In 2022, we are the very ones realizing SK Earthon Financial Story!

Dear SK Earthon Members,

In the new year of 2022, I genuinely desire for SK Earthon to gain momentum from the spirit of a tiger and achieve incredible results in all fields as planned, and for all of our members to be filled with strong confidence and gratifying experience in the course of constructing history.

2021, the first year of rising to New E&P against difficulties

Looking back, we struggled to continuously upgrade our financial story through numerous introspections and heated discussions toward our mid-and long-term goal of securing self-sustainability at an inflection point, or the irreversible and inevitable grand change known as “Carbon to Green,” and embarked on a long journey from the spin-off on October 1, 2021 to chart out the future of technology-based E&P and CCS specialized enterprise SK Earthon.

In fact, SK Earthon’s journey began in early 2021, and we have achieved modest and large results in a variety of areas, all thanks to your enormous dedication and ceaseless efforts.

First, with the announcement of the FID for the Block 17/03 development project in China, we were able to take a big step forward as a full-cycle operator. We had various obstacles in the development project of Block 15-1/05 in Vietnam, but we overcame them and eventually received the final agreement from the partner company on the FDP with Vietnam government approval to progress.

We also made notable progress in terms of exploratory block operating rights. We have successfully identified various structures with hydrocarbon potential in Block 26/26 in China and Block 16-2 in Vietnam, and we intend to perform exploratory well drilling operations sequentially from the middle of this year until the end of next year.

2021 was particularly significant, given SK Earthon added a CCS-based green area to the current upstream as a new growth axis and began full-fledged operations. Despite our early stage, we are laying a solid basis as a carbon solution provider, researching numerous CCS projects in and out of South Korea, creating networks, and collaborating in government-led national projects to ensure BM innovation.

In the meantime, we have been putting financial flexibility into place for portfolio transformation. Though we have settled for partial success for the time being due to geopolitical complications and the pandemic situation in the relevant countries, if we approach in a more strategic and precise manner from this year, we will undoubtedly complete the portfolio transformation.

2022, Critical Time to Secure Sustainability

Dear beloved members,

2022 is the first full year that we operate under the banner of SK Earthon and a crucial year to consolidate a basis for sustainability, which is also our goal for 2023.

The most important thing is to smoothly meet all of the milestones for the Block 17-3 development project in China, which is scheduled to begin production in 2023. As we established a lofty goal of reaching 70% of the accumulated advancement rate by the end of the year, let us make every effort to accomplish it. I also urge you to devote all of your efforts to ensure that another development project, Vietnam’s Block 15-1/05, leads to an FID declaration and the start of full-fledged development.

This year, we plan to conduct drilling campaigns for two holes in exploratory wells in Block 26/26 in China. As the G&G study of the area signaled a high exploration potential, we look forward to another good news to expand the upstream value in China. As we expect a high potential for Block 16-2 as well, the first project as the holder of the operating rights in Vietnam, I encourage you to be prepared for the scheduled drilling campaign for the exploratory wells next year.

This year is also pivotal for obtaining significant results in the CO2 storage-based CCS industry. In terms of the national project, promising candidate storage sites will be reassessed with exploration drilling in the West Sea, while storage candidate sites in the East Sea will be identified through a joint research study on storage site assessment. I have high hopes for SK Earthon to secure prospective storage sites in both the West and East Seas, allowing it to be the first mover in the domestic CCS market.

Furthermore, we will aggressively pursue opportunities to participate in international CCS projects. We will investigate primary business opportunities in regions where CCS projects are most active, such as Australia and Malaysia, while widening our quest to encompass the East Asian region, which includes China and Vietnam.

In 2020, we will not be sluggish in transforming our portfolio in preparation for the successful implementation of the SK Earthon Financial Story. We will prepare not only the farm-out of the blocks in which we have a big stake and a sensible exit from the assets in Peru, but also the overall plans for SK Earthon’s fresh leap toward a bright future. In doing so, we should achieve visible results throughout the year in order to accomplish our portfolio transformation at the right time.

Best expert organization based on technology and operation capability, with a strong co-op based organizational culture

I am confident that our SK Earthon members are the best oil exploration and CCS experts in South Korea.

The various tasks and goals that we are about to accomplish, however, cannot be completed by the skills of a single or a couple of people. It will only be fulfilled when the expertise and passions of every member of our organization are combined as an organizational competence. Furthermore, if your individual abilities are pooled in a balanced manner and we develop a cooperative, robust corporate culture, the outcomes will be even greater. Let us work together to establish such an organizational culture at SK Earthon.

Dear SK Earthon Members,

due to the prolonged pandemic crisis, various indicators have moved outside of our forecasts, and the market condition may continue to pose challenging hurdles. We may face and be disheartened by hardships along the way, but remember that you are not alone on your journey, but are accompanied by your SK Earthon colleagues. And I will always take the lead, even if it means standing in the back, to lead and support you to the best of my ability. Bear in mind that our financial story is a long journey and we should never quit in the middle of it, but rather continue on.

Best wishes and a happy new year to every one of you and your families!

January 1, 2022

Myeong Seong

CEO & President of SK Earthon