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March 2019 Corporate Presentation – Kelt Exploration Ltd.

Kelt Exploration Ltd. · Mar 6, 2019 · 58 slides

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Slides

  1. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 1
    Corporate Presentation March 2019 KeltExploration.com David J. Wilson President & Chief Executive Officer Sadiq H. Lalani Vice President & Chief Financial Officer www.keltexploration.com 0
  2. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 2
    Why Invest in Kelt 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 in…
  3. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 3
    Common Share Information Stock Exchange listing TSX Trading symbol KEL Market capitalization 1.0 billion 52-week trading range 3.97 10.01 Common shares issued ( Feb/2019 ) 184.0 million Stock options ( 9.7 MM ) & RSUs ( 1.1 MM )…
  4. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 4
    Convertible Debentures TSX trading symbol KEL.DB Principal amount issued 90.00 million Principal amount outstanding 89.91 million Coupon / Maturity date 5.0% / May 31, 2021 52-week trading range 105.00 186.05 D&Os purchased 14.7…
  5. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 5
    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…
  6. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 6
    Capital Expenditures 2019 2019/18 ( millions ) 2017 2018 Budget Change Drilling & Completions 154.7 168.7 201.0 + 19% Equipment, Facilities, & 78.0 117.7 60.0 49% Pipeline Infrastructure Land, Seismic & Asset Acquisitions 11.6 9.2…
  7. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 7
    Drilling Program 2018 2019 Budget Drills Gross ( Net ) Wells Gross ( Net ) Wells Alberta 16 ( 15.1 ) 8 ( 8.0 ) British Columbia 17 (17.0 ) 25 ( 25.0 ) Total [1, 2, 3] 33 ( 32.1 ) 33 ( 33.0 ) 2018 2019 Budget Completions Gross ( Net…
  8. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 8
    Expected Timing of 2019 Production Additions Expected Expected Production Expected Number PROJECT On-stream (IP30) Range Oil/NGLs (IP30) of Wells Date BOE/d Percentage Inga (5-9/4-9) 24-well pad 6 Q2 2019 5,800 6,200 60% 65%…
  9. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 9
    2019 Production Outlook 2019 2019/2018 2017 2018 Budget Change Oil ( bbls/d ) 6,634 8,403 11,200 11,800 33% 40% NGLs ( bbls/d ) [1] 2,608 3,186 4,300 4,600 35% 44% Gas ( Mcf/d ) 77,330 92,502 105,000 112,000 14% 21% Combined (…
  10. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 10
    Product Mix Production Operating Income Operating Income 2018 Actual Split (MM) Split Oil & NGLs 43% 158.8 78% Gas 57% 43.8 22% Total 100% 202.6 100% Production Operating Income Operating Income 2019 Budget Split (MM) Split Oil &…
  11. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 11
    Commodity Prices ( CA, unless otherwise specified ) 2017 2018 2019 Budget YOY Change WTI Crude Oil ( USD/bbl ) [1] US 50.95 US 64.94 US 67.50 + 4% MSW Crude Oil ( CAD/bbl ) [2] 62.91 69.29 66.97 3% WTI-MSW Basis Differential (3.27 or…
  12. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 12
    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. Kelt has entered into several contracts that result in…
  13. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 13
    North American Natural Gas Hubs Kelt 2019 Budget Gas Netback Forecast Station 2 Hub Price [1] Netback [2] Netback [2,3] Gas Hub % US/MMBtu US/Mcf CA/Mcf AECO Sumas NYMEX 3.00 Empress Emerson Kingsgate Waddington Dawn 21% 2.90…
  14. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 14
    Hedging Commodity Index Term Quantity Fixed Price NYMEX to Dawn Basis Jan/2019 to Natural Gas 10,000 MMBtu/d Minus US0.0975/MMBtu Differential Dec/2019 NYMEX to Chicago Basis Jan/2019 to Natural Gas 10,000 MMBtu/d Minus…
  15. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 15
    2019 Budget Commodity Price Sensitivities Kelt Kelt Kelt CAD/USD 2019 Oil Price NGLs Price Gas Price Exchange Rate Budget minus 10% minus 10% minus 10% minus CAD 0.05 Kelt Oil Price ( CAD/bbl ) 67.01 60.31 - 10% 67.01 n/c 67.01 n/c…
  16. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 16
    2019 Pro-forma Commodity Prices ( CA, unless otherwise specified ) 2019 Budget 2019 Pro-forma Difference Percent Change WTI Crude Oil ( USD/bbl ) [1] US 67.50 US 55.00 12.50 19% MSW Crude Oil ( CAD/bbl ) [2] 66.97 63.75 3.22 5%…
  17. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 17
    Netbacks 2019 2019/18 2019 ( / BOE ) 2017 2018 Budget Change Pro-forma Revenue/Price 31.51 37.30 37.50 + 1% 36.10 Realized hedging gain ( loss ) ( 0.13 ) ( 0.60 ) 0.13 0.12 Royalties ( % of revenue/price ) ( 9.3% ) ( 8.3% ) ( 10.2% ) +…
  18. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 18
    Financial Outlook 2019 2019/18 2019 2017 2018 Budget Change Pro-forma Revenue ( MM ) 257.6 389.3 473.9 + 22% 449.5 Operating income ( MM ) [1] 123.4 202.6 261.5 + 29% 241.8 Adj. funds from operations ( MM ) [1] 108.0 186.8 240.0 +…
  19. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 19
    Core Areas 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, Valhalla/La Glace & Grande Prairie…
  20. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 20
    Kelt Land Fairway Fireweed Corporate Land Holdings Inga February Net Net Flatrock 2019 Acres Sections Oak Developed 225,797 353 Fort Undeveloped 596,895 933 St. John Total 822,692 1,286 Pouce Coupe Progress Montney Rights…
  21. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 21
    Reserves NPV 10% BT NPV 10% BT Dec/31/2017 Dec/31/2018 Percent Dec/31/2018 Dec/31/2018 ( MBOE ) ( MBOE ) Change ( MM ) ( /BOE ) Proved Developed 37,858 40,701 + 8% 481 11.82 Producing Total Proved 132,973 158,443 + 19% 1,499…
  22. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 22
    Finding, Development & Acquisition Costs As at December 31, 2018 Proved Proved + Probable 2018 capital expenditures + change in FDC ( M ) 381,046 596,004 Reserve additions, net ( MBOE ) 35,298 76,905 FD&A cost ( /BOE ) 10.80 7.75…
  23. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 23
    Sproule P+P Reserves Future Development Capital December 31, 2018 December 31, 2017 ( MM ) FDC Net HZ Wells FDC Net HZ Wells Alberta Montney wells 332 59 176 37 B.C. Montney wells 744 140 638 103 TOTAL Montney wells 1,076 199 814…
  24. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 24
    Kelt Montney Framework 24
  25. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 25
    British Columbia Montney Lands Land ( Montney Rights ) Gross: 368,618 acres ( 576 sections ) Net: 363,852 acres ( 569 sections ) Fireweed Operations Kelt has been successful delineating the Flatrock Upper and Middle Montney at…
  26. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 26
    British Columbia Montney Wells 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% oil/ngls…
  27. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 27
    Inga / Fireweed Montney Lands A-65-I MM B-90-A UM LAND (Montney Rights) 02/A-65-I UM 03/A-65-I UM (sfc C-10-H) 222 gross sections ( 220 net sections ) B-65-I UM (sfc B-33-I) C-26-A UM A-58-I UM (sfc D-A79-I) (sfc A-6-A)…
  28. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 28
    Inga / Fireweed - Stacked Montney Resource Potential THE MONTNEY CUBE Kelt has been successful MULTIPLE STACKED MONTNEY HORIZONS delineating the Upper and Middle Montney at Inga/Fireweed. Initial results from the Montney IBZ have been…
  29. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 29
    Inga 6-Section / 3-Pad / 72-Well Development Plan Kelts 2018/2019 capital expenditures to include 24 drills at Inga from the Companys first 24-well multi-layer Montney cube pad that will include 8 Upper, 8 IBZ and 8 Middle Montney…
  30. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 30
    Inga / Fireweed Montney CGR (Condensate to Gas Ratio) 02/14-24 IP30 1,609 BOE (CGR - 402 bbls/MMcf) 1 Year Cum = 268,000 BOE Inga 24 Well Pad Inga 24 Well Pad 00/14-24 IP30 1,412 BOE (CGR - 278 bbls/MMcf) 1 Year Cum =…
  31. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 31
    Inga DOIG Development Wells Kelt drilled two Doig wells in 2017 and two more wells in 2018. The Company has one Doig well planned in the Companys 2019 capital expenditure budget. 2P Type Curves target EURs of 1,300 MBOE (51% gas / 49%…
  32. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 32
    Inga Gas Processing & Liquids Handling KELT FACILITY (Inga 2-10 Facility): The Company constructed a 100 MMcf/d compression, dehydration, liquids handling and frac water facility located at Inga which is currently in operation. The…
  33. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 33
    Oak / Flatrock Montney Lands LAND Montney Rights: Gross: 206,260 acres ( 322 sections ) Net: 204,988 acres ( 320 sections ) 02/13-13 OPERATIONS (sfc 13-12) Oil and gas exploration activity targeting the Upper Montney (D4 / D5) at…
  34. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 34
    Alberta Montney Lands LAND Montney Rights: Gross: 171,200 acres ( 268 sections ) Net: 147,999 acres ( 231 sections ) Pouce OPERATIONS Coupe Kelt continues with development of the Lower-Middle Progress (D1) and the Middle (D2)…
  35. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 35
    Alberta Montney Wells PRODUCTION RESERVES Kelt Alberta Montney OIL Drills Typical Well EURs Top 10 IP30 Wells ( gross sales, BOE/d ): Pouce Coupe Montney OIL Sproule (1) Pouce Coupe 03/07-18-078-11W6 LMM (D1) 2,045 ( 66% oil/ngls ) 2P…
  36. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 36
    Pouce Coupe / Progress 15-13 MM OPERATIONS 920 BOE/d IP30 (KEL 50%) Kelt recently completed its first well 14-14 MM 875 BOE/d IP30 (03/5-18) at Pouce Coupe in the Upper- Pouce (KEL 50%) Middle Montney (D4). Coupe Progress…
  37. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 37
    Valhalla / La Glace and Pipestone / Wembley OPERATIONS Ownership in pipeline infrastructure, minor interests in Kelt 14-29 gas plants and 100% interest in the Kelt La Glace Facility La Glace Facility Encana which has a handling…
  38. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 38
    Spirit River Charlie Lake Land 13-34 Gross: 29,440 acres ( 46 sections ) CL Pad: 14-22 (60%) 15-22 (60%) Net: 22,227 acres ( 35 sections ) 13-33 16-22 (60%) Charlie Lake: 20.00 net sections 16-11 H2O Disposal Charlie Lake:…
  39. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 39
    Grande Cache Narraway Modern 13-4 IP30: 9 MMcf/d LAND 135 MMcf/d Gas Plant Falher/Wilrich TOU 4-29 Gross: 94,240 acres ( 147 sections ) (7% WI) IP30: 20 MMcf/d Falher/Wilrich Net: 56,904 acres ( 89 sections ) OPERATIONS Low…
  40. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 40
    Net Asset Value Dec/31 Dec/31 Dec/31 2018/17 ( millions ) 2016 2017 2018 Change P&NG reserves, NPV10% BT 1,730.7 2,111.5 3,128.6 + 48% Decommissioning obligations, NPV10% BT [1] ( 9.5 ) ( 12.8 ) ( 9.0 ) 29% Undeveloped land 212.5…
  41. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 41
    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…
  42. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 42
    Management David David J. Wilson Sadiq H. Lalani Douglas J. Errico Alan G. Franks Bruce D. Gigg President & Chief Executive Officer Vice President & Chief Financial Officer Vice President, Land Vice President, Production Vice…
  43. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 43
    Board of Directors Robert J. Dales [2, 3, 4, 7] Geri L. Greenall [2, 3, 6] William C. Guinan [1,5] President, Valhalla Ventures Inc. Vice President, Portfolio Manager Partner, Borden Ladner Gervais LLP & Chief Operating Officer,…
  44. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 44
    Appendix Quarterly 2018 Oil Prices & 2019 Budget Oil Price Forecast Quarterly 2018 Gas Prices & 2019 Budget Gas Price Forecast Annual Production Growth Charts Annual Cash Costs Chart Well Type Curves Abbreviations Disclaimers…
  45. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 45
    Kelts 2019 Budget Oil Price Forecast ( CA/bbl ) ( US/bbl ) 100.00 100.00 KELT Realized WTI ( 2018 Average = CA65.82 ) ( 2018 Average = US64.94 ) 90.00 ( 2019 Average = CA67.01 ) ( 2019 Average = US67.50 ) 90.00 80.00 80.56 80.62…
  46. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 46
    Kelts 2019 Budget Gas Price Forecast ( CA/Mcf ) ( US/MMBtu ) 7.50 6.50 KELT Realized NYMEX Henry Hub ( 2018 Average = CA3.76 ) ( 2018 Average = US3.04 ) 6.50 ( 2019 Average = CA3.28 ) ( 2019 Average = US3.00 ) 5.50 6.37 5.50…
  47. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 47
    Annual Production Growth ( since inception ) PRODUCTION ( BOE / d ) 45,000 CAGR since 2013 = 43% 40,000 33,500 35,000 34,500 30,000 27,006 17,500 25,000 22,130 18,600 20,947 20,000 18,577 15,417 15,000 12,888 12,756…
  48. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 48
    Annual Production per Share Growth ( since inception ) PRODUCTION PER MILLION SHARES ( BOE / d ) 250 CAGR since 2013 = 22% 200 174 179 148 150 120 121 125 91 97 105 100 84 73 77 76 69 53 50 81 85 42 64 43 45 52 36 0…
  49. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 49
    Annual Cash Costs ( / BOE ) CONTROLLING COSTS 24.00 G&A Interest Production & Transportation 20.00 16.00 12.00 8.00 4.00 0.00 2014 2015 2016 2017 2018 2019 [E] 49
  50. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 50
    Inga / Fireweed Upper Montney Type Curve ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 860 MBOE 48% Oil/Ngls 52% Gas 10 15 10 5 0 1 3 5 7 9 11 13 15…
  51. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 51
    Inga / Fireweed Upper Montney Type Curve ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 860 MBOE 48% Oil/Ngls 52% Gas 10 15 10 5 0 1…
  52. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 52
    Inga / Fireweed Middle Montney Type Curve ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 637 MBOE 56% Oil/Ngls 44% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17…
  53. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 53
    Inga / Fireweed Middle Montney Type Curve ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 637 MBOE 56% Oil/Ngls 44% Gas 10 10 5 0 1 3…
  54. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 54
    Pouce Coupe / Progress Montney Oil Type Curve ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 2P EUR Type Curve Well Count 1,000 2P EUR 585 MBOE 35% Oil/Ngls 100 65% Gas 10 30 20 10 0 1 3 5 7 9 11 13 15 17 19 21…
  55. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 55
    Pouce Coupe / Progress Montney Oil Type Curve ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well 2P EUR Type Curve [2] Well Count 1,000 2P EUR [2] 585 MBOE 35% Oil/Ngls 100 65% Gas 10 30 20 10 0 1…
  56. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 56
    La Glace Montney Oil Type Curve ( BOE / d ) TOTAL RAW PRODUCTION (Well Count) 5,000 Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 600 MBOE 58% Oil/Ngls 42% Gas 10 10 5 0 1 3 5 7 9 11 13 15 17 19 21 23 25…
  57. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 57
    La Glace Montney Oil Type Curve ( BOE / d ) TOTAL RAW PRODUCTION ( Well Count [1] ) 5,000 Average Well Sproule 2P Type Curve Well Count 1,000 Sproule 2P EUR 100 600 MBOE 58% Oil/Ngls 42% Gas 10 10 5 0 1 3 5 7 9 11 13…
  58. March 2019 Corporate Presentation – Kelt Exploration Ltd. – slide 58
    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 66

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