Kolibri Global Energy Maps Oklahoma Shale Growth, Buybacks and Takeover Potential

Key Points

• Kolibri Global Energy outlined a growth plan centered on Oklahoma’s Tishomingo Field, with 2024 guidance for about 5,000 boe/d, adjusted EBITDA of $56 million to $62 million, and capital spending of $39 million to $43 million.
• The company said it has significant upside from its reserve base and new drilling targets, including about 40 million proved barrels and 57 million proved plus probable barrels, while testing the unproven False Caney interval could add more locations beyond current reserves.
• Management highlighted strong economics and shareholder returns, citing low operating costs of about $7.50 per boe, expected free cash flow of roughly $20 million-plus, ongoing share buybacks, and the possibility of future dividends or a takeover.

Kolibri Global Energy NASDAQ: KGEI executives outlined the company’s Oklahoma-focused shale oil strategy, drilling plans and capital allocation priorities during a recent investor presentation, emphasizing production growth, low operating costs and potential reserve additions from new intervals in the Tishomingo Field.

President, CEO and Director Wolf Regener said Kolibri operates in Oklahoma’s Tishomingo Field and is focused on developing shale oil assets while maintaining what he described as a prudent balance sheet. The company also trades on the TSX under the symbol KEI.

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Regener said Kolibri has a $75 million line of credit with Bank of Oklahoma and had about $45 million in debt at the end of the most recent quarter. He said the company has been paying down debt after bringing several wells online late last year, which contributed to production growth in the first part of the year.

Guidance and Reserve Base

Kolibri’s current-year guidance calls for a midpoint of about 5,000 barrels of oil equivalent per day, which Regener said represents a 17% to 30% growth rate. The company is forecasting adjusted EBITDA of $56 million to $62 million and capital expenditures of $39 million to $43 million, based on a $70 oil price assumption.

Regener said the company’s reserve report, prepared by Netherland, Sewell & Associates, estimates about 40 million barrels of proved reserves and roughly 57 million barrels of proved plus probable reserves. He said only about 29% of proved reserves are in the proved developed producing category, with the remaining 71% in proved undeveloped reserves.

“We have a lot of running room to drill more wells,” Regener said.

He also said Kolibri’s proved reserves were valued at more than $400 million in the reserve report, while proved plus probable reserves were valued at just under $700 million, compared with a market capitalization he estimated at roughly $190 million at the time of the presentation.

Drilling Program and New Intervals

Kolibri is currently drilling three Clifton Mack wells in the southwest corner of its field, Regener said. After those wells, the rig is expected to move to test the False Caney, a new bench that is not included in the company’s current reserve report.

Regener said all of Kolibri’s current reserves are attributed to the Caney formation across about 11,500 net acres. The False Caney has not yet been tested by Kolibri, but the company has identified just under 10,000 acres where it believes the interval could be prospective.

He said Kolibri has core samples showing “good oil saturations” and well logs indicating the False Caney “looks very good.” Regener described the test as a potential catalyst because it could add drilling locations beyond those already included in the reserve report.

The company also has potential in the T-zone, which Regener said has been tested in a couple of wells. Those wells were “good wells,” he said, but earlier completion activity interfered with Caney wells. Kolibri may test different completion techniques or return to the T-zone after Caney production declines in certain areas.

Tishomingo Field Operations

Regener said the Tishomingo Field benefits from existing infrastructure from older Woodford wells, including gas gathering. Oil is trucked out and typically receives West Texas Intermediate pricing less about $1.85 per barrel, he said.

Netherland, Sewell has credited Kolibri with 89 Caney locations, including 48 proved, 24 probable and 17 possible locations, according to Regener. The company has shifted from one-mile laterals to mile-and-a-half and planned two-mile laterals, which Regener said improves efficiency.

Kolibri has built its acreage position to just under 18,000 acres and has 45 Caney wells on production. Regener said the acreage is 99% held by production, allowing the company to drill where and when it chooses rather than drilling to hold leases.

Regener highlighted drilling efficiency improvements, saying one-mile laterals that took about 30 days in 2016 and 2017 were drilled in as little as 12 days in 2024. He said the company’s 2024 one-mile laterals cost about $5.5 million each, compared with a 2023 forecast budget of $7.2 million per well. The company’s 1.5-mile Caney wells are budgeted at $7.2 million.

Costs, Cash Flow and Capital Returns

Regener said Kolibri’s operating expenses are at the low end of its peer group, at about $7.50 per barrel of oil equivalent. He attributed the cost structure in part to low water production and the use of gas lift powered by the company’s own natural gas.

During the question-and-answer session, Regener said Kolibri expects to generate “about $20 some odd million” of free cash flow after capital expenditures at current commodity prices, based on the company’s forecast.

He said Kolibri is repurchasing shares and expects buyback activity to be weighted toward the second half of the year. On capital allocation, Regener said the board will balance drilling additional wells, buying back shares when management believes the stock is undervalued, reducing debt or potentially initiating a dividend in the future.

On acquisitions, Regener said the company continues to evaluate opportunities but has not found a deal over the past several years that it believes would be accretive.

Management’s View on Growth and Strategic Options

Asked about long-term production growth while remaining cash flow positive, Regener said Kolibri’s current plan, with adjusted EBITDA around a $60 million midpoint and capital spending just above $40 million, leaves room to return capital to shareholders or increase growth depending on board decisions.

Regener said Kolibri has been replacing 100% of production through drilling, while continuing to grow production year over year. He added that the Clifton Mack wells are in the probable category and could add to proved reserves if they perform as expected.

Asked whether Kolibri is more likely to remain independent or be acquired, Regener said that given the company’s size, it is “definitely a takeover target,” though he said three large shareholders would need to support any transaction.

CFO and Vice President Gary Johnson added that, for a small company, Kolibri has “much more inventory than most companies” and more proved undeveloped reserves than many companies of similar size.

About Kolibri Global Energy NASDAQ: KGEI

Kolibri Global Energy Inc engages in the finding and exploiting oil, gas, and clean and sustainable energy in the United States. It sells crude oil, natural gas, and natural gas liquids. The company was formerly known as BNK Petroleum Inc and changed its name to Kolibri Global Energy Inc in November 2020. Kolibri Global Energy Inc was incorporated in 2008 and is headquartered in Thousand Oaks, California.

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