Annual Report - 2001 - ARC Resources Ltd.

More documents

Recommendations

Info

PAGE 9 MESSAGE TO UNITHOLDERS Commodity price volatility will continue and it appears that cycles will be shorter with higher peaks and lower valleys. Managing effectively in this environment requires an in-depth understanding of both commodity and financial markets and a proven analytical and decision making capability. BUILD A TEAM OF EXCELLENT PEOPLE Put simply, we apply ARC’s expertise to transform quality assets into value for our unitholders. We have developed a highly effective team of geologists, geophysicists, engineers, landmen, accountants and business experts to identify and evaluate opportunities and optimize every property we operate. We believe good people make good decisions, so we set out to hire and retain the best people in our business. Our ability to tap into the advice and expertise at ARC Financial Corporation lends depth and insight to our financial decision-making. Since 1994, ARC Financial Group, which encompasses ARC Resources Management Ltd., the manager of the Trust, and ARC Financial Corporation, has been cited as one of Canada’s 50 Best Managed Private Companies based on an annual comprehensive survey led by Arthur Andersen LLP and sponsored by CIBC World Markets, Queen’s School of Business and the National Post. ACQUISITIONS MUST MEET THE TEST To maximize unitholder value, we look for high quality producing properties with upside reserve potential. Ideal characteristics include high netbacks, extensive production histories to reduce technical risk and low decline rates which translates into more stable distributions. To further reduce risk, we have assembled a diverse portfolio of assets to ensure that no one property accounts for a significant portion of reserves or value. The key criteria for ongoing success is low finding, development and acquisition costs for high netback properties which translates into a high recycle ratio. Since inception, our FD&A costs have been among the lowest in the industry and our recycle ratio among the highest. Our 2001 FD&A costs of $9.75 were high relative to our execeptionally low inception to date costs of $6.32/boe. Our acquisition criteria have not changed, the increased FD&A costs reflect the relatively higher commodity price ARC ENERGY TRUST AR 2001
PAGE 10 MESSAGE TO UNITHOLDERS environment which is expected to prevail in the future. The costs in 2001 also reflect a higher component of capital expenditures directed to converting reserves from undeveloped to producing. Given the variability which can exist in annual FD&A costs, three-year rolling average costs are considered more representative of our ongoing cost structure. At $6.94/boe, our three-year average FD&A costs remain among the lowest in the industry while our recycle ratio remains among the highest. The Startech acquisition in 2001 has been our most significant transaction to date. This acquisition provided ARC with complementary oil and gas assets, as well as a significant entry into several new core areas. More importantly, this transaction was completed early in the cycle of corporate acquisitions before the market became expensive later in the year. Rather than participate in the overheated acquisition market during the balance of 2001, ARC focused on the acquisition and consolidation of smaller interests in existing assets, integrating the Startech assets and identifying development opportunities on existing lands to maximize long-term value. Looking forward, we believe the opportunity for new acquisitions has never been brighter. The consolidation of our industry during 2000 and 2001 was, in many cases, driven by the desire to expand natural gas asset portfolios. Today, many of these companies are left with a material component of assets that are not core to their longerterm strategy and some are dealing with weak balance sheets in the lower end of the commodity price cycle. This should result in major near-term property dispositions, particularly of oil assets. While we strive for a relatively balanced commodity exposure, we have a technical bias to crude oil assets, as the reserves tend to demonstrate a longer reserve life and long-term reserve upside. Therefore, we expect significant opportunities to develop to acquire attractive assets in this new wave of rationalization activity. “We view the $500 million acquisition of Startech Energy by ARC Energy Trust in January as perhaps the smartest corporate transaction completed within the Royalty Trust sector in 2001.” BRIAN ECTOR, ANALYST, SCOTIA CAPITAL EQUITY RESEARCH, SEPTEMBER 2001 ARC ENERGY TRUST AR 2001
Page 1 and 2: AR 2001 ARC ENERGY TRUST ANNUAL REP
Page 3 and 4: Photo: Drilling in the Drayton Vall
Page 5 and 6: OPERATING HIGHLIGHTS Years ended De
Page 7 and 8: AT THE TIME OF OUR INITIAL PUBLIC O
Page 9 and 10: PAGE 4 FEATURE: MANAGEMENT EXPERTIS
Page 11 and 12: John P. Dielwart Director, Presiden
Page 13: PAGE 8 MESSAGE TO UNITHOLDERS We ha
Page 17 and 18: PAGE 12 MESSAGE TO UNITHOLDERS We r
Page 19 and 20: PAGE 14 FEATURE: QUALITY ASSETS A C
Page 21 and 22: Top: Deanna Kalenchuk, Wayne Lentz,
Page 23 and 24: PAGE 18 OPERATIONS REVIEW DEVELOPME
Page 25 and 26: PAGE 20 MAJOR PROPERTIES NORTHERN A
Page 27 and 28: PAGE 22 MAJOR PROPERTIES PEMBINA PE
Page 29 and 30: PAGE 24 MAJOR PROPERTIES CENTRAL AL
Page 31 and 32: PAGE 26 MAJOR PROPERTIES SOUTHEAST
Page 33 and 34: PAGE 28 MAJOR PROPERTIES SOUTHEAST
Page 35 and 36: PAGE 30 MAJOR PROPERTIES WEYBURN UN
Page 37 and 38: PAGE 32 ACQUISITIONS AND DIVESTMENT
Page 39 and 40: PAGE 34 RESERVES RESERVES Based on
Page 41 and 42: PAGE 36 RESERVES Reserves Reconcili
Page 43 and 44: PAGE 38 ENVIRONMENT, HEALTH AND SAF
Page 45 and 46: PAGE 40 ENVIRONMENT, HEALTH AND SAF
Page 47 and 48: PAGE 42 FEATURE: COMMITMENT DEFININ
Page 49 and 50: MANAGEMENT’S DISCUSSION AND ANALY
Page 51 and 52: PAGE 46 MANAGEMENT’S DISCUSSION A
Page 65 and 66:
PAGE 60 MANAGEMENT’S RESPONSIBILI
Page 67 and 68:
PAGE 62 CONSOLIDATED FINANCIAL STAT
Page 69 and 70:
PAGE 64 CONSOLIDATED FINANCIAL STAT
Page 71 and 72:
PAGE 66 NOTES TO CONSOLIDATED FINAN
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
PAGE 78 QUARTERLY REVIEW QUARTERLY
Page 85 and 86:
PAGE 80 DIRECTORS AND OFFICERS John
Page 87 and 88:
PAGE 82 CORPORATE GOVERNANCE CORPOR
Page 89 and 90:
PAGE 84 CORPORATE AND UNITHOLDER IN
Page 91:
ANNUAL REPORT 2001 AR 2001 ARC ENER
show all

Annual Report - 2001 - ARC Resources Ltd.

Create successful ePaper yourself

Delete template?

Save as template?