ARC delivered strong financial results again in 2013. Through our paced approach to development, we have demonstrated steady funds from operations, a strong balance sheet and the ability to internally fund growth while paying a consistent dividend to our shareholders.
During the year, sales revenue was $1.6 billion and funds from operations were $862 million, both presenting year-over-year increases as a result of higher production volumes and higher realized crude oil and natural gas prices. ARC ended the year with total net debt of $1.1 billion, resulting in net debt to 2013 funds from operations of 1.2 times, well within our target of 1.0 to 1.5 times. Our strong balance sheet provides us with significant financial flexibility as we move forward with our 2014 capital program.
The results of our operations and financial performance are largely dependent on commodity prices. In 2013, the West Texas Intermediate crude oil price averaged US$98 per barrel for the year, a four per cent increase compared to 2012. Canadian crude oil differentials remained volatile through the year with the WTI/ Edmonton Par differential ranging from a discount of US$1.36 per barrel to a discount of US$19.31 per barrel and averaging US$7.57 per barrel for the year. Higher differentials were largely due to increased North American crude oil production, refinery outages and constrained takeaway and infrastructure capacity. North American natural gas prices increased significantly in 2013 following decade low prices in 2012. The NYMEX Henry Hub price was up 30 per cent in 2013, averaging US$3.61 per mcf. Western Canadian AECO natural gas price also increased by approximately 30 per cent in 2013 relative to 2012, to average $3.15 per mmbtu.
During the year the Canadian dollar devalued relative to the US dollar, ending the year at Cdn$/US$1.06. Given that the North American benchmark commodity prices are US dollar based, the strengthening of the US dollar positively impacts funds from operations. Conversely, the devaluation of the Canadian dollar relative to the US dollar impacts the value of ARC’s long-term debt, of which approximately 80 per cent is US dollar denominated.
ARC maintains a risk management program to reduce the volatility of revenues, increase the certainty of funds from operations and protect project economics. ARC has hedging contracts in place to protect prices on crude oil and natural gas volumes as well as foreign exchange hedges to manage exposure to Cdn$/US$ exchange rates. In 2013, ARC realized gains of over $15 million on its hedging contracts.
In 2013, ARC realized gains of over $15 million on its hedging contracts.