ARC Resources Ltd. (ARX) Earnings Call Transcript & Summary

Good morning. My name is Harold Kvisle, and I'm the Chair of the Board of ARC Resources Limited. On behalf of the management team and my fellow directors, welcome to ARC's 2025 Annual Meeting of Shareholders. 2024 was another year of outstanding performance for the company. ARC continued to advance its long-term strategy and delivered strong operational and financial results. Several key accomplishments were achieved, including successfully commissioning a major growth project in Attachie Phase 1, advancing our LNG strategy with an agreement with Cedar LNG and continued strong reserves and safety performance. On behalf of the Board, I would like to thank the management team and all the employees of ARC for their continued focus on the safe execution of our business. Our meeting today is hosted on the Lumi Virtual Shareholder Meeting platform. Instructions on how to ask questions and information regarding the voting procedure will appear on your screen. Before we commence the formal portion of the meeting, I would like to introduce you to the other directors and officers of ARC, who are joining me online today. Starting with the directors. Present today are Carol Banducci, David Collyer, Hugh Connett, Michael Culbert, Michael McAllister, Marty Proctor; Jackie Sheppard and Leontine van Leeuwen-Atkins. I would also like to take a moment to introduce Denise Man, who is standing for election to the ARC Board today. The ARC officers joining us today are Terry Anderson, President and CEO; Kris Bibby, our Senior Vice President and Chief Financial Officer; Armin Jahangiri, Senior Vice President and Chief Operating Officer; Ryan Berrett, Senior Vice President, Marketing; Lisa Olsen, Senior Vice President, People and Corporate; Sean Calder, our Vice President of Field Operations; Michael Capon, our Vice President of Information Technology; Kristin Cerny, our Vice President, Finance; Brian Groundwater, Vice President, Engineering and Geoscience; Tejay Haugen, our Vice President of Operations Planning; Sean Stuart, our Vice President of Capital Operations; and Grant Zawalsky, our Corporate Secretary. On behalf of this team and the Board, thank you once again for joining us today. The meeting will now come to order. I will act as Chair of the meeting and following the formal portion of our meeting today, Terry Anderson will make a few remarks on ARC's business. I will ask Grant Zawalsky to act as Secretary of the meeting, and both Stephen Bandola and Stephanie Tuss, Representatives of Computershare Trust Company of Canada to active scrutineers. I can confirm that I have received a declaration from Computershare Trust Company of Canada as to the mailing of the meeting materials to our shareholders. The scrutineer's report has now been received, and I confirm that a quorum of shareholders is present at this meeting. I therefore declare that the meeting is regularly called and properly constituted for the transaction of business. We will conduct the voting today by electronic ballot on the Lumi platform. If you have previously voted, you do not need to vote again when prompted. By voting again, you will revoke any previous vote made prior to voting cutoff. To my knowledge, each resolution considered today will be passed by the proxies deposited in advance of the meeting. Voting will be open for all resolutions at the same time, which will allow you to choose to vote on each resolution immediately or wait until the conclusion of discussion on each resolution prior to casting your vote. To vote, simply click on For or Withhold or Against as applicable. You will see confirmation immediately above the voting buttons once you've submitted your choice. There will be an opportunity to ask questions on each resolution in turn. Once discussion of all items of business has concluded, voting will be closed on all resolutions. The results will then be tallied by the scrutineers and will be provided at the end of the formal portion of the meeting. The detailed voting results will be disclosed by news release and posted on ARC's website following the meeting. The polls are now open for voting on all resolutions. Firstly, I would like to formally place before the shareholders the financial statements of ARC for the year ended December 31, 2024, and auditors report thereon, which were previously distributed to shareholders and posted on ARC's website. The next item of business is the election of Directors of ARC. I will now entertain nominations for 11 positions as directors of ARC.

My name is Taryn Bolder, and I nominate Hal Kvisle, Carol Banducci, David Collyer, Hugh Connett, Michael Culbert, Denise Man, Michael McAllister, Marty Proctor, Jacqueline Sheppard, Leontine van Leeuwen-Atkins and Terry Anderson as Directors of ARC.

Thank you, Taryn. As there are no further nominations, I now declare the nominations closed. The Board of Directors of ARC has agreed to conduct the election on an individual basis for each director in accordance with our majority voting policy. Grant, are there any questions?

There are no questions.

The next item of business is the appointment of auditors of ARC.

I move that PricewaterhouseCoopers LLP, Chartered Professional Accountants, be appointed as auditors of ARC.

My name is Jenny Monroe, and I second the motion.

Thank you. Grant, are there any questions?

There are no questions.

The next item of business is a nonbinding vote on our approach to executive compensation known as our say-on-pay vote.

I move that the nonbinding advisory resolution concerning ARC's approach to executive compensation as set forth in the information circular of ARC dated March 19, 2025, be approved.

I second the motion.

And Grant, are there any questions?

There are no questions.

Thank you. As we have now concluded each item of formal business, we will pause for a brief moment to allow shareholders to complete the online ballot. If each shareholder could ensure they have submitted their votes, that would be greatly appreciated. We'll pause briefly. [Voting]

The balloting is now closed. I am advised by the scrutineers that all the directors received a majority of votes in favor of election and I declare those nominated as duly elected directors of ARC. PwC has been appointed as the auditors of ARC and in excess of 98% of the votes cast are in favor of the say-on-pay vote. Grant, are there any remaining questions from the floor?

There are no questions outstanding.

Then as Chair, I would entertain a motion that this meeting be terminated.

I move that this meeting be terminated.

I second the motion.

Thank you. I declare this meeting terminated, and we'll now turn the meeting over to our CEO, Terry Anderson. Terry?

Thanks, Harold, and good morning to everyone joining us online. Before I begin my remarks, I would like to echo Hal's comments in welcoming our newest Board member, Denise Man. Her expertise will be a valuable addition and I look forward to her contribution. In terms of our company and its performance, I'll keep my comments brief as we held our first quarter conference call earlier this morning. 2024 was a milestone year for us. It was a year that was defined by operational excellence, capital discipline and a focus on long-term profitability. During the year, we executed one of the largest capital programs in ARC's history, completed a major growth project in Attachie Phase 1 and distributed $627 million to our shareholders. Throughout this year of exceptional activity, we maintained our focus on safe and efficient development. I am proud of our people for delivering outstanding results and record fourth quarter average production of 382,000 BOE per day, the highest in our 29-year history. Moving into 2025, we have maintained the great momentum we established last year. In March, we advanced our marketing strategy with a long-term sale and purchase agreement with ExxonMobil for all of ARC's LNG offtake from Cedar LNG. This is an important energy project for Canada, the Haisla Nation and the world, and we are proud to be a part of it. With this agreement, we will achieve our market diversification strategy target of linking approximately 25% of our future natural gas production to international pricing. Looking ahead, this year, we expect to deliver average production of 380,000 to 395,000 BOE per day on a $1.6 billion to $1.7 billion capital program. This is expected to drive free funds flow of approximately $1.5 billion, all of which we intend to return to shareholders once again. In 2025, we will demonstrate our profitability with our full year of production from Attachie. We will continue investing in this new development area and continue to plan for Phase 2, the next major milestone in our long-term plan. Our success also extends throughout our communities. Last year, we were proud to make significant investments into causes that are important to the communities in which we operate and to our staff. In particular, we were thrilled to announce 2 major community partnerships, a $5 million commitment to the new Alberta Cancer Center in Calgary, and a $1.25 million donation to Ronald McDonald House, Alberta. These long-term partnerships are a direct reflection of our commitment to positively impact the areas where we operate and highlights the strong culture of giving that defined ARC and our people. In closing, thank you to our shareholders for your ongoing support and to our employees, management team and directors for their continued dedication in safely executing our business and creating long-term value. This is an exciting time for ARC. We look forward to delivering strong results in 2025 and share our progress with you. Thank you, and have a good day.