Calgary, May 5, 2022 (ARX – TSX) ARC Resources Ltd. (“ARC” or the “Company”) today reported its first quarter 2022 financial and operational results and provided revisions to its 2022 guidance.
HIGHLIGHTS
ARC delivered first quarter 2022 production of 344,447 boe(1)(2) per day (62 per cent natural gas and 38 per cent crude oil and liquids).
- Cash flow from operating activities was $759 million and funds from operations was $744 million(3) ($1.08 per share)(4), driven by strong average realized prices across the Company’s assets.
- ARC’s average realized natural gas price of $5.98 per Mcf(4) was $1.39 per Mcf higher than the average AECO 7A Monthly Index price. ARC’s average realized condensate price was $119.15 per barrel(4)
- Free funds flow was $410 million(5) ($0.60 per share)(6). ARC distributed 64 per cent or $265 million ($0.39 per share)(4) to shareholders, with the balance allocated to debt reduction.
- ARC declared dividends of $68 million or $0.10 per share(4) and repurchased 13.1 million common shares for $196 million under its normal course issuer bid (“NCIB”).
- Since instituting the NCIB in September 2021, ARC has repurchased 44.7 million common shares or approximately six per cent of total common shares outstanding at an average price of $12.38 per share for $553 million.
- Since acquiring Seven Generations Energy Ltd. (“Seven Generations”) on April 6, 2021, ARC has generated more than $1.6 billion ($2.29 per share) of free funds flow. Over the period, WTI averaged US$77 per barrel and the AECO 7A Monthly Index price averaged $4.00 per Mcf.
- ARC’s board of directors (the “Board”) has approved an increase of 20 per cent to ARC’s quarterly dividend, from $0.10 per share to $0.12 per share, beginning with the dividend that is expected to be paid on July 15, 2022, to shareholders of record on June 30, 2022. The revised dividend is sustainable at approximately US$40 per barrel WTI and $2.00 per gigajoule (“GJ”) AECO.
- As of March 31, 2022, ARC’s long-term debt balance was $1.6 billion and its net debt balance was $1.7 billion(3) or 0.6 times funds from operations(3)
- Cash flow used in investing activities was $347 million, of which $333 million was invested into capital expenditures(5). During the first quarter of 2022, ARC drilled 31 wells and completed 41 wells across its Alberta and British Columbia (“BC”) operations.
- As part of its market diversification strategy, ARC has entered into a long-term natural gas supply agreement with Cheniere Energy, Inc. (“Cheniere”). Leveraging its scale, low-emissions profile, and operational excellence, ARC will supply 140,000 million British thermal units (“MMBtu”) per day of natural gas for a term of 15 years commencing with commercial operations of Train 7 of the Corpus Christi Stage III expansion, which is expected to occur in 2027. ARC will deliver natural gas to Cheniere through existing pipeline capacity and will receive a liquefied natural gas
Oil Gas Permit Download
ARC Resources Wells Drilled
ARC Resources Facility Permits
OUTLOOK
- ARC’s 2022 capital program remains centered around the Company’s guiding principles of capital discipline, profitable investment, and financial strength.
- Planned capital expenditures are unchanged at $1.15 to $1.25 billion.
- The capital program, including the revised dividend, is expected to be fully funded by funds from operations at approximately US$40 per barrel WTI and $2.00 per GJ AECO.
- Production guidance is unchanged at 335,000 to 350,000 boe per day.
- Transportation guidance has been revised upward to reflect an increase in tolls on certain natural gas pipelines, as well as higher fuel gas expense recognized in conjunction with higher natural gas prices. Fuel gas expense is recognized in transportation expense with a corresponding increase to commodity sales from production.
- General and administrative (“G&A”) expense associated with share-based compensation guidance has been revised upward to reflect higher-than-expected expense recognized under ARC’s share-based compensation plans during the first quarter of 2022.
- Current income tax expense guidance has been revised upward to reflect the increase in expected taxable income associated with higher commodity prices.
- Over the balance of year, ARC will re-direct capital to its Kakwa asset. Excess natural gas processing capacity and strong condensate fundamentals will drive higher free funds flow with no changes to total capital expenditures and production guidance.
- Since acquiring the asset in 2021, ARC has achieved improved capital efficiencies through lower costs and positive well performance. ARC believes the optimal production level to profitably develop the asset over the long term is between 180,000 and 200,000 boe per day. Kakwa production averaged 174,665 boe per day during the first quarter of 2022.
- ARC remains fully prepared to proceed with development of Attachie West Phase I and the Sunrise expansion as soon as the BC regulatory environment supports such investment. The recent receipt of new development permits from the BC Oil and Gas Commission is a positive step towards establishing a solid foundation for future investment in the province.
About ARC
ARC Resources Ltd. is a 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.
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