Kiwetinohk Energy (KEC) Q3 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in Q3 2024, with production rising 23% year-over-year to 25,996 boe/d and a balanced mix of 51% natural gas and 49% condensate/NGLs.

• Seven new Duvernay wells and one Simonette Montney well came online, performing in line with or exceeding expectations.

• Accelerated capital program to bring forward three wells, increasing short-term net debt but positioning for free cash flow and debt repayment in early 2025.

• Maintained robust netbacks and low operating costs, supported by owned infrastructure and extended Alliance Pipeline capacity.

• Power division remains cautious on capital deployment due to regulatory and policy uncertainty.

Financial highlights

• Q3 netback was CAD 28.98 per BOE, with adjusted operating netback at CAD 30.89 per BOE; quarterly netbacks have averaged CAD 32.50 per BOE since 2023.

• Q3 adjusted funds flow from operations was $64.7 million; year-to-date total reached $200.4 million ($4.59/share).

• Operating costs were CAD 7.19 per BOE in Q3, a 22% reduction year-over-year, and tracking to the low end of annual targets.

• Capital expenditures before acquisitions/dispositions were $91.0 million in Q3, with approximately CAD 237 million invested in the first nine months of 2024, 85% funded by cash flows.

• Ended the quarter with strong credit facility availability of about CAD 230 million.

Outlook and guidance

• Nine wells expected online by end of Q1 2025, enabling free cash flow and debt repayment.

• 2024 capital guidance increased to $330–$350 million, up from $320–$340 million, reflecting accelerated drilling.

• Adjusted funds flow from operations for 2024 is expected at $260–$280 million, assuming US$70/bbl WTI and US$2.50/MMBtu HH.

• Guidance retains flexibility to adapt 2025 capital spending to commodity price volatility.

• 2025 budget and guidance to be released later in Q4 2024; annual production guidance remains increased from original budget.