Investor Conference. I'm Steve Ferazani, an analyst at Sidoti. You can see the room is just about filled in now. Before we get started with the presentation, I know it's been two days of presentations, so I'm sure you've all heard this by now, but as a reminder, we should have time following the presentation. If you have a question, you just press that Q&A box at the bottom of your screen, type it in, and we'll get to as many questions as we can. Now, happy to introduce Kolibri Global Energy. The ticker is KGEI. We're joined by CEO Wolf Regener and CFO Gary Johnson. With that, let me turn it over to you, Wolf.
Thanks, Steve. Thanks everyone for joining us here today. Forward-looking information and disclaimer information, non-GAAP, et cetera, can all be found on our website on our corporate presentation. Those of you that are new to the story, we're an oil and gas operator that operates the Tishomingo Shale oil field in Oklahoma, located about halfway between Oklahoma City and Dallas. We try to run our company in a financially stable, prudent fashion, keeping our debt low, try to keep our debt to EBITDA down below one. We've had really good cash flow growth over the years and have high netback production. We're fully funded for our 2026 drilling program, as we have been for the last few years. Just utilizing our cash flow and our existing line of credit, where we have a $75 million line of credit with Bank of Oklahoma.
We have what we consider a really good asset. Excuse me. Netherland, Sewell does our reservoir engineering every year. They've given us 40 million barrels of proved reserves, 57 million barrels of proved probable reserves. On our proved reserves, you'll see it's split between PDP, meaning proved developed producing, and proved undeveloped. 29% at the end of last year was in the proved developed producing category, 71% was in the proved undeveloped category, so it shows you that we have a lot of room to grow, to go further. As Steve said, we're traded on the Nasdaq under KGEI. We also trade on the TSX under KEI. Share price is not that. I should have updated that given the volatility that's just happened. Our market cap right now is trading around $175 million or so U.S.
We had $45 million in net debt at the end of last quarter, we've been paying that down here in the first half of the year. Our enterprise value right now is probably around $210 million or so. That compares to Netherland, Sewell's analysis of our reserves, that 40 million barrels of just the proved reserves was $440 million at the end of last year. If you look down here at the bottom, you can see that the prices they were assuming at that point in time was $58 for 2026, $63 in 2027, $68 in 2028. Given the volatility and what's been going on with the Iranian crisis, and the MoU that was just signed, prices have come down, but they've come down to, oh, $74 or $75, where it is today.
Still significantly above what the assumptions are to create that $440 million value. The proved probable with that same price tag is almost $600 million. I mentioned we were halfway between Oklahoma City and Dallas. We originally out here drilled for what's called the Woodford Shale. We had drilled and participated in about 40 wells at about 12,500 acres. We produced only about 15% of our production was oil. The balance was gas, natural gas liquids. Exxon came in and was buying out everyone around us. Do you see the pink purple down here? We were the last holdout. We had just drilled a well into the Caney, our first horizontal well. It was by no means economic at the time, we felt like we could make economic wells out here.
Exxon didn't want to pay us for what we felt like the Caney could be worth. They agreed to let us keep the rights to the Caney and the Upper Sycamore. These intervals are only about 300 feet above where the Woodford is. We're talking about all these zones are down between 8,500 and 11,000 feet. Quite a ways underground compared to the 300-foot difference between the two. The amazing part was when we were completing these Caney wells, they came on for much higher oil percentages than the Woodford was, even though they're that close together. Since then, we've grown that acreage position to about 17,000 acres, and that's where that 40 million barrels of proved reserves, 57 million barrels of proved probable reserves has come from.
For 2026, we entered 2026 with a strong 2025 exit rate because we brought some wells on production in the fourth quarter. As I mentioned, we were paying down some debt in the first half of 2026, buying back a small amount of shares in the first half. The intent is to buy back more, I should say, in the second half of the year. We're looking to continue to develop the field in 2026. Just in the Caney itself, where we had our base forecast that we said, "Look, we'll drill three wells no matter what, no matter what prices are." The prices stayed higher. We're looking at drilling some additional wells. We're planning on additional benches, meaning some additional subintervals of what we have the right to.
If we can get the board all approved on that, we can try to prove up some additional reserves on top of everything that we have on top of that 40 million barrels. Forecast for the year with that base case of those three wells that I mentioned, that we're in the process of drilling, by the way. We assumed a $74 oil price. We put that out in early April, I think, roughly, when the price of oil was substantially higher still. Our concern was If this war ended, where would the price of oil drop to? We figured that $74 was a reasonable place to be conservative about expecting it to go to. So far, we're pretty close to on the money. Don't hold me for that all the time. So far we're okay on that.
Our assumptions are based on a $74 oil price, which increases our adjusted EBITDA for the year to $55 million-$60 million, which is a 30%-40% increase. Capital expenditures call at midpoint about $25 million, and keeping our debt by the end of the year down between $25 million and $30 million. The graph on the right here shows you in green is our adjusted EBITDA, the forecast for the year, the $55 million-$60 million. You'll see in here we've been about $40 million, plus or minus on adjusted EBIT for the last couple of years. While production has been growing, the boxes here show what the blended price has been for the barrels of oil equivalent. That's oil, the gas, and the natural gas liquids blended together. You can see in 2022, it was up to over $80 a barrel of oil equivalent.
In 2025, it was down to $49. At our $74 price, we're up above that. I think it was around $59 or $60, if I recall, for the years our assumptions. Production quarter-by-quarter has been increasing, as we mentioned. Same on our operating net income has been nice, steadily increasing. The red line, again, is the price of oil equivalent that we've gotten. First quarter with this number here takes into account only, keep in mind, one month of those higher prices, because prices jumped in March. Those two months of the lower prices, one and the higher. For the field, a little background on it. All the infrastructure's in place. Gathering system for the gas, natural gas liquids, less than a mile from all of our approved locations. Oil is priced at a $1.85 less WTI.
The oil is all trucked out of here. It's been very consistent. There haven't been big differential changes between what we've been getting. It's been very consistent for a number of years on that. Netherland, Sewell again, our reserve report has 104 locations booked for us, in the Caney alone. 48 of those are the Proved, 24 Probables, 17 Possibles, and those are now mainly 1.5-mile and 2-mile laterals, where in the past we'd been drilling 1-mile laterals. Acreage 17,700 or so. 45 wells that we have on production, the acreage is almost entirely held by production. That's between the Woodford wells that XTO produces and the Caney wells that we produce since it's the same leases. We have additional upside potential on this property. We have the Sycamore Formation that's present over the entire acreage block.
We have some old wells that had good oil and gas shows when they were drilling through the Sycamore. Some operators to the north have made some very successful Sycamore wells, we've been looking at seeing where we could drill those. There's obviously a little risk associated, a higher risk associated with trying to get those into economic status. We have the T-Zone, which is a sub-formation of the Caney that is proven. We've made some good wells in the T-Zone. We did have an instance where the T-Zone completion interfered with the Caney wells that we were drilling at the same time.
We've decided to hold off on that, for either trying it again with a different completion technique a bit to see if we can not have that interference or we wait till an area of Caney has declined down to a certain level, then we drill a T-Zone, and if it interferes with the Caney, it's not a big deal. These are not in the reserve report, by the way. This is some other potential. We have some other benches that we're looking at potentially testing out here or potentially add more reserves to the reserve report and thus add more wells, and thus have even longer life than the reserves or the number of wells that Netherland, Sewell has given us credit for so far. We tested a well last year on the east side.
We picked a location where we had a smaller interest. Exxon had the balance of it. It's going to be a long payout and didn't have the production rates that we were hoping for because it's a lot shallower than where we are in the heart of our field. We wanted to test that out there because the shale looked good. We just wasn't sure how much energy was going to be there when we tested that. We've gotten better and better over the years of drilling wells back in 2016 or 2017 for these one-mile laterals. It was taking us about 30 days to drill them. In 2024, we had that down to 12 days.
Our drilling costs came into 2023 for about $7.2 million is what we were estimating the average cost of those last one-mile laterals, because now we're drilling longer laterals. We're $5.5 million each. We drilled some Lovina wells here, that were mile and a half laterals that we drilled in as quick as 10 and a half days. It's possible to get that number down even further, even though you're adding 50% more lateral to your recovery here. Our Clifton Mac wells are budgeted at $7.2 million for a mile and a half laterals. You can see that our budgeted cost of $7.2 million compares to what we were anticipating our one-mile laterals were going to cost a number of years ago. Operating expenses per barrel of oil equivalent. These are a number of public company peers of ours, of what we consider our peers.
This is from 2025 year annual reports from all of them, including us. You can see we're on the lower end of the range of how much it takes to get a barrel of oil out of the ground. Most of the ones around us are actually natural gas producers that where gas just flows out of the ground. That leads right over into how much we make per barrel of oil equivalent that we pull out. Net backs. Last year, we were actually in the very top end of these peers as well. G&A has been going down year after year. Yearly net revenue follows all the other charts that I've shown, going up with our forecast going up, the red line is the forecast of the price for this year. As I mentioned before, it's like $59, $60 roughly.
You can see over the years what the price per oil equivalent barrel has done. Touching quickly, trying to leave some time for Q&A still. Myself, over 36 years of oil and gas experience. Everything from land acquisitions, lots of operations experience, finance experience, and M&A experience in my career. Gary, you want to talk about yourself while I take us up here?
Oh, sure. Yeah. I have a CPA and an MBA, about 22 years experience in the energy industry, including a run at Occidental Petroleum as a director of technical accounting. Most of my experience has been in public companies in the U.S. and Canada.
Thanks, Gary. Dan Simpson has about 30 years of experience in petroleum engineering all around the world. Allan Hemmy, about 16 years of oil and gas experience, a geologist. David Neuhauser, through Livermore Partners, owns about 16% of the company, so public company experience there. Lee Canaan is our chair of our audit committee. Is on other public companies, including director of EQT Corporation, where she's been, in the past, the chair of the audit committee. Glen Brown brings lots of experience to the table for Midcontinent, as he was senior vice president of Continental Resources. Murray Grigg brings lots of technical experience in the shale side of things, where he's been involved in a lot of shale plays over the years, including working with EOG Resources. That kind of brings us to the summary. We trade as KGEI on the Nasdaq.
Try to keep our debt low, try to do business the right way. Our cash flow has been increasing nicely. Try to be conservative in what we do. Looking for buying back some more shares later on this year. We are fully funded. With that, I think I can leave some time for some questions.
Thanks so much, Wolf. Thanks, Gary. We do have some questions already in the queue, but I'd like to remind everyone, we do have 10 or 15 minutes remaining. If you have a question, press the Q&A button and type it in, and we'll get to as many as we can, time permitting. I did just want to start off, Wolf, by asking about capital allocation priorities near term. You noted the strong cash flow and growing cash flow you're generating. You currently have a three-well program underway this year. Your balance sheet's in great shape, but paying down debt's never a bad thing. How are you weighing capital allocation priorities in this sort of volatile environment where we might be entering right now?
Yeah. We try to be careful. We have to balance out what we were trying to accomplish. As management, we'd like to see some other testing of some of these other intervals in general, which we think are going to work well, which will add more to reserves and/or add more to cash flow as well. But, that's a board decision that we'll make. The three wells were the minimum that we wanted to drill for the year. Even before prices went up, that was what our plan was.
Yeah
though prices jumped up, we continued there and stayed there for that. We'll see how this all unfolds, and we'll be cautious here a little bit. Hopefully, you'll see us adding some additional wells for the year.
Okay. Follow up with that question. We do have a question about, given the environment, your current hedging strategy. Per bank agreement, you do meet that and do hedge out, was it 50% of 12-month production, somewhere in that range, and then 25% past that. I guess in terms of tactically how you might approach that, any changes?
No. As the oil prices were higher, I wish the backwardation hadn't been so bad. You would've seen us add some hedge to it.
Yeah.
It's kind of tough when you can only hedge where you think that the oil prices are going to be after this all settles out.
Yeah
We didn't add a lot. We just kept what the bank plan was in place. That's probably the biggest question I get from people.
Well, the question, why didn't you?
Why didn't you hedge everything at $95? I'm like, "Wish I could've.
Well, that was-
It just doesn't work that way
We had this conversation anyway, Wolf, which was that the forward strip looked like it was not giving full credit to what was-
Right
going on at the time. I'm not sure there was a right answer to that even then.
Yeah. I don't know if that was the biggest differential ever between 12 months out and current or not, it was up there. In my career, I don't remember seeing it that bad ever.
Fair. Do have some general questions around how many years of drilling do you have left, do you think, in the Tishomingo, and what kind of inventory do you think is there? If you could just give a sort of general picture.
Yeah. I think we have a lot. We have 48 just given on the proved side of things from Netherland and Sewell. If we're looking at what we've been doing, we've been drilling an average of between six and nine wells a year, generally. That gives us a lot of running room. We do think that we've got some other benches that we can go after as well to add even more running room, that doesn't even take into account the probable reserves or anything else.
You've mentioned that a couple times, places, the areas like the Sycamore. You tried the east side last year. Is it a question of mixing one of those in every year, or how are you thinking about that?
Yeah. I like my personal philosophy that, and I don't make the decisions solely, mind you.
Yeah, of course.
My personal philosophy is, you drill just some low-risk stuff, and then every once in a while you add in something that's higher risk in order to see a bigger growth on the company, a bigger upside on something, so that you can try to prove up. That's what that East side was, for instance.
That's the one thing we saw last year. Obviously, you're hitting record production. Netbacks came out very strong in Q1, even with only a portion of it seeing the benefit of the higher oil prices, partially because of the much higher oil content from those most recent wells.
Right.
It still doesn't appear to be reflected in your stock. The one negative of last year was your proved reserves didn't really grow because you drilled.
Right
current location.
We drilled proved reserves. Yeah, exactly.
Yeah.
So.
How do you- I know you're trying to make the most economic sense, you've also got to be thinking about the valuation, too.
Yeah.
Proved reserves is a factor in that, growing that, you want to generate strong cash flow. How do you balance those different perspectives?
Well, I think you've got to do a combination of things.
Right.
One also is like when you test something else and you do a different interval, let's say.
Yeah.
You're not going to get your full reserve credit from your reservoir engineer, right? They're conservative. They're going to want to see a certain amount of production. They want to see a certain number of wells into it. If you look and step back a little further, we're a $200 million market cap company in an oil and gas space, right? We're small.
Yeah.
We either have to grow or we're going to get bought. If we're going to get bought for something, I want to make sure we've got wells in all these intervals that we've proven it out, where an industry person would come in and go, "Yeah, I get that Netherland still hasn't given you credit for this yet.
Right
that's what they do." The industry says, "Okay, yes, I can see how this could work over larger parts of your field or anything else," but you need a few wells into it. You can't just say, "Look, I think this is going to work because it looks good on the log." You've got to actually prove it once or twice, right?
Yeah
that's one of the things as well. We're always subject to potentially buyouts. You want to maximize everything for your shareholders who have been good to you and loyal to you, and we're shareholders as well. That's been my biggest thing. That's why I wanted to put a well on the east side last year, too.
Yep.
No one was going to give you credit for it until you try it, and that's what you have to do, in my opinion.
Got it. Fair answer.
The three wells we're drilling right now are not in the proved category.
Right. Yeah. They're probables. Yep.
Got it. That's an interesting note. Speaking of valuation, you have that great slide in the deck in terms of your netbacks, which are historically and no reason to think it's not going to consistently be at the top of the pack. Having said that, you're not getting credit for that in your stock price.
Yeah.
Is that frustrating or what's the answer to that?
It's, you know.
Anyone who looks at the numbers can go, "Wow, that's
Right. Well, I've been in this business long enough and been in public companies long enough that the two don't always align, right?
Yeah.
Likewise, we don't have a whole lot of coverage by investment banks because we haven't needed any money, right? We're not looking to raise any money. Yeah. It's our biggest challenge is getting the word out and having people actually see those kind of slides.
Yeah. Fair enough.
It is what it is, so.
Speaking of that, it also speaks to the capital allocation question. Given the current valuation, would you ever get more aggressive with buybacks?
Yeah. It's a balancing act, right?
Yeah.
That's where we have robust discussions at the board level as far as, okay, what do we think is the best thing to do for the company, right? Stock price is down, then you want to emphasize more on buybacks. If the stock price is higher, you want to drill, but you still want to drill some wells, and you still want to make sure that you poke a hole into some of the things that you're not getting credit for the reasons that I spoke about before. It's always a challenge.
What about a dividend?
You don't ever want to start a dividend and then drop a dividend.
Yeah.
I think we're finally up at that level where we could potentially do it. I think right now with what we have on our plate and what we have in mind, it's probably not going to be right now. I think we're better off with stock buybacks for right now is my personal opinion.
Yeah.
Putting some more holes in the ground, so to speak, before we start something like that. We definitely have the potential because we're finally at a level where we have that kind of cash flow, which could make sense, or it will make sense at some point in time. It's just a matter when.
Fair enough. Any update on the wells you've been drilling? To do with that question.
No. Basically, we said that we'll bring them on in the third quarter. When we have an update out, then we can speak more toward that.
Fair enough. More likely, that's when you'd update guidance. If you were to update guidance.
Yeah. Whatever the potential changes we make. Correct.
Okay. I think we've covered the basis on the questions. Anything else we didn't cover today that you want to tackle?
I don't think so. I think I spoke pretty quickly.
You did
I tried to give enough time for the Q&A. I was five minutes quicker than I thought I was going to be. Yeah. No, I think everything's here, and we're always open to questions, and I think hopefully our corporate presentation answers questions pretty well, and that's about it.
In terms of the higher oil content you saw from those wells, and you talked quite a bit about this, because the headline number wasn't as quite as good from those wells
Right
you completed in the second half of last year. Largely it was because there was less natural gas content.
Right.
At that point you said slower decline rates.
Will we see that in the numbers? Is it that evident?
I think we've used that in our forecast.
Okay.
That's built in. We assume certain things, with some of the higher gas rates wells that we had, we put a little harder declines on it, our guys I trust them in what they've
Yeah
told us what the forecasts are going to be. That's where that comes from. That's baked in, so to speak.
We do have a question about what bottlenecks would limit a faster development pace for drilling.
I think we just want to be careful on.
Yeah
where the price is going to be. Right? Just that it doesn't fall through, that you don't have a further overreaction to the downside because of everything clearing up. Just bottlenecks in general is just prep time and.
Yeah
laying out what you're going to do, then lining up the rigs and equipment.
Yeah
I don't see any shortages of anything right now. We haven't come across anything, including steel or anything else.
Yeah.
It's all good.
Any inflationary pressure concerns?
No. There's going to be inflation just here and there.
Yeah.
It just is what it is, so.
Fair enough.
Nothing earth-shattering that I can see.
Got it. Wolf Regener, CEO of Kolibri Global Energy. Gary Johnson, CFO. Thanks so much for being here, guys.
Good to see you.
If you have any other questions, I'm sure you can go directly to Wolf or reach out to me, Steve Ferazani at Sidoti, and I'm certainly happy to pass on any questions. I think we got to most of them, and there were quite a few today. Thanks for walking through all of them with us, Wolf.
All good. Thank you, everyone, and thanks, Steve.
Thank you. Have a great day.
Everyone, have a great day. Thanks. Bye now.