HIGHLIGHTS
Third Quarter Results
- ARC delivered quarterly production of 360,177 boe(1) per day (63 per cent natural gas and 37 per cent crude oil and liquids(2)). Production increased five per cent compared to the third quarter of 2022, and 13 per cent on a per share basis(3).
- ARC generated free funds flow of
$261 million (4) ($0.43 per share(5)), out of funds from operations of$662 million (6) ($1.09 per share(7)) and capital expenditures of$401 million (4). ARC recognized cash flow from operating activities of$604 million ($0.99 per share) and net income of$236 million ($0.39 per share).- ARC's natural gas diversification activities continued to generate higher realized pricing than local benchmarks. ARC realized a natural gas price of
$3.16 per Mcf(7), 32 per cent greater than the average AECO 7A Monthly Index price.
- ARC's natural gas diversification activities continued to generate higher realized pricing than local benchmarks. ARC realized a natural gas price of
- ARC distributed 71 per cent of free funds flow or
$185 million , to shareholders during the third quarter. Through the first nine months of 2023, ARC has returned 92 per cent of free funds flow to shareholders.- During the quarter, ARC declared dividends of
$103 million or$0.17 per share, and repurchased 4.1 million common shares for$82 million under its normal course issuer bid ("NCIB"). - Since instituting its first NCIB in
September 2021 , ARC has repurchased 17 per cent of its outstanding shares at an average share price of$15.81 .
- During the quarter, ARC declared dividends of
- Net debt decreased by
$38 million compared to the second quarter of 2023. As ofSeptember 30, 2023 , ARC's long-term debt balance was$1.1 billion and its net debt balance was$1.2 billion (6) or 0.4 times funds from operations(6).
2024 Budget
- ARC's Board of Directors (the "Board") has approved a 2024 capital budget of between
$1.75 billion and$1.85 billion . This is expected to deliver average annual production of between 350,000 to 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids). - The 2024 budget represents an approximate
$200 million decrease in capital spending from what was presented at ARC'sJune 2023 Investor Update. The decrease reflects operational decisions to minimize non-productive capital and realized cost savings. - Total capital investments in 2023 and 2024 to complete Attachie Phase I are unchanged.
- Total capital investment for Attachie Phase I start-up remains at approximately
$740 million , with$240 million anticipated in 2023 and approximately$500 million in 2024. - ARC is on track to fully complete the 40,000 boe per day facility in the first quarter of 2025, with commissioning volumes expected in late 2024.
- Total capital investment for Attachie Phase I start-up remains at approximately
- ARC intends to return essentially all of its free funds flow to shareholders. The optimal method to return capital remains a growing base dividend and share repurchases.
ARC's unaudited condensed consolidated financial statements and notes (the "financial statements") and Management's Discussion and Analysis ("MD&A") as at and for the three and nine months ended
(1) | ARC has adopted the standard six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil ratio when converting natural gas to barrels of oil equivalent ("boe"). Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value. |
(2) | Throughout this news release, crude oil ("crude oil") refers to light, medium, and heavy crude oil product types as defined by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Condensate is a natural gas liquid as defined by NI 51-101. Throughout this news release, natural gas liquids ("NGLs") comprise all natural gas liquids as defined by NI 51-101 other than condensate, which is disclosed separately. Throughout this news release, crude oil and liquids ("crude oil and liquids") refers to crude oil, condensate, and NGLs. |
(3) | Represents average daily production divided by the diluted weighted average common shares outstanding for the respective three months ended |
(4) | Non-GAAP financial measure that is not a standardized financial measure under International Financial Reporting Standards ("IFRS") and may not be comparable to similar financial measures disclosed by other issuers. See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for information relating to this non-GAAP financial measure, which information is incorporated by reference into this news release. See "Non-GAAP and Other Financial Measures" of this news release for the most directly comparable financial measure disclosed in ARC's financial statements to which such non-GAAP financial measure relates and a reconciliation to such comparable financial measure. |
(5) | Non-GAAP ratio that is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Free funds flow, a non-GAAP financial measure, is used as a component of the non-GAAP ratio. See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for the non-GAAP ratio for the comparative period and other information relating to this non-GAAP ratio, which information is incorporated by reference into this news release. |
(6) | See Note 10 "Capital Management" in the financial statements and "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for information relating to this capital management measure, which information is incorporated by reference into this news release. |
(7) | See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for an explanation of the composition of this supplementary financial measure, which information is incorporated by reference into this news release. |
FINANCIAL AND OPERATIONAL RESULTS
(Cdn$ millions, except per share amounts(1), boe amounts, | Three Months Ended | Nine Months Ended | |||
and common shares outstanding) | |||||
FINANCIAL RESULTS | |||||
Net income | 278.9 | 236.4 | 867.8 | 1,090.2 | 1,561.3 |
Per share | 0.46 | 0.39 | 1.32 | 1.78 | 2.32 |
Cash flow from operating activities | 550.9 | 604.2 | 1,103.6 | 1,695.4 | 2,955.0 |
Per share(2) | 0.90 | 0.99 | 1.68 | 2.76 | 4.38 |
Funds from operations | 560.8 | 662.2 | 953.0 | 1,940.4 | 2,726.3 |
Per share | 0.92 | 1.09 | 1.45 | 3.16 | 4.04 |
Free funds flow | 144.3 | 260.8 | 580.1 | 635.1 | 1,667.7 |
Per share | 0.24 | 0.43 | 0.89 | 1.04 | 2.47 |
Dividends declared | 103.7 | 103.0 | 76.7 | 298.6 | 224.8 |
Per share | 0.17 | 0.17 | 0.12 | 0.49 | 0.34 |
Cash flow used in investing activities | 464.4 | 394.6 | 351.9 | 1,256.4 | 1,062.5 |
Capital expenditures | 416.5 | 401.4 | 372.9 | 1,305.3 | 1,058.6 |
Long-term debt | 1,122.0 | 1,108.9 | 1,126.6 | 1,108.9 | 1,126.6 |
Net debt | 1,281.1 | 1,243.5 | 1,541.3 | 1,243.5 | 1,541.3 |
Common shares outstanding, weighted average diluted (millions) | 611.5 | 609.0 | 655.4 | 613.2 | 674.2 |
Common shares outstanding, end of period (millions) | 608.4 | 605.0 | 637.6 | 605.0 | 637.6 |
OPERATIONAL RESULTS | |||||
Production | |||||
Crude oil (bbl/day) | 8,076 | 8,872 | 8,149 | 8,281 | 8,114 |
Condensate (bbl/day) | 75,464 | 78,226 | 82,203 | 74,951 | 77,018 |
Crude oil and condensate (bbl/day) | 83,540 | 87,098 | 90,352 | 83,232 | 85,132 |
Natural gas (MMcf/day) | 1,289 | 1,353 | 1,227 | 1,302 | 1,242 |
NGLs (bbl/day) | 45,202 | 47,557 | 47,108 | 47,182 | 48,736 |
Total (boe/day) | 343,630 | 360,177 | 342,034 | 347,475 | 340,855 |
Average realized price | |||||
Crude oil ($/bbl)(3) | 88.13 | 104.91 | 111.41 | 95.65 | 119.31 |
Condensate ($/bbl)(3) | 93.43 | 103.21 | 110.35 | 100.21 | 122.14 |
Natural gas ($/Mcf)(3) | 2.83 | 3.16 | 9.29 | 3.93 | 8.10 |
NGLs ($/bbl)(3) | 20.89 | 19.63 | 20.72 | 23.09 | 27.67 |
Average realized price ($/boe)(3) | 35.97 | 39.47 | 65.37 | 41.75 | 63.89 |
Netback | |||||
Commodity sales from production ($/boe)(3) | 35.97 | 39.47 | 65.37 | 41.75 | 63.89 |
Royalties ($/boe)(3) | (4.38) | (4.68) | (9.23) | (5.63) | (9.37) |
Operating expense ($/boe)(3) | (4.81) | (4.94) | (4.69) | (4.76) | (4.46) |
Transportation expense ($/boe)(3) | (5.34) | (4.94) | (6.08) | (5.29) | (5.97) |
Netback ($/boe)(3) | 21.44 | 24.91 | 45.37 | 26.07 | 44.09 |
TRADING STATISTICS(4) | |||||
High price | 18.44 | 22.05 | 19.51 | 22.05 | 22.88 |
Low price | 15.38 | 17.63 | 13.12 | 14.33 | 11.66 |
Close price | 17.67 | 21.68 | 16.59 | 21.68 | 16.59 |
Average daily volume (thousands of shares) | 4,009 | 3,705 | 5,315 | 4,559 | 7,322 |
(1) | Per share amounts, with the exception of dividends, are based on weighted average diluted common shares. |
(2) | See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for an explanation of the composition of this supplementary financial measure, which information is incorporated by reference into this news release. |
(3) | Non-GAAP ratio that is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Netback, a non-GAAP financial measure, is used as a component of the non-GAAP ratio. See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for the non-GAAP ratio for the comparative period and other information relating to this non-GAAP ratio, which information is incorporated by reference into this news release. |
(4) | Trading prices are stated in Canadian dollars on a per share basis and are based on intra-day trading on the |
2024 BUDGET
The 2024 budget prioritizes disciplined growth and long-term profitability. To achieve this, ARC will pursue capital efficient
The budget adheres to ARC's guiding principles of operational excellence and capital discipline, and leverages the competitive strengths established over its 28 years that include world-class people, high-quality assets, and a transportation portfolio with global reach to key demand markets.
Highlights
- ARC plans to invest between
$1.75 billion and$1.85 billion (1) in capital expenditures in 2024 to generate average production of between 350,000 and 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids). - Capital expenditures, excluding the investments at
Attachie , represent an approximate 25 per cent decrease compared to 2023. The lower capital expenditures on the base assets is primarily related to a lower corporate decline rate, lower capital expenditures at Kakwa, operational decisions to minimize non-productive capital, and realized cost savings. - ARC estimates capital expenditures required to maintain production at 350,000 to 360,000 boe per day to be between
$1.3 billion and$1.4 billion . - Production guidance in 2024 incorporates the anticipated expiry of an ethane sales contract in the second quarter that will reduce reported NGL production by approximately 5,000 barrels per day on an annualized basis in 2024. As a result, ARC expects to re-inject ethane into its natural gas stream resulting in an expected increase in revenue from sales of higher heat content natural gas that will offset the impact to funds from operations.
- Kakwa production is expected to average approximately 180,000 boe per day (175,000 boe per day upon expiry of the ethane sales contract). This is the optimal production level to maximize profitability and moderate the decline rate, with an estimated 15 years of inventory at this production level from currently identified locations:
- Condensate production at Kakwa is expected to remain relatively flat in 2024 compared to 2023 despite lower capital spending and fewer planned wells at Kakwa. Development in 2024 will focus primarily in the condensate-rich areas of the asset, following 2023 activity where ARC planned and executed development in areas where condensate gas ratios were lower.
Attachie Phase I
- Total capital investment to bring Attachie Phase I on-stream to its facility capacity is unchanged at approximately
$740 million , with approximately$240 million planned in 2023 and$500 million in 2024.- ARC is on track to complete the first phase of
Attachie (40,000 boe per day facilities, 40 per cent natural gas and 60 per cent crude oil and liquids) in the first quarter of 2025, with commissioning volumes expected in late 2024. - Infrastructure related capital represents 55 to 60 per cent of the total investment, with the remainder allocated to the drilling and completion of approximately 40 wells to initially fill the facilities in 2025.
- ARC is on track to complete the first phase of
(1) Refer to the section entitled "About |
- ARC estimates that the facilities and related infrastructure are approximately 20 per cent complete to date.
- The natural gas sales line is installed, and the liquids line is progressing as planned.
- ARC expects Attachie Phase I to be fully electrified through BC Hydro upon start-up, thereby lowering ARC's emissions intensity per boe.
- ARC plans to begin drilling at Attachie Phase I in the fourth quarter of 2023 utilizing its existing rig fleet, and has secured services to fully execute the capital program.
2024 Guidance
ARC's 2024 corporate guidance is based on various commodity price scenarios and economic conditions; certain guidance estimates may fluctuate with commodity price changes and regulatory changes. ARC's guidance provides readers with the information relevant to Management's expectations for financial and operational results for 2024. Readers are cautioned that the guidance estimates may not be appropriate for any other purpose.
2024 Guidance | |
Crude oil and condensate (bbl/day) | 87,000 - 91,500 |
Natural gas (MMcf/day) | 1,325 - 1,340 |
NGLs (bbl/day) | 42,000 - 45,000 |
Total (boe/day) | 350,000 - 360,000 |
Expenses ($/boe)(1) | |
Operating | 4.50 - 4.90 |
Transportation | 5.50 - 6.00 |
General and administrative ("G&A") expense before share-based compensation expense | 1.05 - 1.25 |
G&A - share-based compensation expense | 0.25 - 0.35 |
Interest and financing(2) | 0.90 - 1.00 |
Current income tax expense as a per cent of funds from operations(1) | 10 - 15 |
Capital expenditures ($ billions)(3) | 1.75 - 1.85 |
(1) | See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for an explanation of the composition of these supplementary financial measures, which information is incorporated by reference into this news release. |
(2) | Excludes accretion of ARC's asset retirement obligation. |
(3) | Refer to the section entitled "About |
2023 Guidance
Full-year 2023 guidance for production, expenses, and capital expenditures remains unchanged. Refer to the section entitled "Annual Guidance" in ARC's MD&A for the three and nine months ended
OUTLOOK
ARC provided details of its long-term strategy at its Investor Update in
The development of
The first phase of
With Attachie Phase I anticipated to be on-stream in 2025, ARC is positioned to achieve a significant step-change in production and free funds flow per share:
- Production is expected to increase approximately 10 per cent, and 27 per cent per share(1) compared to 2023.
- Free funds flow per share is expected to increase by approximately 100 per cent compared to 2023.
The anticipated per share growth is driven by a combination of capital efficient
The outlook through 2025 is outlined below, subject to Board approval.
2023 | 2024 | 2025 | |
Total production (boe/day) | 350,000 - 355,000 | 350,000 - 360,000 | 375,000 - 400,000 |
Natural gas production (%) | 62 % | 63 % | 60 % |
Crude oil and liquids production (%) | 38 % | 37 % | 40 % |
Capital Expenditures ($ billions) | 1.8 - 1.9 | 1.75 - 1.85 | 1.6 - 1.8 |
Funds from Operations ($ billions)(2) | 2.7 - 2.8 | 2.9 - 3.2 | 3.4 - 3.7 |
(1) | Represents average daily production divided by the diluted weighted average common shares outstanding for the respective periods. |
(2) | Based on the forward curve at |
FINANCIAL AND OPERATIONAL RESULTS
Production
- ARC's production averaged 360,177 boe per day during the third quarter of 2023 (63 per cent natural gas and 37 per cent crude oil and liquids).
- Production increased five per cent year-over-year, and 13 per cent on a per share basis. The increase in production was driven primarily from Kakwa and Sunrise.
- Production in the fourth quarter of 2023 is estimated at approximately 355,000 boe per day (62 per cent natural gas and 38 per cent crude oil and liquids).
Funds from Operations, Cash Flow from Operating Activities, and Free Funds Flow
Third quarter 2023 funds from operations was
- Third quarter 2023 cash flow from operating activities was
$604 million , increasing by$53 million ($0.09 per share) from the second quarter of 2023. - ARC generated free funds flow of
$261 million ($0.43 per share) during the third quarter of 2023, representing an increase of$117 million ($0.19 per share) from the second quarter of 2023.
The following table details the change in funds from operations for the third quarter of 2023 relative to the second quarter of 2023.
Funds from Operations Reconciliation | $ millions | $/share(1) |
Funds from operations for the three months ended | 560.8 | 0.92 |
Production volumes | ||
Crude oil and liquids | 43.4 | 0.07 |
Natural gas | 20.2 | 0.03 |
Commodity prices | ||
Crude oil and liquids | 78.6 | 0.14 |
Natural gas | 41.1 | 0.06 |
Sales of commodities purchased from third parties | 30.0 | 0.05 |
Interest income | (0.2) | — |
Other income | 2.9 | — |
Realized loss on risk management contracts | (12.8) | (0.02) |
Royalties | (18.5) | (0.03) |
Expenses | ||
Commodities purchased from third parties | (30.3) | (0.05) |
Operating | (13.1) | (0.02) |
Transportation | 3.0 | — |
G&A | (10.7) | (0.02) |
Interest and financing | (1.3) | — |
Current income tax | (37.0) | (0.06) |
Realized gain on foreign exchange | 6.3 | 0.01 |
Other | (0.2) | — |
Weighted average shares, diluted | — | 0.01 |
Funds from operations for the three months ended | 662.2 | 1.09 |
(1) Per share amounts are based on weighted average diluted common shares. |
Shareholder Returns
- During the third quarter, ARC distributed 71 per cent or
$185 million ($0.30 per share) of free funds flow to shareholders through a combination of dividends and share repurchases under its NCIB.- During the third quarter 2023, ARC declared dividends of
$103 million ($0.17 per share). - ARC repurchased 4.1 million common shares under its NCIB at a weighted average price of
$19.95 per share.
- During the third quarter 2023, ARC declared dividends of
- In the first nine months of 2023, ARC has returned 92 per cent of free funds flow to shareholders.
- Since commencing its initial NCIB in
September 2021 , ARC has repurchased approximately 17 per cent of total outstanding shares or 124 million common shares, at a weighted average price of$15.81 per share. - ARC intends to continue to distribute essentially all of its free funds flow to shareholders.
Operating, Transportation, and General and Administrative Expense
Operating Expense
- Operating expense per boe increased three per cent or by
$0.13 per boe quarter-over-quarter, reflecting planned maintenance activity. - ARC's operating expense is expected to decrease in the fourth quarter with planned maintenance largely complete. ARC's full-year 2023 operating expense is expected to be within the guidance range.
Transportation Expense
- ARC's third quarter 2023 transportation expense per boe of
$4.94 decreased by$0.40 per boe from the second quarter of 2023 primarily due to increased volumes. - ARC's full-year 2023 transportation expense is expected to be slightly below ARC's guidance range of
$5.50 to$6.00 per boe primarily due to modifications to certain natural gas transportation contracts and lower fuel gas expense.
General and Administrative Expense
- ARC's third quarter 2023 general and administrative expense before share-based compensation expense per boe of
$1.01 decreased by$0.09 per boe from the second quarter of 2023. - General and administrative expense through the first nine months of 2023 of
$1.68 per boe is above Company guidance primarily due to share based compensation expense related to share price appreciation.
Cash Flow Used in Investing Activities and Capital Expenditures
- Capital expenditures in the third quarter were
$401 million . ARC drilled 33 wells and completed 35 wells during the third quarter, focused mainly at Kakwa, Greater Dawson and Sunrise. Other capital expenditures included Attachie Phase I infrastructure. - Cash flow used in investing activities was
$395 million during the third quarter of 2023. During the nine months endedSeptember 30, 2023 , cash flow used in investing activities was$1.3 billion . Of this, ARC invested$1.3 billion in capital expenditures to drill 111 wells and complete 118 wells.
The following table details ARC's capital activity by area during the first nine months of 2023.
Nine Months Ended | ||
Area | Wells Drilled(1)(2) | Wells Completed(1) |
Kakwa | 60 | 76 |
Greater Dawson | 29 | 17 |
Sunrise | 18 | 17 |
4 | 8 | |
Total | 111 | 118 |
(1) Wells drilled and completed for operated assets only. |
(2) Excludes disposal wells. |
Physical Marketing & Risk Management
- In the third quarter, ARC realized an average natural gas price of
$3.16 per Mcf, 32 per cent greater than the average AECO 7A Monthly Index price for the period. - The Company continues to advance additional opportunities to supply natural gas to international markets through long-term LNG supply agreements.
- ARC plans to market up to 25 per cent of its future natural gas production to international markets with revenue linked to international or LNG pricing.
Net Debt
- As of
September 30, 2023 , ARC's long-term debt balance was$1.1 billion , and its net debt balance was$1.2 billion or 0.4 times funds from operations. - ARC targets its net debt to be approximately 1.0 times funds from operations and manages its capital structure to achieve that target over the long term.
- Long-term debt is comprised of
$1.0 billion of senior notes outstanding and$0.1 billion in borrowings under the Company's credit facility.
- Long-term debt is comprised of
- ARC holds an investment-grade credit rating, which allows the Company to have access to capital and manage a low-cost capital structure. ARC is committed to protecting its strong financial position by maintaining significant financial flexibility with its balance sheet.
Net Income
- ARC recognized net income of
$236 million ($0.39 per share) during the third quarter of 2023, a decrease of$43 million ($0.07 per share) from the second quarter of 2023.
BOARD OF DIRECTORS UPDATE
Mr.
CONFERENCE CALL
ARC's senior leadership team will be hosting a conference call to discuss the Company's third quarter 2023 results on
Date | |
Time | |
Dial-in Numbers | |
587-880-2171 | |
416-764-8659 | |
Toll-free | 1-888-664-6392 |
Conference ID | 75545576 |
Webcast URL | https://app.webinar.net/wKe25d2aWQz |
Callers are encouraged to dial in 15 minutes before the start time to register for the event. A replay will be available on ARC's website at www.arcresources.com following the conference call.
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout this news release and in other materials disclosed by the Company, ARC employs certain measures to analyze its financial performance, financial position, and cash flow. These non-GAAP and other financial measures are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than generally accepted accounting principles ("GAAP") measures which are determined in accordance with IFRS, such as net income, cash flow from operating activities, and cash flow used in investing activities, as indicators of ARC's performance.
Non-GAAP Financial Measures
Capital Expenditures
ARC uses capital expenditures to monitor its capital investments relative to those budgeted by the Company on an annual basis. ARC's capital budget excludes acquisition or disposition activities as well as the accounting impact of any accrual changes and payments under certain lease arrangements. The most directly comparable GAAP measure to capital expenditures is cash flow used in investing activities. The following table details the composition of capital expenditures and its reconciliation to cash flow used in investing activities.
Three Months Ended | Nine Months Ended | ||||
Capital Expenditures ($ millions) |
|
|
|
|
|
Cash flow used in investing activities | 464.4 | 394.6 | 351.9 | 1,256.4 | 1,062.5 |
Acquisition of crude oil and natural gas assets | — | — | (1.0) | (0.5) | (2.6) |
Disposal of crude oil and natural gas assets | — | — | 4.5 | 73.6 | 11.9 |
Long-term investments | (3.2) | (0.7) | (8.6) | (5.1) | (8.7) |
Change in non-cash investing working capital | (44.8) | 3.9 | 22.1 | (24.9) | (14.4) |
Other (1) | 0.1 | 3.6 | 4.0 | 5.8 | 9.9 |
Capital expenditures | 416.5 | 401.4 | 372.9 | 1,305.3 | 1,058.6 |
(1) Comprises non-cash capitalized costs related to the Company's right-of-use asset depreciation and share-based compensation. |
Free Funds Flow
ARC uses free funds flow as an indicator of the efficiency and liquidity of ARC's business, measuring its funds after capital investment available to manage debt levels, pay dividends, and return capital to shareholders through share repurchases. ARC computes free funds flow as funds from operations generated during the period less capital expenditures. Capital expenditures is a non-GAAP financial measure. By removing the impact of current period capital expenditures from funds from operations, Management monitors its free funds flow to inform its capital allocation decisions. The most directly comparable GAAP measure to free funds flow is cash flow from operating activities. The following table details the calculation of free funds flow and its reconciliation to cash flow from operating activities.
Three Months Ended | Nine Months Ended | ||||
Free Funds Flow ($ millions) |
|
|
|
|
|
Cash flow from operating activities | 550.9 | 604.2 | 1,103.6 | 1,695.4 | 2,955.0 |
Net change in other liabilities | (13.9) | 7.9 | 43.3 | 7.7 | 115.3 |
Change in non-cash operating working capital | 23.8 | 50.1 | (193.9) | 237.3 | (344.0) |
Funds from operations | 560.8 | 662.2 | 953.0 | 1,940.4 | 2,726.3 |
Capital expenditures(1) | (416.5) | (401.4) | (372.9) | (1,305.3) | (1,058.6) |
Free funds flow | 144.3 | 260.8 | 580.1 | 635.1 | 1,667.7 |
(1) Certain additional disclosures for these specified financial measures have been incorporated by reference. See "Cash Flow used in Investing Activities, Capital Expenditures, Acquisitions, and Dispositions" in the Q3 2023 MD&A. |
FORWARD-LOOKING INFORMATION AND STATEMENTS
This news release contains certain forward-looking statements and forward-looking information (collectively referred to as "forward-looking information") within the meaning of applicable securities legislation about current expectations regarding the future based on certain assumptions made by ARC. Although ARC believes that the expectations represented by such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Forward-looking information in this news release is identified by words such as "anticipate", "believe", "ongoing", "may", "expect", "estimate", "plan", "will", "project", "continue", "target", "strategy", "upholding", or similar expressions, and includes suggestions of future outcomes. In particular, but without limiting the foregoing, this news release contains forward-looking information with respect to: ARC's 2024 capital budget including expectations with respect to ARC's planned investments in capital expenditures, 2024 average annual production and the component thereof, anticipated condensate production, anticipated expiry of the ethane sales contract, the anticipated on-stream date of the
Readers are cautioned not to place undue reliance on forward-looking information as ARC's actual results may differ materially from those expressed or implied. ARC undertakes no obligation to update or revise any forward-looking information except as required by law. Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to ARC and others that apply to the industry generally. The material assumptions on which the forward-looking information in this news release are based, and the material risks and uncertainties underlying such forward-looking information, include: ARC's ability to successfully integrate and realize the anticipated benefits of completed or future acquisitions and divestitures; access to sufficient capital to pursue any development plans; ARC's ability to issue securities and to repurchase its securities under the NCIB; expectations and projections made in light of ARC's historical experience; data contained in key modeling statistics; the potential implementation of new technologies and the cost thereof; forecast commodity prices and other pricing assumptions with respect to ARC's 2023 and 2024 capital expenditure budget; assumptions with respect to ARC's 2024 and 2025 guidance; continuing uncertainty of the impact of the
Forward-looking information in this news release pertaining to dividend increases and the repurchase of ARC's outstanding common shares, while based on ARC's current intentions and beliefs, are not guaranteed and should not be unduly relied upon. Any decisions with respect to dividends and/or share repurchases are subject to the approval of the Board.
The forward-looking information contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking information included in this news release are made as of the date of this news release and, except as required by applicable securities laws, ARC undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise.
The forward-looking information in this news release also includes financial outlooks and other related forward-looking information (including production and financial-related metrics) relating to ARC, including, but not limited to: the expectations of ARC regarding free funds flow, funds from operations, net debt, and production. Any financial outlook and forward-looking information implied by such forward-looking statements are described in ARC's MD&A, and ARC's most recent annual information form, which are available on ARC's website at www.arcresources.com and under ARC's SEDAR+ profile at www.sedarplus.ca and are incorporated by reference herein.
About ARC
Please visit ARC's website at www.arcresources.com or contact Investor Relations:
E-mail: IR@arcresources.com
Telephone: (403) 503-8600
Fax: (403) 509-6427
Toll Free: 1-888-272-4900
Suite 1200, 308 - 4 Avenue SW
SOURCE
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