Message to Shareholders
The Company is pleased to report its first quarterly results to shareholders after it commenced trading on the Toronto Stock Exchange on March 1, 2013.
Kelt was incorporated on October 11, 2012 for the purpose of participating in a Plan of Arrangement (the "Arrangement") involving ExxonMobil Canada Ltd., ExxonMobil Celtic ULC, Celtic Exploration Ltd. and Kelt. The Plan of Arrangement was completed on February 26, 2013, following which time, Kelt commenced active operations. As a result, production, revenue and funds from operations included in this first quarter interim report were generated during the 33 day period from February 27, 2013 to March 31, 2013.
Kelt is an oil and gas exploration, development and production company with land holdings in three core areas in Western Canada:
-- 71,363 gross (28,149 net) acres in a condensate-rich gas property at Inga in northeastern British Columbia;-- 105,920 gross (57,214 net) acres in a gas property at Grande Cache in west central Alberta; and-- 22,400 gross (22,080 net) acres in an oil exploration prospect at Karr in west central Alberta.
This suite of assets provides the Company with a mix of lower risk development and higher risk exploration plays, as well as, a diversified portfolio of natural gas, condensate and light oil production. Having exposure to the different commodity price points will benefit the Company during periods of volatile price fluctuations. During the first quarter of 2013, the price for Edmonton sweet light oil averaged $88.65 per barrel, up 2% from $86.57 per barrel in the year 2012. During the first quarter of 2013, the price for condensate averaged $108.11 per barrel, up 7% from $100.76 per barrel in the year 2012. During the first quarter of 2013, the price for AECO gas averaged $3.08 per MMBTU, up 27% from $2.43 per MMBTU in the year 2012.
Since commencing active operations on February 27, 2013 and during the 33 day period ended March 31, 2013, production averaged 3,588 BOE per day (82% gas and 18% oil & NGLs), revenue was $3.9 million and funds from operations was $2.2 million. Production averaged 1,316 BOE per day during the 90 day quarter ended March 31, 2013.
At March 31, 2013, Kelt did not have any outstanding bank debt on its $40.0 million demand loan facility with a chartered bank in Canada. The working capital position at the end of the first quarter was a deficiency of $24.5 million.
Subsequent to the quarter-end, on April 5, 2013, the Company completed equity financings resulting in aggregate gross proceeds of $94.35 million. 11.0 million common shares were issued at a price of $5.55 per share pursuant to a brokered private placement for gross proceeds of $61.05 million and 6.0 million common shares were issued at a price of $5.55 per share pursuant to a non-brokered private placement to certain directors, officers and employees of the Company for gross proceeds of $33.3 million.
As at May 6, 2013, the Company has 84.1 million common shares issued and outstanding. Directors and officers of Kelt own (including shares that they exercise control or direction over) 19.9 million common shares or 23.7% of the total shares outstanding.
Entering the second quarter of 2013, Kelt is well positioned financially and expects that it will have sufficient financial flexibility to carry out its operations during the year and pursue new opportunities as they arise.