Kelt Exploration Ltd. (KEL) Earnings Call Transcript & Summary

Hello, and welcome to the 2024 Annual Meeting of Shareholders of Kelt Exploration Limited. Please note that this meeting is being recorded. [Operator Instructions]. It is my pleasure to introduce David Wilson, Chief Executive Officer of Kelt Exploration. Mr. Wilson, the floor is yours.

Good afternoon, ladies and gentlemen. Welcome to the meeting of the shareholders of Kelt Exploration Ltd. My name is David Wilson, and I am the President, Chief Executive Officer and a Director of Kelt Exploration, and I will assume the position of Chairman for this meeting. I'm pleased to note that all of the directors of the corporation have also joined us virtually today. In order to ensure that the meeting covers the required business in an efficient manner, we have prearranged with designated shareholders or proxy holders to move and to second the motions of business. The meeting will now come to order, and if there are no objections, I shall ask Louise Lee to act as recording Secretary of the meeting and Nazim Nathoo of Odyssey Trust Company to act as scrutineer of the meeting. Secretary has provided me with proof of mailing of the notice of meeting, instrument of proxy, management information circular and accompanying documents to the registered shareholders and the directors of the corporation. I direct a copy of the proof of mailing, together with copies of the documents mailed to shareholders to be kept by the Secretary with the records of this meeting. With the consent of the meeting, the reading of the notice of meeting will be dispensed with. The bylaws of the corporation provide that 2 persons present and holding or representing by proxy at least 25% of the shares entitled to vote at the meeting shall constitute a quorum for purposes of a meeting shareholders. The scrutineer has provided me with their preliminary report regarding shareholder attendance at the meeting. Accordingly, I now declare that the meeting is regularly called and properly constituted for the transaction of business. As this meeting is being held virtually via a live webcast, we think it is necessary to set out a few rules for orderly conduct. Questions can be submitted at any time by any registered shareholder or duly appointed proxy holder using the instant messaging service of the Lumi Virtual Interface, but questions must be submitted prior to the commencement of voting. Questions will be addressed at the appropriate time during the meeting. For the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all business items. Once discussion on all items of business has concluded, I will give you a minute to enter your votes if you haven't already voted by proxy. When you're asked to vote, the motions to be voted on will automatically appear. You will only have a certain amount of time to do so when the polls are open. If you have already voted in advance, do not vote again online during the meeting unless you want to change your vote. If you vote again using the online ballot, your online vote during the meeting will revoke your previously submitted proxy. The first item of business is the presentation of the auditor's report and the financial statements of the corporation for the year ended December 31, 2023. Copies of the foregoing are available on the corporation's website and on SEDAR. It is not proposed to read the financial statements to the meeting. Receipt and presentation of the financial statements for the year ended December 31, 2023, are hereby acknowledged. I direct that the financial statements and the auditor's report be annexed to the meetings of the meeting -- sorry, the minutes of the meeting. The next item of business is to fix the number of directors to be elected at the meeting at 6.

I move that the Board of Directors of the corporation shall be fixed at 6 members.

I second the motion.

You've heard the resolution. I will now proceed with the next item of business. The next item of business is the election of the Board of Directors.

I nominate William C. Guinan; Jennifer Haskey; Michael R. Shea; Neil G. Sinclair; Janet E. Vellutini; David J. Wilson for election as directors of the corporation to hold office for the ensuing year.

Are there any further nominations? I now declare the nominations closed. Could we have a motion regarding the election of directors?

I move that each of the following nominees: William C. Guinan; Jennifer Haskey; Michael R. Shea; Neil G. Sinclair; Janet E. Vellutini; and David J. Wilson be hereby elected as a Director of the corporation to hold office until the next Annual Meeting of Shareholders or until their successor is duly elected or appointed.

I second the motion.

You've heard the resolution. I will now proceed with the next item of business. The next item of business is the appointment of auditors.

I move the PricewaterhouseCoopers LLP be and are hereby appointed as auditors of the corporation until the next annual meeting or until a successor is appointed and that their remuneration be fixed by the Board of Directors.

I second the motion.

You have heard the resolution. As there have been no questions received, we will proceed with the voting. As we mentioned, voting today will be conducted by electronic ballot. As a reminder, if you've already voted in advance, do not vote again unless you want to change your vote. If you vote, again, using the online ballot, your online vote will revoke your previously submitted proxy. I will now take a moment to ask that the balloting be open to registered shareholders and duly appointed proxy holders. Polls are now open. And at this point, all registered shareholders and duly appointed proxy holders, who have properly logged in with their control numbers or user name and wish to vote, will be able to see on the screen all motions being brought forth at this meeting. Please register your votes by accessing the voting page and by selecting the for or against buttons next to the resolution fixing the number of directors and by selecting the for or withhold buttons next to the name of each proposed director and next to the resolution with respect to the appointment of Pricewaterhouse LLP as a corporation's auditors. We will provide registered shareholders and duly appointed proxy holders approximately 1 more minute to complete the electronic ballot. Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. [Voting]

I now declare the polls closed. I have been advised by the scrutineer's that a sufficient number of votes received passed all the resolutions before us today. That concludes the formal business brought before the meeting. As there is no further business, I declare the formal part of the meeting to be concluded. We will now proceed to the management presentation. Sadiq, your way.

Good afternoon, fellow shareholders and guests, and welcome to the financial and operating presentation of Kelt at our 11th Annual Meeting of Shareholders. So I will move the slides forward and you should be able to see these on the webcast. So why invest in Kelt? Kelt has a track record. We started our company in February 2013. And this was after running our previous company, Celtic Exploration, for just over 10 years, which we ended up selling to Exxon for $3.2 billion. As part of that transaction, we spun off about $140 million worth of assets into Kelt. And these 3 assets at the time were about 3,300 BOEs a day of mostly gas production, included a 40% interest in a property in BC called Inga. We had 16 Montney sections in an area called Karr, and we also had a dry gas property in an area called Grande Cache. Fast forward to today, the Inga property was consolidated to 100% and eventually monetized in 2020 for over $0.5 billion with a sale to Conoco. The Karr assets were drilled and proven up and sold for $100 million earlier on at the start of the company. And since then, we've made several strategic acquisitions, but mostly accumulated large land resource at organically to Crown land sales. And today, we have just over 339,000 net acres of Montney rights and 87,000 net acres of Charlie Lake rights. Our target is to achieve a 2x better recycle ratio on a 2P basis. Historically, we have been able to do that. And management and the Board of Directors are aligned with all Kelt's shareholders through their significant equity ownership in the company. ESG is at the top of our mind. We focus on all 3 parts of E, S, and G. With the environment part, we are involved in a project on our BC property at Oak, which we'll talk about later. And the intent to add Oak is to get to almost 0 emissions with some of the work we're doing there, eliminating significant CO2 emissions. And everywhere else in Alberta, we've made some changes to the way we operate and have also reduced emissions as much as we can. We're involved with community engagement. We're quite involved with the communities that live within the areas that we operate, including personations. Health and safety is a huge priority for us. And on the leadership and governance side, as I mentioned earlier, we're aligned with our shareholders and all the leaders of the company are shareholders of the company. Our capital structure, we have a market cap of $1.2 billion. Our trading range of our stock has been 4 56 to 8 16 in the last 52 weeks. We do have another 6.7% of dilutive instruments, which takes us to a fully diluted position of about 208 million shares. Directors and officers of the company do own 18% of the stock outright. And with options and RSUs, we would be 20% on a fully diluted basis. This next slide shows how we ended up with our stock position. And you can see that over the years, we've raised just over $600 million in equity financings, and every single equity financing we did to the public insiders participated in significant amounts and at all different prices. We've also been pretty active in the open market and out of the $145 million of our own money that we've invested buying Kelt shares since we rolled over from Celtic, $43 million that has come from public open market purchases. Our capital expenditure budget for 2023 was 2 -- well, our actual capital expenditures for '23 was $282.6 million. We're expecting to spend $325 million in '24. And what you'll notice the significant upside in the spending is on the drill and complete side. And Dave will talk a little bit more about the 3 different divisions that we have and how we've moved over to batch cell drilling and development cell drilling. A lot of the infrastructure money, the accumulation of land. All of that money has actually been spent and the drilling go forward will be way more efficient with the bulk of it being aimed at just drilling and completing wells. So in total, we're looking to spend $325 million, of which $225 million will be to drill and complete wells and $80 million will be for infrastructure. So for that program, we'll see about 29 wells drilled in Alberta and BC and 31 wells completed. The Alberta program will include 16 wells in our Wembley/Pipestone division. We'll have 7 wells in our Pouce Coupe Spirit River division, and we'll have 6 wells in our Oak division. A bulk of this production is going to -- it will be sort of back ended and we'll talk about that when we get to gas processing. But a lot of the production coming on will be later on in the year. So speaking of production, we grew our production in 2023 by 12% from the previous year. In 2022, we have grown our production by 30% from '21. In '24, we're forecasting 36,000 to 39,000 BOEs a day. As you can see, it's a pretty wide range. The reason for that is our Wembley drilling program is subject to a new gas plant that is currently under construction, and we'll talk a little bit more about this gas land when we get to Wembley. As far as we know, the builder and ultimately, the operator of this plant is expecting to have it on early in the fourth quarter of 2024. If that is the case, and the plant is on and we can bring all of our wells on early in the fourth quarter, we should be able to be at the high end of our production forecast. If there is a delay and the plant doesn't come on until November or December of this year, then we would lean closer to the lower end of our production forecast. Needless to say, we're looking for even at the low end, 18% growth from the previous year at the high-end 28% growth, which would represent close to 200 BOEs a day per million shares outstanding. This is an important slide. It shows the actual production mix of our NGLs. Our oil production is about [ 26 -- well ] was in '23 about 26% of our total production. However, the 12% that represented NGLs, 1/3 of it was actually C5+, which fetches about the same pricing as oil and sometimes better. And the remaining NGLs would have been butane, propane and ethane and then the gas percentage would have been 62%. What's interesting about this mix up is 30% of the production, which is oil and C5+, generated 76% of the cash flow. And we're in a similar situation again in 2024 with current oil prices being reasonably high and gas prices being unreasonably low. So speaking of prices, we are forecasting $75 WTI for the year, which in Canadian dollars would be closer to CAD 102 a barrel. For NYMEX Henry Hub natural gas, we're forecasting USD 2.60 per MMBtu. What this does with our mix of gas markets, it would give us a realized gas price of $2.84, which would be down from the $3.08 we realized in 2023. But we would have an oil price fairly similar to what we generated last year, forecasting about $95.33 a barrel compared to $97.90 in 2023. So the sensitivities to these prices, as many of you who are listening on this call, will know that WTI oil is trading up in the 84 -- 83 to 85 range. And natural gas prices are trading a little bit lower than the $2.60 we forecasted. So if you look at the sensitivities, a 10% move in the price of oil and NGLs combined would affect our cash flow for the year by $29.6 million and a 10% move in the realized gas price would affect our cash flow by $12.7 million. So putting in another way, it would take about a 25% move in the realized gas price to match up a 10% move in the price of liquids. On the gas side, we do have several different markets that we deliver our gas to, and that provides us with a diversification in pricing. Any one of these hubs can sometimes have significant risk, whether it's maintenance or unplanned outages, whatever the case may be. So in order to hedge ourselves against being exposed to just one hub, we sell our gas to a bunch of different gas hubs. Currently, for 2024, about 40% of our gas will go to the AECO hub, 16% will go to Dawn, which is kind of that Ontario Northern U.S. hub. Financially, we've moved about 17% of our gas to Henry Hub. And then we've got about 4% going to Chicago and 21% to Station 2. The balance is Marcellus and Sumas gas. This is an interesting slide, and it talkies about our gas plant processing capacity. And so this is something that we've been working on for the past 3 years to put together. And we're now in a position where we can grow our company's production quite significantly with access to processing capacity. And -- the way it works with most wells in our basin, including Kelt's wells, in order to produce your oil, you're going to find a home for your guests because there is associated gas production with your oil wells. And so without this processing, it would be difficult to produce your oil as well. So we've entered into these contracts. And currently, when you look at the 3 divisions, the Wembley division, we have -- while this was in the first quarter of '24, we had 59 million a day of capacity; in the Pouce Coupe, 82 million a day of capacity; at Oak, 25 million a day of capacity. So when you add that up, it's 166 million cubic feet a day of raw gas processing capacity. Once it's processed through the plant and the end result is sales gas, NGLs and our crude oil production, that capability would be about 34,000 BOEs a day. Now outside of that 34,000 BOEs a day, we probably have somewhere between 1,400 BOEs and 1,800 BOEs a day of additional production that does not depend on this capacity. However, on April 1, we took on another 20 million a day of capacity at Oak, which has moved our total capacity up to 186. And the next significant addition is what we talked about earlier, there's another 15 million a day of capacity coming on potentially in the fourth quarter of this year with the plant being built by CSV in the Wembley/Pipestone area. And then after that, we've also got additional capacity coming on in each one of our divisions so that by 2026 or the end of 2026, we will have increased our capacity to about 331 million cubic feet a day of raw gas. At that point, if we use all of our firm capacity we will have capability of about 68,000 BOEs a day of production using a very similar split to what we have today, which is 38% liquids and 62% gas. And given the 3 different areas where we're adding capacity, we think that split that we see today of 38% liquids and 62% gas, we can carry forward through the additions of this incremental gas processing capacity. On the hedging side, we have done some deals here to protect ourselves from the exchange rate and from oil. And also, I mentioned earlier, we moved some basis differential exposure from AECO over to Henry Hub. On the oil side, we currently have 1,500 barrels a day for the second quarter at $105.73 a barrel and 1,000 barrels a day at $107.25 per barrel. And we do have an option here to extend some of these contracts, which is highlighted on this slide as well. So what does this all mean in terms of netbacks, with the price forecast we have, we are looking at an operating netback of about 22.34 of BOE in '24, which would be slightly below the 25.74 that we averaged, 13% below the average in 2023. However, the cost structure seems to be improving here. You'll notice that even though -- our G&A and interest costs are $1.21, it would be probably at the low end of our peer group when you compare ourselves. And part of that is they will run a pretty lean staff at the company and also currently are not taking on significant amounts of debt. So for all intents and purposes, we're debt free with maybe about 0.2x debt to cash flow forecasted for the year. In summary, we're looking at revenue of about $583 million for '24, which would be an 18% increase from what we realized in 2023. Our funds from operations, we're estimating about $290 million, a 5% increase from '23 or $1.46 a share, With our $325 million CapEx program, we're reinvesting all of our cash flow into the ground. And like I said earlier, not taking on any significant amount of debt, expecting to be about $48 million or 0.2x debt to cash flow at the end of the year. An important measure of profitability is our return on average capital employed calculation. And you can see from this slide, in '21, we averaged 20.5%; in '22, it was 25.4%; '23, it was 12%, giving us a 3-year average of 18.8%. And as I mentioned earlier, the makeup of our capital program has changed and will change significantly going forward. whereby we'll be spending more capital on just drilling and completing wells versus infrastructure and accumulation of land for which we've already spent the capital. So that should actually make our spending much more efficient, and we should be able to realize even in today's commodity prices, an improvement in the '23 ROACE calculation and something close to our 3-year average. We came up with our reserves back in February and had a pretty good year in terms of reserve additions. Overall, our PDP reserves were up 16%. Our proven reserves were up 34% and our 2P reserves were up 21%. The mix stayed relatively close to what our production is. 36% liquids; 64% gas. And we replaced our -- on a PDP basis, we replaced our production by 190%. On a proven basis, we replaced our production by 680% and on a 2P basis by 750%. These reserves adds on the proven and 2P case included future drilling locations. And you can see we've summarized for our Alberta and BC Montney wells and our Alberta Charlie Lake wells. The future locations included in the reserve report. On the proven case, you would have to spend about $1.8 million, drilling 233 net wells. And the 2P case is about $2.5 million, drilling about 337 net wells. When we actually start to show you each one of our properties, you will notice that these future locations booked in the reserve report are much lower than what we've actually mapped out on an un-risked basis in each 1 of our divisions. Another measure of efficiency and success is finding costs and recycle ratios. And we had another good year in '23. On a PDP basis, we ended up with a 1.9x recycle ratio; on a proven basis 2.3x; and on a 2P basis, 3x. So for every -- and this is all based on netbacks realized in 2023. So for -- on a 2P basis, for every dollar we invested, we benefited by $3 of value. So speaking of value screw in their forecast when they prepared the reserve report, have used a WTI price of $76.24 and moving it up slightly to $76 in '25 and '26 and $77.50 in '27 and a natural gas price of $2.75 in the first year and moving up to $3.75 in the years after that. So using this commodity price forecast, our proved reserves would have been worth about $13.75 a share, and our probable reserves would be worth $8.20 a share. So back to building in the rest of our undeveloped land for which there is no locations assigned to and adjusting for debt and proceeds on stock options, we would have a net asset value of $22.75 a share at the end of 2023, significantly higher than what the market price of the shares are on the stock exchange. I'll now turn it over to David Wilson and will go through the operations part of the presentation.

Great. Thanks, Sadiq. Yes. So Kelt continues to develop its 3 major divisions, Oak/Flatrock, Pouce Coupe/Progress and Wembley/Pipestone. We've got a smaller property in Grande Cache that we are not doing any drilling on it. It's predominantly dry gas, but low decline and fairly good cash flow. So our operating divisions, here's a slide that shows the production and the oil gas splits on -- in each area that end up adding up to our 38% oil and NGL split. As you could see in '23, we ended up with a $25.74 netback. Like Sadiq said right now, what we're forecasting is going to be slightly lower than that. But with the price of -- current price of gas here today, even if you could come in at $22, we can turn off a significant amount of cash flow here. So our Kelt's land fairway, what's -- if you looked at the Montney fairway, you would see that this -- all of our lands are located in that Montney fairway. But what we've done with Kelt is we've predominantly tied up lands that are on the Northeast part of that Montney fairway. And what that does is it allows you to get -- chase the oilier part of the fairway. And for the most part, -- all 3 of our areas are located in the oilier or higher condensate parts of the Montney. You can see we've got a lot of -- our land holdings are quite substantial with over 900 sections. And the vast majority of that is Montney. So why the Montney? So the Montney is a pretty interesting formation. It's extremely thick. In some areas, it gets up close to 300 meters thick. And what that allows us to do is go in and develop numerous levels of the Montney. Some areas, we're developing 4 different levels, Maybe even in some cases, up to 5. And -- so obviously, the efficiencies when you can drill all these different levels from one location, use the same infrastructure for at all makes for exceptional play. And that's why this Montney play is so coveted there by industry. At the bottom of this slide, you'll see we've got some of the parameters of the different areas. I think the 1 thing to take away here is the pressure regime, you're not looking at super over-pressured formation here because we are playing the oily part of the zone. Typically, you're looking at 10%, maybe 15% overpressured. And because of that, you're able to be chasing the oilier part of this play. So starting in BC there at our Oak play, this is our biggest acreage division. It is probably our least developed or it is our least developed. We did have a bit of hiatus there where we couldn't actually drill or get permits here for a while. So that slowed this area down a little bit, but we're going to be fairly aggressive here. This year, we're only drilling 8 wells. We were going to drill 11 or 12, but we pulled that back, knowing that gas prices were going to be -- didn't look very strong this summer. And we know that Coastal GasLink and LNG Canada should be firing up here towards the end of the year. And once that happens, this market, the Station 2 market, we think, could be become one of the best markets in -- definitely in Western Canada maybe even in North America for a while until the industry gets caught up and replaces the 2 Bcf that's going to be coming off this market when LNG Canada starts up. So just to summarize it in Oak, we will drill 8 wells, get them completed. And then next year, expect a little bigger program from us as we as we kind of drill into this, what we think is going to be a much better gas market in BC. Capacity mentioned, ESG, one thing that is pretty remarkable about this Oak area is the fact that we're able to use the hydroelectricity to power our operations out here. So by the end of the year, we should have everything electrified. And that's going to allow us to be virtually commissions free on our operations from a day-to-day operations standpoint. Obviously, when we're drilling and completing that, that's going to create some emissions on its own, but the actual operations of production, we should get to the point where it's virtually CO2 neutral. Jumping over to Alberta. Not quite as big a land acreage as we have in BC, but it is more delineated and developed. We pretty much know all of our acreage here and understand productivity liquid yields. And we know what to expect if you were to drill anywhere on our acreage. It's quite diverse and just jump into the Pouce Coupe area here. What -- even though what the acreage is not great here as far as -- or not large compared to some of the other areas, this is one of the areas that we're developing for 4 different horizons. And that allows you to get a lot of wells into a fairly small acreage. A good example of that is just Pouce Coupe West or some people call it Gundy, we've only got 6 sections there, but we've -- I think we drilled 7 wells there to date. And we've got -- we still got 29 to drill yet. And huge reserves on these wells. It's quite a -- it's the one Montney area that we've got that is dryer gas. But having said that, it's only 9% liquids, but because it's such a huge EUR, you still end up with 247,000 barrels, which most people would consider that a pretty reasonable oil well. So we will -- we just drilled 3 of these wells and are waiting to complete them here this summer. And that's going to help us fill some of that processing the Sadiq was talking about earlier on. And then we've got some oilier Montney out here that will probably start looking at up in the northern part of the map here. Probably later in the year, we'll drill -- we've got 2 wells planned up there. Jump it over to Wembley/Pipestone. And this is probably the area that more people are acquainted with Kelt on is just because we've done a fair amount of drilling out here. What we try to do here is go out and delineate the entire acreage. So we've got 172 net sections here. And what we wanted to do, we understood that it's a very fertile place to be looking for oil and gas. And we wanted to understand it so that we were able to build our infrastructure properly so that we could go in and develop it at a later date and not have to rebuild infrastructure, lay more lines that we did it properly to start with. So right now, we've got 870 well locations un-risked. That does increase every year as we drill more and more wells and prove up more of the lands. Right now, we've got less than 1/4 of those booked with Sproule. And from a -- a good way to look at this is, it's about 50-50 gas and oil or gas and oil and liquids. Now they'll come on at a higher rate than that. They'll come on at probably about 60% oil and liquids. But as the wells produce over the next decade or so, the gas component will come up. And ultimately, the EUR on these currently is slated for about 53% gas on an EUR of about 3.4 Bcf and 470,000 barrels of oil and liquids. So what I mentioned previously about going in and delineating the acreage, that's so that we could plan on infrastructure, plan on processing in the future. And to that end, that's what we've done here. And you can see we've been very active from an infrastructure standpoint. We've got 4 of our own processing facilities. When I say processing facilities, I mean, batteries that have compression. So we're just finishing off our fourth battery at [ 14 and 2, ] and it's going to be our largest one. It will be -- it will have the ability to actually process up to 100 million of gas. Right now, when it comes on, we'll only be processing about -- or I should say when CSV comes on in the fourth quarter, it will be processing just over 50 million a day and associated liquids. But the facility will be big enough that we can add 2 more compressors and handle any liquids that come along with the additional gas that gets us up to 100 million a day there. Now from processing gas plant standpoint, once CSV is in place, we'll be able to -- we'll be connected to 5 different plants and from multiple different batteries, we'll be connected to different plants. So we have a lot of flexibility here to switch up plants if one plant is experiencing operational problems or whatever. And the other thing I'll mention here is our pipelines that we've put in, people may look at it and say, "Geez, you've overbuilt your pipeline infrastructure." But actually, what we've done here is we've planned for the next 5 to 10 years so that we're not coming back and having to build -- twin these lines and put in more pipe. So it's -- the majority of the money has been spent. Now all we have to do is go in and start development drilling, which we're starting to do this year. And to that end, what our plans are in Wembley/Pipestone is we plan to drill 3 pads this year. We're actually on our first one. First one is going to be 6 wells, move to another 5-well pad and then to a 3-well pad and throw in a Charlie Lake, and that's going to be our drilling program, and that should be -- along with some shut-in gas that we have now, that should give us up to our firm capacity or close to our firm capacity at CSV when it comes on. Moving on to the Charlie Lake. This is a really interesting play that we just, as of the last couple of years, have been able to put capital to just because we've been spending most of our capital developing or delineating our Montney plays. But these wells are quite oily. So it's pretty timely to be able to drill these wells now with the lower gas prices. And they're much cheaper to drill and pretty inexpensive to bring on. We've got -- for the most part, these are not dissimilar from what you see with the Montney from a liquid standpoint, about half and half oil and gas. A lot of these wells like the Montney will come on at 60% or even 70% oil out of the chute. We've got 55 wells that -- 55 locations. And that will go up here as we drill up a play that we've got in North [ Pouce ]. I'll bring up here in a second. And we've only got 27 actual locations booked on this play Wembley. So starting over in Spirit River, we've got that infrastructure or that battery is pretty much filled up. So we're just kind of drilling to fill there right now, and we will drill a couple of wells in this area from locations A to 27, I don't believe it's actually on here, but those wells we'll probably bring on in the summer. And what's interesting on this Charlie Lake play is just the amount of little stratified zones that you actually are able to intersect with these horizontals when you do the fracs, whether it's a Lower Charlie Lake or in the Upper Charlie Lake, you're able to connect up all these little stratified sands that may cover 35 or 40 meters, and you end up with these tremendous wells. I mentioned a newer Charlie Lake play that we've got up in Pouce Coupe North we call it. We drilled 3 horizontals into it. Initial horizontal has been on for just over a year, I guess. Really good rates out of this. And it's made us go in and actually increase our capacity at the battery. This was an older battery that we've kind of revamped. We're going to increase the capacity here again this summer and twin a line or 2 -- sales line out of here so that we can go in here and have a pretty good program next year. This year, we're -- we've got 2 horizontals planned in the Pouce Coupe, also looking at possibly drilling 1 or 2 Montney wells in this area. Last Charlie Lake play is down in the Wembley area and don't have quite the acreage here, but what we do have is pretty synergetic to our Montney acreage. We were able to drill these off of locations that have Montney plays -- or Montney wells on them. So it's quite efficient. And these wells although expensive than the wells in the Pouce Spirit River area, they are also have higher productivity. As you can see, we drilled 2 wells, 1 was almost 1,500 BOEs. IP30, the other was over 1,200 BOEs. And the nice thing about these is, like I mentioned before, you're upwards 70% oil and liquids are, in some cases, even higher. We just drilled a third well out here, 12 x 12. And it actually just went on production yesterday. So we'll wait and see what we end up there, but I suspect it to be a pretty good well as well. So as far as Sadiq mentioned, why you look at Celtic -- or Kelt, sorry, the thing I think that Kelt has going for it now is we've tied up all the land. We've, for the most part, put in virtually all the infrastructure we need to put in. And go forward, it's just a matter of developing these 3 areas. And we've got I would say, from a Montney standpoint, has big acreage for our size of the company as any company out there. And for the most part, it's pretty much all proved up. So I think going forward, we can grow the company at a pretty big quick pace and do it do it all on cash flow. That concludes the presentation. And guess we'll see everybody next year.

Thank you, everybody.