Good afternoon, ladies and gentlemen. Welcome to the meeting of the shareholders of Kelt Exploration Ltd. My name is David Wilson, I'm the President, Chief Executive Officer and a Director of Kelt Exploration Ltd. I will assume the position of Chairman for this meeting. In order to ensure that the meeting covers the required business in an efficient manner, we have pre-arranged with designated shareholders or proxy holders to move and second the motions of business. The meeting will now come to order, if there are no objections, I shall ask Louise Lee to act as recording secretary of the meeting and Nazeem Nattu of Odyssey Trust Company to act as scrutineer of the meeting.
The 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 two 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 of 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 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. Questions will be addressed at the appropriate time during the meeting. For the purpose 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 have 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 a presentation of the auditor's report and the financial statement of the corporation for the year ended December 31st, 2022. Copies of the foregoing were mailed to each registered shareholder and 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 31st, 2022 are hereby acknowledged. I direct the financial statements and the auditor's report be annexed to 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 six members.
I second the motion.
You 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 Geraldine L. Greenall, William C. Guinan, 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, Geraldine L. Greenall, William C. Guinan, 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 that 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've heard the resolution. I will now proceed with the next item of business. The next item of business is the approval of a special resolution authorizing an amendment to the articles of the corporation to amend the preferred shares, all as more particularly described in the corporation's management information circular prepared in connection with the meeting.
I move to approve a special resolution authorizing an amendment to the articles of the corporation to amend the preferred shares, all as more particularly described in the corporation's management information circular prepared in conne ction with this meeting.
I second the motion.
You heard the resolution. I will now proceed with the next item of business. The next item of business is the approval of an ordinary resolution adopting, ratifying, and confirming amended and restated bylaws of the corporation. All is more particularly described in the Corporation's management information circular, prepared in connection with the meeting.
I move to approve an ordinary resolution adopting, ratifying, and confirming amended and restated bylaws of the Corporation, all as more particularly described in the Corporation's management information circular prepared in connection with this meeting.
I second the motion.
You've heard the resolution. There is no further discussion, we will proceed with voting. We mentioned, voting today will be conducted by electronic ballot. A reminder, if you have already voted in advance, do not vote again unless you wanna change your vote. If you vote again using the online ballot, your online vote will revoke your previously submitted vote proxy. I will now take a moment to ask that the balloting be opened to re-registered shareholders and duly appointed proxy holders. The polls are now open. At this point, all registered shareholders and duly appointed proxy holders who have properly logged in with their control numbers or username in which 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 vote, voting page and by selecting the for or against buttons next to the resolution, fixing the number of directors, approval of amendment to the articles, and approval of the amended and restated bylaws, 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 PricewaterhouseCoopers LLP as the corporation's auditors. We will provide registered shareholders and duly appointed proxy holders approximately one minute to complete the electronic ballots. Once the electronic ballot closes, the voting page will disappear, and your votes will be automatically submitted. I now declare the polls closed. I've been advised by the scrutineer that a sufficient number of votes were received to pass all of the resolutions before us today.
That concludes the formal business brought before the meeting. As there's no further business, I declare the formal part of the meeting to be concluded. We will now proceed to the management presentation. Although we will not be holding a question and answer period, we will welcome any shareholders to contact us directly after the presentation. I will now kick it over to Sadiq, and he'll start the presentation.
Thanks, Dave. Welcome, Kelt shareholders to our 10th year in business after starting back in February 2003. Just to kick it off, a quick summary here. As we started the company back in 2013, it was the sale of a previous company that we managed called Celtic Exploration. We spun out about CAD 140 million of assets from Celtic to start up Kelt Exploration as part of the sale of Celtic to Exxon. Since then, we have built up and sold a couple of our Montney assets. The Carr assets were sold in January 2017 for CAD 100 million, and the Inga assets were sold in August 2020 for CAD 510 million.
That last sale basically allowed us to eliminate about $450 million of debt, including convertible debentures, providing a significant return to Kelt shareholders. Our value creation style is very similar to our previous company, where we tend to build large resource positions during downturns, and a lot of the Montney acreage and Charlie Lake assets that we currently own were accumulated during that last downturn in 2015 and 2016. We now have about 344,000 acres of Montney rights and just over 88,000 acres of Charlie Lake rights.
On a long-term basis, we aim to return to shareholders a two times or better recycle ratio on a proved as probable basis, and have been successful in doing so over the last 10 years. Management and the board are aligned with shareholders through their significant equity ownership in the company. As you can see from the next slide, insiders have participated... Actually, I'll move on just to talk about that. Insiders have participated in all of the equity offerings that we've done to date, and have also been actively purchasing stock in the open market. You can see from here, we've spent over CAD 145 million accumulating 30.9 million shares at an average price of CAD 4.70 a share.
That gives the insiders, directors, and officers an 18% ownership interest in the company, 20% diluted. Our current market cap is around CAD 900 million, and the stock has traded in that CAD 4.29-CAD 8.32 range over the last 52 weeks. We place a lot of emphasis on ESG and have ESG reports on our website, you know, focusing on all three components of E, S, and G. We will get into some more detailed information on how we're reducing emissions on one of our major properties in BC later on in the presentation. Moving on to our budget for the year. We are looking to spend CAD 285 million in capital this year.
You know, a large chunk of that spending will be on drilling and completing wells, about CAD 195 million, and CAD 70 million on infrastructure and facilities. The balance will be spent on land, seismic, and miner property acquisitions. The drilling program does provide for 27 gross wells, 26 net wells, and 29 completions and 28 net completions. The focus this year will be primarily in Alberta, you know, where we'll complete about 22 wells, and we do have a 6-well program in our Oak property in British Columbia as well. Production for the year is estimated to average between 32,000 and 34,000 BOEs a day. You know, we are weighted about 62% to gas and 38% to oil and liquids.
That's all gonna be accomplished with cash flow, giving us somewhere between 17%-25% growth over the previous year. For commodity prices, we are assuming an average WTI oil price of $78 U.S. a barrel, and we're assuming a NYMEX gas price of $3.25. These prices are not too far off from what strip pricing looks like today. We're also forecasting an average exchange rate of 1.331 or $0.75 U.S. These would give us realized prices of just over $96 bucks a barrel for oil, just over $52 a barrel for NGLs, and $3.64 realized per Mcf for gas. These prices that we're using in the 2023 forecast are significantly lower than what we saw last year.
In 2022, WTI averaged $94.80 a barrel, and NYMEX averaged $6.38 at MMBtu. You know, with the, with the economy moving in the direction of a recession, fears for less demand for oil has had its toll on WTI oil prices. Obviously with what went on in the winter, a pretty mild winter in North America as well as Europe, and LNG exports interrupted in the U.S. through a facility shutdown, has resulted in excess gas supplies and storage, which has also reduced the price of gas. Hence, we are forecasting both commodities to be quite a bit lower in 2023 compared to 2022. On the gas marketing side, we've diversified our contracts, and we don't have a significant exposure to one single hub.
You know, for the average volumes in 2023, we're forecasting about 21% to be exposed to the AECO Hub, 18% to Dawn, and 33% to Henry Hub, and 9% to Chicago. This sort of diversification gives us a hedge on our gas in terms of fetching an average price that is not necessarily at risk with just one hub in the portfolio. We do have some commodity price contracts. Most of our gas contracts expired in the first quarter, which would've been pretty meaningful in terms of hedging gains for the first quarter of this year. For the summer, we have moved our exposure, as you saw from the previous slide, from AECO to Henry Hub using these basis deals on a financial basis.
We do have some foreign currency locked in at rates that are better than what current rates are. Having an issue with the slides moving here. There we go. On the netback slide, you can see we are forecasting a netback of just over CAD 25/BOE for 2023, which would be 26% lower than what we had last year, which was CAD 33.98/BOE. Most of that goes right to the bottom line as we keep our G&A and interest expenses fairly low at CAD 1.19 for G&A and CAD 0.17 for interest. It's giving us CAD 23.66/BOE right to the funds from operations line. To summarize, we are looking at revenue of CAD 530 million for 2023, which would be 14% lower than last year.
Funds from operations of CAD 285 million, which matches our capital expenditure spend, giving us little to no debt at the end of the year of CAD 14.8 million. Running a fairly strong balance sheet here and expect to continue to do so with the commodity prices where they are currently. For reserves, we did come out with a press release back in February outlining our reserves for 2022. You'll notice we grew our reserves pretty significantly on all three categories. PDP reserves were up 39% year-over-year, proved reserves were up 43%, and P+P reserves were up 34%.
We ended up replacing our production on a PDP basis by 273% and 684% on a proved basis and 973% on a 2P basis. Future development capital, we are looking to spend, and this is just built into the reserve report, about CAD 1.2 billion of future capital to realize our proved reserves and CAD 2 billion to represent to realize our 2P reserves. This program is pretty much run over a five-year period and would match what our current annual spending looks like. Our finding costs last year were pretty good. We ended up averaging CAD 11.65 of BOE on a PDP basis, which on our netback of CAD 33.98 of BOE gave us a 2.9 x recycle ratio.
On a proved basis, we ended up with a three times recycle ratio and on a 2P basis, three and a half times. When Sproule prepared the reserve report, they would have used a forecast that would have looked very similar to what strip pricing was back in December of 2022. At that time, the strip on WTI would have been closer to $86 for 2023 and $84 for 2024, and NYMEX would have been $5 for 2023 and $4.50 for 2024. Using the Sproule price deck, the net asset value per share for Kelt at the end of last year would have been CAD 17.87 a share. I'll now turn it over to Dave Wilson to continue the presentation on the operations front.
Thanks, Sadiq. Yeah, as usual there, Kelt continues to develop its three main areas, Oak/ Flatrock, Pouce Progress and Wembley/Pipestone. We also have some Cretaceous gas in the Grande Cache area, but we're not too active there. That's something we're just letting cash flow and using that cash flow to invest in these other three main areas. When we, when we started Kelt, the one thing we wanted to do was get as much Montney land in the oil prone part of the Montney fairway. To that end, that's what we've done. We've got the Oak Creek in B.C. and then the Progress down into Wembley.
It's all on that east side of the Montney fairway, where it tends to be much oilier than it is on the west side. You know, as a result, we've ended up with some pretty good land holdings here and continue to see some real good results. Right now got a total of 538 Montney sections, not quite split half and half between Alberta and BC. Got a few more in BC there at 303. The second play that we're quite active in is the Charlie Lake, where we've got 138 sections in Alberta. Total acreage, including other zones, are 906 sections.
What makes this Montney work so well, and why it's such a coveted resource play, is the fact that there's so many different horizons within the Montney. you know, both in Pipestone and in the Pouce Coupe field, we're actually developing four different horizons. It makes for a lot of inventory, you know, on even if you don't have a lot of land, you can have a lot of inventory in these two areas. In Oak/Flatrock, we've actually just drilled our first well into the upper portion of the Upper Montney. It shows up as LDS on the little cartoon there. It's probably looks like it could be one of our best wells.
We're starting to wine rack wells in that Upper Montney, and then we're also have drilled wells in the Middle Montney. Looks like some pretty good room to run in Oak as well. Speaking of Oak, you could see that we've got a very large land holding here. It's one of the bigger blocks in BC. You know, it makes for a very efficient operation when you've got this much land all contiguous. What's really fortunate for us is the fact that it's situated right on top of these two main pipelines which deliver the gas to the MacBat Gas Plant.
At MacBad, we've done a deal with North River whereby we've got processing capacity, and we have availability of future processing capacity, so that we can develop this acreage. You know, it's set up quite well so that we can actually even deliver our oil or condensate downline and get it at the MacBat Gas Plant, so that we don't have to actually truck oil. I mentioned a couple of the wells that we just recently drilled in Oak, and you could see, well, this might be a bit of an eyetest there for some people, especially Sadiq, he's colorblind.
You could see the two circles there, that the upper one is actually the one first well that we tried in the upper portion of the Upper Montney. You can see it's outperforming pretty much everything. Like I said, it's hard to see here, but the dotted line is the actual average of all our wells in this play. The solid line is the Sproule curve. You know, you can see that the dotted line is above the Sproule curve. I think what's significant is these last two wells we drilled are, you know, much above the Sproule curve and above the average there. We're pretty happy with how this place been going here so far.
Sadiq mentioned how we're working on the environmental side of the company here. This is a real good example of where we can really diminish emissions almost to the point of zero while producing this Oak property. What we've done is when we built the pads and drilled wells and tied them in, we actually installed solar panels and piped in instrument air so that there is no emissions at the pads themselves. At the battery and compression site, we've got electronic flares, so you don't have a continuous pilot flare burning.
We've got a water injector well, and we've just drilled a second one in preparation for some new wells that we're gonna just start completing here after breakup. No water has to be trucked from the site to outside disposal. From a ESG standpoint and from a, you know, an economic standpoint, you know, we're this water management is working very well. The last thing that really sets this apart from anywhere else is, as of about July, we plan to be tied into the hydro system here. We will convert all of our compression to hydroelectricity, and we'll be able to say that we are virtually emissions free on this property.
It should put us, you know, kind of front and center there in regards to our peers as far as emissions control goal. Jumping over into Alberta. We've got the Montney lands, as I'd mentioned before, about 235 net sections. They don't all show up on this map. We've chosen not to show some just due to competitive issues. What we've found here, like I'd mentioned previously, is, you know, with the amount of the different horizons, we've ended up with quite a large inventory of lands, even in the Pouce and Progress area, just because we've got a lot of different zones to deal with there.
Speaking of Pouce /Progress, you know, a good example of what I said there in that you get a lot of inventory with a small amount of land. Over on the very bottom corner of the map there, you can see six sections. We call it Pouce to K West. We've got about 32 locations left on it. Actually, 30 locations left on it to drill. These wells come on at CAD 10 or 12 million a day. Fairly dry gas. It's kind of the only area that we've got real dry gas in the Montney. The amount of reserves are quite impressive.
You know, it really helps us keep all these plants full that we deliver to. just speaking of the plants, we've got three plants here that we've got, we've tied up processing at. Two North River plants, Gordondale East and Fourth Creek, and then the Progress plant where we actually have ownership. We've got about CAD 30, just over CAD 32 million of ownership there. then the North River plants, we have access to up to CAD 50 million a day of throughput there. lots of, lots of running room here. you know, we can continue to develop these Montney lands in the Pouce area. jumping down to Wembley. you know, this is probably our most developed. no, I wouldn't say developed.
Our most busy land that we've got in the company. We've been very busy drilling wells here. You can see we've delineated a bit very well. We're actually just drilling two wells on the very southeast corner of the block, just on the outskirts of Grande Prairie. The two wells that we're drilling there will actually extend right to the very eastern edge of the block, and the other one will extend right to the southern edge of the block. At that point, we'll have what we feel will be a complete delineation of this 171 sections.
You know, it's, it should be ready for full-fledged development at that point, of which we've actually just started in the last year here drilling some larger pads. With this big land block, obviously, when we first got here, had virtually most of it had not had infrastructure developed on it yet. We've been quite busy over the last three years putting in pipelines, batteries. We currently have three major batteries here, and we are pipelined, as you can see. We are pipelined, there we go, to five different plants, or we will be once the CSV plant is up and running.
We've got a lot of interconnectivity here that allows us to go to different plants if one plant happens to be down. As I mentioned on the previous slide, we're set up very well to start developing this on a pad-style basis. Currently on a 5-well, or actually maybe it's a 6-well pad right now, and plan to continue that go forward. What we've been able to do here is we've tied up processing over the next couple of years. Right now, our processing is full. We've actually got wells behind pipe waiting to come on, and we're currently drilling wells that will address some new processing that comes on at the end of the year or the start of next year.
That's gonna be going into Keyera, about CAD 25 million a day there. In the fourth quarter of 2024, we'll have another ramp up of another CAD 50 million going to CSV. We'll have some big blocks of production that come on production here over the next couple of years that we're currently drilling wells for now so that we're ready to address the new processing. You know, once we get the final CAD 50 million to CSV, we'll be somewhere in that 25,000-30,000 BOEs out of this area. Jumping into the Charlie Lake lands, we've one thing that's been good about kinda filling up our processing in Wembley is it's allowed us to direct some capital into our Charlie Lake lands.
I mean, we always knew we had some great Charlie Lake acreage, but over the past couple of years, we've discovered just how good it was. You know, most of these wells that we've been drilling here in the last year or so, they've been coming on in that 1,000 barrel a day range, you know, typically around 70% oil. You know, it's a shallower zone. It's less. We are less aggressive on the stimulation, so it's less expensive than the Montney wells, but we're seeing some huge wells here and, you know, as a result, some very good economics. Down in Wembley Pipestone, we've actually drilled our first two Charlie Lake wells.
They, like I said, both those wells are 1,000 BOEs or came on 1,000 BOEs or more. The one was probably closer to 1,200 or 1,300 BOEs. Just recently, we've enlarged a battery in Spirit River and brought on another 4- wells there, actually 6- wells there. We've got two more wells that are waiting to come on, but we've got the battery full right now. These things have kinda been better than we actually anticipated, and as a result, you know, we've got some behind pipe that are waiting for room in the battery.
The reason these wells are so, you know, the horizontals work so well in this Charlie Lake zone is you can see on the side of the slide there, the logs, how you've got all these little stratified zones throughout the Charlie Lake zone. You're able to access all these with the horizontals, and you're able to frack up and down into, you know, up to 15 or 20 of these little zones. You end up with some very good recoveries. Just to finish off here, you know, I think we've got as good or as anybody as far as inventory in the three different areas there. We're very long inventory.
We've got lots of oil exposure, both in the Montney and the Charlie Lake. You know, we've got a little different game plan than a lot of people out there due to that reason, because we have such a large land base and so much inventory. We continue to put money back into the ground and develop these plays. We think that, down the road, that's gonna show some big benefits there as people realize that inventory is hard to come by and, you know, I think we'll be in pretty good shape there at some point when we wanna sell one or two of these areas. I think that pretty much sums up the presentation.
We'll just sign off here.
Yeah. Thank you, everybody.
Thanks.
Thanks for everybody to attend the Kelt's AGM.