ARC Resources Ltd Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aaron Bilkoski - TD Securities, Inc. - Analyst : I was hoping you could provide some details on the water cuts you're seeing at Attachie and how that compares to your original expectations?

Question: Michael Harvey - RBC Capital Markets - Analyst : So a couple of questions for me. I guess just on the reserve bookings at Attachie. I think you went through it, but just confirming it really is only Phase 1 that's booked right now to reserves. And then if that's the case, what would cause the evaluators to start booking Phase 2, will that happen at the end of this year? Or does it require more time and actual drilling results as you get kind of into the Phase 2 start-up period? And then second one, just I know it's early days, but any learnings so far from the ramp-up of Phase 1 that you can apply to Phase 2 or subsequent phases could be related to cost, well, productivity? Any of the water items that Aaron mentioned or any facility stuff, anything that would give some folks a bit more understanding about what could change or remain the same into the next phase?

Question: Patrick O'Rourke - ATB Capital Markets Inc. - Analyst : Congratulations on some very strong performance there and bringing Attachie up here. Thanks for the rundown in terms of the performance there as well and what you've learned. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 3:00PM, ARX.TO - Q4 2024 ARC Resources Ltd Earnings Call Maybe to shift gears just slightly. You noted the Cedar LNG, the potential to sign an LNG offtake agreement there. Could you maybe walk through some of the parameters around that, obviously, understanding there's still some commercial sensitivity? And then with respect to the project itself, what the next key milestones we should be watching for are?

Question: Patrick O'Rourke - ATB Capital Markets Inc. - Analyst : Any sort of time frame that you can point to?

Question: Patrick O'Rourke - ATB Capital Markets Inc. - Analyst : Okay. No problem. And then just more of a sort of philosophical question around capital allocation. You're very likely booked at Attachie. You just spoke to that, about 75% of your inventory is still unbooked here. How do you think about sort of the right mix of growth pulling value realization for that inventory -- massive inventory that you have against return of capital to shareholders and the scope and scale of sort of capitalization of infrastructure today?

Question: Joshua Silverstein - UBS Securities LLC - Analyst : Well performance of Kakwa continues to be really strong and you're at 195,000 for the fourth quarter. Can you just talk about the gap to that versus the game plan to be at 170,000, 175,000 for 2025? Is there a downtime, any reason for the decline because you've now been above that level for the second half of '24?

Question: Joshua Silverstein - UBS Securities LLC - Analyst : Got it. Thanks for the clarity. I'm curious just on the natural gas side as well relative to the middle of 2024 period when AECO was weak, and you curtailed volumes at Sunrise. Do you have the potential to flex Sunrise the other way if you do have prices rising over the course of this year or even into next year as well?

Question: Travis Wood - National Bank Financial - Analyst : I just wanted to ask around kind of operating through the winter. Obviously, cold weather is great for prices, but make some operations a little more difficult. What types of things do you have in place to help mitigate downtime? Maybe it's just operating items themselves, but also kind of mitigating BC Hydro power outages, and I'm kind of thinking specifically, the Attachie region.

Question: Travis Wood - National Bank Financial - Analyst : Okay. And is anything done differently from let's say, Dawson, just as you built out Attachie? Were there kind of evolutions as you thought about winter downtime potential as you built out Attachie? Or is it copy [paste]?

Question: Kale Akamine - Bank of America - Analyst : I want to ask your views on consolidation here. What we've seen in the US is that consolidation has imposed discipline and we believe that's leading to a healthier gas macro. Do you think consolidation in your basin is necessary? Do you think we'll see it in that set up? Are you guys a consolidator?

Question: Kale Akamine - Bank of America - Analyst : At 12% free cash flow yield, I would echo your comment that ARC is a great investment. My second question here is operational. In your slide deck, I think you called out better performance at Kakwa due to well design. Can you kind of characterize what you're doing there and how it compares to your prior designs but also to offset operators like maybe Ovintiv?

Question: James Kubik - CIBC World Markets - Analyst : I've got two here. So just maybe on the profile for Q1. You noted Attachie producing at about 17,000 BOEs a day in Q4 against corporate production at 382,000 and then expectations for Attachie to produce between 30,000 to 35,000 BOEs a day in Q1. Can you just talk a little bit more about the Q1 production guide of 370,000 to 375,000 and maybe the contribution between the various assets and what's driving the reduction quarter over quarter?

Question: James Kubik - CIBC World Markets - Analyst : Great. Thank you. And with respect to the reserves report, can you just touch on the economic factors and the bookings on that side? And then it looked like Kakwa demonstrated a sizable increase in positive technical revisions. Can you talk about how the remaining assets contribute to the tech provisions there?

Question: Aaron Bilkoski - TD Securities, Inc. - Analyst : I was curious to what extent the capital efficiencies you're seeing from the modified completion at Kakwa been incorporated into your '25 guidance or your five-year plan?