Capital Markets | Capital Expenditure | Capital Expenditure 2025 | Capex - 2026

ARC Resources: Lower 2026 Capex, Higher Volumes

Share Print Bookmark    |    Monday,December 22,2025

ARC Resources used its third quarter update to reinforce a familiar message to Canadian E&P executives: disciplined capital, structurally better market access, and a growing shareholder return program — now with a 2026 plan that explicitly targets higher production on less capital.

Q3 2025 results: record condensate, strong margins, full distribution

ARC delivered Q3 2025 average production of 359,236 boe/d, up 10% year-over-year and 13% per share, with a corporate mix of 54% natural gas and 46% crude oil and liquids. Importantly, ARC reported record crude oil and condensate production of 113,959 bbl/d, underscoring the company’s multi-year push toward higher-value liquids within its gas-weighted portfolio.

Financially, ARC generated $779 million in funds from operations and $283 million of free funds flow, while investing $496 million of capital expenditures in the quarter. The Company distributed essentially all free funds flow: $279 million returned to shareholders through dividends and buybacks (including 6.8 million shares repurchased for $169 million). Management also increased the quarterly dividend by 11% to $0.21/share, extending ARC’s streak of annual dividend growth and reinforcing a consistent capital return model.

A key operational point from Q3 was ARC’s ability to protect realized gas pricing. ARC realized $2.75/Mcf, which was $1.75 higher than AECO 7A, driven by U.S.-linked transportation exposure and curtailments at Sunrise during periods of weak Canadian gas prices. In practical terms, ARC used its portfolio flexibility to conserve capital and protect margins — a capability that increasingly separates top-tier Canadian gas operators.

2026 Capital Plan: Spend Less, Produce More

ARC’s Board approved a 2026 capital budget of $1.8–$1.9 billion, explicitly framed as ~$100 million lower than 2025, while still delivering record annual average production of 405,000–420,000 boe/d.

That is a meaningful statement: ARC is targeting double-digit volume growth (mid-teens) versus Q3 2025 while spending less capital than the prior year. Management expects the 2026 program to generate approximately $1.5 billion of free funds flow, based on October 23, 2025 forward strip assumptions — and for the fourth consecutive year, ARC plans to return essentially all free funds flow to shareholders through a combination of a growing base dividend and buybacks.

Well investment: the majority of the budget, but the Company is not publishing a single “corporate well count”

ARC disclosed that ~80% of 2026 capital is well-related, with the remainder directed toward facilities, maintenance, and water infrastructure (including corporate capital). Unlike some peers, ARC did not provide a consolidated corporate well count for 2026 in this excerpt. Instead, the Company disclosed asset-level well counts in certain areas — most clearly at Attachie Phase I, where ARC plans to complete 14 wells in 2026 while continuing Phase II planning work.

That matters for operators: ARC is telegraphing a capital program with a high allocation to the drill bit, but also prioritizing targeted infrastructure spend where it drives operating cost reduction and rapid payout — such as $40 million of water infrastructure and disposal at Kakwa, expected to pay out in less than 12 months by reducing trucking and third-party disposal.