Kelt Exploration Ltd. · TSX:KEL
Kelt Exploration — Investor Presentation (November 2021)
51 slides from Kelt Exploration's investor presentation, November 2021
Slide 1: Corporate Presentation November 2021
Corporate Presentation November 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 November 9, 2021 ) $ 980 million ● 52-week stock trading range $ 1.49 – $ 5.37 ● Common shares issued 189.1 million ● Stock options ( 10.6 MM ) & RSUs ( 0.8 MM ) 11.4 million ( 6.0% ) → average ex
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 ( $ millions ) 2020 2021 (E) 2022 (E) Drilling & Completions 70.2 120.0 – 125.0 125.0 – 130.0 Equipment, Facilities, & Pipeline 79.1 75.0 – 80.0 60.0 – 65.0 Infrastructure [1] Land, Seismic & Asset Acquisitions, ( 503.3 ) ( 5.0 ) 15.0 net of Property Dis
Slide 7: Drilling Program – October 2021 to December 2022
Drilling Program – October 2021 to December 2022 Wembley / Pipestone MONTNEY: ❖ Complete THREE wells ( DUCs ) – 02/4-18, 4-13 & 1-36. ❖ Drill and Complete THREE wells – 4-22, 13-20 & 13-18. ❖ Drill and Complete SEVEN wells – 4-20 (4-well pad) & 14-26 (3-well pad). 30 Pouce Coupe / Progress MONTNEY:
Slide 8: Production – Three Year Comparative
Production – Three Year Comparative 2020 2021 (E) 2022 (E) Oil ( bbls/d ) 7,057 28% 4,700 22% 6,800 23% NGLs ( bbls/d ) [1] 4,161 17% 3,300 15% 4,650 15% Gas ( Mcf/d ) 82,646 55% 81,000 63% 111,300 62% Combined ( BOE/d ) 24,992 100% 21,500 100% 30,000 100% Annual Percent Change ( 14% ) 40% [ up 35%
Slide 9: 2021 Forecasted Commodity Prices
2021 Forecasted Commodity Prices ( CAD, unless otherwise specified ) Jan-Sep Oct-Dec (E) 2021 Forecast WTI Crude Oil ( USD/bbl ) [1] US $ 64.86 US $ 77.50 US $ 68.05 MSW Crude Oil ( CAD/bbl ) [2] $ 75.95 $ 91.03 $ 79.75 NYMEX Henry Hub [ L3D ] Natural Gas ( USD/MMBtu ) US $ 3.10 US $ 4.86 US $ 3.54
Slide 10: Commodity Prices – Three Year Comparative
Commodity Prices – Three Year Comparative ( CAD, unless otherwise specified ) 2020 2021 (E) 2022 (E) WTI Crude Oil ( $/bbl ) [1] US $ 39.24 $ 52.62 US $ 68.05 $ 84.87 US $ 72.00 $ 88.34 MSW Crude Oil ( $/bbl ) [2] US $ 33.82 $ 45.34 US $ 63.94 $ 79.75 US $ 67.75 $ 83.13 NYMEX Henry Hub [ L3D ] Natur
Slide 11: Gas Market Risk Management
Gas Market Risk Management GAS MARKET DIVERSIFICATION ● Kelt 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 2022 at each respective price hub is forecasted to be as follows: AECO 4% 1% 13% Dawn 4% C
Slide 12: Commodity Price Risk Management
Commodity Price Risk Management Remaining Commodity Index Term @ Quantity Contract Price Nov/1/2021 WTI−MSW Nov/2021 to 1,500 Minus USD $4.75 / bbl Crude Oil Basis Differential Dec/2022 bbls/d [ equivalent to Minus CAD $5.83 / bbl at a CAD/USD exchange rate of 1.227 ] AECO Fixed Price 20,000 CAD $5.
Slide 13: 2022 Forecast Commodity Price Sensitivities
2022 Forecast Commodity Price Sensitivities 2022 Kelt Oil/NGLs Price Kelt Gas Price Forecast plus 10% plus 10% Net realized Oil price ( CAD/bbl ) 82.19 90.41 10% 82.19 ─ Net realized NGLs price ( CAD/bbl ) 38.91 42.79 10% 38.91 ─ Net realized Gas price ( CAD/Mcf ) 4.18 4.18 ─ 4.60 10% AFFO ( $ MM )
Slide 14: Netbacks – Three Year Comparative
Netbacks – Three Year Comparative 2022/21 ( $ / BOE ) 2020 2021 (E) 2022 (E) change Net realized price 21.73 39.25 40.18 2% Realized hedging gain ( loss ) 0.99 ( 1.75 ) ( 0.24 ) ─ Royalties ( % of net realized price ) 5.2% 10.1% 11.3% 12% Transportation expense ( 3.62 ) ( 3.29 ) ( 3.04 ) ( 6% ) Prod
Slide 15: Financial Summary – Three Year Comparative
Financial Summary – Three Year Comparative 2022/21 ( $ MM, unless otherwise specified ) 2020 2021 (E) 2022 (E) change P&NG sales 207.2 313.7 444.7 42% Operating income [1] 76.9 168.1 257.5 53% Adjusted funds from operations [1] 58.8 158.0 245.0 55% AFFO per share – diluted ( $/share ) [1] 0.31 0.83
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 % ) 4
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 ( November 1, 2021 ) T86 T86 Oak Developed + Gross Net Net T84 Fort T84 Undeveloped Acres Acres Sections St. John T82 BC Montney 207,358 204,172 319 T82 T80 T80 Pouce Pr
Slide 23: Kelt Montney Framework
#2 Kelt exploration Kelt Montney Framework 290m I Oak / Flatrock ; Pouce Coupe Progress La Glace Pipestone / Wembley A A A vA A Doig Doig Upper Montney | Middle Montney Middle Montney oaneniney | eh Lower Montney D1/Sexsmith | D1/Sexsmith Belloy if Lower Montney 1 Belloy —J Proven Productive Montney
Slide 24: British Columbia Montney - Oak / Flatrock Division
British Columbia Montney - Oak / Flatrock Division 8-16 UM 02/8-16 UM 1-9 UM (sfc 13-12) 4-10 UM 16-23 UM (sfc 5-33) 14-24 UM (sfc 13-12) Montney Land Holdings 16-6 MM 02/13-13 UM 13-5 UM (sfc 5-31) (sfc 13-12) Gross 202,307 acres ( 316 sections ) T87 Net 201,035 acres ( 314 sections ) Kelt 6-35 7-3
Slide 25: Pioneering a Model for Sustainable Oil & Gas Development at Oak
Pioneering a Model for Sustainable Oil & Gas Development at Oak Kelt’s “Green” Initiatives for Sustainable Oil & Gas Development at Oak in British Columbia ELECTONIC FLARE STACK* Annual CO2E reduction of Elimination of continuous pilot flare. 70 t 19,630 tonnes from initiatives supporting sustainabl
Slide 26: Alberta Montney Lands
Alberta Montney Lands Alberta − Montney Land Holdings T80 Gross 178,090 acres ( 278 sections ) Net 158,392 acres ( 247 sections ) Pouce Pouce Coupe Coupe T78 POUCE COUPE WEST West ● High deliverability dry gas wells. Progress ● Recent wells that came on production in Q1 2021 at rates between 10-12 M
Slide 27: Pouce Coupe / Progress Division – Montney
Pouce Coupe / Progress Division – Montney T80 Pouce Pouce Coupe Coupe (oil-prone) West T78 (gas-prone) Progress (oil-prone) T76 Kelt Lands Proven Productive Montney Horizons R13 R11 R9 R7W6 Kelt Future Exploratory Horizons within Core Areas Pouce Coupe West − Montney Gas Type Curve ( Sproule, Decemb
Slide 28: Wembley / Pipestone / La Glace Division – Montney (D3)
Wembley / Pipestone / La Glace Division – Montney ( D3 ) 02/13-32 Montney Land Holdings 13-10 (sfc 14-34) 1-35 13-18 (sfc 9-17) (sfc 12-19) T75 Gross 111,690 acres ( 175 sections ) 13-6 5-9 (sfc 11-31) (sfc 15-29) Net 107,746 acres ( 168 sections ) 1-36 (sfc 10-28) T74 Montney ( D3 ) Gas Type Curve
Slide 29: Wembley / Pipestone / La Glace Division – Montney (D2 / D4)
Wembley / Pipestone / La Glace Division – Montney ( D2 / D4 ) 02/14-1 (D2) 02/1-5 (D2) (sfc 9-6) 03/16-32 (D2) OPERATIONS (sfc 9-6) 02/13-33 (D2) (sfc 15-29) T75 ● The D2 Middle Montney formation at La Glace is 03/14-32 (D2) 15-33 (D4) (sfc 14-28) generally more conventional in nature with (sfc 9-6)
Slide 30: Wembley / Pipestone / La Glace Division – Infrastructure
Wembley / Pipestone / La Glace Division – Infrastructure Kelt 14-29 Existing Pipeline INFRASTRUCTURE La Glace Facility (100% WI) New Pipeline Construction T75 ● Ownership in extensive pipeline infrastructure and minor interests in the Sexsmith ( 200 MMcf/d ) and Kelt 11-31 Sexsmith Wembley ( 130 MMc
Slide 31: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands Alberta − Charlie Lake Land Holdings T80 Gross 100,320 acres ( 157 sections ) Progress Net 68,272 acres ( 107 sections ) Pouce Coupe T78 Spirit River − Lower Charlie Lake Type Curve Spirit ( Sproule, December 31, 2020 ) River 331 BOE/d Estimated sales – IP365 T76 ( 59% Oil
Slide 32: Progress / Spirit River – Charlie Lake
Progress / Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS 8-25 UCL 1-25 LCL Spirit T79 Gross: 36,160 acres ( 56 sections ) 1-30 LCL (sfc 8-27) River Progress (sfc 10-7) KEL 50% Net: 23,528 acres ( 37 sections ) 02/16-11 (H2O CHARLIE LAKE GEOLOGY Disposal) Gamma Ray Density Porosity T78 Worsl
Slide 33: 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 34: Appendix
Appendix ● Economic Environment – COVID-19 Pandemic ● 2020 Asset Disposition – Sale of Inga/Fireweed Division ● ESG – GHG Emissions ● ESG – Carbon Tax ● ESG – Corporate Governance ● Corporate Governance – Board of Directors ● Leadership – Management ● Abbreviations and Definitions ● Disclaimers 34
Slide 35: Economic Environment – COVID-19 Pandemic
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 operates. Wi
Slide 36: 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: Abbreviations and Definitions
Abbreviations and Definitions GAAP: Canadian generally accepted accounting principles as Sproule: Sproule Associates Limited, an independent qualified reserve set out in the CPA Canada Handbook – Accounting. evaluator retained by Kelt to prepare a report on its oil and IFRS: International Financial
Slide 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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 49: Disclaimer
Disclaimer “Net debt (surplus)” is equal to bank debt, accounts payable and accrued liabilities, net of cash and cash equivalents, accounts receivables and accrued sales and prepaid expenses and deposits. The Company previously disclosed a “Net bank debt (surplus)” for its non-GAAP measure which was
Slide 50: 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 51: 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 51
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