Summary
Kiwetinohk reported good Q1 results. Production continues to grow and was in Q1 above expectation. The balance sheet is very healthy with limited long-term debt. Kiwetinokh is profitable, Q1 profit was above expectation. The PE is a medium. There are no 2025 shareholder returns. Returns can start in 2026 and can reach good levels. Kiwetinokh is robust under low oil prices.
In my 85 oil and gas companies ranking, Kiwetinokh sits in the top 25 at a high 13th position.
Production
• Kiwetinohk started in 2021. Production has been growing fast over the last four years. Production increased with 264% from 7.0 K BoE/d (2021) to 26.9 K BoE/d (2024).
• Q1 production (32.6 K BoE/d) was 17.9% above Q4 (27.7 K BoE/d). Kiwetinokh did not provide a Q1 outlook. I had expected a production of 31.5 K BoE/d.
• Q2 production will be substantially lower (-4.7 K BoE/d) due to planned maintenance and tie-ins of new facilities. I expect a Q2 production of 28.0 K BoE/d,
• The reiterated 2025 outlook (31-34 K BoE/d) indicates a continued growth in H2 to 34-36 K BoE/d.. The 2025 outlook is 19-22% above the 2024 production. Focus is on the development of the Simonette Duvernay.
• Kiwetinohk targets a production of 40 K BoE/d in 2026 for which pipeline capacity and infrastructure is in place.
• I assume that after 2026 production will flatten out as Kiwetinokh as yet lacks ample reserves which are required from long term growth. Further reserves bookings can mean higher production after 2027.
- Kiwetinokh Q1 Production.jpg (57.91 KiB) Viewed 213 times
Balance sheet
• The balance sheet is very healthy.
• The equity ratio (=equity/balance sheet total) improved from 58.8% (Q4) to a high 60.8% (Q1).
• Long-term debt reduced with C$ 26 M from C$ 250 M to C$ 224 M. The debt/EBITD ratio on annual basis equates to a very healthy 0.40.
• The balance sheet allows generous shareholder returns.
Profitability
• Kiwetinokh is a profitable company with a medium PE.
• Q1 net eps was C$ 1.25. The adjusted eps, excluding -C$ 14 M non-cash hedging losses and the C$ 25.3 M gain on the OPL power plant sale, was approx. C$ 1.05.
• Royalties are a low 6-8%, typical for a company which has not yet earned back it investments. Royalties over time can go up.
• Kiwetinokh managed to reduce its operating cost with C$ 0.50/BoE to $ 5.20/BoE. 2025-unit costs (inclusive depreciation, interest and overheads) are now heading to a medium $ 25.03/BoE.
• For 2025 with WTI at US$ 60-65/bbl, I expect an eps of C$ 2.50-2.66 (PE= medium 6.3-6.7).
• With a higher production but with a lower gas price, the eps in 2029 is estimated to be C$ 2.18-2.67 (PE=6.3-7.7). See charts below
- Kiwetinokh Q1 Profit.jpg (52.24 KiB) Viewed 213 times
• Kiwetinokh targeted to build power generation projects, both renewable energy (solar) projects and gas-fired power generation projects.
• So far, no power projects have materialized. Expenditure on power in Q1 was a minor C$ 0.3 M.
• Kiwetinokh sold in Q1 the rights to the OPAL power station for C$ 21 M to Bitdeer. This allowed the Q1 net profit to be boosted by a gain of C$ 25 M reversing the 2024 impairment on this project.
• Kiwetinokh in 2025 is trying to sell the rights to the Homestead Solar project which is the approval process as well.
Shareholder returns
• Due to negative FCF’s, Kiwetinohk has not yet returned funds to shareholders. There were no shareholder returns in Q1.
• As the FCF in Q2/Q3 will be negative/slightly positive, I do not expect shareholder returns until Q4 earliest.
• First shareholder returns therefore can start in 2026. The form of the returns (dividends and/or share buybacks) is uncertain.
• Shareholder returns in 2026 can reach 5.5-7.2% and 6.7-9.3 towards 2029. See the charts below.
- Kiwetinokh Q1 Returns.jpg (42.29 KiB) Viewed 213 times
Kiwetinokh reported good Q1 results. Production continues to grow and was in Q1 above expectation. The balance sheet is very healthy with limited long-term debt. Kiwetinokh is profitable, Q1 profit was above expectation. The PE is a medium. There are no 2025 shareholder returns. Returns can start in 2026 and can reach good levels. Kiwetinokh is robust under low oil prices.
In my 85 oil and gas companies ranking, Kiwetinokh sits in the top 25 at a high 13th position.