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East Coast Energy Conference – Arc Resources Ltd.

Arc Resources Ltd. · Mar 9, 2011 · 51 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. East Coast Energy Conference – Arc Resources Ltd. – slide 1
    March 9-11, 2011 FirstEnergy/Soci?t? G?n?rale East Coast Energy Conference
  2. East Coast Energy Conference – Arc Resources Ltd. – slide 2
    ARC RESOURCES ? Launched July 1996 as ARC Energy Trust - 20% annual return since inception (to February 28) - $26.28 per unit in total distributions (to February 28) -Total distributions of $3.8 billion (to February 28) - Converted…
  3. East Coast Energy Conference – Arc Resources Ltd. – slide 3
    Proved Undeveloped 20% INCOME AND GROWTH BOTH ARE POSSIBLE ? ARC has a 14 year history of risk managed value creation - Provided a 20% annual return since inception - Distributed $3.8 billion in total distributions - $26.28 / unit…
  4. East Coast Energy Conference – Arc Resources Ltd. – slide 4
    $0 $5 $10 $15 $20 $25 2002 2003 2004 2005 2006 2007 2008 2009 2010 FD&A ? Replaced 502% of production in 2010 at an all in FD&A of $9.21/boe ? Drill bit F&D was $6.47/boe EXCELLENT FD&A PERFORMANCE
  5. East Coast Energy Conference – Arc Resources Ltd. – slide 5
    0% 100% 200% 300% 400% 500% 600% 700% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Development Acquisitions ? Third successive year of greater than 200% reserve replacement from the drill bit ? Proved…
  6. East Coast Energy Conference – Arc Resources Ltd. – slide 6
    0 100 200 300 400 500 Gas Liquids 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,…
  7. East Coast Energy Conference – Arc Resources Ltd. – slide 7
    10% COMPOUND ANNUAL GROWTH IN RESERVES PER UNIT (ADJUSTED) ? An investor who participated in the distribution re-investment plan since inception would have enjoyed a 10% compound annual growth in the reserves attributed to their…
  8. East Coast Energy Conference – Arc Resources Ltd. – slide 8
    2011 CAPITAL PROGRAM TARGETS 12 PER CENT GROWTH 2009 (a) 2010(a) 2011(b) Development 187 354 409 Development ? Facilities 73 72 54 Maintenance 11 15 29 Optimization 8 11 18 Land & Seismic 11 65 17 Unconventional Gas 16 1 5…
  9. East Coast Energy Conference – Arc Resources Ltd. – slide 9
    2011 BUDGET - UNCONVENTIONAL OPPORTUNITIES FORM THE BASE NEBCNWAB $228 MM 35,400 boe/d 35 wells NORTHAB $122.7 MM 10,100 boe/d 19 wells PEMBINA $89.5 MM 7,800 boe/d 42 wells REDWATER $22.2 MM 4,400 boe/d 14 wells…
  10. East Coast Energy Conference – Arc Resources Ltd. – slide 10
    2011 BUDGET ? 86% of WELLS DRILLED WILL BE HORIZONTAL NORTH AB REDWATER NE BC/NW AB PEMBINA CENTRAL AB SE AB/SW SK SE SK/MB 28 7 18 1 41 1 2 1 13 1 2 3 38 10 142 24 TOTAL OPERATED 2011 86% of wells are Horizontal…
  11. East Coast Energy Conference – Arc Resources Ltd. – slide 11
    Proved Undeveloped 20% ARC RESOURCES TOP TIER GROWTH PLUS INCOME ? According to recent Credit Suisse estimates, ARC has one of the highest expected total returns as measured by organic growth rate plus free cash flow yield in the…
  12. East Coast Energy Conference – Arc Resources Ltd. – slide 12
    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, ARC?s current plans call for the construction of three 60…
  13. East Coast Energy Conference – Arc Resources Ltd. – slide 13
    MONTNEY LANDS MAJOR GROWTH ENGINE ? ARC had our independent reserves evaluator assess the resource potential of our main BC Montney lands, excluding Attachie [1] Discovered Gas Initially in Place (?DGIIP?) is the quantity of gas that…
  14. East Coast Energy Conference – Arc Resources Ltd. – slide 14
    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…
  15. East Coast Energy Conference – Arc Resources Ltd. – slide 15
    MONTNEY TYPE CURVE GEOLOGY MATTERS 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Production (mcf/d) Months Dawson…
  16. East Coast Energy Conference – Arc Resources Ltd. – slide 16
    0 2000 4000 6000 8000 10000 12000 1 51 101 151 201 251 301 351 401 451 501 Production Rate (mcf/d) ARC Others HORIZONTAL WELLS ? 30 DAY IP RATES MARCH 2011: Glacier - Town P50 ARC P50 P50 ? All Wells 3.3 mmcf/d ? Dawson/…
  17. East Coast Energy Conference – Arc Resources Ltd. – slide 17
    0 2000 4000 6000 8000 10000 12000 1 21 41 61 Production Rate (mcf/d) HORIZONTAL WELLS ? 30 DAY IP RATES MARCH 2011 ? ARC ONLY ARC P50
  18. East Coast Energy Conference – Arc Resources Ltd. – slide 18
    DAWSON PRODUCTION TARGET 165 MMCF/D IN Q2 2011 0.0 20.0 40.0 60.0 80.0 100.0 120.0 Gas MMcf/d ? First 60 mmcf/d gas plant on stream May 2010, second 60 mmcf/d gas plant under construction ? April 1, 2011 start-up date targeted…
  19. East Coast Energy Conference – Arc Resources Ltd. – slide 19
    RECENT WELL PERFORMANCE REMAINS STRONG ? ARC constrains production to approximately 5.3 mmcf/d to limit abrasion on pipes and fittings ? this results in productive capacity being understated, but lengthens the time that wells will…
  20. East Coast Energy Conference – Arc Resources Ltd. – slide 20
    DAWSON DEVELOPMENT ECONOMICS ? Deep drill royalty credit ~1$MM applied to all cases ? Assumes one month lag from capital spend to production date ? Off lease tie-in well ? No liquids included in economics, E&P tax rates starting in…
  21. East Coast Energy Conference – Arc Resources Ltd. – slide 21
    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: ?…
  22. East Coast Energy Conference – Arc Resources Ltd. – slide 22
    2010 DAWSON GAS PLANT ? Dawson 5-35 Gas Plant (Phase 2) ? Mechanical construction complete ? Electrical wiring complete ? Tie-in of Phase 2 facilities to Phase 1 facilities is in final stages ? On track for an early April 2011…
  23. East Coast Energy Conference – Arc Resources Ltd. – slide 23
    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 *Swan & Septimus as per Peters & Co Montney…
  24. East Coast Energy Conference – Arc Resources Ltd. – slide 24
    PARKLAND ? TIGHT OIL OPPORTUNITY ? Northern portion of the Parkland property is in liquids window ? Several vertical wells swabbed light oil on test ? ARC plans to drill a well in Q1 to better understand the development…
  25. East Coast Energy Conference – Arc Resources Ltd. – slide 25
    PARKLAND DEVELOPMENT ECONOMICS ? Condensate 13 bbls/MMcf, Propane 13 bbls/MMcf, Butane 10 bbls/MMcf ? Royalties noted (26%) based on approximate subsequent year royalty rate after $850 MM credit is drawn down ? Assumes one month lag…
  26. East Coast Energy Conference – Arc Resources Ltd. – slide 26
    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 production. ?…
  27. East Coast Energy Conference – Arc Resources Ltd. – slide 27
    REGIONAL SCHEMATIC CROSS SECTION Total Net Pay>3% (m) 103 78 43 36 Total Net Pay>6% (m) 30 2 23 4 DGIIP (BCF/Section)* 100 60 45 20 Upper Montney Lower Montney A B A B [1] Discovered Gas Initially in Place (?DGIIP?) is the…
  28. East Coast Energy Conference – Arc Resources Ltd. – slide 28
    WEST MONTNEY RESOURCE 5.5 TCF GAS ? 5.5 Tcf of gas classified as DGIIP - P+P Reserves of 253 Bcf at year-end 2010 (approximately 5 per cent of DGIIP) ? Current production of approximately 7 mmcf/d net to ARC through small,…
  29. East Coast Energy Conference – Arc Resources Ltd. – slide 29
    SUNRISE/SUNSET 2011 BUDGET PLANS Capital: ? Total Capital $25 MM Drilling (3 wells): ? Horizontal 2 ? Vertical 1 ? Oil/Gas 0/3 Production: ? Year End 2010 0 boe/d ? Year End 2011 2,301 boe/d ? Year Average 609 boe/d…
  30. East Coast Energy Conference – Arc Resources Ltd. – slide 30
    ATTACHIE ? NEW OPPORTUNITY UNDEFINED POTENTIAL ? Prospective land base of 101 sections ? Land offsets a 13 mmcf/d Montney test from a third party ? ARC plans to drill 4 verticals and 2 horizontals by the end of 2011 13 mmcfd test
  31. East Coast Energy Conference – Arc Resources Ltd. – slide 31
    ANTE CREEK ASSET DETAILS ? Current production 8,000 boe/d ? Reserves 47 mmboe ? Working interest ?98% ? Reserve life index 16 years (based on current production) ? Production split 42% oil & NGLs / 58% natural gas ? ARC owns a…
  32. East Coast Energy Conference – Arc Resources Ltd. – slide 32
    ANTE CREEK - ANOTHER MONTNEY GROWTH STORY - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2001 01 2001 04 2001 07 2001 10 2002 01 2002 04 2002 07 2002 10 2003 01 2003 04 2003 07 2003 10 2004 01 2004 04…
  33. East Coast Energy Conference – Arc Resources Ltd. – slide 33
    ANTE CREEK HORIZONTAL WELLS 0 100 200 300 400 500 600 700 800 900 00/11-24-065- 25W5 00/05-13-065- 25W5 00/08-17-067- 24W5 00/06-23-065- 25W5 02/02-24-067- 25W5 00/05-10-066- 25W5 00/10-26-066- 25W5…
  34. East Coast Energy Conference – Arc Resources Ltd. – slide 34
    ANTE CREEK MEASURED INITIAL PRESSURE @ HORIZONTAL WELLS 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Pressure (kPa) Test Date AnteCreek North…
  35. East Coast Energy Conference – Arc Resources Ltd. – slide 35
    ? Land holding of 245 gross and 238 net sections - post closing ? Horizontal multi stage completions have been very successful ? 30 day production rates have averaged 360 boe/d ? as opposed to 100 boe/d for a vertical well ? Over…
  36. East Coast Energy Conference – Arc Resources Ltd. – slide 36
    ANTE CREEK DEVELOPMENT ECONOMICS 0 100 200 300 400 500 600 0 3 6 9 12 15 18 21 24 27 30 33 36 Normalized Production Rate (BOE/d) Months TypeCurve Top3Wells Bottom3Wells Payout Type Curve based on Average of 17 HWells drilled…
  37. East Coast Energy Conference – Arc Resources Ltd. – slide 37
    PEMBINA ARC?s 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…
  38. East Coast Energy Conference – Arc Resources Ltd. – slide 38
    PEMBINA ? CARDIUM STRUCTURAL CROSS SECTION CARDIUM UNIT Twp 48 Twp 47 Twp 49 5 km Rge 8 Rge 7 Rge 6W5 Conglomerate unit Upper Sand Unit Middle Unit Lower Sand Unit A A 1375m 1494m
  39. East Coast Energy Conference – Arc Resources Ltd. – slide 39
    PEMBINA ? CARDIUM FORMATION Cardium Conglomerate Cardium Sandstone
  40. East Coast Energy Conference – Arc Resources Ltd. – slide 40
    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…
  41. East Coast Energy Conference – Arc Resources Ltd. – slide 41
    PEMBINA ? 30 DAY INITIAL PRODUCTION RATES ? ALL WELLS ARC?s Wells Median Well ? approximately 150 boe/d
  42. East Coast Energy Conference – Arc Resources Ltd. – slide 42
    PEMBINA ? 30 DAY INITIAL PRODUCTION RATES ? CORE WELLS ARC?s Wells Median Well ? approximately 120 boe/d
  43. East Coast Energy Conference – Arc Resources Ltd. – slide 43
    HORIZONTAL WELL RESULTS ? Given the vertical and horizontal variability in the reservoir, it is not surprising that there is great variability in production results Which is the ?type curve??
  44. East Coast Energy Conference – Arc Resources Ltd. – slide 44
    HORIZONTAL WELL RESULTS ARC WELLS ONLY
  45. East Coast Energy Conference – Arc Resources Ltd. – slide 45
    PEMBINA OPPORTUNITY ? ARC is optimistic about the opportunity for increased recovery at Pembina from the application of horizontal drilling and completion technology: ? In the ?heart? of Pembina, excluding the ?halo? lands, a 1%…
  46. East Coast Energy Conference – Arc Resources Ltd. – slide 46
    WHERE TO FROM HERE? ? Our vision remains the same: ? 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…
  47. East Coast Energy Conference – Arc Resources Ltd. – slide 47
    2010 OPERATING PERFORMANCE 2010 2009 Change Production ? full year (boe/d) 4th Quarter 73,954 84,686 63,538 62,520 16% 35% Cash flow from operating activities Per share 186 0.66 143 0.60 +30% +10% Operating Income Per…
  48. East Coast Energy Conference – Arc Resources Ltd. – slide 48
    2011 GUIDANCE Production 2009 (Actual) 2010 (Actual) 2011 (Budget) Oil (bbls/d) 27,509 27,341 27,500 ?28,500 NGLs (bbls/d) 3,689 4,245 4,000 ? 4,800 Gas (mmcf/d) 194 254 315 ? 322 Total (boe/d) 63,538 73,954 84,000 ? 87,000 Costs…
  49. East Coast Energy Conference – Arc Resources Ltd. – slide 49
    HEDGING UPDATE As Of Jan. 31, 2011 Liquids 2011 2012 Oil (bbls/d) 20,000 16,000 Sold Call ($US/bbl)* 89.43 90.00 Bought Put ($US/bbl) 84.43 90.00 Sold Put (partial volumes) 61.04 60.00 Gas 2011 2012 Gas (mcf/d) 162,800 66,500…
  50. East Coast Energy Conference – Arc Resources Ltd. – slide 50
    PEMBINA ? 90 DAY INITIAL PRODUCTION RATES ? ALL WELLS ARC?s Wells Median Well ? proximately 130 boe/d
  51. East Coast Energy Conference – Arc Resources Ltd. – slide 51
    PEMBINA ? 90 DAY INITIAL PRODUCTION RATES ? CORE WELLS ARC?s Wells Median Well ? approximately 150 boe/d

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