Kelt Exploration Ltd T.KEL

Kelts is projected to growth Commodity Sales Significantly

[MyHoneyPot]

In Q3 Kelt produced 11,902 boe/day of (Oil and Natrual gas liquids.) 

CVS Albright
Kelt has 9000-12000 boe behind pipe waiting for the CVS plant startup. Assuming 12,000 boe/day and at 57% liquids that is 6840 boe/day (Oil+Liquids addition), that is and increase of   57.4% increase in liquids over Q3 just associated with the startup of the CVS Albright Plant. 37% in overall production compared to Q3. So considering they recived $1.25 for their gas in Q3 it is more than a 50% increase in commodity sales because of the increased liquids. 

Q4 2024 Exit (36000-38000) boe/day
In Q4 Kelt projects it could exit at 38,000 boe/day that is an increase of 5622 boe/day. I don't know what the Oil/NGLS percentage will so lets assume it is consistent with current Kelt production. So that is a 17% increase in production by year end without consideration of CVS plant startup. 

So in 2025 after the plant startup, you with have 17% increase because production was taken to 38000 boe/day and 50% increase because of CVS Albright plant startup so that is about 67% production growth that will be realized by Q2.. 

Casflow will grown by at least 50% just from bringing on the wembley production, and 17 percent with the yearend growth.  So i would guess KELT will see CF increase by more than 65% from Q3 reported number. 

Aeco prices are going up a bit but the big even will be bringing on the Albright gas plant, bumping up the liquids 57% and increasing cash from operations at least 50%.

So Kelt is on solid footing, and the net debt was .4 times trailing sept 30, with CF projected to go up at least 67% by Q2. Kelts looks real good here. 

IMHO
MHP

[PabloLafortune]

I consider the Albright CSV delay to be material to Kelt. Shareholders should have been notified as soon as management knew. Which wasn't yesterday...Unacceptable. And myhoney, can you please use the proper initials? Its CSV Midstream, not CVS. CVS is a US pharmaceutical chain.

[MyHoneyPot]

Your right a 50% increase in commody sales will be material, I know the company was under the impression that there would be a Dec 1, plant startup. Originally the plant was scheduled to start testing on Sept 1, but something went wrong with CSV Albrights Plan.  CSV ALBRIGHT Q4 PLAN - LINK TO ENTIRE PROJECT Start-up Flaring will commence for testing and safety Equipment

[PabloLafortune]

MHP, in this day and age of commodity price fluctuations and general economic uncertainty, it is foolhardy not to hedge.   Kelt started the year with a budget of $11.3M of net debt and now its going to be over $100M. ...they planned on cashflow of $350MM, they're going to come in at $220M... The error Kelt makes over and over again is they assume only 1 bad thing will happen. But

[MyHoneyPot]

I appreciate you frustration, but you will find that hedging requires expertise in hedging an (call, puts, spreads, etc) most companies do not have the expertise in house and hedging is done in a hap hazard way.  I think this is a great quarter to look at companies that hedged gas properly, the only ones i have seen that have reasonable hedges in place are TOU and VET. In fact in Europe VET

[PabloLafortune]

Tbh, have lost interest in Kelt. Not interested to discuss it anymore. Biting my keyboard not to press the SELL button.

[PabloLafortune]

PS - bought BIR. ~75% HH or Dawn natural gas. Dawn usually 20-25 cents discount to HH. Kind of like buying a US natural gas co. Risk of divi cut though. 

[MyHoneyPot]

If you looking around loot at VET, they have a interesting opportunity in Croatia where they have the ability to produce 8,000 boe/day of gas they are currently producing 2000 boe/day but every 10000 boe they add is more that 30 million in pet sales, and the wells are on 885 meters deep.  Give me your feedback, please.  IMHO

[PabloLafortune]

VET: First thing that stands out is, they are generating a lot of free cash.  As good as TOU, better than ARX, not as good as MEG. Not sure about buying shares back versus paying off debt. Also, a little worried about further acquisitions (Coeleancanth which they have been funding...) as they've done that before...........................they used to pay a HUGE dividend until they

[MyHoneyPot]

  PabloLafortune my friend... They current market cap is less than 2X anualized 3rd quarter FFO I looked at VET and to my surprize i think i found a gold mine. They are producing gas at the receiving end of LNG exports and are in the midst of bringing on significant produciton in Europe. They are hedging out 15 dollar gas and they are 50% hedged for 2025 and their hedges extend to 2027

[Trapped]

Does this mean you're abandoning KEL in favor of a new pump? What about all the folks that you hyped into this name?

[PabloLafortune]

And will the parasites tag along?

[PabloLafortune]

VET has a good overseas profit model. VET's track record however is of taking the overseas cashflow to invest in Canadian oil and gas instead of returning it to shareholders - they partially had it right when they paid the big dividends (some of it needed to be variable), they went astray when they borrowed heavily to sustain the dividend and invested in Cdn oil and gas.  My guess

[MyHoneyPot]

I would say that although VET has hit its debt target(833 million) and is .6 times trailing FFO the lowest it has been in 15 years. Their FFO anualized third quarter is 1.1 billion dollars, while their marketcap is 2 billion dollar roughly, they are trading at less than 2XFFO. If you consider their european gas sells for 15.52 MMcf, it is over $93 dollars a boe in europe, and it likely has a

[PabloLafortune]

I'll have to study VET's Cdn assets.  Their expertise is international - those assets basically print money due to insane realizations - its not clear to me that management adds value acquiring and managing canadian assets.

[MyHoneyPot]

I would say regarding their Canadian assets, they have Montney assets which have compelling size, which i think is necassary.  Looking at the Mica assets go back a few reports because initially the volume were even more liquids rich and then they decline, but i think that okay because the volume are high and a really good ROI is my guess.  Sask is nothing to get excited about but more

[Trapped]

MHP's on fire today across multiple boards this fine day. Bill, would you say you're hard at work or hardly working?

[MyHoneyPot]

Work is my sideline. MHP

[Quintessential1]

Extolling the virtues of buybacks on VET while denouncing them here, He posts out of both sides of his mouth and neither side has it quite right. In fact, he moaned to IR about buybacks at VET until was forced to look at the metrics. He actually asked VET's IR why they wern't hedging  100% of production.  After they stoped laughing they told him how businesses work in the

[PabloLafortune]

Buybacks don't actually add value. They are essentially a financial transaction between parties. Do private companies 100% owned by 1 individual buy back their shares? They do in aggregate significantly impact the financial system. They've also played a significant role in destroying venerable companies. Intel for one. GE for another.  Mechanically (versus opportunistically) buying

[PabloLafortune]

Usually its difficult to make money, and easy to spend it.  Sometimes, its easy to make money, and even easier to spend it. The best is when its easy to make money and difficult to spend it. VET historically has been #2, ideally they'd be #3. I'm just a retail nobody in his basement with no influence, I don't control the board of directors, i can't tell them what to do. All I

[teashade]

>>pay a dividend, and will likely buy back a good chunck of their float But that's evaporating cash off the balance sheet? This would be hilarious if it weren't so tragic. KEL screwed up, and I feel like I've been honest about my expectations of a delay, and you've just...said 9/30 is the day they'll go to 50k boe/d and thank god they're not rewarding long suffering

[longrun86]

I too am frustrated about the items you mentioned and in a previous post I mentioned that they should sell the whole company. The management team seams to now be trying to play a different game compared to how they have created value in the past. I am very grateful to Management for my return at Celtic but I am now approaching the end of this ride. LR

[PabloLafortune]

They could also take it private. 50% premium would be $9.50. They kind of operate it like a private company now anyways. The timing of the CSV Albright delay reporting doesn't sit well with me.

[gassygeezer]

a valid question many ask, but whom would thet sell options  to then? One has to anticipate longer delays when your business plan relies upon third parties infrastructure/timing