Kelt expects delays as Wembley plant start-up stalls

Executive Summary

• Kelt Exploration Ltd. reports a significant delay in the start-up of the Albright gas plant, a third-party facility critical to processing its Wembley/Pipestone production.
• The delay is caused by technical issues with a four-way valve in the sulphur recovery plant, which has failed during testing despite initial success.
• The company currently has significant production shut-in and expects a reduction in daily average production for 2025, with guidance to be reassessed in early September.

Key Details

• Plant Status: Albright gas plant, owned and operated by CSV Midstream Solutions Corp., is located near Kelt's lands at Wembley/Pipestone, Alberta.
• Timeline Changes: CSV originally targeted Q4 2024 for start-up. Commissioning (flaring, testing, safety) began in June 2025, with full-scale operations initially expected in July 2025.
• Current Obstacle: The upstream portion is fully commissioned, but the sulphur recovery plant has experienced multiple starts and stops. A major piece of equipment (four-way valve) failed to perform its intended function during testing.
• Root Cause Analysis: CSV is conducting a root cause analysis (RCA) to determine why the valve failure occurred. CSV can no longer provide an estimated start date.
• Production Impact:
  • Kelt has contracted for 50 MMcf/day of the plant's 150 MMcf/day maximum capacity.
  • Significant oil, NGL, and gas production is currently shut-in awaiting start-up.
  • Each week of delay reduces Kelt's 2025 daily average production by approximately 175 BOE/day.
  • The lower end of Kelt's forecasted average daily production for 2025 is 42,000 BOE/day.
• Future Guidance: Kelt expects to receive RCA results from CSV in early September and will determine if a reduction to its 2025 production guidance is necessary.
• Historical Production Data: For the seven months ended July 31, 2025, average production in the Wembley/Pipestone division was approximately 14,300 BOE/day (55% oil/NGLs, 45% gas).
• Expected Post-Start-Up Production: With the Albright plant operational, Kelt expects Wembley/Pipestone production to increase to approximately 23,000–24,000 BOE/day.

Notable Quotes

• "CSV is currently conducting a root cause analysis (RCA) to identify reasons why the failure occurred. As a result, CSV is no longer able to provide the company with an estimated start date for Albright."
• "Kelt has a significant amount of production (oil, NGLs (natural gas liquids) and gas) currently shut-in as it awaits start-up of Albright."