The fragile state of energy security and supply chain continuity demonstrates the need for continued reliance on traditional energy sources in the near future to ensure that a responsible and seamless energy transition occurs across the globe today. At Hammerhead, we aim to continue supplying responsible energy to help support the challenges the world faces today.

While Canada is ranked first among the top reserve holders across the globe in overall ESG performance, this does not preclude Canadian companies from continuing to push forward with initiatives to become even better. In 2022, Hammerhead received certification from Equitable Origin under the EO100TM Standard for Responsible Energy Development. This external validation supports the sustainability focus we have incorporated into our business over the past three years as well as our strong cultural focus on continuous improvement and business resiliency.

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Our corporate scorecard continues to reflect our commitment to ESG performance, tying 20% of our employee short-term incentives to safety, spill reduction, emission intensity, and water reuse targets.

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In 2022, we began to understand Hammerhead’s resilience in mainstream climate scenario outcomes. Using the World Energy Outlook (WEO) scenarios from the International Energy Agency (IEA), which reflect potential scenarios impacting climate, supply and demand, commodity pricing, and the overall energy transition, we performed a climate scenario analysis to evaluate the interconnectivity and impact of the risks and opportunities identified on Hammerhead’s business. In the coming years, we will continue this work by integrating the impact of the analysis into our business planning and understanding our overall resiliency.

As our activities continue to increase, we constantly work to minimize our impacts on the environment, the people we work with, and the communities we work in by evaluating our current processes through third-party assessments and collaboration with our stakeholders to learn how we can improve. In 2022, we compiled and enacted continuous improvement plans throughout our functional groups, including Safety, Supply Chain, and Emissions. As part of this focus on safety, we revitalized our safety program with the goal of becoming a safety leader and partner of choice for suppliers and vendors. We believe that through our safety leadership, strong relationships with vendors, and consistent activity, we will become a partner of choice in an industry competing for manpower. We also evaluated our current supply chain practices and acknowledged that the resilience of our business is contingent on our ability to maintain a consistent and responsible supply chain and work with top vendors who align with our values and support us in achieving our mutually beneficial goals.

In 2022, we successfully received approval for produced water storage in Gold Creek. This type of infrastructure will provide valuable space to continue increasing our produced water reuse in the area. Hammerhead now has a standard operating procedure to maximize produced water re-use based on availability across all asset areas. We continue to focus on refining our overarching path to net zero on an accelerated timeframe of 2030 while also prioritizing initiatives that can reduce our emissions in the near term. By the end of 2022, Hammerhead had reduced venting by 87% since our peak venting in 2021 and has now fully completed our zero routine vent initiative. We believe the energy industry has an emissions challenge, and we aim to be a leader in redefining public expectations around how companies like ours can contribute to the advancement of global net zero goals.

We are extraordinarily proud of the company we have built since our inception. Not only does Hammerhead stand poised to provide one of the most attractive rates of return in Western Canada, but Hammerhead’s current emissions profile is already advantaged through our investment of over C$400 million in modern,
technically optimized facilities that are being utilized across our asset base.

2023 will be an exciting year for the Hammerhead family as we enter the public market. We’ll continue to progress initiatives across our asset areas, demonstrating our commitment to sustainability in a low-carbon economy.