Slide 1: Corporate Presentation August 2020
Corporate Presentation August 2020 KeltExploration.com David J. Wilson President & Chief Executive Officer Sadiq H. Lalani Vice President & Chief Financial Officer www.keltexploration.com 0
Slide 2: Why Invest in Kelt?
Why Invest in Kelt ? VALUE CREATION ● Kelt focuses on value creation resulting in annual growth in production and funds from operations per share over the long-term. ● The Company emphasizes low-cost land accumulation in resource-style plays with the potential for high rates of return on capital inv
Slide 3: Current Economic Environment
Current Economic Environment COVID-19 PANDEMIC ● Kelt’s highest priority remains the health and safety of its employees, partners and the communities where it operates. The Company has introduced measures to protect the well-being of these stakeholders and is proud of the dedication of its workforce
Slide 4: Recent Asset Disposition
Recent Asset Disposition SALE OF INGA/FIREWEED DIVISION ● On August 21, 2020, Kelt completed the sale of its Inga/Fireweed Division to a multi-national oil and gas company headquartered in Houston, Texas, USA. ● Kelt received cash proceeds of $510.0 million, prior to closing adjustments, and the pur
Slide 5: Environment, Social and Governance (ESG)
Environment, Social and Governance ( ESG ) Environment Social Governance • Kelt is committed to minimalizing impacts on the • Health and safety are a high • Kelt is committed to strong environment. priority and Kelt maintains a HS&E corporate governance practices, • Kelt enacted an Environmental Man
Slide 6: Capital Structure
Capital Structure ● Stock Exchange listing TSX ● Trading symbol KEL ● Market capitalization ( effective August 20, 2020 ) $ 330 million ● 52-week stock trading range $ 0.67 – $ 5.00 ● Common shares issued 188.1 million ● Stock options ( 12.5 MM ) & RSUs ( 0.5 MM ) 13.0 million ( 6.9% ) → average exe
Slide 7: Insider Commitment
Insider Commitment Insider Purchases Offering / Market Purchases Date Shares (MM) Amount (MM) Price/share $ 13.9 MM Equity Private Placement Feb-2013 3.7 $ 8.7 $ 2.32 $ 94.4 MM Equity Private Placement Apr-2013 5.7 $ 31.5 $ 5.55 $ 92.0 MM Equity Private Placement Aug-2013 0.5 $ 4.0 $ 8.00 $ 19.6 MM
Slide 8: Capital Expenditures
Capital Expenditures Jan-Jun ( $ millions ) 2018 2019 2020 Drilling & Completions 168.7 184.7 51.5 Equipment, Facilities, & Pipeline 117.7 129.0 67.2 Infrastructure [1] Land, Seismic & Asset Acquisitions, net of ( 0.9 ) 1.9 0.2 Property Dispositions Net Capital Expenditures 285.5 315.6 118.9 Note: [
Slide 9: Drilling Program
Drilling Program 2018 2019 Jan-Jun 2020 Drills Gross / Net Wells Gross / Net Wells Gross / Net Wells Alberta 16 15.1 8 8.0 ꟷ ꟷ British Columbia 17 17.0 25 25.0 9 9.0 Total 33 32.1 33 33.0 9 9.0 2018 2019 Jan-Jun 2020 Completions Gross / Net Wells Gross / Net Wells Gross / Net Wells Alberta 21 20.1 6
Slide 10: Production
Production Jan-Jun 2018 2019 2020 Oil ( bbls/d ) 8,403 31% 9,361 31% 9,254 30% NGLs ( bbls/d ) [1] 3,186 12% 4,490 15% 4,825 16% Gas ( Mcf/d ) 92,502 57% 96,658 54% 99,045 54% Combined ( BOE/d ) 27,006 100% 29,961 100% 30,587 100% Per MM Shares ( BOE/d ) 148 163 163 Note: [1] Jan-Jun 2020 NGLs produ
Slide 11: Commodity Prices
Commodity Prices ( CA$, unless otherwise specified ) 2018 2019 Jan-Jun 2020 WTI Crude Oil ( USD/bbl ) [1] US $ 64.94 US $ 56.98 US $ 36.81 MSW Crude Oil ( CAD/bbl ) [2] $ 69.29 $ 69.19 $ 40.64 WTI-MSW Basis Differential ( CAD/bbl ) ( $ 14.98 or 18% ) ( $ 6.42 or 8% ) ( $ 9.10 or 18% ) NYMEX Natural
Slide 12: Hedging
Hedging Commodity Index Term Quantity Fixed Price MSW Jul/2020 to 3,000 CAD 31.36 / bbl Crude Oil Fixed Price Dec/2020 bbls/d [ equivalent to USD $23.23 at the Jul/20 CAD/USD exchange rate of 1.350 ] NYMEX Henry Hub Jul/2020 to 45,000 CAD 2.83 / MMBtu Natural Gas Fixed Price Nov/2020 MMBtu/d [ equiv
Slide 13: Netbacks
Netbacks Jan-Jun ( $ / BOE ) 2018 2019 2020 Revenue / Price 37.30 34.53 20.07 Realized hedging gain ( loss ) ( 0.60 ) ( 0.08 ) 3.82 Royalties ( % of revenue / price ) ( 8.3% ) ( 5.1% ) ( 4.6% ) Transportation expense ( 3.92 ) ( 4.62 ) ( 3.57 ) Production expense ( 9.11 ) ( 9.18 ) ( 10.24 ) Operating
Slide 14: Finding, Development & Acquisition Costs: P+P Reserves
Finding, Development & Acquisition Costs: P+P Reserves 2018 2019 Capital expenditures + change in FDC ( $M ) 596,004 1,295,973 P+P reserve additions, net ( MBOE ) 76,905 169,217 FD&A cost ( $/BOE ) 7.75 7.66 Operating netback ( $/BOE ) 20.56 18.89 Recycle ratio 2.7 x 2.5 x Notes: [1] Reserves are pe
Slide 15: Financial
Financial Jan-Jun 2018 2019 2020 Revenue ( $ MM ) 389.3 394.4 116.4 Operating income ( $ MM ) [1] 202.6 206.5 51.0 Adjusted funds from operations ( $ MM ) [1] 186.8 182.5 39.1 AFFO per share – diluted ( $/share ) 1.01 0.99 0.21 Capital expenditures, net ( $ MM ) [2] 285.5 315.6 118.9 Notes: [1] See
Slide 16: Focused on per Share Growth
Focused on per Share Growth PRODUCTION PER MILLION SHARES ( BOE / d ) ADJUSTED FUNDS FROM OPERATIONS PER SHARE ( diluted ) 250 $1.25 CAGR CAGR Since Since 2013 2013 = 21% 200 = 21% $1.00 1.01 0.99 163 0.93 148 150 $0.75 120 121 125 105 87 0.61 100 84 $0.50 73 77 76 69 53 0.36 0.34 50 0.32 $0.25 42 7
Slide 17: Operating Divisions
Operating Divisions Oak/Flatrock ● Montney light oil/condensate-rich gas Pouce Coupe/Progress/Spirit River ● Montney light oil ● Montney and Doig gas Oak/Flatrock Pouce Coupe/ Progress/Spirit River ● Charlie Lake light oil Wembley/Pipestone Wembley/Pipestone Grande Cache ● Montney light oil/condensa
Slide 18: Kelt Land Fairway
Kelt Land Fairway R13 R11 R9 R7 R5 R3 R1W6 R24W5 94-A-14 94-A-11 94-A-15 94-A-10 94-A-16 94-A-9 T90 Corporate Land Holdings T88 T88 [ as at August 2020 ] Flatrock T86 Developed + Gross Net Net T86 Oak Undeveloped Acres Acres Sections T84 T84 Fort St. John BC Montney 210,040 206,854 323 T82 T82 AB Mo
Slide 19: Kelt Montney Framework
#2 Kelt exploration Kelt Montney Framework I Oak / Flatrock ; Pouce Coupe Progress La Glace Pipestone / Wembley A A A vA A Doig | Doig I 1 Upper I Montney | i] 2 25 ve r Upper liddle : 1 sz) Wess i Niddle GE) Middle Middle 4 Montney 1 Upper 2 (0304) 4 Middle i = = | (p34) Fa z - I 4 _ 7 ial (02) = M
Slide 20: British Columbia Montney - Oak / Flatrock Division
British Columbia Montney - Oak / Flatrock Division 00/1-9 UM (DUC) 00/8-23 UM (DUC) 00/4-10 UM (DUC) 00/6-24 UM (DUC) (sfc 5-33) 02/13-13 UM (sfc 13-12) OPERATIONS 00/16-6 UM 00/13-5 MM (sfc 5-31) 00/7-3 UM 00/12-2 MM T87 ● Oil and gas exploration activity targeting (sfc 10-27) the Montney at depths
Slide 21: Alberta Montney Lands
Alberta Montney Lands MONTNEY LAND HOLDINGS T80 Gross: 185,600 acres ( 290 sections ) Net: 163,621 acres ( 256 sections ) Spirit OPERATIONS Pouce River Coupe ● Kelt commenced development of the Montney oil play at T78 Pouce Coupe with its first five-well pad that was Progress completed in Q1-17. The
Slide 22: Alberta Montney Wells
Alberta Montney Wells PRODUCTION RESERVES Top 5 Pouce Coupe IP30 Wells ( gross sales, BOE/d ): Typical Well EUR’s (1) Pouce Coupe 03/07-18-078-11W6 LMM (D1) 2,045 ( 66% oil/ngls ) Wembley Montney GAS (2) Pouce Coupe 02/06-18-078-11W6 MM (D2) 2,004 ( 68% oil/ngls ) ( Sproule – Dec/31/2019 ) (3) Pouce
Slide 23: Wembley/Pipestone/La Glace Division – Upper Middle Montney
Wembley/Pipestone/La Glace Division – Upper Middle Montney ( D3 / D4 ) MONTNEY LAND HOLDINGS 00/5-10 UMM 02/13-32 UMM (sfc 14-34) Gross: 110,880 acres ( 173 sections ) Sexsmith 00/1-35 UMM Gas Plant T75 Net: 107,155 acres ( 167 sections ) (sfc 12-19) (0.3% WI) 00/14-2 00/13-6 UMM (sfc 14-26) UMM 00/
Slide 24: Wembley/Pipestone/La Glace Division – Middle Montney
Wembley/Pipestone/La Glace Division – Middle Montney ( D2 / D5 ) Kelt 14-29 MONTNEY LAND HOLDINGS La Glace Facility (100% WI) 1-5 MM Gross: 110,880 acres ( 173 sections ) 02/13-33 MM 15-33 UM Sexsmith T75 Net: 107,155 acres ( 167 sections ) Gas Plant 02/14-1 MM 2-28 MM (0.3% WI) OPERATIONS 1-27 MM 1
Slide 25: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands CHARLIE LAKE LAND HOLDINGS T80 Gross: 108,320 acres ( 169 sections ) Net: 74,720 acres ( 117 sections ) Progress Pouce OPERATIONS Coupe T78 ● Kelt has over 100 gross locations targeting the Spirit Upper and Lower intervals of the Charlie Lake River Formation. T76 ● Kelt op
Slide 26: Spirit River – Charlie Lake
Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS 02/16-11 CL Pad: H2O Disposal 13-34 14-22 (60%) T79 15-22 (60%) Gross: 27,200 acres ( 43 sections ) 03/3-1 (Upper CL) 14-33 16-22 (60%) Net: 20,000 acres ( 31 sections ) 02/3-1 (Lower CL) 4-15 CHARLIE LAKE GEOLOGY: (60%) Gamma Ray Density Porosi
Slide 27: Future Considerations
Future Considerations ● The Company has numerous potential future drilling opportunities on its existing lands that will provide for continued growth in the years to come. ● The Company has amassed vast Montney acreage in new plays to complement its existing development Montney lands. ● The Company
Slide 28: Appendix
Appendix ● ESG – Health & Safety ● ESG – Environment & Air Quality ● ESG – Climate Change ● ESG – GHG Emissions ● ESG – Corporate Governance ● Leadership – Board of Directors ● Leadership – Management ● Abbreviations ● Disclaimers 27
Slide 29: ESG – Health and Safety
Environment, Social & Governance ( ESG ) Health and Safety Safety is paramount in Kelt’s corporate culture. The Company is committed to safe and environmentally responsible operations for the benefit of its employees, contractors and the communities we work in. We reinforce our commitment through th
Slide 30: ESG – Environment and Air Quality
Environment, Social & Governance ( ESG ) Environment and Air Quality Kelt is committed to ensuring that its operational activities comply with all environmental regulatory standards and requirements. By conducting due diligence, Kelt takes all reasonable care to minimize and/or eliminate any negativ
Slide 31: ESG – GHG Emissions
Environment, Social & Governance ( ESG ) Kelt supports innovative strategies, clean technology (including alternative energy and renewable energy), green products and utilizing lower emitting solutions to meet industry targets. GHG Emissions Type Units 2018 Emissions 2018 Intensity 2019 Emissions 20
Slide 32: ESG – Corporate Governance
Environment, Social & Governance ( ESG ) Corporate Governance The following documents relating to the Company’s corporate governance matters are available on the internet at www.keltexploration.com: ● Advance Notice Policy ● Disclosure, Confidentiality and Trading Policy ● Articles of Incorporation,
Slide 33: Corporate Governance - Board of Directors
Corporate Governance - Board of Directors Robert J. Dales [ 2, 3, 4, 7 ] Geri L. Greenall [ 2, 3, 6 ] President, Valhalla Ventures Inc. Chief Financial Officer, Spartan Delta Corp. Common shares 1,794,255 Common shares 38,500 Debentures $ 200,000 Debentures Nil Stock options 196,000 Stock options 13
Slide 34: Management
Management David J. Wilson Sadiq H. Lalani Douglas J. Errico President & Chief Executive Officer Vice President & Chief Financial Officer Vice President, Land Common shares 18,592,492 Common shares 1,665,233 Common shares 463,842 Debentures $ 8,679,500 Debentures $ 394,500 Debentures Nil Stock optio
Slide 35: Abbreviations
Abbreviations GAAP: Canadian generally accepted accounting principles as set out in the CPA Canada Handbook – Accounting. IFRS: International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB’). FFO: Funds from operations WTI: West Texas Intermediate MSW:
Slide 36: Disclaimer
Disclaimer Forward Looking Statements Certain statements included in this corporate presentation (the “Presentation”) constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purp
Slide 37: Disclaimer
Disclaimer The actual results of operations of the Company and the resulting financial results will likely vary from the amounts set forth in the analysis presented in this Presentation, and such variation may be material. The Company and its management believe that the FOFI has been prepared on a r
Slide 38: Disclaimer
Disclaimer Risks and Uncertainties Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the
Slide 39: Disclaimer
Disclaimer Oil and Gas Advisories Barrel of Oil Equivalent Presentation This Presentation contains various references to the abbreviation BOE which means barrels of oil equivalent. Where amounts are expressed on a BOE basis, natural gas volumes have been converted to oil equivalence at six thousand
Slide 40: Disclaimer
Disclaimer Reserves Unless otherwise specified, reserve estimates disclosed in this Presentation were prepared by Sproule Associates Limited (“Sproule”) in accordance with National Instrument 51- 101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the Canadian Oil and Gas Evalua
Slide 41: Disclaimer
Disclaimer Financial Advisories All dollar amounts are referenced in Canadian dollars, except when otherwise noted. Non-GAAP Financial Measures and Other Key Performance Indicators This Presentation contains certain financial measures, as described below, which do not have standardized meanings pres
Slide 42: Disclaimer
Disclaimer Other Key Performance Indicators Production per common share: is calculated by dividing total production by the basic weighted average number of common shares outstanding, as determined in accordance with GAAP. NPV10% BT: the anticipated net present value of the future net cash flow befor
Slide 43: Corporate Presentation
Corporate Presentation KeltExploration.com Kelt Exploration Ltd. Suite 300, East Tower 311 – Sixth Avenue SW Calgary, Alberta Canada T2P 3H2 Phone: 403-294-0154 Fax: 403-291-0155 Website: www.KeltExploration.com 42