ARC Resources Ltd. (TSX:ARX) entered into a definitive agreement to acquire Seven Generations Energy Ltd. (TSX:VII) from Canada Pension Plan Investment Board and others for CAD 2.8 billion on February 10, 2021. Under the terms of the definitive agreement, Seven Generations shareholders will receive 1.108 common shares of ARC for each common share of Seven Generations held. ARC Resources Ltd. and Seven Generations Energy Ltd. will combine in an all-share transaction valued at approximately CAD 8.1 billion, inclusive of net debt. The transaction is structured through a plan of arrangement in respect of the securities of Seven Generations under the Canada Business Corporations Act. Following the close of the transaction, ARC shareholders will own approximately 49% and Seven Generations shareholders will own approximately 51% of the total shares outstanding. Following the combination, ARC will maintain its strong financial position, with financing for the transaction fully committed, with net debt expected to be reduced to approximately 1.3 times funds from operations by year-end 2021, based on current commodity prices. In connection with the combination, ARC has entered in a binding agreement with RBC Capital Markets and CIBC Capital Markets, who are acting as Joint Bookrunners, to provide the combined company with underwritten aggregate credit facility commitments of up to CAD 3.5 billion which will ensure an ability to optimize the capital structure, including retirement of the Seven Generations outstanding senior notes, while maintaining adequate go-forward liquidity. As part of its returns-focused value proposition, the combined company will pay a quarterly dividend of CAD 0.06 per share, subject to the approval of the Board of Directors. ARC expects to amalgamate Seven Generations upon closing. The combined company will operate as ARC Resources Ltd. Following completion of the transaction, it is anticipated that the Seven Generations Shares will be delisted from the TSX. The agreement provides for a termination fee payable of CAD 75 million to ARC or Seven Generations, as applicable, in certain circumstances if the Business Combination is not completed and the Business Combination Agreement is terminated.

The Board of Directors of the combined company will consist of 11 members, made up of six directors from ARC including one management director and five independent directors and five directors from Seven Generations including four independent directors and one non-independent director and will be led by Harold N. Kvisle as Chair. ARC's Hal Kvisle will remain as independent Board Chair and Seven Generations' Marty Proctor will join to serve the Board as Vice-Chair. Management will be led by ARC's Terry Anderson as President and Chief Executive Officer and Director, ARC's Kristen Bibby as Senior Vice President and Chief Financial Officer, Lara Conrad as Senior Vice President, Development, Armin Jahangiri as Senior Vice President, Capital Projects and Seven Generations' David Holt as Senior Vice President and Chief Operating Officer. Additional senior leaders for the combined company will be selected from the senior leadership teams at both organizations and will be named before the close of the transaction. As of March 1, 2021, Seven Generations and ARC agreed that the Board of Directors of the combined company will consist of six members of the current ARC Board, including Harold N. Kvisle (as Chair) and Terry M. Anderson, with Farhad Ahrabi, David Collyer, Michael McAllister and Kathleen O'Neill expected to continue as members of the Board of Directors of the combined company, and five members of the current Seven Generations Board, with Marty Proctor (as Vice Chair), Leontine Atkins, Susan Jones, William J. McAdam and M. Jacqueline Sheppard being the members expected to join the board of directors of the combined company. The combined company will remain headquartered in Calgary, Alberta, with field operations headquartered in Grande Prairie, Alberta, Dawson Creek, British Columbia, and Drayton Valley, Alberta.

The transaction is subject to the approval of at least two-thirds of the votes cast by holders of Seven Generations common shares, the approval of the majority of votes cast by holders of ARC common shares for the issuance of ARC common shares in connection with the transaction, regulatory approvals, Competition Act Approval, the CTA Approval and the HSR Approval, court approvals, third party consents, TSX shall have conditionally approved the issuance and the listing and posting for trading on the TSX of the ARC Shares to be issued pursuant to the Business Combination, the aggregate number of Seven Generations Shares held, directly or indirectly, by the Seven Generations Shareholders who have properly exercised and not withdrawn Dissent Rights in connection with the Business Combination shall not exceed 10% of the outstanding Seven Generations Shares at the Effective Time and other customary closing conditions. The voting Directors of both ARC and Seven Generations have unanimously approved the arrangement agreement. Canada Pension Plan Investment Board holding 16.8% of issued and outstanding shares of Seven Generations, has entered into a Support Agreement whereby it will vote in favor of the transaction under the terms of the agreement. As of March 1, 2021, the special meetings of both ARC and Seven Generations to obtain shareholders' approval will be held on March 31, 2021. On February 24, 2021, Seven Generations obtained the Interim Order providing for the calling and holding of the Seven Generations Meeting and other procedural matters. The final Court Approval is pending. As of March 31, 2021, shareholders of Seven Generations Energy Ltd. and ARC approved the transaction. The Court of Queen's Bench of Alberta issued a final order approving the transaction on March 31, 2021. The transaction is expected to close in the second quarter of 2021. As of March 1, 2021, the transaction is expected to be completed on or about April 6, 2021. Free funds flow will be allocated towards the company's highest-returning assets for development, debt reduction, and potential return of capital to shareholders through share buybacks and/or dividend increases. The combination is expected to be immediately accretive on a free funds flow and net asset value per share basis to all shareholders, yielding synergies that are expected to deliver approximately CAD 110 million in annual cost savings by 2022. Funds from operations, free funds flow, and the combined company's net asset value are all expected to meaningfully increase.

RBC Dominion Securities Inc acted as financial advisor to ARC and provided fairness opinion regarding exchange ratio to ARC's Board of Directors. Grant Zawalsky and Kelsey Clark of Burnet, Duckworth & Palmer LLP is acting as legal advisor to ARC. Computershare Trust Company of Canada is acting as transfer agent and register to ARC. CIBC Capital Markets is acting as exclusive financial advisor to Seven Generations and provided fairness opinion regarding exchange ratio to Seven Generations' Board of Directors. Leland Corbett and Benjamin Hudy of Stikeman Elliott LLP is acting as legal advisor to Seven Generations. Computershare Trust Company of Canada is acting as transfer agent and register to Seven Generations. Joseph Kaufman of Simpson Thacher & Bartlett LLP acted as legal advisor to Seven Generations Energy Ltd.

ARC Resources Ltd. (TSX:ARX) completed the acquisition of Seven Generations Energy Ltd. (TSX:VII) from Canada Pension Plan Investment Board and others on April 6, 2021. Seven Generations shares are expected to be delisted from the Toronto Stock Exchange on or before April 9, 2021. On closing of the Business Combination, ARC established a $2.0 billion unsecured extendible revolving credit facility with a maturity date of April 6, 2024. The New ARC Credit Facility was used to pay out Seven Generations' $1.4 billion financial covenant-based syndicated credit facility on completion of the Business Combination.