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1Q 2018 Earnings Presentation – Kelt Exploration Ltd.

Kelt Exploration Ltd. · May 7, 2018 · 58 slides

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Slides

  1. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 1
    Corporate Presentation MAY 2018 David J. Wilson, President & Chief Executive Officer Sadiq H. Lalani, Vice President & Chief Financial Officer www.KeltExploration.com
  2. 1Q 2018 Earnings 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. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 3
    Common Share Information 2 Stock Exchange listing TSX Trading symbol KEL Market capitalization 1.5 billion 52-week trading range 5.56 8.71 Common shares issued ( May/4/2018 ) 183.5 million Stock options ( 8.3 MM ) & RSUs ( 0.7…
  4. 1Q 2018 Earnings 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 133.51 166.00 D&Os purchased 14.7 million (16%) of the total Debenture…
  5. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 5
    INSIDER COMMITMENT 4 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…
  6. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 6
    Capital Expenditures 5 2018 2018/17 ( millions ) 2016 2017 Forecast Change Drilling & Completions 47.4 154.7 170.0 + 10% Equipment, Facilities, & 28.5 78.0 95.0 + 22% Pipeline Infrastructure Land, Seismic & Asset 28.3 11.6…
  7. 1Q 2018 Earnings 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 13 11.6 British Columbia 13 13.0 18 18.0 Non-operated Properties 11 3.2 6 0.4 Total 40 31.2 37 30.0 2017 Gross 2017 Net…
  8. 1Q 2018 Earnings 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. 1Q 2018 Earnings 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. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 10
    Production Outlook 9 2018 2018/17 2016 2017 Forecast Change Oil ( bbls/d ) 5,070 6,634 10,000 10,600 51% 60% Ngls ( bbls/d ) [1] 2,709 2,608 3,300 3,600 27% 38% Gas ( mcf/d ) 79,009 77,330 90,000 96,000 16% 24% Combined ( BOE/d )…
  11. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 11
    2018 Product Mix 10 Production 2018 Forecast Income Split ( MM ) Split Oil & Ngls 47% 212.0 91% Gas 53% 19.8 9% Operating income 100% 231.8 100% G&A and interest ( 16.8 ) expense Funds from 215.0 operations
  12. 1Q 2018 Earnings 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 65.00 + 28% CLS Crude Oil ( CAD/bbl ) [2] 52.79 61.85 78.11 + 26% NYMEX Natural Gas ( USD/MMBtu ) US…
  13. 1Q 2018 Earnings 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. 1Q 2018 Earnings 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 15,000 16,000 20,000 18,577 12,888 15,000 13,168 12,756 11,879 10,000 8,419…
  15. 1Q 2018 Earnings 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% 155 - 165 150 125 120 121 82 - 88 105 100 73 77 76 69 53 50 73 - 78 42 45 52 43 36…
  16. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 16
    Netbacks 15 2018/17 ( / BOE ) 2016 2017 2018 (E) Change Revenue/Price 24.08 31.51 38.78 + 23% Realized hedging gain ( loss ) 0.02 ( 0.13 ) Royalties ( % of revenue ) ( 8.6% ) ( 9.3% ) ( 10.5% ) + 13% Transportation expense ( 2.86 )…
  17. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 17
    Financial Outlook 16 2018 2018/17 2016 2017 Forecast Change Revenue ( MM ) 184.6 257.6 410.5 + 59% Operating income ( MM ) [1] 75.7 123.4 231.8 + 88% Adj. funds from operations ( MM ) [1] 58.4 108.0 215.0 + 99% Per share diluted…
  18. 1Q 2018 Earnings 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 ) 65.00 58.40 - 10% 65.00 n/c 65.00 n/c NYMEX Natural Gas (…
  19. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 19
    Core Areas 18 Fort St. John ( BC ) : Inga/Fireweed & Oak/Flatrock Stacked Montney light oil and condensate-rich gas Doig condensate-rich gas Grande Prairie ( AB ) : Fort St. John Pouce Coupe/Progress, La Glace & Grande Prairie…
  20. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 20
    Kelt Land Fairway 19 Fireweed Corporate Land Holdings Inga May/8 Net Net Flatrock 2018 Acres Sections Stoddart Oak Developed 222,271 347 Fort St. John Undeveloped 644,512 1007 Total 866,783 1,354 Progress Pouce Coupe…
  21. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 21
    British Columbia Montney Lands 20 LAND (Montney Rights) Gross: 345,148 acres ( 539 sections ) Net: 340,196 acres ( 532 sections ) Fireweed OPERATIONS Kelt has been successful delineating the Upper and Middle Montney at Stoddart…
  22. 1Q 2018 Earnings 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 ( 68%…
  23. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 23
    B.C. - Stacked Montney Resource Potential 22 MULTIPLE STACKED MONTNEY HORIZONS Kelt has been successful delineating the Upper and Middle Montney at Inga/Fireweed Initial results from the IBZ Montney has been encouraging and…
  24. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 24
    Inga 6-Section / 3-Pad / 72-Well Development Plan 23 Kelt has increased its 2018 capital expenditure budget to include 6 new drills at Inga which will ultimately be part of a 24-well pad made up of 8 Upper, 8 Middle and 8 IBZ…
  25. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 25
    Inga / Fireweed Montney Lands 24 B-90-A UM LAND MONTNEY RIGHTS (sfc C-10-H) A-58-I UM C-26-A UM 220 gross sections ( 218 net sections ) (sfc D-A79-I) (sfc A-6-A) C-85-I UM OPERATIONS 00/15-25 MM (sfc A-65-I) 02/15-25 UM…
  26. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 26
    Inga / Fireweed Upper 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 100 795 MBOE 54% Oil/Ngls 46% Gas 10 10 5 0 1…
  27. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 27
    Inga / Fireweed Middle Montney Type Curve 26 ( 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…
  28. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 28
    Oak / Flatrock Montney Lands 27 OPERATIONS 02/13-13 (sfc 13-12) Oil and gas exploration activity targeting the Upper Montney (D4 / D5) at depths of 1,500 to 1,600 metres. 00/7-3 (sfc 10-27) Expectations are 30% to 50%…
  29. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 29
    Alberta Montney Lands 28 LAND Montney Rights: Gross: 173,280 acres ( 271 sections ) Net: 148,915 acres ( 233 sections ) Pouce OPERATIONS Coupe Kelt has commenced development of the Lower- Progress Middle and the Upper-Middle…
  30. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 30
    Alberta Montney Wells 29 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%…
  31. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 31
    Pouce Coupe / Progress 30 Kelt Lands 14-14 MM Abbreviations: 875 BOE/d IP30 UM Upper Montney (KEL 50%) MM Middle Montney 15-13 MM UMM Upper-middle Pouce 920 BOE/d IP30 Montney (may also be Coupe (KEL 50%) referred to as Montney H…
  32. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 32
    Pouce Coupe / Progress Montney Oil Type Curve 31 ( 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…
  33. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 33
    Valhalla / La Glace and Pipestone / Wembley 32 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…
  34. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 34
    La Glace Montney Oil Type Curve 33 ( 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…
  35. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 35
    2017 Montney Development Wells Paybacks 34 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…
  36. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 36
    Spirit River Charlie Lake 35 LAND Gross: 30,560 acres ( 48 sections ) 13-34 CL Pad: 14-22 (60%) Net: 23,151 acres ( 36 sections ) 15-22 (60%) 13-33 16-22 (60%) Charlie Lake: 20.25 net sections 16-11 H2O Disposal CHARLIE LAKE:…
  37. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 37
    Net Asset Value 36 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 )…
  38. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 38
    Future Considerations 37 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…
  39. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 39
    Management 38 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,…
  40. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 40
    Board of Directors 39 Robert J. Dales Compensation (Chair), Nominating, Audit, Reserves Geri L. Greenall Audit, Nominating William C. Guinan Chairman of the Board, HSE Michael R. Shea Reserves, Compensation Neil G. Sinclair Audit…
  41. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 41
    APPENDIX 40 ABBREVIATIONS 2018 FORECASTED COMMODITY PRICES QUARTERLY FORECAST OF 2018 WTI & NYMEX PRICES QUARTERLY PRODUCTION GROWTH QUARTERLY CASH COSTS MAP OF NORTH AMERICAN NATURAL GAS HUBS GAS MARKETING & TRANSPORTATION…
  42. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 42
    2018 Forecasted Commodity Prices 42 ( CA, unless otherwise specified ) Jan-Mar Apr-Dec (E) 2018 (E) WTI Crude Oil ( USD/bbl ) [1] US 62.91 US 65.69 US 65.00 CLS Crude Oil ( CAD/bbl ) [2] 74.77 79.20 78.11 NYMEX Natural Gas ( USD/MMBtu )…
  43. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 43
    Kelts 2018 Oil Price Forecast 43 KELT Realized CA/bbl WTI US/bbl ( 2018 Average = CA71.74 ) ( 2018 Average = US65.00 ) 80.00 80.00 75.00 74.33 75.00 72.08 71.58 70.00 70.00 68.16 66.74 65.00 65.13 65.34 65.00 65.00 62.91 60.00…
  44. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 44
    Kelts 2018 Gas Price Forecast 44 KELT Realized CA/Mcf NYMEX US/MMBtu ( 2018 Average = CA2.89 ) ( 2018 Average = US2.90) 4.00 4.00 3.50 3.52 3.50 3.47 3.25 3.20 3.13 3.00 2.97 3.00 3.00 2.91 2.90 2.92 2.87 2.83 2.79 2.75…
  45. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 45
    Quarterly Production Growth 45 PRODUCTION ( BOE / d ) 32,000 Oil Ngls 28,000 Gas 24,000 20,000 16,000 12,000 8,000 4,000 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 [E] 2014 2015 2016 2017 2018
  46. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 46
    Quarterly Cash Costs 46 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 18 Q2 [E]…
  47. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 47
    North American Natural Gas Hubs 47 Station 2 AECO Sumas Empress Kelt 2018 Gas Netback Forecast: Emerson Kingsgate Hub Price Netback Waddington Gas Hub % US/MMBtu US/Mcf Stanfield Dawn 26% 2.75 1.94 Opal Dawn Boston Malin…
  48. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 48
    Kelt Gas Firm Transportation Contracts 48 Transportation Supply Term Volume (MMcf/d) Upstream Hub Nov/1/17 Oct/31/18 10.3 [2] Alliance Receipt Point Nov/1/17 Oct/31/20 [1] 2.0 [2] Alliance Receipt Point Apr/1/18 Oct/31/20 [1] 2.1…
  49. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 49
    Kelt Gas Marketing Sales Contracts 49 Volume Physical Sales Market Term Market Price (MMcf/d) Delivery Hub Nov/1/17 Oct/31/27 [1] 23.7 DAWN DAWN USD Daily Index Nov/1/17 Oct/31/20 15.0 NIT MALIN USD NGI FOM Index less US0.70/MMBtu…
  50. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 50
    Reserves 50 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…
  51. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 51
    Sproule P+P Reserves FDC 51 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…
  52. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 52
    Grande Cache 52 LAND Narraway Modern 13-4 IP30: 9 MMcf/d Gross: 130,270 acres ( 204 sections ) 135 MMcf/d Falher/Wilrich TOU 4-29 Net: 93,384 acres ( 146 sections ) Gas Plant IP30: 20 MMcf/d (7% WI) Falher/Wilrich OPERATIONS…
  53. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 53
    2017 B.C. Inga DOIG Development Wells Paybacks 53 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…
  54. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 54
    Inga / Fireweed Upper Montney Type Curve 54 ( 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…
  55. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 55
    Inga / Fireweed Middle Montney Type Curve 55 ( 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…
  56. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 56
    Pouce Coupe / Progress Montney Oil Type Curve 56 ( 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…
  57. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 57
    La Glace Montney Oil Type Curve 57 ( 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…
  58. 1Q 2018 Earnings Presentation – Kelt Exploration Ltd. – slide 58
    Corporate Presentation Suite 300, 311 6th Avenue SW Calgary, Alberta, Canada T2P 3H2 www.KeltExploration.com

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