Kiwetinohk Energy (KEC) Q1 2025 earnings summary

Executive summary

• Achieved record Q1 2025 production of 32,611 boe/d, up 18% from Q4 2024, driven by new Duvernay and Montney wells and significant cost reductions.

• Generated $29.5 million in free cash flow and $21 million from the sale of the Opal gas-fired power project, strengthening the balance sheet.

• Engaged National Bank Financial and RBC Capital Markets to review strategic alternatives, including asset sales, mergers, or new financing.

• Targeting four consecutive years of double-digit upstream production growth, with 2025 guidance of 31.0–34.0 Mboe/d.

• Advanced power division with ~2 GW capacity in pipeline, including solar and gas-fired projects, and two early-stage carbon hubs.

Financial highlights

• Generated CAD 115.9 million in funds flow from operations and CAD 29.5 million in free funds flow in Q1; net income of $54.9 million, up from $11.1 million year-over-year.

• Production averaged 32,611 BOE per day, with 47% liquids, up 18% from the previous quarter.

• Operating costs reduced to CAD 5.20 per BOE in Q1, supporting a netback of CAD 43.52 per BOE, up 39% from Q4 2024.

• Net debt reduced to $234.8 million from $272.8 million at year-end; net debt to annualized adjusted funds flow ratio improved to 0.75, a 25% quarter-over-quarter improvement.

• Capital spending of CAD 86.4 million was fully funded by operations; net capital costs after asset sale were CAD 65.3 million.

Outlook and guidance

• 2025 production guidance: 31.0–34.0 Mboe/d, with 45–49% oil & liquids; annual operating cost guidance reduced to $6.75–$7.25/boe and transportation to $5.75–$6.00/boe.

• Forecasting CAD 375 million of adjusted funds flow for 2025 at current forward pricing; free cash flow sensitivity: $22.5 million at US$50/bbl WTI and US$2.50/MMBtu Henry Hub.

• Net debt to adjusted funds flow from operations expected at 0.5x–0.6x; capital allocation prioritizes debt repayment, high-value growth, and return of capital.

• Confident in maintaining production growth and total returns despite macroeconomic uncertainty.

• Upstream capital: $290–$315MM; plant expansion/maintenance: $20–$25MM.