Kelt Exploration Ltd T.KEL

Oak essentially 200,000 contigious acres of Montney

[MyHoneyPot]

Oak is a massive contigious Montney Land base, and may be one of the largest opportunities of its kind. That contributes very little in term of the value that people see currently in Kelt Resources.

A Large Montney play is usually considered to by 100,000 acres, much like Wembley/Pipestone that potentially worth billions of dollars. 

Now Oak may defie the norm of collecting land blocks to establish a large enough land base, for a meaningful Resource Play. 

Oak could be potentially 2 or 3 resouce plays for 2 or 3 companies, NVA a Pipestone Montney is only 35,000 acres and is a company maker on its own, but it is Alberta montney and more liquids rich, so not a great comparison but more to put things in perspective, Oak is almost 6 times the size of NVA pipestone. 

So creative thinking is possible with Oak, - perhaps a sale of the portion of the play with a commitment of spend a certain amount of capital, so kelt gets the upside on the land position.

Or god forbid take on a partner to develop this massive play area, really what other company you know could have a 200,000 acres Montney play area.

Kelt has many opportunities before it, and they likely will need Partners to make this all happen.

MHP
IMHO

[PabloLafortune]

The 1.5yr well payback model Kelt outlined for Oak at ENERCOM Denver - enabled  by higher initial liquids - my guess doesn't work atall at $68 WTI.  And at $58 WTI, forget about it. Basically that profit model fails a low WTI stress test. At current oil and gas prices, not worth completing or bringing any of these wells on-line right now.

[MyHoneyPot]

I respect your opinions. The only issue is the underlying value of almost 200,000 acres of Montney, where your and expert (Inga Sale), and very well understand the geology of the area. Oak simply is potentially too valuable an asset to do nothing.  Would you tell CREW to not drill any wells? I guess the case in point is how many contigious montney plays exist of this size?, with this

[PabloLafortune]

MHP, first off none of these big guys operate this kind of asset using a 3rd party plant. That capex is done upfront. Second, the proper implementation of the profit model elaborated at Enercom is to hedge until the well is paid for. Hedge oil at $78 with an avg strip of $72 and NG such that you are "assured" x months payback (incl. Interest). Which means when prices are low yes, you

[MyHoneyPot]

With all the concent about hedging be a commodies trader.  There are other companies that don't hedge because they have destroyed billions of dollars in capital over the years.  Hedging is generally a cost center that only works sometimes, and strong balance sheet is the best hedge a company can have.  MHP IMHO

[Trapped]

Hedging is generally a cost center that only works sometimes, and strong balance sheet is the best hedge a company can have.... ------- And in a distressed price environment for a prolonged period, the absence of hedging can destroy the strongest of balance sheets in no time flat. There's a reason we insure our homes, cars and lives.

[MyHoneyPot]

Kelt has done pretty well selling assets to majors like Celtic to Exxon, and Inga to Connoco, I would say they have figured out how to do it without owning a plant. Close to 4 billion in asset sales.  MHP IMHo

[PabloLafortune]

MHP, you lose all credibility when you cite Kelt land sales success. #1 2012 Celtic was sold 12 years ago almost to the day. An eternity in oil and gas - the Permian was in its infancy back then. Intel was worth 10x NVDA 15 years ago (now NVDA worth 30x Intel). It ceased being a useful point 5 yrs ago. #2 2020: Inga/Firesale was a Fireweed. They sold 300MM 2P reserves for $540M. Over 40% liquids

[gassygeezer]

Celtic was a one time hit, doubt another major desperate to find/fund another at such premium , meanwhile Kelt clipping coupons/options/salary until pricing hits their expenditures/capex..average shareholder in for another long ride into profiteability/exit...Kelt can not afford dividends nor share buybacks but could stem the flow of benefits unto themselves to show credability...but that's

[integrity11]

Relax and enjoy the ride if you are an actual shareholder ?

[gassygeezer]

Do you have the same trading account ats MHP?..you didn't yet upvote him, he relies upon your support...ps been in out of wilson etal since his initial public venture,you?

[MyHoneyPot]

I would say that just maybe that is being a little judgemental, but i value you and your opinions,  i can accept your opinions as valid, not wanting to get into a debate with a lot of critics, i accept them. However i might myself not have the same conviction. MHP IMHO 

[MyHoneyPot]

Kelt has a lot of irons in the fire for a company that produced less than 32,000 boe/day in Q2. The value of a montney block whicih is almost 200,000 acres is huge, especially when you have expert knowledge and experience in the area one township over. You have to have a strategy based on expert knowledge, Kelt has that. I trust the management decision making process, and really hedging of gas

[integrity11]

Not owning the gas plant would not be a killer concern preventing big NG producers like CNQ, TOU or Shell from buying a large block of  the BC Montney..