Kelt Exploration Ltd T.KEL

Q3 released

[Seppelt]

Production affected by third party once every four years plant maintenance at Progress. Scheduled for 2 weeks in September, it took the entire month.
Oak compression and oil battery facilities were commissioned in early November (planned for October). 11 wells connected, initial production as anticipated.
The outlook for 2022 is a lot better. 30,000 boe average production and no debt. A surplus based on conservative commodity prices.

[PabloLafortune]

Impact on Q3 production was 2,800 boepd, if not for it, production would have been ~22,400. Since yearly forecast is maintained at 21,500, that implies 28,000 boepd for Q4. Also, since capex is 44M-54M for Q4, and net debt will be reduced by ~$10-20M, that implies operating cashflow of $65M or $25/boe for Q4. Of note, avg realized prices from Q2 to Q3 jumped 22% from $31.49 to $38.33. Due to

[InsideEnergy]

surpisingly weak qtr for them op costs too high. that is the issue when you don't own the processing you need.  to grow, it will again put too much thru third paty plants and the return suffers. Priced to perfection and when th results do no meet that level the share price gets whacked and might start a downtrend that will give a buying opportunity when the share price retraces maybe a

[Cheadle12]

Under $5 = strong buy. Q4 production will be significantly higher than lagged Q3. 2022 will be 30,000 boep/d, understated commodity prices and zero debt, will have surplus cash, which I expect they'll put to work, somehow, somewhere.. This is a team to trust.. a sleeping giant.  Watch & see.  

[PabloLafortune]

Per my calc, the budgeted Q4 #'s are 27,850 boepd and $26.76 field netback (e&oe) based on the liquids mix and commodity prices outlined in the press release and presentation. prices seem to be a little higher than the presentation prices; last year, Q4 results volumes exceeded the above similar calc by 15%; and liquids mix was also a little higher than projected. YMMV.

[InsideEnergy]

my issue and I suspect others is kel lacks processing and so it will be vulnerable to op costs.  The processing plants go down too often as well.  The costs are high enuf that Kel should bring it in house at Oak/Flatrock They have not even mentioned it so it must be out there  Beyond the compression facility the need processing.  I want my e&ps to be "e" and "

[Seppelt]

I don't see a significant increase in production cost. Regardless, unlike gassy AAV and others, Kelt is focusing on liquids, mainly light oil, condensate and NGLs. If the ultimate goal is to develop a producing liquids-rich asset to add value for a possible sale, as they have done in the past, spending capital on expensive gas processing plants is not justified. I think the management made it

[Seppelt]

My biggest fear was cost overruns in building infrastructure at Oak. High steel prices, poor logistics and shortage of labour due to Covid or in general. Good to see it done and no major delays and issues as far as we know. Another risk is geology. Oak for instance is largely undeveloped and only the management will know if volumes and declines are above or below expectations. 

[InsideEnergy]

relax guy... ain't nothin big here.  I make ONE post about the processing or lack of, you respond with 4. I know a bit about kel and yes I prefer aav and in this year aav has made me a ton.  With certain stability in having a 400 Mmcfd plant to fill.  It is a real good idea to own the processing.  You want to control, your destiny and lower costs.  AAV has the best op

[Moemoney42]

Appears that the market likes the Q3 numbers after yesterdays lag.. seems to be stablizing today.. on a down day for many in the sector.. always a good thing.!  ;-)

[integrity11]

Kelt has 362,000 acres of Montney plus Charlie Lake. Advantage has 164,000 acres of Montney. Land is king and the upside of Kelt in share price far exceeds Advantage. I held Advantage and had a nice capital appreciation, but did sell too soon. Advantage is a good company but the upside from current share prices is far greater for Kelt. Processing is a very nice to have, but long term land is far

[Moemoney42]

Agreed.. having the land base in place now that we could be on a cyclical upturn in the energy sector gives Kelt a long runway to continue to drill without having to do any land acquisitions.. that's money in the bank baby..!  ;-)

[PabloLafortune]

By the way, over the past 4 quarters, Kelt spent $170M on capex yet only brought 8 wells online........ After Q4, this metric will be 23 wells on line on $214-224M of capex (over 5 quarters).

[fauxtomato]

Ideally the flush initial production will be capturing premium winter pricing, AECO out to February right now is ~$4.80. The heavy Q4 completion schedule looks to be well timed!

[Seppelt]

It's all good except that everyone is targeting completions in Q4. Kelt had to start from scratch, build infrastructure to start developing Oak and will still be spending a lot on infrastructure in 2022, I.e. pipelines in Wembley/Pipestone. Growing production and its challenges are not appreciated so far, despite the fact that at current commodity prices above average growth can be achieved

[PabloLafortune]

I'm trying to keep a positive outlook but the shine is off the apple.  Kelt simply spent too much on infra and drilling and completing wells that aren't brought on line for extended periods, AND didn't borrow to either accelerate those plays or drill wells that are actually brought on line (such Pouce Coupe oily wells).  In the matrix of debt or no debt on the horizontal axis

[Seppelt]

Not sure. The focus is Oak and Wembly/Pipestone. Couldn't do a lot here without minimum infrastructure. PC wouldn't make a significant long term difference (too small) unless there is consolidation. Landholdings in other areas would also benefit from an acquisition, or disposition.

[PabloLafortune]

They are spending 35-40% of capex on non D&C. Also, the 2022 capex budget is more conservative than 2021 - Q4 2021 CF will be 5x 2020 but capex budget is only 2x.