Capital Budget
2012 - Investment in Oil and Liquids Rich Natural Gas Opportunities
- ARC's 2012 capital expenditure program has been revised from $760 million to $600 million, in response to the current pricing environment and the expected impact on 2012 funds from operations. The capital revision does not include unbudgeted amounts for acquisitions of land and small producing properties, which in the first quarter of 2012 totaled approximately $20 million;
- The $160 million reduction demonstrates ARC’s focus on capital discipline and will allow ARC to maintain its strong financial position;
- ARC plans to drill 150 gross well in 2012, a 45 well decrease from the originally budgeted number of 195 gross operated wells;
- Capital expenditures for the first quarter of 2012 totaled $189.9 million and included the drilling of 59 gross operated wells (53 gross operated oil wells, five gross operated liquids-rich wells and one natural gas well);
- The primary focus of the 2012 budget remains unchanged, as ARC aims to maximize value by directing more capital to oil and liquids-rich gas projects to capitalize on the strength of crude oil prices, and prioritize the highest rate of return projects. However, ARC will defer certain 2012 capital projects due to lower than expected 2012 funds from operation, attributed to the negative outlook for 2012 natural gas prices and crude oil differentials;
- Despite the reduction of 2012 capital spending, strong production performance in the first quarter of 2012 enabled ARC to maintain full year 2012 production guidance at 90,000 – 95,000, not including the impact of natural gas production that may be shut-in. However, the capital reduction will result in lower production in the latter half of 2012 and a reduction in anticipated growth for 2013;
- ARC expects to finance the majority of the 2012 capital budget with funds from operations and proceeds from the Dividend Reinvestment Program (“DRIP”), the remainder will be financed with a modest amount of debt and proceeds from potential minor property divestments.
Additional details on ARC's Capital Budget can be found in the news releases below:
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