Inflation In a Tight Services Market Peters & Co. Limited North American Oil & Gas Conference September 13-15, 2011
ARC RESOURCES Launched July 1996 as ARC Energy Trust -19% annual return since inception (to August 26) - Current dividend 0.10 per month - 26.98 per share in total dividends (to August 26) -Total dividends of 4 billion (to August…
PLANNING AND COMMUNICATION ARE THE KEY TO COST CONTROL Starts with organization design Each team needs a mix of experience and youthful exuberance (most engineers over 40 know you cant get an economic well from 2% porosity rock and…
CRITICAL SERVICE PROVIDERS NEED TO BE PART OF THE TEAM We bid our work during spring break-up, then sit down with our critical service provider partners to discuss our plans and work out a schedule that works for both parties agreement…
Total Company 2011 BUDGET ARCS OPPORTUNITIES NEBCNWAB 228 MM NORTHAB 35 wells 122.7 MM Capital Gross 19 wells mm Wells Operated 633 MM 174 Non-Operated 57 MM 83 REDWATER PEMBINA 22.2 MM 89.5 MM 14 wells 42 wells Total 690…
PLANNING Rig schedule planned months in advance (blue boxes) Frac schedule designed in advance (green boxes) booked for months Completions (yellow) While wells have been completed, they are still waiting for plant capacity prior to…
DAWSON DRIVING DRILLING COSTS DOWN Decreased drilling cost per meter average from 1025 to 429/m Decreased drill time to 12 14 days Increased ownership of well construction design BHA selection ROP control Procurement Best wellbore…
DAWSON DRIVING COMPLETION COSTS DOWN Current costs are comparable to 2009 - up slightly from 2010 Completion Costs: 1000/interval 1000 800 600 400 200 0 2006 2007 2008 2009 2010 2011 Drill, Complete and Tie-in Costs:…
APPLYING LEARNINGS ON THE FLY ATTACHIE CASE STUDY First well on new block cost 4.9 mm to drill, second well cost just 1.9 mm as we moved to a monobore design and made better bit selection 4-20-84-24W6 A4-9-84-22W6 Surface Bits 3 1…
WHEN COSTS ARE INCREASING, YOU MUST FIND EFFECIENCIES Drilling Minimize drill moves pad drilling Drill through break-up pad drilling, plan activities near pavement Rig and crew consistency Provides familiarity with practices and…
APPENDIX
WHY INVEST IN ARC RESOURCES Top-tier, growth plus income opportunity Production History 90,000 Gas Liquids Experienced management team 75,000 Track record of delivering results 60,000 BOE/D 45,000 Entering a new era of…
INCOME AND GROWTH BOTH ARE POSSIBLE ARC has a 15 year history of risk managed value creation - Provided a 19% annual return since inception - Paid out 4 billion in total dividends - 26.88 / share - Grown absolute production from 9,500…
KEY RESERVE INFORMATION 19% COMPOUND ANNUAL GROWTH Reserves as of December 31, 2010* (mmboe) - Proved Producing 213 (104 mmboe liquids, 652 bcf gas) - Total Proved 336 (124 mmboe liquids, 1,274 bcf gas) - Proved Plus Probable 487…
10% COMPOUND ANNUAL GROWTH IN RESERVES PER SHARE (ADJUSTED) An investor who participated in the dividend re-investment plan since inception would have enjoyed a 10% compound annual growth in the reserves attributed to their…
PROPERTY OVERVIEW
BRITISH COLUMBIA MONTNEY
MONTNEY LANDS MAJOR GROWTH ENGINE ARC had our independent reserves evaluator assess the resource potential of our main BC Montney lands, excluding Attachie, Tower and Doe. Based on a 3% porosity cut-off: Reserves and Resources -…
MONTNEY LANDS MAJOR GROWTH ENGINE Lands evaluated to date are just a fraction of our total Montney lands ARC uses a 3% porosity cut-off, currently reassessing at lower cut-offs (industry 0 3%) Area Net Net DGIIP Reserves Net Sections…
MONTNEY LANDS MAJOR GROWTH ENGINE Dawson and the West Montney lands are a significant growth engine for ARC With greater than 10 Tcf of gas classified as DGIIP, ARCs current plans call for 0.8 Tcf the construction of two 60…
MONTNEY LANDS RESERVE GROWTH OVER TIME The first horizontal well was drilled in 2005. Success of this well lead to the recognition that considerably more gas could be accessed then had previously been thought. Over time, ARC has…
BC MONTNEY PRODUCTION ARC IS CURRENTLY SECOND LARGEST 400 Field Production 350 (mmcfe) 300 Dawson 165 250 Parkland 48 200 Sunrise* 7 150 Total 220 100 *non-operated 50 0 May production, by operator from IHS Accumap
BC MONTNEY WELLS ARC IS THIRD MOST ACTIVE DRILLER 400 350 300 250 200 150 100 50 0 BCOGC ; Top 35 Montney Operators Since 2003 (Montney and Doig Targets) Wells Rig Released
HORIZONTAL WELLS 30 DAY IP RATES JULY 2011: Glacier - Town 12000 10000 ARC Others 8000 Production Rate (mcf/d) ARC P50 6000 P50 4000 2000 0 1 108 215 322 429 536 643 P50 All Wells 3.4 mmcf/d Dawson/…
REGIONAL SCHEMATIC CROSS SECTION X Y Total Net Pay3% (m) 103 78 43 36 Total Net Pay6% (m) 30 2 23 4 DGIIP (BCF/Section)* 100 60 45 20 A Y Lower Upper Montney B Montney X E [1] Discovered Gas Initially in Place (DGIIP)…
DAWSON PRODUCTION 165 MMCF/D IN Q2 2011 180.0 Production through Phase 1 was 150.0 temporarily interrupted during the integration of Phase 2 mmcf/d 120.0 90.0 60.0 30.0 0.0 First 60 mmcf/d gas plant on stream May 2010,…
DAWSON TEST RESULTS STAY STRONG ARCs Dawson completions were considerably improved post 2008 with both and increase in test rates and test pressures
DAWSON PEAK RATES OVER TIME ARC typically restricts Dawson Peak IP vs. Peak IP Month (Filtered + H1 2011 Adjusted IP) 7000 production rates to AVG 5.6 approximately 5.4 mmcfd Peak Calendar Month Gas Rate (mcfd) 6000 AVG 5.0…
DAWSON STAYING FLAT LONGER ARC typically restricts production rates to approximately 5.4 mmcf per day Over the past 2 years, the length of time that the Dawson wells are producing at greater than 5 mmcf/d has increased.…
DAWSON DEEP INVENTORY OF WELLS READY FOR PRODUCTION Status Vertical Horizontal Total Producing 4 42 46 Shut In 72 19 91 Drilled (not completed) 1 3 4 Tied In (have not been on production) 0 4 4 Completed (completed not tied…
DAWSON DEVELOPMENT ECONOMICS 7,000 P10 Type Curve P90 IP (1mo) MMcf/d 5.9 5.0 3.3 6,000 IP (12mo) MMcf/d 4.4 3.7 2.1 5,000 EUR (Bcf) 7.7 6.2 3.8 Gas Rate mcf/d 4,000 3,000 2,000 (26 mos) 1,000 0 (49 mos) 0 2 4…
DAWSON 2011 BUDGET PLANS Capital: Total Capital 98 MM Drilling (14 wells): Horizontal 13 Vertical 1 Oil/Gas 0/14 Production: Year End 2010 110 mmcf/d Year End 2011 165 mmcf/d Year Average 150 mmcf/d Strategy: Grow production…
2010 DAWSON GAS PLANT Dawson 5-35 Gas Plant (Phase 2) Construction was completed on time and on budget Early April 2011 start-up of Phase 2 Dawson plant, with full production by the end of the month Progress of the gas plant…
PARKLAND LIQUIDS RICH GAS 0.8 TCF GAS 0.8 Tcf of gas classified as DGIIP - P+P Reserves of 227 Bcfe booked on 17 net sections Current production of 40 mmcf/d plus 1,200 b/d liquids FIELD LIQUIDS CONTENT (BBLS/MMCF) Parkland…
PARKLAND CAN A SINGLE WELL DRAIN THE FULL VERTICAL SECTION At Parkland, the Upper Montney is considerably thicker than at Dawson. We believe the lower-most sands are not contributing to production a horizontal well has been drilled…
PARKLAND DEVELOPMENT ECONOMICS 7,000 P10 Type Curve P90 6,000 IP (1mo) MMcf/d 6.4 5.0 3.7 5,000 Gas Rate mcf/d IP (12mo) Mcf/d 2.0 1.6 1.1 4,000 EUR Bcf 5.6 4.8 3.3 3,000 2,000 1,000 0 0 2 4 6 8 10 12 14 16 18 20 22…
PARKLAND 2011 BUDGET PLANS Capital: Total Capital 67 MM Drilling (13 wells): Horizontal 11 Vertical 2 Oil/Gas 0/13 Production: Year-End 2010 8,000 boe/d Year-End 2011 10,070 boe/d Year Average 8,435 boe/d Strategy: Grow…
TOWER LIQUID RICH OPPORTUNITY Proposed 2010 2011 locations Northern portion of the ARC operated Parkland property is in Tourmaline operated liquids rich window Several vertical wells swabbed light oil on test ARC drilled its first…
WEST MONTNEY RESOURCE 5.5 TCF GAS 5.5 Tcf of gas classified as DGIIP in Septimus, Sunrise/Sunset and Sundown - P+P Reserves of 253 Bcf at year-end 2010 (approximately 5 per 5.5 Tcf cent of DGIIP) Current production of…
SUNRISE/SUNSET/SEPTIMUS 2011 BUDGET PLANS Capital: Total Capital 25 MM Drilling (3 wells): Horizontal 2 Vertical 1 Production: 7 mmcf/d third party at Sunrise Strategy: Sunrise/Sunset: Tie-in 7 existing vertical and horizontal…
ATTACHIE
ATTACHIE NEW OPPORTUNITY UNDEFINED POTENTIAL Prospective land base of 106 sections First horizontal well tested 10 mmcf/d with 30 bbls/mmcf of liquids at 9 Mpa ARC has drilled a second horizontal well on the east side of the…
ANTE CREEK ANOTHER MONTNEY SUCCESS
ANTE CREEK - ANOTHER MONTNEY SUCCESS ARC entered the Ante Creek area through an acquisition in late 2000 Since then ARC has made several acquisitions to build a 238 net section land base Lands may also be prospective for the…
ANTE CREEK - ANOTHER MONTNEY GROWTH STORY 9,000 Gas 8,000 Liquids 7,000 Land Acquisitions 6,000 5,000 4,000 3,000 2,000 1,000 - 2007 07 2009 04 2001 01 2001 04 2001 07 2001 10 2002 01 2002 04 2002 07 2002…
30 Day IP Gas and Oil Rates (boe/d) 0 100 200 300 400 500 600 700 800 900 00/11-24-065- 25W5 Oil 00/05-13-065- Gas 25W5 00/08-17-067- 24W5 00/06-23-065- 25W5 02/02-24-067- 25W5 00/05-10-066- 25W5…
ANTE CREEK MEASURED INITIAL PRESSURE HORIZONTAL WELLS Ante Creek North Triassic E Pool 18000 16000 14000 Well Initial Pressure 12000 Pool Virgin Pressure (kPa) Pressure = 16.3MPa 10000 8000 Infill Horizontals…
ANTE CREEK FUTURE OPPORTUNITIES R26 R25 R24 R23 R22W5 T69 W G _ T69 Land holding of 245 gross and 238 net 1 36 6 31 1 36 6 31 1 36 6 31 1 36 6 31 sections Horizontal multi…
ANTE CREEK DEVELOPMENT ECONOMICS Case Top 3 Avg. Well Bottom 3 600 IP (1 mo) boe/d 550 385 285 IP (12 mo) boe/d 350 235 140 Normalized Production Rate (BOE/d) 500 EUR (mboe) 445 265 140 400 300 200 100 0 0 3 6 9…
PEMBINA CARDIUM
PEMBINA ARCS HOLDINGS Gross Operated Wells in the Pembina Cardium Wells Penn West 2,458 39% ARC 1,423 23% Bonterra 694 11% Imperial 362 6% Enerplus 334 5% PetroBakken 118 2% ARC is the second largest operator in the Pembina…
PEMBINA CARDIUM STRUCTURAL CROSS SECTION A A 1375m CARDIUM 1494m UNIT Rge 8 Rge 7 Rge 6W5 Twp 49 Conglomerate unit Upper Sand Unit Twp 48 Middle Unit Twp 47 5 km Lower Sand Unit
PEMBINA HORIZONTAL DRILLING PLANS 2010 drilled 25 horizontals and 3 vertical wells Initial production results are encouraging average IP rates are 150 200 boe/d but with variability Geology of the Pembina field is quite variable…
PEMBINA FIRST MONTH: INITIAL PRODUCTION RATES ALL WELLS Cardium Area Initial Production Average (Month 1) Rate ARCs Wells Median Well approximately 170 b/d
PEMBINA FIRST MONTH INITIAL PRODUCTION RATES ARC WELLS ARCs Cardium Area Initial Production Average (Month 1) Rate MEDIAN (boe/d) 2009 137 2010 147 2011 153
PEMBINA THIRD MONTH: INITIAL PRODUCTION RATES ALL WELLS Cardium Area Initial Production Average (Month 3) Rate ARCs Wells Median Well approximately 140 b/d
PEMBINA THIRD MONTH: INITIAL PRODUCTION RATES ARC WELLS ARCs Cardium Area Initial Production Average (Month 3) Rate MEDIAN (boe/d) 2009 165 2010 171 2011 180
HORIZONTAL WELL RESULTS Given the vertical and horizontal variability in the reservoir, it is not surprising that there is great variability in production results
HORIZONTAL WELL RESULTS ARC WELLS ONLY
SWAN HILLS
SWAN HILLS Testing various parts of the reef on non-operated lands 8 (gross) partner wells drilled in 2010 12 (gross) partner wells planned for 2011 2011 Budget on operated lands 2 horizontal wells 2 multi-stage acid frac…
ARC RESOURCES A Leading oil and gas entity as measured by: Quality of assets Leadership Long-term return to investors Risk managed value creation We expect to continue to provide both growth and income to our investors Near-term…
2011 CAPITAL PROGRAM TARGETS 12 PER CENT GROWTH ( Millions) 2009 (a) 2010(a) 2011(b) Development 187 354 416 Development Facilities 73 72 70 Maintenance 11 15 29 Optimization 8 11 18 Land & Seismic 11 65 60 Unconventional Gas 16 1 5…
HEDGING UPDATE AS OF JUNE 30, 2011 Liquids 2011 2012 Oil (bbls/d) 20,000 18,000 Sold Call (US/bbl)* 89.46 91.39 Bought Put (US/bbl) 84.51 91.39 Sold Put (partial volumes) 61.09 60.00 Gas 2011 2012 Gas (mcf/d) 161,352 76,700…
Loading...
