RE:Celtic ShareholderTrading Kelt has been the smart thing to do at least the past few years, no doubt.
Kelt is viewed as a gassy name because that's the way they present themselves. They should instead present themselves as an oil prone small cap play with natural gas optionality.
Because the reality is, Kelt's oil prone assets - Wembley, Charlie Lake and misc (Pouce Coupe oil) - are subsidizing natural gas plays - Oak, Pouce Coupe West, other - despite Wembley being in major growth mode!!!
In the 60's, one of the business consulting companies coined the term cash cow and growth star to identify the two kinds of companies/assets a conglomerate (that was the rage at the time) wanted to own. The idea being that the cash cow would fund the growth star.
But in Kelt's case, the oily assets like Wembley are both the cash cow and the growth star!!!!
And what do you call a company that is both growing AND generating cash? A darling.
The question should not be do we invest in Oak or Wembley? The questions should be: a) if and when do you sell the oil prone plays? personally, I keep them around for a few years. and b) what is the best use of the cash flow generated by Kelt's oil prone plays? Personally, I don't think its unhedged natural gas esp. w/o LNG head contract even if its 20% condensate. You simply cannot be successful in natural gas without a core competence of hedging/marketing/LNG.
Hope you enjoyed this narrative.