CALGARY, Feb. 10, 2016 /CNW/ - (ARX -
TSX) ARC Resources Ltd. ("ARC") is pleased to report its
fourth quarter 2015 operating and financial results. Fourth quarter
production averaged 119,243 boe per day and funds from operations
were $200.7 million ($0.58 per share). ARC's audited
Consolidated Financial Statements and Notes, as well as ARC's
Management's Discussion and Analysis ("MD&A") for the years
ended December 31, 2015 and 2014, are
available on ARC's website at www.arcresources.com
and on SEDAR at
www.sedar.com.
|
|
|
|
|
Three Months Ended December
31
|
|
Twelve Months Ended December
31
|
|
2015
|
2014
|
|
2015
|
2014
|
FINANCIAL
|
|
|
|
|
|
(Cdn$ millions, except per share and boe
amounts)
|
|
|
|
|
|
Funds from operations
(1)
|
200.7
|
251.7
|
|
773.4
|
1,124.0
|
|
Per share (2)
|
0.58
|
0.79
|
|
2.27
|
3.54
|
Net income (loss)
|
(55.0)
|
113.7
|
|
(342.7)
|
380.8
|
|
Per share (2)
|
(0.16)
|
0.36
|
|
(1.01)
|
1.20
|
Dividends
|
103.8
|
95.7
|
|
410.5
|
380.2
|
|
Per share (2)
|
0.30
|
0.30
|
|
1.20
|
1.20
|
Capital expenditures, before land and net property
acquisitions (dispositions)
|
149.5
|
249.3
|
|
541.6
|
945.5
|
Total capital expenditures, including land and net
property acquisitions (dispositions)
|
112.2
|
264.9
|
|
473.9
|
1,042.0
|
Net debt outstanding (3)
|
985.1
|
1,255.9
|
|
985.1
|
1,255.9
|
Shares outstanding, weighted average
diluted
|
345.6
|
319.1
|
|
340.5
|
317.2
|
Shares outstanding, end of period
|
347.1
|
319.4
|
|
347.1
|
319.4
|
OPERATING
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
Crude oil (bbl/d)
|
33,899
|
37,442
|
|
32,762
|
36,525
|
|
Condensate (bbl/d)
|
3,631
|
3,448
|
|
3,430
|
3,667
|
|
Natural gas (MMcf/d)
|
469.1
|
432.1
|
|
444.9
|
406.1
|
|
NGLs (bbl/d)
|
3,523
|
5,075
|
|
3,819
|
4,518
|
|
Total (boe/d) (4)
|
119,243
|
117,986
|
|
114,167
|
112,387
|
Average realized prices, prior to
hedging
|
|
|
|
|
|
|
Crude oil ($/bbl)
|
49.24
|
72.49
|
|
53.53
|
90.64
|
|
Condensate ($/bbl)
|
49.80
|
74.04
|
|
53.84
|
93.81
|
|
Natural gas ($/Mcf)
|
2.59
|
4.15
|
|
2.88
|
4.76
|
|
NGLs ($/bbl)
|
10.73
|
32.69
|
|
10.70
|
39.45
|
|
Oil equivalent ($/boe)
(4)
|
26.01
|
41.78
|
|
28.57
|
51.31
|
Operating netback ($/boe)
(5)
|
|
|
|
|
|
|
Commodity and other sales
|
26.06
|
41.83
|
|
28.65
|
51.38
|
|
Royalties
|
(2.03)
|
(5.77)
|
|
(2.48)
|
(7.26)
|
|
Transportation expenses
|
(2.19)
|
(2.51)
|
|
(2.33)
|
(2.23)
|
|
Operating expenses
|
(6.21)
|
(8.55)
|
|
(7.15)
|
(8.88)
|
|
Netback before hedging
|
15.63
|
25.00
|
|
16.69
|
33.01
|
|
Realized hedging gain (loss)
(6)
|
4.73
|
2.29
|
|
4.46
|
(0.65)
|
|
Netback after hedging
|
20.36
|
27.29
|
|
21.15
|
32.36
|
TRADING STATISTICS
(7)
|
|
|
|
|
|
High price
|
22.49
|
29.85
|
|
25.87
|
33.68
|
Low price
|
15.39
|
22.70
|
|
15.39
|
22.70
|
Close price
|
16.70
|
25.16
|
|
16.70
|
25.16
|
Average daily volume (thousands)
|
2,224
|
1,886
|
|
1,832
|
1,344
|
(1)
|
Funds from operations does not have a standardized
meaning under Canadian Generally Accepted Accounting Principles
("GAAP"). See "Additional GAAP Measures" in the MD&A for the
years ended December 31, 2015 and 2014.
|
(2)
|
Per share amounts (with the exception of dividends)
are based on weighted average diluted shares.
|
(3)
|
Net debt does not have a standardized meaning under
GAAP. See "Additional GAAP Measures" in the MD&A for the years
ended December 31, 2015 and 2014.
|
(4)
|
In this document, the commonly accepted boe
conversion ratio of 6 Mcf : 1 bbl has been used, which is based on
an energy equivalency conversion method primarily applicable at the
burner tip. 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 conversion ratio, utilizing the
6:1 conversion ratio may be misleading as an indication of
value.
|
(5)
|
Operating netback does not have a standardized
meaning under GAAP. See "Non-GAAP Measures" in the MD&A for the
years ended December 31, 2015 and 2014.
|
(6)
|
Includes realized cash gains and losses on risk
management contracts.
|
(7)
|
Trading prices are stated in Canadian dollars and
based on intra-day trading.
|
ARC operates a highly efficient business model. As a
conventional oil and gas producer, we continue to generate
significant cash flow through a deliberate strategy of operating
high working interest properties, controlling our company-owned
infrastructure and judiciously managing our cost structure. ARC had
exceptional operating results in 2015, especially when considering
the headwinds posed by lower commodity prices. Operating costs and
general and administrative costs were reduced. Non-core assets
continued to be divested, while ARC continued to add materially to
Montney holdings in 2015. Our
capital programs are very efficient with drilling and completions
costs dropping significantly. Our focus on creating value, while
preserving our strong financial position is a hallmark of ARC.
Based on commodity prices and our objective of maintaining a
strong balance sheet, ARC's Board of Directors has approved actions
to right-size the 2016 capital budget and ARC's monthly dividend.
The 2016 capital budget will be reduced from $550 million to $390
million, and ARC will pay a monthly dividend of $0.05 per share. These changes are consistent
with our long-term strategy of delivering a sustainable dividend to
our shareholders. We believe that with these changes ARC can
continue to create value for shareholders, and emerge from this
cycle in a position of financial strength.
Myron Stadnyk, President and CEO
remarked, "With these decisive actions, ARC will remain
well-positioned to deliver on our principle of risk-managed value
creation, which has served our shareholders well throughout our
over 19-year history. We will continue on our path to invest in key
profitable projects, such as the Dawson Phase III gas processing
and liquids-handling facility, and delineating
the resources identified on our Attachie property. Despite challenging
economic conditions in 2015, ARC achieved excellent operational
results as we executed our capital program in-step with our
long-term strategic plan. Strong results from all areas of our
business, and in particular, exceptionally low finding and
development costs and reserves replacement of approximately 200 per
cent, have further positioned ARC to capitalize on its exceptional
Montney oil and gas resource. Our
balance sheet remains strong, as we manage debt levels and plan
capital activities with a long-term view. ARC is committed to
paying a dividend as a key component of long-term value creation
for our shareholders. In 2016, our team will continue to focus on
balance sheet strength, operational excellence and maximizing value
through all commodity cycles."
FINANCIAL AND OPERATING HIGHLIGHTS
- ARC achieved fourth quarter 2015 production of 119,243 boe per
day, which was within the fourth quarter guidance range of 118,000
to 122,000 boe per day. Fourth quarter 2015 natural gas production
of 469 MMcf per day was nine per cent higher compared to the fourth
quarter of 2014, and is the result of the first full quarter of
production from new wells flowing through the Sunrise gas plant,
which was brought on-stream mid-way through the third quarter of
2015. Crude oil and liquids production of 41,053 barrels per day
was down 11 per cent compared to the fourth quarter of 2014 due to
significantly lower capital activity in response to declining crude
oil prices, and was partially offset by new production brought on
to coincide with the completion of the oil battery expansion at
Tower in the fourth quarter of 2015. Full-year 2015 production of
114,167 boe per day was two per cent higher than full-year 2014
production of 112,387 boe per day, with natural gas production
increasing 10 per cent to 445 MMcf per day and crude oil and
liquids production decreasing 11 per cent to 40,011 barrels per
day. ARC's 2015 annual average production was within the guidance
range of 113,000 to 115,000 boe per day, a significant achievement
given the divestment of approximately 4,900 boe per day of non-core
production volumes throughout the year, which resulted in an annual
volume impact of approximately 3,000 boe per day of production.
- Fourth quarter and full-year 2015 commodity sales revenue of
$285.9 million and $1,193.7 million were down 37 per cent and 43 per
cent, respectively, relative to comparable periods in 2014. Higher
full-year production was offset by considerably lower crude oil and
natural gas prices in 2015. Crude oil and natural gas prices were
down 30 per cent (Edmonton Par) and 34 per cent (AECO),
respectively, relative to the fourth quarter of 2014, and down 39
per cent (Edmonton Par) and 37 per cent (AECO), respectively,
relative to full-year 2014.
- Fourth quarter funds from operations were $200.7 million ($0.58 per share), up 15 per cent from the third
quarter of 2015 as a result of higher production volumes, partially
offset by lower realized quarter-over-quarter crude oil and natural
gas prices. Fourth quarter funds from operations were down 20 per
cent relative to the fourth quarter of 2014 and full-year 2015
funds from operations of $773.4
million ($2.27 per share) were
down 31 per cent relative to full-year 2014. Higher production in
2015 was more than offset by significantly lower crude oil and
natural gas prices relative to 2014. The decline in full-year 2015
crude oil and natural gas prices was partially offset by realized
gains on crude oil and natural gas hedging contracts of
$197 million. With approximately
173,400 MMbtu per day of natural gas and 10,000 barrels per day of
oil hedged with collars and swaps in 2016, ARC's hedges provide
significant protection for ARC's cash flow in the year.
See the Risk Management section for additional
details.
- ARC recorded a net loss of $55
million ($0.16 per share) in
the fourth quarter of 2015 compared to net income of $113.7 million ($0.36 per share) in the fourth quarter of 2014,
and a net loss of $342.7 million
($1.01 per share) for the full-year
2015 compared to net income of $380.8
million ($1.20 per share) for
the full-year 2014. In addition to the factors decreasing funds
from operations in 2015, the loss recorded in the year was also the
result of an aggregate impairment of $469.6
million recorded to ARC's PP&E account, and unrealized
foreign exchange losses of $178.5
million on the revaluation of ARC's US dollar-denominated
debt. Partially offsetting these items were unrealized gains of
$152 million on ARC's risk management
contracts, a deferred tax recovery of $6.8
million relating to the impairment recorded in the period,
as well as a gain of $31.6 million
recorded on the disposal of petroleum and natural gas properties in
2015.
- Fourth quarter and full-year 2015 capital expenditures, before
land and net property acquisitions and dispositions, totalled
$149.5 million and $541.6 million, respectively, and were focused
primarily on ARC's Montney assets
in northeast British Columbia. ARC
drilled five gross operated natural gas wells in the fourth quarter
of 2015 and 60 gross operated wells for the full-year 2015 (33 oil
wells, 21 natural gas wells, five liquids-rich wells, and one
service well). Leveraging cost savings and capital efficiencies
realized throughout 2015, ARC accelerated certain key projects in
the fourth quarter, further strengthening ARC's position as it
entered into the first quarter of 2016.
- ARC's 2015 year-end reserves and resources evaluation reflected
growth in reserves and reaffirmed the significant resource
potential in the northeast British Columbia Montney region. See the
February 10, 2016 news release
entitled, "ARC Resources Ltd. Announces the 8th
Consecutive Year of ~200% Reserves Replacement, 2015 Finding and
Development Costs for 2P Reserves of $6.97 and a Significant Increase in Montney
Resource Estimates in 2015" for additional information.
- Replaced approximately 190 per cent of 2015 total production,
adding 78.7 MMboe of proved plus probable ("2P") reserves in 2015
through development capital activities. Over the last eight years,
ARC has delivered an average of approximately 200 per cent in
produced reserves replacement through the drill bit.
- Proved developed producing ("PDP") reserves increased from 210
MMboe to 222 MMboe. The increase in PDP reserves was driven by
northeast British Columbia Montney, which increased to 115 MMboe at
year-end 2015 from 84 MMboe at year-end 2014.
- Finding and Development ("F&D") costs of $6.97 per boe for 2P reserves and $8.20 per boe for proved reserves, excluding
Future Development Capital ("FDC"). For details on ARC's F&D
costs for 2P reserves and proved reserves, including changes in
FDC, please see the February 10, 2016
news release as mentioned above.
- Significant FDC reduction, from $3.6
billion at year-end 2014 to $2.7
billion at year-end 2015, which was mainly attributed to a
decrease in drilling, completions and facility capital costs, as
well as the removal of capital associated with various
dispositions.
- ARC updated an Independent Resources Evaluation for its lands
in the northeast British Columbia Montney region, including lands
at Pouce Coupe in Alberta. The updated evaluation realized a
significant increase in the identified resource base on ARC's
northeast British Columbia Montney lands. The shale gas Total
Petroleum Initially in Place ("TPIIP") increased 33 per cent from
67.4 Tcf in 2014 to 90 Tcf in 2015 and tight oil TPIIP increased
315 per cent from 2.3 billion barrels of oil in 2014 to 9.7 billion
barrels in 2015 (1).
- Throughout 2015, ARC continued its transition to a greater
focus on its low-cost, high-value Montney assets, growing its Montney land position and divesting of
non-core assets. During the year, ARC added approximately 210 net
Montney sections through Crown
land sales and tuck-in acquisitions. Concurrently, ARC divested
non-core assets with associated production of approximately 4,900
boe per day, and reduced its well count by approximately 3,800
gross wells; including the divestment of its position in
Manitoba in the fourth quarter of
2015. Since 2013, approximately 9,400 boe per day of non-core
production has been divested, reducing the total corporate well
count by approximately 6,300 gross wells. During this time, ARC has
grown its position in the Montney
by approximately 520 net sections and has increased production in
the area by 75 per cent. Today, the Montney region makes up greater than 70 per
cent of total corporate production. The transition towards the
Montney is resulting in greater
operational efficiencies and a more competitive cost structure. ARC
will continue to actively manage its asset portfolio to ensure that
all projects maintain competitive rates of return and that
profitability metrics target those of ARC's world-class
Montney assets.
- ARC continues to actively manage its cost structure by
identifying opportunities to reduce capital, general and
administrative ("G&A"), and operating costs where appropriate.
Asset sales and reduced capital activity throughout the year
resulted in the streamlining of ARC's operations and a reduction in
staff count. In response to the lower commodity price environment,
bonuses were significantly reduced in 2015, and base salaries were
frozen for the second year in a row. ARC's decade-low fourth
quarter and full-year 2015 operating costs of $6.21 per boe and $7.15 per boe, were 27 per cent and 19 per cent
lower than comparable periods in 2014, respectively. Lower
operating costs were attributed to the addition of new Montney production at lower relative costs to
operate and certain realized cost savings. ARC has reduced
operating costs on a per boe basis by 30 per cent since 2009.
- ARC's strategy of risk-managed value creation was demonstrated
in 2015 with our integrated approach to physical and financial risk
mitigation. By holding 100 per cent firm transportation
commitments, proactively securing alternative marketing
arrangements when necessary, and maintaining a diversified sales
portfolio, ARC was able to actively mitigate its exposure to
pipeline interruptions and pricing volatility throughout 2015.
ARC's risk mitigation was further demonstrated through its
financial risk management program, which continues to provide
greater certainty of cash flows and support ARC's long-term
business plan. The fair value of ARC's risk management contracts at
December 31, 2015 was a net asset of
$409.9 million, with hedge positions
on crude oil through to 2017 and hedge positions on natural gas
through to 2020.
- ARC closed the quarter with a strong balance sheet including
$985.1 million of net debt
outstanding. At December 31, 2015,
ARC had available cash and credit of approximately $1.4 billion, taking into account ARC's working
capital surplus. The net debt to 2015 funds from operations ratio
was 1.3 times and net debt was approximately 15 per cent of ARC's
total capitalization at the end of the fourth quarter; both metrics
are within ARC's target levels.
- The Government of Alberta and
the Royalty Review Panel released key guidelines for a Modernized
Royalty Framework ("MRF") on January 29,
2016. Details on the MRF are to be finalized and released by
March 31, 2016. Changes under this
modernized framework will take effect on January 1, 2017, however wells drilled prior to
December 31, 2016 will remain on the
existing royalty framework for 10 years. As such, there will be no
change to the royalty structure on ARC's existing wells in the
province at present time. While the new framework appears
constructive, the impact on future investment decisions will not be
fully understood until the details are released. In 2015,
production in Alberta contributed
approximately 30 per cent to ARC's total corporate production.
- ARC's Board of Directors has approved a monthly dividend of
$0.05 per share, down from the
current monthly level of $0.10 per
share, commencing with the February dividend, payable on
March 15, 2016. Right-sizing of the
dividend will reduce ARC's funding requirements by approximately
$200 million in 2016, preserve
balance sheet strength and better align dividends declared to
expected funds from operations at current commodity prices. While
ARC fully recognizes the importance of the dividend to our
shareholders and remains a committed dividend-payer, the balance
sheet is our top priority in the current environment. We believe
that with this change we can continue to provide a dividend to our
shareholders, while enabling ARC to emerge from this cycle in a
position of financial strength.
- In response to the continued deterioration of commodity prices
in late 2015 and early 2016, ARC is reducing its 2016 capital
program to $390 million, down from
the $550 million previously
announced. The reduced budget will remain focused on balance sheet
preservation and long-term value creation through continued
development of ARC's low-cost, high-value northeast British
Columbia Montney assets. The budget will allow ARC to hold
northeast British Columbia
facilities at capacity, progress the key infrastructure project at
Dawson Phase III, and continue to delineate ARC's highly
prospective Attachie asset.
Capital allocation to ARC's assets in Ante Creek, Pembina and
Southeast Saskatchewan has been
deferred while ARC concentrates investment in larger-scale projects
that deliver superior rates of return in the current commodity
price environment; ARC also awaits final details on the Modernized
Royalty Framework from the Alberta Government for its Alberta assets.
- Full-year 2016 annual average production is expected to be in
the range of 116,000 to 120,000 boe per day.
(1)
|
Year-end 2015 results comply with current Canadian
Oil and Gas Evaluation Handbook guidelines. Resources Evaluation
volumes provided are the "Best Estimate" case. Year-end 2015 and
2014 TPIIP estimates utilize a one per cent porosity cut-off for
shale gas based upon the "Best Estimate" case. Estimates for both
2015 and 2014 were determined using a three per cent porosity
cut-off for tight oil based upon the "Best Estimate"
case.
|
LIVE CONFERENCE CALL
A conference call will be hosted by Mr. Myron Stadnyk, President and CEO, at
7:00 AM MT (9:00 AM EST) on Thursday,
February 11, 2016 to discuss ARC's fourth quarter and
full-year 2015 results. Details of the conference call are as
follows:
Date: Thursday February 11,
2016
Time: 7:00 AM MT (9:00 AM EST)
Toll-free: 1-888-231-8191
International: 1-647-427-7450
Conference ID: 50155873
To ensure timely participation in the conference call, callers
are encouraged to dial in 15 minutes prior to the start time to
register for the event. A telephone replay will be available for 30
days following the conference call and can be accessed at
www.arcresources.com.
ORGANIZATIONAL UPDATE
ARC is pleased to announce the following appointments:
Director Appointment
Ms. Nancy Smith has been
appointed to the Board of Directors. Ms. Smith is currently a
Managing Director of ARC Financial Corp., and has held executive
positions in finance and upstream marketing at a Canadian
integrated energy company and has experience in the banking sector.
Ms. Smith holds a Master of Business Administration and a Bachelor
of Arts (Economics) from the University of
Alberta, and has an ICD.D designation from the Institute of
Corporate Directors. ARC is very pleased to welcome Ms. Smith to
the Board.
Senior Vice President, Business Development
Appointment
Mr. Bevin Wirzba has been appointed to the position of Senior
Vice President, Business Development, overseeing ARC's acquisition,
disposition and business development activities. Mr. Wirzba comes
to ARC with over 20 years of upstream and midstream technical and
commercial experience, including strategic advisory, investment
analysis, project development, and merger, acquisition and
divestiture evaluation and execution. Prior to joining ARC, Mr.
Wirzba held roles in the energy advisory and capital markets
business of a global investment bank, as well as a major
multi-national corporation working both in North America and internationally. Mr. Wirzba
holds a Bachelor of Science in Civil Engineering from the
University of Alberta, has a Master in
Business Administration from the Edinburgh Business School, and is
a member of the Association of Professional Engineers and
Geoscientists of Alberta. ARC is
very pleased to welcome Mr. Wirzba to the team.
Vice President, Human Resources
Appointment
Ms. Lisa Olsen has been promoted
to the position of Vice President, Human Resources, overseeing
ARC's human resources, office services and records information
management functions. Ms. Olsen joined ARC in 2008 as Manager,
Human Resources, and is a passionate champion of ARC's culture and
people strategy. Prior to joining ARC, Ms. Olsen spent over 10
years in human resources functions in both Canadian oil and gas and
for a major international consumer brand. Ms. Olsen has a Bachelor
of Communications from Simon Fraser
University and an HR Management Certificate from the BC
Institute of Technology. ARC congratulates Ms. Olsen as she takes
on this new challenge.
ECONOMIC ENVIRONMENT
ARC's 2015 financial and operational results were impacted by
commodity prices and foreign exchange rates which are outlined in
the following table.
|
|
|
Selected Benchmark Prices and Exchange Rates
(1)
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
2015
|
2014
|
% Change
|
2015
|
2014
|
% Change
|
Brent (US$/bbl)
|
44.69
|
77.07
|
(42)
|
53.60
|
99.45
|
(46)
|
WTI oil (US$/bbl)
|
42.16
|
73.20
|
(42)
|
48.76
|
92.91
|
(48)
|
Edmonton Par (Cdn$/bbl)
|
52.93
|
75.65
|
(30)
|
57.20
|
94.46
|
(39)
|
Henry Hub NYMEX (US$/MMbtu)
|
2.27
|
4.00
|
(43)
|
2.66
|
4.41
|
(40)
|
AECO natural gas (Cdn$/Mcf)
|
2.65
|
4.01
|
(34)
|
2.77
|
4.42
|
(37)
|
Cdn$/US$ exchange rate
|
1.34
|
1.14
|
18
|
1.28
|
1.10
|
16
|
(1)
|
The benchmark prices do not reflect ARC's realized
sales prices. For average realized sales prices, refer to Table 13
in the MD&A for the three and twelve months ended December 31,
2015 and 2014. Prices and exchange rates presented above represent
averages for the respective periods.
|
Global crude oil prices continued their decline throughout the
fourth quarter of 2015, as persistent oversupply in the market was
compounded by OPEC's decision to not reduce production quotas, as
well as the anticipation of new Iranian production hitting the
market and fears of economic slowdown in China and other emerging economies. The WTI
benchmark price averaged 42 per cent lower than the fourth quarter
of 2014 and nine per cent lower than the third quarter of 2015.
ARC's crude oil price is primarily referenced to the Edmonton Par
benchmark price, which fared moderately better than WTI owing to
the decline in the Canadian dollar during 2015. The Edmonton Par
price decreased 30 per cent compared to the fourth quarter of 2014
and six per cent from the third quarter of 2015. The differential
between WTI and Edmonton Par in the fourth quarter of 2015 narrowed
to an average discount of US$2.52, 62
per cent less than the fourth quarter of 2014 and 28 per cent less
than the third quarter of 2015. The narrowing of the differential
was largely driven by increased local demand for Canadian crude
with the initiation of the reversal of Enbridge's Line 9.
Subsequent to December 31, 2015,
global crude oil prices have continued to deteriorate, with the WTI
crude oil price dropping by approximately 25 per cent from the
average realized price in the fourth quarter of 2015. Oversupply
continues to be a concern as inventories remain high, delaying the
effect of any supply/demand rebalancing.
North American natural gas prices, referenced by the average
Henry Hub NYMEX price, experienced a pullback of 18 per cent in the
fourth quarter of 2015 compared to the third quarter, and were
markedly lower in the fourth quarter of 2015 relative to the same
period in 2014, decreasing 43 per cent. ARC's realized natural gas
price is primarily referenced to the AECO hub, which was 34 per
cent lower in the fourth quarter of 2015 compared to the fourth
quarter of 2014 and five per cent lower compared to the third
quarter of 2015. The lower prices were impacted by continued
oversupply throughout the quarter, resulting in record storage
levels at the close of injection season and warmer continental
weather reducing normal seasonal demand. The oversupply was
slightly alleviated by strong demand for Mexican exports and
increased natural gas-fired power generation. Looking ahead to
2016, natural gas pricing is expected to experience continued
weakness as a result of a relatively mild winter in the eastern
half of North America to-date, and
continued strong supply.
The Canadian dollar continued to weaken relative to the US
dollar during the fourth quarter of 2015, averaging US$0.75 (Cdn$/US$1.34), as crude oil prices moved lower and the
US Federal Reserve raised its interest rates for the first time in
almost 10 years, signaling the continued economic recovery in
the United States. The devaluation
of the Canadian dollar relative to the US dollar serves to
partially offset the impact of lower US dollar-denominated crude
oil and natural gas prices for Canadian producers.
FINANCIAL REVIEW
Funds from Operations
ARC's fourth quarter and full-year 2015 funds from operations of
$200.7 million ($0.58 per share) and $773.4 million ($2.27 per share) were down 20 per cent and 31 per
cent, respectively, relative to comparable levels in 2014. While
2015 production increased relative to the same period in 2014,
significantly lower 2015 crude oil and natural gas prices more than
offset the gains realized from higher production in the period. The
impact of lower commodity prices was partially offset by realized
gains on ARC's commodity hedge program in 2015. Lower operating
costs, lower G&A costs, lower royalties, and lower current
income taxes due to reduced taxable income, partially offset the
impact of lower average commodity prices in 2015 on funds from
operations.
The following table details the change in funds from operations
for 2015 relative to 2014.
|
|
|
|
Three Months Ended
|
Twelve Months Ended
|
|
December 31
|
December 31
|
|
$ millions
|
$/Share (2)
|
$ millions
|
$/Share (2)
|
Funds from operations – 2014
(1)
|
251.7
|
0.79
|
1,124.00
|
3.54
|
Volume variance
|
|
|
|
|
|
Crude oil and liquids
|
(30.8)
|
(0.10)
|
(147.0)
|
(0.46)
|
|
Natural gas
|
14.1
|
0.04
|
67.4
|
0.21
|
Price variance
|
|
|
|
|
|
Crude oil and liquids
|
(84.1)
|
(0.26)
|
(529.7)
|
(1.67)
|
|
Natural gas
|
(67.4)
|
(0.21)
|
(305.1)
|
(0.96)
|
Other revenue
|
—
|
—
|
0.4
|
—
|
Realized gain on risk management
contracts
|
27.1
|
0.08
|
215.1
|
0.68
|
Royalties
|
40.4
|
0.13
|
194.7
|
0.62
|
Expenses (recoveries)
|
|
|
|
|
|
Transportation
|
3.3
|
0.01
|
(5.4)
|
(0.02)
|
|
Operating
|
24.6
|
0.08
|
66.2
|
0.21
|
|
G&A
|
12.3
|
0.04
|
16.6
|
0.05
|
|
Interest
|
(0.4)
|
—
|
(3.7)
|
(0.01)
|
|
Current tax
|
9.3
|
0.03
|
79.3
|
0.25
|
|
Realized gain on foreign exchange
|
0.6
|
—
|
0.6
|
—
|
Diluted shares
|
—
|
(0.05)
|
—
|
(0.17)
|
Funds from operations – 2015
(1)
|
200.7
|
0.58
|
773.4
|
2.27
|
(1)
|
Additional GAAP measure which may not be comparable
to similar additional GAAP measures used by other entities. Refer
to the section entitled "Additional GAAP Measures" contained in the
MD&A for the three and twelve months ended December 31, 2015
and 2014. Also refer to the "Funds from Operations" section in the
MD&A for the three and twelve months ended December 31, 2015
and 2014 for a reconciliation of ARC's net income to funds from
operations and cash flow from operating
activities.
|
(2)
|
Per share amounts are based on weighted average
diluted shares.
|
Net Income (Loss)
ARC recorded a net loss of $55
million ($0.16 per share) in
the fourth quarter of 2015 compared to net income of $113.7 million ($0.36 per share) in the fourth quarter of 2014,
and a net loss of $342.7 million
($1.01 per share) for the full-year
2015 compared to net income of $380.8
million ($1.20 per share) for
the full-year 2014. In addition to the factors decreasing funds
from operations in 2015, the loss recorded in the year was also the
result of an aggregate impairment of $469.6
million recorded to ARC's PP&E account, which was
largely the result of the continued declines in forward commodity
prices for crude oil and natural gas. During 2015, ARC also
recognized unrealized foreign exchange losses of $178.5 million on the revaluation of ARC's US
dollar-denominated debt. Partially offsetting these items were
unrealized gains of $152 million on
ARC's risk management contracts, a deferred tax recovery of
$6.8 million relating to the
impairment recorded in the period, and a gain of $31.6 million on the disposal of petroleum and
natural gas properties recorded in 2015. See the Net
Income (Loss) section of ARC'S MD&A for the three and twelve
months ended December 31, 2015 and
2014 for additional details.
Operating Netbacks
ARC's fourth quarter and full-year 2015 operating netbacks,
before hedging, of $15.63 per boe and
$16.69 per boe, were 37 per cent and
49 per cent lower than comparable periods in 2014, respectively.
After hedging, ARC's fourth quarter and full-year 2015 netbacks
were $20.36 per boe and $21.15 per boe, which were 25 per cent and 35 per
cent lower, respectively, than comparable periods in 2014. The
decrease was predominantly due to considerably lower crude oil and
natural gas prices in the period.
ARC's fourth quarter 2015 total corporate royalty rate of 7.8
per cent ($2.03 per boe) was down
from 13.8 per cent ($5.77 per boe) in
the fourth quarter of 2014, and ARC's full-year 2015 total
corporate royalty rate of 8.7 per cent ($2.48 per boe) was down from 14.1 per cent
($7.26 per boe) for the full-year
2014. The decrease reflects the sliding scale effect of decreased
commodity prices on royalty rates, as well as the increase in ARC's
natural gas production volume levels, upon which lower royalty
rates are applied as compared to those rates applied to crude oil
and liquids production volumes.
Fourth quarter 2015 transportation costs of $2.19 per boe decreased 13 per cent relative to
the fourth quarter of 2014 with reduced trucking costs at the
Parkland/Tower area, which became pipeline-connected for crude oil
volumes in 2015. Full-year 2015 transportation costs of
$2.33 per boe were up four per cent
relative to full-year 2014 and were primarily attributed to
transportation arrangements for new production in Sunrise, as well
as ARC having to secure supplementary takeaway capacity in the
second quarter of 2015 due to maintenance and turnaround activity
at a third-party facility.
Fourth quarter and full-year 2015 operating expenses of
$6.21 per boe and $7.15 per boe, were 27 per cent and 19 per cent
lower, respectively, than comparable periods in 2014. Lower per boe
operating expenses were attributed to the addition of new
Montney production at lower
relative costs to operate, the divestment of non-core assets with
higher relative costs to operate, as well as diligent cost control
efforts undertaken in 2015.
Risk Management
ARC has hedge contracts in place to protect prices on a portion
of crude oil volumes for 2016 through 2017 and natural gas volumes
for 2016 through 2020 at prices that support ARC's business
plan.
During the fourth quarter and full-year 2015, ARC realized cash
gains of $12.7 million and
$55.8 million on crude oil hedging
contracts, respectively. ARC currently has 10,000 barrels per day
of crude oil production hedged for 2016 and additional crude oil
production is hedged for 2017. ARC's crude oil hedging portfolio
also includes MSW basis swap contracts for 2016, fixing the
discount between WTI and the mixed sweet crude grade price at
Edmonton. Details regarding ARC's
crude oil hedged volumes and prices for the period 2016 through
2017 are outlined in the table below.
During the fourth quarter and full-year 2015, ARC realized cash
gains of $43.2 million and
$141.2 million on natural gas hedging
contracts, respectively, as approximately 50 per cent of natural
gas production was hedged at an average floor price of
approximately US$3.94 per MMbtu,
while market prices averaged US$2.66
per MMbtu. ARC has hedged approximately 173,400 MMbtu per day of
natural gas production for 2016 and a portion of natural gas
production is hedged for the period 2017 through 2020. ARC's
natural gas hedging portfolio includes AECO basis swap contracts
which fix the AECO price received to approximately 83 to 90 per
cent of the Henry Hub NYMEX price on a portion of its natural gas
volumes for 2016 through 2020. ARC's natural gas hedges support
long-term development economics for ARC's significant natural gas
resource base. Details regarding ARC's natural gas hedged volumes
and prices for the period 2016 through 2020 are outlined in the
table below.
ARC will continue to take positions in natural gas, crude oil,
foreign exchange rates, power and interest rates, as appropriate,
to provide greater certainty over future cash flows. For a complete
listing and terms of ARC's hedging contracts, see Note 16
"Financial Instruments and Market Risk
Management" in the audited Consolidated Financial
Statements and Notes for the three and twelve months ended
December 31, 2015 and 2014.
Hedge Positions Summary
(1)
|
|
|
|
|
|
|
|
|
|
As at February 10, 2016
|
2016
|
2017
|
2018
|
2019
|
2020
|
Crude Oil - Cdn$ WTI
(2)
|
Cdn$/bbl
|
bbl/d
|
Cdn$/bbl
|
bbl/d
|
Cdn$/bbl
|
bbl/d
|
Cdn$/bbl
|
bbl/d
|
Cdn$/bbl
|
bbl/d
|
Ceiling
|
83.38
|
3,000
|
83.38
|
1,488
|
—
|
—
|
—
|
—
|
—
|
—
|
Floor
|
70.00
|
3,000
|
70.00
|
1,488
|
—
|
—
|
—
|
—
|
—
|
—
|
Swap
|
77.20
|
7,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Crude Oil - MSW (Differential to WTI)
(3)
|
US$/bbl
|
bbl/d
|
US$/bbl
|
bbl/d
|
US$/bbl
|
bbl/d
|
US$/bbl
|
bbl/d
|
US$/bbl
|
bbl/d
|
Swap
|
(3.75)
|
9,500
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Natural Gas - NYMEX
(4)
|
US$/MMbtu
|
MMbtu/d
|
US$/MMbtu
|
MMbtu/d
|
US$/MMbtu
|
MMbtu/d
|
US$/MMbtu
|
MMbtu/d
|
US$/MMbtu
|
MMbtu/d
|
Ceiling
|
4.79
|
105,000
|
4.81
|
145,000
|
4.92
|
90,000
|
5.00
|
40,000
|
—
|
—
|
Floor
|
4.00
|
105,000
|
4.00
|
145,000
|
4.00
|
90,000
|
4.00
|
40,000
|
—
|
—
|
Swap
|
4.00
|
40,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Natural Gas - AECO
(5)
|
Cdn$/GJ
|
GJ/d
|
Cdn$/GJ
|
GJ/d
|
Cdn$/GJ
|
GJ/d
|
Cdn$/GJ
|
GJ/d
|
Cdn$/GJ
|
GJ/d
|
Ceiling
|
—
|
—
|
—
|
—
|
—
|
—
|
3.30
|
10,000
|
3.60
|
30,000
|
Floor
|
—
|
—
|
—
|
—
|
—
|
—
|
3.00
|
10,000
|
3.08
|
30,000
|
Swap
|
2.99
|
30,000
|
2.75
|
10,000
|
2.96
|
40,000
|
3.16
|
20,000
|
3.35
|
30,000
|
Natural Gas - AECO Basis
(6)
|
AECO/NYMEX
|
MMbtu/d
|
AECO/NYMEX
|
MMbtu/d
|
AECO/NYMEX
|
MMbtu/d
|
AECO/NYMEX
|
MMbtu/d
|
AECO/NYMEX
|
MMbtu/d
|
Swap (percentage of NYMEX)
|
90.3
|
140,000
|
89.3
|
150,000
|
84.5
|
95,000
|
82.6
|
60,000
|
82.5
|
10,000
|
(1)
|
The prices and volumes in this table represent
averages for several contracts representing different periods. The
average price for the portfolio of options listed above does not
have the same payoff profile as the individual option contracts.
Viewing the average price of a group of options is purely for
indicative purposes. All positions are financially settled against
the benchmark prices disclosed in Note 16 "Financial Instruments
and Market Risk Management" in the financial
statements.
|
(2)
|
Crude oil prices referenced to WTI, multiplied by the
Bank of Canada monthly average noon day rate.
|
(3)
|
MSW differential refers to the discount between WTI
and the mixed sweet crude grade at Edmonton, calculated on a
monthly weighted average basis in US$.
|
(4)
|
Natural gas prices referenced to NYMEX Henry
Hub.
|
(5)
|
Natural gas prices referenced to AECO 7(a)
index.
|
(6)
|
ARC sells the majority of its natural gas production
based on AECO pricing. To reduce the risk of weak basis pricing
(AECO relative to NYMEX Henry Hub), ARC has hedged a portion of
production by tying ARC's price to a percentage of the NYMEX Henry
Hub natural gas price.
|
OPERATIONAL REVIEW
During the fourth quarter of 2015, ARC spent $149.5 million on capital activities, before land
and net acquisitions and dispositions, including drilling five
gross operated natural gas wells, the completion of 16 Tower oil
wells and construction of key infrastructure at Tower and
Dawson. During 2015, ARC spent
$541.6 million on capital activities,
before land and net acquisitions and dispositions, and drilled 60
gross operated wells (33 oil wells, 21 natural gas wells, five
liquids-rich wells, and one service well). The majority of capital
activity in the year was focused on our profitable northeast
British Columbia Montney region. Key infrastructure projects were
completed during the year, including the commissioning of the
Sunrise gas plant in the third quarter of 2015 and the Tower
battery expansion in the fourth quarter of 2015.
ARC achieved fourth quarter production of 119,243 boe per day,
within the fourth quarter volume guidance range of 118,000 to
122,000 boe per day, despite additional non-core property
divestments in the quarter. ARC's fourth quarter natural gas
production was 469 MMcf per day (66 per cent of total production)
and fourth quarter crude oil and liquids production was 41,053
barrels per day (34 per cent of total production). Fourth quarter
2015 total production was slightly higher relative to the fourth
quarter of 2014, and 11 per cent higher than the third quarter of
2015. Higher fourth quarter 2015 production is attributed to the
full-quarter impact of new wells flowing through the Sunrise gas
plant, as well as production from new horizontal oil wells in Tower
that were brought on-stream to coincide with the completion of the
Tower battery expansion.
With commodity prices experiencing further declines in the
fourth quarter of 2015, ARC held all northeast British Columbia facilities at capacity, while
maintaining future productive capacity behind pipe. This positions
ARC for a strong start to 2016, with sufficient inventory to hold
its northeast British Columbia
facilities at capacity throughout the first quarter. Due to
significant efficiency and cost savings realized in its capital
program during the year, ARC was able to accelerate and execute
certain strategic projects in 2015, further strengthening its
position heading into 2016.
Full-year 2015 production was 114,167 boe per day, within the
guidance range of 113,000 to 115,000 boe per day, and two per cent
higher relative to full-year 2014 production. Notably, the modest
growth in annual average production was achieved despite a
significantly reduced capital program and the divestment of
approximately 4,900 boe per day of production volumes throughout
the year, which resulted in an annual volume impact of
approximately 3,000 boe per day (approximately 40 per cent crude
oil and liquids at time of divestments). ARC's corporate base
decline rate remains at approximately 25 per cent despite asset
dispositions. The combination of low decline and efficient
replacement costs has resulted in a predictable and stable
production base.
In response to continued weakening of commodity prices
subsequent to the quarter, ARC is reducing its 2016 capital budget
to $390 million, down from the
$550 million previously announced.
The reduced budget will focus on balance sheet strength and
long-term value creation through continued development of ARC's
low-cost, high-value northeast British Columbia Montney assets.
With robust economics, ARC expects to spend approximately 75 per
cent of the 2016 capital budget in northeast British Columbia. The revised budget will
allow ARC to keep facilities at capacity at Dawson, Sunrise and Parkland/Tower, while
advancing key strategic projects at Dawson and Attachie. ARC will proceed with construction
of the Dawson Phase III gas processing and liquids-handling
facility, and continue to delineate its lands in Attachie. Full-year 2016 annual average
production is expected to be in the range of 116,000 to 120,000 boe
per day.
Parkland/Tower
ARC's Parkland/Tower property, located in the Montney play in northeast British Columbia, consists of 43 net sections
at Tower, which produces predominantly light oil and free
condensate with additional liquids in the gas stream; and 37 net
sections at Parkland, which produces predominantly liquids-rich
gas. With contiguous lands, these areas have shared ARC-operated
infrastructure.
During 2015, ARC spent approximately $179
million on capital activities at Parkland/Tower, drilling 22
gross operated oil wells at Tower and two liquids-rich wells at
Parkland. Parkland/Tower fourth quarter 2015 production averaged
23,740 boe per day (40 per cent crude oil and liquids and 60 per
cent natural gas), an eight per cent decrease from the fourth
quarter of 2014, and an 18 per cent increase from the third quarter
of 2015. Decreased production relative to the fourth quarter of
2014 is the result of lower Parkland volumes throughout the year,
partially offset by increased production at Tower. The increased
fourth quarter 2015 production relative to the third quarter of
2015 was the result of new wells brought on-stream to coincide with
the start-up of the Tower battery expansion, which was commissioned
in mid-November. As a result of the expanded battery, liquids
production in the area increased over 100 per cent in the fourth
quarter of 2015 relative to the prior quarter, to average 9,230
barrels per day.
During the fourth quarter, ARC completed the final eight-well
Tower pad (7-12) planned for 2015 and began testing its
extended-reach horizontal wells, which at an average lateral length
of 2,500 meters, are ARC's longest wells drilled to-date. These
wells are expected to be brought on production as facility capacity
becomes available. A continued focus on execution efficiency has
not only allowed ARC to capture cost savings in the area, but to
advance learnings in the play and further improve well performance.
Well performance at Tower continues to be exceptional, with the
12-16 eight-well pad ranking amongst the top oil wells in the
Western Canadian Sedimentary Basin during the fourth quarter of
2015. Three of the 2015 Tower wells are nearing total cumulative
production of 100,000 barrels of oil, having been on-stream for
less than four months. These wells are expected to achieve this
milestone nearly two months ahead of the best of our previous wells
drilled. Positive technical reserve additions were realized at
Tower for year-end 2015 due to this exceptional well
performance.
ARC expects to spend approximately $80
million at Parkland/Tower in 2016 to maintain production at
facility capacity, with plans to continue to optimize tight oil
completions at Tower. ARC plans to drill 12 gross operated oil
wells at Tower and three gross operated liquids-rich wells at
Parkland. On the back of strong well performance in 2015, ARC
expects 2016 annual average production at Parkland/Tower to be
approximately 28,500 boe per day.
Sunrise
ARC has a land position of 32 net sections at Sunrise, a dry
natural gas Montney play in
northeast British Columbia. With a
significant natural gas resource base, high well deliverability and
low capital and operating costs, Sunrise continues to provide high
rates of return despite relatively low natural gas prices. Fourth
quarter 2015 Sunrise production was approximately 123 MMcf per day
of natural gas production, a 166 per cent increase relative to the
fourth quarter of 2014, and a 25 per cent increase from the third
quarter of 2015. The increase in production is the result of new
wells coming on-stream and a full quarter of production from the
new 60 MMcf per day Sunrise gas plant. Strong well performance
throughout 2015 led to positive technical reserve additions at
Sunrise for year-end 2015.
During 2015, ARC spent a total of $119
million on capital activities at Sunrise to drill 14 gross
operated horizontal natural gas wells and to complete the
construction of the ARC-operated 60 MMcf per day gas processing
facility. During the fourth quarter of 2015, ARC drilled five gross
operated natural gas wells at Sunrise. Efficiencies continue to be
realized in drilling operations in the area, which resulted in
significant cost savings in the year. With strong well performance
and lower drilling costs, the economics at Sunrise continue to be
robust. ARC currently has sufficient productive capacity at Sunrise
to ensure the plant will remain full throughout the first quarter
of 2016.
In 2016, ARC plans to spend approximately $35 million to drill the final three gross
operated natural gas wells on an eight-well pad, which was
initiated in the fourth quarter of 2015, and to complete and tie-in
all eight wells on the pad. Throughout 2016, ARC will continue to
optimize well completions and advance technical learnings at
Sunrise. ARC expects 2016 annual average production at Sunrise to
be approximately 120 MMcf per day.
Dawson
The Dawson Montney play is the foundation of ARC's profitable
low-cost natural gas business. ARC has a land position of 133 net
Montney sections at Dawson. Dawson production averaged 166 MMcf per day of
natural gas and 990 barrels per day of condensate and liquids
during the fourth quarter of 2015. Fourth quarter 2015 production
was slightly lower relative to the fourth quarter of 2014 and 16
per cent higher than the third quarter of 2015. The higher
production in the fourth quarter of 2015 relative to the prior
quarter represents production coming back on-stream following the
completion of a planned facility turnaround in the third quarter of
2015. Dawson continues to exceed
expectations, delivering strong economics and significant cash flow
at current natural gas prices due to exceptional well results,
excellent capital efficiencies and low operating costs. At
Dawson, as at Tower and Sunrise,
strong well performance throughout 2015 led to positive technical
reserve additions for year-end 2015.
ARC spent approximately $67
million on capital activities at Dawson in 2015 on minor infrastructure
spending and to drill seven gross operated natural gas wells and
one service well. Well results at Dawson have further improved with advanced
frac design and execution. ARC continues to assess the two Lower
Montney wells drilled in the fourth quarter of 2014, which are
currently realizing free condensate yields of approximately 40
barrels per MMcf. During the fourth quarter of 2015, ARC continued
construction of the Dawson Phase III gas processing and
liquids-handling facility, completing the lease construction,
beginning procurement of long-lead items, and evaluating the acid
gas disposal well for the facility.
In 2016, ARC plans to spend approximately $140 million at Dawson to hold existing facilities at capacity
and proceed with the construction of Dawson Phase III. The first
stage of the facility is designed for processing capacity of 90
MMcf per day and 7,500 barrels per day of liquids-handling capacity
(approximately 50 per cent condensate-handling), and is expected to
be on-stream in late 2017. Dawson
gas production is expected to ramp up in the fourth quarter of 2017
in conjunction with the start-up of the plant, however liquids
production will be below capacity until wells with higher liquids
content are drilled. ARC expects annual 2016 production at
Dawson to average 165 MMcf per day
of natural gas and 1,000 barrels per day of condensate and
liquids.
Attachie
ARC's Attachie property is a
highly prospective, Montney oil
and liquids-rich natural gas play located in northeast British Columbia. During the second quarter of
2015, ARC acquired 89 net Montney
sections located directly north of ARC's existing Attachie lands. ARC has a land position in the
area of 287 net Montney
sections.
ARC drilled three gross operated wells on the newly-acquired
Attachie East lands in 2015, with encouraging initial test results.
In the fourth quarter of 2015, ARC added infrastructure at Attachie
West in preparation for drilling in the first quarter of 2016. 3D
seismic has now been acquired on the majority of the land, which
will assist ARC with the continued assessment of the large
prospective land base.
In 2016, ARC plans to spend approximately $40 million to drill two wells at Attachie West
and two appraisal wells at Attachie East. ARC will apply learnings
from other parts of the Montney to
further optimize fracs, and continue to assess this large and
highly prospective asset throughout 2016.
Ante Creek
ARC has a land position of 391 net sections at Ante Creek, a
Montney oil play in northern
Alberta with significant future
growth potential. Fourth quarter 2015 Ante Creek production
averaged 16,490 boe per day (approximately 45 per cent crude oil
and liquids), down five per cent relative to the fourth quarter of
2014 and up eight per cent compared to the third quarter of 2015.
The increased production from the prior quarter is the result of
new wells coming on-stream in the fourth quarter of 2015. The lower
year-over-year production is the result of significantly reduced
capital activity in the area in response to low commodity prices
throughout 2015. Considering the reduced capital investment at Ante
Creek in 2015, base production in the area performed well,
demonstrating the effectiveness of optimization activities and the
strength of the asset base.
In 2015, ARC spent a total of $62
million on capital activities at Ante Creek to drill five
gross operated oil wells and carry out maintenance, optimization
and completions activities.
ARC expects Ante Creek production to decrease slightly over the
course of 2016 as limited capital activity is planned for the area.
Focus during the year will be on optimization of base production
and facility improvements to maximize through-put. Annual 2016
production at Ante Creek is expected to average approximately
14,600 boe per day.
Pembina
ARC's Pembina Cardium assets continue to provide stable light
oil production. Pembina production averaged approximately 10,370
boe per day (80 per cent light oil and liquids) in the fourth
quarter of 2015, 14 per cent lower than the fourth quarter of 2014,
and two per cent lower than the third quarter of 2015. Lower fourth
quarter production was due to reduced activity levels in response
to lower commodity prices throughout 2015. The impact of lower
activity levels during the year was partially offset by a
successful base production optimization program.
In 2015, ARC spent approximately $29
million on capital activities at Pembina, including the
drilling of four gross operated Cardium horizontal oil wells, and
optimization and maintenance activities. During the fourth quarter
of 2015, ARC carried out completions activities that had been
deferred earlier in the year, with associated volumes coming
on-stream late in the fourth quarter. Well performance at Pembina
continues to exceed expectations as optimized completions and
waterflood management remain a key focus of operations in the
area.
ARC expects production at Pembina to decrease slightly over the
course of 2016, as limited capital activity is planned for the
area. Annual production for 2016 at Pembina is expected to average
approximately 8,900 boe per day.
Southeast Saskatchewan
and Manitoba
ARC's Southeast Saskatchewan
and Manitoba region contributes
high-quality crude oil. Fourth quarter 2015 production averaged
approximately 9,310 boe per day of light oil, down 15 per cent from
the fourth quarter of 2014, and down three per cent from the third
quarter of 2015. Lower fourth quarter production was due to reduced
activity levels starting in late 2014, as well as the divestment of
ARC's Manitoba assets in the
fourth quarter of 2015. The divested assets had associated crude
oil production of approximately 1,300 boe per day, and 2P reserves
of approximately 3.9 MMboe, which accounts for less than one per
cent of ARC's 2015 2P reserves. The assets were sold for proceeds
of approximately $42 million.
In 2015, ARC spent approximately $25
million on development and optimization activities on
operated and non-operated properties in the region, including the
drilling of two gross operated oil wells in the first quarter of
the year.
Production in the area is expected to decline during 2016 as a
result of the divestment of ARC's Manitoba assets, and limited capital activity
planned for the area in 2016. ARC expects annual production for
2016 for this region to average approximately 7,400 boe per
day.
DIVIDENDS
As a dividend-paying corporation, ARC declares monthly dividends
to its shareholders. ARC continually assesses dividend levels in
light of commodity prices, capital expenditure programs, and
production volumes to ensure that dividends are in line with ARC's
long-term strategy and objectives.
ARC paid dividends totaling $0.30
per share for the fourth quarter of 2015 and $1.20 for the full-year 2015. The Board of
Directors has confirmed a dividend of $0.10 per share for January 2016, payable on February 16, 2016, and has conditionally declared
a monthly dividend of $0.05 per share
for February 2016 through
April 2016 payable as follows:
Record date
|
Ex-dividend date
|
Payment date
|
Per share amount
|
January 29, 2016
|
January 27, 2016
|
February 16, 2016
|
$0.10 (1)
|
February 29, 2016
|
February 25, 2016
|
March 15, 2016
|
$0.05 (2)
|
March 31, 2016
|
March 29, 2016
|
April 15, 2016
|
$0.05 (2)
|
April 29, 2016
|
April 27, 2016
|
May 16, 2016
|
$0.05 (2)
|
(1)
|
Confirmed on January 18, 2016.
|
(2)
|
Conditionally declared, subject to confirmation by
news release and further resolution by the Board of
Directors.
|
ARC's shareholders may receive dividend payments in the form of
cash or may elect to receive dividend payments in the form of
common shares through the Company's Stock Dividend Program ("SDP").
Alternatively, shareholders may reinvest cash dividends into
additional common shares of ARC through the Dividend Reinvestment
Program ("DRIP"). Participation in the SDP or DRIP is optional.
Shareholders will continue to receive dividend payments in cash
unless they choose to participate in the SDP or DRIP. Shareholders,
wherever resident, are encouraged to consult their own tax advisors
regarding the tax consequences to them of receiving cash or stock
dividends or participating in the DRIP.
During the fourth quarter of 2015, ARC declared dividends of
$103.8 million, of which $10.6 million was issued in the form of common
shares under the SDP and $41.2
million was reinvested into ARC shares through the DRIP. For
the full-year 2015, ARC declared dividends of $410.5 million; $44.5
million was issued through the SDP and $151 million was issued through the DRIP. The
DRIP and SDP are a source of funding for ARC's capital program.
For additional details regarding the SDP and DRIP, including
terms, eligibility, and enrollment procedures, please see our
website at www.arcresources.com.
The dividends have been designated as eligible dividends under
the Income Tax Act (Canada). The declaration of the dividends is
conditional upon confirmation by news release and is subject to any
further resolution of the Board of Directors. Dividends are subject
to change in accordance with ARC's dividend policy depending on a
variety of factors and conditions existing from time-to-time,
including fluctuations in commodity prices, production levels,
capital expenditure requirements, debt service requirements,
operating expenses, royalty burdens, foreign exchange rates and the
satisfaction of solvency tests imposed by the Business
Corporations Act (Alberta) for the declaration and payment of
dividends.
OUTLOOK
The foundation of ARC's business strategy is "risk-managed value
creation." High-quality assets, operational excellence, financial
strength, and top talent are the key principles underpinning ARC's
business strategy. ARC's goal is to create shareholder value in the
form of regular dividends and anticipated capital appreciation
relating to future profitable growth.
During this period of prolonged low commodity prices, ARC's
strategy and principles remain unchanged; we are focused on balance
sheet strength, value creation from the development of our
high-quality asset base, and long-term sustainability of our
business. In response to the continued deterioration of commodity
prices in late 2015 and early 2016, ARC is reducing its 2016
capital program to $390 million, from
the $550 million previously
announced. The reduced budget will focus on balance sheet strength
and long-term value creation through continued development of ARC's
low-cost, high-value northeast British Columbia Montney assets.
With robust economics, ARC expects to spend approximately 75 per
cent of the 2016 capital budget in northeast British Columbia. The revised budget will
allow ARC to hold facilities at capacity at Dawson, Sunrise and Parkland/Tower, while
advancing key strategic projects at Dawson and Attachie. ARC will proceed with construction
of the Dawson Phase III gas processing and liquids-handling
facility, and continue to delineate its lands at Attachie. Full-year 2016 annual average
production is expected to be in the range of 116,000 to 120,000 boe
per day.
Ongoing commodity price volatility may affect ARC's funds from
operations and profitability on capital programs. As continued
volatility is expected, ARC will continue to take steps to mitigate
these risks, focus on capital discipline and cost control, and
protect its strong financial position. ARC will adjust spending and
the pace of development, if required, to ensure balance sheet
strength is protected.
ARC's 2016 full-year guidance has been revised to incorporate
reduced 2016 capital spending of approximately $390 million. Reflecting the approximately 30 per
cent reduction in capital spending, ARC's full-year average
production guidance has been revised downward to a range of 116,000
to 120,000 boe per day from the previously guided range of 119,000
to 124,000 boe per day. ARC's full-year guidance for per boe
operating costs was lowered to a range of $7.40 to $7.80 per boe to reflect the deferral of
certain discretionary expenditures to future periods, and to
reflect the continued focus on ARC's northeast British Columbia
Montney assets, which have lower relative costs to operate. Lower
power prices and the revision of estimates for prior periods
benefited 2015 operating costs on a per boe basis; these items are
not expected to impact 2016 operating costs, and as such, the
guidance for 2016 operating costs on a per boe basis is higher
relative to 2015 actual results. All other 2016 per boe guidance
estimates that have changed from the original guidance announced on
November 4, 2015 reflect revised
production guidance for 2016.
|
|
|
|
|
|
|
2016 Original
Guidance(1)
|
2016 Revised Guidance
(1)
|
2015 Guidance(2)
|
2015 Actuals
|
% Variance from
Guidance
|
Production
|
|
|
|
|
|
|
Crude oil (bbl/d)
|
34,500 - 36,500
|
32,000 - 34,000
|
33,500 - 34,500
|
32,762
|
(2)
|
|
Condensate (bbl/d)
|
3,200 - 3,600
|
3,000 - 3,400
|
3,400 - 3,800
|
3,430
|
—
|
|
Natural gas (MMcf/d)
|
465 - 475
|
460 - 470
|
435 - 440
|
444.9
|
1
|
|
NGLs (bbl/d)
|
4,000 - 4,500
|
3,800 - 4,200
|
3,700 - 3,900
|
3,819
|
—
|
Total (boe/d)
|
119,000 - 124,000
|
116,000 - 120,000
|
113,000 - 115,000
|
114,167
|
—
|
Expenses ($/boe)
|
|
|
|
|
|
|
Operating (3)
|
7.70 - 8.10
|
7.40 - 7.80
|
7.50 - 7.70
|
7.15
|
(5)
|
|
Transportation
|
2.40 - 2.70
|
2.40 - 2.70
|
2.30 - 2.50
|
2.33
|
—
|
|
G&A expenses before share-based compensation
plans
|
1.45 - 1.55
|
1.55 - 1.65
|
1.65 - 1.70
|
1.48
|
(10)
|
|
G&A - share-based compensation plans
(4)
|
0.55 - 0.75
|
0.45 - 0.65
|
0.35 - 0.60
|
0.17
|
(51)
|
|
Interest
|
1.00 - 1.20
|
1.10 - 1.30
|
1.10 - 1.30
|
1.22
|
—
|
Current income tax (per cent of funds from
operations) (5)
|
0 - 5
|
0 - 5
|
0 - 2
|
—
|
—
|
Capital expenditures before land purchases and net
property acquisitions (dispositions) ($ millions)
|
550
|
390
|
550
|
541.6
|
(2)
|
Land purchases and net property
dispositions
|
—
|
—
|
—
|
(67.7)
|
N/A
|
($ millions)
|
Weighted average shares, diluted
(millions)
|
351
|
351
|
339
|
341
|
1
|
(1)
|
2016 revised production guidance incorporates impact
of approximately 1,300 boe per day of divested non-core crude oil
assets at the end of 2015 and does not take into account the impact
of any dispositions that may occur during 2016.
|
(2)
|
Incorporates impact of approximately 3,600 boe per
day of divested non-core assets throughout the first nine months of
2015 (75 per cent natural gas), which resulted in an annual volume
impact of approximately 2,200 boe per day of
production.
|
(3)
|
Actual results for the year ended December 31, 2015
include a reduction of approximately $0.40 per boe due to a
revision of estimates for prior period operating
costs.
|
(4)
|
Comprises expenses recognized under the Restricted
Share Unit and Performance Share Unit Plan, Share Option Plan and
Long-term Restricted Share Award Plan. In periods where substantial
share price fluctuation occurs, ARC's G&A expenses are subject
to greater volatility.
|
(5)
|
The 2015 and 2016 corporate tax estimates vary
depending on level of commodity prices.
|
ARC's 2015 financial and operating results were largely in line
with guidance. Production for the year ended December 31, 2015 fell within the guidance range;
crude oil production was two per cent below the guidance range
while natural gas production averaged slightly above the guidance
range. On a per boe basis, ARC's 2015 operating expenses were below
the 2015 guidance range due to the deferral of certain
discretionary spending throughout the year, as well as general cost
savings and diligent cost control efforts undertaken by ARC's field
operations team. ARC's 2015 G&A expenses were below the 2015
guidance due to lower discretionary spending as well as reduced
costs associated with ARC's share-based compensation plans due to
the reduction in ARC's share price at December 31, 2015. ARC's 2015 capital
expenditures, before land and net property acquisitions and
dispositions, were slightly below guidance due to prudent capital
management, realized cost savings, and the deferral of certain
projects in the year.
ARC RESOURCES LTD.
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As at
|
|
|
|
|
|
|
|
(Cdn$ millions)
|
December 31, 2015
|
|
December 31, 2014
|
|
|
|
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
167.3
|
|
7.1
|
|
Short-term investment
|
3.2
|
|
3.6
|
|
Accounts receivable
|
116.6
|
|
165.0
|
|
Prepaid expenses
|
14.3
|
|
14.3
|
|
Risk management contracts
|
207.5
|
|
131.8
|
|
Assets held for sale
|
—
|
|
5.8
|
|
508.9
|
|
327.6
|
Reclamation fund
|
34.3
|
|
35.2
|
Risk management contracts
|
204.7
|
|
128.0
|
Exploration and evaluation assets
|
276.4
|
|
266.4
|
Property, plant and equipment
|
4,659.7
|
|
5,320.1
|
Goodwill
|
248.2
|
|
248.2
|
Total assets
|
5,932.2
|
|
6,325.5
|
|
|
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable and accrued
liabilities
|
137.5
|
|
339.1
|
|
Current portion of long-term debt
|
57.9
|
|
49.5
|
|
Current portion of asset retirement
obligations
|
18.0
|
|
13.0
|
|
Dividends payable
|
34.7
|
|
32.0
|
|
Risk management contracts
|
1.6
|
|
1.0
|
|
Liabilities associated with assets held for
sale
|
—
|
|
5.5
|
|
249.7
|
|
440.1
|
Risk management contracts
|
0.7
|
|
1.0
|
Long-term debt
|
1,056.4
|
|
1,025.3
|
Long-term incentive compensation
liability
|
19.5
|
|
29.1
|
Other deferred liabilities
|
14.1
|
|
15.8
|
Asset retirement obligations
|
555.2
|
|
603.1
|
Deferred taxes
|
648.1
|
|
659.3
|
Total liabilities
|
2,543.7
|
|
2,773.7
|
Commitments and contingencies
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
Shareholders' capital
|
4,536.9
|
|
3,951.1
|
|
Contributed surplus
|
12.6
|
|
8.6
|
|
Deficit
|
(1,161.1)
|
|
(407.9)
|
|
Accumulated other comprehensive
income
|
0.1
|
|
—
|
Total shareholders' equity
|
3,388.5
|
|
3,551.8
|
Total liabilities and shareholders'
equity
|
5,932.2
|
|
6,325.5
|
ARC RESOURCES LTD.
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
For the three and twelve months ended December
31
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December
31
|
|
December
31
|
(Cdn$ millions, except per share
amounts)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
REVENUE
|
|
|
|
|
|
|
Sales of crude oil, natural gas, condensate,
natural
gas liquids and other
income
|
285.9
|
454.1
|
|
1193.7
|
2107.7
|
|
Royalties
|
(22.3)
|
(62.7)
|
|
(103.3)
|
(298.0)
|
|
263.6
|
391.4
|
|
1090.4
|
1809.7
|
|
|
|
|
|
|
Gain on risk management contracts
|
93.5
|
237.4
|
|
338.0
|
176.2
|
|
357.1
|
628.8
|
|
1428.4
|
1985.9
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
Transportation
|
24.0
|
27.3
|
|
97.0
|
91.6
|
|
Operating
|
68.2
|
92.8
|
|
298.0
|
364.2
|
|
Exploration and evaluation expenses
|
—
|
9.5
|
|
46.9
|
39.4
|
|
General and administrative
|
14.0
|
26.0
|
|
68.6
|
84.3
|
|
Interest and financing charges
|
13.3
|
12.9
|
|
51.0
|
47.3
|
|
Accretion of asset retirement
obligations
|
3.3
|
3.7
|
|
13.4
|
14.9
|
|
Depletion, depreciation, amortization and
impairment
|
263.0
|
279.4
|
|
1065.4
|
758.5
|
|
Loss on foreign exchange
|
33.9
|
32.3
|
|
177.8
|
73.7
|
|
Loss on short-term investment
|
0.5
|
1.5
|
|
0.4
|
—
|
|
Gain on disposal of petroleum and natural gas
properties
|
(8.3)
|
(0.1)
|
|
(31.6)
|
1.8
|
|
411.9
|
485.3
|
|
1786.9
|
1475.7
|
Provision for (recovery of) income
taxes
|
|
|
|
|
|
|
Current
|
(3.0)
|
6.3
|
|
(9.0)
|
70.3
|
|
Deferred
|
3.2
|
23.5
|
|
(6.8)
|
59.1
|
|
0.2
|
29.8
|
|
(15.8)
|
129.4
|
|
|
|
|
|
|
Net income (loss)
|
(55.0)
|
113.7
|
|
(342.7)
|
380.8
|
|
|
|
|
|
|
Net income (loss) per share
|
|
|
|
|
|
|
Basic
|
(0.16)
|
0.36
|
|
(1.01)
|
1.20
|
|
Diluted
|
(0.16)
|
0.36
|
|
(1.01)
|
1.20
|
ARC RESOURCES LTD.
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME(unaudited)
|
For the three and twelve months ended December
31
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31
|
|
December 31
|
(Cdn$ millions)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
Net income (loss)
|
(55.0)
|
113.7
|
|
(342.7)
|
380.8
|
Other comprehensive income
|
|
|
|
|
|
Items that may be reclassified into earnings, net of
tax:
|
|
|
|
|
|
|
Net unrealized gain on reclamation fund
investments
|
—
|
—
|
|
0.1
|
—
|
Other comprehensive income
|
—
|
—
|
|
0.1
|
—
|
Comprehensive income (loss)
|
(55.0)
|
113.7
|
|
(342.6)
|
380.8
|
ARC RESOURCES LTD.
|
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
|
For the years ended December 31
|
|
(Cdn$ millions)
|
Shareholders'
Capital
|
|
Contributed
Surplus
|
|
Deficit
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders'
Equity
|
December 31, 2013
|
3,800.8
|
|
3.8
|
|
(408.5)
|
|
—
|
|
3,396.1
|
Total comprehensive income
|
—
|
|
—
|
|
380.8
|
|
—
|
|
380.8
|
Shares issued pursuant to the dividend reinvestment
program
|
115.9
|
|
—
|
|
—
|
|
—
|
|
115.9
|
Shares issued pursuant to the stock dividend
program
|
35.1
|
|
—
|
|
—
|
|
—
|
|
35.1
|
Cancellation of shares and return of accrued
dividends
|
(0.7)
|
|
1.9
|
|
—
|
|
—
|
|
1.2
|
Recognized under share-based compensation
plans
|
—
|
|
2.9
|
|
—
|
|
—
|
|
2.9
|
Dividends declared
|
—
|
|
—
|
|
(380.2)
|
|
—
|
|
(380.2)
|
December 31, 2014
|
3,951.1
|
|
8.6
|
|
(407.9)
|
|
—
|
|
3,551.8
|
Net income (loss)
|
—
|
|
—
|
|
(342.7)
|
|
—
|
|
(342.7)
|
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
0.1
|
|
0.1
|
Total comprehensive income (loss)
|
—
|
|
—
|
|
(342.7)
|
|
0.1
|
|
(342.6)
|
Shares issued for cash
|
402.7
|
|
—
|
|
—
|
|
—
|
|
402.7
|
Shares issued pursuant to the dividend reinvestment
program
|
151.0
|
|
—
|
|
—
|
|
—
|
|
151.0
|
Shares issued pursuant to the stock dividend
program
|
44.5
|
|
—
|
|
—
|
|
—
|
|
44.5
|
Share issuance costs (1)
|
(12.4)
|
|
—
|
|
—
|
|
—
|
|
(12.4)
|
Recognized under share based compensation
plans
|
—
|
|
4.0
|
|
—
|
|
—
|
|
4.0
|
Dividends declared
|
—
|
|
—
|
|
(410.5)
|
|
—
|
|
(410.5)
|
December 31, 2015
|
4,536.9
|
|
12.6
|
|
(1,161.1)
|
|
0.1
|
|
3,388.5
|
(1)
|
Amount is net of deferred tax of $4.4
million.
|
ARC RESOURCES LTD.
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
For the three and twelve months ended December
31
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
December 31
|
|
December 31
|
(Cdn$ millions)
|
2015
|
2014
|
|
2015
|
2014
|
CASH FLOW FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
Net income (loss)
|
(55.0)
|
113.7
|
|
(342.7)
|
380.8
|
Add items not involving cash:
|
|
|
|
|
|
|
Unrealized gain on risk management
contracts
|
(41.6)
|
(212.6)
|
|
(152.0)
|
(205.3)
|
|
Accretion of asset retirement
obligations
|
3.3
|
3.7
|
|
13.4
|
14.9
|
|
Depletion, depreciation, amortization and
impairment
|
263
|
279.4
|
|
1,065.4
|
758.5
|
|
Exploration and evaluation expenses
|
—
|
9.5
|
|
46.9
|
39.4
|
|
Unrealized loss on foreign exchange
|
34.9
|
32.7
|
|
178.5
|
73.8
|
|
Gain on disposal of petroleum and natural gas
properties
|
(8.3)
|
(0.1)
|
|
(31.6)
|
1.8
|
|
Deferred tax expense (recovery)
|
3.2
|
23.5
|
|
(6.8)
|
59.1
|
|
Other
|
1.2
|
1.9
|
|
2.3
|
1.0
|
Net change in other liabilities
|
(4.0)
|
0.4
|
|
(22.0)
|
(20.4)
|
Change in non-cash working capital
|
(20.9)
|
39.1
|
|
(62.4)
|
49.4
|
|
175.8
|
291.2
|
|
689.0
|
1,153.0
|
CASH FLOW FROM (USED IN) FINANCING
ACTIVITIES
|
|
|
|
|
|
Issuance (repayment) of long-term debt under
revolving credit facilities, net
|
—
|
65.1
|
|
(83.8)
|
(22.1)
|
Issuance of senior notes
|
—
|
—
|
|
—
|
166.6
|
Repayment of senior notes
|
(12.9)
|
(10.9)
|
|
(53.8)
|
(43.9)
|
Issuance of common shares
|
—
|
—
|
|
402.7
|
—
|
Share issuance costs
|
(0.1)
|
—
|
|
(16.8)
|
—
|
Cash dividends paid
|
(51.7)
|
(54.7)
|
|
(212.3)
|
(228.6)
|
|
(64.7)
|
(0.5)
|
|
36.0
|
(128.0)
|
CASH FLOW FROM (USED IN) INVESTING
ACTIVITIES
|
|
|
|
|
|
Acquisition of petroleum and natural gas
properties
|
(0.3)
|
—
|
|
(14.4)
|
(71.7)
|
Disposal of petroleum and natural gas
properties
|
42.2
|
2.4
|
|
88.8
|
37.5
|
Property, plant and equipment development
expenditures
|
(140.3)
|
(263.0)
|
|
(514.0)
|
(958.2)
|
Exploration and evaluation asset
expenditures
|
(13.6)
|
(4.3)
|
|
(33.9)
|
(49.4)
|
Net reclamation fund withdrawals
(contributions)
|
(1.1)
|
(1.2)
|
|
0.9
|
(2.6)
|
Change in non-cash working capital
|
(35.7)
|
(18.0)
|
|
(92.2)
|
26.5
|
|
(148.8)
|
(284.1)
|
|
(564.8)
|
(1,017.9)
|
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
|
(37.7)
|
6.6
|
|
160.2
|
7.1
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
|
205.0
|
0.5
|
|
7.1
|
—
|
CASH AND CASH EQUIVALENTS, END OF
PERIOD
|
167.3
|
7.1
|
|
167.3
|
7.1
|
The following are included in cash flow from
operating activities:
|
|
|
|
|
|
|
Income taxes paid in cash
|
—
|
4.3
|
|
42.8
|
30.4
|
|
Interest paid in cash
|
10.1
|
10.3
|
|
52.0
|
46.3
|
Forward-looking Information and
Statements
This news release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect," "anticipate," "continue,"
"estimate," "objective," "ongoing," "may," "will," "project,"
"should," "believe," "plans," "intends," "strategy" and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the foregoing, this
news release contains forward-looking information and statements
pertaining to the following: guidance as to the capital expenditure
plans of ARC in 2016 and its 2016 production, as well as operating
and general and administrative costs, and the impact of the
government of Alberta's recently
announced Modernized Royalty Framework on ARC's results of
operations, under the heading "Financial and Operational
Highlights," as to its views on future commodity prices under the
heading "Economic Environment," as to its risk management plans for
2016 and beyond under the heading "Risk Management," as to its
production, exploration and development plans, and capital
expenditures for 2016 and beyond under the heading "Operational
Review," ARC's plans in relation to future dividend levels under
the heading "Dividends," and all matters in respect of 2016
guidance under the heading "Outlook."
The forward-looking information and statements contained in this
news release reflect material factors and expectations and
assumptions of ARC including, without limitation: that ARC will
continue to conduct its operations in a manner consistent with past
operations; the general continuance of current industry conditions;
the continuance of existing (and in certain circumstances, the
implementation of proposed) tax, royalty and regulatory regimes;
the accuracy of the estimates of ARC's reserves and resource
volumes; certain commodity price and other cost assumptions; and
the continued availability of adequate debt and equity financing
and funds from operations to fund its planned expenditures. ARC
believes the material factors, expectations and assumptions
reflected in the forward-looking information and statements are
reasonable but no assurance can be given that these factors,
expectations and assumptions will prove to be correct.
The forward-looking information and statements included in this
news release are not guarantees of future performance and should
not be unduly relied upon. Such information and statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results or events to differ materially from those
anticipated in such forward-looking information or statements
including, without limitation: changes in commodity prices; changes
in the demand for or supply of ARC's products; unanticipated
operating results or production declines; changes in tax or
environmental laws, royalty rates or other regulatory matters;
changes in development plans of ARC or by third-party operators of
ARC's properties, increased debt levels or debt service
requirements; inaccurate estimation of ARC's oil and gas reserve
and resource volumes; limited, unfavorable or a lack of access to
capital markets; increased costs; a lack of adequate insurance
coverage; the impact of competitors; and certain other risks
detailed from time to time in ARC's public disclosure documents
(including, without limitation, those risks identified in this news
release and in ARC's Annual Information Form).
The forward-looking information and statements contained in this
news release speak only as of the date of this news release, and
none of ARC or its subsidiaries assumes any obligation to publicly
update or revise them to reflect new events or circumstances,
except as may be required pursuant to applicable laws.
ARC Resources Ltd. ("ARC") is one of Canada's largest conventional oil and gas
companies with an enterprise value of approximately $6.8 billion. ARC's Common Shares trade on the
TSX under the symbol ARX.
ARC RESOURCES LTD.
Myron M. Stadnyk
President and Chief Executive Officer
SOURCE ARC Resources Ltd.