ARC Resources : 2023 ESG Report

2023

ESG UPDATE

ARX

In This

Update

Message from our CEO & Board Chair	4
Our Approach to Sustainability	6
Our ESG Framework
Environment Performance Highlights	7
In Focus: ARC's Northeast BC
Electrification Journey	9
Social Performance Highlights	10
In Focus: Empowering Front-line	12
Safety Leadership & Delivering Record Results
Governance Performance Highlights	14
In Focus: Enhancing ESG Governance at ARC	15
2022 ESG Performance Data	17
Disclaimers	25
Independent Auditor's Statement	26

	OVERVIEW	ENVIRONMENT	SOCIAL	BUSINESS ETHICS & CORPORATE GOVERNANCE	PERFORMANCE

About

This Update

Reporting Timeline

This environmental, social and governance (ESG) Update

provides an overview of ARC Resources Ltd.'s (ARC or the Company) 2022 ESG performance, highlighting key metrics, initiatives and accomplishments that were achieved from January 1 to December 31, 2022.

Unless otherwise stated, this report includes historical performance data inclusive of the Business Combination that was completed on April 6, 2021. ARC's historical performance can be found on

our website .

Scope

The scope of this document includes all businesses, assets, and partnerships that are owned and operated by ARC as at December 31, 2022. Unless otherwise noted, all references to "dollars," "$" or "C$" are to Canadian dollars. All amounts are provided on a before- tax basis, unless otherwise stated.

ARC's reporting cycle involves the publishing of a comprehensive ESG report on a biennial basis, with additional performance updates published annually. The comprehensive report provides a detailed overview of all ESG topics deemed material to the Company's current and future operations and highlights performance data across operational activities. The performance update offers year- over-year data reporting to demonstrate the progress ARC has made towards achieving its ESG goals and targets and features select initiatives and accomplishments achieved over the last year. ARC published a comprehensive ESG report in 2022 and will provide its next full report in 2024.

Assurance

ARC maintains a detailed greenhouse gas (GHG) emissions inventory that covers emissions sources across the Company's operations. ARC's GHG emissions are externally verified in accordance with ISO 14064-3 and ISO 14065. GHD Limited has undertaken a limited level of assurance verification of ARC's 2022 scope 1 and scope 2 emissions for its Alberta and British Columbia (BC) facilities.

Standards & Frameworks

Where applicable, indicators used in this report are aligned to internationally recognized standards and frameworks relevant to the energy industry. This report is aligned to the Task Force on Climate- related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI) reporting frameworks.

In addition to this document, further information about our commitment to sustainability, performance and ESG-related policies and initiatives, is available on our website, SEDAR profile, or via our additional reporting and disclosure:

Management Information Circular

Annual Report

Annual Information Form

Share Your Feedback

Continuous improvement is an important part of ARC's culture. Please send your feedback on this ESG Update to our Sustainability team at [e-mail].

ARC RESOURCES LTD. | 2023 ESG UPDATE | 3

OVERVIEW	ENVIRONMENT	SOCIAL	BUSINESS ETHICS & CORPORATE GOVERNANCE	PERFORMANCE

Message From Our

CEO & Board Chair

As the world continues to experience rapid change, the need for clean, affordable, and reliable energy grows greater by the day.

Over the last year, geopolitical events have continued to disrupt global energy markets, highlighting the need for trusted trading partners and supply security. These events, combined with concerted efforts by governments and industries to respond to climate change and reduce global emissions, make a compelling argument for Canadian energy and the important role of natural gas in a low-carbon future.

These global challenges are bigger than any one company. As Canada's third-largest natural gas producer, we are committed to being a part of the solution by living our values, demonstrating environmental leadership, generating economic value, and maintaining accountability.

Terry Anderson	Harold Kvisle
President &	Board Chair
Chief Executive Officer

Responsible Energy

Development

We believe our energy creates a better world for everyone. By producing low-cost, low- emissions energy we can help meet the world's energy needs, while lowering global emissions. This opportunity is shaping our strategy to be the best-in-class responsible energy producer.

Collaboration with stakeholders, Indigenous communities and peers is critical to address the complex energy and environmental challenges the world faces. We proactively engage with federal and provincial governments in support of clear and effective policy that balances these priorities and serves all Canadians.

Recently, our commitment to responsible development was acknowledged when we received certification on 100 per cent of our assets under Equitable Origin's EO100™ Standard for Responsible Energy Development. This process verified our ESG performance across multiple measures and included independent engagements with stakeholders and Indigenous communities. With approximately 350,000 barrels of oil equivalent (boe) per day, we now have the largest production base certified under this global standard in Canada.

Focusing on Safety

Safety is always our #1 priority. Throughout 2022, we executed the largest capital program in our Company's history and completed our largest planned maintenance program on record - all while outperforming our safety targets for total recordable injury frequency (TRIF) and lost-time incident frequency (LTIF). We are incredibly proud of these results and grateful to each of our employees and service providers for their continued focus on the safe execution of our business.

In addition to physical safety, we have also invested in technologies and resources to strengthen our cybersecurity posture to safeguard our digital assets. Events over the past year have highlighted how critical digital safety is to minimize risk and protect our assets. Technology alone is not enough. We have been diligent in educating our people on risks related to cybersecurity to ensure every member of our team is a part of ARC's digital defences.

Reducing Emissions through Innovation and Cleantech

We continue to make progress against our emissions reduction targets of reducing our GHG and methane intensities by 20 per cent

from our 2019 baselines and implementing a minimum of 70,000 tCO2e of emissions reduction projects by 2025.

Through the application of technologies, process optimization, retrofitting existing facilities, and low-emissions facility design, we are making good strides. As at year-end, we have reduced our GHG emissions intensity by approximately eight per cent and our methane emissions intensity by 20 per cent against our 2019 baselines.

In June 2023, we also completed the electrification of our Dawson III and IV natural gas plants, which will result in approximately 125,000 tCO2e of emissions reduction each year. With this project completed, we have effectively met our target to implement 70,000 tCO2e of emissions reduction projects.

In 2022, we also committed $50 million that will be used to accelerate the development and adoption of clean technologies as opportunities arise that align with our emissions reduction efforts. By investing in emerging technologies directly or indirectly, we are helping de-risk cleantech startups so they can achieve commercial scale quicker. We are also piloting technologies with the potential to further reduce emissions in our operations and more broadly across the energy industry.

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	OVERVIEW	ENVIRONMENT	SOCIAL	BUSINESS ETHICS & CORPORATE GOVERNANCE	PERFORMANCE

Supporting Diversity, Equity & Inclusion

We take pride in our values of respect, integrity, trust, and community, and have established a corporate goal to provide a work environment where 100 per cent of our employees feel they belong. In 2022, we established key Diversity, Equity and Inclusionobjectives to prioritize areas of focus to establish equitable practices, enhance employees' knowledge, and maintain a culture of celebration and belonging.

Contributing to Community

Giving back is core to our culture. Thanks to the success and profitability of our business, we invested approximately $3 million to support several local organizations and long-term partners like United Way, STARS, and Brown Bagging for Calgary's Kids. With food insecurity on the rise, $435,000 of our donations went to supporting food banks in Calgary, Dawson Creek and Grande Prairie.

From a broader perspective, we are proud of the significant value that we generate that benefits thousands of Canadians. In 2022, through salaries, dividend payments, taxes, land payments, and supplier contracts, we contributed approximately $4.6 billion to the Canadian economy.

Enhancing Indigenous Engagement

ARC is committed to proactive engagement with the Indigenous communitiesneighbouring our operations, and we look to provide employment and contracting opportunities to support economic inclusion whenever possible. With the announcement of the sustainable

development framework in BC and following proactive engagement with the Indigenous community neighbouring the project, this year we announced the sanctioning of our next major development opportunity - Attachie Phase 1.

Additionally, in 2022 we continued to create opportunities to educate our employees in support of Indigenous reconciliation. Last year, 275 of our leaders and employees completed cultural awareness training to gain a better understanding of Indigenous histories and cultures, and to better inform our approach to Indigenous engagement.

Connecting Canadian Natural Gas to Global Markets

As part of our marketing strategy, we are working to deliver our low- emissions energy to key consuming regions at the lowest cost. Our diversified transportation portfolio provides access to the Canadian West Coast and the U.S. Gulf Coast connecting us to the global LNG market.

In 2022, we announced our second long-term natural gas supply agreement, which will see ARC provide Cheniere Energy, Inc. with

140,000 MMBtu of natural gas per day for 15 years following completion of Cheniere's Corpus Christi Stage III expansion. We also signed a Memorandum of Understanding with Cedar LNG - a proposed floating LNG export facility and what's to be Canada's first Indigenous majority-owned LNG facility - to supply and liquefy approximately 200 MMcf per day of natural gas for an anticipated 20-year term.

Moving Forward

Looking ahead, we are very excited about where our Company is heading. With our world-class assets, industry-leading GHG emissions intensity, and investment-grade credit rating, we have established a strong and resilient energy company that's well-positioned to meet the world's energy needs into the future. We are committed to prioritizing strong ESG governance practices and maintaining our leading ESG performance through a focus on operational excellence and continuous improvement across

our Company.

On behalf of our Board of Directors and Management team, we'd like to thank our employees, shareholders, stakeholders, Indigenous communities, service providers, and partners for their continued support.

Sincerely,

Terry Anderson	Harold Kvisle
President &	Board Chair
Chief Executive Officer

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