Q1 2015 Operational and Financial Performance Record Production, Strong Financial Results Three Months Ended March 31 (CDN millions, except per share and per boe amounts) 2015 2014 Production (boe/d) 120,354 105,699 Gas 64% 58%…
Value Proposition Clear Line of Sight to Long-term Value Creation CREATING VALUE
Value Creation Culture Culture Focused on Organizational Learning Drives Ongoing Success Technology Efficiency Opportunity Applying New Focus on Operational Building for the Technology: Efficiency: Long-Term: Longer Laterals…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy Targeting net debt to funds 200% Reserve Replacement from operations between through the drill bit for the 1.0 1.5x past 7 consecutive years Highly skilled…
Corporate Profile Corporate Summary Production (Q1 2015) 120,354 boe/d Reserves (2P Gross YE 2014) (1) 673 mmboe Reserve Life Index (2P) (1) 16 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 4.9% (3) Annualized…
High Quality Long Life Assets 200% or Greater Reserve Replacement Over the Past Seven Years Annual Produced Reserves Replacement 700% Development 600% Acquisitions 500% 400% 300% 200% 100% 0%
Key Reserve Information Consistent Year-Over-Year Reserves Growth Reserves at year end, December 31, 2014 YE 2014 2P Reserves - Proved Producing 210 mmboe - Total Proved 382 mmboe PDP 31% - Proved Plus Probable 673 mmboe…
Capital Efficiency Strong F&D Performance Growing our Low Cost Montney Business at Low F&D Costs FD&A Costs and Recycle Ratio (1) (2) 25.00 6.0 FD&A F&D 5.0 20.00 Recycle Ratio Recycle Ratio 4.0 15.00 3.0 10.00 2.0…
Operational Excellence Capital Efficiencies Managing Declines and Driving Down Costs ARC All In Capital Efficiencies /boe/d(1) 3 Year Avg. Capital Efficiencies /boe/d(2) (2012-2014) 40,000 40,000 30,000 35,000 per…
Operational Excellence Cost Management Low Cost Producers Deliver Superior Returns Over Time Focused assets, characterized by high working interest, operatorship and ARC owned/operated facilities, provides control over costs and…
Financial Flexibility Balance Sheet Strength Targeting Net Debt to Funds from Operations Between 1.0 1.5x Net Debt to FFO 1,400 2.0 1.8 1,200 1.6 1,000 1.4 millions 1.2 800 Ratio % 1.0 600 0.8 400 0.6 0.4…
Financial Flexibility Balance Sheet Strength Strong Balance Sheet Provides Stability Through Cycles Net Debt to Cash Flow 2015F(1) Net Debt to Enterprise Value 2015F(1) 80% 16.0 14.0 70% 12.0 60% 10.0 50% 8.0 40% Group…
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 17% annualized total return since inception, 5.3 billion of dividends (31.28/share) 6,000 120% Cumulative Dividends and Historic Payout Ratio 5,500…
Risk Managed Value Creation Montney Assets Delivering Profitable Growth and Value 140,000 120,000 100,000 80,000 boe/d Forecast 60,000 40,000 20,000 0 Non-Montney Liquids Montney Liquids Non-Montney…
2015 Capital Budget Revised to 550MM 2015 Capital Program Focused on Profitability Focus on oil and liquids-rich gas and low cost, high rate of return Montney gas development Production guidance of 113,000 116,000 boe/d BRITISH…
2015 Priorities Focused on Long-Term Value Creation Value Creation Cost Management & Capital Efficiencies Value creation prioritized Opportunities to reduce costs and over volume improve efficiencies without compromising safety…
2015 Production Outlook Creating Value with Modest Year-over-Year Production Growth Managing decline to 25% annually through paced development Gas plant maintenance activity in Q2 and Q3 of 2015 will result in production declines in…
Growing Oil and Liquids Since 2009 5% CAGR(1) Total Liquids Production 2009 2015 Forecast 50,000 45,000 Parkland 40,000 Montney Liquids 35% CAGR 35,000 2009- 2015F Ante Creek, Tower bbls/d 30,000 25,000 Cardium…
Growing Our Low Cost Gas Business 14% CAGR(1) Total Natural Gas Production 2009 2015 Forecast ARC divested of certain non-core, non-Montney shallow gas assets in 2014 and 2015 with associated production of approximately 4,800 boe/d…
Long-Term Value Creation Significant Accomplishments, Considerable Future Opportunities 2014 2015 2016 2017+ 112,390 boe/d Growing 113,000 116,000 boe/d Profitable Tower, Sunrise Production Dawson, Ante Creek Filled…
2015 Guidance Focused on Value Creation Original 2015 Revised 2015 2015 YTD Guidance Guidance (1)(2) Actuals Oil (bbls/d) 37,000 - 39,000 33,500 - 34,500 35,851 Condensate (bbls/d) 3,800 - 4,300 3,400 - 3,800 3,591 Gas (mmcf/d) 445…
Operations Overview Western Canadian Producer Strategic Optionality BRITISH COLUMBIA ALBERTA SASKATCHEWAN MANITOBA NE British Columbia Northern Alberta Redwater Pembina Southern Alberta SE Sask and Manitoba
Focused Production and Reserves Montney Comprises 70% of Production and 77% 2P Reserves Production (boe/d) Q1 2015 2P Reserves (Mmboe) YE 2014(1) 40,000 180 Montney 160 Montney Gas Gas 83,600 boe/d (70%) 140 516 mmboe (77%)…
Complimentary Asset Base Montney Growth Assets Underpinned by Free Cash Flow Generating Base Assets Invested 2.5 billion of capital in Montney growth assets since 2009 Base assets generated 1.8 billion of free cash flow since 2009…
Early Stages of Property Development* Large Identified Opportunity for Future Value Creation Gross Drilling Locations 1600 Montney 4,000 Future Gross Drilling Locations 1400 1200 1000 800 600 400 200 0 Dawson…
ARCs Proven Development Model Inventory of Opportunities at all Stages
Why the Montney Total Recoverable Resource Ranks High Amongst North American Resource Plays Massive thickness Large areal extent (500km) Superior lithology and fracability High permeability Over pressured Higher recovery factors…
Significant Montney Land Position 3rd Largest Montney Landholder 1,400 Top Montney Acreage Holder(1) 1,200 1,000 70% of ARCs Montney land is Montney Acreage (000s) undeveloped, providing significant 800 future…
Multiple Layers to Develop Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney A Upper Montney Montney B Montney C Lower Montney Montney D Montney E Existing Horizontal Wells,…
ARC in the Montney 35% Compound Annual Montney Growth - 5 Year Period 120,000 2015 100,000 Sunrise Gas Plant & Tower Liquid 2014 Expansion Parkland Gas 80,000 Plant: Phase 1 2012 Ante Creek Gas 60,000 Plant 2011…
NE BC Montney Reserves & Resources NE BC Montney TPIIP 67.4 Tcf of Gas and 2.3 Billion Barrels of Oil 2014 Resource evaluation conducted by GLJ saw significant growth in Gas TPIIP, which is mainly attributed to newly-acquired land in…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Parkland Tower Dawson Sunrise Ante Creek Half Cycle Economics C55/bbl 55% IRR 35% IRR 95% IRR 65% IRR 35% IRR MSW 4.3x Recycle 3.5x Recycle 5.0x…
NE BC/NW AB Montney First Year Cumulative Gas ARCs Montney Gas Wells Outperform Industry by 55% on First Year Average NE BC / NW AB Montney Gas Only First Year Cumulative 4,000 3,500 Others (1553 wells) 3,000 ARC (137 wells)…
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…
Dawson Gas World Class Resource, Unlimited Potential (1) Breakeven pricing assumes 20% cost savings as compared to late 2014 estimates. Cdn per bbl or mcf price as indicated defined as price at which NPV10 is equal to zero. * IRR…
Dawson Asset Details Excellent Free Cash Flow Net production (boe/d) Q1 2015 28,800 Jen NT Liquids (bbls/d) 870 ARC 13-7 update Proposed Gas Plant new b (90mmcfd) Gas (mmcf/d) 168 up from ARC 1-34 Production split %…
Dawson Development Potential Additional Development Layer Below Core Acreage Dawson Dawson core development has been Upper focused on Upper Montney Montney A; 65% of Upper Montney A Booked Reserves* lands have reserves booked in…
Dawson Gas Type Curve Growth Frac Technology Advancements = Improvements in Well Performance Completions 2009- 2012 2013- 2015 2015 Type curve growth over time due to 2011 2014 revised* improvements in well design, focused Frac…
Dawson Development Economics 95% Rate of Return Flat at 3/GJ AECO and C55/bbl C85/bbl & C55/bbl & 7,000 Key Metrics C3/GJ C3/GJ(1) DCET Capex per well (MM) 5.5 4.4(1) 6,000 Reserve estimate (Bcf) 7.4 7.4 IP (1 mo) (MMcf/d) 6.2…
Dawson A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback (mm) Capex (mm) 250 200 Net Cash Flow 200 160 Production (mmcfe/d) mmcf/d 150 120 millions 100 80 50 40…
Dawson Infrastructure New Facility Planned For 2017 On-Stream Submitted application for two 90 MMcf/d gas plants Dawson Phase III will be the first to be built with commissioning planned for 2017 New Dawson Phase III Gas Plant…
Dawson 2015 and Beyond Better with Age, Facility Expansion Planned Dawson 35,000 Continues to perform, 30,000 delivering significant cash flow 25,000 Facilities producing at capacity Boe/d 20,000 Drilled and tested 2…
Parkland/Tower Reaping Acquisition Benefits (1) Breakeven pricing assumes 20% cost savings as compared to late 2014 estimates. * IRR Half cycle after tax rate of return based on C55/bbl Edmonton Sweet (MSW) and C3/GJ AECO * Free…
Parkland/Tower Asset Details Significant Value Creation Parkland Tower Net production (boe/d) 18,000 6,410 Q1 2015 Liquids (bbls/d) 2,650 3,750 Gas (mmcf/d) 92 15.9 Land (net sections) 23 57 Working Interest 84% 92% Reserves (2P…
Parkland/Tower Development Potential Incremental Reserves Potential with Multilayer Development Upper Montney Upper Montney A Booked Reserves* supports two layers of development at Upper Montney Parkland and Tower At year end…
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 160,000 70 2,500 90…
Tower Completions Advancement Advanced Completion Design = Improved Performance Completions 2014 2015 2015 Revised* 1,200 Frac spacing (m) 40 25 25 2014 Type Curve Fracs per well 44 60 60 1,000 Avg. tonnage 2015 Type Curve 50 45…
Tower Development Economics 35% Rate of Return Flat at 3/GJ AECO and C55/bbl 1400 Cdn85bbl Cdn55/bbl Key Metrics & C3/GJ & C3/GJ(1) 1200 DCET Capex per well (MM) 6.5 5.2(1) 2P Reserve Estimate (Mboe) 600 600 1000 IP (1 mo)…
Tower Cumulative Production New Wells are Exceeding Type Curve Two wells have produced in excess of 100,000 bbl oil in under 7 months Total Production (BOE) 110,000 Oil Production (bbl) 200,000 100,000 180,000 90,000 160,000…
Operational Excellence Parkland Learnings from Dawson = Advanced Frac Design and Improved Results at Parkland Optimizing Fracs, Lowering Costs Optimizing Well Length and Frac Spacing 300,000 35 2,500 120 250,000 30 2,000 100…
Parkland Development Economics Targeting Liquids With Step Out From Core Completions 2012 2013 2014 2015 2015 Revised* Frac spacing (m) 180 100 80 70 70 1,200 Fracs per well 10 15 22 30 30 2012 Type Curve (Dry Gas) Avg. tonnage…
Parkland Development Economics 55% Rate of Return at Flat 3/GJ AECO and C55/bbl 1200 C85/bbl & C55/bbl & Key Metrics 3/GJ C3/GJ(1) 1000 DCET Capex per well (MM) 5.7 4.6(1) 2P Reserve Estimate (Bcfe) 5.8 5.8 800 IP (1 mo) (boe/d)…
Parkland/Tower 2015 10% Year-over-Year Increase in 2015F Production Parkland/Tower 35,000 Dry gas areas in Parkland have 30,000 delivered strong results in 2014 25,000 24 Gross Operated 20,000 Wells Planned for 2015 (22…
Sunrise Long-term Growth Opportunity (1) Breakeven price assumes 20% cost savings as compared to late 2014 estimates. *Breakeven Cdn per bbl or mcf price as indicated defined as price at which NPV10 is equal to zero. * IRR Half…
Sunrise/Sunset Asset Details Sunrise/Sunset Moving Forward with Full Scale Development Sunrise has progressed from pilot to full scale development Net production (boe/d) Q1 2015 12,100 Liquids (bbls/d) 130 Gas (mmcf/d) 72.0 Land…
Sunrise Development Potential Proven Productivity from Four Layered Development Known reserves exist in Upper Montney A. Upper Montney A Booked Reserves* 2014 drilling program has proved Upper Upper Montney Montney A+…
Operational Excellence Sunrise Incorporating Learnings into Early Development = Excellent Initial Results Doubling Fracs/well over 3 years Efficient Lateral Length 250,000 35 3,000 140 30 2,500 120 200,000 Lateral Length…
Sunrise Outperforming Expectations Drilling Results Prove Four Layer Development Model 2015 Type Curve (11.3 Bcf) 10,000 2013/14 Type Curve (11 Bcf) 9,000 2012 Type Curve (9.7 Bcf) This c 8,000 2011 Type Curve (7 Bcf) has b…
Sunrise Continuous Improvements Enhanced Well Design = Type Curve Improvement 2015 Completions 2009-2011 2013-2014 2015 7,000 Revised* 2015 Type Curve (11.5 Bcf) Frac spacing (m) 120 80 80 80 6,000 Fracs per well 16 25 25 29…
Sunrise Development Economics 65% Rate of Return Flat at 3/GJ AECO and C55/bbl 7,000 C85/bbl & C55/bbl & Key Metrics C3/GJ C3/GJ(1) DCET Capex per well (MM) 6.0 4.8(1) 6,000 2P Reserve Estimate (Bcf) 11.5 11.5 IP (1 mo) (MMcf/d)…
Sunrise 2015 and Beyond Commercial Development of Sunrise with 100% YOY Increase in 2015F Production Sunrise 25,000 New wells brought on-stream through third party processing facility 20,000 through second half of 2014…
Montney Pilots Projects Significant Future Potential
Montney Pilots Proving Future Value Before Full Scale Development West Attachie: Pilot Production on-stream since Parkland: Q2 2014 Lower Montney well on-stream Q3 2014 East Attachie: Monitoring Pilot Production since Pouce…
Ante Creek A Montney Success Story (1) Breakeven pricing assumes 20% cost savings as compared to late 2014 estimates. *Breakeven Cdn per bbl or mcf price as indicated defined as price at which NPV10 is equal to zero. * IRR Half…
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunity Net production (boe/d) Q1 2015 17,100 Liquids (bbls/d) 8,600 Gas (mmcf/d) 51 Production split % (liquids/gas) 50/50 Land (Montney net sections)…
Ante Creek Significant Drilling Inventory Large Land Base and Down-spacing = Significant Drilling Inventory Booked reserves exist on 30% of ARC held mineral rights Significant opportunity to prove up this large land base with…
Operational Excellence Ante Creek Reducing Business Cycle Times with Optimized Frac Design Lower Cost/Frac, Optimizing Frac Space Drilling Longer Laterals in Montney Development 180,000 180 2,500 20 160,000 160 18 Lateral…
Ante Creek Delivering Results Type Curve Consistency Moving Out of the Core 2015 Completions 2012 2013 2014 2015 Ante Creek Normalized Type Curves for Revised* Montney Horizontal Wells Frac spacing (m) 120 100 100 80 80 500 Fracs…
Ante Creek Development Economics 35% Rate of Return at Flat 3/GJ AECO and C55/bbl 400 C85bbl & C55/bbl & Key Metrics C3/GJ C3/GJ(1) 350 DCET Capex per well (MM) 4.2 3.3(1) 2P Reserve Estimate (Mboe) 290 290 300 IP (1 mo) (boe/d)…
Ante Creek Oil Leading Capital Efficiency ARCs Ante Creek Montney Capital Efficiency Outperforms Industry 250 Other 12 Mo Cum Gas (Boe) Other 12 Mo Cum Oil (bbl) ARC 12 Mo Cum Gas (Boe) ARC 12 Mo Cum Oil (bbl) 200 Cumulative…
Ante Creek 2015 and Beyond Ante Creek is 20% of ARCs High Value Liquids Production Ante Creek ARCs three plants filled to capacity in late 2013 with 20,000 development drilling 18,000 Successful delineation step 16,000 out…
Sustainability Balancing Inflows and Outflows for Long-Term Sustainability Objective to fully fund ARC's Dividend and Sustaining Capital from Funds from Operations (FFO) over the long-term Profitable Growth Capital will be funded…
Significant Available Cash and Credit Capacity Q1 2015 Net Debt and Cash Balance 2.5 Billion Total Cash & Credit Capacity (1.4 Billion Available) 2.5 Bank Credit Facility Cash Master Shelf 1 Billion credit facility plus 40…
Value Proposition Clear Line of Sight to Long-term Value Creation
Looking Beyond 2016 Diverse Portfolio Provides Strategic Optionality ARC has a well balanced inventory of value creating opportunities which may be pursued beyond 2016 Project Options 2016 - 2020+ 140,000 Dawson Phase 3 120,000…
Crude Oil Commodity Marketing 97% Condensate, Light and Medium Crude Oil Maintain control into liquid market hubs to ensure flexibility and optimize price Secured firm transportation pipeline agreements to support future development…
Natural Gas Commodity Marketing Diversified Sales Point and Purchasers of ARCs Natural Gas Sales are typically sold at 50%/50% monthly/daily index dependent upon operational and market conditions Secured sufficent take-away to support…
NGL Commodity Marketing NGL Pipeline & Fractionation Capacity Secured ARCs NGL Exposure NGL revenue (4,000 bbl/d) makes up approximately 2% of ARCs revenue Ensuring NGL production moves to market protects ARCs oil & gas production…
Hedge Positions April 29, 2015 Summary of Hedge Positions as at April 29, 2015 (1) Q2 2015 H2 2015 2016 2017 2018 2019 (2) Crude Oil - WTI US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day…
Reserves and Resources Disclosure All reserves and resources volumes for the BC Montney and elsewhere in this presentation are, unless indicated otherwise, as at December 31, 2013 as evaluated by GLJ Petroleum Consultants Ltd. in…
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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