The entrepreneurs who sold Celtic Exploration Ltd. to Exxon Mobil Corp. less than three years ago for C$2.6 billion ($2.01 billion) are carving up their latest venture, Kelt Exploration Ltd., to prepare for more deals.
Kelt, a spinoff of Celtic run by that company’s former CEO David Wilson and CFO Sadiq Lalani, is being designed so its two separate units in British Columbia and Alberta appeal to different buyers, Lalani said July 10. Kelt may attract a liquefied natural gas developer to buy its British Columbia lands in another three years, when export projects may need more supplies, he said.
In the meantime, Kelt is focused on boosting per-share production by at least 20 percent annually, keeping returns high and growing drilling opportunities faster than output, he said. “You’ve got to just build your company and keep building it until the stars line up.”
Exxon and Petroliam Nasional Bhd. have made multibillion-dollar takeovers in Canada to supply their LNG projects. They are among at least 19 Pacific Coast proposals that are giving producers hope to reach new markets after a shale supply boom reduced North American prices. Petronas, as the Malaysian state-owned company is known, purchased Progress Energy Resources Ltd. for C$5.16 billion in 2012.
The prospect of a deal with an LNG developer is making investors value Kelt at a premium to its peers, according to AltaCorp Capital Inc. The company is poised to trade at 9.8 times its earnings before interest, depreciation, taxes and amortization relative to its debt-adjusted cash flow next year, compared with 7.8 times for comparable Canadian producers, said Jeremy McCrea, an AltaCorp analyst in Calgary.
Kelt split up its operations into two companies after completing the purchase of Artek Exploration Ltd., a British Columbia-focused gas producer, in April. The company expects output to average 20,000 barrels of oil a day equivalent in 2015, more than five times its 2013 production.