With Attachie Operational, ARX Sets Sights on Record Production for FY25

Recent Notes

• Canada’s Upstream Hydrocarbon Industry, Part 1 (link)

• Canada’s Upstream Hydrocarbon Industry, Part 2 (link)

• Trump, Tariffs & the 2025 Canadian Upstream Outlook (link)

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KEY TAKEAWAYS

• Record Production Growth: ARC Resources Ltd. (ARX) expects to deliver substantial production growth in 2025, reaching 380–395Mboepd, a 9% increase from the FY24 average of 348Mboepd.

• Capital Expenditures Outlook: ARX has set a FY25 capital budget of $1.6B-$1.7B, representing a 4% to 9% YoY increase from the $1.55B spent in 2024.

• Attachie Phase I Contribution: The Attachie Phase I development, which came online in 4Q24, is expected to be a key driver of growth in 2025, with forecasted production of ~37.5Mboepd (60% liquids).

• Operational Efficiency & Shareholder Returns: Despite increased capital spending, ARX remains focused on capital efficiency, strong returns on capital employed (ROCE), and shareholder distributions, with a continued commitment to dividends and buybacks.

• Strategic LNG Agreements: In addition to its LNG agreements with Cedar LNG and Cheniere Energy (LNG), ARX is set to begin realizing international LNG price exposure this summer with the operational start of LNG Canada. ARX agreement with LNG Canada represents 150MMcfpd, or ~6% of its forecasted FY25 production.

PRODUCTION PROFILE

For 2025, ARX is guiding total production between 380 and 395Mboepd, with growth being led by increased natural gas and condensate volumes.

The Attachie Phase I development is the primary driver behind the expected increase in condensate and NGLs production, reinforcing ARX’s shift towards liquids-rich gas plays.

CAPITAL EXPENDITURES, DRILLING & COMPLETION ACTIVITY 

ARX plans to allocate $1.6B to $1.7B for capital expenditures in 2025, reflecting an increase of 4% to 9% from the $1.55B spent in 2024. The incremental spending is primarily directed towards drilling and completion (D&C) activity at Attachie Phase I, as well as maintenance and optimization efforts at Kakwa and Dawson.

D&C Breakdown for 2025:

ARX’s rig activity is anticipated to drop a rig from ~6 rigs for FY24 to ~5 rigs for FY25. Frac crew activity is estimated to remain much the same at ~3 frac crews for FY25.

Basin Focus:

• Attachie appears to have taken precedence, with a near 80% YoY Capex increase, as ARX shifts towards higher-margin condensate production.

• Dawson and Sunrise remain crucial for LNG and gas exports, though capital allocation has been optimized.

• Kakwa remains a key basin for ARX but its Capex growth is moderate, emphasizing operational efficiency.

• Ante Creek appears to be deprioritized, with reduced Capex reflecting a focus on higher-return basins.

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FINANCIAL OUTLOOK

• Return on Capital Employed (ROCE): Projected to remain strong at ~19%, driven by Attachie’s high-margin production and improved capital efficiency at Kakwa.

• Return on Assets (ROA): Expected to improve due to the increasing proportion of high-margin condensate and liquids production.

• Operating Costs: Maintained at $4.50-$4.90 per boe, reflecting continued efficiency improvements and infrastructure optimization.

• Transportation Costs: Expected to be $5.00-$5.50 per boe, slightly higher than 2024 due to Attachie’s ramp-up and increased LNG exports.

FINANCIAL STATEMENT MODEL

Companies Mentioned

• Arc Resources Ltd. (ARX)

• Cedar LNG (Private)

• Cheniere Energy (LNG)

_{Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Patrick Enwright accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Patrick Enwright makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.}