Kelt Exploration Ltd T.KEL

6 reasons why IMO Kelt is best kept secret in small cap E&P

[PabloLafortune]

#1, debt free - lowest leverage among peers (by far). Safer during downturns (not beholden to lenders). Less volatile share price during commodity price drops. Able to seize opportunities as they come along. 

#2 lowest EV/cashflow ratio among peers. More profitable at a given oil % mix than its peers.

#3 increasing liquids mix which translates to better netbacks ($2.25 for every $7 WTI increase or decrease). Q4 was 25% oil, my guess based on wells being brought on line is that Q4 '22 will be 30%. Longer term 33% perhaps? Which I guess means $30 adjusted netback at around $70 WTI. Best upside among peers.

#4 lowest production to Montney land among peers. More room to grow and likely more inventory of top tier locations (an important metric in Los Estados Unidos). 

#5 Fastest Growing production - 50% for 2022 (YoY and Q4 over Q4 my guess) among peers. With significant free cashflow at strip (assuming capex budget remains at $250M - based on 2021, it won't though).

#6 Fastest Growing reserves among peers - my guess is they add 34M in PDP reserves in 2022 and will consume 11.3M. If capex budget is increased in the same fashion as 2021, PDP reserves will grow even more especially that % spent on infrastructure is decreasing (latest $40M capex increase was pretty much all D&C).

GLTA.

[TouchDown12]

Great Insight Pablo. May i add #7.... there is a lot of shares trading hands the last 2 days - and i think it is putting a floor on S/P. First time i have seen this in a while. I'm back in. TD12

[PabloLafortune]

Good point. Yesterday volume was unusually high.

[fauxtomato]

New price deck out from TD, still conservative for 2023, but their KEL estimates are: 2022 31k boe/d netbacks of $27.84 giving CFFO of $316M and capex of $250M 2023 36.5 boe/d netbacks of $22 (!!) giving CFFO of $293M and capex of $250M For 2022/2024 they have WTI at $85/$75 and AECO at $4.35/$3.25 so...production growth of ~20$ and a decline in FFO? They're the highest payout % in the

[PabloLafortune]

Honestly, I'm skeptical of any WTI price projections. Short term supply demand looks bad esp for diesel and Europe thus Brent. Beyond that who knows. So many variables. My own adjusted netback projection for Q1 is $34, probably even better in Q2 (less hedges, WTI potentially $20 higher than Q1's $94ish), depends on their oil mix. As a matter of fact, im quite certain they could (not saying

[Konaboy]

It's definitely a good picture, but what is the endgame? No shareholder returns indicated, high capex, looks like pure growth for the foreseeable future.  High contrast to most of the players, who are succombing to the shareholder returns movement.

[PabloLafortune]

While it wasn't in the past, shale oil and gas is a very viable business now and the trend (natural gas) its its friend because of the associated natural gas which btw, long term will benefit the Montney vis a vis the Permian (and certainly vis a vis offshore). So don't get me wrong, all boats will rise. Its simply my belief that Kelt's lands have a name plate of at least 150,000 boepd