Arc Resources — Investor Presentation (November 2024)
57 slides from Arc Resources's investor presentation, Nov 1, 2024
Slide 1: ARC Resources Ltd. Investor Presentation
ARC Resources Ltd. Investor Presentation Photo Caption copy area Q4 2024
Slide 2: Corporate Profile
Corporate Profile Premium investment opportunity for Montney exposure, one of the most profitable assets in North America Mboe/day BC & Alberta Montney Producers 400 1 Attachie Phase I Shares outstanding 592 million (2025E) 300 2 Market capitalization $13.7 billion 200 1 Long-term debt $1.4 billion
Slide 3: Transformation to the Largest Montney Producer
Transformation to the Largest Montney Producer Large concentrated asset base drives efficiency, well positioned for the future 2014 2025E NEBC Pouce Prestville Valhalla Chinchaga NEBC >1 million Hotchkiss NEBC Montney acres Hawk Hills >1 million Montney acres Swan Hills Ante Creek Ante Redwater Cree
Slide 4: Investment Case for ARC
Investment Case for ARC World-class Assets Free Funds Flow Per Share1 2 Growth • Canada's largest Montney & condensate producer 4.00 • Capability to grow >500 Mboe/d and sustain for greater than 10 years 3.00 Commitment to Shareholder Returns • Clear strategy to triple free funds flow per share $ pe
Slide 5: 2025 Capital Budget
2025 Capital Budget
Slide 6: 2025 Guidance – Production & Expenses
2025 Guidance – Production & Expenses 2025 Guidance Production Crude oil and condensate (bbl/day) 104,000 - 110,000 Natural gas (MMcf/day) 1,400 – 1,420 NGLs (bbl/day) 42,000 - 48,000 Total production (boe/day) 380,000 - 395,000 Expenses ($/boe)(1) Operating 4.50 - 4.90 Transportation 5.00 - 5.50 G&
Slide 7: 2025 Guidance – Capital Expenditures & Production
2025 Guidance – Capital Expenditures & Production Attachie ~$360MM Ante Creek 26 wells ~37,500 boe/day ~$80MM 11 wells ~20,000 boe/day Greater Dawson ~$195MM 21 wells Kakwa ~95,000 boe/day ~$800MM 64 wells ~172,500 boe/day Sunrise ~$105MM 8 wells ~60,000 boe/day Total capital expenditures of $1.6 to
Slide 8: Long-term Plan
Dawson III & IV, BC Long-term Plan
Slide 9: Long-term Outlook Delivers Significant Value
Long-term Outlook Delivers Significant Value Disciplined plan to grow free funds flow per share 1 Boe/day Base Production Attachie I Attachie II 425,000 400,000 ~230% 375,000 Free Funds Flow3 Per Share Growth (~30% CAGR4) 350,000 325,000 300,000 2024 2025 2026 2027 2028 ~10% CAGR Free Funds Flow per
Slide 10: Global Leader in Low-cost Energy Development
Global Leader in Low-cost Energy Development Providing reliable and affordable low-cost energy to global demand markets ~50% Natural gas production delivered to the US ~25% Natural gas production linked to international pricing1 1) Beg inning in 2027. 10 2) Note – Per cen tag es on the map represent
Slide 11: Capital Allocation
Kakwa, AB Capital Allocation
Slide 12: Track Record of Capital Discipline
Track Record of Capital Discipline A disciplined investment framework fundamental to profitable growth 1 Return on Average Capital Employed 40% 30% Average 12% 20% 10% 0% -10% -20% 12 1) Non-GAAP Financial Measure — see "Non-GAAP and Other Financial Measures" in the Advisory Statements of this prese
Slide 13: Long-term Outlook
Long-term Outlook Disciplined investment drives free funds flow per share growth $ millions Capital Expenditures1,2 $ millions Free Funds Flow2 2,000 3,000 WTI US$50/B; AECO C$2.50/GJ WTI US$70/B; AECO C$3.50/GJ WTI US$80/B; AECO C$4.50/GJ 2,500 1,000 $10 billion 2,000 Cumulative Free Funds Flow - (
Slide 14: Return of Capital Strategy
Return of Capital Strategy Balancing sustainable dividend growth with share repurchases $1.20 Shares (millions) 800 >10% Dividend Per Share Growth CAGR3, 4 Dividend per share Dividend payout ratio Outstanding shares 750 $1.00 700 ~15% 650 Dividend Payout Ratio3 $0.80 (% of FFO) 600 $0.60 550 Sustain
Slide 15: Asset Portfolio Overview
Parkland, BC Asset Portfolio Overview
Slide 16: Montney Overview
Montney Overview ARC’s competitive advantage in a world-class asset ~5,000 Drilling locations >20 years High quality inventory ~300 meters Thickness ~1.7 Bcf/d ~190 Mbbl/d Owned-and-operated infrastructure 16
Slide 17: Montney Outcompetes North America Plays
Montney Outcompetes North America Plays Low-cost and deep inventory relative to North American shale plays 17 1) Turn-in line (TILs)
Slide 18: North American Natural Gas Inventory
North American Natural Gas Inventory ARC has a 25-year inventory life economic below US$2.50/MMbtu Source | Enverus Intelligence Research 18
Slide 19: Montney Inventory
Montney Inventory ARC has a deep Montney inventory at the low end of the cost curve Supply Cost of Inventory by Property C$/Mcf 3.50 Natural Gas Supply Cost - NPV10 After-tax 3.00 2.50 ~50% 2.00 of total inventory has a supply cost below C$0/Mcf 1.50 1.00 0.50 0.00 0 500 1000 1500 2000 2500 3000 350
Slide 20: Montney – Track Record of Execution
Montney – Track Record of Execution Early movers to consolidate asset base at a low cost and deliver sustained profitable growth Boe per day 2028 Attachie 440,000 Montney Crude Oil & Liquids (bbl/d) 2025 Phase II Attachie Montney Natural Gas (boe/d) 2021 Phase I 400,000 ARC acquires Seven Generation
Slide 21: Large Network of Owned-and-operated Infrastructure
Large Network of Owned-and-operated Infrastructure Owned infrastructure results in approximately $300 million of cost avoidance annually Parkland 03-09 100 MMcf/day Attachie Phase I 90 MMcf/day 10 Mbbl/day ~1.7 Bcf/d 25 Mbbl/day processing capacity Dawson 300 MMcf/day 20 Mbbl/day ~190 Mbbl/d Sunrise
Slide 22: Kakwa Overview
Kakwa Overview Liquids-rich asset offering a long runway of development 175,000 boe/d Able to sustain at 170,000 - 175,000 boe/d for the next 15 years SCALE Developed (50%) Kakwa development to date covers ~50% Gold Creek Plant Undeveloped (50%) of ARC’s land base Cutbank Plant PREDICTABILITY ~900 p
Slide 23: Kakwa Production Performance
Kakwa Production Performance Production outcomes by vintage 30 Cumulative Production (Mboe per 100 metres) Highly productive reservoir 25 • Every vintage of wells have delivered strong results 20 • Infill drilling effectively complete as of 2023, allowing for return to orderly field development 15 1
Slide 24: Dawson Overview
Dawson Overview Flagship asset delivering superior free funds flow 2 with a long inventory runway >1 Tcf Natural Gas Produced Developed (36%) Undeveloped (64%) SCALE UMA 64% Undeveloped Dawson Phase III & IV 2023-28 Asset Level Outlook ECONOMICS Dawson $1.8 billion of asset level free funds flow2 Ph
Slide 25: Sunrise Overview
Sunrise Overview Scale and low-cost – the key ingredients to supply West Coast LNG EFFICIENT Highly efficient Developed (43%) dry natural gas play due to stacked Undeveloped (57%) UMA development layers Interconnected to Coastal GasLink to move gas volumes to West Coast LNG LOW-COST Lower Sustaining
Slide 26: Attachie
Attachie Attachie, BC
Slide 27: Attachie Overview
Attachie Overview ARC’s largest and most economic undeveloped asset Scale for Multi-phase Development READINESS EFFICIENT SCALE UMA >300 net sections in condensate-rich Montney LMA Consolidated Land Base Drives Efficiencies Multi-layered development Leverage Montney data and experience to MD maximiz
Slide 28: Greater Attachie Development Plan
Greater Attachie Development Plan Liquids sales to Pembina Attachie Resource • > 300 net sections for future development • Multi-layered • Overpressured liquids-rich resource Development Plan Phase II • Natural gas and condensate sales infrastructure in place Phase I • First Nations support Gas sale
Slide 29: Integrated Workflow Identifying Opportunities
Integrated Workflow Identifying Opportunities Optimizing well design to maximize returns 2019 results (300 m interwell, 3 T/m) 280 Attachie West Upper Montney Type Curve (300 m interwell, 3 T/m) Cumulative Condensate (Mbbl) 240 2018 results (150 m interwell, 2 T/m) 200 160 Type Curve Economics 120 D
Slide 30: Attachie Phase I Overview
Attachie Phase I Overview Aiming to deliver the most efficient Montney development to-date Q1 2023 Q4 2023 Q1 2024 Q2 2024 Q4 2024 Q1 2025 Project Drilling First Pad Transmission Facility Complete – Full Productive Sanctioning Commences Completed line completed Commissioning Capacity of Volumes On-S
Slide 31: LNG & Marketing Strategy
Sunrise, BC LNG & Marketing Strategy
Slide 32: Condensate Market Overview and Outlook
Condensate Market Overview and Outlook WCSB condensate remains a structurally short market, reliant on imports to satisfy demand 2023 Canadian Oil 2023 WCSB Sands Production Blending Demand 475 Mbbl/d 750 Mbbl/d WCSB Condensate Balances ~250 Mbbl/d of imports required to meet projected demand Foreca
Slide 33: Natural Gas Marketing Strategy
Natural Gas Marketing Strategy Portfolio with well-diversified global price exposure is driving strong realizations 12 ARC’s Current Natural Gas Portfolio Natural Gas Financial Exposure 9% 11% 17% 16% 29% 16% 8% 8% 15% 11% 11% 10% 2% 9% 9% 8% 11% 111% 20% 10% 20% 20% 10% 16% 15% 15% 28% 39% 38% 40%
Slide 34: LNG Economics and Agreements
LNG Economics and Agreements Long-term supply agreements to diversify and access global natural gas pricing LNG Revenue Enhancement Sensitivity Long-term Agreements 800 $775 MM Annual Incremental Net Revenue relative to AECO Cheniere Shell Cheniere Sabine Pass (40% interest in Corpus Christi Cedar L
Slide 35: Appendix
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Slide 36: Asset Level Inventory
Asset Level Inventory ARC has substantial Montney drilling inventory at each of our producing and growth assets Years of Development Inventory Production Run Rate at Full Capacity 0 5 10 15 20 25 30 (Mboe/d) Ante Creek Ante Creek 15 – 20 Greater Dawson Greater Dawson 90 – 100 Kakwa Kakwa 170 – 175 S
Slide 37: Financial Strength
Financial Strength Strong financial position has been a foundation of ARC for 28 years 1 2024 forecasted net debt sensitivities Long-term notes repayment schedule $ billions, ratio Cdn$ millions 600 1.5x 1.5 450 1.0x 1.0 300 0.5 0.5x 150 0.0 0.0x 0 US$50/bbl WTI & US$60/bbl WTI & US$80/bbl WTI & US$
Slide 38: Greater Kakwa Montney Operational Excellence
Greater Kakwa Montney Operational Excellence ARC continues to deliver top-quartile completions and drilling efficiencies in Kakwa Tonnes/day Completions Efficiency 3,000 Proppant Pumped/Day1 ARC Peer m/day Drilling Efficiency (m/day) 1 2,500 2,000 300 1,500 250 1,000 500 200 - ARC 150 m/day 1,500 Co
Slide 39: NEBC Montney Operational Excellence
NEBC Montney Operational Excellence ARC continues to outperform industry peers on both drilling and completions efficiencies in NEBC Completions Efficiency Tonnes/day Proppant Pumped/Day1 2,500 Drilling Efficiency (m/day) 1 2 2,000 m/day 1,500 700 1,000 600 500 500 0 400 ARC Completions Efficiency 3
Slide 40: BC Landscape
BC Landscape • 100% of ARC’s assets are outside of the Blueberry River First Nation high value areas • Latest agreement removes the disturbance caps in ‘PNG Area A’ that includes Attachie • ARC is the sole oil and gas producer exempt from disturbance caps in ‘PNG Area A’ at this time • ARC’s produci
Slide 41: Attachie Montney Subsurface Overview
Attachie Montney Subsurface Overview High-quality reservoir throughout ARC’s lands Upper Montney reservoir thickness is consistent moving from west to east across Attachie Lower Montney reservoir thickness increases to the north Map depicts net pay times porosity, a fundamental view for reservoir qu
Slide 42: Attachie Drilling Efficiency
Attachie Drilling Efficiency Sustainable efficiency improvements since sanction Drilling Days Drilling Hole Size - 0 2 4 6 8 10 12 14 Optimization Successful transition to 171 mm vs 200 mm 1,000 hole (-2 days/well) Drill Bits and Directional Tool ~50% Measured Depth (m) 2,000 Optimization Improvemen
Slide 43: Attachie Phase I
Attachie Phase I Delivers production outcomes similar to Kakwa Cum Condensate (Mbbl) PERFORMANCE Condensate (bbl/d) Well performance at Attachie Phase I replicates Kakwa core for both gas and liquids Month Month EFFICIENT Cum Gas (MMscf) Pad, well and completion Gas (mcf/d) designs are specific to e
Slide 44: Natural Gas Price Realization – Benchmarking
Natural Gas Price Realization – Benchmarking Physical diversification to end markets is a competitive advantage Realized Natural Gas Price1 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2018 2019 2020 2021 2022 2023 2024E AECO ARX ARC has realized an average premium to AECO of 25% over
Slide 45: U.S. Natural Gas Market Outlook
U.S. Natural Gas Market Outlook Rising export demand requires ~11 Bcf/d of supply growth by 2028, a significant amount must be supplied by dry gas basins U.S. Natural Gas Outlook: Full-Year 2028 vs. Full-Year 2024 12 10 Call-on Dry Gas 8 Bcf/d Max associated 6 gas growth potential via new (FID'd) eg
Slide 46: WCSB Natural Gas Market Outlook
WCSB Natural Gas Market Outlook WCSB demand projections suggest >3 Bcf/d of incremental production is required by 2028-2029 WCSB Natural Gas Outlook WCSB LNG Export Capacity Buildout 6 6 5 LNG Canada Ph. 2 5 Cedar LNG Woodfibre 4 4 LNG Canada Ph. 1 Operational Bcf/d 3 3 Bcf/d 2 2 1 1 0 0 LNG Exports
Slide 47: Risk Management Contracts Positions
Risk Management Contracts Positions ARC’s long-term focus is to reduce downside risk and create certainty in cash flows 1 As at September 30, 2024 2024 (remainder) 2025 2026 2027 2028 2029 Crude Oil – WTI US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day
Slide 48: ESG Ratings and Rankings
ESG Ratings and Rankings Member of MSCI Global Sustainability Index Score: 30.2 – High (13 th Percentile) MSCI ESG Rating: AAA Environment Score: 5 Social Score: 8 Member of the 30% Club since 2018 Governance Score: 1 48
Slide 49: Advisory Statements
Advisory Statements
Slide 50: 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 51: Advisory Statements – Financial Outlook
Advisory Statements Financial Outlook This presentation contains information that may be considered a financial outlook under applicable securities laws about ARC's potential financial position, including, but not limited to, ARC's production guidance, production estimates and expenses; ARC's plans
Slide 52: Advisory Statements – Non-GAAP Financial Measures
Advisory Statements Non-GAAP Financial Measures Capital Expenditures ARC uses capital expenditures to measure its capital investment level compared to the Company’s annual budgeted capital expenditures. ARC’s budgeted capital expenditures exclude any acquisition or disposition activities as well as
Slide 53: Advisory Statements – Non-GAAP Ratios
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 54: Advisory Statements – Supplementary Financial Measures
Advisory Statements Supplementary Financial Measures "Average realized natural gas price" is comprised of natural gas commodity sales from production, as determined in accordance with IFRS, divided by the Company's natural gas production. "Before-tax 2P NPV per share" is comprised of the before-tax
Slide 55: Advisory Statements – Reserves and Operational Information
Advisory Statements Information Regarding Disclosure on Crude Oil and Natural Gas Reserves and Operational Information In accordance with Canadian practice, production volumes and revenues are reported on a company gross basis, before deduction of Crown and other royalties, and without including any
Slide 56: Advisory Statements – Credit Ratings
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 57: 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
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