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To: Goose94 who wrote (874)	8/1/2013 10:29:58 PM
From: Goose94	Read Replies (2) \| Respond to of 202737

Kelt Exploration (KEL-T) to acquire Fireweed assets for $15.5-million Aug 1st, 2013 - News Release Kelt Exploration Ltd. has entered into an agreement with a Canadian oil and gas company to acquire certain natural gas assets located at Fireweed, adjacent to the company's core producing area at Inga, in northeastern British Columbia. The acquisition has an effective date of April 1, 2013 and is subject to standard industry closing conditions. Closing is expected to occur on or around August 9, 2013. Kelt is acquiring a 50% working interest in the Fireweed assets and its partner at Inga, Artek Exploration Ltd. ("Artek"), is also acquiring a 50% working interest in the assets. Artek currently operates the Inga property and will become operator of the Fireweed assets at closing. Financial and operating information provided herein reflect only Kelt's working interest relating to the Fireweed assets to be acquired. The consideration to be paid by Kelt is $15.5 million, before closing adjustments, and will be financed by existing cash on hand. In addition, after conducting a corporate interim review and reviewing the assets to be acquired, the Company has received a commitment letter from its bank, the National Bank of Canada, whereby, Kelt's available bank credit line will be increased by $16.0 million to $56.0 million, upon satisfactory closing of the Fireweed asset acquisition. Key Attributes of Assets to be Acquired Current net production is estimated to be approximately 600 BOE per day - 79% natural gas and 21% natural gas liquids. Net operating income for the first six months of 2013 was approximately $1.9 million. Petroleum and natural gas reserves to be acquired were evaluated by an independent third party effective December 31, 2012. Proved developed producing reserves were 1.23 million BOE, with no associated future development costs; An operated compression and dehydration facility with approximately 16 mmcf per day of gross natural gas capacity and 25 kilometres of pipeline that adds to the Company's infrastructure in the area; The Fireweed assets are a complementary fit with a contiguous land position adjacent to Kelt's Inga exploration and development core area, including 11,227 net acres (15.8 net sections) of land (6,299 net acres with Doig mineral rights and 7,097 net acres with Montney mineral rights). The Fireweed acquisition adds to Kelt's inventory of horizontal drilling locations targeting the Doig formation and provides the Company with additional acreage expanding its land base for potential exploration in the Montney formation. After giving effect to the acquisition, in its Inga/Fireweed core area, Kelt will own 26,862 net acres (40 net sections) of land with Doig rights and 32,320 net acres (48 net sections) of land with Montney rights. Kelt expects to benefit from potential operational synergies as a result of the acquisition, and at the same time expand its land and infrastructure footprint in the Inga/Fireweed area. Inga Operations Update At Inga, to date in 2013, Kelt has participated in the drilling of five (2.0 net) horizontal wells with multi-fracture completions: three development wells targeting the Doig formation and two exploratory wells targeting the Montney formation. The 30-day initial production rate from the three Doig wells was approximately 3,000 BOE (1,200 BOE net) per day or an average of 1,000 BOE (400 BOE net) per day per well. Production was approximately 62% natural gas and 38% liquids. These three wells extend the Doig pool on the north end of Kelt's Inga play. During the second half of the year the Company plans to participate in drilling horizontal wells in the southern part of the Inga play trend, including potential pool extensions. In addition to the Doig drilling, Kelt participated in the drilling of two (0.8 net) exploratory Montney horizontal wells during the first half of 2013. These wells are part of a three well program planned for 2013 that will utilize different completion techniques in order to provide information that helps the Company assess what works best for potential future Montney development. The first well was completed using nitrogen foam energized water and during the first 30 days, gross production averaged 820 mcf per day of raw gas and 102 barrels per day of liquids, of which approximately 85% was condensate. This equates to average total gross sales volumes of approximately 220 BOE per day (46% liquids) with a liquids yield of 124 bbls/mmcf of raw gas. During the completion, the Company sanded off certain fracture stages and encountered an obstruction near the heel on drill out. After remedial work, it was only able to drill out to approximately half of the horizontal length initially planned. An analysis conducted by the Company suggests that considerable formation damage occurred during the completion. The second Montney well was drilled approximately 1.5 miles to the south and was logged and cored with a pilot well, and subsequently drilled out horizontally. This well was completed using propane and during the first 30 days, gross production averaged 2.5 mmcf per day of raw gas and 286 barrels per day of liquids, of which approximately 77% was condensate. This equates to total average gross sales volumes of approximately 637 BOE per day (45% liquids) with a liquids yield of 114 bbls/mmcf of raw gas. The Company is encouraged by the initial results from its Montney exploration program and the high liquids yields enhance the well economics in the current commodity price environment. The third Montney test at Inga is scheduled for early fall. 2013 Capital Budget The Company's Board of Directors have increased Kelt's 2013 capital expenditure budget by $70.0 million Financial Position After giving effect to the acquisition and the increased capital expenditure program, Kelt estimates that it will have bank debt, net of working capital, of approximately $17.0 million at the end of 2013. Given its new bank line of $56.0 million, the Company expects to have sufficient financial flexibility to carry out its operations during the year and pursue new opportunities as they arise. We seek Safe Harbor