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 (Q4 2016) 117,611 boe/day Reserves (2P Gross YE 2016) (1) 737 MMboe Reserve Life Index (2P) (1)(2) 16.4 years Monthly Dividend 0.05 per share Annualized Returns since Inception (3) 14% Market…
2016 Accomplishments A Year of Strong Performance in All Areas of the Business Full-year Review Annual average production of 118,671 boe/d (up 2% from 2015) Replaced 260% of produced reserves, adding 113.5 MMboe through development…
Q4/YE 2016 Operating and Financial Highlights Key Performance Indicators for Q4/YE 2016 Three Months Ended Twelve Months Ended September 30, December 31, December 31, December 31, December 31, (Cdn millions, except per share and per…
Guidance Focused on Value Creation and Sustainability 2017 Original Guidance 2017 Guidance 2016 Guidance (1) 2016 Actuals Production Crude oil (bbl/day) 33,000 - 36,000 25,000 - 28,000 32,000 - 34,000 31,510 Condensate (bbl/day) 4,900…
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 Operating Costs Production 6.65/boe…
Balance Sheet Strength Targeting Net Debt to Funds from Operations of 1.0 1.5x for the Long Term Expect to eventually return to target levels as proceeds from non-core Saskatchewan asset disposition are reinvested into capital…
E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector Canadian Benchmarking: Q3 2016 Net Debt / 2017E Cash Flow (1)(2) 13.1x 15.8x Group Average 7.4 x 5.4 x 4.4 x 2.9 x 2.8 x 2.7 x 2.5 x 2.4…
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 9th Consecutive Year Montney assets have been the centerpiece to ARCs strategy of organic reserves and resource growth and provide continued upside potential Finding and development…
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) 2.23 2.13 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 High-quality assets, excellent capital efficiencies, and low operating costs have resulted in strong returns over the long term, with a ROACE of 10% since…
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 (32.88/share) paid since inception Target is to…
Environmental, Social & Governance Performance ARCs Leadership Culture Is Reflected in Its ESG Practices Look to develop resources in the most efficient manner while creating long-term value for shareholders and supporting the economic…
OPERATIONAL EXCELLENCE
Risk-Managed Value Creation Montney Assets Have Delivered Profitable Growth and Value Quality assets and capital discipline has resulted in 550% Montney production growth since 2009 150,000 Production Profile 120,000 90,000…
Growing Our Low-Cost Gas Business 13% 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 Foot in NE BC Completion Cost per Tonne in NEBC…
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 2017 Capital Budget (boe/day) Septimus (Phase I, II) Sundown (Phase I, II) Montney Sustaining…
2017 Capital Budget of 750 Million Focus on Long-term Value Creation and Balance Sheet Strength Profitable investment in Montney BRITISH COLUMBIA ALBERTA crude oil, liquids-rich gas and natural 134 million (1)(3) gas assets 22 gross…
2017 Budget Priorities 2017 Capital Budget of 750 Million Complete Construction of Dawson Phase III Expected to be on-stream in late 2017 Provides annualized production growth Investment at Tower, Attachie and Sunrise Attachie…
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…
Key Reserve Information 737 MMboe 2P Reserves at Year-end 2016 Reserves at year-end, December 31, 2016 YE 2016 2P Reserves Proved Producing 212 MMboe Total Proved 426 MMboe PDP 29% Proved plus Probable 737 Mmboe Probable 42% 2P…
NE BC Montney Reserves and Risked Resources NE BC Montney TPIIP: 101.5 Tcf of Shale Gas and 10.5 Billion Barrels of Oil Shale Gas Tight Oil, Condensate & NGLs Oil 25 MMbbl TOTAL PROVED + PROBABLE RESERVES 3.0 Tcf Condensate 36…
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 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, Parkland/Tower…
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) Q4 2016 28,710 Liquids (bbl/day) 1,340 ARC 13-7 Phase III Gas Plant (1) Gas (MMcf/day) 164 (90 MMcf/day) ARC 1-34 Production Split % (Liquids /…
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, 2016 ARC Identified Drilling Locations ARC Montney Lands…
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) Pouce Coupe 10-34 Parkland 11-36 Dawson 01-17 Pouce Coupe 14-14 pad Pouce Coupe 01-15 Dawson A9-08 Dawson A8-01 Sunrise C2-25 Sunrise…
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 Parkland Tower Tower Net Production (boe/day) Q4 2016 9,910 15,530 Liquids (bbl/day) 1,610 8,050 Gas (MMcf/day) 50 45 Land (Montney Net Sections) 37 54 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 Cumulative Liquids…
Sunrise/Sunset Asset Details Sunrise Has Progressed from Pilot to Full-scale Development Net Production (boe/day) Q4 2016 22,480 Liquids (bbl/day) 80 Gas (MMcf/day) 134 Land (Montney Net Sections) 32 Sunset Working Interest 89%…
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) Q4 2016 1,150 Liquids (bbl/day) 590 Gas (MMcf/day) 3 Land (Montney Net Sections) 286 Working Interest 99% Reserves (2P MMboe)…
Attachie Pilots Planning for the Future Applying Tower Learnings to Attachie West Attachie: Attachie Four pilot wells are on production through third-party facilities 14-24 Two most recent horizontal wells (13-26 pad), which were…
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunities Net Production (boe/day) Q4 2016 16,070 Liquids (bbl/day) 7,280 Gas (MMcf/day) 53 ARC 2-26 Gas Plant Production Split % (Liquids / Gas) 45% / 55%…
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 High-quality Light Oil Production and Competitive Operating Netbacks Net Production (boe/day) Q4 2016 11,020 Liquids (bbl/day) 8,840 Gas (MMcf/day) 13 Land (Cardium Net Sections) 217 BERRYMOOR Working…
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 Outlook Founding Property Continuing to Deliver Value 16,000 Production Profile 2016 acquisitions increased ARCs working interest which allows for control of pace of development and improved efficiencies 12,000 through core…
SUMMARY
Why Invest in ARC A Differentiated Investment with Tremendous Opportunity Montney Project Potential (boe/day) Septimus (Phase I, II) HSE and Sundown (Phase I, II) Financial Operational Flexibility Excellence Ante Creek…
PROPERTY APPENDIX
Dawson Development Potential Additional Development Layer Below Core Acreage Dawson Drilling Inventory 600 Upper Montney Upper Montney A Booked Reserves* 400 Wells 200 Lower Montney 0 Wells Drilled to YE Drilling…
Parkland/Tower Development Potential Incremental Reserves Potential With Multi-layer Development Tower Parkland Upper Montney A Drilling Inventory Booked Reserves* Upper 750 Montney 500 Wells Upper Montney A+ Lower Booked…
Sunrise Development Potential Proven Productivity From Four-layered Development Sunrise Drilling Inventory 400 Upper Montney A Booked Reserves* Upper Montney Wells Upper Montney A+ 200 Booked Reserves* Upper Montney…
Ante Creek Development Potential Large Land Base and Down-spacing = Significant Drilling Inventory Drilling Inventory 200 Wells 100 0 Wells Drilled to YE Drilling Opportunities 2016 at YE 2016 Wells Drilled ARC Montney…
APPENDIX
Hedge Positions February 8, 2017 (1) Summary of Hedge Positions as at February 8, 2017 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 Ceiling 55.54 11,000…
Hedging Program Program Executed with a Long-term View The fair value of ARCs risk management contracts at December 31, 2016 was a net asset of 150 million Realized Hedging Gains (Losses) (1)(2)(3) 250 Crude Oil Natural Gas Foreign…
Significant Liquidity and Access to Capital ARC Continues to Maintain Ample Liquidity 2.9 Billion Total Cash & Existing Credit Capacity (1)(2)(3)(4) (1.9 Billion Available) Bank Credit Facility 950 million credit facility plus 40…
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