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Risk Managed Value Creation We have always believed that top performing companies have three key attributes: great assets, low cost structure and management that delivers results. Value creation for our investors remains our primary objective. figure 1: Annual Production Replacement (%) 700





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More importantly, we believe the objective is risk managed value creation. Our focus on risk managed value creation means that since ARC’s inception in July 1996, our basic tenet when assembling and developing our asset base has been to focus on high-quality, long-life assets. The large in-place resources of these types of properties present a significant opportunity to add value over time as improvements in technology allow us to exploit the resources and add new reserves. This strategy has resulted in ARC achieving 13 consecutive years of positive aggregate reserve revisions and was a major factor in posting our lowest F&D costs in a decade. ARC was an early entrant into the Montney resource play in northeast British Columbia and is proud to have added the largest amount of reserves in its history in 2009 through the drill bit, and the lowest costs in a decade. For the second consecutive year, ARC replaced over 200 per cent of its production from internal opportunities on lands that were primarily acquired between 2003 and 2007 but whose true value is only starting to be identified. ARC has evolved from a company that replaced production through acquisition to a company that now replaces the majority of its production through internal opportunities and development. (See Figure 1) Assembling a portfolio of large-in-place resource properties was a foundation of our business plan and began right at ARC’s inception with acquisitions of properties in Pembina comprising the first set of assets that ARC purchased. The Pembina Cardium field is over 50 years old and is the largest conventional and most extensive oil field in Canada spanning 3,000 km2. ARC operates approximately 25 per cent of the field with an average 65 per cent working interest. The application of horizontal drilling with multi-stage fracturing technology has improved productivity from tight reservoirs across the Western Canada Sedimentary Basin – Pembina is now being targeted as a candidate for the application of these technologies. For 2010 we have budgeted $54 million to drill

annual Report



Annual Report


Annual Report