ARC Resources Ltd.

Good morning. My name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to the AHRQ Resources First Quarter 2024 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 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 first quarter earnings conference call. Joining me today are Terry Anderson, President and Chief Executive Officer, Chris Bibby, Chief Financial Officer, Armin Jahangiri, Chief Operating Officer, Lara Conrad, Chief Development Officer, and Ryan Barrett, Senior Vice President, Marketing. Before I turn it over to Terry and Chris to take you through our first 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 all 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. Q1 was another quarter of steady execution which resulted in strong operational and financial performance. Average production of 352,000 BOE per day was 2% above consensus and increased 8% on a per share basis compared to the first quarter of 2023. This now marks the 11th consecutive quarter where production per share has increased. This aligns with our strategy to grow free cash flow per share by investing in our assets in a disciplined manner and buying back our shares when it's good value for investors like it is today. If I look back on the quarter and were to summarize, We executed a capital-efficient program, advanced our marketing strategy with another long-term LNG agreement, and completed several critical milestones for Attachee Phase 1. Discipline, efficiency, and execution, these are themes that have long underpinned our operational excellence. At the asset level, we achieved better-than-expected operating performance, which drove the production outperformance relative to our forecasts. This was largely due to revisions we'd made in terms of how we developed the Sunrise asset. We recently modified the well layout at Sunrise to further improve capital efficiencies and lower the supply cost at what is already one of the most economic natural gas plays in North America. As a reminder, Sunrise is a tremendous resource with long development runway, and it is now direct connected to Coastal GasLink which supplies natural gas to the LNG Canada project. Moving to CAQA, in the quarter, we saw production average 175,000 BOE per day, which included 65,000 barrels per day of condensate. This is directly in line with our expectations as we plan to maintain CAQA production near this level going forward to optimize free cash flow. For perspective, CAQA generated over $300 million dollars of asset level cash flow in the quarter. And since acquiring it in 2021, it has accumulated approximately $5 billion of asset level free cash flow, well above what we paid for the asset. Looking ahead, following the turnaround activity we have planned in Q2 at CAQA, we anticipate growth in the second half of the year as we return to developing a higher condensate gas ratio region of the field. We have also implemented some frac design modifications here, and while it's still early, preliminary results are looking positive. Turning to a few financial highlights, ARC generated $100 million of free cash flow in the quarter and returned all of that to our shareholders as planned. Of note, we achieved this free cash flow in a lower natural gas price environment and a more capital-intensive quarter as we complete ATACHI Phase 1. This validates the sustainability and resilience of our business, enabled by the competitive strengths established over the past 28 years, which include having a low-cost structure underpinned by our own and operated infrastructure, having a balanced commodity mix that includes being the largest condensate producer in Canada, and having a diversified transportation portfolio that allows us to sell our natural gas to key demand markets across North America and capture higher margins. ARC's diversified transportation portfolio stood out this quarter with a realized natural gas price of $3.19 per MCF, which is greater than 150% of the ACO benchmark. We have discussed at length the benefits of market diversification. Our long-term takeaway agreements to access U.S. markets have been a major contributor to corporate profitability. In fact, over the past 10 years, ARC has realized greater than 125% of the ACO benchmark on average. As an extension of this strategy, ARC has entered into long-term agreements to supply natural gas to LNG projects on the U.S. Gulf Coast and the Canadian West Coast. Most recently, we announced a 20-year agreement with Cedar LNG whereby ARC will supply 200 million cubic feet a day of natural gas, commencing in the second half of 2028 when the project enters commercial operations. And currently, ARC has entered into a non-binding heads of agreement with a global investment grade counterparty for the purchase and sale of these LNG volumes for which we will receive international pricing. We are now in the process of working towards definitive agreements and we are pleased with the progress made to date. With this announcement, ARC has entered into three LNG supply agreements that will connect our physical gas to global markets in return for international or LNG-based pricing. This will take effect in 2026 with our first Chenier contract, and by the end of the decade, we'll achieve our target of marketing 25% of our natural gas production to global markets. Finally, I'll close with an update on ATACHI. I am very pleased with the progress our team has achieved to date. This is a pivotal year for our company as ATACHI will add significant value over the next decade and it begins with phase one coming on stream later this year. As a reminder, ARC has 300 sections of contiguous Montney acreage at ATACHI and this asset has the scale to replicate CAQA. which is the largest condensate-producing asset in Canada. This initial phase will add approximately 40,000 BOE per day in 2025, representing 10% production growth year over year, and the project is tracking on schedule and on budget with zero safety incidents. This past quarter, we've achieved a few important milestones worth highlighting. We recently completed a pipeline bridge that is key to our takeaway strategy. This was the single biggest critical path item to achieve our planned timeline, so we are pleased to complete this. We are on track with our drilling program, having now drilled 22 of 40 wells needed to initially fill the 40,000 BUE per day facility. Finally, we are making excellent progress towards electrifying Hitachi through BC Hydro. which will establish Atachi as one of the lowest emissions condensate-rich natural gas developments in North America. This will also lower our corporate emissions intensity and maintain our status as one of the lowest emissions producers in North America. To conclude, we are on track and focused on achieving the long-term plan we put forth a year ago. With that, I'll pass it over to Chris.