ARC Resources Ltd.

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the AHRQ Resources fourth quarter and year end 2022 earnings conference call. All lines are being 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 the number one on your telephone keypad. If you would 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 fourth quarter and year-end results conference call. Joining me on the call today are Terry Anderson, President and Chief Executive Officer, Chris Bibby, Chief Financial Officer, Armin Jahangiri, Chief Operating Officer, Laura Conrad, Chief Development Officer, and Ryan Barrett, Senior Vice President, Marketing. Before I turn it over to our executive team to take you through our operational and financial highlights, 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. The press release, financial statements, and 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, Dale, and good morning, everyone. I'll keep my prepared remarks relatively brief before I pass it over to Chris to touch on the financial results. As I reflect back on the past year and look ahead at what's to come, there are three key items that stand out. First is a look back on 2022. It was a record year for our company on several operational and financial measures. Second is an operational update focused primarily on CAFLA and year-end reserves, which are both positive stories. And finally, I'd like to share my perspective on the agreements reached between the BC government and several Treaty 8 First Nations and what this means for our development activities in Northeast BC. Looking back at 2022, what I am most pleased about is that we stuck to our guiding principles and remained disciplined. Asset diversification was critical, allowing us to shift capital from BC to Alberta and surpass 26-year records in production and free cash flow, both on an aggregate and per share basis. From a production standpoint, we delivered record annual production of nearly 346,000 BOE per day, and record fourth quarter production of around 360,000 BOE per day, an increase of 16% per share year over year. Paired with strong commodity prices, ARK generated record free cash flow of $2.3 billion, which is equivalent to 25% of our market cap today. ARK's market diversification and balanced commodity mix were pivotal factors in managing risk and maximizing free cash flow. ARC realized $8.31 per MCF, roughly 50% above the ACO benchmark in the fourth quarter. This was mostly driven by our 170 million cubic feet per day exposure to millen, where the daily price averaged $14.42 per MCF. Over the course of the year, we also reached some significant milestones that have important implications when I think about asset quality and future LNG potential. First, at Dawson, we achieved one TCF of natural gas produced, proof of the quality and scale of our asset base. To put this into perspective, Dawson has 23 TCF of gas in place. This really shows how we are at the very early stage of development in Dawson. In ARC's Northeast BC assets, we have 100 TCF of gas in place alone, which bodes well for our future LNG aspirations. Second, we strengthened our business in 2022 by entering into a natural gas supply agreement with Chenier that will commence with the startup of their Corpus Christi phase three expansion. We are excited about this agreement with a high quality counterparty and the diversified exposure it provides to global natural gas prices. Moving forward, we'll continue to evaluate additional commercial opportunities that leverage our investment-grade credit rating, scale, and ESG leadership, all competitive strengths that make these types of transactions possible. Third, at the end of the year, we also advanced our status as an ESG leader. In December, we achieved Equitable Origins EO100 certification on 100% of our assets, and in doing so, now have the largest production base certified under this global standard in Canada. Operational excellence is a guiding principle and it showed through in our operational performance and reserves. This past year, we executed our largest capital program on record, and most importantly, we did it safely. I would like to thank our staff for their continued focus on safety during this period of tremendous activity. Safety will always be our number one priority. As it relates to our capital program, We made the decision early in 2022 to divert activity from BC to our CAQA asset in Alberta and target CONSATE rich areas. And this decision paid off in a big, big way. We increased production to about 190,000 BOE per day, and it generated 2.1 billion of free cash flow at the operating level in 2022 alone. Since we acquired this world-class asset in 2021, We have reduced well costs by approximately $1 million per well. Inflation has offset that in 2022, but these savings are permanent. Meanwhile, well performance is exceeding expectations with CAQA delivering some of the strongest condensate wells in Canada. And finally, we have confirmed that wider spacing implemented last year is improving long-term well performance. Pairing this with well cost reductions, we achieved we achieved will lower sustaining capital and further improve capital efficiencies at the largest concierge producing asset in Canada. The improved well performance at CACLA resulted in an excellent year for reserves, which really highlights the depth and quality of our Montigny inventory. First, we grew reserves across all categories by 14 to 22% per share. As a result of strong well performance, PDP reserve that CAC was specifically increased by 17%. Second, for the 15th consecutive year, we replaced greater than 140% of production with 2P reserve additions. And third, the pre-tax NPV of 2P reserves of $34 per share is based upon development of just 17% of our interim estimate of drilling inventory. Atachi specifically comprised just 4% of total 2P locations. We look forward to booking the reserves associated with Atachi as the project is developed. These are all important to us as we think about inventory duration and our long-term strategy. Now, turning to BC. I'm pleased to report that we have regained operational momentum in the province. Today, we have two rigs actively drilling. and the level of activity will increase over the course of year. In Q4 of 2022, we started receiving permits on freehold lands, which sets us up to efficiently execute our 2023 program. As it relates to the regulatory environment, the agreements executed between the BC government and the Treaty 8 First Nations are a positive step forward. As an industry, we produce some of the lowest emissions, lowest cost natural gas in the world. Establishing a new framework to sustainably develop that resource is critical. For ARC specifically, we continue to engage with the Indigenous communities neighboring our operations and work alongside the BC government and the energy regulator to ensure we have clarity in all aspects of the process. I know many are wondering about ATACHI and when we will move forward on this landmark development opportunity. Let me be clear, ATACHI is the best development project in our portfolio and sanctioning it is a priority for us. We anticipate to be in a position to sanction the project this year. A couple additional observations worth mentioning and reminding our listeners. First, the agreements executed between the BC government and the Treaty 8 First Nations pertain strictly to Crown lands. All our existing production in BC is on private or freehold land, and we continue to receive permits there. Therefore, we have a clear line of sight to fully execute the 2023 program as planned. Second, there are high-value areas identified in the agreement with the Blueberry River First Nation that are of critical importance to the nation and puts limits on future development. These are identified in the map on the screen, as you can see. All of ARC's assets are outside of these areas. To close, we are excited to be back in BC and the establishment of a new framework is constructive. Given the strengths of our relationships and the merits of a project like ATACHI, we are well positioned to build on this momentum and capitalize on the investment opportunity in front of us. With that, I'll turn it over to Chris.