RE:RE:Kelt in a stressed Commodity EnviromentKelt 2024 vs Kelt 2020 = great plays but not as good as 2020, little debt vs heavy debt, similar management and results, much higher debt free (ie post Inga in 2020) reserves aka the best is yet to come.
There is a pattern at Kelt though of overspending on capex that is not supported by hedges exposing them to not insignificant negative cashflow when commodity prices collapse.
In 2020 they spent $120M on capex the first six months and the financial condition of the company deteriorated by $60M (current assets - current liabilities - LTD).
In 2024 they spent $154M on capex the first six months and the financial condition deteriorated by $50M.
The main difference between 2020 and 2024 is the starting point: they were over $400M in debt to start 2020 whereas they began 2024 with almost no debt.
In the interim it looks like they made little progress whereas in fact they had very little reserves remaining after the sale of Inga as they had focused all their effort there...(possibly why they are spreading out the capex nowadays...).
The other thing with 2024 vs 2020 is they had more oil and NGLs back then then they do today. In 2020 oil was ~30% and NGLs was ~15% whereas now its more like 26% and 11% respectively.
Also, natural gas prices are actually quite a bit lower in 2024 then they were in 2020....Looks like Q3 will be worse than Q2.
Excluding hedges (a loss as they were forced to book them for $19 WTI) netback in Q3 2020 was $10.51. 2024 Q2 was $16.55.
The whole strategy in 2024 - maintain natural gas mix, invest equally in all plays instead of focusing, not hedge - has been blown apart by the reality of volatile commodity markets.