ESG

Here at EnCap, we are proud of being a good steward of our investors’ capital. Our ESG efforts are underpinned by a foundation of strong, principled governance. We’ve been investing in the energy space for more than three decades and have worked hard to maintain a reputation and culture of integrity.

Risk management has always been at the core of what we do. EnCap controls the boards of virtually all of our portfolio companies. When we evaluate a management team, we look for professionals who have proven track records, extensive operational backgrounds and deep expertise in incorporating environmental, regulatory and health and safety concerns into their business decisions. While we are in frequent dialogue with our portfolio companies, we require them to report and discuss significant ESG matters at board meetings.

EnCap and our employees have a long philanthropic history. We consider this an important part of our ESG efforts and are committed to making a meaningful impact in our communities.

As we look ahead, we are excited about the opportunity set for energy investments. Billions of people around the world do not have access to affordable energy. We expect the demand for energy to continue to grow and improve the quality of life for people around the globe. The challenge we face as an industry is to meet this demand while reducing overall emissions. EnCap is committed to staying informed of ESG standards as they evolve and striving to deliver best in class financial and ESG performance.

EnCap's ESG Principles

Environmental

Promote the importance to our operators of being responsible stewards of air, land, and water
Encourage our Upstream companies to monitor and reduce emissions
Invest in a cleaner energy future via our Energy Transition companies
Prioritize the use of innovative technologies and practices to improve our environmental performance where feasible

Social

Take pride in attracting talented employees and provide them an environment to grow and succeed
Foster an inclusive and respectful work environment
Strive for best practices regarding health and safety in our company operations
Partner with communities by providing jobs and engaging with local stakeholders
Support philanthropic organizations we are passionate about

Governance

Committed to conducting our business with integrity, honesty, and transparency
Risk management is core to our investing process – EnCap controls the board of virtually all of our companies
Review ESG matters at quarterly board meetings
Collect standardized ESG metrics from our portfolio companies to direct areas of focus and assess improvement

EnCap’s ESG History

We are proud of the progress we have made in our ESG journey. A few key milestones are represented in the timeline below. You will notice in 2021, we promoted Sophia Friese to Head of ESG. We are pleased to have a talented professional fully dedicated to evaluating, enhancing, and implementing our ESG practices. We recently published our third Sustainability Report and collected standardized data from our upstream companies across several topics, most notably on water management and emissions.

2008

2012

Policies and Procedures

ESG History 1

Formally established ESG related policies and procedures
2009: Responsible Investment policy
2011: EH&S policy
2012: ESG policy

2014

Requirements

ESG History 2

Required portfolio companies to incorporate ESG into board meetings

2015

Reporting

ESG History 3

Started to provide ESG reporting to our investors
Created first ESG video

2019

Energy Transition

ESG History 5

Added Energy Transition platform
Highly experienced leadership team includes two veterans and a woman
Became a UNPRI signatory

2020

Communication & Training

ESG History 6

Published first sustainability report
Hosted ESG summit
Offered diversity training to employees and portfolio companies

2021

Implementation

ESG History 7

Enhanced standardized data collection
Published second sustainability report
Established Head of ESG role and hired energy ESG consultant

2022

Improvement

ESG History 4

Published third sustainability report
Continue to develop the quality of our ESG data

EnCap Cares

Citizenship is a core value at EnCap. We believe that to whom much is given, much is expected. We express this philosophy through our Charitable Contribution and Sponsorship program and volunteering with a range of nonprofit organizations through our EnCap Engage program. Formed in 2019, EnCap Engage is focused on organizing volunteer events that allow EnCap employees to have a hands-on impact in the local community. Previous events have included volunteering at the Houston Food Bank, assembling COVID-19 safety kits and school supply kits for local elementary school children, and home repair with Rebuilding Together Houston.

In addition, EnCap matches dollar-for-dollar certain employee donations to nonprofit organizations, including those focused on education and health care. Beyond EnCap Engage, the firm continues to participate in multiple service and charitable giving programs and individual team members donate time and talent by serving on nonprofit boards.

Learn more about the EnCap Engage program

June 2024- EnCap EnGage with Santa Maria Hostel

Portfolio Company Initiatives

We are also very proud of the various ESG initiatives at our portfolio companies. Here are a few of many outstanding examples available in our Sustainability Report:

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Novo’s standard facility design includes vapor recovery units (VRUs) at all future locations and the company has been installing units at its existing facilities. This equipment enables Novo to capture gas that would otherwise escape into the atmosphere. The associated gas is captured in tanks, which builds in pressure until it is released to the VRU, where it is compressed and sent into a sales line.
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Lotus Midstream has taken an innovative approach to carbon capture through its Green Initiative Program. Lotus partnered with Understanding Ag, a regenerative agriculture company, to implement regenerative agriculture practices on 1,600 acres of their underutilized land. This allows carbon from the atmosphere to be captured and returned to the soil, improving the health of the soil and resulting in numerous benefits to the environment and the community. Lotus seeded the land and introduced cows to the property to graze and till the land, leading to an increase in organic matter and expanded carbon capture rates.
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Catalyze established an ESG steering committee made up of senior management from each department. In addition, Catalyze drafted a comprehensive and forward-looking ESG policy. One of the first initiatives Catalyze completed and continues to work on is a comprehensive audit of all policies, procedures and practices. Additional initiatives are the implementation of a sustainable procurement policy and a Diversity Equity and Inclusion policy at every stage of the recruitment and hiring process.
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XCL is building a million-barrel recycling pond and facility in the heart of the company’s acreage. Approved by the state, the facility is an opportunity for XCL to become an industry leader in the design, permitting and operational excellence of recycling ponds. The process allows XCL to form constructive relationships with regulatory agencies, earn the trust of the community and recycle water at a significant cost savings. XCL has plans to build two more recycling ponds to accommodate future growth, leading to a significant reduction in trucks on roadways and in clean water needs and operating costs.

XCL water pond design example