Arc Resources — Investor Presentation (February 2023)
51 slides from Arc Resources's investor presentation, February 2023
Slide 1: ARC Resources Ltd. Investor Presentation February 2023
ARC Resources Ltd. Investor Presentation February 2023
Slide 2: Corporate Profile
Corporate Profile Premium investment opportunity for Montney exposure, one of the most profitable assets in North America 1 Shares outstanding 621 million Canada’s Market capitalization1 $11.3 billion largest Long-term debt 1 $1.0 billion condensate 12 producer Net debt $1.3 billion Enterprise value
Slide 3: Corporate Strategy
Corporate Strategy Sustainable dividend-paying energy company focused on long-term profitability and shareholder returns Scale in Capital World-class Assets Discipline Profitable Returns Operational Balance Sheet Excellence with Low Strength & Costs & Emissions Risk Management 3
Slide 4: What Differentiates ARC?
What Differentiates ARC? Asset Quality & Duration Multi-decade inventory in world-class Montney assets; Company-owned infrastructure Financial Strength Investment-grade credit; Track record of low debt since 1996 Operational Excellence Capital Efficient and Low-cost; Corporate Break-even US$40/B WTI
Slide 5: Capital Allocation
Capital Allocation
Slide 6: Free Funds Flow Growth
Free Funds Flow Growth 25% Free Funds Flow1 Per Share CAGR2 3 4; 5% Production per share CAGR (2012-22) $6.00 0.60 Production per share FFO per share FFF per share $5.00 0.50 BOE/d per 1,000 shares $4.00 0.40 $ per share $3.00 0.30 $2.00 0.20 $1.00 0.10 $0.00 0.00 2012 2013 2014 2015 2016 2017 2018
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 Maintain Balance Sheet Strength 5.0 • Balance sheet strength is foundational to our company • As debt reaches long-term target; free funds flow
Slide 8: 2023 Capital Budget
2023 Capital Budget CARC
Slide 9: BC Update
BC Update 100% of ARC’s Assets are Outside of the BRFN High Value Areas • The agreements between the BC government and Treaty 8 First Nations is a positive step forward. • All of ARC’s producing assets in NEBC and its 2023 activity is on freehold (private) land where ARC continues to receive permits
Slide 10: 2023 - 2024 Capital Budget
2023 - 2024 Capital Budget $ millions 2.0 $100 $50 $1,800 $300 $125 $175 ~$1,500 1.5 100M $225 1.1 Billion ~$1,100 1.0 0.5 0.0 Capital to sustain Realized Kakwa(2) Rebuild NEBC Sunrise Other(3) 2023 Capital Reduction to one 2024 Capital to 340Mboe/d Inflation(1) Expansion Budget time investment sust
Slide 11: 2023 Guidance – Capital Expenditures & Production
2023 Guidance – Capital Expenditures & Production Attachie Sanction Ready Ante Creek ~2,500 boe/day ~$80MM 11 wells ~20,000 boe/day Greater Dawson $400MM 56 wells Kakwa ~83,000 boe/day $1,075MM 73 wells ~190,000 - 200,000 Sunrise boe/day $175MM 25 wells ~45,000 boe/day Total capital expenditures of
Slide 12: 2023 Guidance – Production & Expenses
2023 Guidance – Production & Expenses 2023 Guidance Production Crude oil (bbl/day) 8,500 - 9,000 Condensate (bbl/day) 79,000 - 81,000 Crude oil and condensate (bbl/day) 87,500 - 90,000 Natural gas (MMcf/day) 1,260 - 1,270 NGLs (bbl/day) 47,000 - 49,000 Total production (boe/day) 345,000 - 350,000 Ex
Slide 13: Financial Sustainability & Return on Investment
Financial Sustainability & Return on Investment
Slide 14: Financial Strength
Financial Strength 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 WTI US$60/bbl WTI US$80/bbl WTI US$90/bbl WTI 2023 2024 2025 2026 2027 2028 2029 2030 2031 & US$3.0/GJ & US$3.
Slide 15: Long-term Corporate Profitability
Long-term Corporate Profitability Disciplined plan to deliver above cost of capital returns 1 Return on average capital employed % 40 30 20 10 Average -11% 0 (10) (20) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20
Slide 16: Marketing & Fundamentals
Marketing & Fundamentals CARC
Slide 17: Natural Gas Marketing Strategy
Natural Gas Marketing Strategy Portfolio with well-diversified North American exposure is driving strong realizations 12 Natural gas financial exposure 11% 14% 9% 10% 15% 9% 10% 11% 8% 8% 9% 8% 7% 11% 11% 11% 11% 24% 23% 20% 12% 15% 23% 170,000 25% 50% MMBtu/day 125,000 46% 46% MMBtu/day 395,000 24%
Slide 18: LNG Supply Agreements
LNG Supply Agreements ARC has secured access to western Canadian and US Gulf Coast LNG as part of its market diversification strategy LNG supply agreements North American LNG export facilities LNG Canada Cheniere Corpus Participant Christi Stage III Volumes 150 MMcf/day 140,000 MMBtu/day Term Long-t
Slide 19: Western Canadian Natural Gas Fundamentals
Western Canadian Natural Gas Fundamentals Significant demand and export capacity growth expected over the next five years 1 2 WCSB natural gas supply and demand WCSB demand and export capacity growth Bcf/day 3.6 Bcf/day Demand & Export Capacity Growth Expected by 2025 24 18 LNG Canada Phase 1 +2.0 B
Slide 20: Western Canadian Condensate Market Fundamentals
Western Canadian Condensate Market Fundamentals Continued reliance on imported volumes is constructive for Canadian condensate pricing 1 2 WCSB condensate supply and demand Crude oil and condensate pricing Mbbl/day US$/bbl 900 120 750 90 600 450 60 300 30 150 0 0 2018 2019 2020 2021 2022 2023F 2024F
Slide 21: Asset Portfolio Overview
Asset Portfolio Overview CARC
Slide 22: Montney Scale & Inventory
Montney Scale & Inventory Reserves per share growth of 22% (PDP), 14% >80% of ARC’s drilling inventory is unbooked locations (TP), and 16% (2P). Reserves (boe per share) Drilling locations 5,000 3.50 PDP TP 2P 4,300 3.00 4,000 2.50 3,000 2.00 1.50 2,000 1.00 ~900 1,000 0.50 # of wells to sustain pro
Slide 23: 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 24: Deep Inventory of Top-tier Development Opportunities
Deep Inventory of Top-tier Development Opportunities ARC has over 5,000 drilling locations with significant commodity and geographic optionality 1 Reserves Drilling inventory MMboe Number of locations 2,000 6,000 5,000 1,500 4,000 1,000 3,000 2,000 500 1,000 0 0 Proved Total Proved + Total Attachie
Slide 25: ARC’s Montney Assets Are World-class
ARC’s Montney Assets Are World-class Largest producer in the Montney positioned at the low end of the North American cost curve Break-even cost of supply of forecasted new wells drilled for 2023 to 20251 US$/MMBtu 4 3 2 1 0 0 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Bcf/day WCSB - Montney WC
Slide 26: Large Network of Owned-and-operated Infrastructure
Large Network of Owned-and-operated Infrastructure Drives lower cost structure and results in greater operational control and reliability Northeast BC infrastructure Parkland 03-09 90 MMcf/day Dawson Phase III & IV 180 MMcf/day Dawson Phase I & II Sunrise Phase I & II 120 MMcf/day 280 MMcf/day 26
Slide 27: Large Network of Owned-and-operated Infrastructure
Large Network of Owned-and-operated Infrastructure Drives lower cost structure and results in greater operational control and reliability Northern AB infrastructure Gold Creek Plant 250 MMcf/day Ante Creek Facilities 65 MMcf/day Cutbank Plant 250 MMcf/day Karr Facility 60 Mbbl/day Lator Plants 260 M
Slide 28: Sustainable Drilling Improvements at Kakwa
Sustainable Drilling Improvements at Kakwa Continuous improvements achieved through technology, innovation, and optimization Drilling costs per metre Drilling metres per day $/metre metres drilled/day 800 300 40% 600 225 36% 400 150 200 75 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 28
Slide 29: Kakwa Overview
Kakwa Overview Premium condensate-rich and high-deliverability natural gas play that generates significant free funds flow Gold Creek Plant Land position1 Production2 Cutbank Plant 469,987 net acres 179 Mboe/day 99% W.I. 59% crude oil and liquids Karr PDP Reserves3 Facility Lator Plant 2023 objectiv
Slide 30: Greater Dawson Overview
Greater Dawson Overview Low reinvestment rates driving significant free funds flow generation Land position1 Production2 Parkland 150,260 net acres 96 Mboe/day Phase I & II 97% W.I. 21% crude oil and liquids Gas Plants Phase III & IV Gas Plants Phase I & II Gas Plants PDP Reserves3 2023 objective 14
Slide 31: Sunrise Overview
Sunrise Overview One of the lowest cost, lowest emission natural gas plays in North America Land position1 Production2 22,741 net acres 278 MMcf/day 100% W.I. Sunrise Phase I & II PDP Reserves3 2023 objective 81 MMboe Execute facility expansion to grow low-cost, low-emission production by 80 MMcf/da
Slide 32: Attachie Overview
Attachie Overview Attachie West is the leading development opportunity within ARC’s portfolio Land position1 Production2 203,419 net acres 3 Mboe/day 100% W.I. 52% crude oil and liquids PDP Reserves3 Attachie West Phase I 2023 objective 4-20 Battery 6 MMboe Remain sanction ready for Attachie West Ph
Slide 33: Attachie West Phase I
Attachie West Phase I Attachie West Phase I is the leading development opportunity within ARC’s portfolio 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 $200,000,000 20,000.000 Natura
Slide 34: Ante Creek Overview
Ante Creek Overview Highly profitable, stable light oil development generating significant free funds flow Land position1 Production2 117,820 net acres 20 Mboe/day Ante Creek 100% W.I. 46% crude oil and liquids 02-26 Ante Creek 10-07 PDP Reserves3 2023 objective Ante Creek 21 MMboe Continue to lever
Slide 35: ESG Strategy & Performance
ESG Strategy & Performance
Slide 36: ARC’s ESG Excellence
ARC’s ESG Excellence ARC scores amongst the best in the world for ESG performance 12 Global oil and gas companies’ relative ESG rankings 64 Social and Governance Score ARC Africa 58 Asia Canada Europe 52 Latin America Middle East Russia 46 United States 40 38 46 54 62 70 Environmental Score 36 1) So
Slide 37: Enverus ESG Score
37 Enverus ESG Score 0 10 20 30 40 50 60 70 80 90 100 EQT RRC SM ARX CTRA FANG PXD ERF OVV OXY CHK WCP Source | Enverus ESG Analytics, FactSet, company Disclosures AR HES CRK ESG Leadership COP CPG CVX PDCE TOU SWN GPOR DVN CIVI CRC Environmental CNX MUR MRO NVA Social BP WLL XOM EOG DEN Governance
Slide 38: Leading Emissions Profile
Leading Emissions Profile ARC has one of the lowest emissions profiles amongst Canadian E&P companies 12 Comparative 2020 GHG emissions intensity tCO2e/boe 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 ARX ARX-Corporate ARX-AB ARX-BC 38 1) Performance data for 2020 GHG emissions intensity comes from com
Slide 39: Emissions Performance and Targets
Emissions Performance and Targets ARC has reduced its emissions primarily through electrification of its BC facilities 1 Absolute GHG emissions reduction 2025 emissions-reduction targets tCO2e, boe/day Relative to 2019 baseline2 1,000,000 180,000 Reduce Scope 1 and 2 emissions intensity by 875,000 1
Slide 40: Appendix
Appendix
Slide 41: 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 1 Production Net debt to FFO Dividends boe/day $ billions, ratio $ billions, % of FFO 360 3.0 4.0 8 120% 3.5 2.5 270 3.0 6 9
Slide 42: 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 December 31, 2022 2023 2024 2025 Crude Oil – WTI US$/bbl bbl/day US$/bbl bbl/day US$/bbl bbl/day Ceiling 76.25 19,000 123.86 5,243 – – Floor 59.47 19,000 69.07 5,243 – – So
Slide 43: Asset Details
Asset Details ARC consistently delivers strong results across its asset base Greater Kakwa Sunrise Ante Creek Attachie Dawson Production1 Crude oil & liquids (bbl/day) 104,740 19,762 167 9,021 1,610 Natural gas (MMcf/day) 445.7 457.0 277.5 63.6 8.9 Total (boe/day) 179,020 95,929 46,416 19,628 3,085
Slide 44: ESG Ratings and Rankings
ESG Ratings and Rankings View ARC’s ESG performance and highlights at www.arcresources.com/sustainability Member of MSCI Global Sustainability Index Member of Sustainalytics’ Jantzi Social Index MSCI ESG Rating: AAA Environment Score: 4 Member of FTSE Russell’s FTSE4Good Index Series since 2018 Soci
Slide 45: Advisory Statements
Advisory Statements
Slide 46: Advisory Statements
Advisory Statements Notes Regarding Forward-looking Information This presentation contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking information") within the meaning of applicable securities legislation about current expectations
Slide 47: Advisory Statements
Advisory Statements Basis of Preparation All financial figures and information have been prepared in Canadian dollars (which includes references to "dollars" and "$"), except where another currency has been indicated, and in accordance with International Financial Reporting Standards ("IFRS" or "GAA
Slide 48: 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 49: 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 50: 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 51: 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 [email protected] [email protected]
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