ESG

ENVIRONMENT – SOCIAL – GOVERNANCE

ENVIRONMENT

Velvet Energy is committed to safeguarding human health and the environment in all its operations and endeavours.

We believe that the sustainability of a business is directly tied to its financial stability and its commitment to environmental social governance issues.

Velvet is proud to have a proven track record as an effective steward of capital, community engagement and support, and enhancement of people while safely developing our nation’s resources in an environmentally sustainable manner.

Since inception, Velvet’s approach to sustainability has focused on its people, the communities where we work, and the environment. We believe in providing energy that is produced by respecting our natural resources while minimizing our impact on the environment.

We apply industry’s best practices to not only comply with federal and provincial regulations, but to become an industry leader in environmental social governance. In that pursuit, we have completed several initiatives to reduce our emissions, minimize our impact on water sources and limit our surface land footprint.

Air

In the last four years while company production has increased by 69%, our Direct emissions intensity has dropped 14% and our Methane emissions intensity has dropped by 18%

Environment Social Governance

Water

Prior to 2017, Velvet’s water use was minimal due to the nature of our operations at the time. In the last three years, we have successfully developed our Montney asset which requires a significant amount of water both for development and maintenance operations. Since we began to develop our Montney resource, Velvet has proactively approached our water management to ensure we reduce our impact on the environment and our dependency on freshwater sources.

Recognizing the growth potential of our asset, we initiated a produced water recycling program intended to develop processes and infrastructure to eliminate freshwater usage in hydraulic fracturing operations at our Gold Creek asset. The project objectives were to reduce our aggregated water costs to < $2/bbl, achieve full replacement of freshwater use in hydraulic operations and reduce our water hauling by 90%, all by year-end 2019.

2020 WINNER OF PROJECT EXCELLENCE

Daily Oil Bulletin Energy Excellence Awards

The Energy Excellence Award program uniquely recognizes not only energy excellence but, focuses on the advancement of collaboration within Canada’s energy industry. This new program draws attention to winning formulas, environmental performance, supply chain sophistication, community and business collaboration that delivers innovation, operational and exporting excellence.

Velvet’s water reuse production in 2019 was 53% vs. Industry peer average of 10%

Environment Social Governance

Land & Biodiversity

Velvet strives to develop Canada’s natural resources in a responsible and sustainable way. From project planning, to construction, drilling and production operations, we carefully evaluate different approaches to develop our assets such that wildlife, water sources and sensitive areas are maintained and protected. We work with local and Indigenous communties, landowners and government agencies to understand and mitigate any specific wildlife or biodiversity issues in the areas we wish to develop.

Spill Management

Velvet’s corporate policies and commitments ensure safe and efficient operations and minimize impact on the environment, including releases and spills. Our HSE management system mandates that environmental risks, including the potential for spills, are evaluated and mitigated appropriately. We track all of our spills (whether reportable or not) and determine the root cause of each.

⬇︎ 86%

Decrease in regulatory reporting spills in 2019, compared to the previous year

Environment Social Governance

Land Management & Reclamation

Velvet applies a cradle-to-grave philosophy to the development of its assets. We consider the full life cycle of our development, which includes the abandonment and reclamation of our well sites once they cease to produce economically.

Velvet’s LMR is Top Decile in the Industry
as we continue to lower our asset liabilities year-over-year

Environment Social Governance

SOCIAL

Our people and the communities where we operate are a key driver to our success.

Their safety, health and wellness, and professional development is a vital part of our corporate culture.

We strive for the highest level of safety and regulatory compliance to guide our approach to the environment, while sharing a passion to give back and ensure that our business enhances the community and their people.

Health & Safety

Safety in the workplace is paramount to our business. Operating safely and responsibly is key to our sustainability as our operations would not be possible without office staff, field workers, consultants, contractors and business partners. To keep our people safe, we not only follow all applicable regulations, but we also have extensive plans, procedures and training programs to ensure that everybody working on a Velvet site knows how to do their job safely and can identify and mitigate any risks.

Environment Social Governance

People & Culture

At Velvet, people are truly our most important asset. Velvet recognizes and celebrates the role that each employee plays in our success. We invest in our people and strive to promote their well-being and safety by off ering opportunities for learning and advancement, generous health and wellness benefi ts, and a fun, supportive work environment. We celebrate diversity of thought and strive to include various backgrounds and experiences.

Environment Social Governance

We have 130 employees and consultants who contribute to our success on a regular basis. The combination of their life experiences brings perspectives from across the Americas, Europe, Russia, and Asia to help us think differently and truly enhance our business acumen. Each pin represents where a staff member was born or their heritage originated.

Community Engagement

0.1%

Of our yearly EBITDA is allocated to give back to communities

We believe in building strong, diverse communities through supporting education, arts and sport, and children, seniors and families in need.

Our extensive community investment program at Velvet is a combination of corporate and employee driven initiatives. Due to the importance of our field operations, we allocate a significant portion of these funds to communities in and around our field locations. The remainder is distributed to local charities in Calgary.

>$663,200

Contributed to the communities where we work since 2016

Environment Social Governance

We are proud to support the following organizations in the Calgary area:

Indigenous Engagement

Velvet prides itself on building strong relationships with its employees, stakeholders, suppliers and communities. We believe in contributing to the success of our communities through supporting local initiatives, participating in cultural activities and investing in programs that enhance the wellbeing of families. Across our asset base, we work with and support the communities of nine different First Nations Communities and two Métis Settlements.

In addition to our community involvement, we also proudly support the employment of First Nations and Métis workers and businesses. Several indigenous construction and oilfield service companies have contracts with Velvet on a regular basis and we continue to build upon these relationships at every opportunity. We also support the development of residential communities through providing assistance in building roads and infrastructure to enhance access to services.

Blessing Our Sites

In the Grande Prairie area, we have strong ties to the Alexis Nakota Sioux First Nations. Once a year, we participate in a sweat lodge with the Elders to discuss our plans for the area and consult with them on the integrity of the sites. The Elders provide insight on the spirits of the site and guide our staff and construction crews through dispelling any negative spirits and ultimately blessing the site.

Velvet is extremely thankful for the strong relationships we have fostered with the Alexis Nakota Sioux First Nation, as their friendship and guidance throughout the years has truly enriched our company. We are proud to be a part of their community!

Team Commitment

We expect excellence in health, safety and environmental performance through the support and active participation of all management, employees and contractors working for Velvet. All those engaged in work for Velvet are aware of this policy and are expected to be committed to its implementation.

ESTMA Payments to Government

Velvet Energy Ltd. is required to report annually under the Extractive Sector Transparency Measures Act (“ESTMA”) enacted by the Government of Canada, beginning with the year ended December 31, 2016.

Velvet’s ESTMA Reports can be viewed from the links below.

Payments reported in the ESTMA Report reflect gross payments made directly by Velvet Energy, including payments made in the capacity of operator on behalf of partners.  Payments made by an operator on behalf of Velvet Energy and its subsidiaries are not included.

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