Value Proposition Risk Managed Value Creation Long-term view with a commitment to value creation through profitable growth and income Focus on cost management and capital discipline Significant exposure to early stage development of…
Corporate Profile Corporate Summary Production (Q2 2014) 110,165 boe/d Reserves (2P Gross YE 2013) (1) 634 mmboe Reserve Life Index (2P) (1) 15.5 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 3.8% (3) Annualized…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy Targeting net debt to 200% Reserve funds from operations Replacement through the between 1.0 1.5x drill bit for the past 6 consecutive years One of the…
High Quality Long Life Assets 200% or greater reserve replacement over the past 6 years
Operational Excellence Capital Efficiencies Managing Declines and Driving Down Costs All In Capital Efficiencies /boe/d (1) 3 Year Avg. Capital Efficiencies /boe/d (2) (1) 2013 Costs include Infrastructure spending, related…
Operational Excellence Cost Management Lowering Costs = Increasing Profitability (1) F&D Costs including change in future development capital. (2) Netback before hedging.
Financial Flexibility Balance Sheet Strength Targeting net debt to funds from operations between 1.0 1.5x Net Debt to FFO (1) H1 2014 Net Debt to FFO was calculated based on annualized Funds from Operations for the six months…
Top Talent and Strong Leadership Culture Commitment to People, Health, Safety and Environment Delivers Results People & Talent Health & Safety Environmental Leadership Leadership Leadership Low Employee Attrition Target Zero Lost…
Risk Managed Value Creation 18% Compound Annual Production Growth Since Inception boe/d Forecast
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 19% annualized total return since inception, 5 billion of dividends (30.48/share) Cumulative Dividends and Historic Payout Ratio
Growth in Per Share Production and Cash Flow Delivering Value with Profitable Growth and Income 23% increase in production per share and 72% increase in Funds from Operations per share since 2009 Production per Share (1) Funds From…
Operations Overview Western Canadian Producer Strategic Optionality
ARCs Proven Development Model Inventory of Opportunities at all Stages FULL CYCLE GROWTH AND INCOME PROVIDER Dawson, Pembina, SE Sask/Manitoba, Redwater OPTIMIZE COMMERCIALITY Ante Creek, Parkland/Tower EXPANSION REPEAT…
2014 Budget and Outlook
2014 Capital Budget 975 Million 2014 Capital Program to Deliver Record Production of 110,000-114,000 boe/d Focused on oil and liquids-rich gas and low cost, high rate of return Montney natural gas development 215MM(1) 40 gross…
Growing Oil and Liquids Since 2009 Meaningful Oil And Liquids Production and Reserves Growth 7% CAGR(1) total Liquids production 2009 2015 Forecast 5% CAGR(1) total 2P Liquids reserves 2008 - 2013 (1) Compound annual growth rate.
Growing Our Low Cost Gas Business Significant Natural Gas Production and Reserves Growth 15% CAGR(1) total Natural Gas production 2009 - 2015 Forecast 21% CAGR(1) total 2P Natural Gas reserves 2008 - 2013 (1) Compound annual growth…
Asset Overview
Montney Growth Assets Greater Than 950 Net Montney Sections in BC and Alberta 500 km
Why the Montney Recoverable Resource exceeds equivalent of 3 Haynesville Shales or 6 Barnett Shales Massive thickness Superior Lithology and Fracability High permeability Higher recovery factors Reservoir Attribute Montney…
Montney Benchmarking 3rd Largest Montney Landholder With Over 950 Net Sections Top Montney Acreage Holder (1) 70% of ARCs Montney land is undeveloped, providing a significant future opportunity Source: RBC Energy…
Montney Benchmarking Positioned in the Best Areas of the Montney Low Cost and High IRRs Natural Gas Supply Cost (/mcf) Montney (2) Before Tax IRR % Montney (1) Source: RBC Energy Insights: The Montney Tracking an Elephant…
Montney Infrastructure Optionality Well Positioned For Market Access Area is currently well served with three major pipelines providing access to North American Markets: TransCanada Canada & US ARC Lands Alliance Chicago…
ARC in the Montney Montney ARCs Growth Engine
Multiple Layers to Develop Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney A Upper Montney Montney B Montney C Montney Lower Montney D Montney E - Existing Horizontal Wells
NEBC Montney Reserves & Resources NEBC Montney TPIIP 55 Tcf of Gas and 2.2 Billion Barrels of Oil Corporate 2P Reserves of 634 mmboe OIL RESERVES 11.3 mmbbls 2.2 Tcf NGL 27.6 mmbbls OIL ECONOMIC CONTINGENT RESOURCE 10.7…
Early Stages of Property Development* Large Identified Opportunity for Future Growth * Subject to change based on technology and economic environment.
Montney Pilots Proving Up Future Value before Full Scale Development West Attachie: Pilot Production on-stream since Q2 Parkland: 2014 Lower Montney well on-stream Q3 2014 East Attachie: Pouce Coupe: Monitoring Pilot Lower…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Half Cycle Economics Cdn 95/bbl Oil and Cdn4/GJ Gas Parkland Tower Dawson Sunrise Ante Creek 70% IRR 35% IRR 85% IRR 80% IRR 70% IRR 4.2x Recycle…
Dawson Gas World Class Gas Resource
Dawson Asset Details Excellent Free Cash Flow Net production (boe/d) Q2 2014 27,700 Liquids (bbls/d) 970 Gas (mmcf/d) 160 Production split % (liquids/gas) 97% gas Land (Montney net sections) 133 Working Interest 96%…
Dawson A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Grown production from approximately 50 Mmcfe/d in 2009 to 165 Mmcfe/d by mid 2012 At Cdn3 gas 30% Reinvestment Ratio to sustain Cash Flow and…
Dawson Gas Type Curve Growth Frac Technology Advancements = Improvements in Well Performance Completions 2009-2011 2012 2014 Type curve growth over time due to Frac spacing (m) 180 150 85 improvements in well design, focused on…
Parkland/Tower Reaping Acquisition Benefits
Parkland/Tower Asset Details Material Value Creation in 2014 Parkland Tower Net production (boe/d) 16,100 4,450 Q2 2014 Liquids (bbls/d) 3,500 2,810 Gas (mmcf/d) 76 9.8 Land (net sections) 23 57 Working Interest 84% 92%…
Operational Excellence - Parkland Learnings from Dawson = Advanced Frac Design and Improved Results at Parkland Optimizing Fracs, Lowering Costs Optimizing Well Length and Frac Spacing Frac Design 60T Slickwater Fracs with Open…
Parkland Development Economics 48% Rate of Return at Flat 3/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 5.0 2P Reserves per well (Bcf) 5.8 IP (1 mo) (MMcf/d) 4.5 IP (12 mo) (MMcf/d) 3.3 Half Cycle Economics (C85/bbl)…
Tower Dual-Layer Development Tower also has Dual-Layer Montney Development Opportunity Parkland and Tower have similar geology Tower Type Well Parkland Type Well Montney A Upper Montney B Montney Montney C Montney…
Operational Excellence - Tower Optimal Frac Design and Significant Efficiency Gains in Tight Oil Play 60% Decrease in Cost/Frac, 2X Increase in Applying Learnings in Well Length and Frac Intensity Frac Spacing Frac Design 45T Dual…
Tower Development Economics Very Promising Early Stage Development Key Metrics DCET Capex per well (MM) 5.9 2P Reserves per well (Mboe) 400 IP (1 mo) (boe/d) 440 IP (12 mo) (boe/d) 220 Half Cycle Economics (C3/GJ) Cdn95/bbl…
Tower Strong Well Performance Early Days.Promising Results at Tower Tower 12-16 Pad (8 wells) Cumulative Production Cumulative Oil Production (Mbbls) Cumulative Total Production (Mboe) Restricted to 100 bopd MRL due to…
West Montney Oil and Gas Long-Term Growth Opportunity
West Montney Asset Details Considerable Undeveloped Land Base in Highly Prospective Montney Fairway Net production (boe/d)- Q2 2014 7,740 Liquids (bbls/d) 480 Gas (mmcf/d) 43.5 Land (net Montney sections) 278 Working Interest…
West Montney Oil and Gas Geology Thick Multi-Zone Potential Across Entire Land Base 150 km (90 mi) Blueberry Attachie Septimus Sunrise Sundown Montney A 300 m (980 ft) Montney B Montney C Montney D Montney E…
Sunrise/Sunset Asset Details Sunrise/Sunset Ready Moving Forward with Full Scale Development Sunrise has progressed from pilot to full scale development Net production (boe/d) Q2 2014 5,100 Liquids (bbls/d) 0 Gas (mmcf/d) 30.6…
Sunrise Development Planning Multiple Zones with Economies of Scale Sunrise Development Sunrise Type Well Proposal Montney A Montney B Montney C Montney D Montney Existing E Horizontal Wells
Sunrise Outperforming Expectations 2014 Drilling Results Prove up Four Layer Development Model C02-25Hz (MTYE): 2010 Completion - 130m interfrac spacing -- proposing reducing interfrac spacing going forward
Sunrise Outperforming Expectations Type Curve Improvements over time due to improvements in well design Completions 2009-2011 2014 Frac spacing (m) 120 80 Fracs per well 16 25 Cost per frac (000) 173 111 Hybrid / Fluid system…
Sunrise 2014 Commercial Development of Sunrise with 60 mmcf/d Exit 2014 14 Gross Operated Wells Planned for full year 2014 Second half 2014 production to increase as new wells are brought on- stream through third party…
Ante Creek Oil & Gas A Montney Success Story
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunity Net production (boe/d) Q2 2014 17,800 Liquids (bbls/d) 9,900 Gas (mmcf/d) 47 Production split % (liquids/gas) 56/44 Land (Montney net sections)…
Ante Creek Opportunity for Down-Spacing Significant Drilling Inventory Testing 200m lateral horizontal well spacing in Montney through pilot schemes; ensuring future development extracts maximum value The down-spacing is aimed at…
Operational Excellence Ante Creek Reducing Business Cycle Times with Optimized Frac Design Drilling Longer Laterals in Fewer Days Lower Cost/Frac, Optimizing Frac Intensity Frac Design 20T, Nitrified Foam Fracs with Open Hole…
Ante Creek Development Economics 50% Rate of Return at Flat 3/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 3.9 2P Reserves per well (MBoe) 276 IP (1 mo) (boe/d) 357 IP (12 mo) (boe/d) 214 Half Cycle Economics Cdn95/bbl…
Summary
Why Invest in ARC Clear Line of Sight to Long-term Value Creation Long-term view and commitment to value creation through profitable growth and income Focus on cost management and capital discipline Significant exposure to early…
Looking Beyond 2015 Diverse Portfolio Provides Strategic Optionality Well balanced inventory of value creating opportunities which may be pursued beyond 2015 Option to grow at a rate estimated to be similar to growth for the period…
Appendix
Strong Performance Through Cycles Positive Earnings Through Commodity Price Cycles (1) Amounts presented for the periods 2010-2012 are in accordance with IFRS and amounts presented for periods 2007-2009 are in accordance with…
Multiple Sources of Debt Significant Available Credit Capacity of 1.0 Billion Bank Credit Facility 1 Billion credit facility plus 40 million working capital facility 12 banks including the five largest Canadian banks Long-term…
Note Repayments Spread Over Time Debt Repayment Schedule Reduces Financing Risk Long-term notes structured to mature over a number of years Repayment will come from existing credit facilities * Assumes USDCAD of 1.0676
Hedge Positions July 30, 2014 Summary of Hedge Positions as at July 30, 2014 (1) Remainder of 2014 2015 2016 - 2017 2018 Jan June 2019 Crude Oil (2) WTI: (US/bbl) US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d…
2014 Guidance 2014 Guidance 2014 YTD Actual 2013 Actual Oil (bbls/d) 35,00037,000 36,391 32,784 Condensate (bbls/d) 3,4003,700 3,679 2,251 Gas (mmcf/d) 405415 383.5 349.4 NGLs (bbls/d) 3,8004,100 3,962 2,811 Total (boe/d)…
Key Reserve Information 17% Compound Annual Growth Since Inception Reserves as of December 31, 2013 (mmboe) - Proved Producing 208 (101 mmboe liquids, 644 bcf gas) - Total Proved 374 (132 mmbbls liquids, 1.5 Tcf gas) - Proved Plus…
Socially Responsible Operator Health, Safety & Environment is a Top Priority ARC strives to meet Environmental the highest standards in health, Stewardship safety Health and and Commitment Safety environment Ranked 1 in the CDPs…
Montney Growth Assets Reserves and Resources Independent Resources Evaluation conducted by GLJ effective December 31, 2013 The amount of natural gas and liquids ultimately recovered from ARCs NEBC Montney resource will be primarily a…
Montney Growth Assets Reserves and Resources 2013 Best 2012 Best 2011 Best Reserves and Economic Contingent Resources (1)(2) Estimate Estimate Estimate Natural Gas (Tcf) Reserves (3) 2.2 2.1 1.9 Economic Contingent Resources 4.5…
Reserves and Resources Disclosure TPIIP, DPIIP and UPIIP have been estimated using a zero percent porosity cut-off for gas and a 3% cutoff for oil. This means that all gas bearing rock has been incorporated into the calculations.…
Definitions of Oil and Gas Reserves and Resources Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis…
Definitions of Oil and Gas Reserves and Resources Economic Contingent Resources (ECR are those contingent resources which are currently economically recoverable. Undiscovered Petroleum Initially-In-Place (UPIIP) is that quantity of…
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