Mr. David Wilson reports
KELT PROVIDES UPDATE REGARDING ITS ANNUAL SHAREHOLDERS MEETING AND PROVIDES AN OPERATIONS UPDATE INCLUDING COST-CUTTING MEASURES
Kelt Exploration Ltd.'s upcoming annual meeting of shareholders will now be held at the company's head office, suite 300, 311 Sixth Ave. SW, Calgary, Alta. The shareholders meeting date will continue to be on Wednesday, April 22, 2020, at 3 p.m. MT.
Due to the unprecedented public health impact of the coronavirus disease and the restrictions on mass gatherings implemented by the Government of Alberta, shareholders and guests are strongly encouraged not to attend the meeting in person. Kelt encourages all shareholders to vote in advance of the meeting by mail, telephone or internet in the manner set out in the meeting materials that have been sent to shareholders, copies of which can be accessed on Kelt's website and can be found on SEDAR.
Attendees will be required to sign a confirmation letter that they have not travelled outside of Canada for a period of two weeks preceding the date of the meeting and have no symptoms of illness. In particular, shareholders from demographic groups at greater risk of disease are strongly encouraged not to attend. Additional attendance requirements may be added based on the changing nature of the public health advisories related to COVID-19. In the event that more than 15 people choose to attend in person, the Shareholders Meeting, by necessity, will be rescheduled to a later date.
A live audio webcast of the Shareholders Meeting will be available on Kelt's website. A recording of the webcast will remain available on Kelt's website following the meeting. Kelt will not be providing a corporate presentation at the Shareholders Meeting.
On March 17, 2020, Kelt announced that it had reduced its 2020 capital expenditure budget by $80.0 million or 36%. In this regard, the Company currently has no immediate plans to start up drilling and completion operations on wells that currently remain in the budget until there is better clarity on future commodity prices which have been negatively impacted by global oil demand destruction as a result of the COVID-19 pandemic.
Kelt has implemented various measures to enhance its financial position in response to the current low oil price environment, in addition to the previously announced 36% reduction in capital expenditures for 2020. Effective May 1, 2020, employee compensation has been reduced by 10% and director fees have been suspended. As part of a continued focus on efficient operations, the Company is reviewing expenses throughout its operations and is working with suppliers and contractors to identify additional efficiencies and cost savings.
During the first quarter of 2020, Kelt completed and brought on production the remaining six wells from its 24-well Montney cube development program at Inga. At Fireweed, the Company drilled a 5-well Montney pad and at Oak, Kelt drilled four Montney wells. The completion operations for all these wells have been put on hold temporarily during the current low commodity price environment.
Major infrastructure projects that commenced construction in 2019 are expected to be fully completed in April 2020. At Inga, construction of the 40-kilometre, 16-inch pipeline that will have the capability to transport 300 MMCF per day of natural gas from the Company's Inga 2-10 facility to the newly constructed AltaGas Townsend Deep-Cut Gas Plant ("Townsend Gas Plant") has been completed and is currently being pressure tested. Kelt expects to commence gas deliveries to the Townsend Gas Plant in late April 2020. At Fireweed, the Company has completed installation of its extensive infrastructure including a pipeline gathering system which connects the 5-well pad drilled during the first quarter of 2020. Kelt has begun to receive recoveries on the $15.0 million credit under the British Columbia Infrastructure Royalty Credit Program that is associated with this infrastructure project at Fireweed. At Wembley, Kelt has completed the construction of a pipeline and related infrastructure that connects the Company's La Glace 14-29 facility to the Tidewater Pipestone Sour Deep-Cut Gas Processing Plant ("Pipestone Plant"). Kelt's production from La Glace that had previously been shut-in due to restricted access to the Ovintiv Sexsmith Gas Plant can now be diverted to the Pipestone Plant.
The Company continues to benefit from its strong hedge position (previously outlined in detail in Kelt's March 17, 2020 press release). However, the Company will monitor actual realized commodity pricing at the field level and may temporarily shut-in high productivity oil wells when the differentials to index prices widen. Kelt has been successful in securing third-party volumes for water injection at the Company's water disposal wells which will add incremental revenue.
Kelt is an oil and gas company based on Calgary, Alberta focused on the exploration, development and production of crude oil and natural gas resources in Western Canada.
We seek Safe Harbor.
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