Kolibri Global Energy (KEI & KGEIF in US) Research Report

[dan_s]

Summary of a 14-page research report on KEI.TO that was published by Seawolf Research on 1-24-2023. My comments are in blue.

Kolibri is a California-based, Oklahoma-focused E&P with ~17,400 net acres in the Tishomingo field of
the prolific SCOOP region, all held by production (under a very oily 78% oil, 11% NGLs, 11% gas
production mix), and with another 180 net drilling locations ready for development. The company’s
stock has experienced decent momentum over the past six months, with its Canada-listed shares
running from a July 6 low close of CAD$1.48, to over CAD$2.00 by mid-October. Shares then went on a
veritable tear, breaking CAD$4.00 before year’s end, and now trading above CAD$6 as of this writing,
with a January 24 close of CAD$6.16.
> The fact that all of the Tishomingo Field leasehold is held-by-production is extremely important. HBP leases are much more valuable than leases with expiration dates because it removes the risk that wells will be drilled just to hold leases.
> Exxon holds the deep rights and it is their wells that hold the leases.
> My current valuation is $8.67Cdn/share ($6.50USD for KGEIF), but it is based on a forecast of just 4,000 Boepd of production in 2023. Kolibri now generates more than enough operating cash flow to fund a continuous drilling program that could easily ramp up production to over 10,000 Boepd this year.

Like the proverbial snowball rolling downhill, gathering size and momentum as it travels, many small
tweaks and changes on completion design are propelling a runaway train of oil production for Kolibri.
Management's forecasted individual well production targets are being beat by roughly double, again a
result of management’s use of new drilling and completion technologies. The economics of Kolibri’s
new wells are, simply put, game-changing. Results from the average of the last 5 wells show IRRs >300%
and >$20M USD NPV10 per well at $75 WTI and $4 HH. Economics of that level are competitive with
the very best wells in North America. Kolibri has on its hands a Tier 1 oil asset.

These results give us confidence that there are many more multiples of value to be delivered by Kolibri
drilling at Tishomingo field. We estimate that as Kolibri leans more aggressively into drilling more wells
that shares could be as valuable as CAD$29.57 based on near-term proved asset development alone,
and as much as CAD$63.19 on a cash flow discounted, fully diluted basis when considering likely
continued asset development through 2030.
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You pay Big Bucks for your EPG membership, so I can find small-caps with this kind of potential.
If you'd like to read the full 14-page report, send me an email: dmsteffens@comcast.net

[dan_s]

I highly recommend that you all watch the replay of our 12-1-2022 webinar that was hosted by Kolibri.
Here is the direct link: https://www.youtube.com/watch?v=BYOfeBK5sTc

This stock has a lot of upside for us.

[dan_s]

I have updated my valuation for KGEIF to $11.65US per share. You can download it directly from the EPG Home Page.

Kolibri's 2022 exit rate was ~4,000 Boepd.

My valuation is based on conservative production estimates of 5,000 Boepd (76% crude oil) for 2023 and 9,000 Boepd for 2024. Based on my estimate of $94.7 million operating cash flow in 2023, Kolibri should have enough cash flow to fund a much more aggressive drilling program this year, so when I get guidance from the Company my valuation may be going a lot higher.

Another point that impacts the valuation: Central Oklahoma has outstanding pipeline access, so Kolibri should get good prices for their production. In Q3 2022 their realized natural gas price was $10.24US/mcf, which compared to the Henry Hub price of $7.80/mcf. I think their gas has a high Btu content.

[Fraser921]

Great find!

[dan_s]

Gems like this only come along every few years. It is their new well completion "recipe" that has unlocked great value.

Today I confirmed that Surge Energy and ROK Resources will host Houston luncheons for us in April. They were brought to my attention by the same EPG member that found KEI for us. She is based in Calgary and is an upstream expert.

The real power of EPG is the networking of our members in the industry.

[mrbill]

Any chance EXXON buys them out? Seeing chatter along these lines on some other sites.

[dan_s]

If so, it will be at a price more than double the current share price. Something like this is a rounding error for Exxon.

[ChuckGeb]

Any ideas on why the bottom fell out this am? Down 15%.

[dan_s]

Large sale at the open likely triggered a lot of stop loss orders.

As stocks move up rapidly, many investors tighten their stop loss orders and one large sell order can trigger a sell off.