130 110 135 P Ago 125 Ago 12 100 e x 120 4 T heL oni b rk t ... Crude Oil Price and Differential to Brent Near-Month WTI and Brent Differential; Rolling 12-Month History Canadian Heavy

January 29, 2018

ARC Energy Charts 1www.arcenergyinstitute.com © 2018 ARC Energy Research Institute. All Rights Reserved.

70

80

90

100

110

Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18

ARC Junior E&P Inde x

S&P 500 E&P

S&P/TSX E& P Index

Indexed to 12 Months Ago

90

95

100

105

110

115

120

125

130

135



Shanghai Composite

S&P/TSX Composite

Dow Jones

40

60

80

100

120

140



Philadelphia Service I ndex

PSAC Cana dian In dex

Spot WTI Crude

$US/B

Edmonton Light

$US/B

Spot Henry Hub

$US/MMBtu

Spot AECO

$Cdn/GJ

Spot AECO Basis

$US/MMBtu

Currency

$US/$Cdn

Please see Advisories and Disclaimers at the end of the publication for important cautionary advisory and disclaimer language

59.22 3.58 2.27 1.64 0.8114

Performance of Oil and Gas Equities Year-to-DateDaily Index Values; Rolling 12-Month History

Oil & Gas Service Equities Year-to-DateDaily Index Values; Rolling 12-Month History

Broad Equity Markets Year-to-DateDaily Index Values; Rolling 12-Month History

Canadian Currency ExchangeDaily Close Values; Rolling 24-Month History

1 2

3 4

$0.65

$0.70

$0.75

$0.80

$0.85

$0.90

Feb-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

$US/$Cdn

Chart Watch

66.14

Visit www.arcenergyinstitute.com for more

information on this publication and the Institute

ARC Energy Charts

4

5

17

21

37

Broad market indices are one the many vital signs measuring the health of the economy. Energy demand is a function of economic health.

Source: Bloomberg, ARC Financial Corp.

Performance of Canadian and US oil & gas equities are compared against each other.


The performance of Canadian oil and gas service equities are plotted in tandem with the corresponding US index.

Source: Bloomberg, Petroleum Services Association of Canada

Much of Canada’s oil and gas production is sold in US dollars. As such, the exchange rate significantly impacts corporate revenues and profits.

Source: Bloomberg

The Loonie broke through $US 0.81

WTI hit a new three-year high

US oil drillers added 12 rigs last week

US gas inventories are well below typical

á áá

áá

10 straight US crude draws set a new record

The DJIA is already up 7.7% in 2018, while the TSX...

...Composite is up by just 0.2%.

Large cap E&Ps have been up slightly since the start of ’18.

US and Cdn large caps are up 0.4% and 0.2% respectively.

The BOC’s rate hike two weeks ago has contrib-uted to the...

á

US and Canadian service compan-ies are up by 8.9% and 7.8%... ...since the

beginning of the year.

...run-up in the Canadian Dollar. On Fri the Loonie broke...

WTI is up by 9.5% in the same time period.

...through $0.81 for the first time since September.

July 3, 2006

ARC Energy Charts

January 29, 2018


0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015 2016 2017

MMB/dOffshore Oil Production

Onshore Oil Production

0

1

2

3

4

5

6

7

8

10

20

30

40

50

60

70


WTI D iff

WTIWTI ($US/B) WTI Dif f to Brent ($US/B)

WTI Crude Oil Price and Differential to BrentNear-Month WTI and Brent Differential; Rolling 12-Month History

Canadian Heavy Oil Price Differential to WTI Western Canadian Select (WCS) Differential; Rolling 12-Month History

6

7 8

9 10

5

0

5

10

15

20

25

30

10

20

30

40

50


WCS Diff.

WCS

WCS ($US/B) WCS Dif f to WTI ($US/B)

54

56

58

60

62

64

66

68

70

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WTI $US/B 2018

2019

2020

US Crude Oil FuturesWest Texas Intermediate (WTI) 2018 to 2020

Canadian Light Crude Oil Price Differential to WTIWTI and Edmonton Light differential; Rolling 12-Month History

0

1

2

3

4

5

6

7

8

9

10

20

30

40

50

60

Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17

Edm. Light Diff.

Edmonton L ight

Edm. Light ($US/B) Edm. Light Dif f to WTI ($US/B)

Ratio of Long to Short Contracts - WTIManaged Money - Futures and Options

Total US Oil ProductionMonthly; 2010 to Present

0

2

4

6

8

10

12

14

16

Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17

Long:Short

The differential should reflect the transportation cost from Alberta to Cushing. Greater discounts can result from infrastructure or refinery outages.

Source: Bloomberg

North American crude oil prices can sometimes disconnect from global prices depending on regional supply and demand dynamics.

Source: Bloomberg

Forward prices for WTI are plotted against months in the calendar year. Years are distinguished by color and symbol coding.

Source: Bloomberg

Canadian heavy crude oil differentials are becoming less volatile with growing access to new markets via pipeline and rail.

Source: Bloomberg

This represents the relative bullishness of money managers on the price of oil in the United States.

Source: Bloomberg, U.S. Commodity Futures Trading Commission

The advancement of drilling and completion methods boosted US crude oil production, prior to the downturn in prices.

Source: Bloomberg, U.S. Energy Information Administration

Crude Oil

The IEA increased its forecast for US production...

...growth from 0.87 MMB/d to 1.1 MMB/d.

Net long contracts held by managed money fell...

...slightly last week, but are still near all-time highs.

TransCanada closed its KXL open season after securing...

Speculator bullishness has been supportive of oil prices.

This was due to improved pricing, among other factors.

...500,000 B/d of firm 20-year commitments.

WTI hit its highest since Dec 2014 on Fri at $66.14/B.

The Brent-WTI differential narrowed to $4.24/B on Fri.

A month ago the differential was over $7/B.

Oil prices have risen along the curve in the last month.

The 24-month WTI contract is up $4.26/B since early December.

The AB Govern-ment committed to 50,000 B/d of capacity.

The Edm. Light – WTI differen-tial is around $7/B, down...

...from nearly $9/B at the beginning of the year.

July 3, 2006

ARC Energy Charts

January 29, 2018


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

MMB/d Crude Oil

Refined Products

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2010 2011 2012 2013 2014 2015 2016 2017

MMB/d

Global Oil Supply-Demand Balance Quarterly; 2010 to Present

28

29

30

31

32

33

34

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17

MMB/d

OPEC Oil Production Monthly; Rolling 60-Month History

Alberta Oil Production

Monthly; Conventional and Oil Sands

16

11 12

13 14

15 US Weekly Crude Oil Imports from CanadaPipeline, Tanker and Barge Crude Imports; Rolling 24-Month History

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

3.8

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17

MMB/d

6

7

8

9

10


MMB/d

US Crude Oil ImportsHistorical Tracks and Current Year Levels

2017

US Exports of Crude Oil and Refined ProductsWeekly Data; 2013 to Present

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17

MMB/d

Mil

lio

ns

Upgraded Oil Sands

Non-Upgraded Oil Sands

Conventional

Oversupply

Shortfall

Most of Canada’s oil production comes from Alberta; split between oil sands and conventional production.

Source: Alberta Energy Regulator

OPEC’s production levels relative to its sustainable and spare capacity influences global crude prices.

Source: Petroleum Intelligence Weekly

Negative numbers indicate a global crude shortfall, while positive numbers indicate an oversupply.

Source: International Energy Agency

Prior to the downturn, growing domestic supply was displacing crude oil imports. Crude oil imports for the current year are in blue.

Source: U.S. Energy Information Administration

Crude oil imports from Canada are taking market share from overseas imports.


The US exports more refined products than crude oil. If/when tight oil growth resumes, most export growth should come from crude oil exports.


Crude Oil

Falling Venezue-lan production brought OPEC production...

...down to 32.23 MMB/d in December.

The latest IEA Oil Market report forecasts that 2018 oil... ...demand growth

will be 1.3 MMB/d.

2018

This represents 129% compliance with the OPEC cuts.

According to the IEA, Canadian oil production surged by...

...240 MB/d in November. The increase mostly came from...

...upgraded production (up 150 MB/d).

Most of the growth in 2018 is expected to come from...

...the Fort Hills oil sands mining project.

This is driven by relatively strong economic growth balanced...

...by demand moderation due to higher oil prices.

US exports of crude oil and refined products both grew in...

...2017, up by 493 MB/d and 1,128 MB/d respectively.

July 3, 2006

ARC Energy Charts

January 29, 2018


Eagle Ford

0

200

400

600

800

1000

1200

1400

1600

1800

0

100

200

300

400

500

600

Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

# of Oil Rigs - Total# of Oil Rigs - Play Lev el

300

350

400

450

500

550


MMB

US Crude Oil Stocks Historical Tracks and Current Year Levels

17 18

19 20

21 22

2016

2017

75

80

85

90

95

100


%

OECD Total Industry Oil StocksAmericas and Rest of OECD; 2012 to Present

2018

2017

US Motor Gasoline ConsumptionHistorical Tracks and Current Year Levels

7.5

8.0

8.5

9.0

9.5

10.0


MMB/d

2017

2018

Daily NGL Prices as a % of Edmonton Light Propane & Butane Spot Prices at Edmonton, AB

-20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

% of Edm. Light

Cond ensate

Butane (Spot)

Propa ne (Spot)

US Oil Drilling ActivityBaker Hughes Horizontal Oil Rig Counts; 2014 to Present

Bakken

Total US (Right-Axis)

Permian

US Weekly Refinery Utilization Rates (%)Historical Tracks and Current Year Levels

US crude oil stock levels can affect crude oil prices. Stock levels for the current year are represented by the blue line.


Global oil stock levels can affect crude oil prices*Includes U.S. (~90%), Canada, Mexico and Chile.

Source: International Energy Agency

Refinery utilization rates change the supply of refined products, impacting price. Utilization for the current year is blue.


Gasoline consumption accounts for almost half of all oil use in the US. Gasoline consumption for the current year is represented by the blue line.


Tracking US oil drilling by major play provides insight into the composition of US oil supply and growth trends.

Source: Baker Hughes

Natural gas liquids have become critical contributors to producer’s cash flow. Prices are influenced by the price of oil as well as local supply and demand.


Crude Oil

US drillers added 12 rigs last week; the largest weekly...

Cana Woodford

1,000

1,250

1,500

1,750

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

MMB

OECD Americas*

Other OECD

Crude oil invent-ories drew by only 1.1 MMB last week.

The latest IEA Oil Market Report showed a decline in...

...OECD commercial stocks of 17.9 MMB.

Refinery utiliza-tion is falling with seasonal trends, but...

The IEA estimates Dec will see a 42.7 MMB reduction.

That draw would bring the surplus to the 5-yr avg down to 68 MMB

...remains above typical for this time of year.

However, the 10 straight weeks of inventory draws set a...

2018

...record since at least 1982.

...increase since March.

The gain was dominated by the Permian, also up by 12.

July 3, 2006

ARC Energy Charts

January 29, 2018


Differential

$US/MMBtu

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Jan 28 Apr 28 Jul 27 Oct 25 Jan 23

25

27 28

26

2423 Near-Month North American Natural Gas Prices Daily Prices; Rolling 12-Month History

Henry Hub

$US/MMBtu

AECO

$C/GJ

US Natural Gas FuturesNymex (Henry Hub) 2018 to 2020

2.50

2.75

3.00

3.25

3.50

3.75


$US/MMBtu 2018

2019

2020

Canadian Natural Gas FuturesAECO Hub (Bloomberg Estimate) 2018 to 2020

US Coal and Natural Gas Power Generation Cost

Converted to a $/MWh Equivalent

$0

$10

$20

$30

$40

$50

2012 2013 2014 2015 2016 2017

$US/MWh

Appalachian

Coal

Henry

Hub

Global Natural Gas Prices

Japanese LNG, UK NBP, Henry Hub; Average Monthly Prices

0

2

4

6

8

10

12

14

16

18

20

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

$US/MMBtu

Japanese

LNG

Henry

Hub

UK NBP

Ratio of Long to Short Contracts – Henry HubManaged Money – Futures and Options

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75


$C/GJ 2018

2019

2020

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17

Long:Short

Near-month prices at AECO track Henry Hub prices, the exchange rate and the cost of transportation. Local factors can also affect price.

Source: Bloomberg

Forward contract prices are plotted against months in the calendar year. Years are distinguished by color and symbol coding.

Source: Bloomberg

This represents the relative bullishness of money managers on the price of natural gas in the United States.

Source: U.S. Commodity Futures Trading Commission

AECO forward prices mimic Henry Hub futures plus a differential

Source: Bloomberg

International natural gas prices strongly impact the economics of proposed LNG projects.

Source: Bloomberg, Japanese Ministry of Economy, Trade and Industry

This graph illustrates when it may be economic to begin coal-gas switching in power generation. Average power plant efficiencies are assumed.

Source: Bloomberg

Natural Gas

Chinese LNG imports in Dec hit a record high 5 million tonnes

Near-month Henry Hub prices hit $3.51/MMBtu on Fri.

Strong Asian demand is help-ing boost global LNG prices.

This was the highest since December of 2016.

Egress concerns continue to weigh on futures markets.

Despite gains in the short end of the curve, longer dated futures...

...have been fairly stable. The average of 25-36 month...

Summer ’18 basis is now trading at $1.96/MMBtu.

Weather driven demand has been supportive of pricing.

...HH contracts is unchanged from a month ago.

This is a discount of over 2/3rds from Henry Hub.

July 3, 2006

ARC Energy Charts

January 29, 2018


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0


Bcf /d

6

7

8

9

10

11

12


Bcf /d

Closing Spot Prices at North American Natural Gas HubsSuperimposed on Relative Pipeline Flows

\

30 31

All prices in $US/MMBtu

Closing Spot Prices at North American Natural Gas HubsSuperimposed on Relative Physical Volumes Traded

AECO

Henry Hub

Kingsgate

Stanfield

Malin Opal

Socal

San Juan

Permian

Ventura ChicagoBoston

29

Dawn

Waddington

TGP Zone 4 -

Marcellus

US Natural Gas Exports – Excluding CanadaDaily; Historical Tracks and Current Year Levels

20172016

Pipeline Flows Out of Western CanadaDaily; Historical Tracks and Current Year Levels

2017

The ability of gas producers to move gas out of the WCSB to eastern markets and the US is a major factor in local natural gas prices.

Source: Various Pipeline Companies

Between exports to Mexico and LNG shipments, the US is growing as a natural gas exporter. Robust US supply growth has driven this trend.

Source: Bentek

North America has an integrated natural gas market. Prices are determined by regional supply and demand, and pipeline flows.

Source: Bloomberg

Natural Gas

US$3.58

US$1.94

US$2.85

US$2.50

US$2.71

US$3.25

US$2.65

US$2.81

US$2.82

US$3.00

US$3.14

US$4.63

US$3.83

US$3.51

US$2.61

Export volumes have been strong since the start of LTFP...

...flows to Dawn on November 1st. Exports since then have been...

...up by 0.96 Bcf/d from the first 10 months of 2017.

Strong US gas exports are helping to absorb some…

...of the production growth.

A study done by Johns Hopkins University found that LNG...

2017 exports (excl. Canada) were up 2.0 Bcf/d over 2016.

20182018

...sent from Kitimat to Asia would result in net global...

...GHG reduc-tions. Although a facility would generate...

...around 3.8 million tonnes of CO2e per year in BC, it would be...

...offset by Asian reductions of 6.5-9.9 million tonnes of CO2e.

The Rover Pipe-line may be delayed after a FERC ruling...

...put a pause on work to cross the Tuscarawas River in Ohio.

The project was expected to come online in late Q1 2018...

...bringing more US gas into the Ontario market.

July 3, 2006

ARC Energy Charts

January 29, 2018


2017

2017

2017

32 33

34 35

36 37

Total US Dry Natural Gas ProductionHistorical Tracks and Current Year Levels

50

54

58

62

66

70

74

78


Bcf /d

2013

40

50

60

70

80

90

100

110

120

130

140


Bcf /d

US Total Natural Gas DemandDaily; Historical Tracks and Current Year Levels

2018

US Weekly Heating Degree DaysSource: NOAA

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5


Tcf

Total Working Natural Gas in US StorageHistorical Tracks and Current Year Levels

2017

(450)

(350)

(250)

(150)

(50)

50

150


Bcf

Weekly US Natural Gas Storage Net ChangeWeekly Injection or (Withdrawals); 2009 to Current

12

13

14

15

16

17


Bcf /d

Daily Western Canadian ProductionEstimated Using Major Pipeline Receipts

Weekly natural gas demand is directly tied to the weather. The current year is in dark blue.

Source: National Oceanic and Atmospheric Administration

Total US demand fluctuates between 60 Bcf/d in the summer and over 100 Bcf/d in the winter. Weather is the most important driver of consumption.

Source: Bentek

US production started ramping up in late 2007 and continues to grow year over year.

Source: Bentek

This includes receipts on the TCPL, Alliance, WestCoast and TransGas pipelines.

Source: Various Pipeline Companies

Weekly gas storage reports provide a snapshot of supply and demand. Current year changes are represented by the blue line.


The EIA reports changes in US natural gas inventories held in underground storage facilities on a weekly basis.


Natural Gas

Strong weather driven demand and exports contributed...

2018

2017

The larger than normal draw brought storage to a deficit of...

0

50

100

150

200

250

300

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

HDDs

Week

...to another above normal storage draw of 288 Bcf.

...486 Bcf to the five-year average.

Cold weather at the end of 2017 and to start 2018 has...

...boosted demand, supporting US gas prices.

US gas production is recovering from freeze-offs.

WCSB gas prod-uction has recovered from freeze-offs.

Production grew 1.5 Bcf/d week- over-week to just shy of the...

Production is back to highs at the end of last year.

US natural gas demand hit a record high 147 Bcf on Jan 1.

Cold weather has been driving the increased demand.

201820172018

Since 1998 the storage deficit to normal has only been this...

20182018

...record level set in December of 2017.

...large in three of those years.

July 3, 2006

ARC Energy Charts

January 29, 2018


2013

2016

2010

2011

2014

0

2

4

6

8

10

12

14

16

18

1 6 11 16 21 26 31 36 41 46 51

Week

Well Completions (000s)

0

50

100

150

200

250

300

350

400

0

20

40

60

80

100

120

140

Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

# of Gas Rigs - Total# of Gas Rigs - Play Lev el

38 39

40 41

42 43

Weekly Canadian Oil and Gas Drilling ActivityBaker Hughes Average Rig Counts; Rolling 24-Month History

0

50

100

150

200

250

Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17

# of Rigs

Gas

Rigs

Oil

Rigs

US Gas Drilling ActivityBaker Hughes Horizontal Gas Rig Counts; 2014 to Present

Marcellus

Total US (Right Axis)

Western Canadian Natural Gas Storage LevelsWeekly; Current Year and Historic Tracks

0

100

200

300

400

500

600


Bcf

2017

Alberta Natural Gas DemandTransCanada Intra-AB Deliveries; Current Year and Historical Tracks

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0


Bcf /d2018

2017

2012

Canadian Cumulative Well CompletionsCurrent Year vs Years Prior

2016

Alberta Crown Land Sales – Excluding Oil SandsYear-over-Year; Cumulative

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0


$ Billions

2017

2012

2010

2011

Haynesville

Eagle Ford

Alberta natural gas demand has grown steadily in recent years, largely driven by new oil sands projects coming on line.

Source: TransCanada Pipelines

Canada’s natural gas storage level provides a good metric if the country is well stocked. Abnormally high or low storage can affect the basis.

Source: Bloomberg

Unlike US drilling activity, Canadian rigs are dispatched seasonally. Capital allocation by operators is driven by views of future oil and gas prices.


Tracking US gas drilling by major play provides insight into the composition of US gas supply and growth trends.


Land prices are an important component of F&D costs. In Alberta, sales of petroleum and natural gas rights are held every two weeks.

Source: Alberta Department of Energy

Relative year-over-year drilling activity is highlighted in this chart. Cumulative well completions for the current year are shown in blue.

Source: Daily Oil Bulletin/JWN

Natural Gas and Other Indicators

2015

2018

According to Baker Hughes there are 338 oil and gas...

Unlike US gas storage, levels in W. Canada are above normal.

Storage is now 77.0% versus 76.1% at this time last year.

Cold weather has boosted gas demand in Alberta.

Industry paid $9.88 MM at Alberta’s second 2018 land sale.

The Duvernay was the focus of the spending.

2017

...rigs operating in Canada, with 65% of them targeting oil.

Demand YTD is 0.34 Bcf/d over last year.

2018

2018

Storage is less full in Ontario at only 52.6%.

July 3, 2006

ARC Energy Charts

January 29, 2018


Estimated Capital Flow in the Canadian Oil and Gas Economy for 2018Industry Revenue, Cash Flow, Reinvestment, Drilling Activity and Production

Oil & Gas

Prices

Production

Volume

Debt,

Equity

E&P

Revenue

Service Sector

Revenue

Land,

Acquisitions

Operating

Expenditures

Reserve

Additions

Capital Flow

in the

Canadian

Oil and Gas

Economy

Royalties

& Taxes

G&A

Exploration &

Development

Cash

Flow

CAPEX

Dividends and

Distributions

Foreign Investment

and Capital Outflow

Drilling

Activity

$C 38.73 per BOE

7.5 Million

BOE/day

$C 42.7

Billion

$C 105.8

Billion

$C 43.7

Billion

7,161

Wells

Canadian Industry Statistics: Historical Data and Forecast44

Canadian Industry Metrics

Advisories and Disclaimers: This document is provided for informational purposes only and none of the information contained herein is intended to provide, nor should be

construed as, investment, financial, legal or other advice and should not be relied upon as such. Certain of the information and data contained herein has been obtained or

prepared from publicly available documents and other sources prepared by third parties, and ARC has relied upon such information and data. ARC does not audit or

independently verify such information and data and ARC makes no representations or warranties as to the accuracy or completeness of such information and data nor the

conclusions derived therefrom. This document has been published on the basis that ARC shall not be responsible for, and ARC hereby expressly disclaims any responsibility

or liability for, any financial or other losses or damages of any nature whatsoever arising from or otherwise relating to any use of this document.

Certain information contained herein may constitute forward-looking information and forward-looking statements" (collectively, "forward-looking statements") under the

meaning of applicable Canadian securities laws. Forward-looking statements include estimates, plans, expectations, intentions, opinions, forecasts, projections, guidance or

other statements that are not statements of fact, including but not limited to global and industry economic conditions and policies, production, demand and commodity prices.

Although ARC believes that the assumptions underlying and expectations reflected in such forward-looking statements are reasonable, it can give no (and does not give any)

assurance that such assumptions and expectations will prove to have been correct. Such forward-looking statements involve known and unknown risks, uncertainties and

other factors outside of ARC's control that may cause actual results to differ materially from those expressed herein. Neither ARC nor any of its affiliates undertakes any

obligation to publicly revise such forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Average

Price

Edmonton

Par AECO

Conv.

Liquids

Bitumen +

Synthetic

Natural

Gas

Total

Volume

Total

Revenue

After-tax

Cash Flow

Conv. Oil

and Gas Oilsands

Reinvest

Ratio

Wells

Compl.

Avg Rig

Utiliz.

Oil

Wells

Gas

Wells

$/BOE $C/B $C/GJ

Average

M BOE/d

Average

M BOE/d

M BOE/d

(@ 6:1)

M BOE/d

(@ 6:1)

$C

millions

$C

millions

$C

millions

$C

millions x:1

# /

Year % % %

2009 42.26 66.42 3.79 1,840 1,331 2,514 5,683 89,057 36,680 22,335 11,227 0.91 8,368 25% 41% 51%

2010 48.41 77.55 3.79 1,830 1,403 2,434 5,668 101,056 43,569 35,666 17,195 1.16 12,119 40% 56% 40%

2011 55.32 95.24 3.44 1,873 1,482 2,386 5,740 115,890 53,448 40,139 22,491 1.10 12,827 52% 69% 31%

2012 50.60 86.38 2.27 1,905 1,743 2,327 5,975 111,389 48,908 39,733 27,199 1.37 11,067 44% 83% 17%

2013 55.95 93.47 3.02 2,023 1,940 2,343 6,306 128,787 54,711 43,165 30,809 1.35 11,071 42% 84% 16%

2014 61.30 95.07 4.23 2,086 2,160 2,452 6,699 149,871 72,188 46,872 33,868 1.12 11,222 45% 78% 22%

2015 37.21 57.63 2.56 1,983 2,368 2,500 6,852 93,051 28,909 31,609 22,929 1.89 5,382 24% 69% 31%

2016 32.53 53.09 2.06 1,964 2,418 2,547 6,930 82,266 26,575 22,264 15,426 1.42 4,060 17% 70% 30%

2017e 37.19 62.82 2.14 1,905 2,690 2,574 7,170 97,324 39,007 31,297 13,242 1.14 7,076 24% 70% 30%

2018e 38.73 67.05 2.33 1,905 2,984 2,596 7,485 105,800 42,652 31,179 12,519 1.02 7,161 24% 70% 30%

R einvestment D rilling Well Split

Canadian Industry Metrics

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130 110 135 P Ago 125 Ago 12 100 e x 120 4 T heL oni b rk t ... Crude Oil Price and Differential to Brent Near-Month WTI and Brent Differential; Rolling 12-Month History Canadian Heavy