At Inga in British Columbia, Kelt completed its second middle Montney well and commenced production from that well in December 2016. The well, which is located at 100/14-24-087-23W6, has been on production for 22 days. The IP22 rate (gross sales) is 1,461 BOE per day of which 71% is oil and liquids. The initial production results from this well are very encouraging as the Company continues to delineate the middle Montney at Inga. In the upper Montney, Kelt has just completed the Fireweed well located at C-31-I/94-A-12 in the northeast part of its large contiguous BC land block. The Company plans to drill one more upper Montney well in the southeast part of its BC land block prior to spring break-up in 2017, after which, Kelt further plans to commence full development in the upper Montney at Inga by switching to pad drilling. The Company expects pad drilling will result in significant savings in per well capital expenditures, as well as lower per unit operating expenses upon the wells being brought on production. At Pouce Coupe in Alberta, Kelt has now completed the drilling of a five well pad of which two wells were drilled in the lower-middle Montney ("D1") and three wells were drilled in the upper-middle Montney ("D2"). Completion operations on these five wells are expected to commence by mid-January 2017. In the current energy business environment, Kelt has continued to take advantage of lower industry-wide spending levels with its strategy of low-cost land accumulation in its core operating areas and significantly lower drilling and completion costs as the Company transitions to full scale development.

The Company's Board of Directors has approved an increase in the Company's 2017 capital expenditure budget to $144.6 million. A portion of the increase in capital spending will be used for facilities, whereby Kelt expects to increase both compression and pipeline gathering capacity in its core producing areas to accommodate production additions. After giving effect to the Karr property disposition, net capital spending in 2017 is expected to be approximately $42.0 million, down 69% from the Company's previous capital expenditure budget of $134.0 million. The company expects Funds from operations of $128.0 million or $0.73 per diluted share compared to previous guidance of $124.0 million or $0.73 per diluted share.

The company expects total production per million common shares of 131 BOE/d.