Why Invest in ARC? A Differentiated Investment Financial Discipline ? Sector-leading balance sheet ? Disciplined approach to profitable investment ? Total return principle for shareholders High-quality Asset Portfolio ? Globally…
Corporate Profile Corporate Summary Production (Q4 2017) Reserves (2P Gross ? YE 2017) (1) Reserve Life Index (2P) (1)(2) Monthly Dividend Annualized Returns since Inception (3) 133,409 boe/day 836 MMboe 17.4 years $0.05 per…
Our Plan ARC?s Plan Is Fully Funded and Demonstrates Our Ongoing Focus on Profitability, Sustainability and Creating Optionality 2016 Monthly dividend of $0.05 per share Sold non-core Saskatchewan assets Eliminated DRIP and SDP…
A Year of Strong Performance in All Areas of the Business Full-year Review ? ? ? ? ? ? ? ? ? ? ? ? ? ? Cost Management ? ? Annual average production of 122,937 boe/d (up 4% from 2016) Replaced 320% of produced…
2017 Performance and 2018 Guidance Focused on Profitability and Long-term Value Creation 2017 Guidance Production Crude oil (bbl/d) Condensate (bbl/d) Natural gas (MMcf/d) NGLs (bbl/d) Total production (boe/d) Expenses ($/boe)…
ARC?s History and Future Strong Foundation for Continued Success In the past 20 years, ARC has successfully achieved the following: 10% Return on Average Capital Employed (1) $6.1 Billion of Distributions / Dividends & 12%…
Consistent and Sustainable Strategy Delivering on Our Strategy of Risk-managed Value Creation Net Debt to Funds from Operations 1,600 1,200 Net Debt Funds From Operations Net Debt to Funds from Operations 2.0 1.5 Ratio 1.0…
Delivering Full-cycle and Corporate Returns Efficiently Converting Resources into Corporate Earnings for Shareholders Sunrise Type Curves & Single-well Economics (Half-cycle) 8,000 Production Rate (Mcf/day) 2018 Type Curve (New Well…
ARC?s Funding Model Is in Balance Disposition Proceeds Give ARC the Ability to Outspend Cash Inflows over the Next Two Years ? Objective is to fully fund ARC?s dividend and sustaining capital with funds from operations over the long…
Physical Marketing Strategy Ensuring Market Access at Optimal Netback Pricing Guiding Principles Market Access ? Proactively plan for future development opportunities ? Keep abreast of changing infrastructure environment…
Crude Oil & Condensate Marketing 60% of Corporate Sales Revenue Derived from Crude Oil and Liquids Production ? Continued focus on Montney assets has resulted in ARC?s production mix being primarily light and medium crude oil grades…
Natural Gas Marketing ARC?s deliberate portfolio management approach to market access reduces single price hub risk ? Proactively secured firm transportation pipeline agreements to support existing production and future development…
Financial and physical diversification activities enable ARC to effectively execute on its long-term plans ARC Overall Corporate Price Years Ended December 31st (Cdn$/Mcf) 4.00 $3.34 $0.78 $0.92 Cdn$/Mcf $0.39 2.00…
Environmental, Social & Governance Performance ARC?s 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…
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 BC Blueberry AB Dawson Red Creek Tower Pouce Coupe Attachie $45MM…
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 at capacity…
Focused Asset Base Investing in Optionality in the Montney and Cardium Montney Overview BC AB 116,800 79% Production Profile Natural Gas 2018 Budget Q4 2017 Average Daily Production…
Proven Development Model Inventory at All Stages Allows for Self-funding and Full-cycle Returns across Portfolio Growth for Future Phase ? Exploration ? Appraisal / Piloting ? Geographic and Commodity Diversity Development Phase…
Optionality in the Montney BC AB 1,000m Lower Montney 10 kPa/m Line Oil and Liquids Blueberry Red Creek 2,000m Attachie Septimus Tower Pouce Coupe Parkland Sunset Dawson Sunrise 3,000m Sundown…
Multiple Layers to Develop Significant Future Delineation Opportunities with the Development of Efficient and Sustainable Resource Base Attachie Montney A Septimus Sunrise Tower Parkland Dawson Pouce Coupe Upper Montney…
Outstanding Lower Montney Results Results from 2017 Lower Montney Appraisal Program Demonstrating Exceptional Liquids Opportunity (1) Dawson F9-21 and D16-13: ? On production Q3 2017 ? Averaging 6.5 to 7 MMcf/day of…
NE BC Montney Reserves and Risked Resources Tremendous Development Potential from NE BC Montney Assets with TPIIP of 106.0 Tcf of Shale Gas and 10.5 Billion Barrels of Oil Shale Gas Tight Oil, Condensate & NGLs Oil 7.8 MMbbl…
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 Half-cycle Economics (1)(2)(3) US$50/bbl WTI Cdn$2.50/GJ AECO IRR Sunrise Upper Montney 85% Dawson Upper Montney Phase I & II: 130% Phase III &…
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…
Competing Continentally ARC?s Efficient Cost Structure Competes with the Best Producers across North America ARC Tower Oil Single Well Economics Capital/Well Canadian 2P Finding & Development Cdn$4.8MM Cdn$7.91/boe Capital/Well…
ARC Tower Oil vs. Permian Oil H1 2017 Netback Comparison (1)(2)(3) (Cdn$/boe) 75.00 $66.65 60.00 WTI (Cdn$) $66.65 4.00 5.00 ARC Sunrise Gas vs. Appalachian Gas H1 2017 Netback Comparison (1)(4)(5)…
Building Sustainable Businesses in the Montney Businesses Sustain Production and Generate Free Cash Flow at Low Reinvestment Rates 150,000 Montney Businesses Sunrise Phase II Montney Production 120,000 Cardium & Non-core…
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 period Dawson…
ARC?s Strong Pipeline of Projects Depth of Portfolio Will Support Profitable Development in the Montney and the Cardium 2018 Capital Budget $690 million Montney and Cardium Project Potential (boe/day) Next Decade ?…
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 30,000 0 Non-Montney…
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 30…
Continuous Improvements in Cost Management Focus on Operational Efficiencies to Preserve Low Cost Structure ? ARC successfully offset the increase in services costs in 2017 through operational efficiencies and design optimization ?…
Significant Reduction in Drilling Times Applying Learnings across Portfolio for Reduced Drill Times and Cost Savings Tower 0 0 Sunrise 0 Ante Creek 1,000 1,000 1,000 ~25% 2,000 Depth (m) Reduction in Overall Drill Times…
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) Efficiencies of…
Investing in Learnings Applying Learnings across ARC?s Portfolio of Assets Further Our Understanding of the Asset Optimize Exploitation Strategy Integrating Learnings at All Stages of Development Establish…
Continuous Improvement in Safety Performance Strong Health and Safety Performance Supports Capital Efficiency Improvements ? ARC?s strong safety performance and capital efficiencies are the result of well planned and executed…
Key Projects Update Advancing Projects across ARC?s Portfolio Montneyontney Key Projects Update Sunrise ? Earthwork underway for Sunrise Phase II; repatriate third-party volumes in 2019 ? Piloting fifth layer of development ?…
Sunrise/Sunset ? Asset Details Confidence in Predictability of Results Supports Magnitude of Resource and Next Stage of Development Net Production (boe/day) ? Q4 2017 Liquids (bbl/day) 4 Existing Layers of Development, Potential for…
Sunrise ? Multi-Layer Development Testing Four-layer Development in Upper Montney ? Strong Reservoir, Low Capital and Operating Costs 8,000 2018 Type Curve (New Well Design: 2,440 m) 2017 Type Curve (Previous Well Design: 2,000 m)…
Sunrise ? Proven Performance Results in Upper Montney Horizon Validate Type Curves and Providing Confidence in Future Results 8,000 Montney A (Upper) 2017 Type Curve Montney A (Second Layer) 2017 Type Curve Montney B 2017 Type Curve…
Sunrise Phase II Expansion Significant Natural Gas Resource Base with High Well Deliverability and Strong Full-cycle Economics Sunrise Phase II 180 MMcf/day sales capacity Phase II sales and processing capacity increased to 180…
Dawson ? Asset Details Poised for Next Stage of Development at Dawson Phase IV Net Production (boe/day) ? Q4 2017 Liquids (bbl/day) Gas (MMcf/day) ARC 13-7 Phase III Gas Plant (1) (90 MMcf/day) ARC 1-34 Compressor…
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 Locations ARC…
Dawson ? Phase I & II vs. Phase III & IV New Area Development for Phase III ? Increased Liquids Content Driving Strong Economics 8,000 Dawson Phase I & II 2018 Type Curve Dawson Phase III & IV 2018 Type Curve 6,000 Production Rate…
Dawson-Parkland ? 2018 Lower Montney Development Early Results Show Strong Economics across Fairway ? Range Due to Transition into Higher Liquids Ratios 1,600 Medium Liquids Ratio 2018 Type Curve High Liquids Ratio 2018 Type Curve…
Dawson-Parkland ? 2017 Lower Montney Results Strong Results from 2017 Lower Montney Appraisal Program Have Set the Stage for 2018 Development Activities Dawson-Parkland Lower Montney Wells Natural Gas Production Dawson-Parkland…
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 decision…
Dawson ? Sustainable Cash Flow Model Low Reinvestment Ratio to Maintain Significant Free Cash Flow 250 200 150 100 $ millions 100 50 50 0 2010 2011 2012 2013 2014 2015 2016 2017 MMcfe/day 250 200 150 (50) (100)…
Parkland/Tower ? Asset Details Building a Profitable Business Tower Parkland Tower Net Production (boe/day) ? Q4 2017 Liquids (bbl/day) Gas (MMcf/day) Land (Montney Net Sections) Working Interest Parkland/Tower 2P Reserves…
Parkland ? 2018 Upper Montney Development Liquids-rich Natural Gas Wells to Complement Tower Development 6,000 2018 Type Curve Gas Production Rate (Mcf/day) 4,500 Key Metrics DCET Capex/Well ($ millions) 2018 Type Curve 4.5 7.9…
Tower ? Strong Oil Production Industry-leading Oil Well Asset 1,200 2018 Core Type Curve 2018 Oil / Gas Transition Region Type Curve Production Rate (boe/day) 900 Key Metrics DCET Capex/Well ($ millions) Internal 2P Reserves…
Tower & Attachie ? Integrated Learnings Transferring Exploitation Strategies Between Assets Is Resulting in Meaningful Improvements to Type Curves and Well Inventory 150 Tower ? 2017 Cumulative Oil & Condensate Production (Mbbl) 125…
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 strong…
Multi-layer Development Potential Journey to Commercial Development Upper Montney Single-well Appraisals 2014 to 2017 Applying Learnings Multi-well Pad 2017 to 2018 Applying Learnings & TCPL North Montney Mainline in…
Ante Creek ? Asset Details Significant Cash Flow with Substantial Growth Opportunities Net Production (boe/day) ? Q4 2017 15,870 Liquids (bbl/day) Gas (MMcf/day) Production Split % (Liquids / Gas) ARC 2-26 Gas Plant (20…
Ante Creek ? New Well Design New Well Design Is Delivering Upside 600 2016 Type Curve 500 2017 Type Curve 2018 Type Curve Production Rate (boe/day) 400 400 Key Metrics DCET Capex/Well ($ millions) 2018 Type Curve 4.0 600…
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 significant drilling inventory Ante Creek Development Plan ?…
Pembina ? Asset Details High Working Interest of Light Oil Production, Competitive Operating Netbacks Net Production (boe/day) ? Q4 2017 Liquids (bbl/day) Gas (MMcf/day) Land (Cardium Net Sections) Working Interest 2P Cardium…
Why Invest in ARC? A Differentiated Investment with Tremendous Opportunity Competitive Cost Structure ? ? ? ? ? Top-tier Assets Owned Infrastructure Operational Efficiencies Market Access Concentrated Asset Base ? ? ?…
Transformation of Our Business Transformation Has Allowed ARC to Manage a Profitable Business through the Cycles Transition to the Montney 100% Net Debt to Funds from Operations 2017 Operating Costs $6.41/boe 1,400 1,200…
Record Produced Reserves Replacement in 2017 Greater than 200% Reserves Replacement for 10th Consecutive Year ? 2017 development reserves adds largest in company history, with 320 per cent of produced reserves replaced ? Montney assets…
Sunrise ? Development Potential Proven Productivity from Four-layered Development, Piloting Six-layered Development Drilling Inventory Upper Montney Upper Montney A Booked Reserves 600 400 Wells 200 Upper Montney B Booked…
Dawson ? Development Potential Additional Development Layer Below Core Acreage Drilling Inventory Upper Montney 800 Upper Montney A Booked Reserves 600 Wells 400 Lower Montney 200 0 Wells Drilled to YEDrilling…
Parkland/Tower ? Development Potential Incremental Reserves Potential With Multi-layer Development Tower Parkland Upper Montney A Booked Reserves Drilling Inventory 1000 Upper Montney 750 Wells Upper Montney A+ Booked…
Ante Creek ? Development Potential Large Land Base and Down-spacing = Significant Drilling Inventory Drilling Inventory (1) 200 Wells 100 0 Wells Drilled to YE Drilling Opportunities 2017at YE 2017 Wells Drilled 2P Booked…
Q4 & YE 2017 Operating and Financial Highlights Key Performance Indicators for Q4 and YE 2017 Three Months Ended (Cdn$ millions, except per share and per boe amounts) Production (boe/day) Natural gas (MMcf/day) Oil & liquids…
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) 13.1x 15.8x Group Average 2.2x 2.1x 2.1x 2.1x 2.1x 1.8x 1.6x 1.4x 1.2x…
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 250 Crude Oil Natural Gas Foreign Exchange & Power 150 $…
Risk Management Contract Positions Summary of Risk Management Contract Positions as at February 8, 2018 (1) H1 2018 Crude Oil ? WTI Ceiling Floor Sold Floor Swap Crude Oil ? Cdn$ WTI Ceiling Floor Swap Total Crude Oil Volumes…
FINANCIAL AND OPERATING HIGHLIGHTS ($ millions, except per share amounts) FINANCIAL Sales of crude oil, natural gas, condensate, NGLs and other income Per share, basic Per share, diluted Net income (loss) Per share, basic Per…
CORPORATE AND SHAREHOLDER INFORMATION DIRECTORS Harold N. Kvisle Chairman (1) EXECUTIVE OFFICE ARC Resources Ltd. 1200, 308 ? 4th Avenue SW Calgary, Alberta T2P 0H7 T 403.503.8600 TOLL FREE 1.888.272.4900 F 403.503.8609 W…
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