Engaging oil and gas companies on fracking

Prior to engaging companies on fracking, investors should establish the company’s starting point and consider its operating environment.

They should:

Identify a company’s exposure to factors that could restrict fracking activities. Is it in a position to engage on fracking at all? For example, some companies may have recently scaled back their shale operations because of the low oil price.
Research the company to identify gaps in disclosure and practices and operational risks.
Use the gap analysis to prioritise appropriate questions under relevant focus areas.
Identify feasible next steps to be agreed with the company.
Prepare for challenges regarding any cost cutting, high staff turnover, increasing regulation, changing priorities and reputational pressures.

When engaging with service providers, consider the specific role they play in the fracking operation concerned and the expertise they deliver. A service provider’s responsibility and accountability will vary and depend on the operation process, its location, and relevant regulation. Investors should be aware that service providers may not be required to implement all indicators as some will not be in their remit.

However, service providers should commit to operating responsibly and increasing their transparency. In addition to meeting the producing company’s requirements and standards, service providers have a role in adopting and disseminating current best practices as part of the operations for which they are responsible.