STEP Energy Services : 2023 ESG Report

2023

ENVIRONMENT, SOCIAL & GOVERNANCE REPORT

STEP ENERGY SERVICES

CEO LETTER

ABOUT STEP

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDIX

TABLE OF CONTENTS

Letter from our CEO	4	ENVIRONMENT	11	GOVERNANCE	36
ABOUT STEP	6	Fuel consumption	12	Corporate governance	37
and GHG emissions
				Ethics	38
What we do	7	Chemical management	15
				Cybersecurity	40
Our approach to business	8	Spills	18
Providing the energy	9	Water handling	20	APPENDIX	41
the world needs
		Air quality	22	Performance table	42
About this report	10
		SOCIAL	23	SASB index	45
				Back cover	47
		Employee health and safety	24
		People practices	31
		Community relations	33
		and investment
		Indigenous relations	35
		and employment

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STEP ENERGY SERVICES

CEO LETTER

ABOUT STEP

ENVIRONMENT

SOCIAL

GOVERNANCE

APPENDIX

FORWARD-LOOKING INFORMATION ADVISORY

Certain statements contained in this report constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation (collectively, "forward-looking statements"). These statements relate to management's expectations about future events, results of operations and STEP's future performance and business prospects.

All statements other than statements of historical fact are forward-looking statements. In particular, statements regarding anticipated efficiencies, rising global energy demand, potential reductions, projections, and the ability to support clients during an energy transition are forward- looking statements. The use of any of the words "anticipate", "capable", "continue", "expected", "forecast", "predict", "pursue", "will" and similar expressions are intended to identify forward-looking statements. These 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 statements. While we believe these forward-looking statements are reasonable, no assurance can be given that they will prove to be correct so they should not be unduly relied upon.

Additional information regarding forward-looking statements, risks, and risk factors can be found in STEP's Annual Information Form dated March 11, 2024, and in STEP's Management Discussion and Analysis for the three- and twelve-month periods ended December 31, 2023, which are both available under STEP's profile on SEDAR+ (www.sedarplus.ca).

The forward-looking statements included in this presentation are expressly qualified by the foregoing cautionary statements, and STEP does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

LETTER FROM OUR CEO

As we celebrate our 13th anniversary, I am very proud of where we are today. We have grown our company across Canada and the U.S. and navigated a lot of complexity during that time. Our success has been driven by technology, and, most importantly, by our professionals' commitment to flawless execution and living our values.

To celebrate our accomplishments and transparently report on areas where we can improve, I am pleased to share our third Environmental, Social, and Governance (ESG) report. In this report, you will see that our ESG activities are not separate initiatives but instead embedded into our operations, decision-making, and business strategy. This level of commitment and integration of ESG underscores our belief that it is the right thing to do, ensuring the sustainability of our company and the viability of our industry.

The culture we have built is one of our key differentiators. In 2023, STEP was recognized as a Great Place to Work®. That recognition has strengthened our dedication to creating a space where everyone can grow and thrive and confirms my belief that our team is made up of the best professionals in this industry. In this report, we have taken the opportunity to highlight five of our professionals and their careers at STEP. In these profiles, you can see the breadth and depth of their experience and backgrounds. Whether they recently joined or have been with us for a decade, they are all part of our STEP family and have made great contributions to the success of our organization.

As we often say, safety is no accident. Our professionals diligently and proactively choose each day to make STEP a safe place to work. As a result, our safety performance is best-in-class, and our lost time injury rate is 89 percent lower than the oil and gas industry in Alberta¹ and

90 percent lower than our industry in the U.S.² One of the areas that we pay particular attention to is driving. Our professionals drove over 29 million kilometers in 2023. To support safe driving, we provide driver training for our professionals at our provincially certified driver training school in our Red Deer Training Center. I am proud to share that in 2023, 85 professionals received their Class 1 license and 403 professionals attended driver improvement courses through our licensed school. In the U.S., many of our professionals join us with a commercial driver's license. They undergo additional defensive driving training, which is an internally administered program tailored for fleet drivers. This training is crucial to us as it promotes safe driving behaviors and helps prevent accidents, ensuring the safety of our team members and the communities we serve.

Our STEP professionals share a vision: supporting responsible energy development that improves the lives of our professionals, our communities, and our world. Close to home, we create more than 1,400 careers, give back to our communities, and are part of a complex value chain that provides essential resources to our society. The extreme cold we experienced this year in Western Canada a stark reminder of the collective effort and coordination required to keep our electricity and furnaces going, even during extended periods of bitter cold.

Conversely, during recent extreme heat events in the U.S., natural gas has played a pivotal role in meeting peak electricity demands, crucial for powering air conditioning systems and keeping homes and businesses cool and comfortable. Far from home, energy creates prosperity. Access to energy enables economic growth and improves standards of living across the world, lifting millions of people, particularly women and children, out of poverty. Together with our clients, we can provide the energy the world needs while taking steps to reduce the environmental impact of our operations.

• Source https://open.alberta.ca/dataset/4fb90b70-7660-4553-98fc-a59574f8fd5a/resource/bbefc756-35ae-47f8-9f48-1ebea552371d/download/jet-workplace-injury-illness-fatality-stats-provincial-summary-2022.pdf² Source https://www.bls.gov/web/osh/table-1-industry-rates-national.htm

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

LETTER FROM OUR CEO

Over the last several years, we have taken concrete steps to reduce the environmental impacts associated with our services. We have incorporated lower emission technology into our fleet in the U.S. and Canada, and as a result, at the end of 2023, 62 percent of our fracturing fleet was dual-fuel capable and 32 of our pumps had idle reduction technology. Dual-fuel equipment helped our clients displace 26.7 million liters of diesel with cleaner-burning natural gas in 2023.

Second, we have focused on reducing the amount of chemicals we use in our operations, eliminating 121 truckloads and the associated emissions from Canadian roads in 2023. Finally, we offer options for our clients to reduce their use of fresh water by providing technology that allows them to use more produced water, helping them continue to operate in areas experiencing water stress.

As I look to the future, I feel hopeful. The world is undergoing a rapid expansion in energy needs, especially in regions outside of North America. We will require various forms of energy - from both conventional and renewable sources - to meet that demand. North America can play a crucial role in providing that energy in a responsible way. At STEP, we will leverage technology and expertise to provide more efficient and lower-emitting services to conventional energy development and use our ingenuity to solve complex problems to support non-conventional energy development in the years to come.

I want to thank, as always, our professionals for their relentless commitment to safety, to each other and our company, to our clients for choosing STEP as your trusted partner, our shareholders for continuing to invest in our company, and our Board for providing us the guidance to move forward. I feel an immense sense of pride in our company and our industry. The work we do is essential and I look forward to sharing more with our stakeholders about the exceptional things to come.

Steve Glanville

STEP Energy Services - President and CEO

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

ABOUT STEP ENERGY SERVICES

STEP Energy Services is an energy services company that provides hydraulic fracturing, deep-capacity coiled tubing, fluid pumping, and nitrogen industrial services. Our combination of modern equipment, along with our commitment to safety and quality execution, has differentiated STEP in plays where wells are deeper, have longer laterals and higher pressures. STEP has a high-performance,safety-focused culture, and our experienced technical field and office professionals are committed to providing innovative, reliable, and cost-effective solutions to our oil and gas exploration and production clients. STEP is publicly traded on the Toronto Stock Exchange under the ticker symbol STEP.

1,428

3

9

1

Plays

STEP Head Office

Sales Office

Service Center

Training Center

professionals

offices

$946 MILLION		3
in sales	service lines

Note: all figures as of December 31, 2023

• HP = horsepower
• based on total HP

LEADERSHIP AND BOARD CHANGES IN 2023

service	training center
centers

strategically located in active North American basins

FRACTURING: 490,000* HP

of pressure pumping equipment

COILED TUBING: 35

coiled tubing units

ANCILLARY SERVICES

a fleet of fluid and nitrogen pumping equipment

62%**

dual-fuel equipment

can run on a

mix of natural gas and diesel

Montney

Deep Basin

Duvernay Viking

Calgary

Bakken

Powder River Basin

Niobrara

Uinta-Piceance

DJ Basin

SCOOP/STACK

Permian

Haynesville

Houston

Eagle Ford

San Antonio

■ STEP expanded its executive leadership team by introducing a new	■ STEP welcomed two additions to its Board of Directors.	■
position. Christine Crawford, formerly STEP's Director of Marketing	Rachel Moore, who currently serves as Executive Vice President,
and Communications, assumed the role of Vice President, Sustainability	Corporate Services at Ovintiv Inc., joined as an independent Director
and Communications. This addition to our leadership team reflects our	in October, bringing expertise from the production and energy services	■
commitment to sustainability as an important driver in our business	sector. In November, Edward LaFehr, Director of VAALCO Energy,
strategy, and our commitment to communicating our sustainability	Inc., joined as an independent Director, bringing an exploration and
progress to investors and stakeholders.	production perspective to STEP's Board of Directors.

Two Board members concluded their service on STEP's Board of Directors. Donna Garbutt retired from the Board in September and Jason Skehar retired from the Board in November.

Please read our Annual Information Form for any other changes in 2023.

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

WHAT WE DO

STEP's experienced professionals, highly specialized equipment, and industry-leading technologies help our clients develop oil and gas resources that would otherwise be technically or economically unfeasible. We specialize in hydraulic fracturing, coiled tubing, and fluid and nitrogen pumping services.

THE LOGISTICS OF A JOB

A typical fracturing job requires:

A typical coiled tubing job requires:

1-3

1-3

days to complete one well

days to complete the job

9

22-34

Client Wellsite

5-8

STEP service centers

STEP professionals

STEP professionals

in 24 hours

OUR SERVICES

HYDRAULIC FRACTURING

Hydraulic fracturing involves injecting a combination of fluids, chemicals and sand into a well at high rates and pressure to create a controlled fracture in tight rock formations, stimulating the flow of trapped hydrocarbons to increase the volume that can be recovered.

Our service centers provide equipment storage, chemical warehousing, maintenance space, and logistics planning space until our crews are ready for their next job.

4-22

fracturing pumps

3,700-75,000+

liters of diesel/day (operations only)

7-24

m³ of chemicals/well

300-10,000

tonnes of sand/well

2,500-8,500+

meters (8,000-28,000+ feet) total measured depth (TMD) of well

900-68,500

m³ of water/well (client provided)

3-6

pieces of equipment (on-site excluding pick-up trucks)

500-3,500

liters of diesel/day (operations only)

0-2

m³ of chemicals/well

2,500-8,500+

meters (8,000-28,000+ feet)

total measured depth (TMD) of well

COILED TUBING

Coiled tubing refers to a continuous string of steel pipe - typically 1 to 3.25 inches (25 to 83 millimeters) in diameter and upwards of 10,000 meters (32,800 feet)

• that is spooled on a large reel for use in a wide range of well intervention operations including milling plugs, annular fracturing, and workovers.

FLUID AND NITROGEN PUMPING SERVICES

Ancillary services primarily include STEP's fluid pumping and nitrogen industrial services. These services support fracturing and coiled tubing operations as well as a variety of stand-alone well stimulation, industrial plant and pipeline service applications.

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

OUR APPROACH TO BUSINESS

We attribute our continued success after 13 years of operations to our unwavering commitment to delivering exceptional services to our clients. We're committed to continuous improvement in our business practices, service offerings, and accountability. This biennial report is a part of that accountability framework, providing an overview of our environmental, social and governance progress and the steps we have taken to better our business practices.

In 2023, we updated our vision and purpose to align with our evolving aspirations (see below). While our values remain unchanged as they represent the core of our identity, our updated vision statement describes the role we aspire to have in the responsible development of energy. We cannot achieve our vision without our dedicated professionals. We are committed to fostering a workplace that celebrates our successes together, creates opportunities and builds a community of professionals united by shared values and a sense of belonging.

OUR PURPOSE

The essence of who we are and how we want to act in achieving our vision.

We are a community of professionals, united by our culture, core values and dedication to exceptional service. Through the flawless execution of our services, we deliver operational excellence, sustainable solutions, and maximize shareholder value.

OUR VISION

This statement paints a picture of the future we aspire to create.

Our vision is to be the trusted partner of choice in the pursuit of responsible energy development that improves the lives of our professionals, our communities, and our world.

OUR VALUES

Our values are our guiding principles and the foundation of our culture.

Safety

Safety is no accident.

Trust

Trust is built with character and competence.

Execution

Goal, plan, execute, learn, repeat.

Possibilities

Engaged professionals, discovering possibilities.

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

PROVIDING THE ENERGY THE WORLD NEEDS

Global energy demand is on the rise. The standard of living continues to improve for billions of people around the world, which requires more energy from different sources, including conventional fossil fuel resources as well as renewables such as hydro, solar and wind power. Companies operating in the oil and gas energy sector, like STEP, must develop hydrocarbon resources with the utmost responsibility, particularly during this time of energy expansion. We believe energy producers and service providers can work together to provide the energy the world needs while meeting stringent environmental and social standards.

Responsible energy development involves adopting practices that minimize the impact on the environment, enhance safety, and contribute positively to the communities where energy development operations occur. To minimize the environmental impact of our operations, we are committed to the continual improvement of our processes and equipment. To protect the health and safety of our team and the communities in which we operate, we collaborate with our professionals, clients, and suppliers.

Over the next few years, we believe the focus should be responsibly managing growing energy needs while actively working towards a more sustainable and cleaner energy future. As part of our role in traditional energy development, we aim to empower clients in safely, efficiently, and economically bringing North American energy to market. We are guided by three key beliefs:

01 | ENDURING EXPERTISE

As our energy sector continues to evolve, encompassing both renewables and conventional resources, our skilled oilfield services workforce will play a pivotal role in tackling industry-wide technical challenges. STEP's experienced and innovative team has consistently set us apart in challenging geological and operating conditions, and we remain committed to utilizing this expertise to provide solutions that drive the success of the evolving energy sector.

02 | CONTINUOUS IMPROVEMENT

We differentiate ourselves by constantly improving and innovating, making incremental changes and adopting next-generation technologies. This approach extends to addressing environmental, social, and governance (ESG) matters, and actively reducing our environmental impact while supporting our clients in doing the same.

03 | COLLABORATIVE IMPACT

Rooted in the belief that significant achievements result from collaboration, we believe that by working together, energy producers and service providers can meet the world's energy needs while improving environmental and social outcomes.

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STEP ENERGY SERVICES	CEO LETTER	ABOUT STEP	ENVIRONMENT	SOCIAL	GOVERNANCE	APPENDIX

ABOUT THIS REPORT

The goal of this report is to provide shareholders, clients, our professionals, and other stakeholders with information about our environmental, social and governance strategies, activities, and performance.

DECIDING WHAT TO REPORT

In 2021, we conducted an internal materiality assessment to identify and prioritize our material ESG topics. In a sustainability context, material ESG topics are topics that can significantly impact our ability to create value and are of interest to our key stakeholders. Topics were sourced from the Sustainability Accounting Standards Board(SASB) Oil & Gas - Services Standard, STEP's business model, and reviews of industry peers. Key stakeholder perspectives considered during the assessment included clients and shareholders. The results of the assessment were reviewed and approved by our executive team and material ESG topics have been covered in this report.

In 2023, we reviewed our material ESG topics to ensure they reflect current stakeholder expectations and the changing business environment, and they remain unchanged. Please note that materiality for this report is different than how we address materiality for disclosure requirements under securities laws.

REPORTING SCOPE	RELEVANT TOPICS
■ Unless otherwise noted, this report covers quantitative
and qualitative performance for the year ended			01
December 31, 2023. When available, historical data
	ENVIRONMENT
is provided for the two previous years.
■ This report covers ESG activities and data for our
Canadian and U.S. operations. Exceptions are noted.		■ Fuel consumption and greenhouse gas
■ Unless noted, data does not cover third-party			(GHG) emissions
service providers.		■	Chemical management
■ Financial data is in Canadian dollars and environmental		■	Spills
data is in metric units.		■	Water handing
■ The accuracy of this report is important to our company.		■	Air quality
Senior management and relevant subject matter experts		■	Energy transition
within STEP have reviewed all information and believe
it is an accurate representation of our performance.
Third-party assurance of this report was not conducted.			02
■ The terms STEP, our, we, us, the company and the
	SOCIAL
corporation refer to STEP Energy Services Ltd.
ALIGNING WITH ESG REPORTING STANDARDS		■ Employee health and safety
We cross-referenced this disclosure to the SASB Standard		■	People practices
for Oil & Gas - Services, pages 45-46.		■ Community relations and investment
		■ Indigenous relations and employment
			03
		GOVERNANCE
		■	Corporate governance
		■ Ethics (including responsible supply chain)
		■	Cybersecurity

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