Market context: Kakwa acquisition pays off in less than three years
ARC Resources’ acquisition of Seven Generations Energy’s condensate rich Montney assets in the Kakwa area has proven to be one of the best deals in recent history in the WCSB.
In under three years the Kakwa asset has generated cumulative free cash flow of $4.2 billion, equal to its original 2021 purchase price. It covers approximately 50% of ARC’s land base, with around 900 wells drilled.
ARC drilled 52 wells and completed 54 wells in 2024. For 2025, the company’s capital expenditure forecast is $800 million at Kakwa with plans to drill 64 wells. ARC expects to maintain production of approximately 170,000-175,000 boe/d (approximately 55% liquids) for at least the next 13 years.
For future liquids growth, ARC is attending to its Attachie assets in northeast B.C. Four phases of development on its 300 sections are envisioned, with production plateauing at a similar level to Kakwa.
Drilling and completions advancements improve well productivity and cut costs
ARC has been continuously improving its drilling and completions program at Kakwa since acquiring the Seven Generations assets. This includes:
- Expanding inter-well spacing to 175 metres from 135 metres, resulting in a 17% increase in productivity, while requiring fewer wells to sustain production resulting in lower sustaining capital costs.
- Completing both the Upper and Lower Montney as a single layer of development, resulting in a 7% improvement in productivity with the same number of wells, and a 10% improvement in costs. Capital efficiencies have improved 20%.
- Adjusting clusters per stage, resulting in increased access to the reservoir and improving connectivity. The modified completion added positive technical revisions of 41 million boe of proved reserves in 2024.
The evolving drilling and completions design is reflected in the performance of wells brought on production in 2024. ARC’s top well in 2024 delivered approximately 283,500 boe in its first six months of production, with its top 10 wells all delivering over 200,000 boe.
Condensate, NGLs drive ARC’s economics
Kakwa production during the fourth quarter averaged approximately 195,000 boe/d, including approximately 74,000 bbls/d of condensate and 30,750 bbls/d of other NGLs.
Across the company, liquids accounted for 38 per cent of production and over 70 per cent of revenues.
ARC’s top 10 wells brought on production in 2024 averaged between 146,000 bbls to 174,500 bbls of total liquids in their first six months of production.
Attachie next phase of liquids expansion
With Kakwa assets in manufacturing mode, ARC is turning its attention to its Attachie assets in northeast B.C. for future liquids growth. The company envisions four phases of development on its 300 sections at Attachie, with production plateauing at a similar level to Kakwa.
Construction of Attachie Phase 1 expansion is complete, with full-year 2025 production expected to average approximately 37,500 boe/d (60 per cent condensate and NGLs).
ARC is on track for Attachie Phase 2 expansion, with investment expected to begin in 2026 and anticipated production in 2028. Phase 2 will mirror Phase 1 with facility capacity of 40,000 boe/d.
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