“

At Hammerhead, we are continuing to expand our disclosures to remain a leader in transparency and performance in the ESG reporting space.

”

2021 continued to be a difficult operating environment for resource companies. The challenges of COVID shutdowns necessitated a resilient and agile response while the development of the vaccine helped to begin establishing normalcy.

Through 2021, Hammerhead remained focused on our sustainability journey. We were pleased with our progress on achieving significant results by continuing to build efficiencies, both in the field and in our head office. We did this while maintaining Hammerhead’s strong health and safety record.

The Operating by Exception program within Hammerhead’s field operations was a significant win. This program will continue to evolve as we realize further improvements with automation at our wellsites and batteries, and minimizing impact on our people and the environment in which we operate. Operationally, we are also reducing impact by continuing to push the envelope of efficiency and we succeeded in breaking multiple cycle time performance metrics in our drilling and completion operations. This has decreased the amount of time spent on our sites and significantly reduced several environmental and logistical impacts in our operations.

In head office, we continued to enhance our overall effectiveness by improving our organizational structure. Mid-year we established an Alternative Energy Team as well as a Supply Chain function. The Alternative Energy team was put in place to bring focus and dedication to our net zero commitment. We are confident in the team’s abilities, and we have put significant effort and resources into equipping the team to achieve this commitment in the most effective manner. It will continue to be an important facet of our future business model. Enhancing the in-house supply chain function helps us to manage risk, and support cost reduction initiatives and supply efficiencies while working closely with our suppliers. To round out the year, we established a dedicated Business Improvement team to engage with employees to support Hammerhead’s vision of being a top Montney producer. This team is also responsible for maintaining strong momentum of continuous improvement initiatives, promoting collaboration and communication, and ensuring that initiatives continue to align with the Company’s goals.

Throughout 2021, we worked hard to maintain company morale by hosting virtual events. Our quarterly townhall meetings kept everyone informed of the progress and successes of the business – and we held virtual celebrations to acknowledge and celebrate milestones and achievements happening throughout the year. The Charity Committee, along with the generous contributions of Hammerhead employees, raised ~ $40,000 for Calgary and GP charities in 2021. We continue to make a commitment to diversity, inclusivity, and equality, reflecting the fact that people are the most important part of Hammerhead.

In 2021, we revised our website to accurately reflect the progressive and transparent nature of our firm. We expanded our reporting transparency by formalizing the processes required to align with the framework for the Task Force on Climate-related Financial Disclosures (TCFD), and we are continuing to work through formalizing our enterprise risk assessment, ensuring that ESG- and climate-related risks and opportunities are reflected accurately within it. As part of TCFD, we are aiming to complete a scenario analysis in early 2022 along with understanding our baseline scope 3 emissions to fully understand the potential impacts to our business going forward under different scenarios.

2021 was an exciting year as we continued to build our path forward on our sustainability journey. We look forward to consolidating our successes in 2022. The 2022 budget was approved in Q4 2021 providing a backdrop to continue to implement our sustainability targets for 2022. This reinforces the strong governance and work ethic of the team at Hammerhead. Some of our commitments to sustainability for 2022 include: becoming a zero routine vent company by end of 2022, focusing on progressing our produced water infrastructure, and increasing our produced water re-use.

We have focused our planning and design for achieving net zero targets in an accelerated time frame. This planning will enable us to be on the leading edge of implementing an emissions reduction program that will coincide with a prudent commensurate capital allocation strategy. I continue to be very proud of our team and the efforts we are making to ensure that future generations will benefit from our delivery of an enhanced and cleaner energy solution that contributes to a higher standard of living.