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ARC Resources, 7Gen Seal $8.1B Merger Deal

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   |    Tuesday,April 06,2021

ARC Resources Ltd. has sealed its $8.1 billion acquisition of Seven Generations Energy.

ARC is now Canada’s largest condensate producer, third-largest natural gas producer, and sixth-largest upstream energy company.


As the largest pure-play Montney producer, ARC owns over 1.1 million net acres of Montney land and has a deep inventory of high-return, de-risked core development opportunities with significant commodity and geographic diversity. ARC produces approximately 340,000 BOEPD, comprising approximately 138,000 barrels per day of liquids and approximately 1.2 billion cubic feet Bcf/d of natural gas. The Company’s low cost structure, excellent environmental, social, and governance (“ESG”) performance, and superior ability to optimize revenue streams are supported by an extensive network of owned-and-operated infrastructure, with natural gas processing and sales capacity totaling approximately 1.5 Bcf per day. Exercising capital discipline, operating safely and efficiently, maintaining a top-decile balance sheet, and executing an active commodity price risk management program continue to be hallmarks of the organization.

RC expects to provide formal 2021 guidance for the Company, on a post-Business Combination basis, in early May 2021.

Capital Structure

ARC is committed to protecting its strong financial position by maintaining significant financial flexibility. To ensure ample liquidity, ARC has syndicated a $2.0 billion unsecured extendible revolving credit facility with a maturity date of 2024 (the “Credit Facility”). As of April 6, 2021, the Credit Facility has approximately $1.2 billion of available liquidity.

On March 10, 2021, ARC completed the issuance of two tranches of private unsecured notes of $1.0 billion aggregate principal amount with a weighted average interest rate of 2.965% and average term of 7.75 years (the “Notes”). The Notes were assigned a provisional rating of BBB with a stable trend by DBRS Morningstar, assuming the successful completion of the Business Combination. On April 6, 2021, ARC used the proceeds from the Notes, combined with draws on the Credit Facility, to repay and/or defease all of Seven Generations’ outstanding senior notes, including US$114 million aggregate principal amount of Seven Generations’ outstanding 6.875% senior notes due 2023, US$700 million aggregate principal amount of Seven Generations’ outstanding 5.375% senior notes due 2025, and US$378 million aggregate principal amount of Seven Generations’ outstanding 6.750% senior notes due 2023.

As of April 6, 2021, ARC has approximately $2.4 billion of net debt outstanding, excluding capital leases. At current forward commodity prices and with a strong deleveraging plan in place, ARC expects its net debt balance will be reduced to the low end of the Company’s target range of 1.0 to 1.5 times annualized funds from operations by year-end 2021.

With the Company’s refinancing complete and a lower overall cost of capital, ARC expects to immediately realize significant interest savings. Following the Business Combination, financing costs are expected to be approximately $50 million lower than they would have been had the Seven Generations senior notes remained outstanding. ARC is currently one of only three natural gas companies in North America with the ability to issue investment-grade debt and will continue to prioritize conservative debt levels.

ARC has 724 million common shares outstanding as of April 6, 2021.

Governance and Leadership

ARC is committed to maintaining the highest standards of corporate governance and risk management. The Company will benefit from the experience of Hal Kvisle as independent Chair, Marty Proctor as Vice-Chair, and Farhad Ahrabi, David Collyer, Susan Jones, William McAdam, Michael McAllister, Kathleen O’Neill, M. Jacqueline Sheppard, Leontine van Leeuwen-Atkins, and Terry Anderson as directors. ARC will continue to promote diversity and inclusion within the organization by maintaining a minimum of 30% female representation at the Board level and participating in initiatives like the 30% Club and the Bloomberg Gender-Equality Index.

ARC’s leadership team brings together the strengths and talents of both ARC and Seven Generations. The members of the senior leadership team are:

  • Terry Anderson – President and Chief Executive Officer
  • Kris Bibby – Senior Vice President and Chief Financial Officer
  • David Holt – Senior Vice President and Chief Operating Officer
  • Lara Conrad – Senior Vice President, Development
  • Armin Jahangiri – Senior Vice President, Capital Projects

ARC’s executive office will remain headquartered in Calgary, Alberta, with field offices located in Grande Prairie, Alberta, Dawson Creek, British Columbia, and Drayton Valley, Alberta.

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