ARC Resources (ARX-T) released its second quarter financials, boosted its budget and touted a "new project sequence" that is expected to increase production by 50,000 barrels of oil equivalent a day over the next 2-1/2 years. That would represent a 44-per-cent increase over ARC's second quarter production of 113,410 barrels a day. The second quarter production was in line with analysts' predictions, as was second quarter cash flow of 48 cents a share. ARC was most pleased with itself during the quarter for completing its new Dawson phase 3 processing plant in the B.C. Montney. President and chief executive officer Myron Stadnyk patted ARC on the back for finishing the plant on budget and ahead of schedule. Thanks to the early start-up, ARC has tightened its full-year production guidance to a range of 120,000 to 124,000 barrels a day from a range of 118,000 to 124,000 barrels a day.
Over four-fifths of ARC's production comes from the B.C./Alberta Montney. ARC entered this play in 2000 and has since boosted its Montney production to over 97,000 barrels a day. It has been steadily increasing its focus on the Montney over the last several years, most recently selling all of its Saskatchewan assets to Spartan Energy (SPE-T) last winter. Now ARC is aiming to add another 50,000 barrels a day of Montney-focused production over the next 2-1/2 years through what Mr. Stadnyk is calling a "new project sequence." This basically means ARC will do various things it already wanted to do, just faster or in different combinations. For example, ARC previously planned to expand the capacity of two different gas plants by 60 million and 120 million cubic feet a day, respectively, over the next two years. Now it will expand just one of the plants by 180 million cubic feet a day. It also plans to drill its first multiwell pad in the Attachie area in the second half of this year, earlier than originally expected.
Mr. Stadnyk said the new schedule will support ARC's "next major phases of growth." To get started, ARC has boosted its budget for the second time this year, to $830-million (up from $750-million before that and $665-million before that). It says it can cover the new budget while still paying its current five-cent monthly dividend, which yields 3.5 per cent.
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