Kolibri Global Energy Inc. Operations and Forecast Update
Kolibri Global Energy Inc. (OTCQX: KGEIF) has completed drilling two wells, the Brock 9-3H and Emery 17-2H, and is currently drilling the Glenn 16-3H in Oklahoma's Tishomingo field. Both completed wells have shown promising oil and gas shows. However, the start of completion operations has been delayed to mid-November. The company expects production from the Emery 17-2H well to start in early December, with the Brock 9-3H and Glenn 16-3H following in late December. Forecasted exit production remains at 2,700 boepd, though revenue projections have been adjusted due to lower oil prices.
- Successful completion of Brock 9-3H and Emery 17-2H wells.
- Good oil and gas shows similar to earlier successful wells in the area.
- Forecasted exit production rate of 2,700 boepd, a 192% increase from fiscal year 2021.
- Revenue forecast revised to $35 million to $37 million, reflecting a 134% to 147% increase year-over-year.
- Completion operations delayed to mid-November, impacting production timelines.
- Lower oil prices will affect revenue expectations despite strong production forecasts.
OPERATIONS
The Emery 17-2H and Brock 9-3H wells were drilled safely and without incident to their intended target depth, and the drilling operations for the Glenn 16-3H are progressing as expected. We have encountered good oil and gas shows in both wells comparable to our previously drilled corridor wells in the field and expect similar results from the Glenn 16-3H well. The completion operations for all three wells originally planned to start at the end of October are delayed to mid-November when our contractor expects to be finished with their prior job. All materials and other services have already been sourced and are awaiting the frack equipment to arrive on location.
The Emery 17-2H well will be fracture stimulated first, followed by the fracture stimulations for the Brock 9-3H and Glenn 16-3H wells, which are scheduled to be done concurrently. Production from the Emery 17-2H well is now anticipated to begin in early December, with production from the Brock 9-3H and Glenn 16-3H expected to commence in late December.
UPDATED FORECAST
While our forecasted year-end exit production rate remains the same at 2,700 boepd, we are revising our previously announced forecast to factor in a lower oil price for the remainder of the year and to reflect the later than expected completion of the wells.
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Revised Forecast |
% Increase from Fiscal Year 2021 |
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Exit rate production |
2,700 boepd |
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Forecasted average production |
1,500 to 1,700 boepd |
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Revenue(1) |
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Adjusted Funds Flow(2) |
|
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(1) |
Assumptions include on forecasted pricing from |
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(2) |
Adjusted funds flow is considered a non-GAAP measure. Refer to the section entitled “Non-GAAP Measures” of this news release. |
NON-GAAP MEASURES
Adjusted funds flow is not a measure recognized under Canadian generally accepted accounting principles ("GAAP") and does not have any standardized meaning prescribed by IFRS. Management of the Company believes that adjusted funds flow is relevant for evaluating returns on the Company's project as well as the performance of the enterprise as a whole. Adjusted funds flow may differ from similar computations as reported by other similar organizations and, accordingly, may not be comparable to similar non-GAAP measures as reported by such organizations. Adjusted funds flow should not be construed as an alternative to net income, cash flows related to operating activities, working capital or other financial measures determined in accordance with IFRS, as an indicator of the Company's performance.
An explanation of how adjusted funds flow provides useful information to an investor and the purposes for which the Company’s management uses adjusted funds flow is set out in the management's discussion and analysis under the heading “Non-GAAP Measures” which is available under the Company's profile at www.sedar.com and is incorporated by reference into this news release.
Adjusted funds flow is calculated as cash from operating activities excluding changes in non-cash operating working capital and interest expense. The Company considers this a key measure as it demonstrates its ability to generate funds from operations necessary for future growth excluding the impact from short-term fluctuations in the collection of accounts receivable and the payment of accounts payable and financing costs.
The following is the reconciliation of adjusted funds flow to the comparable financial measures disclosed in the Company’s financial statements:
(US |
Three months ended
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Six months ended
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2022 |
2021 |
2022 |
2021 |
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Cash flow from continuing operations |
8,314 |
1,649 |
9,557 |
3,013 |
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Change in non-cash working capital |
113 |
(379) |
1494 |
(443) |
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Interest expense(3) |
187 |
195 |
385 |
404 |
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Adjusted funds flow |
8,614 |
1,465 |
11,436 |
2,974 |
(3) |
Interest expense on long-term debt excluding the amortization of debt issuance costs |
About
Cautionary Statements
In this news release and the Company’s other public disclosure:
- 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.
- Discounted and undiscounted net present value of future net revenues attributable to reserves do not represent fair market value.
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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. - The Company discloses peak and 30-day initial production rates and other short-term production rates. Readers are cautioned that such production rates are preliminary in nature and are not necessarily indicative of long-term performance or of ultimate recovery.
Caution Regarding Forward-Looking Information
Certain statements contained in this news release constitute "forward-looking information" as such term is used in applicable Canadian securities laws and “forward-looking statements” within the meaning of
Forward-looking information is based on plans and estimates of management and interpretations of data by the Company's technical team at the date the data is provided and is subject to several factors and assumptions of management, including
Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information. Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions on which such forward looking information is based vary or prove to be invalid, including that 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 equipment failures, permitting delays, labor or contract disputes or shortages of equipment or labor or materials are encountered, 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), the risk of commodity price and foreign exchange rate fluctuations, that the offset operator’s operations have unexpected adverse effects on the Company’s operations, 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 price of oil will decline, 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 and uncertainties applicable to exploration and development activities and the Company's business as set forth in the Company's management discussion and analysis and its annual information form, both of which are available for viewing under the Company's profile at www.sedar.com, any of which could result in delays, cessation in planned work or loss of one or more concessions and have an adverse effect on the Company and its financial condition. The Company undertakes no obligation to update these forward-looking statements, other than as required by applicable law.
Caution Regarding Future-Oriented Financial Information and Financial Outlook
This news release may contain information deemed to be “future-oriented financial information” or a “financial outlook” (collectively, “FOFI”) within the meaning of applicable securities laws. The FOFI has been prepared by management to provide an outlook of the Company’s activities and results and may not be appropriate for other purposes. The FOFI has been prepared based on a number of assumptions including the assumptions discussed above under “Caution Regarding Forward-Looking Information”. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. FOFI contained in this news release was made as of the date of this news release and the Company disclaims any intention or obligations to update or revise any FOFI contained in this news release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221024005366/en/
For further information, contact:
Email: wregener@kolibrienergy.com
Website: www.kolibrienergy.com
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