If you have read The Producer over the last two years, you may recall we have been reporting on different aspects of ESG as it applies to Five States. ESG (Environmental, Social and Governance) is a term used broadly to describe ethical, measurable principles and best practices for companies that seek to improve on socially conscious business behaviors. ESG has become so relevant and newsworthy over the last decade or so that we now dedicate a portion of each issue of The Producer to this topic. Some examples of ESG initiatives are shown below.
Search for Selective Operator Relationships
Five States is selective in choosing properties to acquire and operators with whom to work. Because of this, we can have some influence on decisions and actions taken by our operators, and we hope to make a positive impact through them.
A case in point is our most recent property acquisition. Five States Energy Income 2021 made a $6.0 million acquisition of conventional proved developed producing (“PDP”) properties in Campbell County, Wyoming in the third quarter. Impact Energy Partners, LLC (“Impact”) led the acquisition process, bought a sizeable share of the properties themselves, and took over operations from the seller. Impact exemplifies the kind of operator we look for as we develop our operator network. Not only are we convinced that they know how to effectively operate a field, but they also have an ESG focus.
Impact Energy Partners, LLC
Impact is an Oklahoma City based family business that emphasizes good stewardship of the resources they manage (an ESG signal). Its principals Mickey Raney (CEO) and Grant Raney (VP - Land) believe in using business as a platform to impact lives (another ESG signal). Mickey’s focus has been on acquiring quality PDP properties that have potential for improving profitability using modern technology. Grant is highly relational … a highlight of his work years ago was in Appalachia where he got to know and interact with the local Amish community.
The Impact group has stuck to its roots for the past 30 years, maintaining a traditional model of buying PDP properties, maintaining or increasing production and recompleting zones. Their presence in the ESG space, particularly in the Environmental (the “E” in ESG) area, is notably evidenced by their building a separate company to handle mitigation and remediation issues.
Environmental Remediation
Environmental Impact Solutions, LLC (“EIS”) is an Impact affiliate that provides emergency spill response services to other operators and contractors, serving as environmental remediation experts. They fix environmental problems at well sites and make the land better. In fact, their slogan is “Leaving it better for the next generation”.
Environmental remediation is required when there are chemical spills (hazardous waste), oil spills, or refined petroleum product spills (diesel, gasoline, motor oils or hydraulic oils). Remediation may also be required due to water produced from a well; this is often the costliest spill a company will have, and it can be the most detrimental to the environment.
If a customer has an environmental concern, EIS is ready to provide complete management of that concern. The EIS team of field personnel is capable of providing a response to most requests, and they can set in motion a containment and recovery plan that will limit the environmental impact of releases. Their services include spill containment, recovery, site delineation, remediation plan development, remediation, soil testing and closeout reporting. Their reports contain detailed steps taken, before and after photos, a site map and all sample reports, leaving the customer with a report that can be delivered to state and federal agencies. The professionals at EIS follow the strictest safety guidelines, and they are ready 24/7 to deploy emergency response trailers and personnel to a spill site.
Grant Raney commented: “Like Five States, it is important that our strategic partners share our core values, understand the oil and gas industry both from a technical and sustainability side in addition to being enjoyable to work with. Five States embodies everything we look for in a partner, so we are excited to have partnered with Five States on our recent Wyoming acquisition and look forward to continued growth together on additional acquisition opportunities.”
We are confident that Impact and EIS will prudently manage our most recent property acquisition in Wyoming, and it is reassuring to us at Five States to know they will be on point to address any environmental issues that might surface. We are also pleased that they have such a dedicated presence in the area of ESG.
Closing Remarks
As the Five States business development team focuses on building its operator network, we consider how each potential new operator emphasizes and addresses ESG issues. We feel Impact and Five States are aligned in that area.
We hope you found this article both relevant and interesting. We intend to keep you informed about ESG topics and how they pertain to both market segments that are integral to our business and to your investments in our funds: energy production and investment management.