Kelt Exploration Ltd. · TSX:KEL
Kelt Exploration — Investor Presentation (June 2021)
46 slides from Kelt Exploration's investor presentation, June 2021
Slide 1: Corporate Presentation June 2021
Corporate Presentation June 2021 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 ) 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 May 31, 2021 ) $ 600 million ● 52-week stock trading range $ 1.27 – $ 3.26 ● Common shares issued 188.6 million ● Stock options ( 11.1 MM ) & RSUs ( 1.0 MM ) 12.1 million ( 6.4% ) → average exerci
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 2021/20 ( $ millions ) 2019 2020 2021 (E) change Drilling & Completions 184.7 70.2 84.5 + 20% Equipment, Facilities, & Pipeline 129.0 79.1 62.0 − 22% Infrastructure [1] Land, Seismic & Asset Acquisitions, 1.9 ( 503.3 ) 3.5 101% net of Property Dispositio
Slide 7: 2021 Drilling Program + Production Behind Pipe
2021 Drilling Program + Production Behind Pipe NINE wells that have been drilled, completed & tested (or currently testing) and are awaiting tie-in: ❖ Wembley (sfc 10-28) 00/03-04-074-07W6 Middle Montney (D2) – tie-in in 2022. ❖ Wembley (sfc 12-05) 00/09-04-073-06W6 Middle Montney (D3) – tie-in in 2
Slide 8: Production – Three Year Comparative
Production – Three Year Comparative 2019 2020 2021 (E) Oil ( bbls/d ) 9,361 31% 7,057 28% 4,650 22% NGLs ( bbls/d ) [1] 4,490 15% 4,161 17% 3,200 15% Gas ( Mcf/d ) 96,658 54% 82,646 55% 78,900 63% Combined ( BOE/d ) 29,961 100% 24,992 100% 21,000 100% Per MM Shares ( BOE/d ) 163 133 111 Note: [1] 20
Slide 9: Commodity Prices – Three Year Comparative
Commodity Prices – Three Year Comparative ( CA $, unless otherwise specified ) 2019 2020 2021 (E) WTI Crude Oil ( $/bbl ) [1] US $ 56.98 $ 75.61 US $ 39.24 $ 52.62 US $ 60.00 $ 73.62 MSW Crude Oil ( $/bbl ) [2] US $ 52.17 $ 69.19 US $ 33.82 $ 45.34 US $ 55.89 $ 68.57 NYMEX Natural Gas ( $/MMBtu ) US
Slide 10: 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: 5% Station 2 8% A
Slide 11: Hedging
Hedging Remaining Commodity Index Quantity Fixed Price Term WTI May/2021 to 1,500 CAD $58.52 / bbl Crude Oil Fixed Price Jun/2021 bbls/d [ equivalent to USD $47.69 / bbl at a CAD/USD exchange rate of 1.227 ] WTI Jul/2021 to 1,500 CAD $70.00 / bbl Crude Oil Fixed Price Sep/2021 bbls/d [ equivalent to
Slide 12: 2021 Forecast Commodity Price Sensitivities
2021 Forecast Commodity Price Sensitivities 2021 Kelt Oil/NGLs Price Kelt Gas Price Forecast plus 10% plus 10% Kelt Oil Price ( CAD/bbl ) 68.37 75.21 + 10% 68.37 ─ Kelt NGLs Price ( CAD/bbl ) 31.01 34.11 + 10% 31.01 ─ Kelt Gas Price ( CAD/Mcf ) 3.31 3.31 ─ 3.64 + 10% AFFO ( $ MM ) [1] [2] 118.0 127.
Slide 13: Netbacks – Three Year Comparative
Netbacks – Three Year Comparative 2021/20 ( $ / BOE ) 2019 2020 2021 (E) change Revenue / Price 34.53 21.73 32.28 + 49% Realized hedging gain ( loss ) ( 0.08 ) 0.99 ( 0.50 ) ─ Royalties ( % of revenue / price ) 5.1% 5.2% 7.9% + 52% Transportation expense ( 4.62 ) ( 3.62 ) ( 3.14 ) − 13% Production e
Slide 14: Financial Summary – Three Year Comparative
Financial Summary – Three Year Comparative 2021/20 ( $ MM, unless otherwise specified ) 2019 2020 2021 (E) change Revenue 394.4 207.2 256.4 + 24% Operating income [1] 206.5 76.9 128.8 + 67% Adjusted funds from operations [1] 182.5 58.8 118.0 + 101% AFFO per share – diluted ( $/share ) [1] 0.99 0.31
Slide 15: 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
Slide 16: 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 17: 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 18: 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 19: 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 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 [ June 1, 2021 ] T86 T86 Oak Developed + Gross Net Net T84 Fort T84 Undeveloped Acres Acres Sections St. John T82 BC Montney 210,650 207,464 324 T82 T80 T80 Pouce Progre
Slide 22: Kelt Montney Framework
#2 kelt exploration Kelt Montney Framework Oak / Flatrock ; Pouce Coupe Progress La Glace Pipestone / Wembley — Proven Productive Montney Horizons %% Kelt Future Exploratory Horizons Within Core Areas 21
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) 00/16-23 UM (DUC) Oak / Flatrock − Montney Land Holdings (sfc 5-33) 00/14-24 UM (DUC) 02/13-13 UM 00/16-6 MM * (sfc 13-12) Gross 205,600 acres ( 321 sections ) 00/13-5 UM * (sfc 5-31
Slide 24: Alberta Montney Lands
Alberta Montney Lands Alberta − Montney Land Holdings T80 Gross 181,610 acres ( 284 sections ) Net 160,196 acres ( 250 sections ) Pouce Pouce Spirit River Pouce Coupe West − Sproule Montney Gas Type Curve at Coupe Coupe T78 December 31, 2020 West Progress 2,289 BOE/d Estimated sales – IP30 ( 88% Gas
Slide 25: Wembley / Pipestone / La Glace Division – Montney (D3)
Wembley / Pipestone / La Glace Division – Montney ( D3 ) 00/13-10 Wembley / Pipestone / La Glace − Montney Land Holdings 02/13-32 (sfc 14-34) Gross 112,490 acres ( 176 sections ) 00/1-35 T75 (sfc 12-19) Net 108,573 acres ( 170 sections ) 00/13-6 (sfc 11-31) 00/14-2 (sfc 14-26) 00/16-5 00/1-36 Wemble
Slide 26: Wembley / Pipestone / La Glace Division – Montney (D2 / D4)
Wembley / Pipestone / La Glace Division – Montney ( D2 / D4 ) Kelt 14-29 OPERATIONS La Glace Facility (100% WI) 1-5 (D2) ● Ownership in pipeline infrastructure and minor interests in the 02/13-33 (D2) Sexsmith T75 Sexsmith ( 200 MMcf/d ) and Wembley ( 130 MMcf/d ) Gas 15-33 (D4) Gas Plant Plants. 02
Slide 27: Alberta Charlie Lake Lands
Alberta Charlie Lake Lands Alberta − Charlie Lake Land Holdings T80 Gross 108,640 acres ( 170 sections ) Net 74,625 acres ( 117 sections ) Progress Pouce Coupe T78 Spirit River − Sproule Lower Charlie Lake Type Curve at December 31, 2020 Spirit River 751 BOE/d Estimated sales – IP30 ( 59% Oil/NGLs )
Slide 28: Spirit River – Charlie Lake
Spirit River – Charlie Lake 8-27 Pad: CHARLIE LAKE LAND HOLDINGS 8-25 (Upper CL) 15-15 Pad: 4-5 Pad: 1-25 (Lower CL) 13-34 02/16-11 14-22 (60%) T79 15-22 (60%) Gross: 27,840 acres ( 44 sections ) 03/3-1 (Upper CL) 2 Disposal H O 14-33 16-22 (60%) Net: 20,320 acres ( 32 sections ) 02/3-1 (Lower CL) 4
Slide 29: 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 30: Appendix
Appendix ● Current Economic Environment ● Recent Asset Disposition – Sale of Inga/Fireweed Division ● ESG – GHG Emissions ● ESG – Carbon Tax ● ESG – Corporate Governance ● Governance – Board of Directors ● Leadership – Management ● Abbreviations ● Disclaimers 29
Slide 31: 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 32: 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 (“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 adjustme
Slide 33: 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 34: 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 35: 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 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 169,000 Stock options 163,000 2020 Director fees $ 4,167 202
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 24,473,992 Common shares 1,749,045 Common shares 475,478 Stock options 849,000 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