Canada’s ARC Resources to supply LNG Canada
Canada’s ARC Resources said November 4 it has entered into a long-term agreement to supply 150mn ft3/day of its Montney natural gas production to a member of the LNG Canada consortium.
The agreement will commence when LNG Canada begins operations, expected in 2025. The consortium member was not identified.
Each of the five LNG Canada joint venture partners will provide an estimated 2.1bn ft3/day of natural gas supply to the 14mn mt/yr first phase of the project commensurate with their respective equity positions. The five partners are Anglo-Dutch major Shell (40%), Malaysia’s PETRONAS (25%), PetroChina (15%), Japan’s Mitsubishi (15%) and Korea Gas (5%).
ARC Resources is the largest producer in the Montney formation, which straddles the Alberta/British Columbia border. Natural gas for the supply agreement will be delivered from its low-emission Sunrise facility, which in Q3 2021 produced an estimated 286mn ft3/day but will be expanded by 80mn ft3/day by the end of 2022.
ARC reported record production of 353,657 barrels of oil equivalent (boe)/day and record free funds flow of C$497mn (US$399mn) in the third quarter this year. It recorded net income of C$53.6mn in the quarter, reversing a C$66.1mn net loss a year ago.
The free funds flow supported net debt reduction of C$158mn and the return to shareholders of C$172 through dividends (C$47mn) and share repurchases (C$125mn). ARC will increase its quarterly dividend to C$0.10/share from C$0.66/share, to be paid in January 2022 to shareholders of record at December 31, 2021.
Natural gas production in the third quarter nearly doubled year-over-year, to 1.3bn ft3/day from 708mn ft3/day, mostly reflecting its business combination earlier this year with Seven Generations Energy.