EX-99.18 19 ex99-18.htm

 

Exhibit 99.18 

 

 

 

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

 

MARCH 31, 2023

 

   

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM

STATEMENTS OF FINANCIAL POSITION

(Unaudited, expressed in Thousands of United States Dollars)

 

   March 31,   December 31, 
   2023   2022 
Current assets          
Cash and cash equivalents  $3,771   $1,037 
Trade and other receivables   5,536    5,773 
Deposits and prepaid expenses   774    670 
    10,081    7,480 
           
Non-current assets          
Property, plant and equipment (Note 4)   176,727    176,554 
Right of use assets (Note 5)   1,215    48 
    177,942    176,602 
           
Total assets  $188,023   $184,082 
           
Current liabilities          
Trade and other payables  $8,642   $12,596 
Lease payable   742    32 
Fair value of commodity contracts (Note 2)   584    1,421 
    9,968    14,049 
           
Non-current liabilities          
Loans and borrowings (Note 7)   17,819    17,799 
Asset retirement obligations   1,589    1,425 
Lease payable   488    17 
Fair value of commodity contracts (Note 2)   41    594 
    19,937    19,835 
           
Equity          
Share capital   296,227    296,221 
Contributed surplus   23,272    23,254 
Deficit   (161,381)   (169,277)
Total equity   158,118    150,198 
Total equity and liabilities  $188,023   $184,082 

 

See accompanying notes to condensed consolidated interim financial statements.

 

 1 

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED MARCH 31

(Unaudited, expressed in Thousands of United States Dollars)

 

   2023   2022 
Revenue          
Oil and natural gas revenue, net of royalties (Note 9)  $14,293   $5,547 
Other income   1    1 
    14,294    5,548 
Expenses          
Production and operating expenses   1,553    907 
Depletion and depreciation (Note 4,5)   4,338    1,139 
General and administrative expenses   930    686 
Share based compensation (Note 8)   18    125 
    6,839    2,857 
           
Finance income          
Unrealized gain on financial commodity contracts (Note 2)   1,390    - 
Interest income   -    2 
Foreign exchange gain   -    10 
    1,390    12 
           
Finance expense          
Realized loss on financial commodity contracts (Note 2)   414    1,142 
Unrealized loss on financial commodity contracts (Note 2)   -    3,786 
Interest on loans and borrowings   485    225 
Foreign exchange loss   5    - 
Accretion expense   45    6 
    949    5,159 
           
Net income (loss) and comprehensive income (loss)  $7,896   $(2,456)
           
Basic and diluted net income (loss) per share (Note 6)  $0.22   $(0.07)

 

See accompanying notes to condensed consolidated interim financial statements.

 

 2 

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited, expressed in Thousands of United States dollars)

 

   Number of common shares  

 

Share capital

  

 

Contributed surplus

  

 

Deficit

  

 

Total equity

 
 
Balance at January 1, 2022   35,258,767   $296,060   $22,948   $(185,920)  $133,088 
Share based compensation (Note 8)   -    -    141    -    141 
Rights offering   357,142    161    -    -    161 
Net loss for the period   -    -    -    (2,456)   (2,456)
Balance at March 31, 2022   35,615,909   $296,221   $23,089   $(188,376)  $130,934 
                          
Balance at January 1, 2023   35,615,921   $296,221   $23,254   $(169,277)  $150,198 
Share based compensation (Note 8)   -    -    20    -    20 
Stock options exercised (Note 8)   5,000    6    (2)   -    4 
Net income for the period   -    -    -    7,896    7,896 
Balance at March 31, 2023   35,620,921   $296,227   $23,272   $(161,381)  $158,118 

 

See accompanying notes to condensed consolidated interim financial statements.

 

 3 

 

 

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31

(Unaudited, expressed in Thousands of United States Dollars)

 

   2023   2022 
         
Cash flows from operating activities          
Net income (loss)  $7,896   $(2,456)
Adjustments for:          
Depletion and depreciation   4,338    1,139 
Accretion expense   45    6 
Unrealized (gain) loss on financial commodity contracts   (1,390)   3,786 
Share based compensation (Note 8)   18    125 
Unrealized foreign exchange loss   -    (3)
Amortization of loan acquisition costs   25    27 
Change in non-cash working capital (Note 3)   2,097    (1,381)
Net cash from operating activities   13,029    1,243 
           
Cash flows from investing activities          
Additions to property, plant and equipment (Note 4,5)   (4,188)   (7,401)
Change in non-cash working capital (Note 3)   (5,918)   2,505 
Net cash used in investing activities   (10,106)   (4,896)
           
Cash flows from financing activities          
Repayment of loans and borrowings   (3,000)   (750)
Proceeds from equity offering, net   -    161 
Proceeds from loans and borrowings   2,995    - 
Lease payments   (190)   (19)
Proceeds from stock option exercises   6    - 
Net cash used in financing activities   (189)   (608)
           
Foreign exchange effect on cash and cash equivalents   -    3 
           
Change in cash and cash equivalents   2,734    (4,258)
Cash and cash equivalents, beginning of period   1,037    7,316 
Cash and cash equivalents, end of period  $3,771   $3,058 

 

See accompanying notes to condensed consolidated interim financial statements.

 

 4 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

(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 a North American energy company focused on finding and exploiting energy projects in oil, gas and clean and sustainable energy. Through various subsidiaries, 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 2, and methods of computation as the annual consolidated financial statements of the Company for the year ended December 31, 2022. 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, 2022.

 

The condensed consolidated interim financial statements were approved by the Company’s Board of Directors on May 4, 2023.

 

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 Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

At March 31, 2023, the following financial commodity contracts were outstanding and recorded at estimated fair value:

 

      

Total

Volume

Hedged

   Price 
Commodity  Period   (BBLS)   ($/BBL) 
Oil – WTI Swap   April 1, 2023 to May 31, 2023    18,000   $56.02 
Oil – WTI Swap   April 1, 2023 to December 29, 2023    27,000   $90.45 
Oil – WTI Costless Collars   April 1, 2023 to December 29, 2023    36,000    $70.00 - $94.00 
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 Collars   January 2, 2024 to June 28, 2024    6,000    $65.00 - $79.50 
Oil – WTI Costless Collars   January 2, 2024 to June 28, 2024    24,000    $65.00 - $86.00 
Oil – WTI Costless Collars   June 3, 2024 to June 28, 2024    8,000    $60.00 - $78.15 
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 
Oil – WTI Costless Collars   October 1, 2024 to December 31, 2024    39,000    $60.00 - $82.50 

 

The estimated fair value results in a $0.6 million liability as of March 31, 2023 (December 31, 2022: $2.0 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 $0.6 million and a long term liability of $- (December 31, 2022: current liability of $1.4 million and long term liability of $0.6 million).

 

In April 2023, the Company entered into the following additional financial commodity contracts:

 

Commodity  Period  

Total Volume

Hedged (BBLS/MMBTU)

  

Price

($/BBL or $/MMBTU)

Oil – WTI Costless Collars   January 2, 2025 to March 31, 2025    36,000   $60.00 - $77.00

 

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

 

($000s)

   

Three months ended March 31,

 
    2023    2022 
           
Realized loss on financial commodity contracts  $(414)   (1,142)
           
Unrealized gain (loss) on financial commodity contracts  $1,390    (3,786)

 

 6 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

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.

 

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:

 

   Three months ended March 31, 
   2023   2022 
         
Trade and other receivables  $237   $(1,869)
Deposits and prepaid expenses   (104)   88 
Trade and other payables   (3,954)   2,904 
Foreign currency   -    1 
   $(3,821)  $1,124 
           
Related to operating activities  $2,097   $(1,381)
           
Related to investing activities  $(5,918)  $2,505 

 

4. PROPERTY, PLANT AND EQUIPMENT

 

  

Oil and

Natural Gas Interests

  

Processing

and Other Equipment

   Total 
Cost               
Balance at January 1, 2022  $197,116   $1,379   $198,495 
Additions   37,112    5    37,117 
Disposals   (102)   (6)   (108)
Balance at December 31, 2022  $234,126   $1,378   $235,504 
Additions   4,293    43    4,336 
Balance at March 31, 2023  $238,419   $1,421   $239,840 
Accumulated depletion and depreciation               
Balance at January 1, 2022  $50,095   $1,324   $51,419 
Depletion and depreciation for the period   7,515    16    7,531 
Balance at December 31, 2022  $57,610   $1,340   $58,950 
Depletion and depreciation for the period   4,157    6    4,163 
Balance at March 31, 2023  $61,767   $1,346   $63,113 
Net carrying amounts               
At December 31, 2022  $176,516   $38   $176,554 
At March 31, 2023  $176,652   $75   $176,727 

 

 7 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

5. LEASES AND RIGHT OF USE ASSETS

 

    Right of Use Assets 
Balance at January 1, 2022   $38 
Additions    61 
Depreciation    (51)
Balance at December 31, 2022    48 
Additions     1,342 
Depreciation    (175)
Balance at March 31, 2023   $1,215 

 

The amount of interest accretion recorded in the statement of operations totaled $28 and $1 for the quarters ended March 31, 2023 and 2022, respectively.

 

6. EARNINGS PER SHARE

 

   Three months ended March 31, 
   2023   2022 
Basic earnings per share        
         
Net income (loss)  $7,896   $(2,456)
           
Weighted average number of common shares (basic)   35,620    35,592 
           
Net income (loss) per share – basic  $0.22   $(0.07)
           
Diluted earnings per share          
           
Net income (loss)  $7,896   $(2,456)
           
Effect of outstanding options and future service   582    (a) 
           
Weighted average number of common shares - diluted   36,202    35,592 
           
Net loss per share – diluted  $0.22   $(0.07)

 

(a)All the options and warrants were anti-dilutive as the Company incurred a net loss.

 

 8 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

7. 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 a borrowing base of $25.0 million and the Company has an available borrowing capacity of $6.8 million at March 31, 2023. The credit facility is subject to a semi-annual review and redetermination of the borrowing base. 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, share based compensation expense and unrealized gains or losses on commodity contracts.

 

The Company was in compliance with both covenants for the quarter ended March 31, 2023. At March 31, 2023, the Current Ratio of the US Subsidiary was 1.85 to 1.0 and the Maximum Leverage Ratio was 0.61 to 1.0 for the three months ended March 31, 2023. The Company is forecasting to be in compliance with the debt covenants for the next 12 months.

 

At March 31, 2023, loans and borrowings of $18.2 million (December 31, 2022: $18.2 million) are presented net of loan acquisition costs of $0.4 million (December 31, 2022: $0.4 million).

 

8. STOCK OPTIONS

 

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

 

 9 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

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

 

    Three months ended March 31, 2023   Three months ended March 31, 2022 
                  
    Number of options  

Weighted

average

exercise

price

   Number of options  

Weighted

average

exercise

price

 
                  
Outstanding at January 1    776,000   $1.67    143,500   $5.00 
Granted    -    -    559,500    0.80 
Expired/cancelled    (11,500)   4.90    -    - 
Exercised    (5,000)   0.80           
Outstanding at March 31    759,500   $1.63    703,000   $1.70 
                      
Exercisable at March 31    523,001   $1.90    330,000   $2.60 

 

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

 

   

Number of outstanding

stock

options

  

Weighted

average

exercise

price

  

Weighted

average contractual

life (years)

 
              
$5.00 to $6.00    97,000   $5.70    0.1 
$1.80 to $4.90    108,000   $2.23    3.2 
$0.80 to $1.80    554,500   $0.80    3.8 
     759,500   $1.63    3.2 

 

Share based compensation was recorded as follows:

 

   

Three months ended March 31,

 
    2023   2022 
          
Expensed    $18   $125 
            
Capitalized   $2   $16 

 

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.

 

 10 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

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 March 31,

 
   2023   2022 
         
Oil revenue  $16,278   $6,179 
Natural gas revenue   815    391 
NGL revenue   981    541 
   $18,074   $7,111 
Royalties   (3,781)   (1,564)
    14,293    5,547 

 

 11 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

(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 March 31, 2023
  

United

States

  

Canada

and

Other

   Total 
             
Oil and natural gas revenues, net of royalties  $14,293   $-   $14,293 
Other income   1    -    1 
    14,294    -    14,294 
                
Production and operating expenses   1,553    -    1,553 
Depletion and depreciation   4,338    -    4,338 
General and administrative expenses   785    145    930 
Stock based compensation   9    9    18 
    6,685    154    6,839 
                
Finance income   1,390    -    1,390 
Finance expense   (944)   (5)   (949)
                
Net income (loss)   8,055    (159)   7,896 
                
Assets  $187,862   $161   $188,023 
                
Capital expenditures  $4,188   $-   $4,188 

 

 12 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023 and 2022

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

 

10. SEGMENTED INFORMATION (continued)

 

Three months ended March 31, 2022
  

United

States

  

Canada

and

Other

   Total 
             
Oil and natural gas revenues, net of royalties  $5,547   $-   $5,547 
Other income   1    -    1 
    5,548    -    5,548 
                
Production and operating expenses   907    -    907 
Depletion and depreciation   1,139    -    1,139 
General and administrative expenses   566    120    686 
Stock based compensation   107    18    125 
    2,719    138    2,857 
                
Finance income   -    12    12 
Finance expense   (5,159)   -    (5,159)
                
Net loss   (2,330)   (126)   (2,456)
                
Assets  $160,400   $482   $160,882 
                
Capital expenditures  $7,401   $-   $7,401 

 

 13