Kelt Reports Financial and Operating Results for the Six Months Ended June 30, 2025

Executive Summary

• Kelt Exploration Ltd. reported financial and operating results for the second quarter ended June 30, 2025, showing significant growth in production, revenue, and profitability compared to the same period in 2024.
• The company reported a 26% increase in average daily production to 38,734 BOE/d and a 198% increase in net income to $32.5 million for the quarter.
• Management provided an updated 2025 outlook, forecasting production of 42,000–45,000 BOE/d and adjusted funds from operations (AFFO) of $325.0 million, while noting delays in the start-up of the Albright Gas Plant.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Petroleum and natural gas sales: $116.4 million (up 7% from $109.1 million).
  • Net income: $32.5 million (up 198% from $10.9 million).
  • Adjusted funds from operations (AFFO): $61.8 million (up 46% from $42.5 million), or $0.31 per diluted share.
  • Cash provided by operating activities: $60.7 million (up 31% from $46.4 million).
  • Basic EPS: $0.16 (up from $0.06); Diluted EPS: $0.16 (up from $0.05).
• Operational Performance (Q2 2025 vs Q2 2024):
  • Average daily production: 38,734 BOE/d (up 26% from 30,693 BOE/d).
  • Oil production: 8,508 bbls/d (up 12%).
  • NGL production: 5,371 bbls/d (up 75%).
  • Gas production: 149,128 Mcf/d (up 24%).
  • Operating netback: $19.50/BOE (up 18% from $16.55/BOE).
  • Land holdings: 790,438 gross acres / 590,892 net acres.
• Balance Sheet & Capital Expenditures:
  • Net debt: $178.2 million (as of June 30, 2025), equating to 0.5x forecasted 2025 AFFO.
  • Bank debt: $151.4 million.
  • Capital expenditures (net of A&D): $91.0 million for the quarter; $195.7 million for the first six months of 2025.
  • Shareholders' equity: $1,121.7 million.
• 2025 Outlook & Guidance:
  • Production forecast: 42,000–45,000 BOE/d (reduced from previous guidance of 44,000–47,000 BOE/d due to Albright Plant delays).
  • AFFO forecast: $325.0 million (unchanged).
  • Capital expenditure program: $325.0 million for 2025.
  • Commodity Price Assumptions: WTI Crude Oil $66.50/bbl; AECO Gas $2.23/GJ.
  • Expected net gain from derivatives: $21.7 million for 2025.
  • Year-end net debt expectation: $126.0 million (0.4x AFFO).
• Hedging Contracts:
  • Natural Gas: 20,000 MMBtu/d at CAD $6.40/MMBtu (Jul-Dec 2025); 10,000 MMBtu/d put/call options (floor $5.00, ceiling $10.00).
  • Natural Gas (Jan-Dec 2026): 21,000 GJ/d with put/call options (floor $2.80/GJ, ceiling $5.50/MMBtu).
  • Crude Oil: Various tranches from Jul 2025 to Jun 2026, ranging from 3,000 to 5,000 bbls/d at prices between CAD $90.08 and $93.42/bbl.
• Operational Updates:
  • Spirit River: Two Charlie Lake wells drilled/completed, expected Q3 2025 production.
  • Pouce Coupe North: Two Montney wells drilled, expected Q3 2025 completion/production.
  • Wembley/Pipestone: Four Montney wells (9-17 pad) testing; five additional Montney wells (6-9 pad) expected Q3 2025; three Montney wells (16-8 pad) expected Q4 2025.
  • Oak/Flatrock: 3-D seismic shoot completed (286 sq km); four-well pad drilling commenced, expected Q4 2025 production.
  • Albright Gas Plant: Delayed start-up expected "next week" (relative to Aug 7, 2025); capacity of 50 MMcf/d; potential for 120 tonnes/day of sulfur sales (~$8.0M/year revenue).
• Next Earnings Date: Expected on or about November 13, 2025.