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ARC RESOURCES LTD. 2010 YEAR-END RESERVES INCREASE BY 29 PER CENT

^{Published on 2011-02-10 14:45:37 - Market Wire}
 

 - Proved reserves increased by 25 per cent to 336 mmboe (106 mmbbls oil, 18 mmbbls NGLs, and 1.3 Tcf of natural gas) and proved plus probable reserves increased by 29 per cent to 487 mmboe (140 mmbbls oil, 27 mmbbls NGLs, and 1.9 Tcf of natural gas), from year-end 2009 levels. Proved reserves constitute 69 per cent of the total proved plus probable reserves compared to 71 per cent at year-end 2009. - On a per share basis, proved plus probable reserves increased eight per cent and proved reserves increased four per cent compared to year-end 2009. - All-in Finding and Development costs ("F&D") were $6.47 per boe for proved plus probable reserves and $9.50 per boe for proved reserves excluding Future Development Capital ("FDC") ($11.60 per boe and $14.02 per boe, respectively including FDC)(1). - ARC added 44.2 mmboe through net acquisitions in 2010 at a cost of $657 million, resulting in a proved plus probable acquisition cost of $14.88 per boe excluding FDC, $20.79 per boe on a total proved basis. The only significant transaction was the acquisition of Storm Exploration Inc. ("Storm") in August 2010, which resulted in the addition of 44 mmboe of proved plus probable reserves and 31.4 mmboe of proved reserves. - ARC replaced 502 per cent (67 per cent through internal development) of annual production at an all-in annual Finding, Development and Acquisition ("FD&A") cost of $9.21 per boe excluding FDC for proved plus probable reserves. This brings ARC's three year average FD&A cost excluding FDC down to $8.60 per boe. The 2010 FD&A costs including FDC for proved plus probable reserves were $14.23 per boe. - ARC achieved a recycle ratio of 4.2 times and 3.9 times, respectively for the current year and three year average for proved plus probable reserves based on the 2010 netback of $27.02 per boe and F&D costs excluding FDC. - The proved plus probable reserve life index ("RLI") increased to 15.2 years with the proved RLI remaining effectively unchanged at 10.4 years based on the mid-point 2011 production guidance of 85,500 boe per day. - Total proved plus probable reserves for the Montney in northeastern British Columbia including Dawson, West Montney and Parkland areas increased to 1.4 Tcfe (872 Bcfe proved), a 68 per cent increase over year-end 2009 reserves of 0.8 Tcfe. In total, Montney reserves in this area account for 48 per cent of total proved plus probable reserves. - Natural gas liquids reserves increased 67 per cent in 2010 with the acquisition of the liquids-rich Parkland area, and now account for five per cent of total proved plus probable reserves. - ARC commissioned an independent Economic Contingent Resource Evaluation for three areas within the Montney including Dawson, West Montney and Parkland. In addition to year-end 2010 proved plus probable reserves of 1.4 Tcfe, the contingent resource evaluation assigned a contingent resource best estimate of 0.7 Tcfe in excess of proved plus probable reserves. The high case estimate of incremental contingent resources beyond the proved plus probable reserves is 1.2 Tcfe and 0.2 Tcfe of possible reserves. The low case estimate of incremental contingent resources is 0.6 Tcfe. As part of this study, the estimate of Discovered Gas Initially in Place has been revised to 10.1 Tcf. These findings support ARC's position that the Montney is a significant growth engine with considerable potential reserves and ARC will continue to develop the region in a strategic and prudent manner. Details can be found in the "Montney Economic Contingent Resource Evaluation" section in this news release. -------------------- (1) The F&D and FD&A calculations include $25 million of capital costs associated with the move to a new office building during 2010. If these costs are excluded, ARC's capital expenditures would have been $566 million resulting in proved F&D of $9.11 per boe and proved plus probable F&D of $6.20 per boe before FDC ($13.62 and $11.33 per boe respectively, including FDC). The all in, proved FD&A would have been $13.04 and $9.03 per boe for proved plus probable FD&A ($17.88 and $14.05 respectively including FDC). 

 - ARC's year-end proved plus probable reserves increased 29 per cent to 487 mmboe compared to 379 mmboe of proved plus probable reserves recorded at year-end 2009. - Proved plus probable reserve additions from exploration and development activities (including revisions) were 91 mmboe while 44 mmboe were added through acquisitions (net of minor dispositions), bringing the total additions to 135 mmboe before 2010 production of 27 mmboe. - The 91 mmboe proved plus probable addition from development activities represents 337 per cent of the 27 mmboe produced during 2010 and the total 135 mmboe represents 502 per cent of the 27 mmboe produced during 2010. - Proved developed producing reserves represent 63 per cent of total proved reserves and 44 per cent of proved plus probable reserves. - Total proved reserves account for 69 per cent of proved plus probable reserves. - Approximately 34 per cent of ARC's proved plus probable reserves are crude oil and natural gas liquids and 66 per cent are natural gas on a 6:1 boe conversion basis. 

 ------------------------------------------------------------------------- West Texas Edmonton Intermediate Light Natural Gas Foreign GLJ January 1, 2011 Crude Oil Crude Oil at AECO Exchange Price Forecast ($US/bbl) ($Cdn/bbl) ($Cdn/mmbtu) ($US/$Cdn) ------------------------------------------------------------------------- 2011 88.00 86.22 4.16 0.98 2012 89.00 89.29 4.74 0.98 2013 90.00 90.92 5.31 0.98 2014 92.00 92.96 5.77 0.98 2015 95.17 96.19 6.22 0.98 2016 97.55 98.62 6.53 0.98 2017 100.26 101.39 6.76 0.98 2018 102.74 103.92 6.90 0.98 2019 105.45 106.68 7.06 0.98 2020 107.56 108.84 7.21 0.98 Escalate thereafter at +2.0%/yr +2.0%/yr +2.0%/yr 0.98 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RESERVES SUMMARY ------------------------------------------------------------------------- Light and Medium Heavy Total Crude Oil Crude Oil Crude Oil NGLs Company Interest (mbbl) (mbbl) (mbbl) (mbbl) ------------------------------------------------------------------------- Proved Producing 90,411 2,220 92,631 11,455 Proved Developed Non- Producing 1,763 4 1,767 835 Proved Undeveloped 11,095 30 11,125 6,193 Total Proved 103,269 2,255 105,524 18,483 Proved plus Probable 137,063 2,970 140,033 26,520 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Company Gross ------------------------------------------------------------------------- Proved Producing 90,258 2,071 92,329 11,302 Proved Developed Non- Producing 1,761 4 1,765 835 Proved Undeveloped 11,085 30 11,115 6,193 Total Proved 103,104 2,105 105,209 18,329 Proved plus Probable 136,854 2,777 139,631 26,332 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net Interest ------------------------------------------------------------------------- Proved Producing 77,421 1,972 79,393 8,301 Proved Developed Non- Producing 1,482 4 1,486 677 Proved Undeveloped 9,441 29 9,470 4,956 Total Proved 88,343 2,005 90,348 13,935 Proved plus Probable 116,553 2,620 119,173 20,079 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------- Oil Oil Equivalent Equivalent Natural 2010 2009 Company Interest Gas (bcf) (mboe) (mboe) ------------------------------------------------------------- Proved Producing 651.9 212,733 185,623 Proved Developed Non- Producing 78.5 15,685 7,863 Proved Undeveloped 543.6 107,921 76,048 Total Proved 1,274.0 336,339 269,535 Proved plus Probable 1,925.2 487,418 378,953 ------------------------------------------------------------- ------------------------------------------------------------- Company Gross ------------------------------------------------------------- Proved Producing 643.4 210,860 183,663 Proved Developed Non- Producing 78.5 15,678 7,862 Proved Undeveloped 543.5 107,894 76,018 Total Proved 1,265.4 334,432 267,543 Proved plus Probable 1,914.9 485,121 376,543 ------------------------------------------------------------- ------------------------------------------------------------- Net Interest ------------------------------------------------------------- Proved Producing 550.7 179,481 156,959 Proved Developed Non- Producing 65.6 13,097 6,194 Proved Undeveloped 460.1 91,114 62,525 Total Proved 1,076.5 283,692 225,678 Proved plus Probable 1,603.7 406,543 314,350 ------------------------------------------------------------- ------------------------------------------------------------- RESERVES RECONCILIATION - COMPANY INTEREST(1) ------------------------------------------------------------------------- Light and Company Interest Medium Heavy Total (Company Gross + Crude Oil Crude Oil Crude Oil NGLs Royalties Receivable)(1) (mbbl) (mbbl) (mbbl) (mbbl) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance 93,137 2,353 95,490 8,443 Exploration Discoveries 0 0 0 5 Drilling Extensions 1,562 65 1,627 94 Improved Recovery 507 27 534 395 Infill Drilling 1,451 39 1,490 648 Technical Revisions 3,486 115 3,601 1,195 Acquisitions 407 0 407 2,488 Dispositions -2 0 -2 0 Economic Factors -537 0 -537 -264 Production -9,600 -379 -9,979 -1,549 Closing Balance 90,411 2,220 92,631 11,455 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance 102,918 2,366 105,284 11,500 Exploration Discoveries 0 0 0 9 Drilling Extensions 2,871 95 2,966 414 Improved Recovery 536 5 541 24 Infill Drilling 3,355 39 3,394 1,852 Technical Revisions 3,318 129 3,447 1,057 Acquisitions 408 0 408 5,458 Dispositions -2 0 -2 0 Economic Factors -534 0 -534 -282 Production -9,600 -379 -9,979 -1,549 Closing Balance 103,269 2,255 105,524 18,483 ------------------------------------------------------------------------- PROBABLE Opening Balance 31,653 661 32,314 4,315 Exploration Discoveries 0 0 0 4 Drilling Extensions 3,458 -55 3,403 526 Improved Recovery 95 1 96 3 Infill Drilling 1,114 17 1,131 775 Technical Revisions -2,471 10 -2,461 254 Acquisitions 106 0 106 2,223 Dispositions -2 0 -2 0 Economic Factors -159 81 -78 -63 Production 0 0 0 0 Closing Balance 33,794 715 34,509 8,037 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance 134,571 3,027 137,598 15,815 Exploration Discoveries 0 0 0 13 Drilling Extensions 6,329 40 6,369 940 Improved Recovery 631 6 637 27 Infill Drilling 4,469 56 4,525 2,627 Technical Revisions 847 139 986 1,311 Acquisitions 514 0 514 7,681 Dispositions -4 0 -4 0 Economic Factors -693 81 -612 -345 Production -9,600 -379 -9,979 -1,549 Closing Balance 137,063 2,970 140,033 26,520 ------------------------------------------------------------------------- ------------------------------------------------- Company Interest Oil (Company Gross + Natural Equivalent Royalties Receivable)(1) Gas (mmcf) (mboe) ------------------------------------------------- PROVED PRODUCING Opening Balance 490,140 185,623 Exploration Discoveries 1,152 197 Drilling Extensions 10,357 3,447 Improved Recovery 20,993 4,428 Infill Drilling 92,387 17,536 Technical Revisions 63,510 15,382 Acquisitions 77,767 15,856 Dispositions -17 -5 Economic Factors -11,629 -2,739 Production -92,785 -26,992 Closing Balance 651,875 212,733 ------------------------------------------------- TOTAL PROVED Opening Balance 916,509 269,535 Exploration Discoveries 1,865 320 Drilling Extensions 64,644 14,154 Improved Recovery 797 698 Infill Drilling 138,889 28,394 Technical Revisions 101,982 21,501 Acquisitions 154,482 31,613 Dispositions -17 -5 Economic Factors -12,374 -2,878 Production -92,785 -26,992 Closing Balance 1,273,992 336,339 ------------------------------------------------- PROBABLE Opening Balance 436,736 109,419 Exploration Discoveries 813 140 Drilling Extensions 55,548 13,187 Improved Recovery 301 149 Infill Drilling 75,129 14,428 Technical Revisions 24,884 1,940 Acquisitions 61,380 12,559 Dispositions -11 -4 Economic Factors -3,585 -739 Production 0 0 Closing Balance 651,195 151,079 ------------------------------------------------- PROVED PLUS PROBABLE Opening Balance 1,353,245 378,953 Exploration Discoveries 2,678 459 Drilling Extensions 120,192 27,341 Improved Recovery 1,098 847 Infill Drilling 214,018 42,822 Technical Revisions 126,866 23,441 Acquisitions 215,862 44,172 Dispositions -28 -9 Economic Factors -15,959 -3,617 Production -92,785 -26,992 Closing Balance 1,925,187 487,418 ------------------------------------------------- (1) Additional reserves reconciliation information on a Company Gross basis is included at the end of this news release. 

 ------------------------------------------------------------------------- Reserve Life Index 2010(1) 2009 2008 2007 2006 ------------------------------------------------------------------------- Total Proved 10.4 10.3 10.4 9.8 9.8 Proved Plus Probable 15.2 14.5 13.8 12.5 12.4 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Excludes 10.7 mmboe proved and 14.2 mmboe proved plus probable reserves relating to assets divested in January 2011 and included in the year-end 2010 reserves evaluation. The 2011 production guidance of 85,500 boe per day excluded production from the divested assets of approximately 3,400 boe per day. 

 ------------------------------------------------------------------------- Dis- Dis- Dis- Dis- NPV of Cash Flow Undis- counted counted counted counted Before Income counted at 5% at 10% at 15% at 20% Taxes(1) $MM $MM $MM $MM $MM ------------------------------------------------------------------------- Proved Producing 7,690 5,084 3,839 3,116 2,643 Proved Developed Non-Producing 452 292 215 170 141 Proved Undeveloped 2,305 1,365 866 569 378 Total Proved 10,446 6,740 4,919 3,855 3,162 Probable 5,475 2,499 1,430 931 656 Proved plus Probable 15,921 9,240 6,350 4,786 3,818 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Based on NI-51-101 Net Interest reserves and GLJ January 1, 2011 Forecast Prices and Costs. 

 ------------------------------------------------------------------------- NPV of Cash Flow Dis- Dis- Dis- Dis- After Income Undis- counted counted counted counted Taxes(1) counted at 5% at 10% at 15% at 20% $Millions $MM $MM $MM $MM $MM ------------------------------------------------------------------------- Proved Producing 6,375 4,305 3,303 2,715 2,326 Proved Developed Non-Producing 336 216 157 123 101 Proved Undeveloped 1,720 985 593 359 210 Total Proved 8,432 5,505 4,053 3,197 2,637 Probable 4,086 1,848 1,042 666 460 Proved plus Probable 12,518 7,353 5,095 3,863 3,097 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Based on NI-51-101 Net Interest reserves and GLJ January 1, 2011 Forecast Prices and Costs. 

 ------------------------------------------------------------------------- NAV at December 31, 2010(1) $Millions, except per share/unit amounts 2010 2009 2008 2007 2006 ------------------------------------------------------------------------- Value of Proved Plus Probable Reserves discounted at 10% (Before Tax)(2)(3) $6,350 $5,805 $5,292 $4,651 $4,056 Undeveloped Lands(4) 413 359 428 229 109 Reclamation Fund 25 33 28 26 31 Working Capital Deficit(5) (69) (56) (60) (38) (52) Risk Management Contracts(6) 54 (15) 1 (36) (9) Long-term Debt (804) (846) (902) (715) (687) Asset Retirement Obligation(7) (29) (27) (57) (26) (62) ------------------------------------------------------------------------- Net asset value $5,940 $5,253 $4,732 $4,091 $3,386 Shares/Units outstanding (000's)(8) 284,380 238,984 219,182 213,179 207,173 ------------------------------------------------------------------------- NAV per share/unit before tax $20.89 $21.98 $21.59 $19.19 $16.34 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Financial information is per ARC's 2010 Consolidated Financial Statements. (2) Based on NI-51-101 Net interest proved plus probable reserves based on GLJ price forecast as at January 1 of each respective year. (3) Value excludes future income taxes estimated at $1.3 billion for the GLJ price forecast using a 10 per cent discount rate and after deducting ARC's accumulated federal tax pools of $2.4 billion and $0.2 billion of provincial pools as at Dec 31, 2010 and the pools associated with the FDC. The estimated future taxes do not take into account any corporate tax deductions such as interest or general and administrative expenses. (4) Based on December 31, 2010 Seaton-Jordan and Associates Ltd. evaluation. (5) Working capital deficit excludes risk management contracts and current portion of future income tax assets and liabilities. (6) Risk management contracts represent the fair market value of such contracts as at December 31, 2010 based on the GLJ forecast pricing used to arrive at the value of proved plus probable reserves. This amount differs from the value of risk management contracts in the 2010 Consolidated Financial Statements due to differing future pricing assumptions. (7) The Asset Retirement Obligation ("ARO") is calculated based on the same methodology that was used to calculate the ARO in ARC's year-end financial statements, with the exception that future expected ARO costs were discounted at 10 per cent. The total discounted ARO at 10 per cent of $80.3 million was reduced by $51 million, relating to well abandonment costs, which were incorporated in the value of the proved plus probable reserves discounted at 10 per cent pursuant to the forecast price case as per NI 51-101. (8) Represents common shares as at December 31, 2010 pursuant to conversion to corporation. Prior to December 31, 2010 the amount represents total trust units outstanding and issuable for exchangeable shares. 

 ------------------------------------------------------------------------- Future Development Capital(1) Total Proved + $Millions Total Proved Probable ------------------------------------------------------------------------- 2011 416 459 2012 323 394 2013 391 468 2014 267 285 2015 16 304 Remainder 101 381 ------------------------------------------------------------------------- Total undiscounted $1,514 $2,291 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total discounted at 10% $1,220 $1,738 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) FDC as per GLJ independent reserve evaluation as of December 31, 2010 and based on GLJ forecast pricing as at January 1, 2011. 

 ------------------------------------------------------------------------- FD&A costs - Company Excluding FDC Including FDC Interest(1)(2) ------------------------------------------------ $Thousands, except per Proved + Proved + boe amounts Proved Probable Proved Probable ------------------------------------------------------------------------- E&D Capital Expenditures(3) $590,914 $590,914 $590,914 $590,914 E&D Expenditures - Change in FDC - - 280,927 467,792 ------------------------------------------------------------------------- Total E&D Capital Expenditures(3) 590,914 590,914 871,841 1,058,706 ------------------------------------------------------------------------- Net Acquisition Capital 657,236 657,236 657,236 657,236 Net Acquisitions - Change in FDC - - 172,974 211,507 ------------------------------------------------------------------------- Net Acquisition Capital Expenditures 657,236 657,236 830,210 868,743 ------------------------------------------------------------------------- Total Capital including Net Acquisitions $1,248,150 $1,248,150 $1,702,051 $1,927,449 ------------------------------------------------------------------------- E&D Reserve Additions 62,188 91,294 62,188 91,294 Net Acquisition Reserve Additions 31,608 44,163 31,608 44,163 ------------------------------------------------------------------------- Reserve Additions including Net Acquisitions 93,796 135,457 93,796 135,457 ------------------------------------------------------------------------- ------------------------------------------------------------------------- F&D Costs - Current Year $9.50 $6.47 $14.02 $11.60 F&D Costs - Three Year Average $10.28 $6.93 $15.45 $12.52 Net Acquisition Cost - Current Year $20.79 $14.88 $26.27 $19.67 Net Acquisition Cost - Three Year Average $21.86 $14.77 $27.20 $19.67 FD&A Costs - Current Year $13.31 $9.21 $18.15 $14.23 FD&A Costs - Three Year Average $12.76 $8.60 $17.96 $14.05 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) The aggregate of the Exploration and Development ("E&D") costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. (2) Under NI 51-101, the calculation of F&D costs must incorporate the changes in future development capital ("FDC") required to bring the proved undeveloped and probable reserves to production. In all cases, the F&D, or FD&A number is calculated by dividing the identified capital expenditures by the applicable reserves additions both before and after FDC costs. (3) Includes $24.6 million pertaining to leasehold costs on new corporate office space. ------------------------------------------------------------------------- Company Interest Historic FD&A Costs 2010 2009 2008 2007 2006 ------------------------------------------------------------------------- Proved Reserves: Annual FD&A excluding FDC $13.31 $10.48 $14.22 $20.37 $24.51 Three year average FD&A excluding FDC $12.76 $13.76 $18.28 $18.51 $17.77 ------------------------------------------------------------------------- Annual FD&A including FDC $18.15 $14.29 $21.87 $20.37 $27.53 Three year average FD&A including FDC $17.96 $18.27 $22.85 $20.30 $20.31 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Proved plus Probable Reserves: Annual FD&A excluding FDC $9.21 $6.44 $10.13 $19.00 $22.41 Three Year Average FD&A excluding FDC $8.60 $9.57 $14.70 $16.57 $15.59 ------------------------------------------------------------------------- Annual FD&A including FDC $14.23 $11.56 $17.00 $20.03 $27.20 Three Year Average FD&A including FDC $14.05 $14.75 $19.84 $19.19 $18.99 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ------------------------------------------------------------------------- Reserves and Resources - December 31, 2010(1) --------------------------------------------------------------- Estimated Economic Estimated Reserves Contingent Resource (Bcfe)(1) (Bcfe)(2) ----------------------------------------------- Cumu- Proved + lative Proved Proba- Produc- + ble + Low Best High Montney DGIIP(1) tion Proba Possi- Estim- Estim- Estim- Area (Bcf) (Bcfe) Proved ble ble(4) ate ate ate ------------------------------------------------------------------------- Dawson 3,800 106 601 901 1,002 318 381 477 West Mont- ney(3) 5,500 6 111 253 315 272 331 708 Parkland 800 66 160 227 248 17 18 23 ------------------------------------------------------------------------- Total 10,100 178 872 1,381 1,565 607 730 1,208 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Per GLJ independent reserve evaluation as of December 31, 2010 and based on GLJ forecast pricing as at January 1, 2011. The Bcfe values are sales volumes, with the exception of DGIIP which is presented as raw volumes (Bcf). (2) Per independent GLJ "Economic Contingent Resource Evaluation" as of December 31, 2010 and based on GLJ forecast pricing as of January 1, 2011. (3) Includes Sunrise/Sunset, Septimus and Sundown. (4) This volume is an arithmetic sum of multiple estimates of reserves, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of reserves and appreciate the differing probabilities of recovery associated with each class. 

 Sunrise ------- 

 Septimus and Sundown -------------------- 

 RESERVES RECONCILIATION - COMPANY GROSS ------------------------------------------------------------------------- Light and Company Gross Medium Heavy Total (Company Interest - Crude Oil Crude Oil Crude Oil NGLs Royalties Receivable) (mbbl) (mbbl) (mbbl) (mbbl) ------------------------------------------------------------------------- PROVED PRODUCING Opening Balance 92,988 2,199 95,187 8,299 Exploration Discoveries 0 0 0 5 Drilling Extensions 1,561 65 1,626 94 Improved Recovery 509 22 531 395 Infill Drilling 1,451 30 1,481 648 Technical Revisions 3,435 53 3,488 1,166 Acquisitions 407 0 407 2,488 Dispositions 0 0 0 0 Economic Factors -535 0 -535 -260 Production -9,559 -298 -9,857 -1,533 Closing Balance 90,258 2,071 92,329 11,302 ------------------------------------------------------------------------- TOTAL PROVED Opening Balance 102,756 2,212 104,968 11,355 Exploration Discoveries 0 0 0 9 Drilling Extensions 2,871 95 2,966 414 Improved Recovery 538 0 538 24 Infill drilling 3,355 30 3,385 1,852 Technical Revisions 3,266 66 3,332 1,027 Acquisitions 408 0 408 5,458 Dispositions 0 0 0 0 Economic Factors -531 0 -531 -277 Production -9,559 -298 -9,857 -1,533 Closing Balance 103,104 2,105 105,209 18,329 ------------------------------------------------------------------------- PROBABLE Opening Balance 31,607 622 32,229 4,281 Exploration Discoveries 0 0 0 4 Drilling Extensions 3,458 -55 3,403 526 Improved Recovery 95 0 95 3 Infill Drilling 1,114 15 1,129 775 Technical Revisions -2,472 10 -2,462 253 Acquisitions 106 0 106 2,223 Dispositions 0 0 0 0 Economic Factors -158 80 -78 -63 Production 0 0 0 0 Closing Balance 33,750 672 34,422 8,003 ------------------------------------------------------------------------- PROVED PLUS PROBABLE Opening Balance 134,363 2,834 137,197 15,637 Exploration Discoveries 0 0 0 13 Drilling Extensions 6,329 40 6,369 940 Improved Recovery 633 0 633 27 Infill Drilling 4,469 45 4,514 2,627 Technical Revisions 794 76 870 1,280 Acquisitions 514 0 514 7,681 Dispositions 0 0 0 0 Economic Factors -689 80 -609 -340 Production -9,559 -298 -9,857 -1,533 Closing Balance 136,854 2,777 139,631 26,332 ------------------------------------------------------------------------- ------------------------------------------------- Company Gross Natural Oil (Company Interest - Gas Equivalent Royalties Receivable) (mmcf) (mboe) ------------------------------------------------- PROVED PRODUCING Opening Balance 481,057 183,663 Exploration Discoveries 1,152 197 Drilling Extensions 10,355 3,446 Improved Recovery 20,993 4,425 Infill Drilling 92,384 17,526 Technical Revisions 62,390 15,051 Acquisitions 77,742 15,852 Dispositions 0 0 Economic Factors -11,434 -2,701 Production -91,262 -26,600 Closing Balance 643,377 210,860 ------------------------------------------------- TOTAL PROVED Opening Balance 907,316 267,543 Exploration Discoveries 1,865 320 Drilling Extensions 64,644 14,154 Improved Recovery 797 695 Infill drilling 138,887 28,385 Technical Revisions 100,840 21,165 Acquisitions 154,457 31,609 Dispositions 0 0 Economic Factors -12,181 -2,838 Production -91,262 -26,600 Closing Balance 1,265,363 334,432 ------------------------------------------------- PROBABLE Opening Balance 434,941 109,000 Exploration Discoveries 813 140 Drilling Extensions 55,548 13,187 Improved Recovery 301 148 Infill Drilling 75,128 14,425 Technical Revisions 25,012 1,963 Acquisitions 61,378 12,559 Dispositions 0 0 Economic Factors -3,543 -732 Production 0 0 Closing Balance 649,578 150,689 ------------------------------------------------- PROVED PLUS PROBABLE Opening Balance 1,342,257 376,543 Exploration Discoveries 2,678 459 Drilling Extensions 120,192 27,341 Improved Recovery 1,098 843 Infill Drilling 214,015 42,810 Technical Revisions 125,852 23,127 Acquisitions 215,835 44,168 Dispositions 0 0 Economic Factors -15,724 -3,570 Production -91,262 -26,600 Closing Balance 1,914,941 485,121 ------------------------------------------------- ------------------------------------------------------------------------- FD&A costs - Company Gross(1)(2) Excluding FDC Including FDC $Thousands, except per ------------------------------------------------ boe amounts Proved P+P Proved P+P ------------------------------------------------------------------------- E&D Capital Expenditures(3) $590,914 $590,914 $590,914 $590,914 E&D Expenditures - Change in FDC - - 280,927 467,792 ------------------------------------------------------------------------- Total E&D Capital Expenditures(3) 590,914 590,914 871,841 1,058,706 ------------------------------------------------------------------------- Net Acquisition Capital 657,236 657,236 657,236 657,236 Net Acquisitions - Change in FDC - - 172,974 211,507 ------------------------------------------------------------------------- Net Acquisition Capital Expenditures 657,236 657,236 830,210 868,743 ------------------------------------------------------------------------- Total Capital including Net Acquisitions $1,248,150 $1,248,150 $1,702,051 $1,927,449 ------------------------------------------------------------------------- E&D Reserve Additions 61,880 91,010 61,880 91,010 Net Acquisition Reserve Additions 31,609 44,168 31,609 44,168 ------------------------------------------------------------------------- Reserve Additions including Net Acquisitions 93,489 135,178 93,489 135,178 ------------------------------------------------------------------------- ------------------------------------------------------------------------- F&D Costs - Current Year $9.55 $6.49 $14.09 $11.63 F&D Costs - Three Year Average $10.34 $6.95 $15.50 $12.51 Net Acquisition Cost - Current Year $20.79 $14.88 $26.26 $19.67 Net Acquisition Cost - Three Year Average $21.87 $14.77 $27.35 $19.88 FD&A Costs - Current Year $13.35 $9.23 $18.21 $14.26 FD&A Costs - Three Year Average $12.82 $8.62 $18.04 $14.08 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) The aggregate of the Exploration and Development ("E&D") costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. (2) Under NI 51-101, the calculation of FD&A costs must incorporate the changes in future development capital ("FDC") required to bring the proved undeveloped and probable reserves to production. In all cases, the F&D, or FD&A number is calculated by dividing the identified capital expenditures by the applicable reserves additions both before and after FDC costs. (3) Includes $24.6 million pertaining to leasehold costs on new corporate office space. ------------------------------------------------------------------------- Company Gross Historic FD&A Costs 2010 2009 2008 2007 2006 ------------------------------------------------------------------------- Proved Reserves: Annual FD&A including FDC $18.21 $14.36 $22.01 $20.71 $28.05 Three year average FD&A including FDC $18.04 $18.41 $23.12 $20.57 $20.63 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Proved plus Probable Reserves: Annual FD&A including FDC $14.26 $11.59 $17.08 $20.29 $27.79 Three Year Average FD&A including FDC $14.08 $14.81 $20.04 $19.43 $19.28 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 

 ARC RESOURCES LTD. John P. Dielwart, Chief Executive Officer