Kiwetinohk Energy (KEC) Q2 2024 earnings summary

Executive summary

• Achieved strong Q2 2024 upstream production of 26,924 boe/d, exceeding estimates despite anticipated declines before new wells come online.

• Completed three Duvernay wells at Tony Creek, with initial rates in line with expectations; further drilling and completions ongoing.

• Power division remains cautious on spending due to regulatory and political uncertainty in Alberta's energy market.

Financial highlights

• Adjusted funds flow from operations was $60.6 million ($1.39/share) in Q2, with year-to-date at $3.11/share.

• Operating netback reached $27.81/boe, and operating costs were $6.17/boe, both ahead of plan.

• Net loss for Q2 was $26.5 million, compared to net income of $21.7 million in Q2 2023.

• Capital expenditures before acquisitions/dispositions totaled $70.4 million, in line with budget.

• Exited Q2 with a 0.81x net debt to annualized adjusted funds flow from operations ratio and $253 million in available borrowing capacity.

Outlook and guidance

• Increased full-year 2024 production guidance to 26.0–27.5 Mboe/d (from 25.0–27.5 Mboe/d).

• Reduced full-year operating cost guidance to $7.25–$7.75/boe and transportation cost guidance to $5.50–$6.00/boe.

• Reviewing opportunities to accelerate drilling in H2 2024 to boost projected 2025 returns.

• Sensitivities for net debt to adjusted funds flow ratio increased due to lower realized pricing and minor unplanned downtime.