Environmental
SocialGovernance2021 ReportTable of Contents
CEO Message
About This Report
About Tenaz Energy
Approach to ESG
Materiality
Environment
Environmental Management
Emissions
Water Management
Land Management
Asset Retirement Obligations
Asset Integrity and Spill Prevention
Spill Response
SocialWorkforce Health and Safety
Public Safety
Community and Local Impacts
People Strategy
Stakeholder Engagement
Governance & Business Practices
Role of the Board of Directors
Executive Compensation
Risk Management
Carbon Pricing
EthicsPayments to the Government (ESTMA)
Appendix
ESG Data TableGRI Content Index
SASB Performance Table
Readers Advisory
Forward Looking Statements
Non-GAAP Financial Measures
Oil and Gas Definitions

1
2
3-4
5
6
7-9

10-12

13-16

18-20
21-22
23
24-25

CEO Message
On behalf of Tenaz Energy Corp. (“Tenaz”, the “Company”, or the “Corporation”), I am
pleased to share our story and vision for the future in our third annual sustainability report,
now called our Environmental, Social, and Governance (“ESG”) Report. Our goal is todevelop and produce oil and natural gas safely, responsibly, and profitably, while leaving a
positive impact on all of our stakeholder groups. We believe that this sustainable approach is
the long-term key of our success as a company. Tenaz has created a culture rooted in valuesof environmental protection, social advancement, and responsible governance. From oursenior leadership to our front-line consultants, we focus on continuous improvement andexcellence in all of these aspects of our business.
Tenaz has demonstrated operational strength and capital discipline while delivering on thesafety performance commitment outlined in our Corporate Social Responsibility Policy. Our
focus and commitment to hazard identification, emergency preparedness and communication
regarding safety standards and expectations has created a culture that enables everyone toreturn home safely at the end of the day.
We have a vision of conservation and innovation to minimize environmental impacts andmaximize value from the resources we produce. We have invested time and resources toreduce emissions and, although we are a small company today, I believe the results havedemonstrated leadership on this important objective.
We recognize the value of stakeholder feedback during this important transition phase in theindustry. We believe that in-depth disclosure of Environmental, Social and Governance (ESG)
performance will allow our stakeholders to better evaluate and challenge our approach tosustainability. We look forward to your feedback as we find new and exciting ways tomaximize value and well-being for all stakeholders.
In closing, Tenaz recognizes the critical importance of environmental, social and economic
sustainability to our company’s future, and will place a correspondingly high priority on
performance and leadership in these areas. The Company is committed to the long-termsustainability of the jurisdictions in which it invests and the local communities in which it
operates.
Thank you for your continued support. Again, we are looking forward to your feedback.
Yours very truly,

Anthony Marino
President, Chief Executive Officer and Director
1About this Report
This is the Corporation’s third sustainability report, now called our ESG Report, and is intended tocapture the many topics and data that illustrate corporate sustainability for the year ended December
31, 2021.

•

Financial data is reported in Canadian dollars. For more information on Tenaz’s financial
performance please refer to Tenaz’s Management Discussion and Analysis (“MD&A”) for theyear ended December 31, 2021 as well as our Annual Information Form (“AIF”), both of which
are available on SEDAR and our website•

The term “ESG” used throughout the report refers to Environmental, Social and Governance.

•

This report includes Tenaz performance data for the year ended December 31, 2021.
Quantitative data from 2018, 2019, and 2020 is included to provide relative performance.

•

This report contains certain forward-looking information and statements within the meaning of
applicable securities laws. The use of any of the words "expect", "anticipate", "budget","forecast", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should","believe", "plans", "intends", "strategy" and similar expressions are intended to identify forwardlooking information or statements. Refer to the section entitled, “Forward-looking Statements”
within this report.

•

This report follows the Sustainability Accounting Standards Board’s Extractives & Minerals
Processing Sector: Oil and Gas – Exploration & Production Sustainability Accounting Standard
framework. Refer to the section entitled, “SASB Performance Table” within this report.

•

This report utilizes the Global Reporting Initiative (“GRI”) Standards index for the sustainability
issues that are of interest to Tenaz stakeholders. Refer to the section entitled, “GRI Content
Index” within this report.

•

References to ‘employees’ represent full-time, permanent employees and ‘workers’ reflects all
employees, consultants, and contractors.

•

The information contained within this report has been reviewed and approved by Tenaz’s
relevant staff, senior management, President and CEO, and the Sustainability, HSE, andReserves Committee of the Corporation.

For questions regarding this sustainability report please contact:
Tenaz Energy Corp.
2500, 605 – 5th Avenue SW
Calgary, Alberta T2P 3H5
Telephone (587) 330-1714
www.Tenazenergy.com
Anthony Marino
President and Chief Executive Officer
Direct(587) 330-1983

Brad Bennet
Vice President, Finance and Chief Financial Officer
Direct(587) 330-1714

2

About Tenaz Energy Corp.
Tenaz is a public energy company focused on the acquisition and sustainable development of international oil
and gas assets capable of returning free cash flow to shareholders. In addition, Tenaz conducts development ofa semi-conventional oil project in the Rex member of the Upper Mannville group at Leduc-Woodbend in central
Alberta. Tenaz Energy’s common stock trades on the Toronto Stock Exchange under the symbol TNZ.
Our vision is to apply technical and commercial capabilities in mergers and acquisition to build a leadingintermediate-size E&P. Tenaz targets high quality conventional and semi-conventional assets in overseas
markets. We will prioritize free cash flow generation to support a balanced growth-and-income model.
Additional information regarding Tenaz is available on SEDAR and on our website at www.Tenazenergy.com.
Financial Summary as at December 31, 2021 ($000 CAD unless otherwise noted)
2021 Petroleum and natural gas sales
17,8302021 Cash flow from operating activities
3,945
(1)
2021 Funds flow from operating activities
3,499
2021 Operating Netback ($/boe)(1)(3)
27.10
(1)
2021 Capital expenditures
10,391
Adjusted working capital (net debt)(1)20,688Abandonment, decommissioning, and reclamation costs
5,600 (uninflated, undiscounted)
Common Shares Outstanding (000)End of period – basic(2)28,438Weighted Average for the period – basic(2)14,718(2)
Weighted average for the period – diluted
14,876
Operating Summary as at December 31, 2021
2021 Average daily production (boe/d)(3)2021 Wells drilled
2021 Wells completed

1,015 (56% oil and liquids)
3 gross (2.6 net)
4 gross (3.5 net)

Company Gross Reserves as at December 31, 2021
Total Proved (Mboe)(3)Total Proved + Probable (Mboe)(3)

6,762
11,324

Wells Inventory as at December 31, 2021
Producing
Proved and Probable undeveloped drilling locations
Additional drilling opportunities(4)30 gross (23.4 net)
47 gross (37.4 net)
140 gross (114 net)

Personnel as at December 31, 2021
Full-time employees
Consultants

10
6

Edmonton

Leduc-Woodbend
Calgary

Footnotes:
1)
2)
3)

4)

This is a non-GAAP and other financial measure. Refer to “Non-GAAP and Other Financial Measures” included in the “Advisories”
section of this report.
On December 23, 2021, the Company completed a 10 to 1 common share consolidation. All per share and common share values
have been presented on a post-consolidation basis.
The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. Per boe amounts have been calculated
by using the conversion ratio of six thousand cubic feet (6 Mcf) of natural gas to one barrel (1 bbl) of crude oil. Refer to “Barrels of
Oil Equivalent” section included in the “Advisories” section of this press release.
Tenaz management estimate.

3

About Tenaz Energy Corp.
Significant Operational Changes
Recapitalization Transaction
On October 7, 2021, shareholders approved a recapitalization transaction (the “Recapitalization
Transaction”) which was completed on October 8, 2021. As part of the Recapitalization Transaction,
the Company completed a non-brokered private placement pursuant to which 2,777,800 units were
issued at a price of $1.80 per unit for gross proceeds of $5.0 million. Concurrently with the closing of
the non-brokered private placement, the appointment of a new management team and reconstitutionof the board of directors was completed.
On October 8, 2021, immediately following the completion of the change of management and the nonbrokered private placement, the Company issued 13,611,200 Common Shares pursuant to theconversion of the 13,611,200 Subscription Receipts and $24.5 million in gross proceeds was released
from escrow.
On October 15, 2021, the Company’s name was changed from “Altura Energy Inc.” to “Tenaz Energy
Corp.” through an amalgamation and the symbol for trading on the TSX Venture Exchange waschanged to TNZ (formerly ATU).
On December 17, 2021, the Company completed a rights offering pursuant to which 1,017,984
Common Shares were issued at a price of $1.80 per Common Share for gross proceeds of $1.8
million.
Pursuant to the Recapitalization Transaction and the rights offering, the Company incurred $1.8
million of share issue costs and $1.2 million of transaction costs.
For more information on the Recapitalization Transaction, please refer to our Annual Information
Form, for the year ended December 31, 2021, dated March 24, 2022 on SEDAR and our website.
Share Consolidation
On December 23, 2021, the Company completed a 10-to-1 common share consolidation. The numberof shares, warrants and options outstanding have been adjusted on a retroactive basis. All per shareand common share values have been presented on a post-consolidation basis.
Strategy Update
In addition to the continued development of the Company’s existing assets, Tenaz intends to target
the acquisition of conventional and semi-conventional oil and gas assets in global markets. The
Company will focus on building a portfolio of free cash flow assets that have the potential to provide
returns to shareholders via a growth-and-income capital markets model.

With the completion of the Recapitalization Transaction, the Company has established itself as a
viable public vehicle for the acquisition of oil and gas producing assets. We intend to leverage ourteam’s experience to pursue international opportunities across multiple jurisdictions where there is thepotential for less competition, greater opportunity for operational improvements, and higher returns on
capital as compared to the North American industry.

4

Approach to ESG
Environmental, Social and GovernanceTenaz recognizes that to deliver consistent and long-term shareholder value, we must operate in asafe, healthy, ethical, and environmentally responsible manner. Our commitment to Environmental,
Social and Governance initiatives is embedded in the strategy and the delivery of shareholder returns.
Our Corporate Social Responsibility Policy guides us in how we conduct our business. Our strong
environmental stewardship, proven safety culture and governance practices have created strong
relationships with our stakeholders, improve our financial performance and enhance our contributions
to our communities.
We are committed to conducting our activities in a manner that safeguards the health and safety of ouremployees, contractors, service providers, public and the environment. We operate our business in a
responsible, transparent, and respectful way and comply with all applicable laws, regulations andindustry standards.
In 2021 Tenaz established the Sustainability, Health, Safety, Environment and Reserves Committee(“SHSER Committee”) which is responsible for maintaining and overseeing robust sustainability
performance. The SHSER Committee is comprised of three directors, two of whom are independent.
The purpose of the Committee is to assist the Board of Directors in carrying out its responsibilities toensure that Tenaz’s activities are conducted in an environmentally responsible manner and that the
Corporation maintains the integrity of its environmental, social and governance programs.
Highlights••••

In 2021, Tenaz reduced its Total GHG Emissions (Scope 1 and 2) by 20% and Total GHG
Intensity by 29% relative to 2020.
We are focused on elimination of fugitive emissions and reduction of direct energy inputs to the
production process.
Utilize Best-in-class standards for social and governance practices for Canadian publiccompanies.
Our acquisition strategy includes identifying and supporting sustainability projects contributing tohigher rates of return.

Previously executed projects by management team include:•

Management sees opportunity in using critical oil and gas infrastructure to support the energy
transition.

•

Utilization of waste heat from oil and gas operations in local agriculture and housing initiatives tosignificantly reduce power consumption and overall emissions.

•

In past engagements, management has received strong ESG ratings from independent rating
agencies.

5

Materiality
Materiality Assessment
To understand the topics that are relevant to the Corporation and stakeholders, Tenaz
annually conducts an internal materiality assessment. The Corporation reviews a wide arrayof ESG topics and financial metrics to determine those having the highest importance to the
Corporation.
There are many important issues to address in the constantly changing regulatory andgovernance frameworks. Given the nature of our operations and our areas of geographic
emphasis, we believe focusing on these topics of importance will have the highest impact on
our business. Our topics of importance are:•EnvironmentaloEmissionsoAsset Retiremento

Asset Integrity and Spill Prevention•

Workforce Health and Safety•

Governance and Business Practices

6Environment
Tenaz continually implements practices and technologies that improve our environmental
performance because doing so improves the quality of life in our jurisdictions, sets a positive
example within our industry and enhances our financial sustainability.
Environmental Management

We understand the importance of managing our environmental footprint. Having accurate andtimely data enables us to proactively manage that footprint. We dedicated resources to collectdata, identify trends and assess the following:•

Sources of fugitive emissions and methane venting;•

Converting natural gas combustion engines to electrical drivers;•

Wellsite, facility and infrastructure decommissioning, abandonment and reclamation
obligations.

In addition, Tenaz has enrolled in the following Alberta Energy Regulator programs inaccordance with Directive 60 regulations:•

Fugitive Emissions Management Program (FEMP) to detect and repair fugitive emission
sources; and•Methane Reduction Retrofit Compliance Plan (MRRCP) to identify methane vent sources
and implement solutions to minimize and eliminate, where possible, methane venting.

The results and actions taken from this work is regularly communicated within the executive
team and the Sustainability, HSE, and Reserves Committee.
Emissions
New regulations introduced in Canada target methane (i.e. natural gas venting) emission
reductions of 45% by 2030. We believe these regulations will have minimal impact on ouroperations as our facilities and infrastructure already meet gas conservation requirements.
New wells that are drilled and brought on production are immediately pipeline connected togas gathering infrastructure to conserve the gas.
In 2019, Tenaz completed a baseline emissions assessment and identified sources of fugitive
methane emissions in our operations. The methane fugitive emissions identified wereminimal and related to high-bleed controllers and pneumatic chemical injection pumps on
wellsites. Tenaz is evaluating reducing these emissions by replacing existing equipment withlow-bleed controllers, retrofitting high-bleed controllers, retrofitting chemical injection pumps
and improving maintenance practices to mitigate or eliminate fugitive methane emissions.
The next steps will be to create an action plan to address further reductions and, where
possible, elimination of the remaining minimal emission sources. In the interim, Tenaz willcontinue with wellsite and facility inspections using Optical Gas Imaging, among othersurveillance techniques, annually or as set forth in the FEMP to ensure compliance with work
already completed.
7

Environment
In 2019, Tenaz completed an electrification project. We installed electrical power at our
Leduc-Woodbend well and facility sites to utilize grid electricity and eliminate combustion ofnatural gas to power our operations. The GHG reduction from this project is estimated at
1,378 TCO2e per year.
Tenaz will continue to evaluate our wells, facilities, and new well drilling and completion
operations to identify further emission reduction opportunities.
Water Management
Water is used in Tenaz’s drilling and completion operations including hydraulic fracturing andreservoir pressure maintenance in Enhanced Oil Recovery (EOR) schemes. Tenaz
endeavours to reuse water and establish sources of non-potable and produced waterwherever possible to minimize the amount of fresh water used in our operations. This
includes working with area stakeholders to use run-off water or other sources of water suchas greywater or waste-water from industrial processes. In addition, Tenaz continues tooptimize our drilling and hydraulic fracturing techniques with the goal of reducing the water
intensity for the Corporation.
Land Management
The development of Tenaz’s mineral acreage involves the use of relatively small multi-wellsurface locations to accommodate the necessary drilling, completion, and production
infrastructure. The surface footprint of a typical multi-well site can vary in size from one to two
hectares depending on the number of wells to be drilled from that surface location. Once all
the wells, on a multi-well site, have been drilled and are on production, the surface footprint isoften reduced to a minimal teardrop shape that is less than half of its original size. The
reclaimed wellsite area is then returned to cultivation or grazing.
Asset Retirement Obligations (”ARO”)
When assets are no longer productive, Tenaz prioritizes and undertakes an abandonment andreclamation program to restore the land to its original state. This includes the abandonment ofwells and facilities, removal of any contaminants and the restoration of original soil andvegetation conditions.
At December 31, 2021, the present value of Tenaz's decommissioning liability was $2.6
million (December 31, 2020 - $2.1 million) for the future abandonment and reclamation ofTenaz’s properties. The estimated decommissioning liability includes cost assumptions toabandon wells or reclaim the property, the time frame in which such costs will be incurred aswell as annual inflation factors used to calculate the undiscounted total future liability. The
future liability has been inflated at 1.7% (December 31, 2020 – 1.5%) and discounted at acredit-adjusted risk-free rate of 8.4% (December 31, 2020 – 9.2%). Abandonment costestimates are derived from both industry and government sources and operational knowledgeof the properties.
8

Environment
The Company’s Liability Management Rating (“LMR”) with the Alberta Energy Regulator(“AER”) was 6.23 as at March 24, 2022. The LMR is the ratio of the Company's deemed
assets to its deemed liabilities and is updated monthly. An LMR rating less than 1.0 would
require the Company to pay a deposit to the AER. The Corporation addresses asset
retirement obligations (“ARO”) as assets produce and incorporates ARO into the design of its
capital programs and asset acquisition economics.
Asset Integrity and Spill Prevention
Tenaz follows a comprehensive asset integrity program to prevent, detect and manage leaks
and spills from our surface equipment and pipelines. We have invested capital and resourcesin the proactive management of our pipeline and facility infrastructure to mitigate theopportunity for any such release. This process includes completing annual pipeline risk
assessments, in-line pipeline inspections, right-of-way inspections, water crossing
inspections, corrosion protection, evaluating leak detection systems, tank and pressure vessel
inspections and then making recommendations to our operations teams.
We employ automated gauges, level/pressure alarms, emergency shut-down processes, andother technologies to alert our operators or shut down equipment in the event of an
operational upset. These technologies give us the tools needed to respond to an incident
before it escalates to minimize any potential safety or environmental impacts. In the event of arelease, regardless of the volume, all spills are reported internally, investigated, and corrective
actions implemented.
Spill Response
If there is a release, we have site-specific Emergency Response Plans (“ERP”) in place tonotify all relevant staff, regulators, and members of the community in a timely fashion. These
plans include contacts with local service providers for spill response procedures and control toensure rapid response time.
Field operators are required to complete annual leak detection and maintenance training aswell as review spill response procedures and regulatory reporting requirements. Tenaz is amember in good standing of the Western Canadian Spill Services (WCSS) and attends
annual training exercises for our area. All member companies in these cooperatives haveaccess to strategically placed spill recovery equipment and spill response support.

9SocialWorkforce Health and Safety
Tenaz is committed to protecting the health and safety of our employees, contractors, consultants, andthe public. Safety is an essential and non-negotiable element for our leadership team and everyone in
the Company.
Safety Performance
Our prime objective is to ensure that our workers and the communities potentially impacted by ouroperations remain safe and healthy at the end of each day. To make this happen, Tenaz created a
Corporate Social Responsibility Policy that is shared with our employees and contractors to ensure
everyone understands our level of safety standards.
The COO, SVP Canadian Business Unit, VP Engineering, a third-party independent safety consultant
and field contractors meet quarterly to review incidents and concerns. As a result of these meetings,
we generate or revise safety procedures as necessary. The quarterly reports and action list generated
from these meetings are then reviewed with the Sustainability, HSE, and Reserves Committee andfurther revised if required.
All incidents, including near misses, are reviewed to determine if they had the potential to result in aserious injury or fatality. Tenaz utilizes contractors and consultants to execute many of the field
operations to advance our business objectives. To ensure safe operations, Tenaz also utilizes
contractor management software called ComplyWorks® to pre-approve and monitor contractor safety
and regulatory compliance.
Serious Injury and Fatality (SIF)
While all incidents are tracked and reported, we believe those of greater severity, or those with thepotential for greater severity, should be given additional focus. By identifying situations that have thehighest risk of serious injury or fatality, we can ensure that we have selected the most competentcontractors that have the appropriate training and policies in place to prevent SIF events.
Hazard Identification
Complacency, communication breakdown and the fast-paced nature of our operations are common
contributors to high-risk or high-consequence incidents. To mitigate these risks, Tenaz conducts
proactive task observations, site inspections, audits, and pre-job safety meetings.
Right to Stop Work
Our leadership team believes that every job can and must be done safely, that everyone isaccountable for safety performance and that all employees have the obligation to refuse unsafe
conditions and voice concerns about potential hazards. Contractors are made aware of the
expectation to refuse unsafe work or any tasks they feel uncomfortable undertaking during theirorientation.
We also require contractors and consultants to use job-specific hazard assessments, safe work
permits, and daily tailgate meetings to report hazards and raise any safety concerns they have.
Should a refusal to work be initiated, a full investigation will be undertaken, and appropriate measurestaken to ensure the work environment is safe. Investigation teams are formed based on the situationand may include technical experts, health and safety advisors, supervisors, and management. The
team evaluates the hazard, assesses the risk, and determines corrective actions.

10SocialSafety Training
At a minimum, all field workers must complete Tenaz’s General Safety Orientation or a Common
Safety Orientation (CSO) training on how to work safely around sour gas (H2S Alive), First Aid,
resuscitation (CPR) and safety in handling hazardous materials or chemicals (WHMIS 2018).
Additionally, Tenaz provides individualized training based on the tasks or potential tasks each worker
will be required to carry out during their work. This may include safety around excavations or earth
works (ground disturbance), precautions in confined space, defensive driving, Naturally Occurring
Radioactive Material (NORM) and incident investigation training and any specific equipment related
training.
Public Safety
The safety of the communities where we operate is paramount to Tenaz. As such, we have a robust
and strategically managed ERP in place to effectively handle emergencies and critical events. The
ERP is routinely tested to make certain that all relevant stakeholders are prepared to carry out theirrole in the event of an emergency. In addition, Tenaz regularly conducts multi-stakeholder ERP drills
that include regulators, first responders and community members.
Community and Local Impacts
Tenaz contributes to community prosperity through project development, job creation and community
investment. We value good governance practises, proactive risk management and high ethicalstandards. We believe strong business practises contribute to reducing costs, increasing shareholder
value and enhancing trust from all stakeholders.

Tenaz plays an important role in the economic strength of our communities. Through the payment ofroyalties and taxes, providing local employment and investing time and funding for local charities andnon-profit organizations, we contribute to the overall strength and sustainability of the communities
where we operate.
We recognize both the economic and social benefits of contracting staff and suppliers local to ouroperations and do so whenever possible.
People Strategy
Our people are our greatest asset, and we rely on them to execute our short- and long-term businessstrategies. We have recruited and engaged high-potential professionals that are committed to thelong-term success and sustainability of the Corporation. Tenaz is committed to the development andfurther training of our leadership team and encourages annual training and learning from local
professional seminars and conferences where applicable.
Our performance management systems incorporate elements that encourage positive behaviours in
relation to ESG related issues. The Board, executive management, and employee’s assessments arealigned with our ESG philosophies.

11Social
Stakeholder Engagement
Many stakeholders contribute to Tenaz’s overall success. We make every effort to build strong
and respectful relationships with our stakeholders by regularly engaging in dialogue tounderstand their concerns, inform them of our plans, and identify solutions to ensure theyremain part of our decision-making process.
Stakeholder
Employees

Action•Annual and quarterly employee
career progress and evaluation
process•
Ongoing safety training for all
workers

Focus Areas•
Safety•Executive communication•
Training and development

Shareholders•

Quarterly and ad hoc press
releases
Annual General Meeting open to allshareholders
Quarterly update meetings withresearch analysts
Attend conferences andindependent meetings withinvestors
24-hour emergency number
Training for local emergency
response personnel
Proactive communication andconsultations regarding access toresources, well abandonments, androad use••••

Emergency preparedness
Environmental performance
Community relations andgovernanceConsultation on new projects andproposals
Participation in public policy andregulatory discussions whereapplicable•••

Regulations concerningenergy development
Climate policy
Market access

Safety meetings and ERP drills forstaff and contractors
Clear safety expectations throughmaster service agreements andpre-qualification process•••

Safety performance
Financial performance
Supply chain transparency•••

Communities•••

Government andRegulatory
Bodies•Suppliers andContractors

•

•

•

•
•
•

Financing and operational
performance
Board diversity
Executive compensation
ESG reporting12Governance & Business Practices
Role of the Board of Directors
The fundamental responsibility of our Board of Directors is to foster the long-term success of the
Corporation consistent with the Board's responsibility to the shareholders to maximize shareholder
value. The Board works diligently to uphold this responsibility by:
•
•
•
•
•

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

Managing the affairs of the Board;
Developing the succession plan for the President and CEO as well as the appointment plan,
monitoring of performance, approving compensation and providing advice and counsel to the
President and CEO in the execution of their duties;
Approving and evaluating corporate short-term and long-term performance scorecards;
Ensuring succession planning programs are in place, including programs to train and develop
key personnel;
Participating with management, in the development of, and ultimately the approval of the
Corporation's strategic plan including its targeted capital structure;
Approving capital and operating budgets which support the Corporation’s ability to meet its
strategic objectives;
Monitoring the Corporation's progress towards its goals;
Reviewing operating and financial performance relative to budgets or objectives;
Approving annual and quarterly financial statements, related Management's Discussion &Analysis and related press releases and approve release thereof by management;
Approving the Management Proxy Circular in respect of annual and special meetings, Annual
Information Form and documents incorporated by reference therein;
Ensuring management identifies the principal risks of the Corporation’s business andimplements appropriate systems to manage these risks;Approving and monitoring compliance with all significant policies and procedures by which the
Corporation is operated;
Directing management to ensure the Corporation operates at all times within applicable laws andregulations and to the highest ethical and moral standards;
Ensuring the Corporation has in place effective communication processes with shareholders andother stakeholders, the public in general and financial, regulatory and other recipients;
Ensuring that the financial performance of the Corporation is adequately reported toshareholders, other security holders and regulators on a timely and regular basis;
Ensuring the financial results are reported fairly and in accordance with applicable accounting
and reporting standards;
Ensuring the timely reporting of any other developments that have a significant and material
impact on the value of the Corporation;
Directing management to ensure legal requirements have been met, and documents andrecords have been properly prepared, approved and maintained;
Approving matters requiring shareholder approval at shareholder meetings;
Acting honestly and in good faith with a view to the best interests of the Corporation;
Exercising the care, diligence, and skill that a reasonably prudent person would exercise incomparable circumstances.

13

Governance & Business Practices
The Board performs its mandated responsibilities in part through the activities of the following
committees:•••

Audit Committee,
Governance and Human Resources Committee,
Sustainability, HSE, and Reserves Committee.

The Board and its committees have access to the executive officers and senior management
on a regular basis. At each regularly scheduled Board meeting, the Board meets with theexecutive officers and senior management, who are invited to attend and provide information
on specific areas of the business.
For more information on the role of our Board, please refer to our Terms of Reference for the
Board, updated November 17, 2021, on our website.
Executive Compensation
The Company’s compensation program is administered by the Governance and Human
Resources Committee which consists of John Chambers (Chair), Marty Proctor, and Mark
Rollins, each of whom are highly experienced executives, directors and/or businesspeople
who have dealt with compensation issues in the course of their respective leadership roles
and each of whom is independent. The management team, together with the Governance andHuman Resources Committee, considered an appropriate compensation structure for the
executive officers given the Company’s go-forward international strategy. In the near term,
Tenaz has operations in Canada at the same time it intends to focus on making strategic
global acquisitions in the areas identified by management. As a result, the compensation
structure in the near term is focused on maintaining general and administrative expenses at a
relatively low level, preserving the Company’s balance sheet strength for acquisition
opportunities in the short-term and aligning the interests of the executive officers with the
Shareholders’ interests in increasing the value of the Corporation’s common shares over the
long-term.
The Corporation's compensation policies are comprised of the following principal components:•••

Base salary;
Bonus payments under a discretionary bonus plan; andOptions, Restricted Share Units, Performance Share Units, Deferred Share Units, andDividend-Equivalent Rights under the Tenaz Incentive Plan.

For more information on our Executive Compensation, please refer to our 2022 Information
Circular dated April 27, 2022 on SEDAR and on our website.

14

Governance & Business Practices
Risk Management
Tenaz has developed a corporate risk register to organize and understand the major risks to
the Corporation. The executive team meets annually to discuss any changes to the risks andto review emerging trends in individual areas. The daily management of risk is the
responsibility of the relevant vice president given their expertise and authority to ensure that
all risks in their areas have been identified and that management plans are in place.
The following table summarizes various key risks that pertain to ESG.
Risk
Changes in Legislation

Potential Impact
New regulations could result in additionalcosts or restrict our ability to develop ourasset base.

Mitigation•
Regular review of governmentand regulatory directives andinformation circulars.

Public Perception of the
Oil and Gas Industry

Increased concern from stakeholders
about the impact of our business on theenvironment could negatively impact our
reputation and investor sentiment.

•

Reporting on ESG related
topics.

Carbon Pricing

The implementation of federal andprovincial carbon taxes will have a nearterm financial impact on our operations.
Carbon pricing will be added directly to ouroperating costs and due to the nature of oil
and gas sales, no portion of this added
cost will be passed on to our customers.

••

Reduce GHG Emissions
Enrolled in the Alberta
Technology Innovation
Emissions Reduction (TIER)
program which exempts Tenazfrom certain aspects of thefederal carbon pricing.

Major HSE Incident

The nature of our business at times
involves operational and natural hazards
that have the potential to cause harm to
the environment or to the public.

•

HSE performance and policies
regularly reviewed by senior
management and the Board;
Experienced and well-trained
staff;
Regular inspection and review
of asset integrity;
Regular review of our ERP,
including drills and training
exercises.
Proactive network defense
strategies;
Internal audits and penetration
testing of systems;
End user education andawareness.

•••

Cyber Security

Failure of our information technology
systems could result in financial loss,
business disruption, physical damage andreputation risk.

•••

For additional information on risks, please refer to our Annual Information Form (AIF) for theyear ended December 31, 2021 on SEDAR and on our website.
15

Governance & Business Practices
EthicsAn important element of governance is ensuring appropriate policies and procedures are inplace to mitigate risk and ensure ethical conduct. Tenaz has the following policies andprocedures in place:
•

•

•

•

•

Code of Business Conduct and Ethics Policy – outlines the expectations of our directors,
officers and workers who conduct business on behalf of Tenaz. The policy outlines aframework of guiding principles for directors, officers and employees of the Corporation.
As with any statement of policy, the exercise of judgment is required in determining
applicability of this Code of Conduct to each individual situation;
Corporate Disclosure, Confidentiality & Trading Policy – ensures communications to theinvesting public about the Corporation are broadly disseminated in accordance with allapplicable legal and regulatory requirements and are timely, factual, accurate andbalanced;
Whistleblower Policy – encourages stakeholders to raise concerns regarding financial
controls and audit measures, fraud and/or theft, harassment, workplace violence, conflictof interest, discrimination and safety concerns while maintaining their confidentiality andanonymity. Individuals may report concerns to the Corporate Secretary via telephone oranonymous email, all of which are listed in the policy on our website;
Majority Voting Policy – this policy applies to the election of directors at a meeting ofshareholders of the Corporation other than at a contested meeting. A "contested
meeting" means a meeting at which the number of directors nominated for election isgreater than the number of seats available on the board of directors of the Corporation(the "Board");
Advance Notice By-Law - provides shareholders, directors and management of the
Corporation with a clear framework for nominating directors.

All of the above policies have been reviewed and accepted by the Board, officers andemployees of the Corporation.
Payments to the Government (ESTMA)
Tenaz is required to publicly disclose on an annual basis, specific payments made togovernments in Canada and abroad as outlined by the Extractive Sector Transparency
Measures Act (“ESTMA”). ESTMA delivers on Canada’s international commitments tocontribute to global efforts to increase transparency and deter corruption in the extractive
sector. Our ESTMA report can be found on our website

16Appendix

17

ESG Data Table

18

ESG Data Table

19

ESG Data Table

Footnotes:
1)

Direct energy consumption includes natural gas fuel for processing oil, temporary power generation,
propane consumption and other minor heating.

2)

Direct or Scope 1 emissions are defined as emissions from equipment that is owned or controlled by thecompany such as flaring, combustion, venting and diesel.

3)

Indirect Indirect or Scope 2 emissions are defined as emissions from electricity, steam or heat purchasedby the company. Tenaz only purchases grid electricity.

4)2020 flared gas is higher due to an isolated flow test evaluation in an exploratory area (Entice).

5)Vented gas is estimated annually by a third-party company and includes pneumatic devices, chemical
pumps and tank vents.

6)

Methane emissions are calculated taking the methane composition in the vented natural gas.

7)

Well drilling and completion activity by year:a)2018 - nine horizontal drills, nine horizontal well completionsb)2019 - three horizontal drills, one vertical drill, two horizontal well completionsc)2020 - two horizontal drills, two horizontal well completionsd)2021 - three horizontal drills, four horizontal completions​8)2018 as at Jan 5, 2019; 2019 as at Jan 4, 2020; 2020 as at Jan 2, 2021; 2021 as at Dec 4, 2021.

9)

Tenaz is enrolled in Alberta's Technology Innovation and Emissions Reduction (TIER) program.

20

GRI Content Index
The Global Reporting Initiative (GRI), is an international independent standards organization that helps businesses,
governments and other organizations understand and communicate their impacts on issues such as climate change,
human rights and corruption.
GRI 102 GENERAL DISCLOSURES​
ORGANIZATIONAL PROFILE
102-1 Name of the organization
102-2 Activities, brands, products and services
102-3 Location of headquarters
102-4 Location of operations
102-5 Ownership and legal form
102-6 Markets served
102-7 Scale of the organization
102-8 Information on employees and other workers
102-10 Significant changes to the organization and its supply chain
STRATEGY102-14 Statement from senior decision-maker102-15 Key impacts, risks and opportunities
ETHICS AND INTEGRITY
102-16 Values, principles, standards and norms of behavior
102-17 Mechanisms for advice and concerns about ethics
GOVERNANCE
102-18 Governance structure102-19 Delegating authority
102-20 Executive-level responsibility for economic, environmental, and social topics
102-21 Consulting stakeholders on economic, environmental and social topics
102-22 Composition of the highest governance body and its committees
102-23 Chair of the highest governance body102-24 Nominating and selecting the highest governance body102-26 Role of highest governance body in setting purpose, values, and strategy
102-27 Collective knowledge of highest governance body102-28 Evaluating the highest governance body’s performance102-29 Identifying and managing economic, environmental and social topics
102-30 Effectiveness of risk-management processes
102-31 Review of economic, environmental and social topics
102-32 Highest governance body’s role in sustainability reporting
102-33 Communicating critical concerns
102-34 Nature and number of critical concerns
102-35 Remuneration policies
102-36 Process for determining remuneration
102-37 Stakeholders’ involvement in remuneration
102-38 Annual total compensation ratio
102-39 Percentage increase in annual total compensation ratio
STAKEHOLDER ENGAGEMENT
102-40 List of stakeholder groups
102-41 Collective bargaining agreements

102-42 Identifying and selecting stakeholders
102-43 Approach to stakeholder engagement102-44 Key topics and concerns raised

SOURCE
pp. 1-2
pp. 1, 3-4​
p. 2
pp. 3-4​
pp. 3-4
p. 3
p. 3
p. 3
pp. 3-4
p. 1
pp. 5-12, 15

p. 16
p. 16
pp. 5, 13-14
pp. 5, 10-14
pp. 1, 5-14
pp. 1, 5, 12-14
pp. 5, 13-14
2022 Information Circular
2022 Information Circular
pp. 5, 10-11, 13-16
2022 Information Circular
2022 Information Circular​
pp. 1, 5, 6-16
p. 15
pp.1, 5-12
pp. 1, 5-6, 11-14​pp. 1, 5-7, 10-16
pp. 1, 5-13, 15-16​
2022 Information Circular
2022 Information Circular
2022 Information Circular
2022 Information Circular
2022 Information Circularp. 12​
Tenaz does not have any collective
bargaining agreements.​
p. 12
p. 12
p. 12​

21

GRI Content Index
REPORTING PRACTICE
102-45 Entities included in consolidated financial statements
102-46 Defining report content and topic boundaries
102-47 List of material topics
102-50 Reporting period
102-52 Reporting cycle
102-53 Contact point for questions regarding the report102-54 Claims of reporting in accordance with GRI Standards
102-56 External assurance

SOURCE
Dec 31, 2021 AIF
pp. 1-2
pp. 1, 5-16​
p. 2​
p. 2​
p. 2​
This report references the
GRI Standard 2016 but has not met all
criteria to be in attendance.
Under review

GRI 200 ECONOMIC TOPICS​
201-1 Direct economic value generated and distributed
201-2 Financial implications and other risks and opportunities due to climate change
GRI 205 ANTI-CORRUPTION
205-2 Communication and training about anti-corruption policies and procedures
GRI 206 ANTI-COMPETITIVE BEHAVIOR
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

pp. 3, 19
pp. 5-7, 15​
p. 16
Tenaz was not involved in any legal
actions related to anti-competitive
practices in 2021.

GRI 300 ENVIRONMENTAL TOPICSGRI 302 ENERGY
302-1 Energy consumption within the organization
302-3 Energy intensity
GRI 303 WATER
303-1 Water withdrawal by source
GRI 305 EMISSIONS
305-1 Direct (scope 1) GHG emissions
305-2 Energy indirect (scope 2) GHG emissions
305-4 GHG emissions intensity
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions
GRI 306 EFFLUENTS AND WASTE
306-3 Significant spills
GRI 307 ENVIRONMENTAL NON-COMPLIANCE
307-1 Non-compliance with environmental laws and regulations

p. 18
p. 18
pp. 8, 18
pp. 5, 18, 20
pp. 5, 18, 20
p. 18
pp. 18, 20
p. 18
Tenaz received no fines or nonmonetary sanctions for non-compliancein 2021.

GRI 400 SOCIAL TOPICS​
GRI 401 EMPLOYMENT
401-1 New employee hires and employee turnover
GRI 403 OCCUPATIONAL HEALTH AND SAFETY
403-2 Hazard identification, risk assessment, and incident investigation
403-5 Worker training on occupational health and safety
403-9 Work related injuries
GRI 404 TRAINING AND EDUCATION
404-3 Percentage of employees receiving regular performance and career development reviews
GRI 405 DIVERSITY AND EQUAL OPPORTUNITY
405-1 Diversity of governance bodies and employees

p. 19
pp. 7-10, 12, 15
pp. 10-12
p. 19
pp. 11-13
pp. 11, 13-16, 19

GRI 411 RIGHTS OF INDIGENOUS PEOPLES
411-1 Incidents of violations involving rights of indigenous peoples

Tenaz had no incidents of violations
involving the rights of Indigenous
peoples in 2021.

GRI 413 LOCAL COMMUNITIES
OG11 Number of sites that have been decommissioned and sites that are in the process of
being decommissioned.

p. 18

22

SASB Performance Table
The Sustainable Accounting Standards Board (SASB), is an organization that has established industry-specific disclosure
standards across environmental, social and governance topics that facilitate communication between companies andinvestors.
GHG EMISSIONSEM-EP-110a.1: Gross global scope 1 emissions% methane% covered under emissions-limiting regulations
EM-EP-110a.2: Amount of gross global scope 1 emissions from:
1. Flared hydrocarbons
2. Other combustion
3. Process emissions
4. Fugitive emissions
EM-EP-110a.3: Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions,emissions reduction targets and an analysis of performance against those targets
AIR QUALITY
EM-EP-120a.1: Air emissions of the following pollutants:
1. NOx
2. SOx3. VOCs
4. PM10

SOURCEESG Data TableESG Data TableESG Data TableESG Data Table

pp. 5, 7, 8

ESG Data Table

WATER MANAGEMENT
EM-EP 140a.1:
1. Total freshwater withdrawn
2. Total freshwater consumed
BIODIVERSITY IMPACTS
EM-EP-160a.2: Number and aggregate volume of hydrocarbon spills
HUMAN RIGHTS AND RIGHTS OF INDIGENOUS PEOPLES
EM-EP-210a.2: Percentage of proved and probable reserves in or near indigenous land
EM-EP-210. 3: Discussion of engagement processes and due diligence practices with respect to humanrights, indigenous rights and operation in areas of conflict
OCCUPATIONAL HEALTH AND SAFETY
EM-EP-320a.1:(1) Total recordable incident rate (TRIR), (2) Fatality Rate, and (3) Near Miss Frequency Rate for (a) fulltime employees, (b) contract employees, and (c) short-service employees
Average hours of health, safety, and emergency training for:1. Full-time employees
2. Contract employees
3. Short-service employees
EM-EP-320a.2: Discussion of management systems used to integrate a culture of safety
RESERVES EVALUATION & CAPITAL EXPENDITURES
EM-EP-420a.4: Discussion of how price and demand for hydrocarbons and/or climate regulation influence
the capital expenditure strategy for exploration, acquisition and development of assets
BUSINESS ETHICS & TRANSPARENCY
EM-EP-510a.2: Description of the management system for prevention of corruption and bribery throughout
the value chain
MANAGEMENT OF THE LEGAL AND REGULATORY ENVIRONMENT
EM-EP-530a.1: Discussion of corporate positions related to government regulations and/or policy proposals
that address environmental and social factors affecting the industry
CRITICAL INCIDENT RISK MANAGEMENT
EM-EP-540a.2: Description of management systems used to identify and mitigate catastrophic and tail-end risks

ESG Data TableESG Data Table
N/A
pp. 11, 12

ESG Data Table

p. 11

pp. 10-12
pp. 1, 5, 7-9, 13

p. 16

pp. 1, 5-9, 11-13, 15-16
pp. 5, 7, 9-13, 15​23

Readers Advisory
Forward Looking Information and Statements
This report contains certain forward-looking information and statements within the meaning of
applicable securities laws. The use of any of the words "expect", "anticipate", "budget", "forecast","continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans","intends", "strategy" and similar expressions are intended to identify forward-looking information orstatements. In particular, but without limiting the foregoing, this press release contains forwardlooking information and statements pertaining to: Tenaz’s capital plans and budget for 2022;
forecasted average production volumes for 2022; and the corporate strategy proposed by the new
management team.
The forward-looking information and statements contained in this report reflects several material
factors and expectations and assumptions of the Company including, without limitation: thecontinued performance of the Company's oil and gas properties in a manner consistent with its pastexperiences; that the Company will continue to conduct its operations in a manner consistent withpast operations; the general continuance of current industry conditions; the continuance of existing(and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes;
the accuracy of the estimates of the Company's reserves and resource volumes; certain commodity
price and other cost assumptions; the continued availability of oilfield services; and the continued
availability of adequate debt and equity financing and cash flow from operations to fund its planned
expenditures. The Company believes the material factors, expectations and assumptions reflected in
the forward-looking information and statements are reasonable, but no assurance can be given thatthese factors, expectations, and assumptions will prove to be correct.
The forward-looking information and statements included in this report are not guarantees of future
performance and should not be unduly relied upon. Such information and statements involve known
and unknown risks, uncertainties and other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking information or statements including, without
limitation: changes in commodity prices; changes in the demand for or supply of the Company's
products; unanticipated operating results or production declines; changes in tax or environmental
laws, royalty rates or other regulatory matters; changes in development plans of the Company or by
third party operators of the Company's properties, increased debt levels or debt service
requirements; inaccurate estimation of the Company's oil and gas reserve volumes; limited,unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance
coverage; the impact of competitors; and certain other risks detailed from time to time in the
Company's public documents.

The forward-looking information and statements contained in this report speak only as of the date ofthis report, and the Company does not assume any obligation to publicly update or revise them toreflect new events or circumstances, except as may be required pursuant to applicable laws.

24

Readers Advisory
Non-GAAP and Financial Measures
This report contains references to measures used in the oil and natural gas industry such as “funds
flow from operations”, “net debt”, and “operating netback”. The data presented in this report isintended to provide additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with International Financial
Reporting Standards (“IFRS”) and sometimes referred to in this press release as Generally
Accepted Accounting Principles (“GAAP”) as issued by the International Accounting Standards
Board. These reported non-GAAP measures and their underlying calculations are not necessarily
comparable or calculated in an identical manner to a similarly titled measure of other companies
where similar terminology is used. Where these measures are used, they should be given carefulconsideration by the reader.
Funds flow from operations
Tenaz considers funds flow from operations to be a key measure of performance as it demonstrates
the Company's ability to generate the necessary funds for sustaining capital, future growth throughcapital investment, and to repay debt. Funds flow from operations is calculated as cash flow fromoperating activities, before changes in non-cash operating working capital. Funds flow fromoperations is not intended to represent cash flows from operating activities calculated in accordancewith IFRS.
Capital expenditures
Management uses the terms “capital expenditures” as measures of capital investment in explorationand production activity, as well as property acquisitions and dispositions, and such spending iscompared to the Company’s annual budgeted capital expenditures. The most directly comparable
GAAP measure for capital expenditures and capital expenditures, net of dispositions is cash flowused in investing activities.
Adjusted working capital (net debt)
Management views adjusted working capital (net debt) as a key industry benchmark and measure toassess the Company's financial position and liquidity. Adjusted working capital (net debt) is
calculated as current assets less current liabilities, excluding the fair value of financial instruments.
Oil and Gas Definitions
Barrels of Oil Equivalent
The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. Per boe
amounts have been calculated by using the conversion ratio of six thousand cubic feet (6 Mcf) of
natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 Mcf to 1 bbl is based onan energy equivalency conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Given that the value ratio based on the current priceof crude oil as compared to natural gas is significantly different from the energy equivalent of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

25

Head Office
2500, 605 – 5th Avenue SW
Calgary, Alberta T2P 3H5
Telephone (587) 330-1714
Email Investors@tenazenergy.com
www.Tenazenergy.com