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 (Q1 2017) 115,129 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)…
Q1 2017 Operating and Financial Highlights Key Performance Indicators for Q1 2017 Three Months Ended (Cdn millions, except per share and per boe amounts) December 31, 2016 March 31, 2017 March 31, 2016 Production (boe/d) 117,611…
Guidance Focused on Value Creation and Sustainability 2017 Guidance 2017 YTD Actuals Production Crude oil (bbl/d) 25,000 - 28,000 24,030 Condensate (bbl/d) 5,000 - 5,500 4,504 Natural gas (MMcf/d) 505 - 515 496.2 NGLs (bbl/d) 4,000…
CORPORATE STRATEGY 3-B
Consistent and Sustainable Strategy Delivering on Our Strategy of Risk-managed Value Creation Realized Hedging Gains (Losses) Operating Costs 250 12 200 9 150 /boe millions 6 100 HSE and Financial 3 50 Operational…
Transformation of Our Business Transformation Has Allowed ARC to Manage a Profitable Business through the Cycles Transitioning to the Montney Net Debt to Funds from Operations (1) 100% 1,400 3.0 Montney Growth Q1 2017 Operating…
Delivering Full-cycle and Corporate Returns Efficiently Converting Resources into Earnings Type Curves & Single Well Economics (Half-cycle) Projected Dawson Phase III Cash Flows 8,000 Dawson Phase I & II 2017 Type Curve150000…
Financial Flexibility Balancing Inflows and Outflows for Long-term Financial Sustainability Objective to fully fund ARCs dividend and sustaining capital from FFO over the long term Following the sale of certain non-core assets, ARC…
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…
Physical Marketing Strategy Ensuring Market Access at Optimal Netback Pricing Guiding Principles Marketing ARCs Products Market Access Natural Gas Committing to long-term Proactively planning for future development transportation…
Natural Gas Marketing Operational Diversification of ARCs Natural Gas Secured firm transportation pipeline agreements to support existing production and future development out beyond 2019 ARCs proximity to major pipelines allows for…
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 Pricing Hub (US/MMBtu) Hub Market Price (1) Field-to-Hub Transportation Cost (2) Hub-to-Hub Transportation Cost (3) Market…
Crude Oil & Condensate Marketing Focused on Higher-valued Crude Grades and Condensate Continued focus on Montney assets has resulted in ARCs production mix being primarily light and medium crude oil grades and condensate Premium…
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 9-B
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…
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 2016…
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 Dawson Sunrise Tower 0 0…
PORTFOLIO STRATEGY 12-B
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 Appraisal…
ARCs Strong Pipeline of Projects Depth of Portfolio Will Support Profitable Development in the Montney and the Cardium Montney and Cardium Project Potential (boe/day) 2017 Capital Budget 750 million Septimus (Phase I, II)…
2017 Capital Budget of 750 Million Focus on Long-term Value Creation and Balance Sheet Strength Profitable investment in Montney crude BRITISH COLUMBIA ALBERTA oil, liquids-rich gas and natural gas assets and Cardium crude oil assets…
2017 Budget Priorities 2017 Capital Budget of 750 Million Complete Construction of Dawson Phase III Expected to be on-stream in the second half of 2017 Provides annualized production growth Investment at Tower, Attachie and…
Montney Growth Engine ARCs Montney Assets Are Strategically Located BC AB Geographic Optionality Proximity of ARC Montney land base enables: Capital and operating efficiencies Application of learnings across areas 1,000m Lower…
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 Montney…
Lower Montney Potential Building Confidence in the Lower Montney Fairway (1) 2017 Lower Montney Appraisal Program Pouce Coupe 10-34 Area Drilling in 2017 Pouce Coupe 1 Pouce Coupe 14-14 pad Dawson 4 Parkland 2 Sunrise 5 Total…
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 3.0 Tcf Oil 25 MMbbl TOTAL PROVED + PROBABLE RESERVES 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…
ARCs Gas Is Competing Continentally Superior Gas Economics in the Montney ARC Dawson Gas 2016 Netback Comparison (2)(3)(4) Single Well Economics (1)(2) (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 2016 Netback Comparison (2)(3)(4) Single Well Economics (1)(2) (Cdn/boe) Capital/Well Cdn4.5MM 60.00 57.38 WTI (Cdn) 57.38 Canadian 2P…
PROPERTY DETAILS 20-A
Dawson Asset Details Poised for Next Stage of Development Net Production (boe/day) Q1 2017 30,900 Liquids (bbl/day) 1,310 ARC 13-7 Phase III Gas Plant (1) Gas (MMcf/day) 178 (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…
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 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 6,000 Key Metrics Phase I & II…
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 bbl/day of liquids-handling sales capacity Liquids production will…
Dawson Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow 250 250 200 200 MMcfe/day 150 150 100 100 millions 50 50 0 0 2010 2011 2012 2013 2014 2015 2016 (50) (50) Field…
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) Q1 2017 11,230 13,940 Liquids (bbl/day) 2,260 6,420 Gas (MMcf/day) 54 45 Land (Montney Net Sections) 37 57 Working…
Tower Strong Oil Production Industry-leading Oil Well Performance 1,200 2017 Type Curve 900 Production Rate (boe/day) Key Metrics 2017 Type Curve DCET Capex/Well ( millions) 4.5 600 Internal 2P Reserves (Mboe) 575 IP…
Tower Optimizing Development Our Pace of Development Is Enabling Learnings to Be Incorporated in Subsequent Investments 150,000 Learnings that are driving capital efficiency and increasing net present value: 125,000 12-16 Pad East:…
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) Q1 2017 22,750 Liquids (bbl/day) 120 Gas (MMcf/day) 136 Land (Montney Net Sections) 32 Sunset Working Interest…
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 Montney B 2017 Type Curve 6,000…
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) Q1 2017 1,060 Liquids (bbl/day) 650 Gas (MMcf/day) 3 Land (Montney Net Sections) 286 Working Interest 99% Reserves (2P…
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 (B13-26, 13-14) were…
Ante Creek Asset Details Significant Cash Flow with Substantial Growth Opportunities Net Production (boe/day) Q1 2017 17,430 Liquids (bbl/day) 8,060 Gas (MMcf/day) 56 Production Split % (Liquids / Gas) 46% / 54% Land (Montney…
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 29-A
Ante Creek 2017 Plans New Well Design (Monobore, Cemented Sleeves, Pinpoint Fracs) with Promising Upside 400 2017 Type Curve 2016 Type Curve 300 Key Metrics 2017 Type Curve Production Rate (boe/day) DCET Capex/Well (…
Pembina Asset Details High Working Interest of Light Oil Production, Competitive Operating Netbacks Net Production (boe/day) Q1 2017 11,040 Liquids (bbl/day) 9,040 Gas (MMcf/day) 12 Land (Cardium Net Sections) 217 Berrymoor…
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 30-B
Pembina Inventory of Strong Cash Flow Locations Benefits from Half-cycle Economics as Infrastructure Is Already in Place 400 2017 Type Curve 300 Key Metrics 2017 Type Curve Production Rate (boe/day) DCET Capex/Well (…
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 through core Cardium…
SUMMARY 32-A
Why Invest in ARC A Differentiated Investment with Tremendous Opportunity Montney and Cardium Project Potential (boe/day) Septimus (Phase I, II) Sundown (Phase I, II) HSE and Ante Creek Expansion Financial Operational…
PROPERTY APPENDIX 33-A
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…
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…
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…
APPENDIX 36-A
E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector Canadian Benchmarking: Q4 2016 Net Debt / 2017E Cash Flow (1)(2) 5.9 x 13.1x 15.8x 5.2 x Group Average 4.4 x 4.0 x 3.4 x 3.1 x 2.5 x…
Hedge Positions May 3, 2017 (1) Summary of Hedge Positions as at May 3, 2017 Q2 2017 H2 2017 2018 2019 2020 2021 (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 55.54…
Hedging Program Program Executed with a Long-term View The fair value of ARCs risk management contracts at March 31, 2017 was a net asset of 264.4 million Realized Hedging Gains (Losses) 250 Crude Oil 200 Natural Gas Foreign…
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