Kolibri Global Energy Inc. (KGEI) Q1 2025 Earnings Report, Transcript and Summary

Good day, and welcome to the Kolibri Global Energy's First Quarter 2025 Financial Conference Call. [Operator Instructions] Please note, this event is being recorded. I advise participants that this conference is being recorded today as of May 14, 2025. This call will be available on the company's website at www.kolibrienergy.com. This call may include forward-looking statements, information regarding Kolibri's strategic plans, anticipated production, capital expenditures, exit rates and cash flows, reserves and other estimates and forecasts. Forward-looking statements are subject to risks and uncertainties, and actual results will vary from the forward-looking statements. This call may include 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 assumptions on which such 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 the Kolibri's most recent corporate presentation, all of which are available on the 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 applicable law. I would now like to turn the call over to Mr. Wolf Regener, the President and Chief Executive Officer of Kolibri Global Energy Inc. Please go ahead, sir.

Thank you, and thank you, everyone, for joining us today. With me on today's call is Gary Johnson, our Chief Financial Officer. As I'm sure you're aware, we released our first quarter 2025 results this morning, and we are very pleased with what we've achieved this quarter, which continues to build on our last few years' results in multiple ways. Production increases 23% over first quarter of 2024. Operating expenses remain low with just over $7 a barrel of oil equivalent, leading to really good netbacks. We are continuing to deliver even more efficiencies by drilling 5 wells in the quarter and cutting our drilling times down by a further 25% in the latest 1.5-mile lateral wells. This saves money and thus improves our internal rates of return on our new wells even further. You can see from our corporate presentation how even at lower oil prices, we can drill wells and make good rates of return. Our breakeven oil price is quite low. So things are going very well, and we look forward to increasing our production further when we complete these wells later this quarter. With that, I'll now turn the call over to Gary to discuss our financial results. Go ahead, Gary.

Thanks, Wolf. And thanks, everyone, for being on the call. I'm just going to go over a few highlights of the first quarter, and then we'll take questions. All amounts are in U.S. dollars unless otherwise stated. As you can see from the earnings release today, we had another good -- very good quarter with strong increases in net income, production and adjusted EBITDA. Net income was up 72% to $5.8 million with basic EPS of $0.16 per share compared to $3.3 million and $0.09 per share in the prior year quarter. The increase was due to an increase in revenues and lower realized and unrealized commodity contract losses compared to the prior year first quarter, which were partially offset by higher income tax expense. Average production was up 23% to 4,077 BOE per day compared to 3,305 BOE per day in the prior year quarter. The increase was due to the wells that were drilled during 2024. Adjusted EBITDA was $12.8 million compared to $10.4 million in the prior year quarter, which was an increase of 24%, mainly due to higher revenues. Net revenue increased by 15% to $16.4 million compared to $14.3 million due to the higher production, which was partially offset by lower average prices, which were down 6%. Operating expense was $7.07 per BOE for the quarter compared to $8.36 per BOE in the prior year first quarter, which was a decrease of 15%. Operating expense in the first quarter of last year did include $600,000 of prior period gathering and processing cost adjustments. Our netback from operations decreased slightly to $37.55 per BOE compared to $38.94 per BOE in the prior year quarter due to lower average prices. And to be clear, the impact of hedges on our netbacks, they were only down about 1% from the prior year quarter. And with that, I'll give it back to Wolf.

Thanks, Gary. As Gary laid out, we had a great first quarter, which has continued the success we've had over the last few years. Company has had quite the growth. Revenue and cash flow have grown a lot, all while keeping our leverage low, and our team has been executing extremely well. Our striving for constant improvement continues to pay off. Drilling times and cost improvements for our new wells have been huge. We've also had numerous completion improvements that have led to improved economics and our operating expenses and netbacks are, from what I can see, among the best among our peers. In addition, we are intending to continue returning capital to shareholders in the form of share buybacks. Overall, our plan is to continue to execute and build and grow company value for all shareholders, and we'll continue to get the word out about the company to shareholders and potential shareholders as we have a number of conferences and presentations lined up, which you can see listed on our website. This concludes the formal part of our presentation, and we would be pleased to answer any questions that you may now have.

[Operator Instructions] The first question comes from Steve Ferazani with Sidoti.

I appreciate the detail on the presentation. Wolf, can you give any sense on the financial savings from those faster wells drilled? And what you learned from drilling the 4 wells on the pad? Is that going to be transferable when I believe you still have 2 more wells you're going to drill on a pad in the second half?

Yes. So I don't like quoting what we have from our field estimates until we get our actual expenses in. So I'm not misquoting anything. So it was a nice amount of savings. I'll leave it at that. And we'll put some numbers out once I get all the firm numbers in. I'd prefer to do that once we have all of our costs in since it's drilling and completion that counts in the end. But yes, it will save us both time and money on what we've just done. Transferable, yes, absolutely. Over the years, we've learned what works the best, what drill bits work the best, what systems, and we keep refining that and keep getting better and better at that. And our geological team is steering in intervals that drill faster, but are still in our primary target. And so all those things together have just been led together to -- plus good equipment, don't get me wrong, from the contractors that we're using. So less downtime always helps, too. But yes, so it's just kind of a combination of just not one thing. A lot of different things that lead to it. And yes, we expect that to carry through to all of our drillings that we do from here on out. So I'm hoping that our [indiscernible] costs will continue to come down in the future.

Excellent. Any update on the timing on the second half drilling plans?

No, not right now. We'll just leave it at the second half. We've got locations that are almost ready to go and built, and then we'll take it from there, but we'll announce when we get a little closer.

Okay. And then the plans for getting the Lovina wells to production, you're saying third quarter. Will that be simultaneous with the East side? Or will it be -- how can we think about that?

We'll finish fracture stimulating the Lovina wells and then what we also do is drill out the plugs, and then start flowback. And -- but when we're done completing those and fracture stimulating those, the frac crew will move directly over to Lovina. So as we're drilling out the plugs on Lovina -- excuse me, on the Forguson. As we're drilling out the plugs on the Lovina, the crew should be fracture stimulating the Forguson. So they won't be far behind, but Lovina will come on first.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

Thank you, everyone, for joining us today and for those that listen to the replay as well. So I appreciate everyone's support, and I hope everyone has a great day. Thank you very much.

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