Kelt Provides 2025 Financial and Operating Guidance and Sets Its 2025 Capital Expenditure Budget at $328 Million

Calgary, Alberta--(Newsfile Corp. - January 6, 2025) - Kelt Exploration Ltd. (TSX: KEL) ("Kelt" or the "Company") is providing financial and operating guidance for 2025. The Company expects to incur $328.0 million in capital expenditures during the year and is forecasting to generate $345.0 million in adjusted funds from operations in 2025.

The following table outlines Kelt's forecasted average commodity price assumptions for 2025 with actual 2023 and forecasted 2024 commodity prices shown for comparative purposes:

Financial and operating highlights forecasted for 2025 compared to 2024 forecasts are outlined in the table below:

Kelt's Board of Directors has approved a capital expenditure program of $328.0 million in 2025. The Company expects to spend $209.0 million (64%) drilling 30.5 net wells and completing 33.5 net wells during the year. An estimated $97.0 million (30%) is expected to be incurred equipping new wells and on other related infrastructure such as facilities and pipelines. The remaining budget of $22.0 million (6%) is expected to be spent on land purchases and a $14.0 million 3-D seismic shoot at Oak in British Columbia covering approximately 286 square kilometres (110 sections of land).

Production in 2025 is expected to average between 44,000 and 48,000 BOE per day, up 40% from average production forecasted for 2024. The product mix for 2025 average production is expected to be 37% oil and NGLs and 63% gas. Production during the first quarter of 2025 is expected to average between 37,500 and 39,500 BOE per day, ramping up significantly in the second quarter with the start-up of the CSV Albright Gas Plant in the Company's Wembley/Pipestone Division where Kelt currently has shut-in production from wells already drilled and completed.

Adjusted funds from operations ("AFFO") for 2025 is forecasted to be $345.0 million, 56% higher than the Company's 2024 forecast of $221.5 million. On December 31, 2025, the Company expects to have net debt of $100.0 million, or 0.3 times forecasted AFFO for 2025.

In its Oak/Flatrock Division, Kelt expects to drill three development wells and one exploratory/delineation well, in the second half of 2025.

In its Pouce Coupe/Progress/Spirit River Division, Kelt expects to drill four Montney wells and eight (6.0 net) Charlie Lake wells during 2025.

In its Wembley/Pipestone Division, Kelt expects to be the most active during 2025. The Company expects to drill 15 Montney wells and two (1.2 net) Charlie Lake wells during the year. In addition, the Company will also complete three wells drilled off a pad in the fourth quarter of 2024.

Kelt continues to maintain financial flexibility with an anticipated net debt to AFFO ratio of 0.3 times forecasted at December 31, 2025. In the event that commodity prices are substantially higher than the Company's forecasts, Kelt does have the ability to increase its capital expenditure program in the second half of 2025. Commodity price sensitivities to estimated AFFO for 2025 are as follows:

• A 10% change in Kelt's forecasted average net realized price for oil sales of $87.33/bbl, would affect AFFO by $27.6 million.
• A 10% change in Kelt's forecasted average net realized price for NGL sales of $47.64/bbl, would affect AFFO by $7.4 million; and
• A 10% change in Kelt's forecasted average net realized price for gas sales of $3.00/Mcf, would affect AFFO by $18.3 million.

Changes in forecasted commodity prices and variances in production estimates can have a significant impact on estimated funds from operations and profit. Please refer to the advisories regarding forward-looking statements and to the cautionary statement below.

The information set out herein is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Kelt's reasonable expectations as to the anticipated results of its proposed business activities for the calendar years 2024 and 2025. Readers are cautioned that this financial outlook may not be appropriate for other purposes.

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Advisory Regarding Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of and of the words "will", "expects", "believe", "plans", potential", "forecasts" and similar expressions are intended to identify forward-looking statements. In particular, this press release contains forward-looking statements pertaining to the following: Kelt's expected price realizations and future commodity prices; its expected oil and NGLs weighting; the cost and timing of future capital expenditures and expected results; the expected timing of wells bring brought on-production; the expected timing of production additions from capital expenditures; the ability to show significant production growth; the expected drill and complete costs; the expected timing and processing capacity from the start-up of a third party facility; the expected timing of when the Company shoots its 3-D seismic program; the production volumes at Wembley/Pipestone being brought on-stream in the second quarter of 2025; the estimated new production ready to be brought on-stream; and the Company's expected future financial position and operating results.

Certain information with respect to Kelt contained herein, including management's assessment of future plans and operations, contains forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, many of which are beyond Kelt's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency exchange rate fluctuations, imprecision of reserve estimates, environmental risks, competition from other explorers, stock market volatility and ability to access sufficient capital. As a result, Kelt's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur.

In addition, the reader is cautioned that historical results are not necessarily indicative of future performance. The forward-looking statements contained herein are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Kelt's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Non-GAAP and Other Key Financial Measures

This press release contains certain non-GAAP financial measures and other specified financial measures, as described below, which do not have standardized meanings prescribed by GAAP and do not have standardized meanings under the applicable securities legislation. As these non-GAAP, and other specified financial measures are commonly used in the oil and gas industry, the Company believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.

Non-GAAP Financial Measures

Net realized price

Net realized price is a non-GAAP measure and is calculated by dividing the Company's P&NG sales after cost of purchases by the Company's production and reflects Kelt's realized selling prices plus the net benefit of oil blending and third-party natural gas sales. In addition to using its own production, the Company may purchase butane and crude oil from third parties for use in its blending operations, with the objective of selling the blended oil product at a premium. Marketing revenue from the sale of third-party volumes is included in P&NG sales as reported in the Consolidated Statement of Net Income and Comprehensive Income in accordance with GAAP. Given the Company's per unit operating statistics disclosed throughout this press release are calculated based on Kelt's production volumes, and excludes the sale of third-party marketing volumes, management believes that disclosing its net realized prices based on P&NG sales after cost of purchases is more appropriate and useful, because the cost of third-party volumes purchased to generate the incremental marketing revenue has been deducted.

Combined net realized prices referenced throughout this press release are before derivative financial instruments, except as otherwise indicated as being after derivative financial instruments.

Capital expenditures

"Capital expenditures, before A&D" and "Capital expenditures, net of A&D" are measures the Company uses to monitor its investment in exploration and evaluation, investment in property plant and equipment, and net investment in acquisition and disposition activities.

Capital Management Measures:

Funds from operations and adjusted funds from operations

Management considers funds from operations and adjusted funds from operations as a key capital management measure as it demonstrates the Company's ability to meet its financial obligations and cash flow available to fund its capital program. Funds from operations and adjusted funds from operations are not standardized measures and therefore may not be comparable with the calculation of similar measures by other entities.

Net debt (surplus) and net debt (surplus) to adjusted funds from operations ratio

Management considers net debt (surplus) and a net debt (surplus) to adjusted funds from operations ratio as key capital management measures to assess the Company's liquidity at a point in time and to monitor its capital structure and short-term financing requirements. The "net debt (surplus) to adjusted funds from operations ratio" is also indicative of the "net debt to cash flow ratio" calculation used to determine the applicable margin for a quarter under the Company's Credit Facility agreement (though the calculation may not always be a precise match, it is representative).

"Net debt (surplus)" is equal to bank debt, accounts payable and accrued liabilities, net of cash and cash equivalents, accounts receivables and accrued sales and prepaid expenses and deposits. The Company believes that using a "Net debt (surplus)" non-GAAP measure, which excludes non-cash derivative financial instruments, non-cash lease liabilities, and non-cash decommissioning obligations, provides investors with more useful information to understand the Company's cash liquidity risk.

Supplementary Financial Measures

Adjusted funds from operations per share (basic and diluted), and net income and comprehensive income per share (basic and diluted) is calculated by dividing the amounts by the basic weighted average common shares outstanding.

Measurements

All dollar amounts are referenced in thousands of Canadian dollars, except when noted otherwise. This press release contains various references to the abbreviation BOE which means barrels of oil equivalent. Where amounts are expressed on a BOE basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and is significantly different than the value ratio based on the current price of crude oil and natural gas. This conversion factor is an industry accepted norm and is not based on either energy content or current prices. Such abbreviation may be misleading, particularly if used in isolation. References to "oil" in this press release include crude oil and field condensate. References to "natural gas liquids" or "NGLs" include pentane, butane, propane, and ethane. References to "liquids" include field condensate and NGLs. References to "gas" in this discussion include natural gas and sulphur.

Abbreviations

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