Sustainability Report 2017 Highlights

Exploring Potentials, Propelling the Future. Chairman’s letter There is no doubt of the trying year we have witnessed and the challenges ’s oil and gas industry faced both nationally and internationally. I am proud to see that Dana Energy has continued to grow and progress even during these turbulent times. This wouldn’t have been achieved if it wasn’t for our core values, team spirit and the right standards guided us.

Successful business operations are based on responsibility. We see sustainable development as a responsibility, not just in economy, but the inclusion of its social, environmental and trade implications. It also means to maintain and promote the current economic situation, without suffering the environmental damage.

Iran is a country endowed with rich natural resources, including high amounts of fossil and renewable energies and a young growing population. These are key assets for a bright future. Dana Energy sees itself as a key player in exploring these potentials and propelling the nation’s future.

Our 2017 Sustainability Report Highlights provides a view of how we work with regards to safety and performance to meet company, employee, shareholder and society’s interests whilst creating value in the energy sector. This will help us in getting closer to our goal of an established comprehensive sustainability reporting.

Dana Energy has and will continue to play a fundamental role in the growth of society and the environment it encounters whilst improving quality of life and powering it’s economy. I am proud of what we have achieved this year and happy to share this report with you that shows how we approach challenges, the actions we’re committed to taking and the performance of the capable teams across the business.

Mohammad Iravani Chairman & CEO Introduction Sustainability approach At Dana Energy we achieve success through technological Our position as a leading private company in the oil and expertise, strong partnerships and responsible operations gas industry, requires us to act responsibly for long-term to ensure we conduct our business in a manner that is corporate success. For this reason we have integrated compatible with the environment and the communities aspects of sustainability into our corporate strategy and into in which we operate whilst delivering value to our all of our business activities. stakeholders. Sustainability to us means combining economical, With nearly 20 years of experience, Dana Energy makes environmental and social responsibilities to allow us in an important contribution to the supply of energy through assessing opportunities and risks early on. This enables us its different business segments. Our prosperity is based on to create value for us, our partners, our employees, and the secure long-term supply of energy by striving to protect society as a whole. the environment through using natural resources more effectively and benefiting society’s broader sustainability Dana Energy promotes sustainability by: objectives. • Identifying and managing risks and opportunities across We work in areas that span a wide range of natural, the corporate value chain economical, cultural and social conditions. We undertake • Applying integration goals into core business decisions environmental, socio-economic and health assessments and providing sustainable solutions to understand the potential impacts of our operations. We • Implementing internal mechanisms to ensure incorporate this understanding into our project management sustainability is valued by minimizing our ecological plans to effectively mitigate risks. This allows us to identify footprint and using resources efficiently opportunities and risks early on in the planning process and take appropriate steps. At Dana Energy, people come first and our commitment to their safety and health is an integral part of our culture. This is fundamental to Safety, health and our long-term business success. As such, we promote this culture by attracting, developing and retaining individuals who share our core values the workplace and seek nothing less than operational excellence. This is true along our value chain which includes our employees, suppliers and contractors.

Our HSE team conduct their routine inspections and controls to provide a positive, safe and secure working environment for employees at our central office in Tehran. We are committed to provide a positive, safe and secure working environment for our employees, clients and Personnel safety subcontractors throughout our national and international Our workforce safety programs have been implemented and operations. When an accident or near miss does occur, refined over many years of experience. We provide the tools, we investigate the incident and all potential outcomes training and culture that allow our workforce, suppliers and and evaluate barriers to preventing future occurrences. contractors to execute work safely and intervene or prevent Hence, employing the right people and coaching them an incident from occurring. Regardless of role, everyone is ensures continuous improvement, always. responsible at Dana Energy. Therefore, our employees are committed to continuous improvement by sharing knowledge across a single international organization. Total recordable incident rate Lost time incident frequency rates

*Dana Energy’s total recordable incident rate per 200,000 work hours. Workforce *Dana Energy’s Geophysical Services LTIFR compared with IAGC . includes employees and contractors. Incident include both injuries and illnesses, compared with the IADC workforce benchmark. Process safety We have a comprehensive approach to managing process safety. Collaborating with our peers and industry associates on process safety is paramount to sharing lessons learned within our company and across our industry. Dana Energy serves as a contributing member to a variety of committees and an active promoter of safety in the industry. This is done by sharing experiences and knowledge about process safety, hazard identification and industry best practices. This helps shape risk management across our operations. In addition, we take great care in the design and safety of our facilities and that they “We have an extensive safety management program in operate in a way that no risks are associated. All our facilities place across our plants, with the aim of creating a zero- pass through a rigorous safety analysis system both by our harm environment. We believe that risks can be managed and accidents are preventable. internal and external auditors. To keep up with new standards and regulations we update our safety and management system Our processes include identification and evaluation certificates. In 2017 we renewed our Quality Management of all potential hazards, with management of risks to System and HSE Quality Management certificates. international standards. We record and communicate our health, safety and environment (HSE) performance on a regular basis, and we have a policy of continuous improvement through incident management procedures Emergency preparedness & response that identify and correct deficiencies. Dana Energy maintains a strong emphasis on training for Our Health and Safety Management System, OHSAS effective emergency response. We routinely train emergency 18001, helps us continually to improve our systems, support group personnel on a range of possible scenarios, our technology and our employees` skills, as well as including simulated spills, fires, natural disasters and security promoting safety awareness.” incidents. Regardless of the size of an incident, all our facilities have access to an array of trained responders, including our Rasoul Tavakoli Emergency Response Teams (ERT), which provide rapid tactical HSE Manager, Drilling Operations support when needed. Health and wellness Our people are our most valuable asset, hence, their safety and health is our top priority. We apply public health and safety procedures to all aspects of our operations, from day to day activities to complex offshore drilling operations. We are striving to continuously learn, share and improve personal safety efforts by putting safety leadership in our culture, fully absorbing all employees in safety and providing a safe working environment for all employees and contractors. Our goal is to address the diverse health risks prevalent in the locations where we operate and to protect the health, safety and productivity of our employees whilst preserving our business operations. We carried out a Malaria Initiative in our Ratana Project, Pakistan in 2017. This included training, screening, vaccination, treatment, and rapid diagnosis as well as educating all our employees at Ratana We aim to attract and retain talented people from diverse camp. As a result we haven’t had any cases of malaria amongst our backgrounds who share our core values and help them to employees. develop their skills and attributes. We focus on creating an inclusive environment where every one of our employees is valued and has the opportunity to reach their potential and contribute to our business success. Diversity and inclusion Diversity and inclusion is embedded in our employment strategy, invest in young talents by providing classical vocational which is derived from our corporate strategy. Adhering to this training and entry programs for interns. Every year we strategy allows us to achieve our goals. To show our commitment we take on 10 young talents and students from Iran and support local employment, promote career development and lifelong other countries in various programs to give them the learning for our employees. We strive to create and maintain a necessary knowledge and training to progress in this diverse workforce that represents the community we do business in, industry. by utilizing a range of programs, activities and investments. We also Young talents In the competition for the best employees and managers, we want to recruit qualified talent at a very early stage. Dana Energy promotes career development and lifelong learning of its employees and managers in all levels of its organization.

Number of employees and average age of the company

1,650

2016 46

1,500

2017 39

No. of employees Average age

Resource availability and climate change are two major challenges we all face. In addition, we are conscious of the potential environmental impact of our Environmental business activities. We tackle these challenges through our actions and through the application of Iranian and international standards. Dana Energy fully supports performance this policy and encourages all employees and contractors to take a proactive approach to environmental and climate protection.

We do our best to minimize our environmental impact when it comes to our seismic projects. Considering the path these projects go through, from plough lands to mountainous climates, leaving no footprint is a tall order. Dana Energy considers risks at every stage of development, Green business and we continuously work to mitigate those risks and improve our environmental performance. Through clear As part of our commitment to operate in an environmentally specifications and systematic management, we aim to responsible manner, we have set ourselves the goal of reduce our ecological footprint and use resources efficiently. having our management system certified to the International We integrate stakeholder feedback and other due diligence Environmental Management System standards (ISO 14001). into our processes to ensure we operate in a safe, respectful and environmentally protective manner. We recognize our commitment to the principles and requirements of green business. During the first six months To analyse the effects of measures taken, we regularly of 2017, in order to achieve our sustainable development review our performance. Our environmental management goals and plans, we implemented the strategies needed to policy monitors our performance in five key areas: modify the pattern of consumption across our business. • Water management • Air emissions • Environmental Incidents • Spill performance • Waste management Water management Water is one of the world’s most valuable resource. Protection of this natural resource is of high importance for Dana Energy. Therefore, each of our relevant sites has a water protection system in place, particularly in water stress areas. We constantly endeavor to save as much water as we can by using innovative technologies or by recycling drilling fluids or deploying recycling systems. This connection between energy “The drought in Iran and the long-term sustainability of water resources are key issues for us. Our goal is to and water highlights the importance of these resources for maintain water and protect this natural resource across society and the environment. In 2017, total water consumption our value chain. at our operations was 576 million cubic meters, which was an We hope to stand as an example in the oil and gas improvement on previous year’s results. industry for sustainable consumption and steward resources for future generations. We set ourselves commitments and objectives for real progress: from Air emissions managing our natural resources sustainably to operating more efficiently. Our objective is to work towards a zero In accordance with regulatory requirements and our water waste policy.” commitment to climate and environmental protection, we insist on reducing air emissions associated with our operations Hedieh Deyhim and the products we deliver through our trade division. We Senior CSR & Sustainability Specialist employ Pollution Control of Emissions policy and one of the most important goal is the prevention of emission of gaseous pollutants like SO2, CFC and NOx. Our policy is to reduce Ozone depleting gas (mainly in cooling), Environmental incidents while at the same time taking into account safety aspects. Dana Energy’s environmental management system requires In accordance with EN3781:2008 and ISO 817:2009, we use that staff report all environmental incidents related to products that reduce CFC emissions as much as possible and activities promptly. It is imperative that the incident’s act in a manner that is Ozone friendly through out all our potential risk is carefully determined and reported as soon activities. as possible via The Environment Incident Procedure. Spill performance Dana Energy’s Project Management Team recognizes the importance of integrating sustainability into their planning at the earliest possible stage of projects to prevent any damage to the environment. Because a significant portion of our upstream operations are located offshore, we have developed specialized capabilities and tactics to improve offshore oil spill response and risk mitigation. We have a proven track record in the industry for oil spill response and control plan. We take a rigorous approach to assessing and managing the potential impacts of a spill on water or land. We implement preventive measures to avoid spills and continually seek to improve our risk management, operational integrity and containment capabilities. Waste management COSL Force jack-up rig in the during South We consider an efficient waste management to be a core element Pars Project, phases 17&18. This project was completed of operational excellence. This includes identifying, controlling and in a resource-efficient way with low emission and least disposing of pollutants (air, water and soil) associated with project environmental damage. and oil product shipping. We recover and dispose waste according to applicable national legislation and international compliance to ensure that waste is disposed in an environmentally compatible and appropriate manner across our organization. Our Total Waste saw an improvement in 2017: • Used oil: 4.95 kg • Total solid waste: 467,500 kg • Total diesel consumption: 1,375 million cubic meters • Total gasoline consumption: 1,650 million cubic meters Dana Energy seeks not only to contribute to the social and economic growth of the local communities we operate in, but also their boarder sustainability Community and objectives. Understanding and addressing the needs and wants of the local communities is critical to our long-term business success. Our approach to social impact engaging with local communities and responsibly managing our impacts on them whilst making valued social investments, helps us to create and sustain a productive relationships, which is mutually beneficial.

The local “under 21s” football team in Khabr village, Kerman where we have invested in reviving schools for a brighter future. Dana Energy strives to achieve border sustainability objectives of the communities we come across. We work in communities, each with their own unique culture, needs and Community relations challenges. In all cases, we maintain our corporate-wide commitment to responsibly manage our social and environmental impacts, uphold We actively engage with the various stakeholders respect for everyone and make social investments by tailoring our efforts in the communities we operate and include their to individual community’s for their social and economic growth. feedback into our decision-making processes to identify any issues or concerns early on in a project. We provide local groups and individuals Our role in society with communication channels including community and individual meetings to voice their Dana Energy strives to be a world-class operator, a responsible concerns. We want the local community to see corporate citizen and a good employer. We believe that the societies us as their neighbor who is always ready to help and communities we work in should benefit from our presence. That is when needed. That is why we actively participate why we support their development. We rely on an open cooperation and in bilateral exchange, project related meetings dialog with the local communities to discover the challenges that exists and information events to and how we can contribute to solving them. The aim of our commitment avoid and reduce our impacts on their is to create added value for the community and for our company by community. growing their economy through employing local staff, helping to develop In addition, averting delays, reducing costs and national and local suppliers and appropriate social investments. preventing escalation of issues are benefits of this kind of an approach.

Our clear and consistent approach helps our employees, partners and contractors effectively manage socio-economic issues. The socio-economic aspects of our business fall into five broad categorize as seen above. Indigenous people Social investments Our operations sometimes take place in areas inhabited or In addition to addressing community’s priorities where historically used by indigenous people. In these locations, we do business, we partner with governments and we start by identifying indigenous populations and then nongovernmental organizations to help enhance the engaging with them in an open and inclusive manner whilst quality of life in communities and strategically invest in respecting and considering their traditions and cultures. social programs to answer their community needs. We are When working with indigenous people, one of our key truly committed to helping people to lead healthier and objectives is to determine how they prefer to engage. happier lives. We are a highly people-oriented business and For example, communities can decide if they want us to corporate social responsibility (CSR) is an integral part of the meet with elected leaders, community elders or other way we work, at every level of the company. We believe we representatives, and whether those engagements should be can make a profound impact on our world given our scale, conducted in a public forum, either formal or informal. business values and commitments.

Bibi Hakimeh 3D seismic project was one that spread across four Prior to the start of the operation, the project team try to anticipate provinces, each with different communities. It’s one of our proudest the problems and obstacles that the project would face with field qualities that we know how to engage with the different communities identification in the project. We also look into how we can enhance we encounter. the quality of life in these communities. Benefiting society The quality of our social activities is measured by the positive impact they generate for society. For example, during the Bibi Hakimeh project, after talking to the locals, we discovered that their biggest obstacle was high number of road accidents that occurred along the dirt road into town. Our project team took the initiative to asphalt the dirt road. This resulted in a decreased number of accidents and strengthened our relationship with the larger community. Improving quality of life At our sites, we support regional projects that benefit disadvantaged people. Water health is an issue in some of our projects and the first concern for our HSE teams. In Pakistan and during our Ratana project, we made an important decision to improve the health and safety of not only our workforce there, but the entire local community. This was achieved through providing everyone with healthy water. We feel connected to the regions which we operate. Above is the tree-planting activity during the Bibi Hakimeh project. More than 2,500 trees were planted in the Sustainable development of another kind rangelands of this region. Our business brings us into contact with various stakeholders. Hence, we look at achieving sustainability beyond the scope of our in Kerman province. As well as raising awareness for organization and projects, but also on a national scale. In 2017, the cause, we have invested in the reconstruction Dana Energy got involved in promoting an idea that focused on of two abandoned schools into advanced and fully “sustainable development through villages“. We have become the equipped learning centers for all the villagers and its ambassador for spreading this movement for a village called Khabr surrounding communities. Dana Energy recognizes that the positive local impact of our supply chain investments can be amplified by sourcing suppliers who share our core values and sustainability Supply chain approach. We strive to promote a healthy supply chain that respects the society and environment while creating opportunities for underrepresented groups. As part of our management supply chain management efforts, we have taken steps to foster a commitment to sustainability with our key suppliers.

Planning and management of mega projects like South Pars needs excellent coordination amongst services providers and suppliers of materials, additives, fuels, etc. Supply chain management We seek to build and maintain a qualified and globally competitive supply chain wherever we operate. Our goal is to nurture entrepreneurship and foster competitive businesses capable of contributing to the sustainable economic progress of our country and the region we operate in. Dana Energy works with a range of stakeholders, including non-governmental organizations and local communities to develop local vendors for the supply of goods and services. A competitive advantage that we have is that our business partners share our philosophy and are familiar with standards and act in accordance with them. We know the success of our operations and reputation “Powered with our ERP application from IFS AB, we is based on a responsible value chain, hence, our criteria for have an integrated control over the huge amount of selecting suppliers and contractors are not only economical in data regarding material procurement and thousands of nature. We also assess existing and new supply relationships subcontract’s items which enables us to optimize our cost in terms of compliance, environmental protection, safety, and structure. adherence to social standards. Dana Energy has collaborated closely with more than 7,000 suppliers of goods and services and the success of our business is influenced by the many valued suppliers Promoting supplier diversity who support our operations. Meanwhile, as part of our supply chain management efforts, we have taken steps We regard diversity in our suppliers as an enrichment. We aim to foster a commitment to sustainability with our key to benefit from different perspectives that can come from suppliers and we encourage our suppliers to take action promoting this culture. We value our diverse supply chain and to improve environmental performance, as embedded have cultivated this approach from the start. through supplier requirements within our subcontracts.”

Hessam Nedaei Hour Quality Assurance Manager Good corporate governance creates a business that is conducive to long-term investments and sustainable economic growth. Dana Energy implements a variety of corporate Corporate governance practices, underpinned by a board comprised predominantly of independent Directors. Our Code of Conduct, adopted and administered by the Board of Directors, governance cover a range of topics to tackle issues including labor, diversity, the environment and anti-corruption. This provides us with an overview on our corporation’s conduct.

Dana Energy’s headquarters in Tehran, Iran. Commitment, Integrity and Knowledge are the values of our corporate culture. Code of Conduct Our Code of Conduct ensures we meet our standards that are aligned with legal regulations and acts as a guideline for the company. This applies to all Dana Energy employees who firmly comply and embed these standards in their daily business. Members of the Board of Directors are also obligated to follow these principles to prevent violations from the outset. Compliance culture

We have spent many years developing and embedding a “I have served in various financial positions and worked consistent and reliable application for compliance standards. with individuals from many different backgrounds and Along the way we have been successful in developing and cultures. establishing an active culture of living up to these standards. All employees take part in basic compliance training, I cherish this community of talents with different skills and approaches who work in this company. More refresher courses and tutorials upon joining and during their importantly, these capable and experienced people are employment. all engaged in expanding our business objectives. This To ensure we operate at the highest level of operational is accomplished by fostering an environment where integrity and ethics, Dana Energy’s Board of Directors review everyone can contribute and can develop both personally the standards annually. This keeps us significance and truthful. and professionally.” We observe the standards of integrity and ethics to develop, Sadegh Shirazi approve and implement projects. Dana Energy requires that Corporate Finance Manager employees, officers, directors and those working on our behalf comply and commit to all applicable laws, including anti-corruption, anti-trust, anti-boycott, trade sanctions and export control laws, as well as laws in other countries that are applicable to our business. Board of Directors Dana Energy is a two-tier corporate chaired by Mohammad Strategic Committee Iravani. The Board meet regularly to discuss reviews and Dana Energy’s strategic committee assists the Board in reports on the businesses and plans of the company. Our carrying out its oversight responsibilities relating to potential Board of Directors provide independent oversight of the mergers, acquisitions, divestitures and other key strategic corporation’s affairs. The Board also routinely has committee transactions outside the ordinary course of the corporation’s meetings, where issues and assessments by Dana Energy’s business. five committees are reviewed. Compensation Committee The compensation committee assists the Board to conduct its responsibilities with respect to determining Dana Energy’s compensation structure and policy. Our business committees CSR and Ethics Committee The primary function of the corporate social responsibility Committee Composition and ethics committee is to assist the Board of the company Dana Energy’s committee structure is designed to be a in reviewing the policies including sustainable development consistent and clear framework to carry out certain oversight and the health, safety and environment policy and as well functions on behalf of the Board. It is comprised of four as majorissues of ethics and public concern. committees.

Audit Committee The purpose of the audit committee is to assist the board of the company in fulfilling its responsibilities in relation to internal control and the integrity of the companies’ financial statements. Performance data table*

2015 2016 2017 Safety, health and the workplace Total man-hours 8,043,896 6,080,016 6,847,258 1Fatalities — employees 0 0 0 Fatalities — contractors 0 1 0 2Fatal accident rate (Fatalities per 100 million working hours)/Man-hours (FAFR) 0.00 16.45 0.00 3Total recordable case frequency (TRCF) 9.47 24.63 12.37 4Lost time injury frequency (LTIF) 9.74 11.80 4.23 5Total recordable occupational illness frequency (TROIF) 0.00 0.00 0.00 Gender diversity Senior/professional positions (% women) 10 10 10 Employee ratio (% women) 24 25 26 Environmental performance Fresh water consumed (m3) 0.06 0.04 0.05 Total waste (Tone) 1.00 0.82 0.77

1 Work-related injury or illness that results in death. 2 Includes employees and contractors. 3 Total recordable case frequency= Number of LTI + MTC + RWC X 1,000,000 / Man hours 4 Lost time injury frequency (employees and contractors). 5Total recordable occupational illness frequency (employees only). *Performance data are reported for our management and operational control. Some uncertainty exist in performance data, depending on measurement methods. About this report:

Dana Energy 2017 Sustainability Report highlights, gives information regarding economical, environmental and social activities within the year. This reports covers the broad sustainability strategies, uses examples and indicators to illustrate how corporate responsibility contributes to Dana Energy’s long-term success.

This report includes Dana Energy and its subsidiaries.

No. 140, Shahid Dastgerdi St., Shariati Ave., Tehran, 1919943555, Iran

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