(Bloomberg) -- Civitas Resources Inc., a Colorado shale driller created via a series of mergers earlier this year, said it has accumulated enough credits to cover its 1 million tons of annual carbon emissions from the company’s oilfield activities.

The credits cover emissions from the company’s operations and the power and heat its uses, classified as Scope 1 and Scope 2, according to Ben Dell, its chairman. They don’t offset so-called Scope 3 emissions from customers burning the oil Civitas produces, a category that typically dwarfs the other two in terms of size.

By acquiring credits and taking other environmental actions, the company aims to set itself apart from the rest of the U.S. hydrocarbon sector. While many of the biggest energy companies have pledged to improve their environmental performance, only nine other U.S. oil and gas exploration and producers currently publish Scope 1 and Scope 2 emissions, according to data compiled by Bloomberg. Civitas says it’s the first producer in Colorado to zero out its operational emissions.

Civitas’s plan will test an approach Dell has been publicly advocating for through Kimmeridge Energy Management Co., the activist investor he co-founded. Kimmeridge has pushed for improved environmental stewardship and greater consolidation in the shale industry, as well as restraint on executive pay.

“We have dollars going out the door, and we consider it an operating cost for our emissions,” Dell said in an interview. “The organization is economically incentivized to reduce our emissions.”

Denver-based Civitas declined to comment via a representative on how much it paid for its portfolion of offsets or which projects they originated from, beyond saying that some of the projects are based in Colorado.

The carbon credits market has attracted criticism for the varying levels of disclosure by participants, and the way that some credits are calculated. The Nature Conservancy, a major seller of offsets, conducted an internal review of its portfolio of carbon-offset projects following a Bloomberg Green investigation last year showed it took credit for preserving trees that were in no danger of destruction.

“Without some ability to understand the quality of what’s being purchased, it tells us nothing about what the actual climate impact of that purchase is,” said Charlie Donovan, a visiting professor of finance at the University of Washington, and the former head of structuring and valuation at  BP Plc’s Alternative Energy division. “You just don’t know if you’ve got hamburger or grade A beef.”

Civitas was formed through the combination of Bonanza Creek Energy Inc., Extraction Oil & Gas Inc. and Crestone Peak Resources. Kimmeridge owns a 13.5% stake, according to a company representative.

Civitas expects to issue more detailed climate disclosures next month and is working to cut its emissions in order to reduce the amount of credits it needs to buy in the future, Dell said. Those cuts won’t include Scope 3 emissions. Although a handful of major international oil and gas producers have committed to net zero targets for all types of emissions, Scope 3 is something Dells says the industry shouldn’t be made accountable for.

The company’s board plans to discuss whether the shale producer should operate its own forest-management or carbon-sequestration projects, or simply buy credits from others doing that kind of work.

In the meantime, Civitas is going through its operations to find ways to cut emissions -- for example, by switching to electric-powered drill rigs and fracking fleets, and cutting the amount of natural gas flared from wells. In particular, Civitas is also targeting reductions in the venting of methane into the atmosphere.

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