Slide 1: Corporate Presentation
Corporate Presentation January 2016 David J. Wilson, President & Chief Executive Officer Sadiq H. Lalani, Vice President, Finance & Chief Financial Officer www.KeltExploration.com
Slide 2: Advisory Regarding Forward-Looking Statements
Advisory Regarding Forward-Looking Statements 1 Certain information with respect to Kelt Exploration Ltd. (“Kelt” or the “Company”) contained herein, including expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operati
Slide 3: Why Invest in Kelt?
Why Invest in Kelt? 2 TRACK RECORD/EXPERIENCE: the Kelt management team has a track record of creating shareholder value, previously with Celtic Exploration Ltd., sold in February 2013 for $3.2 billion. GROWTH ORIENTED: Kelt maintains financial flexibility during periods of opportunistic market
Slide 4: Common Share Information
Common Share Information 3 • Stock Exchange listing TSX • Trading symbol KEL • Market capitalization ( @ Jan / 4 / 2016 ) $ 750 million • 52-week trading range $ 3.29 – $ 9.95 • Common shares issued 168.7 million • Stock options (6.7 MM) & RSUs (1.2 MM) 7.9 million ( 4.7% ) → average exercise price
Slide 5: Capital Expenditures
Capital Expenditures 4 2015 2016 2016/15 ( $ millions ) 2014 Forecast Budget Change Drilling & Completions 188.6 99.0 75.0 - 24% Facilities, Equipment & 46.1 54.0 22.0 - 59% Pipeline Infrastructure Land, Seismic & Asset 21.6 28.0 13.0 - 54% Acquisitions [1] Sub-total 256.3 181.0 110.0 - 39% Corporat
Slide 6: Drilling Program
Drilling Program 5 Gross Net Average Notes: 2015 Wells Wells WI % [1] Alberta drilling prospects include: Alberta [1] 14 10.7 76% (a) Grande Prairie ( Pouce Coupe / Progress / Spirit River / La Glace ): - Montney British Columbia [2] 5 5.0 100% - Doig - Charlie Lake Total 19 15.7 83% - Halfway (b) K
Slide 7: Production Outlook
Production Outlook 6 2014 2015 2016 2016 Actual Forecast Range Budget Split (average) (average) (average) Oil ( bbls/d ) 3,413 5,000 – 5,250 5,800 26% NGLs ( bbls/d ) [1] 924 1,650 – 1,750 2,200 10% Gas ( mcf/d ) 50,516 71,100 – 72,000 84,000 64% Combined ( BOE/d ) 12,756 18,500 – 19,000 22,000 Per
Slide 8: Production Growth (since inception)
Production Growth ( since inception ) 7 PRODUCTION ( BOE / d ) PRODUCTION PER MM SHARES ( BOE / d ) 28,000 160 CAGR since CAGR since 2013 = 77% 2013 = 35% 24,000 130 22,000 120 120 20,000 18,500 105 16,000 83 14,000 12,756 80 77 11,850 69 12,000 53 8,419 8,000 40 3,961 42 4,000 8,000 43 47 6,650 36
Slide 9: Commodity Prices
Commodity Prices 8 2016/15 ( CA $, unless otherwise specified ) 2014 2015 (E) 2016 (E) Change WTI Crude Oil ( USD/bbl ) [1] US $ 92.99 US $ 48.76 US $ 51.50 + 6% WTI Crude Oil ( CAD/bbl ) $ 102.49 $ 62.36 $ 72.54 + 16% NYMEX Natural Gas ( USD/mmBtu ) US $ 4.37 US $ 2.67 US $ 2.75 + 3% AECO 5A Natura
Slide 10: Gas Marketing / Transportation Contracts
Gas Marketing / Transportation Contracts 9 NIT Spectra Alliance Firm Service ( mmBtu / d ) TOTAL AECO Station 2 Chicago ALBERTA Current to Nov/30/15 38,000 - - 38,000 Dec/1/15 to Oct/31/16 38,000 - 8,100 46,100 Nov/1/16 to Oct/31/17 38,000 - 8,100 46,100 BRITISH COLUMBIA Current to Nov/30/15 6,100 5
Slide 11: Netbacks
Netbacks 10 2016/15 ( $ / BOE ) 2014 2015 (E) 2016 (E) Change Oil & gas revenue 46.11 26.75 31.55 + 18% Realized hedging gain ( loss ) ( 0.08 ) ( 0.05 ) - Royalties ( % of revenue ) ( 13.3% ) ( 10.0% ) ( 10.7% ) + 7% Transportation expense ( 2.30 ) ( 2.25 ) ( 2.17 ) - 4% Production expense ( 12.00 )
Slide 12: Facility Spending to result in Cost Savings
Facility Spending to result in Cost Savings 11 In each of its core areas, Kelt embarked on projects that were expected to reduce corporate operating and transportation expenses: KARR: Pembina Pipeline Corporation announced the construction of a 30,000 bbl/d Karr Lateral pipeline and LACT Unit as par
Slide 13: Financial Outlook
Financial Outlook 12 2015 2016 2014 Forecast Range Budget Revenue, before royalties ( $ MM ) 214.3 180.0 – 185.0 254.0 Funds from operations ( $ MM ) [1] 115.5 60.0 – 63.0 110.0 Per share – diluted ( $/share ) 0.93 0.38 – 0.40 0.65 Capital expenditures ( $ MM ) [2] 423.9 495.0 110.0 Net debt, at yea
Slide 14: Commodity Price Sensitivities – Funds from Operations
Commodity Price Sensitivities – Funds from Operations 13 Forecasted 2016 Funds from Operations - Sensitivities to varying Commodity Prices ( $ millions ) WTI Oil → US $ 41.00 US $ 51.50 US $ 62.00 US $ 72.50 AECO Gas ↓ $ 2.20 66 86 104 119 $ 2.95 90 110 128 143 $ 3.70 113 133 151 166 $ 4.45 135 155
Slide 15: Recycle Ratio (since inception)
Recycle Ratio ( since inception ) 14 As at December 31, 2014 Proved + Recycle Ratio ( since inception ) Proved Probable Capital expenditures plus future development 1,277.8 1,400.3 capital expenditures ( $MM ) Reserve additions, net ( MMBOE ) 67.2 105.2 Finding, Development & Acquisition 19.02 13.31
Slide 16: Core Areas
Core Areas 15 Grande Prairie ( includes Pouce Coupe, Progress, Spirit River & La Glace ) : → Montney/Doig gas development → Montney light oil development → Charlie Lake light oil development → Halfway light oil development Inga / Fireweed / Stoddart Karr: Grande Prairie → Montney/Dunvegan light oil
Slide 17: Land Holdings
Land Holdings 16 Gross Acres Net Acres Average WI Net Sections Developed 387,239 205,866 53% 321 Undeveloped 666,620 537,318 81% 840 Total 1,053,859 743,184 71% 1,161 Note: Growth in net land holdings since March 31, 2013: Date Net Acres Net Sections % Growth since Mar/31/2013 Mar/31/2013 107,997 16
Slide 18: Kelt Land Fairway
Kelt Land Fairway 17 Fireweed Inga Stoddart Fort St. John Progress Pouce Coupe Spirit River Valhalla / La Glace Grande Prairie Karr Kelt Lands British Columbia Alberta
Slide 19: Grande Prairie
Grande Prairie 18 LAND Gross: 308,908 acres ( 483 sections ) Progress Pouce Coupe Spirit River Net: 195,017 acres ( 305 sections ) OPERATIONS Top five IP30 wells Valhalla / La Glace ( gross sales, BOE/d ): (1) Pouce Coupe 14-25-077-13W6 Montney ( 95% gas ) 1,401 (2) Progress 04-16-077-09W6 Halfway (
Slide 20: Pouce Coupe
Pouce Coupe 19 Targeting Montney (upper Progress and middle/lower) and Halfway “O” Pool Unit 7.8% WI Doig formations. Pouce Coupe Ownership in pipeline infrastructure, gas South Boundary “B” Unit #2 67.9% WI 8-18 Operated 12-8 7-18 13-8 Progress Gas Plant compression and a 20% (20% WI) interest
Slide 21: Progress / Spirit River
Progress / Spirit River 20 PROGRESS: SPIRIT RIVER: • Targeting Montney and Halfway • 20 to 25 vertical up-hole re-completion formations. candidates in the Charlie Lake. Gamma Ray Density Porosity Worsley (O) Progress Halfway 13-34 Y Gas Unit #1 15.9% WI 15-13 (50%) Montney 13-33 J (Upper) J (Lower)
Slide 22: Valhalla / La Glace
Valhalla / La Glace 21 Targeting the Montney formation. Kelt Valhalla/La Glace 3,500 bopd + Ownership in pipeline + 20 MMcf/d Facility infrastructure, oil (100% WI) Sexsmith Gas Plant battery and gas 13-33 (0.3% WI) compression. 15-33 Ownership interest (0.3%) in the Encana 1-19 Sexsmith 200 M
Slide 23: Karr
Karr 22 12-26 LAND Montney Rights: 16-10 (75%) 37.0 sections ( gross ) 16-8 (75%) “ MM ” 35.8 sections ( net ) OPERATIONS 16-31 Top four IP30 wells “ MM ” 2015 ( gross sales, BOE/d ): drill 15-28 16-28 4-2 OS 2015 (1) Karr 102/15-28-065-03W6 ( 78% oil ) 1,360 13-31 (2) Karr 100/16-28-065-03W6 ( 57%
Slide 24: Grande Cache
Grande Cache 23 Cretaceous dry-gas Narraway producing area. 135 MMcf/d Gas Plant (7% WI) Stable and low-decline production. Ownership in pipeline infrastructure, gas compression and gas plants. Copton Land held by 25 MMcf/d Gas Plant production. Future (30% WI) upside potential at +$3.50/mcf
Slide 25: British Columbia – Doig Lands
British Columbia – DOIG Lands 24 LAND Doig Rights: Fireweed 16 MMcf/d Gross: 175 sections Compressor/ Facility (100% WI) Net: 168 sections OPERATIONS Fireweed ● Recent Doig wells completed using Inga 28 MMcf/d slick-water fractures have shown very Compressor/ Facility encouraging results. In about e
Slide 26: BC Wells: Doig Slick Water Completions
BC Wells: DOIG Slick Water Completions 25 ( BOE / d ) PRODUCTION 2,500 10-21 Cumulative 10-21-87-23W6 2,000 Raw Gas: 1,406 MMcf 3-33-87-23W6 Condensate: 146 Mbbls 1,500 1,000 3-33 Cumulative 500 Raw Gas: 869 MMcf Condensate: 107 Mbbls 0 1 2 3 4 5 6 7 8 9 10 11 12 Month ( BBLs / MMCF ) CONDENSATE TO
Slide 27: British Columbia – Montney Lands
British Columbia – MONTNEY Lands 26 LAND C-26-A Montney (Sfc: A-6-A) Gross IP30 = Montney Rights: 1,147 BOE/d of which Gross: 163 sections 696 bbls/d (60%) was condensate Net: 162 sections Fireweed C-85-I Montney OPERATIONS (Sfc: A-65-I) Gross IP30 = 903 BOE/d ● recent Montney wells completed using
Slide 28: BC Wells: Montney Slick Water Completions
BC Wells: MONTNEY Slick Water Completions 27 ( BOE / d ) PRODUCTION 1,400 8-31 Cumulative 8-31-87-23W6 1,200 Raw Gas: 414 MMcf C-26-A/94-A-13 1,000 C-26-A Cumulative Condensate: 75 Mbbls C-85-I/94-A-12 800 Raw Gas: 623 MMcf Condensate: 57 Mbbls 600 400 C-85-I Cumulative 200 Raw Gas: 398 MMcf Condens
Slide 29: British Columbia – Baldonnel Lands
British Columbia – BALDONNEL Lands 28 LAND Baldonnel Rights: Gross: 149 sections Net: 138 sections OPERATIONS ● Oil exploration activity with plans to drill initial well in 2016/2017. ● Competitor activity offsetting Kelt lands has been successful in the Baldonnel formation. Kelt Lands
Slide 30: Future Considerations
Future Considerations 29 – DRILLING INVENTORY: Kelt estimates that it has numerous years of drilling inventory on its existing lands to continue to grow the Company. – BALANCE SHEET: Kelt maintains financial flexibility so that it can persevere during periods of declining commodity prices and pursue
Slide 31: Management
Management 30 David J. Wilson, President & CEO Sadiq H. Lalani, Vice President, Finance & CFO Douglas J. Errico, Vice President, Land Alan G. Franks, Vice President, Production Douglas O. MacArthur, Vice President, Operations Patrick Miles, Vice President, Exploration William C. Guinan, Corporate Se
Slide 32: Board of Directors
Board of Directors 31 Robert J. Dales Compensation (Chair), Nominating, Audit, Reserves William C. Guinan Chairman, Nominating (Chair), HSE Eldon A. McIntyre Reserves (Chair), Nominating, Audit, Compensation Neil G. Sinclair Audit (Chair), Compensation, HSE, Reserves David J. Wilson HSE (Chair)
Slide 33: Oil and Gas Advisories
Oil and Gas Advisories 32 Barrel of oil equivalent (“BOE”) amounts may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel. This conversion ratio of six thousand cubic feet of nat
Slide 34: Financial Advisories
Financial Advisories 33 All dollar amounts are referenced in Canadian dollars, except when noted otherwise. This presentation contains the terms “funds from operations”, “operating income”, “operating netback”, “production per million shares”, “finding, development and acquisition cost” and “recycle
Slide 35: Corporate Presentation
Corporate Presentation January 2016 Suite 300, 311 – 6th Avenue SW Calgary, Alberta, Canada T2P 3H2 www.KeltExploration.com