ARC Resources Ltd.

Good morning, my name is Cynthia and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Resources third quarter 2023 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 the number one on your telephone keypad. If you would like to withdraw your question, please press the star, then the number two. Thank you. Mr. Luca, you may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for joining us for our third quarter earnings conference call. Joining me today are Terry Anderson, President and Chief Executive Officer, Chris Bibby, Chief Financial Officer, Lara Conrad, Chief Development Officer, Armin Jahangiri, Chief Operating Officer, and Ryan Barrett, Senior Vice President, Marketing. Before I turn it over to the executive team to take you through our third quarter results in 2024 budgets, 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. 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. I'm going to spend a little time discussing three important items this morning. Our Q3 results, an update on Attachee, and our 2024 budget. I'll then hand it over to Chris, who will provide some additional color on our financial performance. Beginning with the quarter, Q3 was a lot like the quarters that preceded it. We executed to plan and delivered solid performance across all aspects of the business. It's certainly not easy, but delivering this type of consistent execution is a defining characteristic for ARC that has served us well over our 28-year history. Today, we are realizing the benefits of a balanced capital allocation framework that includes not only a base dividend, but also share buybacks at what we deem to be great value. Production per share this quarter is over 25% higher than the second quarter of 2021. the first full quarter following the seven generations acquisition. This investment in our assets and our shares to compound per share growth is a strategy we intend to continue based on where our shares trade today. This quarter, we executed a $400 million capital program and delivered average production of just over 360,000 BOE per day. This represents 5% growth year over year and 13% on a per share basis, highlighting the impact of share repurchases. We had great operational momentum this quarter. CAQA volumes approached 200,000 BUE per day, driving corporate condensate volumes to 78,000 barrels per day at a time when condensate prices topped $100 Canadian per barrel. As the largest condensate producer in Canada, This has meaningful impact on profitability as operating margins exceeded 60% corporately. In addition, the team safely and efficiently completed the rest of our planned turnarounds for this year. Before I move on to ATACHI, I want to quickly highlight an example of our commitment to safety. We recently elected to shut in a few thousand BUE per day of production at Anticreek to complete some pipeline maintenance on one of our lines. This was identified by our team as a proactive measure to maintain the safety of our operations. The volumes shut in are mostly natural gas and are expected to be fully restored in Q1 2024. So while it's not material to our overall business, I've said numerous times before, safety is our number one priority, and this is just a great example of that commitment in action. Now, turning to Attachee. I'm extremely pleased with the progress the team has made to date. Capital costs and timing are both tracking to expectations and what we outlined at our investor update in June. Total cost for phase one startup remains at $740 million, of which one-third will be spent in 2023 and the balance invested in 2024. We expect to be producing between 35,000 and 40,000 BUE per day in 2025, with commissioning volumes coming on by the end of 2024. Recently, we took the time to tour the site and have a look at the progress firsthand. There are many different projects at multiple stages, but overall, we are about 20% complete on the facilities and infrastructure. On this slide, you can see some of the milestones that have been achieved to date. The gas sales line is installed. The liquids line is well underway. At the plant site, the tank farm is completed. 75% of the pilings for all the equipment and buildings have been installed, and some of the equipment has arrived on site. The plant construction, gathering system, and all the other infrastructure is progressing as planned. And over the next few weeks, we'll begin drilling. We are also on track to fully electrify this facility at startup, further lowering our emissions intensity per BOE while delivering low-cost energy to market. In summary, we've secured all the long lead items, services, and critical permits to execute this project. Attachee will be our eighth Montigny infrastructure project, and I'm confident it'll be the most efficient project to date. We are in great shape and I'd like to thank our staff and service providers for their excellent work thus far in keeping the project on time, on budget, and ensuring safety is our number one priority. Finally, I'd like to move on to the 2024 budget. The priorities are clear. Deliver a safe and capital efficient program while focusing on completing ATACHI. The outcome of this will be a step change in our free cash flow per share growth in 2025 and beyond. Next year, we plan to invest between $1.75 and $1.85 billion, and this includes $500 million for the Tatchy Phase 1 startup. The capital program is balanced geographically with a 50-50 split between Alberta and British Columbia, and we'll deliver average annual production between 350,000 and 360,000 BUE per day. This budget is approximately $200 million lower than communicated previously at the investor day in June and 25% lower than the 2023 capital budget once you adjust for the attached capital in each year. The primary contributors to lower capital are first operational decisions to minimize non-productive capital Second, realize cost savings on certain items. And third, a lower decline rate in 2024. At CAQA, which is our flagship condensate-producing asset, we are investing less capital and holding condensate volumes flat year over year. The primary drivers of this are twofold, a lower decline rate and a shift back to the condensate-rich areas of the asset. This follows our planned activity in 2023 that focused in areas with slightly lower condensate gas ratios. Longer term, our overall condensate growth will be driven by ATACHI, which is 60% liquids, of which 75% is condensate. ARC reached an important milestone at CAPA this quarter. We achieved payout for the asset that we acquired in the second quarter of 2021. So in less than three years, CAQA has generated cumulative free cash flow at the asset level of $4.2 billion, which is equal to the purchase price. And we still have approximately 15 years of high-quality inventory ahead of us. I'm extremely proud of how we've made a world-class asset even better by leveraging the strengths embedded in our company. Moving on to northeast B.C., We expect to produce near our capacity with modest growth at sunrise following the facility expansion project completed in 2023. This will increase capacity at sunrise to 360 million cubic feet per day, which is direct connected to coastal gas link and will supply LNG projects off the West Coast of Canada. To summarize, 2024 will serve as a banner year and set the stage for a step change in our free cash flow per share growth in 2025. With that, I'll turn it over to Chris.