ARC Resources Ltd.

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Resources for Quarter 2023 Earnings Conference Call. All lines at a place on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star, then the number two. Thank you. Mr. Luko, 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, 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 of 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. Before I get into some of the achievements and milestones from the quarter, I'd like to start by acknowledging our people for their continued commitment to safety and operational excellence. Over the past month, we saw temperatures dip below minus 40 degrees, causing interruptions and threatening blackouts here in Alberta and across the continent. These extreme temperatures introduced challenging operating conditions, which our team handled safely with very little impact on our business, a testament to the dedication and preparedness. I'm proud that we were able to execute a record $1.8 billion capital program and delivered our best safety performance ever. Thank you to the team for ensuring safety remains our number one priority. There is nothing more important. About a year ago, I told you that 2023 would go down as a major step forward for our organization. Today, I'm pleased to say this is certainly the case. Over the course of the year, we resumed full operations in BC, and in Alberta, we leaned into our world-class asset at CAQA with confidence. The outcome was a record year in terms of production, reserves, and safety performance. In addition, we sanctioned a major growth project in Itachi and executed another LNG supply agreement. In short, we overcame some obstacles, made excellent progress on our strategic initiatives, and we are now in a position to execute and deliver tremendous value in the future. We also introduced a five-year outlook that outlines what we are planning to achieve and provides the associated financial outcomes from successful executions. Our approach is simple in concept. Balance investment in our assets with a meaningful return of capital to shareholders, guided by our principles of discipline and financial strength. Underpinning this is staged development of our Montney assets, complemented by our owned and operated infrastructure and a diversified transportation portfolio that enables access to both North American gas and global LNG markets. Now turning over to the quarter itself, production was a 28 year record, both in the fourth quarter and on a full year basis. Fourth quarter production of 365,000 BOE per day represented 6% growth on a per share basis compared to fourth quarter of 2022 and was 10,000 BOE per day above fourth quarter guidance. The increase above guidance was mainly due to strong performance across our asset base. Once again, our competitive strengths played an important role this quarter. Our infrastructure contributed to high margins and a low-cost structure. Operating and transportation costs combined were below $9 per BOE, the lowest in two years. We were able to leverage our transportation portfolio put in place years ago to deliver our natural gas to key markets at a low cost. And for the 11th straight year, we realized the natural gas price that was greater than a 20% premium to ACO. And we executed another LNG supply agreement in the fourth quarter, a second agreement with Cheniere. This agreement will utilize our existing U.S. Gulf Coast capacity to physically deliver our natural gas to Cheniere for a period of 15 years beginning around 2029 with the Stage 5 of its Sabine Pass facility. In exchange, ARC will receive exposure to TTF pricing. With our two executed Chenier agreements, approximately 300 million cubic feet per day or 23% of our current natural gas production will be delivered to global markets in exchange for international pricing. At Sunrise specifically, the asset is now direct connected to Coastal Gas Link. We expect it will begin supplying gas to Shell for LNG Canada around the first half of 2025. Continuous improvement has always been core to ARC. One of the benefits of having a 25-year history with a large and contiguous asset base is the tremendous amount of data in our possessions. This helps inform how we test and evaluate new technologies, capture learnings, and adapt to drive better performance. We continue to do so in our operations. We are drilling longer wells, testing various completion designs, and applying technology to drive environmental improvements. Switching gears to reserves, here are some of the more notable takeaways from this year's report. It was a record year in terms of reserve ads. This resulted in 12% to 13% growth in reserves per share on a PDP, 1P, and 2P basis. The record reserve ads of 310 million BOEs was driven by a combination of new bookings at Attachee Phase 1 and positive revisions across the asset base. ARCs before tax NPV 10 of 2P reserves increased 13% to $38 per share based on GLJ's price deck. For perspective, that number at strip is $29 per share. It is important to highlight that these values are based on the development of just 20% of ARCs internally identified inventory and includes only partial development of the first phase of ATACHI meaning we have a long runway of future reserves growth. Third, reserves increased across the board at CAQA. PDP reserves increased 5% primarily due to positive technical revisions. And as a result, the RLI at CAQA increased in all categories. We have spent a lot of time and effort and continue to learn how to maximize value from this asset. So to see it come through in the reserves is notable. Finally, I'll speak briefly to the contingent resource study. This is the first time we updated this report since 2018, and it has both quantified and validated our inventory depth and asset quality. The resource study estimates a total unrisked contingent resource of 15 TCF of natural gas and 920 million barrels of liquids. That's in addition to ARC's 2P reserves of 8 TCF and 670 million barrels of liquids. The study estimates roughly 5,000 wells of Montney inventory over and above the 1,000-well inventory that forms our 2P reserves and the 2P NPV of $38 per share. For perspective, this compares to the 165 wells that ARC will need to drill to sustain production at roughly 390,000 BUE per day once phase one of ATACHI is complete. A few takeaways from the report. It aligns with our internal view of the resource, providing confidence and credibility to our long-term strategy to create value. We believe this will serve to only strengthen our relationship with existing and future counterparties as it relates to LNG supply. And it reaffirms our corporate A&D strategy with conviction in our resource We can be patient and counter-cyclical as it relates to future opportunities to consolidate assets. Finally, I'll provide an update on Attachee. As many of you know, in May we announced that we are moving ahead with Attachee, a flagship development opportunity for ARC. We are now nearly halfway through the 18-month construction schedule and approximately 50% complete. and I could not be more pleased with the progress achieved to date. Drilling commenced in November with one rig, and a second one arrived in January. Our first pad has finished completion operations, and the next pads are scheduled for frack in Q2. Construction of the transmission and distribution lines is set to begin this quarter, so we will be fully electrified upon startup. This will make Hitachi one of the lowest emissions industries liquids-rich Montney developments to date and puts us on track to achieve our 2025 emissions intensity targets. All aspects of the project are tracking to schedule and budget, and we look forward to commissioning and first volumes late this year. Attachee Phase 1 is our eighth major development project in the Montney and is set to be one of ARC's most efficient and profitable projects executed to date. At a capital cost of $740 million, we'll drill 40 wells and produce 40,000 BUE per day, which is expected to generate $500 million of funds flow annually under a 70 WTI and 350 ACO price environment. I look forward to providing more updates as we progress towards commissioning, maybe even a site tour at some point, if they'll let me, And with that, I'll turn it over to Chris to go through some of our financial highlights.