Corporate Responsibility

Our approach is to analyze every project individually to determine its economic, safety and environmental impacts over the life of the project

CEO Letter

As I write this letter amid the COVID-19 pandemic, I have spent time reflecting on the state of our industry. Many companies are struggling to survive as oil demand has decreased 20 to 30 percent, and oil prices have fallen to record lows. We’ve seen massive disruptions, layoffs, bankruptcies, and trepidation throughout the oil and gas supply chain.

In spite of these unprecedented events, Cimarex’s commitment to the environment, social issues, and governance (ESG) has not wavered. It was never a reaction to external pressures but an example of the values that define us.

In 2019, we initiated an intensive project to analyze and catalog the sources of our emissions. We set some of our brightest minds to task in finding ways to lessen or eliminate our overall emissions footprint, whether or not they were governed by state or federal regulations. Environmental Protection Agency (EPA) Greenhouse Gas (GHG) reporting is a convenient starting point, but EPA regulations do not comprehensively capture all emission sources. In particular, EPA guidelines call for operators to estimate emissions from look-up tables that list emission rates for various pieces of equipment that are installed on our facilities. These estimates do not always reliably account for variances due to operating runtime, pressures, and equipment failures. Furthermore, not all of our properties require inspection under EPA regulations and are excluded from GHG reporting based upon vintage and property type. At Cimarex we have mandated that our organization understand our total emissions footprint, disclose it, and take prudent action to reduce it. 

As an example, we will maintain or increase our Optical Gas Imaging (OGI) camera inspection frequency, despite the EPA proposal to cut the required inspection frequency in half. We instituted a “quick look” inspection protocol that will inspect facilities monthly. Although the “quick look” inspection will not identify every small leak that a thorough inspection finds, it will identify significant leaks and allow us to fix them immediately. Following a pilot program in 2019, we instituted a fixed-wing airborne inspection of our Permian Basin facilities. These airborne inspections monitor producing facilities, compressor stations and gathering and transportation lines. The data that these enhanced efforts are delivering has greatly increased our emission awareness and helped us to reduce leaks.

Flaring of natural gas into the atmosphere has also been a noteworthy topic during the past year as flared volumes have increased along with the increase in oil production in the Permian Basin. There are multiple circumstances that can result in the flaring. For example, short-term flaring in response to high pressures in producing facilities occurs to maintain safe operations. Flaring can also be caused by interruptions or high line pressures in midstream gathering and compression systems. These high-pressure events are usually short lived. The unavailability of gas takeaway can also result in flaring.

In 2019, Cimarex flared 1.39 percent of our total produced gas volumes. Our Permian flaring came in at 1.97 percent. This is unacceptably high to us and is one of the many reasons that Cimarex has chosen to own and operate its gathering and compression systems. Controlling these systems allows for better planning of operational downtime which minimizes our flaring.

During 2020, we established corporate goals to reduce our flaring and methane intensity rate. We have tasked ourselves to not exceed a flaring intensity of 1.44 percent in the Permian. We are aiming for a five percent reduction in our methane intensity rate. These aggressive targets have been incorporated into the executive team’s short-term compensation goals. Thus far, we have made good progress in meeting and exceeding these goals. We can and will do better.

Also contained within these pages, you will find comprehensive data on agency reportable spills. At Cimarex, we have zero tolerance for spills. We record all spills, including freshwater. We design our facilities such that fluids are contained and do not escape. All of our new-build facilities have lined containment around all equipment that stores or processes fluids. Spills within containment are recorded, even though the containment prevents fluids from escaping into the soil. Cimarex also utilizes custom mats for all of our well completion operations. Any vehicle that contains or moves fluids on a Cimarex completion operation job does so on one of these mats that protects the earth from spills. 

Finally, a word about safety. Nothing is more important to us than making sure that every person on a Cimarex facility goes home safely at the end of their shift. We are unrelenting on this topic. Safety is more than statistics. Safety statistics like those presented herein do not fully distinguish between serious and minor events. Of course we want to have good safety statistics, but we aspire to have a workplace that comprehensively prevents serious injury. They are not always one and the same. 

Good operations are safe operations. It is no accident that the best operators are also the most responsible operators. Cimarex has always strived for operational excellence. We are an organization committed to self-examination and self-challenge in order to continuously improve. Good operators manage their properties prudently; they are not wasteful with precious resources. Good operators are tough, but fair, on their vendors and contractors in demanding excellence. They also understand their responsibility to be good partners in demanding this excellence. Good operations are also clean operations. 

Within these pages, we hope that you will notice increased transparency. This year, and in years to come, we will be reporting on ongoing initiatives to improve our operations and deliver our products in a cleaner, more sustainable fashion. We believe that the benefits of hydrocarbons offset the risks, and these pages will disclose how we are addressing these risks to deliver the tremendous advantages that our products bring.

We hope you will enjoy reading the ESG disclosure contained herein. We would appreciate your feedback in order to make it more useful to you. Thank you for your support of Cimarex during this COVID-19 crisis. The repercussions from it will be with us for a long, long time. Please know that, through this crisis and beyond it, our commitment to ESG will be steadfast and undiminished. This dedication is reflective of our core commitment to operational excellence.

Stay safe and healthy,

Thomas E. Jorden
Chairman, President and CEO