Arc Resources — Investor Presentation (February 2022)
37 slides from Arc Resources's investor presentation, February 2022
Slide 1: ARC Resources Ltd. Investor Presentation
ARC Resources Ltd. Investor Presentation February 2022
Slide 2: ARC Is the Largest Pure-play Montney Producer
ARC Is the Largest Pure-play Montney Producer Shares outstanding1 694 million 1 Market capitalization $8.0 billion 1 Long-term debt $1.7 billion 12 Net debt $1.8 billion 1 Enterprise value $9.8 billion Quarterly dividend $0.10/share 3 Dividend yield 3.5% Montney production4 Mboe/day ~340 2% 22% ~340
Slide 3: ARC's Long-term Strategy
ARC’s Long-term Strategy Scale in Capital World-class Assets Discipline Profitable Returns Operational Balance Sheet Excellence with Low Strength Costs & Emissions ARC’s focus is on long-term profitability and shareholder returns 3
Slide 4: Why Invest in ARC?
Why Invest in ARC? Top-tier People and Profitable Assets Multi-decade inventory of world-class assets supported by company-owned infrastructure and managed by a talented team Financial Strength Investment-grade credit rating and track record of low debt since inception Disciplined Capital Allocators
Slide 5: 2021 in Review
2021 in Review Returns to shareholders Strengthened business Operational excellence • Increased quarterly dividend by 67% to $0.10/share1 • Strengthened investment-grade • Surpassed 8 years without an financial position employee lost-time incident • Repurchased 31 million shares or ~4% of shares out
Slide 6: Successful Integration of Seven Generations
Successful Integration of Seven Generations Kakwa drilling and completions costs Synergies from Seven Generations acquisition $ millions per well $ millions 7.0 $190 million 6.5 $160 million $110 million 6.0 16% Reduction 5.5 5.0 2020 2021 Announcement Refinancing Year-end 2021 • 17% reduction in co
Slide 7: 2022 Plan
2022 Plan ARC RESOURCES LTD.
Slide 8: Capital Allocation Priorities
Capital Allocation Priorities Returning 50% to 80% of free funds flow1 Return of capital measures Sustainable Dividend Growth • Dividend is the core return mechanism US$80/bbl WTI • Designed to grow with profits and not be reduced Cdn$5.00/GJ • Sustainable at low commodity prices AECO Share Repurcha
Slide 9: 2022 Guidance – Capital Expenditures & Production
2022 Guidance – Capital Expenditures & Production Attachie ~$25MM ~2,500 boe/day Ante Creek ~$70MM 17 wells Greater Dawson ~19,000 boe/day $230MM - $250MM 37 wells ~96,000 boe/day Kakwa $600MM - $700MM 67 wells Sunrise ~180,000 boe/day $180MM - $200MM 31 wells ~49,000 boe/day Note: Well counts denot
Slide 10: 2022 Guidance
2022 Guidance 2022 2022 Revised Guidance Guidance Production Crude oil (bbl/day) 7,000 - 9,000 7,000 - 9,000 Condensate (bbl/day) 72,000 - 78,000 72,000 - 78,000 Crude oil and condensate (bbl/day) 79,000 - 87,000 79,000 - 87,000 Natural gas (MMcf/day) 1,240 - 1,280 1,240 - 1,280 NGLs (bbl/day) 49,00
Slide 11: Strong Financial Position
Strong Financial Position 2022 forecasted net debt sensitivities1 2 3 Long-term notes repayment schedule $ billions, ratio Cdn$ millions 2.0 2.0 600 1.5 1.5 450 1.0 1.0 300 0.5 0.5 150 0.0 0.0 0 US$40/bbl WTI & US$60/bbl WTI & US$80/bbl WTI & 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Cdn$2.0
Slide 12: Long-term Corporate Profitability
Long-term Corporate Profitability Return on average capital employed1 30% 18% 15% 0% (15%) (30%) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021F 2021 ROACE Trailing Three-year ROACE (1) Non-GAAP financial ratio that i
Slide 13: Natural Gas Marketing Strategy
Natural Gas Marketing Strategy Natural gas sales exposure1 2022 natural gas sales exposure Dawn 9% 8% 8% 8% Malin 12% 11% 11% 11% Henry Hub 10% 10% 10% 11% Dawn Floating 27% 24% 23% Malin Floating Midwest US Henry Hub Floating 45% Midwest US Floating WCSB Floating 44% 47% 48% WCSB 23% 2022 2023 2024
Slide 14: Canadian Condensate Market
Canadian Condensate Market Crude oil and condensate pricing1 WCSB condensate supply and demand2 US$/bbl Mbbl/day 100 1,000 75 750 50 500 25 250 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2022F 2023F 2024F 2025F WTI Condensate WCS WCSB Supply Imports Required WCSB Demand • Heavy reliance o
Slide 15: ARC's ESG Excellence
ARC’s ESG Excellence Global oil and gas companies’ relative ESG rankings1 2 64 ARC Social and Governance Score 58 Africa Asia Canada 52 Europe Latin America Middle East Russia 46 United States 40 38 46 54 62 70 Environmental Score (1) Source: BMO Capital Markets; CSRHub; Bloomberg (January 2021). (2
Slide 16: Reducing Emissions through Facility Electrification
Reducing Emissions through Facility Electrification Northeast BC infrastructure Absolute GHG emissions reduction1 tC02e, boe/day 1,000,000 180,000 875,000 160,000 Attachie Tower 750,000 140,000 Septimus 625,000 120,000 Parkland 500,000 100,000 Sunrise 2016 2020 Dawson Absolute GHG Emissions (LHS) Pr
Slide 17: ARC's Leading Emissions Profile
ARC’s Leading Emissions Profile Comparative 2020 GHG emissions intensity1 2 Emissions-reduction targets tCO2e/boe relative to 2019 baseline3 0.08 Reduce Scope 1 & 2 emissions intensity by 20% by 2025 0.06 0.04 Reduce absolute Scope 1 & 2 emissions by 70,000 by 2025 tCO2e 0.02 20% 0.00 Reduce methane
Slide 18: Asset Overview
Asset Overview CARC RESOURCES LTD.
Slide 19: ARC's Resource and Scalability Potential
ARC’s Resource and Scalability Potential Depth of inventory number of drilling locations1 2,000 1,500 1,000 500 0 Attachie Kakwa Greater Dawson Sundown Ante Creek Sunrise Septimus 2P Booked Locations Internal Inventory Estimate (1) Comprises 2P booked undeveloped locations and internal inventory est
Slide 20: Record Reserves Growth
Record Reserves Growth Proved developed producing reserves1 MMboe 600 503 MMboe 450 300 268 MMboe 150 0 Year-end 2020 Organic Reserves Production A&D Kakwa Kakwa Organic Kakwa Year-end 2021 Growth Acquisition Reserves Growth Production ARC Legacy Assets (1) Kakwa asset acquired through the Business
Slide 21: Greater Dawson Overview
Greater Dawson Overview Snapshot Land position1 Production2 150,300 net acres 94 Mboe/day 97% W.I. 19% crude oil and liquids Tower Phase I & II Gas Plants Phase III & IV Parkland Gas Plants PDP Reserves3 2022 objective Phase I & II Gas Plants Dawson 147 MMboe Electrify Dawson Phase III & IV to lower
Slide 22: Sunrise Overview
Sunrise Overview Snapshot Land position1 Production2 22,700 net acres 292 MMcf/day 100% W.I. 100% natural gas Phase I & II Gas Plants PDP Reserves3 2022 objective 74 MMboe Expand Sunrise Phase I & II by 80 MMcf/day to grow low-cost, low-emission production Coastal GasLink (1) Represents Montney acre
Slide 23: Kakwa Overview
Kakwa Overview Snapshot Gold Creek Gas Plant Land position1 Production2 Cutbank 237,400 net acres 178 Mboe/day Gas Plant 99% W.I. 57% crude oil and liquids Karr Facility Lator Gas Plant PDP Reserves3 2022 objective Pembina Kakwa River 250 MMboe Continue to drive capital efficiency improvements and T
Slide 24: Ante Creek Overview
Ante Creek Overview Snapshot Land position1 Production2 118,500 net acres 19 Mboe/day 2-26 Gas Plant 100% W.I. 46% crude oil and liquids 10-7 Gas Plant PDP Reserves3 2022 objective 10-36 Gas Plant 23 MMboe Leverage 2020 facility expansion to harvest free funds flow (1) Represents Montney acreage and
Slide 25: Attachie Overview
Attachie Overview Snapshot Land position1 Pilot production2 203,200 net acres 4 Mboe/day 100% W.I. 52% crude oil and liquids Phase I PDP Reserves3 Gas Plant 4-20 2022 objective Battery 5 MMboe Invest in long-lead items to advance Attachie West Phase I ahead of sanctioning Pembina North Montney Mainl
Slide 26: Attachie West Phase I
Attachie West Phase I Project overview Forecasted cash flow profile Processing capacity $600,000,000 60,000.000 Total 40 Mboe/day $400,000,000 40,000.000 Condensate and NGLs 25 Mbbl/day Natural gas 90 MMcf/day $200,000,000 20,000.000 Cash flow profile $0 0.000 Year 1 Year 2 Year 3 Year 4 Year 5 Year
Slide 27: Appendix
Appendix ARC RESOURCES LTD.
Slide 28: Cash Flow Protection
Cash Flow Protection Crude oil and condensate production hedged1 Natural gas production hedged1 Mbbl/day, % MMBtu/day, % 40 48% 480,000 48% 30 36% 360,000 36% 20 24% 240,000 24% 10 12% 120,000 12% 0 0% 0 0% 2022 2023 2024 2025 2022 2023 2024 2025 Production Hedged % Hedged Production Hedged % Hedged
Slide 29: Risk Management Contracts Positions
Risk Management Contracts Positions 12 As at December 31, 2021 2022 2023 2024 2025 Crude Oil – WTI US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day Ceiling 59.90 25,767 62.35 12,000 55.82 1,243 - - Floor 49.24 25,767 51.25 12,000 50.00 1,243 - - Sold Floor 41.35 15,767 45.00 5,000 - -
Slide 30: Historical Performance
Historical Performance Production Net debt to FFO Dividends1 Mboe/day $ billions, ratio $ billions, % of FFO 360 2.5 2.5 8 120% 2.0 2.0 270 6 90% 1.5 1.5 180 4 60% 1.0 1.0 90 2 30% 0.5 0.5 0 0.0 0.0 0 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 31: ESG Recognitions and Rankings
1 ESG Recognitions and Rankings Member of MSCI Global Sustainability Index Member of Sustainalytics’ Jantzi Social Index MSCI ESG Rating: AAA Voluntary participant since 2007 2020 Climate Change Score: A- Member of FTSE Russell’s FTSE4Good Index Series since 2018 2020 Water Security Score: B Environ
Slide 32: Advisory Statements
Advisory Statements CARC RESOURCES LTD.
Slide 33: 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 34: Advisory Statements
Advisory Statements Basis of Preparation All financial figures and information have been prepared in Canadian dollars (which includes references to "dollars" and "$"), except where another currency has been indicated, and in accordance with International Financial Reporting Standards ("IFRS" or "GAA
Slide 35: Advisory Statements
Advisory Statements Return on Average Capital Employed ("ROACE") ARC calculates ROACE, expressed as a percentage, as EBIT divided by the average capital employed. The components EBIT and average capital employed are non-GAAP financial measures. ARC uses ROACE as a measure of long-term financial perf
Slide 36: Advisory Statements
Advisory Statements This presentation discloses ARC's expectations of future drilling inventory or locations. While certain of these estimated drilling locations may be consistent with "booked" drilling locations identified in the Reserves Report, as having associated proved and/or probable reserves
Slide 37: Investor Relations Contacts
Investor Relations Contacts Dale Lewko Martha Wilmot Manager, Capital Markets Senior Investor Relations Advisor 403.503.8696 403.509.7280 [email protected] [email protected] General Investor Relations Enquiries 403.503.8600 1.888.272.4900 [email protected] Visit ARC’s website at www.a
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