Kelt Exploration (KEL-T) to spend $52-million in 2013 capex
March 7, 2013 - News Release
Kelt Exploration Ltd. has provided financial and operating guidance for 2013.
Guidance for 2013
Kelt was recently formed as a junior oil and gas exploration and development company resulting from a plan of arrangement involving Celtic Exploration Ltd., ExxonMobil Canada Ltd., ExxonMobil Celtic ULC and Kelt. As a result, guidance for 2013 is based on a short year, commencing Feb. 26, 2013, and ending Dec. 31, 2013.
Kelt is optimistic about its future prospects. The company is opportunity driven and is confident that it can build its production base by building on its current inventory of development prospects and by adding new exploration prospects. Kelt will endeavour to maintain a high-quality product stream that on a historical basis receives a superior price with reasonably low production costs. In addition, the company will focus its exploration efforts in areas of multizone hydrocarbon potential, primarily in west-central Alberta and northeastern British Columbia.
Kelt's board of directors has approved a 2013 capital expenditure budget of $52.0-million. In addition, and in connection with the arrangement, approximately $25.0-million was incurred by Kelt with respect to capital projects, including land acquisitions, prior to the completion of the arrangement on Feb. 26, 2013. In aggregate, the company expects to spend $54.7-million on drilling and completing wells, $11.0-million on facilities, equipment and pipelines, and $11.3-million on land and seismic.
Kelt expects production in 2013 to average between 3,700 and 3,900 barrels of oil equivalent per day. At the mid-level of the range of the 2013 average production forecast, production is expected to be weighted 22 per cent oil and 78 per cent gas; however, operating income in 2013 is expected to be generated 59 per cent from oil production and 41 per cent from gas production.
The company's average commodity price assumptions for the period from Feb. 26, 2013, to Dec. 31, 2013, are $87.50 (U.S.) per barrel for WTI oil, $4 (U.S.) per million British thermal units for Nymex natural gas, $3.50 per gigajoule for AECO natural gas and a U.S./Canadian-dollar exchange rate of 97.32 U.S. cents. These prices compare with average calendar 2012 prices of $94.20 (U.S.) per barrel for WTI oil, $2.80 (U.S.) per million British thermal units for Nymex natural gas, $2.26 per gigajoule for AECO natural gas and a U.S./Canadian-dollar exchange rate of 99.94 U.S. cents. After giving effect to the aforementioned production and commodity price assumptions, funds from operations for 2013 are forecasted to be approximately $20.5-million or 30 cents per common share, diluted.
Changes in forecasted commodity prices and variances in production estimates can have a significant impact on estimated funds from operations and profit.
The information set out herein under the heading guidance for 2013 is a 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 2013. Readers are cautioned that this financial outlook may not be appropriate for other purposes.
Financial position and landholdings
Kelt estimates year-end 2013 bank debt, net of working capital, will be approximately $42.0-million. Kelt has established a demand operating loan facility with National Bank of Canada with an authorized borrowing limit of $40.0-million. The company expects to increase its authorized borrowing limit during the year, as new production and reserves are added.
Kelt's current landholdings include 195,703 gross (105,915 net) acres of land, of which 130,153 gross (70,084 net) acres are undeveloped. The attached table summarizes the company's Triassic Montney and Doig rights in its core areas at Inga, B.C., and Karr, Alta.
MONTNEY AND DOIG RIGHTS Property
Gross acres Net acres Average WI Net sections Inga
Doig 39,207 15,023 38% 22.8Inga
Montney 49,493 19,797 40% 30.0Karr
Montney 17,280 16,960 98% 26.5
Kelt has entered into several farm-in arrangements, whereby the company has committed to drill 3.75 net wells. In doing so, Kelt will earn an additional 8.45 net sections (5,408 net acres) of Montney land rights.
Common share information
Kelt current has approximately 67.1 million common shares issued and outstanding, of which approximately 14.2 million (21.1 per cent) are held by officers and directors of the company.
Kelt's board of directors has also determined to approve, subject to all necessary regulatory approvals, the grant of 1.5 million restricted share units under its restricted share unit plan and 2.1 million stock options under its stock option plan, to certain directors, officers and employees of the company, all in accordance with the terms and conditions of those plans. The foregoing grants of restricted share units and stock options are expected to represent approximately 5.3 per cent of Kelt's issued and outstanding common shares as at the date hereof.
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