ARC Resources Ltd T.ARX

earnings...part 2

[petrofac]

Funds from Operations and Free Funds Flow

Funds from Operations

• ARC generated funds from operations of $765 million ($1.06 per share) during the third quarter of 2021, increasing $223 million ($0.31 per share) from the second quarter of 2021. In addition to increased commodity sales from production, lower G&A expense and lower transaction costs helped increase funds from operations in the period. Partially offsetting the increases to funds from operations were higher realized losses on ARC's risk management contracts and $31 million of make-whole payments associated with the private senior note repayments.
• ARC's average realized natural gas price of $4.67 per Mcf during the third quarter of 2021 was $1.13 per Mcf higher than the average AECO 7A Monthly Index price.
• The following table details the change in funds from operations for the third quarter of 2021 relative to the second quarter of 2021.

	$ millions	$/share(1)
Funds from operations for the three months ended June 30, 2021	542.5	0.75
Production volumes
Crude oil and liquids	18.2	0.02
Natural gas	33.8	0.05
Commodity prices
Crude oil and liquids	85.1	0.13
Natural gas	159.3	0.22
Sales of commodities purchased from third parties	69.5	0.10
Interest income	(1.6)	—
Other income	(4.1)	(0.01)
Realized loss on risk management contracts	(78.7)	(0.11)
Royalties	(17.2)	(0.02)
Expenses
Commodities purchased from third parties	(62.8)	(0.09)
Operating	21.7	0.03
Transportation	(23.3)	(0.03)
G&A	15.3	0.02
Transaction costs	16.1	0.02
Interest and financing	(27.2)	(0.04)
Current income tax	2.5	—
Realized gain (loss) on foreign exchange	15.2	0.02
Other	1.1	—
Funds from operations for the three months ended September 30, 2021	765.4	1.06

(1) Per share amounts are based on weighted average diluted common shares.

• ARC generated funds from operations of $1.6 billion ($2.63 per share) during the nine months ended September 30, 2021, compared to funds from operations of $456 million ($1.29 per share) during the nine months ended September 30, 2020.

Free Funds Flow

• Demonstrating the underlying strength of ARC's business and its high-quality assets, ARC generated free funds flow of $497 million ($0.69 per share) during the third quarter of 2021 and free funds flow of $895 million ($1.49 per share) during the nine months ended September 30, 2021.