicted with
certainty, the Company believes that the resolution of these audits will not have a material impact on the Company’s consolidated
financial position or results of operations.

The Company is subject to various regulatory and statutory requirements relating to the protection of the environment. These
requirements, in addition to the contractual agreements and management decisions, result in the recognition of estimated
decommissioning obligations and environmental remediation. Estimates of decommissioning obligations and environmental
remediation costs can change significantly based on such factors as operating experience and changes in legislation and regulations.

The Company is involved in various legal actions which have occurred in the ordinary course of business. The Company is of the
opinion that losses, if any, arising from such legal actions would not have a material impact on the Company’s consolidated financial
position or results of operations.

Contractual obligations

The following table presents, at December 31, 2015, the Company’s obligations and commitments to make future payments under
contracts and contingent commitments:

Payments due by period

(in thousands)
Long-term debt(1) ............................................................. $ 1,311,200
Interest payments on long-term debt(1) .............................
662,815
Operating lease and other commitments(2) .......................
287,442
Total contractual obligations ............................................ $2,261,457

Total

Less than
1 year
-
85,006
78,790
$ 163,796

1-3 years

-
170,012
127,885
$ 297,897

3-5 years
$ 250,000
170,012
67,916
$ 487,928

More than
5 years
$1,061,200
237,785
12,851
$ 1,311,836

(1) The exchange rate used to translate the U.S. dollar obligations on the Company’s long-term debt and interest payments is the

rate as of December 31, 2015 of U.S.$0.7225 to $1.00.

(2) Operating lease and other commitments relate to an office lease for the Company’s Calgary head office, rail tank cars, vehicles,

field buildings, various equipment leases and terminal services arrangements.

As at December 31, 2015, the Company has identified and approved a capital expenditure budget, excluding acquisitions, of $264.7
million that the Company expects to undertake over the next 12 to 24 months. In addition, the Company had accrued liabilities for
obligations with respect to the Company’s defined benefit plans of $5.2 million and provisions associated with site restoration on
the retirement of assets and environmental costs of $155.3 million but the timing of such payments is uncertain due to the estimates
used to calculate these amounts and the long-term nature of these balances. The Company also has commitments relating to its risk
management contracts which are discussed further in “Quantitative and Qualitative Disclosures about Market Risks”.

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or
future effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or
capital expenses that are material to investors.

RELATED PARTY TRANSACTIONS

On August 11, 2011, the Company formed a partnership (the “Plato Partnership”) to jointly construct and own a pipeline and
emulsion treating, water disposal and oilfield waste management facilities in the Plato area of Saskatchewan. The Plato Partnership
commenced operations in 2012. The Company’s interest in the Plato Partnership is 50%. A member of the Company’s Board is
also a director of the other party with the 50% interest in the Plato Partnership. At December 31, 2015 and 2014, the Company’s
proportionate share of property, plant and equipment was $9.4 million and $10.2 million, respectively. The impact of the Company’s
share of the other financial position and results of the Plato Partnership is not material to the Company’s consolidated financial
statements.

The related party transactions noted above have been measured at agreed upon market based terms.

OUTSTANDING SHARE DATA

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. As at
December 31, 2015, there were 126.1 million common shares outstanding and no preferred shares outstanding. In addition, under
the Company’s equity incentive plan, there were an aggregate of 1.8 million restricted share units, performance share units and
deferred share units outstanding and 3.3 million stock options outstanding as at December 31, 2015.

At December 31, 2015, awards available to grant under the equity incentive plan were approximately 7.5 million.

As at February 29, 2016, 126.2 million common shares, 1.8 million restricted share units, performance share units and deferred share
units and 3.3 million stock options were outstanding.

DIVIDENDS

The Company is currently paying quarterly dividends to holders of common shares. The payment of dividends is not guaranteed,
and the amount and timing of any dividends payable by Gibsons’ will be at the discretion of the Board and will be established on
the basis of Gibson's earnings, financial requirements for operations, the satisfaction of a solvency calculation and the terms of the
Company’s debt agreements. In addition, in connection with Company’s dividend policy, after each fiscal year end the Board will
formally review the annual dividend amount.

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Gibson Energy Inc.
TSX: GEI

DISTRIBUTABLE CASH FLOW

2015 Year End Report

Distributable cash flow is not a standard measure under IFRS and, therefore, may not be comparable to similar measures reported
by other entities. Distributable cash flow is used to assess the level of cash flow generated from ongoing operations and to evaluate
the adequacy of internally generated cash flow to fund dividends. Changes in non-cash working capital are excluded from the
determination of distributable cash flow because they are primarily the result of fluctuations in product inventories or other
temporary changes. Upgrade and replacement capital expenditures are deducted from distributable cash flow as they are ongoing
recurring expenditures.

The following is a reconciliation of distributable cash flow to its most closely related IFRS measure, cash flow from operating
activities.

Cash flow from operating activities .....................................................................................
Adjustments:

Changes in non-cash working capital ...............................................................................
Upgrade and replacement capital .....................................................................................
Cash interest expense, including capitalized interest ........................................................
Current income tax(1) ........................................................................................................
Distributable cash flow ........................................................................................................

Year ended
December 31
2015
(in thousands)

2014

$ 458,067

$ 336,228

(74,293)
(46,775)
(84,965)
(32,503)
$ 219,531

105,291
(59,035)
(68,708)
(48,549)
$ 265,227

Dividends declared to shareholders .....................................................................................

$ 161,002

$ 148,573

(1) 2015 - Excludes the $11.0 million payment to settle the provincial portion of the partnership deferral for 2015 and 2016 and
approximately $4.6 million of additional current tax expense relating to the net realized gain on the settlement of the U.S.
dollar forward contracts and U.S dollar options in the first quarter of 2015.

Dividends declared in the year ended December 31, 2015 were $161.0 million, of which $140.3 million was paid in cash and the
balance was settled with the issuance of common shares under the Company’s DRIP and SDP. In the year ended December 31,
2015, dividends declared represented 73% of the distributable cash flow generated or, distributable cash flow was 1.4 times
dividends declared. On a net basis after consideration of the DRIP and SDP, declared dividends paid in cash represented 64% of
the distributable cash flow generated, or distributable cash flow was 1.6 times dividends paid in cash. On August 6, 2015, the
Company suspended, until further notice, its DRIP and SDP.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is involved in various commodity related marketing activities that are intended to enhance the Company’s operations
and increase profitability. These activities often create exposure to price risk between the time contracted volumes are purchased
and sold and to foreign exchange risk when contracts are in different currencies (Canadian dollar versus U.S. dollar). The Company
is also exposed to various market risks, including volatility in (i) crude oil, refined products, natural gas and NGL prices, (ii) interest
rates, (iii) currency exchange rates and (iv) equity prices. The Company utilizes various derivative instruments from time to time
to manage commodity price, interest rate and currency exchange rate exposure and, in certain circumstances, to realize incremental
margin during volatile market conditions. The Company’s commodity trading and risk management policies and procedures are
designed to establish and manage to an approved level of Value at Risk. The Company has a Risk Management Committee that has
direct responsibility and authority for the Company’s risk policies and the Company’s trading controls and procedures and certain
aspects of corporate risk management. The Company’s approved strategies are intended to mitigate risks that are inherent in the
Company’s core businesses of aggregating and marketing and distribution. To hedge the risks discussed above the Company
engages in risk management activities that the Company categorizes by the risks the Company is hedging and by the physical
product that is creating the risk. The following discussion addresses each category of risk.

Commodity Price Risk. The Company hedges its exposure to price fluctuations with respect to crude oil, refined products, natural
gas and NGLs, and expected purchases and sales of these commodities (relating primarily to crude oil, roofing flux, propane sales
and purchases of natural gasoline). The derivative instruments utilized consist primarily of futures and option contracts traded on
the NYMEX, ICE and over-the-counter transactions, including swap and option contracts entered into with financial institutions
and other energy companies. The Company’s policy is to transact only in commodity derivative products for which the Company

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

physically transacts, and to structure the Company’s hedging activities so that price fluctuations for those products do not materially
affect the net cash the Company ultimately receives from its commodity related marketing activities.

Although the Company seeks to maintain a position that is substantially balanced within the Company’s various commodity
purchase and sales activities, the Company may experience net unbalanced positions as a result of production, transportation and
delivery variances as well as logistical issues associated with inclement weather conditions.

The intent of the Company’s risk management strategy is to hedge the Company’s margin. However, the Company has not
designated nor attempted to qualify for hedge accounting. Thus, changes in the fair values of all of the Company’s derivatives are
recognized in earnings, and result in greater potential for earnings volatility.

The fair value of futures contracts is based on quoted market prices obtained from the Chicago Mercantile Exchange. The fair value
of swaps and option contracts is estimated based on quoted prices from various sources such as independent reporting services,
industry publications and brokers. These quotes are compared to the contract price of the swap, which approximates the gain or loss
that would have been realized if the contracts had been closed out at the period end. For positions where independent quotations are
not available, an estimate is provided, or the prevailing market price at which the positions could be liquidated is used. No such
positions existed as at December 31, 2015 and December 31, 2014. All derivative positions offset existing or anticipated physical
exposures. Price-risk sensitivities were calculated by assuming 15% volatility in crude oil and NGL related prices, regardless of
term or historical relationships between the contractual price of the instruments and the underlying commodity price. In the event
of an increase or decrease in prices, the fair value of the Company’s derivative portfolio would typically increase or decrease,
offsetting changes in the Company’s physical positions. A 15% favorable change would increase the Company’s net income by
$6.8 million and $5.6 million as of December 31, 2015 and 2014, respectively. A 15% unfavorable change would decrease the
Company’s net income by $6.1 million and $5.6 million as of December 31, 2015 and 2014, respectively. However, these changes
may be offset by the use of one or more risk management strategies.

Interest rate risks. Following the Notes offering, the Company’s long-term debt accrues interest at fixed interest rates and
accordingly, changes in market interest rates do not expose the Company to future interest cash outflow variability.

Under the Revolving Credit Facility, the Company is subject to interest rate risk, as borrowings bear interest at a rate equal to, at
the Company’s option, either U.S. LIBOR, U.S. Base Rate, Canadian Prime Rate or Canadian Bankers’ Acceptance rate, plus an
applicable margin based on the Company’s total leverage ratio. As at December 31, 2015, the Company had $35.0 million drawn
under the Revolving Credit Facility and accordingly is subject to the interest rate cash flow risk associated with these amounts. A
1% favorable and unfavorable change in interest rates in relation to the amounts drawn at December 31, 2015 would impact net
income by $0.3 million.

Currency exchange risks. The Company’s monetary assets and liabilities in foreign currencies are translated at the period-end rate.
Exchange differences arising from this translation are recorded in the Company’s statement of operations. In addition, currency
exposures can arise from revenues and purchase transactions denominated in foreign currencies. Generally, transactional currency
exposures are naturally hedged (i.e., revenues and expenses are approximately matched), but where appropriate, are covered using
forward exchange contracts. All of the foreign currency forward exchange contracts entered into by the Company, although effective
hedges from an economic perspective, have not been designated as hedges for accounting purposes, and therefore any gains and
losses on such forward exchange contracts impact the Company’s earnings. A 5% unfavorable change in the value of the Canadian
dollar relative to the U.S. dollar would affect the fair value of the Company’s outstanding forward currency contracts and options
and would decrease the Company’s net income by $1.2 million and $3.2 million as at December 31, 2015 and 2014, respectively.
A 5% favorable change would increase the Company’s net income by $1.2 million and $3.2 million as at December 31, 2015 and
2014, respectively. The Company expects to continue to enter into financial derivatives, primarily forward contracts, to reduce
foreign exchange volatility.

Additionally, currency exposure occurs on a portion of the principal of the Company’s long-term debt and the related interest
payments, as they are denominated in U.S. dollars. As at December 31, 2015, the Company had outstanding U.S. dollar denominated
debt of U.S.$550.0 million.

As a result of the settlement of U.S. forward and options contracts in the first quarter of 2015 the Company had no foreign currency
contracts outstanding relating to its long-term debt at December 31, 2015. A 5% unfavorable change in the value of the Canadian
dollar relative to the U.S. dollar would impact both the carrying value of the Company’s long-term debt and any related foreign
currency contracts and would decrease the Company’s net income by $33.1 and $10.7 million as at December 31, 2015 and 2014
respectively. A corresponding favorable change would increase the Company’s net income by $33.1 and $10.7 million as at
December 31, 2015 and 2014, respectively.

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

With respect to the related interest payments on the U.S. dollar denominated long-term debt, to date the Company has not entered
into any foreign currency hedges as the Company believes that it will generate enough U.S. dollar cash inflows to pay these interest
payments when due and/or hedge the incremental exposure using derivative instruments. Based on the interest rate in effect at
December 31, 2015, a 5% unfavorable change in the value of the Canadian dollar relative to the U.S. dollar as of December 31,
2015 would increase the Company’s annual interest expense by $2.6 million. A 5% favorable change in the value of the Canadian
dollar relative to the U.S. dollar as of December 31, 2015 would decrease the Company’s annual interest expense by $2.6 million.

Equity price risk: The Company has equity price and dilution exposure to shares that it issues under its stock based compensation
programs. Gibsons uses equity derivatives to manage volatility derived from its stock based compensation programs. On January
2, 2015, the Company entered into derivative share swap contracts to manage the risks relating to its stock based compensation
programs. These contracts will mature at the prevailing share prices in accordance with the specific maturities of each contract over
a three year period. As at December 31, 2015, the Company estimates that a 10% increase in the Company’s share price would have
resulted in a $0.6 million increase in the Company’s net income. A corresponding decrease in the Company’s share price would
decrease the Company’s net income by $0.6 million. Such contracts did not exist in 2014.

ACCOUNTING POLICIES

Critical accounting policies and estimates

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and
assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results
may vary from estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical
if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate
is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the Company’s consolidated financial statements. The Company’s critical
accounting policies and estimates are as follows:

Fair value of assets and liabilities acquired in a business combination. In conjunction with each business combination, the Company
must allocate the cost of the acquired entity to the assets and liabilities assumed based on their estimated fair values at the date of
acquisition. Determining the fair value of assets and liabilities acquired, as well as intangible assets that relate to such items as
customer relationships, brands, contracts, and industry expertise involves professional judgment and is ultimately based on
acquisition models and management’s assessment of the value of the assets acquired and, to the extent available, third party
assessments. Uncertainties associated with these estimates include changes in production volumes, changes in commodity prices,
fluctuations in capacity or product slates, economic obsolescence factors in the area and potential future sources of cash flow.
During the measurement period, the allocation of purchase price of the acquired entity may be adjusted when the initial accounting
for business combination is recorded based on provisional amounts. Although the resolution of these uncertainties has not
historically had a material impact on the Company’s results of operations or financial condition, the actual amounts may vary
significantly from estimated amounts. Any excess of the cost of acquisition over the net fair value of the identifiable assets acquired
is recognized as goodwill.

Recoverability of asset carrying values. The Company carries out impairment reviews in respect of goodwill at least annually or if
indicators of impairment exist. The Company also assesses during each reporting period whether there have been any events or
changes in circumstances that indicate that property, plant and equipment, inventories and other intangible assets may be impaired
and an impairment review is carried out whenever such an assessment indicates that the carrying amount may not be recoverable.
Such indicators include changes in the Company’s business plans, changes in activity levels, and an increase in the discount rate,
the intention of “holding” versus “selling” and evidence of physical damage. For the purposes of impairment testing, assets are
grouped at the lowest levels for which there are separately identifiable cash flows. Where impairment exists, the asset is written
down to its recoverable amount, which is the higher of the fair value less costs to sell and value in use. Impairments are recognized
immediately in the consolidated statement of operations.

The assessment for impairment entails comparing the carrying value of the asset or cash-generating unit with its recoverable amount,
that is, the higher of fair value less costs to sell and value in use. Value in use is usually determined on the basis of discounted
estimated future net cash flows. However, the determination as to whether and how much an asset is impaired involves management
estimates on highly uncertain matters such as the outlook for global or regional market supply-and-demand conditions, future
commodity prices, the effects of inflation on operating expenses and discount rates.

Income tax. Income tax expense represents the sum of the income tax currently payable and deferred income tax. Interest and
penalties relating to income tax are also included in income tax expense. Deferred income tax is provided for using the liability
method of accounting. Deferred income tax assets and liabilities are determined based on differences between the financial reporting

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

and income tax basis of assets and liabilities. These differences are then measured using enacted or substantially enacted income
tax rates and laws that will be in effect when these differences are expected to reverse. The effect of a change in income tax rates
on deferred tax assets and liabilities is recognized in income in the period that the change occurs.

Financial instruments. In situations where the Company is required to mark financial instruments to market, the estimates of gains
or losses at a particular period-end do not reflect the end results of particular transactions, and will most likely not reflect the actual
gain or loss at the conclusion of the underlying transactions. The Company reflects the fair value estimates for financial instruments
based on valuation information from third parties. The calculation of the fair value of certain of these financial instruments is based
on proprietary models and assumptions of third parties because such instruments are not quoted on an active market. Additionally,
estimates of fair value for such financial instruments may vary among different models due to a difference in assumptions applied,
such as the estimate of prevailing market prices, volatility, correlations and other factors, and may not be reflective of the price at
which they can be settled due to the lack of a liquid market. Although the resolution of these uncertainties has not historically had
a material impact on the Company’s results of operations or financial condition, the actual amounts may vary significantly from
estimated amounts.

Provisions and accrued liabilities. The Company uses estimates to record liabilities for obligations associated with site restoration
on the retirement of assets and environmental costs, taxes, potential legal claims, and other accruals and liabilities.

Liabilities for site restoration on the retirement of assets are recognized when the Company has an obligation to restore the site, and
when a reliable estimate of that liability can be made. An obligation may also crystallize during the period of operation of a facility
through a change in legislation or through a decision to terminate operations. The amount recognized is the present value of the
estimated future expenditure determined in accordance with local conditions and requirements. The present value is determined by
discounting the expenditures expected to be required to settle the obligation using a risk-free discount rate. Estimated future
expenditure is based on all known facts at the time and current expected plans for decommissioning. Among the many uncertainties
that may impact the estimates are changes in laws and regulations, public expectations, prices and changes in technology. A
corresponding item of property, plant and equipment of an amount equivalent to the provision is also recorded. This is subsequently
depreciated as part of the asset. Other than the unwinding discount on the provision, any change in the present value of the estimated
expenditure is reflected as an adjustment to the provision and the corresponding item of property, plant and equipment.

Liabilities for environmental costs are recognized when a clean-up is probable and the associated costs can be reliably estimated.
Generally, the timing of recognition of these provisions coincides with the completion of a feasibility study or a commitment to a
formal plan of action. The amount recognized is the best estimate of the expenditure required. Where the liability will not be settled
for a number of years, the amount recognized is the present value of the estimated future expenditure. Estimated future expenditure
is based on all known facts at the time and an assessment of the ultimate outcome. A number of factors affect the cost of
environmental remediation, including the determination of the extent of contamination, the length of time remediation may require,
the complexity of environmental regulations and the advancement of remediation technology.

Other provisions and accrued liabilities are recognized in the period when it becomes probable that there will be a future outflow
of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition
and quantification of the liability require the application of judgment to existing facts and circumstances, which can be subject to
change. Since the actual cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities
are reviewed regularly and adjusted to take account of changing facts and circumstances. A change in estimate of a recognized
provision or accrued liability would result in a charge or credit to net income in the period in which the change occurs.

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Gibson Energy Inc.
TSX: GEI

2015 Year End Report

Amended standards adopted by the Company

The Company adopted the following new and revised standards, along with any consequential amendments. These changes were
made in accordance with applicable transitional provisions.

•
The annual improvements process addresses issues in the 2010-2012 and 2011-2013 reporting cycles including changes to
IFRS 13, Fair value measurements, IFRS 8, Operating segments and IAS 24, Related party transactions. These improvements
are effective for annual periods beginning on or after July 1, 2014. The impact of adopting these improvements did not have
a material impact on the consolidated financial statements.

•

IAS 19, Employee benefits (“IAS 19”), has been amended to clarify the application of requirements to plans that require
employees or third parties to contribute toward the cost of the benefits. The amendment to IAS 19 is effective for annual
periods beginning on or after July 1, 2014. The impact of adopting this amendment did not have a material impact on the
consolidated financial statements.

New standards and interpretations issued but not yet adopted

•
The annual improvements process addresses issues in the 2012-2014 reporting cycles including changes to IFRS 5, Non-current
assets held for sale and discontinued operations, IFRS 7, Financial instruments: Disclosures, IAS 19, Employee benefits, and
IAS 34, Interim financial reporting. These improvements are effective for periods beginning on or after January 1, 2016. The
adoption of these improvements will not have a material impact on the consolidated financial statements.

•

IFRS 10, Consolidated financial statements (“IFRS 10”), and IAS 28, Investments in associates and joint ventures (“IAS 28”),
has been amended to address an inconsistency between IFRS 10 and IAS 28 in regards to a sale or contribution of assets
between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is
recognized when the transaction involves a business combination, and whereas a partial gain is recognized when the transaction
involves the assets that do not constitute a business. Additionally, the amendments clarify the exception from preparing
consolidated financial statements, the consolidation requirements for subsidiaries which act as an extension of an investment
entity, and the requirements for equity accounting for investments in associates and joint ventures. The amendments to IFRS
10 and IAS 28 are effective for annual periods beginning on or after January 1, 2016. The adoption of these amendments will
not have a material impact on the consolidated financial statements.

IFRS 15, Revenue from contracts with customers (“IFRS 15”), has been issued as a new standard on revenue recognition and
will supersede IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. IFRS 15 is effective for annual
periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of adopting this standard on its
consolidated financial statements.

• The International Accounting Standards Board (“IASB”) completed the final element of its comprehensive publication of IFRS
9 Financial Instruments in July 2014. The package of improvements introduced by IFRS 9 includes a logical model for
classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed
approach to hedge accounting. The IASB has previously published versions of IFRS 9 that introduced new classification and
measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication
represents the final version of the Standard, replaces earlier versions of IFRS 9 and completes the IASB’s project to replace
IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is effective for annual periods beginning on or after 1
January 2018. The Company is currently evaluating the impact of adopting this standard on its consolidated financial
statements.

•

IAS 1, Presentation of financial statements (“IAS 1”), has been amended to clarify the guidance on materiality and aggregation,
the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies. The amendment to
IAS 1 is effective for annual periods beginning on or after January 1, 2016. The Company is currently evaluating the impact of
adopting these amendments on its consolidated financial statements. The adoption of this amendment will not have a material
impact on the consolidated financial statements.

IFRS 16, Leases (“IFRS 16”), has been issued as a new standard on leases and will supersede IAS 17. IFRS 16 is effective for
annual periods beginning on or after January 1, 2019. The Company is currently evaluating the impact of adopting this standard
on its consolidated financial statements.

29
36

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

DISCLOSURE CONTROLS & PROCEDURES

As part of the requirements mandated by the Canadian securities regulatory authorities under National Instrument 52-109-
Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Company’s Chief Executive Officer ("CEO")
and the Chief Financial Officer ("CFO") have evaluated the design and operation of the Company's disclosure controls and
procedures ("DC&P"), as such term is defined in NI 52-109, as at December 31, 2015. The CEO and CFO are also responsible for
establishing and maintaining internal controls over financial reporting, ("ICFR"), as such term is defined in NI 52-109. In making
its assessment, management used the Committee of Sponsoring Organizations of the Treadway Commission framework in Internal
Control – Integrated Framework (2013) to evaluate the design and effectiveness of internal control over financial reporting. These
controls are designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and compliance
with IFRS. The Company’s CEO and CFO have evaluated, or caused to be evaluated under their supervision, the design and
operational effectiveness of such controls as at December 31, 2015.

Based on the evaluation of the design and operating effectiveness of the Company’s DC&P and ICFR, the CEO and the CFO
concluded that Gibson's DC&P and ICFR were effective as at December 31, 2015. There have been no changes in ICFR that
occurred during the period beginning January 1, 2015 and ended on December 31, 2015 that has materially affected or is reasonably
likely to materially affect Gibson’s ICFR.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or the
Company’s future performance. All statements other than statements of historical fact are forward-looking statements. The use of
any of the words ‘‘anticipate’’, ‘‘plan’’, ‘‘contemplate’’, ‘‘continue’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘propose’’, ‘‘might’’,
‘‘may’’, ‘‘will’’, ‘‘shall’’, ‘‘project’’, ‘‘should’’, ‘‘could’’, ‘‘would’’, ‘‘believe’’, ‘‘predict’’, ‘‘forecast’’, ‘‘pursue’’, ‘‘potential’’
and ‘‘capable’’ and similar expressions are intended to identify forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in
such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-
looking statements included in this MD&A should not be unduly relied upon. These statements speak only as of the date of this
MD&A. In particular, this MD&A contains forward-looking statements pertaining to the following:

•
•
•
•
•

•
•
•

•

•
•
•

the addition or disposition of assets and changes in the services to be offered by the Company;
the Company's investment in new equipment, technology, facilities and personnel;
the Company's growth strategy to expand in existing and new markets;
the availability of sufficient liquidity for planned growth;
new technology and drilling methodology being deployed towards conventional and unconventional production within the
Company's operating areas;
uncertainty and volatility relating to crude prices and price differentials between crude oil streams and blending agents;
increased crude oil production and exploration activity on shore in North America, including from the Canadian oil sands;
the expansion of midstream infrastructure in North America to handle increased production and expansion of capacity in the
U.S. refining complex to handle heavier crude oil from the WCSB;
the effect of competition in regions of North America and its impact on downward pricing pressure and regional crude oil price
differentials among crude oil grades and locations;
the effect of market volatility on the Company's marketing revenues and activities;
the Company's ability to pay down and retire indebtedness;
the Company's plans for additional strategic acquisitions, capital expenditures or other similar transaction, including the costs
thereof;
in-service dates for new storage capacity being constructed by the Company;
the Company's planned hedging activities;
the Company's projections of commodity purchase and sales activities;
the Company's projections of currency and interest rate fluctuations;
the Company’s projections of dividends; and
the Company's dividend policy.

•
•
•
•
•
•
With respect to forward-looking statements contained in this MD&A, assumptions have been made regarding, among other things:

•
•
•

future growth in world-wide demand for crude oil and petroleum products;
crude oil prices;
no material defaults by the counterparties to agreements with the Company;

30
37

Gibson Energy Inc.
TSX: GEI

2015 Year End Report

•

•
•
•
•
•
•
•

the Company's ability to obtain qualified personnel, owner-operators, lease operators and equipment in a timely and cost-
efficient manner;
the regulatory framework governing taxes and environmental matters in the jurisdictions in which the Company conducts and
will conduct its business;
changes in credit ratings applicable to the Company;
operating costs;
future capital expenditures to be made by the Company;
the Company's ability to obtain financing for its capital programs on acceptable terms;
the Company's future debt levels;
the impact of increasing competition on the Company; and
the impact of future changes in accounting policies on the Company’s consolidated financial statements.

In addition, this MD&A may contain forward-looking statements and forward-looking information attributed to third party industry
sources. The Company does not undertake any obligations to publicly update or revise any forward-looking statements except as
required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a
result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in “Forward-Looking
Statements” and “Risk Factors” included in the Company’s Annual Information Form dated March 1, 2016 as filed on SEDAR at
www.sedar.com and available on Gibsons website at www.gibsons.com.

NON-GAAP FINANCIAL MEASURES
This MD&A refers to certain financial measures that are not determined in accordance with IFRS. EBITDA, Adjusted EBITDA,
Pro Forma Adjusted EBITDA and distributable cash flow are not measures recognized under IFRS and do not have standardized
meanings prescribed by IFRS. Management considers these to be important supplemental measures of the Company’s performance
and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of
companies in industries with similar capital structures. See ‘‘Summary of Quarterly Results” for a reconciliation of EBITDA to net
income (loss), the IFRS measure most directly comparable to EBITDA, and for a reconciliation of Adjusted EBITDA and Pro Forma
Adjusted EBITDA to EBITDA. Distributable cash flow is used to assess the level of cash flow generated from ongoing operations
and to evaluate the adequacy of internally generated cash flow to fund dividends. See ‘‘Distributable Cash Flow” for a
reconciliation of distributable cash flow to cash flow from operations, the IFRS measure most directly comparable to distributable
cash flow.

Readers are encouraged to evaluate each adjustment and the reasons the Company considers it appropriate for supplemental
analysis. Readers are cautioned, however, that these measures should not be construed as an alternative to net income (loss)
determined in accordance with IFRS as an indication of the Company’s performance.

31
38

Gibson Energy Inc.

Consolidated Financial Statements
For the years ended December 31, 2015 and 2014
(in thousands of Canadian dollars)

March 1, 2016

Independent Auditor’s Report

To the Shareholder of Gibson Energy Inc.

We have audited the accompanying consolidated financial statements of Gibson Energy Inc. which
comprise the consolidated balance sheets as at December 31, 2015 and December 31, 2014 and the
consolidated statements of operations, comprehensive income, changes in equity and cash flows for the
years then ended, and the related notes, which comprise a summary of significant accounting policies and
other explanatory information.

Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Gibson Energy Inc. as at December 31, 2015 and December 31, 2014 and its financial
performance and its cash flows for the years then ended in accordance with International Financial
Reporting Standards.

Chartered Professional Accountants

PricewaterhouseCoopers LLP
111 5th Avenue SW, Suite 3100, Calgary, Alberta, Canada T2P5L3
T: 403 509 7500, F: 403 781 1825, www.pwc.com/ca

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

Gibson Energy Inc.
Consolidated Balance Sheet

(tabular amounts in thousands of Canadian dollars)

Assets
Current assets

December 31,
2015

2014

Cash and cash equivalents ................................................................................................
Trade and other receivables (note 6) .................................................................................
Inventories (note 7) ...........................................................................................................
Income taxes receivable ....................................................................................................
Prepaid expenses and other assets .....................................................................................
Net investment in finance leases (note 8) ..........................................................................
Total current assets ............................................................................................................

82,775
370,313
107,593
16,130
18,124
1,045
595,980

Non-current assets

Property, plant and equipment (note 9) .............................................................................
Long-term prepaid expenses and other assets (note 10) ....................................................
Net investment in finance leases (note 8) ..........................................................................
Deferred income tax assets (note 11) ................................................................................
Intangible assets (note 12) .................................................................................................
Goodwill (note 13) ............................................................................................................
Total non-current assets ....................................................................................................
Total assets ..............................................................................................................................
Liabilities
Current liabilities

Credit facilities (note 14)...................................................................................................
Trade payables and accrued charges (note 15) ..................................................................
Dividends payable (note 18) .............................................................................................
Deferred revenue ...............................................................................................................
Income taxes payable ........................................................................................................
Total current liabilities ......................................................................................................

Non-current liabilities

Long-term debt (note 14) ..................................................................................................
Provisions (note 16) ..........................................................................................................
Other long-term liabilities (note 17) ..................................................................................
Deferred income tax liabilities (note 11) ...........................................................................
Total non-current liabilities ...............................................................................................
Total liabilities ..................................................................................................................

Equity

Share capital (note 18) ......................................................................................................
Contributed surplus ...........................................................................................................
Accumulated other comprehensive income.......................................................................
Deficit................................................................................................................................
Total equity .......................................................................................................................
Total liabilities and equity .....................................................................................................
Commitments and contingencies (note 19)
See accompanying notes to the consolidated financial statements

1,771,117
4,564
93,389
1,596
145,433
670,907
2,687,006
$ 3,282,986

35,000
418,732
40,363
7,690
7,775
509,560

1,291,423
155,343
13,975
145,684
1,606,425
2,115,985

Approved by the Board of Directors:

(signed) “James M. Estey”
James M. Estey
Director

(signed) “

Marshall L. McRae”

Marshall L. McRae
Director

41
1

1,672,323
34,959
224,866
(765,147)
1,167,001
$ 3,282,986

1,634,001
23,841
93,011
(323,673)
1,427,180
$ 3,573,029

131,911
641,283
154,937
12,100
24,366
908
965,505

1,494,569
39,778
94,387
3,532
191,537
783,721
2,607,524
$ 3,573,029

-
581,463
37,346
19,042
122
637,973

1,165,368
136,347
14,810
191,351
1,507,876
2,145,849

Gibson Energy Inc.
Consolidated Statement of Operations

(tabular amounts in thousands of Canadian dollars, except per share amounts)

Year ended
December 31,
2015

2014

Revenue (note 20) ......................................................................................................................
Cost of sales (notes 7, 21, 22 and 28) .........................................................................................
Gross profit ................................................................................................................................

$ 5,591,982
5,461,519
130,463

$ 8,573,529
8,299,403
274,126

General and administrative expenses (notes 21 and 22) .............................................................
Impairment of goodwill (note 13) ..............................................................................................
Other operating income (note 23) ..............................................................................................
Income (loss) from operating activities...................................................................................

Interest expense .........................................................................................................................
Interest income ...........................................................................................................................
Foreign exchange loss on long-term debt (note 14) ...................................................................
Income (loss) before income taxes ...........................................................................................
Income tax provision (recovery) (note 11) .................................................................................
Net income (loss) .......................................................................................................................

71,702
175,959
(22,026)
(95,172)

79,580
(558)
113,150
(287,344)
(6,688)

56,245
-
(11,845)
229,726

67,598
(832)
35,431
127,529
35,588

$ (280,656)

91,941

Earnings (loss) per share (note 24)

Basic ....................................................................................................................................
Diluted .................................................................................................................................

$
$

(2.23)
(2.23)

$
$

0.74
0.73

See accompanying notes to the consolidated financial statements

2
42

Gibson Energy Inc.
Consolidated Statement of Comprehensive Income (Loss)

(tabular amounts in thousands of Canadian dollars)

Year ended
December 31,
2015

2014

Net income (loss) .......................................................................................................................

$ (280,656)

91,941

Other comprehensive income (loss) ........................................................................................
Items that may be reclassified subsequently to statement of operations

Exchange differences on translating foreign operations ......................................................

131,855

59,132

Items that will not be reclassified to statement of operations

Remeasurements of post-employment benefit obligation, net of tax ..................................
Other comprehensive income, net of tax ................................................................................
Comprehensive income (loss) ..................................................................................................

184
132,039
$ (148,617)

(521)
58,611
$ 150,552

See accompanying notes to the consolidated financial statements

3
43

Gibson Energy Inc.
Consolidated Statement of Changes in Equity

(tabular amounts in thousands of Canadian dollars)

Share
capital
(note 18)
Balance – January 1, 2014 ............................... $ 1,585,145

Contributed
surplus
$ 16,130

Accumulated
other
comprehensive
income
$ 33,879

Total
Equity
$ (266,520) $ 1,368,634

Deficit

Net income .........................................................
Other comprehensive income, net of tax ............
Comprehensive income ......................................
Employee share options:

Stock based compensation .........................
Proceeds from exercise of stock options ...
Reclassification of contributed surplus on
exercise of stock option and other stock
awards ....................................................

Issuance of common shares in connection with
the dividend reinvestment and stock dividend
programs .........................................................

Dividends on common shares ($1.20 per

-
-
-

-
59,132
59,132

91,941

(521)

91,420

-
5,942

13,977
-

6,266

(6,266)

36,648

-
-

91,941
58,611
150,552

13,977
5,942

36,648

common share)................................................

-
Balance – December 31, 2014 .......................... $ 1,634,001

-
$ 23,841

-
$ 93,011

(148,573)

(148,573)
$ (323,673) $ 1,427,180

Net loss ..............................................................
Other comprehensive income, net of tax ............
Comprehensive income (loss) ............................
Employee share options:

Stock based compensation ..........................
Proceeds from exercise of stock options .....
Reclassification of contributed surplus on
exercise of stock option and other stock
awards ......................................................

Issuance of common shares in connection with
the dividend reinvestment and stock dividend
programs...........................................................

-
-
-

-
105

-
-
-

20,379
-

9,261

(9,261)

-
131,855
131,855

(280,656)

184

(280,472)

(280,656)
132,039
(148,617)

-
-

20,379
105

28,956

(161,002)

Dividends on common shares ($1.28 per
-
common share) ...................................................
Balance – December 31, 2015 .......................... $ 1,672,323

28,956

$ 34,959

$ 224,866

$ (765,147) $ 1,167,001

See accompanying notes to the consolidated financial statements

4
44

Gibson Energy Inc.
Consolidated Statement of Cash Flows

(tabular amounts in thousands of Canadian dollars)

Cash provided by (used in)
Operating activities

Income (loss) from operating activities ..................................................................................
Items not affecting cash

Depreciation of property, plant and equipment (notes 9 and 21) .......................................
Amortization of intangible assets (notes 12 and 21) ...........................................................
Impairment of goodwill (note 13) ......................................................................................
Stock based compensation (note 22) ..................................................................................
Gain on sale of property, plant and equipment (note 23) ...................................................
Other ...................................................................................................................................
Net (gain) loss on fair value movement of financial instruments (note 28).......................

Changes in items of working capital

Trade and other receivables ................................................................................................
Inventories ..........................................................................................................................
Other current assets ............................................................................................................
Trade payables and accrued charges ..................................................................................
Deferred revenue ................................................................................................................
Income taxes paid, net ...........................................................................................................
Net cash provided by operating activities ...................................................................................
Investing activities

Purchase of property, plant and equipment ............................................................................
Purchase of intangible assets ..................................................................................................
Acquisitions, net of cash acquired (note 5) ............................................................................
Proceeds on sale of assets ......................................................................................................
Net cash used in investing activities............................................................................................

Financing activities

Payment of shareholder dividends .........................................................................................
Proceeds from dividend reinvestment plans (note 18) ...........................................................
Interest paid ............................................................................................................................
Interest received .....................................................................................................................
Proceeds from exercise of stock options ................................................................................
Proceeds from long-term debt, net of debt discount and premium (note 14) .........................
Payment of debt issue and financing costs .............................................................................
Proceeds from credit facilities ................................................................................................
Repayment of credit facilities ................................................................................................
Repayment of finance lease liabilities ...................................................................................
Net proceeds on settlement of derivative financial instruments

(note 28) ............................................................................................................................
Net cash provided by (used in) financing activities ....................................................................

Year ended
December 31,
2015

2014

(95,172)

$ 229,726

195,438
87,554
175,959
20,379
(2,515)
640
1,491

297,699
52,000
6,948
(226,809)
(11,382)
(44,163)
458,067

(328,647)
(10,728)
(39,772)
6,519
(372,628)

(157,985)
28,956
(84,665)
556
105
-
-
163,257
(128,257)
(411)

36,582
(141,862)

154,934
54,991
-
13,977
(2,717)
(7,509)
(1,883)

4,819
10,252
3,127
(63,264)
15,764
(75,989)
336,228

(354,682)
(19,123)
(128,440)
7,230
(495,015)

(144,832)
36,648
(62,058)
850
5,942
358,595
(7,072)
463,601
(463,494)
(563)

582
188,199

Effect of exchange rate on cash and cash equivalents ............................................................

7,287

5,317

Net increase (decrease) in cash and cash equivalents ............................................................

(49,136)

34,729

Cash and cash equivalents – beginning of year ......................................................................
Cash and cash equivalents – end of year .................................................................................

131,911

82,775

97,182
$ 131,911

See accompanying notes to the consolidated financial statements

5
45

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

1 General Information

Gibson Energy Inc. (“Gibsons” or the “Company”) was incorporated pursuant to the Business Corporations Act (Alberta). The
Company’s common shares are traded on the Toronto Stock Exchange under the symbol “GEI”.

Gibsons is engaged in the movement, storage, blending, processing and marketing and distribution of crude oil, condensate,
natural gas liquids, water, oilfield waste and refined products. The Company also provides emulsion treating, water disposal,
oil-field waste management services and propane distribution. The Company is incorporated and domiciled in Canada. The
address of the Company’s principal place of business is 1700, 440 Second Avenue S.W., Calgary, Alberta, Canada.

2 Basis of preparation

These consolidated financial statements have been prepared in compliance with International Financial Reporting Standards
(“IFRS”) as set out in the Handbook of the Canadian Institute of Chartered Professional Accountants and as issued by the
International Accounting Standards Board (“IASB”).

These consolidated financial statements were approved for issuance by the Company’s board of directors (“Board”) on March
1, 2016.

These consolidated financial statements are presented in Canadian dollars, the Company’s functional currency, and all values
are rounded to the nearest thousands of dollars, except where indicated otherwise. All references to $ are to Canadian dollars
and references to U.S.$ are to United States dollars.

3 Summary of significant accounting policies

The significant accounting policies applied in the preparation of these consolidated ﬁnancial statements are set out below.
These policies have been consistently applied to all the years presented.

Basis of measurement

These consolidated financial statements have been prepared under the historical cost convention except for certain items that
are recorded at fair value as required by the respective accounting standards.

Basis of consolidation

These consolidated financial statements include the results of the Company and its subsidiaries together with its interest in joint
operations.

Subsidiaries are all entities over which the Company has control. The Company controls an entity when the Company is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Company and continue to be consolidated until the date control ceases. All intercompany transactions, balances, income and
expenses are eliminated on consolidation.

Joint arrangements are classiﬁed as either joint operations or joint ventures depending on the contractual rights and obligations
of each investor. The Company has assessed the nature of its joint arrangements and determined them to be joint operations
and accordingly, the Company has recognized its proportionate share of revenues, expenses, assets and liabilities relating to
these joint operations.

6
46

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Foreign currency translation

The financial statements for each of the Company’s subsidiaries and joint operations are prepared using their functional
currency. The functional currency is the currency of the primary economic environment in which an entity operates. The
presentation and functional currency of the parent company is Canadian dollars. Assets and liabilities of foreign operations are
translated into Canadian dollars at the market rates prevailing at the balance sheet date. Operating results are translated at the
average rates for the period. Exchange differences arising on the consolidation of the net assets of foreign operations are
recorded in other comprehensive income (loss).

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the transaction date.
Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at
period end exchange rates of monetary assets and liabilities denominated in currencies other than an entity’s functional currency
are recognized in the statement of operations.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method of accounting. The cost of an acquisition is measured
as the cash paid and the fair value of other assets given, equity instruments issued and liabilities incurred or assumed at the
date of exchange. For acquisitions achieved in stages, previously held equity interests in the acquired company are remeasured
at the acquisition date fair value and the resulting gain or loss is recognized in the statement of operations. Direct costs incurred
by the Company in connection with an acquisition, such as finder’s fees, advisors, legal, accounting, valuation and other
professional or consulting fees, are expensed as general and administrative expenses when incurred. The acquired identifiable
assets, liabilities and contingent liabilities are measured at their fair values at the date of acquisition. Any excess of the cost of
acquisition plus the amount of any non-controlling interest in the acquiree, and the acquisition date fair value of the acquirer’s
previously held equity interest, if any, over the net fair value of the identifiable assets, liabilities and contingent liabilities
acquired is recognized as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets
acquired is credited to the statement of operations in the period of acquisition.

Any contingent consideration to be transferred by the Company is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that are deemed to be an asset or liability are recognised in the
statement of operations. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement
is accounted for within equity.

At the acquisition date, any goodwill acquired is allocated to each of the operating segments expected to benefit from the
combination’s synergies. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Intangible assets

An intangible asset acquired as part of a business combination is measured at fair value at the date of acquisition and is
recognized separately from goodwill if the asset is separable or arises from contractual or other legal rights and its fair value
can be measured reliably. Intangible assets acquired separately from a business are carried initially at cost. The initial cost is
the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

Intangible assets with a finite life are amortized on a straight-line basis over their expected useful lives as follows:

Brands ........................................................................................................................................................................ 2 – 10 years
Customer relationships ............................................................................................................................................... 1 – 12 years
Long-term customer contracts .................................................................................................................................... 6 – 10 years
Non-compete agreements ........................................................................................................................................... 2 – 10 years
Technology .................................................................................................................................................................. 3 – 5 years
Software ....................................................................................................................................................................... 3 – 7 years
License and permits ........................................................................................................................................................... 3 years

The expected useful lives and method of amortization of intangible assets are reviewed on an annual basis and, if necessary,
changes in expected useful life are accounted for prospectively.

7
47

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate
carrying value may not be recoverable.

Property, plant and equipment

Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset
into operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs. The
purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire
the asset.

Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets, inspection costs
and overhaul costs. Where an asset or part of an asset that was separately depreciated is replaced and it is probable that future
economic benefits associated with the item will flow to the Company, the expenditure is capitalized and the carrying amount
of the replaced asset is derecognized. Inspection costs associated with major maintenance programs are capitalized and
amortized over the period to the next inspection. All other maintenance costs are expensed as incurred.

Depreciation is charged so as to write off the cost of assets, other than assets that are work in progress, using the straight-line
method over their expected useful lives.

The useful lives of the Company’s property, plant and equipment are as follows:

Buildings .................................................................................................................................................................. 10 – 20 years
Equipment .................................................................................................................................................................. 3 – 20 years
Rolling stock .............................................................................................................................................................. 5 – 23 years
Pipelines ..................................................................................................................................................................... 8 – 20 years
Tanks ........................................................................................................................................................................ 20 – 33 years
Plant ........................................................................................................................................................................... 7 – 25 years
Disposal wells .......................................................................................................................................................... 15 – 25 years

The expected useful lives, method of depreciation and residual values of property, plant and equipment are reviewed on an
annual basis and, if necessary, changes are accounted for prospectively.

The carrying value of property, plant and equipment is reviewed for impairment whenever events or changes in circumstances
indicate the carrying value may not be recoverable.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the item) is included in the statement of operations in the period
the item is derecognized.

Impairments

The Company carries out impairment reviews in respect of goodwill at least annually or if indicators of possible impairment
exist. The Company also assesses during each reporting period whether there have been any events or changes in circumstances
that indicate that property, plant and equipment and intangible assets may be impaired and an impairment review is carried out
whenever such an assessment indicates that the carrying amount may not be recoverable. Such indicators include, but are not
limited to changes in the Company’s business plans, changes in commodity prices leading to lower activity levels, an increase
in the discount rate and evidence of physical damage. For the purposes of impairment testing, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows. Where impairment exists, the asset is written down to its
recoverable amount, which is the higher of the fair value less costs of disposal and its value in use. Impairments are recognized
immediately in the statement of operations.

8
48

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

of discounted estimated future net cash flows. In determining fair value less costs of disposal, recent market transactions are
taken into account, if available. In the absence of such transactions, an appropriate valuation model is used.

An impairment loss in respect of goodwill is not reversible in the future. In respect of other assets, an impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortization, if no impairment loss had been previously recognized.

Non-derivative financial instruments – recognition and measurement

Financial assets

Financial assets include cash and cash equivalents and trade and other receivables. The Company determines the classification
of its financial assets at initial recognition. Financial assets are recognized initially at fair value, normally being the transaction
price plus directly attributable transaction costs.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortized cost using the effective interest method if the time value of money is significant.
Gains and losses are recognized in the statement of operations when the loans and receivables are derecognized or impaired,
as well as through the use of the effective interest method. This category of financial assets includes cash and cash equivalents
and trade and other receivables.

A provision for impairment of trade receivables is established when there is objective evidence that the Company may not be
able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments (more than
30 days past the due date) are considered indicators that the trade receivable may be impaired. The amount of the provision is
the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the
amount of the loss is recognized in the statement of operations. When a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables.

Cash and cash equivalents comprise cash on hand and short-term deposit, highly liquid investments that are readily convertible
to known amounts of cash which are subject to insignificant risk of changes in value and maturity of three months or less from
the date of acquisition.

Financial liabilities

Financial liabilities classified as other liabilities include amounts borrowed under credit facilities, trade payables and accrued
charges, dividends payable and long-term debt. The Company determines the classification of its financial liabilities at initial
recognition. All financial liabilities are initially recognized at fair value. For interest-bearing loans and borrowings this is the
fair value of the proceeds received net of issue costs associated with the borrowing. After initial recognition, financial liabilities
are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into
account any issue costs, and any discount or premium on settlement. Gains and losses arising on the repurchase, settlement or
cancellation of liabilities are recognized in statement of operations.

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously.

Derivative financial instruments

Derivative financial instruments, used periodically by the Company to manage exposure to market risks relating to commodity
prices, interest rates, share based compensation and foreign currency exchange rates, are not designated as hedges. They are
recorded at fair value and recorded on the Company’s balance sheet as either an asset, when the fair value is positive, or a
liability, when the fair value is negative. Changes in fair value are recorded immediately in the statement of operations.

9
49

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Inventories

Inventories are carried at the lower of cost and net realizable value, with cost determined using a weighted average cost method.
Net realizable value is the estimated selling price less applicable selling expenses. If carrying value exceeds net realizable
amount, a write down is recognized. The write down may be reversed in a subsequent period if the circumstances which caused
it no longer exist.

Leases - lessee

A finance lease is a lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee. Assets
acquired under finance leases are recorded in the balance sheet as property, plant and equipment at the lower of their fair value
and the present value of the minimum lease payments and depreciated over the shorter of their estimated useful life or their
lease terms. The corresponding rental obligations are included in other long-term liabilities as finance lease liabilities. Interest
incurred on finance leases is charged to the statement of operations on an accrual basis.

All other leases are operating leases, and the rental of these is charged to the statement of operations as incurred over the lease
term.

Leases - lessor

Contractual arrangements that transfer substantially all the risks and benefits of ownership of property to the lessee are recorded
as a net investment in a finance lease. The present value of minimum lease receivable under such arrangements are recorded
as an investment in finance lease and the finance income is recognized in a manner that produces a consistent rate of return on
the investment in the finance lease and is included in revenue.

Operating lease income is recognized in the statement of operations as it is earned over the lease term.

Provisions and contingencies

Provisions are recognized when the Company has a present obligation, legal or constructive, as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where appropriate, the future cash flow estimates are adjusted to reflect
risks specific to the liability.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money. Where discounting is used, the increase in
the provision due to the passage of time is recognized within finance costs.

A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events or where the
amount of the obligation cannot be measured reliably and outflow of cash is less than remote. Contingent assets are not
recognized, but are disclosed when an inflow of economic benefits is probable.

Decommissioning

A corresponding item of property, plant and equipment of an amount equivalent to the provision is also created. The amount
capitalized in property, plant and equipment is depreciated over the useful life of the related asset. Increases in the
decommissioning liabilities resulting from the passage of time are recognized as a finance cost in the consolidated statement
of operations. Other than the unwinding of the discount on the provision, any change in the present value of the estimated
expenditure is reflected as an adjustment to the provision and the corresponding item of property, plant and equipment.

10
50

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Environmental liabilities

Environmental liabilities are recognized when a remediation is probable and the associated costs can be reliably estimated.
Generally, the timing of recognition of these provisions coincides with the completion of a feasibility study or a commitment
to a formal plan of action. The amount recognized is the best estimate of the expenditure required. Where the liability will not
be settled for a number of years, the amount recognized is the present value of the estimated future expenditure using a risk-
free discount rate.

Employee benefits

Defined benefit pension plan

The liability recognised in the balance sheet in respect of deﬁned beneﬁt plans is the present value of the deﬁned beneﬁt
obligation at the end of the reporting period less the fair value of plan assets. The deﬁned beneﬁt obligation is calculated
annually by independent actuaries using the projected unit credit method. The present value of the deﬁned beneﬁt obligation is
determined by discounting the estimated future cash outﬂows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the beneﬁts will be paid, and that have terms to maturity approximating to the terms of
the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to equity in other comprehensive income in the period in which they arise.

Past-service costs or credits are recognised immediately in statement of operations.

Defined contribution pension plans

The Company’s defined contribution plans are funded as specified in the plans and the pension expense is recorded as the
benefits are earned by employees and funded by the Company.

Share-based payments

The Company’s equity incentive plan allows for the granting of stock options, restricted share units with time based vesting
(RSUs) and performance share units (PSUs) with performance based vesting conditions and deferred share units (DSUs) that
vest on the date such employee redeems the DSUs after their cessation of employment with the Company.

The fair value of grants made under the employee share award plan is measured at the date of grant of the award. The resulting
cost, as adjusted for the expected and actual level of vesting of the awards, is expensed over the period in which the awards
vest.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting
period has expired and management’s best estimate of the number of equity instruments that will ultimately vest.

The movement in the cumulative expense since the previous balance sheet date is recognized in the statement of operations
with a corresponding impact to contributed surplus.

The fair value of RSUs, PSUs and DSUs are equal to the Company five days weighted average share price at the date of grant.

The fair value of options is measured by using the Black-Scholes model. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable and
it requires the input of highly subjective assumptions. Expected volatility of the stock is based on a combination of the historical
stock price of the Company and also of comparable companies in the industry. The expected term of options represents the
period of time that options granted are expected to be outstanding. The risk-free rate is based on the Government of Canada’s
Canadian Bond Yields with a remaining term equal to the expected life of the options used in the Black-Scholes valuation
model.

11
51

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Termination benefit

The Company recognizes termination benefits as an expense when it is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing benefits
as a result of an offer made to encourage voluntary termination.

Income taxes

Income tax expense represents the sum of the income tax currently payable and deferred income tax. Interest and penalties
relating to income tax are also included in income tax expense.

The income tax currently payable is based on the taxable income for the period. Taxable income differs from net income as
reported in the statement of operations because it excludes items of income or expense that are taxable or deductible in other
periods and it further excludes items that are never taxable or deductible. The Company’s liability for current income tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided for using the liability method of accounting. Deferred income tax assets and liabilities are
determined based on differences between the financial reporting and income tax basis of assets and liabilities. These differences
are then measured using enacted or substantially enacted income tax rates and laws that will be in effect when these differences
are expected to reverse. The effect of a change in income tax rates on deferred tax assets and liabilities is recognized in income
in the period that the change occurs. Deferred income tax assets are recognized for tax loss carry-forwards to the extent that
the realization of the related tax benefit through future taxable profits is probable.

Revenue recognition

Product revenues associated with the sales of crude oil, diluent, natural gas liquids, road asphalt, roofing flux, wellsite fluids
and distillate owned by the Company are recognized when the risk of ownership passes to the customer and physical delivery
occurs, the price is fixed and collection is reasonably assured. Sales terms are generally FOB shipping point, in which case the
sales are recorded at the time of shipment, because this is when title and risk of loss are transferred. All payments received
before delivery are recorded as deferred revenue and are recognized as revenue when delivery occurs, assuming all other criteria
are met. Freight costs billed to customers are recorded as a component of revenue. Revenues from buy/sell transactions whereby
the Company effectively is acting as an agent are recorded on a net basis.

Revenue associated with the provision of services such as transportation, terminalling and environmental services are
recognized when the services are provided, the price is fixed and collection is reasonably assured. Revenue from pipeline tariffs
and fees are based on volumes and rates as the pipeline is being used. Long-term take-or-pay contracts, under which shippers
are obligated to pay fixed amounts ratably over the contract period regardless of volumes shipped, may contain make-up rights.
Make-up rights are earned by shippers when minimum volume commitments are not utilized during the period but under certain
circumstances can be used to offset overages in future periods, subject to expiry periods. The Company recognizes revenues
associated with make-up rights at the earlier of when the make-up volume is shipped, the make-up right expires or when it is
determined that the likelihood that the shipper will utilize the make-up right is remote. Revenue from pipeline tariffs and fees
are based on volumes and rates as the pipeline is being used. Revenue from equipment rentals and non-refundable propane
tank fees are recorded in deferred revenue and are recognized in revenue on a straight line basis over the rental period, typically
one year.

Excise taxes are reported gross within sales and other operating revenues and taxes other than income taxes, while other sales
and value-added taxes are recorded net in operating expenses.

Cost of sales

Cost of sales includes the cost of finished goods inventory (including depreciation, amortization and impairment charges),
processing costs, costs related to transportation, inventory write downs and reversals, and gains and losses on derivative
financial instruments relating to commodities.

Interest

Interest income and expense is recognized in the statement of operations using the effective interest method.

12
52

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are
recognized in the statement of operations in the period in which they are incurred.

Share capital

Common and preferred shares are classified as equity. Incremental costs directly attributable to the issuance of shares are
recognized as a deduction from equity.

Per share amounts

Basic per share amounts are calculated using the weighted average number of shares outstanding during the year. Diluted per
share amounts are calculated giving effect to the potential dilution that would occur if stock options and other equity awards
were exercised or converted into common shares.

Dividends

Dividends on common shares are recognized in the period in which the dividends are approved by the Board.

Segmental reporting

The Company determines its reportable segments based on the nature of its operations, which is consistent with how the
business is managed and results are reported to the chief operating decision maker. Each operating segment also uses a measure
of profit and loss that represents segment profit. The chief operating decision maker, who is responsible for resource allocation
and assessing performance of the operating segments, has been identified as the President and Chief Executive Officer.

Critical accounting estimates and judgements

The preparation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Company’s accounting policies. Estimates and
judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The preparation of financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date and the
reported amounts of revenues and expenses during the reporting period. Actual outcomes could differ from those estimates.
The estimates and assumptions that have a signiﬁcant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next ﬁnancial year are addressed below.

Fair value of assets and liabilities acquired in a business combination

In conjunction with each business combination, the Company must allocate the cost of the acquired entity to the assets and
liabilities assumed based on their estimated fair values at the date of acquisition. Determining the fair value of assets and
liabilities acquired, as well as intangible assets that relate to such items as customer relationships, brands and contracts involves
professional judgment and is ultimately based on acquisition models and management’s assessment of the value of the assets
and liabilities acquired and, to the extent available, third party assessments. Uncertainties associated with these estimates
include changes in production volumes, changes in commodity prices, fluctuations in capacity or product slates, economic
obsolescence factors in the area and potential future sources of cash flow. During the measurement period, the fair value of
assets acquired and liabilities assumed may be adjusted when the initial accounting for business combination is recorded based
on provisional amounts. Although the resolution of these uncertainties has not historically had a material impact on the
Company’s results of operations or financial condition, the actual amounts may vary significantly from estimated amounts.
Any excess of the cost of acquisition over the net fair value of the identifiable assets acquired is recognized as goodwill.

13
53

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Impairment assessment of non-financial assets

The Company tests annually whether goodwill of an operating segment has suffered any impairment, in accordance with the
Company’s accounting policy. The recoverable amounts of the operating segments are determined based on fair value less
costs of disposal calculations which require the use of estimates. The Company also assesses at least annually whether there
have been any events or changes in circumstances that indicate that property, plant and equipment and other intangible assets
may be impaired and an impairment review is carried out whenever such an assessment indicates that the carrying amount may
not be recoverable.

In the impairment analysis of the Company’s assets, some of the key assumptions used in estimating future cash flows include
revenue growth, future commodity prices, expected margin, expected sales volumes, cost structures and the outlook of market
supply and demand conditions appropriate to the local circumstances and macro-economic environment. These assumptions
and estimates are uncertain and are subject to change as new information becomes available. Changes in economic conditions
can also affect the rate used to discount future cash flow estimates.

Income taxes

The Company is subject to income taxes in Canada and the United States of America. Tax provisions are recognized when it
is considered probable that there will be a future outflow of funds to a taxing authority. In such cases, provision is made for
the amount that is expected to be settled, where this can be reasonably estimated. This requires management to make some
assumptions as to the ultimate outcome, which can change over time depending on facts and circumstances. A change in
estimate of the likelihood of a future outflow and/or in the expected amount to be settled would be recognized in statement of
operations in the period in which the change occurs.

Fair value of derivatives ﬁnancial instruments

The Company reflects the fair value of derivative financial instruments based on valuation information from third parties. The
calculation of the fair value of certain of these instruments is based on proprietary models and assumptions of third parties
because such instruments are not quoted on an active market. Additionally, estimates of fair value may vary among different
models due to a difference in assumptions applied, such as the estimate of prevailing market prices, volatility, correlations and
other factors, and may not be reflective of the price at which they can be settled due to the lack of a liquid market. As a result
of changes in key assumptions, the actual amounts may vary significantly from estimated amounts.

Provisions

Accruals for decommissioning and environmental remediation are recorded when it is considered probable and the costs can
be reasonably estimated. A number of factors affect the cost of environmental remediation, including the determination of the
extent of contamination, the length of time remediation may require, the complexity of environmental regulations and the
advancement of technology. Considering these factors, the Company has estimated the costs of remediation, which are likely
to be incurred in future years. The Company believes the provisions made for environmental matters are adequate, however it
is reasonably possible that actual costs may differ from the estimated accrual, if the selected methods of remediation do not
adequately reduce the contaminates and if further remedial action is required. The Company uses third-party environmental
evaluators, where possible, to obtain the estimates of decommissioning and environmental provision.

Critical judgements in applying the Company’s accounting policies

Identification of cash-generating unit (“CGU”)

For the purposes of impairment testing, assets are grouped at the lowest levels of integrated assets that generate identifiable
cash inflows that are largely independent of the cash inflows of other assets or groups of assets, termed as a CGU. The allocation
of assets into a CGU requires significant judgment and interpretations with respect to the integration between assets, the
existence of active markets, similar exposure to market risks, shared infrastructures and the way in which management monitors
the operations.

14
54

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Investment in finance leases

In determining whether certain of the Company’s long-term tank storage arrangements are, or contain, a lease, the Company
must use judgement in assessing whether the fulfilment of the arrangement is dependent on the use of a specific asset and the
arrangement conveys the right to use the assets. For those arrangements considered to be a lease, further judgement is required
to determine whether substantially all of the significant risks and rewards of ownership are transferred to the customer or
remain with the Company, to appropriately account for the arrangement as a finance or operating lease. These judgements can
be significant as to how the Company classifies amounts related to the arrangements as property, plant and equipment or net
investment in finance lease on the balance sheet. The Company has determined, based on the terms and conditions of these
arrangements, that the substantial risks and rewards to the ownership of certain storage tanks have been transferred to the
customer, and accordingly, these storage tanks have been recognized as an investment in finance lease.

Current and deferred taxation

The computation of the Company’s income tax expense involves the interpretation of applicable tax laws and regulations in
many jurisdictions. The resolution of tax positions taken by the Company can take significant time to complete and in some
cases it is difficult to predict the ultimate outcome. In addition, the Company has carry-forward tax losses in certain taxing
jurisdictions that are available to offset against future taxable profit. This involves an assessment of when those deferred tax
assets are likely to be realized, and a judgment as to whether or not there will be sufficient taxable profits available to offset
the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently
uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts
recognized in respect of deferred tax assets as well as in the amounts recognized in statement of operations in the period in
which the change occurs. However, deferred income tax assets are recognized only to the extent that it is probable that taxable
profit will be available against which the unused tax losses can be utilized. To the extent that actual outcomes differ from
management’s estimates, income tax charges or credits may arise in future periods.

4 Changes in accounting policies and disclosures

New and amended standards adopted by the Company

The Company adopted the following new and revised standards, along with any consequential amendments. These changes
were made in accordance with applicable transitional provisions.
• The annual improvements process addresses issues in the 2010-2012 and 2011-2013 reporting cycles including changes
to IFRS 13, Fair value measurements, IFRS 8, Operating segments and IAS 24, Related party transactions. These
improvements are effective for annual periods beginning on or after July 1, 2014. The impact of adopting these
improvements did not have a material impact on the consolidated financial statements.

•

15
55

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

New standards and interpretations issued but not yet adopted

The following provides information requiring new standards and interpretations that have been issued but not yet adopted by
the Company:

•
The annual improvements process addresses issues in the 2012-2014 reporting cycles including changes to IFRS 5, Non-
current assets held for sale and discontinued operations, IFRS 7, Financial instruments: Disclosures, IAS 19, Employee
benefits, and IAS 34, Interim financial reporting. These improvements are effective for periods beginning on or after
January 1, 2016. The adoption of these improvements will not have a material impact on the consolidated financial
statements.

•

IAS 1, Presentation of financial statements (“IAS 1”), has been amended to clarify the guidance on materiality and
aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies.
The amendment to IAS 1 is effective for annual periods beginning on or after January 1, 2016. The adoption of this
amendment will not have a material impact on the consolidated financial statements.

• The IASB completed the final element of its comprehensive publication of IFRS 9 Financial Instruments in July 2014.
The package of improvements introduced by IFRS 9 includes a logical model for classification and measurement, a single,
forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting. The IASB
has previously published versions of IFRS 9 that introduced new classification and measurement requirements (in 2009
and 2010) and a new hedge accounting model (in 2013). The July 2014 publication represents the final version of the
Standard, replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. The Company
is currently evaluating the impact of adopting this standard on its consolidated financial statements.

•

IFRS 10, Consolidated financial statements (“IFRS 10”), and IAS 28, Investments in associates and joint ventures (“IAS
28”), has been amended to address an inconsistency between IFRS 10 and IAS 28 in regards to a sale or contribution of
assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain
or loss is recognized when the transaction involves a business combination, and whereas a partial gain is recognized when
the transaction involves the assets that do not constitute a business. Additionally, the amendments clarify the exception
from preparing consolidated financial statements, the consolidation requirements for subsidiaries which act as an
extension of an investment entity, and the requirements for equity accounting for investments in associates and joint
ventures. The amendments to IFRS 10 and IAS 28 are effective for annual periods beginning on or after January 1, 2016.
The adoption of these amendments will not have a material impact on the consolidated financial statements.

IFRS 15, Revenue from contracts with customers (“IFRS 15”), has been issued as a new standard on revenue recognition
and will supersede IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. IFRS 15 is effective for
annual periods beginning on or after January 1, 2018. The Company is currently evaluating the impact of adopting this
standard on its consolidated financial statements.

IFRS 16, Leases (“IFRS 16”), has been issued as a new standard on leases and will supersede IAS 17. IFRS 16 is effective
for annual periods beginning on or after January 1, 2019. The Company is currently evaluating the impact of adopting
this standard on its consolidated financial statements.

16
56

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

5 Business combinations

The Company completed the following business combinations in 2015:

Littlehawk Enterprises Ltd (“Littlehawk”)
On February 1, 2015, the Company acquired all of the issued and outstanding common shares of Littlehawk for total cash
consideration of $11.5 million. Littlehawk is a private Canadian company which operates hydrovac units that specialize in
hydro excavation, pressure testing and water hauling for the construction and energy industries.

The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date:

Fair Value

Trade and other receivables .................................................................................................................................. $
Inventories.............................................................................................................................................................
Prepaid and other assets ........................................................................................................................................
Property, plant and equipment ..............................................................................................................................
Goodwill(1) ...........................................................................................................................................................
Intangible assets (2) ................................................................................................................................................
Other long-term assets ..........................................................................................................................................
Trade payables and accrued charges .....................................................................................................................
Deferred income tax liabilities ..............................................................................................................................
Net assets acquired ................................................................................................................................................ $

1,784
128
57
8,123
1,533
1,754
48
(505)
(1,391)
11,531

The total consideration includes contingent consideration of $0.6 million that the Company has recorded as it expects that
the specified targets will be achieved.
(1) The goodwill arising on the acquisition is not deductible for tax purposes.
(2) Consists of customer relationships of $0.2 million and non-compete agreements of $1.6 million.
The goodwill arising from the acquisition is attributable to the expected synergies with the Company’s existing Truck
Transportation segment. The goodwill for this acquisition is allocated to the Truck Transportation segment.

The fair value of trade receivables is $1.8 million, which approximates their gross contractual amount.

Ross Eriksmoen, Inc, GWCC, LLC, Frontier Ventures, LLC (collectively doing business as “T&R Transport”)
On July 1, 2015, the Company acquired all of the issued and outstanding ownership interests of T&R Transport for total cash
consideration of $34.9 million. T&R transports water and oil field waste and provides related transportation services to
customers in the oil, gas, and petrochemical industry throughout the Bakken region of North Dakota.

The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date:

Fair Value

8,501
619
67
22,578
6,226
3,133
(6,197)
34,927

The total consideration includes contingent consideration of $6.2 million that the Company has recorded as it expects that
the specified targets will be achieved.
(1) The goodwill arising on the acquisition is deductible for tax purposes.
(2) Consists of customer relationships of $1.3 million and non-compete agreements of $1.8 million.
The goodwill arising from the acquisition is attributable to the expected synergies with the Company’s existing Environmental
Services segment. The goodwill for this acquisition is allocated to the Environmental Services segment.

17
57

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The fair value of trade receivables is $8.5 million, which approximates their gross contractual amount.

Additional Information
If the Littlehawk and T&R Transport acquisitions had occurred on January 1, 2015, the Company estimates that it would have
reported combined revenue of $5,621.9 million and net loss before income taxes of $286.1 million for the year ended December
31, 2015. From the date that each acquisition was completed to December 31, 2015, the acquisitions contributed revenue of
$23.7 million and net loss before income taxes of $0.4 million.

The Company completed the following business combinations in 2014:

Cal-Gas Inc. (“Cal-Gas”)
On August 1, 2014, the Company acquired all of the issued and outstanding common shares of Cal-Gas for total cash
consideration of $96.4 million, including final closing adjustments. Cal-Gas is a provider of propane and related equipment,
service and delivery to commercial, industrial and residential customers in Western Canada and Northwestern Ontario.

The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date:

Trade and other receivables ..............................................................................................................................
Inventories.........................................................................................................................................................
Prepaid and other assets ....................................................................................................................................
Property, plant and equipment ..........................................................................................................................
Goodwill(1) .......................................................................................................................................................
Intangible assets (2) ............................................................................................................................................
Other long-term assets ......................................................................................................................................
Trade payables and accrued charges .................................................................................................................
Deferred revenue ...............................................................................................................................................
Provisions ..........................................................................................................................................................
Deferred income tax liabilities ..........................................................................................................................
Net assets acquired ............................................................................................................................................

Fair Value

11,314
1,457
331
64,401
29,152
7,534
105
(10,957)
(442)
(90)
(6,420)
96,385

(3) The goodwill arising on the acquisition is not deductible for tax purposes.
(4) Consists of customer relationships of $5.1 million and non-compete agreements of $2.4 million.
Acquisition-related costs of $0.3 million have been charged to general and administrative expenses in the consolidated
statement of operations for the year ended December 31, 2014.

The goodwill arising from the acquisition is attributable to the expected synergies with the Company’s existing propane
operations within the Propane and NGL Marketing and Distribution segment. The goodwill for this acquisition is allocated to
the Propane and NGL Marketing and Distribution segment.

The fair value of trade receivables is $11.3 million, which approximates its gross contractual amount.

18
58

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Stittco Energy Limited (“Stittco”)
On April 1, 2014, the Company acquired all of the issued and outstanding common shares of Stittco for total cash consideration
of $32.1 million including final closing adjustments. Stittco is a provider of propane and related equipment, service and delivery
to commercial, industrial and residential customers in northern Manitoba and the Northwest Territories.

The following table summarizes the fair value of assets acquired and liabilities assumed at the acquisition date:

Trade and other receivables ..............................................................................................................................
Inventories.........................................................................................................................................................
Prepaid and other assets ....................................................................................................................................
Property, plant and equipment ..........................................................................................................................
Goodwill(1) .......................................................................................................................................................
Intangible assets (2) ............................................................................................................................................
Trade payables and accrued charges .................................................................................................................
Income taxes payable ........................................................................................................................................
Other liabilities ..................................................................................................................................................
Provisions ..........................................................................................................................................................
Deferred income tax liabilities ..........................................................................................................................
Net assets acquired ............................................................................................................................................

Fair Value

12,818
4,922
253
15,653
4,837
5,660
(4,068)
(1,270)
(2,007)
(734)
(4,009)
32,055

(1) The goodwill arising on the acquisition is not deductible for tax purposes.
(2) Consists of customer relationships of $5.4 million, and non-compete agreements of $0.3 million.
Acquisition-related costs of $0.2 million have been charged to general and administrative expenses in the consolidated
statement of operations for the year ended December 31, 2014.

The fair value of trade receivables is $12.8 million, which approximates its gross contractual amount.

6 Trade and other receivables

Trade receivables ............................................................................................................
Allowance for doubtful accounts ....................................................................................
Trade receivables - net ....................................................................................................
Risk management assets (note 28) ..................................................................................
Deposits held as collateral ...............................................................................................
Broker accounts receivable .............................................................................................
Indirect taxes receivable ..................................................................................................
Other ...............................................................................................................................

December 31,

2015

353,485
(1,950)
351,535
8,415
43
1,561
5,579
3,180
370,313

2014

599,546
(4,678)
594,868
18,702
898
4,554
15,377
6,884
641,283

19
59

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Allowance for doubtful accounts

Year ended
December 31,

2015

2014

Opening balance ..............................................................................................................
Additional allowances .....................................................................................................
Receivables written off as uncollectible ..........................................................................
Recoveries .......................................................................................................................
Effect of changes in foreign exchange rates ....................................................................
Closing balance ...............................................................................................................

4,678
35
(2,953)
(31)
221
1,950

4,092
1,708
(1,191)
(73)
142
4,678

Inventories

Crude oil..........................................................................................................................
Diluent ............................................................................................................................
Asphalt ............................................................................................................................
Natural gas liquids ..........................................................................................................
Wellsite fluids and distillate ............................................................................................
Spare parts and other .......................................................................................................

December 31,
2015

2014

46,876
1,244
10,928
22,238
8,856
17,451
$ 107,593

68,883
2,889
15,922
41,230
11,727
14,286
$ 154,937

The cost of the inventory sold included in cost of sales was $4,351.6 million and $7,149.1 million for the year ended December
31, 2015 and 2014, respectively.

8 Net investment in finance leases

The following summarizes the Company’s net investment in arrangements whereby the Company has entered into fixed term
contractual arrangements to allow customers to have dedicated use of certain tanks owned by the Company. These
arrangements are accounted for as finance leases:

Total minimum lease payments receivable .....................................................................
Residual value .................................................................................................................
Unearned income ............................................................................................................

Less: current portion .......................................................................................................
Net investment in finance lease : non-current portion.....................................................

December 31,
2015

2014

$ 329,806
35,858
(271,230)
94,434
1,045
93,389

$ 353,392
35,858
(293,955)
95,295
908
94,387

The minimum lease receivables are expected to be as follows:

2016 ....................................................................................................................................................................
2017 ....................................................................................................................................................................
2018 ....................................................................................................................................................................
2019 ....................................................................................................................................................................
2020 ....................................................................................................................................................................
2021 and later ......................................................................................................................................................

$ 23,548
23,548
23,548
23,548
23,548
212,066

20
60

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

9 Property, plant and equipment

Land &
Buildings

Pipelines
and
Connections

Tanks

Rolling
Stock

Plant,
Equipment &
Disposal
wells

Cost:
At January 1, 2015 ...................... $ 159,631 $ 137,434 $ 430,153 $ 454,493 $ 668,425
26,671
Additions ....................................
(2,197)
Disposals .....................................
Acquisitions through business

2,144
(13,676)

57,372
(177)

7,964
(1,506)

4,222
-

Work in
Progress

Total

$200,400 $ 2,050,536
376,479
(17,556)

278,106
-

combinations (note 5) ..............
Reclassifications .........................
Change in decommissioning

provision (note 16) ..................

Effect of movements in

5,741
29,772

-
23,818

-
47,532

6,773
-

18,187
99,659

-
(200,781)

30,701
-

2,705

5,740

9,180

17,625

exchange rates .........................

23,186
At December 31, 2015 ................ $ 207,519 $ 168,179 $ 542,750 $ 491,946 $ 843,111

42,212

5,917

2,130

Accumulated depreciation and

impairment:

At January 1, 2015 ...................... $ 25,599 $
Depreciation ................................
Impairment .................................
Disposals .....................................
Effect of movements in

5,773
385
(324)

exchange rates .........................

508

At December 31, 2015 ................ $ 31,941 $

52,652 $ 78,211 $ 184,624 $ 214,881
82,066
9,996
12,045
-
(1,450)
-

60,952
1,034
(11,531)

23,187
-
(247)

18,098
62,648 $ 101,156 $ 251,585 $ 325,640

16,506

12,857

86,302
$290,582 $ 2,544,087

- $ 555,967
181,974
-
13,464
-
(13,552)
-

-
35,117
- $ 772,970

Carrying amounts:
At January 1, 2015 ...................... $ 134,032 $ 84,782
105,531
At December 31, 2015 ................

175,578

$ 351,942 $ 269,869 $ 453,544
517,470
240,361

441,594

$200,400 $ 1,494,569
1,771,117

290,582

21
61

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Land &
Buildings

Pipelines
and
Connections

Tanks

Rolling
Stock

Plant,
Equipment &
Disposal
wells

Cost:
At January 1, 2014 ...................... $ 113,292 $ 128,360 $ 266,947 $ 400,671 $ 524,655
50,454
Additions ....................................
(2,050)
Disposals .....................................
Acquisitions through business

38,438
(11,670)

25,535
(22)

9,155
(798)

3,971
-

Work in
Progress

Total

$ 86,464 $ 1,520,389
391,270
(14,540)

263,717
-

combinations (note 5) ..............

13,150

53,879

8,016

5,009

80,054

Transfer to net investment in

finance leases ...........................
Reclassifications .........................
Change in decommissioning

provision (note 16) ..................

Effect of movements in

-
6,510

-
517

(2,026)
85,557

-
2,967

-
54,629

-
(150,180)

(2,026)
-

4,586

16,225

23,828

44,639

exchange rates .........................

11,900
At December 31, 2014 ................ $ 159,631 $ 137,434 $ 430,153 $ 454,493 $ 668,425

16,071

1,166

1,214

Accumulated depreciation and

impairment:

At January 1, 2014 ...................... $ 20,706 $ 43,579 $ 58,377 $ 132,214 $ 145,657
66,754
Depreciation ................................
(1,252)
Disposals .....................................
Effect of movements in

19,494
(244)

54,781
(8,605)

4,832
(22)

9,073
-

399

30,750
$200,400 $ 2,050,536

- $ 400,533
154,934
-
(10,123)
-

exchange rates .........................

584

6,234

3,722

10,623

At December 31, 2014 ................ $ 25,599 $ 52,652 $ 78,211 $ 184,624 $ 214,881

- $ 555,967

Carrying amounts:
At January 1, 2014 ...................... $ 92,586 $ 84,781
84,782
At December 31, 2014 ................

134,032

$ 208,570 $ 268,457 $ 378,998
453,544

351,942

269,869

$ 86,464 $ 1,119,856
1,494,569

200,400

Additions to property, plant and equipment includes capitalization of interest of $12.2 million and $7.2 million for the year
ended December 31, 2015 and 2014, respectively.

Property, plant and equipment are reviewed for impairment whenever events or conditions indicate that their net carrying
amount may not be recoverable. As a result of the continued general market downturn in 2015, the Company recorded an
impairment loss of $13.5 million that was recorded as additional depreciation. Of the impairment loss recorded, $12.8 million
related to assets within the Environmental Services segment and $0.7 million related to assets within the Truck Transportation
segment.

10 Long-term prepaid expenses and other assets

Risk management assets (note 28) ............................................................................
Long-term prepaid expenses .....................................................................................
Defined benefit pension plan assets ..........................................................................
Other assets ...............................................................................................................

December 31,

2015

-
1,189
1,084
2,291
4,564

2014

34,855
1,381
989
2,553
39,778

22
62

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

11 Income tax

The major components of income tax are as follows:

Current tax provision
Current tax on income for the year ..........................................................................
Adjustments in respect of prior years ......................................................................
Total current tax provision ...................................................................................
Deferred tax recovery ..............................................................................................
Origination and reversal of temporary differences ..................................................
Total deferred tax recovery ..................................................................................
Income tax provision (recovery) ..............................................................................

39,904
8,195
48,099
(48,892)
(5,895)
(54,787)
(6,688)

Year ended
December 31,

2015

2014

48,274
275
48,549
(12,886)
(75)
(12,961)
35,588

The income tax provision (recovery) differs from the amounts which would be obtained by applying the Canadian statutory
income tax rate to income before income taxes. These differences result from the following items:

Year ended
December 31,

2015

2014

Income (loss) before income taxes ..........................................................................
Statutory income tax rate .........................................................................................
Computed income tax provision ..............................................................................
Increase (decrease) in income tax resulting from:

$ (287,344)

26.13%
(75,083)

Foreign exchange loss on long-term debt, net ..................................................
Foreign exchange loss, other ............................................................................
Non-deductible expenses ..................................................................................
Stock based compensation ................................................................................
Non-taxable dividends ......................................................................................
Rate differential on foreign taxes .....................................................................
Goodwill impairment ........................................................................................
Impact of corporate rate changes ......................................................................
Other, including revisions in previous tax estimates and rate reductions .........

Effective income tax rate .........................................................................................

Current .....................................................................................................................
Deferred ...................................................................................................................

14,622
15,227
1,015
5,325
(13,863)
(8,237)
45,978
6,825
1,503
(6,688)

2.3%

48,099
(54,787)
(6,688)

$ 127,529
25.3%
32,265

4,646
4,704
484
3,533
(12,014)
2,173
-
-
(203)
$ 35,588

27.9%

48,549
(12,961)
$ 35,588

The increase in the statutory rate was due to higher provincial income tax rates in Canada in the current year.

23
63

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The analysis of deferred tax assets and deferred tax liabilities is as follows:

Deferred tax assets:

Deferred tax asset to be settled after more than 12 months ...................................
Deferred tax asset to be settled within 12 months .................................................

December 31,

2015

896
700
1,596

2014

1,532
2,000
3,532

Deferred tax liabilities:

Deferred tax liability to be settled after more than 12 months ...............................
Deferred tax liability to be settled within 12 months .............................................

Deferred tax liabilities, net............................................................................................

The gross movement on the deferred income tax account is as follows:

Opening balance ...........................................................................................................
Effect of changes in foreign exchange rates .................................................................
Recognized through business combinations (note 5) ....................................................
Income statement recovery ...........................................................................................
Tax charge (credit) relating to components of other comprehensive income ..............
Closing balance .............................................................................................................

124,284
21,400
145,684
$ 144,088

172,851
18,500
191,351
$ 187,819

Year ended
December 31,

2015
$ 187,819
9,600
1,391
(54,787)
65
$ 144,088

2014
$ 185,918
4,609
10,429
(12,961)
(176)
$ 187,819

The movement in the significant components of deferred income tax assets and liabilities during the year, without taking into
consideration the offsetting balances within the same tax jurisdiction, is as follows:

Deferred tax assets

At January 1, 2014 ........................................
Credited (charged) to the statement of

operations ...............................................
Credited to other comprehensive income .....
Effect of changes in foreign exchange rates .
At December 31, 2014 ..................................
Credited (charged) to the statement of

operations ...............................................
Charged to other comprehensive income ......
Effect of changes in foreign exchange rates .
At December 31, 2015 ..................................

Non-capital
losses carried
forward

Asset
retirement
obligations

Retirement
benefits
obligations

Other

Total

$ 21,493

$ 12,511

$ 1,480

$ 21,042

$ 56,526

(5,062)
-
1,686
$ 18,117

10,449
-
1,577
$ 30,143

1,006
-
380
$ 13,897

3,093
-
420
$ 17,410

(213)
176
-
$ 1,443

34
(65)
-
$ 1,412

(9,350)
-
1,531
$ 13,223

5,785
-
(4,689)
$ 14,319

(13,619)
176
3,597
$ 46,680

19,361
(65)
(2,692)
$ 63,284

24
64

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Deferred tax liabilities

At January 1, 2014 ......................................
Credited (charged) to the statement of

operations .............................................
Business combinations ................................
Effect of changes in foreign exchange rates
At December 31, 2014 ................................
Credited (charged) to the statement of

Income tax losses carry forward

Timing of
Partnership
Income

Property,
Plant and
Equipment

Accounting
and tax
basis
differences

Other

Total

$ 47,468

$ 156,049

$ 38,927

$ 242,444

(14,606)
-
-
$ 32,862

(1,412)
10,429
5,934
$ 171,000

(20,729)
-
-
$ 12,133

274
1,391
6,064
$ 178,729

(11,285)
-
1,272
$ 28,914

(13,958)
-
844
$ 15,800

723
-
1,000
$ 1,723

(26,580)
10,429
8,206
$ 234,499

(1,013)
-
-
710

(35,426)
1,391
6,908
$ 207,372

At December 31, 2015 and 2014, the Company had losses available to offset income for tax purposes of $79.8 million and
$48.8 million, respectively. At December 31, 2015, the Company has $1.6 million and $78.2 million of the losses available in
Canada and the United States, respectively that expire as follows:

December 31, 2031 .............................................................................................................................................
December 31, 2032 .............................................................................................................................................
December 31, 2033 .............................................................................................................................................
December 31, 2034 .............................................................................................................................................
December 31, 2035 .............................................................................................................................................

$ 39,895
14,719
-
1,332
23,874
$ 79,820

No income tax liability has been recognized in respect of temporary differences associated with investments in subsidiaries.
As no income taxes are expected to be paid in respect of these differences related to Canadian subsidiaries, the amounts have
not been determined. There are no taxable temporary differences associated with investments in non-Canadian subsidiaries.

25
65

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

12 Intangible assets

Brands

Customer
relationships

Long-term
customer
contracts

Non-compete

License and
Permits

agreements Technology

Software

Total

Cost:
At January 1, 2015 ........ $ 51,330 $ 258,716 $ 37,380 $ 26,554 $ 2,667 $ 47,539 $ 3,716 $ 427,902
16,087
-
Additions .......................
Acquisitions through
business combinations
(note 5) ........................
Effect of movements in
40,275
exchange rates .............
At December 31, 2015 .. $ 53,240 $ 288,880 $ 43,706 $ 31,601 $ 2,873 $ 64,417 $ 4,434 $ 489,151

16,087

28,745

1,910

1,579

3,468

1,419

6,326

4,887

206

791

718

Accumulated

amortization and
impairment:

At January 1, 2015 ........ $ 39,451 $ 136,796 $ 19,702 $ 20,923 $ 2,371 $ 14,452 $ 2,670 $ 236,365
87,554
Amortization .................
Effect of movements in
19,799
exchange rates .............
At December 31, 2015 .. $ 48,076 $ 214,069 $ 26,510 $ 25,225 $ 2,873 $ 22,534 $ 4,431 $ 343,718

12,220

65,053

1,903

1,385

2,917

7,755

3,178

3,630

1,151

6,722

326

176

327

610

Carrying amounts:
At January 1, 2015 ........ $ 11,879 $ 121,920 $ 17,678 $
5,164
At December 31, 2015 ..

74,811

17,196

5,631
6,376

296 $ 33,087 $ 1,046 $ 191,537
145,433

41,883

Brands

Customer
relationships

Long-term
customer
contracts

Non-compete

License and
Permits

agreements Technology

Software

Total

Cost:
At January 1, 2014 ........ $ 50,465 $ 235,096 $ 34,653 $ 23,368 $ 2,579 $ 27,911 $ 3,448 $ 377,520
20,252
-
Additions .......................
Acquisitions through
business combinations
(note 5) ........................
Effect of movements in
16,936
exchange rates .............
At December 31, 2014 .. $ 51,330 $ 258,716 $ 37,380 $ 26,554 $ 2,667 $ 47,539 $ 3,716 $ 427,902

10,602

12,264

13,194

19,498

2,592

2,727

865

594

130

754

268

Accumulated

amortization:

At January 1, 2014 ........ $ 28,142 $ 101,478 $ 14,801 $ 17,468 $ 1,980 $ 9,944 $ 1,312 $ 175,125
54,991
Amortization .................
Effect of movements in
6,249
exchange rates .............
At December 31, 2014 .. $ 39,451 $ 136,796 $ 19,702 $ 20,923 $ 2,371 $ 14,452 $ 2,670 $ 236,365

31,637

10,617

2,894

4,547

1,129

3,772

3,681

1,184

(39)

561

340

692

174

Carrying amounts:
At January 1, 2014 ........ $ 22,323 $ 133,618 $ 19,852 $
11,879
At December 31, 2014 ..

121,920

17,678

5,900
5,631

26
66

599 $ 17,967 $ 2,136 $ 202,395
191,537
296

33,087

1,046

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

During the year ended December 31, 2015 the Company revised the useful lives for certain intangible assets within the
Environmental Services segment. The net change on the current financial year was an increase to amortization expense of
$30.5 million. Assuming the assets are held until the end of their estimated useful lives, amortization in future years in relation
to these assets will be decreased by $13.7 million in 2016.

13 Goodwill

The changes in the carrying amount of goodwill are as follows:

Year ended
December 31,
2015

2014

Balance as at January 1 .......................................................................................................
Additions through business combinations (note 5) .............................................................
Impairment .........................................................................................................................
Effect of changes in foreign exchange rates ........................................................................
Balance as at December 31 .................................................................................................

$ 783,721
7,759
(175,959)
55,386
$ 670,907

$ 726,148
33,989
-
23,584
$ 783,721

Goodwill is monitored for impairment by management at the operating segment level. The following is a summary of goodwill
allocated to each operating segment:

Terminals and Pipelines ......................................................................................................
Environmental Services ......................................................................................................
Truck Transportation ..........................................................................................................
Propane and NGL Marketing and Distribution ...................................................................
Processing and Wellsite Fluids ...........................................................................................
Marketing ............................................................................................................................

December 31,

2015

2014

$ 200,464
111,860
57,908
139,456
117,664
43,555
$ 670,907

$ 200,120
234,731
54,474
133,177
117,664
43,555
$ 783,721

The goodwill recorded on the balance sheet represents the excess of the cost of acquisitions over the fair value of identifiable
assets, liabilities and contingent liabilities acquired. Of the balance as at December 31, 2015 and 2014, $432.7 million, net of
impairment, relates to goodwill recognized on the acquisition of the Company on December 12, 2008. Of the remaining
balance, $145.8 million represents additional goodwill recorded on acquisitions completed and $92.4 million relates to the
effect of changes in foreign exchange rates recorded by the Company since December 12, 2008.

The recoverable amount of goodwill is determined based on a fair value less costs of disposal calculation. This calculation
involves comparing the fair value of each operating segment to its carrying value, including goodwill. To calculate a fair value,
management uses an earning’s multiple approach. In calculating earnings, the Company uses Board approved budgets to
determine earnings before interest, taxes, depreciation and amortization (“EBITDA”) by operating segment. To determine fair
value, an implied forward multiple was applied to each operating segment’s budgeted EBITDA less corporate expenses. The
implied multiple was calculated by utilizing multiples of comparable public companies by operating segment. In calculating
fair value for each operating segment, the Company used an implied average forward multiples that ranged from 8.1 to 11.1.
The fair value of each of operating segment was categorized as Level 2 fair value based on the observables inputs.

On November 30, 2015, the Company carried out its annual impairment test with respect to goodwill. For all operating
segments, except for Environmental Services, the fair value less costs of disposal was greater than the operating segments
carrying value, including goodwill. The Company determined that the goodwill in the Environmental Services segment was
impaired by $176.0 million. The impairment within this segment was due to the continued impact of lower crude oil prices
resulting in a lower customer demand in the Environmental Services segment. Key assumptions used in the determination of
the recoverable amount include utilizing Board approved budgeted EBITDA for the operating segment and the application of
an implied forward multiple of 8.3. These assumptions represent management’s assessment of future trends in the
environmental services industry and were based on historical data from both external and internal sources.

27
67

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

14 Loans and Borrowings

Revolving Credit Facility

The Company has established an unsecured revolving credit facility of up to $500.0 million (the “Revolving Credit Facility”),
with a maturity date of August 15, 2020, the proceeds of which are available to provide financing for working capital and other
general corporate purposes. In addition, during the year ended December 31, 2015, the Company established three bilateral
demand letter of credit facilities totaling $150.0 million.

The Revolving Credit Facility provides sub–facilities for letters of credit, swingline loans and borrowings in Canadian dollars
and U.S. dollars. Borrowings under the Revolving Credit Facility bear interest at a rate equal to Canadian Prime Rate or U.S.
Base Rate or LIBOR or Canadian Bankers Acceptance Rate as the case may be plus an applicable margin. The applicable
margin for borrowings under the Revolving Credit Facility is subject to step up and step down based on the Company’s total
debt leverage ratio. In addition, the Company must pay a standby fee on the unused portion of the Revolving Credit Facility
and customary letter of credit fees equal to the applicable margins based on the Company’s total debt leverage ratio.

The Revolving Credit Facility contains certain covenants including financial covenants requiring the Company to maintain
ratios of maximum senior debt leverage ratio of 4.0 to 1.0 until June 30, 2017 and 3.5 to 1.0 thereafter, maximum total debt
leverage ratio of 4.0 to 1.0 and minimum interest coverage ratio of 2.5 to 1.0. As at December 31, 2015, the Company was in
compliance with all covenants under the Revolving Credit Facility.

The Company has $35.0 million drawn against the Revolving Credit Facility as at December 31, 2015. The Company had
issued letters of credit totalling $32.6 million and $57.5 million as at December 31, 2015 and December 31, 2014, respectively.

Long-term debt

December 31,
2015

2014

U.S.$550.0 million 6.75% Notes due July 15, 2021 .........................................................
$250.0 million 7.00% Notes due July 15, 2020 ................................................................
$300.0 million 5.375% Notes due July 15, 2022 ..............................................................
Unamortized issue discount and debt issue costs ..............................................................
Long-term debt: non-current portion ................................................................................

$ 761,200
250,000
300,000
(19,777)
$ 1,291,423

$ 638,055
250,000
300,000
(22,687)
$ 1,165,368

On June 28, 2013, the Company issued U.S.$500.0 million 6.75% Senior Unsecured Notes due July 15, 2021 at an issue price
of 98.476% and $250.0 million 7.00% Senior Unsecured Notes due July 15, 2020 at an issue price of 98.633%. On June 12,
2014, the Company issued U.S.$50.0 million 6.75% Senior Unsecured Notes due July 15, 2021 at an issue price of 108% under
its existing indenture and issued $300.0 million 5.375% Senior Unsecured Notes due July 15, 2022 at an issue price of par
(collectively, the “Notes”). Interest is payable semi–annually on January 15 and July 15 of each year the Notes are outstanding.

The Notes agreements contain certain redemption options whereby the Company can redeem all or part of the Notes at prices
set forth in the respective indebtedness from proceeds of an equity offering or on the dates specified in the respective
indebtedness. In addition, the Notes holders have the right to require the Company to redeem the Notes at the redemption prices
set forth in the respective indebtedness in the event of change in control or in the event certain asset sale proceeds are not re-
invested in the time and manner specified in the respective indebtedness.

The Company’s long-term debt contains non-financial covenants and customary events of default clauses. As of December 31,
2015 and December 31, 2014, the Company was in compliance with all of its covenants. As at December 31, 2015 and
December 31, 2014, the fair value of long-term debt based on period end trading prices on the secondary market (Level 2) was
$1,235.6 million and $1,193.6 million, respectively.

28
68

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Foreign exchange loss on long-term debt

As a result of the movement in foreign exchange rates, the Company recorded foreign exchange losses, net, on long-term debt
as follows:

Year ended
December 31,
2015

2014

Foreign exchange loss on movement in exchanges rates on U.S. dollar long-term debt ....
Gain on financial instruments relating to long-term debt (note 28) ....................................
Foreign exchange loss on long-term debt .............................................................................

$ 123,145
(9,995)
$ 113,150

52,000
(16,569)
35,431

15 Trade payables and accrued charges

Trade payables and accrued charges include the following items:

Trade payables ....................................................................................................................
Accrued compensation charges ...........................................................................................
Indirect taxes payable ........................................................................................................
Risk management liabilities (note 28) ................................................................................
Broker accounts payable .....................................................................................................
Defined benefit plan obligations .........................................................................................
Interest payable ...................................................................................................................
Due to Hunting plc (note 19) ..............................................................................................
Other ...................................................................................................................................

December 31,

2015

2014

$ 322,347
18,409
3,164
5,479
-
465
39,251
8,585
21,032
$ 418,732

$ 445,670
43,988
3,157
18,135
183
493
36,892
8,999
23,946
$ 581,463

29
69

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

16 Provisions

The aggregate carrying amounts of the obligation associated with decommissioning and site restoration on the retirement of
assets and environmental costs are as follows:

Year ended
December 31,
2015

Opening balance ...............................................................................................................
Settlements........................................................................................................................
Assumed in a business combination (note 5) ....................................................................
Additions ..........................................................................................................................
Change in estimated future cash flows .............................................................................
Change in discount rate ....................................................................................................
Unwinding of discount .....................................................................................................
Effect of changes in foreign exchange rates .....................................................................
Closing balance .................................................................................................................

$ 136,347
(4,247)
-
6,774
2,240
8,611
3,251
2,367
$ 155,343

2014

$ 91,424
(4,462)
824
4,152
14,584
25,903
2,898
1,024
$ 136,347

The Company currently estimates the total undiscounted future value amount, including an inflation factor of 2.0%, of
estimated cash flows to settle the future liability for asset retirement and remediation obligations to be approximately
$277.9 million and $265.7 million at December 31, 2015 and 2014, respectively. In order to determine the current provision
related to these future values, the estimated future values were discounted using an average risk-free rate of 2.1% and 2.3% at
December 31, 2015 and 2014, respectively. The provision is expected to be settled up to 40 years into the future. A one percent
increase in the risk-free rate would decrease the provision by $34.6 million, with a corresponding adjustment to property, plant
and equipment. A one percent decrease in the risk-free rate would increase the provision by $34.6 million, with a corresponding
adjustment to property, plant and equipment.

17 Other long-term liabilities

Defined benefit plan obligations .........................................................................................
Risk management liabilities (note 28) .................................................................................
Other post-retirement benefits obligations ..........................................................................
Other ...................................................................................................................................

December 31,
2015

1,530
3,824
4,072
4,549
13,975

2014

2,142
8,269
3,797
602
14,810

18 Share capital

Authorized

The Company is authorized to issue an unlimited number of common shares and preferred shares.

Holders of common shares are entitled to one vote per common share at meetings of shareholders of the Company, to receive
dividends if, as and when declared by the Board and to receive pro rata the remaining property and assets of the Company upon
its dissolution, liquidation or winding-up, subject to the rights of shares having priority over the common shares.

The preferred shares are issuable in series and have such rights, restrictions, conditions and limitations as the Board may from
time to time determine. The preferred shares shall rank senior to the common shares with respect to the payment of dividends
or distribution of assets or return of capital of the Company in the event of a dissolution, liquidation or winding up of the
Company. There were no issued and outstanding preferred shares as at December 31, 2015 or 2014.

30
70

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Common Shares - Issued and outstanding

The following table below sets forth the issued and outstanding common shares for the years ended December 31, 2015 and
2014.

Common Shares

Number of
Common
Shares

Balance as at January 1, 2014 ................................................................................................ 122,200,192
580,145
Issuance of common shares in connection with the exercise of stock options .......................
Issuance of common shares in connection with other equity awards .....................................
436,783
Issuance of common shares in connection with the dividend reinvestment and stock

1,271,425
dividend programs ..........................................................................................................
Transfer from contributed surplus on issue of equity awards ................................................
-
Balance as at December 31, 2014 .......................................................................................... 124,488,545
12,162
Issuance of common shares in connection with the exercise of stock options .......................
Issuance of common shares in connection with other equity awards .....................................
412,054
Issuance of common shares in connection with the dividend reinvestment and stock

Amount

$ 1,585,145
5,942
-

36,648
6,266
$ 1,634,001
105
-

1,222,805
dividend programs ..........................................................................................................
Transfer from contributed surplus on issue of equity awards ................................................
-
Balance as at December 31, 2015 .......................................................................................... 126,135,566

28,956
9,261
$ 1,672,323

A dividend of $0.32 per share, declared on November 3, 2015, was paid on January 15, 2016.

19 Commitments and contingencies

Commitments

Operating lease obligations primarily relate to office leases, rail cars, vehicles, field buildings, various equipment and terminal
services arrangements. The minimum payments required under these commitments, net of sub-lease income, are as follows:

2016 ................................................................................................................................................................
2017 ................................................................................................................................................................
2018 ................................................................................................................................................................
2019 ................................................................................................................................................................
2020 ................................................................................................................................................................
2021 and later ..................................................................................................................................................

78,790
68,165
59,720
46,435
21,481
12,851
$ 287,442

Expenses related to operating leases, net of sublease income, were $65.8 million and $39.6 million for the year ended December
31, 2015 and 2014, respectively.

With respect to capital expenditures, at December 31, 2015, the Company had an estimated amount of $264.7 million remaining
to be spent that relates to projects approved at that date.

Contingencies

The Company is currently undergoing income tax related and excise tax audits. While the final outcome of such audits cannot
be predicted with certainty, it is the opinion of management that the resolution of these audits will not have a material impact
on the Company’s consolidated financial position or results of operations.

At December 31, 2015 and 2014 the Company recorded $8.6 million in both income tax receivable and trade payables and
accrued charges whereby the Company paid tax assessments relative to certain of these audits that were funded by Hunting plc
who owned the Company prior to December 12, 2008. The Company has assumed that the remaining assessment amounts paid
in connection with these audits will be refunded to the Company and although the timing is uncertain, will be settled within a
year.

31
71

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The Company is subject to various regulatory and statutory requirements relating to the protection of the environment. These
requirements, in addition to the contractual agreements and management decisions, result in the recognition of estimated
decommissioning provisions. Estimates of decommissioning costs can change significantly based on such factors as operating
experience and changes in legislation and regulations.

The Company is involved in various legal actions, which have occurred in the ordinary course of business. Management is of
the opinion that losses, if any, arising from such legal actions would not have a material impact on the Company’s consolidated
financial position or results of operations.

20 Revenue

Products ..........................................................................................................................
Services ...........................................................................................................................

21 Depreciation, amortization, and impairment

Depreciation of property, plant and equipment ...............................................................
Amortization of intangible assets ....................................................................................

Year ended
December 31,

2015

2014

$ 4,734,340
857,642
$ 5,591,982

$ 7,507,013
1,066,516
$ 8,573,529

Year ended
December 31,
2015

2014

$
$
$

195,438
87,554
282,992

$
$
$

154,934
54,991
209,925

Depreciation and impairment of property, plant and equipment and amortization of intangible assets have been expensed as
follows:

Cost of sales ....................................................................................................................
General and administrative .............................................................................................

22 Employee salaries and benefits

Salaries and wages ..........................................................................................................
Post-employment benefits ...............................................................................................
Share based compensation ..............................................................................................
Termination benefits .......................................................................................................

Year ended
December 31,

2015

2014

276,008
6,984
282,992

205,043
4,882
209,925

Year ended
December 31,

2015

2014

295,149
8,254
20,379
2,904
326,686

292,188
6,394
13,977
1,365
313,924

32
72

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Employee salaries and benefits have been expensed as follows:

23 Other operating income

Gain on sale of property, plant and equipment ...............................................................
Other income ..................................................................................................................
Foreign exchange gain ....................................................................................................

Year ended
December 31,
2015

2014

287,835
38,851
326,686

280,730
33,194
313,924

Year ended
December 31,

2015

2,515
4,770
14,741
22,026

2014

2,717
-
9,128
11,845

24 Per share amounts

The following table shows the number of shares used in the calculation of earnings per share:

Year ended
December 31,

2015

2014

Weighted average common shares outstanding - Basic ..................................................
Dilutive effect of:

125,652,815

123,591,547

Stock options and other awards ...............................................................................
Weighted average common shares – Diluted ..................................................................

-
125,652,815

2,004,643
125,596,190

The dilutive effect of 2.0 million stock options and other awards for the year ended December 31, 2015 has not been included
in the determination of the weighted average number of common shares outstanding as the inclusion would be anti-dilutive to
the net loss per share.

25 Related party transactions

Joint operations

On August 11, 2011, the Company formed a partnership to jointly construct and own pipeline and emulsion treating, water
disposal and oilfield waste management facilities in the Plato area of Saskatchewan. The partnership commenced operations
in 2012. The Company’s interest in the partnership is 50%. A member of the Company’s Board is also a director of the other
party with the 50% interest in the partnership. At December 31, 2015 and 2014, the Company’s proportionate share of property,
plant and equipment was $9.4 million and $10.2 million, respectively. The impact of the Company’s share of the other financial
position and results of the partnership is not material to the Company’s consolidated financial statements.

33
73

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Compensation of key management

Key management includes the Company’s directors, executive officers, business unit leaders and other non-business unit senior
vice presidents. Compensation awarded to key management was:

Salaries and short-term employee benefits .....................................................................
Post-employment benefits ..............................................................................................
Share based compensation ..............................................................................................

26 Post-retirement benefits

Defined benefit plans

Year ended
December 31,

2015

4,571
1,123
6,262
11,956

2014

7,597
1,068
4,639
13,304

The Company maintains a funded defined benefit pension plan that is funded based upon the advice of independent actuaries.
The Company is required to file an actuarial valuation of the defined benefit pension plans with the provincial regulator every
three years, with the most recent actuarial valuation filing as at December 31, 2013. Based on the actuarial valuations as at
December 31, 2015 and 2014, the status of the defined benefit plans was as follows:

Accrued benefit obligation

Year ended
December 31,
2015

Accrued benefit obligation, beginning of year ........................................................................... $
Current service cost.............................................................................................................
Interest cost .........................................................................................................................
Benefits paid .......................................................................................................................
Actuarial loss (gain) ............................................................................................................
Other ...................................................................................................................................
Accrued benefit obligation, end of year ..................................................................................... $

16,342
216
608
(571)
(167)
12
16,440

Plan assets

Year ended
December 31,
2015

Fair value of pension plan assets, beginning of year .................................................................. $
Interest on plan assets .........................................................................................................
Actual contributions ............................................................................................................
Actual benefits paid ............................................................................................................
Actuarial gain ......................................................................................................................
Fair value of pension plan assets, end of year ............................................................................ $

14,696
513
809
(571)
82
15,529

2014

15,187
212
674
(518)
773
14
16,342

2014

12,939
536
1,211
(518)
528
14,696

34
74

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Accrued benefit liability

Year ended
December 31,
2015

2014

Accrued benefit obligation ......................................................................................................... $ (16,440)
15,529
Fair value of plan assets .............................................................................................................
(911)
Accrued benefit liability ............................................................................................................. $

(16,342)
14,696
(1,646)

The significant weighted average actuarial assumptions adopted in measuring the Company’s defined benefit plan obligation are
as follows:

Discount rate .....................................................................................................................................
Rate of compensation increase ..........................................................................................................

4.0%
3.0%

Year ended
December 31,
2015

2014

4.0%
4.0%

The assumed discount rate has an effect on the amounts reported for the defined benefit plan obligations. A one-percentage
point change in the discount rate would have the following impact:

One % point
increase

One % point
decrease

Increase/(decrease) in defined benefit plans obligations ................................................................... $ 2,381

$ 2,381

Defined contribution pension plan

The Company operates defined contribution plans whereby, in some cases, contributions made by participants are matched by
the Company up to specified annual limits and in other cases, contributions are fully funded by the Company. The total expense
recorded for the defined contribution pension plans was $7.1 million and $6.2 million for the year ended December 31, 2015
and 2014, respectively.

27 Share based compensation

The Company has established an equity incentive plan which permits the award of stock options, RSUs, PSUs’ and DSUs for
executives, directors, employees and consultants of the Company. Stock options provide the holder with the right to exercise
an option to purchase a common share upon vesting at a price determined on the date of grant. RSUs give the holder the right
to receive, upon vesting, either a common share or a cash payment, subject to consent of the Board, or its equivalent in fully
paid common shares equal to the fair market value of the Company’s common shares at the date of such payment. The RSUs
granted in 2015 and 2014 were expected to be settled by delivery of common shares and accordingly, were considered an
equity–settled award for accounting purposes. Stock options and RSUs granted generally vest equally each year over a three
year period. RSUs granted with specific performance criteria are designated as PSUs. PSU’s vest at the end of the three year
period and granting depends on the achievement of certain performance criteria. DSUs are similar to RSUs except that DSUs
may not be redeemed until the holder ceases to hold all offices, employment and directorships.

At December 31, 2015, awards available to grant under the equity incentive plan totalled approximately 7.5 million.

35
75

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

A summary of stock options activity is as follows:

Balance at January 1, 2014.......................................................................................................
Granted .............................................................................................................................
Exercised ...........................................................................................................................
Forfeited ............................................................................................................................
Balance at December 31, 2014 .................................................................................................
Granted .............................................................................................................................
Exercised ...........................................................................................................................
Forfeited ............................................................................................................................
Balance at December 31, 2015 .................................................................................................
Vested and exercisable at December 31, 2015 .........................................................................
Vested and exercisable at December 31, 2014 .........................................................................

Number of
Shares

1,928,985
1,159,259
(580,145)
(22,884)
2,485,215
852,192
(12,162)
(8,077)
3,317,168
1,557,276
847,530

Weighted-
Average
Exercise Price
(in dollars)

16.22
28.72
10.24
25.94
$ 23.33
25.00
8.64
26.44
$ 23.81
$ 20.53
$ 15.03

Additional information regarding stock options outstanding as of December 31, 2015 is as follows:

Outstanding

Weighted Average
Remaining
Contractual Life
(Years)
3.0
6.2
3.4
4.4
4.5
5.3
5.2
5.6
4.9

Exercise
Price
(in dollars)
8.64
17.06
20.67
22.37
24.44
25.61
28.24
34.44

Number
Outstanding
524,970
38,608
33,681
57,981
21,930
1,456,424
1,100,727
82,847
3,317,168

Number
Outstanding
524,970
26,247
30,053
57,981
16,082
468,017
385,543
48,383
1,557,276

A summary of RSUs, PSUs and DSUs activity is set forth below:

Balance at January 1, 2014 ................................................................
Granted .......................................................................................
Issued for common shares ..........................................................
Forfeited .....................................................................................
Issued for cash ............................................................................
Balance at December 31, 2014 ..........................................................
Granted .......................................................................................
Issued for common shares ..........................................................
Forfeited .....................................................................................
Issued for cash ............................................................................
Balance at December 31, 2015 ..........................................................
Vested, Balance at December 31, 2015 .............................................
Vested, Balance at December 31, 2014 .............................................

RSUs
727,611
270,308
(429,526)
(22,012)
(1,628)
544,753
345,508
(241,299)
(38,547)
(264)
610,151
106,240
110,652

Exercisable
Weighted-Average
Remaining
Contractual Life
(Years)
3.0
6.0
3.4
4.4
4.5
4.3
5.3
5.6
4.1

Number of Shares

PSUs
223,160
438,590
(7,257)
(24,542)
(992)
628,959
555,383
(106,254)
(50,042)
(204)
1,027,842

-
-

Exercise
Price
(in dollars)
8.64
17.06
20.67
22.37
24.44
25.61
28.24
34.44

DSUs
95,021
52,955
-
(1,190)
-
146,786
108,665
(64,501)
-
-
190,950
167,406
146,786

Stock based compensation expense was $20.4 million and $14.0 million for the years ended December 31, 2015 and 2014,
respectively, and is included in general and administrative expenses.

36
76

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The fair value of the options granted was estimated at $2.42 and $2.46 per option for the year ended December 31, 2015 and
2014, respectively. The fair value of options was calculated by using the Black-Scholes model with the following weighted
average assumptions:

Expected dividend rate .........................................................................................................
Expected volatility ...............................................................................................................
Risk-free interest rate ...........................................................................................................
Expected life of option (years) .............................................................................................

Year ended
December 31,
2015
5.2%
24.2%
0.5%
3.0

2014
4.3%
19.5%
1.2%
3.0

The fair value of RSUs, PSUs and DSUs was determined using the five days weighted average stock price prior to the date of
grant.

28 Financial instruments

Non-Derivative financial instruments

Non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables, net investment in finance
lease, trade payables and accrued charges, amount borrowed under the credit facilities, dividends payable, and long-term debt.

Cash and cash equivalents, trade and other receivables, trade payables and accrued charges, dividends payable and amount
borrowed under the credit facilities are recorded at amortized cost which approximates fair value due to the short term nature
of these instruments.

Long-term debt is recorded at amortized cost using the effective interest method of amortization. As at December 31, 2015,
the carrying amount of long-term debt was $1,311.1 million less debt discount and issue costs of $19.8 million and the fair
value of long-term debt based on period end trading prices on the secondary market (Level 2) was $1,235.6 million. As at
December 31, 2014, the carrying amount of long-term debt was $1,188.1 million less debt discount and issue costs of $22.7
million and the fair value of long-term debt based on period end trading prices on the secondary market (Level 2) was $1,193.6
million.

Financial assets and liabilities are only offset if the Company has the current legal right to offset and intends to settle on a net
basis or settle the asset and liability simultaneously. The following table provides a summary of the Company’s offsetting trade
and other receivables and trade payables and accrued charges:

December 31,
2015

December 31,
2014

Trade and other
receivables

Trade payable
and accrued
charges

Trade and other
receivables

Trade payable
and accrued
charges

Gross amounts ........................................................ $ 268,602
(169,351)
Amount offset .........................................................
Net amount included in the consolidated

$ 228,022
(169,351)

$ 430,794
(316,703)

$ 417,337
(316,703)

financial statements ............................................. $

99,251

58,671

$ 114,091

$ 100,634

37
77

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Derivative financial instruments (recurring fair value measurements)

The following is a summary of the Company’s risk management contracts outstanding:

Commodity futures ................................................................ $
Commodity swaps .................................................................
Commodity options ...............................................................
Equity swaps ..........................................................................
Foreign currency forwards .....................................................
Foreign currency options .......................................................
Total ....................................................................................... $
Less non-current portion:

Equity swaps ...................................................................
Foreign currency forward contracts ................................
Foreign currency options ................................................

Current portion ...................................................................... $

December 31,
2015

December 31,
2014

Assets

Liabilities

Assets

Liabilities

1,105
6,545
765
-
-
-
8,415

-
-
-
-
8,415

337
3,165
13
5,390
398
-
9,303

3,824
-
-
3,824
5,479

4,850
13,847
-

490
16,928
-

34,860
-
$ 53,557

717
8,269
$ 26,404

-
34,855
-
34,855
$ 18,702

-
-
8,269
8,269
$ 18,135

The fair value of financial instruments are classified as a non-current asset (long-term prepaid expense and other assets) or
liability (other long-term liabilities) if the remaining maturity is more than 12 months and, as a current asset or liability, if the
maturity is less than 12 months.

(i) Commodity financial instruments

Futures, options and swaps

The Company enters into futures, options and swap contracts to manage the price risk associated with sales, purchases and
inventories of crude oil, natural gas liquids and petroleum products.

(ii) Currency financial instruments

The Company enters into forward and options contracts to buy and sell U.S. dollars in exchange for Canadian dollars to
fix the exchange rate on its estimated future net cash inflows denominated in U.S. dollars and long-term borrowings
denominated in U.S. dollars.

At December 31, 2014, the Company had U.S. dollar forward contracts to buy U.S. dollars on a notional amount of
U.S.$250.0 million at a weighted average rate of $1.0242 for U.S.$1.00 expiring on September 15, 2017 and the Company
had also sold U.S. dollar options at a strike price of $1.295 for U.S.$1.00 on a notional amount of U.S.$250.0 million.
During the year ended December 31, 2015, the Company received cash of $53.3 million on the settlement of U.S. dollar
forward contracts for a notional amount of U.S.$250.0 million. Additionally, the Company paid cash of $16.7 million to
settle U.S dollar options for a notional amount of U.S. $250.0 million. At December 31, 2015, the Company had no forward
and options contracts to buy and sell U.S. dollars in exchange for Canadian dollars to fix the exchange rate on its long-
term borrowings denominated in U.S. dollars.

38
78

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

(iii) Equity price financial instruments

During the year ended December 31, 2015, the Company entered into equity swap contracts to help manage equity price
and dilution exposure to shares that it issues under its stock based compensation programs. At December 31, 2015, the
Company had entered into equity swaps on a total of 550,000 notional common shares, at an initial price of $23.65 per
share for settlement over a three year period.

The value of the Company’s derivative finance instruments are determined using inputs that are either readily available in
public markets or are quoted by counterparties to these contracts. In situations where the Company obtains inputs via quotes
from its counterparties, these quotes are verified for reasonableness via similar quotes from another source for each date for
which financial statements are presented. The Company has consistently applied these valuation techniques in all periods
presented and the Company believes it has obtained the most accurate information available for the types of financial instrument
contracts held. The Company has categorized the inputs for these contracts as Level 1, defined as observable inputs such as
quoted prices in active markets; Level 2 defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; or Level 3 defined as unobservable inputs in which little or no market data exists therefore requiring an
entity to develop its own assumptions.

The Company used the following techniques to value financial instruments categorized in Level 2:

• The fair value of commodity options and swaps is calculated as the present value of the estimated future cash flows based

on the difference between contract price and commodity price forecast.

• The fair value of foreign currency options and forward contracts is determined using the forward exchange rates at the

measurement date, with the resulting value discounted back to present values.

The fair value of financial instrument contracts by fair value hierarchy at December 31, 2015 was:

Total

Level 1

Level 2

Level 3

Assets from financial instrument contracts

$ 1,105
6,545
765
$ 8,415

$ 1,105
-
-
$ 1,105

-
6,545
765
$ 7,310

Liabilities from financial instrument contracts

Commodity futures ...........................................................
Commodity swaps ............................................................
Commodity options ..........................................................
Equity swaps .....................................................................
Foreign currency forwards................................................
Total liabilities ..................................................................

337
3,165
13
5,390
398
$ 9,303

337
-
-
5,390
-
$ 5,727

-
3,165
13
-
398
$ 3,576

-
-

-
-
-
-
-
-

39
79

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The fair value of financial instrument contracts by fair value hierarchy at December 31, 2014 was:

Total

Level 1

Level 2

Level 3

Assets from financial instrument contracts

Commodity futures ...........................................................
Commodity swaps ............................................................
Foreign currency forwards................................................
Foreign currency options ..................................................
Total assets .......................................................................

$ 4,850
13,847
34,860
-
$ 53,557

$ 4,850
-
-
-
$ 4,850

-
13,847
34,860
-
$ 48,707

Liabilities from financial instrument contracts

Commodity futures ...........................................................
Commodity swaps ............................................................
Foreign currency forwards................................................
Foreign currency options ..................................................
Total liabilities ..................................................................

490
16,928
717
8,269
$ 26,404

490
-
-
-
490

-
16,928
717
8,269
$ 25,914

-
-
-
-
-

The impact of the movement in the fair value of financial instruments has been expensed in the consolidated statement of
operations as follows:

Cost of sales .......................................................................................................................
General and administrative ................................................................................................
Foreign exchange gain on long-term debt (note 14) ...........................................................

Year ended
December 31,
2015

2014

(3,899)
5,390
(9,995)
(8,504)

(1,883)
-
(16,569)
$ (18,452)

Financial Risk Management

The Company’s activities expose it to certain financial risks, including foreign exchange risk, interest rate risk, commodity
price risk, credit risk and liquidity risk. The Company’s risk management strategy seeks to reduce potential adverse effects on
its financial performance. As a part of its strategy, both primary and derivative financial instruments are used to hedge its risk
exposures.

There are clearly defined objectives and principles for managing financial risk, with policies, parameters and procedures
covering the specific areas of funding, banking relationships, interest rate exposures and cash management. The Company’s
treasury function is responsible for implementing the policies and providing a centralised service to the Company for
identifying, evaluating and monitoring financial risks.

Foreign currency exchange risk

Foreign exchange risks arise from future transactions and cash flows and from recognized monetary assets and liabilities that
are not denominated in the functional currency of the Company’s operations.

The exposure to exchange rate movements in significant future transactions and cash flows is managed by using foreign
currency forward contracts and options. These financial instruments have not been designated in a hedge relationship. No
speculative positions are entered into by the Company.

40
80

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Foreign currency exchange rate sensitivity

If the Canadian dollar strengthened or weakened by 5% relative to the U.S. dollar and all other variables, in particular interest
rates remain constant, the impact on net income and equity would be as follows:

December 31,
2015

2014

U.S. Dollar Forwards and Options

Favorable 5% change ...................................................................................................
Unfavorable 5% change ...............................................................................................

1,180
(1,180)

3,223
(3,223)

U.S. Dollar long-term debt Forwards and the related Options

-
-

10,694
(10,694)

The movement is a result of a change in the fair value of U.S. dollar forward contracts and options. The sensitivity relating to
the Company’s long-term debt includes the change in the carrying value of the Company’s U.S. dollar denominated long-term
debt, the U.S. dollar forward contracts on the principal and the related U.S. dollar call options.

The impact of translating the net assets of the Company’s U.S operations into Canadian dollars is excluded from this sensitivity
analysis.

Interest rate risk

Interest rate risk is the risk that the fair value of a financial instrument will be affected by changes in market interest rates. At
December 31, 2015, the Company has exposure to changes to market interest rates that relate to the $35.0 million drawn on
the Company’s credit facility as at December 31, 2015. A 1% increase or decrease in interest rates in relation to the amounts
drawn at December 31, 2015 would impact net income by $0.3 million, when annualized, and assuming a consistent balance
over the duration of the year.

Commodity price risk

The Company is exposed to changes in the price of crude oil, NGLs, oil related products and electricity commodities, which
are monitored regularly. Crude oil and NGL priced futures, options and swaps are used to manage the exposure to these
commodities’ price movements. These financial instruments are not designated as hedges. Based on the Company’s risk
management policies, all of the financial instruments are employed in connection with an underlying asset/liability and/or
forecasted transaction and are not entered into with the objective of speculating on commodity prices.

The following table summarizes the impact to net income and equity due to a change in fair value of the Company’s derivative
positions because of fluctuations in commodity prices leaving all other variables constant, in particular foreign currency rates.
The Company believes that a 15% volatility in crude oil and NGL related prices is a reasonable assumption.

Crude oil and NGL related prices

Favorable 15% change ................................................................................................
Unfavorable 15% change ............................................................................................

6,747
(6,092)

5,634
(5,634)

December 31,

2015

2014

Credit risk

The Company’s credit risk arises from its outstanding trade receivables, including receivables from customers who have
entered into fixed term contractual arrangements to have dedicated use of certain of the Company’s tanks. A significant portion
of the Company’s trade receivables are due from entities in the oil and gas industry. Concentration of credit risk is mitigated
by having a broad customer base and by dealing with credit-worthy counterparties in accordance with established credit
approval practices. The Company actively monitors the financial strength of its customers and in select cases has tightened
credit terms to minimize the risk of default on trade receivables.

41
81

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

At December 31, 2015 and 2014, approximately 3% and 6%, respectively, of net trade receivables are past due but not
considered to be impaired. The Company considers trade receivables as past due when they are 30 days past the due date. The
maximum exposure to credit risk related to trade receivables is their carrying value as disclosed in these financial statements.

The Company establishes guidelines for customer credit limits and terms. The Company review includes financial statements
and external ratings when available. The Company does not usually require collateral in respect of trade and other receivables.
The Company provides adequate provisions for expected losses from the credit risks associated with trade receivables. The
provision is based on an individual account-by-account analysis and prior credit history.

The Company is exposed to credit risk associated with possible non-performance by financial instrument counterparties. The
Company does not generally require collateral from its counterparties but believes the risk of non-performance is low. The
counterparties are generally major financial institutions or commodity brokers with investment grade credit ratings as
determined by recognized credit rating agencies.

The Company’s cash equivalents are placed in time deposits with investment grade international banks and financial
institutions.

Equity price risk

The Company is exposed to changes in the Company’s share price with respect to equity swap contracts. If the Company’s
share price increased or decreased by 10%, the impact on net income and equity would be as follows:

Equity Swaps

Favorable 10% change ...........................................................................................
Unfavorable 10% change .......................................................................................

Liquidity risk

December 31,

2015

558
(558)

2014

-
-

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. This risk relates to
the Company’s ability to generate or obtain sufficient cash or cash equivalents to satisfy these financial obligations as they
become due. The Company’s process for managing liquidity risk includes preparing and monitoring capital and operating
budgets, coordinating and authorizing project expenditures and authorization of contractual agreements. The Company may
seek additional financing based on the results of these processes. The budgets are updated with forecasts when required and as
conditions change. Cash on hand and the Revolving Credit Facility are available to satisfy the Company's requirements over
the next 12 months, and are expected to be available to satisfy the Company’s long term requirements. The Company has a
Revolving Credit Facility of $500.0 million and three bilateral demand letter of credit facilities totaling $150.0 million. At
December 31, 2015, $35.0 million was drawn against the Revolving Credit Facility and the Company had outstanding issued
letters of credit of $32.6 million.

The terms of the Notes and Revolving Credit Facility require the Company to comply with certain covenants. If the Company
fails to comply with these covenants the lenders may declare an event of default. At December 31, 2015 and December 31,
2014, the Company was in compliance with these covenants.

42
82

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Set out below is maturity analyses of certain of the Company’s financial contractual obligations as at December 31, 2015. The
maturity dates are the contractual maturities of the obligations and the amounts are the contractual undiscounted cash flows.

On demand or
within one year

Between one
and five years

After

five years

Total

Trade payables and accrued charges, excluding
derivative financial instruments and accrued
interest ..................................................................
Dividend payable .......................................................
Credit facilities ...........................................................
Long-term debt ...........................................................
Interest on long-term debt ..........................................
Commodity futures ....................................................
Commodity swaps ......................................................
Commodity options ....................................................
Equity swap ................................................................
Foreign currency forwards .........................................

Capital management

$ 374,002
40,363
-
-
85,006
337
3,165
13
1,566
398
$ 504,850

-
-
35,000
250,000
340,024
-
-
-
3,824
-
$ 628,848

-
-
-
1,061,200
237,785
-
-
-
-
-
$1,298,985

374,002
40,363
35,000
1,311,200
662,815
337
3,165
13
5,390
398
$ 2,432,683

The Company's objectives when managing its capital structure are to maintain financial flexibility so as to preserve the
Company’s ability to meet its financial obligations and to finance internally generated growth as well as potential acquisitions.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of the underlying assets. The Company considers its capital structure to include shareholders' equity, long-term
debt, the Revolving Credit Facility and working capital. To maintain or adjust the capital structure, the Company may draw on
its revolving credit facility, issue notes or issue equity and/or adjust its operating costs and/or capital spending to manage its
current and projected debt levels.

Financing decisions are made by management and the Board based on forecasts of the expected timing and level of capital and
operating expenditure required to meet the Company’s commitments and development plans. Factors considered when
determining whether to issue new debt or to seek equity financing include the amount of financing required, the availability of
financial resources, the terms on which financing is available and consideration of the balance between shareholder value
creation and prudent financial risk management.

Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance
sheet), less cash and cash equivalents. Total capital is calculated as net debt plus share capital as shown in the consolidated
balance sheet.

December 31,

2015

2014

Total financial liability borrowings ................................................................................. $ 1,291,423
(82,775)
Less: cash and cash equivalents ......................................................................................
1,208,648
Net debt ...........................................................................................................................
1,672,323
Total share capital ...........................................................................................................
Total capital ................................................................................................................... $ 2,880,971

$ 1,165,368
(131,911)
1,033,457
1,634,001
$ 2,667,458

If the Company is in a net debt position, the Company will assess whether the projected cash flow and availability under the
Revolving Credit Facility and the bilateral demand letter of credit facilities are sufficient to service this debt and support
ongoing operations.

43
83

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

29 Segmental information

The Company has defined its operations into the following operating segments: (i) Terminals and Pipelines, (ii) Environmental
Services, (iii) Truck Transportation, (iv) Propane and NGL Marketing and Distribution, (v) Processing and Wellsite Fluids and
(vi) Marketing.

Terminals and Pipelines include fee-based storage and terminalling services and tariff-based pipeline services for crude
oil, condensate and refined products. The Company owns and operates major storage terminals located at Edmonton and
Hardisty, which are the principal hubs for aggregating and exporting oil and refined products out of the Western Canadian
Sedimentary Basin; pipelines, which are connected to the Hardisty Terminal; and injection stations, which are located in
the United States.

Environmental Services includes the provision of environmental and production services, such as emulsion hauling
and treating, water hauling and disposal services and oilfield waste management, as well as exploration support services
and accommodation facilities to the oil and gas industry.

Truck Transportation includes provision of hauling services for crude oil, condensate, propane, butane, asphalt, sulfur,
petroleum coke, gypsum, emulsion, waste water and drilling fluids, as well as hydrovac services for customers in Western
Canada and the United States.

Propane and NGL Marketing and Distribution includes an industrial propane distribution operation and a wholesale
business that includes wholesale propane distribution and an NGL marketing business. The industrial operation sells
propane to oil and gas, commercial and residential customers, while the wholesale operations sell to larger customers
who are not usually the end users of the product.

Processing and Wellsite Fluids includes the processing of crude oil and marketing of a variety of products, including
road asphalt, roofing flux, frac oils, light and heavy straight run distillates, combined vacuum gas oil, oil based mud
product and tops.

Marketing includes, purchasing, selling, storing and blending of crude oil and condensate, providing aggregation
services to producers and earning margins through aggregation and/or capturing quality, locational or time-based
arbitrage opportunities.

These operating segments of the Company have been derived because they are the segments: (a) that engage in business
activities from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the
Company’s chief operating decision maker to make decisions about resources to be allocated to each segment and assess its
performance; and (c) for which discrete financial information is available. No operating segments were aggregated to arrive at
the reportable segments.

Inter-segmental transactions are eliminated upon consolidation. No margins are recognized on inter-segmental transactions.

Accounting policies used for segment reporting are consistent with the accounting policies used for the preparation of the
Company’s consolidated financial statements.

44
84

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Terminals &
Pipelines

Year ended
December 31, 2015
Statement of operations
Revenue - external ................ $ 133,349
Revenue - inter-segmental ....
50,830
Revenue - external and inter-
segmental ........................

184,179

Environmental
Services

Truck
Transportation

Propane
& NGL
Marketing &
Distribution

Processing &

Wellsite Fluids Marketing

Total

$ 307,243
27,206

$ 391,671 $ 799,391 $ 294,366 $ 3,665,962 $ 5,591,982
1,023,491
101,421

124,720

665,016

54,298

334,449

445,969

924,111

395,787

4,330,978

6,615,473

Segment profit ...................... $ 142,796

$ 57,257

$ 52,034 $ 94,192 $ 37,207 $

35,271 $

418,757

Corporate & other reconciling balances
Depreciation of property, plant and equipment ..............................................................................................................
Amortization of intangible assets ...................................................................................................................................
Impairment of goodwill .................................................................................................................................................
General and administrative ............................................................................................................................................
Stock based compensation .............................................................................................................................................
Corporate foreign exchange gain ...................................................................................................................................
Interest expense..............................................................................................................................................................
Interest income ...............................................................................................................................................................
Foreign exchange loss on long-term debt ......................................................................................................................
Net loss before income tax .............................................................................................................................................
Income tax recovery .......................................................................................................................................................
Net loss ......................................................................................................................................................................... $

195,438
87,554
175,959
39,569
20,379
(4,970)
79,580
(558)
113,150
(287,344)
(6,688)
(280,656)

Terminals &
Pipelines

Year ended
December 31, 2014
Statement of operations
Revenue - external ............... $ 97,100
Revenue - inter-segmental ....
60,869
Revenue - external and inter-

segmental ....................... 157,969

Environmental
Services

Truck
Transportation

Propane
& NGL
Marketing &
Distribution

Processing &

Wellsite Fluids Marketing

Total

$ 368,910
62,243

$ 495,090 $1,190,636 $ 474,771 $ 5,947,022 $ 8,573,529
1,598,907
193,022

1,058,023

162,105

62,645

431,153

557,735 1,352,741

667,793 7,005,045

10,172,436

Segment profit ...................... $ 116,524

$ 100,273

$ 83,178 $ 70,271 $ 51,675 $

65,180 $

487,101

Corporate & other reconciling balances
Depreciation of property, plant and equipment ..............................................................................................................
Amortization of intangible assets ...................................................................................................................................
General and administrative ............................................................................................................................................
Stock based compensation .............................................................................................................................................
Corporate foreign exchange gain ...................................................................................................................................
Interest expense..............................................................................................................................................................
Interest income ...............................................................................................................................................................
Foreign exchange loss on long-term debt ......................................................................................................................
Net income before taxes.................................................................................................................................................
Income tax provision .....................................................................................................................................................
Net income .................................................................................................................................................................... $

154,934
54,991
37,385
13,977
(3,912)
67,598
(832)
35,431
127,529
35,588
91,941

45
85

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

The breakdown of additions to property, plant and equipment and intangible assets, including through business combinations, by
operating segment are as follows:

Terminals and Pipelines .....................................................
Environmental Services .....................................................
Truck Transportation .........................................................
Propane & NGL Marketing & Distribution .......................
Processing & Wellsite Fluids .............................................
Corporate & other .............................................................

2015

Property,
plant and
equipment

$ 247,893
76,904
45,396
9,744
23,996
3,247
$ 407,180

December 31

2014

Intangible
Assets

2,426
3,868
5,210
30
-
9,440
$ 20,974

Property,
plant and
equipment

$ 224,401
76,761
42,469
98,060
20,065
9,568
$ 471,324

Intangible
Assets

1,971
1,281
3,670
14,251
77
12,196
$ 33,446

Geographic Data

Based on the location of the end user, approximately 19% and 18% of revenue was from customers in the United States for the
year ended December 31, 2015 and 2014, respectively.

The Company’s non-current assets, excluding investment in finance leases and deferred tax assets, are primarily concentrated
in Canada with 22% and 27% in the United States at December 31, 2015 and 2014, respectively.

30 Subsequent Events

Subsequent to year end, the Company reached an agreement with its bank syndicate to amend its $500M revolving credit
facility maturing in August 2020. These amendments included an increase to the maximum consolidated senior and total debt
leverage ratio covenants from 4.0:1.0 to 4.85:1.0 until December 31, 2017, with such threshold decreasing to 4.25:1.0 for the
period beginning January 1, 2018 and ending on March 31, 2018, and decreasing thereafter to 4.0:1.0 for total debt and 3.5:1.0
for senior debt.

On March 1, 2016, the Company announced that the Board declared a quarterly dividend of $0.33 per common share for the
quarter ending March 31, 2016 on its outstanding common shares. The common share dividend is payable on April 15, 2016
to shareholders of record at the close of business on March 31, 2016.

46
86

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

31 Principal subsidiaries

The Company had the following subsidiaries as at December 31, 2015:

Name

A&A Tank Truck Co.

B.E.G. Liquid Mud Services Corp.
Cal-Gas Inc.
Canwest Propane Partnership
Canwest Propane ULC
Charles Houston Inc.
Chief Hauling Contractors ULC
Frontier Ventures LLC
GEP ULC
Gibson (U.S) Acquisition Corp.
Gibson (U.S) Finco Corp.
Gibson (U.S) Holdco Corp.
Gibson Energy (US) Inc.
Gibson Energy Inc.
Gibson Energy Infrastructure, LLC
Gibson Energy Corp.
Gibson Energy Marketing, LLC
Gibson Energy Partnership
Gibson Energy Sask Ltd.
Gibson Energy ULC
Gibson Energy LLC
Gibson Energy ULC Pension Plan
Gibson Finance Ltd.
Gibson Gas Liquids Partnership (Alberta)
Gibson Gas Liquids ULC
Gibson GCC Inc.
Gibson Offshore Services, LLC
Gibson Omni Parent Inc.
Griswold Management, Inc.
GWCC, LLC
Industrial Lift Truck & Equipment Co, Inc.
Keeton Services, Inc.
Link Petroleum Inc.
Link Petroleum Services Ltd.
Littlehawk Enterprises Ltd.
Moose Jaw Refinery Partnership
Moose Jaw Refinery ULC
OMNI Energy Seismic Services, LLC
OMNI Energy Services Corp.
OMNI Energy Transportation Corp.
OMNI Labor Corp.

Country of
incorporation
and place of
business

USA

USA
Canada
Canada
Canada
USA
Canada
USA
Canada
USA
USA
USA
USA
Canada
USA
USA
USA
Canada
Canada
Canada
USA
Canada
Canada
Canada
Canada
Canada
USA
USA
USA
USA
USA
USA
USA
Canada
Canada
Canada
Canada
USA
USA
USA
USA

47
87

Nature of business
Transportation and Waste
Disposal
Oil & Gas Support Services
Industrial propane
Industrial propane
Industrial propane
Oil & Gas Support Services
Transportation Services
Oil & Gas Support Services
Transportation and Storage
Holding Company
Holding Company
Holding Company

Wholesale petroleum products

Holding Company
Holding Company
Holding Company

Wholesale petroleum products

Transportation and Storage
Transportation and Storage
Holding Company
Transportation
Pension Fund
Holding Company
Wholesale propane
Wholesale propane
Inactive
Oil & Gas Support Services
Holding Company
Inactive
Oil & Gas Support Services
Oil & Gas Support Services
Oil & Gas Support Services
Wholesale propane
Inactive
Oil & Gas Support Services
Fluids and refining
Fluids and refining
Oil & Gas Seismic Services
Oil & Gas Support Services
Oil & Gas Support Services
Inactive

Proportion
of
ordinary
shares
owned by
the
Company
100%

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Gibson Energy Inc.
Notes to Consolidated Financial Statements

(tabular amounts in thousands of Canadian dollars, except where noted)

Name

OMNI Properties Corp.
Plato Services Partnership
Preheat, Inc.
Rig Tools, Inc.
Ross Eriksmoen Inc.
Stittco Energy Ltd.
Stittco Utilities Man Ltd.
Stittco Utilities NWT Ltd.
Taylor Transfer Services, LLC
TPG Leasing, LLC
TPG Transport, LLC
Trussco, Inc.
WISCO Inc.

Country of
incorporation
and place of
business

USA
Canada
USA
USA
USA
Canada
Canada
Canada
USA
USA
USA
USA
USA

Nature of business

Inactive
Waste Disposal Services
Oil & Gas Support Services
Oil & Gas Support Services
Oil & Gas Support Services
Industrial propane
Industrial propane
Industrial propane
Transportation
Rental and Leasing
Transportation
Oil & Gas Support Services
Oil & Gas Support Services

Proportion
of
ordinary
shares
owned by
the
Company

100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

48
88

Corporate Information

HEAD OFFICE
1700, 440–2nd Ave SW
Calgary, AB Canada
T2P 5E9
Phone: (403) 206-4000
Fax: (403) 206-4001
Website: www.gibsons.com

AUDITORS
PricewaterhouseCoopers LLP

BANKERS
Royal Bank of Canada
JPMorgan Chase Bank, N.A.

LEGAL COUNSEL
Bennett Jones LLP

TRUSTEE, REGISTRAR &
TRANSFER AGENT
Computershare Trust
Company of Canada
Calgary, Alberta

STOCK EXCHANGE
Toronto Stock Exchange
Trading Symbol: GEI

INVESTOR RELATIONS & MEDIA
Tammi Price
Vice President, Investor Relations &
Corporate Development
Phone: (403) 206-4212
Email: tprice@gibsons.com

Cam Deller
Manager, Investor Relations
Phone: (403) 776-3041
Email: cam.deller@gibsons.com

Amanda Condie
Manager, Communications
Phone: (403) 776-3189
Email: amanda.condie@gibsons.com

MANAGEMENT
A. Stewart Hanlon
President & Chief Executive Officer

Sean M. Brown
Chief Financial Officer

Brian J. Recatto
President U.S. Operations

Douglas P. Wilkins
Chief Commercial Officer

Richard M. Wise
Chief Operating Officer

Rodney J. Bantle
Senior Vice President, Truck
Transportation

Stephen L. Bart
Senior Vice President, Terminals &
Pipelines

Sean W. Duffee
Senior Vice President, Marketing &
Commercial Development

Donald A. Fowlis
Senior Vice President, Finance

Warren Osatiuk
Senior Vice President, Refining

Samuel van Aken
Senior Vice President, Propane
Marketing & Distribution

DIRECTORS
James M. Estey
Chair of the Board

James J. Cleary

A. Stewart Hanlon

Donald R. Ingram

Marshall L. McRae

Mary Ellen Peters

Clayton H. Woitas

FORWARD-LOOKING STATEMENTS
Certain statements contained in this annual
report constitute forward-looking information
and statements (collectively “forward-looking
statements”). These statements relate to future
events or the Company’s future performance. All
statements other than statements of historical
fact are forward-looking statements. The use of
any of the words “anticipate”, “plan”, “contem-
plate”, “continue”, “estimate”, “expect”, “in-
tend”, “propose”, “might”, “may”, “will”, “shall”,
“project”, “should”, “could”, “would”, “believe”,
“predict”, “forecast”, “pursue”, “potential” and
“capable” and similar expressions are intended
to identify forward-looking statements. These
statements involve known and unknown risks,
uncertainties and other factors that may cause
actual results or events to differ materially from
those anticipated in such forward-looking
statements. No assurance can be given that
these expectations will prove to be correct and
such forward-looking statements included in this
annual report should not be unduly relied upon.
These statements speak only as of the date of
this annual report.

With respect to forward-looking statements
contained in this annual report, assumptions
have been made regarding, among other things:

future growth in worldwide demand for crude

oil and petroleum products;

crude oil prices;

no material defaults by the counterparties to

agreements with the Company;

the Company’s ability to obtain qualified

personnel, owner-operators, lease operators
and equipment in a timely and cost-efficient
manner;

the regulatory framework governing taxes

and environmental matters in the jurisdictions
in which the Company conducts and will
conduct its business;

operating costs;

future capital expenditures to be made by the

Company;

the Company’s ability to obtain financing for
its capital programs on acceptable terms;

the Company’s future debt levels;

the impact of increasing competition on the

Company;

the impact of future changes in accounting
policies on the Company’s consolidated
financial statements.

Actual results could differ materially from
those anticipated in these forward-looking
statements as a result of numerous risks
and uncertainties including, but not limited
to, the risks described in “Risk Factors” and
“Forward-Looking Statements” included in the
Company’s AIF dated March 1, 2016 as filed on
SEDAR at www.sedar.com.

www.gibsons.com
TSX: GEI

1700, 440 - 2nd Ave. SW

Calgary, AB, Canada, T2P 5E9

Phone: (403) 206-4000

Fax: (403) 206-4001