First Quarter 2015 Operations Review
- ARC achieved record first quarter production of 120,354 boe per day, 14 per cent higher than the first quarter of 2014 and two per cent higher than the fourth quarter of 2014.
- Construction continued on the new 60 MMcf per day Sunrise gas processing facility; construction is on schedule and on budget. All major equipment is on site and a significant portion of mechanical installation was completed during the first quarter. ARC plans to commission the new facility in the fourth quarter of 2015 and expects to fill the facility by early 2016. See the Sunrise Photo Blog for updates.
- First quarter funds from operations were $191.5 million ($0.57 per share), down 34 per cent from the first quarter of 2014. Higher production in the first quarter of 2015 was more than offset by significantly lower crude oil and natural gas prices relative to 2014. The decline in first quarter crude oil and natural gas prices was partially offset by realized gains on crude oil and natural gas hedging contracts of $47.1 million.
- First quarter 2015 capital expenditures of $129.5 million were focused primarily on ARC's Montney lands in northeastern British Columbia and northern Alberta. ARC drilled 25 gross operated wells in the first quarter of 2015. ARC's first quarter 2015 activity levels were significantly lower than 2014 levels as certain capital projects were deferred to future periods in response to the decline in commodity prices.
- Subsequent to March 31, 2015, ARC divested certain non-core shallow gas assets located in southern Alberta with associated production of approximately 2,400 boe per day (98 per cent natural gas) and 12 MMboe of proved plus probable natural gas reserves. The divested properties were characterized by low netback wells with a higher relative cost profile compared to our natural gas properties in the Montney region. The divested properties comprised approximately 2,200 gross shallow gas wells (1,600 net wells), thereby reducing ARC’s well count and associated abandonment liability. Proceeds from the divestment of approximately $12 million were received following quarter end.
- ARC's first quarter 2015 operating costs of $7.24 per boe decreased 19 per cent from $8.97 per boe in the first quarter of 2014 due to continued growth of our low cost Montney production, lower electricity prices and a continued focus on cost management.
- ARC has reduced its planned 2015 capital program to approximately $550 million from $750 million to preserve its strong financial position while remaining focused on the long-term and advancing key strategic projects. Our 2015 planned capital program will focus primarily on profitable development in the British Columbia Montney region as these projects provide the highest rates of return at current commodity prices. For more information on the revised capital program please view the April 29, 2015 news release titled “ARC Resources Ltd. Reports Record First Quarter Production”.
Q1 2015 Production
(Three Months ended March 31, 2015)
|Crude Oil (bbl/d)||35,851||37,478|
|Natural gas (mmcf/d)||459.6||369.6|
|Natural Gas Liquids (bbl/d)||4,314||3,743|
|Total Production (boe/d)||120,354||105,699|
The following table summarizes the companies production by core area for three months ended March 31,2015:
|Core Area (1)||Total (boe/d)||Oil (bbl/d)||Condensate (bbl/d)||Gas (mmcf/d)||NGL (bbl/d)|
|South Central AB||8,437||4,451||63||22.1||242|
|Southeast SK & MB||10,846||10,545||47||1.1||74|
(1) Provincial and directional references: AB is Alberta, BC is British Columbia, SK is Saskatchewan, MB is Manitoba, NE is northeast, NW is northwest, SE is southeast and SW is southwest.