Kelt Exploration Ltd T.KEL

Kelt in a stressed Commodity Enviroment

[MyHoneyPot]

These type of events are necassary so that real economics surface with respect to the quality of plays, the condition of the balance sheet, and the management of Capital.

I have looked at some companies that in mid August were buying back their shares at close to all time highs to find they share have closed down 17.5 percent as of last Friday. That is an evaporation of capital off the balance sheet. None of these companies can efficiently and in a responsible manner buy back they shares. (thats why its better to own companies that don't need to buy back shares because they have been responsible managing their share float)

If they want less shares do a 2:1 consolidation of shares, rather than evaporate shareholder capital. Buying shares limits the balance sheet size of the corporation making it more difficult to do opportunistic deals, ask TOU who doesn't buy back share. 

Some companies have recently executed major capex project to bring on dry gas to only find plant and production shut in or put future plans put on hold like AAV Glacier, AAV has shifted to an Alberta Based Oil exploration program (pouce coupe Charlie Lake). So the economics for dry gas may not be there, especially today. 

In the last month Kelts share price is marginally down, about 4%, because shareholder know that High Liquids production is ramping up and by the end of the year their production will increase, projected by their own management (Kelt) by as much as 50%.

Oil companies do have capital investments sometime in terms of drilling, you can have cash in the bank or perhaps in a highly productive gas reserve (DUC) with the intent to bring it on when prices and hedging will support the production economically. There is strategy to all this drilling, its not done without consideration for cashflow and enterprise risk. 

In 2024 Kelt will complete more wells than they drilling bringing forward some of this sunk capital. 

Kelt assets are quality and when everything is taking a beating, and your in the darkest of days these quality assets will shine. Kelt will be better off 3 months from now then they are today, and people are very interested in Alberta assets with high liquids. 

DRY gas plays with costly infastructure are going the way of the Dodo bird.

MHP
IMHO

[PabloLafortune]

I just posted a similar argument but using Diamondback Energy as an example. Many think US associated gas won't continue to grow but in fact it will. Exxon told us that. EOG told us that. The implications for Kelt is they have to park or sell Oak and Pouce Coupe West. Not worth investing there (certainly bat !@#$ crazy to build own plant for Oak when the play's economics are poor, natgas

[gassygeezer]

So MHP,what do you see ANY downside risk in this stock or strategy? So far hedging not an issue to you going into dowwnward pricing cycle Oak capex fine given potential suitors/prize Insiders deserve more options and further dilution to manage the portfolio while the few remaining institutions/public wait out another cycle while bank debt increases to fund the promotion/production required to

[PabloLafortune]

Kelt 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

[gassygeezer]

volatile commodity prices, who could have predicted that? lol it's how you grow bank debt,again while dumping cheap shares