In 2013, ARC continued to add significant reserves through the drill bit at low finding costs, and to convert our large reserves and resource base into production and cash flow.
This year was the sixth consecutive year that ARC has replaced approximately 200 per cent or more of produced reserves; ending the year with total proved plus probable reserves of 634 mmboe, a four per cent increase compared to 2012. The majority of reserve growth is attributed to exploration and development activities with a portion coming from positive technical revisions at the Sunrise, Dawson, Parkland, Pembina and Redwater fields. These revisions demonstrate the strength of ARC’s high quality asset base. A continued focus on crude oil and liquids development yielded a four per cent increase in proved plus probable crude oil and natural gas liquids reserves and 180 per cent replacement of crude oil and NGL’s production. ARC’s Reserve Life Index (“RLI”) of 15.5 years was down from 17.5 years in 2012 as ARC’s development program converted resources and reserves into production and cash flow.
ARC executed an efficient capital program in 2013, evident by low Finding and Development (“F&D”) costs. The company delivered F&D costs of $12.79 per boe for proved plus probable reserves and $17.45 per boe for proved reserves before changes in Future Development Capital (“FDC”) - $11.47 per boe and $18.11 per boe, respectively, including changes in FDC. ARC’s all in Finding, Development and Acquisition (“FD&A”) costs were $13.32 per boe of proved plus probable reserves and $18.31 per boe of proved reserves, before changes in FDC - $12.07 per boe and $19.18 per boe, respectively, including changes in FDC. ARC’s low F&D costs reflect the high quality of ARC’s asset portfolio, a focus on cost management and excellent results across our operations. Notably, ARC’s FDC declined slightly from $3.4 billion in 2012 to $3.3 billion in 2013. Changes to FDC reflect the Independent Resources Evaluator’s best estimate of what it will cost to bring the proved and probable undeveloped reserves on production. The change in FDC is the result of improved capital efficiencies gained from the application of multi-well pad development. FDC has also been reduced due to the inclusion of longer horizontal laterals in field development plans resulting in larger reserves per well and fewer wells required to access the reserves, therefore a decrease in the number of future drilling locations.
ARC also has a considerable volume of Economic Contingent Resource (“ECR”) associated with its northeast British Columbia Montney assets. The Independent Resources Evaluator provided an update for the ECR in this region, which reaffirmed the significant resources on ARC’s lands. Compared to 2012 levels, Total Petroleum Initially in Place (“TPIIP”) estimates increased 10 per cent for natural gas bearing lands and 50 per cent for oil bearing lands to reach 55 tcf and 2.2 billion barrels of estimated natural gas and oil resources, respectively. The northeast British Columbia Montney region represents a significant long-term growth opportunity with exposure to natural gas, crude oil and liquids-rich gas.
Using GLJ January 1, 2014 Forecast Prices and Costs
||Light and Medium Crude Oil (mbbl)
Heavy Crude Oil
Total Crude Oil
Natural Gas (Bcf)
|Oil Equivalent 2013
|Oil Equivalent 2012 (mboe)
|Proved Developed Non-producing
|Proved plus Probable
The reserves data set forth above are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise. All reserves information has been prepared in accordance with National Instrument (“NI”) 51-101. In addition to the detailed information disclosed in this document more detailed reserves information is included ARC’s Annual Information Form (“AIF”), which is available on our SEDAR profile at www.sedar.com. Numbers presented may not add due to rounding.