Diversified Energy Company PLC (LON:DEC) has now published its 2022 Sustainability Report, which details successes that include lower methane intensity, safety wins, and investment in local communities. The 4th annual report, titled Decarbonizing While Delivering and available on the Company’s website (div.energy/sustainability), presents a comprehensive review of Diversified’s ongoing commitment to and significant performance improvements on material environmental, social and governance (“ESG”) issues which are important to our stakeholders. Diversified remains a sustainability leader for existing producing and midstream assets, providing transparency through enhanced disclosures of greenhouse gas and air emissions, cyber security, state economic impact analysis across our operating footprint, and a variety of climate-related financial disclosures.
Responsibly managing our environmental footprint:
• Reduced methane intensity to 1.2 MT CO2e/ MMcfe(a), representing a 20% reduction vs 2021 and 25% vs 2020(b)
◦ Represents substantial progress towards stated goal of 30% intensity reduction by 2026
• Achieved Gold Standard Pathway from the Oil and Gas Methane Partnership (OGMP 2.0)
• Sustainability-linked 70% of the Company’s total borrowings:
◦ Completed four sustainability-linked asset-backed security or ABS transactions in 2022 totalling $1.2 billion
◦ Amended the Company’s Credit Facility to include sustainability-linked features
• Delivered significant progress on 2022 emissions reduction plan, including:
◦ Surveyed 100% of operated Appalachian wells for fugitive emissions
◦ Surveyed by air ~11,000 miles of owned Appalachia midstream system
◦ Converted pneumatic devices to compressed air, representing >35% of 5-year target
• Significantly expanded the Company’s vertical integration of Asset Retirement capabilities
◦ Established Diversified’s wholly-owned retirement subsidiary, Next LVL Energy
◦ Retired 200 Diversified wells in Appalachia, representing a 47% increase vs 2021
• Advanced Diversified’s Marginal Abatement Cost Curve (“MACC”) analysis for use in progressing the Company’s climate strategy
Safeguarding our people and communities:
• Expanded “OneDEC” culture programme delivered improved key safety metrics, including:
◦ Total Recordable Incidence Rate (“TRIR”) of 0.73, a 50% improvement vs 2021
◦ Motor Vehicle Accident (“MVA”) of 0.69, a 4% improvement vs 2021
• State economic analysis affirms the significance of our direct and indirect impact across our ten-state operating area
◦ Distributed $507 million in royalty payments to mineral interest owners
◦ Contributed $105 million in state and local taxes
• Initiated data-driven diversity, equity and inclusion (“DEI”) tracking and recruiting initiatives to improve recruitment, retention and promotion
• Provided community support through charitable giving and emergency/disaster relief programs
◦ Contributed $2.5 million in funding through Diversified’s Community Giving and Engagement Programme and other outreach efforts
◦ Established a company-matching program of employees’ charitable donations
◦ Deployed financial and physical support to community flood relief efforts in Appalachia
Focused oversight and risk management:
• Increased weighting of methane reduction targets in executive leadership’s long-term incentive compensation
• Completed Board of Directors (the “Board) climate training to increase climate literacy, aid in assessing and managing climate-related risks and opportunities
• Board-designated Non-Executive Director Employee Representative personally engaged with a diverse group of employees to inform the Board’s efforts and ensure alignment with the Company’s operations
Commenting on the report, Diversified Energy Company CEO Rusty Hutson, Jr. said:
“Diversified continues to demonstrate its leadership across a broad spectrum of environmental, social, and governance policies and disclosures. We proudly discuss our many accomplishments within our 2022 Sustainability Report. Stewardship underpins our differentiated business model and Smarter Asset Management activities to deeply embed sustainability in every aspect of our operations. Accordingly, we will play an increasingly critical role in a lower-carbon energy economy.
While environmental discipline is at the core of our business strategy, so too is our commitment to socio-economic development and community engagement. We are proud to have formalised our Community Giving and Engagement Programme to support our commitment to contribute up to $2 million per year to this purpose. Building on past successes, we’ve positioned ourselves to deliver another year of substantial progress for our stakeholders, made possible by our focused team who are committed to safety and operational integrity.”
Vice President of ESG & Sustainability, Teresa Odom, also commented:
“Diversified has built a track record of trust by delivering on our commitment to responsible operations and transparently reporting on the same. Our team of approximately 1,600 employees remain committed to driving and delivering meaningful progress through responsible stewardship, focused operations, and community engagement.”
Diversified’s 2022 Sustainability Report was developed in reference to the following sustainability reporting standards and frameworks:
• Global Reporting Initiative (“GRI”) Core Standards
• Sustainability Accounting Standards Board (“SASB”)
• United Nations’ Sustainable Development Goals (“UN SDG”)
• Task Force for Climate Related Financial Disclosures (“TCFD”)
Independent third-party, ISOS Group, Inc. (“ISOS”), has provided a Level 2 moderate assurance of the Company’s 2022 Scope 1 and 2 greenhouse gas emissions, as reflected in ISOS’ assurance statement included in the Appendix of the 2022 Sustainability Report.
Footnotes:
| (a) | Diversified’s methane intensity metrics utilise a global warming potential (100-year GWP) of 28 in line with IPCC’s Fifth Assessment Report (AR5), and reflect metric tonnes (“MT”) of carbon dioxide equivalent (“CO2e”) per million cubic feet equivalent (“MMcfe”) of gross production |
| (b) | Percent reductions in relation to Diversified’s baseline methane intensity metric of 1.6 MT CO2e per MMcfe, as previously reported for the 2020 measurement year. |
For Company-specific items, refer also to the Glossary of Terms and/or Alternative Performance Measures found in the Company’s 2022 Annual Report.
