Kolibri Global Energy (KGEI) Update - Jan 29

[dan_s]

Over the next two days I will review and update all of the forecast/valuation models for the companies in our Small-Cap Growth Portfolio.

Thousand Oaks, CALIFORNIA, January 29, 2024 – Kolibri Global Energy Inc. (the “Company” or “KEI”) (TSX: KEI, NASDAQ: KGEI) is providing 2024 guidance and operations update for its Tishomingo field in Oklahoma.

2024 Guidance

The Company is providing its forecasted guidance for 2024 as follows:

Average production of 3,500 to 4,000 Boepd, which is a 25% to 33% increase over 2023 production
Revenue should be US$60 million to US$65 million, which is a 18% to 23% increase over 2023
Adjusted EBITDA of US$46 million to US$51 million
Capital Expenditure of US$33 million to US$39 million
Net Debt at year end of US$25 million to US$27 million
Debt to EBITDA Ratio Below 1.0

Assumptions include forecasted pricing for 2024 of WTI US $72/bbl, $2.60 Henry Hub, and NGL pricing of $28.40/boe and includes the impact of the Company’s existing hedges.
Adjusted EBITDA is considered a non-GAAP measure.

The strategy of the Company for 2024 is to continue to develop the field by converting its significant number of proved undeveloped wells into producing wells that generate cash flow. The average production, revenue, and Adjusted EBITDA guidance for 2024 shows significant growth from the latest 2023 forecast numbers, even with a $72 WTI price assumption. As the Company executes this strategy going forward, it will consider the implementation of a shareholder return policy in 2024. < If WTI increases to my forecast of $82.50/bbl in 2H 2024, I expect the Company to start paying dividends.

The Company anticipates completing 6-7 wells this year. The Company plans to drill and complete two wells in the 2nd quarter, drill two to three additional wells later in the year, and then fracture stimulate the two to three additional wells together with the two Velin wells that the Company just finished drilling.

Wolf Regener, President and CEO, commented, “We are looking forward to another strong year of revenue and cash flow growth for the Company, based on our 2024 forecast. We are also very pleased with our team’s execution. The constant improvement that we strive for has led to a large reduction in our well costs. The forecasted well costs were $7.2 million last year, and the cost for the last two Emery wells was about $5.4 million, which is a 25% reduction in well costs.”

Operations Update

The three well Emery pad averaged a total of 960 Barrels of Oil Equivalent per day (“BOEPD”) (710 Barrels of Oil per day (“BOPD”)) for the first 30 days of production and averaged 1,010 BOEPD (755 BOPD) for five days last week. As previously disclosed, more fracture stimulation fluid is being recovered from all three wells than from our previous wells, which Management believes explains the slight uptick in the recent production numbers. Based on our preliminary analysis, the technical team believes that there is increased natural fracturing in certain areas of the field, which appears to allow the fracture stimulations to communicate between the T-zone and the Caney. This connection is likely the cause of the different flowback and early production profiles of the Emery wells, with more fluid having been pushed into the Caney. The Company is still conducting further analysis work on the tracers, production, and pressure data that is continuing to be gathered and intends to complete that analysis before drilling additional T-zone wells.

The three Emery wells were drilled and completed for about US$5.6 million each, with the last two averaging US$5.4 million each. The last two were drilled utilizing efficiency changes implemented part-way through drilling the first Emery well. The Company continues to improve its efficiency in its field operations as the well costs of US$5.4 million are substantially lower than the well costs of US$7.2 million that were forecast in early 2023 and are also lower than the US$6.0 million cost of the last two wells, the Barnes 7-4H and Barnes 7-5H.

The Company recently finished drilling the Velin 12-9H well and the Velin 12-10H well, which are both Caney wells. Both wells were drilled safely and on budget. As the Company continues to analyze the flowback profile from the three-well Emery pad, the drilling rig has been released as it determined not to drill the previously planned T-zone well.

Also, as previously disclosed, the fracture stimulation of these three Emery wells impacted the surrounding wells more than was originally anticipated, which was likely also caused by increased natural fracturing. These wells have continued to recover, and the Company continues to expect that recovery to take several months.

Like many other operators, the Company's operations were impacted by the below-freezing temperatures in January 2024. This caused much of the Tishomingo field to be shut in for 9 to 14 days. The Company is currently restoring production and anticipates it will be fully restored this week. Prior to the freeze, the field was producing about 3,800 BOEPD.

[Cliff_N]

Seems positive. At one point this AM it was down over 7%. Currently off 4.55%. At 11:11 AM, has gone Green and up 2.49%.

[dan_s]

KGEI trading at $3.29 this morning. I am still looking at few things, but my updated valuation will go down to $6.50 primarily because they are now budgeting about half the new well completions in 2024 than I was expecting. Still has nice production growth expected.

My updated forecast/valuation model will be posted to the EPG website this afternoon.