History
ARC Resources grew from an income trust into a Western Canadian producer through acquisitions and repeated share issues, became a corporation in 2011, then cut its dividend and sold Saskatchewan in 2016.
2003-2009: Building the trust through acquisitions
The record opens in 2003 with ARC Energy Trust digesting its purchase of Star Oil & Gas. In June, United ARC L.P. converted $200 million of the $320 million special debenture issued for that deal into 16,891,891 trust units and sold them at $11.95 (about $201.9 million). The Trust received no proceeds, but its debt fell. In November it closed a bought-deal offering (shares sold in bulk to underwriters, who resell them) of 14.5 million units at $13.40, raising $194.3 million gross, first to repay bank debt.
The record then goes quiet until December 2005. ARC announced a record $340 million 2006 capital program, aiming for about 61,000 barrels of oil equivalent a day (boe/d), and bought the Redwater and North Pembina Cardium Unit properties, a long-life oil acquisition that closed December 16. A 9,000,000-unit offering at $26.65 raised $240 million gross to repay bank debt, including debt used for the purchase.
The record is quiet again until 2009. In February ARC sold 15,474,400 units at $16.35 for about $253 million gross to help fund that year's capital program. In April it placed about US$125 million of secured notes in three tranches, with rates of 6.5% to 8.21%, to diversify its borrowing away from banks, and extended its Prudential Capital Group agreement to allow draws up to US$225 million.
2010: Ante Creek, Storm and a new structure
In December 2009 ARC bought Ante Creek and other Northern Alberta assets, and in January 2010 it sold 13 million units at $19.40 (about $252 million gross), with $180 million going to repay the bank debt from that purchase. In May the security on its bank facilities and senior notes was released, and it closed a US$150 million unsecured note placement at 5.36%.
The biggest deal came in August, when ARC acquired Storm Exploration for about $645 million at $19.53 per unit. Storm holders received ARC units or exchangeable shares, plus shares of a spun-out company, Storm Resources, warrants and $1.00 cash. ARC issued 23,524,456 trust units and 1,744,038 exchangeable shares and assumed about $89 million of debt. It then expected 2010 production of 72,500 to 74,500 boe/d.
In November the board proposed converting the Trust into a dividend-paying corporation. Unitholders voted 99.9% in favour on December 15, and the Alberta court approved it on December 16. ARC said it had about $2.4 billion of tax pools and expected no material income tax until 2014. On December 23 it agreed to sell non-core Central Alberta assets (about 3,400 boe/d) for $170 million plus 36 sections of Ante Creek land.
2011-2015: A corporation, and more equity
The conversion completed on January 1, 2011. Each trust unit became one common share, the exchangeable shares became 2.89162 common shares each, and about 284,379,730 common shares were outstanding. ARC set a $0.10 monthly dividend and guided 2011 production at 84,000 to 87,000 boe/d from six core areas. The Central Alberta sale closed on February 1, with part of the proceeds held in escrow until rights of first refusal were resolved.
In August 2012 ARC cut its 2012 capital program to $600 million from $760 million, citing low natural gas prices and volatile crude oil price differentials. It raised about $345 million by selling roughly 14.6 million shares at $23.65, and placed US$360 million and $40 million of unsecured notes to repay credit facility borrowings. Planned 2013 spending was about $800 million, including two Parkland gas processing plants.
In May 2013 shareholders approved a stock dividend program, letting holders take shares at a 5% discount instead of cash. In September 2014 ARC placed US$150 million of 3.72% notes with Prudential, which also upsized its shelf agreement to US$350 million. In January 2015, citing worsening commodity prices, ARC cut its 2015 capital budget to $750 million from $875 million. It raised about $402 million by issuing roughly 17.9 million shares at $22.55.
2016-2017: Dividend cut and Saskatchewan sale
In February 2016 the board halved the monthly dividend to $0.05 from $0.10, which it said reduced funding requirements by about $200 million a year. In November ARC agreed to sell all its Saskatchewan assets, about 7,500 boe/d, to Spartan Energy Corp. for $700 million cash. The sale closed on December 8, 2016, subject to post-closing adjustments. ARC said the proceeds would strengthen its balance sheet and support its Montney assets, and it removed the 3% discount on its dividend reinvestment and stock dividend plans from January 2017.
On February 17, 2017, the latest record, ARC confirmed a $0.05 dividend for March 15. Trailing twelve-month payments were $0.60 per share, and stated enterprise value was about $7.8 billion. The board had approved eliminating both plans entirely from the April 17, 2017 dividend, with enrolled holders receiving cash. The Saskatchewan post-closing adjustments and the escrow from the 2011 sale were still listed as pending.
Written from the 28 story beats below (2003 to 17 Feb 2017), which come from the company's own announcements and filings.