CALGARY, AB, Aug. 1, 2024 /CNW/ - (TSX:ARX) ARC Resources Ltd. ("ARC" or the "Company") today reported its second quarter 2024 financial and operational results. HIGHLIGHTS ARC delivered second quarter 2024 production of 330,046 boe(1) per day (65 per cent natural gas and 35 per cent crude oil and liquids(2)), in line with the top end of the second quarter production guidance range of 325,000 to 330,000 boe per day. Second quarter production decreased four per cent year-over-year reflecting planned turnaround activity completed at Greater Dawson and Kakwa. ARC generated funds from operations of $503 million(3) ($0.84 per share(4)) and capital expenditures totalled $532 million(5), therefore free funds flow registered at ($29) million(5) or ($0.05) per share(6). ARC recognized cash flow from operating activities of $543 million(4) ($0.91 per share) and net income of $240 million ($0.40 per share). Company guidance in 2024 remains unchanged. Capital expenditures are planned between $1.75 to $1.85 billion(7), and production is forecast to average between 350,000 and 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids). In response to weak natural gas prices, ARC has elected to curtail approximately 250 MMcf per day of natural gas production at Sunrise to preserve value for periods when prices are higher. Despite the curtailment at Sunrise, 2024 production guidance is unchanged with current expectations to be at the low end of the guidance range. The inclusion of the natural gas curtailment at Sunrise is expected to result in average third quarter production between 330,000 and 335,000 boe per day, with a higher percentage of crude oil and liquids relative to the second quarter of 2024. Fourth quarter production is expected to average between 380,000 and 385,000 boe per day. This includes restored volumes at Sunrise, increased condensate-rich production from Kakwa and Greater Dawson relative to the first half of 2024, and initial production contribution from Attachie. Attachie Phase I remains on schedule and budget. Initial commissioning volumes are planned for the fourth quarter of 2024, and full productive capacity of 40,000 boe per day (40 per cent natural gas, 60 per cent crude oil and liquids) is anticipated for the first quarter of 2025. In July, the Government of B.C. and Halfway River First Nation announced an agreement which includes a Landscape Planning Pilot for an area that encompasses ARC's Attachie development. As a result, ARC's Attachie development is no longer limited by the disturbance cap for petroleum and natural gas development outlined in the Blueberry River First Nations Implementation Agreement. ARC distributed $118 million to shareholders during the second quarter, and intends to return essentially all free funds flow to shareholders in 2024 through the base dividend and share repurchases. ARC declared dividends of $102 million or $0.17 per share and repurchased 0.7 million common shares for $16 million under its normal course issuer bid ("NCIB"). As of June 30, 2024, ARC's long-term debt balance was $1.4 billion and its net debt balance was $1.5 billion(3) or 0.6 times funds from operations(3). ARC's unaudited condensed interim consolidated financial statements and notes (the "financial statements") and Management's Discussion and Analysis ("MD&A") as at and for the three months and six months ended June 30, 2024, are available on ARC's website at www.arcresources.com and under ARC's SEDAR+ profile at www.sedarplus.ca. The disclosure under the section entitled "Non-GAAP and Other Financial Measures" in ARC's MD&A as at and for the three and six months ended June 30, 2024 (the "Q2 2024 MD&A") is incorporated by reference into this news release. (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) See Note 8 "Capital Management" in the financial statements and "Non-GAAP and Other Financial Measures" in the Q2 2024 MD&A for information relating to this capital management measure, which information is incorporated by reference into this news release. (4) See "Non-GAAP and Other Financial Measures" in the Q2 2024 MD&A for an explanation of the composition of this supplementary financial measure, which information is incorporated by reference into this news release. (5) Non-GAAP financial measure that is not a standardized financial measure under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and may not be comparable to similar financial measures disclosed by other issuers. See "Non-GAAP and Other Financial Measures" in the Q2 2024 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 current financial statements to which such non-GAAP financial measure relates and a reconciliation to such comparable financial measure. (6) Non-GAAP ratio that is not a standardized financial measure under IFRS Accounting Standards and may not be comparable to similar financial ratios 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 Q2 2024 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. (7) Refer to the section entitled "About ARC Resources Ltd." contained within the Q2 2024 MD&A for historical capital expenditures, 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 Six Months Ended and common shares outstanding) March 31, 2024 June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 FINANCIAL RESULTS Net income 185.4 239.5 278.9 424.9 853.8 Per share 0.31 0.40 0.46 0.71 1.39 Cash flow from operating activities 636.3 543.0 550.9 1,179.3 1,091.2 Per share(2) 1.06 0.91 0.90 1.97 1.77 Funds from operations 606.9 502.8 560.8 1,109.7 1,278.2 Per share 1.01 0.84 0.92 1.85 2.08 Free funds flow 102.3 (29.5) 144.3 72.8 374.3 Per share 0.17 (0.05) 0.24 0.12 0.61 Dividends declared 101.6 101.6 103.7 203.2 195.6 Per share 0.17 0.17 0.17 0.34 0.32 Cash flow used in investing activities 499.8 643.4 464.4 1,143.2 861.8 Capital expenditures 504.6 532.3 416.5 1,036.9 903.9 Long-term debt 1,144.0 1,379.5 1,122.0 1,379.5 1,122.0 Net debt 1,336.1 1,477.9 1,281.1 1,477.9 1,281.1 Common shares outstanding, weighted average diluted (millions) 598.4 598.2 611.5 598.3 615.4 Common shares outstanding, end of period (millions) 596.7 596.7 608.4 596.7 608.4 OPERATIONAL RESULTS Production Crude oil and condensate (bbl/day) 82,672 74,713 83,540 78,693 81,268 Natural gas (MMcf/day) 1,322 1,286 1,289 1,304 1,277 NGLs (bbl/day) 49,411 40,994 45,202 45,203 46,991 Total (boe/day) 352,328 330,046 343,630 341,187 341,018 Average realized price Crude oil ($/bbl)(2) 83.83 100.28 88.13 91.10 90.42 Condensate ($/bbl)(2) 94.58 103.73 93.43 98.96 98.58 Natural gas ($/Mcf)(2) 3.19 1.86 2.83 2.53 4.34 NGLs ($/bbl)(2) 25.65 21.69 20.89 23.85 24.87 Average realized price ($/boe)(2) 37.49 33.35 35.97 35.49 42.97 Netback per boe Commodity sales from production ($/boe)(3) 37.49 33.35 35.97 35.49 42.97 Royalties ($/boe)(3) (4.15) (4.19) (4.38) (4.16) (6.14) Operating expense ($/boe)(3) (4.26) (5.51) (4.81) (4.87) (4.66) Transportation expense ($/boe)(3) (5.35) (5.22) (5.34) (5.29) (5.47) Netback per boe ($/boe)(3) 23.73 18.43 21.44 21.17 26.70 TRADING STATISTICS(4) High price 24.32 26.18 18.44 26.18 18.44 Low price 19.44 23.45 15.38 19.44 14.33 Close price 24.15 24.41 17.67 24.41 17.67 Average daily volume (thousands of shares)