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SM Energy Corporation GHG Goals 2014

RESOLVED:   Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gases (GHGs), including methane emissions and flaring, resulting from all operations and that SM Energy report to shareholders by fall 2014 on its plans (omitting proprietary information and prepared at reasonable cost) to achieve these goals. 
WHEREAS:  The economic, business and societal impacts of climate change are of paramount importance to investors. Investors with $87 trillion in assets have supported CDP’s (formerly Carbon Disclosure Project) request to over 6,000 companies for disclosure of carbon emissions, reduction goals, and climate change strategies to address these risks. SM Energy has not responded to CDP’s survey request, leaving investors without the information they need to properly assess our Company’s exposure to these risks.  
Methane is a potent greenhouse gas, with 86 times the climate impact of carbon dioxide over a 20-year period. The oil and gas industry accounts for 70% of energy-related methane emissions. Studies from Cornell and the Universities of Colorado and Texas estimate highly varied methane leakage rates as a percentage of production, creating uncertainty and garnering attention from Forbes and The New York Times, where methane leakage was referred to as “the Achilles’ heel of hydraulic fracturing.”
Flaring is likewise a potent source of GHG emissions and other toxic air pollutants, as well as a waste of a valuable economic resource. Domestic flaring has propelled the U.S. into the top 10 gas flaring countries globally.  Approximately 29% of gas produced in the Bakken, a major production area for SM Energy, is flared; gas flared in North Dakota more than doubled between May 2011 and May 2013, with $1 billion worth of gas wasted in 2012.  
Reducing methane emissions in upstream oil and gas production is one of four policies proposed by the International Energy Agency (IEA) that “could stop the growth in global energy-related emissions by the end of this decade at no net economic cost.” The policies “rely only on existing technologies” and “would not harm economic growth.” The IEA recommends that producers “eliminate venting, minimise flaring,” and “consider setting targets on emissions as part of their overall strategic policies to win public confidence.”
Methane leakage and flaring have a direct economic impact on SM Energy as lost and flared gas is not available for sale.  We recognize some operations may incorporate best practice management; however, leakage risks at high growth or select geographies can negate best practices elsewhere. A disciplined business strategy with clear targets and goals to reduce GHG emissions from operations and products would help SM Energy stay ahead of regulatory and legal risks.  
We believe a report adequate for investors to assess SM Energy’s strategy would include a description of how it is: measuring and mitigating emissions including its methane leakage rate as a percentage of production; reducing flaring; adopting best practices and risk mitigation measures, addressing the worst performing assets, and reducing environmental impacts.