Kelt Reports Financial and Operating Results for the Three Months Ended March 31, 2024
Kelt Exploration reports financial and operating results for the first quarter of 2024. Petroleum and natural gas sales decreased by 9% compared to the same period in 2023. Adjusted funds from operations dropped by 34%, and net income decreased by 27%. Capital expenditures increased by 5% to $80.2 million. The company forecasts a capital expenditure budget of $325 million for 2024, aiming to increase production by 18-28% compared to 2023 levels. Average commodity price assumptions for 2024 are provided as well.
Kelt expects to increase its raw gas processing capacity, which may lead to a higher oil and NGLs weighting in production. The company plans to drill and complete multiple wells in different divisions, aiming to increase production significantly in 2024. The completion of new wells and gas processing capacity additions are expected to positively impact future operations and revenue.
Kelt experienced decreases in petroleum and natural gas sales, adjusted funds from operations, and net income in the first quarter of 2024 compared to the same period in 2023. The company also reported a decrease in average realized prices for oil, NGLs, and gas. These factors may potentially impact the company's financial performance and investor confidence in the short term.
Calgary, Alberta--(Newsfile Corp. - May 9, 2024) - Kelt Exploration Ltd. (TSX: KEL) ("Kelt" or the "Company") reports its financial and operating results to shareholders for the first quarter ended March 31, 2024. The Company's financial results are summarized as follows:
| FINANCIAL HIGHLIGHTS | Three months ended March 31 | ||||||||
| (CA$ thousands, except as otherwise indicated) | 2024 | 2023 | % | ||||||
| | |||||||||
| Petroleum and natural gas sales | 126,391 | 139,571 | -9 | ||||||
| Cash provided by operating activities | 62,493 | 100,160 | -38 | ||||||
| Adjusted funds from operations (1) | 61,176 | 92,000 | -34 | ||||||
| Basic ($/ common share) (1) | 0.31 | 0.48 | -35 | ||||||
| Diluted ($/ common share) (1) | 0.31 | 0.47 | -34 | ||||||
| Net income and comprehensive income | 11,847 | 16,336 | -27 | ||||||
| Basic ($/ common share) | 0.06 | 0.09 | -33 | ||||||
| Diluted ($/ common share) | 0.06 | 0.08 | -25 | ||||||
| Capital expenditures, net of A&D (1) | 80,181 | 76,629 | 5 | ||||||
| Total assets | 1,282,456 | 1,174,489 | 9 | ||||||
| Net debt (surplus) (1) | 31,961 | (4,899 | ) | -752 | |||||
| Shareholders' equity | 1,018,604 | 919,809 | 11 | ||||||
| Weighted average shares outstanding (000s) | |||||||||
| Basic | 194,655 | 192,060 | 1 | ||||||
| Diluted | 198,285 | 195,370 | 1 | | |||||
| (1) Refer to advisories regarding Non-GAAP and Other Financial Measures. | |||||||||
Financial Statements
Kelt's unaudited consolidated interim financial statements and related notes for the quarter ended March 31, 2024 will be available to the public on SEDAR+ at www.sedarplus.ca and will also be posted on the Company's website at www.keltexploration.com on May 9, 2024.
Kelt's operating results for the first quarter ended March 31, 2024 are summarized as follows:
| OPERATIONAL HIGHLIGHTS | Three months ended March 31 | | |||||||
| (CA$ thousands, except as otherwise indicated) | 2024 | 2023 | % | ||||||
| Average daily production | |||||||||
| Oil (bbls/d) (2) | 8,758 | 7,752 | 13 | ||||||
| NGLs (bbls/d) | 3,497 | 4,627 | -24 | ||||||
| Gas (Mcf/d) | 123,931 | 116,725 | 6 | ||||||
| Combined (BOE/d) | 32,910 | 31,833 | 3 | ||||||
| Production per million common shares (BOE/d) (1) | 169 | 166 | 2 | ||||||
| Net realized prices, before derivative financial instruments(1) | |||||||||
| Oil ($/bbl) | 90.15 | 99.33 | -9 | ||||||
| NGLs ($/bbl) | 52.18 | 56.48 | -8 | ||||||
| Gas ($/Mcf) | 2.94 | 4.03 | -27 | ||||||
| Operating netbacks ($/BOE) (1) | |||||||||
| Petroleum and natural gas sales | 42.20 | 48.71 | -13 | ||||||
| Cost of purchases | (1.61 | ) | (1.56 | ) | 3 | ||||
| Combined net realized price, before derivative financial instruments (1) | 40.59 | 47.15 | -14 | ||||||
| Realized gain (loss) on financial instruments | - | 6.85 | -100 | ||||||
| Combined net realized price, after derivative financial instruments (1) | 40.59 | 54.00 | -25 | ||||||
| Royalties | (5.02 | ) | (6.38 | ) | -21 | ||||
| Production expense | (10.42 | ) | (11.34 | ) | -8 | ||||
| Transportation expense | (3.46 | ) | (3.01 | ) | 15 | ||||
| Operating netback (1) | 21.69 | 33.27 | -35 | ||||||
| Landholdings | |||||||||
| Gross acres | 791,879 | 799,399 | -1 | ||||||
| Net acres | 578,975 | 582,641 | -1 | ||||||
| (1) Refer to advisories regarding Non-GAAP and Other Financial Measures. | |||||||||
Message to Shareholders
Kelt's average production for the three months ended March 31, 2024, was 32,910 BOE per day, up
During the month of February 2024, the Company's production was negatively affected due to a third-party gas plant at Wembley that was temporarily shut-in for approximately two weeks, where Kelt has 25 MMcf per day of raw gas firm processing capacity. This gas plant was back to near
Average production for the month of March 2024 was approximately 34,000 BOE per day, weighted
Kelt's realized average oil price during the first quarter of 2024 was
For the three months ended March 31, 2024, petroleum and natural gas sales were
Capital expenditures, net of A&D incurred during the three months ended March 31, 2024, were
Kelt expects to spend
2024 Guidance
The Company's 2024 capital expenditure budget of
Preparation of the 2024 capital expenditure budget includes the following forecasted average commodity price assumptions (with average 2023 commodity prices shown for comparative purposes):
| Commodity Index | 2024 Forecast | 2023 | Change |
| WTI Crude Oil (USD/bbl) | 79.50 | 77.63 | |
| MSW Crude Oil (CAD/bbl) | 102.35 | 100.40 | |
| NYMEX Henry Hub Daily Index Natural Gas (USD/MMBtu) | 2.35 | 2.53 | ( |
| DAWN Gas Daily Index (USD/MMBtu) | 2.30 | 2.34 | ( |
| AECO NIT 5A Gas Daily Index (CAD/GJ) | 1.87 | 2.50 | ( |
| STATION 2 Gas Daily Index (CAD/GJ) | 1.81 | 2.14 | ( |
| Exchange Rate (USD/CAD) | 0.7326 | 0.7410 | ( |
| Exchange Rate (CAD/USD) | 1.3650 | 1.3495 |
Financial and operating highlights for the Company's 2024 forecast compared to its 2023 results are highlighted in the table below:
| Financial and Operating Highlights ($ MM, unless otherwise specified) | 2024 Forecast | 2023 | Change |
| Production [2] | |||
| Oil & NGLs (bbls/d) | 14,000 - 15,500 | 11,738 | |
| Gas (Mcf/d) | 132,000 - 141,000 | 112,634 | |
| Combined (BOE/d) | 36,000 - 39,000 | 30,510 | |
| P&NG Sales [1] | 587.0 | 495.6 | |
| Adjusted Funds from Operations [1] | 292.0 | 276.2 | |
| AFFO per share, diluted ($/share) [1] | 1.47 | 1.40 | |
| Capital Expenditures, net of A&D [1] | 325.0 | 282.6 | |
| Net Debt, at year-end [1] | 46.0 | 13.0 | |
| Net Debt / AFFO ratio | 0.2 x | 0.0 x | |
| Notes: [1] Refer to advisories regarding "Non-GAAP and Other Financial Measures". [2] Percent change for production is calculated using the mid-point of each production range. | |||
In its Pouce Coupe/Progress/Spirit River Division, during 2024, Kelt expects to drill and complete six wells targeting Montney or Charlie Lake horizons. At Pouce Coupe West, the Company has drilled three Montney wells on its high gas deliverability land block. Kelt expects to complete these wells in the summer and put them on production early in the third quarter.
Kelt currently has access to approximately 82 MMcf per day of raw gas processing capacity through a plant ownership interest and third-party facility firm service arrangements at Pouce Coupe/Progress/Spirit River. Kelt expects to increase its overall raw gas processing capacity in the area to 117 MMcf per day over the next two years with incremental firm service arrangements, giving the Company access to five different gas plants in the area.
In its Wembley/Pipestone Division, during 2024, Kelt expects to drill and complete 14 wells targeting the Montney horizon. The Company plans to have three multi-well pad development operations consisting of six wells, five wells and three wells respectively as it prepares to add production upon start-up of an incremental 50 MMcf per day of gas processing capacity at a newly constructed third-party gas plant in the fourth quarter of 2024. Kelt expects to frac these 14 wells over the June to October period and may preferentially produce the wells using existing gas plant processing capacity prior to the start-up of the new gas plant.
During the first quarter of 2024, Kelt drilled and completed its third Charlie Lake horizontal well at Wembley/Pipestone with encouraging production results that are similar to its previous wells and with cumulative oil and NGLs of approximately
At Wembley/Pipestone, Kelt expects to increase its firm service raw gas processing capacity from 59 MMcf per day to 124 MMcf per day by 2026. New production additions at Wembley/Pipestone resulting from increased gas processing capacity is expected to increase the Company's oil and NGLs weighting as this production is expected to be
In its Oak/Flatrock Division, Kelt has drilled an eight well development program that commenced in November 2023. Two of these wells were completed in the first quarter of 2024 and have now been put on production. Three wells are expected to be completed in May 2024 and the remaining three wells are expected to be completed in the summer. Kelt has the ability to increase firm service raw gas processing capacity from 45 MMcf per day to 90 MMcf per day over the next 24 months through gas processing arrangements with a third-party at a gas plant located just south of the Company's Oak property.
Management looks forward to updating shareholders with 2024 second quarter results on or about August 8, 2024.
Changes in forecasted commodity prices and variances in production estimates can have a significant impact on estimated funds from operations and profit. Please refer to the advisories regarding forward-looking statements and to the cautionary statement below.
The information set out herein is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Kelt's reasonable expectations as to the anticipated results of its proposed business activities for the calendar year 2024. Readers are cautioned that this financial outlook may not be appropriate for other purposes.
Advisory Regarding Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of and of the words "will", "expects", "believe", "plans", potential", "forecasts" and similar expressions are intended to identify forward-looking statements. In particular, this press release contains forward-looking statements pertaining to the following: Kelt's expected price realizations and future commodity prices; the cost and timing of future capital expenditures and expected results; the expected timing of wells bring brought on-production; the expected timing of production additions from capital expenditures; obtaining and the expected timing around third party additional processing capacity; and the Company's expected future financial position and operating results.
Certain information with respect to Kelt contained herein, including management's assessment of future plans and operations, contains forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, many of which are beyond Kelt's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency exchange rate fluctuations, imprecision of reserve estimates, environmental risks, competition from other explorers, stock market volatility and ability to access sufficient capital. As a result, Kelt's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur.
In addition, the reader is cautioned that historical results are not necessarily indicative of future performance. The forward-looking statements contained herein are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.
Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Kelt's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.
Non-GAAP and Other Key Financial Measures
This press release contains certain non-GAAP financial measures and other specified financial measures, as described below, which do not have standardized meanings prescribed by GAAP and do not have standardized meanings under the applicable securities legislation. As these non-GAAP, and other specified financial measures are commonly used in the oil and gas industry, the Company believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where simil
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