Slide 1: Corporate Presentation September 2021
Corporate Presentation September 2021 KeltExploration.com David J. Wilson President & Chief Executive Officer Sadiq H. Lalani Vice President & Chief Financial Officer www.keltexploration.com 1
Slide 2: Why Invest in Kelt?
Why Invest in Kelt ? VALUE CREATION ● Kelt focuses on value creation for shareholders 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 invested and rapid growth of its drilling inventory portfolio.
Slide 3: Environment, Social and Governance (ESG)
Environment, Social and Governance ( ESG ) On January 7, 2021, Kelt released its inaugural ESG Report as part of its ongoing commitment to health and safety, responsible and sustainable resource development, good governance practices and Environment community engagement. The ESG Report can be viewed
Slide 4: Capital Structure
Capital Structure ● Stock Exchange listing TSX ● Trading symbol KEL ● Market capitalization ( effective August 25, 2021 ) $ 610 million ● 52-week stock trading range $ 1.34 – $ 3.62 ● Common shares issued 188.9 million ● Stock options ( 10.7 MM ) & RSUs ( 0.9 MM ) 11.6 million ( 6.1% ) → average exe
Slide 5: 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 6: Capital Expenditures – Three Year Comparative
Capital Expenditures – Three Year Comparative 2021/20 ( $ millions ) 2019 2020 2021 (E) change Drilling & Completions 184.7 70.2 108.5 + 55% Equipment, Facilities, & Pipeline 129.0 79.1 70.0 − 12% Infrastructure [1] Land, Seismic & Asset Acquisitions, 1.9 ( 503.3 ) ( 3.5 ) n/a net of Property Dispos
Slide 7: 2021 Drilling Program + Production Behind Pipe
2021 Drilling Program + Production Behind Pipe EIGHTEEN wells that have been drilled & completed and are awaiting tie-in: ❖ Wembley (sfc 14-34) 02/13-32-074-09W6 Middle Montney (D3) – tie-in in August 2021. ❖ Wembley (sfc 14-34) 00/13-10-075-09W6 Middle Montney (D3) – tie-in in August 2021. ❖ Wemble
Slide 8: Production – Three Year Comparative
Production – Three Year Comparative 2019 2020 2021 (E) Oil ( bbls/d ) 9,361 31% 7,057 28% 4,700 22% NGLs ( bbls/d ) [1] 4,490 15% 4,161 17% 3,300 15% Gas ( Mcf/d ) 96,658 54% 82,646 55% 81,000 63% Combined ( BOE/d ) 29,961 100% 24,992 100% 21,500 100% Annual Percent Change + 11% − 17% − 14% * Per MM
Slide 9: 2021 Forecasted Commodity Prices
2021 Forecasted Commodity Prices ( CAD, unless otherwise specified ) Jan-Jun Jul-Dec (E) 2021 Forecast WTI Crude Oil ( USD/bbl ) [1] US $ 61.94 US $ 65.03 US $ 63.50 MSW Crude Oil ( CAD/bbl ) [2] $ 71.94 $ 75.05 $ 73.51 NYMEX Henry Hub [L3D] Natural Gas ( USD/MMBtu ) US $ 2.69 US $ 3.79 US $ 3.25 DA
Slide 10: Commodity Prices – Three Year Comparative
Commodity Prices – Three Year Comparative ( CAD, unless otherwise specified ) 2019 2020 2021 (E) WTI Crude Oil ( $/bbl ) [1] US $ 56.98 $ 75.61 US $ 39.24 $ 52.62 US $ 63.50 $ 79.17 MSW Crude Oil ( $/bbl ) [2] US $ 52.17 $ 69.19 US $ 33.82 $ 45.34 US $ 58.96 $ 73.51 NYMEX Henry Hub [L3D] Natural Gas
Slide 11: Gas Market Risk Management
Gas Market Risk Management GAS MARKET DIVERSIFICATION ● The Company has taken a diversified approach to selling its natural gas in order to reduce exposure to single market risk. ● Estimated % of average gas sales in 2021 at each respective price hub is forecasted to be as follows: 5% 9% Station 2 A
Slide 12: Commodity Price Risk Management
Commodity Price Risk Management Remaining Commodity Index Quantity Fixed Price Term WTI 1,500 CAD $70.00 / bbl Crude Oil Sep/2021 Fixed Price bbls/d [ equivalent to USD $56.13 / bbl at a CAD/USD exchange rate of 1.247 ] WTI−MSW 1,500 USD −$4.55 / bbl Crude Oil Sep/2021 Basis Differential bbls/d [ eq
Slide 13: 2021 Forecast Commodity Price Sensitivities
2021 Forecast Commodity Price Sensitivities 2021 Kelt Oil/NGLs Price Kelt Gas Price Forecast plus 10% plus 10% Kelt Oil Price ( CAD/bbl ) 73.19 80.50 + 10% 73.19 ─ Kelt NGLs Price ( CAD/bbl ) 33.63 37.00 + 10% 33.63 ─ Kelt Gas Price ( CAD/Mcf ) 3.98 3.98 ─ 4.38 + 10% AFFO ( $ MM ) [1] [2] 145.0 157.
Slide 14: Netbacks – Three Year Comparative
Netbacks – Three Year Comparative 2021/20 ( $ / BOE ) 2019 2020 2021 (E) change Kelt Revenue / Price 34.53 21.73 36.17 + 66% Realized hedging gain ( loss ) ( 0.08 ) 0.99 ( 1.22 ) ─ Royalties ( % of revenue / price ) 5.1% 5.2% 9.0% + 73% Transportation expense ( 4.62 ) ( 3.62 ) ( 3.19 ) − 12% Product
Slide 15: Financial Summary – Three Year Comparative
Financial Summary – Three Year Comparative 2021/20 ( $ MM, unless otherwise specified ) 2019 2020 2021 (E) change P&NG sales 394.4 207.2 289.7 + 40% Operating income [1] 206.5 76.9 155.5 + 102% Adjusted funds from operations [1] 182.5 58.8 145.0 + 147% AFFO per share – diluted ( $/share ) [1] 0.99 0
Slide 16: Reserves - Volumes
Reserves - Volumes Pro-forma Reserves Reserves Reserves [2] Dec/31/2019 Dec/31/2020 Change Dec/31/2019 ( MBOE ) ( MBOE ) ( MBOE ) Proved Developed Producing 48,854 24,749 29,606 + 20% Total Proved 224,582 85,237 95,956 + 13% Proved plus Probable ( P+P ) 460,981 159,620 178,782 + 12% Oil / Ngls ( P+P
Slide 17: Reserves - Values
Reserves - Values Net Present Value of Reserves Sproule’s Forecasted Future Commodity Prices WTI NYMEX Exchange NPV 10% BT Crude Oil Natural Gas Rate Dec/31/2020 ( USD/bbl ) ( USD/MMBtu ) ( USD / CAD ) ( $ MM ) 2021 46.00 3.00 0.770 PDP 203 2022 48.00 3.00 0.770 Proved 430 2023 53.00 3.00 0.770 P+P
Slide 18: Reserves – Future Development Capital
Reserves – Future Development Capital Proved Reserves P+P Reserves December 31, 2020 FDC Net HZ FDC Net HZ ( $ MM ) Wells ( $ MM ) Wells Alberta Montney wells 398 73.3 671 121.3 B.C. Montney wells 24 4.0 58 11.0 TOTAL Montney wells 422 77.3 729 132.3 Other formation wells 66 18.4 149 42.0 ( includin
Slide 19: 2020 Finding, Development, Acquisition & Disposition Costs
2020 Finding, Development, Acquisition & Disposition Costs Proved P+P Reserves Reserves Capital expenditures 149,981 149,981 Net proceeds from disposition of Inga Assets ( 503,938 ) ( 503,938 ) Change in FDC costs required to develop reserves ( 842,190 ) ( 1,527,897 ) Total capital costs ( $M ) ( 1,
Slide 20: 2020 FD&A Costs, excluding disposition of Inga Assets
2020 FD&A Costs, excluding disposition of Inga Assets PDP Proved P+P Reserves Reserves Reserves Capital expenditures 149,981 149,981 149,981 Less: capex associated with Inga Assets ( 81,675 ) ( 81,675 ) ( 81,675 ) Change in FDC costs required to develop reserves 25 51,874 68,157 Total capital costs
Slide 21: 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 22: Kelt Land Fairway Land Holdings
Kelt Land Fairway R13 R11 R9 R7 R5 R3 R1W6 R24W5 94-A-14 94-A-15 94-A-16 T90 Land Holdings 94-A-11 94-A-10 94-A-9 T88 T88 Flatrock [ August 1, 2021 ] T86 T86 Oak Developed + Gross Net Net T84 Fort T84 Undeveloped Acres Acres Sections St. John T82 BC Montney 208,678 205,492 321 T82 T80 T80 Pouce Prog
Slide 23: Kelt Montney Framework
#2 kelt exploration Kelt Montney Framework Oak / Flatrock ; Pouce Coupe Progress La Glace Pipestone / Wembley — Proven Productive Montney Horizons %% Kelt Future Exploratory Horizons Within Core Areas 23
Slide 24: British Columbia Montney - Oak / Flatrock Division
British Columbia Montney - Oak / Flatrock Division 00/8-16 UM 00/1-9 UM (DUC) 02/8-16 UM 00/4-10 UM (DUC) (sfc 13-12) 00/16-23 UM (DUC) Oak / Flatrock − Montney Land Holdings (sfc 5-33) 00/14-24 UM (DUC) 02/13-13 UM 00/16-6 MM * (sfc 13-12) Gross 203,628 acres ( 318 sections ) 00/13-5 UM * (sfc 5-31
Slide 25: Alberta Montney Lands
Alberta Montney Lands Alberta − Montney Land Holdings T80 Gross 178,410 acres ( 279 sections ) Net 159,031 acres ( 248 sections ) Pouce Pouce Spirit River Pouce Coupe West − Sproule Montney Gas Type Curve at Coupe Coupe T78 December 31, 2020 West Progress 2,289 BOE/d Estimated sales – IP30 ( 88% Gas
Slide 26: Wembley / Pipestone / La Glace Division – Montney (D3)
Wembley / Pipestone / La Glace Division – Montney ( D3 ) 00/13-10 Wembley / Pipestone / La Glace − Montney Land Holdings 02/13-32 (sfc 14-34) Gross 111,850 acres ( 175 sections ) 00/1-35 T75 (sfc 12-19) Net 107,933 acres ( 169 sections ) 00/13-6 (sfc 11-31) 00/14-2 (sfc 14-26) 00/5-9 00/1-36 Wembley
Slide 27: Wembley / Pipestone / La Glace Division – Montney (D2 / D4)
Wembley / Pipestone / La Glace Division – Montney ( D2 / D4 ) Kelt 14-29 OPERATIONS La Glace Facility (100% WI) 1-5 (D2) ● Ownership in pipeline infrastructure and minor interests in the 02/13-33 (D2) Sexsmith T75 Sexsmith ( 200 MMcf/d ) and Wembley ( 130 MMcf/d ) Gas 15-33 (D4) Gas Plant Plants. 02
Slide 28: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands Alberta − Charlie Lake Land Holdings T80 Gross 101,440 acres ( 159 sections ) Net 70,149 acres ( 110 sections ) Progress Pouce Coupe T78 Spirit River − Sproule Lower Charlie Lake Type Curve at December 31, 2020 Spirit River 751 BOE/d Estimated sales – IP30 ( 59% Oil/NGLs )
Slide 29: Progress / Spirit River – Charlie Lake
Progress / Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS 8-27 Pad: Spirit 8-25 (UCL) River T79 Gross: 23,360 acres ( 37 sections ) Progress 1-25 (LCL) Net: 17,344 acres ( 27 sections ) 02/16-11 8-27 Pad: (H2O 1-22 (LCL) Disposal) 2-22 (LCL) CHARLIE LAKE GEOLOGY Gamma Ray Density Porosity T7
Slide 30: 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 31: Appendix
Appendix ● Current Economic Environment – COVID-19 Pandemic ● 2020 Asset Disposition – Sale of Inga/Fireweed Division ● ESG – GHG Emissions ● ESG – Carbon Tax ● ESG – Corporate Governance ● Governance – Board of Directors ● Leadership – Management ● Abbreviations ● Disclaimers 31
Slide 32: Current Economic Environment – COVID-19 Pandemic
Current Economic Environment – COVID-19 Pandemic ● The COVID-19 pandemic has had a substantial impact on people’s lives and continues to impact the way companies conduct their business. Kelt's highest priority remains the health and safety of its employees, partners and the communities where it oper
Slide 33: 2020 Asset Disposition – Sale of Inga / Fireweed Division
2020 Asset Disposition – Sale of Inga / Fireweed Division ● On August 21, 2020, Kelt completed the sale of its Inga/Fireweed Division (“Inga Assets”) to a multi-national oil and gas company headquartered in Houston, Texas, USA. ● Kelt received cash proceeds of $510.0 million, prior to closing adjust
Slide 34: ESG – Greenhouse Gas Emissions
ESG – Greenhouse Gas Emissions Kelt supports innovative strategies, clean technology (including alternative energy and renewable energy), green products and utilizing lower emitting solutions to improve air quality by reducing greenhouse gas (“GHG”) emissions. Type of Emissions Units 2018 Emissions
Slide 35: ESG – Carbon Tax
ESG – Carbon Tax CARBON TAX ● FEDERAL ➢ The Federal carbon tax applies where a Province does not have a carbon pricing system that aligns with Federal benchmarks. ➢ The current carbon tax rate is $40/tonne; $50/tonne in Apr/22; and proposing annual increases reaching $170/tonne by 2030. ● ALBERTA ➢
Slide 36: ESG – Corporate Governance
ESG – Corporate Governance 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, Amalgamation,
Slide 37: Corporate Governance - Board of Directors
Corporate Governance - Board of Directors Geri L. Greenall [ 1, 2, 5 ] William C. Guinan [ 4 ] Lead Director, Independent Board Chair, Independent Common shares 38,500 Common shares 1,154,459 Stock options 163,000 Stock options 169,000 2020 Director fees $ 4,167 2020 Director fees $ 4,167 Louise K.
Slide 38: Leadership - Management
Leadership - Management Douglas J. Errico David J. Wilson Sadiq H. Lalani Senior Vice President, Land President & Chief Executive Officer Vice President & Chief Financial Officer and Corporate Development Common shares 24,999,992 Common shares 1,749,045 Common shares 475,478 Stock options 849,000 St
Slide 39: 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’). P&NG: Petroleum and natural gas AFFO: Adjusted funds from op
Slide 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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 46: Disclaimer
Disclaimer “Net bank debt” (surplus)” is equal to “bank debt”, net of “working capital deficit (surplus)”. Working capital deficit (surplus) excludes current bank debt, current outstanding convertible debentures, and assets and liabilities held for sale. “Net bank debt (surplus)” is calculated by ad
Slide 47: Disclaimer
Disclaimer IRR: Internal rate of return. IRR is the discount rate required to arrive at a NPV equal to zero. Rates of return set forth in this Presentation are for illustrative purposes. There is no guarantee that such rates of return will be achieved in the future. Reserves Replacement: the estimat
Slide 48: 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 48