Corporate Profile Corporate Summary Production (Q1 2014) 105,700 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 / 3.7% (3) Annualized…
Unique Strategy Targeting net debt to 200% Reserve funds from operations Replacement through between 1.0 1.5x the drill bit for the past Active Hedging 6 consecutive years Program Capital Discipline and Pace of Development…
Operations Overview Production (Q1 2014) 105,700 boe/d 2P Reserves (YE 2013) 634 Mmboe Western Canadian Producer
Sustainable Dividend Key component of strategy Supported by active hedging and balance sheet strength Cumulative Dividends and Historic Payout Ratio Committed to the Dividend While Delivering Profitable Growth
Risk Managed Value Creation Production Profile boe/d Forecast Strategic Optionality
Delivering Income and Growth Delivered 19% annualized total return since inception Paid out greater than 5 billion in total dividends to date - 30.28/share (1) Production Growth Reserves Growth (2P) Gas Liquids (1) Includes May…
Significant Reserve and Resource Base 634 mmboe of 2P reserves and RLI of 15.5 years (1) See Reserves and Resources Disclosure and Definitions of Oil and Gas Reserves and Resources in the Appendix to this presentation. 17% Annual…
Reserve Replacement Significant organic growth in reserves over past five years Six consecutive years of 200% or greater reserve replacement Adding Value Through the Drill Bit
Capital Efficiency Replaced 200% of production at an all in FD&A cost of 13.32/boe(1) 2013 recycle ratio of 2.2 times (F&D of 12.79/boe(1) and netback of 28.57/boe) Three year FD&A of 8.39 before changes in FDC (1) 2P FD&A and…
Key Reserve Information 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 Probable 634 (194 mmbbls liquids, 2.6 Tcf…
Per Share Growth Growth in per share production and reserves while also paying a meaningful dividend In 2013, 2P RLI decreased from 17.5 years to 15.5 years converting reserves into production and cash flow (1) Debt Adjusted…
ARCs Proven Development Model Dawson, Pembina, SE Sask/Manitoba, Redwater Ante Creek, Parkland/Tower Sunrise West Attachie, Septimus Blueberry, Sundown Inventory of Opportunities at all Stages
2014 Budget and Outlook
2014 Capital Budget 915 Million Significant spending on oil and liquids-rich gas and low cost, high rate of return Montney natural gas development 2014 Capital Budget Volumes Year Capital Average Gross Net MM (boe/d) Wells…
Looking Forward to 2014 and 2015 Assuming economic conditions remain similar to the current outlook, 2014 and 2015 will include the following: Ante Creek Explore newly-acquired lands Continue testing 200m lateral horizontal well…
Production Outlook Managing decline…
Growing Our Low Cost Gas Business 15% CAGR(1) total Natural Gas production driven by 33% CAGR Montney Natural Gas production 2009 - 2015 Forecast 21% CAGR(1) in 2P Natural Gas reserves from 1 Tcf to 2.6 Tcf 2008 - 2013 (1)…
Growing Oil and Liquids Since 2009 7% CAGR(1) total Liquids production driven by 34% CAGR Montney Liquids production 2009 2015 Forecast 5% CAGR(1) in 2P Liquids reserves from 152 Mmbbls to 194 Mmbbls 2008 - 2013 Meaningful Oil…
2013 and 2014 Guidance 2014 Guidance 2014 YTD Actual 2013 Actual Oil (bbls/d) 35,00037,000 37,478 32,784 Condensate (bbls/d) 2,3002,500 2,887 2,251 Gas (mmcf/d) 415425 369.6 349.4 NGLs (bbls/d) 3,7004,000 3,743 2,811 Total…
Asset Overview
Montney Growth Assets
Reserve Benchmarking - North American Plays ARC Montney EUR 5.5 Bcf/well Wellhead EUR (Mboe) Wellhead EUR (Bcfe) Source: ITG April 2013, raw data provided by DI Desktop, geoScout Montney is a World Class Play with 3x…
Breakeven Price Benchmarking Montney and Marcellus Break-Even NYMEX (/Mcf) Break-Even WTI (/bbl) ARC West Montney early pilot data shows costs coming down and EUR going up. Source: ITG April 2013, raw data provided by DI Desktop,…
Montney Comparison to Select U.S. Plays Montney Advantage: Massive thickness: Montney is akin to stacking four separate shale plays on top of one another Lithology and fracability: Low clay content, low Poissons Ratio and high…
Montney Infrastructure Optionality Area is currently well served with three major pipelines providing access to North American Markets: TransCanada Canada & US Alliance Chicago Spectra - Westcoast ARC Lands Multiple pipelines are…
ARC in the Montney Montney ARCs Growth Engine
Deep Basin Montney Schematic
Significant Montney Land Base Grown ARCs Montney land base from 130 net sections in 2005 to 902 net sections today Significant Montney landholdings with 966 gross sections (902 net sections) including 676 gross undeveloped sections…
Early Stages of Property Development* Gross Drilling Locations * Subject to change based on technology and economic environment. Large Identified Opportunity for Future Growth
NEBC Montney 30 Day Hz IP Rates (1) All Montney Horizontal gas wells in NW AB from T75 R10 W6 (Glacier) to NE BC 94-G-2 (Northern Montney) (2) Based on public data as available in April 2014 (data to January 2014) ARCs 30 Day…
NEBC Montney First Year Cumulative Gas (1) All Montney Horizontal gas wells in NW AB from T75 R10 W6 (Glacier) to NE BC 94-G-2 (Northern Montney). (2) Based on first 365 days of production (excludes oil wells and all gas wells…
Dawson Gas World Class Gas Resource
Dawson Asset Details Net production (boe/d) Q1 2014 27,200 Liquids (bbls/d) 950 Gas (mmcf/d) 158 Production split % (liquids/gas) 97% gas Land (Montney net sections) 133 Working Interest 96% Reserves (2P mmboe) 174 Liquids…
Dawson A Cash Flow Machine 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 generate 100 million of Free Cash Flow annually for 15 years…
Dawson Gas Type Curve Growth Expect 2014 type curve to be consistent with 2013; plans to drill core Dawson wells to keep plant full in 2014 and into 2015 Based on delineation data from pressure and rate performance, we expect…
Dawson Development Economics Key Metrics DCET Capex per well (MM) 4.6 2P Reserves per well (Bcf) 7.1 IP (1 mo) (MMcf/d) 5.0 IP (12 mo) (MMcf/d) 4.8 Half Cycle Economics (C85/bbl) 4/GJ 3/GJ IRR (% AT) 86% 55% Recycle Ratio 4.5…
Dawson 2014 Budget 54 Million Drilling Three Pads to Keep Production Flat in 2014 and into 2015
Parkland/Tower Reaping Acquisition Benefits
Parkland/Tower Asset Details Parkland Tower Net production (boe/d) 12,700 3,870 Q1 2014 Liquids (bbls/d) 1,950 2,850 Gas (mmcf/d) 65 6.1 Land (net sections) 23 57 Working Interest 84% 92% Reserves (2P mmboe) 58.0 24.6 Liquids…
Parkland/Tower Infrastructure Regulatory approval for 120 Mmcf/d, sweet service with two trains of 60 Mmcf/d (staged construction) First phase of plant built with design capacity of: 64 Mmcf/d of inlet gas 3,000 bbls/day LPG…
Parkland Development Economics 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) 4/GJ 3/GJ IRR (% AT) 67% 48% Recycle Ratio 4.0…
Tower Dual-Layer Development Parkland and Tower have similar geology Two Layer Horizontal Development Very Thick Montney A 100M (328 ft.) Tower also has Dual-Layer Montney Development Opportunity
Tower Development Economics 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 Cdn85bbl IRR (% AT) 35% 28% Recycle Ratio…
Tower Strong Well Performance Tower 12-16 Pad (8 wells) Cumulative Production Cumulative Oil Production (Mbbls) Cumulative Total Production (Mboe) Restricted to 100 bopd MRL due to Government Regulations. 2014 Type Well Early…
Parkland/Tower 2014 Budget 191MM* 84% Year-over-Year Increase in Q1 Production
West Montney Asset Details Net production (boe/d)- Q1 2014 4,110 Liquids (bbls/d) 60 Gas (mmcf/d) 24.3 Land (net Montney sections) 278 Working Interest 90% Reserves (2P mmboe) 150 Liquids (mmbbls) 10 Gas (bcf) 842 Reserve…
West Montney Oil and Gas Geology 150 km (90 mi) Blueberry Attachie Septimus Sunrise Sundown 300 m (980 ft) Thick Multi-Zone Potential Across Entire Land Base
Sunrise/Sunset Asset Details Sunrise has progressed from pilot to full scale development Net production (boe/d) Q1 2014 3,000 Liquids (bbls/d) 0 Gas (mmcf/d) 18.0 Land (net Montney sections) 32 Working Interest 89% Reserves…
Sunrise Development Planning Sunrise 02-25 Sunrise Development Model Vertical Frac Offset Proposal Upper Montney Middle Montney Montney B Montney E Multiple Zones with Economies of Scale
Sunrise Outperforming Expectations Estimated Ultimate Recovery (EUR) is Cumulative Production + Forecast or GLJ 2P Reserves A 02-25 Hz MTYA Cum to March 10, 2014: 3.9 Bcf ARC EUR Forecast (RTA): 15 Bcf GLJ 2013 (2P) EUR:14 Bcf B…
Sunrise Development Economics Key Metrics DCET Capex per well (MM) 5.2 2P Reserves per well (Bcf) 11.0 IP (1 mo) (MMcf/d) 5.3 IP (12 mo) (MMcf/d) 4.8 Half Cycle Economics (C85/bbl) 4/GJ 3/GJ IRR (% AT) 80% 50% Recycle Ratio 4.8…
Sunrise 2014 Budget 119MM* Commercial Development of Sunrise with 60 mmcf/d Exit 2014
Building Confidence for Commercialization Attachie West and Septimus will be piloting production in 2014 to assess commerciality Attachie East continues delineation and land retention Blueberry and Sundown are waiting in…
Ante Creek Oil & Gas A Montney Success Story
Ante Creek Asset Details Net production (boe/d) Q1 2014 18,200 Liquids (bbls/d) 10,700 Gas (mmcf/d) 45 Production split % (liquids/gas) 59/41 Land (Montney net sections) 341 Working Interest 99% Reserves (2P mmboe) 50.9…
Ante Creek Opportunity for Down-Spacing Testing 200m lateral horizontal well spacing in Montney through pilot schemes; ensuring future development extracts maximum value The down-spacing is aimed at greatly increasing the NPV of the…
Ante Creek Oil Leading Capital Efficiency (1) Source information from Well Completions & Frac Database Canadian Discovery Ltd. and Introspec Energy Group Inc., wells rig released Jan 2011 to current. (2) All reported wells from…
Ante Creek Development Economics 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 Cdn85/bbl 4/GJ 3/GJ 4/GJ 3/GJ IRR (% AT) 71%…
Ante Creek 2014 Budget 198MM 71% Year-over-Year Increase in Q1 2014 Production
Pembina Oil Revitalizing a Mature Oil Field
Pembina Asset Details Net production (boe/d) Q1 2014 11,200 Cardium production 94% Production split % (liquids/gas) 81/19 Land (Cardium net sections) 138 Working Interest 80% Reserves (2P mmboe) Cardium 53.7 Reserve Life Index…
Pembina Horizontal Injection Pilot 1 Injection started in Dec 2012; encouraging trend of declining GOR, stabilizing/increasing oil Monitoring 15 offsetting producers; 5 Hz wells and 9 verticals Gain of 30-70 bbl/d of incremental oil…
Pembina Leading Capital Efficiency Average Daily BOE (IP3) data from Accumap - includes wells greater than 750hrs, wells within TWP 47-49 RNG 5-10W5, on production after January 1, 2008. (1) TWP 47-49 RNG 5-10W5 (2) Source…
Pembina Development Economics Key Metrics DCET Capex per well (MM) 2.6 2P Reserves per well (Mboe) 191 IP (1 mo) (boe/d) 270 IP (12 mo) (boe/d) 104 Half Cycle Economics (C3/GJ) Cdn95/bbl Cdn85bbl IRR (% AT) 74% 58% Recycle Ratio…
Pembina 2014 Budget 118MM* * Operated Capital Only ** Includes 1 vertical injection well ARC Plans to Drill 43 gross operated Horizontal Cardium Wells in 2014
Summary
Why Invest in ARC Long-term view and commitment to value creation Strong balance sheet Disciplined capital management Significant exposure to early stage development of world class assets Strategic optionality of high rate of return…
Looking Beyond 2015 ARC has a 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 2010 2014 Project Options 2016 -…
Appendix
Strong Performance Through 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 Canadian GAAP. (2) Net Income presented for the periods…
Multiple Sources of Debt Bank Credit Facility 1 Billion credit facility plus 40 million working capital facility 12 banks including the five largest Canadian banks Recently extended to October 2017 Long-term notes Private…
Note Repayments Spread Over Time Long-term notes structured to mature over a number of years Repayment will come from existing credit facilities * Assumes USDCAD of 1.1053 Debt Repayment Schedule Reduces Financing Risk
Natural Gas Commodity Marketing Ensuring Production Moves to Market Move product to the nearest and most liquid point Proactively plan for future development to ensure adequate take-away Current production 370 Mmcf/d of Natural…
Crude Oil Commodity Marketing ARC controls the produced barrel by selling onto the feeder pipeline system or to a destination of choice for sale at a custody transfer point (Edmonton, Cromer, Hardisty) ARC is not currently a Mainline…
NGL Commodity Marketing Western Canadian NGL Market Propane is reliant on exports to U.S. due to limited Canadian demand Butane markets well balanced due to demand from refining and crude oil blending Condensate market remains…
Hedge Positions April 30, 2014 Summary of Hedge Positions as at April 30, 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…
Socially Responsible Operator ARC strives to meet the highest standards in health, safety and environment Environmental Stewardship Health and Safety Commitment Ranked 1 in the CDPs Canadian Targets zero lost time incidents Carbon…
Montney Growth Assets 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 function of the future…
Montney Growth Assets 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 4.2 4.1 Natural Gas…
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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