Corporate Profile Corporate Summary Production (Q4 2015) 119,243 boe/day Reserves (2P Gross YE 2015) (1) 687 MMboe Reserve Life Index (2P) (1) 16 years (2) Monthly Dividend 0.05 per share Annualized Returns (3) Since Inception 14%…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy ARC delivered on its strategy in 2015: Maintained net debt to funds Completed Sunrise Gas from operations between Plant and Tower Oil Battery target of 1.0…
2015 Highlights Year of Strong Performance in All Areas of the Business Full Year Review Annual average production of 114,170 boe/d (up 2% from 2014) 190% production replacement adding 78.7 MMboe through the drill bit 687 MMboe of 2P…
Balance Sheet Strength Targeting Net Debt to Funds from Operations 1.0 1.5x for the Long Term During specific times, debt to FFO will trend towards a ratio of two times Expect debt to FFO to return to target range once normal pricing…
2016 E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector 14.6 x Canadian Benchmarking: 2016E YE Net Debt / 2016E Cash Flow (1)(2) 13.1x 15.8x 8.6 x 7.4 x Group Average 6.9 x 5.8 x 4.5…
Profitable Investment Managing a Profitable Business Through Cycles ARCs high-quality assets, excellent capital efficiencies, and low operating costs have resulted in strong returns over the long term ARC has realized earnings of 4…
Shareholder Value ARCs Share Price Has Demonstrated Lower Volatility Than Most Peers Share Price Volality 75% 2011 to 2015 60% 45% Group Average 30% 15% 0% ARC Source: Scotiabank The Valuation Book…
Hedging Program Results Hedging Continues to Smooth Cash Flow Volatility ARCs hedging program continues to provide greater certainty of cash flows and supports the business plan 250 Realized Hedging Gains (Losses) 200 Crude Oil…
Priorities 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 from…
Committed to a Dividend ARC Has Always Paid a Dividend While Delivering Value 14% annualized total return since inception, 5.7 billion of dividends (32.33/share) Target is to continue to reduce ARCs payout ratio to 25-30% 6 120%…
Risk Managed Value Creation Montney Assets Have Delivered Profitable Growth and Value Quality assets and capital discipline has resulted in 85% Montney production growth since 2011 140,000 Production Profile 120,000 100,000…
Reserve Replacement 200% Reserves Replacement for 8th Consecutive Year Montney assets have been the centrepiece to ARCs strategy of organic reserves and resources growth and provide continued upside potential Annual Produced Reserves…
Capital Efficiency Strong F&D Performance Growing our Montney Business at Low F&D Costs Low FD&A costs reflect high-quality assets, cost management and allocation of capital to high rate of return projects 30.00 Three-year Average…
Operating Efficiencies ARC Continues to Drive Down Operating Costs as It Grows in the Montney Total per boe operating costs have decreased 30% (2009 to 2015) Montney per boe operating costs have decreased 30% (2009 to 2015) Owned and…
Growing Our Low Cost Gas Business 13% 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…
2016 Budget 390 Million 2016 Capital Budget Sustaining the Business Holding NE BC Facilities at Capacity Holding Parkland/Tower, Sunrise and Dawson facilities at capacity for 2016 Investing for Future Growth Progressing…
Sustaining Capital Superb Capital Efficiencies Drive Low Sustaining Capital Requirements 23,000 boe/day Non-Montney No capital allocated for drilling Corporate/Other (Maintenance, Exploration, 50MM Optimization) Ante Creek…
Proven Development Model Inventory of Opportunities at All Stages Allows for Self-Funding and Full Cycle ROCE Growth for Future Phase Development Phase Free Cash Flow Phase Exploration Develop to Commercialize Optimization Appraisal /…
Montney Assets
NE BC Montney Growth Assets ARCs NE BC Montney Assets Strategically Located Geographic Optionality TCPL Proximity of ARC Spectra Montney landbase Alliance enables: TCPL Proposed Capital & operating efficiencies Application of…
Montney Development Montney Development Driving Efficiencies and Competitive Cost Structure 2.8 billion of capital invested in the Montney since 2009 to grow low-cost, high-value Montney production Production Proved + Probable…
NE BC Montney Capital Efficiencies Forecasting Future Cost and Efficiency Savings in 2016 ARC continues to incorporate efficiencies realized from its 2014 and 2015 capital programs and expects further service cost reductions in 2016…
Multiple Layers to Develop Significant Future Delineation Opportunities Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney A Upper Montney Montney B Montney C Lower Montney Montney D Montney…
NE BC Montney Reserves and Risked Resources NE BC Montney TPIIP 90 Tcf of Shale Gas and 9.7 Billion Barrels of Oil Shale Gas Tight Oil and NGLs TOTAL PROVED + PROBABLE RESERVES Oil 23 MMbbl 2.6 Tcf NGLs 42 MMbbl ECONOMIC ECONOMIC…
Early Stages of Property Development* Large Identified Opportunity for Future Value Creation Inclusive of internally identified locations in NEBC and Ante Creek, 5,000 potential future drilling opportunities exist within the Montney…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Dawson Sunrise Parkland Tower Half Cycle Economics C45/bbl 75% IRR 45% IRR 45% IRR 25% IRR MSW 4.1x Recycle Ratio 4.5x Recycle Ratio 3.6x Recycle…
North American Gas Plays Supply Costs Montney is Extremely Competitive Against Other North American Gas Plays Source: RBC Capital Markets Montney Evolution Playing the Long Game (October 2015). 15% before-tax IRR assumes US/Cdn is…
Tower is Among the Best Oil Plays Strong Oil Economics at Tower Source: CIBC reports, CIBC World Markets Inc.
Dawson Heart of the Montney Low Cost Superior Significant Gas Economics Resource Op Cost 3.06/boe 75% IRR 20.7 Tcf C45/bbl & C2.50/GJ of shale gas resource F&D 0.65/Mcf Capital Breakeven Efficiency Price 5,000/boe/day…
Dawson Asset Details Poised for Next Stage of Development Net production (boe/d) Q4 2015 28,720 Liquids (bbl/d) 990 Gas (MMcf/d) 166 Production split % (liquids/gas) 97% gas Land (Montney net sections) 133 Working Interest…
Dawson A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) Capital Expenditures ( millions) 250 250 Free Cash Flow ( millions) 200 Production (MMcfe/day) 200 150 150…
Dawson Gas Type Curve Growth Continuous Improvement in Well Performance 7,000 Key Metrics 2016 Budget 6,000 2015/2016 Type Curve DCET Capex/well ( millions) 4.2 2013/2014 Type Curve Internal 2P Reserves (Bcfe) 7.4 5,000…
Dawson Natural Gas Liquids Potential Finding Higher Liquids With Move Away from Dawson Core Liquids ratio at Dawson varies across Upper and 40 bbl/MMcf Wellhead Lower Montney 40 bbl/MMcf Condensate Wellhead Majority of development…
Dawson Phase III Plant Construction at Dawson Phase III Underway Dawson Phase III Sour Gas Plant with 90 MMcf per day of gas and 7,500 barrels of liquids- handling sales capacity approved by the BC Oil and Gas Commission in September…
Dawson Phase III Project Economics From Well Economics to Project Economics Well Economics Include drill, completion, wellsite equipment and pipeline from well to gathering system Standalone after-tax economics*: IRR = 100%,…
Parkland/Tower Significant Value Creation Strong Growth Exceptional Economics Driver Results 45% IRR (Parkland) 95% Forecast YoY 7 wells with over 100,000 25% IRR (Tower) 2016 liquids growth barrels of cumulative oil C45/bbl &…
Parkland/Tower Asset Details Significant Value Creation Parkland Tower Net production (boe/d) 15,050 8,700 Q4 2015 Liquids (bbl/d) 2,530 6,700 Gas (MMcf/d) 75 12 Land (net sections) 37 43 Working Interest 84% 92% Reserves (2P…
Parkland/Tower Development Potential Incremental Reserves Potential with Multilayer Development Upper Montney A Booked Reserves* Drilling Inventory Upper Montney 750 500 Wells Lower Montney Upper Montney A+ Booked…
Tower Cumulative Production Continuous Improvement in Well Performance Cumulative oil production from nine 2014 wells had surpassed one million barrels in January 2016 Total Production Oil Production 160,000 100,000 5-14 Pad (2014)…
Tower Completions Advancement Advanced Completion Design = Improved Performance 1,400 1,400 Key Metrics 2016 Budget 2014 Type 2016 Curve Type Curve DCET Capex/well ( millions) 5.5 2015 Type Curve 1,200 1,200 2015 Type Curve…
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 drilling time over previous Tower pads 500 12-16 Pad Average (Horizon…
Sunrise Long-term Growth Opportunity Significant Strong Four Layer Resource Economics Development 8.3 Tcf 45% IRR Currently producing of shale gas resource C45/bbl & from all four layers C2.50/GJ 2015 Growth Breakeven Low Cost…
Sunrise Asset Details Sunrise Has Progressed from Pilot to Full Scale Development Net production (boe/d) Q4 2015 20,690 Liquids (bbl/d) 150 Gas (MMcf/d) 123 Land (Montney net sections) 32 Working Interest 89% Reserves (2P…
Sunrise Development Potential Proven Productivity from Four-Layered Development Drilling Inventory 400 Upper Montney A Booked Reserves* Upper 300 Montney 200 Wells Upper Montney A+ Booked Reserves* 100 Upper…
Sunrise Outperforming Expectations Drilling Results Continue to Reaffirm Four-Layer Development Model 2015/16 Upper MTY Type Curve (11.7 Bcf) 10,000 02-26-78-18 W6 (08-24Hz) Upper MTYA 9,000 00/16-35-78-18 W6 (A13-30) Upper MTYA…
Sunrise Continuous Improvements Enhanced Well Design = Type Curve Improvement 7,000 2014-16 Type Curve (11.5 Bcf) Key Metrics 2016 Type Curve 6,000 2013 Type Curve (11 Bcf) DCET Capex/well ( millions) 5.4 2011 Type Curve (7 Bcf)…
Sunrise Phase II Project Economics From Well Economics to Project Economics Well Economics Include drill, completion, wellsite equipment and pipeline from well to gathering system Standalone after-tax economics*: IRR = 60%, Recycle…
Sunrise 2015 Drilling Performance Strong Performance at Sunrise from 2015 Drills 12-30 Pad wells are flowing at higher bottomhole flowing pressures than had been forecast As wells are rate-restricted (i.e., held at a constant…
Sunrise Drilling Curves 35% Reduction in Drill Times = 40% Cost Savings on Sunrise Pads 0 Realizing reduced drill days and 12-30 Pad Average (Q1 2015) cost savings during the year from 500 G2-25-78-18 (Q4 2015) re-engineered well…
Attachie Asset Details Highly Prospective Asset With Strong Liquids Potential Net production (boe/d) Q4 2015 460 Liquids (bbl/d) 260 Gas (MMcf/d) 1.2 Land (Montney net sections) 279 Working Interest 100% Reserves (2P MMboe)…
Attachie Pilots Continued Evaluation on Liquids-Rich Land Two pilot horizontal wells on western side of lands have produced 1.4 Bcf of gas and 130 Mbbl of liquids in 18 months NGLs yield up to 25 bbl/MMcf dependent on plant…
Greater Dawson Lower Montney Fairway Building Understanding of the Lower Montney Fairway Parkland 11-36 Pouce 1-15 Dawson 1-17 Dawson 8-1 Sunrise C2-25 Sunrise B8-24 Only Lower Montney wells are displayed.
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+…
Q4 2015 Operational and Financial Performance Strong Production and Financial Results Three Months Ended Year Ended December 31 December 31 (Cdn millions, except per share and per boe amounts) 2015 2014 2015 2014 Production (boe/d)…
2015 and 2016 Guidance Focused on Value Creation 2016 Original 2016 Revised Guidance (1) Guidance (1) 2015 Guidance (2) 2015 Actuals Oil (bbl/day) 34,500 - 36,500 32,000 - 34,000 33,500 - 34,500 32,762 Condensate (bbl/day) 3,200 -…
Hedge Positions February 10, 2016 Summary of Hedge Positions as at February 10, 2016 (1) 2016 2017 2018 2019 2020 (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 83.38…
Significant Liquidity ARC Continues to Maintain Ample Liquidity 2.5 Billion Total Cash & Existing Credit Capacity (1.4 Billion Available) Bank Credit Facility Cash 1 billion credit facility plus 40 million 167MM working capital…
Natural Gas Commodity Marketing Diversified Sales Points 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 Pricing NGLs revenue (4,000 bbl/day) North American NGLs supply growth makes up 1% of ARCs revenue continues to put downward pressure on…
Key Reserve Information 687 MMboe 2P Reserves at Year-End 2015 YE 2015 2P Reserves Reserves at year end, December 31, 2015 - Proved Producing 222 MMboe - Total Proved 393 MMboe PDP 32% - Proved Plus Probable 687 MMboe Probable…
NE BC Montney Schematic Multiple Layers, Multiple Targets, Massive Opportunity Not to scale.
Growing Oil and Liquids Since 2009 4% CAGR(1) Total Liquids Production 2009 2016 Forecast ARC continues to invest in long-term strategic oil and liquids assets 50,000 Oil and Liquids Production 45,000 Dawson, Parkland 40,000…
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…
Strategic Montney Infrastructure Building Montney Infrastructure to Support Resource Development Parkland Gas Plant On-Stream 2013 Tower Battery November 2015 Dawson Gas Plant Phase I: On-Stream 2010 Phase II: On-Stream…
Greater Dawson Montney Pilots Proving Future Value Before Full-Scale Development Septimus Pouce Coupe Pilot production Lower Montney on-stream since pilot production Q2 2014 on-stream since late 2013 Parkland Dawson Lower…
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