Kelt Exploration Ltd. · TSX:KEL
Kelt Exploration — Investor Presentation (January 2023)
50 slides from Kelt Exploration's investor presentation, January 2023
Slide 1: Corporate Presentation January 2023
Corporate Presentation January 2023 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 Exploration Ltd. (“Kelt” or the “Company”) 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 g
Slide 3: Environment, Social and Governance (ESG)
Environment, Social and Governance ( ESG ) On February 17, 2022, Kelt released its second annual 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
Slide 4: Capital Structure
Capital Structure ● Stock Exchange listing TSX ● Trading symbol KEL ● Market capitalization ( @ $ 4.70 effective Jan/10/2023 ) $ 900 million ● 52-week stock trading range $ 4.47 – $ 8.32 ● Common shares issued 192.0 million ● Stock options ( 10.6 MM ) & RSUs ( 0.9 MM ) 11.5 million ( 6.0% ) → averag
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 ) 2021 2022 Forecast 2023 Budget Drilling & Completions 123.5 183.0 220.0 Infrastructure: Equipment, Facilities, 95.7 112.0 70.0 Pipelines & Tangible Inventory [1] Land, Seismic, Corporate Assets & 3.3 7.5 20.0 Property Acquisitions Property
Slide 7: Drilling & Completions Program
Drilling & Completions Program 2021 2022 Forecast 2023 Budget Drills Gross / Net Wells Gross / Net Wells Gross / Net Wells Alberta 16 15.7 29 26.1 23 22.0 British Columbia 5 5.0 3 3.0 12 12.0 Total 21 20.7 32 29.1 35 34.0 2021 2022 Forecast 2023 Budget Completions Gross / Net Wells Gross / Net Wells
Slide 8: Production – Three Year Comparative
Production – Three Year Comparative 2021 2022 Forecast 2023 Budget Oil ( bbls/d ) 4,692 22% 5,650 – 6,150 21% 6,950 – 7,650 21% NGLs ( bbls/d ) [1] 3,154 15% 4,250 – 4,350 15% 4,750 – 5,250 15% Gas ( Mcf/d ) 78,846 63% 105,600 – 108,000 64% 127,800 – 132,600 64% Combined ( BOE/d ) 20,987 100% 27,500
Slide 9: 2022 Forecasted Commodity Prices
2022 Forecasted Commodity Prices ( CAD, unless otherwise specified ) Jan-Sep Oct-Dec (E) 2022 Forecast WTI Crude Oil ( USD/bbl ) [1] US $ 98.85 US $ 81.58 US $ 94.50 MSW Crude Oil ( CAD/bbl ) [2] $ 124.41 $ 106.94 $ 120.00 NYMEX Henry Hub [ L3D ] Natural Gas ( USD/MMBtu ) US $ 6.60 US $ 5.81 US $ 6.
Slide 10: Commodity Prices – Three Year Comparative
Commodity Prices – Three Year Comparative ( CAD, unless otherwise specified ) 2021 2022 Forecast 2023 Budget WTI Crude Oil ( $/bbl ) [1] US $ 68.03 $ 85.31 US $ 94.50 $ 122.85 US $ 78.00 $ 105.30 MSW Crude Oil ( $/bbl ) [2] US $ 64.08 $ 80.29 US $ 92.30 $ 120.00 US $ 74.00 $ 99.90 NYMEX Henry Hub [
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 2023 at each respective price hub is forecasted to be as follows: AECO 2% Dawn 22% Henry H
Slide 12: Commodity Price Risk Management – Derivatives (1/2)
Commodity Price Risk Management – Derivative Financial Instruments (1/2) Remaining Commodity Index Quantity Contract Price Term NYMEX Henry Hub Jan/2023 to 20,000 CAD $10.12 / MMBtu Natural Gas Fixed Price Feb/2023 MMBtu/d [ equivalent to USD $7.50 / MMBtu at a CAD/USD exchange rate of 1.350 ] NYMEX
Slide 13: Commodity Price Risk Management – Derivatives (2/2)
Commodity Price Risk Management – Derivative Financial Instruments (2/2) Commodity Index Remaining Term Quantity Contract Price AECO Apr/2023 to 5,000 CAD $4.00 / GJ ( ~ CAD $4.22 / MMBtu ) Natural Gas Fixed Price Oct/2023 GJ/d [ equivalent to USD $3.13 / MMBtu at a CAD/USD exchange rate of 1.350 ]
Slide 14: Netbacks – Three Year Comparative
Netbacks – Three Year Comparative 2023/22 ( $ / BOE ) 2021 2022 Forecast 2023 Budget change Net realized price 40.52 58.99 48.55 ( 18% ) Realized hedging gain ( loss ) ( 2.14 ) ( 5.74 ) 0.72 ─ Royalties ( % of net realized price ) ( 8.8% ) ( 12.2% ) ( 15.1% ) 24% Transportation expense ( 3.38 ) ( 3.
Slide 15: Financial Summary – Three Year Comparative
Financial Summary – Three Year Comparative 2023/22 ( $ MM, unless otherwise specified ) 2021 2022 Forecast 2023 Budget change P&NG sales 316.8 617.0 607.0 ( 2% ) Adjusted funds from operations [1] 161.4 325.0 338.0 4% AFFO per share – diluted ( $/share ) [1] 0.85 1.66 1.71 3% Capital expenditures, n
Slide 16: Reserves - Volumes
Reserves - Volumes ( MBOE ) Dec/31/2020 Dec/31/2021 Change Proved Developed Producing 29,606 43,854 48% Proved 95,956 134,091 40% Proved plus Probable 178,782 254,149 42% Oil & NGLs / Gas Mix 42% 58% 41% 59% ( MBOE ) PDP Proved P+P Reserve Additions, net 21,896 45,784 83,015 2021 Production 7,648 7,
Slide 17: Reserves – Future Development Capital
Reserves – Future Development Capital Proved Reserves P+P Reserves December 31, 2021 FDC Net FDC Net ( $ MM ) Wells ( $ MM ) Wells Alberta Montney wells 585.6 86.8 1,091.1 158.3 B.C. Montney wells 52.6 9.0 129.5 22.0 Other formation wells 77.4 23.0 157.4 41.8 ( including Doig & Charlie Lake ) Other
Slide 18: 2021 Finding, Development, Acquisition & Disposition Costs
2021 Finding, Development, Acquisition & Disposition Costs PDP Proved P+P ( $ M, unless otherwise specified ) Reserves Reserves Reserves Capital expenditures, net of dispositions 213,511 213,511 213,511 Change in FDC costs required to develop reserves 1,402 217,631 494,307 Total capital costs 214,91
Slide 19: Reserves - Values
Reserves - Values Net Asset Value per Share Sproule’s Forecasted Future Commodity Prices $M $ / share WTI NYMEX HH Exchange Crude Oil Natural Gas Rate ( USD/bbl ) ( USD/MMBtu ) ( CAD / USD ) P+P Reserves, NPV 10% BT [3] [4] 2,143,646 10.82 Undeveloped land 135,429 0.68 2022 73.00 4.00 1.250 Net debt
Slide 20: 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 21: 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 ( January 10, 2023 ) T86 T86 Oak Developed + Gross Net Net T84 Fort T84 Undeveloped Acres Acres Sections St. John T82 BC Montney 196,792 193,607 303 T82 T80 T80 Pouce Pr
Slide 22: Kelt Montney Framework
#2 kelt exploration Kelt Montney Framework i Oak / Flatrock ; Pouce Coupe Doig I Upper Montney 0 | 290m Middle Montney ! Lower Montney | Belloy Progress La Glace Pipestone / Wembley A oA A Doig Middle Montney 2/Moniney H l Lower Montney D1/Sexsmith . | Belloy — J Proven Productive Montney Horizons &
Slide 23: 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) 16-23 UM 4-10 UM (sfc 5-33) 14-24 UM (sfc 13-12) Montney Land Holdings 02/13-13 UM 16-6 MM 13-5 UM (sfc 13-12) Gross 191,742 acres ( 300 sections ) (sfc 5-31) T87 Net 190,470 acres ( 298 sections ) Kelt 6-35 7-3
Slide 24: Oak – Recovery of D&C Capital (Payout Calculation)
Oak – Recovery of D&C Capital ( Payout Calculation ) Cumulative D&C Capex to Cumulative Daily Average Operating Recover ( Excess Production Production D&C Capex Income [1] Recovered ) to May/31/22 [2] June 2022 [3] Upper Montney Well ( $ MM ) ( $ MM ) ( $ MM ) ( MBOE ) ( BOE/d ) 00/13-05-087-18W6 (s
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 ELECTRONIC FLARE STACK* Annual CO2E reduction of Elimination of continuous pilot flare. 70 t 19,630 tonnes from initiatives supporting sustainab
Slide 26: Alberta Montney Lands
Alberta Montney Lands Alberta − Montney Land Holdings T80 Gross 169,928 acres ( 265 sections ) Net 150,667 acres ( 235 sections ) Pouce Pouce Coupe Coupe T78 POUCE COUPE WEST West ● High deliverability dry gas wells. Progress ● Wells that came on production in Q1 2021 at rates between 10-12 MMcf/d,
Slide 27: Pouce Coupe / Progress Division – Montney
Pouce Coupe / Progress Division – Montney Kelt Lands T82 Gas Plants NRM Fourth Creek T81 Gas Plant NRM Gordondale East Gas Plant Pouce T79 Pouce Coupe Coupe (oil-prone) West (gas-prone) Progress T77 Progress (oil-prone) Proven Productive Montney Horizons Kelt Future Exploratory Horizons within Core
Slide 28: Wembley / Pipestone / La Glace Division – Montney (D3)
Wembley / Pipestone / La Glace Division – Montney ( D3 ) 02/13-32 13-10 Montney Land Holdings (sfc 14-34) 1-35 13-18 (sfc 9-17) (sfc 12-19) T75 Gross 113,608 acres ( 177 sections ) 13-6 5-9 (sfc 11-31) (sfc 15-29) Net 109,659 acres ( 171 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 INFRASTRUCTURE Kelt 11-31 La Glace Facility Wembley (100% WI) T75 ● Ownership in extensive pipeline infrastructure and Facility (100% WI) minor interests in the Sexsmith ( 200 MMcf/d ) and Sexsmith Wembley ( 130 MMcf/d ) Gas Plants.
Slide 31: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands Alberta − Charlie Lake Land Holdings T80 Gross 121,280 acres ( 189 sections ) Progress Net 88,447 acres ( 138 sections ) Pouce Coupe T78 Spirit River − Lower Charlie Lake Type Curve Spirit ( Sproule, December 31, 2021 ) River 346 BOE/d Estimated sales – IP365 T76 ( 55% Oil
Slide 32: Progress / Spirit River – Charlie Lake
Progress / Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS Spirit River 1-30 LCL T79 Gross: 27,840 acres ( 43 sections ) Progress (sfc 10-7) KEL 50% 1-25 LCL Net: 20,755 acres ( 32 sections ) 8-25 UCL (sfc 8-27) 9-25 UCL 2-22 LCL (sfc 8-27) CHARLIE LAKE GEOLOGY Gamma Ray Density Porosity T78
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 ● 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 it also impacted the way companies conducted their business. ● Kelt's highest priority during the pandemic was the health and safety of its employees, partners and the communities whe
Slide 36: 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 37: 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 $50/tonne; and proposing annual increases reaching $170/tonne by 2030. ● ALBERTA ➢ The Technology Innova
Slide 38: 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 39: 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 161,000 Stock options 106,000 RSUs 5,000 RSUs 5,000 2021 Director fees $ 10,000 2021 Director
Slide 40: 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 26,230,442 Common shares 1,779,838 Common shares 488,772 Stock options 1,061,500
Slide 41: Abbreviations and Definitions
Abbreviations and Definitions ACE the Chicago natural gas hub pricing point identified as the Alliance M thousand Chicago Exchange MM million AECO Alberta Energy Company “C” Meter Station of the Nova Gas Pipeline MSW Medium Sweet Blend System NGTL Nova Gas Transmission Limited AESO Alberta Electric
Slide 42: 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 43: 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 44: 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 45: 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 46: 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 47: Disclaimer
Disclaimer Financial Advisories All dollar amounts are referenced in Canadian dollars, except when otherwise noted. Refer to "Non-GAAP Measures and Other Financial Measures" in the Company’s Management’s Discussion and Analysis (“MD&A”) as at and for the three months ended March 31, 2022 for a quant
Slide 48: Disclaimer
Disclaimer “Net asset value” is calculated by adding the present value of proved plus probable petroleum and natural gas reserves discounted at 10% before tax, undeveloped land value, proceeds from exercise of stock options, and net bank debt (surplus). “Net asset value per common share” is calculat
Slide 49: Disclaimer
Disclaimer Supplementary Financial Measures 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 50: 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 50
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