Kolibri Global Energy Inc. (KEI.TO) Q3 Results - Nov 14

[dan_s]

THIRD QUARTER 2023 HIGHLIGHTS < Good news. Q4 will be even better.

* Average production for the third quarter of 2023 was 2,737 BOEPD, an
increase of 61% compared to third quarter 2022 production of 1,702 BOEPD.
This increase is due to production from the Emery 17-2H, the Brock 9-3H
and the Glenn 16-3H wells, which started production at the end of 2022,
and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started
production in the last week of June 2023. The production increases were
partially offset by production restrictions due to the Company’s gathering
system operator, existing wells that were shut-in while completion
operations were underway and a few well reworks. These reduced third
quarter production by approximately 200 BOEPD

* Adjusted EBITDA^(1) was $9.5 million in the third quarter of 2023 compared
to $6.9 million in the third quarter of 2022, an increase of 39%. The
increase was primarily due to an increase in production of 61% and lower
realized losses on commodity contracts, partially offset by a decrease in
average prices of 20%

* Revenue, net of royalties was $12.7 million in the third quarter of 2023
compared to $9.9 million for the third quarter of 2022, which was an
increase of 29%, as production increased by 61% partially offset by a
decrease in average prices of 20%

* Net income for the third quarter of 2023 was $2.3 million and Basic EPS
was $0.07/share compared to net income of $9.3 million and Basic EPS of
$0.26 for the third quarter of 2022. The decrease was mainly due to an
unrealized loss on commodity contracts of $2.6 million in the third
quarter of 2023 versus an unrealized gain on commodity contracts of $4.6
million that was recorded in the third quarter of 2022. In addition, the
third quarter of 2023 had lower average prices and higher depreciation
expense which was offset by higher production compared to the third
quarter of 2022

* Average netback from operations^(2) for the third quarter of 2023 was
$43.28/boe, a decrease of 22% from the prior year third quarter due to
lower prices in 2023. Average netback including commodity contracts^(2)
for the third quarter of 2023 was $41.65 per boe, a decrease of 16% from
the prior year third quarter due to lower prices

* Production and operating expenses per barrel averaged $7.34 per BOE in the
third quarter of 2023 compared to $7.77 per BOE in the third quarter of
2022, a decrease of 6%. The $7.34 per BOE in the third quarter includes
prior month costs, which our gathering system operator had underbilled for
previous periods. In addition, due to the Company’s recent completion
operations, some of the adjacent existing wells are producing additional
water, which is expected to decrease over time

* In October 2023, the credit facility was redetermined with the same $40
million borrowing base. At September 30, 2023, the Company had $15.8
million of available borrowing capacity on its credit agreement and its
net debt outstanding was $23.8 million

KEI’s President and Chief Executive Officer, Wolf Regener commented:

“We are pleased that the Company continues to grow our operations with third
quarter 2023 adjusted EBITDA^(1) of $9.5 million, a 39% increase from the
prior year quarter. With the Barnes 7-4H and the Barnes 7-5H wells starting
production at the beginning of October and the Emery 17-3H, 17-4H and 17-5H
wells expected to start production at the beginning of December, we expect a
continued increase in our cash flow in the fourth quarter. The Barnes 7-4H
well had a thirty-day production rate of 665 BOEPD, and the Barnes 7-5H had a
thirty-day production rate of 613 BOEPD.

“We are also continuing to improve the efficiency of our field operations as
the Barnes 7-4H and Barnes 7-5H wells had an average total cost of
approximately $6 million per well and the 3 Emery wells were drilled at an
average time of only 11 days each. This is a dramatic improvement, as we were
estimating 20-day wells at the beginning of this year. We expect to start
completion operations for the Emery 17-3H, 17-4H and 17-5 wells in the next
week and expect them to begin producing in early December. We are excited to
apply our new completion technique to the Emery 17-4H well, which is the
second well we have drilled in the T-zone, to demonstrate the repeatability of
making economic wells in this new formation.

“We have also scheduled to begin drilling the first well in our next 3 well
pad in mid-December. The three well pad will consist of two lower Caney wells
and one T-zone well.

“Average production for the third quarter of 2023 was 2,737 BOEPD, an increase
of 61% compared to third quarter 2022 production of 1,702 BOEPD due to
production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells,
which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H
and Barnes 8-3H wells, which started production in the last week of June 2023,
partially offset by the wells that were shut-in during completion operations
and the production restrictions from the gathering system operator.

“Adjusted EBITDA^(1) was $9.5 million for the third quarter of 2023 compared
to $6.9 million for the prior year third quarter, an increase of 39%. The
increase was due to the increase in production partially offset by a decrease
in average prices.

“Net revenue was $12.7 million in the third quarter of 2023 compared to $9.9
million for third quarter of 2022, which was an increase of 29% due to higher
production partially offset by lower prices.

“Net income for the third quarter of 2023 was $2.3 million compared to net
income of $9.3 million for the third quarter of 2022. The decrease was mainly
due to an unrealized loss on commodity contracts of $2.6 million in the third
quarter of 2023 versus an unrealized gain on commodity contracts of $4.6
million that was recorded in the third quarter of 2022. In addition, the third
quarter of 2023 had lower average prices and higher depreciation expense,
which was offset by higher production compared to the third quarter of 2022.

“Netback from operations^(2) decreased to $43.28 per BOE in the third quarter
of 2023 compared to $55.16 per BOE in the same period of 2022, a decrease of
22%. Netback including commodity contracts^(2) for the third quarter of 2023
was $41.65 per BOE compared to $49.69 in 2022, a decrease of 16% from the
prior year period. The 2023 decreases compared to the same periods in the
prior year were due to the decrease in average prices.

“Operating expenses averaged $7.34 per BOE in the third quarter of 2023
compared to $7.77 per BOE in the third quarter of 2022, a decrease of 6%. The
$7.34 per BOE in the third quarter includes prior month costs, which our
gathering system operator had underbilled for previous periods. In addition,
due to the Company’s recent completion operations, some of the adjacent
existing wells are producing additional water, which is expected to decrease
over time.”

[dan_s]

Top line revenues and Adjusted Net Income below my forecast due to gathering system issues that carried over from Q2. See last sentence below. Kolibri should report a big increase in production from Q3 to Q4 with a 2023 exit rate near 5,000 Boepd.

"Average production for the third quarter of 2023 was 2,737 BOEPD, an increase of 61% compared to third quarter 2022 production of 1,702 BOEPD. This increase is due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells, which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started production in the last week of June 2023. The production increases were partially offset by production restrictions due to the Company’s gathering system operator, existing wells that were shut-in while completion operations were underway and a few well reworks. These reduced third quarter production by approximately 200 BOEPD."