Business
Kelt Reduces 2020 Capital Expenditure Program by 36%
Calgary, Alberta--(Newsfile Corp. - March 17, 2020) - Kelt Exploration Ltd. (TSX: KEL) ("Kelt"...
About this update from Kelt Exploration Ltd.
[{"type":"text","content":"Kelt Reduces 2020 Capital Expenditure Program by 36%Calgary, Alberta--(Newsfile Corp. - March 17, 2020) - Kelt Exploration Ltd. (TSX: KEL) (\"Kelt\" or the \"Company\") announces that it's board of directors has approved a reduction in capital expenditures for 2020. The Company has reduced its capital expenditure budget by $80.0 million or 36% to $145.0 million (previously $225.0 million).The energy industry continues to experience high volatility with lower crude oil prices driven by fears of a retraction in global economic growth and increases in crude oil supply as oil producing countries such as Saudi Arabia and Russia ramp up oil production during a period of heightened uncertainty caused by the COVID-19 pandemic. In addition, natural gas prices at most major U.S. gas hubs are trading at low levels coming out of a warmer than average winter in North America.Kelt has taken measures to mitigate near term commodity price volatility by entering into fixed price swap contracts for the first half of 2020 on crude oil and for the summer of 2020 on natural gas.The reduction in Kelt's capital spending plans for the remainder of 2020 includes the deferral of the following projects:Drilling of an exploratory well at Oak/Flatrock;Completions of seven development wells at Oak/Flatrock;Construction of pipeline tie-ins, gas compression and an oil battery at Oak/Flatrock;Drilling of a well at Wembley/Pipestone;Completion of a well at Wembley/Pipestone;Construction of pipeline tie-ins at Wembley/Pipestone; andDrilling and completions of a five well pad at Fireweed.The revised capital expenditure program will begin immediately with minimal activity in the second quarter of 2020.Kelt has reduced its production forecast for 2020 by approximately 12% to reflect the delayed start-up of new wells resulting from the deferral of capital expenditures. The Company expects 2020 production to average between 34,000 and 36,000 BOE per day (previous forecast was 38,500 to 41,000 BOE per day). The revised 2020 production forecast would represent an increase of between 13% and 20% from average production of 29,961 BOE per day in 2019.Given the significant recent decline in commodity prices, Kelt has reduced its 2020 commodity price assumptions as follows:WTI Crude Oil (USD/bbl) : $39.50 (down 24% from $52.00).[Note: WTI averaged USD $54.09 for the first tw...