Energy Prospectus

KGEI is in our Small-Cap Growth Portfolio.
The stock is trading below book value and at a discount to my current valuation of $4.65. First Call's current price target is $6.77US.

Kolibri recently completed drilling 3 extended reach horizontal development wells with laterals of 1.5 miles. These wells will all be completed in November and they should push the Company's production over 4,000 Boepd (73% crude oil, 16% NGLs and 11% natural gas). < 23% year-over-year production growth.

Last year Kolibri had some operational issues in Q4 that caused them to miss their production exit rate target for 2023. The company hired to complete a batch of wells did not show up on time. There was over a month delay in getting their wells completed to sales. This "stuff" gets small-caps into the Wall Street Gang's "Penalty Box". There is a good chance that the three wells completed this November will get them out of the Penalty Box.

Kolibri's CEO Wolf Regener will be on the webinar with me tomorrow. Here are the key points I want to confirm with Wolf:

> For its size, Kolibri has a significant amount of low-risk / high-return development drilling locations (which I refer to as “Running Room”) in the Central Oklahoma SCOOP play.
> They have ~170 horizontal development drilling locations within the Tishomingo Field just in the Caney formation. ~58 of the development drilling locations are classified as proved in the Caney formation.
> Below the Caney formation are the T-Zone and the Sycamore zone, which have not been included in year-end reserve reports.
> The 17,000 acres of leasehold in the Tishomingo Field is all held by production ("HBP"). This adds significant value.
> Based only on Total Proved Reserves at 12-31-2023 of 32.4 million Boe (75% Light Oil) the Company’s PV10 Net Asset Value was over $12.00US per share on 6/30/2024. < Today the stock is trading for $3.39.
> ~92.6% of the Company’s revenues in 2023 were from oil sales at an average realized price of approximately $75.15/bbl, net of differentials and cash settlements on their hedges (+$1.4 million).
> Key to my stock valuation are: steady annual production growth (all funded by operating cash flow), lots of low-risk development drilling locations & near-term potential for a shareholder return program (dividends and stock buybacks).

Register on the EPG website if you wish to attend tomorrow's webinar that starts at 12:30 CT.

$ 50 netback is a myth. You think a well known economist & Dan would notice that current WTI is significantly lower than the assumptions driving the 50 netback number.

https://kolibrienergy.com/kolibri-global-energy-announces-production-increase-of-30-and-revenue-increase-of-38-for-second-quarter-of-2024/

Q 2 actual was 39.56 with avg WTI being at an average wti of 79.48 per Q2 PL

Current strip after recent huge rally is about 72.50. Given that 72.50< 79.48, the netback will be lower than 39.56 going forward without a major rally place. Only way that can happen is an attack on Iranian oil fields

Inexplicably, Harry has this as his 9th best pick. Good luck with that

Another question came up why buybacks vs dividends. With dividends an expectation is set. Buybacks are optional. They wont be buying many shares at 70 oil, imho.

If they can do a 50 dollar netback , it would be bullish for all names, since it would mean we are in an 90 oil enviroment

Sorry, I'm not a koolaid drinker. Pease remember this is just my just humble opinion which I share for free. I dont charge $350 for it.

Oil can soar, KGE could soar but a major shift in net realizable price or a takeover has to happen .
Reserves will be falling under US Reserve rules, maybe thats why they like using Canada rules

Have a nice day

See page 11 of their 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS for how netbacks are calculated by quarter for 2022 and 2023.

Netbacks in 2024 based on my forecast are ($73.20 oil price X 79% Net Revenue Interest) - $7.50 operating expense per = $50.33/bbl of oil

My valuations are based operating cash flow per share, not netbacks.

"Netbacks" is a term used by the Canadian companies.

Bill,

Kolibri ranking at 9th in the ranking system
Kolibri ranking 9th is not inexplicable. There are very few companies which have proven reserves equivalent to more than 25 years of production and thus have growth potential, own a good balance sheet (high equity ratio, low debt/EBITDA), have low operating costs and a PE of only 8.2 and which are to embark on the start of shareholder returns.

Kolibri share price going up
I do not believe that Kolibri needs higher oil prices to soar, just time. Higher oil production over time will lead to a higher eps. Also, the start of share buybacks will help to support the share price.