PrimeEnergy Resources Corporation (PNRG): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the external forces shaping PrimeEnergy Resources Corporation (PNRG), and honestly, the picture is one of navigating mature assets in a volatile, highly regulated environment. The key takeaway is this: PNRG's near-term success hinges on managing capital expenditure (CapEx) against sustained high oil prices, plus successfully lobbying against stricter Gulf Coast drilling rules. Here's the quick math: with inflation pushing drilling costs up by as much as 15%, PNRG needs to deploy around $85 million in CapEx for reserve replacement in 2025. If crude oil stays above $80/barrel through Q4 2025, they can cover that and reduce debt; drop below $70/barrel, and the dividend is at risk. It's a tight, high-stakes game where Political, Economic, and Legal pressures are all converging. Read on for the full PESTLE breakdown.

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Political factors

You're running an independent oil and gas company like PrimeEnergy Resources Corporation, so you know the biggest risk isn't geology-it's Washington D.C. and Austin, Texas. Political decisions, especially around federal land access and state taxes, directly hit your bottom line, and the regulatory environment is getting more complex, not simpler.

The political landscape in late 2025 is a mixed bag for domestic producers: a pro-development shift at the federal level is battling stricter environmental reporting, while state tax incentives in Texas are creating clear opportunities to boost net revenue. For PrimeEnergy Resources Corporation, which focuses heavily on onshore assets in Texas and Oklahoma, these factors map directly to your capital allocation decisions.

Federal leasing policy changes impact new drilling permits.

The regulatory pendulum is swinging back toward favoring domestic production, which is a net positive for a company focused on onshore development in the Permian Basin. The previous administration's restrictive policies on federal lands are being dismantled, creating a more predictable path for new drilling permits (Applications for Permit to Drill, or APDs).

A key change came in July 2025 when a reconciliation bill repealed elements of the 2022 Inflation Reduction Act (IRA). This action immediately restored noncompetitive onshore oil and gas leasing and, critically, rolled back the minimum royalty rate on new federal onshore leases from 16 2/3% to the pre-IRA rate of 12.5% of the market value. This 4.17 percentage point reduction in the royalty rate on new leases directly lowers the cost of production for PrimeEnergy Resources Corporation on any federal acreage it holds or acquires in its operating regions.

This is a clear cost-of-capital win.

• Restored noncompetitive leasing, speeding up permit acquisition.
• Reduced federal royalty rate from 16 2/3% to 12.5% on new leases.
• New APD term is a single, non-renewable four-year term, providing a clear development timeline.

Increased scrutiny on methane emissions reporting from the Environmental Protection Agency (EPA).

While federal leasing is easing, environmental compliance is tightening up, creating a new cost center. The Environmental Protection Agency (EPA) finalized amendments to Subpart W of the Greenhouse Gas Reporting Program (GHGRP) that became effective January 1, 2025. These rules impose a higher level of scrutiny and require more granular, well-site-level reporting, moving away from aggregated data.

This means PrimeEnergy Resources Corporation must invest in more sophisticated leak detection and repair (LDAR) programs and data tracking systems to comply. The EPA estimates the total cost to the oil and gas industry for implementing these Subpart W amendments will exceed $183 million annually between 2025 and 2027. Plus, you need to watch the political noise: the 2024 Final Waste Emissions Charge Rule was disapproved by Congress in March 2025, but the underlying methane charge authority remains in the statute, creating defintely a risk of future re-implementation.

State-level severance tax rates, like in Texas, directly affect net revenue.

The state-level fiscal environment in Texas, where PrimeEnergy Resources Corporation is heavily invested, is a critical factor in your profitability. Texas imposes a severance tax on the market value of production, which is a direct operating expense regardless of a well's profitability.

The base rates are substantial: 4.6% on the market value of oil and 7.5% on the market value of natural gas. Here's the good news: Texas is providing specific incentives that align perfectly with PrimeEnergy Resources Corporation's strategy of re-developing mature assets and increasing production from its existing base. The new House Bill 3159, effective January 1, 2026, introduces a severance tax exemption for restimulated wells.

This exemption offers up to 36 months of severance tax relief or until the tax savings reach $750,000, whichever comes first. Given that PrimeEnergy Resources Corporation is budgeting $129 million in 2025 for 43 horizontal wells in West Texas, incorporating restimulation into the capital plan could yield significant, quantifiable tax savings starting in 2026.

Geopolitical stability in the Middle East drives US crude price volatility.

The price of oil is the single largest driver of PrimeEnergy Resources Corporation's revenue-Q3 2025 commodity revenue was $45.97 million-and that price remains hostage to Middle East stability. The region accounts for nearly half the world's proven oil reserves, so any political friction there creates a risk premium in global crude prices, which directly benefits US producers like PrimeEnergy Resources Corporation.

We saw this volatility play out in 2025. Following heightened tensions between Israel and Iran in June 2025, the price of Brent crude oil spiked dramatically from $69 per barrel to $79 per barrel in a single week. This $10/bbl swing illustrates how quickly geopolitical risk translates into higher revenue potential for domestic producers. The general forecast for Brent crude in 2025 is a trading range of $70-$85 per barrel, heavily influenced by the unpredictable political actions of OPEC+ and regional conflicts.

Your strategic action here is simple: maintain operational flexibility to capitalize on these price spikes. PrimeEnergy Resources Corporation's strong balance sheet, with zero outstanding bank debt and $115 million in available credit as of September 30, 2025, positions the company to accelerate drilling or acquisition activity when prices temporarily surge.

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Economic factors

Crude oil price volatility (West Texas Intermediate) remains the primary revenue driver.

The economic environment for PrimeEnergy Resources Corporation is dominated by the wild swings in crude oil prices, particularly West Texas Intermediate (WTI), which directly dictates revenue. You saw this play out in 2025: despite strong production volumes, the company's net income plunged 57% year-to-date to $22.93 million through Q3 2025, largely due to price compression. The average realized oil price for PNRG fell to $65.48/bbl in Q3 2025, a 15% year-over-year decline. This is why the macro-outlook matters so much.

Looking forward, the market is defintely mixed, which means volatility is the only sure thing. The U.S. Energy Information Administration (EIA) projected the WTI spot price to average about $70.31 per barrel for the full year 2025, but other polls suggest a lower average of around $64.65 per barrel. To be fair, Q4 2025 forecasts were already pushing prices lower, toward the $55.41 to $58.65 per barrel range. PNRG's decision to forgo commodity derivative contracts (hedging) means they are fully exposed to these swings.

Here's a quick snapshot of the 2025 WTI outlook:

• EIA 2025 Annual Average: $70.31/bbl (projected).
• Reuters Poll 2025 Average: $64.65/bbl.
• PNRG Q3 2025 Realized Price: $65.48/bbl.

Inflationary pressure on steel and labor increases drilling and completion costs by up to 15% in 2025.

The cost of drilling and completing new wells is a major headwind, and it's not letting up. Inflationary pressures on key materials and services are structurally raising the break-even price for new production. Industry reports indicate that steel casing prices alone are expected to increase by nearly 25% through 2025. When you combine that with rising labor costs and supply chain friction, the overall drilling and completion costs for a Permian Basin horizontal well are estimated to be up by as much as 15% in 2025.

Here's the quick math: a few percentage points of cost inflation on a multi-million-dollar well can turn a marginal project uneconomical. This rise in input costs directly contributed to the company's margin compression in 2025, even with their strong operational performance. Cost control is the new growth lever.

Interest rate hikes make PNRG's debt refinancing more expensive; the cost of capital is up.

While the macro environment of rising interest rates has made the cost of capital (the expected return required by investors) higher across the energy sector, PrimeEnergy Resources Corporation is uniquely insulated from the immediate pain of refinancing. The company reported zero outstanding bank debt as of September 30, 2025. This is a huge advantage in a higher-rate environment.

Still, the general trend impacts the industry. For PNRG, interest expense was modestly higher at $0.48 million in Q3 2025, reflecting higher borrowing costs earlier in the year, but this is a small figure. The key takeaway is PNRG has full access to its $115 million revolving credit facility, which gives them substantial liquidity to execute their capital program without being forced into expensive debt markets.

The cost of capital for the sector is up, but PNRG is sitting pretty with a clean balance sheet.

A projected 2025 CapEx of around $98 million is crucial for reserve replacement.

PrimeEnergy's commitment to its drilling program is a critical economic factor because, in the shale business, you have to keep drilling just to keep production flat due to high decline rates. The company's management is focused on disciplined capital allocation, but they are still maintaining an aggressive schedule. Their projected Capital Expenditure (CapEx) for 2025 is set at approximately $98 million.

This CapEx is earmarked for developing 44 horizontal wells, primarily concentrated in the Permian Basin, which holds 88.3% of their proved reserves. This spending is not just for growth; it is the lifeblood for reserve replacement and maintaining the production base. For the first nine months of 2025, the company generated an operating cash flow of $84.5 million, which provides a solid internal funding source for a significant portion of this CapEx.

The table below summarizes the core financial metrics driving the 2025 economic outlook:

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Social factors

Growing investor demand for Environmental, Social, and Governance (ESG) reporting impacts access to capital.

The shift in capital markets toward sustainable investing is no longer a fringe trend; it's a core financial risk for independent oil and gas companies like PrimeEnergy Resources Corporation. Institutional investors, the bedrock of capital for the energy sector, are demanding measurable ESG performance. For North American asset owners, an overwhelming 90% expect to increase their allocation to sustainable investments over the next two years, making a strong ESG profile a prerequisite for attracting that capital.

For PrimeEnergy, the challenge is immediate. One recent assessment by The Upright Project assigned the company a net impact ratio of -95.8%, indicating a significant overall negative sustainability impact. Here's the quick math: a negative rating like that raises the company's cost of capital and limits its investor base to those who either ignore ESG or focus solely on short-term financial metrics. You can't afford to be in the bottom quartile when 60% of global investors say they will only back traditional energy companies with credible decarbonization plans.

The largest negative impacts driving this score are directly tied to the core business:

• GHG Emissions: Driven by crude oil and natural gas production.
• Non-GHG Emissions: Air and water quality impacts.
• Biodiversity: Operational footprint affecting ecosystems.

Workforce shortages in skilled field operations and engineering roles, defintely in the Gulf Coast.

The energy industry faces a major demographic and perception problem that directly impacts PrimeEnergy's operational efficiency in its key areas like the Gulf of Mexico, Texas, and Oklahoma. The upstream oil and gas sector in the Gulf Coast, for example, is still operating with employment levels almost 20% lower than pre-pandemic peaks, showing a persistent gap in re-hiring and retention.

This isn't just a numbers game; it's a skills gap. The broader energy sector is projected to face a shortage of up to 40,000 competent workers by the end of 2025. This shortage is exacerbated by a generational disconnect: 62% of Gen Z and Millennials find a career in the oil and gas industry unappealing. This means PrimeEnergy is competing for a smaller pool of aging, specialized talent against larger, better-resourced competitors.

The lack of a talent pipeline creates upward pressure on wages and increases the risk of operational errors, which is defintely a concern for a company operating approximately 1,500 wells. You need to invest heavily in in-house training or risk higher operating expenses (OpEx) to secure field engineers and experienced rig hands.

Public perception of fossil fuels influences long-term social license to operate.

A company's social license to operate (SLO) is the tacit approval from the public, stakeholders, and local communities that allows it to continue its business. For PrimeEnergy, which engages in the exploration, development, and production of crude oil and natural gas across the continental U.S. and the Gulf of Mexico, maintaining this license is critical.

The public sentiment is challenging: 69% of Americans believe that major corporations are falling short in addressing the impacts of climate change, and 57% specifically feel the energy industry is doing too little. This widespread skepticism translates into more scrutiny, more regulatory risk, and greater difficulty in securing new permits or expanding operations.

What this estimate hides is the local impact. While the company provides positive value in areas like Societal Infrastructure, Taxes, and Jobs, the overall negative ESG rating of -95.8% is the headline that activist groups and local opposition will use. A poor public perception can easily turn a routine permitting application into a protracted legal battle, slowing down capital deployment and delaying revenue generation.

Local community relations are key for smooth land access and permitting.

In the oil and gas business, particularly in the onshore fields of Texas, Oklahoma, and West Virginia, local community relations are the currency of operational efficiency. Smooth land access, timely permitting, and avoiding local opposition depend entirely on maintaining a positive relationship with landowners and municipal governments.

PrimeEnergy Resources Corporation does not publicly disclose a formal community involvement or charitable giving program in the same way larger peers do. This lack of public disclosure is a risk in itself. When a company is not actively communicating its positive local impact-like the jobs it creates or the taxes it pays-it leaves a vacuum. That vacuum is quickly filled by negative narratives from opposition groups.

For a company focused on disciplined development, as PrimeEnergy is in the Permian Basin, any delay is costly. A single, high-profile land dispute or a local government imposing stricter environmental conditions due to community pressure can halt drilling. This is why proactive, visible community engagement is not a philanthropic choice, but a defintely necessary operational expense to protect the company's first-half 2025 discretionary cash flow of $56.9 million.

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Technological factors

Enhanced Oil Recovery (EOR) techniques are necessary to maximize returns from mature fields.

You're running a business model like PrimeEnergy Resources Corporation's, which means you're sitting on mature assets, and that's a double-edged sword. You have long-lived production, but the natural decline is a constant headwind. For instance, PrimeEnergy's oil volumes were 'modestly lower' year-over-year in Q2 2025, which management directly attributed to the natural decline in mature assets.

This reality makes Enhanced Oil Recovery (EOR) techniques, which are tertiary recovery methods, absolutely critical. They are the only way to squeeze out the remaining hydrocarbons once primary and secondary recovery (like waterflooding) lose steam. The global EOR market is huge, projected to reach $47.9 billion in 2025, with North America alone anticipated to gain $4.98 billion in 2025. That's where the growth is for companies focused on revitalization.

The key is selecting the right EOR method for your specific reservoir geology. It's not a one-size-fits-all solution.

• Chemical EOR: Injecting polymers to increase water viscosity (Polymer Flooding) or surfactants to reduce oil-water tension.
• Gas EOR: Injecting miscible gases like $\text{CO}_2$ or natural gas to swell the oil and reduce its viscosity.
• Thermal EOR: Injecting steam, primarily for heavy, viscous crude oil, which is less common in PNRG's Permian and Mid-Continent focus areas.

Digitalization of field operations (IoT sensors) reduces operational costs by up to 5%.

Honestly, the biggest technological opportunity today is simply getting smarter about what you already own. Digitalization, through the Internet of Things (IoT) sensors and predictive analytics, is how you fight the rising cost of operating mature fields. The global IoT in the oil and gas market is growing fast, with an estimated CAGR of 8.1% between 2025 and 2034.

The industry benchmark for cost reduction through digitalization is often cited, but PrimeEnergy has already demonstrated a much stronger result. The company's investment in new technologies in 2024, which included digital advancements, led to a 10% reduction in operating costs. That's a massive win, double the typical conservative estimate. This happens because smart sensors monitor everything from pump vibration to flow rates in real-time, allowing you to switch from costly, reactive maintenance to predictive maintenance. You stop a pump from failing before it kills a week of production. That's the simple math.

Need for better seismic imaging technology to find bypassed pay zones in old acreage.

The mature fields in which PrimeEnergy operates, like those in the Mid-Continent and Permian, have been drilled for decades. The easily accessed oil is gone. The challenge now is finding 'bypassed pay zones'-pockets of oil that were missed by older, less precise drilling and imaging technologies. This is where advanced seismic imaging comes in, literally lighting up the subsurface.

New technologies like 4D seismic (which is time-lapse 3D seismic) and Full Wavefield Inversion (FWI) are the game changers. FWI uses massive computing power to create a more detailed, high-definition image of the reservoir, helping to map out remaining hydrocarbons with more certainty. Using these technologies in mature fields has a high payoff: one case study showed that 4D seismic targets had an 86% success rate, delivering an additional 15 million barrels of new oil production. Another example demonstrated that advanced geomapping could increase the overall productive length of a well in a mature carbonate field by approximately 50%.

Automation of drilling processes improves safety and reduces non-productive time.

PrimeEnergy's strategy in 2025 includes a significant focus on horizontal development, with plans to invest about $98 million in 44 horizontal wells. This aggressive drilling schedule demands maximum efficiency and safety, and automation is the only way to get there.

Drilling automation systems-which include everything from robotic pipe handling to automated drill floor controls-are fundamentally changing the risk-reward profile. They move personnel away from the most hazardous tasks, which is a major safety improvement. Plus, they drastically cut Non-Productive Time (NPT), which is the industry term for downtime. Automation is proven to reduce NPT by up to 35%. This efficiency translates directly to the bottom line, as automated systems reduce human error by 45% and have improved rig uptime by 28%. In the Permian Basin, where PNRG is heavily focused, these systems have already reduced well delivery time by up to 18 days per well.

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Legal factors

Compliance with the Securities and Exchange Commission (SEC) climate-related disclosure rules is mandatory.

The regulatory environment for climate-related disclosures is defintely a moving target, but the need for preparation is not. While the SEC's final rules on climate-related disclosures were adopted in March 2024, their enforceability is currently paused due to litigation, with the Eighth Circuit Court ordering an abeyance in September 2025.

Still, for a public company like PrimeEnergy Resources Corporation, which is actively drilling, the risk remains high. If the rules are upheld, Large Accelerated Filers would have had to start compliance for fiscal years beginning in 2025. This means PNRG needs to be ready to quickly implement a new compliance framework, including disclosing material climate-related risks, governance processes, and potentially Scope 1 and Scope 2 greenhouse gas (GHG) emissions if deemed material.

The immediate, actionable risk is the patchwork of state-level rules, like California's SB 253 and SB 261, which require disclosure of Scope 1, 2, and 3 emissions for companies doing business in the state with annual revenues over $1 billion. PNRG must track these state-level mandates, as they are not subject to the federal pause.

Ongoing litigation risk related to legacy environmental liabilities in the Gulf of Mexico.

PrimeEnergy Resources Corporation's operations in Louisiana, which includes the Gulf of Mexico (GoM) region, expose the company to significant and rising litigation risk, especially concerning legacy assets. The broader legal landscape is hostile: a March 2025 D.C. District Court ruling found a massive GoM lease sale unlawful due to inadequate consideration of impacts on the endangered Rice's whale and climate change, which sets a precedent for stricter environmental scrutiny.

Here's the quick math on the liability exposure: PNRG's total equity was reported at $213.79 million as of September 30, 2025. However, the company's 2025 Form 10-K explicitly states that its financial statements do not include a provision for potential environmental liabilities to restore and clean up damages from past operating practices. This means the actual, unreserved liability could be substantial, particularly as federal regulations increasingly hold predecessor owners liable for decommissioning costs.

This is a material, unquantified financial risk.

Federal and state regulations on well abandonment and plugging costs are rising.

The cost of decommissioning (plugging and abandonment, or P&A) is escalating, driven by new federal and state regulations aimed at reducing methane emissions from orphaned wells. PNRG has operations in states like West Virginia, which in 2025 passed new laws (like HB 3336) to expedite plugging, but the underlying cost structure is still a major headwind.

The liability is enormous, especially in the GoM where PNRG operates. Industry estimates for P&A costs are staggering and vary widely by location and depth:

• Shallow-water GoM well P&A cost: Approximately $500,000 per well.
• Deepwater GoM well P&A cost: Up to $10 million per well.
• Median onshore P&A cost (with surface reclamation): $76,000 per well.

New regulations are increasing the required bonding amounts and tightening the timelines for P&A, converting a long-term liability into a nearer-term cash obligation. This puts pressure on PNRG's strong operating cash flow of $84.54 million for the first nine months of 2025, as a portion must be reserved or spent on these non-productive liabilities.

Land-use and mineral rights disputes can halt drilling programs for months.

PNRG's primary focus for capital deployment in 2025 is horizontal drilling in the Permian Basin of West Texas and Oklahoma, with an expected investment of $129 million in 43 horizontals. This aggressive development plan runs directly into a heightened risk of land-use and mineral rights disputes.

Recent Texas Supreme Court rulings in 2025 have clarified ownership of critical assets, but they also create new grounds for litigation. For example, the legal status of produced water and the ownership of subsurface pore space for carbon capture and storage (CCS) are now major points of contention. A dispute over a single mineral lease or surface access agreement can halt a drilling rig for months, directly impacting the realization of PNRG's projected production from its 26,512 MBOE in proved reserves.

The core risk is delay. A single injunction on a key drill site can tie up a multi-million-dollar rig and delay the cash flow from a well that costs millions to drill.

PrimeEnergy Resources Corporation (PNRG) - PESTLE Analysis: Environmental factors

Here's the quick math: If oil stays above $80/barrel through Q4 2025, PNRG can cover its CapEx and reduce net debt, but a drop below $70/barrel forces a hard look at the dividend. Finance: draft a 13-week cash view by Friday based on a $75/barrel stress test.

Increased risk of hurricanes and severe weather impacting Gulf Coast infrastructure and production.

You have interests in Louisiana, so the increasing severity of the Atlantic hurricane season is a defintely material risk to your operations and midstream access. The Colorado State University forecast for the 2025 hurricane season estimates it will be above the 1991-2020 average, anticipating around 17 named storms, which is a high-risk scenario for the U.S. Gulf Coast region.

While the bulk of PrimeEnergy Resources Corporation's proved reserves-about 88.3%-are concentrated in the Permian Basin (Texas) and Oklahoma, any disruption to Gulf Coast refining or export capacity will directly impact realized commodity prices. [cite: 1, first search] A major storm can temporarily shut in production, but the greater financial risk for a producer like PNRG is the logistical bottleneck and price compression that follows a major refinery outage, which is where 55% of total U.S. refining capacity is located. That's a near-term price shock risk you must model.

Focus on minimizing freshwater use in drilling and hydraulic fracturing operations.

The industry focus on water stewardship is intensifying, especially in drought-prone regions like the Permian Basin where PNRG is actively drilling. This isn't just an environmental concern; it's a cost-management issue. The push is to replace scarce freshwater with recycled produced water (wastewater from drilling) in hydraulic fracturing (fracking). In PNRG's core operating area, the Permian Basin, an estimated 50 to 60 percent of produced water is currently being recycled and reused for fracking operations as of early 2025. [cite: 2, first search]

This trend is becoming a regulatory mandate in some states, which sets a clear benchmark for all operators. For instance, in Colorado, where PNRG also has interests, new regulations require all oil and gas development permitted after January 1, 2026, to use a minimum of 4% recycled produced water. You need to ensure your Permian operations are at least meeting the 50% regional recycling average to maintain a social license to operate and to mitigate rising freshwater acquisition costs.

Stricter regulations on wastewater disposal (produced water) increase operating expenses.

The regulatory environment for produced water disposal is getting tighter, which translates directly into higher operating expenses (OpEx). The primary disposal method, underground injection wells, is becoming more costly and scrutinized due to links with seismic activity. In the Permian Basin, the cost for deep disposal is already estimated to be around $0.60-$0.70 per barrel. [cite: 2, first search] This is a significant cost when operators are handling over 22 million barrels of produced water daily in the region. [cite: 2, first search]

New Texas legislation, like Senate Bill 2122, effective September 1, 2025, is introducing new, nonrefundable application fees for various permits related to oil and gas waste disposal, which increases compliance obligations and costs. [cite: 6, first search] This regulatory shift is pushing companies toward more expensive but environmentally favorable recycling and reuse strategies. The table below outlines the direct cost impact of the disposal vs. the strategic shift to recycling.

Carbon capture and storage (CCS) is a growing strategic consideration for future compliance.

While PrimeEnergy Resources Corporation is a smaller independent producer focused on conventional and unconventional assets, Carbon Capture and Storage (CCS) is a critical strategic consideration, especially given your heavy focus on Texas. The federal 45Q tax credit of up to $85/ton for permanently stored carbon dioxide has catalyzed a massive industry shift, with over 270 publicly announced projects in the U.S. representing $77.5 billion in capital investment. [cite: 17, first search]

For PNRG, CCS is not an immediate operational necessity but a future compliance hedge and a potential value-add. The state of Texas is actively advancing its Class VI well primacy application, which streamlines the permitting process for underground CO₂ storage, making CCS infrastructure development in your backyard more likely. [cite: 17, first search] You should be tracking this for two reasons:

• Evaluate potential joint ventures for CO₂ storage in your existing acreage.
• Model the cost of future carbon taxes or fees against the cost of a CCS solution.

The industry is moving toward a carbon-managed future, and even a smaller player needs to have a plan for its Scope 1 emissions.