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March 2018 Corporate Presentation – Arc Resources Ltd.

Arc Resources Ltd. · Mar 15, 2018 · 83 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. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 1
  2. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 2
    Why Invest in ARC? A Differentiated Investment Financial Discipline High-quality Asset Portfolio Proven Execution and Development Model Operational and Organizational…
  3. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 3
    Corporate Profile Corporate Summary Production (Q4 2017) 133,409 boe/day Reserves (2P Gross ? YE 2017) (1) 836 MMboe Reserve Life Index (2P) (1)(2) 17.4 years Monthly Dividend $0.05 per share Annualized Returns since…
  4. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 4
    Our Plan ARC?sctionPlanCAGRIsFullyoverFundedaThreeand Will Result in 10 Per Cent Produ -year Period 2016 2017 2018 2019 Reduced the Brought on Dawson Sustain Montney Maintain consistent dividend Phase III businesses investment…
  5. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 5
    2017 Accomplishments A Year of Strong Performance in All Areas of the Business Full-year Review ? Annual average production of 122,937 boe/d (up 4% from 2016) ? Replaced 320% of produced reserves, adding 144.6 MMboe through…
  6. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 6
    2017 Performance and 2018 Guidance Focused on Profitability and Long-term Value Creation 2017 Guidance 2017 Actuals 2018 Guidance Production Crude oil (bbl/d) 25,000 - 27,000 24,380 25,000 - 27,000 Condensate…
  7. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 7
    ARC?s History and Future 20+ History Has Set the Stage for Another 20+ Years of Value Cr In the past 20 years, ARC has successfully achieved the following: 10% $6.1 Billion Stayed within Transitioned of Distributions / Target of…
  8. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 8
    Consistent and Sustainable Strategy Delivering on Our Strategy of Risk-managed Value Creation Net Debt to Funds from Operations 1,600 Net Debt 2.0 Funds From Operations 1,200 Net Debt to Funds from…
  9. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 9
    Delivering Full-cycle and Corporate Returns Efficiently Converting Resources into Corporate Earnings for Shareholders Sunrise Type Curves & Single-well Economics (Half-cycle) Projected Sunrise Phase II Cash Flows Production…
  10. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 10
    ARC?s Funding Model Is in Balance Disposition Proceeds Give ARC the Ability to Outspend Cash Inflows over the Next Two Years ? Objective is to fully fund ARC?s dividend and sustaining capital with funds from operations over the long…
  11. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 11
    Ensuring Market Access at Optimal Netback Pricing Guiding Principles Market Access ? Proactively plan for future development opportunities ? Keep abreast of changing infrastructure environment Market Diversification ?…
  12. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 12
    Crude Oil & Condensate Marketing 60% of Corporate Sales Revenue Derived from Crude Oil and Liquids Production ? Continued focus on Montney assets has resulted in ARC?s production mix being primarily light and medium crude oil grades…
  13. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 13
    Natural Gas Marketing ARC?s deliberate portfolio management approach to market access reduces single price hub risk ? Proactively secured firm transportation pipeline agreements to support existing production and future…
  14. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 14
    Natural Gas Marketing ARC?s deliberate portfolio management approach to market access reduces single price hub risk ? Proactively secured firm transportation pipeline agreements to support existing production and future…
  15. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 15
  16. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 16
  17. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 17
    2018 Budget of $690 Million Capital Budget Focuses on Overall Capital Efficiency and Profitability and Delivers Production of 130,000 to 134,000 boe per day Blueberry BC AB Dawson Red…
  18. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 18
    2018 Guidance Focused on Profitability and Long-term Value Creation Invest to drill $690 million 64 gross operated wells and advance Sunrise Phase II and Dawson Phase IV Keeping gas plants in our core Montney areas…
  19. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 19
    Focused Asset Base Investing in Optionality in the Montney and Cardium BC AB Montney Overview Proved plus Q4 2017 Average Daily Production Probable…
  20. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 20
    Proven Development Model Inventory at All Stages Allows for Self-funding and Full-cycle Returns across Portfolio Growth for Future Phase Development Phase Free Cash Flow Phase ? Exploration ? Develop to Commercialize ?…
  21. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 21
    Optionality in the Montney BC AB 1,000m Lower Montney 10 kPa/m Line Blueberry Red Creek 2,000m Attachie Tower Septimus Parkland Sunset Dawson Sunrise 3,000m…
  22. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 22
    Multiple Layers to Develop Significant Future Delineation Opportunities with the Development of Efficient and Sustainable Resource Base Upper Montney Lower Montney Attachie Septimus Sunrise Tower Parkland…
  23. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 23
    Outstanding Lower Montney Results Results from 2017 Lower Montney Appraisal Program Demonstrating Exceptional Liquids Opportunity (1) 2017 Lower Montney Drilled and Completed…
  24. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 24
    NE BC Montney Reserves and Risked Resources Tremendous Development Potential from NE BC Montney Assets with of Oil Shale Gas Tight Oil, Condensate & NGLs 0.9 Tcf Oil 7.8 MMbbl CUMULATIVE PRODUCTION Condensate & NGLs 21…
  25. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 25
    Early Stages of Property Development (1) Large Identified Opportunity for Future Value Creation ? Inclusive of internally identified locations in NE BC and Ante rilling opportunities exist within the Montney ? Pembina area has…
  26. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 26
    Montney Development Economics Strong Rates of Return Across the Montney Portfolio Half-cycle Sunrise Dawson Parkland Dawson- Tower Ante Creek Economics (1)(2)(3) Parkland US$50/bbl WTI Upper Montney…
  27. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 27
    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, Sunrise…
  28. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 28
    Competing Continentally ARC?s Efficient Cost Structure Competes with the Best Producers across North America ARC Tower Oil Single Well Economics Capital/Well Cdn$4.8MM Canadian 2P Finding & Development…
  29. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 29
    ARC Tower Oil vs. Permian Oil ARC Sunrise Gas vs. Appalachian Gas H1 2017 Netback Comparison (1)(2)(3) H1 2017 Netback Comparison (1)(4)(5) (Cdn$/boe) (Cdn$/Mcfe) 75.00 $66.65 WTI (Cdn$) 60.00 Cdn$/boe…
  30. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 30
    Building Sustainable Businesses in the Montney Businesses Sustain Production and Generate Free Cash Flow at Low Reinvestment Rates 150,000 Montney Production Montney Businesses Sunrise Phase II…
  31. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 31
    Montney Cash Flow Models Next Three Growth Projects Will Contribute Significant Free Cash Flow ? ARC is investing in three infrastructure growth projects to grow production by ~40,000 to 50,000 boe/day over a 2.5-year…
  32. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 32
    ARC?s Strong Pipeline of Projects Depth of Portfolio Will Support Profitable Development in the Montney and the Cardium 2018 Capital Budget Montney and Cardium Project Potential $690 million (boe/day) Next Decade ?…
  33. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 33
  34. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 34
    Montney Assets Deliver Profitable Growth and Value Quality Assets and Capital Discipline Has Resulted in >600% Montney Production Growth since 2009 150,000 Production Profile 120,000 90,000 boe/day 60,000…
  35. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 35
    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…
  36. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 36
    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…
  37. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 37
    Significant Reduction in Drilling Times Applying Learnings across Portfolio for Reduced Drill Times and Cost Savings 0 Tower 0 Sunrise 0 Ante Creek 1,000 1,000 1,000 ~25%…
  38. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 38
    Montney Exploitation Approach Improves Efficiencies ARC Has Advanced Its Understanding of the Full-stack Development Potential for All Project Areas in Order to Execute Efficiently Montney Full-stack Development (1)…
  39. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 39
    Investing in Learnings Applying Learnings across ARC?s Portfolio of Assets Further Our Understanding of the Asset Optimize Integrating Establish Exploitation Project Strategy Learnings Sequencing at All…
  40. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 40
    Continuous Improvement in Safety Performance Strong Health and Safety Performance Supports Capital Efficiency Improvements ? ARC?s strong safety performance and capital efficiencies are t ? Improvements in safety performance are…
  41. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 41
  42. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 42
    Key Projects Update Advancing Projects across ARC?s Portfolio Montney BC AB Key Projects Update Sunrise ? Earthwork underway for Sunrise Phase II; repatriate…
  43. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 43
    Sunrise/Sunset ? Asset Details Confidence in Predictability of Results Supports Magnitude of Resource and Next Stage of Development Sunset ARC 13-36 Sunrise Gas Plant (60 MMcf/day) & Phase II Gas Plant…
  44. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 44
    Sunrise ? Multi-Layer Development Testing Four-layer Development in Upper Montney ? Strong Reservoir, Low Capital and Operating Costs Production Rate (Mcf/day) 8,000 2018 Type Curve (New Well Design: 2,440…
  45. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 45
    Sunrise ? Proven Performance Results in Upper Montney Horizon Validate Type Curves and Providing Confidence in Future Results Cumulative Gas (MMcf) 8,000 6,000 4,000 Montney A (Upper)…
  46. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 46
    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 Sunrise Phase II 180 MMcf/day sales…
  47. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 47
    Dawson ? Asset Details Poised for Next Stage of Development at Dawson Phase IV Net Production (boe/day) ? Q4 2017 45,000 Liquids (bbl/day) 3,660 Gas (MMcf/day) 248 ARC 13-7 Production Split % (Liquids / Gas)…
  48. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 48
    Dawson ? Development Potential Significant Upside Remaining in Upper and Lower Montney Horizons Upper Montney Development Plan Lower Montney 2P Reserves Booked as at December 31, 2017 ARC Identified Drilling…
  49. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 49
    Dawson ? Phase I & II vs. Phase III & IV New Area Development for Phase III ? Increased Liquids Content Driving Strong Economics Production Rate (Mcf/day) ? ? ? ? 8,000 Dawson…
  50. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 50
    Dawson-Parkland ? 2018 Lower Montney Development Early Results Show Strong Economics across Fairway ? Range Due to Transition into Higher Liquids Ratios Production Rate (boe/day) 1,600 Medium…
  51. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 51
    Dawson-Parkland ? 2017 Lower Montney Results Strong Results from 2017 Lower Montney Appraisal Program Have Set the Stage for 2018 Development Activities Cumulative Gas Production (MMcf) Dawson-Parkland Lower…
  52. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 52
    Dawson Phase IV Sanctioning Leveraging Pre-investment in Dawson Phase III for Superior Capital Efficiencies in Dawson Phase IV ? Confidence in well performance, predictability of results, and overall well inventory support…
  53. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 53
    Dawson ? Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow 250 200 150 $millions 100 50 0 (50) (100) (150) Gas (MMcf/day) Liquids (bbl/day) AECO Gas…
  54. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 54
    Parkland/Tower ? Asset Details Building a Profitable Business Tower ARC 8-13 Compressor (20 MMcf/day) ARC 3-9 Gas Plants (90 MMcf/day) Parkland ARC Gas Plants ARC…
  55. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 55
    Parkland ? 2018 Upper Montney Development Liquids-rich Natural Gas Wells to Complement Tower Development Gas Production Rate (Mcf/day) 6,000 2018 Type Curve 4,500 3,000 45 bbl/MMcf 1,500…
  56. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 56
    Tower ? Strong Oil Production Industry-leading Oil Well Asset 1,200 2018 Core Type Curve 2018 Oil / Gas Transition Region Type Curve Rate (boe/day) 900 600 Production 300 0 0 6 12 18 24 30 36 Months on…
  57. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 57
    Tower & Attachie ? Integrated Learnings Transferring Exploitation Strategies Between Assets Is Resulting in Meaningful Improvements to Type Curves and Well Inventory Cumulative Oil & Condensate Production (Mbbl)…
  58. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 58
    Attachie ? Planning for the Future Taking Next Steps Forward at Attachie West Attachie West ? Added 21 net sections of land in Q3 2017 ? Six pilot wells are on production through third-party facilities ? Building on…
  59. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 59
    Multi-layer Development Potential Upper Montney Lower Montney Existing Horizontal Wells, Development Existing Horizontal Wells, Pilots Potential Horizontal Wells…
  60. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 60
    Ante Creek ? Asset Details Significant Cash Flow with Substantial Growth Opportunities ARC 2-26 Gas Plant (20 MMcf/day) ARC 10-7 Gas Plant (30 MMcf/day & 12.5 Mbbl/day) ARC 10-36 Gas…
  61. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 61
    Ante Creek ? New Well Design New Well Design Is Delivering Upside Production Rate (boe/day) 600 500 400 300 200 100 0 0 400 300 Rate 200 (boe/day) 100…
  62. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 62
    Ante Creek ? Development Potential New Well Design Is Delivering Promising Upside and Has Extended Development Area ? Large land base and down-spacing has resulted in Ante Creek Development Plan significant drilling…
  63. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 63
    Pembina ? Asset Details High Working Interest of Light Oil Production, Competitive Operating Netbacks Net Production (boe/day) ? Q4 2017 10,860 Liquids (bbl/day) 9,010 Gas (MMcf/day) 11 Land…
  64. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 64
  65. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 65
    Why Invest in ARC? A Differentiated Investment with Tremendous Opportunity Competitive Cost Profitable Deep Project Long-term Structure Investment Inventory Value Creation ? Top-tier Assets ? Balance Sheet Strength ? Growth…
  66. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 66
  67. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 67
    Transformation of Our Business Transformation Has Allowed ARC to Manage a Profitable Business through the Cycles Production Split 100% Transition to the Montney 1,400 Net Debt to Funds from…
  68. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 68
    Record Produced Reserves Replacement in 2017 Greater than 200% Reserves Replacement for 10th Consecutive Year ? 2017 development reserves adds largest in company history, with 320 per cent of produced reserves replaced ? Montney…
  69. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 69
    Key Reserve Information MMboe8362P Reserves at Year-end 2017 Reserves at year-end, December 31, 2017 ? Proved Producing 230 MMboe ? Total Proved 506 MMboe ? Proved plus Probable 836 MMboe ?…
  70. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 70
  71. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 71
    Sunrise ? Development Potential Proven Productivity from Four-layered Development, Piloting Six-layered Development UpperMontney Upper Montney A Upper Montney A+ Booked Reserves Booked…
  72. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 72
    Dawson ? Development Potential Additional Development Layer Below Core Acreage UpperMontney Upper Montney A Booked Reserves Lower Montney Lower Montney Booked Reserves Existing Horizontal…
  73. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 73
    Parkland/Tower ? Development Potential Incremental Reserves Potential With Multi-layer Development Tower Parkland Upper Montney A Booked Reserves Montney Upper Upper Montney A+ Booked Reserves Lower…
  74. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 74
    Ante Creek ? Development Potential Large Land Base and Down-spacing = Significant Drilling Inventory ARC Montney Lands ARC Montney Lands with 2P Reserves booked as of YE…
  75. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 75
    Q4 & YE 2017 Operating and Financial Highlights Key Performance Indicators for Q4 and YE 2017 Three Months Ended Year Ended September 30, December 31, December 31, December 31, December 31, (Cdn$ millions, except per share and…
  76. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 76
    E&P Leverage Analysis ARC Has One of the Strongest Balance Sheets in the Sector Canadian Benchmarking: 2018E Year-end Net Debt / 2018E Cash Flow (1)(2) Group Average 0.6x 0.8x 1.0x 1.0x 1.0x 1.0x 1.1x 1.2x 1.2x 1.3x…
  77. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 77
    Risk Management Program Program Executed with a Long-term View ? The fair value of ARC?s risk management contracts at December 31, 2017 was a net asset of $294.8 million $ millions 250 200 150…
  78. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 78
    Risk Management Contract Positions Summary of Risk Management Contract Positions as at February 8, 2018 (1) H1 2018 H2 2018 2019 2020 2021 2022 Crude Oil ? WTI (2) US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl…
  79. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 79
    Definitions of Oil and Gas Reserves and Resources Undiscovered Petroleum Initially-in-Place (\"UPIIP\") is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The…
  80. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 80
    FINANCIAL AND OPERATING HIGHLIGHTS ($ millions, except per share amounts) 2017 2016 FINANCIAL Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Sales of crude oil, natural gas, condensate, NGLs and other income 340.3 279.2 297.0 309.2 331.8…
  81. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 81
    CAPITAL EXPENDITURES Geological and geophysical 2.5 1.8 2.0 3.2 1.8 3.5 4.3 2.8 Drilling and completions 154.8 119.3 105.9 171.6 89.1 59.0 55.7 23.2 Plant and facilities 87.2 55.5 41.6 78.4 65.9 59.8 52.2 32.7 Administrative…
  82. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 82
    CORPORATE AND SHAREHOLDER INFORMATION DIRECTORS Harold N. Kvisle (1) Chairman Myron M. Stadnyk President and Chief Executive Officer David R. Collyer (2) (3) John P. Dielwart (2) (4) Fred J. Dyment (1) (3)…
  83. March 2018 Corporate Presentation – Arc Resources Ltd. – slide 83

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