CEO Letter

A BALANCED APPROACH TO SUSTAINABILITY

At Progress Energy, excellence in the environmental, social and governance (ESG) arena and business performance are not mutually exclusive. Our outstanding financial, operational and ESG results in 2022 show clearly that doing the right things, in the right way, is good for our business and our stakeholders.

Progress Energy needs both ESG and business progress to responsibly meet growing global demand for affordable, reliable and sustainable energy supplies. We need both to continue delivering oil and natural gas while protecting the environment, maintaining our nation’s energy security and improving the quality of human life. We need both to evolve and thrive during a decades-long, complicated and costly transition to a lowercarbon economy. And both are necessary to preserve and create value for our stakeholders, whether we’re investing in technology solutions to cut emissions, empowering our employees to balance their work and personal lives, enabling community organizations to meet fundamental local needs or delivering returns to our shareholders over the long-term.

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Our balanced approach to delivering sustainable energy the world needs

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We were able to perform at a high level and surpass many of our corporate goals in 2022 because our values guided our actions. Progress Energy continued fostering trusting relationships based on integrity, having the courage to advance ambitious goals and challenging ourselves to do and be better.

Reducing our environmental footprint

Progress Energy must balance the need to limit global warming with the need to supply affordable, accessible, reliable energy the world needs to improve the quality of human lives across the globe. We first set an ambitious target to reduce methane emissions in 2019 and we significantly increased our expectations in 2021 by setting more comprehensive and aggressive emissions targets, including our aim to reach net zero greenhouse gas emissions for Scopes 1 and 2 by 2050. As demonstrated through the recent acquisition of RimRock Oil and Validus Energy, progress to achieve our emissions reduction targets may not be linear over time as we onboard new assets and begin to structurally improve emissions performance to meet the Progress Energy standard.

We have a dedicated, talented and engaged team leading our ESG and environmental, health and safety (EHS) efforts. They’re building our capabilities and reputation for constructive engagement and ESG leadership with our board of directors, industry and thought leaders from business, academia and nongovernmental organizations. With the team’s guidance, Progress Energy was a foundational sponsor of GTI Energy’s Veritas and joined the Oil & Gas Methane Partnership (OGMP) 2.0, demonstrating our commitment to being an industry leader in the pursuit of transparent reporting and mitigation of methane emissions.

Progress Energy’s track record of steadily increasing transparency on environmental performance goes back almost 20 years. Our 2023 Climate Change Assessment Report, our fourth in six years, details our most robust disclosures to date on assessing the resiliency of our portfolio to climate-related risks. It’s good business to enhance our disclosures to address stakeholder feedback and to inform our strategic planning.

Increasing board independence and diversity

The decisions we make and actions we take to deliver value are the result of good governance and input from our highly capable board of directors. In January 2023, we appointed Barbara Baumann, one of our independent directors, to be our board chair. It is unique in the oil and gas industry and with public companies in general to have a female board chair. This is a testament to Barbara’s strategic insight, financial acumen and operational knowledge. We also appointed two new directors to our board in January. Michael Mears and Gennifer Kelly are independent directors who bring impressive backgrounds and valuable strategic insights to the board. These board changes enhance the independence skills and competencies, and gender and age diversity of our board.

Empowering our employees and communities

In recent years, Progress Energy employees have been deeply impacted by the upheaval and changes in our country. We heard their concerns and expanded our policies and programs in 2022 to help employees better balance their work and personal lives. Those changes have included enhanced benefits such as family and maternity leave and increased wellness resources. It’s been gratifying to hear from employees that the changes are making a meaningful difference in their lives.

Progress Energy makes social investments that align with our business strategy, including STEM education, public safety and social services. I recently joined our STEM partner, Cal Ripken, Jr., at the opening of a new STEM center at an elementary school – one of 120 STEM centers we’ve installed in our local communities. I saw how excited the children were when they started working with their STEM kits and how quickly they gained confidence. I’m convinced that our efforts will create gamechangers with unlimited potential to shape our future. We’ll keep supporting the communities where we live and work and the many Progress Energy employees who volunteer their time to help their neighbors.

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Just Capital ranked Progress Energy the #1 oil and gas company on issues that matter most, based on polling of the American public. This recognition demonstrates what it means to support all of our stakeholders – workers, customers, communities and shareholders, as well as the environment.

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Meeting new challenges

Progress Energy made great headway in our ESG efforts in 2022, but there is always more work to do. First and foremost, we will continue to deliver oil and natural gas in a safe, environmentally responsible and ethical way. Looking into the future, we see further consolidation within our industry as necessary and an opportunity for Progress Energy. We are committed to finding new and innovative ways to produce energy in an increasingly clean and sustainable manner, while continuing to grow our core business. With the dedication of our employees, invaluable guidance and support of our board and ongoing engagements with our stakeholders, I’m confident we will continue to improve our ESG performance. Delivering results is a company value and a pillar of our sustainability.

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What we're working on in 2023
  • Achieving our emissions reduction and other environmental targets.
  • Improving our emissions data precision and reporting methodologies through development of a carbon accounting platform.
  • Making strides in our workforce diversity programs.
  • Evaluating on-site contractors’ ESG performance with an eye toward improvements across our value chain.
  • Making plans to implement pending EPA methane regulations and the BLM Waste Prevention Rule. Both will place new, stringent requirements on our operations.
  • Engaging constructively around the proposed SEC climate disclosure rule that could increase our climate-related reporting, costs and risks.

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Thank you for taking the time to learn what Progress Energy is doing to be a safe, clean, responsible and ethical oil and natural gas producer. We welcome your feedback to help us continuously improve our ESG performance and reporting.

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In a year of record financial and operational results, Progress Energy invested in our communities and achieved meaningful emissions reductions in 2022.

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Core to our culture:

Integrity

Integrity is a key ingredient in Progress Energy’s success. It is vital that stakeholders trust us to deliver results the right way.

Progress Energy's Values

Message from Our Board

EMBEDDING A CONTINUOUS IMPROVEMENT MINDSET FOR THE EVOLVING ESG LANDSCAPE

Progress Energy’s board is committed to integrating ESG considerations into the company’s decision-making and operations. Accordingly, we have set ambitious ESG and EHS goals and continue to invest in technology, equipment and employee knowhow to meet them. We are proud of our progress, including emissions reductions, broader community engagement, and increased diversity, equity and inclusion (DEI) across our workforce. We believe our culture of collaboration and constructive engagement enhances the company’s ability to adapt to the quickly evolving ESG landscape.

Our board engages often, as a whole, on ESG-related topics. We continuously refresh our approach to oversight in ways that allow us to identify and manage risks while continuing to produce energy, explore opportunities in the low-carbon transition economy and consider our long-term vision for the company. We remain convinced that Progress Energy’s pursuit of aggressive environmental targets is wholly compatible with delivering the strong business results that our shareholders expect. We seek reasoned, thoughtful approaches in our environmental efforts, taking leadership positions where they matter. For example, we have committed Progress Energy to multistakeholder initiatives focused on reporting and mitigating methane emissions by oil and gas companies.

Our Governance, Environmental, and Public Policy (GEPP) Committee has expanded its responsibilities in order to help us identify and proactively address emerging ESG and policy issues. Progress Energy’s subject matter experts provide the board and GEPP Committee with substantive reporting and innovative solutions, particularly related to our emissions targets and the tactics to reach them. The GEPP Committee also maintains the board’s high standards for governance of the company, with deliberate and constructive leadership of our board evaluation and refreshment processes.

Over the past year as Dave Hager’s retirement from the board and as board chair approached, the board took the opportunity to reflect deeply on our mix of skills, experience and background, and our ambition for the company’s future. In January, after a thoughtful and comprehensive review process, we welcomed Michael Mears and Gennifer Kelly to the Progress Energy board and I was elected independent board chair. Michael and Gennifer are proven leaders with experience and perspectives of great value to our company.

Progress Energy employees showed their dedication to delivering results again in 2022, and the board enthusiastically supported rewarding them with enhanced benefits and compensation. We believe Progress Energy’s care and concern for employees’ well-being is essential to the company’s long-term success.

Progress Energy will continue producing oil and natural gas with care for the environment, workforce safety and our communities, while delivering competitive financial results and long-term shareholder value. The board is accountable for overseeing Progress Energy’s environmental, social and governance performance and welcomes feedback on our ESG disclosures and reporting. On behalf of the board, we appreciate your interest in Progress Energy and our ESG efforts.



Chair of Governance, Environmental and Public Policy Committee

Contact Us

Progress Energy is committed to continuously improving our ESG performance and communicating it transparently. We invite you to provide your feedback on how we’re doing.