Corporate Profile Corporate Summary Production (Q4 2013) 100,880 boe/d Reserves (2P Gross YE 2013) (1) 634 mmboe Reserve Life Index (2P) (1) 15.5 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 4.1% (3) Annualized…
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 6 consecutive years Program Capital Discipline and Pace of Development…
Operations Overview Western Canadian Producer
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
Risk Managed Value Creation Strategic Optionality
Delivering Income and Growth Delivered 19% annualized total return since inception Paid out greater than 4.9 billion in total dividends - 29.88/share Long-term Vision
Significant Reserve and Resource Base 634 mmboe of 2P reserves and RLI of 15.5 years 17% Annual Growth in 2P Reserves Since 1996 (1) See Reserves and Resources Disclosure and Definitions of Oil and Gas Reserves and Resources in the…
Reserve Replacement Significant organic growth in reserves over past five years Six consecutive years of 200% or greater reserve replacement Adding Value Through the Drill Bit
Capital Efficiency Replaced 200% of production at an all in FD&A cost of 13.32/boe(1) 2013 recycle ratio of 2.2 times based on F&D of 12.79/boe(1) and netback of 28.57/boe Three year FD&A of 8.39 before changes in FDC Excellent…
Key Reserve Information Reserves as of December 31, 2013 (mmboe) - Proved Producing 208 (101 mmboe liquids, 644 bcf gas) - Total Proved 374 (132 mmbbls liquids, 1.5 Tcf gas) - Proved Plus Probable 634 (194 mmbbls liquids, 2.6 Tcf…
Per Share Growth Growth in per share production and reserves while also paying a meaningful dividend In 2013, 2P RLI decreased from 17.5 years to 15.5 years converting reserves into production and cash flow (1) Debt Adjusted…
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 natural gas development 2014 Capital Budget Volumes Year Capital Average Gross Net MM (boe/d) 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 21% CAGR in 2P Natural Gas reserves from 1 Tcf to 2.6 Tcf 2008 - 2013 Montney…
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 194 Mmbbls 2008 - 2013 Meaningful Oil And…
2013 and 2014 Guidance 2013 Guidance 2013 Actual 2014 Guidance Oil (bbls/d) 32,00033,000 32,784 35,00037,000 Condensate (bbls/d) 1,9002,100 2,251 2,3002,500 Gas (mmcf/d) 345355 349.4 415425 NGLs (bbls/d) 2,8003,000 2,811 3,7004,000…
ASSET OVERVIEW
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 899 net sections today Significant Montney landholdings with 951 gross sections (899 net sections) including 671 gross undeveloped sections and…
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…
E F 1 G H E F 4 G F 1 G H H E F G H E Montney Infrastructure Optionality 3 G H E F 2 D C B A D C B C B A A D C B A D C B A D R12 R11 R10W6 L K J I T92 L K J I L I L K J I K J I L K J T91 E F 16 G H E F 13 G…
DAWSON GAS WORLD CLASS GAS RESOURCE
Dawson Asset Details Net production (boe/d) Q4 2013 27,400 Liquids (bbls/d) 970 Gas (mmcf/d) 158 Production split % (liquids/gas) 97% gas Land (Montney net sections) 130 Working Interest 96% Reserves (2P mmboe) 174 Liquids…
Dawson A Cash Flow Machine Grown production from approximately 50 Mmcfe/d in 2009 to 165 Mmcfe/d by mid 2012 At Cdn3 gas 30% Reinvestment Ratio to sustain Cash Flow and generate 100 million of Free Cash Flow annually for 15 years…
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 Net production (boe/d) 10,700 1,750 Q4 2013 Liquids (bbls/d) 1,320 1,250 Gas (mmcf/d) 56 3.0 Land (net sections) 23 57 Working Interest 84% 92% Reserves (2P mmboe) 58.0 24.6 Liquids…
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 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)- Q4 2013 4,180 Liquids (bbls/d) 70 Gas (mmcf/d) 24.7 Land (net Montney sections) 278 Working Interest 90% Reserves (2P mmboe) 150 Liquids (mmbbls) 10 Gas (bcf) 842 Reserve…
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) - Q4 2013 3,510 Liquids (bbls/d) 0 Gas (mmcf/d) 21.0 Land (net Montney sections) 32 Working Interest 89%…
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* * 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) Q4 2013 16,200 Liquids (bbls/d) 8,900 Gas (mmcf/d) 44 Production split % (liquids/gas) 45/55 Land (Montney net sections) 341 Working Interest 99% Reserves (2P mmboe) 50.9…
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 Ante Creek 2014 Operated Budgeted Volumes 30% YoY Increase in Average Production in 2014
PEMBINA OIL REVITALIZING A MATURE OIL FIELD
Pembina Asset Details Net production (boe/d) Q4 12,400 2013 Cardium production 94% Production split % (liquids/gas) 83/17 Land (Cardium net sections) 138 Working Interest 80% Reserves (2P mmboe) Cardium 53.7 Reserve Life Index…
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) TWP 47-49 RNG 5-10W5 (2) Source information from Well Completions and Frac Database Canadian Discovery Ltd. and Introspec Energy Group Inc., 2013 (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 * Assumes USDCAD of 1.0636 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 Canadian demand Butane markets well balanced due to demand from refining and crude oil blending Condensate market remains strong…
Hedge Positions February 5, 2014 Summary of Hedge Positions as at February 5, 2014 (1) 2014 2015 2016 - 2017 2018 Crude Oil (2) WTI: (US/bbl) US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d US/bbl bbl/d Ceiling 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…
Montney Growth Assets Independent Resources Evaluation conducted by GLJ effective December 31, 2013 The amount of natural gas and liquids ultimately recovered from ARCs NEBC Montney resource will be primarily a function of the future…
Montney Growth Assets 2013 Best 2012 Best 2011 Best Reserves and Economic Contingent Resources (1)(2) Estimate Estimate Estimate Natural Gas (Tcf) Reserves (3) 2.2 2.1 1.9 Economic Contingent Resources 4.5 4.2 4.1 Natural Gas…
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…
Loading...
