EX-99.14 15 ex99-14.htm

 

Exhibit 99.14

 

 

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

 

SEPTEMBER 30, 2022

 

 

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited, Expressed in Thousands of United States Dollars)

 

   September 30,   December 31, 
   2022   2021 
Current assets          
Cash and cash equivalents  $4,878   $7,316 
Trade and other receivables   4,233    1,999 
Deposits and prepaid expenses   1,407    587 
    10,518    9,902 
           
Non-current assets          
Property, plant and equipment (Note 4)   162,060    147,076 
Right of use assets   56    38 
    162,116    147,114 
Total assets          
   $172,634   $157,016 
           
Current liabilities          
Trade and other payables  $6,883   $3,145 
Current portion of loans and borrowings (Note 6)   -    1,000 
Lease payable   26    43 
Fair value of commodity contracts (Note 2)   770    1,891 
    7,679    6,079 
           
Non-current liabilities          
Loans and borrowings (Note 6)   15,855    15,866 
Asset retirement obligations   1,617    1,398 
Fair value of commodity contracts (Note 2)   99    585 
Lease payable   27    - 
    17,598    17,849 
           
Equity          
Share capital   296,221    296,060 
Contributed surplus   23,206    22,948 
Deficit   (172,070)   (185,920)
Total equity   147,357    133,088 
           
Total equity and liabilities  $172,634   $157,016 

 

1

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited, expressed in Thousands of United States dollars, except per share amounts)

 

  

Three months ended

September 30

  

Nine months ended

September 30

 
   2022   2021   2022   2021 
Revenue                    
Oil and natural gas revenue, net of royalties (Note 9)  $9,851   $3,909   $27,826   $10,717 
Other income   16    1    45    2 
    9,867    3,910    27,871    10,719 
Expenses                    
Production and operating expenses   1,216    742    3,487    2,209 
Depletion and depreciation (Note 4)   1,860    874    5,086    2,679 
General and administrative expenses   905    650    2,435    2,075 
Share based compensation (Note 8)   75    -    232    - 
Gain on forgiven loan   -    -    -    (303)
    4,056    2,266    11,240    6,660 
Finance income                    
Unrealized gain on financial commodity contracts (Note 2)   4,648    -    1,608    - 
Interest income   -    -    3    - 
    4,648    -    1,611    - 
Finance expense                    
Realized loss on financial commodity contracts (Note 2)   856    780    3,646    1,722 
Unrealized loss on financial commodity contracts (Note 2)   -    11    -    2,953 
Interest on loans and borrowings   281    237    718    700 
Accretion   8    6    20    19 
Foreign exchange loss   15    2    8    3 
    1,160    1,036    4,392    5,397 
                     
Net income (loss) and comprehensive income ( loss)  $9,299   $608   $13,850   $(1,338)
                     
Basic and diluted net income (loss) per share (Note 5)  $0.26    0.03    0.39    (0.06)

 

See accompanying notes to the condensed consolidated interim financial statements.

 

2

 

 



KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited, Expressed in Thousands of United States Dollars, except number of common shares)

 

  

Number of common shares

  

Share capital

  

Contributed Surplus

  

Deficit

  

Total

Equity

 
 
Balance at January 1, 2021   23,292,262   $289,622   $22,948   $(256,922)  $55,648 
Net loss for the period   -    -    -    (1,338)   (1,338)
Balance at September 30, 2021   23,292,262   $289,622   $22,948   $(258,260)  $54,310 
                          
Balance at January 1, 2022   35,258,778   $296,060   $22,948   $(185,920)  $133,088 
Share based compensation (Note 8)   -    -    258    -    258 
Rights offering   357,143    161              161 
Net income for the period   -    -    -    13,850    13,850 
Balance at September 30, 2022   35,615,921   $296,221   $23,206   $(172,070)  $147,357 

 

See accompanying notes to the condensed consolidated interim financial statements.

 

3

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30

(Unaudited, Expressed in Thousands of United States Dollars)

 

   2022   2021 
         
Cash flows from operating activities          
Net income (loss)  $13,850   $(1,338)
Adjustments for:          
Depletion and depreciation (Note 4)   5,086    2,679 
Accretion   20    19 
Unrealized loss (gain) on financial commodity contracts   (1,608)   2,953 
Share based compensation (Note 8)   232    - 
Unrealized foreign exchange loss   14    - 
Amortization of loan acquisition costs   74    89 
Other non-cash income   (16)   (303)
Change in non-cash working capital (Note 3)   (1,708)   392 
Net cash from operating activities   15,944    4,491 
           
Cash flows from investing activities          
Additions to property, plant and equipment (Note 4)   (19,913)   (137)
Proceeds from sale of assets, net   124    - 
Change in non-cash working capital (Note 3)   2,381    (1,749)
Net cash used in investing activities   (17,408)   (1,886)
           
Cash flows from financing activities          
Proceeds from equity offering, net   161    - 
Proceeds from loans and borrowings   -    280 
Repayment of long term debt   (1,085)   (3,369)
Lease payments   (49)   (56)
Net cash from financing activities   (973)   (3,145)
           
Foreign exchange effect on cash and cash equivalents   (1)   - 
           
Change in cash and cash  equivalents   (2,438)   (540)
Cash and cash equivalents, beginning of period   7,316    920 
Cash and cash equivalents, end of period  $4,878   $380 

 

See accompanying notes to the condensed consolidated interim financial statements.

 

4

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

1.NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Kolibri Global Energy Inc. (the “Company” or “KEI”), was incorporated under the Business Corporations Act (British Columbia) on May 6, 2008. KEI is an international energy company focused on finding and exploiting energy projects in oil, gas and clean and sustainable energy. The Company owns and operates energy properties in the United States. The Company continues to utilize its technical and operational expertise to identify and acquire additional projects. The Company’s shares are traded on the Toronto Stock Exchange under the stock symbol KEI and on the OTCQX under the stock symbol KGEIF.

 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, “Interim Financial Reporting” following the same accounting policies, except as described in Note 3, and methods of computation as the annual consolidated financial statements of the Company for the year ended December 31, 2021. The disclosures provided below are incremental to those included with the annual consolidated financial statements and certain disclosures, which are normally required to be included in the notes to the annual consolidated financial statements, have been condensed or omitted. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s annual filings for the year ended December 31, 2021.

 

On May 16, 2022, a share consolidation was completed on the basis of one post-consolidation common share for every ten pre-consolidation common shares. The consolidation reduced the number of common shares issued and outstanding from 356,159,098 common shares to 35,615,921 common shares. All information related to earnings per share, issued and outstanding common shares, stock options and per share amounts in the financial statements have been retrospectively adjusted to reflect the share consolidation. See Note 7 for more information.

 

The condensed consolidated interim financial statements were approved by the Company’s Board of Directors on November 3, 2022.

 

2.FINANCIAL RISK MANAGEMENT

 

Credit Risk

 

The Company’s accounts receivable are with customers and joint interest partners in the petroleum and natural gas business and are subject to normal credit risks. Concentration of credit risk is mitigated by marketing to numerous purchasers under normal industry sale and payment terms. The Company routinely assesses the financial strength of its customers. The Company is exposed to certain losses in the event of non-performance by counterparties to commodity price contracts. The Company mitigates this risk by entering into transactions with highly rated financial institutions.

 

Commodity price risk

 

The Company has entered into financial commodity contracts which are summarized in the table below. Total Volume Hedged in the table is the annual volumes and Price is the fixed price specified in the financial commodity contracts.

 

5

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

2.FINANCIAL RISK MANAGEMENT (continued)

 

At September 30, 2022 the following financial commodity contracts were outstanding and recorded at estimated fair value:

 

      Total Volume Hedged   Price 
Commodity Contract  Period  (BBLS)   ($/BBL) 
Oil – WTI Swap  October 1, 2022 to December 31, 2022   6,000   $102.05 
Oil – WTI Swap  October 1, 2022 to December 31, 2022   12,000   $103.30 
Oil – WTI Swap  October 1, 2022 to December 31, 2022   30,000   $57.05 
Oil – WTI Swap  January 1, 2023 to May 31, 2023   45,000   $56.02 
Oil – WTI Swap  January 3, 2023 to December 31, 2023   36,000   $90.45 
Oil – WTI Swap  June 1, 2023 to December 31, 2023   63,000   $64.90 
Oil – WTI Swap  January 1, 2024 to May 31, 2024   40,000   $62.77 
Oil – WTI Costless Collar  January 2, 2024 to June 28, 2024   6,000   $65.00 - $79.50 
Oil – WTI Costless Collar  June 3, 2024 to June 28, 2024   8,000   $60.00 - $78.15 

 

The estimated fair value results in a $0.9 million liability as of September 30, 2022 (December 31, 2021: $2.5 million liability) for the financial oil and gas contracts which has been determined based on the prospective amounts that the Company would receive or pay to terminate the contracts, consisting of a current liability of $0.8 million and a long term liability of $0.1 million (December 31, 2021: current liability of $1.9 million and long term liability of $0.6 million).

 

In October 2022, the Company entered into the following additional financial commodity contracts:

 

      Total Volume Hedged   Price 
Commodity Contract  Period  (BBLS)   ($/BBL) 
Oil – WTI Costless Collars  January 3, 2023 to December 29, 2023   48,000   $70.00 - $94.00 
Oil – WTI Costless Collars  January 2, 2024 to June 28, 2024   24,000   $65.00 - $86.00 
Oil – WTI Costless Collars  July 1, 2024 to September 30, 2024   21,000   $60.00 - $86.65 
Oil – WTI Costless Collars  July 1, 2024 to September 30, 2024   18,000   $60.00 - $78.00 

 

The realized and unrealized gains/losses from the financial commodity contracts are as follows:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2022   2021   2022   2021 
                 
Realized loss on financial commodity contracts  $(856)  $(780)  $(3,646)  $(1,722)
                     
Unrealized gain (loss) on financial commodity contracts  $4,648   $(11)  $1,608   $(2,953)

 

The Company classifies fair value measurements according to the following hierarchy based on the amount of observable inputs used to value the instrument:

 

Level 1 fair value measurements are based on unadjusted quoted market prices.

 

6

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

2.FINANCIAL RISK MANAGEMENT (continued)

 

Level 2 fair value measurements are based on valuation models and techniques where the significant inputs are derived from quoted indices.

 

Level 3 fair value measurements are based on unobservable information.

 

The Company’s cash and cash equivalents are classified as Level 1 and the commodity derivative contracts are classified as Level 2.

 

3.SUPPLEMENTAL CASH FLOW INFORMATION

 

Changes in non-cash flow working capital is comprised of:

 

   Nine months ended September 30, 
   2022   2021 
         
Trade and other receivables  $(2,234)   (173)
Deposits and prepaid expenses   (820)   (99)
Trade and other payables   3,738    (1,086)
Foreign currency   (11)   1 
   $673    (1,357)
           
Related to operating activities  $(1,708)   392 
           
Related to investing activities  $2,381    (1,749)

 

7

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

4.PROPERTY, PLANT AND EQUIPMENT

 

   Oil and Natural Gas Interests   Processing and Other Equipment   Total 
Cost or deemed cost               
Balance at January 1, 2021  $125,490   $1,379   $126,869 
Additions   806    -    806 
Impairment reversal   70,820    -    70,820 
Balance at December 31, 2021  $197,116   $1,379   $198,495 
Additions (a)   20,130    5    20,135 
Disposals   (102)   (6)   (108)
Balance at September 30, 2022  $217,144   $1,378   $218,522 
                
Accumulated depletion and depreciation               
Balance at January 1, 2021  $46,586   $1,304   $47,890 
Depletion and depreciation for the period   3,509    20    3,529 
Balance at December 31, 2021  $50,095   $1,324   $51,419 
Depletion and depreciation for the period   5,031    12    5,043 
Balance at September 30, 2022  $55,126   $1,336   $56,462 
                
Net carrying amounts               
                
At December 31, 2021  $147,021   $55   $147,076 
At September 30, 2022  $162,018   $42   $162,060 

 

(a)Includes non-cash additions of $26 from capitalized stock-based compensation and $199 from assets related to ARO liabilities.

 

There were no indicators of impairment at September 30, 2022.

 

5.EARNINGS PER SHARE

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2022   2021   2022   2021 
Basic Earnings per share                    
                     
Net income (loss)  $9,299   $608   $13,850   $(1,338)
                     
Weighted average number of common shares - basic   35,616    23,292    35,608    23,292 
Net income (loss) per share – basic  $0.26   $0.03   $0.39   $(0.06)
                     
Diluted earnings per share                    
                     
Net income (loss)  $9,299   $608   $13,850   $(1,338)
                     
Effect of outstanding options   373    (a)    301    (a) 
                     
Weighted average number of common shares - diluted   35,989    23,292    35,909    23,292 
                     
Net income (loss) per share –
diluted		  $0.26   $0.03   $0.39   $(0.06)

 

(a)All options were anti-dilutive in 2021.

 

8

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

6.LOANS AND BORROWINGS

 

In May 2022, the Company’s US subsidiary amended the credit facility from BOK Financial, which is secured by the US subsidiary’s interests in the Tishomingo Field. The credit facility expires in June 2026 and is intended to fund the drilling of the Caney wells in the Tishomingo Field.

 

The credit facility has an initial borrowing base of $20.0 million and the Company has an available borrowing capacity of $3.8 million at September 30, 2022. The credit facility is subject to a semi-annual review and redetermination of the borrowing base. In October 2022, the bank redetermined the credit facility and increased the borrowing base to $25 million. The next redetermination will be in the second quarter of 2023. Future commitment amounts will be subject to new reserve evaluations and there is no guarantee that the size and terms of the credit facility will remain the same after the borrowing base redetermination. Any redetermination of the borrowing base is effective immediately and if the borrowing base is reduced, the Company has six months to repay any shortfall.

 

The credit facility has two primary debt covenants. One covenant requires the US subsidiary to maintain a positive working capital balance which includes any unused excess borrowing capacity and excludes the fair value of commodity contracts, the current portion of long-term debt (the “Current Ratio”). The second covenant ensures the ratio of outstanding debt and long-term liabilities to a trailing twelve month adjusted EBITDA amount (the “Maximum Leverage Ratio”) be no greater than 3 to 1 at any quarter end. Adjusted EBITDA is defined as net income excluding interest expense, depreciation, depletion and amortization expense, and other non-cash and non-recurring charges including severance, stock based compensation expense and unrealized gains or losses on commodity contracts.

 

The Company was in compliance with both covenants for the quarter ended September 30, 2022. At September 30, 2022, the Current Ratio of the US Subsidiary was 2.1 to 1.0 and the Maximum Leverage Ratio was 0.8 to 1.0 for the three months ended September 30, 2022.

 

At September 30, 2022, loans and borrowings of $16.2 million (December 31, 2021: $17.0 million) are presented net of loan acquisition costs of $0.3 million (December 31, 2021: $0.1 million).

 

7.SHARE CAPITAL

 

On May 16, 2022, a share consolidation was completed on the basis of one post-consolidation common share for every ten pre-consolidation common shares. The consolidation reduced the number of common shares issued and outstanding from 356,159,098 common shares to 35,615,921 common shares. The common shares commenced trading on the Toronto Stock Exchange on a post-consolidation basis on the opening of trading May 19, 2022. The exercise price and the number of shares issuable under the Company’s outstanding stock options were proportionately adjusted upon the completion of the consolidation. All information related to earnings per share, issued and outstanding common shares, stock options and per share amounts in the financial statements have been retrospectively adjusted to reflect the share consolidation.

 

9

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

8.SHARE BASED COMPENSATION

 

The Company has an option program that entitles officers, directors, employees and certain consultants to purchase shares in the Company. Options are generally granted at the market price of the shares at the date of grant, have a five year term and vest over two years.

 

The number and weighted average exercise prices of share options are as follows:

 

   Nine months ended September 30, 
   2022   2021 
                 
   Number of options   Weighted average exercise price   Number of options   Weighted average exercise price 
                 
Outstanding at January 1   143,500    5.00    465,500    4.50 
Granted   634,500    0.93           
Expired/cancelled   -    -    (290,500)   4.40 
Outstanding at September 30   778,000    1.68    175,000    4.70 
                     
Exercisable at September 30   329,999    2.62    175,000    4.70 

 

The range of exercise prices of the outstanding stock options is as follows:

 

Range

of exercise

prices

  

Number of

outstanding stock

options

  

Weighted

average

exercise

price

  

Weighted

average

Contractual

life (years)

 
              
$5.00 to $6.00    97,000   $5.70    0.5 
$1.80 to $4.90    121,500   $2.51    3.3 
$0.80    559,500   $0.80    4.3 
     778,000   $1.68    3.6 

 

Share based compensation was recorded as follows:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2022   2021   2022   2021 
                 
Expensed  $75   $-   $232   $- 
                     
Capitalized  $4   $-   $26   $- 

 

10

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

9.REVENUES

 

Revenue is recognized when the performance obligations are satisfied and revenue can be reliably measured. Revenue is measured at the consideration specified in the contracts and represents amounts receivable for goods or services provided in the normal course of business, net of discounts, customs duties and sales taxes. All revenue is based on variable prices. Performance obligations associated with the sale of crude oil, natural gas, and natural gas liquids are satisfied at the point in time when the products are delivered to and title passes to the customer. Performance obligations associated with processing services, transportation, and marketing services are satisfied at the point in time when the services are provided.

 

Oil, natural gas liquids and natural gas are mostly sold under contracts of varying price and volume terms. Revenues for oil are typically collected on the 20th day of the month following production, while natural gas and NGL revenues are collected by the 45th day of the month following production.

 

The following table presents the Company’s gross oil and gas revenue disaggregated by revenue source:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2022   2021   2022   2021 
                 
Oil revenue  $10,773   $4,104   $31,317   $11,528 
Natural gas revenue   1,020    320    2,161    842 
NGL revenue   873    564    2,443    1,314 
    12,666    4,988    35,921    13,684 
Royalties   (2,815)   (1,079)   (8,095)   (2,967)
   $9,851   $3,909    27,826   $10,717 

 

11

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

10.SEGMENTED INFORMATION

 

The Company defines its reportable segments based on the countries where it conducts business.

 

Three months ended September 30, 2022

 

   United States   Canada and Other   Total 
             
Oil and natural gas revenues, net of royalties  $9,851   $-   $9,851 
Other income   16    -    16 
    9,867    -    9,867 
                
Production and operating expenses   1,216    -    1,216 
Depletion and depreciation   1,860    -    1,860 
General and administrative expenses   699    206    905 
Share based compensation   27    48    75 
    3,802    254    4,056 
                
Finance income   4,648    -    4,648 
Finance expense   (1,145)   (15)   (1,160)
Net income (loss)  $9,568   $(269)  $9,299 
                
Total Assets  $172,487   $147   $172,634 
                
Capital expenditures  $4,940   $-   $4,940 

 

Nine months ended September 30, 2022

 

   United States   Canada   Total 
             
Oil and natural gas revenues, net of royalties  $27,826   $-   $27,826 
Other income   51    (6)   45 
    27,877    (6)   27,871 
                
Production and operating expenses   3,487    -    3,487 
Depletion and depreciation   5,086    -    5,086 
General and administrative expenses   1,981    454    2,435 
Share based compensation   161    71    232 
    10,715    525    11,240 
                
Finance income   1,608    3    1,611 
Finance expense   (4,384)   (8)   (4,392)
Net income (loss)  $14,386   $(536)  $13,850 
                
Total Assets  $172,487   $147   $172,634 
                
Capital expenditures  $19,913   $-   $19,913 

 

12

 

 

Notes to the Condensed Interim Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited, expressed in Thousands of United States dollars except per share information)

 

10.SEGMENTED INFORMATION (continued)

 

Three months ended September 30, 2021

 

   United States   Canada and Other   Total 
             
Oil and natural gas revenues, net of royalties  $3,909   $-   $3,909 
Other income   1    -    1 
    3,910    -    3,910 
                
Production and operating expenses   742    -    742 
Depletion and depreciation   874    -    874 
General and administrative expenses   549    101    650 
    2,165    101    2,266 
                
Finance expense   (1,034)   (2)   (1,036)
Net income (loss)  $711   $(103)  $608 
                
Total Assets  $79,275   $98   $79,373 
                
Capital expenditures  $137   $-   $137 

 

Nine months ended September 30, 2021

 

   United States   Canada   Total 
             
Oil and natural gas revenues, net of royalties  $10,717   $-   $10,717 
Other income   2    -    2 
    10,719    -    10,719 
                
Production and operating expenses   2,209    -    2,209 
Depletion and depreciation   2,679    -    2,679 
General and administrative expenses   1,710    365    2,075 
Other income   (303)   -    (303)
    6,295    365    6,660 
                
Finance expense   (5,394)   (3)   (5,397)
Net income (loss)  $(970)  $(368)  $(1,338)
                
Total Assets  $79,275   $98   $79,373 
                
Capital expenditures  $137   $-   $137 

 

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