ARC Resources Ltd.

My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Resources Second Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then 1 on your telephone keypad. If you'd like to withdraw your question, please press star, then the number two. Thank you. Mr. Lucco, you may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for joining us for our second quarter earnings conference call. Joining me today are Terry Anderson, President and Chief Executive Officer, and Chris Bibby, Chief Financial Officer. Before I turn it over to Terry and Chris to take you through our second quarter results, I'll remind everyone that this conference call includes forward-looking statements and non-GAAP and other financial 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. Finally, the press release, financial statements, and MD&A are 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, Dale, and good morning, everyone. We'll try to keep this conference call short, sweet, and to the point. As we know, many people are on vacation, and the rest of us want to go on vacation. I'll touch on a few noteworthy items before I turn the call over to Chris to discuss the financial highlights. First, the quarter itself was record-setting. Free funds flow and funds from operation per share were the highest in our 26 years, and this allowed us to further strengthen our balance sheet and accelerate returns to shareholders. We reinvested one-third of our cash flow into our assets to maintain production and generated $677 million of free funds flow, or $1 per share, which is equivalent to 7% of our market cap. 60% of that was returned to shareholders through the dividend and share repurchases, and the remainder was used to further strengthen our balance sheet. Reducing debt and the share count when your shares are dislocated from fair value are an excellent way to create value and represent permanent changes to our capital structure. We have now returned 11% of our market cap to shareholders over the past year through the growing base dividend and 10 months of share repurchases. Second, our operational momentum remains strong. Our scale and track record of operational excellence is helping to mitigate the tightness in supply chain and inflationary pressure on our business. Second quarter production was directly in line with expectations, and all of our planned maintenance was completed safely, on time, and within budget. As a result, we are set up for a strong growth over the back half of the year at CAQA, which continues to perform very well. Before I move on, I want to briefly reflect on CAQA and the significant progress we've made. We've been able to take a world-class asset and implement ARC's operational excellence to make it even more profitable. That culture of continuous improvement and focus on capital efficiency has been a part of ARC for 26 years and is more evident today than ever. As an example, we are observing the benefits of wider well spacing, We are using less water in frac operations, which lowers cost and our environmental footprint without degradation of our well performance. Since acquiring the asset last April, we've maintained production in that 180,000 BOE a day range and generated a whopping $2.3 billion of asset-level free cash flow, around 40% of the acquisition price, a tremendous achievement by the team in only 18 months. As it relates to the supply chain, we have all the critical pieces in place to redeploy capital in BC once the regulatory framework is in place to do so. This will represent a step change for ARC, given the quality and scale of opportunities at assets like Sunrise and Attachee. As most of you know, Attachee is very similar to CAQA, about 60% liquids, 40% gas, and the first phase of Attachee is a 40,000 BOE a day project. and we have four to five similar phases to develop. This will enable Hitachi to reach a similar production level in the future as CAQA is today. And Sunrise, which is among the cleanest and most profitable dry gas asset in North America, sits adjacent to the Coastal Gas Link, which will supply natural gas to LNG Canada upon startup in 2025. We are often asked how inflation is impacting our business. Well, first, we estimate a 10% to 15% inflation this year, both realized and anticipated. We have increased our capital spending guidance to reflect that. The majority of the increase is related to diesel and chemical price increases, which are related to the higher oil prices. Second, long-term planning and scale have been critical in ensuring we have access to material and high-quality services to execute our plan safely and efficiently. These types of challenges during periods of high prices is not new, but years of underinvestment and lack of skilled workers are compounding the challenges today. For the time being, these and other factors are acting as governors on supply growth that we have not experienced in prior cycles. As mentioned, we increased our capital budget from $1.2 billion to $1.4 billion. The majority of that is inflationary. However, it also includes water infrastructure investments, and funds to manage long lead items to support 2023 activity. Production guidance was also revised up with higher liquids waiting due to our confidence at CAQA and implies a 4% growth over the balance of the year. With that, I'll turn it over to Chris to walk us through the financial results.