Third Quarter 2015 Operations Review
- ARC achieved third quarter 2015 production of 107,261 boe per day, exceeding the third quarter guidance range of 104,000 to 107,000 boe per day. New production brought on to coincide with the early start-up of the Sunrise gas processing facility helped offset the negative volume impact from major planned turnarounds at Dawson and Ante Creek during the quarter. Third quarter 2015 natural gas production of 425.1 MMcf per day was unchanged and crude oil and liquids production of 36,411 barrels per day was down 19 per cent compared to the third quarter of 2014.
- Construction of the new 60 MMcf per day Sunrise gas processing facility was completed in early August ahead of schedule, under budget and with an exceptional safety record. ARC drilled and completed nine wells at Sunrise during the first nine months of 2015 in preparation for commissioning of the plant. All nine wells were tied in and are capable of production; the wells are currently being choked back as the plant is operating at capacity.
- Third quarter funds from operations were $174.9 million ($0.51 per share), down 15 per cent from the second quarter of 2015 as a result of lower realized quarter-over-quarter crude oil and natural gas prices and lower crude oil production volumes. Third quarter funds from operations were down 38 per cent relative to the third quarter of 2014, and year-to-date 2015 funds from operations of $572.7 million ($1.69 per share) were down 34 per cent relative to the first nine months of 2014.
- Third quarter and year-to-date 2015 capital expenditures, before land and net property acquisitions and dispositions, totalled $164.2 million and $392.1 million, respectively, and were focused primarily on ARC's Montney lands in northeast British Columbia. ARC drilled 18 gross operated wells in the third quarter of 2015 (11 oil wells, three natural gas wells, three liquids-rich wells, and one service well) and 55 gross operated wells in the first nine months of 2015 (33 oil wells, 16 natural gas wells, five liquids-rich wells, and one service well).
- ARC continues to demonstrate its core principle of operational excellence through several ongoing initiatives, resulting in lower operating costs and improved capital and operating efficiencies. With the decrease in commodity prices, ARC is focused on cost management by pursuing opportunities to reduce capital, operating and general and administrative expenses. ARC's third quarter and year-to-date 2015 operating costs of $7.18 per boe and $7.49 per boe were 19 per cent and 17 per cent lower than comparable periods in 2014, respectively, and were attributed to certain realized cost savings and the addition of new production at lower relative costs to operate. ARC has reduced operating costs on a per boe basis by 30 per cent since 2009, and with the continued transition towards low-cost, high-value Montney development, ARC expects ongoing improvements to operating costs and capital efficiencies.
Q3 2015 Production
(Three Months ended September 30, 2015)
|Crude Oil (bbl/d)||29,397||35,871|
|Natural gas (mmcf/d)||425.1||424.5|
|Natural Gas Liquids (bbl/d)||3,653||5,065|
|Total Production (boe/d)||107,261||115,530|
The following table summarizes the companies production by core area for three months ended September 30,2015:
|Core Area (1)||Total (boe/d)||Oil (bbl/d)||Condensate (bbl/d)||Gas (mmcf/d)||NGL (bbl/d)|
|South Central AB (2)||5,253||3,978||7||6.6||164|
|Southeast SK & MB||9,605||9,305||57||1.0||87|
(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.
(2) During the second quarters of 2015 and 2014, ARC disposed of certain non-core assets in this district. Each disposition included assets that had been producing approximately 2,400 boe per day prior to disposal. An additional 500 boe per day were disposed from this district toward the end of the third quarter of 2015.