Kelt Exploration Ltd T.KEL

Kelt Wembley 50% more Liquids, 3.6 times the resource base

[MyHoneyPot]

NVA "PIPESTONE" (35,250 acres) produces 45,000 boe/day, and it is primarily value is found in its condensate. This play appears to produce between 35-40% NGL's, a high percentage being condensate. 

PIPESTONE for NVA is over 50% of their production and it is their highest netback BOE's. NVA enterprise value is close to 3.2 billion dollars, and pipestone is their best netback, likely more than half of their enterprise value. (1.6 billion - or higher ?)

This play, NVA highest netback boe's that is suppose to increase in production to 33% to 60,000 boe/day in 2025.


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 57% to 62% weighted to oil and NGLs.

57-62% NGLS at Wembley/Pipestone in a play area that is 126,273 acres of resource. 

So the netbacks of Kelts wembley/pipestone will be significantly higher than NVA, that are about 50% more liquids. Also kelts land base is 3.6 times as big, and they can drill Charlie Lake wells into the mix that are around 78% NGLS Liquids improving the area economics.

Kelt will be able to drill longer wells, have more stacked horizions, and they truely have a 25 year plus play area. If NVA is projecting 60,000 boe/day form 35,000 acres does that make Kelts play 200,000 boe/day? not likely the truth is somewhen in between. 

Kelts enterprise value is roughly 1.2 billion dollars, and with the plant expansion, Wembley will have 109 MMcf of processing. However there does look like we are getting more processing to the north that is not in the forecast.

It clear that Kelts wembley/pipestone (Montney/Charlie Lake) should be worth a lot more than NVA pipestone. (better liquids ratio (50% better), (3.6 X size) - 5 times more?

I have my own estimate of what the production of wembley will be, and my guess is that Kelt is currently looking at ways to get more gas processing and ramp this area up. You can see they are thinking of building a pipeline to the north. 

Kelt is simply to cheap, and i usually am way ahead of the curve with their energy companies, and it is hard to hold some days with the bouncing commodity prices, and shareprice changes. However this is one of the best play opportunities i have seen in a long time. 

MHP

IMHO

[PabloLafortune]

If there is sort of a relatively fixed % of other NGLs (butane, propane, ethane (most in stream now I guess)), then the % difference in oil/high value NGLs (pentane, condensate) might actually be more pronounced.  Is it really too much to ask to stop growing dry natural gas (Oak, Pouce Coupe West) and keep their eyes on the prize???  WTI is $83.

[MyHoneyPot]

My guess is that are commiting to a bunch of processing, and they believe with LNG Canada the prices will firm up gas, and with more processing in West Pouce Coupe, they will eventually build a pipeline.  However maybe there is more of a bigger strategy to it all, i will send them an email and get back to you when i hear a responce with repect to their overall plan. Maybe they have some

[PabloLafortune]

What Kelt is doing at Oak makes no sense unless the plan is to sell it. For them, Wembley economics >> Oak at normal commodity prices, and >>>>>> at current prices. Perhaps for someone else, Oak may have better economics than what they currently have or they need the potential capacity.  Of course, it might be better to wait until natural gas prices have recovered

[gassygeezer]

100% agree, wilsons strategy defies what it seems s/b common sense,dry gas logic...the longer it remains a key focus of capex, the higher the odds cyclical timing forces a reset in LNG pricing for unhedged juniors PS MHP. Insider sales at NVA kept me from ever buying any but they are significantly outpertorming kelt notwithstanding land/mgmnt/debt