Kolibri Global Energy - Earnings Call - Q3 2025

Transcript

Operator (participant)

Okay, and welcome to the Kolibri Global Energy's third quarter 2025 financial conference call. All participants will be in the listen-only mode. Media may monitor this call in a listen-only mode. They are free to quote any member of management, but are asked not to quote remarks from any other participant without the participant's permission. If anyone has any trouble or needs assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phone. To withdraw your question, you may press star and then two. Please note this event is being recorded. It is advised that participants that this conference is being recorded today on November 12th, 2025. This call will be available on the company's website at www.kolibrienergy.com.

Here is a disclaimer. This call may include forward-looking information regarding Kolibri's strategic plans, anticipated production, capital expenditures, exit rates, and cash flows, reserves, and other estimates and forecasts. Forward-looking information is subject to risks and uncertainties, and actual results will vary from the forward-looking statements. This call may include foreign or future-oriented financial information and financial outlook information, which Kolibri discloses in order to provide readers with a more complete perspective on Kolibri's potential future operations, and such information may not be appropriate for other purposes. For a description of the assumptions on which forward-looking information is based and the applicable risks and uncertainties and Kolibri's policy for updating such statements, we direct you to Kolibri's most recent annual information form and management's discussion and analysis for the period under discussion, as well as Kolibri's most recent corporate presentation, all of which are available on Kolibri's website.

Listeners should not place undue reliance on forward-looking information. Kolibri undertakes no obligation to update any forward-looking, future-oriented financial or financial outlook information other than as required by the applicable law. I would now like to turn the call over to Mr. Wolf Regener, the President and CEO of Kolibri Global Incorporation. Thank you, and over to you.

Wolf Regener (President and CEO)

Thank you, Myron, and thank you everyone for joining us today. With me on today's call is also Gary Johnson, our Chief Financial Officer. As I'm sure you're aware, we released our third quarter 2025 results this morning, and I'm happy to say that we're very pleased with what we've achieved this quarter, where we continue to build on our last few years of great results in multiple ways. Production from the field has been going well with our third quarter of over 4,250 barrels of oil equivalent per day. That's up from the second quarter of this year of 3,200 BOE per day, and also an increase of over 40% from the third quarter of 2024.

With our operating expenses remaining low, with just over $7.15 a BOE, these would have been even lower at $6.57 a BOE if we exclude the one-time production tax adjustments from the prior periods. In spite of the oil prices being lower, our line of credit was reaffirmed at $65 million from our banking syndicate led by Bank of Oklahoma. We are in the middle of fracture stimulating the four new wells that we expect to come on production in early December, which are expected to further increase our production, where we are expecting to exit the year at an all-time high production rate. Things are going very well. With that, now I will turn the call over to Gary to discuss our financial results. Gary?

Gary Johnson (CFO)

Thanks, Wolf, and thanks to everyone for joining the call. I'm going to go over a few highlights of the quarter and September year-to-date results, and then we'll take questions at the end. All amounts are in US dollars unless otherwise stated. As you will see from the results, we continue to increase our revenue and cash flow year-over-year, despite the price declines we have experienced in 2025. I'll start with the third quarter comparisons. Average production was up 40% to 4,254 BOE per day compared to 3,032 BOE per day in the prior year quarter. The increase was due to production from the wells that were drilled in 2025. Revenue was up 15% to $15 million in the third quarter of 2025 due to the higher production, which was partially offset by lower prices, which were down 18%.

Adjusted EBITDA reached $11.1 million compared to $10.1 million in the prior quarter, which was an increase of 9% due to the higher revenue, which was partially offset by an increase in operating expenses due to the increase in production. Our net income was $3.6 million, and basic EPS was $0.10 per share in the third quarter of 2025 compared to $5.1 million or $0.14 per basic share in the prior year quarter. This decrease was due to a $1.8 million negative swing in the non-cash unrealized mark-to-market adjustments on our hedges between the third quarter of 2025 and the third quarter of last year. The increase we added revenues was offset by the increase in depreciation expense and operating expense due to the increase in production.

Net back for the quarter decreased 23% to $30.84 per BOE compared to $40.01 per BOE in the prior year quarter, due primarily to the lower prices. Operating expense was $7.37 per BOE for the quarter compared to $6.63 per BOE in the prior year third quarter, which was an increase of 11%, which was due to reassessed production tax adjustments, which added $0.80 per BOE to the third quarter 2025 number. Excluding those adjustments, operating costs would have been $6.57 per BOE, which was a 1% decrease from the prior year. Now, moving on to the year-to-date September results. Average production was up 22% to 3,851 BOE per day for the nine months ended September 30th, compared to 3,154 BOE per day in the comparable prior year period.

Revenue was up 2% to $42.1 million compared to $41.2 million in 2024 due to the higher production, which was partially offset by lower prices, which decreased by 16%. Adjusted EBITDA increased by 3% to $31.6 million compared to $30.5 million in 2024 due to the increase in revenues, which were partially offset by higher operating expense due to the increase in production. Net income was $12.2 million with basic EPS of $0.34 per share, which compares to $12.5 million and basic EPS of $0.35 per share last year, as the higher depreciation and operating expense from the increase in production offset the increase in revenue. Net back from operations decreased 17% to $3,286 per BOE compared to $3,978 per BOE last year due to lower average prices.

Operating expense was $7.20 per BOE for the year-to-date September, compared to $7.84 per BOE in the prior year period, which was a decrease of 8%. In October, our credit facility was redetermined at the same $65 million borrowing base. Our net debt at the end of September was $42.8 million, and we had $18.5 million of available borrowing capacity. Since we started our stock buyback program in September of last year, we have repurchased a total of about 568,000 shares. We will continue to repurchase additional shares to enhance share value as our working capital allows. Looking back over the last several years, our average production has increased by almost 300% since the end of 2021, as we continue to demonstrate the value of our field.

As Wolf said, when the last four wells of our 2025 drilling program start production in December, we expect to exit the year with record high production, which should lead to a further increase in production in the first quarter of 2026. With that, I'll hand it back to Wolf.

Wolf Regener (President and CEO)

Thanks, Gary. As Gary laid out, we had a very solid third quarter. While oil prices were lower, our revenue and cash flow is still increasing year-over-year, and we're looking to continue the success we've had over the last few years. The company has had quite the growth, and with the activity we have going on, we're looking to continue that. Along with the production revenue and cash flow growth, we're intending to continue returning capital to shareholders in the form of share buybacks, where we've started buying back the shares, as Gary mentioned, over about 570,000 shares. Our plan is to continue to grow all value for shareholders, and we'll continue to get the word out about the company to shareholders and potential shareholders. This actually concludes the formal part of our presentation, and we'd be happy to answer any questions you may now have.

Operator (participant)

Thank you. We will now begin the question-answer session. To ask a question, you press star and then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we'll pause momentarily to assemble our roster. We have the first question on the line of Steve Ferazani from Sidoti. Please go ahead.

Steve Ferazani (Senior Equity Analyst)

Afternoon, Wolf. Afternoon, Gary. Appreciate the color on the call. Wolf, I wanted to ask about the timing of the four new wells. I know you've drilled two wells. You're also going to simultaneously complete two others you previously drilled. Where is that timing-wise? When are you expecting production this year?

Wolf Regener (President and CEO)

Hi, Steve. Good to hear from you. Yeah, we're on schedule with where we thought we would be now. We're in the middle of fracture stimulating the wells. Everything's going well on that. We look to see that production coming on in early December. Everything's moving along.

Steve Ferazani (Senior Equity Analyst)

As far as you updated all your guidance in early October.

Wolf Regener (President and CEO)

Correct.

Steve Ferazani (Senior Equity Analyst)

Any changes? Any thoughts to the expectation sort of gets us to about a one-times leverage year-end. Any of those numbers change significantly, or are you still comfortable with around a one-times net leverage year-end?

Wolf Regener (President and CEO)

Yeah, no, we should be right in that number. I think as we put in our guidance, we're expecting to pay down $8 million-$10 million in the first quarter just because of the timing of when we're spending all this money bringing these other wells online.

Steve Ferazani (Senior Equity Analyst)

Got it. That's helpful. Can you give us an update on the Forguson well? I know you mentioned it in the press release. Just where you are with that and how that might impact your thoughts on drilling in the east side in the future.

Wolf Regener (President and CEO)

Yeah, so we'll keep monitoring where it is. Production's been fairly flat on it. We'll see as more fracture stimulation fluid comes back to see how flat that actually stays. I don't see us drilling another well over there at where we dropped to do today with oil. We have great timing on putting our financials, don't we? Right as oil drops 4%. If we're in the high 50s, I can't see us drilling well over there for a while. We'll need higher prices at these numbers. We'll just see where it turns out to be here in another month or two. It'll definitely take higher prices in order to do other activities over there. We definitely won't be focusing over there. Let's put it that way.

We've got a new presentation up on the website too, which shows the other potential that we have, not only the east side, but these other things as well. Like the [Sycamore] formation is out there. And then also people kind of tend to forget about the T-zone. So I put that back on there because that's a proven level that isn't in the reserve report.

Steve Ferazani (Senior Equity Analyst)

I'll check it out. It sort of leads into I know it's only November. I know things change and the market's been volatile. Can you provide any color to what's going to guide your thinking on a 2026 drilling program?

Wolf Regener (President and CEO)

Sure. I mean, I'll speak for just myself and Gary. What we're likely to be recommending to the board is, A, depend on where prices are in December or early January, right? I didn't quite expect the drop here today. I thought we were at the lows and coming up already. It looks like it's going to take a little bit longer. Really, I think from our point of view, we'll probably be recommending something more along the lines of keeping production kind of flat to where we end up here near the end of the year. The lower the prices are, the less capital you kind of want to put in the ground, but you want to make sure you're still flat to slightly growth, I think. That is my view of it.

We'll have a good board discussion about it, and we'll see where we end up in the long term.

Steve Ferazani (Senior Equity Analyst)

The October hedges, you sort of changed how you're approaching that, and I'm assuming that's a reflection on pricing. It looks like around, looks like October it was primarily $50 puts. Can you talk about the shift?

Wolf Regener (President and CEO)

Yeah, I mean, the forward curve was so bad that it's hard to even put dollars in place on that. I'd hate to see us cap out because I think oil is going to turn around. We want to protect for the downside still, and our bank makes us do a certain amount of hedges. I'm grateful that we can do some puts so that our upside isn't capped. Just where the costless collars were, it just made more sense to put puts in place rather than having a very low cap on prices going forward because I don't know if it's going to take two weeks, a month, or six months, but I'm sure prices are going to turn around. They can't stay down here. I don't think anybody in the world wants that. On the producer side, I think it looks that way.

Steve Ferazani (Senior Equity Analyst)

Right. That's fair. That's fair. Good caveat. Gary, you mentioned that the higher OpEx, it sounded like there was a tax adjustment. Can you just give us a brief explanation on what that was, and is that one-time only?

Gary Johnson (CFO)

It is one-time only. This is the true-up of production taxes. Our purchaser reassesses costs sometimes going back. They're allowed to do that. They did that adjustment. Like I said, a one-time thing that we don't expect. I mean, it could happen again, but it's not going to be a recurring thing. It's just a one-time one-off.

Wolf Regener (President and CEO)

Yeah. One clarification is, in Oklahoma, the purchaser pays the gas and NGL taxes, not the producer. That is why accounting had accrued for a chunk of it, but a piece of it turned out to be higher than what was accrued for.

Steve Ferazani (Senior Equity Analyst)

Got it. Okay. That's helpful. General trends on OpEx.

Yeah. If we can back that out.

Wolf Regener (President and CEO)

If we can back the taxes in that way, we'd know right away.

Steve Ferazani (Senior Equity Analyst)

I don't like to talk about taxes in general. If we back that out, general trend, you're comfortable with being able to continue if production is up that OpEx per barrel should typically trend down over the long term?

Wolf Regener (President and CEO)

Yeah. Yeah. I'd kind of keep it flat to do in this range where we're at. If you use $7, you're probably conservative on what we're doing, so.

Got it.

Steve Ferazani (Senior Equity Analyst)

Great. Thanks, Wolf. Thanks, Gary.

Wolf Regener (President and CEO)

Absolutely. Good to hear from you.

Operator (participant)

Thank you. This concludes our question-answer session. I would like to turn the conference back over to Mr. Wolf Regener for closing remarks.

Wolf Regener (President and CEO)

Thank you again, everyone, for participating. And always happy to answer questions at any time. Feel free to contact us and reach out. So thank you, everyone, for the time, and have a good rest of your day.

Operator (participant)

Thank you. The conference call is now concluded. Thank you for attending today's presentation. You may now disconnect.