Shareholder Resolutions

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Company: QEP Resources
Subject: Natural Gas Hydraulic Fracturing
Year: 2015
Sector: Energy Production
Lead Filer: Calvert Investments
Outcome: Vote: 32%

Quantitative Risk Management Reporting for

Hydraulic Fracturing Operations

WHEREAS: The Department of Energy secretary's shale advisory panel recommended in 2011 that companies "adopt a more visible commitment to using quantitative measures as a means of achieving best practice and demonstrating to the public that there is continuous improvement in reducing the environmental impact of shale gas production." 

In its U.S. Securities and Exchange Commission Form 10-K filing for the year ended December 31, 2014, the Company states: ‘QEP's ability to produce oil and gas economically and in commercial quantities could be impaired if it is unable to acquire adequate supplies of water for its drilling and completion operations or is unable to dispose of or recycle the water or other waste at a reasonable cost and in accordance with applicable environmental rules. The hydraulic fracture stimulation process on which QEP depends to produce commercial quantities of oil and gas requires the use and disposal of significant quantities of water. The availability of disposal wells with sufficient capacity to receive all of the water produced from QEP's wells may affect QEP's production. QEP's inability to secure sufficient amounts of water, or to dispose of or recycle the water used in its operations, could adversely impact its operations.'

The Company's comments regarding the economic and regulatory challenges of well stimulation employing hydraulic fracturing, including those related to emissions and water management, are of interest to investors. However, The Company's public disclosures do not indicate what combination of policies, programs and performance data it employs to address these broadly recognized challenges.

Investors require detailed and comparable information about how companies manage the challenges and opportunities of onshore unconventional oil and gas development. The 2011 report, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations" outlines 12 management goals and performance indicators that provide such information. Publicly supported by a broad group of investors and companies and environmental organizations, the guide stresses the importance of companies reporting performance indicators quantitatively.

RESOLVED: Shareholders request that QEP Resource issue a report to shareholders, using quantitative and qualitative measures to describe how the Company manages the environmental and social challenges and opportunities associated with hydraulic fracturing with special emphasis on those related to water and emissions management. The report should be available by December 1, 2015, be prepared at reasonable cost, and omit proprietary information.

SUPPORTING STATEMENT:  In 2012, the International Energy Agency (IEA) advised energy companies to "measure, disclose, and engage" in its report "Golden Rules for a Golden Age of Gas." The IEA recommends establishing baselines for environmental indicators; establishing emissions targets; and securing third party certification of performance.

Proponents concur with the IEA and believe additional indicators could include measures to respond to community concerns; to measure water sourcing and waste water management by project; and to reduce emissions.