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3Q 2019 Earnings Presentation – Kelt Exploration Ltd.

Kelt Exploration Ltd. · Nov 11, 2019 · 52 slides

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Slides

  1. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 1
    Corporate Presentation November 2019 KeltExploration.com David J. Wilson President & Chief Executive Officer Sadiq H. Lalani Vice President & Chief Financial Officer www.keltexploration.com 0
  2. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 2
    Why Invest in Kelt VALUE CREATION OPPORTUNISTICALLY TAKING ADVANTAGE OF INDUSTRY DOWNTURNS BY ACCUMULATING RESOURCE DEVELOPMENT POTENTIAL AT HISTORICALLY LOW COSTS Kelt focuses on value creation resulting in annual growth in…
  3. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 3
    Environment, Social and Governance ( ESG ) Environment Social Governance Commitment to minimalize our impacts on Safety is a priority and Kelt maintains a Kelt is committed to governance, the environment. HS&E program designed to…
  4. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 4
    Capital Structure Stock Exchange listing TSX Trading symbol KEL Market capitalization 600 million Enterprise value 1.0 billion 52-week stock trading range 2.45 6.31 Common shares issued 184.3 million Stock options ( 10.8 MM ) &…
  5. 3Q 2019 Earnings 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. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 6
    Capital Expenditures 2019 2020 2020/19 ( millions ) 2018 Forecast Budget Change Drilling & Completions 168.7 170.0 155.0 9% Equipment, Facilities, & Pipeline 117.7 122.0 70.0 43% Infrastructure [1] Land, Seismic & Asset…
  7. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 7
    Drilling Program 2018 2019 Forecast 2020 Budget Drills Gross / Net Wells Gross / Net Wells Gross / Net Wells Alberta 16 15.1 8 8.0 4 4.0 British Columbia 17 17.0 24 24.0 21 21.0 Total [1, 2, 3] 33 32.1 32 32.0 25 25.0 2018 2019…
  8. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 8
    2019 Production Outlook 2019 2020 2020/19 2018 Forecast Budget Change Oil ( bbls/d ) 8,403 9,600 10,200 12,600 13,400 31% NGLs ( bbls/d ) [1] 3,186 4,600 5,000 7,700 8,300 66% Gas ( Mcf/d ) 92,502 96,000 102,000 110,000 118,000…
  9. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 9
    Product Mix Production Operating Income Operating Income 2019 Forecast Split ( MM ) Split Oil & NGLs 48% 177.0 83% Gas 52% 36.0 17% Total 100% 213.0 100% Production Operating Income Operating Income 2020 Budget Split ( MM ) Split…
  10. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 10
    Commodity Prices ( CA, unless otherwise specified ) 2018 2019 Forecast 2020 Budget 2020/19 Change WTI Crude Oil ( USD/bbl ) [1] US 64.94 US 56.00 US 52.00 7% MSW Crude Oil ( CAD/bbl ) [2] 69.29 67.93 62.09 9% WTI-MSW Basis…
  11. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 11
    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…
  12. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 12
    North American Natural Gas Hubs Kelt 2020 Forecast Gas Hub Netbacks Station 2 Natural Hub Price Netback Hub Price Netback Gas % US / US / CA / CA / AECO Hub MMBtu [1] Mcf [2] MMBtu [1,3] Mcf [2,3] Sumas Empress Emerson NYMEX 2.75…
  13. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 13
    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 Jan/2019 to USD CAD/USD US1.0 MM/month CA1.3050 Dec/2019 WTI to MSW Edmonton…
  14. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 14
    2020 Forecast Commodity Price Sensitivities Kelt Kelt Kelt CAD / USD 2020 Oil Price NGLs Price Gas Price Exchange Rate Forecast minus 10% minus 10% minus 10% minus 5% Kelt Oil Price ( CAD/bbl ) 60.90 54.81 10% 60.90 60.90 57.88 5%…
  15. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 15
    Netbacks 2019 2020 2020/19 ( / BOE ) 2018 Forecast Budget Change Revenue/Price 37.30 34.88 32.49 7% Realized hedging gain ( loss ) ( 0.60 ) ( 0.02 ) ( 0.00 ) 100% Royalties ( % of revenue/price ) ( 8.3% ) ( 6.3% ) ( 6.7% ) + 6%…
  16. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 16
    Financial Outlook 2019 2020 2020/19 2018 Forecast Budget Change Revenue ( MM ) 389.3 410.0 490.0 + 20% Operating income ( MM ) [1] 202.6 213.0 262.0 + 23% Adjusted funds from operations ( MM ) [1] 186.8 190.0 235.0 + 24% Per share…
  17. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 17
    Focused on per Share Growth PRODUCTION PER MILLION SHARES ( BOE / d ) FUNDS FROM OPERATIONS PER SHARE ( diluted ) 300 1.75 CAGR Since CAGR 2013 Since 1.50 2013 250 = 22% = 22% 217 1.25 1.27 200 168 103 1.00 1.03 148 1.01 150…
  18. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 18
    Operating Areas Fort St. John ( BC ) : Inga/Fireweed & Oak/Flatrock Stacked Montney light oil and condensate-rich gas Doig condensate-rich gas Grande Prairie ( AB ) : Pouce Coupe/Progress, Spirit River, Fort St. John Valhalla/La Glace &…
  19. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 19
    Kelt Land Fairway R13 R11 R9 R7 R5 R3 R1W6 R24W5 Corporate Land Holdings 94-A-13 94-A-14 94-A-15 94-A-16 Fireweed T90 94-A-12 September Gross Net Net 94-A-11 94-A-10 94-A-9 T88 Inga T88 Flatrock 2019 Acres Acres Sections T86…
  20. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 20
    Reserves Dec/31 Dec/31 NPV 10% BT NPV 10% BT Percent 2017 2018 Dec/31/2018 Dec/31/2018 Change ( MBOE ) ( MBOE ) ( MM ) ( / BOE ) Proved Developed 37,858 40,701 + 8% 481 11.82 Producing Total Proved 132,973 158,443 + 19% 1,499…
  21. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 21
    Kelt Montney Framework 20
  22. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 22
    British Columbia Montney Lands 94-A-13 94-A-14 94-A-15 94-A-16 G H E F G H E F G H E F G MONTNEY LAND HOLDINGS B A Fireweed D C B A D C B A D C B Gross: 368,618 acres ( 576 sections ) Net: 363,852 acres ( 569 sections ) 94-A-12…
  23. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 23
    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) Inga (B5-9) 05/16-33-087-23W6 UM 2,148 ( 80%…
  24. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 24
    Inga / Fireweed Montney Lands 94-A-13 94-A-14 MONTNEY LAND HOLDINGS F A-65-I MM G 02/A-65-I UM B-90-A UM H (sfc C-10-H) E F G Gross: 142,297 acres ( 222 sections ) 03/A-65-I UM Net: 140,718 acres ( 220 sections ) 94-A-13…
  25. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 25
    Inga / Fireweed - Stacked Montney Resource Potential THE MONTNEY CUBE Kelt has been successful delineating MULTIPLE STACKED MONTNEY HORIZONS the Upper and Middle Montney at Inga/Fireweed. Initial results from the Montney IBZ have been…
  26. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 26
    Inga 6-Section / 3-Pad / 72-Well Montney Development Plan Kelts 2019 / 2020 capital expenditures to include 24 drills at Inga from the Companys first 24-well multi- layer Montney cube pad that is expected to include eight Upper, seven…
  27. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 27
    Inga / Fireweed Montney CGR (Condensate to Gas Ratio) 94-A-13 94-A-14 94-A-13 94-A-14 F G H E F G H F G H E F G H 94-A-13 94-A-14 94-A-13 94-A-14 C B A D C B A C B A D C B A 02/14-24 02/15-33 IP30 1,609 BOE IP30 -…
  28. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 28
    Inga 24-well Montney Cube Pad Initial Results Aggregate combined sales volumes from the first six wells for initial production of 30 days (720 operating hours) was 6,569 BOE per day (77% oil and NGLs). Aggregate combined sales volumes…
  29. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 29
    Inga / Fireweed DOIG Development Wells Kelt drilled two Doig wells at Inga in 2017 and two more wells in 2018. 2P Type Curves target EURs of 1,300 MBOE (51% gas / 49% oil/ngls). Kelt has 36 (33.4 net) future 2P HZ wells booked as…
  30. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 30
    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…
  31. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 31
    Oak / Flatrock Montney Lands MONTNEY LAND HOLDINGS 02/13-13 UM (sfc 13-12) Gross: 206,260 acres ( 322 sections ) T87 Net: 204,988 acres ( 320 sections ) OPERATIONS 00/16-6 UM 00/13-5 MM T86 Oil and gas exploration activity…
  32. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 32
    Alberta Montney Lands MONTNEY LAND HOLDINGS T80 Gross: 178,080 acres ( 278 sections ) Net: 153,188 acres ( 239 sections ) OPERATIONS Pouce Coupe Kelt continues with development of the Montney oil play T78 at Pouce Coupe. The first…
  33. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 33
    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…
  34. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 34
    Wembley / Pipestone Montney Lands MONTNEY LAND HOLDINGS Gross: 107,680 acres ( 168 sections ) Sexsmith 00/1-35 UMM Gas Plant T75 Net: 103,955 acres ( 162 sections ) (sfc 12-19) (0.3% WI) OPERATIONS 00/13-6 UMM Kelt has entered…
  35. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 35
    Valhalla / La Glace Montney Lands Kelt 14-29 MONTNEY LAND HOLDINGS La Glace Facility (100% WI) 1-5 MM Gross: 107,680 acres ( 168 sections ) 02/13-33 MM 15-33 UM Sexsmith T75 Net: 103,955 acres ( 162 sections ) 14-32 Gas Plant MM…
  36. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 36
    Net Asset Value Dec/31 Dec/31 NET ASSET VALUE PER SHARE ( diluted ) ( millions ) Change 20.00 2017 2018 CAGR Since P&NG reserves, NPV10% BT 2,111.5 3,128.6 + 48% 17.50 2013 = 23% Decommissioning obligations, ( 12.8 ) ( 9.0 ) 30%…
  37. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 37
    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…
  38. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 38
    Appendix Convertible Debentures 2019 Forecasted Commodity Prices Quarterly Oil & Gas Prices - 2018 Actual & 2019 Forecast Reserves: FD&A Costs and FDC required to develop P+P Reserves Annual Reserves and Production Growth Charts…
  39. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 39
    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 98.15 132.00 D&Os purchased 14.7…
  40. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 40
    2019 Forecasted Commodity Prices ( CA, unless otherwise specified ) Jan-Sep Oct-Dec (E) 2019 Forecast WTI Crude Oil ( USD/bbl ) [1] US 57.00 US 53.03 US 56.00 MSW Crude Oil ( CAD/bbl ) [2] 69.57 63.06 67.93 WTI-MSW Basis Differential…
  41. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 41
    Kelts 2019 / 2020 Oil Price Forecast ( CA/bbl ) ( US/bbl ) 100.00 100.00 KELT Realized WTI ( 2019 Forecast = CA66.33 ) ( 2019 Forecast = US56.00 ) 90.00 ( 2020 Forecast = CA60.90 8% ) ( 2020 Forecast = US52.00 7% ) 90.00 80.56…
  42. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 42
    Kelts 2019 / 2020 Gas Price Forecast ( CA/Mcf ) ( US/MMBtu ) 8.50 8.50 KELT Realized NYMEX Henry Hub ( 2019 Forecast = CA3.41 ) ( 2019 Forecast = US2.70 ) 7.50 ( 2020 Forecast = CA2.86 16% ) ( 2020 Forecast = US2.75 + 2% ) 7.50…
  43. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 43
    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…
  44. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 44
    Sproule P+P Reserves Future Development Capital December 31, 2017 December 31, 2018 FDC Net HZ FDC Net HZ ( MM ) Wells ( MM ) Wells Alberta Montney wells 176 37 332 59 B.C. Montney wells 638 103 744 140 TOTAL Montney wells 814 140…
  45. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 45
    Annual Growth in Proved plus Probable Reserves ( since inception ) RESERVES ( MBOE ) 400,000 CAGR since 2013 = 39% 350,000 302,678 300,000 250,000 235,601 194,066 173,831 200,000 150,507 133,813 150,000 122,173 99,110 100,000…
  46. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 46
    Annual Production Growth ( since inception ) PRODUCTION ( BOE / d ) 55,000 CAGR since 50,000 2013 = 39% 45,000 38,500 41,000 40,000 35,000 30,500 31,500 18,300 30,000 27,006 19,700 25,000 22,130 16,000 20,947 18,577…
  47. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 47
    Environment, Social & Governance ( ESG ) Health & Safety Safety is paramount in Kelts corporate culture. The Company is committed to safe and environmentally responsible operations for the benefit of its employees, contractors and the…
  48. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 48
    Environment, Social & Governance ( ESG ) Air Quality Kelts air emission roadmap is focused on continuous improvement to meet provincial and federal standards. Kelts emissions management framework includes air monitoring, utilizing…
  49. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 49
    Environment, Social & Governance ( ESG ) Corporate Governance The following documents relating to the Companys corporate governance matters are available on the internet at www.keltexploration.com: Advance Notice Policy Disclosure,…
  50. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 50
    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. Chief Financial Officer, Partner, Borden Ladner Gervais LLP Chief Compliance Officer & Portfolio…
  51. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 51
    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…
  52. 3Q 2019 Earnings Presentation – Kelt Exploration Ltd. – slide 52
    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 59

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