ARC Resources Ltd. Reports Second Quarter 2021 Results and Announces Dividend Increase of 10 Per Cent
Love this company, but buried at the bottom something we all could have written:
Should future commodity prices remain strong and in line with the current outlook, free funds flow is expected to exceed the capital investment needs of the business, including what is required to develop Attachie West Phase I. ARC is currently evaluating alternative return of capital options for the Company's anticipated excess free funds flow.
SECOND QUARTER 2021 HIGHLIGHTS
- ARC successfully closed the strategic Montney combination with Seven Generations Energy Ltd. ("Seven Generations") on April 6, 2021 (the "Business Combination"), to become the largest pure-play Montney producer, and remains well on track to deliver annual synergies of $160 million for 2022.
- ARC's board of directors (the "Board") has approved a 10 per cent increase to ARC's quarterly dividend, from $0.06 per share to $0.066 per share. The dividend increase is effective for ARC's third quarter 2021 dividend, payable on October 15, 2021 to shareholders of record on September 30, 2021 , and reflects ARC's conviction in its assets, increased profitability, and the progress made to-date in delivering on the $160 million of annual synergies.
- ARC generated funds from operations (1) of $542.5 million ( $0.75 per share) and free funds flow (2) of $249 .7 million ( $0.35 per share).
- Free funds flow was allocated to debt reduction and declaring dividends of $43.5 million ( $0.06 per share).
- Net debt excluding lease obligations (1) outstanding was reduced by $270.8 million or 11 per cent and was 1.3 times annualized funds from operations at period end.
- ARC delivered average daily production of 335,701 boe (3) per day (60 per cent natural gas and 40 per cent crude oil and liquids) (4) , which was above guidance. Production in the period was impacted by planned maintenance and turnaround activities across the Company's asset base.
- ARC safely executed its active capital program, drilling 38 wells and completing 40 wells. Capital investments totalled $292.8 million and included bringing the Sunrise facilities expansion on-stream in May 2021 .
- ARC disposed of its Pembina assets in the second quarter of 2021. Production guidance during the second half of 2021 is unchanged at approximately 340,000 boe per day, while operating expense guidance and crude oil production guidance have been lowered to reflect the disposition. Production guidance for condensate, natural gas, and NGLs remains unchanged.