Kelt Exploration Ltd. · TSX:KEL
Kelt Exploration — Investor Presentation (December 2020)
46 slides from Kelt Exploration's investor presentation, December 2020
Slide 1: Corporate Presentation December 2020
Corporate Presentation December 2020 KeltExploration.com David J. Wilson President & Chief Executive Officer Sadiq H. Lalani Vice President & Chief Financial Officer www.keltexploration.com 0
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 ) Environment Social Governance • Kelt is committed to minimalizing impacts on the • Health and safety are a high • Kelt is committed to strong environment. priority and Kelt maintains a HS&E corporate governance practices, • Kelt enacted an Environmental Man
Slide 4: Current Economic Environment: COVID-19 Pandemic
Current Economic Environment COVID-19 PANDEMIC ● Kelt’s highest priority remains the health and safety of its employees, partners and the communities where it operates. The Company has introduced measures to protect the well-being of these stakeholders and is proud of the dedication of its workforce
Slide 5: Recent Asset Disposition: Sale of Inga/Fireweed Division
Recent Asset Disposition SALE OF INGA/FIREWEED DIVISION ● On August 21, 2020, Kelt completed the sale of its Inga/Fireweed Division to a multi-national oil and gas company headquartered in Houston, Texas, USA. ● Kelt received cash proceeds of $510.0 million, prior to closing adjustments, and the pur
Slide 6: Capital Structure
Capital Structure ● Stock Exchange listing TSX ● Trading symbol KEL ● Market capitalization ( effective December 1, 2020 ) $ 340 million ● 52-week stock trading range $ 0.67 – $ 5.00 ● Common shares issued 188.5 million ● Stock options ( 11.1 MM ) & RSUs ( 0.4 MM ) 11.5 million ( 6.1% ) → average ex
Slide 7: 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 8: Capital Expenditures
Capital Expenditures 2021/20 ( $ millions ) 2019 2020 (E) 2021 (E) change Drilling & Completions 184.7 68.5 58.5 − 15% Equipment, Facilities, & Pipeline 129.0 75.7 28.0 − 63% Infrastructure [1] Land, Seismic & Asset Acquisitions, 1.9 0.8 3.5 + 337% net of Property Dispositions [2] Net Capital Expend
Slide 9: Drilling Program
Drilling Program Drills 2019 Gross / Net Wells 2020 (E) Gross / Net Wells 2021 (E) Gross / Net Wells Alberta 8 8.0 5 5.0 4 4.0 British Columbia 25 25.0 9 9.0 6 6.0 Total 33 33.0 14 14.0 10 10.0 Completions 2019 Gross / Net Wells 2020 (E) Gross / Net Wells 2021 (E) Gross / Net Wells Alberta 6 6.0 3 3
Slide 10: Production
Production 2019 2020 (E) 2021 (E) Oil ( bbls/d ) 9,361 31% 6,850 28% 3,800 22% NGLs ( bbls/d ) [1] 4,490 15% 3,950 16% 2,700 15% Gas ( Mcf/d ) 96,658 54% 81,600 56% 66,000 63% Combined ( BOE/d ) 29,961 100% 24,400 100% 17,500 100% Per MM Shares ( BOE/d ) 163 130 93 Note: [1] 2021 estimated NGLs prod
Slide 11: Commodity Prices
Commodity Prices ( CA $, unless otherwise specified ) 2019 2020 (E) 2021 (E) WTI Crude Oil ( $/bbl ) [1] US $ 56.98 $ 75.61 US $ 38.00 $ 51.34 US $ 38.50 $ 51.59 MSW Crude Oil ( $/bbl ) [2] US $ 52.17 $ 69.19 US $ 32.68 $ 44.16 US $ 34.50 $ 46.23 NYMEX Natural Gas ( $/MMBtu ) US $ 2.62 $ 3.48 US $ 2
Slide 12: 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: Station 2 6% 11%
Slide 13: Hedging – Oil and NGLs
Hedging – Oil and NGLs Remaining Commodity Index Quantity Fixed Price Term MSW 1,500 CAD 32.25 / bbl Crude Oil Dec/2020 Fixed Price bbls/d [ equivalent to USD $24.07 at a CAD/USD exchange rate of 1.340 ] OPIS Conway 500 CAD 23.35 / bbl Propane Dec/2020 Fixed Price bbls/d [ equivalent to USD $17.43 a
Slide 14: Hedging – Natural Gas
Hedging – Natural Gas Remaining Commodity Index Quantity Fixed Price Term NYMEX Henry Hub 45,000 CAD 2.83 / MMBtu Natural Gas Oct/2020 Fixed Price MMBtu/d [ equivalent to USD $2.11 at a CAD/USD exchange rate of 1.340 ] NYMEX to AECO 5A 25,000 NYMEX minus USD 0.47 / MMBtu Natural Gas Oct/2020 Basis D
Slide 15: 2021 Forecast Commodity Price Sensitivities
2021 Forecast Commodity Price Sensitivities Kelt Kelt Kelt CAD / USD 2021 Oil Price NGLs Price Gas Price Exchange Rate Forecast plus 10% plus 10% plus 10% plus 5% Kelt Oil Price ( CAD/bbl ) 44.61 49.07 + 10% 44.61 ─ 44.61 ─ 46.82 + 5% Kelt NGLs Price ( CAD/bbl ) 19.14 19.14 ─ 21.05 + 10% 19.14 ─ 20.
Slide 16: Netbacks
Netbacks 2021/20 ( $ / BOE ) 2019 2020 (E) 2021 (E) change Revenue / Price 34.53 21.50 26.48 + 23% Realized hedging gain ( loss ) ( 0.08 ) 1.16 ( 0.13 ) − Royalties ( % of revenue / price ) 5.1% 4.9% 7.2% + 47% Transportation expense ( 4.62 ) ( 3.55 ) ( 3.16 ) − 11% Production expense ( 9.18 ) ( 9.4
Slide 17: Finding, Development & Acquisition Costs: P+P Reserves
Finding, Development & Acquisition Costs: P+P Reserves 2018 2019 Capital expenditures + change in FDC ( $M ) 596,004 1,295,973 P+P reserve additions, net ( MBOE ) 76,905 169,217 FD&A cost ( $/BOE ) 7.75 7.66 Operating netback ( $/BOE ) 20.56 18.89 Recycle ratio 2.7 x 2.5 x Notes: [1] Reserves are pe
Slide 18: Financial
Financial 2021/20 ( $ MM, unless otherwise specified ) 2019 2020 (E) 2021 (E) change Revenue 394.4 200.0 175.0 − 13% Operating income [1] 206.5 76.5 76.5 − Adjusted funds from operations [1] 182.5 57.0 66.5 + 17% AFFO per share – diluted ( $/share ) 0.99 0.30 0.35 + 17% Capital expenditures, net [2]
Slide 19: Operating Divisions
Operating Divisions Oak/Flatrock ● Montney light oil/condensate-rich gas Pouce Coupe/Progress/Spirit River ● Montney light oil ● Montney and Doig gas Oak/Flatrock Pouce Coupe/ Progress/Spirit River ● Charlie Lake light oil Wembley/Pipestone Wembley/Pipestone Grande Cache ● Montney light oil/condensa
Slide 20: Kelt Land Fairway Land Holdings
Kelt Land Fairway R13 R11 R9 R7 R5 R3 R1W6 R24W5 94-A-14 94-A-15 94-A-16 T90 T88 94-A-11 94-A-10 94-A-9 T88 Land Holdings Flatrock [ September 2020 ] T86 T86 Oak Developed + Gross Net Net T84 T84 Undeveloped Acres Acres Sections Fort St. John T82 T82 BC Montney 210,040 206,854 323 T80 T80 Progress A
Slide 21: Kelt Montney Framework
#2 Kelt exploration Kelt Montney Framework 290m I Oak / Flatrock ; Pouce Coupe Progress La Glace Pipestone / Wembley A A A vA A Doig Doig Upper Montney | Middle Montney Middle Montney oaneniney | eh Lower Montney D1/Sexsmith | D1/Sexsmith Belloy if Lower Montney 1 Belloy —J Proven Productive Montney
Slide 22: Drilling Economics
Drilling Economics Wembley/Pipestone Oak/Flatrock Pouce Coupe Alberta Charlie ( CA$, unless otherwise specified ) Montney Well Montney Well Montney Gas Well Lake Well Estimated sales – IP30 ( BOE / d ) 1,290 1,060 2,000 570 IP30 split – % Oil/NGLs | % Gas 72% 28% 49% 51% 12% 88% 76% 24% EUR: estimat
Slide 23: 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) 00/8-23 UM (DUC) (sfc 5-33) 00/6-24 UM (DUC) 02/13-13 UM MONTNEY LAND HOLDINGS 00/16-6 UM * 00/13-5 MM * (sfc 13-12) Gross: 204,933 acres ( 320 sections ) (sfc 5-31) T87 Net: 203,661
Slide 24: Alberta Montney Lands
Alberta Montney Lands MONTNEY LAND HOLDINGS T80 Gross: 185,600 acres ( 290 sections ) Net: 163,621 acres ( 256 sections ) Spirit OPERATIONS Pouce River Coupe ● Kelt commenced development of the Montney oil play at T78 Pouce Coupe with its first five-well pad that was Progress completed in Q1-17. The
Slide 25: Alberta Montney Wells
Alberta Montney Wells PRODUCTION Top Five Pouce Coupe IP30 Wells ( gross sales, BOE/d ): (1) Pouce Coupe 03/07-18-078-11W6 ( D1 ) 2,045 ( 66% oil/ngls ) (2) Pouce Coupe 02/06-18-078-11W6 ( D2 ) 2,004 ( 68% oil/ngls ) (3) Pouce Coupe 02/16-09-078-11W6 ( D2 ) 1,652 ( 67% oil/ngls ) (4) Pouce Coupe 05/
Slide 26: Wembley/Pipestone/La Glace Division – Middle Montney (D3)
Wembley/Pipestone/La Glace Division – Middle Montney ( D3 ) MONTNEY LAND HOLDINGS 00/13-10 02/13-32 (sfc 14-34) Gross: 110,880 acres ( 173 sections ) Sexsmith 00/1-35 (sfc 12-19) Gas Plant T75 Net: 107,155 acres ( 167 sections ) (0.3% WI) 00/13-6 (sfc 11-31) 00/14-2 (sfc 14-26) 00/16-5 00/13-30 (sfc
Slide 27: Wembley/Pipestone/La Glace Division – Middle Montney (D2 / D4)
Wembley/Pipestone/La Glace Division – Middle Montney ( D2 / D4 ) Kelt 14-29 MONTNEY LAND HOLDINGS La Glace Facility (100% WI) 1-5 (D2) Gross: 110,880 acres ( 173 sections ) 02/13-33 (D2) 15-33 (D4) Sexsmith T75 Net: 107,155 acres ( 167 sections ) Gas Plant 02/14-1 (D2) 2-28 (D2) (0.3% WI) OPERATIONS
Slide 28: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands CHARLIE LAKE LAND HOLDINGS T80 Gross: 108,320 acres ( 169 sections ) Net: 74,720 acres ( 117 sections ) Progress Pouce OPERATIONS Coupe T78 ● Kelt has over 100 gross locations targeting the Spirit Upper and Lower intervals of the Charlie Lake River Formation. T76 ● Kelt op
Slide 29: Spirit River – Charlie Lake
Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS 02/16-11 15-15 Pad: H2O Disposal 13-34 14-22 (60%) T79 15-22 (60%) Gross: 27,200 acres ( 43 sections ) 4-5 Pad: 03/3-1 (Upper CL) 14-33 16-22 (60%) Net: 20,000 acres ( 31 sections ) 02/3-1 (Lower CL) 4-15 (60%) CHARLIE LAKE GEOLOGY Gamma Ray Den
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 ● ESG – Health & Safety ● ESG – Environment & Air Quality ● ESG – Climate Change ● ESG – GHG Emissions ● ESG – Corporate Governance ● Leadership – Board of Directors ● Leadership – Management ● Abbreviations ● Disclaimers 30
Slide 32: Environment, Social & Governance (ESG)
Environment, Social & Governance ( ESG ) Health and Safety Safety is paramount in Kelt’s corporate culture. The Company is committed to safe and environmentally responsible operations for the benefit of its employees, contractors and the communities we work in. We reinforce our commitment through th
Slide 33: Environment, Social & Governance (ESG)
Environment, Social & Governance ( ESG ) Environment and Air Quality Kelt is committed to ensuring that its operational activities comply with all environmental regulatory standards and requirements. By conducting due diligence, Kelt takes all reasonable care to minimize and/or eliminate any negativ
Slide 34: Environment, Social & Governance (ESG)
Environment, Social & Governance ( ESG ) Kelt supports innovative strategies, clean technology (including alternative energy and renewable energy), green products and utilizing lower emitting solutions to meet industry targets. GHG Emissions Type Units 2018 Emissions 2018 Intensity 2019 Emissions 20
Slide 35: Environment, Social & Governance (ESG)
Environment, Social & Governance ( ESG ) 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,
Slide 36: Corporate Governance - Board of Directors
Corporate Governance - Board of Directors Robert J. Dales [ 2, 3, 4, 7 ] Geri L. Greenall [ 2, 3, 6 ] President, Valhalla Ventures Inc. Chief Financial Officer, Spartan Delta Corp. Common shares 1,794,255 Common shares 38,500 Stock options 196,000 Stock options 133,000 2019 Director fees $ 10,000 20
Slide 37: 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 24,003,792 Common shares 1,708,318 Common shares 463,842 Stock options 809,000 St
Slide 38: 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’). FFO: Funds from operations WTI: West Texas Intermediate MSW:
Slide 39: 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 40: 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 41: 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 42: 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 43: 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 44: 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 45: Disclaimer
Disclaimer Other Key Performance Indicators 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 46: 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 45
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