Kelt Reports Financial and Operating Results for the Three Months
Ended March 31, 2014
CALGARY, ALBERTA--(Marketwired - May 13, 2014) - Kelt
Exploration Ltd. ("Kelt" or the "Company") (TSX:KEL) has released
its financial and operating results for the three months ended
March 31, 2014. The Company's financial results are summarized as
follows:
| (CA$ thousands, except as otherwise
indicated) |
|
Q1 2014 |
|
Q4 2013 |
|
|
Q1 2013 |
|
| Revenue, before royalties and financial
instruments |
|
47,793 |
|
18,543 |
|
|
3,865 |
|
| Funds from operations(1) |
|
26,084 |
|
9,396 |
|
|
2,179 |
|
|
|
Basic ($/ common share)(1) |
|
0.24 |
|
0.09 |
|
|
0.09 |
|
|
|
Diluted ($/ common share)(1) |
|
0.23 |
|
0.09 |
|
|
0.09 |
|
| Profit (loss) |
|
4,851 |
|
(1,838 |
) |
|
(140 |
) |
|
|
Basic ($/ common share) |
|
0.04 |
|
(0.02 |
) |
|
(0.01 |
) |
|
|
Diluted ($/ common share) |
|
0.04 |
|
(0.02 |
) |
|
(0.01 |
) |
| Total capital expenditures, net of dispositions(2) |
|
40,933 |
|
231,329 |
|
|
40,210 |
|
| Total assets |
|
666,257 |
|
485,201 |
|
|
141,834 |
|
| Bank debt |
|
- |
|
- |
|
|
- |
|
| Working capital surplus (deficiency) |
|
123,150 |
|
20,500 |
|
|
(24,471 |
) |
| Shareholders' equity |
|
539,410 |
|
392,872 |
|
|
98,138 |
|
| Weighted average common shares outstanding (000's) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
110,991 |
|
99,244 |
|
|
25,359 |
|
|
|
Diluted |
|
112,788 |
|
100,242 |
|
|
25,359 |
|
| (1) Refer to advisory regarding non-GAAP measures. |
| (2) Total capital expenditures incurred during the first
quarter of 2013 include approximately $22.9 million of expenditures
incurred prior to completion of the Arrangement on February 26,
2013. |
FINANCIAL STATEMENTS
Kelt's unaudited condensed interim financial statements and
related notes for the quarter ended March 31, 2014 will be
available to the public on SEDAR at www.sedar.com and will also be
posted on the Company's website at www.keltexploration.com on May
13, 2014.
Kelt's operating results for the three months ended March 31,
2014 are summarized as follows:
|
|
Q1 2014 |
|
|
Q4 2013 |
|
|
Q1 2013 |
|
| Average daily production |
|
|
|
|
|
|
|
|
|
|
|
Oil (bbls/d) |
|
2,428 |
|
|
809 |
|
|
158 |
|
|
|
NGLs (bbls/d) |
|
654 |
|
|
487 |
|
|
82 |
|
|
|
Gas (mcf/d) |
|
42,367 |
|
|
26,660 |
|
|
6,456 |
|
|
|
Combined (BOE/d)(2) |
|
10,143 |
|
|
5,739 |
|
|
1,316 |
|
| Production per million common shares (BOE/d)(1) |
|
91 |
|
|
58 |
|
|
52 |
|
| Average realized prices, after financial
instruments |
|
|
|
|
|
|
|
|
|
|
|
Oil ($/bbl) |
|
89.62 |
|
|
81.35 |
|
|
87.84 |
|
|
|
NGLs ($/bbl) |
|
69.36 |
|
|
57.00 |
|
|
70.96 |
|
|
|
Gas ($/mcf) |
|
6.00 |
|
|
3.97 |
|
|
3.60 |
|
| Operating netbacks(1) ($/BOE) |
|
|
|
|
|
|
|
|
|
|
|
Oil and gas revenue |
|
52.36 |
|
|
35.12 |
|
|
32.64 |
|
|
|
Realized loss on financial instruments |
|
(1.37 |
) |
|
(0.38 |
) |
|
- |
|
|
|
Average realized price, after financial instruments |
|
50.99 |
|
|
34.74 |
|
|
32.64 |
|
|
|
Royalties |
|
(6.52 |
) |
|
(4.71 |
) |
|
(4.36 |
) |
|
|
Production and transportation expense |
|
(15.07 |
) |
|
(11.36 |
) |
|
(9.00 |
) |
|
|
Operating netback(1) |
|
29.40 |
|
|
18.67 |
|
|
19.28 |
|
| Undeveloped land |
|
|
|
|
|
|
|
|
|
|
|
Gross acres |
|
346,120 |
|
|
299,142 |
|
|
134,238 |
|
|
|
Net acres |
|
227,284 |
|
|
184,082 |
|
|
72,166 |
|
| (1) Refer to advisory regarding non-GAAP measures. |
| (2) Average daily production reported in the table above for
the first quarter of 2013 is calculated over the 90 day period
ended March 31, 2013. Production for the 33 day period following
commencement of active operations on February 27, 2013, averaged
3,588 BOE per day. |
MESSAGE TO SHAREHOLDERS
The Company is pleased to report its first quarter interim
results to shareholders for the three months ended March 31,
2014.
Kelt was incorporated on October 11, 2012 for the purpose of
participating in a Plan of Arrangement between ExxonMobil Canada
Ltd., ExxonMobil Celtic ULC and Celtic Exploration Ltd. and Kelt
(the "Arrangement"). The Arrangement was completed on February 26,
2013, at which time Kelt commenced active operations.
Kelt achieved record production levels in the first quarter of
2014. Average production for the three months ended March 31, 2014
was 10,143 BOE per day, up 77% from average production of 5,739 BOE
per day during the fourth quarter of 2013. Daily average production
in the first quarter of 2014 was 183% higher than the average
production of 3,588 BOE per day for the 33-day period ended March
31, 2013. On a production per share basis, the first quarter of
2014 was up 75% compared to the first quarter of 2013.
For the three months ended March 31, 2014, revenue was $47.8
million, funds from operations was $26.1 million ($0.23 per share,
diluted) and profit was $4.9 million ($0.04 per share, diluted). At
March 31, 2014, Kelt did not have any outstanding bank debt on its
$100.0 million demand loan facility. The working capital surplus
position, including cash and cash equivalents, at the end of the
first quarter was $123.2 million.
On March 25, 2014, the Company completed an equity financing
issuing 9.8 million common shares at a price of $11.60 per share
and 2.6 million common shares on a "CDE flow-through" basis at a
price of $12.75 per share, resulting in aggregate gross proceeds of
$147.0 million. Certain insiders participated in the equity
financing acquiring 1.1 million common shares for an aggregate
subscription price of $14.1 million. As at May 12, 2014, the
Company has 122.5 million common shares issued and outstanding.
Directors and officers of Kelt own (including shares that they
exercise control or direction over) 24.4 million common shares or
19.9% of the total shares outstanding.
During the three months ended March 31, 2014, Kelt drilled seven
gross (5.9 net) oil and gas wells, with a 100% success rate, and
one service well. The Company drilled two gross (0.9 net)
horizontal wells at Inga/Fireweed, British Columbia. These wells
were targeting condensate-rich natural gas in the Triassic Doig
formation. The Company drilled two gross (2.0 net) wells at Karr,
Alberta targeting the Triassic Montney oil formation. In addition,
Kelt drilled a 100% working interest water injection well at Karr,
which will reduce production expenses by eliminating water trucking
costs. At Pouce Coupe, Alberta, the Company drilled three gross
(3.0 net) wells in the Triassic Montney formation. Two wells that
were drilled in the natural gas leg have now been completed and the
third well drilled in the oil leg is expected to be completed in
the second quarter of 2014.
During the remainder of 2014 Kelt is well positioned financially
and expects that it will have sufficient financial flexibility to
carry out its operations during the year and to pursue new
opportunities as they arise. Management is excited about the
Company's prospects and looks forward to updating shareholders with
second quarter results in August 2014.
2014 GUIDANCE
Kelt remains optimistic about its future prospects. The Company
is opportunity driven and is confident that it can grow its
production base by building on its current inventory of development
projects and by adding new exploration prospects. Kelt will
endeavor to maintain a high quality product stream that on a
historical basis receives a superior price with reasonably low
production costs. In addition, the Company will focus its
exploration efforts in areas of multi-zone hydrocarbon potential,
primarily in west central Alberta and northeastern British
Columbia.
Kelt's Board of Directors has approved a 2014 capital
expenditure budget of $250.0 million, net of dispositions. In
aggregate, the Company expects to spend $198.0 million on drilling
and completing wells, $34.5 million on facilities, equipment and
pipelines, and $30.0 million on land and seismic. Proceeds from
dispositions, net of acquisitions, are expected to be $12.5
million.
Kelt expects production in 2014 to average approximately 11,000
BOE per day. Production is expected to be weighted 24% oil, 6%
NGLs, and 70% gas; however, operating income in 2014 is expected to
be derived 47% from oil production, 10% from NGLs production, and
43% from gas production.
The Company's average commodity price assumptions for 2014 are
US$92.00 (previously US$90.00) per barrel for WTI oil, US$4.60
(previously US$4.65) per MMBTU for NYMEX natural gas, $4.55
(previously $4.50) per GJ for AECO natural gas and a US/Canadian
dollar exchange rate of US$0.9174 (previously US$0.9200). These
prices compare to average calendar 2013 prices of US$97.98 per
barrel for WTI oil, US$3.68 per MMBTU for NYMEX natural gas, $2.97
per GJ for AECO natural gas and a US/Canadian dollar exchange rate
of US$0.971. Funds from operations for 2014 is forecasted to be
approximately $103.0 million (previously $102.0 million) or $0.85
per common share, diluted.
Kelt estimates that the Company's bank indebtedness, net of
working capital, will be approximately $3.0 million (previously
$3.9 million) at December 31, 2014. On May 6, 2014, the Company
established a new $100.0 million committed term credit facility
with a syndicate of financial institutions. Additional information
is available under the heading of Subsequent events.
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 cautionary
statement on forward-looking statements and information set out
below.
The information set out herein under the heading "2014 Guidance"
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 2014.
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 any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward-looking
information or statements. In particular, this press release
contains forward-looking statements concerning the Company's
expected future financial position and operating results.
Although Kelt believes that the expectations and assumptions on
which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because Kelt cannot give any assurance that they will
prove to be correct. Since forward-looking statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks. These include, but are not limited to, the risks
associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; failure to obtain
necessary regulatory approvals for planned operations; health,
safety and environmental risks; uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; volatility of
commodity prices, currency exchange rate fluctuations; imprecision
of reserve estimates; and competition from other explorers) as well
as general economic conditions, stock market volatility; and the
ability to access sufficient capital. We caution that the foregoing
list of risks and uncertainties is not exhaustive.
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 MEASURES
This document contains certain financial measures, as described
below, which do not have standardized meanings prescribed by GAAP.
As these 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 similar
terminology is used.
"Operating income" is calculated by deducting royalties,
production expenses and transportation expenses from oil and gas
revenue, after realized gains or losses on financial instruments.
The Company refers to operating income expressed per unit of
production as an "Operating netback". "Funds from operations" is
calculated by adding back settlement of decommissioning obligations
and change in non-cash operating working capital to cash provided
by operating activities. Funds from operations per common share is
calculated on a consistent basis with profit (loss) per common
share, using basic and diluted weighted average common shares as
determined in accordance with GAAP. Funds from operations and
operating income or netbacks are used by Kelt as key measures of
performance and are not intended to represent operating profits nor
should they be viewed as an alternative to cash provided by
operating activities, profit or other measures of financial
performance calculated in accordance with GAAP.
"Production per common share" is calculated by dividing total
production by the basic weighted average number of common shares
outstanding, as determined in accordance with GAAP.
MEASUREMENTS AND ABBREVIATIONS
All dollar amounts are referenced in thousands of Canadian
dollars, except when noted otherwise. Where amounts are expressed
on a barrel of oil equivalent ("BOE") basis, natural gas volumes
have been converted to oil equivalence at six thousand cubic feet
per barrel and sulphur volumes have been converted to oil
equivalence at 0.6 long tons per barrel. The term BOE may be
misleading, particularly if used in isolation. A BOE conversion
ratio of six thousand cubic feet per barrel is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
References to oil in this discussion include crude oil and field
condensate. References to natural gas liquids ("NGLs") include,
pentane, butane, propane, and ethane. References to gas in this
discussion include natural gas and sulphur.
|
bbls |
barrels |
|
mcf |
thousand cubic feet |
|
MMBTU |
million British Thermal Units |
|
AECO-C |
Alberta Energy Company "C" Meter Station of the Nova Pipeline
System |
|
WTI |
West
Texas Intermediate |
|
NYMEX |
New
York Mercantile Exchange |
Kelt Exploration Ltd.David J. WilsonPresident and Chief
Executive Officer(403) 201-5340Kelt Exploration Ltd.Sadiq H.
LalaniVice President, Finance and Chief Financial Officer(403)
215-5310www.keltexploration.com
Kelt Exploration (TSX:KEL)
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