Calgary, November 4, 2021 (ARX – TSX) 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.
Arc Resources Permit Summary Current Year
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.
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.
About ARC
ARC Resources Ltd. is the largest pure-play Montney producer and one of Canada’s largest dividendpaying 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.
Well Permit & Wells Drilled
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