Corporate Profile Corporate Summary Production (YTD Q3 2013) 94,471 boe/d Reserves (2P Gross YE 2012) (1) 607 mmboe Reserve Life Index (2P) (1) 17.5 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 4.1% (3)…
Unique Strategy Targeting net debt to 200% Reserve funds from operations Replacement through between 1.0 1.5x the drill bit for the past Active Hedging 5 consecutive years Program Capital Discipline and Pace of Development…
Operations Overview Western Canadian Producer
Risk Managed Value Creation Strategic Optionality
Delivering Income and Growth Delivered 19% annualized total return since inception Paid out 4.9 billion in total dividends - 29.78/share Gas Liquids *Compound Annual Growth Rate Long-term Vision
Reserve Replacement Significant organic growth in reserves over past five years Five consecutive years of greater than 200% reserve replacement Adding Value Through the Drill Bit
Significant Reserve and Resource Base 607 mmboe of 2P reserves and RLI of 17.5 years (1) See Reserves and Resources Disclosure and Definitions of Oil and Gas Reserves and Resources in the Appendix to this presentation. 18% Annual…
Per Share Growth Growth in per share production and reserves while also paying a meaningful dividend Production per thousand shares 2P Reserves per share Normalized per thousand shares (1) Normalized per shares (1) Dividend…
Sustainable Dividend Key component of strategy Supported by active hedging and balance sheet strength Historic Dividends and Funds from Operations Committed to the Dividend While Delivering Profitable Growth
ARCs Proven Development Model Dawson, Pembina, SE Sask/Manitoba, Redwater Ante Creek, Parkland/Tower Sunrise West Attachie, Septimus Blueberry, Sundown Inventory of Opportunities at all Stages
2014 BUDGET AND OUTLOOK
2014 Capital Budget 915 Million Significant spending on oil and liquids-rich gas and low cost, high rate of return Montney gas development 2014 Capital Budget Volumes Year Capital Average Gross Net MM (boe/d) Wells Wells…
Looking Forward to 2014 and 2015 Assuming economic conditions remain similar to the current outlook, 2014 would likely entail the following: Ante Creek Explore newly-acquired lands Continue testing 200m lateral horizontal well spacing…
Production Outlook Managing decline to
Growing Our Low Cost Gas Business 15% CAGR total Natural Gas production driven by 33% CAGR Montney Natural Gas production 2009-2015 Forecast 26% CAGR in 2P Natural Gas reserves from 1 Tcf to 2.5 Tcf 2008-2012 Montney Gas 33%…
Growing Oil and Liquids since 2009 7% CAGR total Liquids production driven by 34% CAGR Montney Liquids production 2009 2015 Forecast 5% CAGR in 2P Liquids reserves from 152 Mmbbls to 186 Mmbbls 2008-2012 Montney Montney Liquids…
Understanding ARCs Assets Balanced portfolio of growth assets and free cash flow generating assets Optionality for both liquids and natural gas development dependent upon commodity prices ARC targets to develop growth opportunities,…
Montney Growth Assets
Reserve Benchmarking - North American Plays ARC Montney EUR 5.5 Bcf/well Wellhead EUR (Mboe) Wellhead EUR (Bcfe) Source: ITG April 2013, raw data provided by DI Desktop, geoScout Montney is a World Class Play with 3x…
Breakeven Price Benchmarking Montney and Marcellus Break-Even NYMEX (/Mcf) Break-Even WTI (/bbl) ARC West Montney early pilot data shows costs coming down and EUR going up. Source: ITG April 2013, raw data provided by DI Desktop,…
ARC in the Montney Montney ARCs Growth Engine
Significant Montney Land Base Grown ARCs Montney land base from 130 net sections in 2005 to 888 net sections today Significant Montney landholdings with 951 gross sections (888 net sections) including 671 gross undeveloped sections and…
NEBC Montney Reserves & Resources Corporate 2P Reserves of 607 mmboe (186 mmbbls liquids/ 2.5 Tcf gas) (1) (1) Independent Resources Evaluation conducted by GLJ effective December 31, 2012. (2) See Reserves and Resources…
Early Stages of Property Development* * Subject to change based on technology and economic environment. Large Identified Opportunity for Future Growth
NEBC Montney 30 Day Hz IP Rates 16 14 12 Production Rate (MMcf/d) 10 8 ARC Wells P50 = 5.0 MMcf/d 6 All Other Wells P50 = 3.4 MMcf/d 4 2 0 ARCs 30 Day Production Rates Outperforms Industry by 50% (1)…
NEBC Montney First Year Cumulative Gas 3.0 2.5 ARC Wells P50 = 1.46 Bcf (4.0 MMcf/d) 2.0 Cumulative Gas (Bcf) 1.5 All Other Wells P50 = 0.84 Bcf (2.3 MMcf/d) 1.0 0.5 ARCs First Year Cumulative Production…
Montney Infrastructure Optionality E F 2 G H E F 1 G F 1 G H H E F 4 G H E F 3 G H E F 2 G H E D C B A D A C B A D A D C B C B A D C B A D C B L K J I L I R12 R11 R10W6 K J I L I L K J K J I L K J I L K J T91…
DAWSON GAS WORLD CLASS GAS RESOURCE
Dawson Asset Details Net production (boe/d) Q3 2013 27,800 Liquids (bbls/d) 960 ARC 1-34 Gas (mmcf/d) 161 Compressor Station Production split % (liquids/gas) 97% gas (45 mmcfd) Land (Montney net sections) 130 ARC 5-35 Gas…
Dawson A Cash Flow Machine Grown production from approximately 50 Mmcfe/d in 2009 to 165 Mmcfe/d by mid 2012 Significant capital investment in 2009-2010, Dawson can now generate approximately 100 million of free cash flow annually at…
Dawson Gas Type Curve Growth Expect 2014 type curve to be consistent with 2013; plans to drill core Dawson wells to keep plant full in 2014 and into 2015 Based on delineation data from pressure and rate performance, we expect…
Dawson Development Economics Key Metrics DCET Capex per well (MM) 4.6 2P Reserves per well (Bcf) 7.1 IP (1 mo) (MMcf/d) 5.0 IP (12 mo) (MMcf/d) 4.8 Half Cycle Economics (C85/bbl) 4/GJ 3/GJ IRR (% AT) 86% 55% Recycle Ratio 4.5…
Dawson 2014 Budget 54 Million Drilling Three Pads to Keep Production Flat in 2014 and into 2015
PARKLAND/TOWER REAPING ACQUISITION BENEFITS
Parkland/Tower Asset Details Parkland Tower Tower Net production (boe/d) - 8,600 1,600 Q3 2013 Liquids (bbls/d) 920 1,180 Gas (mmcf/d) 46 2.5 Land (net sections) 23 57 ARC 8-13 Compressor (20 mmcfd) Working Interest 84% 92%…
Parkland/Tower Infrastructure Regulatory approval for 120 Mmcf/d, sweet service with two trains of 60 Mmcf/d (staged construction) First phase of plant built with design capacity of: 64 Mmcf/d of inlet gas 3,000 bbls/day LPG…
Parkland Dual-Layer Development Layered Well Placement Upper 1 Upper 2 400 m Lower Montney 50 m 200 m 200 m Multiple Non-Competing Reserve Adding Opportunities
Parkland Development Economics Key Metrics DCET Capex per well (MM) 5.0 2P Reserves per well (Bcf) 5.8 IP (1 mo) (MMcf/d) 4.5 IP (12 mo) (MMcf/d) 3.3 Half Cycle Economics (C85/bbl) 4/GJ 3/GJ IRR (% AT) 67% 48% Recycle Ratio 4.0…
Tower Dual-Layer Development Parkland and Tower have similar geology Two Layer Horizontal Development Very Thick Montney A 100M (328 ft.) Tower Also has Dual-Layer Montney Development Opportunity
Tower Development Economics All economics run at FLAT price forecasts with C85/bbl and 3/GJ AECO Liquid yield assumptions: Condensate 7.1 bbl/mmcf, NGL 42.7 bbl/mmcf Reserves estimate breakdown: 240 mbbls oil, 45 mbbls…
Parkland/Tower 2014 Budget 191MM* * Operated Capital Only 115% YoY Increase in Average Production in 2014
WEST MONTNEY OIL AND GAS LONG-TERM GROWTH OPPORTUNITY
West Montney Asset Details Net production (boe/d)- Q3 2013 4,590 Blueberry Liquids (bbls/d) 50 Gas (mmcf/d) 27.2 Land (net Montney sections) 275 Working Interest 90% Attachie Reserves (2P mmboe) 131 Liquids (mmbbls) 11 Tower…
West Montney Oil and Gas Geology 150 km (90 mi) Blueberry Attachie Septimus Sunrise Sundown 300 m (980 ft) Thick Multi-Zone Potential Across Entire Land Base
Sunrise/Sunset Asset Details Sunrise has progressed from pilot to full scale development Net production (boe/d)- Q3 2013 3,470 Liquids (bbls/d) 0 Gas (mmcf/d) 20.8 Land (net Montney sections) 32 Working Interest 89% Reserves…
Sunrise Development Planning Sunrise 02-25 Sunrise Development Model Vertical Frac Offset Proposal Upper Montney Middle Montney Montney B Montney E Multiple Zones with Economies of Scale
Sunrise Outperforming Expectations Estimated Ultimate Recovery (EUR) is Cumulative Production + Forecast or GLJ 2P Reserves A 02-25 Hz MTYA Cum to Oct.31, 2013: 3.4 Bcf ARC EUR Forecast (RTA): 16 Bcf GLJ 2012 EUR: 10 Bcf B 02-25…
Sunrise Development Economics Key Metrics DCET Capex per well (MM) 5.2 2P Reserves per well (Bcf) 11.0 IP (1 mo) (MMcf/d) 5.3 IP (12 mo) (MMcf/d) 4.8 Half Cycle Economics (C85/bbl) 4/GJ 3/GJ IRR (% AT) 80% 50% Recycle Ratio 4.8…
Sunrise 2014 Budget 119MM* Sunrise 2014 Operated Budget Volumes * Operated Capital Only Commercial Development of Sunrise with 60 mmcf/d Exit 2014
Building Confidence for Commercialization Attachie West and Septimus moving into pilot production phase to assess commerciality Attachie East continues delineation and land retention Blueberry and Sundown are waiting in inventory…
ANTE CREEK OIL & GAS A MONTNEY SUCCESS STORY
Ante Creek Asset Details Net production (boe/d) Q3 2013 11,400 Liquids (bbls/d) 5,700 Gas (mmcf/d) 34 Production split % (liquids/gas) 50/50 Land (Montney net sections) 332 Working Interest 99% Reserves (2P mmboe) 47.7…
Ante Creek Opportunity for Down-Spacing Infill Hz drilling encountered near virgin (original) pressure implies substantial incremental reserves to be produced by the new wells Substantial Incremental Reserves from New Wells
Ante Creek Opportunity for Down-Spacing Testing 200m lateral horizontal well spacing in Montney through pilot schemes; ensuring future development extracts maximum value The down-spacing is aimed at greatly increasing the NPV of the…
Ante Creek Oil - Leading Capital Efficiency (1) Source information from Well Completions & Frac Database Canadian Discovery Ltd. and Introspec Energy Group Inc., wells rig released Jan 2011 to current. (2) All reported wells from…
Ante Creek Development Economics All economics run at FLAT price forecasts with C85/bbl and 3/GJ AECO Liquid yield assumptions: Condensate 7 bbl/mmcf, NGL 20 bbl/mmcf 50% Rate of Return at Flat 3/GJ AECO and C85/bbl
Ante Creek 2014 Budget 198MM 30% YoY Increase in Average Production in 2014
PEMBINA OIL REVITALIZING A MATURE OIL FIELD
Pembina Asset Details Net production (boe/d) Q3 12,000 2013 Cardium production 89% Production split % (liquids/gas) 79/21 Land (Cardium net sections) 137 Working Interest 80% Reserves (2P mmboe) Cardium 49.4 Reserve Life Index…
Pembina Base Waterflood - Case Study Increased water injection and optimization of waterflood patterns has: Decreased Gas-Oil Ratio, showing improvement in pressure maintenance Reduced Oil decline, indicating improvement in flood…
Pembina Horizontal Injection Pilot 1 Injection started in Dec 2012; encouraging trend of declining GOR, stabilizing/increasing oil Monitoring 15 offsetting producers; 5 Hz wells and 9 verticals Gain of 50-70 bbl/d of incremental oil…
Pembina - Leading Capital Efficiency (1) Source information from Well Completions and Frac Database Canadian Discovery Ltd. and Introspec Energy Group Inc., 2013 (2) TWP 47-49 RNG 5-10W5 (3) IP3 data from Accumap - includes wells with…
Pembina Development Economics All economics run at FLAT price forecasts with C85/bbl and 3/GJ AECO Liquid yield assumptions: Condensate 16.4 bbl/mmcf, NGL 36.2 bbl/mmcf 58% Rate of Return at Flat 3/GJ AECO and C85/bbl
Pembina 2014 Budget 118MM* * Operated Capital Only 7% YoY Increase in Average Liquids Production in 2014
SUMMARY
Why Invest in ARC Long-term view and commitment to value creation Strong balance sheet Disciplined capital management Significant exposure to early stage development of world class assets Strategic optionality of high rate of return…
Looking Beyond 2015 ARC has a well balanced inventory of value creating opportunities which may be pursued beyond 2015 Option to grow at a rate estimated to be similar to growth for the period 2010 2014 Project Options 2016 - 2020+…
APPENDIX
Strong Performance Through Cycles (1) Amounts presented for the periods 2010-2012 are in accordance with IFRS and amounts presented for periods 2007-2009 are in accordance with Canadian GAAP. (2) Net Income presented for the periods…
Multiple Sources of Debt Bank Credit Facility 1 Billion credit facility plus 40 million working capital facility 12 banks including the five largest Canadian banks Recently extended to October 2017 Long-term notes Private…
Note Repayments Spread Over Time Long-term notes structured to mature over a number of years Repayment will come from existing credit facilities Debt Repayment Schedule Reduces Financing Risk
Natural Gas Commodity Marketing Ensuring Production Moves to Market Move product to the nearest and most liquid point Proactively plan for future development to ensure adequate take-away Currently Produce 360 Mmcf/d of Natural Gas
Crude Oil Marketing ARC controls the produced barrel by selling onto the feeder pipeline system or to a destination of choice for sale at a custody transfer point (Edmonton, Cromer, Hardisty) ARC is not currently a Mainline shipper
NGL Commodity Marketing Western Canadian NGL Market Propane is reliant on exports to U.S. due to limited Component Breakdown Canadian demand Butane markets well balanced due to demand from refining and crude oil blending Condensate…
Hedge Positions November 6, 2013 Summary of Hedge Positions as at November 6, 2013 (1) Q4 2013 2014 2015 - 2017 2018 Crude Oil WTI: (US/bbl) US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d Ceiling 102.78 18,000 98.04 13,967 - -…
Socially Responsible Operator ARC strives to meet the highest standards in health, safety and environment Environmental Stewardship Health and Safety Commitment Ranked 1 in the CDPs Canadian Targets zero lost time incidents Carbon…
Reserves and Resources Disclosure TPIIP, DPIIP and UPIIP have been estimated using a zero percent porosity cut-off for gas and a 3% cutoff for oil. This means that all gas bearing rock has been incorporated into the calculations.…
Definitions of Oil and Gas Reserves and Resources Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis…
Definitions of Oil and Gas Reserves and Resources Economic Contingent Resources (ECR are those contingent resources which are currently economically recoverable. Undiscovered Petroleum Initially-In-Place (UPIIP) is that quantity of…
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