Why Invest in ARC? A Differentiated Investment Financial Discipline High-quality Asset Portfolio Proven Execution and Development Model Operational and Organizational Excellence ? Sector-leading balance sheet ? Disciplined…
Corporate Profile Corporate Summary Production (Q2 2017) 113,410 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)…
Q2 2017 Financial and Operating Highlights Financial Results ? Net income of $124.0 million ($0.35 per share) ? Funds from operations of $169.8 million ($0.48 per share) ? Strong financial position with net debt to annualized funds…
Guidance On Track to Meet Annual Production Guidance of 120,000 ? 124,000 boe/day 2017 Guidance 2017 Revised Guidance 2017 YTD Production Crude oil (bbl/d) 25,000 - 28,000 25,000 - 27,000 23,921 Condensate (bbl/d) 5,000 - 5,500…
ARC?s History and Future In the past 20 years, ARC has successfully achieved the following: 20-year History Has Set the Stage for Another 20+ Years of Value Creation $6 Billion of Distributions / Dividends & 13% Annualized Total…
Consistent and Sustainable Strategy Delivering on Our Strategy of Risk-managed Value Creation Montney Growth Assets RISKMANAGED VALUE CREATION High-Quality, Long-Life Assets Financial Flexibility HSE and Operational…
Delivering Full-cycle and Corporate Returns Efficiently Converting Resources into Earnings 0 2,000 4,000 6,000 8,000 0 6 12 18 24 30 36 Single Well Economics (Half-cycle) Proportional Facility and Appropriate Timing…
Physical Marketing Strategy Ensuring Market Access at Optimal Netback Pricing Guiding Principles ? Proactively planning for future development opportunities ? Keep abreast of changing infrastructure environment Market Access ?…
? Continued focus on Montney assets has resulted in ARC?s production mix being primarily light and medium crude oil grades and condensate ? Premium products trade more tightly to WTI than heavy crude, therefore realizing higher sales…
Natural Gas Flows & Sales Points (H1 2017 Pricing in US$/MMBtu) GTN Physical Flow of ARC?s Production: ? 77% through the TransCanada NGTL system ? 23% through the Enbridge Westcoast system ? Secured firm transportation pipeline…
(1) Indicative H1 2017 pricing and exchange rate of Cdn$/US$1.3339. (2) Transportation costs assume firm transportation rate as per current tariff and exclude fuel and applicable carbon and motor fuel tax. (3) Assumes Dawn LTFP…
Environmental, Social & Governance Performance ARC?s Leadership Culture Is Reflected in Its ESG Practices Recognitions and Rankings: ? MSCI Global Sustainability Index ? Jantzi Social Index ? CDP Participant for eight consecutive…
Capital Cardium Capital Non-core & Corporate Capital 0 150 300 450 600 750 900 2017 Revised Budget Drilling & Completions Infrastructure Investment 2017 Mid-year Budget Capital Budget ($ millions) 2017 Mid-year Capital Budget…
Long-term Plan Update ? Project Resequencing ? Resequencing of projects to deliver improved capital efficiencies, greater production growth and enhanced long-term optionality ? Deliberate long-term planning and pace of asset…
Focused Asset Base Investing in Optionality in the Montney and Cardium BC AB Blueberry Red Creek Attachie Septimus Tower Parkland Sunset Sunrise Dawson Pouce Coupe Ante Creek Sundown Montney Overview Q2 2017 Average Daily…
Proven Development Model Inventory at All Stages Allows for Self-funding and Full-cycle ROACE Across Portfolio Dawson Phase I & II Sunrise Phase I Attachie Parkland/Tower Phase I & II Net Cash Flow + Blueberry Sundown Attachie…
Oil and Liquids Dry Gas Blueberry Red Creek Attachie Septimus Tower Parkland Sunset Sunrise Sundown Dawson Pouce Coupe Ante Creek 1,000m 2,000m 3,000m 1,000m 2,000m Montney Erosional Edge Lower Montney 10 kPa/m…
Multiple Layers to Develop Significant Future Delineation Opportunities Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Lower Montney Upper Montney Montney A Montney B Montney C Montney D Montney E Existing…
Lower Montney Potential Building Confidence in the Lower Montney Fairway (1) (1) Only Lower Montney wells are displayed. ARC Lower Montney wells with completion operations conducted during H1 2017 Existing ARC Lower Montney…
NE BC Montney Reserves and Risked Resources NE BC Montney TPIIP: 101.5 Tcf of Shale Gas and 10.5 Billion Barrels of Oil ? Independent Resources Evaluation conducted by GLJ effective December 31, 2016. ? Contingent Resource and…
Number of Locations Total HZ Wells Drilled to YE2016 2P Booked Undeveloped Locations Development Pending ECR Booked Locations Development Unclarified ECR Booked Locations Early Stages of Property Development (1) ? Inclusive of…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio (1) IRR (half-cycle after-tax rate of return) run at US$50/bbl WTI and Cdn$2.50/GJ AECO flat pricing. (2) Breakeven prices are US$ per barrel WTI or Cdn$…
? Significant drilling results and large inventory of future drilling locations provides support for favourable economics at Dawson Phase III, Dawson Phase IV, and Sunrise Phase II ? Sunrise Phase II economics have improved due to…
Appalachian Gas Single Well Economics (1)(4)(5) Capital/Well Cdn$9.2MM US 1P Finding & Development Cdn$0.52/Mcfe ARC Tower Oil Single Well Economics Capital/Well Cdn$4.5MM Canadian 2P Finding & Development Cdn$7.91/boe ARC Dawson…
0.00 15.00 30.00 45.00 60.00 Permian Average ARC Tower Oil Cdn$/boe WTI (Cdn$) ARC?s cash costs are ~20% lower 80% Liquids 60% Liquids $57.38 $57.38 ARC?s netback is ~25% higher ARC Tower Oil vs. Permian Oil 2016 Netback…
Creating Sustainable Businesses in the Montney ? ARC is investing in three infrastructure growth projects to grow production by ~50,000 boe/day over a 2.5-year period Businesses Will Sustain Production at Low Reinvestment Rates Field…
ARC?s Strong Pipeline of Projects Depth of Portfolio Will Support Profitable Development in the Montney and the Cardium Montney Capital Efficiencies: ? Sustaining: ~$9,000/boe/day ? Gas Development: ~$7,000 to $8,000/boe/day ? Oil…
500 1,000 1,500 2,000 2,500 2014 2015 2016 Completion $/Tonne Completion Cost per Tonne in NE BC 0 400 800 1,200 1,600 2014 2015 2016 $/Lateral Foot Drilled Drilling Cost per Lateral Foot in NE BC 40% Reduction…
Significant Reduction in Drilling Times ? Utilizing state of the art technology to improve performance and to increase efficiencies Applying Learnings Across Portfolio for Reduced Drill Times and Cost Savings 0 1,000 2,000 3,000…
Investing in Learnings Applying Learnings across ARC?s Portfolio of Assets Integrating Learnings at All Stages of Development Further Our Understanding of the Asset Establish Project Sequencing Determine Well Designs…
Key Projects Update Advancing Projects across ARC?s Portfolio Key Projects Update Dawson ? Phase III started up, sanctioned Phase IV ? Delineating and proving up Lower Montney Parkland/Tower ? Refining development strategy and well…
Dawson ? Asset Details Poised for Next Stage of Development at Dawson Phase IV (1) Dawson Phase III Gas Plant was started up in mid-June 2017. The facility has 90 MMcf/day of gas processing and 7,500 bbl/day of liquids-handling…
Dawson ? Development Potential Significant Upside Remaining in Both Upper and Lower Montney Lower Montney 2P Reserves Booked as at December 31, 2016 Upper Montney Development Plan ARC Identified Drilling Locations ARC Wells ARC…
Dawson ? Upper Montney NGLs Potential ? Liquids ratio at Dawson varies across Upper and Lower Montney ? Majority of development to-date focused on the Upper Montney A, which has lower liquids yields (core is defined by yellow…
Production Rate (Mcf/day) Months on Production 24 bbl/MMcf 5 bbl/MMcf Dawson ? Phase I & II vs. Phase III New Area Development for Phase III ? Increased Liquids Content Driving Strong Economics ? Type curves are internal estimates…
(100) (50) 0 50 100 150 200 250 2010 2011 2012 2013 2014 2015 2016 MMcfe/day $ millions Dawson ? Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow $3.91 $3.48 $2.28 $3.00 $4.19 $2.62…
Leveraging Pre-investment in Dawson Phase III for Superior Capital Efficiencies in Dawson Phase IV Dawson Phase III Sanctioning Checklist Inventory High confidence Well Execution No concerns Facility Execution Ready to execute…
Parkland/Tower ? Asset Details Building a Profitable Business Parkland Tower Net Production (boe/day) ? Q2 2017 9,470 14,170 Liquids (bbl/day) 2,010 7,760 Gas (MMcf/day) 45 38 Land (Montney Net Sections) 37 57 Working Interest ~90%…
Tower ? Strong Oil Production Industry-leading Oil Well Performance ? Type curves are internal estimates based on analog wells and reservoir modeling. ? Assumed cycle time (from spud to on-production): five months. ? Lateral length of…
Tower ? Optimizing Development Our Pace of Development Is Enabling Learnings to Be Incorporated in Subsequent Investments ? Type curves are internal estimates based on analog wells and reservoir modeling. ? Chart based on sales…
Sunrise/Sunset ? Asset Details Confidence in Predictability of Results Supports Magnitude of Resource and Next Stage of Development (1) Sunrise Phase II Gas Plant expansion includes 120 MMcf/day of incremental natural gas production…
Sunrise ? Multi-Layer Development Three-layer Development in Upper Montney ? Strong Reservoir, Low Capital and Plant Costs ? Type curves are internal estimates based on analog wells and reservoir modeling. ? Assumed cycle time (from…
Cumulative Gas (MMcf) Months on Production Sunrise ? Proven Performance Results in Upper Montney Horizon Validate Type Curves ? Type curves are internal estimates based on analog wells and reservoir modeling. ? 12-30 data based on…
Sunrise Phase II Expansion Significant Natural Gas Resource Base with High Well Deliverability and Strong Full-cycle Economics Sunrise Phase I 60 MMcf/day sales capacity Phase II sales and processing capacity increased to 180…
Attachie ? Planning for the Future Taking Next Steps Forward at Attachie West Attachie West ? Six pilot wells are on production through third-party facilities ? Building on strong results, an additional five wells will be drilled in…
Single-well Appraisals 2014 to 2017 Applying Learnings Multi-well Pad 2017 to 2018 Commercial Development 2019 to 2020 Applying Learnings & TCPL North Montney Mainline in Service Asset Details Net Production (boe/day) ? Q2…
Ante Creek ? Asset Details Significant Cash Flow with Substantial Growth Opportunities Net Production (boe/day) ? Q2 2017 15,270 Liquids (bbl/day) 7,130 Gas (MMcf/day) 49 Production Split % (Liquids / Gas) 47% / 53% Land (Montney…
Ante Creek ? 2017 Plans New Well Design Is Delivering Promising Upside Key Metrics 2017 Type Curve DCET Capex/Well ($ millions) 3.8 Internal 2P Reserves (Mboe) 440 IP (1 month) (boe/day) 365 IP (12 months) (boe/day) 260 Half-cycle…
Ante Creek ? Development Potential ? Large land base and down-spacing has resulted in significant drilling inventory ? Continued delineation of Lower Montney prospect in southeast Ante Creek New Well Design Is Delivering Promising…
Pembina ? Asset Details High Working Interest of Light Oil Production, Competitive Operating Netbacks Net Production (boe/day) ? Q2 2017 10,760 Liquids (bbl/day) 8,770 Gas (MMcf/day) 12 Land (Cardium Net Sections) 218 Working…
Pembina ? Cardium Geology ? Future drilling will target the entire Cardium pay zone with a focus on the low-recovery bioturbated zone Optimizing Existing Production, Exploiting New Unconventional Reserves Pembina Cardium Schematic…
Pembina ? Inventory of Strong Cash Flow Locations Benefits from Half-cycle Economics as Infrastructure Is Already in Place Key Metrics 2017 Type Curve DCET Capex/Well ($ millions) 2.5 Internal 2P Reserves (Mboe) 200 IP (1 month)…
Reserve Replacement ? Montney assets have been the centerpiece to ARC?s strategy of organic reserves and resource growth and provide continued upside potential ? Finding and development costs of $4.02/boe for proved plus probable…
Key Reserve Information Reserves at year-end, December 31, 2016 ? Proved Producing 212 MMboe ? Total Proved 426 MMboe ? Proved plus Probable 737 MMboe ? Crude and Tight Oil 124 MMboe ? NGLs 72 MMboe ? Natural Gas 3.2 Tcf ? 2P…
Dawson ? Development Potential Additional Development Layer Below Core Acreage Upper Montney Lower Montney Dawson Lower Montney Booked Reserves* Upper Montney A Booked Reserves* Existing Horizontal Wells, Pilots Existing…
Parkland/Tower ? Development Potential Incremental Reserves Potential With Multi-layer Development Upper Montney A Booked Reserves* Upper Montney A+ Booked Reserves* Lower Montney Booked Reserves* Upper Montney Lower Montney…
Ante Creek ? Development Potential Large Land Base and Down-spacing = Significant Drilling Inventory 0 100 200 Wells Drilled to YE 2016 Drilling Opportunities at YE 2016 Wells Drilling Inventory Wells Drilled 2P Booked…
Q2 & H1 2017 Operating and Financial Highlights Key Performance Indicators for Q2 and H1 2017 Three Months Ended Six Months Ended (Cdn$ millions, except per share and per boe amounts) March 31, 2017 June 30, 2017 June 30, 2016 June 30,…
Canadian Benchmarking: 2017E Net Debt / 2017E Cash Flow (1)(2) 13.1x 15.8x E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector US Benchmarking: 2017E Net Debt / 2017E Cash Flow (1)(3) (1) Estimates as per…
Risk Management Program ? The fair value of ARC?s risk management contracts at June 30, 2017 was a net asset of $272.6 million Program Executed with a Long-term View (1) 2017 Forecast based on actuals for the six months ended June 30,…
Risk Management Contract Positions Summary of Risk Management Contract Positions as at August 3, 2017 (1) H2 2017 2018 2019 2020 2021 Crude Oil ? WTI (2) US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day…
For further information about ARC Resources Ltd. please visit our website www.arcresources.com Or contact: Investor Relations E-mail: ir@arcresources.com T 403.503.8600 F 403.509.6417 Toll Free 1.888.272.4900 ARC Resources Ltd.…
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