ARC RESOURCES LTD. REPORTS FIRST QUARTER 2024 RESULTS
CALGARY, AB, May 9, 2024 /CNW/ - (TSX:ARX) ARC Resources Ltd. ("ARC" or the "Company") today reported its first quarter 2024 financial and operational results.
HIGHLIGHTS
- ARC delivered first quarter 2024 production of 352,328 boe(1) per day (63 per cent natural gas and 37 per cent crude oil and liquids(2)). Production increased four per cent year-over-year, and eight per cent on a per share(3) basis.
- ARC generated funds from operations of $607 million(4) ($1.01 per share(5)) and recognized cash flow from operating activities of $636 million ($1.06 per share).
- Market diversification contributed to a realized natural gas price of $3.19 per Mcf in the first quarter. This represents a 56 per cent premium to the average AECO 7A Monthly Index price of $2.05 per Mcf, and an increase relative to the NYMEX Henry Hub benchmark of US$2.24 per MMBtu (C$3.02 per MMBtu).
- Operating expense of $4.26 per boe and transportation expense of $5.35 per boe were both below the bottom end of 2024 Company guidance.
- Free funds flow registered at $102 million(6) ($0.17 per share(7)) in the first quarter, while capital expenditures totalled $505 million(6). ARC recognized net income of $185 million ($0.31 per share).
- ARC distributed approximately 114 per cent of free funds flow, or $117 million, to shareholders during the first quarter. ARC intends to return essentially all free funds flow to shareholders through the base dividend and share repurchases in 2024.
- ARC declared dividends of $102 million or $0.17 per share and repurchased 0.6 million common shares for $15 million under its normal course issuer bid ("NCIB").
- The 2024 capital budget and production guidance remain unchanged. Planned capital expenditures remain between $1.75 to $1.85 billion(8) and full-year production is forecast to average between 350,000 and 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids).
- Attachie Phase I remains on-schedule and on-budget with several milestones achieved during the first quarter. Full-productive capacity of 40,000 boe per day (40 per cent natural gas, 60 per cent crude oil and liquids) is anticipated for the first quarter of 2025, with commissioning volumes expected late 2024.
- On April 4, 2024, ARC announced a long-term liquefaction tolling services agreement with Cedar LNG Partners LP. Under this agreement, ARC will deliver approximately 200 MMcf per day of natural gas for liquefaction for a term of 20 years commencing with commercial operations anticipated in the second half of 2028.
- ARC has also entered into a non-binding Heads of Agreement with an investment-grade rated company for the purchase and sale of an equivalent volume of LNG offtake, approximately 1.5 million tonnes per annum of LNG.
- As of March 31, 2024, ARC's long-term debt balance was $1.1 billion and its net debt balance was $1.3 billion(4) or 0.5 times funds from operations(4).
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 months ended March 31, 2024, are available on ARC's website at www.arcresources.com and under ARC's SEDAR+ profile at www.sedarplus.ca. The disclosure under the section entitled "Non-GAAP and Other Financial Measures" in ARC's MD&A as at and for the three months ended March 31, 2024 (the "Q1 2024 MD&A") is incorporated by reference into this news release.
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(1) |
ARC has adopted the standard six thousand cubic feet ("Mcf") of natural gas 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. |
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(2) |
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. |
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(3) |
Represents average daily production divided by the diluted weighted average common shares outstanding for the respective three months ended March 31. |
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(4) |
See Note 8 "Capital Management" in the financial statements and "Non-GAAP and Other Financial Measures" in the Q1 2024 MD&A for information relating to this capital management measure, which information is incorporated by reference into this news release. |
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(5) |
See "Non-GAAP and Other Financial Measures" in the Q1 2024 MD&A for an explanation of the composition of this supplementary financial measure, which information is incorporated by reference into this news release. |
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(6) |
Non-GAAP financial measure that is not a standardized financial measure under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and may not be comparable to similar financial measures disclosed by other issuers. See "Non-GAAP and Other Financial Measures" in the Q1 2024 MD&A for information relating to this non-GAAP financial measure, which information is incorporated by reference into this news release. See "Non-GAAP and Other Financial Measures" of this news release for the most directly comparable financial measure disclosed in ARC's current financial statements to which such non-GAAP financial measure relates and a reconciliation to such comparable financial measure. |
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(7) |
Non-GAAP ratio that is not a standardized financial measure under IFRS Accounting Standards and may not be comparable to similar financial measures disclosed by other issuers. Free funds flow, a non-GAAP financial measure, is used as a component of the non-GAAP ratio. See "Non-GAAP and Other Financial Measures" in the Q1 2024 MD&A for the non-GAAP ratio for the comparative period and other information relating to this non-GAAP ratio, which information is incorporated by reference into this news release. |
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(8) |
Refer to the section entitled "About ARC Resources Ltd." contained within the Q1 2024 MD&A for historical capital expenditures, which information is incorporated by reference into this news release. |
FINANCIAL AND OPERATIONAL RESULTS
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(Cdn$ millions, except per share amounts(1), boe amounts, |
Three Months Ended |
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and common shares outstanding) |
December 31, 2023 |
March 31, 2024 |
March 31, 2023 |
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FINANCIAL RESULTS |
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Net income |
506.3 |
185.4 |
574.9 |
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Per share |
0.84 |
0.31 |
0.93 |
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Cash flow from operating activities |
698.9 |
636.3 |
540.3 |
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Per share(2) |
1.16 |
1.06 |
0.87 |
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Funds from operations |
699.2 |
606.9 |
717.4 |
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Per share |
1.16 |
1.01 |
1.16 |
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Free funds flow |
154.7 |
102.3 |
230.0 |
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Per share |
0.26 |
0.17 |
0.37 |
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Dividends declared |
101.7 |
101.6 |
91.9 |
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Per share |
0.17 |
0.17 |
0.15 |
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Cash flow used in investing activities |
434.3 |
499.8 |
397.4 |
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Capital expenditures |
544.5 |
504.6 |
487.4 |
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Long-term debt |
1,148.9 |
1,144.0 |
1,056.0 |
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Net debt |
1,317.1 |
1,336.1 |
1,264.7 |
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Common shares outstanding, weighted average diluted (millions) |
602.8 |
598.4 |
619.2 |
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Common shares outstanding, end of period (millions) |
596.9 |
596.7 |
611.2 |
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OPERATIONAL RESULTS |
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Production |
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Crude oil and condensate (bbl/day) |
85,805 |
82,672 |
78,969 |
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Natural gas (MMcf/day) |
1,380 |
1,322 |
1,264 |
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NGLs (bbl/day) |
49,474 |
49,411 |
48,800 |
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Total (boe/day) |
365,248 |
352,328 |
338,377 |
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Average realized price |
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Crude oil ($/bbl)(2) |
93.34 |
83.83 |
92.78 |
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Condensate ($/bbl)(2) |
99.09 |
94.58 |
104.10 |
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Natural gas ($/Mcf)(2) |
3.33 |
3.19 |
5.89 |
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NGLs ($/bbl)(2) |
21.97 |
25.65 |
28.59 |
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Average realized price ($/boe)(2) |
38.69 |
37.49 |
50.16 |
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Netback |
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Commodity sales from production ($/boe)(3) |
38.69 |
37.49 |
50.16 |
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Royalties ($/boe)(3) |
(5.14) |
(4.15) |
(7.96) |
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Operating expense ($/boe)(3) |
(4.13) |
(4.26) |
(4.50) |
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Transportation expense ($/boe)(3) |
(4.59) |
(5.35) |
(5.61) |
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Netback ($/boe)(3) |
24.83 |
23.73 |
32.09 |
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TRADING STATISTICS(4) |
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High price |
23.77 |
24.32 |
18.07 |
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Low price |
19.02 |
19.44 |
14.33 |
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Close price |
19.67 |
24.15 |
15.33 |
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Average daily volume (thousands of shares) |
4,271 |
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