January 2017 All references to 2017 budgeted, forecasted or guidance data will be updated following the release of ARCs fourth quarter and full-year 2016 results in February, 2017.
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…
Corporate Profile Corporate Summary Production (Q3 2016) 115,205 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…
CORPORATE STRATEGY
Unique Strategy Delivering on Our Strategy of Risk-managed Value Creation Realized Hedging Gains (Losses) Transitioning to the Montney 250 Base Montney 100% 200 Montney Growth 2016 YTD Operating Costs Production Production…
Balance Sheet Strength Targeting Net Debt to Funds from Operations of 1.0 1.5x for the Long Term During temporary periods, net debt to FFO will trend towards a maximum ratio of two times Net Debt to Funds from Operations 1,400 3.0…
2016 E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector Canadian Benchmarking: Current Net Debt / 2016E Cash Flow (1)(2) 13.1x 15.8x Group Average 9.4 x 6.2 x 4.6 x 4.2 x 4.1 x 4.1 x 4.0…
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…
Reserve Replacement 200% Reserves Replacement for 8th Consecutive Year Montney assets have been the centerpiece to ARCs strategy of organic reserves and resource growth and provide continued upside potential Annual Produced Reserves…
Natural Gas 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 market…
Natural Gas Diversification Strategy ARC Continues to Physically and Financially Diversify to Downstream Markets to Achieve Optimal Pricing A combination of financial and physical diversification tools shift ARCs natural gas price…
Natural Gas Netback Analysis ARC Continues to Diversify to Downstream Physical Markets Sales Point Gas Map (US/MMBtu) Pricing Hub Hub Market Price (1) Station 2 AECO Field-to-Hub Transportation Cost (2) 1.41 1.78 Hub-to-Hub…
Crude Oil & Condensate 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…
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 of…
Committed to a Dividend & Business Sustainability ARC Has Always Paid a Dividend While Delivering Value Robust business allows us to pay a sustainable dividend 5.9 billion of dividends (32.78/share) paid since inception Target is to…
Environmental, Social & Governance Performance Creating Value Through ESG Performance Recognitions and Rankings: MSCI Global Sustainability Index Jantzi Social Index CDP Participant for eight consecutive years Globe and Mail Board…
OPERATIONAL EXCELLENCE
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 150,000 Production Profile 120,000…
Growing Our Low Cost Gas Business 16% CAGR (1) Total Natural Gas Production 2009 2017 Forecast ARC has divested of certain non-core, non-Montney shallow gas assets from 2014 to 2016 with associated production of approximately 5,500…
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 32…
Continuous Improvement in Cost Structure Reduced Drilling Days Combined with Increased Tonnage Resulting in 25% Cost Reductions in Drilling and Completions Drilling Cost per Lateral Meter in NE BC Completion Cost per Tonne in NE BC…
Significant Reduction in Drilling Times Applying Learnings Across Portfolio for Reduced Drill Times and Cost Savings Utilizing state of the art technology to improve performance and to increase efficiencies 0 Dawson 0 Sunrise 0…
PORTFOLIO STRATEGY
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 Redwater…
ARCs Strong Pipeline of Projects Depth of Portfolio Will Support Profitable Development in the Montney Montney Project Potential (boe/day) Sundown (Phase I, II) 2017 Capital Budget (1) Septimus (Phase I, II) Montney Sustaining…
2017 Capital Budget of 665 Million (1) 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 128,000 to 133,000 boe per…
2017 Budget Priorities 2017 Capital Budget of 665 Million (1) Complete Construction of Dawson Phase III Expected to be on-stream in late 2017 Provides annualized production growth Sustain Production at Gas Plant Capacities in Core…
Montney Growth Engine ARCs Montney Assets Are Strategically Located BC AB Geographic Optionality Proximity of ARC Montney land base enables: Lower Montney Capital and operating efficiencies 10 kPa/m Line 1,000m Application of…
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 (1) Large Identified Opportunity for Future Value Creation Inclusive of internally identified locations in NE BC and Ante Creek, 5,000 potential future drilling opportunities exist within the…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Dawson Sunrise Parkland Tower Ante Creek Half-cycle Economics (1)(2)(3) US50/bbl WTI 122% IRR (Phase I & II) 86% IRR 71% IRR 75% IRR 56% IRR…
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…
Competing Across North America ARCs Low-cost Montney Assets Deliver Favourable Operating Netbacks H1 2016 Operating Cash Costs (1)(2)(3) Average 2016E/2017E Operating Netback (1)(3)(4) 3.00 (Cdn/Mcfe) 4.00 (Cdn/Mcfe) Canadian…
ARCs Gas Is Competing Continentally Superior Gas Economics in the Montney ARC Dawson Gas H1 2016 Netback Comparison (2)(3)(4) (1)(2) Single Well Economics (Cdn/Mcfe) Capital/Well Cdn3.6MM 4.00 Canadian 2P Finding & Development…
ARCs North American Oil Competitiveness Competitive Cost Structure in the Montney ARC Tower Oil H1 2016 Netback Comparison (2)(3)(4) (1)(2) Single Well Economics (Cdn/boe) Capital/Well Cdn4.5MM 60.00 52.64 52.64 Canadian 2P Finding…
PROPERTY DETAILS
Dawson Asset Details Poised for Next Stage of Development Net Production (boe/day) Q3 2016 29,570 ARC 13-7 Liquids (bbl/day) 1,230 Phase III Gas Plant (1) (90 MMcf/day) Gas (MMcf/day) 170 ARC 1-34 Compressor Station Production…
Dawson Development Potential Significant Upside Remaining in Both Upper and Lower Montney Upper Montney Development Plan Lower Montney 2P Reserves Booked as at December 31, 2015 ARC Identified Drilling Locations ARC Wells…
Dawson Upper Montney NGLs 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 40 bbl/MMcf Wellhead Upper…
Dawson Lower Montney Potential Building Understanding of the Lower Montney Fairway (1) Parkland 11-36 Pouce 2/1-15 Dawson 1-17 Dawson A9-8 Dawson A8-1 Sunrise C2-25 Sunrise B8-24 Drilled in Q3 2016. (1) Only Lower…
Dawson Phase I & II vs. Phase III New Area Development for Phase III Increased Liquids Content Driving Strong Economics 8,000 Dawson Phase I & II 2017 Type Curve Dawson Phase III 2017 Type Curve Key Metrics Phase I & II Phase III…
Dawson Phase III Plant Construction of Dawson Phase III 90 MMcf/Day Gas Plant Progressing Dawson Phase III Sour Gas Plant designed for 90 MMcf/day of gas and 7,500 barrels of liquids-handling sales capacity Liquids production will…
Dawson Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow Field Netback ( millions) 250 Capital Expenditures, excluding Facility Expenditures ( millions) (1) 250 Facility Expenditures ( millions)…
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 wells to fill facility 2018: Drill 10…
Parkland/Tower Asset Details Building a Profitable Business Tower Parkland Tower Net Production (boe/day) Q3 2016 10,670 13,400 Liquids (bbl/day) 1,740 6,670 Gas (MMcf/day) 54 40 Land (Montney Net Sections) 37 43 Working Interest…
Tower Strong Oil Production Industry-leading Oil Well Performance 1,200 2017 Type Curve Key Metrics 2017 Type Curve 900 DCET Capex/Well ( millions) 4.5 Production Rate (boe/day) Internal 2P Reserves (Mboe) 575 IP (1 month)…
Tower Optimizing Development Reducing Development Costs and Refining Well Design for Optimized Capital Efficiency 160 Prior Well Design Tower 200 m 200 m 200 m O O O O Cumulative Oil (Mbbl) 120 Upper Montney A Lower Montney A…
Tower Outstanding Performance ARCs Tower Wells Are Some of the Best in Western Canada Historic Light Oil Liquids Production of Western Canadian Oil Wells (1) On Production 2009+ Cumulative Production Increasing Majority of wells…
Sunrise Asset Details Sunrise Has Progressed from Pilot to Full-scale Development Net Production (boe/day) Q3 2016 19,700 Liquids (bbl/day) 100 Gas (MMcf/day) 118 Land (Montney Net Sections) 32 ARC 13-36 Gas Plant (60 MMcf/day)…
Sunrise Multi-Layer Development Three-layer Development in Upper Montney Strong Reservoir, Low Capital and Plant Costs 8,000 Montney A (Upper) 2017 Type Curve Montney A (Second Layer) 2017 Type Curve 2017 Type Curve Key Metrics…
Sunrise Proven Performance Results in Upper Montney Horizon Validate Type Curves 8,000 Montney A (Upper) 2017 Type Curve Sunrise Montney A (Second Layer) 2017 Type Curve Montney B 2017 Type Curve 12-30 Pad Average per Well Montney A…
Attachie Asset Details Highly Prospective Asset with Strong Liquids Potential Net Production (boe/day) Q3 2016 840 Liquids (bbl/day) 310 Gas (MMcf/day) 3 Land (Montney Net Sections) 288 Working Interest 99% Reserves (2P MMboe)…
Attachie Pilots Planning for the Future Applying Tower Learnings to Attachie West Attachie: Attachie Two horizontal wells have produced 2 Bcf of gas and 105 Mbbl of liquids in 30 months (average liquids ratio of 53 bbl/MMcf) Upper…
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunities Net Production (boe/day) Q3 2016 15,250 Liquids (bbl/day) 6,840 Gas (MMcf/day) 51 ARC 2-26 Gas Plant (20 MMcf/day) Production Split %…
Ante Creek Montney Geology Adding Value from a Complex Reservoir Large land base and down-spacing has resulted in significant drilling inventory Continued delineation of Lower Montney prospect in southeast Ante Creek
Ante Creek 2017 Plans New Well Design (Monobore, Cemented Sleeves, Pinpoint Fracs) with Promising Upside 400 2017 Type Curve 2016 Type Curve Key Metrics 2017 Type Curve 300 DCET Capex/Well ( millions) 3.8 Production Rate…
Pembina Asset Details Low Decline, High-quality Light Oil Production and Competitive Operating Netbacks Net Production (boe/day) Q3 2016 11,160 Liquids (bbl/day) 8,920 Gas (MMcf/day) 13 Land (Cardium Net Sections) 214 BERRYMOOR…
Pembina Strategic Acquisition Strategic Acquisition Further Consolidates Large Oil-in-Place, Low-risk, Predictable Production 2016 acquisitions provided the opportunity to eliminate 78 km of unit boundaries, 60 km of which allow for…
Pembina Cardium Geology Optimizing Existing Production, Exploiting New Unconventional Reserves Future drilling will target the entire Cardium pay zone with a focus on the low-recovery bioturbated zone
Pembina Inventory of Strong Cash Flow Locations Benefits from Half-cycle Economics as Infrastructure Is Already in Place 400 2017 Type Curve Key Metrics 2017 Type Curve 300 DCET Capex/Well ( millions) 2.5 Production Rate…
Pembina Focus on Technology Horizontal Drilling and Water Injection Pilot Delivers Incremental Crude Oil 400 2,000 Hz+V Oil Waterflood injection started in December 2012; cumulative injection of 926 Mbbl Injection Begins to Q3…
Pembina Outlook Founding Property Continuing to Deliver Value 16,000 Production Profile Acquisitions in 2016 have increased ARCs working interest which allows for control of pace of development and improved 12,000 efficiencies…
SUMMARY
Why Invest in ARC A Differentiated Investment with Tremendous Opportunity Montney Project Potential (boe/day) Sundown (Phase I, II) Septimus (Phase I, II) HSE and Financial Operational Flexibility Excellence Pouce Coupe…
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*…
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…
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…
APPENDIX
Q3 2016 Operating and Financial Highlights Key Performance Indicators for Q3 2016 Three Months Ended Nine Months Ended June 30, September 30, September 30, September 30, September 30, (Cdn millions, except per share and per boe…
2016 and 2017 Guidance (1) Focused on Sustainability and Value Creation 2017 Guidance (1) 2016 Revised Guidance (2)(3) 2016 YTD Actuals Production Crude oil (bbl/day) 33,000 - 36,000 32,000 - 34,000 32,056 Condensate (bbl/day) 4,900 -…
Hedge Positions November 10, 2016 Summary of Hedge Positions as at November 10, 2016 (1) Q4 2016 H1 2017 H2 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…
Hedging Program Program Executed with a Long-term View The fair value of ARCs risk management contracts at September 30, 2016 was a net asset of 250 million Realized Hedging Gains (Losses) (1)(2)(3) 250 Crude Oil Natural Gas…
Significant Liquidity and Access to Capital ARC Continues to Maintain Ample Liquidity 2.3 Billion Total Cash & Existing Credit Capacity (1)(2)(3)(4) (1.3 Billion Available) Bank Credit Facility Cash 44MM Undrawn Master Shelf 1…
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 Reserves and Risked Resources Amendments to Disclosure of Resource Evaluation Amendments to NI 51-101 came into effect July, 2015 that require changes to the way resources are disclosed Key changes that impact ARC…
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