Value Proposition Clear Line of Sight to Long-term Value Creation Dividend + Profitable Growth = Value Creation CREATING VALUE Exposure to Early Growth & Cost Management & Stage Development Strategic Income Capital Discipline of…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy Targeting net debt to funds Operating costs reduced by from operations between 30% since 2009: 1.0 1.5x 10.19/boe in 2009 7.18/boe in Q3 2015 200%…
Corporate Profile Corporate Summary Production (Q3 2015) 107,261 boe/day Reserves (2P Gross YE 2014) (1) 673 MMboe Reserve Life Index (2P) (1) 16 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 6.2% (3) Annualized…
Q3 2015 Highlights Invested 164.2 million started production (392.1 million YTD) at the and drilled 18 gross Sunrise Gas operated wells (55 gross wells YTD) Plant Producing Op Costs to 107,261 managing generating boe per…
Risk Managed Value Creation Montney Assets Delivering Profitable Growth and Value 140,000 Production Profile 120,000 100,000 Forecast 80,000 boe/day 60,000 40,000 20,000 0 Non-Montney Liquids Montney…
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 15% annualized total return since inception, 5.6 billion of dividends (31.88/share) 6,000 120% Cumulative Dividends and Historic Payout Ratio 5,500…
Financial Flexibility Balance Sheet Strength Targeting Net Debt to Funds from Operations Between 1.0 1.5x 1 billion credit facility was renewed in October, 2015 and remains completely undrawn 1,400 Net Debt to Funds from…
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…
2016 Budget
2016 Capital Budget of 550 Million Focus on Long-term Value Creation and Balance Sheet Strength Profitable investment in Montney crude oil, liquids-rich gas and natural gas assets Production guidance of 119,000 124,000 boe/day…
2016 Key Projects Profitable Investment in Crude Oil, Liquids-Rich Gas & Natural Gas Drilling program to hold plants at capacity at Dawson, Sunrise, Parkland, Ante Creek Continued oil growth in Tower Benefit from oil treater expansion…
Capital Efficiencies Significant Improvements in Capital Efficiency Rates ARCs transition to the Montney is driving improved capital efficiencies 70% of ARCs production currently from the Montney 3,600 boe per day divested in 2015…
Operating Efficiencies ARC Continues to Drive down Costs as It Grows in the Montney Per boe operating costs are expected to decrease by 20% from 2010 to 2016 forecast Operating Costs (1) 10.00 140,000 9.50 120,000 Operating…
Growing Our Low Cost Gas Business 14% CAGR(1) Total Natural Gas Production 2009 2016 Forecast ARC divested of certain non-core, non-Montney shallow gas assets in 2014 and 2015 with associated production of approximately 4,800 boe/day…
2016 Production Outlook Creating Value with Modest Year-over-Year Production Growth Annual average production in the range of 119,000 to 124,000 boe per day Modest year-over-year average production growth of 5% Hold gas plants at…
Long-Term Value Creation Significant Accomplishments, Considerable Future Opportunities 2014 2015 2016 2017+ 112,390 boe/d Growing 113,000 115,000 boe/d Profitable Tower, Sunrise Production Dawson, Ante Creek Filled…
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 135 net Montney sections since Q3 2014 70% of ARCs Montney land is undeveloped, providing significant future opportunity 120 Net Montney Sections in 2003 1,100 Net…
ARC in the Montney 20% Compound Annual Montney Growth - 5 Year Period 120,000 2015 Sunrise Gas Plant & Tower Liquid 100,000 Expansion 2014 Parkland Gas Plant: Phase 1 boe/day 80,000 2012 Ante Creek Gas Forecast…
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…
NE BC Montney Schematic Multiple Layers, Multiple Targets *Not to Scale
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…
Competitive Montney Economics ARCs Montney Competes with Some of the Lowest Break-Evens Marcellus vs Montney Break-evens Assumes F/X Parity Break-even NYMEX (US/Mcf) Lowest Highest Source: ITG IR; raw data provided by Drilling…
Tower is Among the Best Oil Plays Strong Oil Economics at Tower Source: CIBC reports, CIBC World Markets Inc.
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 A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) Capital Expenditures ( millions) 250 200 Net Cash Flow ( millions) 200 Production (MMcfe/day)) 160 150 120…
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 Infrastructure New Facility Planned for 2017 On-Stream Received regulatory approval for two 90 MMcf/d gas plants Dawson Phase III will be the first to be built with commissioning planned for late 2017 New Dawson Phase III Gas…
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…
Tower Cumulative Production Type Curve Upgraded for 2016 Cumulative oil production from nine 2014 wells approaching 1 million barrels Total Production (boe) Oil Production (bbl) 280,000 2016 Type Curve 2016 Type Curve 140,000 (2200…
Tower Wells Deliver Outstanding Results ARCs Tower Wells Are Some of the Best in Western Canada Cumulative Production Increasing Majority of wells never produce 100,000 barrels Days on Production Increasing Source: AltaCorp…
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 Drilling Curves 25% Reduction in Drill Times = 30% Cost Savings at Tower Pads 0 12-16 Best Well 30% cost savings and 25% 8-24 Pad Average reduction in time over previous Tower pads 500 12-16 Pad Average (Horizon 50)…
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…
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…
Sunrise Outperforming Expectations Drilling Results Continue to Reaffirm Four-Layer Development Model 2015/16 Upper MTY Type Curve (11.7 Bcf) 10,000 2013/14 Type Curve (11 Bcf) 9,000 02-26-78-18 W6 (08-24Hz) Upper MTYA 8,000…
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…
Colo Strategic Montney Infrastructure com cons Building Montney Infrastructure to Support Resource Development Tower Battery Coming 2015 Parkland Gas Plant On-Stream 2013 Attachie Tower Pouce Coupe Septimus Parkland…
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 1.4 Bcf gas and 130 Mbbl liquids in 18 months NGLs yield up to 25 bbl/MMcf dependent on plant…
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…
Significant Available Cash and Credit Capacity Q3 2015 Net Debt and Cash Balance 2.5 Billion Total Cash & Credit Capacity (1.4 Billion Available) 3.0 Bank Credit Facility Cash 1 billion credit facility plus 40 million 2.5 Master…
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 Production Profile Project Options 2016 - 2020+…
Q3 2015 Operational and Financial Performance Strong Production and Financial Results Three Months Ended Nine Months Ended September 30 September 30 (Cdn millions, except per share and per boe amounts) 2015 2014 2015 2014 Production…
2015 and 2016 Guidance Focused on Value Creation 2015 Guidance (1)(2) 2015 YTD Actuals 2016 Guidance Oil (bbl/day) 33,500 - 34,500 32,379 34,500 - 36,500 Condensate (bbl/day) 3,400 - 3,800 3,363 3,200 - 3,600 Gas (MMcf/day) 435 -…
Natural Gas Commodity Marketing Diversified Sales Point and Purchasers of ARCs Natural Gas Secured firm transportation pipeline agreements to support existing production and future development until 2019 50% of Station 2 exposure…
Crude Oil Commodity Marketing Focused on Condensate, Light and Medium Crude Oil Secured firm transportation pipeline agreements to support existing production and future development Maintain control into liquid market hubs to ensure…
NGLs Commodity Marketing NGLs Pipeline & Fractionation Capacity Secured ARCs NGLs Exposure NGLs revenue (4,000 bbl/d) makes up 1% of ARCs revenue Ensuring NGLs production moves to market protects ARCs oil & gas production ARC has…
Hedge Positions November 4, 2015 Summary of Hedge Positions as at November 4, 2015 (1) Q4 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 81.27…
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