Kelt is optimistic about its future prospects. The Company is opportunity driven and is confident that it can grow 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 multi-zone 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 expected to be incurred by Kelt with respect to capital projects, including land acquisitions, prior to the completion of the Arrangement on February 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 3,100 and 3,300 BOE per day during the 365 day year (3,700 and 3,900 BOE per day, for the 308 day period following commencement of active operations on February 27, 2013). At the mid-level of the range of 2013's average production forecast, production is expected to be weighted 22% oil & NGLs and 78% gas; however, operating income in 2013 is expected to be generated 52% from oil & NGL production and 48% from gas production.
The Company's average commodity price assumptions for the period from February 27, 2013 to December 31, 2013 are US$89.00 per barrel for WTI oil, US$4.15 per MMBTU for NYMEX natural gas, $3.50 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$0.9900. These prices compare to average calendar 2012 prices of US$94.20 per barrel for WTI oil, US$2.80 per MMBTU for NYMEX natural gas, $2.26 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$0.9994. After giving effect to the aforementioned production and commodity price assumptions, funds from operations for 2013 is forecasted to be approximately $23.6 million or $0.28 per common share, diluted.
Kelt estimates 2013 year-end bank debt to be nil and cash, net of working capital, to be approximately $53.0 million. Kelt has established a demand operating loan facility with a Canadian chartered bank with an authorized borrowing limit of $40.0 million. The Company expects to increase its authorized borrowing limit as new production and reserves are added.
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 cautionary statement on forward-looking statements and information set out below.
Advisory Regarding Forward-Looking Statements
Certain information with respect to the Company contained herein, including expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations, performance, Kelt's planned capital expenditure program, or management's assessment of future potential, contains forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond the Company'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. We caution that the foregoing list of risks and uncertainties is not exhaustive.
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