Kelt Exploration Ltd. ('Kelt' or the 'Company') reports its financial and operating results to shareholders for the three and six months ended June 30, 2023.

FINANCIAL STATEMENTS

Kelt's unaudited consolidated interim financial statements and related notes for the quarter ended June 30, 2023 will be available to the public on SEDAR at www.sedar.com and will also be posted on the Company's website at www.keltexploration.com on August 3, 2023.

MESSAGE TO SHAREHOLDERS

During the second quarter of 2023, Kelt continued to maintain its strong financial position with a net surplus of $18.6 million as at June 30, 2023. Adjusted funds from operations during the second quarter exceeded net capital expenditures by $13.8 million or 31%. In addition, Kelt recorded positive earnings for the tenth consecutive quarter. Net income was $25.8 million ($0.13 per share) for the three months ended June 30, 2023. Kelt's average production for the three months ended June 30, 2023 was 29,705 BOE per day, up 7% from average production of 27,713 BOE per day during the corresponding period in 2022 and down 7% from average production of 31,833 BOE per day during the first quarter of 2023. The decline in quarter-over-quarter production was attributed to shut-in production as a precaution to wildfires burning in close proximity to certain of the Company's properties; shut-in production at the Pipestone Gas Plant where gas processing was curtailed due to heat issues and also due to shut-in production at the Progress Gas Plant where Kelt owns approximately 20% of the facility and processes approximately 28.0 MMcf per day of raw gas plus associated liquids. The Progress Gas Plant was shuttered for approximately a month during the second quarter as the operator conducted an expansion to the facility. With the expansion complete, Kelt's ownership in gas processing capacity at the plant has increased by 14% to approximately 32 MMcf per day of raw gas. The aforementioned production shut-ins affected average daily production for the second quarter of 2023 by approximately 3,000 to 3,200 BOE per day. Production for the three months ended June 30, 2023 was weighted 40% oil and NGLs and 60% gas compared to 35% oil and NGLs and 65% gas during the second quarter of 2022. Kelt's emphasis on drilling oilier wells in its Montney and Charlie Lake plays have contributed to the higher liquids weighting. During the second quarter of 2023, oil production increased by 67% to 8,158 barrels per day compared to 4,871 barrels per day in the second quarter of 2022. Kelt's realized average oil price during the second quarter of 2023 was $92.98 per barrel, down 31% from $135.36 per barrel in the second quarter of 2022. The realized average NGLs price during the second quarter of 2023 was $40.67 per barrel, down 49% from $79.24 per barrel in the same quarter of 2022. Kelt's realized average gas price for the second quarter of 2023 was $2.57 per Mcf, a significant decline of 68% from $8.14 per Mcf in the corresponding quarter of the previous year. Oil prices declined as fears of lower global crude oil demand have been triggered in anticipation of a global economic recession during a period of high inflation. Since the start of 2022, after averaging a monthly high price of US$114.84 per barrel in June 2022, WTI crude oil prices averaged a monthly low price of US$70.25 per barrel in June 2023, a drop of 39% from the monthly average high price during the 18-month period. After a relatively mild winter in both North America and Europe, combined with the protracted shut-in of a major US Gulf Coast LNG export facility, natural gas inventories have filled up significantly higher than historical averages resulting in the precipitous decline in natural gas prices. For the three months ended June 30, 2023, petroleum and natural gas sales were $110.1 million and adjusted funds from operations was $58.8 million ($0.30 per share, diluted), compared to $178.9 million and $94.8 million ($0.48 per share, diluted) respectively, in the second quarter of 2022. At June 30, 2023, the Company had a net surplus of $18.6 million compared to net debt of $23.1 million at June 30, 2022. Net capital expenditures incurred during the three months ended June 30, 2023 were $45.0 million. During the second quarter of 2023, the Company spent $32.7 million on drill and complete operations and $10.7 million on facilities, pipelines and equipment.

Contact:

Tel: (403) 215-5310

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of and of the words 'will', 'expects', 'believe', 'plans', potential', 'forecasts' and similar expressions are intended to identify forward-looking statements. In particular, this press release contains forward-looking statements pertaining to the following: Kelt's expected price realizations and future commodity prices; the cost and timing of future capital expenditures and expected results; the expected timing of wells bring brought on-production; well performance relative to expectations; the expected timing of production additions from capital expenditures; expectations of future production growth; production results exceeding type cure expectations; obtaining and the expected timing around third-party additional processing capacity; the impact and timing of BC maintenance activities and the Company's expected future financial position and operating results. Any references to test rates or initial production rates are useful for confirming the presence of hydrocarbons and initial well performance. However, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long term performance or ultimate recovery. Although Kelt believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Kelt cannot give any assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general, operational risks in development, exploration and production; risks associated with the COVID-19 pandemic; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; failure to obtain necessary regulatory approvals for planned operations; health, safety and environmental risks; uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures; volatility of commodity prices, currency exchange rate fluctuations; imprecision of reserve estimates; as well as general economic conditions, stock market volatility and the ability to access sufficient capital. We caution that the foregoing list of risks and uncertainties is not exhaustive. 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 forward-looking 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

(C) 2023 Electronic News Publishing, source ENP Newswire