Q3 2023 ARC Resources Ltd Earnings Call
Speaker 1: The sales line is installed. The liquids line is well underway. At the plant site, the tank farm is completed. 75% of the piling throw of equipment and buildings have been installed and some of the equipment has arrived on site.
<unk> liquids line is well underway at the plant site. The tank farm is completed 75% of the pilings for all the equipment and buildings have been installed and some of the equipment has arrived on site.
Speaker 1: The plant construction gathering system and all the other infrastructures progressing as planned and over the next few weeks we'll begin drilling.
Plant construction gathering system and all the other infrastructure is progressing as planned and over the next few weeks, we'll begin drilling.
Speaker 1: We are also on track to fully electrify this facility at startup. Further lowering our emissions and density per BLE while delivering low cost energy to Mark.
We're also on track to fully electrify this facility at startup further lowering our emissions intensity per Boe, while delivering low cost energy to market.
Speaker 1: In summary, we've secured all the long lead items, services, and critical permits to execute this project.
In summary, we have secured all the long lead items services and critical permits to execute this project.
Speaker 1: Attach you will be our eighth monthly infrastructure project and I'm confident it'll be the most efficient project today.
Attach you will be our eighth Montney infrastructure project and I'm confident it will be the most efficient project to date.
Speaker 1: We are in great shape and I'd like to thank our staff and service providers for their excellent work thus far and keeping the project on time, on budget and ensuring safety is our number one prior.
We are in great shape, and I would like to thank our staff and service providers for their excellent work, thus far in keeping the project on time on budget and ensuring safety is our number one priority.
Speaker 1: Finally, I'd like to move on to the 2024 bike.
Finally, I'd like to move on to the 2020 for budget the.
Speaker 1: Priorities are clear. Deliver a safe and capital-efficient program while focusing on completing attacks.
Our priorities are clear deliver a safe and capital efficient program, while focusing on completing attached.
Speaker 1: The outcome of this will be a step change in our free cash flow per share growth in 2025 and beyond.
The outcome of this will be a step change in our free cash flow per share growth in 2025 and beyond.
Speaker 1: Next year, we plan to invest between $1.75 and $1.85 billion. And this includes $500 million for that Tatchee Phase I startup.
Next year, we plan to invest between $1 75, and $1 $85 billion and this includes $500 million for that catchy phase one startup.
Speaker 1: The capital program is balanced geographically with a 50-50 split between Alberta and British Columbia and we will deliver average annual production between 350,000 and 360,000 Buie per day.
Capital program is balanced geographically with a 50 50 split between Alberta, and British Columbia, and we will deliver average annual production between 350000 and 360000 Boe per day.
Speaker 1: This budget is approximately $200 million lower than communicated previously at the investor day in June .
This budget is approximately $200 million lower than communicated previously at the Investor Day in June.
Speaker 1: 25% lower than the 2023 capital budget once you adjust for the attache capital each year The primary contributors to lower capital are first Operational decisions to minimize non productive capital Second realize cost savings on certain items and third a lower decline rate in 2024
25% lower than the 2023 capital budget once you adjust for the Apache capital in each year.
The primary contributors to lower capital, our first operational decisions to minimize nonproductive capital.
Realized cost savings on certain items and third a lower decline rate in 2024.
Speaker 1: At CACWA, which is our flagship condosate producing asset, we are investing less capital and hold and condosate volumes flat year over year. The primary drivers of this...
At <unk>, which is our flagship condensate producing asset.
We are investing less capital and holding condensate volumes flat year over year.
The primary drivers of this are twofold.
Speaker 1: lower decline rate and a shift back to the cornstake rich areas of the <expletive> .
A lower decline rate and a shift back to the condensate rich areas of the asset.
Speaker 1: This follows our planned activity in 2023 that focused in areas with slightly lower compensate gas rates.
This follows our planned activity in 2023 that focused in areas with slightly lower condensate gas ratios.
Speaker 1: Longer term, our over-qual condensate growth will be driven by a tax.
Longer term, our overcall condensate growth will be driven by attached.
Speaker 1: which is 60% liquids of which 75% is conund-
Which is 60% liquids of which 75% is condensate.
Speaker 1: ARC reached an important milestone at CAQA this quarter. We achieved payout for the asset that we acquired in the second quarter of 2021. So in less than three years, CAQA has generated cumulative free cash flow at the asset level of $4.2 billion, which is equal to the purchase price.
Arc reached an important milestone at cap with this quarter, we achieved payout for the asset that we acquired in the second quarter of 2021.
So in less than three years <unk> has generated cumulative free cash flow at the asset level of $4 $2 billion, which is equal to the purchase price.
Speaker 1: And we still have approximately 15 years of high quality inventory ahead of us.
And we still have approximately 15 years of high quality inventory ahead of us.
Speaker 1: I'm extremely proud of how we've made a world-class asset even better by leveraging the strengths embedded in our company.
I'm extremely proud of how we've made our world class asset even better by leveraging the strengths embedded in our company.
Speaker 1: Moving on to North East BC, we expect to produce near our capacity with modest growth that sunrise following the facility expansion project completed in 2020.
Moving on to northeast BC, we expect to produce near our capacity with modest growth at Sunrise. Following the facility expansion project completed in 2023.
Speaker 1: This will increase capacity at sunrise to 360 million cubic feet per day, which is direct connected to coastal gas link, and will supply LNG projects off the west coast of Canada.
This will increase capacity at Sunrise to 360 million cubic feet per day, which is direct connected to coastal gas link and we will supply LNG projects off the west coast of Canada.
Speaker 1: To summarize, 2024 will serve as a banner year and set the stage for a step change in our free cash flow per share growth in 2025. Without, I'll turn it over to Chris.
To summarize 2024 will serve as a banner year and set the stage for a step change in our free cash flow per share growth in 2025.
With that I'll turn it over to Chris.
Thanks, Terry and good morning, everyone.
First I'll touch on the quarter itself.
Speaker 2: Park delivered average production of 360,000 DOEs per day and generated funds from operations of 662 million. Both were directly in line with analyst forecast. While free cash low of 261 million exceeded expectations by about 45% primarily due to lower capital expenditures during the court.
We delivered average production of 360000 Boe's per day and generated funds from operations of $662 million. Both were directly in line with analysts' forecast, while free cash flow of $261 million exceeded expectations by about 45%, primarily due to lower capital expenditures during the quarter.
Speaker 2: In terms of capital, we invested $400 million in the quarter, split between Kacqua and in Northeast BC, including approximately $60 million at a touch.
In terms of capital, we invested $400 million in the quarter slip between capa and in northeast BC, including approximately $60 million out attaching.
Speaker 2: AHRQ maintained full year guidance for production, capital spending, and costs with fourth quarter production forecast to be approximately $355,000 BOEs per day.
Arc maintained full year guidance for production capital spending and cost with fourth quarter production forecast to be approximately 355000 boe's per day.
Speaker 2: When I look back at our financial performance over this quarter, what sit out was profitability and margins, and how market diversification and a balanced commodity mix played a key role. First,
When I look back at our financial performance over this quarter, which stood out was profitability and margins and how market diversification and a balanced commodity mix played a key role.
First as it relates to natural gas.
Speaker 2: ARC realized $3.16 per MCF in the quarter, which registered as a 32% premium relative to the local ACO benchmark. This was mainly driven by our transportation portfolio to the U.S. demand markets in California, Chicago and in the U.S. Gulf Coast.
Dark realized $3 16 per Mcf in the quarter, which registered as a 32% premium relative to the local April benchmark.
This was mainly driven by our transportation portfolio to the U S demand markets in California, Chicago and in the U S Gulf Coast.
Speaker 2: In periods of volatility, we are typically able to capture better margins for our gas and Q3 was a great example of this.
In periods of volatility we are typically able to capture better margins for our gas in Q3 was a great example of this.
Speaker 2: Second, ARC's 360,000 BOEs per day of production included 87,000 barrels per day of crude oil and condensate, which as Terry already mentioned, averaged greater than $100 Canadian per barrel in the quarter.
<unk> 360000, Boe's per day of production included 87000 barrels per day of crude oil and condensate, which is Terry already mentioned average greater than $100 Canadian per barrel in the quarter.
Speaker 2: As a reminder, we are Canada's largest condensate producer, which is structurally short mark.
As a reminder, we are Canada's largest condensate producer, which is structurally short market.
Western Canada consumes about 700000 barrels a day in the oil sands and altogether the market produces roughly 450000 barrels a day locally.
Speaker 2: The 250,000 barrel at a shortfall is imported via two pipelines from the US which are operating at or near capacity. So it's structurally a strong market for us long-term.
The 250000 barrel a day shortfall is imported two pipelines from the U S, which are operating at or near capacity. So it's structured a strong market for us long term.
Okay.
We returned 71% of free cash flow to shareholders in the quarter through a combination of dividends and share repurchases and the balance was used to reduce debt.
Speaker 2: As we have stated in the past, we plan to return essentially all free funds for the shareholders this year and in 24, implying an increase in the percentage returned over the remainder of the year.
As we have stated in the past we plan to return essentially all free funds flow to shareholders. This year ended 24, implying an increase in the percentage returned over the remainder of the year.
Speaker 2: To this end, net debt at quarter end was $1.2 billion, which is the right level for our business, factoring in our asset quality and duration, low cost structure, and our low emissions intensity.
Net debt at quarter end was $1 2 billion.
Which is the right level for our business factoring in our asset quality and duration low cost structure and our low emissions intensity.
Speaker 2: Combine these that attribute shield our business and ensure we are profitable and sustainable through commodity cycle.
Combined these attributes shield, our business and ensure we are profitable and sustainable through commodity cycles.
Speaker 2: Now looking ahead to the 2024 budget. Our top priority is a capital efficient program that will provide long-term per share of growth. We will achieve this by continuing to invest in our assets and balance that with a meaningful return of capital to our shareable.
Now looking ahead to the 2020 for budget our top priority is a capital efficient program that will provide long term per share growth. We will achieve this by continuing to invest in our assets and balance that with a meaningful return of capital to our shareholders.
Speaker 2: This is the optimal way to generate an attractive and competitive total return.
This is the optimal way to generate an attractive and competitive total return.
Speaker 2: Production guidance for 24 of 350 to 360,000 BOEs per day. Incorporates the anticipated expiry of an ethane sales contract in the second quarter, which will reduce reported NGL production by approximately 5,000 barrels per day on an annualized basis.
Production guidance for 'twenty four of 350 to 360000 Boe's per day incorporates the anticipated expiry of an ethane sales contract in the second quarter, which will reduce reported NGL production by approximately 5000 barrels per day on an annualized basis.
Speaker 2: We plan to re-inject Essay into the natural gas stream, resulting in high revenue from sales of higher heat content gas, offsetting the impact to funds from operations.
We plan to re inject ethane into the natural gas stream, resulting in high <unk> higher revenue from sales of higher heat content gas offsetting the impact to funds from operation.
Speaker 2: In terms of capital, we are investing $1.8 billion in 2024.
In terms of capital we are investing $1 8 billion in 2024.
Speaker 2: As mentioned, this is about $200 million less than 2023 once you adjust for the attached growth capital. And we are generating the same or slightly higher production level.
As mentioned this is about $200 million less than 2023 once you adjust for the attach of growth capital and we're generating the same or slightly higher production levels.
Speaker 2: This is driven by two things. First, a lower corporate decline in 2024. Therefore, we need to drill and complete fewer wells to offset production decline. And second, a concerted effort to further reduce non-productive capital in our business.
This is driven by two things first a lower corporate decline in 2024, therefore, we need to drill and complete fewer wells to offset production declines and.
And second a concerted effort to further reduce nonproductive capital in our business.
Speaker 2: This is particularly true at CAPLA. Next year, we are investing less capital, both capital in facilities and in wells, and expect to maintain flat, condosate volumes in 2020.
This is particularly true of Capex next year, we are investing less capital, both capital and facilities and in wells and expect to maintain flat condensate volumes in 2024.
Speaker 2: As planned, total production at Calcua is expected to average 180,000 Vlle's per day, or 175,000 Vlle's per day once we adjust for the ethane contract expiry in the second quarter of next year.
As planned total production at <unk> is expected to average 180000 Boe's per day or 175000 Boe's per day. Once you adjust for the ethylene contract expiring in the second quarter of next year.
Speaker 2: Over the long term, we think this is the optimal production level to maximize free cashflow and asset level return.
Over the long term, we think this is the optimal production level to maximize free cash flow and asset level returns.
Speaker 2: In terms of our cost structure, we forecast little change in 2024. Operating and transportation costs are forecast to be relatively unchanged year over year at approximately $10 per BOE combined.
In terms of our cost structure, we forecast little change in 2024 operating.
Operating and transportation costs are forecast to be relatively unchanged year over year at approximately $10 per Boe combined.
Speaker 2: Provide some additional contact on our cost structure and resiliency of our business. We can sustain production in the 350 to 360,000 BLE per day range and fund the current dividend with organic cash flow below US $45 a barrel WTI and Canadian $2 ako per ampere.
To provide some additional context on our cost structure and resiliency of our business. We can sustain production in the 350 to 360000 BOE per day range and fund the current dividend with organic cash flow below U S $45, a barrel WTS and Canadian $2 <unk> per Mcf.
Speaker 2: This is based on our cost rupture today, so does not include any deflation that would be expected in a very low commodity price environment.
This is based on our cost structure today. So it does not include any deflation that would be expected in a very low commodity price environment.
Speaker 2: Beyond our low cost structure, our competitive strengths also include our infrastructure footprint, asset quality, and market and commodity diversification.
Beyond our low cost structure, our competitive strengths also include our infrastructure footprint asset quality and market and commodity diversification.
Speaker 2: At script pricing, the 2024 program is expected to generate $3.0 to $3.2 billion cash load and roughly $1.4 billion of free cash.
At strip pricing. The 2024 program is expected to generate 3.0 to $3 $2 billion of cash flow and roughly $1 4 billion of free cash flow.
Speaker 2: Precarslow will once again be returned to shareholders through a combination of a growing dividend and share repurchases given the value of our shares today.
Free cash flow will once again be returned to shareholders through a combination of a growing dividend and share repurchases given the value of our shares today.
Speaker 2: Finally, as we look out further, the five year outlook is essentially unchanged from what we first introduced at our investor update in June . We intend to deliver a balanced program that invests in our best projects like Attachee while reducing the share count to compound that per share growth.
Finally, as we look out further the five year outlook is essentially unchanged from what we first introduced at our Investor update in June we need to deliver we intend to deliver a balanced program that invest in our best projects like Hitachi, while reducing the share count to compound that per share growth.
Speaker 2: step change in our per share metrics will first appear in 2025. Incorporating a Tatchy, we anticipate 10% growth on a production basis and $600 million increase in pre-finals flow.
The step change in our per share metrics will first occur in 2025, incorporating attaching we anticipate 10% growth on a production basis and $600 million increase in free funds flow.
Speaker 2: This equivalent to more than a dollar per share relative to our 2024 are an unchanged commodity price deck of US $70 WTI and $3.50 since the IMX US. With that, I'll pass it back to Terry for closing remarks.
This is equivalent to more than $1 per share relative to our 2024 on an <unk>.
<unk> commodity price deck of U S $70, <unk> and $3 50 <unk>.
With that I'll pass it back to Terry for closing remarks.
Thanks, Chris.
Speaker 1: Looking ahead, as the largest Montague producer, I have never had more conviction in our business and where we are.
Looking ahead as the largest montney producer I have never had more conviction in our business and where we are headed.
Speaker 1: We've communicated a five-year plan that adds significant value through investing in our business to grow free cash flow, increase the dividend, and buy back our shares.
We've communicated a five year plan that add significant value through investing in our business to grow free cash flow increased the dividend and buyback our shares.
Speaker 1: This plan will nearly triple free cash flow to approximately $5 per share.
This plan will nearly triple our free cash flow to approximately $5 per share.
Speaker 1: As I look forward out towards 2030, ARC will be a larger, more profitable company with expanded reach to global markets through our LNG agreement.
As I look forward out towards 2030 arc will be a larger more profitable company with expanded reach to global markets through our LNG agreement at.
Speaker 1: at the same time, the build out of LNG and Western Canada will fundamentally improve the dynamics of our market, providing additional optionality for value creation along the way.
At the same time to build out of LNG in Western Canada will fundamentally improve the dynamics of our market, providing additional optionality for value creation, along the way.
Speaker 1: With that, I want to again thank all of our staff for their commitment and contribution towards our success. Thank you. Operator? Operator?
With that I want to again, thank all of our staff for their commitment and contribution towards our success.
Thank you.
Operator, you can open the line to questions.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Speaker 3: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press the star, then the number 1 on your telephone key.
Speaker 3: If you would like to withdraw your question, please press the start and the number 2. There will be a brief pause while...
I would like to call. Your question. Please press Star then the number two there.
There will be a brief pulse last questions have been thank you again.
Speaker 3: Our first question comes from Michael Harvey from RBC Capital Markets. Please go ahead. Your line is out.
Our first question comes from Michael <unk> from RBC Capital markets. Please go ahead. Your line is open.
Speaker 4: Sure, thanks. Good morning, guys. I just had a couple questions. The first one's on your natural gas price hub exposure. Looks like your ACO percentage is increasing quite a bit in 25, then 26 and 27. I assume that's by design, but maybe you could just confirm that, or we'll see that be adjusted kind of as we move forward over the next couple of years. And then the second one was...
Sure. Thanks, Good morning, guys I just had a couple of questions.
First one is on your your natural gas price hub exposure. It looks like you are.
Heiko percentages is increasing quite a bit in 'twenty five 'twenty six 'twenty seven I assume thats by design, but.
Maybe you could just confirm that or if we will see that.
The adjusted kind of as we as we move forward over the next couple of years and then the second one was.
Speaker 4: Just on the drilling plan at Atache, when you start moving rigs there, I think later this year. So it's been a few years since you've drilled a well there. Is there anything different you're going to be doing just well design wise you may have learned from CAC or otherwise that you think may impact the recovery profile in that area? And that's it for me.
Just on the drilling plan at attach when you start moving rigs or I think later this year.
So it's been a few years since you've drilled a well there is there anything different youre going to be doing just well design wise you may have learned.
CAC or otherwise.
Do you think may impact the recovery profile in that area and that's it for me.
Speaker 5: Hey Mike, what's Ryan, thanks for the question on, I'll tackle the first question on your eco pricing hub. Yeah, no, you're correct. This is by design. We are increasing our exposure as you know, the buildup of LNG Canada comes on and you start to see those volumes flow in the middle of the decade. So by design, but you know, as, as you know, we always have a balanced portfolio and we'll continue to do so.
Hey, Michael It's Ryan Thanks for the question on I'll tackle the first question on <unk> pricing hub.
Yes, no you are correct. This is by design, we are increasing our exposure as the buildup of LNG, Canada comes on and we start to see those volumes flow in the middle of the decade. So by design, but as you know we always have a balanced portfolio and we'll continue to do so.
Speaker 6: Michael, this is Armin. In regards to your question about drilling, we are quite excited to go back to Atachi. Obviously, there's been a lot of learning from all the other operations that we are doing in the rest of Northeast BC and Kakwa, and all those learnings are going to be transferable. We are expecting to be able to hit the ground running in Atachi and incorporate a lot of those efficiencies that we've realized over the last year.
Michael This is armen in regards to your question about drilling we are quite excited to go back to Hitachi, obviously theres been a lot of learning from all the other operations that we are doing in rest of north <unk>.
All of those learnings are going to be transferable.
We're expecting to be able to hit the ground running and attach and incorporate a lot of those.
<unk> sees that we've realized over the last couple of years.
Speaker 4: Right on. And, you know, would there be changes to things like well length, frac design, that kind of stuff? Or, you know, maybe you're just kind of getting started in that process?
Great.
Would there be changes things like well length frac.
Frac design that kind of stuff or.
Maybe you just kind of getting started in that process.
Speaker 6: Well, initially, I think it's going to be fairly consistent with where we ended at Atachi a couple of years ago, but there's obviously always opportunity for improvement. We look at our wealth placement. If there's an opportunity to extend the lateral length, for example, to improve capital efficiency, we always do that. So nothing out of ordinary.
Volume initially I think he is going to be fairly classes stand with where we ended Apache a couple of years ago, but there's obviously always opportunity for improvement.
We look at our well placement and if there is an opportunity to extend the lateral lengths for example to improve capital efficiency, we always do that so nothing out of ordinary.
Got you great. Thanks for that guys.
Yeah.
Speaker 7: Thank you. Our next question comes from Patrick O'Rourke from ATB Capital Markets. Please go ahead. Your line is open.
Thank you. Our next question comes from Patrick <unk> from Keybanc Capital markets. Please go ahead. Your line is open.
Okay.
Hello.
One moment.
Hello.
Your line is open please ask your question.
Yes can you guys hear me.
Yes, we can.
Hello.
Yes, we can hear you Patrick.
Speaker 8: Okay, sorry, the operator was talking over me there, so I wasn't sure if you could, but I apologize for any miscommunication there. Just kind of wondering and wanted to unpack here with respect to the $200 million improvement in the capital budget, and you guys are talking about non-productive capital sort of...
Sorry, the operator was talking over me there. So I wasn't sure if you could but I apologize for any miscommunication. There just kind of wondering and wanted to unpack here with respect to the $200 million improvement in the capital budget and you guys are talking about nonproductive capital sort of how durable those improvements are out through sort of the life of the asset.
Speaker 8: how durable those improvements are out through sort of the life of the asset, and then just wondering are there any sort of analogous improvements that you can see at something like Atachi where we could see the capital efficiency.
And then just wondering are there any sort of analogous improvements that you can see at something like Apache, where we could see the capital efficiency profile improve in an.
Speaker 8: profile improve and incremental free cash flow from similar type improvements.
Incremental free cash flow from sort of similar.
Type improvements.
You bet, Patrick it's Chris here I'll take a stab at it.
Speaker 2: You know, the 200 million does apply across the entire asset base, so it's not it's not really an asset specific number.
The $200 million does apply across the entire asset base. So it's not it's not really an asset specific number and really what we've done is we've just optimize basically the delivery time of the wells.
Speaker 2: What we've done is we've just optimized basically the delivery time of the wells, so that we aren't investing as much capital prior to needing some of that production or even facility
So that we aren't investing as much capital prior to needing some.
Some of that production or even facilities. So if you think about it we would have less invested in basically ducks than we would've otherwise had and part of the reason we're comfortable doing that we've spent a lot of time working on predictability of results and deliverability results. So so it gives us the comfort that we can.
Speaker 2: If you think about it, you know, we would have less invested in basically ducks than we would have otherwise had. And part of the reason we're comfortable doing that, you know, we've spent a lot of time working on predictability of results and deliverability results.
Speaker 2: So it gives us the comfort that we can, you know, tighten up some of the white space perhaps that we would have otherwise had in some of our safety margin, just because we have spent so much time on the predictability to have a very high confidence factor in what the outcomes are going to be.
Tighten up some of the white space, perhaps that we would've otherwise had in some of our our safety margin just because we have spent so much time on the predictability to have a very high confidence factor and what the outcomes are going to be.
Speaker 2: And so could that lead into further improvements down the road? You know, it's hard to say right now. We're comfortable with this tightening and let us get through, you know, the next year or so, and then we can see where we get to.
So could that lead into further improvements down the road.
It's hard to say right now we're comfortable with this.
Tightening and let us get through the next year or so and then we can see where we get to.
Speaker 8: Okay, and then just kind of maybe shifting gears a little bit here. You talked a little bit about natural gas price exposures, but can you maybe provide a little bit of an update in terms of the timeframes and key milestones for Cedar in particular, but also your Corpus Christi exposure? And when we'll start to see the benefit of that. Yeah, hey, Patrick, it's Ryan.
Okay, and then just kind of maybe shifting gears a little bit here, you talked a little bit about natural gas price exposures, but.
Can you maybe provide a little bit of an update in terms of the timeframes and key milestones for.
Cedar in particular, but also your corpus Christi exposure and when we'll start to see the benefit of that.
Yeah, Hey, Patrick it's Ryan I'll just.
Dig into both of those questions. Obviously as you know we signed the Cheniere contract with Corpus Christi about a year and a half ago.
Speaker 5: Obviously, as you know, we signed the Schneer contract with Corpus Christi about a year and a half ago. Schneer came out yesterday and or two days ago and talked about the startup of construction on those on the phase three of the expansion. We're trained seven of that expansion and we would expect our service to come into service roughly near the end of twenty twenty six. So no real change on that front.
Senior came out yesterday, and two days ago and talked about the startup of construction on those on the phase III of the expansion were trained seven of that expansion and we would expect our service to come into service roughly near the end of 2026, So no real change on that front.
Speaker 5: On the CEDAR front, we continue to work through all the various commercial arrangements. Pemina came out this morning and has talked about potentially a slippage into Q1 of their FID. We are working through definitive agreements on both offtake and on the tolling, and would hopefully be in line with Pemina's timing on that.
On the Cedar front, we continue to work through all the various commercial arrangements permanent came out this morning and has talked about.
Q potentially of slippage into Q1 of there.
We are working through definitive agreements on both offtake and on the tolling and would hopefully be in line with with permanent timing on that.
Okay, great. Thank you very much.
Speaker 3: Thank you. The next question comes from Jamie Kubik from CIBC. Please go ahead. Your line is open.
Thank you. The next question comes from Jamie Kubik from CIBC. Please go ahead. Your line is open.
Speaker 8: Good morning. Thanks for taking my questions. I have two here. So first, capital spending for ARC has come in lower than I'd say budgeted for the first three quarters of the year. Can you just outline what's driven the savings this year and how should we think about the full year budget for 2023 based on where you're at today?
Yes. Good morning, Thanks for taking my questions I have two here, so first capital spending for arc.
Come in lower than.
I would say budgeted for the first three quarters of the year can you just outline what's driven the savings this year and.
And how should we think about the full year budget for 2023 based on where youre at today.
Speaker 2: You bet, Jamie, it's Chris here again. You know, I wouldn't, I would hesitate to call them savings. Really, this is just a timing issue. And so, you know, we would expect to meet.
You bet, Jamie it's Chris here again.
I wouldn't I would hesitate to call them savings really this is just a timing issue.
So we would expect to meet our capital guidance of one eight to one nine here by the end of the year, which does imply.
Speaker 2: our capital guidance of 1.8 to 1.9 here by the end of the year, which does imply quite a very active Q4 spend. So I think we are comfortable with it, but we're ramping up activities and Q4 should be in line to get to our full year guidance.
Right, a very a very active Q4 spend so I think.
We are comfortable with it but we're ramping up activities in Q4 should be should be in line to get to our full year guidance.
Speaker 8: Second question. In the 2024 budget, you do have oil and condensate volumes growing relative to the 2023 guidance and you indicate condensate volumes CAC were expected to stay flat. Can you just talk about where you expect the growth is going to come from next year?
Okay. Thanks, and then second question.
2020 for budget do you have.
Oil and condensate volumes growing relative to the 2023 guidance and you indicated condensate volumes CAC, we're expected to stay flat.
Can you just talk about where you expect the growth is going to come from next year.
Speaker 9: I mean, really, it's going to be our two key properties that are condensate-rich, so Caqua and Hitachi.
You bet, Hey, Jamie its Laura.
As far as where the condensate comes from I mean, really it's going to be our key properties.
Condensate rich <unk> and Hitachi, so effectively as we bring a tacky on in Q4, youre going to see that condensate add coming up and then the nice part of that of course is into 2025 Hitachi will be at capacity in that condensate volume will be consistent for us go forward.
Speaker 9: you're going to see that condensate ad coming up. And then the nice part of that, of course, is into 2020.
Speaker 9: at capacity and that condensate volume will be consistent for us to go forward.
Okay. That's all for me thank you.
Speaker 3: Thank you. Our next question comes from Travis Wood from National Bank Financial. Please go ahead to your line.
Thank you. Our next question comes from Travis Wood from National Bank Financial. Please go ahead. Your line is open.
Speaker 3: facility, and then through next year. So, kind of the key item. Apologies. Sorry to interrupt, Travis. Please do ask your question again. Thank you.
Utility.
And then through next year, so kind of the key ideology Alrighty Tavis. Please ask your question again. Thank you.
Speaker 2: Okay, my question is wanting to understand the critical path around attaching just getting kind of a timeline, or.
Okay. My question is wanting to understand.
The critical path around attached.
Getting kind of a timeline or.
Speaker 10: you know, the items that you see the most relevant that you want to check off the to-do list as you get ready for processing that attache. So, for example, rig mobility for this quarter, starting to drill the wells, you commented on.
The items that you see the most relevant that you want to check off the to do list as you get ready for.
Processing that attaches. So for example rig.
Rig mobility for this quarter starting to drill the wells you commented on.
Speaker 10: the natural gas line is complete, what's the timeline for the liquids line, and any of the key factors and timelines that can keep us comfortable that everything remains on schedule.
The natural gas line is complete so whats the timeline for the liquids line and kind of any of the key factors in timeline.
Keep us comfortable that everything remains on schedule.
Speaker 6: Travis, this is Armin. So we have multiple obviously active with your projects underway in Attachi. As Terry alluded to, it's fairly active, and it's going to be over the next 12 months.
Yes, Travis this is armen.
So we have multiple obviously activity you have projects underway in Hitachi as Terry alluded to it's a fairly active.
And it's going to be over the next 12 months until they get the facility to the commissioning phase.
Speaker 6: to the commissioning phase. Obviously, the liquid sales line is a major project for us that we've already started working on it, expected to finish around Q1 of next year.
Obviously, there is the liquid sales line isn't as a major major project for us and we've already started working on it expect it to finish around Q1 of next year.
Speaker 6: The construction of the plant itself is a major task.
The construction of the plant itself is a major task.
Speaker 6: The plant includes also water recycling hub that is going to be included in it.
The plan includes also water recycling hub that is going to be included in it. So that is going to be an activity that are going to continue over the next 12 months or so.
Speaker 6: So that is going to be an activity that I'm going to continue over the next 12 months or so. Here you also spoke about the electrification, so we've received all our...
Terry you also spoke about a day electrification. So we've received all necessary.
Speaker 6: necessary permits to start building the transmission line and substations. So there's quite a lot happening over the next 12 months.
Necessary permits to start building the transition line transmission line and substation, so theres quite a lot happening over the next 12 months in terms of what is on critical path and then obviously the big project is the plant any that's the one we need to have up and running and I see absolutely no reason to be concerned about the <unk>.
Speaker 6: In terms of what is on critical pattern, obviously the big project is the plan and that's the one we need to have up and running. And I see absolutely no reason to be concerned about the timeline. I think the project is going as per the plan on schedule on budget.
Lineup.
The project is going as per the plan on schedule on budget.
Okay. Thanks, very much for him and that's all for me.
Speaker 3: Thank you. Lady St. gentlemen, as a reminder, if you do wish to register for a question, please press the star then the number one on your telephonic heat pad. Our next question comes from Mike Dunn, from Steve Ford. Please go ahead, your line is open.
Thank you, ladies and gentlemen, as a reminder, if you do wish to register for a question. Please press. The Star then the number one on your telephone keypad. Our next question comes from Mike Dunn from Stifel. Please go ahead. Your line is open.
Thanks. Good morning, everyone can you hear me okay.
Yes, we can.
Speaker 11: A couple of questions from me if I may.
Great a couple questions from me if I may.
Speaker 11: just on the electrification at Atachi, is that...
Just on the electrification at attached.
Is is that.
Speaker 11: timing of that? Is it reliant on Site C completion or is it sort of connected to the grid independent of Site C?
Yeah.
The timing of that is reliant on site C completion or is it sort of connected to the grid independent of site C.
Speaker 6: Mike Armin here. No, it has nothing to do with Site C. That's the power for that facility has already been secured through BC Hydro.
Mike <unk> here I know it has nothing to do with <unk>.
That said the power for that facility has already been secured through BC hydro.
Speaker 11: Okay, thanks. And it secondly, just maybe a follow-up from, I think it was Chris's response to Patrick earlier. But 2024 production guidance, are we to infer that there's less margin of safety to meeting the targets than maybe there was in the past?
Okay. Thanks, and then secondly, just maybe a follow up from I think it was Chris's response to Patrick earlier, but.
For 2024 production guidance are we to infer that there's less margin of safety to meeting the targets than maybe there was in the past.
Speaker 2: It's Chris. No, I wouldn't, I wouldn't interpret it that way because of the mitigation items that we talked about in terms of better predictability, understanding white space in the in the schedule. So I would say no, it's not a higher risk program from a production standpoint. Okay.
Hey, it's Chris no I wouldn't I would interpret it that way because of the mitigation items that we talked about in terms of better predictability understanding.
White space in the schedule, So I would say no it's not.
Higher risk program from a production standpoint.
Okay. Thanks.
Chris That's all for me I'll turn it back.
Speaker 3: Thank you. There are no further questions. So just I will return the conference back.
Thank you there are no further questions at this time I will return the conference back to the speakers.
Speaker 12: All right, thanks everyone for joining. That concludes the call. How?
Alright. Thanks.
Thanks, everyone for joining that concludes the call have a good day.
Speaker 3: Thank you, ladies and gentlemen. This does conclude today's conference call. Thank you all for attending. You may now disconnect your line.
Thank you ladies and gentlemen, this does conclude today's conference call. Thank you all for attending you may now disconnect your lines.
Okay.
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Sure.