Kolibri Global Energy Announces Third Quarter 2023 Net Income of US$2.3 Million and Adjusted EBITDA of US$9.5 Million

THOUSAND OAKS, Calif.–(BUSINESS WIRE)–All amounts are in U.S. Dollars unless otherwise indicated:

THIRD QUARTER 2023 HIGHLIGHTS

• Average production for the third quarter of 2023 was 2,737 BOEPD, an increase of 61% compared to third quarter 2022 production of 1,702 BOEPD. This increase is due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells, which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started production in the last week of June 2023. The production increases were partially offset by production restrictions due to the Company’s gathering system operator, existing wells that were shut-in while completion operations were underway and a few well reworks. These reduced third quarter production by approximately 200 BOEPD
• Adjusted EBITDA⁽¹⁾ was $9.5 million in the third quarter of 2023 compared to $6.9 million in the third quarter of 2022, an increase of 39%. The increase was primarily due to an increase in production of 61% and lower realized losses on commodity contracts, partially offset by a decrease in average prices of 20%
• Revenue, net of royalties was $12.7 million in the third quarter of 2023 compared to $9.9 million for the third quarter of 2022, which was an increase of 29%, as production increased by 61% partially offset by a decrease in average prices of 20%
• Net income for the third quarter of 2023 was $2.3 million and Basic EPS was $0.07/share compared to net income of $9.3 million and Basic EPS of $0.26 for the third quarter of 2022. The decrease was mainly due to an unrealized loss on commodity contracts of $2.6 million in the third quarter of 2023 versus an unrealized gain on commodity contracts of $4.6 million that was recorded in the third quarter of 2022. In addition, the third quarter of 2023 had lower average prices and higher depreciation expense which was offset by higher production compared to the third quarter of 2022
• Average netback from operations⁽²⁾ for the third quarter of 2023 was $43.28/boe, a decrease of 22% from the prior year third quarter due to lower prices in 2023. Average netback including commodity contracts⁽²⁾ for the third quarter of 2023 was $41.65 per boe, a decrease of 16% from the prior year third quarter due to lower prices
• Production and operating expenses per barrel averaged $7.34 per BOE in the third quarter of 2023 compared to $7.77 per BOE in the third quarter of 2022, a decrease of 6%. The $7.34 per BOE in the third quarter includes prior month costs, which our gathering system operator had underbilled for previous periods. In addition, due to the Company’s recent completion operations, some of the adjacent existing wells are producing additional water, which is expected to decrease over time
• In October 2023, the credit facility was redetermined with the same $40 million borrowing base. At September 30, 2023, the Company had $15.8 million of available borrowing capacity on its credit agreement and its net debt outstanding was $23.8 million

KEI’s President and Chief Executive Officer, Wolf Regener commented:

“We are pleased that the Company continues to grow our operations with third quarter 2023 adjusted EBITDA⁽¹⁾ of $9.5 million, a 39% increase from the prior year quarter. With the Barnes 7-4H and the Barnes 7-5H wells starting production at the beginning of October and the Emery 17-3H, 17-4H and 17-5H wells expected to start production at the beginning of December, we expect a continued increase in our cash flow in the fourth quarter. The Barnes 7-4H well had a thirty-day production rate of 665 BOEPD, and the Barnes 7-5H had a thirty-day production rate of 613 BOEPD.

“We are also continuing to improve the efficiency of our field operations as the Barnes 7-4H and Barnes 7-5H wells had an average total cost of approximately $6 million per well and the 3 Emery wells were drilled at an average time of only 11 days each. This is a dramatic improvement, as we were estimating 20-day wells at the beginning of this year. We expect to start completion operations for the Emery 17-3H, 17-4H and 17-5 wells in the next week and expect them to begin producing in early December. We are excited to apply our new completion technique to the Emery 17-4H well, which is the second well we have drilled in the T-zone, to demonstrate the repeatability of making economic wells in this new formation.

“We have also scheduled to begin drilling the first well in our next 3 well pad in mid-December. The three well pad will consist of two lower Caney wells and one T-zone well.

“Average production for the third quarter of 2023 was 2,737 BOEPD, an increase of 61% compared to third quarter 2022 production of 1,702 BOEPD due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells, which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started production in the last week of June 2023, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator.

“Adjusted EBITDA⁽¹⁾ was $9.5 million for the third quarter of 2023 compared to $6.9 million for the prior year third quarter, an increase of 39%. The increase was due to the increase in production partially offset by a decrease in average prices.

“Net revenue was $12.7 million in the third quarter of 2023 compared to $9.9 million for third quarter of 2022, which was an increase of 29% due to higher production partially offset by lower prices.

“Net income for the third quarter of 2023 was $2.3 million compared to net income of $9.3 million for the third quarter of 2022. The decrease was mainly due to an unrealized loss on commodity contracts of $2.6 million in the third quarter of 2023 versus an unrealized gain on commodity contracts of $4.6 million that was recorded in the third quarter of 2022. In addition, the third quarter of 2023 had lower average prices and higher depreciation expense, which was offset by higher production compared to the third quarter of 2022.

“Netback from operations⁽²⁾ decreased to $43.28 per BOE in the third quarter of 2023 compared to $55.16 per BOE in the same period of 2022, a decrease of 22%. Netback including commodity contracts⁽²⁾ for the third quarter of 2023 was $41.65 per BOE compared to $49.69 in 2022, a decrease of 16% from the prior year period. The 2023 decreases compared to the same periods in the prior year were due to the decrease in average prices.

“Operating expenses averaged $7.34 per BOE in the third quarter of 2023 compared to $7.77 per BOE in the third quarter of 2022, a decrease of 6%. The $7.34 per BOE in the third quarter includes prior month costs, which our gathering system operator had underbilled for previous periods. In addition, due to the Company’s recent completion operations, some of the adjacent existing wells are producing additional water, which is expected to decrease over time.”

Third Quarter 2023 versus Third Quarter 2022

Oil and gas gross revenues totaled $16.4 million in the third quarter of 2023 versus $12.7 million in the third quarter of 2022, an increase of 29%. Oil gross revenues totaled $15.3 million in the third quarter of 2023 versus $10.8 million in the third quarter of 2022. Oil revenues increased $4.5 million or 42% as oil production increased by 66% to 2,083 BOPD partially offset by average oil price decreases of 15%. Natural gas revenues decreased by $0.6 million or 62% as natural gas prices decreased 74% partially offset by production increases of 45%. Natural gas liquids (NGLs) revenues decreased $0.2 million or 18% as NGL prices decreased 44% to $19.84/boe partially offset by production increases of 46%.

Average third quarter 2023 production per day increased 1,035 boepd or 61% from the third quarter of 2022. The increase was due to the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells, which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started production in the last week of June 2023, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator.

Production and operating expenses increased to $1.6 million in the third quarter of 2023, an increase of 34% due to increased production. Operating expenses averaged $7.34 per BOE for the third quarter of 2023 compared to $7.77 per BOE for the same period in 2022. The $7.34 per BOE in the third quarter includes prior month costs which our gathering system operator had underbilled for previous periods. In addition, due to the Company’s recent completion operations, some of the adjacent existing wells are producing additional water, which is expected to decrease over time.

Depletion and depreciation expense increased $1.9 million or 104% due to increased production and a higher PP&E balance.

General and administrative expenses increased $0.3 million or 29% in the third quarter of 2023 due to higher costs associated with the dual listing process, higher investor relations and marketing costs and increases in payroll costs.

Finance income decreased by $4.6 million in the third quarter of 2023 compared to the third quarter of 2022 due to realized gains on commodity contracts in the third quarter of 2022.

Finance expense increased by $2.5 million in the third quarter due to unrealized losses on commodity contracts in the third quarter of 2023.

FIRST NINE MONTHS 2023 HIGHLIGHTS

• Average production for the nine months ended September 30, 2023 was 2,780 BOEPD, an increase of 78% from the average production of 1,563 BOEPD in the same period of 2022. This increase is due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells, which started production at the end of 2022, and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells, which started production in the last week of June 2023, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator
• Adjusted EBITDA⁽¹⁾ was $28.6 million for the nine months ended September 30, 2023 compared to $18.3 million for the prior year period, an increase of 57%. The increase was primarily due to an increase in production of 78% partially offset by a decrease in average prices of 26%
• Revenue, net of royalties was $37.2 million in the first nine months of 2023 compared to $27.8 million for the first nine months of 2022, which was an increase of 34%, as production increased by 78% partially offset by a decrease in average prices of 26%
• Net income for the first nine months of 2023 was $14.5 million and Basic EPS was $0.41/share compared to $13.9 million and Basic EPS of $0.39/share for the first nine months of 2022 primarily due to an increase in production, partially offset by a decrease in average prices and higher depreciation expense
• Average netback from operations⁽²⁾ for the first nine months of 2023 was $42.48/boe, a decrease of 26% from the prior year period due to lower prices in 2023. Netback including commodity contracts⁽²⁾ for the first nine months of 2023 was $41.00/boe which was 15% lower than the prior year period
• Production and operating expenses per barrel averaged $6.47 per BOE in the first nine months of 2023 compared to $8.17 per BOE in the first nine months of 2022 due to increased production which reduced the per barrel fixed costs

First Nine Months of 2023 versus First Nine Months of 2022

Oil and gas gross revenues totaled $47.2 million in the first nine months of 2023 versus $35.9 million in the first nine months of 2022, an increase of 31%. Oil revenues were $43.5 million in the first nine months of 2023 versus $31.3 million in the same period of 2022, an increase of 39%, as average production increased by 86% partially offset by a decrease in oil prices of 25%. Natural gas revenues decreased $0.7 million or 34% due to an average natural gas price decrease of 57% partially offset by a 55% increase in natural gas production. NGL revenue decreased $0.2 million or 9% due to an average NGL price decrease of 43% partially offset by an increase in NGL production of 59% in the first nine months of 2023 compared to the comparable prior year period.

Average production per day for the first nine months of 2023 increased 78% to 2,780 boepd from the prior year comparable period. This increase is due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells which started production at the end of 2022 and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells which started production in the last week of June 2023, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator.

Production and operating expenses increased to $4.3 million or 24% in the first nine months of 2023 compared to the prior year period. Production and operating expenses per barrel averaged $6.47 per BOE in the first nine months of 2023 compared to $8.17 per BOE in the first nine months of 2022 due to increased production which reduced the per barrel fixed costs.

Depletion and depreciation expense increased $6.4 million due to increased production and a higher PP&E balance.

General and administrative expenses increased $0.7 million or 28% in the first nine months of 2023 due to higher costs associated with the dual listing process, higher investor relations and marketing costs and increases in payroll costs.

Finance income decreased by $1.6 million due to unrealized gains on financial commodity contracts recorded in the first nine months of 2022.

Finance expense decreased $1.2 million in the first nine months of 2023 due to lower realized losses on commodity contracts partially offset by higher interest expense.

The information outlined above is extracted from and should be read in conjunction with the Company’s unaudited financial statements for the three and nine months ended September 30, 2022 and the related management’s discussion and analysis thereof, copies of which are available under the Company’s profile at www.sedar.com.

NON-GAAP MEASURES

Netback from operations, netback including commodity contracts and adjusted EBITDA (collectively, the “Company’s Non-GAAP Measures”) are not measures or ratios recognized under Canadian generally accepted accounting principles (“GAAP“) and do not have any standardized meanings prescribed by IFRS. Management of the Company believes that such measures and ratios are relevant for evaluating returns on each of the Company’s projects as well as the performance of the enterprise as a whole. The Company’s Non-GAAP Measures may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar non-GAAP measures and ratios as reported by such organizations. The Company’s Non-GAAP Measures should not be construed as alternatives to net income, cash flows related to operating activities, working capital or other financial measures and ratios determined in accordance with IFRS, as an indicator of the Company’s performance.

An explanation of how the Company’s Non-GAAP Measures provide useful information to an investor and the purposes for which the Company’s management uses the Non-GAAP Measures is set out in the management’s discussion and analysis under the heading “Non-GAAP Measures” which is available under the Company’s profile at www.sedar.com and is incorporated by reference into this earnings release.

Netback from operations per barrel and its components are calculated by dividing revenue, less royalties and operating expenses by the Company’s sales volume during the period. Netback including commodity contracts is calculated by adjusting netback from operations by the realized gains or losses received from commodity contracts during the period. The following is the reconciliation of the non-GAAP ratio netback from operations to net income (loss) from continuing operations, which the Company considers to be the most directly comparable financial measure that is disclosed in the Company’s financial statements:

Adjusted EBITDA is calculated as net income before interest, taxes, depletion and depreciation and other non-cash and non-operating gains and losses. The Company considers this a key measure as it demonstrates its ability to generate cash from operations necessary for future growth excluding non-cash items, gains and losses that are not part of the normal operations of the Company and financing costs. The following is the reconciliation of the non-GAAP measure adjusted EBITDA:

CAUTIONARY STATEMENTS

In this news release and the Company’s other public disclosure:

Contacts

For further information, contact:
Wolf E. Regener, President and Chief Executive Officer, +1 (805) 484-3613

Email: [email protected]
Website: www.kolibrienergy.com

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