CALGARY, AB, Might 14, 2025/ CNW/ – ARX ARC Resources Ltd. (” ARC” or the “Business”) today revealed it signed a conclusive contract to obtain condensate-rich Montney possessions in the Kakwa area in Alberta (the “Assets”) from Strathcona Resources Ltd. in an all-cash deal valued at around $ 1.6 billion( 1 ) (the “Deal”). The Deal has a reliable date of April 1, 2025 and is anticipated to close in early July 2025, based on traditional closing conditions.
The Assets, situated straight surrounding to ARC’s Kakwa advancement, will include around 40,000 boe each day of existing production (around 50 percent petroleum and liquids, 50 percent gas), consisting of around 11,000 barrels each day of condensate. The Properties are underpinned by a significant drilling stock, strengthening ARC’s position as Canada’s biggest Montney and condensate manufacturer.
TACTICAL REASONING
The acquisition of these premium Montney possessions lines up with ARC’s technique to grow complimentary funds circulation per share and accomplish a strong return on invested capital. The Deal is anticipated to increase the capital went back to investors, while preserving ARC’s monetary strength.
The acquisition is accretive to ARC’s base strategy and is anticipated to increase complimentary funds circulation per share( 2 ) by around 10 percent in 2026, based upon existing strip rates( 3 ) ARC strategies to return basically all complimentary funds circulation to its investors through a growing base dividend and share repurchases. This is made it possible for by its strong monetary position, big stock, and inexpensive structure.
DEAL HIGHLIGHTS
- Broadens Core Kakwa Area The acquisition increases ARC’s Kakwa production by 24 percent to higher than 210,000 boe each day, and increases the Montney stock period at Kakwa from 12 years to higher than 15 years. ARC’s advancement strategies will target the Montney, which is around 100 percent working interest land. ARC likewise maintains future stock in other developments that might even more extend the advancement runway at Kakwa over the long-lasting.
- Immediate and Long-lasting Accretion. The Properties are anticipated to include around $ 200 million of complimentary funds circulation( 2 ) in 2026 at existing strip rates (before synergies). ARC will supply upgraded 2025 assistance to include the obtained Properties after closing.
- Owned-and-operated Facilities. Owned-and-operated facilities is an essential tenet of ARC’s technique to maintain a low expense structure and functional versatility. The Deal consists of 100 percent ownership of 2 gas processing centers and condensate handling facilities. In addition, the Properties consist of a 19 percent interest in a 3rd party gas processing center with deep cut NGL healing.
- Functional and Monetary Synergies. ARC’s substantial and adjoining operations in the area will lead to functional synergies through drilling and conclusion expense enhancements, running and supply chain cost savings, downstream marketing optimization, and location facilities synergies.
- Retain Financial Strength. Upon closing, ARC quotes net financial obligation( 2 ) of around $ 2.8 billion, enabling ARC to maintain a strong monetary position. Net financial obligation to funds from operations( 2 ) is anticipated to be around 0.8 times in 2025, based upon existing strip rates. The Deal will be moneyed through a brand-new $ 1.0 billion dedicated two-year term loan, and existing credit centers.
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( 1 ) |
The Deal purchase cost consists of $1.6 billion for the Kakwa possessions (internet of approximated purchase cost modifications) and $20 million for extra unassociated devices and undeveloped land. |
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( 2 ) |
The disclosures of “complimentary funds circulation per share”, “complimentary funds circulation”, “net financial obligation” and the “ratio of net financial obligation to funds from operations” in this press release are defined monetary procedures relevant under National Instrument 52-112 Non-GAAP and Other Financial Procedures Disclosure. See “Non-GAAP and Other Financial Procedures” of this press release, Keep in mind 8 “Capital Management” in the unaudited condensed interim combined monetary declarations as at and for the 3 months ended March 31, 2025 (the “Q1 2025 monetary declarations”) and the area entitled “Non-GAAP and Other Financial Procedures” in ARC’s Management’s Conversation and Analysis as at and for the 3 months ended March 31, 2025 (the “Q1 2025 MD&A”) for extra disclosures relating to these monetary procedures. |
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( 3 ) |
Based upon existing strip prices in 2026 of around US$ 61 per barrel WTI and C$ 3.40 per GJ AECO. |
CONSULTANT
Scotiabank is functioning as monetary consultant to ARC on the Deal. RBC Capital Markets is functioning as tactical consultant to ARC. Burnet, Duckworth & & Palmer LLP is functioning as ARC’s legal consultants for the Deal.
The totally dedicated term loan center was offered by the Royal Bank of Canada and The Bank of Nova Scotia as underwriters and bookrunners.
POSITIVE DETAILS
This press release includes positive info as specified under relevant securities legislation. Positive info includes considerable recognized and unidentified threats and unpredictabilities. Using any of the words “strategy”, “anticipate”, “plan”, “think”, “need to”, “prepare for”, or other comparable words, or declarations that particular occasions or conditions “might” or “will” happen are meant to recognize positive info. Positive info shows the Business’s expectations, quotes and forecasts just. Real occasions or outcomes might vary materially. Lots of elements might trigger ARC’s real outcomes to vary materially from those revealed or suggested in any positive info made by or on behalf of ARC. In specific, this press release includes positive info with regard to: the anticipated timing of closing for the Deal; the approximated boosts to volumes of production as an outcome of the Deal; the awaited advantages of the acquisition, consisting of increased complimentary funds circulation; ARC’s strategies to return basically all complimentary funds circulation to its investors; ARC’s strategies to target the Montney which the advancement runway at Kakwa might be more extended; expectations relating to additions to complimentary funds circulation; that the Deal will lead to functional synergies and the sources thereof; approximated net financial obligation upon closing; expectations relating to net financial obligation to funds from operations; and comparable positive info. There can be no guarantee that the strategies, objectives, or expectations upon which positive info is based will happen.
This positive info goes through many threats and unpredictabilities consisting of: possible hold-ups with regard to the closing of the Deal; modifications to laws and policies; and the irregularity of product rates and modifications in operations and advancement strategies in reaction to modifications to product rates. Readers need to likewise thoroughly check out the danger elements explained in the “Threat Elements” area of the Business’s yearly management’s conversation & & analysis (the “Yearly MD&A”) which is offered on SEDAR+ at sedarplus.ca for a description of particular threats relevant to the Business and its company. The “Threat Elements” area of the Business’s Yearly MD&A is integrated by recommendation into this press release.
With regard to positive info consisted of in this press release, ARC has actually made presumptions that: the Deal will close within the timelines considered; any regulative approval needed will be gotten within anticipated timelines; that the conditions precedent to the contract for the Deal will be fulfilled; future product rates and basis differentials; capital markets and other sources of liquidity to money operations or acquisitions and handle financial obligation; the accessibility of appealing product or monetary hedges and the enforceability of danger management programs; the Business’s capability to catch and keep gains in performance and performance; the counterparties to the conclusive arrangements for the Deal and associated funding will adhere to their legal commitments; expectations of strategies, techniques and goals of the Business, consisting of awaited production volumes and capital expense; the Business’s capability to handle expense inflation and anticipated expense structures, consisting of anticipated operating, transport, processing and labor costs; the outlook of the oil and gas market typically, consisting of effects from modifications to the geopolitical environment; forecasts made because of, and typically constant with, the Business’s historic experience and its understanding of historic market patterns; and the regulative program will stay considerably comparable to the existing regulative program. Although the positive info consisted of in this press release is based upon presumptions which management thinks to be affordable, ARC can not ensure financiers that real outcomes will follow this positive info.
This positive info is made since the date of this press release and ARC disclaims any intent or responsibility to upgrade openly any positive info, whether as an outcome of brand-new info, future occasions or outcomes, or otherwise, aside from as needed by relevant securities laws.
Non-GAAP and Other Financial Procedures
In this press release, ARC uses particular non-GAAP and other defined monetary procedures to portray the awaited future monetary efficiency, monetary position, and capital of ARC upon closing of the Deal, consisting of complimentary funds circulation per share, complimentary funds circulation, net financial obligation, and net financial obligation to funds from operations (the “deal monetary procedures”). The deal monetary procedures are not standardized monetary procedures under International Financial Reporting Standards as released by the International Accounting Standards Board (” IFRS Accounting Standards”) and might not be equivalent to comparable monetary procedures utilized and divulged by other companies for the exact same functions. The deal monetary procedures need to not be thought about to be more significant than typically accepted accounting concepts (” GAAP”) procedures which are identified in accordance with IFRS Accounting Standards as indications of monetary efficiency, monetary position, and capital. See Keep In Mind 8 “Capital Management” in the Q1 2025 monetary declarations and the area entitled “Non-GAAP and Other Financial Procedures” in the Q1 2025 MD&A, each of which is offered on ARC’s site at www.arcresources.com and on SEDAR+ at www.sedarplus.ca, for descriptions of the structure of the non-GAAP monetary procedures utilized by ARC, how the non-GAAP monetary procedures utilized by ARC supply beneficial info to financiers, and the extra functions for which management utilizes the non-GAAP monetary procedures, which disclosures are integrated by recommendation into this press release. ARC determined the prepared for deal monetary procedures utilizing the exact same approach utilized to identify the defined monetary procedures divulged in its Q1 2025 monetary declarations and Q1 2025 MD&A. Comparable historic complimentary funds circulation per share and complimentary funds circulation non-GAAP monetary procedures divulged in this press release are not available.
About ARC
ARC Resources Ltd. is a pure-play Montney manufacturer and among Canada’s biggest dividend-paying energy business, including inexpensive operations. ARC’s investment-grade credit profile is supported by product and geographical variety and robust danger management practices around all elements of business. ARC’s typical shares trade on the Toronto Stock Market under the sign ARX.
ARC RESOURCES LTD.
Please go to ARC’s site at www.arcresources.com or contact Financier Relations:
Email: IR@arcresources.com
Telephone: (403) 503-8600
Fax: (403) 509-6427
Toll Free: 1-888-272-4900
ARC Resources Ltd.
Suite 1500, 308 – 4 Opportunity SW
Calgary, AB T2P 0H7
SOURCE ARC Resources Ltd.