Kelt Exploration Stock Is on Track for More Upside

Kelt Exploration [stock_market_widget type="inline" template="generic" color="default" assets="KEL.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock had started losing some momentum before the company’s impressive first-quarter results released at the beginning of May helped it stage a comeback.

Kelt stock has shot up over the past few weeks, and don’t be surprised to see it heading higher as the company seems to be pulling the right strings. Let’s take a closer look at how Kelt performed last quarter and what lies in store for the company.

Impressive Financial Growth

Thanks to the higher revenue, Kelt delivered a profit during the quarter as compared to a small loss in the prior-year period.

Kelt Exploration delivered petroleum and natural gas revenue of C$102.5 million for the first quarter, up 14% from the prior-year period’s revenue of nearly C$90 million.

Thanks to the higher revenue, Kelt delivered a profit during the quarter as compared to a small loss in the prior-year period. What’s more, its adjusted funds from operations increased 13% year over year to C$51.4 million as compared to C$45.7 million a year ago.

The improvement in Kelt’s financial performance was a result of an increase in output. The company’s combined output for the quarter came in at 27,057 barrels of oil equivalent per day, a slight improvement from the prior-year period’s output of 26,978 barrels of oil equivalent.

But more importantly, Kelt enjoyed a nice bump in the average realized price of oil during the quarter. After taking into account the impact of derivatives, Kelt’s average realized price for the quarter came in at C$40.64 per barrel, up 12% from the year-ago period’s number of C$36.07 per barrel of oil equivalent.

Thanks to the higher pricing, Kelt’s operating netback increased to C$23.39 per barrel of oil equivalent as compared to the year-ago period’s operating netback of C$20.47. In all, Kelt delivered a nice set of results thanks to higher oil prices.

More Growth Ahead

Analysts expect Kelt’s revenue to jump 28% in 2019, while earnings are expected to increase to C$0.18 per share from $0.04 per share in the year-ago period.

The company looks well-placed to achieve that as it expects its production to increase around 26% in 2019 to a range of 33,500-34,500 barrels of oil equivalent per day. The higher production will allow Kelt to take advantage of an increase in oil prices, which have stabilized at respective levels of late.

WTI oil is currently at almost $63 per barrel, and it can go higher because of several factors at play. These include an improving economic scenario in the U.S., strong Chinese oil demand, and sanctions on countries such as Venezuela and Iran.

Not surprisingly, economists have turned positive on oil prices, raising their forecasts for the year. This is good news for Kelt as it has based its 2019 forecasts on a $60 WTI oil price. Now that WTI oil is trading at a higher level, don’t be surprised to see the company growing at a faster pace as the year progresses.

Kelt Exploration stock seems all set to deliver more upside going forward, making it a great stock to add to your portfolio.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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