Mr. David Wilson reports

KELT REPORTS FINANCIAL AND OPERATING RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2023

Kelt Exploration Ltd. has released its financial and operating results for the fourth quarter and year ended Dec. 31, 2023. The company's financial results are summarized herein.

Financial statements

Kelt's audited annual consolidated financial statements and related notes for the year ended Dec. 31, 2023, will be available to the public on SEDAR+ and will also be posted on the company's website on March 8, 2024.

Kelt's operating results for the fourth quarter and year ended Dec. 31, 2023, are summarized herein.

Message to shareholders

Kelt reports its financial and operating results to shareholders for the fourth quarter and year ended Dec. 31, 2023.

Average production for the three months ended Dec. 31, 2023, was 32,344 boe (barrels of oil equivalent) per day, up 15 per cent compared with average production of 28,036 boe per day during the fourth quarter of 2022. Average production for 2023 was 30,510 boe per day, an increase of 12 per cent from an average production of 27,236 boe per day in 2022. Production for the three months ended Dec. 31, 2023, was weighted 38 per cent to oil and NGLs (natural gas liquids) and 62 per cent to gas.

Petroleum and natural gas sales during the fourth quarter of 2023 decreased 16 per cent to $129-million, down from $152.7-million in the same period of the previous year. Petroleum and natural gas sales for the year were $495.6-million, down 19 per cent from $613.4-million in 2022. Kelt's net realized average oil price during the fourth quarter of 2023 was $95.68 per barrel, down 11 per cent from $107.88 per barrel in the fourth quarter of 2022. The company's net realized average NGLs price during the fourth quarter of 2023 was $49.79 per barrel, down 18 per cent from $60.54 per barrel in the fourth quarter of 2022. Kelt's net realized average gas price for the fourth quarter of 2023 was $2.75 per Mcf (thousand cubic feet), down 58 per cent from $6.52 per Mcf in the fourth quarter of 2022.

For the three months ended Dec. 31, 2023, adjusted funds from operations were $66.6-million (33 cents per share, diluted), compared with $92.9-million (47 cents per share, diluted) in the fourth quarter of 2022. Year-over-year, adjusted funds from operations decreased 16 per cent to $276.2-million ($1.40 per share, diluted) from $327-million ($1.67 per share, diluted) in 2022. During 2023, Kelt recorded net income of $86-million (44 cents per share, diluted) compared with $158.8-million (81 cents per share, diluted) in the previous year.

Kelt's return on average capital employed (ROACE) was 12 per cent in 2023 and 25 per cent in 2022. The three-year average ROACE was 19 per cent, showing a significant return on capital employed as the company transitions from exploration and resource delineation to development and multiwell pad drilling.

At Dec. 31, 2023, Kelt had net debt of $13-million compared with $9.8-million at Dec. 31, 2022. At a net debt to adjusted funds from operations ratio of 0.05 times, Kelt continues to maintain its strong financial position.

Capital expenditures, net of A&D (acquisition and dispositions) incurred during the three months ended Dec. 31, 2023, were $62.7-million, down 9 per cent compared with net capital expenditures of $68.6-million during the fourth quarter of 2022. During the fourth quarter of 2023, the company spent $26.6-million on drill and complete operations and $35.9-million on well equipment, facilities and pipelines.

Kelt expects to report to shareholders its 2024 first quarter results on or about May 9, 2024.

The information set out herein is 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 calendar year 2024. Readers are cautioned that this financial outlook may not be appropriate for other purposes.

We seek Safe Harbor.