Kolibri Global (KGEI) Q3 2026 Earnings Call Transcript

DATE

Friday, Nov. 13, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Wolf E. Regener
• Chief Financial Officer - Gary W. Johnson

TAKEAWAYS

• Revenue -- $18.3 million, representing a 22% increase driven by a 34% rise in average commodity prices.
• Average Production -- 3,867 barrels of oil equivalent per day, declining 9% due to temporary shut-ins during drilling operations and normal field declines.
• Adjusted EBITDA -- $13.3 million, increasing 20% primarily due to higher realized commodity prices.
• Net Income -- $3.6 million, remaining flat compared to the prior year as higher revenue was offset by noncash mark-to-market adjustments on commodity contracts.
• Basic EPS -- $0.10, remaining unchanged from the same period in 2025.
• Netback from Operations -- $43.48 per barrel of oil equivalent, growing 41% due to higher realized prices.
• Netback Including Commodity Contracts -- $40.55 per barrel of oil equivalent, representing a 31% increase.
• Operating Expense -- $8.39 per barrel of oil equivalent, rising 14% reflecting higher severance taxes, workover costs on a non-operated well, and increased chemical costs.
• Nine-Month Revenue -- $60.4 million, increasing 43% due to higher production volumes and a 24% increase in average realized prices.
• Nine-Month Production -- 4,412 barrels of oil equivalent per day, growing 15% following the completion of wells in the fourth quarter of 2025.
• Nine-Month Adjusted EBITDA -- $44.6 million, representing a 41% increase compared to the first nine months of 2025.
• Nine-Month Net Income -- $16.1 million, a 31% increase reflecting higher top-line performance partially offset by hedging losses.
• Current Production -- 5,700 barrels of oil equivalent per day, following the contribution of new wells brought online after the close of the third quarter.
• Lovina Well Results -- 636 barrels of oil equivalent per day, including 545 barrels of oil per day, from the company's first test of the False Caney formation.
• Clifton Mack Well Results -- 1,911 barrels of oil equivalent per day, combined from three wells that began flowing at the end of the third quarter.
• Borrowing Base -- $75 million, which was redetermined at the existing level in October 2026.
• Available Borrowing Capacity -- $19.5 million, providing financial flexibility for upcoming drilling programs.
• Capital Expenditure Guidance -- $47 million to $48.5 million for the full year, representing an increase from the previously forecasted range of $38 million to $43 million.
• Unrealized Loss -- $2.4 million, recorded as a noncash mark-to-market adjustment on financial commodity contracts.
• Realized Loss -- $1 million, resulting from financial commodity settlements during the quarter.
• Average Oil Price -- $85.01 per barrel, an increase of 33% compared to the third quarter of 2025.
• Average Natural Gas Price -- $3.42 per thousand cubic feet, representing a 26% increase.
• General and Administrative Expenses -- $4.5 million for the nine-month period, rising from $4.1 million due to increased legal and consulting costs.

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RISKS

• Regener stated, "I think we'll be within that range, probably a little on the lower end just because these wells came on a little bit later than we had anticipated so that affects," referring to the company's full-year production guidance.
• Johnson noted that operating expenses increased 14% to $8.39 per barrel of oil equivalent, driven by higher severance taxes resulting from elevated commodity prices and unexpected workover costs on a non-operated well.

SUMMARY

Kolibri Global Energy Inc. (NASDAQ:KGEI) reported a quarter defined by higher realized pricing and the strategic testing of new geological intervals. Management focused on the successful flowback of three Clifton Mack wells and the initial production results from the Lovina 5-8-1HF well, which represents the company's first test of the False Caney formation. While production during the quarter was affected by temporary shut-ins related to drilling activities, the company ended the period with an exit rate of approximately 5,700 barrels of oil equivalent per day. Financial performance remained stable with flat net income as increased revenue was balanced by unrealized losses on commodity hedges. Management expressed confidence in the company's debt position and current liquidity, noting that the credit facility was recently redetermined with a $75 million borrowing base.

• Management identified the False Caney formation as a significant potential catalyst, with Regener noting that the interval is present over most of the company's property.
• The company intends to incorporate other benches, such as the T-zone, into future development plans to drive reserve growth.
• Regener indicated that the company maintains flexibility in its 2027 drilling program, with the ability to accelerate or decelerate based on prevailing oil prices.
• Management reported that higher gas rates observed in new wells were isolated to the Southwest corner of the field rather than being a widespread characteristic.
• Current production does not include several wells undergoing workover operations, which could provide additional output once completed.

INDUSTRY GLOSSARY

• BOE: Barrels of oil equivalent, a measure used to express the energy content of natural gas and other liquids in terms of barrels of oil.
• BOEPD: Barrels of oil equivalent per day, a metric for daily production rates.
• Costless Collar: A hedging strategy that uses a floor and a ceiling price to limit exposure to commodity price volatility.
• False Caney: A geological formation in the Tishomingo Field that management is testing for future development and reserve expansion.
• IP: Initial production, the rate at which a well flows when it first begins commercial operations.
• Netback: A measure of operating profit per unit of production, calculated by subtracting royalties and operating expenses from gross revenue.
• Redetermination: The periodic review by lenders of a company's borrowing base under a credit facility, based on the value of its oil and gas reserves.
• WTI: West Texas Intermediate, a grade of crude oil used as a pricing benchmark in the United States.

Full Conference Call Transcript

Operator: Good day, and welcome to the Kolibri Global Energy's Third Quarter 2026 Financial Conference Call. [Operator Instructions] Please note this event is being recorded. I advise participants that this conference is being recorded today, November 13, 2026. This call will be available on the company's website at www.kolibrienergy.com. Here is a disclaimer. This call may include forward-looking information regarding Kolibri's strategic plans, anticipated production, capital expenditures, exit rates and cash flows, reserves and other estimates and forecasts. Forward-looking information is subject to risks and uncertainties, and actual results may vary from forward-looking statements.

This call may include future-oriented financial information and financial outlook information, which Kolibri discloses in order to provide readers with a more complete perspective on Kolibri's potential future operations and such information may not be appropriate for other purposes. For a description of the assumptions on which such forward-looking information is based and applicable risks and uncertainties and Kolibri's policy for updating such statements, we direct you to Kolibri's most recent annual information form and management's discussion and analysis for the period under discussion as well as Kolibri's most recent corporate presentation, all of which are available on Kolibri's website. Listeners should not place undue reliance on forward-looking information.

Kolibri takes no obligation to update any forward-looking future-oriented financial or financial outlook information other than as required by applicable law. I would now like to turn the call over to Mr. Wolf Regener, the President and CEO of Kolibri Global Energy, Inc. Please go ahead, sir.

Wolf E. Regener: Thank you, and thank you, everyone, for joining us today. With me on today's call is Gary Johnson, our Chief Financial Officer. As hopefully, everyone has seen, we released our third quarter 2026 results this morning. And if you've looked at them, then hopefully, you'll agree that it was a very solid quarter. Gary will go into the financials, but I'll speak a little bit to the operations side of things. We've accomplished quite a few things in the third quarter. In the quarter, we completed the 3 Clifton Mack wells and started flowback right at the end of the quarter.

So the production from those wells realistically started in the fourth quarter, and we'll have the benefit of that in the fourth quarter and on. Also in the third quarter, we finished drilling the Lovina 5-8-1HF well, which is our first test of the False Caney formation. This well was completed in October, and you've all hopefully seen the results we put out a few days ago about this well. We're really excited that the Lovina well is performing so well from this new interval. It's always great to have a good well, but it's even better when it's coming from a previously untested interval and it goes so well.

We'll continue to monitor the well, but it really is looking good and strong. The interval is present over most of our property. And since our reserve report includes no False Caney reserves so far, this will hopefully perform as we expect it to and then will be a material catalyst for the company and lead to meaningful increases in our reserves and in turn, value for our shareholders. With these wells coming on production, our current production rate is around 5,700 BOE a day, giving us some strong production, and that actually doesn't include a few wells that we're doing some work on right now.

Now with that, I'll turn the call over to Gary to discuss our financial results.

Gary W. Johnson: Thanks, Wolf, and thanks for everyone on the call. I'm just going to go over a few highlights of the quarter and September year-to-date results, and then we can take questions at the end. All amounts are in U.S. dollars unless otherwise stated. I'll start with the third quarter comparisons. Revenue was up 22% to $18.3 million in the third quarter of '26 due to higher prices, which were up 34%, partially offset by lower production. Average quarterly production was 3,876 BOE per day, which was down 9% compared to the prior year quarter due to shut-in wells during the quarter as well as normal decline since the new wells didn't start producing until the fourth quarter.

As we mentioned in our earnings release, our current production is approximately 5,700 BOE per day with all the new wells online. Adjusted EBITDA was $13.3 million compared to $11.1 million in the prior year quarter, which was an increase of 20% due to higher revenue, which was partly offset by an increase in operating expenses due to the increase in production and a realized loss on our commodity contracts. Our net income was flat for the third quarter at $3.6 million with basic EPS of $0.10 for both periods. This was due to the higher revenues being offset by a noncash mark-to-market adjustment of $2.4 million on our commodity contracts.

Netback from operations increased 41% to $43.48 per BOE compared to $30.84 in the prior year quarter due to the higher prices. And the netbacks, including our commodity contracts, increased 31% to $40.55 per BOE. Operating expense was $8.39 per BOE for the quarter compared to $7.37 per BOE in the prior year third quarter, which was an increase of 14%. The increase was primarily due to higher severance taxes from the higher prices, workover costs on a nonoperated well and higher chemical costs. Now I'll move on to the year-to-date September results. Revenue was up 43% to $60.4 million compared to $42.1 million in 2025 due to higher prices, which increased by 24% and higher production.

Average production was up 15% to 4,412 BOE per day for the 9 months ended September '26 compared to 3,851 in the comparable prior year period due to the wells that were drilled and completed at the end of '25. Adjusted EBITDA increased by 41% to $44.6 million compared to $31.6 million in 2025, which was due to the increase in revenues, which were partially offset by higher operating expense due to the increase in production and a realized loss on hedges. Net income was $16.1 million with basic EPS of $0.45 per share, which compares to $12.2 million and $0.34 per share last year.

The 31% increase was due to the higher revenue, partially offset by higher depreciation and operating expense from the increase in production as well as realized and unrealized losses on commodity contracts. Netback from operations increased 27% to $41.85 per BOE compared to $32.86 last year due to the higher average prices. And the netback, including commodity contracts, increased 21% to $39.79 per BOE compared to $32.91 last year. Operating expense was $8.43 per BOE for the year-to-date September compared to $7.20 in the prior year quarter. And that was due to higher severance taxes, higher prices, workover costs on a nonoperated well and also higher chemical and water hauling costs.

In October, our credit facility was redetermined at the same $75 million borrowing base. And our net debt at the end of the quarter was $15.4 million, and we had $19.5 million available of available borrowing capacity. And with that, I'll hand it back to Wolf.

Wolf E. Regener: Thanks, Gary. As Gary laid out, we had a good, solid quarter. In addition, and as I said at the beginning of the call, I'm also really excited to continue the growth that we've had, and it looks like we have increased our drilling runway nicely. We believe that with the great production from our first False Caney well, while it's early in its production life, it really opens the door to many more locations, reserves, and thus further value creation for all shareholders. And that is what I believe we are here to do.

We'll be looking to drill additional wells where our future development plans will be focused on both continuing the Caney development, but also developing these other benches that we have where we have not been given any credit in our reserve reports yet. Our current production of about 5,700 BOE a day, especially with the oil prices being where they are, gives us strong results into the year-end and should also lead to strong cash flows extending into the next year, which provides a lot of flexibility for the company. Looking forward to exciting times ahead for our company, and I hope you are as well.

This concludes the formal part of our presentation, and we'd be happy to answer any questions you may now have.

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

Steve Ferazani: Wolf, I did want to start off by asking you about the healthy production of the False Caney well. I wanted to get your initial reaction. I mean my thoughts here was, one, that was a slightly shorter lateral than planned. So those numbers look very healthy and the really high oil content you've seen so far. First reactions on it and thoughts on how it might influence your future drilling program.

Wolf E. Regener: Yes, without a doubt, we're very pleased by what it is. And if you extrapolate out to normal 2 miles of laterals that we can probably drill out here for these wells, those would be healthy IP rates, assuming the same barrel per foot, right? So -- but even as it stands, we're very happy with what we've seen so far. It's been strong. It's been steady. And I've got 0 complaints about this well. It's what we had hoped for. And like one of our shareholders have said to me [indiscernible] this is fantastic, you really hit it out of the park with it. And I said, yes, it's early days on it, but it looks really strong.

So I don't expect any negative surprises or anything. Yes, it's been great.

Steve Ferazani: Does this -- I know you've talked before this -- you drilled this well that was part of a sort of change, if not change in strategy, but just to start drilling sometimes within the other benches that you have, which could certainly drive reserves. This clearly supports those efforts. How are you thinking about how you incorporate other benches, including, obviously, the False Caney now, into your drilling program and how this might influence it, I'm guessing positively.

Wolf E. Regener: Absolutely. It definitely -- it opens up this new bench in our opinion over hopefully a large section of our acreage. We won't get reserve report credit for it right away, but I think we'll grow into that without an issue. And like I said, the first one is always the hardest to go. We also have the T-zone still down below us that we know it works well. We have multiple benches that are proved that are not proved in our reserve report yet. So we'll definitely be incorporating drilling those at the same time with drilling along with our Caney and developing everything together.

Steve Ferazani: Excellent. On the third quarter release, I mean, production came in a little bit ahead of where we were. I know you had the 4 shut-in wells. The only number that surprised me was the quarter was a little bit more gassier than we were expecting. Was that related to the shut-ins? I know you were getting some higher gas levels from the new wells, but I'm guessing that's not what drove that number.

Wolf E. Regener: Yes. No, that's not what drove that number. And yes, we did have some shut-ins on a couple of wells that could have twisted that a little bit but nothing major. I mean obviously, the new wells are quite gassy, and we'll see where they end up. They're still flowing back a lot of frac fluid. So we hope that, that is actually -- that those oil cuts will come back up again in our gassier wells, in the Woodford days, a number of times when we got the frac fluid completely off of it, the oil percentages went up. So we'll see how that goes. But they're strong, healthy wells still even if they're gassier for us right now.

And it's isolated to that Southwest corner, right? So I know I've said that before, but in the rest of the field, we don't see higher gas rates at all.

Steve Ferazani: Got it. That's helpful. In terms of where you are with production now, I mean, clearly on pace to set another quarterly production record, all things continuing the way they are in 4Q. In terms of where you were with the guidance you provided earlier in the year, are you still comfortable with that range given how we've gotten through 4Q so far?

Wolf E. Regener: Yes, I think so. I think we'll be within that range, probably a little on the lower end just because these wells came on a little bit later than we had anticipated so that affects. But we should be in that ballpark.

Steve Ferazani: Got it. Any kind of thoughts on -- I know we're early and there's a lot of potential global changes to impacts to WTI prices, but any thoughts around, you have the really healthy balance sheet, it's supported by now another record in production, how that can impact how you're thinking about the drilling program for '27, or are we too early?

Wolf E. Regener: Yes. So we like -- I mean we're going to have some good conversations with our Board as far as options that we have, right? So given the size we are, we can accelerate or decelerate pretty quickly. And so we'll put some plans in place based on agreed upon oil price. But we'll have Plan B and Plan C as well for higher or lower prices. And so we can just make adjustments for that. And I don't think anyone can figure out where the oil price is going to be right now. So we'll definitely have a minimum that we're going to drill and then hopefully, it's going to be a whole lot more than that.

Steve Ferazani: But the balance sheet gives you far more flexibility to make those decisions.

Wolf E. Regener: Without a doubt, like you said, I mean, our debt to EBITDA, keeping it down low, we've got a lot of room to run even if we wanted to take on some additional debt, we could. That's not the current plan right now, but we do have the ability to do that. And our reserve report, our redetermination, I should say, went well. And that was -- we didn't expect anything differently. I don't think we're pushing the limit of what we could take there as well.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Wolf Regener for any closing remarks.

Wolf E. Regener: I just want to say thank you, everyone, for being here today and listening, and thanks, everyone, for their support to those shareholders. And if you're not a shareholder, our stock's down a little bit today along the rest of the market, take a look. Anyway, have a great day, everyone, and I appreciate it.

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

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