Corporate Profile Corporate Summary Production (Q1 2016) 124,224 boe/day Reserves (2P Gross YE 2015) (1) 687 MMboe Reserve Life Index (2P) (1)(2) 16 years Monthly Dividend 0.05 per share Annualized Returns since Inception (3)(4) 15%…
Unique Strategy Delivering on Our Strategy of Risk-Managed Value Creation Net Debt to Funds from Operations Operating Costs (/boe) 1,600 Net Debt (LHS) 2.0 10.0 Funds From Operations (LHS) Net Debt to Funds from Operations (RHS)…
Balance Sheet Strength Targeting Net Debt to Funds from Operations 1.0 1.5x for the Long Term During specific times, Net Debt to FFO will trend towards a ratio of two times Expect Net Debt to FFO to return to target range once normal…
2016 E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector 13.1x 15.8x Canadian Benchmarking: 2016E YE Net Debt / 2016E Cash Flow (1)(2) 6.3 x 5.8 x Group Average 4.9 x 4.8 x 4.7 x 4.6 x…
Profitable Investment Managing a Profitable Business Through the 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…
Shareholder Value ARCs Share Price Has Demonstrated Lower Volatility Than Most Peers Share Price Volatility 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 provides greater certainty of cash flows and supports the business plan 300 Realized Hedging Gains (Losses) 250 Crude Oil Natural Gas 200…
Right-Sizing ARCs Capital Investment & Dividend Balancing Inflows and Outflows for Long-Term Sustainability Objective to fully fund ARC's Dividend and Sustaining Capital from Funds from Operations over the long term Profitable Growth…
Committed to a Dividend & Business Sustainability ARC Has Always Paid a Dividend While Delivering Value Robust business allows us to pay a sustainable dividend 5.8 billion of dividends (32.43/share) paid since inception Target is to…
Risk Managed Value Creation Montney Assets Have Delivered Profitable Growth and Value Quality assets and capital discipline has resulted in 140% Montney production growth since 2011 140,000 Production Profile 120,000 100,000…
Transitioning to the Montney Replacing Base Production With High-Rate, Low-Cost Montney Production 100% Since 2009: 90% Montney Q1 2016 Divested 13,200 boe/day of Growth Operating Costs non-core production 80% 6.10/boe Production…
Reserve Replacement 200% Reserves Replacement for 8th Consecutive Year Montney assets have been the centerpiece to ARCs strategy of organic reserves and resources growth and provide continued upside potential Annual Produced Reserves…
Cost Management Low-Cost Producers Deliver Superior Returns over Time Focused assets, characterized by high working interest, operatorship and ARC-owned and operated facilities, provide control over costs and operations 30…
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 throughout 2014 and 2015 with associated production of approximately 4,800…
2016 Budget 390 Million 2016 Capital Budget Sustain for Today Hold NE BC Facilities at Capacity Hold Parkland/Tower, Sunrise and Dawson facilities at capacity for 2016 Build for Tomorrow Progress Construction of Dawson Phase III…
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 at All Stages Allows for Self-Funding and Full Cycle ROCE Across Portfolio Growth for Future Phase Development Phase Free Cash Flow Phase Exploration Develop to Commercialize Optimization Redwater…
MONTNEY ASSETS
Montney Growth Assets ARCs Montney Assets Are Strategically Located BC AB 1,000m Geographic Optionality Proximity of ARC Montney land base enables: Capital & operating efficiencies 2,000m Blueberry Application of learnings…
Multiple Layers to Develop Significant Future Delineation Opportunities Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney Upper Montney A Montney B Montney C Lower Montney Montney D…
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…
Natural Gas Market Access Well-Positioned for Access to Multiple North American Markets Dynamic approach to physical marketing ensures market access and optimal pricing across portfolio Montney Market Access TCPL Spectra…
Montney Technological Advancements Application of New Technologies Has Resulted in Efficiency Improvements Business Drilling Completions Outcomes Optimize Multi-well Pads Fracs per Well Production per Well Optimize Slickwater…
Improving NE BC Montney Capital Efficiencies Forecast 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…
Montney Reduced Drilling Times Applying Tower Learnings to Sunrise for Reduced Drill Times and Cost Savings Tower Sunrise 0 0 12-16 Best Well 12-30 Pad Average (Q1 2015) 500 8-24 Pad Average G2-25-78-18 (Q4 2015) 500 12-16 Pad…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Dawson Sunrise Parkland Tower Half Cycle Economics C45/bbl MSW 75% IRR 45% IRR 45% IRR 25% IRR C2.50/GJ AECO 4.1x Recycle Ratio 4.5x Recycle…
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/day) Q1 2016 29,360 Liquids (bbl/day) 1,100 Gas (MMcf/day) 170 Production Split % (Liquids/Gas) 96% Gas Land (Montney Net Sections) 135 Working…
Dawson Gas Type Curve Growth Continuous Improvement in Well Performance 7,000 6,000 Key Metrics 2016 Budget 2015/2016 Type Curve 2013/2014 Type Curve DCET Capex/well ( millions) 4.2 5,000 2009-2011 Forecast Internal 2P Reserves…
Dawson Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) 250 Capital Expenditures ( millions) 250 Net Cash Flow ( millions) 200 Production (MMcfe/day) 200 150…
Dawson Phase III Projected Cash Flows Replicating Sustainable Business Model at Low Reinvestment Rates Development Timeline: 2015 to 2017: Facility and infrastructure spending 2017: Pre-drill 20 feeder wells to fill facility 2018:…
Dawson Phase III Plant Construction of 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%, Recycle…
Dawson Natural Gas Liquids Potential Finding Higher Liquids With Move Away From Dawson Core Liquids ratio at Dawson varies across Upper and Lower Montney Majority of development to-date focused on the Upper Montney A, which has lower…
PARKLAND/TOWER Significant Value Creation Strong Exceptional Growth Economics Results Driver 45% IRR (Parkland) 8 wells with 100,000 95% forecast YoY 2016 25% IRR (Tower) barrels of cumulative oil liquids growth due to Q4 C45/bbl…
Parkland/Tower Asset Details Significant Value Creation Parkland Tower Net production (boe/day) Q1 2016 12,950 16,400 Liquids (bbl/day) 2,210 10,320 Gas (MMcf/day) 64 36 Land (Net Sections) 37 43 Working Interest 90% 90% Reserves…
Parkland/Tower Development Potential Incremental Reserves Potential With Multi-Layer Development Upper Montney A Drilling Inventory Booked Reserves* Upper 750 Montney 500 Wells Upper Montney A+ Lower Booked Reserves* 250…
Tower Outstanding Well Performance ARCs Tower Wells Are Some of the Best in Western Canada Cumulative Production Increasing Majority of wells will never produce 100,000 barrels Days on Production Increasing Source: AltaCorp…
Tower Cumulative Production Continuous Improvement in Well Performance Cumulative oil production from nine 2014 wells had surpassed one million barrels in January 2016 Wells from 7-12 pad (longest extended-reach wells drilled to-date)…
Tower Completions Advancement Advanced Completions Design = Improved Performance 1,400 2016 Type Curve 1,200 2015 Type Curve Key Metrics 2016 Budget 2014 Type Curve DCET Capex/well ( millions) 5.5 Production Rate (boe/day)…
SUNRISE Long-Term Growth Opportunity Significant Strong Four Layer Resources Economics Development 8.3 Tcf of shale gas 45% IRR Currently producing resource C45/bbl & C2.50/GJ from all four layers 2015 Low Cost Growth Driver…
Sunrise Asset Details Sunrise Has Progressed From Pilot to Full-Scale Development Net production (boe/day) Q1 2016 21,490 Liquids (bbl/day) 140 Gas (MMcf/day) 128 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* 300 Upper Wells Montney 200 Upper Montney A+ Booked Reserves* 100 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 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) 6,000 2013 Type Curve (11 Bcf) 2011 Type Curve (7 Bcf) Key Metrics 2016 Type Curve 5,000 DCET Capex/well (…
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…
Attachie Asset Details Highly Prospective Asset With Strong Liquids Potential Net production (boe/day) Q1 2016 360 Liquids (bbl/day) 190 Gas (MMcf/day) 1.0 Land (Montney Net Sections) 288 Working Interest 99% Reserves (2P…
Attachie Pilots Planning for the Future Applying Tower Learnings to Attachie 2015 Three wells were drilled on newly acquired lands West Attachie in H2 2015 Pilot production on-stream since Q2 2014 Two HZ wells have produced 1.4…
Lower Montney Fairway Building Understanding of the Lower Montney Fairway Only Lower Montney wells are displayed.
SUMMARY
Why Invest in ARC A Differentiated Investment Peer-leading balance sheet Financial Discipline Disciplined approach to profitable investment Total return principal for shareholders Montney oil and gas position globally competitive…
APPENDIX
Q1 2016 Operational and Financial Performance Strong Results With Record Production Three Months Ended March 31 (Cdn millions, except per share and per boe amounts) 2016 2015 Production (boe/d) 124,224 120,354 Natural Gas 66% 64%…
2016 Guidance Focused on Sustainability and Value Creation 2016 Guidance 2016 YTD Actuals Production Crude oil (bbl/day) 32,000 - 34,000 34,852 Condensate (bbl/day) 3,000 - 3,400 3,442 Natural gas (MMcf/day) 460 - 470 489.7 NGLs…
Hedge Positions April 28, 2016 Summary of Hedge Positions as at April 28, 2016 (1) Q2 2016 H2 2016 2017 2018 2019 2020 (2) Crude Oil WTI US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day US/bbl bbl/day Ceiling…
Significant Liquidity ARC Continues to Maintain Ample Liquidity 2.5 Billion Total Cash & Existing Credit Capacity (1.4 Billion Available) Cash Bank Credit Facility 166MM 1 billion credit facility plus 40 million working Undrawn…
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 out beyond 2019 ARC continues to monitor…
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 liquids market hubs to ensure…
NGLs Commodity Marketing NGLs Pipeline & Fractionation Capacity Secured ARCs NGLs Exposure NGLs Pricing NGLs revenue (4,000 bbl/day) makes up 2% ARC continues to mitigate weakness in propane of ARCs revenue prices by adjusting gas…
Key Reserve Information 687 MMboe 2P Reserves at Year-End 2015 Reserves at year-end, December 31, 2015: YE 2015 2P Reserves Proved Producing 222 MMboe Total Proved 393 MMboe PDP 32% Proved plus Probable 687 Mmboe Probable 2P…
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…
Environmental, Social & Governance Performance Creating Value Through ESG Performance Our Commitment: Recognitions and Rankings: Investment in facility upgrades and low-emissions technology MSCI Global Sustainability Index drives…
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