ARC Resources Ltd.

Good morning, ladies and gentlemen, and welcome to the ARC Resources Limited Quarter 3 2021 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Friday, November 5, 2021. I would like to turn the conference over to Dale Luko. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us on our third quarter earnings conference call. Joining me on the call today are Terry Anderson, President and Chief Executive Officer, Chris Bibby, Senior Vice President and Chief Financial Officer, Laura Conrad, Senior Vice President Development, and Armin Jahangiri, Senior Vice President Capital Projects. Before I turn it over to our executive team to take you through our Q3 results in 2022 budget, I'll remind everyone that this conference call includes forward-looking statements and non-GAAP measures with the associated risks outlined in the earnings release and our MD&A. All dollar amounts discussed today are in Canadian dollars unless otherwise stated. The press release, financials, MD&A are also available on our website as well as CDAR. Following our prepared remarks, we'll open the line to questions. With that, I'll turn it over to our President and CEO, Terry Anderson. Terry, please go ahead.

Thanks, Gail, and good morning, everyone. I'll keep my opening remarks brief and focused on what I believe is most relevant, which can be summarized in five key points. First being the continual operational excellence of our business. Second, the completion of the seven generations integration. Third, our record production and free cash flow per share. Fourth, the accelerated shareholder returns. And fifth, the 2022 budget announcement. So over the past 12 to 24 months, we have observed the complexity of the energy environment and the importance of having a reliable and safe source of energy supply. ARCA has established itself as a leading provider of that energy and is well positioned to retain that moving forward. Q3 was excellent across the board and really demonstrated the strength of our assets and the best-in-class people that run them. The team continues to build on our 25-year track record of safe and efficient operations. We delivered both record production and free cash flow per share, eclipsing the previous mark set way back in 2006. Our operational momentum is very strong. Continuous improvement and our focus on operational excellence is truly part of our DNA, and we are seeing this materialize again in our results. Production of 354,000 BOE per day was above analyst expectations and we continue to find tangible ways to improve efficiencies and reduce costs. Capital well costs have decreased by greater than 10% year over year, and we anticipate that further efficiencies will offset these inflationary pressures that our industry is facing. I think it's important to step back to realize our operating costs were $3.58 of DOE, and considering our production is 40% liquid, that is an exceptional number. Even though commodity prices are strong, we are still very focused on being a low-cost producer. In addition, we made excellent progress on the integration efforts. Today, we have realized 90% of the $160 million of synergies and are now on pace to exceed that total by year-end, primarily due to greater-than-anticipated capital synergies being realized. We anticipated that the $25 million in capital synergies outlined in April will now double by year-end. It is true that large-scale integrations like seven generations are often difficult to execute successfully. However, the ARC team has worked tirelessly for six months, and the integration is now substantially complete, and we are realizing a significant value from this effort. We generated over a half a billion dollars, or 69 cents per share, of free cash flow in the quarter, approximately 6% of our market cap, which was used to pay down debt, and accelerate capital returns to our shareholders much faster than we anticipated. To this end, we have increased our quarterly dividend by 52% to 10 cents a share. The dividend increase reflects two things. First, our conviction in our business, and second, the greater profitability from fully capturing the synergies. We also put in place an NCIB as a complimentary value creation tool. Since commencing in September, we have allocated over $200 million of free cash flow to repurchase 20 million shares, or approximately 3% of our stock. Even with the conservative commodity price assumption, we perceive the intrinsic value of our business to be much greater than the share price, and therefore will continue to utilize the NCID to create value and per share growth. In addition to the quarter, we released our preliminary 2022 budget, which balances reinvestment with an accelerated return of capital to provide an attractive total return. Next year, the capital budget is $1.2 to $1.3 billion, of which $1.1 billion is to sustain production, and the balance will be invested in an 80 million cubic feet a day expansion at Sunrise, long lead items at Atachi, and emissions reduction project at Dawson. Our budget is expected to deliver average production of 335,000 to 350,000 BUE per day. The sunrise expansion is one of our highest return opportunities in our portfolio. Supply cost is well below a dollar per MCF. Its emissions intensity is near zero, and it's an excellent supply source for LNG, given its proximity to inlet of coastal gas link. Related to that, we recently entered into a long-term supply gas agreement with an LNG Canada participant to deliver 150 million cubic feet a day of gas to the project, which equates to roughly 12% of our corporate natural gas volumes. We also continue to evaluate several measures to extract more profit along the value chain. Our resource depth, financial position, investment grade credit rating, and operating track record of delivering safely on time and on budget make us an excellent partner in these initiatives. Switching gears to Hitachi, we plan to invest 75 million on long lead time items and we have plenty of flexibility to change the pace of spending based on the outcomes of negotiations between the Blueberry River First Nations and the BC government. The total cost of phase one remains at approximately $600 million inclusive of the 75 million earmarked for 2022. Once on production, we expect Hitachi will generate $250 million of free cash flow at mid-cycle pricing or roughly $350 million at strip. The 2022 budget and dividend can be funded with cash flow down to $30 a barrel WTI. So with strip north of $70 today, there'll be meaningful return of capital component that Chris will talk about. Before turning it over to Chris, I want to stress that we can remain committed to building on our leading position as a low emissions producer with top tier governance practices. We are one of the lowest emissions producers in North America, and we've set out to further reduce our scope one and two emissions, both on an intensity and an absolute basis. We've committed to reducing our emissions intensity by 20% and absolute emissions by 70,000 tons of CO2 equivalent by 2025. Our targets are backed by a tangible plan to achieve them, and we continue to look for a viable and concrete path to becoming a net zero producer in the future. Finally, I want to again recognize our entire staff for their efforts in delivering a record quarter safely and efficiently, despite operating in a challenging environment. With that, I'll turn it over to Chris to touch briefly on our financial highlights.