ARC Resources — Barclays Capital CEO Energy-Power Conference 2011
62 slides from ARC Resources's conference presentation, Sep 6, 2011
Slide 1: Barclays Capital CEO Energy-Power Conference
Barclays Capital CEO Energy-Power Conference New York September 6-8, 2011
Slide 2: Forward Looking Information
ARC RESOURCES FORWARD LOOKING INFORMATION This presentation contains forward-looking information as to ARC’S internal projections, expectations or beliefs relating to future events or future performance and includes information as to our future well inventory in our core areas, our exploration and d
Slide 3: ARC Resources
ARC RESOURCES • Launched July 1996 as ARC Energy Trust -19% annual return since inception (to August 26) - Current dividend $0.10 per month - $26.98 per share in total dividends (to August 26) -Total dividends of $4 billion (to August 26) - Converted to a dividend paying corporation on January 1, 20
Slide 4: Why Invest in ARC Resources?
WHY INVEST IN ARC RESOURCES? • Top-tier, growth plus income opportunity Production History 90,000 Gas Liquids • Experienced management team 75,000 BOE/D 60,000 • Track record of delivering results 45,000 30,000 • Entering a new era of organic growth 15,000 • Added 60 mmcf/d at Dawson in 2010 0 2009
Slide 5: Income and Growth Both Are Possible
INCOME AND GROWTH BOTH ARE POSSIBLE • ARC has a 15 year history of risk managed value creation - Provided a 19% annual return since inception - Paid out $4 billion in total dividends - $26.88 / share - Grown absolute production from 9,500 boe/d to 83,000 boe/d, with discrete transactions followed by
Slide 6: Key Reserve Information
KEY RESERVE INFORMATION 19% COMPOUND ANNUAL GROWTH • Reserves as of December 31, 2010* (mmboe) - Proved Producing 213 (104 mmboe liquids, 652 bcf gas) - Total Proved 336 (124 mmboe liquids, 1,274 bcf gas) - Proved Plus Probable 487 (167 mmboe liquids, 1,925 bcf gas) -15.2 year reserve life index 19%
Slide 7: Reserves per Share
10% COMPOUND ANNUAL GROWTH IN RESERVES PER SHARE (ADJUSTED) • An investor who participated in the dividend re-investment plan since inception would have enjoyed a 10% compound annual growth in the reserves attributed to their investment 2010 Proven + Probable Reserves Per Share with Debt and Dividen
Slide 8: Property Overview
PROPERTY OVERVIEW
Slide 9: British Columbia Montney
BRITISH COLUMBIA MONTNEY
Slide 10: Montney Lands Major Growth Engine
MONTNEY LANDS MAJOR GROWTH ENGINE • Lands evaluated to date are just a fraction of our total Montney lands • ARC uses a 3% porosity cut-off, currently reassessing at lower cut-offs (industry 0 – 3%) Area Net Acres Net DGIIP Reserves Net Sections Production Liquids Sections (Bcf) P+P(Bcf) with reserv
Slide 11: Montney Lands Major Growth Engine
MONTNEY LANDS MAJOR GROWTH ENGINE • Dawson and the West Montney lands are a significant growth engine for ARC • With greater than 10 Tcf of gas classified as DGIIP, ARC’s current plans call for 0.8 Tcf the construction of two 60 5.5 Tcf mmcf/d gas plants over the 2012 – 2014 time period with 3.8 Tcf
Slide 12: Montney Production – ARC Is Currently Third Largest
MONTNEY PRODUCTION – ARC IS CURRENTLY THIRD LARGEST 500 Field (mmcfe) 450 400 Dawson 165 350 Parkland 48 300 Pouce 15 250 Sunrise* 7 200 Total 245 150 *non-operated 100 50 0 Source: BMO Report (Geoscout)
Slide 13: BC Montney Wells: ARC Is Third Most Active Driller
BC MONTNEY WELLS ARC IS THIRD MOST ACTIVE DRILLER 400 350 300 250 200 150 100 50 0 BCOGC ; Top 35 Montney Operators Since 2003 (Montney and Doig Targets) Wells Rig Released
Slide 14: Horizontal Wells – Day IP Rates July 2011
HORIZONTAL WELLS – 30 DAY IP RATES JULY 2011: Glacier - Town 12000 10000 ARC Others 8000 Production Rate (mcf/d) ARC P50 6000 P50 4000 2000 0 1 108 215 322 429 536 643 P50 – All Wells 3.4 mmcf/d • Dawson/ Parkland – 5.1 mmcf/d
Slide 15: Montney Type Curve – Geology Matters
MONTNEY TYPE CURVE GEOLOGY MATTERS 5000 Dawson 4500 Parkland Town/Altares 4000 Swan/Tupper 3500 Alberta Septimus Production (mcf/d) 3000 Sunrise/Groundbirch 2500 2000 1500 1000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Months
Slide 16: Regional Schematic Cross Section
REGIONAL SCHEMATIC CROSS SECTION X Y Total Net Pay>3% (m) 103 78 43 36 Total Net Pay>6% (m) 30 2 23 4 DGIIP (BCF/Section)* 100 60 45 20 A Y Lower Upper Montney B Montney X E [1] Discovered Gas Initially in Place (“DGIIP”) is the quantity of gas that is estimated to be contained in known accumulation
Slide 17: Dawson – Test Results Stay Strong
DAWSON – TEST RESULTS STAY STRONG • ARC’s Dawson completions were considerably improved post 2008 with both and increase in test rates and test pressures
Slide 18: Dawson – Peak Rates Over Time
DAWSON – PEAK RATES OVER TIME • ARC typically restricts Dawson Peak IP vs. Peak IP Month (Filtered + H1 2011 Adjusted IP) 7000 production rates to AVG 5.6 approximately 5.4 mmcfd Peak Calendar Month Gas Rate (mcfd) 6000 AVG 5.0 AVG 5.5 mmcfd mmcfd mmcf per day AVG 5.2 mmcfd AVG 4.5 5000 mmcfd • Faci
Slide 19: Dawson – Staying Flat Longer
DAWSON – STAYING FLAT LONGER • ARC typically restricts production rates to approximately 5.4 mmcf per day • Over the past 2 years, the length of time that the Dawson wells are producing at greater than 5 mmcf/d has increased. • Typical wells are now producing at least 1.0 Bcf (200 days at 5 mmcf/d)
Slide 20: Dawson – Deep Inventory of Wells Ready for Production
DAWSON – DEEP INVENTORY OF WELLS READY FOR PRODUCTION Status Vertical Horizontal Total Producing 4 42 46 Shut In 72 19 91 Drilled (not completed) 1 3 4 Tied In (have not been on production) 0 4 4 Completed (completed not tied in) 0 4 4 Status is as of June 30, 2011 • ARC has a deep inventory of well
Slide 21: Dawson Development Economics
DAWSON DEVELOPMENT ECONOMICS 7,000 P10 Type Curve P90 IP (1mo) MMcf/d 5.9 5.0 3.3 6,000 IP (12mo) MMcf/d 4.4 3.7 2.1 5,000 EUR (Bcf) 7.7 6.2 3.8 Gas Rate mcf/d 4,000 3,000 2,000 (26 mos) 1,000 0 (49 mos) 0 2 4 6 8 10 12 14 16 18 20 22 24 Months P10 Producers Type Curve P90 Producers Capital $k Econo
Slide 22: Parkland – Liquids Rich Gas 0.8 Tcf Gas
PARKLAND – LIQUIDS RICH GAS 0.8 TCF GAS • 0.8 Tcf of gas classified as DGIIP - P+P Reserves of 227 Bcfe booked on 17 net sections • Current production of 40 mmcf/d plus 1,200 b/d liquids FIELD LIQUIDS CONTENT (BBLS/MMCF) Parkland 30+ *Swan 2 *Septimus 27 Dawson 5 Sunrise 1 *Swan & Septimus as per Pe
Slide 23: Parkland – Can a Single Well Drain the Full Vertical Section?
PARKLAND – CAN A SINGLE WELL DRAIN THE FULL VERTICAL SECTION? • At Parkland, the Upper Montney is considerably thicker than at Dawson. We believe the lower-most sands are not contributing to production – a horizontal well has been drilled into these lower sands to test this theory. IF correct, an ad
Slide 24: Parkland Development Economics
PARKLAND DEVELOPMENT ECONOMICS 7,000 P10 Type Curve P90 6,000 IP (1mo) MMcf/d 6.4 5.0 3.7 5,000 Gas Rate mcf/d IP (12mo) Mcf/d 2.0 1.6 1.1 4,000 EUR Bcf 5.6 4.8 3.3 3,000 2,000 1,000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 Months P10 Producers Type Curve P90 Producers Capital Costs ($k) Economics ($4/GJ
Slide 25: Tower – Liquid Rich Opportunity
TOWER – LIQUID RICH OPPORTUNITY Proposed 2010 – 2011 locations • Northern portion of the ARC operated Parkland property is in Tourmaline operated liquids rich window • Several vertical wells swabbed light oil on test • ARC drilled its first well in Q2 – currently being tested • Plan is to drill two
Slide 26: West Montney Resource 5.5 Tcf Gas
WEST MONTNEY RESOURCE 5.5 TCF GAS • 5.5 Tcf of gas classified as DGIIP in Septimus, Sunrise/Sunset and Sundown - P+P Reserves of 253 Bcf at year-end 2010 (approximately 5 per 5.5 Tcf cent of DGIIP) • Current production of approximately 7 mmcf/d net to ARC through small, partner operated development
Slide 27: Attachie
ARG RESOURCES LTD.
Slide 28: Attachie – New Opportunity Undefined Potential
ATTACHIE – NEW OPPORTUNITY UNDEFINED POTENTIAL • Prospective land base of 106 sections • First horizontal well tested 10 mmcf/d with 30 bbls/mmcf of liquids at 9 Mpa • ARC has drilled a second horizontal well on the east side of the block that is currently waiting on test equipment • A third horizon
Slide 29: Ante Creek – Another Montney Success
ANTE CREEK – ANOTHER MONTNEY SUCCESS
Slide 30: Ante Creek – Another Montney Success
ANTE CREEK - ANOTHER MONTNEY SUCCESS • ARC entered the Ante Creek area through an acquisition in late 2000 • Since then ARC has made several acquisitions to build a 238 net section land base • Lands may also be prospective for the Nordegg formation – an oil bearing shale that sits on top of the Mont
Slide 31: Ante Creek – Another Montney Growth Story
ANTE CREEK - ANOTHER MONTNEY GROWTH STORY 9,000 Gas 8,000 Liquids 7,000 Land Acquisitions 6,000 5,000 4,000 3,000 2,000 1,000 - 2007 07 2009 04 2001 01 2001 04 2001 07 2001 10 2002 01 2002 04 2002 07 2002 10 2003 01 2003 04 2003 07 2003 10 2004 01 2004 04 2004 07 2004 10 2005 01 2005 04 2005 07 2005
Slide 32: Ante Creek Horizontal Wells – 30 Day IP Rates
30 Day IP Gas and Oil Rates (boe/d) 0 100 200 300 400 500 600 700 800 900 00/11-24-065- 25W5 Oil 00/05-13-065- Gas 25W5 00/08-17-067- 24W5 00/06-23-065- 25W5 02/02-24-067- 25W5 00/05-10-066- 25W5 00/10-26-066- 25W5 ANTE CREEK 00/01-16-067- 24W5 00/10-23-066- 25W5 00/03-23-067- 24W5 00/10-25-066- 25W
Slide 33: Ante Creek Measured Initial Pressure @ Horizontal Wells
ANTE CREEK MEASURED INITIAL PRESSURE @ HORIZONTAL WELLS Ante Creek North Triassic E Pool 18000 16000 14000 Well Initial Pressure 12000 Pool Virgin Pressure (kPa) Pressure = 16.3MPa 10000 8000 Infill Horizontals Encountering Initial Pressure that is at or near Pool Virgin Pressure 6000 HWell Pressure
Slide 34: Ante Creek Future Opportunities
ANTE CREEK FUTURE OPPORTUNITIES R26 R25 R24 R23 R22W5 T69 W G _ T69 • Land holding of 245 gross and 238 net 1 36 6 31 1 36 6 31 1 36 6 31 1 36 6 31 sections • Horizontal multi stage completions have GW G J FE T68 T68 F JL F G been very successful – 30 day production 1 36 6 31 1 36 6 31 C G 36 1 6 31
Slide 35: Ante Creek Development Economics
ANTE CREEK DEVELOPMENT ECONOMICS Case Top 3 Avg. Well Bottom 3 600 IP (1 mo) boe/d 550 385 285 IP (12 mo) boe/d 350 235 140 Normalized Production Rate (BOE/d) 500 EUR (mboe) 445 265 140 400 300 200 100 0 0 3 6 9 12 15 18 21 24 27 30 33 36 Months Type Curve based on Average of 17 HWells TypeCurve Top
Slide 36: Pembina Cardium
PEMBINA CARDIUM ad, = | k : » RESOURCES
Slide 37: Pembina – ARC's Holdings
PEMBINA ARC’S HOLDINGS Gross Operated Wells in the Pembina Cardium # Wells Penn West 2,458 39% ARC 1,423 23% Bonterra 694 11% Imperial 362 6% Enerplus 334 5% PetroBakken 118 2% • ARC is the second largest operator in the Pembina area • Pembina has been a core holding of ARC since inception – July 19
Slide 38: Pembina – Cardium Structural Cross Section
PEMBINA – CARDIUM STRUCTURAL CROSS SECTION A A 1375m CARDIUM 1494m UNIT Rge 8 Rge 7 Rge 6W5 Twp 49 Conglomerate unit Upper Sand Unit Twp 48 Middle Unit Twp 47 5 km Lower Sand Unit
Slide 39: Pembina Horizontal Drilling Plans
PEMBINA HORIZONTAL DRILLING PLANS • 2010 drilled 25 horizontals and 3 vertical wells • Initial production results are encouraging – average IP rates are 150 – 200 boe/d but with variability • Geology of the Pembina field is quite variable – need to test the application in several different geologic
Slide 40: Pembina – First Month Initial Production Rates – All Wells
PEMBINA – FIRST MONTH: INITIAL PRODUCTION RATES – ALL WELLS Cardium Area Initial Production Average (Month 1) Rate ARC’s Wells Median Well – approximately 170 b/d
Slide 41: Pembina – First Month Initial Production Rates – ARC Wells
PEMBINA – FIRST MONTH INITIAL PRODUCTION RATES – ARC WELLS ARC’s Cardium Area Initial Production Average (Month 1) Rate MEDIAN (boe/d) 2009 137 2010 147 2011 153
Slide 42: Pembina – Third Month Initial Production Rates – All Wells
PEMBINA – THIRD MONTH: INITIAL PRODUCTION RATES – ALL WELLS Cardium Area Initial Production Average (Month 3) Rate ARC’s Wells Median Well – approximately 140 b/d
Slide 43: Pembina – Third Month Initial Production Rates – ARC Wells
PEMBINA – THIRD MONTH: INITIAL PRODUCTION RATES – ARC WELLS ARC’s Cardium Area Initial Production Average (Month 3) Rate MEDIAN (boe/d) 2009 165 2010 171 2011 180
Slide 44: Horizontal Well Results
HORIZONTAL WELL RESULTS • Given the vertical and horizontal variability in the reservoir, it is not surprising that there is great variability in production results
Slide 45: Horizontal Well Results ARC Wells Only
HORIZONTAL WELL RESULTS ARC WELLS ONLY
Slide 46: Summary
SUMMARY
Slide 47: ARC Resources Summary
ARC RESOURCES • A Leading oil and gas entity as measured by: • Quality of assets • Leadership • Long-term return to investors • Risk managed value creation • We expect to continue to provide both growth and income to our investors • Near-term growth in production and reserves is expected from define
Slide 48: Appendix
APPENDIX
Slide 49: 2011 Capital Program Targets 12 Per Cent Growth
2011 CAPITAL PROGRAM TARGETS 12 PER CENT GROWTH ($ Millions) 2009 (a) 2010(a) 2011(b) Development 187 354 416 Development – Facilities 73 72 70 Maintenance 11 15 29 Optimization 8 11 18 Land & Seismic 11 65 60 Unconventional Gas 16 1 5 Enhanced Oil Recovery (EOR) 23 18 27 Exploration 15 21 49 Other
Slide 50: 2011 Guidance
2011 GUIDANCE Production 2009 (Actual) 2010 (Actual) 2011 (Budget) Total (boe/d) 63,538 73,954 80,000 – 85,000 Costs and Expenses ($/boe) 2009 (Actual) 2010 (Actual) 2011 (Budget) Operating costs 10.19 9.70 9.40 – 9.70 Transportation costs 0.89 1.10 1.10 – 1.20 Cash G&A expenses 2.26 2.95 2.50 – 2.7
Slide 51: Hedging Update as of June 30, 2011
HEDGING UPDATE AS OF JUNE 30, 2011 Liquids 2011 2012 Oil (bbls/d) 20,000 18,000 Sold Call ($US/bbl)* 89.46 91.39 Bought Put ($US/bbl) 84.51 91.39 Sold Put (partial volumes) 61.09 60.00 Gas 2011 2012 Gas (mcf/d) 161,352 76,700 AECO sold call (C$/mcf) 5.45 4.28 Bought Put 5.13 4.28 *All 2011 bbl/d and
Slide 52: Montney Lands Major Growth Engine
MONTNEY LANDS MAJOR GROWTH ENGINE • ARC had our independent reserves evaluator assess the resource potential of our main BC Montney lands, excluding Attachie, Tower and Doe. Based on a 3% porosity cut-off: Reserves and Resources - December 31, 2010 (1) Estimated Economic Contingent Estimated Reserve
Slide 53: Montney Lands Reserve Growth Over Time
MONTNEY LANDS RESERVE GROWTH OVER TIME • The first horizontal well was drilled in 2005. Success of this well lead to the recognition that considerably more gas could be accessed then had previously been thought. Over time, ARC has added significant land and significant resources 10,000 400 DGIIP 350
Slide 54: Dawson Production 165 mmcf/d in Q2 2011
DAWSON PRODUCTION 165 MMCF/D IN Q2 2011 180.0 Production through Phase 1 was 150.0 temporarily interrupted during the integration of Phase 2 mmcf/d 120.0 90.0 60.0 30.0 0.0 • First 60 mmcf/d gas plant on stream May 2010, second 60 mmcf/d gas plant started up in April, 2011 – currently running at ful
Slide 55: Dawson 2011 Budget Plans
DAWSON 2011 BUDGET PLANS Capital: • Total Capital $98 MM Drilling (14 wells): • Horizontal 13 • Vertical 1 • Oil/Gas 0/14 Production: • Year End 2010 110 mmcf/d • Year End 2011 165 mmcf/d • Year Average 150 mmcf/d Strategy: • Grow production by 60 mmcfd with the commencement of production from Phase
Slide 56: 2010 Dawson Gas Plant
2010 DAWSON GAS PLANT • Dawson 5-35 Gas Plant (Phase 2) – Construction was completed on time and on budget – Early April 2011 start-up of Phase 2 Dawson plant, with full production by the end of the month Progress of the gas plant can be tracked at: http://www.arcresources.com/en-ca/operations/dawso
Slide 57: Parkland 2011 Budget Plans
PARKLAND 2011 BUDGET PLANS Capital: • Total Capital $67 MM Drilling (13 wells): • Horizontal 11 • Vertical 2 • Oil/Gas 0/13 Production: • Year-End 2010 8,000 boe/d • Year-End 2011 10,070 boe/d • Year Average 8,435 boe/d Strategy: • Grow production. • Evaluate liquids potential of undeveloped lands n
Slide 58: Sunrise/Sunset/Septimus 2011 Budget Plans
SUNRISE/SUNSET/SEPTIMUS 2011 BUDGET PLANS Capital: • Total Capital $25 MM Drilling (3 wells): • Horizontal 2 • Vertical 1 Production: • 7 mmcf/d third party at Sunrise Strategy: • Sunrise/Sunset: Tie-in 7 existing vertical and horizontal wells to 3rd party – 15 mmcf/d contracted • Order long lead-ti
Slide 59: Pembina – Cardium Formation
PEMBINA – CARDIUM FORMATION Cardium Cardium Conglomerate Sandstone
Slide 60: Swan Hills
SWAN HILLS
Slide 61: Swan Hills
SWAN HILLS • Testing various parts of the reef on non-operated lands • 8 (gross) partner wells drilled in 2010 • 12 (gross) partner wells planned for 2011 • 2011 Budget on operated lands – 2 horizontal wells – 2 multi-stage acid frac recompletions on existing horizontal wells
Slide 62: For further information about ARC's
This presentation contains forward-looking statements that may be identified by words like “outlook”, “estimates” and similar expressions. These forward-looking statements are based on certain assumptions that involve a number of risks and uncertainties and are not guarantees of future performance.
ARC Resources — Barclays Capital CEO Energy-Power Conference 2011 on 6ix