Slide 1: Corporate Presentation
Corporate Presentation September 2016 David J. Wilson, President & Chief Executive Officer Sadiq H. Lalani, Vice President & Chief Financial Officer www.KeltExploration.com
Slide 2: Why Invest in Kelt?
Why Invest in Kelt? 1 CREATING VALUE DURING DOWNTURNS The Kelt management team has a track record of creating shareholder value during downturns, previously in the 2008- 2009 period with Celtic Exploration Ltd., sold in February 2013 for $3.2 billion. Kelt focuses on long-term growth with emphas
Slide 3: Common Share Information
Common Share Information 2 • Stock Exchange listing TSX • Trading symbol KEL • Market capitalization $ 920 million • 52-week trading range $ 2.51 – $ 7.38 • Common shares issued ( @ Aug/31/2016 ) 174.6 million → D&O’s have participated in all nine equity offerings completed to date (for aggregate gr
Slide 4: Convertible Debentures
Convertible Debentures 3 • TSX trading symbol KEL.DB • Principal amount outstanding $ 90.0 million • Coupon / Maturity date 5.0% / May 31, 2021 • 52-week trading range $ 105.50 – $ 126.00 → D&O’s purchased $15.0 million (17%) of the total Debenture offering. Conversion privilege: Each debenture will
Slide 5: Capital Expenditures
Capital Expenditures 4 2016 2016/15 ( $ millions ) 2014 2015 Forecast Change Drilling & Completions 188.6 100.9 42.0 - 58% Facilities, Equipment & 46.1 56.0 20.3 - 64% Pipeline Infrastructure Land, Seismic & Asset 21.6 26.1 24.7 - 5% Acquisitions [1] Sub-total 256.3 183.0 87.0 - 52% Corporate Acquis
Slide 6: Drilling Program
Drilling Program 5 Gross Net Average 2016 Drills Wells Wells WI % Notes: [1] Alberta drilling prospects include: Alberta [1] 8 5.3 66% Grande Prairie ( Pouce Coupe / Progress / Spirit River / La Glace ): - Montney British Columbia [2] 4 4.0 100% - Doig - Charlie Lake - Halfway Total [3] 12 9.3 78% K
Slide 7: Production Outlook
Production Outlook 6 2016 2016/15 2014 2015 Forecast Change Oil ( bbls/d ) 3,413 5,091 5,470 7% NGLs ( bbls/d ) 924 1,607 2,470 54% Gas ( mcf/d ) 50,516 71,272 81,360 14% Combined ( BOE/d ) 12,756 18,577 21,500 16% Per MM Shares ( BOE/d ) 105 120 124 3%
Slide 8: Production Growth ( since inception )
Production Growth ( since inception ) 7 PRODUCTION ( BOE / d ) PRODUCTION PER MM SHARES ( BOE / d ) CAGR since 24,000 2013 = 76% 160 21,500 CAGR since 2013 = 33% 20,000 18,577 124 120 120 105 16,000 13,560 12,756 11,879 78 12,000 80 77 69 8,419 53 8,000 40 3,961 42 4,000 7,940 6,698 43 46 3,148 4,33
Slide 9: Commodity Prices
Commodity Prices 8 2016/15 ( CA $, unless otherwise specified ) 2014 2015 2016 (E) Change WTI Crude Oil ( USD/bbl ) US $ 93.00 US $ 48.80 US $ 41.85 - 14% CLS Crude Oil ( CAD/bbl ) $ 93.99 $ 57.45 $ 50.73 - 12% NYMEX Natural Gas ( USD/mmBtu ) US $ 4.37 US $ 2.67 US $ 2.50 - 6% AECO 5A Natural Gas (
Slide 10: Forecast 2016 WTI & AECO Prices
Forecast 2016 WTI & AECO Prices 9 WTI US$/bbl AECO CA$/GJ 60.00 4.00 48.85 48.00 46.80 46.00 45.00 44.80 44.00 2.94 2.97 3.00 41.12 42.00 39.90 2.66 37.96 2.53 2.55 2.37 2.25 31.78 30.00 30.62 2.00 1.76 1.69 1.27 1.18 15.00 1.04 1.00 Jan [A] Feb [A] Mar [A] Apr [A] May [A] Jun [A] Jul [E] Aug [E] Se
Slide 11: Hedging
Hedging 10 ( CA $ unless otherwise specified ) Period Quantity Fixed Price Jul/2/15 to Interest Rate Swap [1] CA $100 MM 0.925% Jun/30/17 Chicago City Gate – AECO Jun/1/16 to 10,000 US $ 0.96 Basis Differential Oct/31/16 MMBtu/d NYMEX Henry Hub – AECO Sep/1/16 to 30,000 US $ 0.94 Basis Differential
Slide 12: Netbacks
Netbacks 11 2016/15 ( $ / BOE ) 2014 2015 2016 (E) Change Oil & gas revenue 46.11 26.45 23.63 - 11% Realized hedging gain ( loss ) ( 0.08 ) ( 0.12 ) 0.01 Royalties ( % of revenue ) ( 13.3% ) ( 10.6% ) ( 8.3% ) - 22% Transportation expense ( 2.30 ) ( 2.09 ) ( 2.83 ) + 35% Production expense ( 12.00 )
Slide 13: Financial Outlook
Financial Outlook 12 2016 2016/15 2014 2015 Forecast Change Revenue, before royalties ( $ MM ) 214.7 179.3 186.0 + 4% Funds from operations ( $ MM ) [1] 115.7 56.5 54.0 - 4% Per share – diluted ( $/share ) 0.93 0.36 0.31 - 14% Capital expenditures ( $ MM ) [2] 423.9 497.3 87.0 - 83% Net bank debt, a
Slide 14: Product Mix
Product Mix 13 2016 (E) 2016 (E) Product Income Production Operating Split Split BOE/d Income ($MM) Oil 5,470 25% 52.6 74% NGLs 2,470 12% 6.0 8% Gas 81,360 63% 12.7 18% Combined 21,500 100% 71.3 100% G&A and interest expense ( 17.3 ) Funds from operations 54.0 Note: [1] The 2016 forecasted NGLs prod
Slide 15: Core Areas
Core Areas 14 Inga / Fireweed / Stoddart ( BC ) : → Montney/Doig condensate rich gas exploration/development → Baldonnel oil exploration/development Grande Prairie ( AB ) : Inga / Fireweed → Montney/Doig gas development / Stoddart → Montney light oil development Grande Prairie → Charlie Lake light o
Slide 16: Reserves
Reserves 15 DEC/31/2014 DEC/31/2014 DEC/31/2015 DEC/31/2015 ( $ MM ) ( MMBOE ) NPV 10% BT ( MMBOE ) NPV 10% BT Proved Developed 26.8 $ 404 33.8 $ 364 Producing Total Proved 61.1 $ 669 83.8 $ 661 Proved plus Probable 99.1 $ 1,072 150.5 $ 1,185 ( P+P ) Oil/NGLs ( P+P % ) 35% 36% Gas ( P+P% ) 65% 64% N
Slide 17: Land Holdings
Land Holdings 16 Jun/30/2016 Gross Acres Net Acres Average WI Net Sections Developed 390,736 211,126 54% 330 Undeveloped 665,010 543,530 82% 849 Total 1,055,746 754,656 71% 1,179 Note: Growth in net land holdings since March 31, 2013: Date Net Acres Net Sections % Growth since Mar/31/2013 Mar/31/201
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: British Columbia Properties
British Columbia Properties 18 PRODUCTION RESERVES Kelt Drills - Slick-water Completions Typical well EUR’s: Top Ten IP30 ( gross sales, BOE/d ): (1) Inga/Fireweed Doig (1) Inga 10-21-087-23W6 Doig 2,043 ( 27% gas ) Sproule 2P EUR = 930 MBOE ( 58% gas 42% oil ) (2) Inga 03-33-087-23W6 Doig 1,326 ( 2
Slide 20: British Columbia – DOIG Lands
British Columbia – DOIG Lands 19 LAND Fireweed 16 MMcf/d Doig Rights: Compressor/ Facility (100% WI) Gross: 186 sections Net: 178 sections Fireweed b-76-I OPERATIONS 13-15 (sfc a-65-I) ● Recent Doig wells completed using (sfc A7-10) CNRL West slick-water fractures have shown very Inga 9-25 Stoddart
Slide 21: BC Doig Type Curve – Slick-water Completed Wells
BC Doig Type Curve – Slick-water Completed Wells 20 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 100 10 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Month 00/02-28-087-23W6 00/03-33-087-23W6 00
Slide 22: BC Doig Type Curve - Average Well
BC Doig Type Curve - Average Well 21 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 1,000 Kelt 2P EUR 1,015 MBOE 24% Oil 17% NGLs 59% Gas Sproule 2P EUR 100 930 MBOE 23% Oil 19% NGLs 58% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Month Average Well Kelt Typ
Slide 23: British Columbia – MONTNEY Lands
British Columbia – MONTNEY Lands 22 LAND Montney Rights: c-26-A Gross: 181 sections (sfc a-6-A) Net: 180 sections Fireweed c-85-I OPERATIONS (sfc a-65-I) ● Montney wells completed using slick- New Location a-58-I b-41-I water fractures have shown very (sfc b-B62-I) (sfc d-A79-I) encouraging results
Slide 24: BC Montney Type Curve - All Wells
BC Montney Type Curve - All Wells 23 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 100 10 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Month 00/05-07-088-22W6 00/07-12-088-23W6 00/07-17-087-23W6
Slide 25: BC Montney Type Curve - Average Well
BC Montney Type Curve - Average Well 24 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 1,000 Kelt 2P EUR 700 MBOE 31% Oil 19% NGLs 50% Gas 100 Sproule 2P EUR 650 MBOE 24% Oil 18% NGLs 58% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Month Average Well Kelt Ty
Slide 26: British Columbia – MIDDLE MONTNEY Isopach
British Columbia – MIDDLE MONTNEY Isopach 25 OPERATIONS ● Kelt has drilled its first horizontal Middle Montney well in BC located at 7-17 (surface 7-29) Fireweed ● The Inga 7-17 well had an IP 30 rate of 905 BOE/d (69% liquids) New ● The thickness of the Middle Montney Location 6-25 MM ‘C’ Unit on K
Slide 27: British Columbia – BALDONNEL Lands
British Columbia – BALDONNEL Lands 26 LAND Birch Baldonnel Rights: Gross: 164 sections Baldonnel “C” Oil Pool (CTD 5.0 MM barrels of oil) Net: 153 sections OPERATIONS Fireweed ● Oil exploration activity with plans to drill initial well in 2017. ● Competitor activity at Stoddart offsetting Kelt lands
Slide 28: Alberta Properties
Alberta Properties 27 PRODUCTION RESERVES Kelt Drills – Top Ten IP30 Wells Typical well EUR’s: (gross sales, BOE/d): (1) Pouce Coupe Doig/Montney Gas (1) Karr 15-28-065-03W6 Upper Montney 1,490 ( 79% oil ) Sproule 2P EUR = 1,380 MBOE ( 90% gas 10% oil ) (2) Pouce Coupe 14-25-077-13W6 M-Montney [a] 1
Slide 29: Pouce Coupe / Progress
Pouce Coupe / Progress 28 14-14 (50%) MM Spirit River Progress Progress 15-5 Gas Plant 15-13 (50%) Charlie Pouce (20% WI) MM Lake Coupe 8-18 LMM 13-8 8-18 UMM LMM 14-25 MM 14-8 LMM 16-11 13-32 H2O Doig/UM Disposal Pouce Coupe Compressor Facility 2-10 Halfway (Future Location) 16-17 Doig/UM (100% WI)
Slide 30: Pouce Coupe Montney Oil Type Curve - All Wells
Pouce Coupe Montney Oil Type Curve - All Wells 29 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 100 10 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Month 02/08-18-078-11W6 02/12-08-078-11W6 02/1
Slide 31: Pouce Coupe Montney Oil Type Curve - Average Well
Pouce Coupe Montney Oil Type Curve - Average Well 30 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 1,000 Kelt 2P EUR 865 MBOE 36% Oil 16% NGLs 48% Gas 100 Sproule 2P EUR 485 MBOE 61% Oil 6% NGLs 33% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Month Average
Slide 32: Valhalla / La Glace
Valhalla / La Glace 31 Targeting the Montney formation. Encana Ownership in pipeline Sexsmith Gas Plant infrastructure, oil battery (0.3% WI) 16-32 and gas compression. 13-33 15-33 UM Ownership interest (0.3%) in the Encana Sexsmith 2-28 1-27 200 MMcf/d Gas Plant. 16-22 Drilling has been foc
Slide 33: La Glace Montney Type Curve - All Wells
La Glace Montney Type Curve - All Wells 32 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 100 10 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Month 00/01-27-074-08W6 00/02-28-074-08W6 00/03-28-07
Slide 34: La Glace Montney Type Curve - Average Well
La Glace Montney Type Curve - Average Well 33 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 1,000 Kelt 2P EUR 685 MBOE 63% Oil 9% NGLs 28% Gas 100 Sproule 2P EUR 675 MBOE 62% Oil 8% NGLs 30% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 Month Average Well Kel
Slide 35: Net Asset Value
Net Asset Value 34 Dec/31 Dec/31 ( millions ) 2014 2015 P&NG Reserves, NPV10 BT 1,072.3 1,185.2 Decommissioning Obligations, NPV10 BT [1] ( 12.8 ) ( 11.7 ) Undeveloped Land 103.2 168.7 Net Bank Debt ( 104.4 ) ( 212.1 ) Proceeds from exercise of Stock Options [2] 13.1 0.0 NET ASSET VALUE 1,071.4 1,13
Slide 36: Future Considerations
Future Considerations 35 FUTURE DRILLING POTENTIAL: Kelt estimates that it has numerous potential future drilling opportunities on its existing lands that will provide for continued growth in the years to come. CRUDE OIL PRICES: the number of rigs drilling for oil in the U.S. was 406 in late- Au
Slide 37: Management
Management 36 David J. Wilson, President & CEO Sadiq H. Lalani, Vice President & CFO Douglas J. Errico, Vice President, Land Patrick Miles, Vice President, Exploration Douglas O. MacArthur, Vice President, Operations Alan G. Franks, Vice President, Production Bruce D. Gigg, Vice President, Engineeri
Slide 38: Board of Directors
Board of Directors 37 Robert J. Dales Compensation (Chair), Nominating, Audit, Reserves William C. Guinan Chairman of the Board, HSE Eldon A. McIntyre Reserves (Chair), Nominating, Audit, Compensation Neil G. Sinclair Audit (Chair), Nominating (Chair), Compensation, HSE, Reserves David J. Wilson HSE
Slide 39: Disclaimer
Disclaimer 38 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 p
Slide 40: Disclaimer
Disclaimer 39 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
Slide 41: Disclaimer
Disclaimer 40 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 t
Slide 42: Disclaimer
Disclaimer 41 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 thousa
Slide 43: Disclaimer
Disclaimer 42 Future Drilling Locations Unless otherwise specified, the information in this Presentation pertaining to future drilling locations or drilling inventories is based solely on internal estimates made by management and such locations have not been reflected in any independent reserve or r
Slide 44: Disclaimer
Disclaimer 43 Financial Advisories All dollar amounts are referenced in Canadian dollars, except when otherwise noted. Non-GAAP financial measures This Presentation contains certain financial measures, as described below, which do not have standardized meanings prescribed by GAAP. As these measures
Slide 45: Disclaimer
Disclaimer 44 DEFINITIONS NPV10 BT: The anticipated net present value of the future net cash flow before taxes and after capital expenditures, discounted at a rate of 10%. 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 t
Slide 46: Disclaimer
Disclaimer 45 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’). WTI: West Texas Intermediate CLS: Canadian Lig
Slide 47: Corporate Presentation
Corporate Presentation September 2016 Suite 300, 311 – 6th Avenue SW Calgary, Alberta, Canada T2P 3H2 www.KeltExploration.com