Kelt Exploration Ltd. · TSX:KEL
Kelt Exploration — Investor Presentation (March 2022)
49 slides from Kelt Exploration's investor presentation, March 2022
Slide 1: Corporate Presentation March 2022
Corporate Presentation March 2022 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 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 ( @ $ 5.68 effective March 4, 2022 ) $ 1.1 billion ● 52-week stock trading range $ 2.35 – $ 6.05 ● Common shares issued 189.3 million ● Stock options ( 10.3 MM ) & RSUs ( 0.8 MM ) 11.1 million ( 5.9% ) → aver
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 2022 (E) Drilling & Completions 70.2 123.5 169.0 Infrastructure: Equipment, Facilities, 78.7 95.7 67.0 Pipelines & Tangible Inventory [1] Land, Seismic, Corporate Assets & 5.5 3.3 14.0 Property Acquisitions Property Dispositions
Slide 7: Operating Divisions – Drilling Program
Operating Divisions – Drilling Program 2020 [1] 2021 2022 Forecast Drills Gross / Net Wells Gross / Net Wells Gross / Net Wells Wembley / Pipestone 3 3.0 6 6.0 10 9.6 Pouce Coupe / Progress / Spirit River 2 2.0 10 9.7 14 12.5 Oak / Flatrock 4 4.0 5 5.0 6 6.0 Total 9 9.0 21 20.7 30 28.1 2020 [1] 2021
Slide 8: Production – Three Year Comparative
Production – Three Year Comparative 2020 2021 2022 (E) Oil ( bbls/d ) 7,057 28% 4,692 22% 6,960 23% NGLs ( bbls/d ) [1] 4,161 17% 3,154 15% 4,620 15% Gas ( Mcf/d ) 82,646 55% 78,846 63% 116,520 62% Combined ( BOE/d ) 24,992 100% 20,987 100% 31,000 100% ( 16% ) Annual Percent Change 48% Up 35% exclud
Slide 9: Commodity Prices – Three Year Comparative
Commodity Prices – Three Year Comparative ( CAD, unless otherwise specified ) 2020 2021 2022 (E) WTI Crude Oil ( $/bbl ) [1] US $ 39.24 $ 52.62 US $ 68.03 $ 85.31 US $ 85.00 $ 106.25 MSW Crude Oil ( $/bbl ) [2] US $ 33.82 $ 45.34 US $ 64.08 $ 80.29 US $ 82.00 $ 102.50 NYMEX Henry Hub [ L3D ] Natural
Slide 10: 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: 1% 11% AECO 2% Dawn 6% C
Slide 11: Commodity Price Risk Management
Commodity Price Risk Management Remaining Commodity Index Term @ Quantity Contract Price Mar/1/2022 WTI 5,000 CAD $96.26 / bbl Crude Oil Mar/2022 Fixed Price bbls/d [ equivalent to USD $77.00 / bbl at a CAD/USD exchange rate of 1.250 ] WTI Apr/2022 to 3,000 CAD $95.67 / bbl Crude Oil Fixed Price Jun
Slide 12: Netbacks – Three Year Comparative
Netbacks – Three Year Comparative 2022/21 ( $ / BOE ) 2020 2021 2022 (E) change Net realized price 21.73 40.52 45.42 12% Realized hedging gain ( loss ) 0.99 ( 2.14 ) ( 0.61 ) ─ Royalties ( % of net realized price ) ( 5.2% ) ( 8.8% ) ( 11.2% ) 27% Transportation expense ( 3.62 ) ( 3.38 ) ( 3.10 ) ( 8
Slide 13: Financial Summary – Three Year Comparative
Financial Summary – Three Year Comparative 2022/21 ( $ MM, unless otherwise specified ) 2020 2021 2022 (E) change P&NG sales 207.2 316.8 518.8 64% Adjusted funds from operations [1] 58.8 161.4 300.0 86% AFFO per share – diluted ( $/share ) [1] 0.31 0.85 1.55 82% Capital expenditures, net of A&D [1,2
Slide 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 ( February 14, 2022 ) T86 T86 Oak Developed + Gross Net Net T84 Fort T84 Undeveloped Acres Acres Sections St. John T82 BC Montney 199,433 196,247 307 T82 T80 T80 Pouce P
Slide 20: 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 21: 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 194,383 acres ( 304 sections ) (sfc 5-31) T87 Net 193,111 acres ( 302 sections ) Kelt 6-35 7-3
Slide 22: Oak – Well Performance
Oak – Well Performance Cumulative Cumulative Recent Recent D&C Capex Upper Montney Well [2] [3] Production [1] Oil & NGLs Production [1] Oil & NGLs [1] ( $ MM ) ( BOE ) (%) ( BOE/d ) (%) 00/13-05-087-18W6 (sfc 5-31) 6.0 99,040 33% 1,073 22% 00/01-09-087-18W6 (sfc 5-33) 6.0 65,152 44% 991 32% 00/04-1
Slide 23: 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 24: Alberta Montney Lands
Alberta Montney Lands Alberta − Montney Land Holdings T80 Gross 169,610 acres ( 265 sections ) Net 149,912 acres ( 234 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 25: 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 26: 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 107,773 acres ( 168 sections ) 1-36 (sfc 10-28) T74 Montney ( D3 ) Gas Type Curve
Slide 27: 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 28: 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 29: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands Alberta − Charlie Lake Land Holdings T80 Gross 107,200 acres ( 168 sections ) Progress Net 72,067 acres ( 113 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 30: Progress / Spirit River – Charlie Lake
Progress / Spirit River – Charlie Lake CHARLIE LAKE LAND HOLDINGS 8-25 UCL 1-30 LCL 1-25 LCL T79 Gross: 37,600 acres ( 59 sections ) Progress (sfc 10-7) (sfc 8-27) Spirit Net: 24,739 acres ( 39 sections ) KEL 50% River 02/16-11 (H2O CHARLIE LAKE GEOLOGY Disposal) Gamma Ray Density Porosity T78 Worsl
Slide 31: 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 32: 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 32
Slide 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 2021 Director fees $ 10,000 2021 Director fees $ 10,000 Louise K
Slide 39: 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 25,019,992 Common shares 1,766,861 Common shares 488,772 Stock options 849,000 St
Slide 40: 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 R
Slide 41: 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 42: 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 43: 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 44: 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 45: 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 46: Disclaimer
Disclaimer Financial Advisories All dollar amounts are referenced in Canadian dollars, except when otherwise noted. Non-GAAP Financial Measures and Other Financial Measures This Presentation contains certain financial measures, as described below, which do not have standardized meanings prescribed b
Slide 47: 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 48: 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 49: 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 49
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