ARC Resources Ltd. reported a net income of $207.72 million (CAD 278.9 million) for the second quarter, a decrease of 63.45 percent compared to its net income of $569.2 million (CAD 762.9 million) for the second quarter of 2022.
The company’s funds from operations were $417.8 million (CAD 561 million) in the second quarter, representing a decrease of $116.9 million (CAD 157 million) from the first quarter of 2023. This decrease was driven by lower commodity prices. Partially offsetting lower commodity prices were slightly higher production volumes and lower realized losses on risk management contracts, ARC said in a press release.
ARC’s cash flow from operating activities was $410.4 million (CAD 551 million) in the second quarter, increasing by $8.2 million (CAD 11 million) from the previous quarter, according to the release.
ARC posted second-quarter production of 343,630 barrels of oil equivalent per day (boepd), divided into 63 percent natural gas and 37 percent crude oil and liquids. Production increased two percent year-over-year, and 13 percent on a per-share basis, the company said.
The wildfires in Alberta, as well as associated downtime on third-party pipelines and infrastructure, affected ARC’s second-quarter production by approximately 4,100 boepd. The company said that its production was fully restored in the quarter, with June production averaging 355,000 boepd. The company’s assets did not sustain any damages, and its owned and operated infrastructure and dual-connected facilities were “critical in minimizing the operating and financial impact”, ARC said.
ARC forecasts production in the second half to average approximately 360,000 boepd. The increase in production compared to the first half of the year would be driven primarily by the Kakwa, Greater Dawson, and Sunrise assets returning to full production levels, the company said. At the Kakwa natural gas play, ARC reported an 18 percent improvement in well productivity due to improved design progressions and wider inter-well spacing. With approximately 55 percent of Kakwa undeveloped, ARC said it can sustain production at approximately 180,000 boepd for the next 15 years.
In the second quarter, ARC completed its Sunrise facility expansion, with a capacity of 80 million cubic feet per day (MMcfpd), drilled 32 wells, and completed 49 wells. According to the company website, Sunrise is a dry natural gas play with a low-cost structure, industry-leading emissions profile, and excellent well deliverability. ARC commissioned a facility expansion in 2021, bringing onstream an additional 40 MMcfpd of natural gas processing and sales capacity to the area.
ARC’s guidance for the year remains unchanged, with full-year production still projected at between 350,000 and 355,000 boepd, with 62 percent natural gas and 38 percent crude oil and liquids. Planned capital expenditures remain between $1.34 billion (CAD 1.8 billion) and $1.42 billion (CAD 1.9 billion).
In the first quarter, ARC began the first phase of its Attachie gas play development with an expected investment of $551.2 million (CAD 740 million). The company projects a full productive capacity of 40,000 boepd in the first half of 2025. Long-term takeaway capacity for all products has been secured for multiple phases of Attachie, the company said.
ARC said it has “transformed to become the largest condensate producer and largest Montney producer in Canada, establishing its large Montney position early and investing in organic development and counter-cyclical acquisitions and divestitures”. The company’s strategy is to execute long-term global liquefied natural gas supply agreements.
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