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 (Q3 2014) 115,530 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 / 4.5% (3) Annualized…
Q3 2014 Operational and Financial Performance Record Production, Strong Financial Results Three Months Ended Nine Months Ended September 30 September 30 (CDN millions, except per share and per boe amounts) 2014 2013 2014 2013…
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 Annual Reserve Replacement
Operational Excellence Capital Efficiencies Managing Declines and Driving Down Costs (1) 2013 Costs include Infrastructure spending, related production did not come on-stream until 2014 (2) Source: Scotiabank GBM Statsbook May 2014…
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 (1) Q3 2014 Net Debt to FFO was calculated based on annualized Q3 2014 Funds from Operations and net debt at September 30,…
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 15% Compound Annual Production Growth Since Inception boe/d Forecast
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 17% annualized total return since inception, 5.2 billion of dividends (30.78/share)
Growth in Per Share Production and Cash Flow Delivering Value with Profitable Growth and Income 38% increase in production per share and 69% increase in Funds from Operations per share over five year period since Q3 2009 (1)…
Operations Overview Western Canadian Producer Strategic Optionality
ARCs Proven Development Model Inventory of Opportunities at all Stages Dawson, Pembina, SE Sask/Manitoba, Redwater Ante Creek, Parkland/Tower Sunrise West Attachie, Septimus, Lower Montney Blueberry, Sundown
2015 Budget and Outlook
2015 Capital Budget 875 Million 2015 Capital Program to Deliver Record Production of 120,000-125,000 boe/d Focused on oil and liquids-rich gas and low cost, high rate of return Montney natural gas development 205MM(1) 32 gross…
2015 Capital Budget Growing Production in 2014 and 2015 Managing decline to 25% annually through paced development *** Risks to the plan: commodity prices, timing issues and cost pressures related to service sector demand for…
Growing Oil and Liquids Since 2009 7% CAGR(1) Total Liquids Production 2009 - 2015F (1) Compound annual growth rate.
Growing Our Low Cost Gas Business 15% CAGR(1) total Natural Gas production 2009 2015F (1) Compound annual growth rate.
Asset Overview
Montney Growth Assets 970 Net Montney Sections in 2014 BC AB Blueberry Red Creek Attachie Tower Parkland Septimus Pouce Sunset Coupe Sunrise Dawson Sundown 500 km Ante Creek File: ARC WI NEBC and NAB.MAP…
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 970 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 Lower Montney Montney D Montney E Attachie Tower Parkland Existing…
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…
Montney Pilots Proving Up Future Value before Full Scale Development West Attachie: Pilot Production on-stream since Parkland: Q2 2014 Red Creek Lower Montney well on-stream Q3 Attachie 2014 East Attachie: Pouce Coupe:…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Half Cycle Economics Cdn85/bbl Oil and Cdn4/GJ Gas Parkland Tower Dawson Sunrise Ante Creek 70% IRR 50% IRR 110% IRR 75% IRR 40% IRR 5.0x Recycle…
Dawson Gas World Class Gas Resource
Dawson Asset Details Excellent Free Cash Flow Net production (boe/d) Q3 2014 28,000 ARC 13-7 Proposed Gas Plant (90 mmcfd & 7,500 Liquids (bbls/d) 920 bbls/d liquids) Gas (mmcf/d) 162 ARC 1-34 Production split % (liquids/gas) 97%…
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…
Operational Excellence - Dawson Continual Learning in Frac Design = Lower Costs + Improved Economics Frac Design 100T Slickwater Fracs with Open Hole Packers/Ball Drop system Increased frac intensity planned with 840lbs/ft (1.25…
Dawson Development Economics 110% Rate of Return at Flat 4/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 5.5 2P Reserves per well (Bcf) 7.4 IP (1 mo) (MMcf/d) 6.2 IP (12 mo) (MMcf/d) 5.4 Half Cycle Economics…
Dawson - 2014 and Beyond Better with Age, Facility Expansion Planned Continues to perform well, delivering significant cash flow Facilities continue to produce at capacity Plan to drill and test 2 Lower Montney wells in Q4 2014…
Parkland/Tower Reaping Acquisition Benefits
Parkland/Tower Asset Details Material Value Creation in 2014 Parkland Tower Net production (boe/d) 18,200 6,880 Q3 2014 Liquids (bbls/d) 3,700 4,940 Gas (mmcf/d) 87 11.6 Land (net sections) 23 57 Working Interest 84% 92%…
Operational Excellence - Tower Optimal Frac Design and Significant Efficiency Gains in Tight Oil Play Frac Design 45T Dual Cluster Slickwater Fracs with Plug and Perf Dual clusters and high frac intensity of 1210lbs/ft (1.8 T/m) of…
Tower Development Economics 50% Rate of Return at Flat 4/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 6.5 2P Reserves per well (Mboe) 600 IP (1 mo) (boe/d) 1000 IP (12 mo) (boe/d) 400 Half Cycle Economics (C3/GJ)…
Tower - 2014 and Beyond Strong 2014 Results = Accelerated 2015 Development Tower oil is 50 degree API; realized condensate pricing New well initial production often constrained due to infrastructure and operation constraints. 9…
Tower Dual-Layer Upper Montney Development Parkland and Tower have Similar Geology Upper Montney Lower Montney
Operational Excellence - Parkland Learnings from Dawson = Advanced Frac Design and Improved Results at Parkland Frac Design 100T Slickwater Fracs with Open Hole Packers/Ball Drop system Increased frac intensity planned with…
Parkland Development Economics 70% Rate of Return at Flat 4/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 5.7 2P Reserves per well (Bcfe) 5.8 IP (1 mo) (boe/d) 1080 IP (12 mo) (boe/d) 645 Half Cycle Economics…
Parkland - 2014 and Beyond Drilling and New Facilities Delivered Significant Growth in 2014 Brought new wells on systematically through 2014 to fill capacity of new facility (commissioned in late 2013) Transition to slickwater…
Sunrise Long-Term Growth Opportunity
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) Q3 2014 7,050 Liquids (bbls/d) 0 Gas (mmcf/d) 42.3 Land…
Sunrise Development Planning Multiple Zones with Economies of Scale Sunrise Development Sunrise Type Well Proposal Montney A Montney B Montney C Montney D Existing Horizontal Wells Montney E Potential…
Sunrise Outperforming Expectations 2014 Drilling Results Prove up Four Layer Development Model C02-25Hz (MTYD): 2010 Completion - 130m interfrac spacing -- proposing reducing interfrac spacing going forward
Sunrise Development Economics 75% Rate of Return Flat at 4/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 6.0 2P Reserves per well (Bcf) 11.5 IP (1 mo) (MMcf/d) 6.2 IP (12 mo) (MMcf/d) 5.4 Half Cycle Economics…
Sunrise - 2014 and Beyond Commercial Development of Sunrise with 60 mmcf/d Exit 2014 New wells brought on-stream through third party processing facility through second half of 2014 Montney B suggests similar performance to…
Ante Creek Oil & Gas A Montney Success Story
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunity Net production (boe/d) Q3 2014 17,800 Liquids (bbls/d) 9,300 Gas (mmcf/d) 51 Production split % (liquids/gas) 52/48 Land (Montney net sections)…
Operational Excellence Ante Creek Reducing Business Cycle Times with Optimized Frac Design Frac Design 20T, Nitrified Foam Fracs with Open Hole Packers and Ball Drops 80m 80m 2000 m 27 fracs/wells
Ante Creek Development Economics 40% Rate of Return at Flat 4/GJ AECO and C85/bbl Key Metrics DCET Capex per well (MM) 4.2 2P Reserves per well (Mboe) 290 IP (1 mo) (boe/d) 375 IP (12 mo) (boe/d) 210 Half Cycle Economics (C3/GJ)…
Ante Creek - 2014 and Beyond Ante Creek is 20% of ARCs High Value Liquids Production ARCs three plants were filled to capacity in late 2013 through development drilling Successful delineation step out locations have added low…
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 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+ Dawson Phase 3 Pouce…
Appendix
Strong Performance Through Cycles Positive Earnings Through Commodity Price Cycles (1) Amounts presented for the periods 2010-2014 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 1.1 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 1.1208
Hedge Positions November 5, 2014 Summary of Hedge Positions as at November 5, 2014 (1) Remainder of 2014 2015 2016 - 2017 2018 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 Ceiling…
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. Based on the July 2014 updated Resource Other Than Reserves guidelines in the…
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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