CALGARY, AB, Nov. 4, 2021 /CNW/ - (TSX: ARX) ARC
Resources Ltd. ("ARC" or the "Company") today reported its third
quarter 2021 financial and operational results and announced its
2022 budget.
HIGHLIGHTS
Q3 2021 Results — ARC delivered record quarterly
production and free funds flow(1) per share, exceeding
consensus expectations(2). Average production of 353,657
boe(3)(4) per day generated funds from
operations(5) of $765
million ($1.06 per share) and
free funds flow of $497 million ($0.69 per share).
- Free funds flow was used to reduce net debt excluding lease
obligations(5) by $158
million and to return $172
million of capital to shareholders through quarterly
dividends of $47 million and share
repurchases of $125 million.
- To date, ARC has repurchased approximately 20 million
common shares for total consideration of $210 million, representing 2.7 per cent of common
shares outstanding.
2022 Capital Budget — ARC's board of directors (the
"Board") has approved a preliminary 2022 capital budget of
$1.2 to $1.3
billion that is expected to deliver average production in
the range of 335,000 to 350,000 boe per day.
- Approximately $1.1 billion is
required to sustain production at 335,000 to 350,000 boe per day,
with the balance planned for investing in an expansion at Sunrise,
long-lead investments for Attachie West Phase I, and progressing
several emissions-reduction initiatives.
Free Funds Flow Allocation — ARC plans to return 50
to 80 per cent of free funds flow to shareholders primarily
through:
- Sustainable dividend growth as the primary long-term
mechanism.
- Share repurchases when Management's view of the intrinsic value
of the business exceeds ARC's share price under moderate commodity
price scenarios.
- ARC plans to allocate the balance of free funds flow to debt
reduction.
Dividend Increase — The Board has approved a 52 per cent
increase to ARC's quarterly dividend, from $0.066 per share to $0.10 per share, beginning with its dividend that
is expected to be paid on January 17,
2022 to shareholders of record on December 31, 2021.
- ARC now expects to exceed the $160
million of synergies originally identified through the
business combination (the "Business Combination") with Seven
Generations Energy Ltd. ("Seven Generations") due to
greater-than-expected capital synergies. The integration is
effectively complete and ARC expects to capture all of the
identified synergies by year-end.
- The dividend increase reflects ARC's conviction in its
business, increased profitability, and is sustainable in a low
commodity price environment.
Long-term Gas Supply Agreement — ARC has
entered into a long-term gas supply agreement to deliver
approximately 150 MMcf per day of natural gas from ARC's Sunrise
facility to an LNG Canada participant. The agreement will commence
with the start-up of LNG Canada.
ARC's unaudited condensed interim consolidated financial
statements and notes (the "financial statements") and Management's
Discussion and Analysis ("MD&A") as at and for the three and
nine months ended September 30, 2021, are available on ARC's
website at www.arcresources.com and under ARC's SEDAR profile at
www.sedar.com.
Notes:
|
(1)
|
Non-GAAP measure that
does not have any standardized meaning under International
Financial Reporting Standards ("IFRS") and therefore may not be
comparable to similar measures presented by other entities. Refer
to the section entitled "Non-GAAP Measures" in ARC's
MD&A for the three and nine months ended September 30, 2021,
available on ARC's website at www.arcresources.com and under ARC's
SEDAR profile at www.sedar.com.
|
(2)
|
Source: Refinitiv
Eikon (October 27, 2021).
|
(3)
|
ARC has adopted the
standard six thousand cubic feet ("Mcf") to one barrel ("bbl") of
crude oil ratio when converting natural gas to barrels of oil
equivalent ("boe"). Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf:1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
than the energy equivalency of the 6:1 conversion ratio, utilizing
the 6:1 conversion ratio may be misleading as an indication of
value.
|
(4)
|
Throughout this news
release, crude oil ("crude oil") refers to light, medium, and heavy
crude oil product types as defined by National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities ("NI
51-101"). Condensate is a natural gas liquid as defined by NI
51-101. Throughout this news release, natural gas liquids ("NGLs")
comprise all natural gas liquids as defined by NI 51-101 other than
condensate, which is disclosed separately. Throughout this news
release, crude oil and liquids ("crude oil and liquids") refers to
crude oil, condensate, and NGLs.
|
(5)
|
Refer to Note 15
"Capital Management" in ARC's financial statements and to
the sections entitled "Funds from Operations" and
"Capitalization, Financial Resources and Liquidity" in ARC's
MD&A as at and for the three and nine months ended September
30, 2021, available on ARC's website at www.arcresources.com and
under ARC's SEDAR profile at www.sedar.com.
|
FINANCIAL AND OPERATIONAL RESULTS
|
Three Months
Ended
|
Nine Months
Ended
|
(Cdn$ millions,
except per share amounts, boe amounts, and common shares outstanding)
|
June 30,
2021
|
September
30,
2021
|
September
30,
2020(1)
|
September
30,
2021
|
September
30,
2020(1)
|
FINANCIAL
RESULTS
|
|
|
|
|
|
Net income
(loss)
|
(123.0)
|
53.6
|
(66.1)
|
108.6
|
(668.0)
|
Per
share(2)
|
(0.17)
|
0.07
|
(0.19)
|
0.18
|
(1.89)
|
Cash flow from
operating activities
|
458.9
|
615.0
|
174.1
|
1,352.3
|
454.6
|
Per
share(2)
|
0.63
|
0.85
|
0.49
|
2.25
|
1.29
|
Funds from
operations(3)
|
542.5
|
765.4
|
144.6
|
1,581.8
|
455.6
|
Per
share(2)
|
0.75
|
1.06
|
0.41
|
2.63
|
1.29
|
Free funds
flow(4)
|
249.7
|
497.0
|
92.0
|
894.9
|
189.1
|
Per
share(2)
|
0.35
|
0.69
|
0.26
|
1.49
|
0.53
|
Dividends
declared
|
43.5
|
47.1
|
21.2
|
111.9
|
85.0
|
Per
share(2)
|
0.06
|
0.066
|
0.06
|
0.186
|
0.24
|
Capital expenditures
before net property acquisitions (dispositions)
|
292.8
|
268.4
|
52.6
|
686.9
|
266.5
|
Capital expenditures
including net property acquisitions (dispositions)
|
214.8
|
268.4
|
52.6
|
608.8
|
266.5
|
Net
debt(3)
|
2,986.7
|
2,807.9
|
867.8
|
2,807.9
|
867.8
|
Net debt excluding
lease obligations(3)
|
2,084.1
|
1,926.4
|
834.2
|
1,926.4
|
834.2
|
Common shares
outstanding, weighted average diluted (millions)
|
723.1
|
723.1
|
353.4
|
601.8
|
353.4
|
Common shares
outstanding, end of period (millions)
|
723.9
|
711.7
|
353.4
|
711.7
|
353.4
|
OPERATIONAL
RESULTS
|
|
|
|
|
|
Production
|
|
|
|
|
|
Crude oil
(bbl/day)
|
11,659
|
8,639
|
15,373
|
11,304
|
15,784
|
Condensate
(bbl/day)
|
73,459
|
77,539
|
14,831
|
55,152
|
13,117
|
Crude oil and
condensate (bbl/day)
|
85,118
|
86,178
|
30,204
|
66,456
|
28,901
|
Natural gas
(MMcf/day)
|
1,203
|
1,300
|
708
|
1,101
|
725
|
NGLs
(bbl/day)
|
50,020
|
50,891
|
10,208
|
37,316
|
9,258
|
Total
(boe/day)
|
335,701
|
353,657
|
158,444
|
287,233
|
158,911
|
Average realized
prices, prior to gain or loss on risk management contracts
|
|
|
|
|
|
Crude oil
($/bbl)
|
74.01
|
77.43
|
45.45
|
71.09
|
40.79
|
Condensate
($/bbl)
|
77.93
|
85.72
|
48.49
|
81.11
|
45.38
|
Natural gas
($/Mcf)
|
3.34
|
4.67
|
2.16
|
4.17
|
2.04
|
NGLs ($/bbl)
|
22.19
|
27.92
|
14.85
|
25.51
|
11.01
|
Oil equivalent
($/boe)
|
34.90
|
41.88
|
19.55
|
37.67
|
17.74
|
Netback
($/boe)(4)
|
|
|
|
|
|
Commodity sales from
production
|
34.90
|
41.88
|
19.55
|
37.67
|
17.74
|
Royalties
|
(3.02)
|
(3.38)
|
(0.72)
|
(2.90)
|
(0.72)
|
Operating
expense
|
(4.53)
|
(3.58)
|
(4.13)
|
(4.00)
|
(3.93)
|
Transportation
expense
|
(4.49)
|
(4.93)
|
(3.22)
|
(4.52)
|
(2.99)
|
Netback
|
22.86
|
29.99
|
11.48
|
26.25
|
10.10
|
Realized gain (loss) on
risk management contracts
|
(1.97)
|
(4.27)
|
1.13
|
(2.88)
|
1.50
|
Netback including
realized gain (loss) on risk management contracts
|
20.89
|
25.72
|
12.61
|
23.37
|
11.60
|
TRADING
STATISTICS(5)
|
|
|
|
|
|
High price
|
10.74
|
11.95
|
6.94
|
11.95
|
8.39
|
Low price
|
7.26
|
7.51
|
4.54
|
5.88
|
2.42
|
Close
price
|
10.55
|
11.87
|
5.95
|
11.87
|
5.95
|
Average daily volume
(thousands of shares)
|
3,309
|
3,034
|
1,363
|
3,156
|
2,249
|
(1)
|
Comparative figures
represent ARC's results prior to the closing of the Business
Combination on April 6, 2021, and therefore do not reflect
historical data from Seven Generations.
|
(2)
|
Per share amounts
(with the exception of dividends) are based on weighted average
diluted common shares.
|
(3)
|
Refer to Note 15
"Capital Management" in ARC's financial statements and to
the sections entitled "Funds from Operations" and
"Capitalization, Financial Resources and Liquidity" in ARC's
MD&A as at and for the three and nine months ended September
30, 2021, available on ARC's website at www.arcresources.com and
under ARC's SEDAR profile at www.sedar.com.
|
(4)
|
Non-GAAP measure that
does not have any standardized meaning under IFRS and therefore may
not be comparable to similar measures presented by other entities.
Refer to the section entitled "Non-GAAP Measures" in ARC's
MD&A for the three and nine months ended September 30, 2021,
available on ARC's website at www.arcresources.com and under ARC's
SEDAR profile at www.sedar.com.
|
(5)
|
Trading prices are
stated in Canadian dollars on a per share basis and are based on
intra-day trading on the Toronto Stock Exchange ("TSX").
|
BOARD OF DIRECTORS UPDATE
Director Appointment
ARC is pleased to announce that Ms. Carol Banducci has been appointed to the Board,
effective immediately. Ms. Banducci is a global finance executive
with over 30 years of experience in operational, corporate, and
senior leadership roles. Most recently, Ms. Banducci served as
Executive Vice President and Chief Financial Officer of IAMGOLD
Corporation until her retirement from the company in 2021. Ms.
Banducci serves on the board of directors of Hudbay Minerals
Inc., is a member of the National Association of Corporate
Directors (USA), the Institute of
Corporate Directors and the Financial Executives Institute of
Canada, and is a past member of
the Canadian Board Diversity Council.
OUTLOOK
2022 Capital Budget
The Board has approved a preliminary capital budget of
$1.2 to $1.3
billion, which is expected to deliver production of 335,000
to 350,000 boe per day. Capital discipline and risk management are
guiding principles of ARC. The Company will closely monitor and
adjust its capital budget based on the outcome of the ongoing
negotiations between Blueberry River First Nations and the
Government of British Columbia
("BC") regarding continued resource development in the province
following the June 29, 2021 BC
Supreme Court ruling in Blueberry First River Nations (Yahey) v.
Province of British
Columbia.
The capital budget is designed to sustain production levels in
the near term, return additional free funds flow to shareholders to
provide a competitive total return, and invest a modest amount of
capital to grow free funds flow in the future.
Notably, ARC will invest:
- Approximately $1.1 billion of its
capital budget to sustain production between 335,000 and 350,000
boe per day.
-
- ARC anticipates continuous efficiency improvement initiatives
will largely offset inflationary pressures in 2022.
- Average drilling and completions costs at Kakwa have been
reduced by 12 per cent since 2020, which includes inflationary
pressures realized in 2021.
- $115 million to expand natural
gas production and processing capacity at Sunrise by 80 MMcf per
day, which includes facility capital of approximately $35 million. The expansion is expected to be
brought on-stream in late 2022, bringing the area's processing
capacity to 360 MMcf per day of low-cost, low-emission natural
gas.
-
- ARC is pleased to announce that it has entered into a long-term
gas supply agreement to deliver approximately 150 MMcf per day of
natural gas from ARC's Sunrise facility to an LNG Canada
participant. The agreement will commence with the start-up of LNG
Canada.
- $75 million to advance Attachie
West Phase I ahead of sanctioning.
-
- ARC is fully prepared to proceed with Attachie West Phase I.
Total capital expenditures required to build the facility and drill
the initial wells, including the $75
million, is expected to total approximately $600 million over an 18 to 24-month period.
- $45 million of environmental,
social, and governance ("ESG")-related investments to reduce
corporate emissions, which includes investment in the
electrification of the Dawson Phase III and Phase IV facilities and
several other emissions-reduction projects.
Free Funds Flow Allocation
ARC's goal is to deliver a competitive total return to its
shareholders through a combination of sustainable return-of-capital
measures and capital appreciation from profitable investments. The
Company is in a strong financial position and its capital
requirements are being met. As net debt excluding lease obligations
reaches the low end of the Company's targeted range of 1.0 to 1.5
times annualized funds from operations under moderate commodity
price assumptions, ARC intends to accelerate and increase the
return-of-capital component of its total return proposition:
- ARC will return 50 to 80 per cent of free funds flow to
shareholders.
- A growing dividend remains ARC's primary long-term mechanism of
returning capital to shareholders. The dividend is designed to grow
with the underlying profitability of the business and be
sustainable during extended periods of low commodity prices.
- ARC will repurchase its shares under its normal course issuer
bid ("NCIB") when Management's view of the business' intrinsic
value exceeds ARC's share price under moderate commodity price
scenarios.
- ARC plans to allocate the balance of free funds flow
to debt reduction.
- ARC does not believe that the returns currently generated by
M&A activities compete with the returns generated by investing
in ARC's common shares or by developing ARC's own assets.
2022 Guidance
ARC's 2022 preliminary corporate guidance is based on various
commodity price scenarios and economic conditions; certain guidance
estimates may fluctuate with commodity price changes and regulatory
changes. ARC's guidance provides readers with the information
relevant to Management's expectations for financial and operational
results for 2022. Readers are cautioned that the guidance estimates
may not be appropriate for any other purpose.
|
|
|
2022
Guidance
|
Crude oil
(bbl/day)
|
7,000 -
9,000
|
Condensate
(bbl/day)
|
72,000 -
78,000
|
Crude oil and
condensate (bbl/day)
|
79,000 -
87,000
|
Natural gas
(MMcf/day)
|
1,240 -
1,280
|
NGLs
(bbl/day)
|
49,000 -
51,000
|
Total
(boe/day)
|
335,000 -
350,000
|
Expenses
($/boe)
|
|
Operating
|
4.00 -
4.50
|
Transportation
|
4.50 -
5.00
|
General and
administrative ("G&A") expense before share-based compensation
expense
|
0.80 -
0.90
|
G&A - share-based
compensation expense
|
0.30 -
0.40
|
Interest and
financing
|
0.55 -
0.65
|
Current income tax
expense as a per cent of funds from operations
|
1 -
6
|
Capital expenditures
before undeveloped land purchases and net property acquisitions
(dispositions) ($
billions)
|
1.2 -
1.3
|
Full-year 2021 guidance for production, expenses, and capital
expenditures remains unchanged. Refer to the section entitled
"Annual Guidance" in ARC's MD&A for the three and nine
months ended September 30, 2021,
available on ARC's website at www.arcresources.com and under ARC's
SEDAR profile at www.sedar.com.
Q3 2021 OPERATIONAL RESULTS
Capital Expenditures
- ARC invested $268 million during
the third quarter of 2021 to drill 41 wells and complete 31 wells.
In addition, ARC commissioned the Parkland/Tower facility expansion
and sour conversion project, which allows for continued development
of the lower Montney horizon and
is expected to improve the area's overall deliverability and
profitability.
- ARC invested $687 million during
the nine months ended September 30,
2021, which included drilling 94 wells and completing 103
wells.
- ARC has realized significant capital efficiencies at Kakwa by
leveraging the Company's expertise in the Montney.
-
- Average drilling and completions costs have been reduced by 12
per cent since 2020, which includes inflationary pressures realized
in 2021. Drilling and completions costs per metre have been reduced
by 11 per cent and 12 per cent, respectively.
- Wider well spacing is expected to yield better deliverability
per well, which ARC anticipates will result in meaningful capital
efficiency improvements and increased profitability.
- ARC expects full-year 2021 capital expenditures to be at the
upper end of the Company's guidance range of $950 million to $1.0
billion.
Production and Operating Expenses
- Production averaged 353,657 boe per day during the third
quarter of 2021 (61 per cent natural gas and 39 per cent crude oil
and liquids), increasing five per cent relative to the second
quarter of 2021. Production growth was driven primarily by
production at Kakwa as operations recovered from planned turnaround
activities conducted in the prior period.
- ARC expects fourth quarter 2021 production to average
approximately 340,000 boe per day. Fourth quarter 2021 production
was partly impacted by unplanned third-party infrastructure outages
at the beginning of the period, which were fully resolved by the
end of October 2021.
- ARC's third quarter 2021 operating expense of $3.58 per boe decreased 21 per cent relative to
the second quarter of 2021 as a result of the planned turnaround
activities that were conducted in the prior period.
Q3 2021 FINANCIAL RESULTS
Financial Position
Net Debt Excluding Lease Obligations
- ARC's net debt excluding lease obligations was $1.9 billion or 0.9 times annualized funds from
operations at the end of the third quarter of 2021, decreasing
$158 million or eight per cent from
the end of the second quarter of 2021.
- ARC has reduced its net debt excluding lease obligations by
approximately $0.5 billion or 20 per
cent since the closing of the Business Combination.
- Preserving a strong balance sheet through all commodity price
cycles is a key tenet of ARC's long-term strategy. Given the
volatility of commodity prices, ARC plans its business at
conservative pricing levels. ARC plans to maintain its net debt
excluding lease obligations at the lower end of its targeted range
of 1.0 to 1.5 times annualized funds from operations under pricing
assumptions of US$55 per barrel WTI
and Cdn$2.50 per GJ AECO.
Private Senior Note Repayments
- During the third quarter of 2021, in order to optimize its
capital structure and investment-grade credit rating, ARC repaid
the entire principal amount outstanding of the private senior notes
outlined in the following table.
Private Senior
Notes
|
Maturity
Date
|
Principal Amount
Repaid(1)
(US$
millions)
|
Principal Amount
Repaid(1)
(Cdn$
millions)
|
3.72% US$
note(2)
|
September 25,
2026
|
150.0
|
189.7
|
5.36% US$
note
|
May 27,
2022
|
30.0
|
37.9
|
3.81% US$
note
|
August 23,
2024
|
180.0
|
227.6
|
4.49% Cdn$
note
|
August 23,
2024
|
N/A
|
24.0
|
Total
|
|
|
479.2
|
(1)
|
An additional Cdn$31
million of make-whole payments were incurred as part of the private
senior note repayments.
|
(2)
|
Private senior note
issued under ARC's Master Shelf Agreement.
|
- The repayments were made with ARC's unsecured extendible
revolving credit facility (the "Credit Facility"), lowering the
Company's overall cost of debt to approximately 2.4 per cent.
- ARC expects interest and financing expenses to exceed full-year
2021 guidance due to the private senior note repayments.
Credit Facility Amendments
- On October 27, 2021, ARC amended
and restated its $2.0 billion Credit
Facility to improve the Company's overall investment-grade credit
profile. The tenor of the Credit Facility was extended from three
to four years, and amendments to the financial covenants governing
the Credit Facility were executed to align with credit facilities
of other investment-grade energy companies.
- ARC currently has approximately $1.2
billion of capacity remaining on the Credit Facility.
Returns to Shareholders
ARC delivered on its commitment to return capital to
shareholders during the third quarter of 2021, distributing
$172 million ($0.24 per share) through dividends and share
repurchases. This represented 35 per cent of free funds flow in the
period and included only one month of share repurchases, with ARC's
NCIB commencing on September 1,
2021.
Dividends
- ARC declared a quarterly dividend of $47
million or $0.066 per share
during the third quarter of 2021, representing a 10 per cent
increase from the Company's previous quarterly dividend of
$0.06 per share.
- The Board has approved an increase of 52 per cent to ARC's
quarterly dividend, from $0.066 per
share to $0.10 per share, beginning
with its dividend that is expected to be paid on January 17, 2022 to shareholders of record on
December 31, 2021. The ex-dividend
date is December 31, 2021.
Share Repurchases
- On August 30, 2021, ARC received
approval from the TSX to commence an NCIB, allowing the Company to
purchase up to 72.2 million of its common shares outstanding or up
to 10 per cent of its public float.
- ARC repurchased 12.4 million common shares in September 2021 at a weighted average price of
$10.11 per share for total
consideration of $125 million.
- Subsequent to quarter end, ARC repurchased an additional 7.2
million common shares at a weighted average price of $11.80 per share for total consideration of
$85 million.
Net Income
- ARC recognized net income of $54
million ($0.07 per share) in
the third quarter of 2021. Increased commodity sales from
production, driven by higher production and higher commodity
prices, were partially offset by increased losses on ARC's risk
management contracts and a reduced income tax recovery.
- ARC recognized net income of $109
million ($0.18 per share)
during the nine months ended September 30,
2021, compared to a net loss of $668
million ($1.89 per share)
during the nine months ended September 30,
2020.
Funds from Operations and Free Funds Flow
Funds from Operations
- ARC generated funds from operations of $765 million ($1.06
per share) during the third quarter of 2021, increasing
$223 million ($0.31 per share) from the second quarter of 2021.
In addition to increased commodity sales from production, lower
G&A expense and lower transaction costs helped increase funds
from operations in the period. Partially offsetting the increases
to funds from operations were higher realized losses on ARC's risk
management contracts and $31 million
of make-whole payments associated with the private senior note
repayments.
- ARC's average realized natural gas price of $4.67 per Mcf during the third quarter of 2021
was $1.13 per Mcf higher than the
average AECO 7A Monthly Index price.
- The following table details the change in funds from operations
for the third quarter of 2021 relative to the second quarter of
2021.
|
$
millions
|
$/share(1)
|
Funds from operations
for the three months ended June 30, 2021
|
542.5
|
0.75
|
Production
volumes
|
|
|
Crude oil and
liquids
|
18.2
|
0.02
|
Natural gas
|
33.8
|
0.05
|
Commodity
prices
|
|
|
Crude oil and
liquids
|
85.1
|
0.13
|
Natural gas
|
159.3
|
0.22
|
Sales of commodities
purchased from third parties
|
69.5
|
0.10
|
Interest
income
|
(1.6)
|
—
|
Other
income
|
(4.1)
|
(0.01)
|
Realized loss on risk
management contracts
|
(78.7)
|
(0.11)
|
Royalties
|
(17.2)
|
(0.02)
|
Expenses
|
|
|
Commodities purchased
from third parties
|
(62.8)
|
(0.09)
|
Operating
|
21.7
|
0.03
|
Transportation
|
(23.3)
|
(0.03)
|
G&A
|
15.3
|
0.02
|
Transaction
costs
|
16.1
|
0.02
|
Interest and
financing
|
(27.2)
|
(0.04)
|
Current income
tax
|
2.5
|
—
|
Realized gain (loss) on
foreign exchange
|
15.2
|
0.02
|
Other
|
1.1
|
—
|
Funds from operations
for the three months ended September 30, 2021
|
765.4
|
1.06
|
(1) Per share amounts
are based on weighted average diluted common shares.
|
- ARC generated funds from operations of $1.6 billion ($2.63
per share) during the nine months ended September 30, 2021, compared to funds from
operations of $456 million
($1.29 per share) during the nine
months ended September 30, 2020.
Free Funds Flow
- Demonstrating the underlying strength of ARC's business and its
high-quality assets, ARC generated free funds flow of
$497 million ($0.69 per share)
during the third quarter of 2021 and free funds flow of
$895 million ($1.49 per share)
during the nine months ended September 30,
2021.
ESG TARGETS
ARC plays a leadership role within the energy sector with its
strong ESG performance and ongoing commitment to responsible
resource development. ARC has successfully integrated Seven
Generations' sustainability initiatives into its broader ESG
strategy, and has maintained or enhanced the Company's existing ESG
targets. These targets will continue to evolve as ARC evaluates and
pursues numerous opportunities across its assets and the energy
value chain to enhance the Company's leadership position as a
low-emission and responsible energy producer.
ARC has set the following emissions-reduction targets relative
to ARC's and Seven Generations' combined 2019 emissions
profiles:
- Reduce its Scope 1 and Scope 2 greenhouse gas emissions
intensity by 20 per cent and its absolute emissions by a minimum of
70,000 metric tonnes of carbon dioxide equivalent
("tCO2e") by 2025, through emissions-reduction
projects.
- Reduce its overall methane emissions intensity by 20 per cent
by 2025.
- The 2019 baseline has been adjusted to remove emissions
associated with ARC's Pembina asset, which was disposed of in the
second quarter of 2021 and emitted approximately 165,000 metric
tCO2e in 2019.
ARC will continue its approach of setting meaningful and
achievable emissions-reduction targets over shorter timeframes to
deliver industry-leading, low-emissions production.
A complete summary of ARC's ESG goals and targets, in addition
to ARC's 2020 performance results, can be accessed on ARC's website
at www.arcresources.com/responsibility.
CONFERENCE CALL
ARC's management team will be holding a conference call to
discuss the Company's third quarter 2021 results and 2022 budget on
Friday, November 5, 2021, at
8:00 a.m. Mountain Time ("MT").
Date
|
Friday, November 5,
2021
|
Time
|
8:00 a.m.
MT
|
Dial-in
Numbers
|
|
Calgary
|
587-880-2171
|
Toronto
|
416-764-8659
|
Toll-free
|
1-888-664-6392
|
Conference
ID
|
31080422
|
Webcast
URL
|
https://produceredition.webcasts.com/starthere.jsp?ei=1507053&tp_key=068b394c79
|
Callers are encouraged to dial in 15 minutes before the start
time to register for the event. A replay will be available on ARC's
website at www.arcresources.com for 30 days following the
conference call.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This news release 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 about the future,
based on certain assumptions made by ARC. Although ARC believes
that the expectations represented by such forward-looking
information are reasonable, there can be no assurance that such
expectations will prove to be correct. Forward-looking information
in this news release is identified by words such as "anticipate",
"believe", "ongoing", "may", "expect", "estimate", "plan", "will",
"project", "continue", "target", "strategy", "upholding", or
similar expressions and includes suggestions of future outcomes. In
particular, but without limiting the foregoing, this news release
contains forward-looking information with respect to: estimated
production amounts and quantities thereof; the anticipated
investments in an expansion at Sunrise and in Attachie West Phase
I; the planned returns to shareholders and the expected ranges of
such returns; emissions-reduction targets and the associated
timelines; planned ESG initiatives, priorities, and targets, and
the anticipated success and timing thereof; ARC's intended approach
to emissions-reduction targets and expected results thereof; the
continued assessment of dividends and the payment thereof;
statements with respect to the 2022 capital budget including the
planned investment and allocation of the 2022 capital budget; the
estimated total capital expenditures with respect to Attachie West
Phase I; the anticipated ability of ARC to remain flexible in
adjusting its capital budget and production guidance; ARC's plans
to maintain its net debt excluding lease obligations to annualized
funds from operations at the lower end of its targeted range; the
expectation that ARC will fully fund the capital program and
dividend with internally generated funds from operations; the
expectation that interest and financing expenses will exceed
full-year 2021 guidance due to ARC's private senior note
repayments; intentions and strategies regarding free funds flow
allocation; ARC's plans to repurchase its shares under the NCIB and
the timing and anticipated benefits thereof; adjusting the capital
budget based on the outcome of negotiations between Blueberry River
First Nations and the Government of BC; plans to accelerate and
increase the return-of-capital component or its total return
proposition; ARC's 2021 and 2022 guidance estimates; plans to
evaluate return-of-capital measures with excess free funds flow;
and other statements.
Readers are cautioned not to place undue reliance on
forward-looking information as ARC's actual results may differ
materially from those expressed or implied. ARC undertakes no
obligation to update or revise any forward-looking information
except as required by law. Developing forward-looking information
involves reliance on a number of assumptions and consideration of
certain risks and uncertainties, some of which are specific to ARC
and others that apply to the industry generally. The material
assumptions on which the forward-looking information in this news
release is based, and the material risks and uncertainties
underlying such forward-looking information, include: ARC's ability
to successfully integrate and realize the anticipated benefits of
the Business Combination as well as other completed or future
acquisitions and divestitures; access to sufficient capital to
pursue any development plans; ARC's ability to issue securities;
ARC's ability to meet and maintain certain targets, including with
respect to emissions-related and ESG performance; expectations and
projections made in light of ARC's historical experience; data
contained in key modeling statistics; the potential implementation
of new technologies and the cost thereof; the successful
implementation and use of the NCIB; forecast commodity prices and
other pricing assumptions with respect to ARC's 2022 capital
budget; continuing uncertainty of the impact of the June 29, 2021 BC Supreme Court ruling in
Blueberry First River Nations (Yahey) v. Province of
British Columbia on BC and/or
federal laws or policies affecting resource development in
northeast BC and potential outcomes of the ongoing negotiations
between Blueberry River First Nations and the Government of BC;
assumptions with respect to global economic conditions and the
accuracy of ARC's market outlook expectations for 2021, 2022, and
in the future; suspension of or changes to guidance, and the
associated impact to production; the assumption that ARC will be
able to proceed with Attachie West Phase I; forecast production
volumes based on business and market conditions; the accuracy of
outlooks and projections contained herein; that future business,
regulatory, and industry conditions will be within the parameters
expected by ARC, including with respect to prices, margins, demand,
supply, product availability, supplier agreements, availability,
and cost of labour and interest, exchange, and effective tax rates;
projected capital investment levels, the flexibility of capital
spending plans, and associated sources of funding; the ability of
ARC to complete capital programs and the flexibility of ARC's
capital structure; achievement of further cost reductions and
sustainability thereof; applicable royalty regimes, including
expected royalty rates; future improvements in availability of
product transportation capacity; opportunity for ARC to pay
dividends and the approval and declaration of such dividends by the
board of directors of ARC; the existence of alternative uses for
ARC's cash resources which may be superior to payment of dividends
or effecting repurchases of outstanding common shares; cash flows,
cash balances on hand, and access to ARC's credit facility being
sufficient to fund capital investments; foreign exchange rates;
near-term pricing and continued volatility of the market; the
ability of ARC's existing pipeline commitments and financial hedge
transactions to partially mitigate a portion of ARC's risks against
wider price differentials; business interruption, property and
casualty losses, or unexpected technical difficulties; estimates of
quantities of crude oil, natural gas, and liquids from properties
and other sources not currently classified as proved; accounting
estimates and judgments; future use and development of technology
and associated expected future results; ARC's ability to obtain
necessary regulatory approvals; potential regulatory and industry
changes stemming from the results of court actions affecting
regions in which ARC holds assets; risks and uncertainties related
to oil and gas interests and operations on Indigenous lands; the
successful and timely implementation of capital projects or stages
thereof; the ability to generate sufficient cash flow to meet
current and future obligations; estimated abandonment and
reclamation costs, including associated levies and regulations
applicable thereto; ARC's ability to obtain and retain qualified
staff and equipment in a timely and cost-efficient manner; ARC's
ability to carry out transactions on the desired terms and within
the expected timelines; forecast inflation and other assumptions
inherent in the guidance of ARC; the retention of key assets; the
continuance of existing tax, royalty, and regulatory regimes; the
accuracy of the estimates of each of ARC's and Seven Generations'
reserve volumes; ARC's ability to access and implement all
technology necessary to efficiently and effectively operate its
assets; the ongoing impact of COVID-19 on commodity prices and the
global economy; and other assumptions, risks, and uncertainties
described from time to time in the filings made by ARC with
securities regulatory authorities.
The forward-looking information in this news release also
includes certain financial outlooks relating to net debt excluding
lease obligations and net debt excluding lease obligations to
annualized funds from operations. Any financial outlook contained
in this news release regarding prospective financial position is
based on reasonable assumptions about future events, including
those described above, based on an assessment by Management of the
relevant information that is currently available. The actual
results will likely vary from the amounts set forth herein and such
variations may be material. Readers are cautioned that any such
financial outlook contained herein should not be used for purposes
other than those for which it is disclosed herein. Such information
was made as of the date of this news release and ARC disclaims any
intention or obligation to update or revise any such information,
whether as a result of new information, future events, or
otherwise, unless required pursuant to applicable law.
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
specific security for a particular investor. There is no assurance
that any rating will remain in effect for any given period of time
or that any rating will not be revised or withdrawn entirely by the
rating agency in the future if, in its judgment, circumstances so
warrant.
About ARC
ARC Resources Ltd. is the largest pure-play Montney producer and one of Canada's largest dividend-paying energy
companies, featuring low-cost operations and leading ESG
performance. ARC's investment-grade credit profile is supported by
commodity and geographic diversity and robust risk management
practices around all aspects of the business. ARC's common shares
trade on the Toronto Stock Exchange under the symbol ARX.
ARC RESOURCES LTD.
Please visit ARC's website at
www.arcresources.com or contact Investor Relations:
E-mail: IR@arcresources.com
Telephone: (403) 503-8600
Fax: (403) 509-6427
Toll Free: 1-888-272-4900
ARC Resources Ltd.
Suite 1200, 308 - 4 Avenue SW
Calgary, AB T2P 0H7
SOURCE ARC Resources Ltd.