EX-99.2 3 ex99-2.htm

 

Exhibit 99.2

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

SEPTEMBER 30, 2023

 

Kolibri Global Energy Inc. | 1 | Third Quarter 2023
 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

The following is management’s discussion and analysis (“MD&A”) of Kolibri Global Energy Inc.’s (“KEI” or the “Company”) operating and financial results for the three and nine months ended September 30, 2023, compared to the corresponding period in the prior year, as well as information and expectations concerning the Company’s outlook based on currently available information. The MD&A should be read in conjunction with the unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2023 and the audited consolidated financial statements and MD&A for the year ended December 31, 2022. The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”. The reporting and measurement currency is the United States dollar. Additional information relating to KEI including its Annual Information Form is filed on SEDAR at www.sedar.com and on the Company’s website at www.kolibrienergy.com.

 

Netback from operations, netback including commodity contracts, net operating income and adjusted EBITDA (collectively, the “Company’s Non-GAAP Measures”) are not measures or ratios recognized under IFRS and do not have any standardized meanings prescribed by IFRS. Management of the Company believes that such measures and ratios are relevant for evaluating returns on each of the Company’s projects as well as the performance of the enterprise as a whole. The Company’s Non-GAAP Measures may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar non-GAAP measures and ratios as reported by such organizations. The Company’s Non-GAAP Measures should not be construed as alternatives to net income, cash flows from operating activities, working capital or other financial measures and ratios determined in accordance with IFRS, as an indicator of the Company’s performance.

 

This report is prepared as of November 13, 2023. Please read carefully the important cautionary notes regarding technical information, forward-looking statements and other matters set out in this report.

 

Description of Business

 

KEI is a North American energy company focused on finding and exploiting energy projects in oil and gas. 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 in oil, gas and clean and sustainable energy. The common shares of the Company trade on the Toronto Stock Exchange (“TSX”) under the symbol “KEI” and on the NASDAQ under the symbol “KGEI”.

 

Operating Summary

 

The Company’s results of operations are dependent on production volumes of natural gas, crude oil and natural gas liquids and the prices received for the production. Prices for these commodities have shown significant volatility during recent years and are determined by supply and demand factors, including weather and general economic conditions.

 

Kolibri Global Energy Inc. | 2 | Third Quarter 2023
 

 

Results at a Glance  

 

   Three Months ended   Nine Months ended 
   September 30,   September 30, 
   2023   2022   2023   2022 
                 
Financial (US $000 except per share)                    
Oil and gas gross revenues   16,378    12,666    47,198    35,921 
Oil and gas net revenues   12,746    9,851    37,153    27,826 
Net operating income(1)   11,118    8,635    32,825    24,339 
Net income   2,319    9,299    14,483    13,850 
Basic net income per share   0.07    0.26    0.41    0.39 
Diluted net income per share   0.06    0.26    0.40    0.39 
Cash flow from operating activities   9,631    6,387    28,673    15,944 
Adjusted EBITDA(2)   9,536    6,874    28,578    18,258 
Additions to property, plant and equipment   17,247    4,940    37,177    19,913 
                     
Operating                    
Average production (Boepd)   2,737    1,702    2,780    1,563 
Average price ($/BOE)   65.04    80.89    62.19    84.19 
Netback from operations ($/BOE)(3)   43.28    55.16    42.48    57.05 
Netback including commodity contracts ($/BOE)(3)   41.65    49.69    41.00    48.50 

 

   30-Sep-23   30-Jun-23   31-Mar-23   31-Dec-22 
Balance Sheet                    
Cash and cash equivalents   501    945    3,771    1,037 
Total assets   211,745    196,655    188,023    184,082 
Total non-current liabilities   26,340    19,865    19,937    19,835 
Working capital (deficiency)   (13,093)   (8,274)   113    (6,569)
Borrowing capacity available from credit facility   15,842    21,842    6,842    6,842 

 

(1) Net operating income is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(2) Adjusted EBITDA is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(3) Netback from operations and netback including commodity contracts are considered non-GAAP ratios. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.

 

Highlights

 

The average production for the third quarter of 2023 was 2,737 BOEPD, an increase of 61% compared to third quarter 2022 production of 1,702 BOEPD. Average production for the nine months ended September 30, 2023 was 2,780 BOEPD, an increase of 78% from the average production of 1,563 BOEPD in the same period of 2022. These increases are due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells which started production at the end of 2022 and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells which started production in mid-June 2023. The production increases were partially offset by production restrictions due to the Company’s gathering system operator, existing wells that were shut-in while completion operations were underway and a few well reworks. These reduced third quarter production by approximately 200 BOEPD.

 

Kolibri Global Energy Inc. | 3 | Third Quarter 2023
 

 

Adjusted EBITDA(1) was $9.5 million for the third quarter of 2023 compared to $6.9 million for the same period in 2022, an increase of 39%. The increase was due to a 61% increase in production partially offset by a decrease in average prices of 20%. Adjusted EBITDA(1) was $28.6 million for the nine months ended September 30, 2023 compared to $18.3 million for the prior year period, an increase of 57%. The increase was primarily due to an increase in production of 78% partially offset by a decrease in average prices of 26%.

 

Gross revenues for the third quarter of 2023 increased by 21% compared to the third quarter of 2022. The increase was due to a 61% increase in production, partially offset by a decrease in average prices of 20%. Gross revenues for the nine months ended September 30, 2023 increased by 29% compared to the same period in 2022. The increase was due to a 78% increase in production in the nine months ending September 30, 2023 compared to the same period in 2022 partially offset by a 26% decrease in average prices in the nine months ending September 30, 2023.

 

Net income in the third quarter of 2023 was $2.3 million, compared to net income of $9.3 million in the same period of 2022. The decrease was mainly due to an unrealized loss on commodity contracts of $2.6 million in the third quarter of 2023 versus an unrealized gain on commodity contracts of $4.6 million that was recorded in the third quarter of 2022. In addition, the third quarter of 2023 had lower average prices and higher depreciation expense which was offset by higher production compared to the third quarter of 2022. Net income in the first nine months of 2023 was $14.5 million, compared to net income of $13.9 million in the same period of 2022. The increase was primarily due to an increase in production, partially offset by a decrease in average prices and higher depreciation expense.

 

Netback from operations(2) decreased to $43.28 per BOE in the third quarter of 2023 compared to $55.16 per BOE in the same period of 2022, a decrease of 22% due to lower average prices. Netback from operations(2) decreased to $42.48 per BOE in the nine months ending September 30, 2023 compared to $57.05 per BOE in the nine months ending September 30, 2022, a decrease of 26%. Netback including commodity contracts(2) for the third quarter of 2023 was $41.65 per BOE compared to $49.69 in 2022, a decrease of 17% from the prior year period. Netback including commodity contracts(2) for the nine months ended September 30, 2023 was $41.00 per BOE, compared to $48.50, a decrease of 15% from the prior year period. The decreases compared to the prior year were due to the decrease in average prices.

 

Production and operating expense per barrel averaged $7.34 per BOE in the third quarter of 2023 compared to $7.77 per BOE in the third quarter of 2022, a decrease of 6%. The $7.34 per BOE in the third quarter includes prior month costs which our gathering system operator had underbilled for previous periods. In addition, due to the Company’s recent completion operations, some of the adjacent existing wells are producing additional water, which is expected to decrease over time. Production and operating expense per barrel averaged $6.47 per BOE in the first nine months of 2023 compared to $8.17 per BOE for the same period of 2022, a decrease of 21%. The decreases were due to lower production taxes and increased production which reduced the per barrel fixed costs.

 

At September 30, 2023, the Company had $15.8 million of available borrowing capacity on the credit facility. The borrowing base remained at $40.0 million during the latest redetermination in October 2023.

 

(1) Adjusted EBITDA is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.

(2) Netback from operations and netback including commodity contracts are considered non-GAAP ratios. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.

 

Kolibri Global Energy Inc. | 4 | Third Quarter 2023
 

 

OPERATIONS UPDATE

 

Tishomingo Field, Ardmore Basin, Oklahoma

 

The average production for the third quarter of 2023 was 2,737 BOEPD, an increase of 61% compared to third quarter 2022 production of 1,702 BOEPD. Average production for the nine months ended September 30, 2023 was 2,780 BOEPD, an increase of 78% from the average production of 1,563 BOEPD in the same period of 2022. These increases are due to production from the Emery 17-2H, the Brock 9-3H and the Glenn 16-3H wells which started production at the end of 2022 and the Barnes 8-1H, Barnes 8-2H and Barnes 8-3H wells which started production in mid-June 2023, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator.

 

The Company completed the first three wells in its 2023 drilling program at the end of the second quarter. The Barnes 8-1H (98% working interest), Barnes 8-2H (98% working interest) and the Barnes 8-3H (98% working interest) wells started producing in the last week of June 2023. The Company’s next two wells, the Barnes 7-4H well (98% working interest) and the Barnes 7-5H well (98% working interest), both started producing in early October 2023 and had a 30-day IP rate of 665 BOEPD and 613 BOEPD, respectively. The Company completed drilling the three well pad for the Emery 17-3H, Emery 17-4H and Emery 17-5H wells and completion operations are planned in the next week with production expected to begin by the beginning of December 2023.

 

DISCUSSION OF OPERATING RESULTS

 

Production and Revenue  Three months ended September 30  Nine months ended September 30
   2023  2022  %  2023  2022  %
Average oil production (BOPD)   2,083    1,252    66    2,110    1,137    86 
Average natural gas production (MCFPD)   1,565    1,083    45    1,698    1,093    55 
Average NGL production (BOEPD)   393    269    46    387    244    59 
Average production (BOEPD)   2,737    1,702    61    2,780    1,563    78 
Average oil price ($/bbl)   79.70    93.52    (15)   75.57    100.91    (25)
Average natural gas price ($/mcf)   2.71    10.24    (74)   3.10    7.24    (57)
Average NGL price ($/bbl)   19.84    35.33    (44)   21.04    36.63    (43)
Average price ($/BOE)   65.04    80.89    (20)   62.19    84.19    (26)
Oil gross revenue ($000)   15,270    10,773    42    43,537    31,318    39 
Natural gas gross revenue ($000)   390    1,020    (62)   1,437    2,161    (34)
NGL gross revenue ($000)   718    873    (18)   2,224    2,443    (9)

 

Oil production for the third quarter of 2023 was 2,083 BOPD compared to 1,252 BOPD for the same period of 2022, an increase of 66%. Oil production for the first nine months of 2023 was 2,110 BOPD compared to 1,137 BOPD for the same period of 2022, an increase of 86%. The production increases were due to the additional production from the wells in the 2022 drilling program and the first three wells in the 2023 drilling program, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator. Oil revenue increased by 42% in the third quarter of 2023 versus the same period of 2022 due to the increase in production, partially offset by a decrease in oil prices of 15%. Oil revenue increased by 39% in the first nine months of 2023 versus the same period of 2022 due to the 86% production increase, partially offset by a decrease in oil prices of 25%.

 

For the third quarter of 2023, average natural gas production was 1,565 MCFPD compared to 1,083 MCFPD for the same period of 2022, an increase of 45%. Average natural gas production for the first nine months of 2023 was 1,698 MCFPD compared to 1,093 MCFPD for the first nine months of 2022, an increase of 55%. The production increases were due to the additional production from the wells in the 2022 drilling program and the first three wells in the 2023 drilling program, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator. Natural gas revenue decreased by 62% in the third quarter of 2023 versus the same period in 2022 due to the decrease in natural gas prices of 74% partially offset by the 45% production increase. Natural gas revenue decreased by 34% in the first nine months of 2023 versus the same period in 2022 due to a decrease in natural gas prices of 57% partially offset by the 55% production increase.

 

Kolibri Global Energy Inc. | 5 | Third Quarter 2023
 


 

Natural gas liquids (NGL) production in the third quarter of 2023 increased to 393 BOEPD from 269 BOEPD in the same period of 2022, an increase of 46%. Natural gas liquids (NGL) production in the first nine months of 2023 increased to 387 BOEPD from 244 BOEPD in the same period of 2022, an increase of 59%. The production increases were due to the additional production from the five wells in the 2022 drilling program and the first three wells in the 2023 drilling program, partially offset by the wells that were shut-in during completion operations and the production restrictions from the gathering system operator. NGL revenue decreased by 18% in the third quarter of 2023 compared to the same period in 2022 due to a decrease in NGL prices of 44% partially offset by the 46% production increase. NGL revenue decreased by 9% in the first nine months of 2023 compared to the same period in 2022 due to a decrease in NGL prices of 43% partially offset by the 59% production increase.

 

Average production on a per BOE basis was 2,737 BOEPD in the third quarter of 2023 compared to 1,702 BOEPD in the same period of 2022, an increase of 61%. Average production on a per BOE basis was 2,780 BOEPD in the first nine months of 2023 compared to 1,563 BOEPD in the same period of 2022, an increase of 78%. The increase is due to the factors discussed above. Gross revenue for the third quarter of 2023 increased by 29% compared to the third quarter of 2022 due to the increase in production, partially offset by a decrease in average prices. Gross revenue for the first nine months of 2023 increased by 31% compared to the same period of 2022 due to an increase in production, partially offset by a decrease in average prices.

 

Royalties, Operating Expenses and Netback

 

   Three months ended September 30  Nine months ended September 30
($/BOE)  2023  2022  %  2023  2022  %
Average price   65.04    80.89    (20)   62.19    84.19    (26)
Less: Royalties   14.42    17.96    (20)   13.24    18.97    (30)
Less: operating expenses(3)   7.34    7.77    (6)   6.47    8.17    (21)
Netback from operations(1)   43.28    55.16    (22)   42.48    57.05    (26)
Price adjustment from commodity contracts(2)   (1.63)   (5.47)        (1.48)   (8.55)     
Netback including commodity contracts(1)   41.65    49.69    (16)   41.00    48.50    (15)

 

(1) Netback from operations and netback including commodity contracts are considered non-GAAP ratios. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(2) Price adjustment from commodity contracts includes the positive or negative adjustment to the average price per barrel that the Company realized from its commodity contracts. See the listing of commodity contracts below.
(3) Operating expenses includes compressor costs of $219,375 in the third quarter of 2023 and $584,625 in the first nine months of 2023 that are accounted for as a lease under IFRS 16 as of January 1, 2023.

 

Average prices decreased by 20% in the third quarter of 2023, compared to the same period in the prior year, due to the price decreases in oil, gas and NGLs discussed above. Oil made up 76% of the production mix in the third quarter of 2023 compared to 74% for the same period in 2022. Average prices decreased by 26% in the first nine months of 2023, compared to the same period in the prior year, due to the price decreases in oil, gas and NGLs discussed above. Oil made up 76% of the production mix in the first nine months of 2023 compared to 73% for the same period in 2022.

 

Royalties on Tishomingo production averaged approximately 22.2% for both the third quarter of 2023 and the third quarter of 2022. Royalties on Tishomingo production averaged approximately 21.3% for the first nine months of 2023 versus 22.5% in the third quarter of 2022. The differences in percentages in both periods are due to different royalty burdens on the leases drilled by the Company.

 

Kolibri Global Energy Inc. | 6 | Third Quarter 2023
 

 

Major production and operating expenses are related to the gathering and processing of natural gas and NGLs as well as periodic well repairs and maintenance. Operating expenses averaged $7.34 per BOE for the third quarter of 2023 compared to $7.77 per BOE for the same period in 2022. The $7.34 per BOE in the third quarter includes prior month costs which our gathering system operator had underbilled for previous periods. In addition, due to the Company’s recent completion operations, some of the adjacent existing wells are producing additional water, which is expected to decrease over time. Operating expenses averaged $6.47 per BOE for the first nine months of 2023 compared to $8.17 per BOE for the same period in 2022. The decrease was due to increased production which reduced the fixed per barrel costs and lower production taxes due to a decrease in prices.

 

Realized and Unrealized Gains and Losses from Risk Management Contracts

 

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.

 

At September 30, 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  July 1, 2023 to December 29, 2023   9,000   $90.45 
Oil – WTI Costless Collars  July 1, 2023 to December 29, 2023   12,000   $70.00 - $94.00 
Oil – WTI Swap  July 1, 2023 to December 31, 2023   27,000   $64.90 
Oil – WTI Put  July 1, 2023 to March 31, 2024   42,000   $60.00 
Oil – WTI Costless Collars  July 1, 2023 to September 30, 2024   75,000   $65.00 - $89.50 
Oil – WTI Swap  January 1, 2024 to May 31, 2024   40,000   $62.77 
Oil – WTI Costless Collars  January 1, 2024 to June 30, 2024   6,000   $65.00 - $79.50 
Oil – WTI Costless Collars  January 1, 2024 to June 30, 2024   24,000   $65.00 - $86.00 
Oil – WTI Put  April 1, 2024 to June 30, 2024   1,650   $60.00 
Oil – WTI Costless Collars  June 1, 2024 to June 30, 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 
Oil – WTI Costless Collars  January 1, 2025 to March 31, 2025   36,000   $60.00 - $77.00 
Oil – WTI Costless Collars  April 1, 2025 to June 30, 2025   20,400   $60.00 - $75.40 
Oil – WTI Costless Collars  July 1, 2025 to September 30, 2025   21,000   $65.00 - $82.00 
Oil – WTI Costless Collars  April 1, 2025 to June 30, 2025   750   $65.00 - $80.50 

 

The estimated fair value results in a $2.3 million liability as of September 30, 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 $2.0 million and a long term liability of $0.3 million (December 31, 2022: current liability of $1.4 million and a long term liability of $0.6 million).

 

Kolibri Global Energy Inc. | 7 | Third Quarter 2023
 

 

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

 

      Total Volume Hedged  Price
Commodity Contract  Period  (BBLS)  ($/BBL)
Oil – WTI Costless Collars  April 1, 2024 to June 30, 2024   1,950   $65.00 - $94.55 
Oil – WTI Costless Collars  July 1, 2024 to September 30, 2024   3,600   $65.00 - $90.65 
Oil – WTI Costless Collars  April 1, 2025 to June 30, 2025   1,350   $65.00 - $80.50 

 

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

 

($000s)   Three months ended    Nine months ended 
    September 30,    September 30, 
    2023    2022    2023    2022 
                     
Realized loss on financial commodity contracts  $(412)   (856)   (1,126)   (3,646)
                     
Unrealized gain (loss) on financial commodity contracts   (2,579)   4.648    (412)   1,608 

 

Production and Operating Expenses

 

Production and operating expenses for the third quarter of 2023 was $1.6 million compared to $1.2 million for the same period of 2022, an increase of 34%. The increase is due to increased production, partially offset by lower compressor costs which are accounted for as leases under IFRS 16 and therefore not included in the third quarter of 2023 production and operating expenses. Production and operating expenses including these compressor costs would have been $1.8 million for the third quarter of 2023.

 

Production and operating expenses for the first nine months of 2023 was $4.3 million compared to $3.5 million for the same period of 2022, an increase of 25%. The increase is due to increased production, partially offset by lower compressor costs which are accounted for as leases under IFRS 16 and therefore not included in the third quarter of 2023 production and operating expenses. Production and operating expenses including these compressor costs would have been $4.9 million for the first nine months of 2023.

 

General and Administrative Expenses

 

G&A expense for the third quarter of 2023 was $1.2 million compared to $0.9 million for the same period of 2022, an increase of 29%. G&A expense for the first nine months of 2023 was $3.1 million compared to $2.4 million for the same period of 2022, an increase of 28%. The increases were due to higher costs associated with the dual listing process, higher investor relations and marketing costs and increases in payroll costs.

 

Depletion and Depreciation

 

Depletion and depreciation expense for the third quarter of 2023 was $3.8 million compared to $1.9 million in the same period of 2022. Depletion and depreciation expense on a per barrel basis was $15.05 for 2023 compared to $11.88 for 2022. Depletion and depreciation expense for the first nine months of 2023 was $11.5 million compared to $5.1 million in the same period of 2022. Depletion and depreciation expense on a per barrel basis was $15.15 for 2023 compared to $11.92 for 2022. The increases were due to increased production and a higher PP&E balance.

 

Kolibri Global Energy Inc. | 8 | Third Quarter 2023
 

 

Interest on loans and borrowings

 

Interest on loans and borrowings increased from $0.3 million in the third quarter of 2022 to $0.7 million for the same period of 2023. Interest on loans and borrowings increased from $0.7 million in the first nine months of 2022 to $1.5 million for the same period of 2023. The increases were due to an increase in interest rates in 2023 and an increase in the outstanding balance in the first nine months of 2023 compared to the same period of 2022.

 

Share based compensation

 

Share based compensation increased from $0.1 million in the third quarter of 2022 to $0.2 million for the same period of 2023. Share based compensation increased from $0.2 million in the first nine months of 2022 to $0.5 million for the same period of 2023. The increases were due to stock option and restricted share unit grants made in the second quarter of 2023.

 

Net income for the period

 

The Company had net income of $2.3 million ($0.07 per basic share) in the third quarter of 2023 compared to net income of $9.3 million ($0.26 per basic share) for the same period of 2022. The change in net income in 2023 compared to the same period in 2022 is due to realized and unrealized losses in financial commodity contracts in the third quarter of 2023 totaling $3.0 million versus a gain of $3.8 million in the same period of 2022, an increase in depletion and depreciation of $1.9 million, an increase in accretion of $32 thousand, an increase in operating expenses of $0.4 million, an increase in interest on long term debt of $0.4 million, an increase in G&A expense of $0.3 million, an increase in stock based compensation of $0.1 million, partially offset by an increase in revenue net of royalties of $2.9 million.

 

The Company had net income of $14.5 million ($0.41 per basic share) in the first nine months of 2023 compared to net income of $13.9 million ($0.39 per basic share) for the same period of 2022. The change in net income in 2023 compared to the same period in 2022 is due to an increase in revenue net of royalties of $9.3 million, realized and unrealized losses in financial commodity contracts in 2023 totaling $1.5 million versus losses of $2.0 million in the same period of 2022, partially offset by an increase in depletion and depreciation of $6.4 million, an increase in operating expenses of $0.8 million, an increase in interest on long term debt of $0.8 million, an increase in G&A expense of $0.7 million, an increase in stock based compensation of $0.3 million and an increase in accretion of $0.1 million.

 

Cash from operating activities

 

Cash flows from operating activities for the third quarter of 2023 was $9.6 million compared to cash flows from operating activities of $6.4 million for the same period in 2022. Cash flows from operating activities for the first nine months of 2023 was $28.7 million compared to cash flows from operating activities of $15.9 million for the same period in 2022. The changes were due to the same reasons noted above.

 

CAPITAL EXPENDITURES

 

Capital expenditures for the first nine months of 2023 were for the Barnes 8-1H well (operated, KEI 98% working interest), the Barnes 8-2H well (operated, KEI 98% working interest), the Barnes 8-3H well (operated, KEI 98% working interest), the Barnes 7-4H well (98% working interest) and the Barnes 7-5H well (98% working interest), all in the Tishomingo field located in Oklahoma.

 

($000)   2023    2022 
           
Additions to oil and gas properties  $37,177   $19,913 
   $37,177   $19,913 

 

Kolibri Global Energy Inc. | 9 | Third Quarter 2023
 

 

LIQUIDITY AND CAPITAL RESOURCES

 

(000s; other than number of shares and per share amounts) 

At September

30, 2023

 

At December

31, 2022

       
Working Capital (Deficiency) (US$)  $(13,093)  $(6,569)
           
Loans and Borrowings (US$)  $23,809   $17,799 
           
Borrowing capacity available from credit facility (US$)  $15,842   $6,842 
           
Shares Outstanding, end of period   35,625,587    35,615,921 
           
Market Price per share (in Canadian $)  $5.45   $3.98 
Market Value of Shares (in Canadian $)  $194,159   $141,751 

 

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 borrowing base of the credit facility was increased to $40.0 million in May 2023 and the Company has an available borrowing capacity of $15.8 million at September 30, 2023. In October 2023, the credit facility was redetermined at a borrowing base of $40.0 million and the credit facility was amended to allow for distributions from the US subsidiary to KEI under certain conditions. 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 2024. 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 September 30, 2023. At September 30, 2023, the Current Ratio of the US Subsidiary was 1.3 to 1.0 and the Maximum Leverage Ratio was 0.8 to 1.0 for the three months ended September 30, 2023.

 

Kolibri Global Energy Inc. | 10 | Third Quarter 2023
 

 

At September 30, 2023, loans and borrowings of $24.2 million (December 31, 2022: $17.8 million) are presented net of loan acquisition costs of $0.4 million (December 31, 2022: $0.4 million).

 

At September 30, 2023, the Company had working capital deficit of $13.1 million compared to a working capital deficit of $6.6 million at December 31, 2022. The Company had available borrowing capacity of $15.8 million which exceeded the working capital deficit by $2.7 million. The Company closely monitors its working capital and borrowing capacity to ensure adequate funds are available to finance its administrative and operating requirements. Planned drilling activity can be adjusted if adequate funds are not available and the Company has available borrowing capacity to manage its working capital requirements.

 

The Company has entered into financial commodity contracts as part of its risk management strategy to manage its cash flow for future activity and to offset commodity price fluctuations. Other potential sources of cash flow include proceeds from additional debt or equity offerings but there is no guarantee that additional financing will be available when needed.

 

CONTRACTUAL OBLIGATIONS

 

The following are the contractual maturities of financial liabilities, excluding estimated interest payments at September 30, 2023:

 

($000s)   Carrying amount  2023  2024  2025  Thereafter
Liabilities                         
Lease payable  $(1,480)  $(295)  $(1,099)  $(86)   - 
Loans and borrowings*  $(23,809)   -    -    -   $(23,809)
Trade and other payables  $(16,995)  $(16,995)   -    -    - 
   $(42,284)  $(17,290)  $(1,099)  $(86)  $(23,809)

 

* The Credit Facility provides for interest only payments until the September 2026 maturity date. The Company is required to repay amounts owing under the Credit Facility in full on the September 2026 maturity date. See “Liquidity and Capital Resources” and “Principal Business Risks” for discussion of events that would require early repayment of the Credit Facility.

 

Kolibri Global Energy Inc. | 11 | Third Quarter 2023
 


 

QUARTERLY SUMMARY

 

Below is a summary of the Company’s performance over the last eight quarters:

 

   2023  2022  2021
($000, except as noted)  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Q4
                         
Daily Production                                        
Oil (BOPD)   2,083    1,821    2,431    1,551    1,252    1,439    714    638 
Natural gas (MCFPD)   1,565    1,397    2,138    969    1,083    1,271    922    825 
NGLs (BOEPD)   393    361    407    155    269    277    186    155 
                                         
Average production (BOEPD)   2,737    2,415    3,194    1,868    1,702    1,928    1,054    931 

 

   2023  2022  2021
($000, except as noted)  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Q4
                         
Average Price                                        
Oil ($/bbl)   79.70    72.33    74.40    80.42    93.52    109.74    96.17    75.80 
                                         
Natural gas ($/mcf)   2.71    1.83    4.24    6.71    10.24    6.48    4.71    5.49 
                                         
NGL ($/bbl)   19.84    15.97    26.77    26.66    35.33    40.82    32.25    40.56 
                                         
Average price ($/bbl)   65.04    58.00    62.87    72.47    80.89    92.02    74.97    63.56 

 

   2023  2022  2021
($000, except as noted)  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Q4
                         
Netback(1)                                        
Average price ($/BOE)   65.04    58.00    62.87    72.47    80.89    92.02    74.97    63.56 
                                         
Royalties   14.42    11.98    13.16    15.83    17.96    21.19    16.50    13.89 
                                         
Operating expenses (4)   7.34    6.05    6.04    8.25    7.77    7.77    9.56    8.79 
                                         
Netback from operations(1)   43.28    39.97    43.67    48.39    55.16    63.06    48.91    40.88 
                                         
Price adjustment from commodity contracts   (1.63)   (1.37)   (1.44)   (2.34)   (5.47)   (9.40)   (12.03)   (11.89)
                                         
Netback including commodity contracts(1)   41.65    38.60    42.23    46.05    49.69    53.66    36.88    28.99 

 

Kolibri Global Energy Inc. | 12 | Third Quarter 2023
 

 

   2023  2022  2021
($000, except as noted)  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Q4
                         
Net operating income(2)                                        
Oil and gas revenue   16,378    12,746    18,074    12,455    12,666    16,114    7,111    5,444 
                                         
Royalties   3,632    2,632    3,781    2,721    2,813    3,717    1,564    1,190 
                                         
Operating expenses   1,628    1,147    1,553    1,417    1,216    1,364    907    753 
                                         
    11,118    8,967    12,740    8,317    8,637    11,033    4,640    3,501 

 

   2023  2022  2021
($000, except as noted)  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Q4
                         
Net income (loss)   2,319    4,268    7,896    2,793    9,299    7,007    (2,456)   71,002 
                                         
Basic income (loss) ($/share)   0.07    0.12    0.22    0.08    0.26    0.20    (0.07)   3.05 
                                         
Adjusted EBITDA(3)   9,536    7,646    11,396    6,854    6,874    8,572    2,812    1,861 
                                         
Cash flows from operating activities   9,631    6,013    13,030    6,078    6,387    8,314    1,243    1,812 
                                         
Bank debt   23,809    17,819    17,819    17,799    15,855    15,907    16,143    16,866 
                                         
Total assets   211,745    196,655    188,023    184,082    172,634    169,193    160,882    157,016 

 

(1) Netback from operations and netback including commodity contracts are considered non-GAAP ratios. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(2) Net operating income is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(3) Adjusted EBITDA is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” at the end of this MD&A.
(4) Operating expenses includes compressor costs of $219,375 in the third quarter of 2023 and $584,625 in the first nine months of 2023 that are accounted for as a lease under IFRS 16 as of January 1, 2023.

 

Kolibri Global Energy Inc. | 13 | Third Quarter 2023
 

 

Quarterly Variability

 

Fluctuations in quarterly results are due to a number of factors, some of which are not within the Company’s control such as:

 

●Oil, gas and NGL price changes due to volatile market conditions related to the current conflict between Russia and Ukraine
●Changes in production resulting from fluctuations in drilling and completions and shut-in of wells
●Production increases from new wells that begin producing

 

CRITICAL ACCOUNTING ESTIMATES

 

The preparation of the consolidated financial statements requires management to make estimates and use judgment regarding the reported amounts of assets and liabilities, the disclosures of contingencies at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future years could require a material change in the financial statements. Accordingly, actual results may differ from the estimated amounts. Significant estimates and judgments made by management in the preparation of the consolidated financial statements are as follows:

 

Oil and gas assets

 

Development and production assets are assessed for recoverability at cash generating unit (“CGU”) level. The determination of CGUs is subject to management judgments. Recoverability is assessed by comparing the carrying value of the asset to its estimated recoverable amount, which is based on the higher of fair value of the assets less the cost to sell (“FVLCS”) or value in use (“VIU”). The significant estimates used in the determination of the estimated recoverable amount include the following:

 

●Proved and probable oil and gas reserves – Significant assumptions that are valid at the time of oil and gas reserve estimation may change significantly when additional information becomes available. Estimates of economically recoverable proved and probable oil and gas reserves are based upon a number of significant assumptions, such as forecasted production, forecasted oil and gas commodity prices, forecasted operating costs, forecasted royalty costs, and forecasted future development costs. Changes in forecasted oil and gas commodity price assumptions, costs or recovery rates may change the economic status of proved and probable oil and gas reserves and may ultimately result in a restatement of proved and probable oil and gas reserves. Independent third-party reserve evaluators are engaged at least annually to estimate proved and probable oil and gas reserves

 

●Discount rate – The discount rate used to calculate the net present value of cash flows is based on estimates of an industry peer group weighted average cost of capital. Changes in the economic environment could result in significant changes to this estimate.

 

Depletion of oil and gas assets

 

Depletion of development and production assets is determined based on proved and probable oil and gas reserves and includes forecasted future development costs as estimated by the Company’s independent third-party reserve evaluators. By their nature, the estimates of proved and probable oil and gas reserves are subject to measurement uncertainty. Accordingly, the impact to the consolidated financial statements in future periods could be material.

 

Kolibri Global Energy Inc. | 14 | Third Quarter 2023
 

 

Asset retirement obligations

 

The provisions for site restoration and abandonment is based on current legal requirements, technology, price levels and expected plans and are based on significant assumptions such as inflation rate and discount rate. Actual costs and cash outflows can differ from estimates because of changes in laws or regulations, market conditions and changes in technology.

 

Derivative instruments

 

The estimated fair value of derivative financial instruments resulting in financial assets and liabilities, by their very nature is subject to estimation, due to the use of future oil and natural gas prices and the volatility in these prices.

 

Compensation costs

 

Compensation costs recognized for share based compensation plans are subject to the estimation of what the ultimate payout will be using pricing models such as Black-Scholes model which is based on assumptions such as volatility, forfeiture rate, interest rate and expected term.

 

Income taxes

 

Tax interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. As such income taxes are subject to measurement uncertainty. Deferred income tax assets are assessed by management at the end of the reporting period to determine the likelihood that they will be realized from future taxable earnings.

 

Liquidity

 

The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

 

Typically the Company ensures that it has sufficient cash on demand and cash flows from operating activities to meet expected operational expenses for a one-year period, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. To achieve this objective, the Company prepares annual capital expenditure budgets, which are regularly monitored and updated as considered necessary. Further, the Company utilizes authorizations for expenditures on both operated and non-operated projects to further manage capital expenditure. The Company also attempts to match its payment cycle with collection of oil revenue on the 20th of each month.

 

The Company monitors its expected cash inflows from trade and other receivables and its expected cash outflows on trade and other payables and principal debt payments. The current volatile economic climate may lead to adverse changes in cash flow and working capital levels which may also have a direct impact on the Company’s results and financial position and which may adversely affect the Company’s liquidity.

 

OUTSTANDING SHARE DATA

 

There were 35,625,587, 35,625,587 and 35,615,921 common shares outstanding as of November 13, 2023, September 30, 2023 and December 31, 2022, respectively. The Company had 939,634, 864,634 and 776,000 stock options outstanding as of November 13, 2023, September 30, 2023 and December 31, 2022, respectively. The Company had 119,140, 119,140, and 0 restricted share units (RSUs) granted as of November 13, 2023, September 30, 2023 and December 31, 2022, respectively.

 

Kolibri Global Energy Inc. | 15 | Third Quarter 2023
 

 

PRINCIPAL BUSINESS RISKS

 

KEI’s business and results of operations are subject to a number of risks and uncertainties, including but not limited to the following:

 

●the uncertainty of finding oil and gas in commercial quantities
●securing markets for existing and future production
●commodity price fluctuations due to market forces
●volatile market conditions related to the current conflict between Russia and Ukraine
●financial risk due to foreign exchange rates and interest rate exposure
●changes to government regulations in the United States, including regulations relating to prices, taxes, royalties and environmental protection
●changing government policies and regulations, social instability and other political, economic or diplomatic developments in the countries in which the Company operates
●the ability to fund wells drilled in non-operated sections of the Tishomingo field
●the uncertainty of pipeline repairs leading to temporary shutting-in of wells
●availability of equity or debt financing is affected by many factors many of which are beyond the control of the Company
●uncertainties inherent in estimating quantities of oil and natural gas reserves and cash flows to be derived therefrom
●the oil and gas industry is intensely competitive and the Company competes with a large number of companies with greater resources
●risks related to evolving emissions, carbon and other regulations impacting climate change and the advancement of alternative sources of renewable energy
●risks related to the Credit Facility, including the risk that the Company could be required under the terms of the Credit Facility to prepay the outstanding principal amount and other amounts owing under the Credit Facility in certain circumstances, some of which are out of the Company’s control, including failure to comply with financial ratio tests, borrowing base redeterminations, Mr. Wolf Regener ceasing to be the President of Kolibri Global Energy Inc., certain changes to the board of directors of the Company and the acquisition by any person or persons acting jointly or in concert of 25% or more of the Company’s shares. There can be no assurance that the Company will be able to obtain sufficient capital to repay the Credit Facility. A failure by the Company to perform its obligations under the Credit Facility could result in, among other adverse effects, the loss of the Company’s Tishomingo Field assets. A copy of the Amended and Restated Credit Agreement was filed on SEDAR on May 26, 2022. See “Liquidity and Capital Resources” and “Contractual Obligations” above and the “Risk Factors” section in the Company’s most recent Annual Information Form.
●the other risks identified in the Company’s most recent Annual Information Form under the “Risk Factors” section and the Company’s other public disclosure, available under the Company’s profile on SEDAR at www.sedar.com.

 

The Company seeks to mitigate these risks by:

 

●maintaining product mix to manage exposure to commodity price risk
●monitoring production trends to maximize the potential of its capital spending program
●from time to time, entering into financial commodity contracts to hedge against commodity price risk
●ensuring strong third-party operators for non-operated properties
●transacting with creditworthy counterparties
●monitoring commodity prices and capital programs to manage cash flow
●reviewing proposed changes in applicable government regulations and laws to assess the impact on the Company’s operations

 

Kolibri Global Energy Inc. | 16 | Third Quarter 2023
 

 

DISCLOSURE CONTROLS AND PROCEDURES

 

The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have designed, or caused to be designed under their supervision, disclosure controls and procedures (“DC&P”) and internal controls over financial reporting (“ICOFR”) as defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements in accordance with IFRS.

 

The DC&P have been designed to provide reasonable assurance that material information relating to KEI is made known to the CEO and CFO by others and that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by KEI under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation. The Company’s CEO and CFO have concluded, based on their evaluation that the Company’s DC&P and ICOFR are effective at September 30, 2023 to provide reasonable assurance that material information related to the Company is made known to them by others within the Company.

 

The CEO and CFO are required to cause the Company to disclose any change in the Company’s ICOFR and DC&P that occurred during the most recent interim period that has materially affected, or is reasonably likely to materially affect, the Company’s ICOFR. No changes in ICOFR and DC&P were identified during such period that have materially affected, or are reasonably likely to materially affect, the Company’s ICOFR during the quarter ended September 30, 2023.

 

It should be noted that a control system, including the Company’s DC&P and ICOFR, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objective of the control system will be met and it should not be expected that DC&P and ICOFR will prevent all errors or fraud.

 

OUTLOOK

 

In the United States, the Company intends to drill and complete additional wells in the Caney/Sycamore formations on its Oklahoma lands utilizing cash flows from operating activities and potentially its available borrowing capacity under its credit facility. In addition, the Company continues to utilize its technical and operational expertise to identify and acquire additional oil, gas and clean energy projects.

 

NON-GAAP MEASURES

 

The Company’s Non-GAAP Measures are not measures or ratios recognized under IFRS and do not have any standardized meanings prescribed by IFRS. Management of the Company believes that such measures and ratios are relevant for evaluating returns on each of the Company’s projects as well as the performance of the enterprise as a whole. The Company’s Non-GAAP Measures may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar non-GAAP measures and ratios as reported by such organizations. The Company’s Non-GAAP Measures should not be construed as alternatives to net income, cash flows from operating activities, working capital or other financial measures and ratios determined in accordance with IFRS, as an indicator of the Company’s performance.

 

Netback from operations per barrel and its components are calculated by dividing revenue, less royalties and operating expenses by the Company’s sales volume during the period. Netback including commodity contracts is calculated by adjusting netback from operations by the realized gains or losses received from commodity contracts during the period. Netback is a non-GAAP ratio but it is commonly used by oil and gas companies to illustrate the unit contribution of each barrel produced. The Company believes that the netback is a useful supplemental measure of the cash flow generated on each barrel of oil equivalent that is produced in its operations. However, non-GAAP measures and non-GAAP ratios do not have any standardized meaning prescribed by IFRS and therefore, may not be comparable to similar measures or ratios used by other companies and should not be used to make comparisons.

 

Kolibri Global Energy Inc. | 17 | Third Quarter 2023
 

 

The following is the reconciliation of the non-GAAP ratio netback from operations to net income from continuing operations:

 

(US $000)  Three months ended September 30,  Nine months ended September 30,
   2023  2022  2023  2022
Net income   2,319    9,299    14,483    13,850 
                     
Adjustments:                    
Finance income   -    (4,648)   -    (1,611)
Finance expense   3,683    1,160    3,189    4,392 
Share based compensation   157    75    531    232 
General and administrative expenses   1,170    905    3,121    2,435 
Depletion, depreciation and amortization   3,790    1,860    11,503    5,086 
Other income   (1)   (16)   (2)   (45)
Operating netback   11,118    8,635    32,825    24,339 
                     
Netback from operations per BOE   43.28    55.16    42.48    57.05 

 

Net operating income is similarly a non-GAAP measure that represents revenue net of royalties and operating expenses. The Company believes that net operating income is a useful supplemental measure to analyze operating performance and provides an indication of the results generated by the Company’s principal business activities prior to the consideration of other income and expenses.

 


The following is the reconciliation of the non-GAAP measure net operating income:

 

(US $000)  Three months ended September 30,  Nine months ended September 30,
   2023  2022  2023  2022
Oil and gas revenue, net of royalties   12,746    9,851    37,153    27,826 
Operating expenses   1,628    1,216    4,328    3,487 
                     
Net operating income   11,118    8,635    32,825    24,339 

 

Kolibri Global Energy Inc. | 18 | Third Quarter 2023
 

 

Adjusted EBITDA is calculated as net income before interest, taxes, depletion and depreciation and other non-cash and non-operating gains and losses. The Company considers this a key measure as it demonstrates its ability to generate cash from operations necessary for future growth excluding non-cash items, gains and losses that are not part of the normal operations of the Company and financing costs. The following is the reconciliation of the non-GAAP measure adjusted EBITDA:

 

(US $000)  Three months ended September 30,  Nine months ended September 30,
   2023  2022  2023  2022
Net income   2,319    9,299    14,483    13,850 
Depletion and depreciation   3,790    1,860    11,503    5,086 
Accretion   40    8    129    20 
Interest expense   651    281    1,511    718 
Unrealized (gain) loss on commodity contracts   2,579    (4,648)   412    (1,608)
Share based compensation   157    75    531    232 
Interest income   -    -    -    (3)
Other income   (1)   (16)   (2)   (45)
Foreign currency loss (gain)   1    15    11    8 
                     
Adjusted EBITDA   9,536    6,874    28,578    18,258 

 

Cautionary Statements

 

(a)The Company’s natural gas production is reported in thousands of cubic feet (“Mcfs”). The Company also uses references to barrels (“Bbls”) and barrels of oil equivalent (“BOEs”) to reflect natural gas liquids and oil production and sales. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
(b)Discounted and undiscounted net present value of future net revenues attributable to reserves do not represent fair market value.
(c)Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
(d)This MD&A and the Company’s other public disclosure contains peak and 30-day initial production rates and other short-term production rates. Readers are cautioned that initial production rates are preliminary in nature and are not necessarily indicative of long-term performance or of ultimate recovery.

 

CAUTION REGARDING FORWARD-LOOKING INFORMATION

 

This MD&A contains forward-looking information including expectations regarding proposed timing and expected results of development work in the Company’s Tishomingo Field, expected productivity from current and future wells, planned capital expenditure programs and cost estimates, the effect of design and performance improvements on future productivity, planned use and sufficiency of proceeds from the Company’s debt and equity financings, compliance with debt covenants under the Company’s credit facility, cash on hand and cash flows from operating activities and the Company’s strategy and objectives. The use of any of the words “target”, “plans”, “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, “intend” and similar expressions are intended to identify forward-looking statements.

 

Kolibri Global Energy Inc. | 19 | Third Quarter 2023
 

 

Such forward-looking information is based on management’s expectations and assumptions, including that the Company’s geologic and reservoir models and analysis will be validated, that indications of early results are reasonably accurate predictors of the prospectiveness of the shale intervals, that previous exploration results are indicative of future results and success, that expected production from future wells can be achieved as modeled, declines will match the modeling, future well production rates will be improved over existing wells, that rates of return as modeled can be achieved, that recoveries are consistent with management’s expectations, that additional wells are actually drilled and completed, that design and performance improvements will reduce development time and expense and improve productivity, that discoveries will prove to be economic, that well shut-ins will not materially reduce production or adversely affect future productivity, that anticipated results and estimated costs will be consistent with managements’ expectations, that all required permits and approvals and the necessary labor and equipment will be obtained, provided or available, as applicable, on terms that are acceptable to the Company, when required, that no unforeseen delays, unexpected geological or other effects, equipment failures, permitting delays or labor or contract disputes are encountered, that the development plans of the Company and its co-venturers will not change, that the demand for oil and gas will be sustained, that the combination of cash on hand and cash flows from operating activities will be sufficient to finance the Company’s cash requirements through 2023, that the Company will continue to be able to access sufficient capital through financings, credit facilities, farm-ins or other participation arrangements to maintain its projects, that the Company will continue in compliance with the covenants under its reserve-based loan facility and that the borrowing base will not be reduced, that the Company will not be adversely affected by changing government policies and regulations, social instability or other political, economic or diplomatic developments in the countries in which it operates and that global economic conditions will not deteriorate in a manner that has an adverse impact on the Company’s business and its ability to advance its business strategy.

 

Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: any of the assumptions on which such forward looking information is based vary or prove to be invalid, including that the Company’s geologic and reservoir models or analysis are not validated, anticipated results and estimated costs will not be consistent with managements’ expectations, that the Company will not achieve a comparable level of hedging going forward in respect of its existing production, that the Company will not achieve the results anticipated by management from the Company’s cost reduction measures, the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration and development projects or capital expenditures; the uncertainty of reserve and resource estimates and projections relating to production, costs and expenses, and health, safety and environmental risks, including flooding and extended interruptions due to inclement or hazardous weather conditions), well shut-ins and the potential for damage to the affected wells, the risk of commodity price and foreign exchange rate fluctuations, risks and uncertainties associated with securing the necessary regulatory approvals and financing to proceed with continued development of the Tishomingo Field, the Company or its subsidiaries is not able for any reason to obtain and provide the information necessary to secure required approvals or that required regulatory approvals are otherwise not available when required, that unexpected geological results are encountered, that completion techniques require further optimization, that production rates do not match the Company’s assumptions, that very low or no production rates are achieved, that the Company will cease to be in compliance with the covenants under its reserve-based loan facility and be required to repay outstanding amounts or that the borrowing base will be reduced pursuant to a borrowing base redetermination and the Company will be required to repay the resulting shortfall, that the Company is unable to access required capital, that occurrences such as those that are assumed will not occur, do in fact occur, and those conditions that are assumed will continue or improve, do not continue or improve and the other risks identified in the Company’s most recent Annual Information Form under the “Risk Factors” section and the Company’s other public disclosure, available under the Company’s profile on SEDAR at www.sedar.com.

 

Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause actual results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. The forward-looking information included in this MD&A is expressly qualified in its entirety by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to update these forward-looking statements, other than as required by applicable law.

 

Kolibri Global Energy Inc. | 20 | Third Quarter 2023
 

 

CORPORATE INFORMATION

 

DIRECTORS AND OFFICERS  
   
David Neuhauser 1,3  
Director, Chairman of the Board  
   
Eric Brown 1,4,5  
Director  
   
Leslie O’Connor 2,3,4,5  
Director  
   
Evan Templeton2,3,5  
Director  
   
Douglas Urch 1,2 BANKERS
Director BOK Financial
  Denver, CO, USA
Wolf Regener 4  
Director, President and Chief Executive Officer HSBC Bank Canada
  Calgary, AB
Gary Johnson  
Chief Financial Officer and Vice President CONSULTING ENGINEERS
  Netherland, Sewell & Associates, Inc.
1 Member of the Audit Committee Houston, TX, USA
2 Member of the Corporate Governance Committee  
3 Member of the Compensation Committee TRANSFER AGENT AND REGISTRAR
4 Member of the HS&E Committee Computershare Trust Company
5 Member of the Reserves Committee Calgary, AB
   
STOCK EXCHANGE LISTING HEAD OFFICE
The Toronto Stock Exchange Suite 220, 925 Broadbeck Drive
Trading Symbol: KEI Thousand Oaks, CA, USA 91320
NASDAQ Telephone: (805) 484-3613
Trading Symbol: KGEI Fax: (805) 484-9649
   
LEGAL COUNSEL CANADIAN OFFICE
DuMoulin Black LLP 10th Floor, 595 Howe Street
Vancouver, BC Vancouver, BC, Canada V6C 2T5
  Telephone (604) 687-1224
Haynes Boone, LLP Fax: (604) 687-3635
New York, NY, USA  

 

Kolibri Global Energy Inc. | 21 | Third Quarter 2023