Value Proposition Clear Line of Sight to Long-Term Value Creation CREATING VALUE Exposure to Early Growth & Cost Management & Stage Development Strategic Income Capital Discipline of World Class Optionality Assets Strong…
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 Operating costs reduced by from operations between 20% since 2009: 1.0 1.5x 10.19/boe in 2009 8.05/boe in Q2 2015 200% Reserve…
Corporate Profile Corporate Summary Production (Q2 2015) 109,900 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 / 6.1% (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…
Operational Excellence Capital Efficiencies Managing Declines and Driving Down Costs ARC All-In Capital Efficiencies /boe/d (1)(2) 3 Year Avg. Capital Efficiencies /boe/d (3)(4) (2012-2014) 40,000 40,000 ARC Competitors 30,000…
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 1,400 Net Debt to Funds from Operations 2.0 1.8 1,200 1.6 1,000 1.4 millions Ratio % 1.2 800 1.0 600 0.8…
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 15% annualized total return since inception, 5.5 billion of dividends (31.68/share) 6,000 120% Cumulative Dividends and Historic Payout Ratio 5,000…
Risk Managed Value Creation Montney Assets Delivering Profitable Growth and Value 140,000 Production Profile 120,000 100,000 80,000 boe/d Forecast 60,000 40,000 20,000 0 Non-Montney Liquids 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 Q3 of 2015 will result in production declines in the…
Growing Oil and Liquids Since 2009 5% CAGR(1) Total Liquids Production 2009 2015 Forecast 50,000 Oil and Liquids Production 45,000 Dawson, Parkland, Sunrise 40,000 Tower Montney Liquids 35,000 35% CAGR 2009- 2015F bbl/d…
Oil and Liquids/Gas Revenue Split Oil and Liquids Production Key to Bottom Line Oil and liquids comprise 35% of production (Q2 2015) and make up 70% of sales revenue (2009 H1 2015) 600.0 Sales Revenue 2009 H1 2015 500.0 400.0…
Growing Our Low Cost Gas Business 15% 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…
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 80% 2P Reserves Production (boe/d) Q2 2015 2P Reserves (MMboe) YE 2014 (1) 40,000 200 Montney Montney 160 30,000 77,900 boe/d (71%) 516 MMboe (77%) 120…
Complimentary Asset Base Montney Growth Assets Underpinned by Free Cash Flow Generating Base Assets Invested 2.6 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…
Montney Growth Assets Growing our Montney Land Base ARC has added 165 net Montney sections since Q2 2014 70% of ARCs Montney land is undeveloped, providing significant future opportunity 120 Net Montney Sections in 2003 1,100 Net…
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 33% Compound Annual Montney Growth - 5 Year Period 120,000 2015 100,000 Sunrise Gas Plant & Tower Liquid Expansion 2014 Parkland Gas Plant: Phase 1 80,000 boe/d 2012 Ante Creek Gas Plant 60,000…
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 Ratio 3.5x Recycle…
Dawson Leads the Way ARCs Key Montney Developments are 3 of the Top 6 in Canada Source: Company reports, CIBC World Markets Inc.
Tower is Among the Best Oil Plays Strong Oil Economics at Tower Source: CIBC reports, CIBC World Markets Inc.
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 Low Cost Superior Significant Gas Economics Resource Op cost 0.57/Mcf 95% IRR 13.7 Tcf C55/bbl & C3/GJ of gas resource F&D 0.60/Mcf Multi-layer Capital Breakeven…
Dawson Asset Details Excellent Free Cash Flow Net production (boe/d) Q2 2015 27,400 Jen NT Liquids (bbl/d) 820 update new b Gas (MMcf/d) 159 up from Production split % (liquids/gas) 97% gas Land (Montney net sections) 133…
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 A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) Capex ( millions) 250 200 Net Cash Flow ( millions) 200 Production (MMcfe/d) 160 MMcfe/d 150 120…
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, delivering 30,000 significant cash flow Facilities producing at capacity 25,000 Drilled and tested 2 lower boe/d 20,000…
Parkland/Tower Asset Details Significant Value Creation Parkland Tower Net production (boe/d) 16,880 5,370 Q2 2015 Liquids (bbl/d) 2,140 2,940 Gas (MMcf/d) 88 15 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 80 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 7 wells have produced in excess of 100,000 bbl oil within first year of production Total Production (boe) Oil Production (bbl) 130,000 240,000 120,000 220,000…
Tower Drilling Curves 25% Reduction in Drill Times Resulting in 20% Cost Savings at Tower Pads Realizing reduced drill days and cost savings in the last 6 months from re-engineering and optimization of drilling operations. Tower…
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/Tower 2015 10% Year-over-Year Increase in 2015F Production Parkland/Tower Done 35,000 Dry gas areas in Parkland delivered 30,000 strong results in 2014 25,000 24 gross operated wells planned for 20,000 2015 (22…
Sunrise Long-term Growth Opportunity Significant Strong Four Layer Resource Economics Development 6.6 Tcf 65% IRR Currently producing of gas resource C55/bbl & C3/GJ from all four layers 2015 Growth Breakeven Low Cost…
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) Q2 2015 10,630 Liquids (bbl/d) 120 Gas (MMcf/d) 63 Land…
Sunrise Development Potential Proven Productivity from Four-Layered Development Known reserves exist in Upper Montney A. 2014 Upper Montney A Booked Reserves* drilling program proved Upper Montney A+ Upper Montney…
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 10,000 2015 Type Curve (11.3 Bcf) 2013/14 Type Curve (11 Bcf) 9,000 2012 Type Curve (9.7 Bcf) Estel updat 8,000 2011 Type Curve (7 Bcf) 6,…
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 2015 and Beyond Commercial Development of Sunrise with 100% YOY Increase in 2015F Production Sunrise 25,000 Producing from 4 layers of the Montney through third-party processing 20,000 facility Montney B suggests…
Montney Pilot Projects Significant Future Potential
Montney Pilots Proving Future Value Before Full Scale Development Done
Montney Pilots Attachie Continued Evaluation on Liquids-Rich Land Two pilot horizontal wells on the western side of lands have produced 0.8 Bcf gas and 75 mbbl liquids in past 7 months NGLs yield is 25 bbl/MMcf; total NGLs and free…
Ante Creek A Montney Success Story Strong Considerable Significant Economics Land Base Drilling Inventory 35% IRR 336 net Montney 850 future Montney C55/bbl & C3/GJ sections drilling locations (75% undeveloped) Optimizing…
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunity Net production (boe/d) Q2 2015 16,640 Liquids (bbl/d) 7,860 Gas (MMcf/d) 53 Production split % (liquids/gas) 47/53 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 Revised* Ante Creek Normalized Type Curves for Frac spacing (m) 120 100 100 80 80 Montney Horizontal Wells 500 Fracs…
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 20,000 ARCs three plants filled to 18,000 capacity in late 2013 with development drilling 16,000 Successful delineation step 14,000…
Financial Strategy Financial Flexibility Provides Optionality FINANCIAL FLEXIBILITY Strong Balance Stable and Prudent Funding Opportunistic Manage Risk Sheet & Simple Meaningful of Capital Acquisitions and and Preserve Capital…
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 Q2 2015 Net Debt and Cash Balance 2.5 Billion Total Cash & Credit Capacity (1.4 Billion Available) 2.5 Bank Credit Facility Cash 1 billion credit facility plus 40 million Master…
Value Proposition Clear Line of Sight to Long-Term Value Creation WHY INVEST IN ARC Exposure to Early Growth and Cost Management & Stage Development Strategic Income Capital Discipline of World Class Optionality Assets Strong…
Looking Beyond 2016 Diverse Portfolio Provides Strategic Optionality ARC has a well balanced inventory of value creating opportunities which may be pursued beyond 2016 140,000 Project Options 2016 - 2020+ Production Profile…
Q2 2015 Operational and Financial Performance Strong Production and Financial Results Three Months Ended June 30 (CDN millions, except per share and per boe amounts) 2015 2014 Production (boe/d) 109,900 110,165 Gas 65% 60% Liquids…
2015 Guidance Focused on Value Creation 2015 Guidance (1)(2) 2015 YTD Actuals Oil (bbl/d) 33,500 - 34,500 33,894 Condensate (bbl/d) 3,400 - 3,800 3,363 Gas (MMcf/d) 430 - 440 442.7 NGLs (bbl/d) 4,500 - 4,900 4,053 Total (boe/d) 113,000…
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 existing production…
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 sufficient take-away to support…
NGLs Commodity Marketing NGLs Pipeline & Fractionation Capacity Secured ARCs NGLs Exposure NGLs revenue (4,000 bbl/d) makes up 2% of ARCs revenue Ensuring NGLs production moves to market protects ARCs oil & gas production Planned…
Hedge Positions July 29, 2015 Summary of Hedge Positions as at July 29, 2015 (1) H2 2015 2016 2017 2018 2019 (2) Crude Oil Cdn WTI Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Cdn/bbl bbl/day Ceiling 80.95 10,000…
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, 2014 as evaluated by GLJ Petroleum Consultants Ltd. in…
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