ARC Resources Ltd. — Management Reports 2026

Feb 5, 2026

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MANAGEMENT'S REPORT

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of the accompanying consolidated financial statements and for the consistency therewith of all other financial and operating data presented in this annual report. The consolidated financial statements have been prepared in accordance with the accounting policies detailed in the notes thereto. In Management's opinion, the consolidated financial statements are in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"), have been prepared within acceptable limits of materiality, and have utilized supportable, reasonable estimates.

To ensure the integrity of our financial statements, we carefully select and train qualified personnel. We also ensure our organizational structure provides appropriate delegation of authority and division of responsibilities. Our policies and procedures are communicated throughout the organization including a written ethics and integrity policy that applies to all employees including the Chief Executive Officer and Chief Financial Officer.

The Board of Directors approves the consolidated financial statements. Their financial statement-related responsibilities are fulfilled primarily through the Audit Committee. The Audit Committee is composed entirely of independent directors, and includes at least one director with financial expertise. The Audit Committee meets regularly with Management and the external auditors to discuss reporting and control issues and ensures each party is properly discharging its responsibilities. The Audit Committee also considers the independence of the external auditors and reviews their fees.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants, in accordance with Canadian generally accepted auditing standards on behalf of the shareholders.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance that all assets are safeguarded, transactions are appropriately authorized, and to facilitate the preparation of relevant, reliable, and timely information. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the internal control over financial reporting for ARC Resources Ltd. The assessment was based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2025.

Terry M. Anderson Kristen J. Bibby

President and Chief Executive Officer Senior Vice President and Chief Financial Officer

Calgary, Alberta

February 5, 2026

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Independent auditor's report

To the Shareholders of ARC Resources Ltd.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of ARC Resources Ltd. and its subsidiaries (together, the Company) as at December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

• the consolidated balance sheets as at December 31, 2025 and 2024;
• the consolidated statements of comprehensive income for the years then ended;
• the consolidated statements of changes in shareholders' equity for the years then ended;
• the consolidated statements of cash flows for the years then ended; and
• the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

PricewaterhouseCoopers LLP Suncor Energy Centre, 111 5th Avenue South West, Suite 2900 Calgary, Alberta, Canada T2P 5L3 T.: +1 403 509 7500, F.: +1 403 781 1825 Fax to mail: ca_calgary_main_fax@pwc.com

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter

The impact of crude oil, condensate, natural gas and natural gas liquids reserves on net Development and Production (D&P) assets

Refer to note 3 – Summary of material accounting policies, note 5 – Management judgments and estimation uncertainty and note 9 – Property, plant and equipment to the consolidated financial statements.

The Company had \$12.5 billion of net D&P assets as at December 31, 2025. Depletion, depreciation and amortization (DD&A) expense related to D&P assets was \$1.4 billion for the year then ended. D&P assets are depleted on a unit-ofproduction basis over the life of the associated proved plus probable reserves. Reserves are evaluated by the Company's independent qualified reserve evaluator (management's expert). Key assumptions developed by management used to determine proved plus probable reserves include forward commodity price estimates, expected future rates of production, future production costs and future development expenditures.

Our approach to addressing the matter included the following procedures, among others:

• Tested how management determined the proved plus probable reserves used to determine the DD&A expense, which included the following:
• The work of management's expert was used in performing the procedures to evaluate the reasonableness of the proved plus probable reserves. As a basis for using this work, the competence, capabilities and objectivity of management's expert were evaluated, the work performed was understood and the appropriateness of the work as audit evidence was evaluated. The procedures performed also included evaluation of the methods and key assumptions used by management's expert, tests of data used by management's expert and an evaluation

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We considered this a key audit matter due to (i) the judgments by management, including the use of management's expert, when estimating the proved plus probable reserves; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures relating to the key assumptions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge in the field of petroleum engineering and reserves estimation.

Key audit matter How our audit addressed the key audit matter

• of their findings for certain properties. Professionals with specialized skill and knowledge in the field of petroleum engineering and reserves estimation assisted in this evaluation, as applicable.
• Evaluated the reasonableness of key assumptions used, including expected future rates of production, future production costs and future development expenditures, by considering current and past performance of the Company and whether these assumptions were consistent with evidence obtained in other areas of the audit for certain properties, as applicable.
• Evaluated the reasonableness of forward commodity price estimates by comparing those forecasts with third party industry forecasts.
• Recalculated DD&A expense.

Valuation of D&P assets acquired in the Kakwa acquisition

Refer to note 3 – Summary of material accounting policies, note 5 – Management judgments and estimation uncertainty and note 6 – Business combination to the consolidated financial statements.

On July 2, 2025, the Company completed an acquisition of Montney assets in the Kakwa region in Alberta for total cash consideration of \$1.67 billion. The assets acquired included D&P assets that were valued at \$1.70 billion by management. This transaction was recognized as a business combination and accounted for using the acquisition method, which requires that identifiable assets acquired and liabilities assumed are recognized at their fair value at the date of the acquisition. Management determined the fair value of D&P assets acquired in the transaction using a fair value less cost of disposal model based on the after-tax cash flows from the acquired oil and gas

Our approach to addressing the matter included the following procedures, among others:

• Tested how management determined the fair value of the D&P assets acquired, which included the following:
• The work of management's expert was used in performing the procedures to evaluate the reasonableness of the acquired oil and gas reserves used to determine the fair value of the D&P assets. As a basis for using this work, the competence, capabilities and objectivity of management's expert were evaluated, the work performed was understood and the appropriateness of the work as audit evidence was evaluated. The procedures performed also included evaluation of the methods and assumptions used by management's expert, tests of

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Key audit matter How our audit addressed the key audit matter

reserves. Key assumptions developed by management in determining the fair value of the D&P assets acquired include forward commodity price estimates, expected future rates of production, future production costs, future development expenditures and discount rate. Management utilized the Company's independent qualified reserve evaluator (management's expert) in estimating the acquired oil and gas reserves.

We considered this a key audit matter due to (i) the judgments by management, including the use of management's expert, when estimating the acquired oil and gas reserves used to determine the fair value of the acquired D&P assets; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures relating to the key assumptions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge in the fields of valuation and petroleum engineering and reserves estimation.

data used by management's expert and an evaluation of their findings. Professionals with specialized skill and knowledge in the field of petroleum engineering and reserves estimation assisted in this evaluation, as applicable.

• Evaluated the appropriateness of the method used by management to determine the fair value of the acquired D&P assets.
• Tested the data used in determining the fair value of the acquired D&P assets.
• Evaluated the reasonableness of key assumptions used by management in determining the fair value of the acquired D&P assets by:
• o considering whether expected future rates of production, future production costs and future development expenditures were consistent with current performance of the acquired assets and whether these assumptions were consistent with evidence obtained in other areas of the audit, as applicable;
• o comparing forward commodity price estimates to third party industry forecasts; and
• o using professionals with specialized skill and knowledge in the field of valuation, who assisted us in assessing the reasonableness of the discount rate.

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis, which we obtained prior to the date of this auditor's report and the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, which is expected to be made available to us after that date.

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Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the information, other than the consolidated financial statements and our auditor's report thereon, included in the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

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Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Ryan McKay.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants Calgary, Alberta February 5, 2026

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ARC RESOURCES LTD. CONSOLIDATED BALANCE SHEETS

As at

(Cdn\$ millions)	December 31, 2025	December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	7.0	—
Inventory	17.9	12.4
Accounts receivable (Note 7)	749.2	691.0
Prepaid expense	136.6	107.4
Risk management contracts (Note 17)	135.6	190.1
	1,046.3	1,000.9
Risk management contracts (Note 17)	56.4	154.1
Long-term investments	30.2	27.7
Exploration and evaluation assets (Note 8)	442.4	338.1
Property, plant and equipment (Notes 6 and 9)	12,514.4	10,373.9
Right-of-use and other long-term assets (Notes 6 and 10)	972.4	956.8
Goodwill (Note 9)	248.2	248.2
Total assets	15,310.3	13,099.7
LIABILITIES Current liabilities
Accounts payable and accrued liabilities	760.8	634.4
Current portion of lease obligations (Notes 6 and 12)	112.1	92.8
Current portion of long-term debt (Notes 6 and 13)	450.0	—
Current portion of other deferred liabilities (Note 14)	28.6	23.3
Current portion of asset retirement obligation (Notes 6 and 15)	20.0	17.0
Dividends payable (Note 19)	120.0	112.2
Risk management contracts (Note 17)	—	1.0
	1,491.5	880.7
Risk management contracts (Note 17)	138.9	37.1
Long-term portion of lease obligations (Notes 6 and 12)	922.1	908.5
Long-term debt (Notes 6 and 13)	2,428.1	1,387.4
Long-term incentive compensation liability (Note 21)	28.1	76.2
Other deferred liabilities (Note 14)	113.0	95.8
Asset retirement obligation (Notes 6 and 15)	473.9	414.4
Deferred taxes (Note 18)	1,450.7	1,351.4
Total liabilities	7,046.3	5,151.5
SHAREHOLDERS' EQUITY
Shareholders' capital (Note 19)	5,990.6	6,194.3
Contributed surplus	28.4	31.6
Retained earnings	2,247.0	1,728.5
Accumulated other comprehensive loss	(2.0)	(6.2)
Total shareholders' equity	8,264.0	7,948.2
Total liabilities and shareholders' equity	15,310.3	13,099.7

Commitments and contingencies (Note 22)

See accompanying notes to the consolidated financial statements.

Approved by the Board of Directors

/s/ Harold N. Kvisle /s/ Leontine van Leeuwen-Atkins

Harold N. Kvisle Leontine van Leeuwen-Atkins

Chair of the Board of Directors and Director Chair of the Audit Committee and Director

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ARC RESOURCES LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31

(Cdn\$ millions, except per share amounts)	2025	2024
Commodity sales from production (Note 20)	5,421.7	4,603.7
Royalties	(536.8)	(524.9)
Sales of third-party purchases (Note 20)	1,190.8	1,020.2
Total revenue	6,075.7	5,099.0
Interest and other income	20.4	20.2
Gain on risk management contracts (Note 17)	11.0	272.7
Total revenue, interest and other income, and gain on risk
management contracts	6,107.1	5,391.9
Operating	735.8	596.4
Transportation	689.1	662.9
Third-party purchases (Note 24)	1,164.9	1,011.4
General and administrative	175.6	248.1
Interest and financing	151.3	133.8
Impairment (reversal of impairment) of financial assets (Note 7)	(2.8)	2.3
Depletion, depreciation and amortization and impairment of property, plant and equipment (Notes 9 and 10)	1,547.2	1,360.7
Loss on foreign exchange	16.1	1.3
Gain on disposal of assets	(4.0)	(80.0)
Total expenses	4,473.2	3,936.9
Net income before income taxes	1,633.9	1,455.0
Provision for income taxes (Note 18)
Current	260.0	200.4
Deferred	98.8	130.5
Total income taxes	358.8	330.9
Net income	1,275.1	1,124.1
Other comprehensive income
Items that may be reclassified to net income in subsequent periods:
Net unrealized gain on foreign currency translation adjustment	4.2	11.7
Comprehensive income	1,279.3	1,135.8
Net income per share (Note 19)
Basic	2.19	1.89
Diluted	2.19	1.88

See accompanying notes to the consolidated financial statements.

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ARC RESOURCES LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the years ended December 31

(Cdn\$ millions)	Shareholders' Capital (Note 19)	Contributed Surplus	Retained Earnings	Accumulated Other Comprehensive Loss	Total Shareholders' Equity
January 1, 2024	6,268.2	36.1	1,141.4	(17.9)	7,427.8
Comprehensive income	—	—	1,124.1	11.7	1,135.8
Share-based compensation plans (Note 21)	1.1	(0.2)	—	—	0.9
Exercise of share options (Note 21)	20.8	(4.3)	—	—	16.5
Repurchase of shares for cancellation (Note 19)	(93.2)	—	(113.9)	—	(207.1)
Change in liability for share purchase commitment (Note 19)	(2.6)	—	(6.9)	—	(9.5)
Dividends declared (Note 19)	—	—	(416.2)	—	(416.2)
December 31, 2024	6,194.3	31.6	1,728.5	(6.2)	7,948.2
Comprehensive income	—	—	1,275.1	4.2	1,279.3
Share-based compensation plans (Note 21)	2.6	(1.9)	—	—	0.7
Exercise of share options (Note 21)	11.7	(1.3)	—	—	10.4
Repurchase of shares for cancellation (Note 19)	(216.8)	—	(306.1)	—	(522.9)
Change in liability for share purchase commitment (Note 19)	(1.2)	—	1.3	—	0.1
Dividends declared (Note 19)	—	—	(451.8)	—	(451.8)
December 31, 2025	5,990.6	28.4	2,247.0	(2.0)	8,264.0

See accompanying notes to the consolidated financial statements.

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ARC RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31

(Cdn\$ millions)	2025	2024
CASH FLOW FROM OPERATING ACTIVITIES
Net income	1,275.1	1,124.1
Add items not involving cash:
Unrealized loss (gain) on risk management contracts (Note 17)	253.0	(82.4)
Depletion, depreciation and amortization and impairment of property, plant and equipment (Notes 9 and 10)	1,547.2	1,360.7
Unrealized loss on foreign exchange	3.3	5.1
Gain on disposal of assets	(4.0)	(80.0)
Deferred taxes (Note 18)	98.8	130.5
Other (Note 24)	19.0	14.5
Net change in other liabilities (Note 24)	(95.4)	(19.9)
Change in non-cash working capital (Note 24)	(3.5)	(104.0)
Cash flow from operating activities	3,093.5	2,348.6
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES
Draw of long-term debt under credit facilities (Note 13)	6,095.9	7,348.0
Issuance of senior notes (Notes 6 and 13)	1,000.0	—
Issuance of term loan (Notes 6 and 13)	500.0	—
Repayment of long-term debt	(6,099.9)	(7,111.0)
Proceeds from exercise of share options	10.4	16.5
Repurchase of shares	(514.0)	(202.4)
Repayment of principal relating to lease obligations	(103.8)	(93.6)
Cash dividends paid	(444.0)	(405.7)
Change in non-cash working capital (Note 24)	4.9	4.7
Cash flow from (used in) financing activities (Note 24)	449.5	(443.5)
CASH FLOW USED IN INVESTING ACTIVITIES
Business combination (Note 6)	(1,672.1)	—
Acquisition of assets (Notes 9 and 10)	(17.8)	(13.9)
Disposition of assets	4.0	80.0
Property, plant and equipment development expenditures (Note 9)	(1,819.1)	(1,787.8)
Exploration and evaluation asset expenditures (Note 8)	(53.6)	(31.2)
Long-term investments	(3.5)	(6.8)
Change in non-cash working capital (Note 24)	26.1	(146.5)
Cash flow used in investing activities	(3,536.0)	(1,906.2)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	7.0	(1.1)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	—	1.1
CASH AND CASH EQUIVALENTS, END OF YEAR	7.0	—
The following are included in cash flow from operating activities:
Income taxes paid in cash	183.3	199.7
Interest paid in cash	129.5	117.4

See accompanying notes to the consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024

1. Structure of the Business

The principal undertakings of ARC Resources Ltd. and its subsidiaries ("ARC" or the "Company") are to carry on the business of acquiring, developing, and holding interests in crude oil and natural gas assets.

ARC was incorporated in Alberta, Canada and the Company's registered office and principal place of business is located at 1500, 308 – 4th Avenue SW, Calgary, Alberta, Canada T2P 0H7. ARC's common shares are traded on the Toronto Stock Exchange ("TSX") under the symbol ARX.

2. Basis of Preparation

These consolidated financial statements (the "financial statements") have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). All financial information is reported in millions of Canadian dollars ("Cdn\$"), unless otherwise noted. References to "US\$" are to United States dollars.

The financial statements have been prepared on a historical cost basis, except those items that are presented at fair value as detailed in the accounting policies disclosed in Note 3 "Summary of Material Accounting Policies".

All inter-entity transactions have been eliminated upon consolidation between ARC and its subsidiaries in these financial statements. ARC's operations are viewed as a single operating segment by the chief operating decision maker of the Company for the purpose of resource allocation and assessing performance.

The preparation of financial statements requires Management to use judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingencies at the date of the financial statements, and revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimated. Significant estimates and judgments used in the preparation of the financial statements are detailed in Note 5 "Management Judgments and Estimation Uncertainty".

These financial statements were authorized for issue by ARC's board of directors (the "Board") on February 5, 2026.

3. Summary of Material Accounting Policies

Fair Value Measurement

Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants in its principal or most advantageous market at the measurement date.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are further categorized using a three-level hierarchy that reflects the significance of the lowest level of inputs used in determining fair value:

• Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
• Level 2 Pricing inputs are other than quoted prices in active markets included in Level 1. Prices in Level 2 are either directly or indirectly observable as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, time value, and volatility factors, which can be substantially observed or corroborated in the marketplace.
• Level 3 Valuations in this level are those with inputs for the asset or liability that are not based on observable market data.

At each reporting date, ARC determines whether transfers have occurred between levels in the hierarchy by reassessing the level of classification for each financial asset and financial liability measured or disclosed at fair value in the financial statements based on the lowest level of input that is significant to the fair value measurement as a whole. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the categorization within the fair value hierarchy.

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Financial Instruments

Classification and Measurement of Financial Instruments

ARC's financial assets and financial liabilities are classified into two categories: Amortized Cost and Fair Value through Profit and Loss ("FVTPL"). The classification of financial assets is determined by their context in ARC's business model and by the characteristics of the financial asset's contractual cash flows. ARC does not classify any of its financial instruments as Fair Value through Other Comprehensive Income.

Financial assets and financial liabilities are measured at fair value on initial recognition, which is typically the transaction price, unless a financial instrument contains a significant financing component. Subsequent measurement is dependent on the financial instrument's classification.

• Amortized Cost

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, dividends payable, lease obligations, other deferred liabilities, and long-term debt are measured at amortized cost. The contractual cash flows received from the financial assets are solely payments of principal and interest and are held within a business model whose objective is to collect the contractual cash flows. The financial assets and financial liabilities are subsequently measured at amortized cost using the effective interest method.

• FVTPL

Long-term investments and risk management contracts are measured at FVTPL with subsequent changes in fair value charged to the consolidated statements of comprehensive income (the "statements of comprehensive income").

Embedded Derivatives

Embedded derivatives are separated from the host contract and accounted for as a derivative when a separate item with the same terms would meet the definition of a derivative, the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract, and the combined instrument is not measured at fair value with changes recognized in FVTPL.

Impairment of Financial Assets

Impairment of financial assets carried at amortized cost is determined by measuring the assets' expected credit loss ("ECL"). Accounts receivable are due within one year or less; therefore, these financial assets are not considered to have a significant financing component and a lifetime ECL is measured at the date of initial recognition. If credit risk increases significantly subsequent to initial recognition, a further lifetime ECL is required to be recognized. ECL allowances have not been recognized for cash and cash equivalents due to the virtual certainty associated with their collection.

The ECL pertaining to accounts receivable is assessed at initial recognition and this provision is re-assessed at each reporting date. ECLs are a probability-weighted estimate of possible default events related to the financial asset (over the lifetime or within 12 months after the reporting period, as applicable) and are measured as the difference between the present value of the cash flows due to ARC and the cash flows the Company expects to receive, including cash flows expected from collateral and other credit enhancements that are a part of contractual terms. The carrying amounts of financial assets are reduced by the amount of the ECL through an allowance account and losses are recognized as an impairment of financial assets in the statements of comprehensive income.

In alignment with industry practices, the Company considers its accounts receivable to be in default when the receivable is greater than 90 days past due. If the Company has pursued collection activities but has determined that the incremental cost of pursuing collection outweighs the benefits, ARC derecognizes the gross carrying amount of the financial asset and the associated allowance from the consolidated balance sheets (the "balance sheets").

Derecognition of Financial Liabilities

If an amendment to a contract or agreement comprises a substantial modification, ARC will derecognize the existing financial liability and recognize a new financial liability, with the difference recognized as a gain or loss in the statements of comprehensive income. To determine whether a modification is substantial, ARC performs quantitative and qualitative tests. Quantitatively, if the present value of the cash flows under the new terms is at least 10 per cent different than the remaining cash flows of the original liability, the modification is deemed to be

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substantial. If the difference in cash flows is less than 10 per cent, the change is evaluated qualitatively based on its specific impact to the economic risk associated with the liability.

If the modification results in the derecognition of a liability, any associated fees are recognized as part of the gain or loss. If the modification is not deemed to be substantial, any associated fees adjust the liability's carrying amount and are amortized over the remaining term.

Inventories

Product inventories are valued at the lower of cost or net realizable value on a weighted average cost basis. The cost of inventory includes all costs incurred in the normal course of business to bring each product to its present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less any expected selling costs. If the carrying amount exceeds net realizable value, an impairment is recognized. The impairment may be reversed in a subsequent period if the circumstances which caused it no longer exist and the inventory is still on hand.

Emission credits that are held for sale in the ordinary course of business are recognized as inventory and are measured at the lower of cost or net realizable value. The cost of emission credits are those required to register and make them available for sale in a liquid market. Similar to product inventories, if the carrying amount exceeds net realizable value, an impairment is recognized.

Capitalization of Exploration and Development Costs

ARC capitalizes all costs that are directly attributable to bringing an asset to the location and condition necessary for it to be capable of use in the manner intended by Management. These costs include certain overhead charges including cash and share-based compensation paid to ARC personnel dedicated to capital projects.

Exploration and Evaluation ("E&E") Assets

E&E costs are capitalized until the technical feasibility and commercial viability, or otherwise, of the relevant projects have been determined. Technical feasibility and commercial viability of E&E assets is dependent upon the assignment of a sufficient amount of economically recoverable crude oil, condensate, natural gas, and natural gas liquids reserves ("reserves") relative to the estimated potential resources available and available infrastructure to support commercial development, as well as obtaining the appropriate internal and external approvals. E&E costs may include costs of seismic and land acquisitions, technical services and studies, exploratory drilling and testing, and the estimate of any related asset retirement costs. Costs incurred prior to obtaining the legal right to explore are expensed as incurred. Assets classified as E&E may have sales of crude oil and natural gas associated with production from test wells. These operating results are recognized in the statements of comprehensive income. A depletion charge, recognized as E&E expense, is recognized on these wells. Non-producing assets classified as E&E are not depleted.

When a project classified as E&E is determined to be technically feasible and commercially viable, the cost is transferred from E&E to property, plant and equipment ("PP&E") on the balance sheets. The assets are assessed for impairment prior to any such transfer, by comparing the carrying amount to the greater of the assets' fair value less costs of disposal or value in use. If a decision is made by Management not to continue an E&E project, the E&E asset is derecognized and all associated costs are charged to the statements of comprehensive income in E&E expense at that time.

Property, Plant and Equipment

Items of PP&E, which include crude oil and natural gas development and production assets and corporate assets, are measured at cost less accumulated depletion, depreciation and amortization ("DD&A") and accumulated impairment charges.

Business Combinations and Goodwill

ARC accounts for business combinations using the acquisition method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the acquisition date. Identifiable assets and liabilities assumed are measured and recognized at their fair value at the date of the acquisition, with the exception of income taxes, right-of-use ("ROU") assets, and lease obligations. Any deferred tax asset or liability arising from a business combination is recognized at the acquisition date. Transaction costs associated with a business combination are expensed as incurred. Results of acquisitions are included in the financial statements from the closing date of the acquisition. Any excess of purchase price over the fair value of net assets is recognized as goodwill. Subsequent measurement of goodwill is stated at cost less any accumulated impairment charges.

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Impairment of Non-Financial Assets

PP&E

ARC's PP&E is grouped into cash-generating units ("CGUs") for the purpose of assessing impairment. A CGU is a grouping of assets that generate cash inflows independently of other assets held by the Company.

CGUs are reviewed at each reporting date for indicators of potential impairment and, in the case of previously impaired CGUs, reversal of impairment. If such indicators exist, an impairment test is performed by comparing the CGU's carrying value to its recoverable amount, defined as the greater of a CGU's fair value less costs of disposal and its value in use. Any excess of carrying value over the recoverable amount is recognized in the statements of comprehensive income as impairment of property, plant and equipment.

If there is an indicator that a previously recognized impairment charge may no longer exist or may have decreased, the recoverable amount of the relevant CGU is calculated and compared against the carrying amount. An impairment charge is reversed to the extent that the asset's recoverable amount does not exceed the carrying amount that would have been determined, net of accumulated DD&A, if no impairment charge had been recognized. A reversal of impairment of PP&E is recognized in the statements of comprehensive income as reversal of impairment of property, plant and equipment.

E&E

E&E assets are assessed for impairment at the operating segment level and are reviewed at each reporting date for indicators of potential impairment, or in the case of previously impaired E&E assets, reversal of impairment. An impairment charge on E&E assets is recognized if the carrying value of the E&E assets exceeds the recoverable amount. Impairment of E&E assets is recognized in the statements of comprehensive income as E&E expense.

If there is an indicator that a previously recognized impairment charge may no longer exist or may have decreased, the recoverable amount of the relevant E&E asset is calculated and compared against the carrying amount. An impairment charge is reversed to the extent that the asset's recoverable amount does not exceed the carrying amount that would have been determined, net of accumulated DD&A if applicable, if no impairment charge had been recognized. A reversal of impairment of E&E assets is recognized in the statements of comprehensive income as a recovery of E&E expense.

Goodwill

Goodwill is assessed for impairment at the operating segment level. Goodwill has not been attributed to individual CGUs as ARC believes the goodwill it has acquired enhanced the value of all of its pre-existing CGUs through operational efficiencies. Goodwill is reviewed at each reporting date for indicators of potential impairment. If such indicators exist, an impairment test is performed. Additionally, goodwill is tested for impairment annually. An impairment on goodwill is recognized if the combined carrying amount of the CGUs, including goodwill, exceeds the aggregate recoverable amount of the CGUs, determined as the greater of the combined fair value less costs of disposal and its value in use. Impairment of goodwill is recognized in the statements of comprehensive income as impairment of goodwill. Once recognized, impairment of goodwill is not eligible for reversal.

Lease Arrangements

As lessee, ARC recognizes an ROU asset and a corresponding lease obligation on the balance sheets when a leased asset becomes available for use. Interest associated with the lease obligation is recognized over the lease period with a corresponding increase to the underlying lease obligation. ROU assets are depreciated on a straight-line basis over the shorter of the asset's useful life and the lease term. Depreciation on ROU assets is recognized in the statements of comprehensive income as DD&A. Where appropriate, depreciation charges to ROU assets may be capitalized as additions to either E&E or PP&E.

ROU assets and lease obligations are initially measured on a present value basis. Lease obligations are measured as the net present value of the lease payments which may include: fixed lease payments, variable lease payments based on an index or a rate, and amounts expected to be payable under residual value guarantees and payments to exercise an extension or termination option, if ARC is reasonably certain to exercise either of those options. ROU assets are measured at cost, which is composed of the amount of the initial measurement of the lease obligation, less any incentives received, plus any lease payments made at, or before, the commencement date and initial direct costs and asset restoration costs, if any. The rate implicit in the lease is used to determine the present value of the liability and ROU asset arising from a lease, unless this rate is not readily determinable, in which case the Company's incremental borrowing rate is used.

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ROU assets and lease obligations are remeasured when there is a modification to the underlying contract terms, a change in the future lease payments arising from a change in an index or rate, if there is a change in the amount expected to be payable under a residual value guarantee, or if there is a change in the assessment of whether the Company will exercise a purchase extension or termination option.

Short-term leases and leases of low-value assets are not recognized on the balance sheets and lease payments are instead recognized in the statements of comprehensive income as incurred. For certain classes of leases, ARC does not separate lease and non-lease components, accounting for these leases as a single lease component.

Asset Retirement Obligation ("ARO")

Provisions for decommissioning and restoration obligations associated with ARC's E&E and PP&E assets are recognized as ARO. ARO is measured as the present value of Management's best estimate of expenditures required to settle the liability at the end of the asset's useful life. On a periodic basis, Management reviews these estimates and changes, if any, are applied prospectively. These changes are recognized as an increase or decrease to the liability, with a corresponding increase or decrease to the carrying amount of the related asset. The capitalized amount in PP&E is depreciated on a unit-of-production basis over the life of the associated proved plus probable reserves. The long-term liability is increased each reporting period with the passage of time and the associated accretion charge is recognized in the statements of comprehensive income. Periodic revisions to the liability-specific risk-free discount rate, estimated timing of cash flows, or to the estimated undiscounted cost can also result in an increase or decrease to the ARO and the related asset. Actual costs incurred upon settlement of the obligation are recorded against the ARO to the extent of the liability recognized.

Provisions and Contingent Liabilities

Provisions are recognized when ARC has a present legal or constructive obligation as a result of past events, it is probable that an outflow of economic resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

A provision for onerous contracts is recognized when the expected economic benefits to be derived by ARC from a contract are lower than the unavoidable cost of meeting the obligations under the contract. The provision is measured at the lower of the expected cost of terminating the contract and the present value of the expected net cost of the remaining term of the contract. Before a provision is established, ARC first recognizes any impairment charge on assets associated with the onerous contract.

A contingent liability is disclosed when ARC has a possible obligation arising from a past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly under its control, or when ARC has a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

Share Capital

Common shares are classified as equity. Costs directly attributable to the issuance of common shares are recognized as a deduction from equity, net of tax. When ARC repurchases its own common shares, share capital is reduced by the average carrying value of the shares repurchased. If the average carrying value of the shares exceeds the purchase price including any associated fees and taxes, the difference will be recognized as contributed surplus. If the purchase price exceeds the average carrying value of the shares, any previous contributed surplus related to such transactions is reversed. To the extent there is none, the difference is recognized as a reduction to retained earnings. Shares are cancelled upon repurchase.

Revenue Recognition

ARC principally generates revenue from the sale of commodities, which include crude oil, natural gas, condensate, and natural gas liquids ("NGLs"). Revenue associated with the sale of commodities is recognized when control is transferred from ARC to its customers. ARC's commodity sale contracts represent a series of distinct transactions. ARC considers its performance obligations to be satisfied and control to be transferred when all of the following conditions are satisfied:

• ARC has transferred title and physical possession of the commodity to the buyer;
• ARC has transferred the significant risks and rewards of ownership of the commodity to the buyer; and
• ARC has the present right to payment.

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Revenue represents ARC's share of commodity sales net of royalty obligations to governments and other mineral interest owners. ARC sells its production pursuant to fixed and variable-priced contracts. The transaction price for variable-priced contracts is based on the commodity price, adjusted for quality, location, or other factors, whereby each component of the pricing formula can be either fixed or variable, depending on the contract terms. Under these contracts, the Company is required to deliver a fixed commodity volume to the contract counterparty. Revenue is recognized when a unit of production is delivered to the contract counterparty. The amount of revenue recognized is based on the agreed upon transaction price, whereby any variability in revenue is related specifically to the Company's efforts to deliver production. Therefore, the resulting revenue is allocated to the production delivered in the period during which the variability occurs. As a result, none of ARC's variable revenue is considered to be constrained.

ARC also purchases commodity products from third parties and subsequently sells these products to its customers. These transactions are presented as separate revenue and expense items in the statements of comprehensive income.

At times, ARC may exchange like commodities with other entities to facilitate ARC's sales to its customers. These non-monetary exchanges lack commercial substance and do not give rise to separate recognition of revenue and expense items in the statements of comprehensive income.

Depletion, Depreciation and Amortization

PP&E and, where applicable, E&E assets are organized into groups of assets with similar useful lives for the purposes of performing DD&A calculations. Depletion expense is measured using the unit-of-production method based on:

• total estimated proved plus probable reserves calculated in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101");
• total capitalized costs plus estimated future development costs of proved plus probable reserves, including future estimated asset retirement costs; and
• relative volumes of reserves and production, before royalties, converted at the energy equivalent conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil.

Depreciation and amortization of corporate assets is recognized on a straight-line basis over the estimated useful lives of the related assets, which range from three to 20 years.

Share-based Compensation Plans

ARC's share-based compensation plans are primarily cash-settled awards. Liabilities associated with cashsettled awards are determined based on the fair value of the award at grant date and are subsequently revalued at each period end. This valuation incorporates the period-end share price, dividends declared during the period, the number of awards outstanding at each period end, and certain Management estimates, such as a performance multiplier and estimated forfeiture. Compensation expense is recognized in the statements of comprehensive income over the relevant service period with a corresponding increase or decrease in accrued liabilities. Classification of the associated short-term and long-term liabilities is dependent on the expected payout dates of the individual awards.

Income Taxes

Provision for, or recovery of, income tax comprise current and deferred income taxes and is recognized in the statements of comprehensive income, except to the extent that it relates to a business combination or items recognized directly in equity or in Other Comprehensive Income ("OCI").

Current tax is the expected tax payable on taxable income for the year, using enacted or substantively enacted tax rates at the reporting date, and any adjustment to tax payable in respect of previous years. ARC recognizes the financial statement impact of a tax filing position when it is probable that the position will be sustained upon audit. The liability is measured based on an assessment of possible outcomes and their associated probabilities. Claims made for scientific research and experimental development ("SR&ED") tax credits are offset against current tax expense.

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Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred income taxes are not recognized for:

• • temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and
• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognized for unused tax losses, tax credits, and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Earnings per Share

Basic earnings per share is calculated using the weighted average number of common shares outstanding during the period.

Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding for the dilutive common shares related to the company's share-based compensation plans which could have a dilutive impact on net income during the year. The number of shares included is computed using the treasury stock method, whereby the common shares are assumed to be purchased at the average market price.

Foreign Currency Translation

Monetary assets and liabilities denominated in a foreign currency are translated at the rate of exchange in effect at the reporting date. Revenues and expenses are translated at the period average rates of exchange. Translation gains and losses are recognized in the statements of comprehensive income in the period in which they arise.

The financial statements of subsidiaries with a functional currency other than the Canadian dollar are translated into Canadian dollars. The assets and liabilities are translated at the exchange rates at the reporting date. The revenue and expenses are translated at the exchange rates that approximate the dates of those transactions. Foreign currency differences are recognized in OCI and accumulated in the translation reserve, unless or until such time as the subsidiary is disposed or liquidated, upon which the cumulative translation adjustment is recognized in the statements of comprehensive income.

ARC's functional and presentation currency is Canadian dollars.

4. Future Accounting Pronouncements

Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

In May 2024, the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures relating to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets. The amendments are effective on January 1, 2026, but will not have a material impact on ARC's financial statements.

IFRS 18 Presentation and Disclosure in Financial Statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18"), which will replace IAS 1 and includes requirements for all entities applying IFRS Accounting Standards for the presentation and disclosure of information in the financial statements. IFRS 18 will introduce new totals, subtotals, and categories for income and expenses in the statements of comprehensive income, as well as classification changes to the consolidated statements of cash flows. IFRS 18 also requires disclosure of management-defined performance measures ("MPMs") and adds requirements regarding the aggregation and disaggregation of certain information. The standard will be effective on January 1, 2027 and it must be adopted on a retrospective basis.

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ARC is currently assessing the required adjustments to its chart of accounts, along with other enterprise system change requirements. Draft financial statements are being prepared to quantify the impact of changes, as are draft MPMs and the related disclosures. Throughout 2026, ARC will finalize its drafted disclosures, prepare retrospective disclosures for the comparative period, and continue communication with Management and other stakeholders.

5. Management Judgments and Estimation Uncertainty

The timely preparation of financial statements in accordance with IFRS Accounting Standards requires Management to use judgments, estimates, and assumptions. These estimates and judgments are subject to change and actual results could differ from those estimated. The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingencies are discussed below.

Crude Oil, Condensate, Natural Gas, and Natural Gas Liquids Reserves

There are a number of inherent uncertainties associated with estimating reserves. Reserve estimates are based on forward commodity price estimates, expected future rates of production, future production costs, and future development expenditures, all of which are subject to many uncertainties, interpretations, and judgments. Estimates reflect market and regulatory conditions existing at December 31, 2025 and 2024, which could differ significantly from other points in time throughout the year, or future periods. Reserves have been evaluated at December 31, 2025 and 2024 by ARC's independent qualified reserves evaluator ("IQRE").

Determination of Cash-Generating Units

Determination of what constitutes a CGU is subject to Management judgment. The recoverability of development and production asset carrying values are assessed at the CGU level. The asset composition of a CGU can directly impact the recoverability of the assets included therein. Geological formation, shared infrastructure and marketing arrangements, product type, geographic location, and internal management are key factors considered when grouping ARC's crude oil and natural gas assets into CGUs.

Recoverability of Asset Carrying Values

Management applies judgment in assessing the existence of indicators of impairment and reversal of impairment based on various internal and external factors. The recoverable amount of a CGU or of an individual asset is determined as the greater of its fair value less costs of disposal and its value in use. The key input estimates ARC applies in determining an acceptable range of recoverable amounts include forward commodity price estimates, expected future rates of production, future production costs, future development expenditures, and discount rate.

In estimating the recoverable amount of a CGU and operating segment, the following information is incorporated:

• The net present value of the after-tax cash flows from proved plus probable reserves of each CGU based on reserves estimated by ARC's IQRE. The reserve evaluation is based on an estimated remaining reserve life up to a maximum of 50 years.
• The fair value of undeveloped land based on estimates provided by ARC's independent land evaluator at period end.
• Data pertaining to ongoing and completed transactions within the industry on assets with similar geological and geographic characteristics within the relevant CGU.

Assumptions that are valid at the time of reserve estimation may change significantly when new information becomes available. Changes in forward commodity price estimates, future production costs, future development expenditures, or expected future rates of production may change the economic status of reserves and may ultimately result in reserves being revised. Additionally, the evolving worldwide demand for energy and the global advancement of alternative sources of energy could result in a change in assumptions used to determine the recoverable amount and could affect the carrying value of certain assets. The timing of when, and the degree to which, global energy markets transition from carbon-based sources to alternative energy sources is highly uncertain. Other factors could impact the following key input estimates:

• Crude oil and natural gas prices – Forward commodity price estimates are used in the discounted cash flow model. These prices are adjusted for quality differentials, heat content, and distance to market. Commodity prices may be impacted by multiple factors including supply and demand fundamentals, inventory levels, exchange rates, weather, economic, geopolitical factors, tariffs, a global pandemic or

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natural disaster and the respective responses from various levels of government, and the rate at which global energy markets transition to a lower carbon-based economy. Pricing assumptions incorporate the legislated carbon tax based on prevailing market conditions.

• Discount rate – The discount rate used to calculate the net present value of cash flows is based on estimates of an approximate industry peer group weighted average cost of capital as appropriate for each CGU being tested. Changes in the general economic environment could result in significant changes to this estimate.

Depletion of Crude Oil and Natural Gas Assets

Depletion of crude oil and natural gas assets is determined based on total proved plus probable reserves as well as future development expenditures as estimated by ARC's IQRE.

E&E Assets

The accounting for E&E assets requires Management to make judgments as to whether these investments have discovered a sufficient amount of economically recoverable reserves, which requires the quantity and realizable value of such reserves to be estimated. Previous estimates can be revised as new information becomes available.

E&E assets remain capitalized as long as sufficient progress is being made in assessing whether the recovery of the reserves is technically feasible and commercially viable. The concept of "sufficient progress" is a judgmental area, and it is possible to have E&E assets remain classified as such for several years while additional E&E activities are carried out or the Company seeks government, regulatory, or internal approval for development plans. E&E assets are subject to ongoing Management review to confirm the continued intent to establish the technical feasibility and commercial viability of the discovery. When Management is making this assessment, changes to project economics, expected capital investments and production costs, results of other operators in the region, and access to infrastructure and potential infrastructure expansions are important factors considered.

Lease Arrangements

Management applies judgment in reviewing each of its contractual arrangements to determine whether the arrangement contains a lease. Leases that are recognized are subject to further Management judgment and estimation in various areas specific to the arrangement, including lease term and discount rate. In determining the lease term to be recognized, Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option. Where the discount rate implicit in a lease obligation is not readily determinable, the rate is estimated using ARC's company-specific incremental borrowing rate. This rate represents the rate that ARC would incur to obtain the funds necessary to purchase an asset of a similar value, with similar payment terms and security in a similar economic environment.

Provisions and Contingent Liabilities

The determination of provisions and disclosure of contingent liabilities involves Management judgments about the probability of outcomes of future events and estimates on timing and amount of expected future cash flows. Such disclosure could relate to predicted outcomes of ongoing legal matters, ongoing or completed asset dispositions, and current regulatory processes.

Asset Retirement Obligation

The provision for site restoration and abandonment for ARC's PP&E and E&E assets is based on estimated inflation and discount rates, current legal requirements, technology, cost of services, and expected plans for remediation expenditures. Actual costs and timing of cash outflows can differ from estimates because of changes in laws and regulations, public expectations, and market conditions, all of which could be influenced by the rate at which global energy markets transition to a lower carbon-based economy. Additionally, further discovery, analysis of site conditions, and changes in technology could also cause estimates to differ from actual costs.

Financial Instruments

The estimated fair value of derivative financial instruments is reliant upon a number of estimated variables including forward curves for commodity prices, foreign exchange rates and interest rates, as well as volatility curves, and risk of non-performance. A change in any one of these factors could result in a change to the overall estimated valuation of the instrument.

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Management also applies judgment in assessing and determining when an embedded derivative exists within a host contract, if the embedded derivative is closely related to the host contract, and if determined not to be closely related, the unobservable inputs used to determine its fair value.

Income Taxes

Tax regulations and legislation are subject to change and there are differing interpretations requiring Management judgment. Deferred tax assets are recognized when it is considered probable that deductible temporary differences will be recovered in future periods, which requires Management judgment. Deferred tax liabilities are recognized when it is considered probable that temporary differences will be payable to tax authorities in future periods, which requires Management judgment. Income tax filings are subject to audits and re-assessments and changes in facts, circumstances, and interpretations of the standards and legislation may result in a material increase or decrease in the Company's provision for income taxes.

Business Combinations

Management judgment may be required to identify one of the combining entities as the acquirer for accounting purposes and then to determine the fair value of the net assets acquired. The determination of fair value is estimated based on information available at the date of acquisition and requires Management to make assumptions and estimates about future events. The assumptions and estimates with respect to determining the fair value of PP&E and E&E assets using a fair value less cost of disposal model generally require significant judgment and include forward commodity price estimates, expected future rates of production, future production costs, future development expenditures, and discount rate. Assumptions are also required to determine the fair value of the ARO associated with the assets, as well as any ROU assets and associated lease obligations, other deferred liabilities, and long-term incentive compensation liability.

Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets, liabilities, and goodwill (or net assets acquired in excess of purchase consideration). Future net income will be affected as the fair value on initial recognition impacts future DD&A, asset impairment or reversal, or goodwill impairment.

6. Business Combination

On July 2, 2025, ARC completed an acquisition of condensate-rich Montney assets in the Kakwa region in Alberta (the "Kakwa Assets") from Strathcona Resources Ltd. for total cash consideration of \$1.7 billion (the "Transaction"). The Transaction has been recognized as a business combination using the acquisition method in accordance with the accounting policies disclosed in Note 3 "Summary of Material Accounting Policies".

The Transaction expands ARC's holdings in its core Kakwa region, increases its drilling inventory in the area, increases ARC's owned-and-operated infrastructure, and presents operational and financial synergies with ARC's contiguous operations.

Purchase Price Allocation

The following purchase price allocation is based on Management's best estimate of the assets acquired and liabilities assumed and is subject to change based upon finalizing the value of the net assets acquired.

Cash consideration	1,672.1
Identifiable net assets
Property, plant and equipment	1,702.6
Right-of-use asset	50.8
Lease obligation	(50.8)
Asset retirement obligation	(30.5)
Total identifiable net assets	1,672.1

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Liquidity and Commitments

The Transaction was financed with proceeds from the offering of \$1.0 billion aggregate principal amount of senior unsecured notes that closed in June 2025, a \$500.0 million two-year term loan, and borrowings under ARC's revolving credit facility, for which the borrowing capacity was increased from \$1.7 billion to \$2.0 billion. There are no new financial covenants and no changes to ARC's existing debt covenants. For more information, refer to Note 13 "Long-term Debt".

Upon closing of the Transaction, ARC assumed approximately \$190.0 million of additional commitments relating to transportation and natural gas processing.

Revenue and Net Income Contribution

As a result of the Transaction, ARC's total revenue and net income increased by \$205.7 million and \$8.5 million, respectively, for the year ended December 31, 2025.

If the Transaction had occurred on January 1, 2025, pro forma total revenue and net income from the Kakwa Assets is estimated to be approximately \$445.0 million and \$55.0 million, respectively, for the year ended December 31, 2025; however, these estimates may not be representative of actual results. The pro forma net income estimates DD&A based on ARC's reserve estimates for the acquired assets, and assumes that financing of the acquisition would have occurred on January 1, 2025.

Transaction costs were not significant and were recognized in general and administrative expense in the statements of comprehensive income.

7. Financial Assets and Credit Risk

Credit risk is the risk of financial loss to ARC if a counterparty to a product sales contract, financial instrument, jointly controlled operation, or other financial transaction fails to meet its contractual obligations. At December 31, 2025, ARC was exposed to credit risk with respect to its accounts receivable and risk management contracts.

Credit risk is typically considered to be very low for the Company's trade accounts receivable and risk management contracts due to ARC's processes for selecting only credit-worthy counterparties and continuously monitoring its credit exposure. ARC's accounts receivable primarily relate to commodity sales and are subject to typical industry credit risks.

ARC manages its credit risk by:

• entering into sales contracts with only established, credit-worthy counterparties as verified by a thirdparty rating agency, through internal evaluation or by requiring security such as letters of credit or parental guarantees;
• maintaining a credit policy that limits excessive exposure to any one counterparty at a given time;
• restricting cash equivalent investments and risk management transactions to counterparties that are not less than investment-grade;
• subjecting all counterparties to regular credit reviews; and
• continuously monitoring its credit exposure.

The majority of credit exposure on accounts receivable at December 31, 2025 pertains to accrued commodity sales of December 2025 production volumes. ARC transacts with a number of crude oil and natural gas marketing companies and commodity end users ("commodity purchasers"), the majority of which have investment-grade credit rating. Commodity purchasers typically settle their obligations to ARC by the 25th day of the month following production. Joint interest receivables are typically collected within one to three months following production.

At December 31, 2025, 87 per cent of ARC's commodity sales accounts receivable were with customers who had a public investment-grade rating (84 per cent at December 31, 2024). Nine per cent (nine per cent at December 31, 2024) were with customers who do not have a public debt rating, but whom ARC regards as financially equivalent to investment-grade. The remaining four per cent (seven per cent at December 31, 2024) of commodity sales accounts receivable were with customers who do not hold a public investment-grade rating.

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For both the years ended December 31, 2025 and 2024, ARC had two external customers that each constituted more than 10 per cent of commodity sales from production. Sales to these customers were \$735.3 million and \$707.9 million for the year ended December 31, 2025 (\$679.3 million and \$596.9 for the year ended December 31, 2024), respectively.

The following table details the composition of ARC's accounts receivable at December 31, 2025 and December 31, 2024:

Accounts Receivable Composition (1)	December 31, 2025	December 31, 2024
Commodity sales	676.7	607.1
Joint interest	2.5	2.2
Other (2)	70.0	81.7
Balance	749.2	691.0

⁽¹⁾ Net of provision for ECL.

The total ECL provision recognized in ARC's accounts receivable balance at December 31, 2025 was \$4.1 million (\$6.9 million at December 31, 2024).

The aging of ARC's accounts receivable net of provision for ECL at December 31, 2025 and December 31, 2024 is as follows:

Accounts Receivable Aging	December 31, 2025	December 31, 2024
Current (less than 30 days)	712.1	675.0
31 - 60 days	2.5	0.6
61 - 90 days	8.8	9.5
Past due (greater than 90 days) (1)	25.8	5.9
Balance	749.2	691.0

⁽¹⁾ Amounts greater than 90 days at December 31, 2025, primarily relate to a reimbursement of natural gas transportation costs and are still considered collectible.

Maximum credit risk is calculated as the total recorded value, before an ECL provision, of accounts receivable and risk management contracts at the balance sheet date. For additional information on financial instruments, refer to Note 17 "Financial Instruments and Market Risk Management".

8. Exploration and Evaluation Assets

Carrying Amount
Balance, January 1, 2024	307.6
Additions	31.2
Change in asset retirement cost	(0.7)
Balance, December 31, 2024	338.1
Additions	53.6
Acquisitions	49.7
Change in asset retirement cost	1.0
Balance, December 31, 2025	442.4

During the year ended December 31, 2025, ARC executed an agreement for the earning and development of land in the Attachie area which has been recognized as an acquisition of E&E.

⁽²⁾ Other receivables primarily consist of income taxes and reimbursement of certain expenditures.

{24}------------------------------------------------

9. Property, Plant and Equipment

Cost	Development and Production Assets	Corporate Assets	Total
Balance, January 1, 2024	17,167.7	131.3	17,299.0
Additions	1,790.3	24.0	1,814.3
Acquisitions	21.5	—	21.5
Change in asset retirement cost	(17.1)	—	(17.1)
Assets disposed in period	(12.4)	—	(12.4)
Balance, December 31, 2024	18,950.0	155.3	19,105.3
Acquired through a business combination (Note 6)	1,702.6	—	1,702.6
Additions	1,833.0	22.1	1,855.1
Acquisitions	7.1	—	7.1
Change in asset retirement cost	32.6	—	32.6
Balance, December 31, 2025	22,525.3	177.4	22,702.7
Accumulated DD&A
Balance, January 1, 2024	(7,351.0)	(111.5)	(7,462.5)
DD&A	(1,261.4)	(9.1)	(1,270.5)
Impairment	(3.2)	—	(3.2)
Accumulated DD&A disposed in period	4.8	—	4.8
Balance, December 31, 2024	(8,610.8)	(120.6)	(8,731.4)
DD&A	(1,447.4)	(9.5)	(1,456.9)
Balance, December 31, 2025	(10,058.2)	(130.1)	(10,188.3)
Carrying Amounts
Balance, December 31, 2024	10,339.2	34.7	10,373.9
Balance, December 31, 2025	12,467.1	47.3	12,514.4

For the year ended December 31, 2025, \$44.3 million of overhead charges, including share-based compensation, were capitalized to PP&E (\$59.6 million for the year ended December 31, 2024). Future development costs of \$11.3 billion were included in the determination of DD&A for the year ended December 31, 2025 (\$10.3 billion for the year ended December 31, 2024).

During the year ended December 31, 2025, ARC disposed of certain non-core, non-Montney assets for cash proceeds of \$4.0 million, and recognized a gain on disposal for the same amount in the statements of comprehensive income.

Subsequent to December 31, 2025, ARC executed an agreement to purchase assets in the Kakwa area of Alberta for approximately \$160.0 million. The transaction is expected to close in February 2026.

During the year ended December 31, 2024, ARC disposed of certain non-core, non-Montney assets for cash proceeds of \$80.0 million, and recognized a gain on disposal for the same amount in the statements of comprehensive income. Additionally, ARC exchanged certain assets with no gain on disposition or impairment recognized.

Goodwill

At December 31, 2025 and 2024, ARC conducted impairment tests of its goodwill. The carrying value of goodwill at December 31, 2025 and 2024 was not determined to be impaired as the combined recoverable amount of ARC's CGUs exceeded the combined carrying value of ARC's operating segment using a discount rate of 11.0 per cent. Reasonably possible changes of key assumptions inherent in the estimate of the recoverable amount of ARC's operating segment, such as a one per cent increase in the discount rate or a 10 per cent decrease in forecasted commodity prices, would not result in an impairment of goodwill.

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The following table details the forward pricing used in estimating the recoverable amounts of ARC's operating segment at December 31, 2025:

	Edmonton Light Crude Oil	WTI Crude Oil	AECO Natural Gas	NYMEX Henry Hub Natural Gas	Exchange Rates
Year	(Cdn\$/bbl) (1)	(US\$/bbl) (1)	(Cdn\$/MMBtu) (1)	(US\$/MMBtu) (1)	Cdn\$/US\$ (1)
2026	77.54	59.92	3.00	3.74	0.73
2027	83.60	65.10	3.30	3.78	0.74
2028	90.18	70.28	3.49	3.85	0.74
2029	92.32	71.93	3.58	3.93	0.74
2030	94.17	73.37	3.65	4.01	0.74
2031	96.06	74.84	3.72	4.09	0.74
2032	97.98	76.34	3.80	4.17	0.74
2033	99.93	77.87	3.88	4.26	0.74
2034	101.93	79.42	3.95	4.34	0.74
2035	103.97	81.01	4.03	4.43	0.74
Thereafter at	+2.0% per year	+2.0% per year	+2.0% per year	+2.0% per year	0.74

⁽¹⁾ Source: GLJ Ltd., Sproule ERCE, McDaniel & Associates Consultants Ltd. average price forecast at January 1, 2026.

The following table details the forward pricing used in estimating the recoverable amounts of ARC's operating segment at December 31, 2024:

	Edmonton Light Crude Oil	WTI Crude Oil	AECO Natural Gas	NYMEX Henry Hub Natural Gas	Exchange Rates
Year	(Cdn\$/bbl) (1)	(US\$/bbl) (1)	(Cdn\$/MMBtu) (1)	(US\$/MMBtu) (1)	Cdn\$/US\$ (1)
2025	94.79	71.58	2.36	3.31	0.71
2026	97.04	74.48	3.33	3.73	0.73
2027	97.37	75.81	3.48	3.85	0.74
2028	99.80	77.66	3.69	3.93	0.74
2029	101.79	79.22	3.76	4.01	0.74
2030	103.83	80.80	3.83	4.09	0.74
2031	105.91	82.42	3.91	4.17	0.74
2032	108.02	84.06	3.99	4.26	0.74
2033	110.19	85.75	4.07	4.34	0.74
2034	112.39	87.46	4.15	4.43	0.74
Thereafter at	+2.0% per year	+2.0% per year	+2.0% per year	+2.0% per year	0.74

⁽¹⁾ Source: GLJ Ltd., Sproule, McDaniel & Associates Consultants Ltd. average price forecast at January 1, 2025.

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10. Right-of-Use and Other Long-term Assets

		Leases		Other
		Equipment and		Service
Cost	Buildings	Vehicles	Facilities	Contracts	Total
Balance, January 1, 2024	40.2	88.9	1,157.9	8.2	1,295.2
Additions	—	30.0	—	18.9	48.9
Modifications	—	4.9	—	—	4.9
Balance, December 31, 2024	40.2	123.8	1,157.9	27.1	1,349.0
Acquired through a business combination (Note 6)	—	—	50.8	—	50.8
Additions	—	87.8	—	2.2	90.0
Modifications	(1.5)	4.6	—	—	3.1
Balance, December 31, 2025	38.7	216.2	1,208.7	29.3	1,492.9
Accumulated Depreciation
Balance, January 1, 2024	(23.9)	(54.7)	(195.0)	(5.6)	(279.2)
Depreciation (1)	(1.8)	(29.9)	(80.4)	(0.9)	(113.0)
Balance, December 31, 2024	(25.7)	(84.6)	(275.4)	(6.5)	(392.2)
Depreciation (1)	(1.2)	(39.9)	(85.3)	(1.9)	(128.3)
Balance, December 31, 2025	(26.9)	(124.5)	(360.7)	(8.4)	(520.5)
Carrying Amounts
Balance, December 31, 2024	14.5	39.2	882.5	20.6	956.8
Balance, December 31, 2025	11.8	91.7	848.0	20.9	972.4

⁽¹⁾ Includes \$36.0 million of depreciation on equipment and vehicle ROU assets capitalized to PP&E for the year ended December 31, 2025 (\$26.5 million for the year ended December 31, 2024).

ARC's ROU assets primarily comprise office space, equipment used in operations including drilling rigs and camps, vehicles, and third-party processing facilities and gathering infrastructure.

During the year ended December 31, 2025, ARC added ROU assets related to equipment used in ARC's operations and acquired ROU assets through a business combination related to third-party natural gas gathering infrastructure. Other long-term assets include certain service arrangements whereby the cost will be amortized into income through transportation expense over the terms of the agreements.

11. Financial Liabilities and Liquidity Risk

Liquidity risk is the risk that ARC will not be able to meet its financial obligations as they become due. ARC actively manages its liquidity at a reasonable cost through strategies such as continuously monitoring forecast and actual cash flows from operating, financing, and investing activities, and available credit and working capital facilities under existing banking arrangements. Management believes that future cash flows generated from these sources will be adequate to settle ARC's financial liabilities. Refer to Note 13 "Long-Term Debt" for further details on available amounts under existing banking arrangements and Note 16 "Capital Management" for further details on ARC's capital management objectives and policies.

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The following tables detail the undiscounted cash flows and contractual maturities of ARC's financial liabilities at December 31, 2025 and December 31, 2024:

As at December 31, 2025	Undiscounted Cash Flows (1)	1 Year	2-3 Years	4-5 Years	Beyond 5 Years
Accounts payable and accrued liabilities (2)	672.1	672.1	—	—	—
Dividends payable	120.0	120.0	—	—	—
Share-based compensation (3)	106.1	78.0	28.1	—	—
Risk management contracts	355.7	—	1.4	93.4	260.9
Lease obligations	1,302.6	161.9	273.3	262.4	605.0
Long-term debt	2,888.0	450.0	1,438.0	—	1,000.0
Interest payments	288.3	63.9	107.3	77.8	39.3
Total financial liabilities	5,732.8	1,545.9	1,848.1	433.6	1,905.2
As at December 31, 2024	Undiscounted Cash Flows (1)	1 Year	2-3 Years	4-5 Years	Beyond 5 Years

As at December 31, 2024	Undiscounted Cash Flows (1)	1 Year	2-3 Years	4-5 Years	Beyond 5 Years
Accounts payable and accrued liabilities (2)	565.3	565.3	—	—	—
Dividends payable	112.2	112.2	—	—	—
Share-based compensation (3)	136.2	60.0	76.2	—	—
Risk management contracts	96.0	1.0	—	29.5	65.5
Lease obligations	1,299.2	141.8	237.0	227.8	692.6
Long-term debt	1,392.0	—	842.0	—	550.0
Interest payments	139.8	29.7	43.4	38.1	28.6
Total financial liabilities	3,740.7	910.0	1,198.6	295.4	1,336.7

⁽¹⁾ The undiscounted cash flows equal the carrying value, with the exception of lease obligations, risk management contracts, and long-term debt.

12. Lease Arrangements

The following table details the movement in ARC's lease obligations for the years ended December 31, 2025 and 2024:

Carrying Amount
Balance, January 1, 2024	1,059.8
Additions	30.0
Modifications	5.1
Interest expense	53.6
Repayments	(147.2)
Balance, December 31, 2024	1,001.3
Acquired through a business combination (Note 6)	50.8
Additions	82.8
Modifications	3.1
Interest expense	51.4
Repayments	(155.2)
Balance, December 31, 2025	1,034.2
Lease obligations due within one year	112.1
Lease obligations due beyond one year	922.1

⁽²⁾ Excludes the portion of accrued cash obligations associated with share-based compensation anticipated to be settled within one year, as well as interest payable at December 31, 2025 and December 31, 2024.

⁽³⁾ Accrued cash obligations associated with share-based compensation.

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ARC's lease obligations primarily comprise office space, equipment used in operations including drilling rigs and camps, vehicles, and third-party processing facilities and gathering infrastructure.

During the year ended December 31, 2025, ARC added lease obligations related to equipment used in ARC's operations. ARC also acquired lease obligations through a business combination related to third-party natural gas gathering infrastructure.

Payments recognized in the financial statements relating to short-term leases and leases of low-value assets for the year ended December 31, 2025 were \$1.8 million (\$0.8 million for the year ended December 31, 2024). ARC's short-term leases and leases of low-value assets consist of leased equipment for operations and office equipment. Variable lease payments not included in the calculation of ARC's lease obligations were \$2.6 million for the year ended December 31, 2025 (\$2.4 million for the year ended December 31, 2024).

The majority of ARC's lease arrangements are effective for periods of one to 11 years but may have extension options. Potential future undiscounted cash outflows of \$795.6 million have not been included in the measurement of ARC's lease obligations at December 31, 2025 and December 31, 2024 because it is not reasonably certain that the leases will be extended.

To optimize lease costs during the contract period, ARC may provide residual value guarantees in relation to certain leases. At December 31, 2025, \$6.9 million of guaranteed residual value is not expected to be payable at the end of the contract term (\$6.2 million at December 31, 2024) and has been excluded from the estimated value of applicable lease obligations.

The Company's lease agreements do not impose any covenants, however leased assets are not to be used as security for borrowing purposes.

13. Long-term Debt

	December 31, 2025	December 31, 2024
Syndicated credit facilities	388.0	392.0
Term loan	500.0	—
Senior notes
2.354% note	450.0	450.0
3.577% note	550.0	—
3.465% note	550.0	550.0
4.409% note	450.0	—
Total senior notes	2,000.0	1,000.0
Unamortized debt issuance costs	(9.9)	(4.6)
Total long-term debt outstanding	2,878.1	1,387.4
Long-term debt due within one year	450.0	—
Long-term debt due beyond one year	2,428.1	1,387.4

In conjunction with the acquisition of the Kakwa Assets, ARC:

• issued \$1.0 billion aggregate principal amount of senior unsecured notes;
• obtained a \$500.0 million two-year term loan; and
• increased the borrowing capacity of its revolving credit facility to \$2.0 billion from \$1.7 billion.

Based on a market comparison, the fair value of all long-term debt outstanding was \$2.9 billion at December 31, 2025 (\$1.4 billion at December 31, 2024).

Credit Facility

At December 31, 2025, ARC has a \$2.0 billion unsecured extendible revolving credit facility (the "credit facility"). During the year ended December 31, 2025, the maturity date was extended to March 2029 from February 2028.

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Borrowings under the credit facility bear interest at Canadian bank prime or US base rate, or at ARC's option, Canadian Overnight Repo Rate Average or Secured Overnight Financing Rate, plus applicable margin and stamping fees. The total stamping fees range between zero basis points and 125 basis points on Canadian bank prime and US base rate borrowings and between 100 basis points and 225 basis points on Canadian dollar bankers' acceptance and US dollar borrowings. The undrawn portion of the credit facility is subject to a standby fee in the range of 20 basis points to 45 basis points. ARC also has in place a \$40.0 million demand working capital facility and letters of credit from three lenders totaling \$90.0 million.

The following are the financial covenants governing the credit facility, all capitalized terms are as defined in the respective agreements:

• Consolidated Debt not to exceed 60 per cent of Total Capitalization; and
• Consolidated Tangible Assets of the Restricted Group must exceed 80 per cent of Consolidated Tangible Assets.

Term Loan

The two-year term loan is a non-revolving credit facility and it matures on July 2, 2027. It was issued by a similar syndicate of banks with the same terms, conditions, and pricing as the credit facility.

Senior Notes

At December 31, 2025, ARC has four tranches of senior unsecured notes issued by way of private placement. The terms and rates are summarized below:

Issue Date	Principal	Coupon Rate	Maturity Date	Principal Payment Terms
March 10, 2021	\$450 million	2.354 %	March 10, 2026	Due upon maturity
March 10, 2021	\$550 million	3.465 %	March 10, 2031	Due upon maturity
June 17, 2025	\$550 million	3.577 %	June 17, 2028	Due upon maturity
June 17, 2025	\$450 million	4.409 %	June 17, 2032	Due upon maturity

There were no financial covenants associated with the senior unsecured notes issued in 2025.

Credit Capacity

The following table summarizes ARC's available credit capacity and the current amounts drawn as at December 31, 2025:

	Credit Capacity	Drawn	Remaining
Credit facility	2,000.0	388.0	1,612.0
Term loan	500.0	500.0	—
Working capital facility	40.0	—	40.0
Senior notes	2,000.0	2,000.0	—
Total	4,540.0	2,888.0	1,652.0

At December 31, 2025, ARC had \$49.4 million in letters of credit (\$46.5 million at December 31, 2024), no subordinated debt, and was in compliance with all of its debt covenants.

{30}------------------------------------------------

14. Other Deferred Liabilities

Carrying Amount
Balance, January 1, 2024	146.7
Additions	4.5
Settlements	(7.4)
Amortization	(24.7)
Balance, December 31, 2024	119.1
Additions	46.0
Accretion	1.1
Settlements	(2.0)
Amortization	(22.6)
Balance, December 31, 2025	141.6
Expected to be settled within one year	28.6
Expected to be settled beyond one year	113.0

The balance at December 31, 2025, is comprised of amounts payable in future periods as well as amounts that will be amortized into income over the remaining lives of the associated agreements, the longest of which matures in 2039.

15. Asset Retirement Obligation

The total ARO was estimated by Management based on ARC's net ownership interest in all wells, facilities, and pipelines; estimated costs to reclaim and abandon the wells, facilities, and pipelines; and the estimated timing of the costs to be incurred in future periods. ARC has estimated the net present value of its total ARO to be \$493.9 million at December 31, 2025 (\$431.4 million at December 31, 2024) based on a total future undiscounted liability of \$792.9 million (\$599.7 million at December 31, 2024). Management estimates that these payments are expected to be made over the next 57 years, with the majority of payments occurring in the years 2050 - 2070. The Bank of Canada's long-term risk-free bond rate of 3.9 per cent (3.3 per cent at December 31, 2024) and an average inflation rate of 2.0 per cent (2.0 per cent at December 31, 2024) were used to calculate the present value of ARO at December 31, 2025.

The following table reconciles ARC's provision for its ARO:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Balance, beginning of year	431.4	451.3
Acquired through a business combination (1) (Note 6)	30.5	—
Revaluation of obligations acquired through a business combination (2)	28.5	—
Development activities	16.3	21.8
Change in estimates (3)	42.1	(8.4)
Change in discount rate	(53.3)	(31.2)
Settlement of obligations	(17.6)	(16.2)
Accretion	16.0	14.1
Balance, end of year	493.9	431.4
Expected to be incurred within one year	20.0	17.0
Expected to be incurred beyond one year	473.9	414.4

⁽¹⁾ The obligations acquired were measured at a credit-adjusted rate of 6.6 per cent.

⁽²⁾ The obligations acquired were subsequently remeasured at a risk-free rate in accordance with the accounting policies disclosed in Note 3 "Summary of Material Accounting Policies".

⁽³⁾ Relates to changes in cost estimates of future obligations and anticipated settlement dates of ARO.

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The following table demonstrates the change in ARO as a result of reasonably possible changes in discount rate:

	December 31, 2025	December 31, 2024
Increase of one per cent	(99.4)	(83.6)
Decrease of one per cent	138.2	118.6

16. Capital Management

ARC actively manages its capital structure and adjusts it in response to changes in economic conditions and the risk characteristics of its underlying assets. ARC has the ability to manage its capital structure by issuing or repurchasing shares, or issuing or repaying debt.

ARC's objective when managing its capital is to maintain a conservative structure that will allow it to:

• fund its development and exploration programs;
• maintain sustainable, meaningful returns of capital to shareholders; and
• maintain financial flexibility to execute on strategic opportunities.

During the year ended December 31, 2025, ARC issued \$1.5 billion of long-term debt, repurchased 19.7 million common shares under its normal course issuer bid ("NCIB"), while also renewing its NCIB, and the Board declared dividends totaling \$0.78 per share. The issuance of long-term debt was in conjunction with the acquisition of the Kakwa Assets, for more information refer to Note 6 "Business Combination". During the year ended December 31, 2025, ARC increased its dividend by 11 per cent from \$0.19 per share per quarter to \$0.21 per share per quarter.

Funds from Operations

ARC considers funds from operations to be a key measure of capital management as it demonstrates ARC's ability to generate the necessary funds to maintain production at current levels and fund future growth through capital investment. Management believes that such a measure provides an insightful assessment of ARC's financial performance on a continuing basis by eliminating certain non-cash charges and actual settlements of ARO, of which the nature and timing of expenditures are discretionary. Funds from operations is not a standardized measure and therefore may not be comparable with the calculation of similar measures by other entities.

Funds from operations for the years ended December 31, 2025 and 2024 is calculated as follows:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Cash flow from operating activities	3,093.5	2,348.6
Net change in other liabilities (Note 24)	95.4	19.9
Change in non-cash operating working capital (Note 24)	3.5	104.0
Funds from operations	3,192.4	2,472.5

Net Debt and Net Debt to Funds from Operations

Net debt and net debt to funds from operations are used by Management as key measures to assess the Company's liquidity position at a point in time. The determination of net debt and net debt to funds from operations is reflective of the measures used by Management to monitor its liquidity in light of operating and capital budgeting decisions. Net debt is not a standardized measure and therefore may not be comparable with the calculation of similar measures by other entities.

ARC manages its capital structure for the long term, with the objective of having its net debt less than 1.5 times funds from operations. At December 31, 2025, ARC's net debt was 0.9 times its funds from operations.

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The following table details the composition of ARC's net debt and net debt to funds from operations as at December 31, 2025 and 2024:

	December 31, 2025	December 31, 2024
Long-term debt (1)	2,878.1	1,387.4
Accounts payable and accrued liabilities	760.8	634.4
Dividends payable	120.0	112.2
Cash and cash equivalents, accounts receivable, and prepaid expense	(892.8)	(798.4)
Net debt	2,866.1	1,335.6
Funds from operations	3,192.4	2,472.5
Net debt to funds from operations (ratio) (2)	0.9	0.5

• (1) Includes current portion of long-term debt of \$450.0 million at December 31, 2025 (\$nil at December 31, 2024).
• (2) Composed of net debt divided by funds from operations.

17. Financial Instruments and Market Risk Management

Financial Instruments

At December 31, 2025, ARC's financial instruments include cash and cash equivalents, accounts receivable, long-term investments, risk management contracts, accounts payable and accrued liabilities, dividends payable, lease obligations, and long-term debt.

ARC's risk management contracts are carried at fair value on the balance sheets. All of ARC's risk management contracts are transacted in active markets, with the exception of embedded derivatives identified within certain natural gas sales contracts.

Risk management contracts and fair value disclosure for ARC's long-term debt are classified as Level 2 measurements in the three-level fair value measurement hierarchy. The fair value of ARC's long-term debt is disclosed in Note 13 "Long-term Debt". There were no transfers between levels in the fair value hierarchy for the year ended December 31, 2025.

The carrying values of ARC's accounts receivable, accounts payable and accrued liabilities, and dividends payable as at December 31, 2025 approximate their fair values due to the short-term nature of these instruments.

Embedded Derivatives

ARC has a long-term natural gas supply agreement to supply 140,000 MMbtu/d of natural gas for a term of 15 years, which delivery is expected to commence in 2027. Under the terms of the agreement, ARC will deliver natural gas to its counterparty at a delivery point in Illinois, USA and receive a Japan Korea Marker ("JKM") index price less deductions for transport and liquefaction (the "JKM Agreement"). The contract contains an embedded derivative as a result of the JKM pricing formula. ARC has defined the host contract as a natural gas sales agreement with a Chicago Citygate price.

Additionally, ARC has a long-term natural gas supply agreement to supply 140,000 MMbtu/d of natural gas for a term of 15 years, which delivery is expected to commence in 2029. Under the terms of the agreement, ARC will deliver natural gas to its counterparty at a delivery point in Louisiana, USA and receive a Title Transfer Facility ("TTF") index price less deductions for transport, liquefaction, and regasification (the "TTF Agreement"). The contract contains an embedded derivative as a result of the TTF pricing formula. ARC has identified the host contract as a natural gas sales agreement with a New York Mercantile Exchange ("NYMEX") Henry Hub price.

ARC's natural gas embedded derivative contracts are classified as Level 3 within the fair value hierarchy, as the fair values have been determined using a discounted cash flow valuation technique, which models incorporate significant unobservable inputs.

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The following table details the significant unobservable inputs used in the valuation of the JKM Agreement and the sensitivity of the fair value of the embedded derivative from reasonably possible changes:

JKM Agreement	December 31, 2025	December 31, 2024
Net asset (liability) fair value	(42.6)	62.3
Significant unobservable inputs:
Forward prices (1)	A blend of observable and constructed forward curves for Chicago Citygate and JKM prices.	A blend of observable and constructed forward curves for Chicago Citygate and JKM prices.
	US\$4.50/MMBtu - US\$5.97/MMBtu	US\$4.99/MMBtu - US\$8.51/MMBtu
Discount rate	12 %	12 %
Increase (decrease) in fair value:
Forward prices (1)
Increase of five per cent	86.6	89.1
Decrease of five per cent	(86.6)	(89.1)
Discount rate
Increase of one per cent	3.5	1.0
Decrease of one per cent	(3.9)	(1.3)
Cdn\$/US\$ exchange rate
Increase of \$0.10	(2.4)	3.3
Decrease of \$0.10	2.4	(3.3)

⁽¹⁾ Forward prices refers to the differential between JKM and Chicago Citygate forward prices and the sensitivity of forward prices refers to an increase and decrease in those differentials.

The following table details the significant unobservable inputs used in the valuation of the TTF Agreement and the sensitivity of the fair value of the embedded derivative from reasonably possible changes:

TTF Agreement	December 31, 2025	December 31, 2024
Net liability fair value	(95.7)	(37.1)
Significant unobservable inputs:
Forward prices (1)	A blend of observable and constructed forward curves for NYMEX Henry Hub and TTF prices.	A blend of observable and constructed forward curves for NYMEX Henry Hub and TTF prices.
	US\$4.01/MMBtu - US\$5.82/MMBtu	US\$3.87/MMBtu - US\$5.72/MMBtu
Discount rate	12 %	12 %
Increase (decrease) in fair value:
Forward prices (1)
Increase of five per cent	65.8	35.1
Decrease of five per cent	(65.8)	(35.1)
Discount rate
Increase of one per cent	5.5	2.3
Decrease of one per cent	(5.9)	(2.6)
Cdn\$/US\$ exchange rate
Increase of \$0.10	(5.4)	(2.0)
Decrease of \$0.10	5.4	2.0
US\$/EUR exchange rate
Increase of \$0.10	31.6	16.3
Decrease of \$0.10	(31.6)	(16.3)

⁽¹⁾ Forward prices refers to the differential between NYMEX and TTF forward prices and the sensitivity of forward prices refers to an increase and decrease in those differentials.

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In addition to the significant unobservable inputs, ARC assesses the risk of non-performance in its embedded derivative contracts. The non-performance risk factor applied to the value of the JKM Agreement was not significant as construction of the counterparty's liquefied natural gas facility is well underway and anticipated to be substantially complete in 2026. The non-performance risk factor applied to the value of the TTF Agreement is also not significant, as all conditions precedent of the agreement have been waived and a commencement date has been issued by the counterparty.

With respect to both agreements, upon initial recognition the fair value was deemed to be \$nil, as there was no initial transaction price, and the unobservable inputs were calibrated to yield this result.

ARC recognizes a gain (loss) on risk management contracts in the statements of comprehensive income related to its natural gas embedded derivatives. The gain (loss) is determined by the relative movements in fair value compared to the prior period balance sheet date. For the year ended December 31, 2025, ARC recognized an unrealized loss of \$163.5 million (unrealized gain of \$31.2 million for the year ended December 31, 2024). At December 31, 2025, the fair value of the natural gas embedded derivatives was a liability of \$138.3 million (asset of \$25.2 million at December 31, 2024).

Financial Assets and Financial Liabilities Subject to Offsetting

The following is a summary of ARC's financial assets and financial liabilities that are subject to offsetting as at December 31, 2025 and December 31, 2024:

	Gross Amounts of Recognized Financial Assets (Liabilities)	Gross Amounts of Recognized Financial Assets (Liabilities) Offset	Net Amounts of Financial Assets (Liabilities) Prior to Credit Risk Adjustment	Credit Risk Adjustment	Net Amounts of Financial Assets (Liabilities) Recognized on Balance Sheets
As at December 31, 2025
Risk management contracts
Current asset	172.5	(36.3)	136.2	(0.6)	135.6
Long-term asset	77.5	(20.8)	56.7	(0.3)	56.4
Current liability	(36.3)	36.3	—	—	—
Long-term liability	(159.7)	20.8	(138.9)	—	(138.9)
Net position	54.0	—	54.0	(0.9)	53.1
As at December 31, 2024
Risk management contracts
Current asset	250.9	(60.0)	190.9	(0.8)	190.1
Long-term asset	187.2	(32.7)	154.5	(0.4)	154.1
Current liability	(61.1)	60.0	(1.1)	0.1	(1.0)
Long-term liability	(69.8)	32.7	(37.1)	—	(37.1)
Net position	307.2	—	307.2	(1.1)	306.1

Market Risk Management

ARC is exposed to a number of market risks that are part of its normal course of business. Market risks that could adversely affect the value of the Company's financial assets, liabilities, and expected future cash flows include commodity price risk, foreign exchange risk, and interest rate risk. ARC has a risk management program in place that includes financial instruments as disclosed in the "Risk Management Contracts" section of this note.

ARC's Management oversees the Company's risk management program and the program is governed by certain guidelines approved by the Board. The objective of the risk management program is to support ARC's business plan by mitigating adverse changes in commodity prices, foreign exchange rates, and interest rates in order to reduce the volatility of commodity sales, increase the certainty of cash flows from operating activities, and to protect acquisition and development economics. All risk management contracts are executed by specialist teams that have the appropriate skills, experience, and oversight.

The following sensitivity analyses demonstrate the potential impact that a change in these market risk factors could have on the fair value of ARC's risk management contracts and subsequently the impact of net income. For the purposes of the sensitivity analyses, the effect of a variation in a particular variable is calculated independently of any change in another variable. In reality, changes in one factor may contribute to changes in

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another, which may magnify or counteract the sensitivities. The assumptions made to derive the changes in the relevant risk variables in each sensitivity analysis are based on Management's assessment of reasonably possible changes that could occur at December 31, 2025. The results of the sensitivity analyses should not be considered to be predictive of future performance.

Commodity Price Risk

ARC's operational results and financial condition are largely dependent on the commodity prices received for its crude oil and natural gas production. Commodity prices may be impacted by multiple factors including supply and demand fundamentals, the rate at which global energy markets transition to a lower carbon-based economy, nations approach to energy security, inventory levels, exchange rates, weather, economic and geopolitical factors, tariffs, and a global pandemic or natural disaster and the respective responses from various levels of government. Changes in commodity prices could have a significant positive or negative impact on ARC's net income.

The guidelines for ARC's risk management program currently restrict the amount of risk management contracts to a maximum of 60 per cent of anticipated production over the next two years and 30 per cent of anticipated production beyond two years and up to five years where a specific commodity (crude oil or natural gas) cannot exceed a maximum of 70 per cent over the next two years and 35 per cent for years three through five. ARC's risk management program guidelines allow for further risk management contracts on anticipated volumes associated with new production arising from specific capital projects and acquisitions or to further protect cash flows for a specific period with approval of the Board.

ARC manages the risks associated with changes in commodity prices by entering into a variety of risk management contracts (refer to section of this note entitled "Risk Management Contracts"). The following table illustrates the effects of movement in commodity prices on net income due to changes in the fair value of risk management contracts in place at December 31, 2025.

Sensitivity of Commodity Price on Risk Management	Increase in Commodity Price			Decrease in Commodity Price
Contracts (1)	Crude Oil (2) Natural Gas (3)		Crude Oil (2)		Natural Gas (3)
	2025	2024	2025	2024	2025	2024	2025	2024
Net income	(28.9)	(53.2)	(54.4)	(24.9)	24.7	54.0	63.5	28.0

• (1) Excludes any sensitivity related to ARC's embedded derivatives. Refer to the section of this note entitled "Embedded Derivatives".
• (2) Crude oil sensitivities are based on a US\$10 per barrel increase and decrease in the price of West Texas Intermediate ("WTI").
• (3) Natural gas sensitivities are based on a US\$0.50 per MMBtu increase and decrease in the price of NYMEX Henry Hub.

ARC enters into physical commodity contracts in the normal course of business. These contracts are treated as executory contracts, which are recognized at cost at the time of transaction.

Foreign Exchange Risk

North American crude oil and natural gas prices are based upon US dollar-denominated commodity prices. As a result, the price received by Canadian producers is affected by the Cdn\$/US\$ foreign exchange rate that may fluctuate over time.

The following table demonstrates the effect of exchange rate movements on net income due to changes in the fair value of risk management contracts in place at December 31, 2025, and the unrealized gain or loss on revaluation of outstanding US dollar-denominated payables and receivables. The sensitivity is based on a \$0.10 increase and decrease in the Cdn\$/US\$ foreign exchange rate.

Sensitivity of Foreign Exchange Exposure		Increase in Cdn\$/US\$ Rate		Decrease in Cdn\$/US\$ Rate
	2025	2024 (1)	2025	2024 (1)
Risk management contracts (2)	(9.6)	(29.3)	7.3	22.1
US dollar-denominated payables and receivables	7.0	5.8	(7.0)	(5.8)
Net income	(2.6)	(23.5)	0.3	16.3

• (1) Prior period amounts have been revised.
• (2) Excludes any sensitivity related to ARC's embedded derivatives. Refer to the section of this note entitled "Embedded Derivatives".

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Interest Rate Risk

ARC may manage its interest cost by issuing debt bearing a mix of both fixed and variable interest rates. Changes in interest rates could result in an increase or decrease in the amount ARC pays to service variable interest rate debt. ARC is exposed to interest rate risk with respect to debt drawn under its credit facility and term loan. If interest rates were to increase or decrease by 100 basis points, the impact on interest expense in the statements of comprehensive income for the year ended December 31, 2025, would be \$6.0 million (\$4.5 million for the year ended December 31, 2024).

Risk Management Contracts

The following table details the composition of ARC's gain (loss) on risk management contracts:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Realized gain on risk management contracts	264.0	190.3
Unrealized gain (loss) on risk management contracts	(253.0)	82.4
Total gain on risk management contracts	11.0	272.7

The following table summarizes ARC's risk management contracts as at December 31, 2025:

Risk Management Contracts Positions Summary (1)
As at December 31, 2025	2026		2027		2028		2029
Crude Oil – WTI	US\$/bbl	bbl/day	US\$/bbl	bbl/day	US\$/bbl	bbl/day	US\$/bbl	bbl/day
Ceiling	79.19	15,000	—	—	—	—	—	—
Floor	63.33	15,000	—	—	—	—	—	—
Sold Floor	51.67	15,000	—	—	—	—	—	—
Swap	58.60	161	—	—	—	—	—	—
Sold Swaption (2)	—	—	89.51	4,000	—	—	—	—
Total Crude Oil Volumes (bbl/day)		15,161		—		—		—
Natural Gas – NYMEX Henry Hub (3)	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day
Ceiling	6.16	50,000	—	—	—	—	—	—
Floor	3.00	5,000	—	—	—	—	—	—
Natural Gas – AECO 7A	Cdn\$/GJ	GJ/day	Cdn\$/GJ	GJ/day	Cdn\$/GJ	GJ/day	Cdn\$/GJ	GJ/day
Ceiling	4.04	300,000	3.61	180,000	3.46	30,000	3.46	30,000
Floor	2.71	300,000	2.55	180,000	2.50	30,000	2.50	30,000
Swap	2.87	29,315	—	—	—	—	—	—
Natural Gas – Chicago (4)	US\$/MMBtu	MMBtu/ day	US\$/MMBtu	MMBtu/ day	US\$/MMBtu	MMBtu/ day	US\$/MMBtu	MMBtu/ day
Ceiling	5.27	48,301	—	—	—	—	—	—
Floor	3.50	48,301	—	—	—	—	—	—
Total Natural Gas Volumes (MMBtu/day)		410,432		170,607		28,435		28,435
Natural Gas – AECO Basis (Differential to NYMEX Henry Hub)	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day	US\$/MMBtu	MMBtu/day
Sold Swap	(1.05)	84,644	(1.05)	92,500	(1.05)	(92,500)	(1.05)	21,075
Foreign Exchange	Notional (US\$ Millions)	Rate (Cdn\$/US\$)	Notional (US\$ Millions)	Rate (Cdn\$/US\$)	Notional (US\$ Millions)	Rate (Cdn\$/US\$)	Notional (US\$ Millions)	Rate (Cdn\$/US\$)
Ceiling	360.0	1.4265	—	—	—	—	—	—
Floor	360.0	1.3700	—	—	—	—	—	—
Sold Floor	240.0	1.3100	—	—	—	—	—	—

⁽¹⁾ The prices and volumes in this table represent averages for several contracts representing different periods. The average price for the portfolio of options listed above does not have the same payoff profile as the individual option contracts. Viewing the average price of a group of options is purely for indicative purposes. All positions are financially settled against the benchmark prices.

⁽²⁾ The sold swaption allows the counterparty, at a specific future date, to enter into a swap with ARC at the above-detailed terms. These volumes are not included in the total commodity volumes until such time that the option is exercised.

⁽³⁾ Natural gas prices referenced to NYMEX Henry Hub Last Day Settlement.

⁽⁴⁾ Natural gas prices referenced to NGI Chicago Citygate.

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18. Income Taxes

The major components of income tax expense for the years ended December 31, 2025 and 2024 were as follows:

	December 31, 2025	December 31, 2024
Current	260.0	200.4
Deferred:
Origination and reversal of temporary differences	69.2	119.6
Adjustments for prior years	26.6	13.6
Changes in tax rates and legislation	3.0	(2.7)
	98.8	130.5
Total income tax expense	358.8	330.9

The Organization for Economic Co-Operation and Development's Pillar Two Model Rules do not have a significant impact on ARC's income tax expense.

The tax provision differs from the amount computed by applying the combined Canadian federal and provincial statutory income tax rates to net income before income taxes as follows:

	December 31, 2025	December 31, 2024
Net income before tax	1,633.9	1,455.0
Canadian statutory rate (1)	23.32 %	23.27 %
Expected income tax expense at statutory rates	381.0	338.6
Effect on income tax of:
Change in corporate tax rate	3.0	(2.7)
Change in estimated pool balances (2)	(25.6)	(5.1)
Other	0.4	0.1
Total income tax expense	358.8	330.9

⁽¹⁾ The tax rate consists of the combined federal and provincial statutory tax rates for the Company for the years ended December 31, 2025 and 2024. The combined federal and provincial rate increase to 23.32 per cent in 2025 from 23.27 per cent in 2024 reflects changes made to the 2025 provincial income allocation, resulting in increased income allocated to British Columbia which has a relatively higher corporate tax rate of 12 per cent.

(2) Change in estimated pool balances primarily consists of recognition of SR&ED and related Investment Tax Credits.

	December 31, 2025	December 31, 2024
Deferred tax liabilities:
PP&E in excess of tax basis	1,630.7	1,458.3
Risk management contracts	44.8	80.0
ROU assets	222.4	218.5
Deferred tax assets:
ARO	(115.2)	(100.4)
Risk management contracts	(32.4)	(8.9)
Long-term incentive compensation expense	(24.7)	(31.7)
Lease obligations	(241.2)	(233.0)
Other deferred liabilities	(30.0)	(24.3)
Other	(3.7)	(7.1)
Deferred taxes	1,450.7	1,351.4

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At December 31, 2025, the crude oil and natural gas assets owned by ARC have a federal tax basis of \$6.0 billion (\$4.5 billion at December 31, 2024) available for future use as deductions from taxable income.

The following is a summary of ARC's estimated tax pools as at December 31, 2025 and December 31, 2024:

	December 31, 2025	December 31, 2024
Canadian oil and gas property expense	1,891.4	788.6
Canadian development expense	2,098.8	1,881.5
Undepreciated capital cost	1,969.0	1,769.8
Other	25.6	31.2
Total federal tax pools	5,984.8	4,471.1

19. Shareholders' Capital

ARC is authorized to issue an unlimited number of no par value common shares and 50 million preferred shares without nominal or par value. Common shares carry one vote per share and the right to any dividends declared. Preferred shares may be issued in series with rights and conditions to be determined by the Board prior to issuance and subject to the Company's articles. There were no preferred shares outstanding as at December 31, 2025 or 2024.

(thousands of shares)	Year Ended December 31, 2025	Year Ended December 31, 2024
Common shares, beginning of year	589,626	596,853
Repurchase of shares for cancellation	(19,687)	(8,487)
Issued on exercise of share options and long-term incentive awards	598	1,215
Unvested restricted shares held in trust pursuant to the LTRSA Plan (1)	(16)	(18)
Restricted shares vested pursuant to the LTRSA Plan	105	63
Common shares, end of year	570,626	589,626

⁽¹⁾ Unvested restricted shares held in trust pursuant to the Long-term Restricted Share Award ("LTRSA") Plan includes restricted shares purchased.

In September 2025, ARC announced the renewal of its NCIB. The renewed NCIB allows ARC to purchase up to 58.0 million of its outstanding common shares over a 12-month period, commencing September 8, 2025. During the year ended December 31, 2025, ARC repurchased 19.7 million common shares under its NCIB at a weighted average price per share of \$26.54 for a total of \$522.9 million, inclusive of all costs. Shares are cancelled upon repurchase.

At December 31, 2025, ARC has recognized a liability of \$15.0 million (\$15.1 million at December 31, 2024) in accounts payable and accrued liabilities on the balance sheets for share repurchases that may take place during its internal blackout period under an automatic share purchase plan agreement with an independent broker. The transaction has been recognized as a reduction to share capital of \$6.8 million and a reduction to retained earnings of \$8.2 million (\$5.6 million and \$9.5 million at December 31, 2024, respectively).

Net income per common share has been determined based on the following:

(thousands of shares)	Year Ended December 31, 2025	Year Ended December 31, 2024
Weighted average common shares	581,537	594,861
Dilutive impact of share-based compensation (1)	1,062	1,560
Weighted average common shares, diluted	582,599	596,421

⁽¹⁾ For the year ended December 31, 2025, 0.1 million of share-based compensation awards were excluded from the diluted weighted average shares calculation, as they were anti-dilutive (0.3 million for the year ended December 31, 2024).

Dividends declared for the year ended December 31, 2025 were \$0.78 per share (\$0.70 for the year ended December 31, 2024).

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20. Revenue

Commodity Sales from Production

ARC earns revenue from contracts with customers primarily through the transfer of commodities at a point in time representing the following major product types:

Commodity Sales from Production, by Product	Year Ended December 31, 2025	Year Ended December 31, 2024
Crude oil	248.3	233.4
Condensate	3,104.7	2,850.7
Natural gas	1,697.6	1,134.6
Natural gas liquids	371.1	385.0
Total commodity sales from production	5,421.7	4,603.7

During the year ended December 31, 2025, \$922.4 million of total commodity sales from production are attributed to the United States (\$635.9 million for the year ended December 31, 2024), with the remainder attributed to Canada, based on the location of ARC's sales points.

At December 31, 2025, accounts receivable includes \$676.7 million from contracts with customers (\$607.1 million at December 31, 2024).

ARC enters into contracts with customers that can have performance obligations that are unsatisfied, or partially unsatisfied, at the reporting date. At December 31, 2025, the company has a number of unfulfilled performance obligations including fixed volume and index-based commodity sales contracts. These contracts have varying durations, with the Company's longest individual commodity sales contract ending in 2044.

ARC does not adjust its revenue transactions for the time value of money as it does not have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.

Sales of Third-Party Purchases

Through the normal course of business, ARC will purchase goods and services from third parties and will earn revenue upon the subsequent sale of these purchases. The following table presents the Company's disaggregation of sales of third-party purchases:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Sales of commodities purchased from third parties	1,151.8	1,020.2
Transportation assignment sales	39.0	—
Sales of third-party purchases	1,190.8	1,020.2

During the year ended December 31, 2025, \$47.6 million of sales of third-party purchases are attributed to the United States (\$1.2 million for the year ended December 31, 2024), with the remainder attributed to Canada.

21. Share-based Compensation Plans

ARC's share-based, long-term incentive plans result in employees, officers and directors (the "plan participants") receiving cash compensation in relation to the value of a specified number of underlying notional share awards. Collectively, ARC's long-term incentive plans are comprised of Restricted Share Unit ("RSU"), Performance Share Unit ("PSU"), and Deferred Share Unit ("DSU") plans. ARC also has certain share-based compensation plans that were acquired through a business combination which are eligible for continuation and exercise (the "Acquired Plans").

RSU Plans and PSU Plans

Awards under the RSU and PSU plans consist of RSUs for which the number of share awards is fixed and will vest evenly over a period of three years and PSUs for which the number of share awards is variable and will vest at the end of three years.

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Upon vesting of the RSUs, the plan participant receives a cash payment based on the fair value of the underlying share awards plus all dividends accrued since the grant date. The cash compensation of the PSUs issued upon vesting is further dependent upon an adjustment to the final number of PSU awards that eventually vest based on a performance multiplier. The performance multiplier is determined through the assessment of a corporate scorecard, which occurs at the end of the three-year performance period and includes a weighting of 50 per cent based on ARC's relative total shareholder return performance compared to a defined peer group.

The performance multiplier is calculated at the time of payment and can result in cash compensation issued upon vesting of the PSUs ranging from zero to two times the value of the PSU awards originally granted.

DSU Plans

ARC offers a DSU plan to non-employee directors, under which each director receives a minimum of 60 per cent of their total annual remuneration in the form of DSUs. DSU awards fully vest on the date of grant, but are available for redemption when the director ceases to be a member of the Board. Awards are settled in cash and are determined by the value of the underlying common shares.

Remaining DSU awards outstanding under the Acquired Plans are vested, but are available for redemption when the director ceases to be a member of the Board. Approximately 35 per cent of these awards are eligible to be settled in equity, with the remainder to be settled in cash.

Long-term Incentive Plans

The following table summarizes the changes in the RSU, PSU, and DSU awards for the years ended December 31, 2025 and 2024:

RSU, PSU, and DSU Plans (number of awards, thousands)	RSUs	PSUs (1)	DSUs
Balance, January 1, 2024	1,992	3,516	1,257
Granted	744	2,109	117
Distributed	(1,082)	(2,644)	(295)
Forfeited	(97)	(119)	—
Balance, December 31, 2024	1,557	2,862	1,079
Granted	683	1,735	114
Distributed	(854)	(1,772)	—
Forfeited	(52)	(147)	—
Balance, December 31, 2025 (2)	1,334	2,678	1,193

• (1) Based on underlying awards before any effect of the performance multiplier.
• (2) Includes 0.3 million DSUs under the Acquired Plans.

Compensation charges relating to ARC's share-based compensation plans are reconciled as follows:

	Year Ended December 31, 2025	Year Ended December 31, 2024
General and administrative ("G&A")	24.5	83.9
Operating	2.7	6.6
PP&E	8.8	23.6
Total compensation charge	36.0	114.1
Cash payment	66.0	91.7

At December 31, 2025, compensation amounts of \$78.0 million were recognized in accounts payable and accrued liabilities on the balance sheets (\$60.0 million at December 31, 2024) and \$28.1 million was included in long-term incentive compensation liability (\$76.2 million at December 31, 2024).

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Share Option Plans

ARC has certain share options remaining under the Acquired Plans which vest annually over three years and expire 10 years after the date of grant. The final grant was in 2019. The option holder has the right to exercise the options and purchase one common share per option at the original grant price.

ARC also had a share option plan whereby share options vested evenly on the fourth and fifth anniversary of their grant date and had a maximum term of seven years. At December 31, 2025, all outstanding share options were vested.

The original grant price under ARC's share option plan and the Acquired Plans is calculated as the weighted average trading price of ARC common shares for the five days immediately preceding the grant date.

At December 31, 2025, all outstanding share options were vested and exercisable. The changes in total share options outstanding and related weighted average exercise prices of share options outstanding were as follows:

Share Option Plans	Share Options (number of units, thousands)	Weighted Average Exercise Price (\$)
Balance, January 1, 2024	2,271	16.64
Exercised	(1,211)	13.60
Balance, December 31, 2024	1,060	18.95
Exercised	(594)	17.42
Balance, December 31, 2025 (1)	466	20.74

⁽¹⁾ All share options pertain to the Acquired Plans.

The following table summarizes information regarding share options outstanding at December 31, 2025:

Range of Exercise Price per Common Share (\$)	Number of Share Options Outstanding (thousands)	Weighted Average Exercise Price (\$)	Weighted Average Remaining Term (years)
5.98 - 18.00	148	11.01	2.8
18.01 - 27.89	318	25.29	1.0
Total	466	20.74	1.5

LTRSA Plan

Issuance of new awards under the LTRSA plan were suspended in 2021. Previously granted LTRSAs consist of restricted common shares that were awarded at the date of grant and a cash payment made equal to the estimated personal tax obligation associated with the total award. The restricted shares issued on the grant date of the award are held in trust until the vesting conditions have been met. In 2020, the LTRSA plan was amended to extend the vesting schedule from three years to five years and to adjust the calculation of the service period.

While in trust, the restricted shares earn cash dividends that are reinvested into the purchase of ARC common shares. These re-invested common shares issued are also held in trust until vested. LTRSA awards granted prior to 2020 vest evenly on the eighth, ninth, and tenth anniversaries of their respective grant dates. LTRSA awards granted subsequent to 2019 vest evenly on the sixth, seventh, eighth, ninth, and tenth anniversaries of their respective grant dates. Restricted shares and any accrued dividends that are subject to forfeiture will be redeemed and cancelled by ARC.

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The estimated fair value of LTRSAs is determined as the weighted average trading price of ARC common shares on the TSX for the five days immediately preceding the grant date.The changes in total LTRSA outstanding and related fair value per restricted share for the years ended December 31, 2025 and 2024 were as follows:

		Granted Prior to 2020	Granted Subsequent to 2019
	LTRSA (number of awards, thousands)	Fair Value per Restricted Share (\$)	LTRSA (number of awards, thousands)	Fair Value per Restricted Share (\$)
Balance, January 1, 2024	760	12.03	212	6.75
Restricted shares purchased	14	23.31	4	23.31
Distributed	(63)	24.27	—	—
Forfeited	(18)	10.76	(11)	6.17
Balance, December 31, 2024 (1)	693	11.18	205	7.12
Restricted shares purchased	12	26.43	4	26.43
Distributed	(105)	28.56	—	—
Forfeited	(44)	12.04	(20)	6.17
Balance, December 31, 2025	556	8.17	189	7.61

⁽¹⁾ Balances at December 31, 2024 have been revised to reflect forfeitures from awards granted prior to 2020, which had previously been attributed to awards granted subsequent to 2019.

ARC recognized G&A expense of \$0.7 million relating to the LTRSA Plan for the year ended December 31, 2025 (\$0.9 million for the year ended December 31, 2024).

22. Commitments and Contingencies

The following is a summary of ARC's contractual obligations and commitments as at December 31, 2025 and 2024:

	Payments Due by Period
As at December 31, 2025	1 Year	2-3 Years	4-5 Years	Beyond 5 Years	Total
Debt repayments	450.0	1,438.0	—	1,000.0	2,888.0
Interest payments (1)	63.9	107.3	77.8	39.3	288.3
Purchase and service commitments (2)	170.6	314.4	878.3	7,174.5	8,537.8
Transportation commitments	721.2	1,334.6	1,180.0	4,820.4	8,056.2
Total contractual obligations and commitments	1,405.7	3,194.3	2,136.1	13,034.2	19,770.3

As at December 31, 2024	1 Year	2-3 Years	4-5 Years	Beyond 5 Years	Total
Debt repayments	—	842.0	—	550.0	1,392.0
Interest payments (1)	29.7	43.4	38.1	28.6	139.8
Purchase and service commitments (2)	144.0	100.3	689.3	7,963.7	8,897.3
Transportation commitments	665.5	1,180.7	957.8	4,385.0	7,189.0
Total contractual obligations and commitments	839.2	2,166.4	1,685.2	12,927.3	17,618.1

⁽¹⁾ Fixed interest payments on senior notes.

ARC enters into commitments for purchases of goods and services in the normal course of operations in advance of expenditures being made. At a given point in time, ARC has committed to a portion of its capital budget by means of giving the necessary authorizations to incur the expenditures in a future period.

ARC is involved in other litigation and claims arising in the normal course of operations. Such claims are not expected to have a material impact on ARC's results of operations or cash flows.

⁽²⁾ Includes variable operating costs associated with the Company's lease obligations.

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23. Related Parties

ARC's key management personnel consists of its officers and directors. Short-term benefits comprise salaries and directors' fees, annual bonuses, and other benefits. In addition, the Company provides share-based compensation to its key management personnel under the RSU, PSU, DSU and LTRSA plans, as well as through share options under the Acquired Plans. The compensation for key management personnel is as follows:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Short-term benefits	11.5	13.6
Share-based compensation	13.3	59.7
Total key management personnel compensation	24.8	73.3

24. Supplemental Disclosures

Presentation in the Statements of Comprehensive Income

ARC's statements of comprehensive income are prepared primarily by nature of item, with the exception of employee compensation expense which is included in both operating and G&A expense. The following table details the amount of total employee compensation expense included in operating and G&A expense in the statements of comprehensive income:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Operating	64.0	54.2
G&A	98.6	151.7
Total employee compensation expense	162.6	205.9

Through the normal course of business, ARC will purchase goods and services from third parties which are subsequently sold. The following table presents the disaggregation of the expenses associated with third-party purchases:

	Year Ended December 31, 2025	Year Ended December 31, 2024
Commodities purchased from third parties	1,125.9	1,011.4
Transportation assignment	39.0	—
Third-party purchases	1,164.9	1,011.4

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Presentation in the Statements of Cash Flows

The following tables provide a detailed breakdown of certain line items contained within cash flow from operating, financing, and investing activities:

Change in Non-cash Working Capital	Year Ended December 31, 2025	Year Ended December 31, 2024
Accounts receivable	(103.0)	(93.1)
Accounts payable and accrued liabilities	167.3	(144.6)
Inventory	(5.5)	15.7
Prepaid and other long-term assets	(31.3)	(23.8)
Total change in non-cash working capital	27.5	(245.8)
Relating to:
Operating activities	(3.5)	(104.0)
Financing activities	4.9	4.7
Investing activities	26.1	(146.5)
Total change in non-cash working capital	27.5	(245.8)

Other Non-cash Items	Year Ended December 31, 2025	Year Ended December 31, 2024
Accretion expense	17.1	14.1
Share-based compensation expense	0.7	1.0
Impairment (reversal of impairment) of financial assets	(2.8)	2.3
Loss (gain) on long-term investments	0.3	(0.3)
Other income	—	(0.5)
Other amortization	3.7	(2.1)
Total other non-cash items	19.0	14.5

Net Change in Other Liabilities	Year Ended December 31, 2025	Year Ended December 31, 2024
Long-term incentive compensation liability	(48.1)	17.8
Risk management contracts	—	1.2
ARO cash settlements	(17.6)	(16.2)
Other deferred liabilities	(21.3)	(21.9)
Debt issuance costs	(8.4)	(0.8)
Total net change in other liabilities	(95.4)	(19.9)

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The following table provides a detailed breakdown of the cash and non-cash changes in financing liabilities arising from financing activities:

Financing Liabilities	Current Financial Liabilities	Long-term Financial Liabilities	Total Financial Liabilities from Financing Activities
Balance, January 1, 2024	85.2	2,123.5	2,208.7
Cash flows
Draw of long-term debt	—	7,348.0	7,348.0
Repayment of long-term debt	—	(7,111.0)	(7,111.0)
Repayment of lease obligations	(93.6)	—	(93.6)
Reclassified to current
Lease obligations	101.2	(101.2)	—
Non-cash changes
Lease recognition	—	30.0	30.0
Lease modification	—	5.1	5.1
Amortization of debt issuance costs	—	2.3	2.3
Other changes	—	(0.8)	(0.8)
Balance, December 31, 2024	92.8	2,295.9	2,388.7
Cash flows
Draw and issuance of long-term debt	—	7,595.9	7,595.9
Repayment of long-term debt	—	(6,099.9)	(6,099.9)
Repayment of lease obligations	(103.8)	—	(103.8)
Debt issuance costs	—	(8.4)	(8.4)
Reclassified to current
Long-term debt	450.0	(450.0)	—
Lease obligations	119.3	(119.3)	—
Non-cash changes
Lease obligation acquired through a business combination (Note 6)	—	50.8	50.8
Lease recognition	—	82.8	82.8
Lease modification	3.8	(0.7)	3.1
Amortization of debt issuance costs	—	3.1	3.1
Balance, December 31, 2025	562.1	3,350.2	3,912.3
Lease obligations due within one year	112.1	—	112.1
Lease obligations due beyond one year	—	922.1	922.1
Long-term debt due within one year	450.0	—	450.0
Long-term debt due beyond one year	—	2,428.1	2,428.1