All right. Hello everyone, and welcome to the Kolibri Global Energy Fireside Chat. My name is Robert Blum. I'm Managing Partner here at Lytham Partners. Today, I'll be moderating a Q&A discussion with Wolf Regener, the Chief Executive Officer at Kolibri. As a reminder, Kolibri trades under the ticker symbol KGEI. That's on the NYSE. Wolf, thanks so much for joining us here today.
Oh, thanks for having me. I appreciate it.
Absolutely. For those not familiar with the company, give a quick overview. Your strategy, where you operate is the right place to deploy capital here today.
Sounds good. Just overall, we're a North American oil and gas company. We operate a shale oil field in Oklahoma. It's our main asset. It's located about halfway between Oklahoma City and Dallas. I think why own us? We are, I believe, a very well-run company. We've got a solid balance sheet, and we have a great project. Governance is strong. That's kinda demonstrated through our reservoir engineering firm that we retain, which is Netherland, Sewell. That has a great reputation. Also, our auditors are BDO. Back on the property, we've shown excellent growth over the last three years or so. We've got, I think, a 35% CAGR in production over the last three years.
Our reserve report from Netherland, Sewell that came out at the end of 2025 here, or dated at the end of 2025, it just came out here a little while ago, valued the 40.8 million barrels of oil equivalent of our proved reserves at $440 million and our proved and probable reserves of at $584 million. That compares to our current market cap, which, you know, with oil prices moving all over the place, we'll call it $195 million or so. One note that I have is that $440 million in proved reserves used an oil price of $58 in 2026, $63 in 2027, and kind of ratcheting up through 2029 up to $69.
Given you know the large increase in oil that's happened recently, and who knows where it'll be any point in time. But it's obviously drastically higher. If the valuations were done with those prices, then the valuations would be even higher. At low, very low oil prices, we've got a great value on the ground on proved reserves, and even bigger on the proved probable. Then also, we're really efficient on our operations. Our cost for getting a barrel of oil equivalent out of the ground, that's oil comes out of the ground mainly for us, but we also have natural gas liquids and some natural gas that comes out with it, costs us about $7.33 to get it out of the ground. That was the average for last year.
You know, talk about that sort of low risk and low cost drilling. What specifically makes a development price just that? Is it geology? Is it infrastructure? Is it sort of just your execution?
Yeah. It's a little of all of the above, actually. As far as how that goes, you know, we've gotten better and better at drilling wells over the years, and we've made improvements, and it's been more efficient to get our cost of drilling down and completion side of things as well. Our operating side of things is a, we're quite efficient. We don't buy electricity. We use our own natural gas in order to run compressors, which help lift the oil out of the ground. So we don't have these pump jacks that go up and down. We're able to use our own gas in order to do the lift.
One of the reasons for that is, other than when we get some of our frack fluid back after we fracture stimulation these wells, these are all, by the way, horizontal, so we drill down to about 8,000 ft-12,000 ft, then we're drilling anywhere from 1 mi to more. Recently, we're drilling more like 1.5-mi and 2-mi laterals.
Yeah.
It doesn't produce a lot of water. We get some of that fracture stimulation fluid back, but then the field doesn't give up a lot of fluid on its own and actually retains some of that fracture stimulation fluid that we put in the ground. We don't have huge infrastructure that has to be built out for water disposal or anything else like that. We're fortunate in the field, and then we're fortunate how we go about it. Like I said, we're not having to buy electricity. We can just use our own natural gas.
You know, when you talk about, you know, just the risk out here, I think you mentioned that, you know, we've drilled 45 wells into this field, kind of all over the field, kind of delineating it, and now we're focusing on the proved reserves that Netherland, Sewell gave us. They've given us 48 proved reserves, 24 probables, and 17 possibles in this last reserve report. That takes into account all those previous 45 wells that have been drilled. You know, when we drill, you know, some wells are a little better, some wells aren't quite as good, some way outperform, but it's the average that it comes into account, and that's what they take into account. Those big reserve numbers that we have are based on all that.
Yeah. As you sort of talked about here, you've emphasized that a large portion of your proved reserves are still undeveloped here. You know, what's sort of the practical plan to convert the, you know, the PUDs to PDPs over time, and what factors determine that pace? Is it oil pricing costs, infrastructure spacing? What might that be?
Yeah. It's a little of all the above, actually. As you mentioned, we only have about 29% of our proved reserves that's in the proved developed producing category. Then on top of that, we still have the probable reserves. The pace is definitely influenced by the price. When the price, you know, was down here in the high $50s, low $60s, we said, "Okay, do we really wanna pull that much of it out of the ground?" You know, my inclination was to recommend to our board to drill, let's say, about three wells for the year. If the prices were gonna be there, that would hold our production fairly flat, probably increase it a little bit, keep good cash flow for the company still, being able to return capital to shareholders, even in that pricing environment.
Price comes up higher, if it stays up higher here how it's been recently, then we're able to increase the speed at which we're drilling wells. We can just drill more wells, increase cash flow further and get more production out of the ground.
Just expand on that for just a moment, you know.
Mm-hmm
'Cause you bet you saw this production growth pretty meaningfully last year, and really your exit rate-
Right
Strengthened sort of late in the year here.
Right
As we think about sort of the base declines versus the growth from new wells, you know, what sort of has to stay true to keep this trajectory here?
Really, I mean, the wells have been performing well. I don't expect anything to change drastically on these. We've got a lot of production life on a lot of these wells for a long period of time, so we kind of get a good feel for what the declines are like in the longer term. Like you said, shale wells, the newer wells come on, they have a harder decline, right? They flatten out and go, and that is all taken into account when we calculate our net present value or another one still does. I think it's probably around three wells a year that we have to, you know, keep the production about flat and yet probably grow it a little bit, depending on how they come in.
It doesn't take very much just to keep that cash going and, you know, with the 48 proved locations, that's a lot of years if we wanted to keep cash flow just flat or production just flat, I should say. Cash flow is, will be subject to where oil prices are for the year.
Sure. Of course. You know, I wanna come back to some of the efficiencies that you talked about here.
Mm-hmm.
You know, what sort of changed operationally to really drive those gains and maybe again, what has to stay true for those results to remain repeatable as you begin to scale activity here?
Well, it's a learning process for any field. You learn how you drill faster, how you do drill better, what sub-interval you go into to make the best reserves coming out of the ground and best production available. Then what sub-interval in there can you drill the fastest in order to get your well cost down, and does that affect what the outcome is, as far as how much it produces? You know, do you have a negative effect if you're in a certain interval that you can drill fast, let's say. It takes a number of wells to, in a certain field, to just figure out where to place the wells. Then you also start tweaking your fracture stimulation designs.
You know, what proppant you use, how big are the holes you shoot, and a lot of other items. Through this process, you kind of only change like one thing at a time, 'cause if you change more than one thing at a time, you don't know which one helped, which one didn't. So really, I think we've dialed in on what we can do out here and how we do it. We'll still try some new technologies, some new things to test them out and see if we can do even better and get more out of the ground and higher rates. I think we've got a pretty good base case here for what we've been doing recently is hopefully the low side, and we can just keep getting better by tweaking little things.
All right. Excellent. You know, obviously, you know, with sort of your expertise here today, I wanna dive into maybe a couple of the macros here and get your opinions on them. Maybe as it comes to connecting those dots between the macros and how you sort of plan for the future, given some of these very wide swings that we've seen here and this headline-driven volatility.
Right. Yeah. It's hard when prices move fast. It's hard putting plans together. What we generally do is take care of our longer lead items, like getting surface locations ready and things like that take a bit of time, right? It's a lot of dirt work. If it rains or something, it might get delayed and things like that. We've been busy getting multiple different locations and pads together for drilling or so that we can drill from those. When I say a pad, it's generally a location where we can drill, you know, three to four to five wells from that same location. Once we have those in place, then it's, you know, when can we get a drilling rig? Where we are, we've been fortunate that, you know, we're halfway between Oklahoma City and Dallas.
We've been able to pull equipment and rigs, you know, from either location and sometimes even from Texas in order to get equipment. The longest lead sometimes is just getting locations ready. We've been proactive on securing some locations and then starting to build those out, so we can quickly increase activity if we choose to.
All right. Very good. Obviously, you know, notwithstanding some of the most recent activities here, you know, when you sort of look for the demand for oil here, in the supply-demand equation here, you know, where do you sort of see where market consensus is right and maybe where it's wrong right now?
Yeah. Right now it's hard to say where they are. It's like with everything going on.
Yeah.
I'll start with before the war, everyone was talking about this giant glut, or I wouldn't say everyone, but the mainstream media and a lot of the headlines you saw was this fear of this big glut. Some of the analysts that, you know, we've subscribed to and listened to that have been really accurate in the past have said, "You know, that doesn't really look like we have a big glut out there." Now with the war, with, you know, probably 15% of the world's production not being able to get to market, I'm sure there's a lot more people that say, "Okay. Yeah. There can't be a glut anymore right now." That's, you know, a lot of what caused the oil price to go up.
You know, when you talk about oil price going up, you know, it's shot up, you know, instantaneously to, you know, originally $90, then, you know, over $100 for even West Texas Intermediate, then it drops back down again. That's the very first month of what you're looking at, right? The current month that's going on. 'Cause everyone's afraid that, you know, with the Strait being blocked that there isn't any oil getting out. But that oil is so backed up now, the question is how long will that take to get back to normal even if everything ends and it's open like it might be soon here, if you believe the news, then how long does that take to get back to normal? I think that's gonna take a lot longer than everyone's anticipating.
I think we're gonna have higher prices for the year than people are anticipating. Even when things get back to normal, I have a feeling that I don't think we're gonna be in the, you know, low $60 range. I think we'll be closer in the low $70s, and that's a fantastic environment for us to go drill and produce.
You know, natural gas and LNG are also sort of major macro themes here in 2026. Again, notwithstanding everything we're talking about here in the near term. You know, how do sort of the gas market dynamics matter for your basin and for the way that you think about product mix over a period of time?
I don't fixate too much on natural gas. We have a very low percentage. Like in November, we were producing 75% oil. There was also another 16% or so of natural gas liquids. Our natural gas generally is in the, you know, call it 10%-15% range.
Okay.
Being, you know, lower price-wise recently, it doesn't make a big impact on our bottom line. Sure, natural gas higher, it helps a little bit, but really what drives the needle for us is oil. Oil and natural gas liquids 'cause we're so liquids heavy in this field.
Okay. How do you sort of think about hedging here, especially given the volatility that we've seen?
Our hedging in general, we have a certain amount that we have to hedge for our bank loan. By the way, we have a $65 million line of credit with the Bank of Oklahoma. We try to keep our debt to EBITDA down around 1%. It's just over 1% right now, and we're paying that down here in the first and part of second quarter to be back underneath the 1%. They have us hedge a certain amount of what the expected Proved Developed Producing is gonna be. When oil prices popped up, we added to that as well. We have about 50% of our estimated production from the PDP, from the Proved Developed Producing that's hedged right now.
Some of it was hedged at lower prices where we used what's called a costless collar, like, puts it into a band, where we were capped around, like, the previous year when we put those hedges in place at around $75-$77, I think, for this year. We just added some other costless collars on for the rest of the year that have a cap that's more like $70-$90, roughly. We can really fluctuate with the price of oil, but we still have our, you know, very negative downside covered. We also did a couple, straight swaps, when oil prices were higher, so I locked in some $95 and some high $80s, for the, for the early end months.
Generally prices are up higher, and especially if the futures curve, those are up too, then we'll lock in some more. When prices are lower, we try to keep as much optionality to participate in the upside when oil prices come back up while protecting the downside.
Okay. Couple minutes left here, but as, you know, you've sort of flagged a couple of Sycamore testing plans, East Side appraisal as potential value drivers here. You know, what are sort of the specific proof points investors should look for to sort of validate the upside outside of just sort of core development area?
There's been a focus. We've drilled the East Side well. That's not given any credit really in the reserve report because we would need higher prices than what the reserve report used in order to make economic wells out there. We'd still work on trying that in the future again, but the near term upside for us would be in the Sycamore. There's a number of operators that have made some good Sycamore wells to the north and northwest of us. We've got good oil and gas shows in the Sycamore in some of the old wells that have been drilled previously out here because we did have to drill through the Sycamore in order to develop a deeper horizon that we had sold off to Exxon a number of years ago.
We have all that data from all those deeper wells that were there. Catalyst-wise, it'll just generally be, let's see the activity in our area, and then at some point in time we'll put down the test well and as we call it, the drilling truth teller. We have a lot of hope for that the Sycamore should be significant on this property as well in certain areas in the field. Probably not the whole field, but enough to make a really good impact, I think.
All right. Wrapping it all up here, you know, what are sort of the most important milestones over the next 12 months or so, operational, subsurface, capital allocation, that would sort of most clearly signal that the company's positioned to really compound value through the next cycle here?
Yeah, what we're really deciding on also on how many wells we drill and things like that, I don't think we touched on that really, is it's a decision between where do we use that cash flow that we're generating, right? We're generating everything ourselves. We're not needing to raise any money or anything. That cash flow is either gonna go to drilling, some is going to debt reduction right now, but also return of capital to shareholders and buying back shares, which is the current form of the return to capital that is. We'll be looking at what that allocation is between that. We have the next wells that we have coming up. We've announced by June we're gonna be start drilling again.
Yep.
Once we have that defined exactly, we'll put out a press release on that. That should be a good catalyst. I think, it's gonna be an excellent location that we have. We should make some really good wells here. We'll see where the price of oil ends up settling out and whether we just drill more wells this year, or just focus on returning capital to shareholders.
All right. Fantastic. Well, thank you so much, Wolf, for your participation here today, your insights into what's sort of taking place in the market, specifically within Oklahoma there. If anyone is interested in having a one-on-one meeting here with management, I'd be happy to coordinate that here after the summit's over. Again, you can shoot me an email. That's blum, B-L-U-M@lythampartners.com. Again, we have additional presentations and fireside chats coming up, so to everyone, please stick around. Again, Wolf, thank you so much for your participation here today. Greatly appreciate it.
Oh, thanks for having me, and thanks everyone for listening here today.