SEDAR Interim Financial Statements

INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 KELT EXPLORATION LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [UNAUDITED] KELT EXPLORATION LTD. 1 FINANCIAL STATEMENTS (CA$ thousands) [Notes] September 30, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents 1,336 228 Accounts receivable and accrued sales [9] 46,198 60,236 Prepaid expenses and deposits 4,090 4,109 Derivative financial instruments [9] 16,328 6,709 Total current assets 67,952 71,282 Exploration and evaluation assets [4] 32,176 18,092 Property, plant and equipment [5] 1,494,410 1,361,305 Total assets 1,594,538 1,450,679 LIABILITIES Current liabilities Accounts payable and accrued liabilities [9] 89,308 80,463 Derivative financial instruments [9] 4,470 7,936 Decommissioning obligations [7] 4,203 3,552 Lease liability 633 1,655 Total current liabilities 98,614 93,606 Bank debt [6] 186,000 108,993 Derivative financial instruments [9] 83 - Decommissioning obligations [7] 90,235 97,423 Lease liability 424 419 Deferred income tax liability 102,032 87,234 Total liabilities 477,388 387,675 SHAREHOLDERS' EQUITY Shareholders' capital [8] 1,193,685 1,184,065 Contributed surplus and reserve (6,160) (6,692) Deficit (70,375) (114,369) Total shareholders' equity 1,117,150 1,063,004 Total liabilities and shareholders' equity 1,594,538 1,450,679 Commitments [12] The accompanying notes form an integral part of these condensed consolidated interim financial statements. On behalf of the Board of Directors: [signed] [signed] David J. Wilson, Director Ray Kwan, Director KELT EXPLORATION LTD. CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE NET INCOME (LOSS) [UNAUDITED] KELT EXPLORATION LTD. 2 FINANCIAL STATEMENTS Three months ended September 30 Nine months ended September 30 (CA$ thousands, except per share amounts) [Notes] 2025 2024 2025 2024 Revenue Petroleum and natural gas sales [10] 110,377 107,884 369,296 343,368 Royalties (10,235) (12,899) (34,946) (45,185) 100,142 94,985 334,350 298,183 Expenses Production 37,135 30,533 101,806 92,120 Transportation 13,123 10,046 37,081 30,427 Cost of purchases 6,273 3,728 12,345 13,060 Financing [11] 4,104 1,895 10,413 4,490 General and administrative 3,119 3,245 10,503 9,786 Share based compensation [8] 2,052 2,321 5,796 6,497 Exploration and evaluation [4] - - 49 145 Depletion and depreciation [5] 43,309 35,187 130,506 100,955 109,115 86,955 308,499 257,480 Gain (loss) on derivative financial instruments [9] (236) 3,898 33,293 3,623 Gain (loss) on foreign exchange 111 (67) (244) (15) Other income (expenses) (130) 5 (108) 114 Net income (loss) before taxes (9,228) 11,866 58,792 44,425 Deferred income tax recovery (expense) 1,782 (2,995) (14,798) (12,802) Net income (loss) and comprehensive net income (loss) (7,446) 8,871 43,994 31,623 Net income (loss) per common share Basic (0.04) 0.05 0.22 0.16 Diluted (0.04) 0.04 0.22 0.16 The accompanying notes form an integral part of these condensed consolidated interim financial statements. KELT EXPLORATION LTD. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY [UNAUDITED] KELT EXPLORATION LTD. 3 FINANCIAL STATEMENTS Shareholders’ capital Contributed surplus and reserve Retained earnings (deficit) Total shareholders’ equity (CA$ thousands) [Notes] Number of Shares (000s) Amount ($ thousands) Balance at December 31, 2024 196,756 1,184,065 (6,692) (114,369) 1,063,004 Net income and comprehensive net income - - - 43,994 43, --- 994 Exercise of stock options [8] 1,931 6,442 (2,086) - 4,356 Vesting of restricted share units [8] 671 3,178 (3,178) - - Share based compensation [8] - - 5,796 - 5,796 Balance at September 30, 2025 199,358 1,193,685 (6,160) (70,375) 1,117,150 Shareholders’ capital Contributed surplus and reserve Retained earnings (deficit) Total shareholders’ equity (CA$ thousands) [Notes] Number of Shares (000s) Amount ($ thousands) Balance at December 31, 2023 194,506 1,175,465 (12,010) (159,792) 1,003,663 Net income and comprehensive net income - - - 31,623 31,623 Exercise of stock options [8] 1,463 6,127 (1,768) - 4,359 Vesting of restricted share units [8] 408 1,393 (1,393) - - Share based compensation [8] - - 6,497 - 6,497 Balance at September 30, 2024 196,377 1,182,985 (8,674) (128,169) 1,046,142 The accompanying notes form an integral part of these condensed consolidated interim financial statements. KELT EXPLORATION LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED] KELT EXPLORATION LTD. 4 FINANCIAL STATEMENTS The accompanying notes form an integral part of these condensed consolidated interim financial statements. Three months ended September 30 Nine months ended September 30 (CA$ thousands) [Notes] 2025 2024 2025 2024 Operating activities Net income (loss) and comprehensive net income (loss) (7,446) 8,871 43,994 31,623 Items not affecting cash: Accretion of decommissioning obligations [11] 824 817 2,431 2,273 Share based compensation 2,052 2,321 5,796 6,497 Exploration and evaluation - - 49 145 Depletion and depreciation 43,309 35,187 130,506 100,955 Unrealized (gain) loss on derivative financial instruments [9] 7,555 (1,252) (13,002) (1,723) Other expenses 136 - 136 - Deferred income tax expense (recovery) (1,782) 2,995 14,798 12,802 Settlement of decommissioning obligations [7] (1,186) (1,180) (1,949) (3,168) Change in non-cash operating working capital [13] 10,365 4,407 18,693 11,674 Cash provided by operating activities 53,827 52,166 201,452 161,078 Financing activities Increase in bank debt 34,568 32,817 77,007 45,428 Proceeds on exercise of stock options [8] 865 1,746 4,356 4,359 Repayment of lease liability principal (40) (200) (417) (554) Cash provided by financing activities 35,393 34,363 80,946 49,233 Investing activities Exploration and evaluation assets [4] (133) (200) (15,096) (2,844) Property, plant and equipment [5] (89,675) (81,910) (270,410) (232,484) Property acquisitions (40) - (40) (773) Property dispositions 47 - 47 - Change in non-cash investing working capital [13] 1,847 (4,786) 4,209 11,594 Cash used in investing activities (87,954) (86,896) (281,290) (224,507) Net change in cash and cash equivalents 1,266 (367) 1,108 (14,196) Cash and cash equivalents, beginning of period 70 511 228 14,340 Cash and cash equivalents, end of period 1,336 144 1,336 144 KELT EXPLORATION LTD. 5 NOTES TO THE FINANCIAL STATEMENTS KELT EXPLORATION LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 [UNAUDITED] (All tabular amounts in thousands of Canadian dollars, except as otherwise indicated) 1. DESCRIPTION OF THE BUSINESS Kelt Exploration Ltd. (“Kelt” or the “Company”) is an oil and gas company based in Calgary, Alberta, focused on the exploration, development and production of crude oil and natural gas resources, primarily in northwestern Alberta and northeastern British Columbia. The Company’s British Columbia assets are operated by Kelt Exploration ( --- LNG) Ltd. (“Kelt LNG”), a wholly owned subsidiary of Kelt. The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “KEL”. The head office of Kelt is located at Suite 300, 311 - 6th Avenue S.W., Calgary, Alberta T2P 3H2. 2. BASIS OF PRESENTATION The Company’s Board of Directors approved and authorized these condensed consolidated interim financial statements on November 12, 2025. a) Statement of compliance These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), applicable to the preparation of interim financial statements, including IAS 34 Interim Financial Reporting. Certain disclosures included in the notes to the financial statements have been condensed in the following note disclosures or have been disclosed on an annual basis only. Accordingly, these condensed consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements as at and for the year ended December 31, 2024. b) Basis of measurement All references to dollar amounts in these financial statements and related notes are thousands of Canadian dollars, unless otherwise indicated. The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are recorded at fair value. The methods used to measure fair values are described in note 9 of these financial statements. c) Significant Judgements and Estimates The timely preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ materially from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are reviewed and for any future years affected. Significant judgments, estimates and assumptions made by management in these financial statements are outlined in note 2 of the December 31, 2024 audited annual consolidated financial statements. These estimates require assumptions for future commodity prices, exchange rates, interest rates, future oil and natural gas production, and other economic issues that have a high degree of uncertainty. In April 2025, the Company approved a Performance Share Unit (“PSU”) plan, as a new component of its long-term incentive compensation strategy. The fair value method of accounting is used for its PSU Plan, with the fair value estimated on the date of grant using the Black-Scholes option pricing model based on the prevailing Kelt share price at the date granted. KELT EXPLORATION LTD. 6 NOTES TO THE FINANCIAL STATEMENTS PSU’s are granted with a performance multiplier. This multiplier, ranging from zero to two, will be applied at vesting and is dependent on the performance of the Company relative to pre-defined corporate performance measures for a particular period and the Board of Directors’ discretion. Judgment is required to estimate the multiplier, the rate of forfeiture, and the number of performance share units that will ultimately vest. 3. MATERIAL ACCOUNTING POLICIES The material accounting policies applied by the Company are described in note 3 of the December 31, 20 --- 24 audited annual consolidated financial statements. These condensed consolidated interim financial statements as at September 30, 2025 have been prepared following the same accounting policies and methods of computation as the most recent audited annual consolidated financial statements as at and for the year ended December 31, 2024. In April 2024, the IASB issued IFRS 18 'Presentation and Disclosure in Financial Statements' which will replace IAS 1 'Presentation of Financial Statements'. The standard introduces a new defined structure to the Consolidated Statements of Net Income and Comprehensive Net Income with new categories for income and expenses and new totals and subtotals. In addition, there are additional disclosures around management defined performance measures and additional requirements regarding the aggregation and disaggregation of certain information. IFRS 18 is effective January 1, 2027, and are required to be adopted retrospectively with early adoption permitted. The Company is assessing the impact of IFRS 18 on the Company's consolidated financial statements. In May 2024, the IASB issued amendments IFRS 9 'Financial Instruments' and IFRS 7 'Financial Instruments: Disclosures' to clarify the date of recognition and derecognition of financial assets and liabilities including the settling of financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets. These amendments are effective January 1, 2026, and are required to be adopted retrospectively with early adoption permitted. The Company does not anticipate significant impacts to the Company's consolidated financial statements. 4. EXPLORATION AND EVALUATION ASSETS The following table reconciles movements of exploration and evaluation (“E&E”) assets: September 30, 2025 December 31, 2024 Balance, beginning of period 18,092 17,162 Additions 15,096 2,961 Transfers to property, plant and equipment (963) (1,817) Exploration and evaluation expense (49) (214) Balance, end of period 32,176 18,092 5. PROPERTY, PLANT AND EQUIPMENT Net carrying value September 30, 2025 December 31, 2024 Development and production (“D&P”) assets 1,492,618 1,358,231 Right-of-use (“ROU”) assets 1,027 2,227 Corporate assets 765 847 Total net carrying value of property, plant and equipment 1,494,410 1,361,305 KELT EXPLORATION LTD. 7 NOTES TO THE FINANCIAL STATEMENTS The following table reconciles movements of property, plant and equipment (“PP&E”) during the period: Property, plant and equipment, at cost D&P Assets Corporate Assets ROU Assets Total PP&E Balance at December 31, 2023 2,057,993 7,908 4,617 2,070,518 Additions 324,190 1,140 1,967 327,297 Transfers from ROU assets 683 - (683) - Property acquisitions 5,115 - - 5,115 Property dispositions (705) - - (705) Change in decommissioning obligations 2,777 - - 2,777 Transfers from E&E 1,817 - - 1,817 Balance at December 31, 2024 2,391,870 9,048 5,901 2,406,819 Additions 268,198 924 1,210 270,332 Transfers from ROU assets 1,288 - (1,288) - Property acquisitions 573 - - 573 Property disposition and derecognition (1) (460) - (4,544) (5,004) Change in decommissioning obligations (7,139) - - (7,139) Transfers from E&E 963 - - 963 Balance at September 30, 2025 2,655,293 9,972 1,279 2,666,544 Accumulated depletion and depreciation D&P Assets Corporate Assets ROU Assets Total PP&E Balance at December 31, 2023 893,745 7,333 3,028 904,106 Depletion and depreciation expense 139,894 868 732 141,49 --- 4 Property disposition and derecognition - - (86) (86) Balance at December 31, 2024 1,033,639 8,201 3,674 1,045,514 Depletion and depreciation expense 129,036 1,006 464 130,506 Property disposition and derecognition (1) - - (3,886) (3,886) Balance at September 30, 2025 1,162,675 9,207 252 1,172,134 (1) In the third quarter of 2025 the Company derecognized $3.1 million of cost and accumulated depreciation related to ROU Assets where the lease term had ended. Future capital costs required to develop proved reserves in the amount of $1,747.9 million (December 31, 2024 – $1,839.9 million) are included in the depletion calculation for development and production assets. Based on its assessment as of September 30, 2025, the Company determined that there were no indicators of impairment. 6. BANK DEBT At September, 30, 2025 $186.0 million was drawn under the Company’s credit facility, with outstanding letters of credit of $2.4 million. Subsequent to the third quarter of 2025, the Company and its lenders increased the amount available under the credit facility to $300.0 million from a previous available amount of $250.0 million. Repayments of principal are not required provided that the borrowings under the credit facility do not exceed the authorized borrowing amount. The borrowing base is subject to semi-annual reviews with the next scheduled review to take place prior to November 30, 2025. There are no financial covenants under the credit facility and Kelt is in compliance with all other covenants. Covenants include industry standard positive and negative covenants including reporting requirements, permitted indebtedness, permitted risk management activities, permitted encumbrances and other standard business operating covenants. Security is provided for by a demand debenture with a floating charge over all assets in the amount of $800.0 million. KELT EXPLORATION LTD. 8 NOTES TO THE FINANCIAL STATEMENTS Interest is payable monthly for borrowings through direct advances. Interest rates fluctuate based on the prime rate plus the applicable margin. The applicable margin ranges from 175 basis points to 375 basis points depending upon the Net Debt to Cash Flow ratio of between less than 0.5 times and three times. Under the credit facility, borrowings through the use of benchmark loans are also available. Stamping fees fluctuate based on a pricing grid and range from 2.75% to 4.75%, depending upon the Net Debt to Cash Flow ratio of between less than 0.5 times and three times. The credit facility may be extended annually at Kelt’s option and subject to lender approval, with a 364 day term-out period if not renewed. 7. DECOMMISSIONING OBLIGATIONS Decommissioning obligations arise as a result of the Company’s net ownership interests in petroleum and natural gas assets including well sites, processing facilities and infrastructure. The following table provides a reconciliation of the carrying amount of the obligation associated with the retirement of oil and gas properties: September 30, 2025 December 31, 2024 Balance, beginning of period 100,975 99,915 Obligations incurred 1,523 3,247 Obligations acquired 261 299 Obligations disposed (141) (62) Obligations settled (1,949) (5,036) Changes in discount rate (7,815) (6,954) Revisions to estimates (847) 6,484 Accretion expense 2,431 3,082 Balance, end of period 94,438 100,975 Decommissioning obligations – current 4,203 3,552 Decommissioning obligations – non-current 90,235 97,423 Key assumptions Risk free r --- ate 3.7% 3.3% Inflation rate 2.0% 2.0% The underlying cost estimates are derived from a combination of published industry benchmarks as well as site specific information. As at September 30, 2025 the undiscounted amount of the estimated cash flows required to settle the obligation is $146.3 million (December 31, 2024 – $144.3 million) and is expected to be incurred over the next 50 years. The undiscounted amount of the estimated future cash flows required to settle the obligation is $263.9 million at September 30, 2025 (December 31, 2024 – $274.4 million). The inflated future cost estimates are discounted based on a risk-free rate to determine the carrying amounts presented in the table above. Accretion of the decommissioning obligation due to the passage of time is presented within financing expenses in the Consolidated Statement of Net Income (Loss) and Comprehensive Net Income (Loss) (note 11). 8. SHARE CAPITAL Authorized The Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, each without par value. Issued and outstanding The following table summarizes the change in common shares issued and outstanding. There are no preferred shares issued or outstanding as of September 30, 2025 (December 31, 2024 – nil). KELT EXPLORATION LTD. 9 NOTES TO THE FINANCIAL STATEMENTS Number of Shares (000s) Amount ($ thousands) Balance at December 31, 2023 194,506 1,175,465 Issued on exercise of stock options 1,836 5,072 Transfer from contributed surplus on exercise of stock options - 2,103 Released upon vesting of restricted share units 414 1,425 Balance at December 31, 2024 196,756 1,184,065 Issued on exercise of stock options 1,931 4,356 Transfer from contributed surplus on exercise of stock options - 2,086 Released upon vesting of restricted share units 671 3,178 Balance at September 30, 2025 199,358 1,193,685 Stock options The Incentive Stock Option Plan (the “Option Plan”) includes stock options which may be granted to directors, officers, employees and certain consultants. The stock options granted pursuant to the Option Plan are to be settled through the issuance of new common shares of the Company which vest in equal tranches over a three year period and have a maximum term of five years to expiry. In April 2025 the Company discontinued the Option Plan, after which no further stock options will be granted. The following table summarizes the change in stock options outstanding: Number of Options (000s) Average Exercise Price ($/share) Balance at December 31, 2023 9,697 3.74 Granted 2,315 6.09 Exercised (1) (1,836) 2.76 Forfeited (205) 6.19 Balance at December 31, 2024 9,971 4.41 Granted 35 5.78 Exercised (1) (1,931) 2.26 Forfeited (96) 5.64 Balance at September 30, 2025 7,979 4.93 (1) The weighted average share price on the date stock options were exercised during the nine months ended September 30, 2025 was $7.10 per common share ($6.19 per common share on average during the year ended December 31, 2024). The following table summarizes information regarding stock options outstanding at September 30, 2025: Range of exercise prices per common share Number of options outstanding (000s) Weighted average remaining term (years) Weighted average exercise price for options outstanding ($/share) Number of options exercisable (000s) Weighted average exercise price for options exercisable ($/share) $0.00 to $2.00 15 0.1 1.59 15 1.59 $2.01 to $4.00 1,614 0.5 2.75 1,614 2.75 $4.01 to $6.00 4,002 1. --- 9 5.08 3,413 5.14 $6.01 to $8.00 2,348 3.5 6.19 781 6.20 Total 7,979 2.0 4.93 5,823 4.61 Restricted share units The restricted share unit plan includes restricted share units (“RSUs”) that may be granted to officers and employees. The RSUs granted under the RSU Plan are to be settled through the issuance of new common shares upon vesting. KELT EXPLORATION LTD. 10 NOTES TO THE FINANCIAL STATEMENTS RSUs vest in two equal tranches with the first half vesting after two years and the second half after three years. The following table summarizes the change in RSUs outstanding: Number of RSUs (000s) Balance at December 31, 2023 1,742 Granted 558 Released upon vesting (414) Forfeited (58) Balance at December 31, 2024 1,828 Granted 610 Released upon vesting (671) Forfeited (45) Balance at September 30, 2025 1,722 Performance share units In April 2025, the Company’s shareholders approved a PSU plan, as a component of its long-term incentive compensation strategy, designed to align the interests of executives and employees with those of shareholders. The approval of the PSU plan, was made in combination with discontinuing the Company’s Stock Option Plan. The PSU plan provides for the issuance of equity-settled awards that vest based on the achievement of defined performance criteria over a rolling three-year period. Each PSU entitles the holder to receive common shares upon vesting, with the number of shares issued ranging from 0% to 200% of the target award. The final number of shares delivered is determined by a Payout Multiplier, which is calculated based on the Company’s performance against pre-established targets over the vesting period. The following table summarizes the change in PSUs outstanding: Number of PSUs (000s) Balance at December 31, 2024 - Granted 751 Released upon vesting - Forfeited (4) Balance at September 30, 2025 747 The total fair value associated with stock options, RSUs, and PSUs is recognized over the service period using graded vesting, resulting in share based compensation expense as follows: Three months ended September 30 Nine months ended September 30 2025 2024 2025 2024 Stock options 616 1,367 2,526 3,890 Restricted share units 968 954 2,571 2,607 Performance share units 468 - 699 - Total share based compensation expense 2,052 2,321 5,796 6,497 KELT EXPLORATION LTD. 11 NOTES TO THE FINANCIAL STATEMENTS Weighted average number of common shares The table below summarizes the weighted average number of common shares outstanding: Three months ended September 30 Nine months ended September 30 (000s of common shares) 2025 2024 2025 2024 Weighted average common shares outstanding, basic 199,274 196,084 198,610 195,437 Effect of stock options, RSUs, and PSUs 3,440 3,931 3,124 3,820 Weighted average common shares outstanding, diluted 202,714 200,015 201,734 199,257 The treasury stock method is used to determine the dilutive effect of stock options, RSUs, and PSUs. Under this method, only “in-the-money” dilutive instruments impact the calculation of diluted net income per common share. Accordingly, in computing the diluted loss per common share for the three months ended September 30, 2025, the Company excluded the effect of stock options, RSUs, and PSUs as they were antidilutive. 9. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Financial instruments of the Company include cash and cash equivalents, accounts receivable and accrued sales, deposits, accounts payable and accrued liabilities, derivative financial instruments, lease l --- iabilities and bank debt. The Company is exposed to financial risks arising from its financial assets and liabilities that include credit and liquidity risk in addition to the market risks associated with commodity prices, and interest and foreign exchange rates. Net income, cash flows and the fair value of financial assets and liabilities may fluctuate due to movement in market prices or as a result of the Company’s exposure to credit and liquidity risks. The objective of the Company’s risk management is to manage and control market risk exposures within acceptable limits, while maximizing long-term returns. All such transactions are conducted in accordance with the Company’s risk management policy that permits management to enter into commodity price agreements, provided that: i) the contracts are not entered into for speculative purposes; ii) the total notional quantity hedged, at the time of entering the contract, does not exceed 65% of average daily production; and iii) the contracted term does not exceed 36 months. Commodity price risk Inherent to the business of producing oil and gas, cash provided by operating activities is subject to commodity price risk. Commodity price risk is the risk that future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices are impacted by economic events that dictate the levels of supply and demand as well as the currency exchange rate relationship between the Canadian and U.S. dollar. As of September 30, 2025, the following commodity price derivative financial instrument contracts are outstanding: Crude oil derivative financial instrument swap Contract Type (1) Notional Volume Contract Price Remaining Term WTI option (2) 500 bbl/d Settles monthly if WTI price > USD$70.50/bbl Oct 25 – Dec 25 WTI fixed price swap 2,000 bbl/d USD$69.6575/bbl Oct 25 – Dec 25 WTI fixed price swap (3) 2,500 bbl/d CAD $89.68/bbl Oct 25 – Dec 25 WTI fixed price swap (4,5,6,7) 4,500 bbl/d CAD $90.49/bbl Jan 26 – Mar 26 WTI fixed price swap (5,6,7) 4,000 bbl/d CAD $90.20/bbl Apr 26 – Jun 26 (1) West Texas Intermediate (“WTI”) (2) The WTI option is settled monthly at USD$70.50/bbl if the average WTI price is above USD$70.50/bbl. (3) Includes a fixed price WTI oil swap option to sell 500 bbl/d for Jan-Mar 2026 at CAD$94.30/bbl exercisable on December 31, 2025. (4) Includes a fixed price WTI oil swap option to sell 500 bbl/d for Apr-Jun 2026 at CAD$92.85/bbl exercisable on March 31, 2026. KELT EXPLORATION LTD. 12 NOTES TO THE FINANCIAL STATEMENTS (5) Includes a fixed price WTI oil swap option to sell 500 bbl/d for Jul-Dec 2026 at CAD$91.90/bbl exercisable on June 30, 2026. (6) Includes a fixed price WTI oil swap option to sell 500 bbl/d for Jul-Dec 2026 at CAD$90.50/bbl exercisable on June 30, 2026. (7) Includes a fixed price WTI oil swap option to sell 500 bbl/d for Jul-Dec 2026 at CAD$90.63/bbl exercisable on June 30, 2026. NGL derivative financial instrument swap Contract Type Notional Volume Contract Price Remaining Term OPIS-Conway propane fixed price swap 250 bbl/d USD$33.60/bbl Oct 25 – Mar 26 OPIS-Conway propane basis swap 250 bbl/d Monthly OPIS-Conway basis calculated at 46% of the floating monthly WTI price Oct 25 – Mar 26 Natural gas derivative financial instrument Contract Type (1) Notional Volume Contract Price $/MMBtu Remaining Term NYMEX swap 20,000 MMBtu/d CAD$6.405/MMBtu Oct 25 – Dec 25 NYMEX costless collar 10,000 MMBtu/d Floor: CAD$5.00/MMBtu Ceiling: CAD$10.00/MMBtu Oct 25 – --- Dec 25 NYMEX call 20,000 MMBtu/d USD$5.50/MMBtu Jan 26 – Dec 26 AECO 7A put 21,000 GJ/d CAD$2.80/GJ Jan 26 – Dec 26 (1) NYMEX Henry Hub (“NYMEX”) The Company has the following natural gas physical supply agreements for delivery to the Nova Inventory Transfer point, where the Company receives a price equal to the Floating AESO Power Pool Price divided by the fixed heat rate. These supply agreements contain an embedded derivative where the fair value of the embedded derivative is calculated as the difference between the forecasted Floating AESO Power Pool Price divided by the fixed heat rate, less the forecasted AECO 5A price. Natural gas embedded derivative Contract Type Notional Volume Contract Price (1) Remaining Term Physical delivery 2,513 GJ/d Floating AESO power pool price (CAD/MWh) divided by the Fixed Heat Rate of 17.95 GJ/MWh Oct 25 – Dec 25 Physical delivery 7,349 GJ/d Floating AESO power pool price (CAD/MWh) divided by the Fixed Heat Rate of 16.75 GJ/MWh Jan 26 – Dec 26 (1) Alberta Electric System Operator (“AESO”) Interest rate risk The Company is exposed to interest rate risk as changes in market interest rates will impact the credit facility which is subject to a floating interest rate. Based on bank debt balance as of September 30, 2025 of $186.0 million, an increase (decrease) in the market rate of interest by 25 basis points would have an increased (decreased) annualized interest expense of $0.5 million. As of September 30, 2025, there are no interest rate risk management contracts outstanding. Foreign exchange risk Kelt is exposed to fluctuations of the Canadian to U.S. dollar exchange rate given realized pricing is directly influenced by U.S. dollar denominated benchmark pricing and from exposure from certain U.S. dollar denominated marketing arrangements. As at September 30, 2025, the following foreign exchange risk management contracts are outstanding: KELT EXPLORATION LTD. 13 NOTES TO THE FINANCIAL STATEMENTS Foreign exchange derivative financial instrument swap Contract Type Notional Volume Contract/Exercise Price Remaining Term CAD/USD swap USD$6.0 million/month $1.3795 CAD/USD Oct 25 – Dec 25 Foreign exchange derivative financial instrument option Contract Type Notional Volume Contract/Exercise Price Exercise/ expiration date Term if exercised Sold call option USD$2.0 million/month $1.3820 CAD/USD Dec 31, 2025 Jan 26 – Dec 26 Sold call option USD$2.0 million/month $1.3800 CAD/USD Dec 31, 2025 Jan 26 – Dec 26 Foreign exchange derivative financial instrument fade-in forward Contract Type Notional Volume Strike Rate Fade-in Rate Remaining Term Average rate fade- in forward USD$2.0 million/month $1.3910 CAD/USD $1.3295 CAD/USD Jan 26 – Dec 26 Gains and losses on derivative financial instrument contracts The table below summarizes realized and unrealized gains (losses) on derivative financial instrument contracts: Three months ended September 30 Nine months ended September 30 2025 2024 2025 2024 Realized gain Derivative financial instrument contracts 6,797 2,646 19,582 1,900 Natural gas embedded derivative 522 - 709 - Total realized gain 7,319 2,646 20,291 1,900 Unrealized gain (loss) Derivative financial instrument contracts (7,617) 1,177 12,470 1,648 Natural gas embedded derivative 62 75 532 75 Total unrealized gain (loss) (7,555) 1,252 13,002 1,723 Gain (loss) on derivative financial instruments (236) 3,898 33,293 3,623 Fair value measurements The Company classifies fair value measurements using a hierarchy that r --- eflects the significance of the inputs used in making the measurements. The Company maximizes the use of observable inputs when preparing calculations of fair value, where possible. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy. The fair value hierarchy has the following levels: ? Level 1 - Values are based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date. ? Level 2 - Values are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting date. ? Level 3 - Values are based on prices or valuation techniques that are not based on observable market data. The fair value of cash and cash equivalents, accounts receivable and accrued sales, deposits, accounts payable and accrued liabilities approximate their carrying value due to the short term to maturity of these instruments. Bank debt bears interest at a floating market rate and accordingly the fair market value of bank debt approximates the carrying amount. Derivative financial instruments are classified as Level 2. KELT EXPLORATION LTD. 14 NOTES TO THE FINANCIAL STATEMENTS Credit Risk As at September 30, 2025, the carrying amount of cash and cash equivalents, accounts receivable and accrued sales, deposits, and derivative financial instruments represent the Company’s maximum credit exposure. Potential losses are mitigated from this credit exposure by holding cash and cash equivalents with a Canadian chartered bank, and restricting derivative financial instrument transactions to counterparties that are all investment grade. The remaining credit risk exposure arises primarily from receivables from oil and gas marketers and joint venture partners. The composition of the Company’s accounts receivable is set out in the following table: Accounts receivable and accrued sales September 30, 2025 December 31, 2024 Joint venture partners 8,340 5,893 Oil and gas marketers 31,586 45,708 GST input tax credits 2,835 4,036 Derivative financial instrument contracts 2,919 1,314 Other 966 3,638 Expected credit loss provision (448) (353) Accounts receivable and accrued sales 46,198 60,236 During the quarter ended September 30, 2025, sales to three oil and gas marketers accounted for approximately 28% and 22% and 16% of total sales. During the year ended December 31, 2024, sales to two oil and gas marketers accounted for approximately 29% and 31% of total sales. Credit risk from oil and gas marketers is mitigated through transacting with investment grade rating counterparties for the majority of its oil and gas sales. The oil and gas industry has a pre-arranged monthly clearing day for payment of revenues from all buyers of oil and natural gas; this occurs on the 25th day following the month of sale. As a result, oil and gas marketers revenues are current. All other accounts receivable are generally contractually due within 30-90 days. The balance of accounts receivable outstanding for more than 90 days relates primarily to receivables from joint venture partners. Credit risk related to joint venture receivables is mitigated by obtaining partner approval of significant capital expenditures prior to expenditure and in certain circumstance --- s may require cash deposits in advance of incurring financial obligations on behalf of joint venture partners. The Company has the ability to withhold production from joint venture partners in the event of non-payment or may be able to register security on the assets of joint venture partners. As of September 30, 2025, the collection risk on outstanding accounts receivable balances is considered low as 1.0% of the accounts receivable balance are outstanding for more than 90 days (December 31, 2024 – 1.0%). Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. Financial obligations include accounts payable, derivative financial instruments, lease liabilities and bank debt. Liquidity risk is managed through the budgeting process, which sets out expected debt levels, capital expenditures and funds from operations. In addition, derivative financial instrument contracts may be used to protect future sales. The Board of Directors approves an annual capital expenditure budget, which is regularly monitored and updated as necessary in response to changing capital requirements and expected sales. The capital intensive nature of Kelt’s operations may create a working capital deficiency position during periods with high levels of capital investment. However, the Company targets to maintain sufficient unused bank credit lines or other liquidity to satisfy such working capital deficiencies. KELT EXPLORATION LTD. 15 NOTES TO THE FINANCIAL STATEMENTS The table below outlines a contractual maturity analysis for Kelt’s financial liabilities as at September 30, 2025: Within 1 Year 1 to 5 Years More than 5 Years Total Accounts payable and accrued liabilities 89,308 - - 89,308 Derivative financial instruments 4,470 83 - 4,553 Lease liability 633 424 - 1,057 Bank debt and estimated interest (1) 11,346 186,000 - 197,346 Total 105,757 186,507 - 292,264 (1) Estimated interest for future years related to the credit facility was calculated using the weighted average interest rate of 6.1% for the nine months ended September 30, 2025, applied to the principal balance outstanding as at that date. Capital Management The Company’s capital structure is comprised of shareholders’ capital, bank debt and working capital. The Company’s objective when managing its capital structure is to maintain financial flexibility in order to meet financial obligations, as well as finance future capital expenditures relating to exploration, development and acquisition activities. The Company may increase or decrease capital expenditures including acquisitions and dispositions, issue new shares, issue new debt or repay existing debt, if any, according to market conditions in order to maintain its financial flexibility. Adjusted funds from operations, net debt and net debt to adjusted funds from operations ratio Management considers adjusted funds from operations, net debt and net debt to adjusted funds from operations ratio as key capital management measures that demonstrate the Company’s ability to meet its financial obligations and cash flow available to fund its capital program, and to assess the Company’s liquidity at a point in time while monitoring its capital structure and short-term financing requirements. The Company targets a net debt to adjusted funds from operations ratio of less than 2.0 times. Adjusted funds from operations, net debt and net debt to adjusted funds are not a standardized measure and the --- refore may not be comparable with the calculation of similar measures by other entities. Adjusted funds from operations are calculated as follows: Three months ended September 30 Nine months ended September 30 2025 2024 2025 2024 Cash provided by operating activities 53,827 52,166 201,452 161,078 Change in non-cash working capital (10,365) (4,407) (18,693) (11,674) Settlement of decommissioning obligations 1,186 1,180 1,949 3,168 Adjusted funds from operations 44,648 48,939 184,708 152,572 Net debt and net debt to adjusted funds from operations ratio is calculated as follows: September 30, 2025 December 31, 2024 Bank debt 186,000 108,993 Accounts payable and accrued liabilities 89,308 80,463 Cash and cash equivalents (1,336) (228) Accounts receivable and accrued sales (46,198) (60,236) Prepaid expenses and deposits (4,090) (4,109) Net debt 223,684 124,883 Adjusted funds from operations (1) 254,114 221,978 Net debt to adjusted funds from operations ratio 0.9 0.6 KELT EXPLORATION LTD. 16 NOTES TO THE FINANCIAL STATEMENTS (1) 12-month trailing adjusted funds from operations. As described in note 6, there are no financial covenants under the credit facility agreement and Kelt is in compliance with all other covenants. 10. PETROLEUM AND NATURAL GAS SALES Kelt sells its oil, natural gas, and NGLs production under fixed and variable price contracts. The transaction price for fixed price contracts represents the stand-alone selling price per the contract terms. The transaction price for variable priced contracts is based on a benchmark commodity price, adjusted for quality, location or other factors, whereby each component of the pricing formula (apart from the benchmark commodity price) can be either fixed or variable, depending on the contract terms. Sales are typically collected on the 25th day of the month following the prior month’s production, with sales being recorded once the product is delivered to a contractually agreed upon delivery point. Kelt generates oil treating, gas processing, and other services income from fees charged to third parties provided at facilities where Kelt has an ownership interest. Marketing revenue is generated from the sales of third-party volumes related to its oil blending and natural gas operations, with the production being sold under the same terms as the variable price contracts discussed above. Kelt sells some of its natural gas outside of Alberta and British Columbia where title transfer occurs prior to the market location where the benchmark commodity price is determined. For the nine months ended September 30, 2025, natural gas sales in relation to these contracts was $10.2 million (September 30, 2024 – $11.3 million). The following table presents Kelt’s production disaggregated by sales source: Three months ended September 30 Nine months ended September 30 2025 2024 2025 2024 Oil production 64,291 75,953 206,935 218,093 Oil treating and other 242 242 664 718 NGLs production 16,706 13,877 55,440 46,077 Gas production 21,899 13,417 91,948 63,248 Gas processing and other 816 626 1,684 1,997 Marketing revenue 6,423 3,769 12,625 13,235 Total petroleum and natural gas sales 110,377 107,884 369,296 343,368 Included in accounts receivable at September 30, 2025 is $31.6 million (December 31, 2024 – $45.7 million) of accrued oil and gas sales related to September 2025 production. 11. FINANCING EXPENSES The following table summarizes significant components of the Company’s financing expenses: Three months ende --- d September 30 Nine months ended September 30 2025 2024 2025 2024 Total interest expense 3,280 1,078 7,982 2,217 Accretion of decommissioning obligations 824 817 2,431 2,273 Total financing expense 4,104 1,895 10,413 4,490 KELT EXPLORATION LTD. 17 NOTES TO THE FINANCIAL STATEMENTS 12. COMMITMENTS As of September 30, 2025, the Company is committed to future payments under the following agreements: 2025 2026 2027 2028 2029 Thereafter Firm processing commitments 13,527 72,132 73,553 75,558 74,467 416,270 Firm transportation commitment 10,862 47,682 47,733 52,671 41,954 151,719 Total annual commitments 24,389 119,814 121,286 128,229 116,421 567,989 13. SUPPLEMENTAL CASH FLOW INFORMATION Three months ended September 30 Nine months ended September 30 Changes in non-cash working capital 2025 2024 2025 2024 Accounts receivable and accrued sales 3,054 1,725 14,038 12,121 Prepaid expenses and deposits 2,113 1,294 19 1,065 Accounts payable and accrued liabilities 7,045 (3,398) 8,845 10,082 Change in non-cash working capital 12,212 (379) 22,902 23,268 Relating to: Operating activities 10,365 4,407 18,693 11,674 Investing activities 1,847 (4,786) 4,209 11,594 Change in non-cash working capital 12,212 (379) 22,902 23,268 During the reporting period, the Company made the following cash outlays in respect of interest and taxes: Three months ended September 30 Nine months ended September 30 Cash outlays in respect of interest and taxes 2025 2024 2025 2024 Interest and standby fees on bank debt 2,936 969 7,335 1,732 Taxes (1) - - - - (1) Kelt was not required to pay cash income taxes as the Company had sufficient income tax deductions available to shelter taxable income.