Value Proposition Clear Line of Sight to Long-term Value Creation CREATING VALUE
Corporate Profile Corporate Summary Production (Q4 2014) 117,986 boe/d Reserves (2P Gross YE 2014) (1) 673 mmboe Reserve Life Index (2P) (1) 15.0 years (2) Annualized Dividend / Dividend Yield 1.20 per share / 4.9% (3) Annualized…
Unique Strategy Risk Managed Value Creation is Central to ARCs Strategy Targeting net debt to funds 210% Reserve Replacement from operations between through the drill bit for the 1.0 1.5x past 7 consecutive years Highly…
Risk Managed Value Creation Montney Assets Delivering Profitable Growth and Value 140,000 120,000 100,000 80,000 boe/d 60,000 40,000 20,000 0 Non-Montney Liquids Montney Liquids Non-Montney Gas…
High Quality Long Life Assets 200% or Greater Reserve Replacement Over the Past Seven Years Annual Produced Reserves Replacement 700% Development 600% Acquisitions 500% 400% 300% 200% 100% 0%
Operational Excellence Capital Efficiencies Managing Declines and Driving Down Costs ARC All In Capital Efficiencies /boe/d(1) 3 Year Avg. Capital Efficiencies /boe/d(2) (2011-2013) 40,000 40,000 ARC Competitors 30,000…
Operational Excellence Cost Management Low Cost Producers Deliver Superior Returns Over Time Focused assets, characterized by high working interest, operatorship and ARC owned/operated facilities, provides control over costs and…
Growth in Per Share Production and Cash Flow Delivering Value with Profitable Growth and Income 41% increase in production per share and 32% increase in Funds from Operations per share over five year period Production per Share(1)…
Financial Flexibility Balance Sheet Strength Targeting Net Debt to Funds from Operations Between 1.0 1.5x Net Debt to FFO 1,400 2.0 1.8 1,200 1.6 1,000 1.4 millions 1.2 800 Ratio % 1.0 600 0.8 400 0.6 0.4…
Sustainability Balancing Inflows and Outflows for Long-Term Sustainability Objective to fully fund ARC's Dividend and Sustaining Capital from Funds from Operations (FFO) over the long-term Profitable Growth Capital will be funded…
Sustainable Dividend Committed to the Dividend While Delivering Profitable Growth 17% annualized total return since inception, 5.3 billion of dividends (31.08/share) 6,000 Cumulative Dividends and Historic Payout Ratio 120% 5,500…
Montney Assets
Why the Montney Total Recoverable Resource Ranks High Amongst North American Resource Plays Massive thickness Large areal extent (500km) Superior lithology and fracability High permeability Over pressured Montney Higher…
Montney Growth Assets Growing our Montney Land Base 120 Net Montney Sections in 2003 970 Net Montney Sections Today 500 km 500 km
ARC in the Montney 40% Annual Montney Profitable Growth over 5 Year Period (2009 2014) 40% CAGR 2009 2014 90,000 32% CAGR 2000 - 2014 2014 80,000 Parkland Gas Plant: Phase 1 2013 Construction 70,000 begins on 2012 Parkland…
NE BC Montney Reserves & Resources NE BC Montney TPIIP 67.4 Tcf of Gas and 2.3 Billion Barrels of Oil 2014 Resource evaluation conducted by GLJ saw significant growth in Gas TPIIP, which is mainly attributed to newly-acquired land in…
Multiple Layers to Develop Attachie Septimus Sunrise Tower Parkland Dawson Pouce Coupe Montney A Upper Montney Montney B Montney C Lower Montney Montney D Montney E Existing Horizontal Wells,…
Montney Development Economics Strong Rates of Return Across the Montney Portfolio Parkland Tower Dawson Sunrise Ante Creek Half Cycle Economics C55/bbl 55% IRR 35% IRR 95% IRR 65% IRR 35% IRR MSW 4.3x Recycle 3.5x Recycle 5.0x…
ARCs Proven Development Model Inventory of Opportunities at all Stages
Montney Pilots Proving Future Value Before Full Scale Development West Attachie: Red Creek Pilot Production on-stream since Parkland: Attachie Q2 2014 Lower Montney well on-stream Q3 2014 Tower Pouce Coupe Parkland East…
Dawson Gas World Class Resource, Unlimited Potential (1) Breakeven pricing assumes 20% cost savings as compared to late 2014 estimates. Cdn per bbl or mcf price as indicated defined as price at which NPV10 is equal to zero. * IRR…
Dawson Asset Details Excellent Free Cash Flow Net production (boe/d) Q4 2014 29,000 Liquids (bbls/d) 900 Gas (mmcf/d) 169 Production split % (liquids/gas) 97% gas Land (Montney net sections) 133 Working Interest 96%…
Dawson A Cash Flow Machine Low Reinvestment Ratio to Maintain Significant Free Cash Flow Grown production from 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…
Dawson Development Potential Additional Development Layer Below Core Acreage Dawson Dawson core development has been Upper Montney focused on Upper Upper Montney A Montney A; 65% of Booked Reserves* lands have reserves booked…
Dawson Gas Type Curve Growth Frac Technology Advancements = Improvements in Well Performance Completions 2009- 2012 2013- 2015 2015 Type curve growth over time due to 2011 2014 revised* improvements in well design, focused on Frac…
Dawson Infrastructure New Facility Planned For 2017 On-Stream New Dawson Phase III Gas Plant Plan to apply for regulatory approval in Q2 2015 90 MMscfd with 7,500 bbls/day of liquids handling New site ideally situated in the Lower…
Parkland/Tower Reaping Acquisition Benefits (1) Breakeven pricing assumes 20% cost savings as compared to late 2014 estimates. * IRR Half cycle after tax rate of return based on C55/bbl Edmonton Sweet (MSW) and C3/GJ AECO * Free…
Parkland/Tower Asset Details Material Value Creation in 2014 Parkland Tower Net production (boe/d) 17,900 7,920 Q4 2014 Liquids (bbls/d) 3,200 5,190 Gas (mmcf/d) 88 16.4 Land (net sections) 23 57 Working Interest 84% 92% Reserves…
Parkland/Tower Development Potential Incremental Reserves Potential with Multilayer Development Upper Montney Upper Montney A Booked Reserves* supports two layers of development at Upper Montney Parkland and Tower At year end…
Parkland Development Economics Targeting Liquids With Step Out From Core Completions 2012 2013 2014 2015 2015 Revised* Frac spacing (m) 180 100 80 70 70 1,200 Fracs per well 10 15 22 30 30 2012 Type Curve (Dry Gas) Avg. tonnage…
Tower Cumulative Production New Wells are Exceeding Type Curve Total Production (BOE) Oil Production (bbl) 2015 Type Curve 2015 Type Curve 2014 Type Curve 2014 Type Curve Old completion 12-16 Pad design 5-14 Pad (2014)…
Tower Completions Advancement Advanced Completion Design = Improved Performance Completions 2014 2015 2015 Revised* 1,200 Frac spacing (m) 40 25 25 2014 Type Curve Fracs per well 44 60 60 1,000 Avg. tonnage 2015 Type Curve 50…
Sunrise Long-term Growth Opportunity (1) Breakeven price assumes 20% cost savings as compared to late 2014 estimates. *Breakeven Cdn per bbl or mcf price as indicated defined as price at which NPV10 is equal to zero. * IRR Half…
Sunrise/Sunset Asset Details Sunrise/Sunset Moving Forward with Full Scale Development Sunrise has progressed from pilot to full scale development Net production (boe/d) Q4 2014 7,770 Liquids (bbls/d) 6 Gas (mmcf/d) 46.6 Land…
Sunrise Development Potential Proven Productivity from Four Layered Development Known reserves exist in Upper Montney A. Upper Montney A Booked Reserves* 2014 drilling program has proved Upper Upper Montney Montney A+…
Sunrise Continuous Improvements Enhanced Well Design = Type Curve Improvement 2015 Completions 2009-2011 2013-2014 2015 7,000 Revised* 2015 Type Curve (11.5 Bcf) Frac spacing (m) 120 80 80 80 6,000 Fracs per well 16 25 25 29…
Summary
Value Proposition Clear Line of Sight to Long-term Value Creation
2015 Priorities Focused on Long-Term Value Creation Value Creation Cost Management & Capital Efficiencies Value creation prioritized over Opportunities to reduce costs and volume improve efficiencies without compromising safety…
Looking Beyond 2016 Diverse Portfolio Provides Strategic Optionality ARC has a well balanced inventory of value creating opportunities which may be pursued beyond 2016 Project Options 2016 - 2020+ Dawson Phase 3 140,000 Pouce…
Appendix
Reserves and Resources Disclosure All reserves and resources volumes for the BC Montney and elsewhere in this presentation are, unless indicated otherwise, as at December 31, 2013 as evaluated by GLJ Petroleum Consultants Ltd. in…
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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