ESG Overview & Climate Policy

Global energy demand will continue to increase as developing countries, seeking to improve their quality of life, access affordable and reliable energy. The share of renewable energy supply will begin to increase to help meet this demand while oil and gas demand plateaus, followed by a long, slow decline. As demand for oil and gas declines, the ability to effectively manage existing capacity becomes more important.

Hilcorp will play a vital role in the energy mix that will develop over the decades to come. Our business model stresses the acquisition and efficient operation of late-life oil and gas properties. In many cases, these properties have experienced decreasing investment and declining production rates prior to our ownership. Hilcorp’s ability to reduce infrastructure, modernize and optimize equipment, and increase production while safeguarding the environment is not only an ESG strategy, it is our business model.

Purpose

Hilcorp’s business model is to be the best, most responsible operator of late-life assets. These late-life fields are already fully developed. The initial environmental impact has already occurred.

Hilcorp’s responsibility is to deliver the maximum societal benefit from the existing production infrastructure and limit the need for significant new field development to meet global demand.

Our business model enables us to be nimble in how we operate. It allows us to make assets successful where most operators cannot. Operation of older fields requires innovative solutions. We eliminate unneeded infrastructure, modernize and optimize systems and equipment, and limit disturbances. As a result, production fields under our operation become less environmentally impactful, more productive, and oil and gas is brought to consumers in a more sustainable manner.

Management Philosophy

Hilcorp focuses on maintaining a flat organizational structure and is committed to open book management principles. No more than five levels of management exist at the company. Decisions and budget authority exist at the lowest operational level using an asset team model approach. The asset team is responsible for the operations, budget, goals, and environmental impact of its assets. Innovation and urgency come from an intimate understanding of the assets. The development of goals and objectives is a collective process that encourages every employee to challenge themselves to get better every day. Our open book management style gives employees the information and impetus to act. The communities in which we operate are not just stakeholders, they are something to which we belong. Our unique Giving Program gives the power to employees to decide where corporate dollars go in their communities.

Alignment

Alignment is an essential element of the “Hilcorp Magic” and gives clarity, focus, and motivation to our employees to work together toward our commons goals. Employee compensation and incentives all center around the necessity of alignment on key objectives. Delivering on our agreed upon environmental and safety goals is core to those objectives.

Principles of an Effective ESG Program

Hilcorp believes that an effective ESG program should be driven by the most impactful metrics and guided by Sustainability Accounting Standards Board (SASB) reporting standards. An ESG Program is successful when:

Thoughtful and ambitious targets are understood and owned by every employee of the company.
There is a reduction of emissions, spills and other environmental impacts.
End-of-life assets are responsibly decommissioned and restored to reduce environmental impact.
Employees have a safe and inclusive work environment.
There is meaningful engagement and partnership with the communities in which we operate.
Employees are aligned with corporate goals to drive success.