Slide 1: ARC Resources Ltd. Investor Presentation
ARC Resources Ltd. Investor Presentation May 2023
Slide 2: Corporate Profile
Corporate Profile Premium investment opportunity for Montney exposure, one of the most profitable assets in North America Shares outstanding1 611 million 1 Canada’s Market capitalization $9.4 billion largest Long-term debt 1 $1.1 billion condensate producer Net debt 1 2 $1.3 billion Enterprise value
Slide 3: Scale in a World-class Resource Play
Scale in a World-class Resource Play Largest Montney producer, Canada’s largest condensate producer and 3rd largest gas producer Mboe/day BC and Alberta Montney Producers MMbl/day Montney Condensate & Liquids Producers 400 160 350 140 300 120 250 100 200 80 150 60 100 40 50 20 0 - ARC ARC 2023E 2023
Slide 4: What Differentiates ARC?
What Differentiates ARC? Guiding principles to achieve sustainable per share growth Operational Balance Sheet World-class Capital Excellence & Strength & Assets Discipline ESG Leadership Risk Management • Investment-grade • Profitable Assets with • Returns-Focused • Low-Cost, Low-Emission Credit Rat
Slide 5: Strategic Priorities
Strategic Priorities ARC Can Do It All 1) Maintain a Strong Balance Sheet • To ensure we can be opportunistic 2) Focus on Improving Per Share Metrics • Invest in the business to grow free funds flow • Buy back shares at attractive pricing • Expand margins through LNG, Marketing, and Infrastructure i
Slide 6: Capital Allocation
Capital Allocation
Slide 7: Free Funds Flow Allocation
Free Funds Flow Allocation ARC plans to return 50% to 100% of free funds flow1 to shareholders Free Funds Flow Priorities 2023 Capital Allocation $ billions 5.0 Maintain Balance Sheet Strength • Balance sheet strength is foundational US$100/bbl WTI • With debt near its long-term target, free funds f
Slide 8: Funds From Operations Growth Strategy
Funds From Operations Growth Strategy Reduced share count by ~15% with goal of reducing share count to pre-merger levels millions 800 $8.00 700 $7.00 600 $6.00 500 $5.00 400 $4.00 300 $3.00 200 $2.00 100 $1.00 0 $0.00 2015 2016 2017 2018 2019 2020 2021(1) 2022 2023E outstanding shares funds from ope
Slide 9: 2023 Capital Budget
2023 Capital Budget
Slide 10: 2023 Guidance – Capital Expenditures & Production
2023 Guidance – Capital Expenditures & Production Attachie ~$300 MM Ante Creek ~2,500 boe/day ~$80MM 11 wells ~20,000 boe/day Greater Dawson $400MM 56 wells Kakwa ~87,500 boe/day $900MM 73 wells ~190,000 - 200,000 Sunrise boe/day $175MM 25 wells ~47,000 boe/day 10 Total capital expenditures of $1.8
Slide 11: 2023 Revised Guidance
2023 Revised Guidance 2023 2023 Revised Production Guidance Guidance Crude oil (bbl/day) 8,500 - 9,000 8,500 - 9,000 Condensate (bbl/day) 79,000 - 81,000 76,000 - 78,000 Crude oil and condensate (bbl/day) 87,500 - 90,000 84,500 - 87,000 Natural gas (MMcf/day) 1,260 - 1,270 1,295 - 1,305 NGLs (bbl/da
Slide 12: 2023 Capital Budget - Revised
2023 Capital Budget - Revised Budget Incorporating Attachie Phase I investments $ millions 2,000 $1,800 $130 $300 ~$1,850 $120 100M 1,500 1.1 Billion 1,000 500 0 2023 Preliminary Base Production Water Infrastructure Removal Attachie Phase I Capital 2023 Revised Budget Capital Budget Outperformance 1
Slide 13: Attachie Phase I
Attachie Phase I Building Attachie Phase I • Capital costs to construct and fill facility are approximately $740 million • Plant start-up to occur in late 2024 with full production capacity targeted in early 2025 • Production – 40,000 boe/day (60% liquids) • 90 MMcf/day natural gas • ~25,000 B/d of
Slide 14: BC Update
BC Update Attachie is the blueprint for responsible development in BC • 100% of ARC’s assets are outside of the Blueberry River First Nations high value areas • ARC sanctioned Attachie Phase I in May 2023 • Establishes the path forward for future resource development BRFN High Value Areas Surface Di
Slide 15: Financial Sustainability & Return on Investment
Financial Sustainability & Return on Investment
Slide 16: Financial Strength
Financial Strength Strong financial position has been a foundation of ARC for 26 years 2023 forecasted net debt sensitivities1 Long-term notes repayment schedule $ billions, ratio Cdn$ millions 1.5x 1.5 600 1.0x 450 1.0 300 0.5 0.5x 150 0.0 0.0x 0 US$50/bbl US$60/bbl US$80/bbl US$90/bbl 2023 2024 20
Slide 17: Long-term Corporate Profitability
Long-term Corporate Profitability Disciplined plan to deliver above cost of capital returns Return on average capital employed1 % 40 30 20 Average 11% 10 0 (10) (20) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Slide 18: Marketing & Fundamentals
Marketing & Fundamentals
Slide 19: Natural Gas Marketing Strategy
Natural Gas Marketing Strategy Portfolio with well-diversified North American exposure is driving strong realizations Natural gas financial exposure1 2 ARC’s Natural gas portfolio 13% 14% 9% 10% 20% 9% 10% 11% 8% 8% 8% 7% 12% 11% 11% 11% 11% 24% 9% 10% 22% 23% 11% 15% 20% 20% 170,000 26% MMBtu/day 1
Slide 20: Natural Gas Marketing Strategy
Natural Gas Marketing Strategy Physical diversification to end markets is a competitive advantage STN 2 C$1.72 C$0.25 C$1.47 o AECO C$2.61 C$0.27 C$2.34 Alliance o TCPL Mainline GTN Northern GLGT Border o o o Malin Dawn $4.04 C$3.68 $0.64 Mid-West C$1.35 $3.40 $2.55 C$2.33 $0.71 NGPL $1.84 Legend Na
Slide 21: LNG Supply Agreements
LNG Supply Agreements ARC has secured access to western Canadian and US Gulf Coast LNG as part of its market diversification strategy LNG supply agreements North American LNG export facilities Cheniere LNG Canada Corpus Christi Cedar LNG2 Participant Stage III Volumes 150 MMcf/day 140 MMcf/day 200 M
Slide 22: Long-term U.S. LNG Export Capacity
Long-term U.S. LNG Export Capacity Approximately 9 Bcf/d of incremental liquefaction capacity by 2027 Bcf/d 45 Existing Capacity New Fortress Energy >20 Bcf/d of 40 incremental LNG Plaquemines Ph. 1 export demand 35 Energia Costa Azul Golden Pass 30 Plaquemines Ph. 2 25 Driftwood 20 15 10 5 0 2019 2
Slide 23: Western Canadian Natural Gas Fundamentals
Western Canadian Natural Gas Fundamentals Significant demand and export capacity growth expected over the next five years WCSB natural gas supply and demand1 WCSB demand and export capacity growth2 Bcf/day 3.2 Bcf/day Demand & Export Capacity Growth Expected by 2025 24 LNG Canada Phase 1 18 +2.0 Bcf
Slide 24: Condensate Supply and Demand Outlook
Condensate Supply and Demand Outlook • 35% of WCSB condensate demand 2022 Canadian Oil Sands Blending Demand is met by supply imported from the 700 Mbbl/d U.S. market • Import pipelines run at high utilization 2022 WCSB Production 450 Mbbl/d • Demand from the oil sands is growing 2022 Imports from U
Slide 25: Asset Portfolio Overview
Asset Portfolio Overview
Slide 26: Concentrated Asset Base Drives Efficiency
Concentrated Asset Base Drives Efficiency High-quality assets with geographic diversification Production Mix1 14% 23% 63% Oil and Condensate Natural Gas NGL >1,600 Montney Sections 26 (1) Represents operational results for the year ended December 31, 2022. (2) Reserves as of December 31, 2022.
Slide 27: Large Network of Owned-and-operated Infrastructure
Large Network of Owned-and-operated Infrastructure Reduces costs and ensures operational flexibility in periods of volatility Dawson Phase I & II 120 MMcf/day Parkland 03-09 90 MMcf/day Dawson Phase III & IV 180 MMcf/day Sunrise Phase I & II 280 MMcf/day Gold Creek Plant 250 MMcf/day Cutbank Plant A
Slide 28: Montney – Executing the Strategy
Montney – Executing the Strategy Boe per day 2025 Accumulate Asset Base (2000-2010) 420,000 2023 ARC Attachie sanctions Phase I • Drilled first horizontal Montney well in Montney Crude Oil & Liquids (bbl/day) 2021 Attachie ARC acquires Seven Phase I fully on 2005 production 360,000 Montney Natural G
Slide 29: Montney Reserves
Montney Reserves ARC’s $34.00 per share1 NPV of 2P reserves is based on just 17% of its drilling inventory Reserves Reserves (boe per share) MMboe 2,000 3.50 Natural Gas Oil and NGLs PDP TP 2P 3.00 1,500 2.50 1.95 2.00 1,000 1.50 1.00 500 0.50 - 0 2022 Proved Total Proved + Producing Proved Probable
Slide 30: Deep Inventory of Top-tier Development Opportunities
Deep Inventory of Top-tier Development Opportunities ARC has over 5,000 drilling locations in high quality regions of the Montney Reserves – Unbooked original locations >80% Drilling inventory1 (boe per share) 3.50 Number of locations 6,000 3.00 5,000 2.50 4,000 2.00 3,000 1.50 2,000 1.00 1,000 0.50
Slide 31: Reserves Replacement
Reserves Replacement ARC has replaced >140% of production for 15 consecutive years 500% 400% 300% 200% 100% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1
Slide 32: Kakwa Overview
Kakwa Overview Condensate-rich and high-deliverability natural gas play that generates significant free funds flow Quick facts Gold Creek Plant Production1 180 Mboe/day 59% crude oil and liquids Cutbank PDP Reserves2 290 MMboe Plant 2P Reserves2 900 MMboe Inventory 1,013 total locations (382 booked)
Slide 33: Greater Dawson Overview
Greater Dawson Overview Low reinvestment rates driving significant free funds flow generation Quick facts 96 Mboe/day Production1 21% crude oil and liquids Parkland PDP Reserves2 150 MMboe Phase I & II 2P Reserves2 Gas Plants 490 MMboe Phase III & IV Gas Plants Inventory 946 total locations (266 boo
Slide 34: Attachie Overview
Attachie Overview Attachie Phase I is the leading development opportunity within ARC’s portfolio Quick facts Production1 3 Mboe/day 52% crude oil and liquids PDP Reserves2 6 Mmboe Inventory 1,730 total locations (34 booked) Attachie Phase I 2023 Objective Phase I sanctioned in May 2023 4-20 Battery
Slide 35: Attachie Phase I
Attachie Phase I Attachie Phase I is a significant free funds flow growth project Project overview Forecasted cash flow profile Processing capacity Total 40 Mboe/day Condensate and NGLs 25 Mbbl/day Natural gas 90 MMcf/day Cash flow profile Year 10 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Yea
Slide 36: Sunrise Overview
Sunrise Overview One of the lowest cost, lowest emission natural gas plays in North America Quick facts Production1 278 MMcf/day PDP Reserves2 80 Mmboe 2P Reserves2 270 MMboe Sunrise Phase I & II Inventory 298 total locations (90 booked) 25 wells in 2023 2023 Objective Execute facility expansion to
Slide 37: Ante Creek Overview
Ante Creek Overview Highly profitable, stable light oil development generating significant free funds flow Quick facts Production1 20 Mboe/day 46% crude oil and liquids Ante Creek PDP Reserves2 20 MMboe 02-26 2P Reserves2 80 MMboe Ante Creek 10-07 Inventory 395 total locations (80 booked) 11 wells i
Slide 38: Septimus and Sundown Overview
Septimus and Sundown Overview Capable of delivering approximately 1 bcf per day of combined production for greater than a decade Septimus Quick facts Sundown land position 36,600 acres Septimus land position 19,100 acres Sunrise Inventory >10 years at 1 bcf/d (internal estimate, combined) Developmen
Slide 39: ESG Strategy & Performance
ESG Strategy & Performance
Slide 40: Enverus ESG Score
40 Enverus ESG Score 10 20 30 40 50 60 70 80 90 0 100 EQT RRC SM ARX CTRA FANG PXD ERF OVV OXY CHK Source | Enverus ESG Analytics, FactSet, company Disclosures WCP AR HES CRK ESG Leadership COP CPG CVX PDCE TOU SWN GPOR DVN CIVI CRC Environmental CNX MUR MRO Social NVA BP WLL XOM EOG DEN Governance
Slide 41: Leading Emissions Profile
Leading Emissions Profile ARC has one of the lowest emissions profiles amongst Canadian E&P companies Comparative 2021 GHG emissions intensity1 2025 emissions-reduction targets tCO2e/boe Relative to 2019 baseline2 0.0800 0.0700 Reduce Scope 1 and 2 emissions intensity by 0.0600 20% 0.0500 Reduce met
Slide 42: Appendix
Appendix
Slide 43: Historical Performance
Historical Performance ARC has managed a profitable business through all commodity price cycles with its efficient Montney assets, capital discipline, and strong balance sheet Production Net debt to FFO Dividends1 boe/day $ billions, ratio $ billions, % of FFO 360 3.0 4.0 8 120% 3.5 2.5 270 3.0 6 90
Slide 44: Transformation to the Largest Pure-Play Montney Producer
Transformation to the Largest Pure-Play Montney Producer Large concentrated asset base drives efficiency 2014 2022 NEBC Pouce Prestville Valhalla Chinchaga Hotchkiss NEBC Hawk Hills Swan Hills Ante Redwater Creek Non Montney Minors Ante Creek Kakwa Delburne Ghost Pine Pembina Youngstown Brooks Gull
Slide 45: Risk Management Contracts Positions
Risk Management Contracts Positions ARC’s long-term focus is to reduce downside risk and create certainty in cash flows 1 As at March 31, 2023 Remainder 2023 2024 2025 Crude Oil – WTI US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day Ceiling 76.52 20,338 123.86 5,243 – – Floor 60.17 20,338 69.07 5,243
Slide 46: Asset Details
Asset Details ARC consistently delivers strong results across its asset base Greater Kakwa Sunrise Ante Creek Attachie Dawson Production1 Crude oil & liquids (bbl/day) 104,740 19,762 167 9,021 1,610 Natural gas (MMcf/day) 445.7 457.0 277.5 63.6 8.9 Total (boe/day) 179,020 95,929 46,416 19,628 3,085
Slide 47: ESG Ratings and Rankings
ESG Ratings and Rankings View ARC’s ESG performance and highlights at www.arcresources.com/sustainability Member of MSCI Global Sustainability Index Member of Sustainalytics’ Jantzi Social Index MSCI ESG Rating: AAA Environment Score: 4 Member of FTSE Russell’s FTSE4Good Index Series since 2018 Soci
Slide 48: Advisory Statements
Advisory Statements
Slide 49: Advisory Statements
Advisory Statements Notes Regarding Forward-looking Information This presentation contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking information") within the meaning of applicable securities legislation about current expectations
Slide 50: Advisory Statements
Advisory Statements Basis of Preparation All financial figures and information have been prepared in Canadian dollars (which includes references to "dollars" and "quot;), except where another currency has been indicated, and in accordance with International Financial Reporting Standards ("IFRS" or "GAA
Slide 51: Advisory Statements
Advisory Statements Non-GAAP Ratios Netback per boe ARC calculates netback per boe as netback divided by weighted average daily production. Netback is a non-GAAP financial measure component of netback per boe. Management believes that netback per boe is a key industry performance measure of operatio
Slide 52: Advisory Statements
Advisory Statements Barrels of Oil Equivalent Natural gas volumes have been converted to barrels of oil equivalent ("boe") on the basis of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of liquids. Boe may be misleading, particularly if used in isolation. A conversion ratio of
Slide 53: Advisory Statements
Advisory Statements Advisory – Credit Ratings Credit ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. Credit ratings are not recommendations to purchase, hold, or sell securities and do not address the market price or suitability of a
Slide 54: Investor Relations Contacts
Investor Relations Contacts Dale Lewko General Investor Relations Enquiries Manager, Capital Markets 403.503.8600 403.503.8696 1.888.272.4900 DLewko@arcresources.com IR@arcresources.com