Kolibri Global – Decent Q3 results

[Petroleum economist]

Kolibri is a small company producing oil and gas from the shallow zones of the Tishomingo Field in Central Oklahoma. The deeper zones are operated by Exxon.

Summary
Kolibri reported decent Q3 results. The results were in line with expectation. Q3 production was slightly below expectation. Kolibri has ample reserves and future production can triple. The balance sheet is strong. Q3 profit was slightly above expectation due to higher than expected oil and NGL prices. The PE is medium to low. Shareholder returns in 2025/2026 will be limited, but thereafter can rise to high levels.

In my 84-oil and gas companies ranking, Kolibri sit at the top the rankings (1st).

Production
• Kolibri production has grown with 179% from 1.4 K BoE/d (2019) to 3.5 K BoE/d (2024).
• Q3 production (4,254 BoE/d) was well above Q2 (3,220 K BoE/d) due to the four Lovina wells and the Forguson well in the east flank well coming onstream. Kolibri did not provide new information on these wells
• Q3 production (4,254 BoE/d) was just below my expectation (4,363 BoE/d).
• Two Barnes wells were spudded in Q3, out of which one required a redrill. I do not expect any production from these wells until well into December 2025.
• For Q4 I expect a production of 4.827 K BoE/d. If the Lovina wells clean up well this can be higher, Kolibri did not provide a Q4 outlook.
• Kolibri did not state anything on a 2025 outlook. The previous one of 4.5-5.1 K BoE/d is not reachable anymore with all the Barnes wells delays. I expect a 2025 production of 4.1 K BoE/d.
• High reserves enable Kolibri to double its production to levels of 7.7 K BoE/d in 2030 and to 9-10 K BoE/d thereafter. This based on drilling each year two pads with four wells each. With more wells per year production can go higher
• If more wells are to be drilled per year (twelve or sixteen) , then production will be higher. The reserves are more than sufficient for such a scenario. I will keep this as an upside.
• In view of current oil prices Kolibri Is planning a potential drilling program for 2026, contingent on oil price recovery.
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Kolibri production profile.jpg (155.08 KiB) Viewed 3007 times

• Q3 fluids were 66% oil, 19% NGL and 15% gas. The oil content did not go up as much as I had expected based the higher oil content of the Lovina wells (82%).

Balance sheet
• The balance sheet is very healthy.
• The equity ratio (equity/balance sheet total) fell from 75.5% (Q2) to 71.3% (Q3). The equity ratio still is very high.
• Long-term debt increased from C$ 29.7 M (Q1) to C$ 45.7 M (Q2), mainly due to the $ 17.6 M of capex spend in Q3.
• Q3 debt/EBITDA ratio on an annual basis is a good 1.06. With more production in Q4 the ratio can reduce to an good 1.0 by the end of 2025.
• The balance sheet is healthy allows generous shareholder return.
• Kolibri aims to reduce net debt by $ 8-10 M in Q1 2026 and in view of the current oil price maintains a flexible capital allocation strategy.
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• There will be a shareholder vote closing on the 21st of November on whether Kolibri new shares to be issued should be capped at 37.4 M Total shares (current shares count is 35.5 M). This was proposed by one of the major shareholders. The Kolibri is against the imposed limit, stating it will limit their freedom to negotiate new deals. I am neutral on the vote.

Profitability
• Kolibri is a very profitable company.
• Q3 eps ($ 0.10) excluding non-cash hedging) was above Q2 ($ 0.07).
• The eps was above my expectation ($ 0.08) as realized oil prices ($ 63.93/bbl) and NGL prices ($ 19.74/bbl) were higher than I had anticipated. Realized gas prices $ 2.71/MM Btu) were lower but have a minimal impact..
• Operational costs were as expected.
• With WTI=$ 60/bbl, I expect for 2025 an eps of $ 0.44 (PE = medium 9.4). After 2025 the eps can increase to $ 0.81 in 2030. PE will be a low 5.2.

Kolibri profit.jpg (122.1 KiB) Viewed 3007 times

• Kolibri profits are robust under low oil prices

Free cash flow and Financing
• Kolibri is generating significant amounts of FCF, also under lower oil prices.
• Kolibri will have to repay the debt of $ 35M under its current credit facility which will expire in 2029.
• The FCF should be adequate to repay the debt.
• There are no other debt repayments.

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Shareholder returns
• The balance sheet allows shareholder returns, although in 2026 the FCF for this may be lacking.
• Kolibri bought back shares for $ 130 K in Q1, for $ 1.3 M in Q2 and for $ 1.8 M in Q3.
• With a high Q4 capex and la low FCF, I expect share buybacks in Q4 to be limited
• Total 2025 return therefore should be 3.3%.
• In 2026 returns will stay at 2025 levels of 2-3%,with WTI=$ 60/bbl to increase to levels to 10-12% in 2030.


Conclusions
below expectation. Kolibri has ample reserves and future production can triple. The balance sheet is strong. Q3 profit was slightly above expectation due to higher than expected oil and NGL prices. The PE is medium to low. Shareholder returns in 2025/2026 will be limited, but thereafter can rise to high levels.

In my 84-oil and gas companies ranking, Kolibri sit at the top the rankings (1st).

[allen46]

So why oh why does the stock continue to decline? I hold a full position and am getting killed!

[dan_s]

Kolibri's revenues are heavily weighted to sales of oil. Until oil prices rebound, which they will eventually, KGEI won't draw much attention.

The shareholder meeting on November 21st might be interesting. I think several large shareholders want a more aggressive drilling program.

THIRD QUARTER 2025 HIGHLIGHTS

Average production for the third quarter of 2025 was 4,254 BOEPD, an increase of 40% from the third quarter of 2024 average production of 3,032 BOEPD. The increase was due to production from the wells that were drilled and completed in the first nine months of 2025 < My forecast was 4,300 Boepd.

Revenue, net of royalties was $15.0 million in the third quarter of 2025 compared to $13.0 million for the third quarter of 2024, which was an increase of 15% due to a 40% increase in production partially offset by a decrease in average prices of 18%. < My forecast was $15.6 million revenues net of royalties.

Net income in the third quarter of 2025 was $3.6 million and Basic EPS was $0.10/share, compared to net income of $5.1 million and Basic EPS of $0.14/share, in the same period of 2024. Net income in the third quarter of 2025 included a $0.5 million unrealized loss on commodity contracts compared to a $1.3 million unrealized gain on commodity contracts in the third quarter of 2024. The decrease was also due to higher depreciation expense and higher operating expenses from increased production in the third quarter of 2025 which offset the increase in revenues < Adjusted net income was close to my forecast of $4.4 million.

Adjusted EBITDA was $11.1 million in the third quarter of 2025 compared to $10.1 million in the third quarter of 2024, an increase of 9%. The increase was primarily due to an increase in revenues, partially offset by an increase in operating expenses due to the increase in production

Production and operating expense per barrel averaged $7.37 per BOE in the third quarter of 2025 compared to $6.63 per BOE in the third quarter of 2024, an increase of 11%. The increase was due to reassessed production tax adjustments related to prior periods that were recorded in September 2025 totaling $0.3 million, or $0.80 per BOE. Excluding those costs, production and operating costs would have been $6.57 per BOE, a 1% decrease from the prior year. < Operating expense per boe was higher than my forecast of $6.20/boe. It the primary reason that net income was below my forecast.

Average netback from operations for the third quarter of 2025 was $30.84/boe, a decrease of 23% from the prior year third quarter due to lower prices in 2025. Average netback including commodity contracts for the third quarter of 2025 was $30.89 per boe, a decrease of 23% from the prior year third quarter

In October 2025, the credit facility was redetermined with the same $65 million borrowing base. At September 30, 2025, the Company had $18.5 million of available borrowing capacity on its credit agreement.
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If I was a major shareholder I would be pushing for a more aggressive drilling program. The Tishomingo Field is a very good asset, but the wells that you won't drill for ten years have very little present value. Kolibri should be completing at least 12 new wells per year.