Corporate Presentation

Transcription

1 Corporate Presentation March 2016 David J. Wilson, President & Chief Executive Officer Sadiq H. Lalani, Vice President, Finance & Chief Financial Officer

2 Advisory Regarding Forward-Looking Statements 1 Certain information with respect to Kelt Exploration Ltd. ( Kelt or the Company ) contained herein, including expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations, performance, financial position, average daily production and land holdings, Kelt s planned capital expenditure program and the nature of the expenditures, drilling plans, expected drilling and completion costs, expected average production, the expected splits among crude oil, NGLs and gas and forecasted commodity prices and factors affecting natural gas prices, forecasted general and administrative expenses, interest expenses, revenue, operating income, operating netbacks, funds from operations and year-end bank debt, management s assessment of future potential, including numerous years of drilling inventory and expectations with respect to natural gas supply in the Unites States of America, contain forwardlooking 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, ability to access sufficient capital and receipt of necessary regulatory and shareholder approvals. We caution that the foregoing list of risks and uncertainties is not exhaustive.

3 Advisory Regarding Forward-Looking Statements 2 Statements relating to reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on current estimates and assumptions that the reserves and resources can be profitably produced in the future. Readers are cautioned that disclosure of any well test results are not necessarily indicative of long-term performance. Kelt s actual results, performance or achievement could differ materially from those expressed or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur. As a result, undue reliance should not be placed on forward-looking statements. In addition, the reader is cautioned that historical results are not necessarily indicative of future performance. The forward-looking statements contained herein are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws. Certain information set out herein may be considered as financial outlook within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Kelt s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

4 Why Invest in Kelt? 3 CREATING VALUE DURING DOWNTURNS The Kelt management team has a track record of creating shareholder value during downturns, previously in the period with Celtic Exploration Ltd., sold in February 2013 for $3.2 billion. Kelt focuses on long-term growth with emphasis on low-cost land accumulation on resource-style plays and rapid growth of its drilling inventory portfolio. Kelt targets a 2.0 times or better recycle ratio over the longterm on a proved plus probable reserve basis.

5 Common Share Information 4 Stock Exchange listing TSX Trading symbol KEL Market capitalization Mar / 4 / 2016 ) $ 715 million 52-week trading range $ 2.51 $ 9.95 Common shares issued million Stock options (6.5 MM) & RSUs (1.2 MM) 7.7 million ( 4.6% ) average exercise price of stock options is $ 7.34 / share Total diluted common shares million Directors & Officers ownership 17% ( 18% diluted ) D&O s have participated in all eight equity offerings completed to date (for aggregate gross proceeds of $593 MM) investing a total of $100 MM

6 Capital Expenditures 5 ( $ millions ) Forecast 2016/15 Change Drilling & Completions % Facilities, Equipment & Pipeline Infrastructure Land, Seismic & Asset Acquisitions [1] % % Sub-total % Corporate Acquisitions [2] [3] - - Total Capital Expenditures [4] - 87% Notes: [1] Asset acquisitions are net of property dispositions. [2] Acquisition of Capio Exploration Ltd. (private company), including value of debt assumed. [3] Acquisition of Artek Exploration Ltd. (public company), including value of debt assumed. [4] First half 2016 capital spending is expected to be approximately $35.0 million.

7 Drilling Program Gross Wells Net Wells Average WI % Alberta [1] % British Columbia [2] % Total % 2016 Forecast Gross Wells Net Wells Average WI % Alberta [1] % British Columbia [2] % Total % Notes: [1] Alberta drilling prospects include: (a) Grande Prairie ( Pouce Coupe / Progress / Spirit River / La Glace ): - Montney - Doig - Charlie Lake - Halfway (b) Karr: - Montney - Dunvegan (c) Grande Cache: - Cretaceous [2] B.C. drilling prospects include: (a) Inga / Fireweed / Stoddart: - Montney - Doig - Baldonnel

8 Production Outlook Forecast 2016/15 Change Oil ( bbls/d ) 3,413 5,091 5,470 7% NGLs ( bbls/d ) 924 1,607 1,890 18% Gas ( mcf/d ) 50,516 71,272 81,840 15% Combined ( BOE/d ) 12,756 18,577 21,000 13% Per MM Shares ( BOE/d ) %

9 Production Growth ( since inception ) 8 PRODUCTION ( BOE / d ) PRODUCTION PER MM SHARES ( BOE / d ) 24,000 CAGR since 2013 = 74% 21, CAGR since 2013 = 33% 20,000 16,000 18, ,000 12,756 11,879 13, ,000 8, ,000 3,961 3,148 4,337 6,698 7, [E] [E] Oil / NGLs Gas

10 Commodity Prices 9 ( CA $, unless otherwise specified ) (E) 2016/15 Change WTI Crude Oil ( USD/bbl ) [1] US $ US $ US $ % WTI Crude Oil ( CAD/bbl ) $ $ $ % NYMEX Natural Gas ( USD/mmBtu ) US $ 4.37 US $ 2.67 US $ % AECO 5A Natural Gas ( CAD/GJ ) [2] $ 4.27 $ 2.55 $ % Exchange Rate ( CAD/USD ) Exchange Rate ( USD/CAD ) $ US $ $ US $ $ US $ % Kelt realized Oil price ( $/bbl ) Percent of WTI CAD $ % $ % $ % - 13% Kelt realized NGLs price ( $/bbl ) Percent of WTI CAD $ % $ % $ % - 8% Kelt realized Gas price ( $/mcf ) $ 4.75 $ 2.74 $ % Kelt realized Combined price ( $/BOE ) $ $ $ % Notes: [1] As at Mar/4/16, the forward strip price for WTI crude oil for Apr-Dec 2016 was US $40.92/bbl (5% above Kelt 2016 forecast). [2] As at Mar/4/16, the forward strip price for NYMEX natural gas for Apr-Dec 2016 was US$2.08/mmBtu (17% below Kelt 2016 forecast).

11 Netbacks 10 ( $ / BOE ) (E) 2016/15 Change Oil & gas revenue % Realized hedging gain ( loss ) ( 0.08 ) ( 0.12 ) - Royalties ( % of revenue ) ( 13.3% ) ( 10.6% ) ( 9.3% ) - 12% Transportation expense ( 2.30 ) ( 2.09 ) ( 2.64 ) + 26% Production expense ( ) ( ) ( ) -8% Operating netback [1] % G&A expense ( 0.78 ) ( 0.77 ) ( 0.89 ) Interest expense ( 0.18 ) ( 0.98 ) ( 1.07 ) Other income ( costs ) Funds from operations [1] % Note: [1] See Financial Advisories

12 Financial Outlook Forecast 2016/15 Change Revenue, before royalties ( $ MM ) % Funds from operations ( $ MM ) [1] % Per share diluted ( $/share ) % Capital expenditures ( $ MM ) [2] % Net debt, at year-end ( $ MM ) [3] % Notes: [1] See Financial Advisories [2] Capital expenditures are net of dispositions, if any. [3] Current availability under Kelt s credit facility is $275.0 million, with additional funds available up to the total credit facility commitment of $300.0 million subject to approval of the lending syndicate, leaving sufficient unused credit capacity and providing financial flexibility. Kelt has entered into an interest rate swap fixing the B/A rate at 0.925% for two years ending June 30, Using current stamping fees of 3.0%, this provides the Company with an all-in fixed borrowing rate of 3.925% on $100.0 million of bank debt.

13 Product Mix (E) Production BOE/d Product Split 2016 (E) Operating Income ($MM) Income Split Oil 5,470 26% % NGLs 1,890 9% 6.3 9% Gas 81,840 65% % Combined 21, % % G&A and interest expense ( 15.1 ) Funds from operations 55.0 Notes: [1] The 2016 forecasted NGLs production mix is as follows: pentane (35%), butane (31%), propane (29%) and ethane (5%).

14 Core Areas 13 Inga / Fireweed / Stoddart Grande Prairie Karr Grande Cache Grande Prairie ( includes Pouce Coupe, Progress, Spirit River & La Glace ) : Montney/Doig gas development Montney light oil development Charlie Lake light oil development Halfway light oil development Karr: Montney/Dunvegan light oil exploration/development Grande Cache: Cretaceous gas development Cretaceous oil/gas exploration Inga / Fireweed / Stoddart ( B.C. ) : Montney/Doig condensate rich gas exploration/development Baldonnel oil exploration/development

15 Reserves 14 ( $ MM ) Proved Developed Producing DEC/31/2014 ( MMBOE ) DEC/31/2014 NPV 10% BT DEC/31/2015 ( MMBOE ) DEC/31/2015 NPV 10% BT 26.8 $ $ 364 Total Proved 61.1 $ $ 661 Proved plus Probable ( P+P ) 99.1 $ 1, $ 1,185 Oil/NGLs ( P+P % ) 35% 36% Gas ( P+P% ) 65% 64% Notes: [1] Reserves are per the reports prepared by Sproule Associates Limited. Reserve volumes include Company gross working interest share of remaining reserves, as determined in accordance with NI [2] FD&A (proved plus probable reserves) was $14.78/BOE in 2015 compared to $13.42/BOE in [3] Inception to December 31, 2015 FD&A (proved plus probable reserves) is $13.83/BOE, resulting in a recycle ratio of 1.2 times.

16 Land Holdings 15 Gross Acres Net Acres Average WI Net Sections Developed 389, ,895 54% 326 Undeveloped 649, ,413 80% 815 Total 1,039, ,308 70% 1,141 Note: Growth in net land holdings since March 31, 2013: Date Net Acres Net Sections % Growth since Mar/31/2013 Mar/31/ , Dec/31/ , % Dec/31/ , % Dec/31/ ,308 1, %

17 Kelt Land Fairway 16 Fireweed Inga Stoddart Fort St. John Pouce Coupe Progress Spirit River Valhalla / La Glace Grande Prairie Kelt Lands British Columbia Alberta Karr

18 Alberta Properties 17 PRODUCTION Kelt Drills Top Ten IP30 Wells (gross sales, BOE/d): (1) Karr W6 U.Montney 1,490 ( 79% oil ) (2) Pouce Coupe W6 L.Montney [a] 1,400 ( 95% gas ) (3) La Glace W6 M.Montney 1,090 ( 88% oil ) (4) Pouce Coupe W6 Doig/U.M. [a] 1,071 ( 90% gas ) (5) Pouce Coupe W6 LM.Montney 1,068 ( 83% oil ) (6) Pouce Coupe 02/ W6 UM.Montney 1,034 ( 73% oil ) (7) Karr W6 U.Montney 1,022 ( 57% oil ) (8) Pouce Coupe W6 LM.Montney 995 ( 83% oil ) (9) Pouce Coupe W6 Doig/U.M. 988 ( 80% gas ) (10) Progress W6 Montney [b] 973 ( 58% oil ) RESERVES Typical well EUR s: (1) Pouce Coupe Doig/Montney Gas EUR = 1,380 MBOE ( 90% gas 10% oil ) (2) Pouce Coupe Montney Oil EUR = 485 MBOE ( 67% oil 33% gas ) (3) La Glace Montney Oil EUR = 675 MBOE ( 70% oil 30% gas ) (4) Karr Upper Montney Oil EUR = 510 MBOE ( 54% oil 46% gas ) Note: % oil includes crude oil and natural gas liquids. Note: [a] The Pouce Coupe and wells were drilled with approximately two mile horizontal laterals and were put on production at restricted rates due to limited compression capacity. [b] The Progress well is a new Montney discovery well. The production rate is an IP23.

19 Pouce Coupe LM Kelt Lands 8-18UMM 8-18 LMM UM/Doig UM/Doig Unit Outline LM Lower Montney UM Upper Montney 13-8 LMM UMM Upper-Middle Montney LMM Lower-Middle Montney Pouce Coupe South Boundary B Unit #2 67.9% WI Operated 14-8 LMM Pouce Coupe South Boundary A Unit 32.0% WI Progress Halfway O Pool Unit 7.8% WI Progress Gas Plant (20% WI) Kelt Pouce Coupe Compressor Facility (100% WI) Targeting Montney and Doig formations. Ownership in pipeline infrastructure, gas compression and a 20% interest in the CNRL Progress 140 MMcf/d Gas Plant. Montney drilling to date has been successful for both oil and gas.

20 Pouce Coupe Montney Oil Type Curve 19 ( BOE / d ) 5,000 TOTAL RAW PRODUCTION (Well Count) Sproule 2P Well Count Month 00/ W6/0 (CTD 6 mboe) 02/ W6/0 (CTD 73 mboe) 02/ W6/0 (CTD 65 mboe) 02/ W6/0 (CTD 157 mboe) 02/ W6/0 (CTD 151 mboe) 02/ W6/0 (CTD 222 mboe)

21 Progress / Spirit River PROGRESS: Targeting Montney and Halfway formations. SPIRIT RIVER: 20 to 25 vertical up-hole re-completion candidates in the Charlie Lake. Gamma Ray Density Porosity Worsley (O) 20 Progress Halfway Gas Unit #1 15.9% WI (50%) Montney (50%) Montney Y J (Upper) J (Lower) H2O Disposal 15-5 Charlie Lake R 2-12 (25%) Halfway Kelt Lands Unit Outline Spirit River Charlie Lake E & M Unit 100% WI Operated F D M E

22 Valhalla / La Glace Sexsmith Gas Plant (0.3% WI) Targeting the Montney formation. Ownership in pipeline infrastructure, oil battery and gas compression. Ownership interest (0.3%) in the Encana Sexsmith 200 MMcf/d Gas Plant. Kelt Lands Kelt Valhalla/La Glace 3,500 bopd MMcf/d Facility (100% WI)

23 La Glace Montney Type Curve 22 ( BOE / d ) 5,000 TOTAL RAW PRODUCTION (Well Count) Sproule 2P Well Count Month 00/ W6/0 (CTD 162 mboe) 00/ W6/0 (CTD 33 mboe) 00/ W6/0 (CTD 214 mboe)

24 Karr MM 16-8 (75%) Kelt Lands H2O Disposal Dunvegan Test MM (75%) 4-2 MM Middle Montney H2O water LAND Montney Rights: 37.0 sections ( gross ) 35.8 sections ( net ) OPERATIONS Pembina Pipeline Corporation announced the construction of a 30,000 bbl/d Karr Lateral pipeline and LACT Unit as part of its Phase III pipeline expansion. Upon completion in mid-2016, Kelt will have all of its oil production from Karr pipeline connected, eliminating trucking requirements. Water injection was implemented in Q2-15.

25 Karr Montney Type Curve 24 ( BOE / d ) 5,000 TOTAL RAW PRODUCTION (Well Count) Sproule 2P Well Count Month 00/ W6/0 (CTD 91 mboe) 00/ W6/0 (CTD 124 mboe) 00/ W6/3 (CTD 489 mboe) 02/ W6/0 (CTD 333 mboe) 00/ W6/3 (CTD 18 mboe) 00/ W6/2 (CTD 58 mboe) 02/ W6/0 (CTD 33 mboe)

26 British Columbia Properties PRODUCTION Slick-water Completions IP30 (gross sales, BOE/d): (1) Inga W6 Doig 2,043 ( 27% gas ) (2) Inga W6 Doig 1,326 ( 23% gas ) (3) Inga W6 U.Montney 1,296 ( 26% gas ) (4) Inga W6 Doig [a] 1,271 ( 50% gas ) (5) Fireweed c-026-a/094-a-13 U.Montney 1,188 ( 35% gas ) (6) Inga W6 Middle Montney [b] 905 ( 31% gas ) (7) Fireweed c-085-i/094-a-12 U.Montney 844 ( 31% gas ) (8) Fireweed a-058-i/094-a-12 U.Montney [c] 686 ( 32% gas ) (9) Inga W6 Doig [d] 661 ( 37% gas ) RESERVES Typical well EUR s: (1) Inga/Fireweed Doig EUR = 930 MBOE ( 58% gas 42% oil ) (2) Inga/Fireweed Upper Montney EUR = 650 MBOE ( 58% gas 42% oil ) Note: % oil includes crude oil and natural gas liquids. Notes: [a] Hybrid completion. [b] The Inga well is the first drilled into the Middle Montney. [c] During the completion operation of the Fireweed a-058-i Montney well, the Company experienced difficulty getting liner to bottom resulting in only stimulating two-thirds of the well. [d] The Doig well was drilled to test the edge of the Inga Doig pool. 25

27 British Columbia DOIG Lands 26 Fireweed Inga Kelt Lands Inga 28 MMcf/d Compressor/ Facility (100% WI) Fireweed 16 MMcf/d Compressor/ Facility (100% WI) New well Stoddart Stoddart 10 MMcf/d + 2,500 bopd Facility (100% WI) CNRL West Stoddart 120 MMcf/d Gas Plant LAND Doig Rights: Gross: 175 sections Net: 168 sections OPERATIONS Recent Doig wells completed using slick-water fractures have shown very encouraging results. Kelt has ownership in extensive infrastructure in the area and processes the majority of its gas at the non-owned CNRL West Stoddart 120 MMcf/d gas plant.

28 BC Doig Type Curve 27 ( BOE / d ) 5,000 TOTAL RAW PRODUCTION (Well Count) Sproule 2P Well Count Month 00/ W6/0 (CTD 454 mboe) 00/ W6/0 (CTD 287 mboe) 00/ W6/0 (CTD 450 mboe) 00/ W6/2 (CTD 44 mboe)

29 British Columbia MONTNEY Lands 28 Fireweed Inga a-58-i (sfc: d-a79-i) 8-31 (sfc: B7-29) 7-17 MM new well Kelt Lands c-26-a (sfc: a-6-a) c-85-i (sfc: a-65-i) 7-12 New well 3-7 New well Stoddart CNRL West Stoddart 120 MMcf/d Gas Plant LAND Montney Rights: Gross: 163 sections Net: 162 sections OPERATIONS recent Montney wells completed using slick-water fractures have shown very encouraging results with high IP30 rates comprised 57% to 69% condensate Montney wells qualify for BC royalty incentives of approximately $900,000 per well Drilling to date has been in the upper- Montney where the reservoir is up to 40 metres thick and porosities are up to 9% Kelt has drilled its first Middle Montney horizontal well at Inga, completed using slick-water

30 British Columbia MIDDLE MONTNEY Isopach 29 Inga 7-17 KEL s First Middle Montney Horizontal Test Fireweed Kelt Lands OPERATIONS Kelt has drilled its first horizontal Middle Montney well in BC located at 7-17 (surface 7-29) The Inga 7-17 well had an IP 30 rate of 905 BOE/d (69% liquids) The thickness of the Middle Montney C Unit on Kelt s lands at Inga ranges from 30 to 60 metres Kelt is encouraged with the results of the first well into the Middle Montney and expects to follow-up with additional drilling on its lands With further delineation, the inventory of drilling locations could increase significantly as the Company moves to the development stage in both the Upper and Middle Montney horizons.

31 BC Upper Montney Type Curve 30 ( BOE / d ) 5,000 TOTAL RAW PRODUCTION (Well Count) Sproule 2P Well Count Month 00/ W6/0 (CTD 181 mboe) 00/A-058-I/094-A-12/0 (CTD 38 mboe) 00/C-085-I/094-A-12/0 (CTD 152 mboe) 02/C-026-A/094-A-13/0 (CTD 192 mboe)

32 British Columbia BALDONNEL Lands 31 Fireweed Inga Kelt Lands Birch Baldonnel C Oil Pool (CTD 4.9 MM barrels of oil) Stoddart 4-1 HZ Producing competitor Baldonnel oil well LAND Baldonnel Rights: Gross: 149 sections Net: 138 sections OPERATIONS Oil exploration activity with plans to drill initial well in Competitor activity at Stoddart offsetting Kelt lands has been successful in the Baldonnel formation. The Baldonnel C oil pool at Birch has produced 4.9 million barrels of oil and 10.9 bcf of associated gas, cumulative to date, from 55 wells (44 HZ s).

33 Net Asset Value 32 ( millions ) Dec/ Dec/ P&NG Reserves, PV10% before tax (BT) 1, ,185.2 Decommissioning Obligations, PV10% BT [1] ( 12.8 ) ( 11.7 ) Undeveloped Land Bank Debt, net of Working Capital ( ) ( ) Proceeds from exercise of Stock Options [2] NET ASSET VALUE 1, ,130.1 Diluted Common Shares Outstanding NET ASSET VALUE PER SHARE $ 8.20 $ 6.65 Notes: [1] The present value of decommissioning obligations included above is incremental to the amount included in the present value of P&NG reserves as evaluated by Sproule. [2] The calculation of proceeds from exercise of stock options and the diluted number of common shares outstanding only include stock options that are in-the-money based on the closing price of KEL of $4.24 and $7.00 per common share respectively as at December 31, 2015 and There were no in-the-money stock options at December 31, 2015.

34 Future Considerations 33 DRILLING INVENTORY: Kelt estimates that it has numerous years of drilling inventory on its existing lands to continue to grow the Company. BALANCE SHEET: Kelt maintains financial flexibility so that it can persevere during periods of declining commodity prices and pursue new opportunities as they arise. CRUDE OIL PRICES: the number of rigs drilling for crude oil in the U.S. declined to 392 in early-march 2016, after peaking at about 1,600 in November With low current oil prices, we believe that global oil supply will eventually be negatively affected as a result of significant reductions in capital investment. We believe this could lead to higher crude oil prices in the second half of NATURAL GAS PRICES: the number of rigs drilling for natural gas in the U.S. declined to 97 in early-march 2016, after peaking at about 1,600 in September Despite record high gas storage in the U.S. due to higher productive shale wells and a mild winter, we expect U.S. supply to be negatively affected as declines on shale production sets in and declining new production additions resulting from massive reductions in drilling. In addition, with a drop in the crude oil rig count in the U.S., associated gas production will also be negatively affected. We believe these factors bode well for natural gas prices in 2017, after the current surplus in storage balances out.

35 Management 34 David J. Wilson, President & CEO Sadiq H. Lalani, Vice President, Finance & CFO Douglas J. Errico, Vice President, Land Patrick Miles, Vice President, Exploration Douglas O. MacArthur, Vice President, Operations Alan G. Franks, Vice President, Production William C. Guinan, Corporate Secretary

36 Board of Directors 35 Robert J. Dales William C. Guinan Eldon A. McIntyre Neil G. Sinclair David J. Wilson Compensation (Chair), Nominating, Audit, Reserves Chairman of the Board, HSE Reserves (Chair), Nominating, Audit, Compensation Audit (Chair), Nominating (Chair), Compensation, HSE, Reserves HSE (Chair) Note: HSE Health, Safety & Environment Committee.

37 Oil and Gas Advisories 36 Barrel of oil equivalent ( BOE ) amounts may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel. This conversion ratio of six thousand cubic feet of natural gas to one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, if applicable, sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. References to oil in this presentation include crude oil and field condensate. References to natural gas liquids ( NGLs ) include pentane, butane, propane and ethane. References to gas in this discussion include natural gas and sulphur. In this presentation, reference may be made to OOIP or OGIP, meaning original oil in place and original gas in place, respectively, which are hereinafter collectively will be called discovered petroleum initially-in-place. Discovered petroleum initially-in-place is the quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. References to IP30 means initial production from a well for the first 720 hours (30 days) based on operating/producing hours. Test results and initial production rates disclosed herein may not necessarily be indicative of long-term performance or of ultimate hydrocarbon recovery. Estimates of the net present value of the future net revenue from Kelt s reserves do not represent the fair market value of the Company s reserves. The estimates of reserves and future net revenue from individual properties or wells may not reflect the same confidence level as estimates of reserves and future net revenue for all properties and wells, due to the effects of aggregation. Where discussed herein "NPV" represents the net present value of cash flow (after capital expenditures) discounted at the percentage indicated, with cash flow reflecting the indicated oil, liquids and natural gas prices, less internal estimates of operating costs and royalties.

38 Financial Advisories 37 All dollar amounts are referenced in Canadian dollars, except when noted otherwise. This presentation contains the terms funds from operations, operating income, operating netback, production per million shares, finding, development and acquisition cost and recycle ratio which do not have a standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures by other companies. Funds from operations, operating income and operating netbacks are used by Kelt as key measures of performance. Funds from operations, operating income and operating netbacks are not intended to represent corporate profits nor should they be viewed as an alternative to cash provided by operating activities, profit or other measures of financial performance calculated in accordance with GAAP. Operating income is determined by deducting royalties, production expenses and transportation expenses from oil and gas revenue, after realized financial instruments and cash premiums. Operating netbacks are calculated by dividing operating income by aggregate production. Funds from operations is determined by adding back transaction costs associated with acquisitions and dispositions, settlement of decommissioning obligations and the change in non-cash operating working capital to cash provided by operating activities. The Company calculates funds from operations per share using the same method and shares outstanding which are used in the determination of profit per share. Production per share is calculated by dividing total production by the basic weighted average number of common shares outstanding, as determined in accordance with GAAP. The Company uses the debt to funds flow ratio as a benchmark by which management monitors the Company s capital structure and short-term financing requirements. The debt to funds flow ratio is calculated by dividing bank debt, net of working capital, at a period end, by funds from operations for that period. Finding, development and acquisition ( FD&A ) cost is the sum of capital expenditures incurred in the period and the change in future development capital ( FDC ) required to develop reserves. FD&A cost per BOE is determined by dividing current period net reserve additions into the corresponding period s FD&A cost. Readers are cautioned that the aggregate of capital expenditures incurred in the year, comprised of exploration and development costs and acquisition costs, and the change in estimated FDC generally will not reflect total FD&A costs related to reserves additions in the year. Recycle ratio is a measure for evaluating the effectiveness of a company s re-investment program. The ratio measures the efficiency of capital investment by comparing the operating netback per BOE to FD&A cost per BOE.

39 Corporate Presentation March 2016 Suite 300, th Avenue SW Calgary, Alberta, Canada T2P 3H2