We recognize the dual challenge facing the energy industry today – to meet the world’s growing energy demands with affordable and reliable energy while addressing the need to reduce carbon emissions. At DGO we embrace our role in meeting this challenge, balanced with our desire to act as responsible stewards of the natural resources we manage and the environment in which we operate. Therefore, we support the development of clean and sustainable energy from multiple sources, including our own hydrocarbons as well as nuclear, hydro and renewables.
We operate within the U.S.’s Appalachia region, which comprises 37% of total U.S. natural gas supply. Appalachian natural gas production continues to be a major contributor to the consistent and substantial reductions in U.S. carbon dioxide (“CO2”) emissions, which have been declining significantly faster than any other country. Our significant recent acquisitive expansion in the region and resulting substantial natural gas production elevates us to be an integral part of this environmentally positive story. Net production in December 2019 exceeded 568 million cubic feet equivalent per day and comprised nearly 90% dry natural gas, further increasing to 99% when combined with associated natural gas liquids.
We believe that natural gas is more than a bridge fuel – it is part of the long-term, clean energy solution for U.S. and global energy requirements. As the cleanest-burning hydrocarbon, natural gas is an abundant, economically viable, affordable, reliable and predictable source of energy, which makes it an ideal partner to renewable energy sources like wind and solar.
Our strategy of acquiring and enhancing existing energy assets is a great example of environmental stewardship and sustainability. Since our founding in 2001, we have focused on acquiring existing gas and oil wells and midstream assets while executing practices that enhance operational safety, increase produced volumes and safeguard the environment.
We are establishing a robust approach to sustainability, underpinned by our commitment to high standards of corporate behavior, social responsibility and environmental stewardship. Consistent with our growth strategy, one of our fundamental operational objectives and differentiating factors is our disciplined emphasis on managing mature, producing gas and oil wells to their natural end of lives before safely and responsibly retiring those wells that are no longer capable of production.
Maximizing an existing well’s productive life reduces the need to drill new wells and reflects environmental responsibility. Our operating philosophy simultaneously contributes to the economic well-being of the communities in which we live and operate by creating and maintaining high-paying jobs, increasing tax revenues and sustaining royalty income to mineral owners while also increasing production and cash flow, which benefits our company, shareholders and other stakeholders.
Our unique Smarter Well Management program comprises well maintenance and workover activities designed to improve production from active wells, restore production from inactive wells, enhance the safety of the on-site well equipment and achieve compliance with environmental requirements.
Consistent with our reputation as a leading operator in the region, we are committed to acting as good stewards of the environment. To this end, we recently established a Board-level Sustainability and Safety Committee, chaired by our Independent Non-Executive Director Sandy Stash, to guide the business’s policies and strategy related to sustainability and other stewardship activities.
Evidence of our emphasis on environmental stewardship is our commitment to provide the necessary resources for our asset retirement obligations, as demonstrated by the number of wells we retire each year in full compliance with our multi-year plugging agreements with the various states in which we operate. Our approach to proactively engage with the state regulatory agencies to establish consistent and long-term retirement agreements provides objective and measurable progress indicators and strengthens our commitment of stewardship to our communities and to our investors.
We believe that principles of corporate responsibility are a central and a commercial priority. Not only do we promote such principles to achieve strong governance, safe working conditions and a minimal impact to the environment, but we also believe that thoughtful Environmental, Social and Governance (“ESG”) initiatives significantly reduce risk, create long-term value and represent a competitive advantage.
As part of our continued commitment to environmental stewardship, we have recently completed a review of our ESG activities. As we move forward, our Sustainability and Safety Committee will be formalizing a roadmap that sets out our key sustainability objectives for the next several years and then reporting on these objectives accordingly. Using 2019 as our benchmark period, we call this new multi-year initiative “Target 2020”, which will include sustainability aims and objectives for emissions management, leak detection and repair, water management, spill prevention, safe operations and conservation efforts – all with the goal of pushing DGO towards achieving improved results for these areas of our operations.
We recognize that our success hinges on not only our ability to manage our assets with operational and capital discipline, but also our ongoing commitment to meet the increasing demand for energy through the safe and responsible production of our natural resources.
Robert R. (Rusty) Hutson, Jr.
Co-Founder, Chief Executive Officer and Shareholder