Rockies Resources 2022 ESG Report

Rockies Resources LLC 2022 ESG REPORT

Message from the CEO At Rockies Resources, we are proud of what we do and how we do it. We provide safe, reliable, and affordable energy as demanded by the nation and around the globe. We are the industry that helps fuel every other industry. Rockies drilled its first well in 2019, and we have since drilled two dozen more. With this growth, we have tracked Environmental, Social, and corporate Governance (ESG) data and best practices and are proud to issue this inaugural ESG Report.

While we may be a newer company, the average Rockies employee has more than twenty years of industry experience. Most of us started our careers many years ago working for large independent or major integrated oil and gas companies that commanded adherence to very robust Environment, Health, and Safety (EHS) programs. To us, the term “ESG” is just a new way of describing the conduct and behavior we have always practiced. Protecting the health, safety, and wellbeing of our employees, all the people working on our locations, and the people living near our wells are our top priorities.

It is disappointing how maligned the oil & gas business has become in the media and general public. I’d like to stand on my soapbox and state a few of my whole-hearted beliefs as a long-time contributor and leader in the oil and gas industry: • Cheap energy has provided modern societies with the wonderful standard of living that we enjoy.

• Fossil fuel-generated carbon dioxide is likely accelerating climate change. If you do not believe that, then just focus on the fact that carbon dioxide and other fossil fuel pollutants are not good for our health and should be minimized.

• The world is quickly running out of cheap oil. Very little new cheap oil has been discovered in the last few years. I believe this problem is more than just underinvestment — it existed before shale oil technology was invented, and we are no longer finding new cheap shale oil plays.

I encourage people to shift away from focusing on eliminating cheap oil supply. We need oil to heat our homes, run our vehicles, and make so many of the products we use in our everyday lives, including medicines, plastics, clothing and cosmetics, to name a few. Instead, we must consider putting the focus on reducing cheap oil demand.

An energy transition is needed. It’s needed to address climate change, and it’s needed because we are running out of cheap oil. We can replace oil in certain instances with other cost-effective energy and save the oil that is still available for the uses that cannot be replaced. (I’m not ready to hop on an electric airplane, are you?) In the meantime, while the demand for oil still exists, we must supply it. And we need to do it in the cleanest manner possible — while still maintaining its “cheap” status.

One of the most promising technologies to reduce cheap oil demand is the combination of electric vehicles and natural gas supplied electricity.

Natural gas already is one of the cleanest, least environmentally impactful forms of cheap energy that we have, and I believe it will become the lowest carbon emitter once CO2 powered turboexpander electricity generation technology is perfected (see Netpower’s website for more information.) And the world has plenty of cheap natural gas.

While not popular, it is based on these beliefs that Rockies gets its simple mission: to help supply the world its demand for cheap oil and gas. It isn’t easy to do. The world’s inventory of highly economic oil well locations is diminishing quickly. But we are steadfast in being part of the solution, while continuing to operate in a safe and environmentally conscious manner.

Mark Mueller CEO, Rockies Resources 1

About Rockies Resources LLC Rockies Resources LLC is a privately held Denver-based exploration and production company focused on the leasing, acquisition, and development of upstream opportunities in Rocky Mountain oil and gas basins, specifically in Colorado and Wyoming.

Since we were founded in 2017, Rockies has focused its efforts on finding small, highly economic areas or “pockets” of overlooked well locations.

Most of our work has been in the Powder River Basin, and we have developed expertise in drilling and completing under-pressured tight oil sands.

We supplement our technical expertise with creative business savvy and sound environmental, health and safety operating practices. Rockies is currently a top ten operator of gross oil production in Wyoming.

FOUNDED

2017

EMPLOYEES

OPERATED WELLS

18*

48

NET ACRES

>116,000

GROSS PRODUCTION

~11,000 BOE/D

*We also employ six contractors full-time in both the office and the field.

ROCKIES OPERATING AREA Rockies' Operations

SOUTH DAKOTA Rockies' Operations

CONVERSE

FORMULA FOR SUCCESS

BEST PEOPLE WYOMING

NEBRASKA

LARAMIE Rockies' Operations

COLORADO

WELD

+ BEST ROCK =

BEST RETURNS 2

Our Leadership – Passion. Experience. Diligence.

Rockies Resources LLC has a proven management team with a significant track record of value creation, having drilled hundreds of horizontal wells in the Williston, Powder River, and Denver-Julesburg Basins. The team’s collective experience spans more than 100 years, operating in conventional and unconventional oil and gas plays across North America.

Mark Mueller CHIEF EXECUTIVE OFFICER

Ken Friedman CHIEF FINANCIAL OFFICER/ VP OF BUSINESS DEVELOPMENT

Greg Hilton CHIEF OPERATING OFFICER/ VP OF ENGINEERING

Andy Hennes VICE PRESIDENT OF EXPLORATION

Our Partners – Trace Capital Management Rockies is well capitalized by a majority investor, Trace Capital Management.

Trace is an SEC-registered investment advisor that was formed via the “lift out” of Denham Capital’s Energy Resources investment program in 2022.

A proven and pragmatic energy private equity firm, Trace is focused on value and growth investments across the global energy landscape, with a particular focus on energy infrastructure, upstream oil and gas and viable low/ no carbon opportunities. Based in Houston, Trace currently manages funds with invested and committed capital of over $1.4 billion.

Jesse Martin VICE PRESIDENT OF LAND

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Environment – A Good Steward Environmental stewardship is an important part of our day-to-day business. While “ESG” may be a relatively new buzzword, it is not new to us. ESG encapsulates what we have been doing for years and what we will continue to do as we grow.

At Rockies, we are committed to doing what is right for the environment. We believe that in order to continually improve our performance, we must be proactive and results-oriented, while considering the potential impacts of our operations on the air, water, land, and wildlife. As a responsible producer committed to excellence, we are dedicated to meeting and often exceeding all applicable environmental laws and regulations, and incorporating new technologies, tools, and best practices to help minimize our impact to the areas in which we operate.

ONGOING ENVIRONMENTAL STEWARDSHIP INITIATIVES 1)

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We drill multiple wells from a single well pad to minimize surface disturbance and reduce our overall environmental footprint.

2) 2

We drill a majority of our wells with longer laterals than many of our peers — typically drilling 10,000-foot wells. This reduces the number of wells needed to develop all the resource below.

3) 3

We take a proactive approach to continuously monitoring and reducing our emissions, and employ state-of-the-art technologies to decrease and in some cases eliminate flaring.

4) 4

We develop and employ comprehensive Spill Prevention Control and Countermeasure (SPCC) and Storm Water Prevention Pollution Plans (SWPPP) for each field area.

5) 5

We conduct regular inspections of all production equipment, including a semi-annual Optical Gas Imaging Inspection using FLIR camera emissions imaging.

We want to be a good neighbor, a trusted partner, and a responsible operator as we work to meet global demand for oil and natural gas.

Transparency is important at Rockies. In 2022, we publicly disclosed all fluid components used on 100% of Rockies’ hydraulically fractured wells.

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Emissions Reduction Programs In the oil and natural gas exploration and production business, many best practices can lead to the generation of greenhouse gas emissions, including venting and flaring, and the combustion of diesel and natural gas equipment. At Rockies, we take a proactive approach to monitoring and reducing these emissions.

VAPOR RECOVERY INITIATIVE Rockies recently designed and put into service a new facility that includes a vapor recovery tower (VRT) and vapor recovery unit (VRU). The VRT and VRU components compress low-pressure gas off the production tanks into a sales line, ultimately reducing flare gas and overall site emissions. The company put metering in place to determine the new system’s effectiveness and operational impacts, to help determine future installation considerations.

PIPELINE CONNECTS We are experts at drilling for and producing oil and natural gas — but midstream infrastructure is critical to get these products to market and ultimately to the end-users. If a well commences production before it has been connected to a gas pipeline, the initial gas flow is typically flared. At Rockies, we employ effective project management to ensure that all our wells have a pipeline in place BEFORE they go online, which significantly reduces flaring and overall emissions.

DUAL-FUEL ENGINES We make an effort to partner with companies who share our values when it comes to protecting the environment and reducing emissions. Rockies recently hired a frac service company that has expanded their horsepower fleet to include dual-fuel or full CNG capability engines. These engines burn cleaner and emit significantly less CO2 than standard diesel engines. It is estimated that approximately 8,500 gallons of diesel was replaced by utilizing a dual fuel fleet.

20

%

IN 2022, ROCKIES DECREASED ITS OVERALL METHANE INTENSITY RATE BY 20% 5

Spill Prevention

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Risk is inherent to our business. We are committed to preventing and minimizing all product releases and their impacts on the surrounding environment. In addition to complying with all federal, state and local rules and regulations, we have comprehensive Spill Prevention Control and Countermeasure (SPCC) plans in place for all our field areas. We also conduct regular inspections of all our equipment to ensure that we identify and mitigate any risks. We are proud to report that we had ZERO product spills in 2022.

Reducing Truck Traffic Many oil and gas companies — especially those that operate in remote areas — utilize trucks to transport oil and liquids from their facilities to a final destination. Alternatively, Rockies moves 97% of its oil by pipeline, limiting the number of trucks on the road, minimizing the impact to nearby communities, and significantly reducing vehicle emissions.

Renewable Energy When possible, we connect all our sites to line power, avoiding the need for generators and ultimately reducing our carbon footprint. Additionally, a significant portion of our power distribution uses renewables including geothermal, solar, sustainably sourced biomass (including biogas), hydropower and wind energy sources.

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PRODUCT SPILLS IN 2022

97

%

OF ROCKIES OIL IS MOVED BY PIPELINE

28

%

OF ROCKIES TOTAL ENERGY CONSUMPTION COMES FROM RENEWABLE ENERGY SOURCES

A majority of our wells fall within Bureau of Land Management (BLM) and/or Colorado regulations, both of which are known to be some of the most stringent oil and gas regulating bodies in the world. We work closely with these agencies to comply with all environmental requirements, adopting best practices that often

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exceed regulatory standards. Our goal is to be a respected leader in environmental stewardship, focusing on clean, safe and efficient operations.

— GREG HILTON, CHIEF OPERATING OFFICER 6

Safety – People are our Greatest Asset While the “S” in “ESG” typically stands for “Social”, we often interchange this with “Safety” — because the wellbeing and safety of our people and the communities where we work and live is what matters most. People are our greatest asset.

To that end, we are committed to creating a strong culture where workplace safety, loss prevention, and accountability are integrated into our-day-to-day operations. Employees as well as contract personnel have the responsibility to implement and maintain safety practices to achieve our objective of a zero-incident environment.

As part of our ongoing commitment, we recently hired an EHS (environment, health and safety) field supervisor to help oversee and manage our safety protocols and reporting. Additionally, we rolled out a comprehensive EHSR manual; a standardized set of procedures and policies that provide the company, its employees, its contractors, and other operating partners the ability to create and promote an accident-free work environment.

SAFETY CREDO* Rockies Resources LLC will conduct business in a safe and responsible manner that protects our employees, contractors, and others on our properties. We will comply with all applicable environmental, health, and safety laws and regulations.

The protection of people and the environment is a priority for Rockies, and we need the help of our employees, contractors/subcontractors, and government to accomplish this objective. As such, we believe safety and protecting the environment is a team effort.

*an excerpt from Rockies’ EHSR manual

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Safety By the Numbers We strive for a zero-incident work environment, ensuring that all of our employees are properly trained on health, safety, and incident response measures. The success of these programs speaks for itself. In 2022, Rockies’ Total Recordable Incidence Rate (TRIR), Days Away From Work Rate (DAFWR) and Lost Time Incident Rate (LTIR) were all zero, well below the industry average.

0

TOTAL CASE INCIDENT RATE (TRIR)

0

DAYS AWAY FROM WORK (DAFWR)

0

100

%

LOST TIME INJURIES (LTI)

OF FIELD PERSONNEL TRAINED ANNUALLY

STOP WORK AUTHORITY* Rockies employees, contractors and representatives have the right and the duty to stop any work, task, or project when unsafe conditions have the potential to result in injury, death, negative environmental impact, or property damage.

The following steps must be used when initiating Stop Work Authority:

1 Stop the job/ project/or task when an unsafe condition is observed;

2 Notify all affected personnel of the hazard and evacuate the area, if necessary;

3 Communicate the potential hazard(s) to supervisor and other affected personnel;

4 Mitigate/remedy the hazard;

5 Complete a job safety analysis addressing the cause of the work stoppage; and

6 Resume work once it is safe to do so.

Contractors will train their employees on the stop work requirements and ensure supervisors support the policy. Under no circumstances will negative repercussions be directed toward any employee or contract worker who uses Stop Work Authority. *an excerpt from Rockies “Stop Work Authority” policy

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A Good Neighbor Most of our operations take place in rural parts of Colorado and Wyoming, and we work hard to build and maintain good relationships with the landowners in the area. Along with being a good neighbor and a trusted operator, Rockies gives back to the communities where we work and live. In addition to the individual volunteer and philanthropic work of our leadership and employees, Rockies sponsors and participates in several community events including:

ANNUAL DURHAM RANCH CHARITY BUFFALO STAMPEDE 5K/10K

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JEFFERSON COUNTY ANNUAL 4-H LIVESTOCK SALE

CAMPBELL COUNTY ANNUAL 4-H LIVESTOCK SALE

Making a positive difference in the communities where we live and work isn’t just part of our ESG strategy, it is ingrained in who we are as a company. Being a trusted neighbor, doing the right thing, giving back though time and service — these are all principles that we value at Rockies.

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— MARK MUELLER, CHIEF EXECUTIVE OFFICER

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Governance – Accountability and Trust Our corporate governance structure represents our commitment to maintaining the trust and confidence of our employees, customers, vendors, partners, capital providers, and all other stakeholders. We believe that governance goes beyond rules, regulations, and best practices; it is a commitment to Rockies’ values that is woven into every aspect of our business.

Risk Management Our internal risk management program allows us to identify, understand, monitor, and manage all internal and external business risks. We utilize comprehensive auditing programs and financial modeling to regularly assess risk and ensure that we are operating in the safest and most efficient manner possible.

Trade Associations Rockies actively participates in several trade associations that are highly attentive to government regulations and policies, addressing environmental and social factors affecting the industry.

With significant operator participation in these trade associations and common interests, funneling our areas of concern through these organizations provides a stronger voice towards successful mitigation of risks. These organizations are also focused on education of the public on the benefits of oil and gas development, as well as social/ community beneficial events.

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12136 West Bayaud Ave. Suite 320 Lakewood, CO 80228 (720) 543-0810 rockiesresourcesllc.com