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March 2018 Corporate Presentation – Kelt Exploration Ltd.

Kelt Exploration Ltd. · Mar 9, 2018 · 56 slides

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Slides

  1. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 1
    Corporate Presentation MARCH 2018 David J. Wilson, President & Chief Executive Officer Sadiq H. Lalani, Vice President & Chief Financial Officer www.KeltExploration.com
  2. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 2
    Why Invest in Kelt 1 CREATING VALUE DURING DOWNTURNS The Kelt management team has a track record of creating shareholder value during downturns, previously during the 2008- 2009 period with Celtic Exploration Ltd., eventually sold…
  3. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 3
    Common Share Information 2 Stock Exchange listing TSX Trading symbol KEL Market capitalization 1.2 billion 52-week trading range 5.56 8.20 Common shares issued ( Mar/6/2018 ) 180.3 million Stock options ( 8.5 MM ) & RSUs ( 0.8…
  4. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 4
    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 133.51 162.00 D&Os purchased 14.7 million (16%) of the total Debenture…
  5. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 5
    INSIDER COMMITMENT 4 Insider Purchases Offering / Market Purchases Shares (MM) Amount (MM) Price/share 13.9 MM Equity Private Placement 3.7 8.7 2.32 94.4 MM Equity Private Placement 5.7 31.5 5.55 92.0 MM Equity Private Placement…
  6. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 6
    Capital Expenditures 5 2018 2018/17 ( millions ) 2016 2017 Forecast Change Drilling & Completions 47.4 154.7 135.0 - 13% Facilities, Equipment & 28.5 78.0 65.0 - 17% Pipeline Infrastructure Land, Seismic & Asset 28.3 11.6 10.0…
  7. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 7
    Drilling Program 6 2017 Gross 2017 Net 2018 Gross 2018 Net Drills Wells Wells Wells Wells Alberta 16 15.0 8 7.1 British Columbia 13 13.0 12 12.0 Non-operated Properties 11 3.2 1 1.0 Total 40 31.2 21 20.1 2017 Gross 2017 Net 2018…
  8. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 8
    Reserves 7 LIQUIDS WEIGHTING CONTINUES TO GROW: 2017 proved plus probable reserve additions, before dispositions, were weighted 63% to oil/ngls and 37% to gas compared to 40% and 60% respectively in 2016. The 2018 drilling program…
  9. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 9
    Finding, Development & Acquisition Costs 8 Proved + As at December 31, 2017 Proved Probable 2017 capital expenditures + change in FDC ( M ) 315,436 343,953 Reserve additions, net ( MBOE ) 32,837 49,592 FD&A cost ( /BOE ) 9.61 6.94…
  10. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 10
    Production Outlook 9 2018 2018/17 2016 2017 Forecast Change Oil ( bbls/d ) 5,070 6,634 10,200 10,600 54% 60% Ngls ( bbls/d ) 2,709 2,608 3,200 3,300 23% 27% Gas ( mcf/d ) 79,009 77,330 90,600 93,600 17% 21% Combined ( BOE/d )…
  11. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 11
    2018 Product Mix 10 Production 2018 Forecast Income Split ( MM ) Split Oil 36% 173.0 80% Ngls [1] 11% 20.0 9% Gas 53% 24.0 11% Operating income 100% 217.0 100% G&A and interest expense ( 17.0 ) Funds from operations 200.0…
  12. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 12
    Commodity Prices 11 ( CA, unless otherwise specified ) 2016 2017 2018 (E) YOY Change WTI Crude Oil ( USD/bbl ) [1] US 43.32 US 50.95 US 58.50 + 15% CLS Crude Oil ( CAD/bbl ) [2] 52.79 61.85 69.80 + 13% NYMEX Natural Gas ( USD/MMBtu ) US…
  13. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 13
    Gas Market Risk Management 12 GAS MARKET DIVERSIFICATION: The Company has taken a diversified approach to selling its natural gas in order to reduce exposure to single market risk. Kelt has entered into several contracts that result…
  14. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 14
    Annual Production Growth ( since inception ) 13 PRODUCTION ( BOE / d ) : CAGR since 35,000 2013 = 49% 28,500 30,000 29,500 25,000 22,130 20,947 15,100 15,600 20,000 18,577 12,888 15,000 13,168 12,756 11,879 10,000 8,419…
  15. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 15
    Annual Production per Share Growth ( since inception ) 14 PRODUCTION PER MILLION SHARES ( BOE / d ) : 200 CAGR since 2013 = 25% 158 - 164 150 121 125 120 84 - 87 105 100 73 77 76 69 53 50 74 - 77 42 45 52 43 36…
  16. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 16
    Netbacks 15 2018/17 ( / BOE ) 2016 2017 2018 (E) Change Price 24.08 31.51 37.42 + 19% Realized hedging gain ( loss ) 0.02 ( 0.13 ) Royalties ( % of price ) ( 8.6% ) ( 9.3% ) ( 10.8% ) + 16% Transportation expense ( 2.86 ) ( 3.13 ) (…
  17. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 17
    Financial Outlook 16 2018 2018/17 2016 2017 Forecast Change Revenue ( MM ) 184.6 257.6 396.1 + 54% Operating income ( MM ) [1] 75.7 123.4 217.0 + 76% Adj. funds from operations ( MM ) [1] 58.4 108.0 200.0 + 85% Per share diluted…
  18. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 18
    2018 Commodity Price Sensitivities 17 Kelt Kelt CAD/USD 2018 Oil/NGLs Price Gas Price Exchange Rate Forecast minus 10% minus 10% minus CAD 0.05 WTI Crude Oil ( USD/bbl ) 58.50 52.61 - 10% 58.50 n/c 58.50 n/c NYMEX Natural Gas (…
  19. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 19
    Core Areas 18 Fort St. John ( BC ) : Stacked Montney light oil and condensate-rich gas Fort St. John Doig condensate-rich gas Grande Prairie Grande Prairie ( AB ) : Stacked Montney light oil Grande Cache Montney/Doig gas…
  20. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 20
    Kelt Land Fairway 19 Fireweed Corporate Land Holdings Inga Dec/31 Net Net Flatrock 2017 Acres Sections Stoddart Oak Developed 210,783 329 Fort St. John Undeveloped 637,853 997 Total 848,636 1,326 Progress Pouce Coupe…
  21. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 21
    British Columbia Montney Lands 20 LAND (Montney Rights) Gross: 295,043 acres ( 461 sections ) Net: 290,091 acres ( 453 sections ) Fireweed OPERATIONS Kelt has successfully delineated the Upper Montney at Inga/Fireweed Stoddart…
  22. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 22
    British Columbia Montney Wells 21 PRODUCTION RESERVES Kelt British Columbia Montney Drills Typical well EURs: Top 10 IP30 Wells ( gross sales, BOE/d ): Inga/Fireweed Upper Montney ( UM ) (1) Fireweed 00/C-31-I/94-A-12 UM 2,068 ( 32%…
  23. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 23
    B.C. - Stacked Montney Resource Potential 22 MULTIPLE STACKED MONTNEY HORIZONS Kelt has successfully delineated the Upper Montney at Inga/Fireweed and currently estimates an un-risked drilling inventory of over 700 locations…
  24. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 24
    Inga / Fireweed Montney Lands 23 B-90-A UM LAND MONTNEY RIGHTS (sfc C-10-H) A-58-I UM C-26-A UM 207 gross sections ( 204 net sections ) (sfc D-A79-I) (sfc A-6-A) C-85-I UM OPERATIONS (sfc A-65-I) B-65-I UM (sfc A-34-I)…
  25. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 25
    Inga / Fireweed Upper Montney Type Curve 24 ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 795 MBOE 54% Oil/Ngls 46% Gas 10 10 5 0 1…
  26. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 26
    Inga / Fireweed Middle Montney Type Curve 25 ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 645 MBOE 59% Oil/Ngls 41% Gas 10 5 0 1…
  27. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 27
    Oak / Flatrock Montney Lands 26 OPERATIONS 02/13-13 (sfc 13-12) Oil and gas exploration activity with plans to drill and complete two wells in 2018. 00/7-3 (sfc 10-27) First well at 02/6-2 was successful and initially…
  28. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 28
    Alberta Montney Lands 27 LAND Montney Rights: Gross: 172,640 acres ( 270 sections ) Net: 148,274 acres ( 232 sections ) Pouce OPERATIONS Coupe Kelt has successfully delineated the Lower- Progress Middle and the Upper-Middle…
  29. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 29
    Alberta Montney Wells 28 PRODUCTION RESERVES Kelt Alberta Montney OIL Drills Typical well EURs: Top 10 IP30 Wells (gross sales, BOE/d): (1) Pouce Coupe Montney OIL: 2P EUR = 600 MBOE * (1) Pouce Coupe 03/07-18-078-11W6 LMM 2,045 ( 66%…
  30. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 30
    Pouce Coupe / Progress 29 Kelt Lands 15-13 MM 14-14 MM 920 BOE/d IP30 Abbreviations: 875 BOE/d IP30 (KEL 50%) UM Upper Montney (KEL 50%) MM Middle Montney UMM Upper-middle Montney (may also be Pouce referred to as Montney H Coupe UMM…
  31. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 31
    Pouce Coupe / Progress Montney Oil Type Curve 30 ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well 2P EUR Type Curve* Well Count 1,000 2P EUR * 600 MBOE 100 45% Oil/Ngls 55% Gas * Sproule has a 795…
  32. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 32
    Valhalla / La Glace and Pipestone / Wembley 31 Drilling has been focused on the Middle Montney. Upper Montney also productive - tested in the 15-33 well Kelt 14-29 La Glace Ownership in pipeline infrastructure, minor Facility…
  33. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 33
    La Glace Montney Oil Type Curve 32 ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 590 MBOE 61% Oil/Ngls 39% Gas 10 10 5 0 1 3 5 7 9…
  34. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 34
    2017 Montney Development Wells Paybacks 33 Actual Cumulative to Dec 31, 2017 [3] Remaining to Payback [4] Last Drill & Months Complete Production Operating Production Cost Initial Start Operating Operating Production Income Payback…
  35. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 35
    Spirit River Charlie Lake 34 LAND Gross: 42,880 acres ( 67 sections ) 13-34 CL Pad: 14-22 (60%) Net: 35,352 acres ( 55 sections ) 15-22 (60%) 13-33 16-22 (60%) Charlie Lake: 28 net sections 16-10 H2O Doe Creek: 17 net sections…
  36. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 36
    Net Asset Value 35 Dec/31 Dec/31 % ( millions ) 2016 2017 change P&NG reserves, NPV10% BT 1,730.7 2,111.5 + 22% Decommissioning obligations, NPV10% BT [1] ( 9.5 ) ( 12.8 ) + 35% Undeveloped land 212.5 239.1 + 13% Net bank debt ( 138.0 )…
  37. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 37
    Future Considerations 36 KELT: 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…
  38. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 38
    Management 37 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,…
  39. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 39
    Board of Directors 38 Robert J. Dales Compensation (Chair), Nominating, Audit, Reserves Geri L. Greenall Audit, Nominating William C. Guinan Chairman of the Board, HSE Eldon A. McIntyre [1] Reserves (Chair), Nominating, Audit,…
  40. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 40
    APPENDIX 39 ABBREVIATIONS QUARTERLY FORECAST OF 2018 WTI & NYMEX PRICES QUARTERLY PRODUCTION GROWTH QUARTERLY CASH COSTS MAP OF NORTH AMERICAN NATURAL GAS HUBS GAS MARKETING & TRANSPORTATION CONTRACTS SPROULE RESERVES PLUS…
  41. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 41
    Kelts 2018 Oil Price Forecast 41 KELT Realized CA/bbl WTI US/bbl ( 2018 Average = CA66.88 ) ( 2018 Average = US58.50 ) 70.00 70.00 67.30 67.70 65.97 66.49 65.00 65.13 65.00 60.00 60.21 59.75 60.00 59.00 58.25 56.80 56.97 55.00…
  42. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 42
    Kelts 2018 Gas Price Forecast 42 KELT Realized CA/Mcf NYMEX US/MMBtu ( 2018 Average = CA3.05 ) ( 2018 Average = US3.05) 4.50 5.00 3.50 3.52 3.47 3.42 4.00 3.37 3.25 2.79 3.31 2.76 3.13 2.70 3.15 2.50 2.97 2.91 2.99 3.00 2.33…
  43. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 43
    Quarterly Production Growth 43 PRODUCTION ( BOE / d ) 32,000 Oil Ngls 28,000 Gas 24,000 20,000 16,000 12,000 8,000 4,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 [E] 2014 2015 2016 2017 2018
  44. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 44
    Quarterly Cash Costs 44 CONTROLLING COSTS ( / BOE ) 22.00 G&A 20.00 Interest Production and 18.00 Transportation 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 18…
  45. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 45
    North American Natural Gas Hubs 45 Station 2 AECO Sumas Empress Kelt 2018 Gas Netback Forecast: Emerson Kingsgate Hub Price Netback Waddington Gas Hub % US/MMBtu US/Mcf Stanfield Chicago 16% 2.85 2.02 Opal Dawn Boston Malin…
  46. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 46
    B.C. Gas Marketing / Transportation Contracts 46 Supply Term Volume Upstream Market Term Volume Market Price (Firm Transportation) (MMcf/d) Hub (Sales) (MMcf/d) Nov/1/2017 Alliance Nov/1/2017 CHICAGO City Gate USD Gas 10.3 [2]…
  47. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 47
    Alberta Gas Marketing / Transportation Contracts 47 Supply Term Volume Upstream Market Term Volume Market Price (Firm Transportation) (MMcf/d) Hub (Sales) (MMcf/d) Nov/1/2017 NGTL FT-D Nov/1/2017 24.6 [2] 23.7 DAWN USD Daily…
  48. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 48
    Reserves 48 NPV 10% BT DEC/31/2016 DEC/31/2017 Percent DEC/31/2017 ( MMBOE ) ( MMBOE ) Change ( MM ) Proved Developed 34.5 37.9 + 10% 423 Producing Total Proved 108.2 133.0 + 23% 1,093 Proved plus Probable 194.1 235.6 + 21% 2,112…
  49. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 49
    Sproule P+P Reserves FDC 49 December 31, 2017 FDC ( MM ) Net HZ Wells Alberta Montney wells 176 37 B.C. Montney wells 638 103 TOTAL Montney wells 814 140 Other formation wells 342 74 Other expenditures 7 - TOTAL 1,163 214…
  50. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 50
    Grande Cache 50 LAND Narraway Modern 13-4 IP30: 9 MMcf/d Gross: 141,120 acres ( 220 sections ) 135 MMcf/d Falher/Wilrich TOU 4-29 Net: 99,716 acres ( 155 sections ) Gas Plant IP30: 20 MMcf/d (7% WI) Falher/Wilrich OPERATIONS…
  51. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 51
    2017 B.C. Inga DOIG Development Wells Paybacks 51 Kelt drilled two Doig wells in 2017 where 2P Type Curves target an IP30 of 2,000 BOE/d (26% gas / 74% oil/ngls) and EURs of 1,080 MBOE (49% gas / 51% oil/ngls). Kelt has 31 (28.4…
  52. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 52
    Inga / Fireweed Upper Montney Type Curve 52 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 795 MBOE 54% Oil/Ngls 46% Gas 10 10 5 0 1 3 5 7 9 11 13 15…
  53. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 53
    Inga / Fireweed Middle Montney Type Curve 53 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 645 MBOE 59% Oil/Ngls 41% Gas 10 5 0 1 3 5 7 9 11 13 15…
  54. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 54
    Pouce Coupe / Progress Montney Oil Type Curve 54 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 2P EUR Type Curve* Well Count 1,000 2P EUR * 600 MBOE 100 45% Oil/Ngls 55% Gas * Sproule has a 795 MBOE and a 514 MBOE…
  55. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 55
    La Glace Montney Oil Type Curve 55 ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 590 MBOE 61% Oil/Ngls 39% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21…
  56. March 2018 Corporate Presentation – Kelt Exploration Ltd. – slide 56
    Corporate Presentation Suite 300, 311 6th Avenue SW Calgary, Alberta, Canada T2P 3H2 www.KeltExploration.com

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