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October 2016 Corporate Presentation – Arc Resources Ltd.

Arc Resources Ltd. · Oct 10, 2016 · 66 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. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 1
    October 2016
  2. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 2
    Why Invest in ARC A Differentiated Investment Peer-leading balance sheet Financial Discipline Disciplined approach to profitable investment Total return principle for shareholders Montney oil and gas position globally competitive…
  3. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 3
    Corporate Profile Corporate Summary Production (Q2 2016) 117,695 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) 15% Market…
  4. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 4
    CORPORATE STRATEGY
  5. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 5
    Unique Strategy Delivering on Our Strategy of Risk-Managed Value Creation Realized Hedging Gains (Losses) Transitioning to the Montney 250 Base Montney 200 100% Montney Growth H1 2016 150 Operating Costs Production…
  6. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 6
    Balance Sheet Strength Targeting Net Debt to Funds from Operations 1.0 1.5x for the Long Term During temporary periods, Net Debt to FFO will trend towards a maximum ratio of two times Expect Net Debt to FFO to return to target range…
  7. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 7
    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) Group Average 6.5 x 6.2 x 6.2 x 5.0 x 4.4 x 4.4 x…
  8. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 8
    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 FFO over the long term Profitable Growth Capital will be…
  9. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 9
    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…
  10. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 10
    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…
  11. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 11
    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…
  12. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 12
    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…
  13. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 13
    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 (32.63/share) paid since inception Target is to…
  14. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 14
    Environmental, Social & Governance Performance Creating Value Through ESG Performance Our Commitment: Recognitions and Rankings: Investment in facility upgrades and low-emissions MSCI Global Sustainability Index technology Jantzi…
  15. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 15
    OPERATIONAL EXCELLENCE
  16. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 16
    Risk-Managed Value Creation Montney Assets Have Delivered Profitable Growth and Value Quality assets and capital discipline has resulted in 500% Montney production growth since 2009 Production Profile 140,000 120,000 100,000…
  17. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 17
    Growing Our Low Cost Gas Business 14% CAGR(1) Total Natural Gas Production 2009 2016 Forecast ARC has divested of certain non-core, non-Montney shallow gas assets from 2014 to 2016 with associated production of approximately 5,500…
  18. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 18
    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…
  19. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 19
    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…
  20. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 20
    Montney Reduced Drilling Times Applying Learnings from Tower and Sunrise to Dawson for Reduced Drilling Times and Cost Savings 0 Dawson Drilling Times 500 1,000 1,500 2,000 Depth (m) 2,500 3,000 Q2 2015 to Q2 2016:…
  21. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 21
    PORTFOLIO STRATEGY
  22. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 22
    Proven Development Model Inventory at All Stages Allows for Self-Funding and Full Cycle ROACE Across Portfolio Growth for Future Phase Development Phase Free Cash Flow Phase Exploration Develop to Commercialize Optimization…
  23. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 23
    2016 Mid-Year Budget 450 Million 2016 Capital Budget Progress Construction of Dawson Phase III Expected to be on-stream in late 2017 Investment at Attachie and Tower Continue to delineate play with two drills at Attachie West…
  24. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 24
    2016 Mid-Year Budget Capital Expenditures and Volume Reconciliation 2016 Mid-Year Capital Budget 2016 Mid-Year Production Guidance 500 121,000 Drilling 450M Volume Adds Capital Budget millions) 450 Through Front-end…
  25. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 25
    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…
  26. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 26
    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…
  27. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 27
    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…
  28. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 28
    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…
  29. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 29
    Montney Development Economics Strong Rates of Return Across the Montney Portfolio Dawson Sunrise Parkland Tower Ante Creek Half Cycle Economics C55/bbl MSW 75% IRR 45% IRR 50% IRR 40% IRR 30% IRR C2.50/GJ AECO 4.2x Recycle Ratio…
  30. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 30
    Montney Full Cycle Economics Dawson & Tower Robust Project Economics for Next Growth Platforms Significant drilling results and large inventory of future drilling locations provides support for favourable economics at Dawson Phase III…
  31. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 31
    Dawson Asset Details Poised for Next Stage of Development Net Production (boe/day) Q2 2016 28,860 Liquids (bbl/day) 1,100 Gas (MMcf/day) 167 Production Split % (Liquids/Gas) 96% Gas Land (Montney Net Sections) 135 Working…
  32. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 32
    Dawson Gas Type Curve Growth Continuous Improvement in Well Performance 7,000 6,000 2015/2016 Type Curve 2013/2014 Type Curve 5,000 Key Metrics 2016 Budget 2009-2011 Forecast DCET Capex/well ( millions) 4.2 Production Rate…
  33. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 33
    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…
  34. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 34
    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:…
  35. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 35
    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…
  36. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 36
    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…
  37. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 37
    Parkland/Tower Asset Details Significant Value Creation Parkland Tower Net production (boe/day) Q2 2016 11,250 16,450 Liquids (bbl/day) 1,830 9,320 Gas (MMcf/day) 57 43 Land (Net Sections) 37 43 Working Interest 90% 90% Reserves…
  38. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 38
    Tower Completions Advancement Advanced Completions Design = Improved Performance 1,400 2016 Type Curve 1,200 2015 Type Curve 2014 Type Curve Production Rate (boe/day) Key Metrics 2016 Budget 1,000 DCET Capex/well (…
  39. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 39
    Tower Outstanding Well Performance ARCs Tower Wells Are Some of the Best in Western Canada Cumulative Production Increasing Days on Production Increasing Source: AltaCorp Research (includes May 2016 production data).
  40. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 40
    Tower Cumulative Production Continuous Improvement in Well Performance Cumulative production from 24 wells from 2015 now exceeds 1.8 MMbbl of oil and 7.6 Bcf of natural gas Eight wells have exceeded 100 Mbbl cumulative oil production…
  41. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 41
    Sunrise Asset Details Sunrise Has Progressed From Pilot to Full-Scale Development Net production (boe/day) Q2 2016 18,860 Liquids (bbl/day) 120 Gas (MMcf/day) 112 Land (Montney Net Sections) 32 Working Interest 86% Reserves (2P…
  42. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 42
    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) 5,000 Key Metrics 2016 Type Curve DCET Capex/well (…
  43. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 43
    Sunrise Outperforming Expectations Drilling Results 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 15-23-78-18…
  44. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 44
    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…
  45. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 45
    Attachie Asset Details Highly Prospective Asset With Strong Liquids Potential Net production (boe/day) Q2 2016 1,240 Liquids (bbl/day) 680 Gas (MMcf/day) 3 Land (Montney Net Sections) 288 Working Interest 99% Reserves (2P…
  46. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 46
    Attachie Pilots Planning for the Future Applying Tower Learnings to Attachie West Attachie Two HZ wells have produced 2015 1.7 Bcf of gas and 165 Mbbl Three wells were drilled on of liquids in 24 months newly acquired lands in H2…
  47. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 47
    Lower Montney Fairway Building Understanding of the Lower Montney Fairway Only Lower Montney wells are displayed.
  48. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 48
    Ante Creek Asset Details Significant Cash Flow With Substantial Growth Opportunities Net production (boe/d) Q2 2016 15,400 Liquids (bbl/d) 6,860 Gas (MMcf/d) 51 Production split % (liquids/gas) 45/55 Land (Montney net sections)…
  49. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 49
    Ante Creek 2016 Plans Type Curve Repeatability in Core of Ante Creek H2 2016 drilling will apply new fracture stimulation mechanical isolation using NCS cemented sliding sleeves to allow for pinpoint fracturing 450 2016 400 2014…
  50. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 50
    Pembina Strategic Acquisitions Strategic Acquisitions Further Consolidate Large Oil-in-Place, Low Risk, Predictable Production Q2 2016 acquisition added 2,200 boe per day of light, high-netback oil production Additional 800 boe per…
  51. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 51
    Pembina Outperforming Expectations Slickwater Completions Delivering Strong Results 350 2016 Type Curve 300 2014 Type Curve Production Rate (boe/day) 2012 Type Curve Key Metrics 2016 Budget 250 DCET Capex/well ( millions)…
  52. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 52
    Pembina Focus on Technology Horizontal Drilling and Water Injection Pilot Delivers Incremental Crude Oil 400 North Pembina Cardium Unit 2,000 Waterflood injection started in December 2012; cumulative injection of 885 Mbbl Hz+V Oil…
  53. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 53
    SUMMARY
  54. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 54
    Why Invest in ARC A Differentiated Investment Peer-leading balance sheet Financial Discipline Disciplined approach to profitable investment Total return principle for shareholders Montney oil and gas position globally competitive…
  55. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 55
    PROPERTY APPENDIX
  56. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 56
    Dawson Development Potential Additional Development Layer Below Core Acreage Dawson Drilling Inventory 500 Upper Montney 400 Upper Montney A Booked Reserves* 300 Wells 200 100 Lower Montney 0 Wells Drilled to…
  57. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 57
    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*…
  58. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 58
    Sunrise Development Potential Proven Productivity From Four-Layered Development Drilling Inventory 400 Upper Montney A Booked Reserves* 300 Upper Montney Wells Upper Montney A+ Booked Reserves* 200 100 Upper Montney…
  59. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 59
    Ante Creek Development Potential Large Land Base and Down-Spacing = Significant Drilling Inventory Drilling Inventory 200 150 Wells 100 50 0 Wells Drilled to Drilling Opportunities YE2015 at YE2015 Wells…
  60. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 60
    APPENDIX
  61. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 61
    Q2 2016 Operating and Financial Performance Strong Quarterly Results Three Months Ended Six Months Ended (Cdn millions, except per share and per boe amounts) March 31, 2016 June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015…
  62. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 62
    2016 Guidance Focused on Sustainability and Value Creation 2016 Guidance 2016 Revised Guidance (1) 2016 YTD Actuals Production Crude oil (bbl/day) 32,000 - 34,000 32,000 - 34,000 33,277 Condensate (bbl/day) 3,000 - 3,400 3,400 - 3,800…
  63. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 63
    Hedge Positions July 28, 2016 Summary of Hedge Positions as at July 28, 2016 (1) 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 Ceiling 50.00 3,000 53.78 7,000…
  64. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 64
    Hedging Program Results Hedging Continues to Smooth Cash Flow Volatility ARCs hedging program provides greater certainty of cash flows and supports the business plan 250 Realized Hedging Gains (Losses) 200 Crude Oil Natural Gas…
  65. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 65
    Significant Liquidity ARC Continues to Maintain Ample Liquidity 2.2 Billion Total Cash & Existing Credit Capacity (1.2 Billion Available) Bank Credit Facility Cash Undrawn Master 1 billion credit facility plus 40 million working 59MM…
  66. October 2016 Corporate Presentation – Arc Resources Ltd. – slide 66
    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…

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