On Tuesday, Roth/MKM reaffirmed its Buy rating and $6.75 stock price target for NASDAQ:KGEI, Kolibri Global Energy Inc. The firm's analysis indicates steady projections for the company's third-quarter 2024 performance, with a minor adjustment in production estimates.
The expected production for the third quarter is now at 3,065 barrels of oil equivalent (BOE) per day, a slight decrease from the previously estimated 3,089 BOE per day. This anticipated dip is attributed to the lack of drilling and completions planned for that period.
The financial forecasts for the third quarter remain largely consistent, with earnings per share (EPS), cash flow per share (CFPS), and earnings before interest, taxes, depreciation, and amortization (EBITDA) experiencing minimal changes. The EPS and CFPS are both projected to hold at $0.13, with a minor decrease in CFPS from $0.28 to $0.27. Conversely, EBITDA is expected to see a slight increase from $11.2 million to $11.3 million.
Looking ahead to the fourth quarter of 2024, the firm is optimistic about a significant increase in production for Kolibri Global Energy. This boost is projected to reach 3,893 BOE per day, thanks to the drilling and completion of three wells: Alicia Renee 2-11-3H, Alicia Renee 2-11-4H, and Alicia Renee 2-11-5H. These wells, described as 1.5-mile laterals, will be predominantly owned by KGEI with a 97.8% interest.
The company plans to begin fracking these wells early in the fourth quarter of 2024, with operations set to occur simultaneously across the three sites. Moreover, the analyst's financial model anticipates a credit facility balance of $30.9 million for KGEI as of December 31, 2024. This figure corresponds to a Debt/EBITDA ratio of 0.67x, suggesting a manageable level of debt in relation to earnings.
In other recent news, Kolibri Global Energy has reported a substantial 30% increase in production during its Q2 2024 earnings call. The energy company has also initiated drilling on three longer lateral wells, expecting to finish these by early Q4 2024. The company anticipates these wells will enhance productivity by 1.35 to 1.5 times. Kolibri has also increased its line of credit to $50 million, providing greater financial flexibility.
The company is also planning to complete two drilled but uncompleted wells next year. In further developments, Kolibri is open to mergers and acquisitions that align with its valuation, while also focusing on organic growth. The company maintains a steady outlook on natural gas and NGL processing costs and is committed to increasing reserves and closing the valuation gap.
InvestingPro Insights
As Roth/MKM maintains its positive stance on Kolibri Global Energy Inc., a glance at the latest InvestingPro data provides additional context for investors. The company boasts a strong gross profit margin of 86.12% over the last twelve months as of Q2 2024, reflecting efficient operations and potentially contributing to the analyst's confidence in the stock. This is coupled with a notable revenue growth of 23.59% during the same period, indicating a robust financial performance despite the slight adjustment in production estimates for Q3 2024.
InvestingPro Tips highlight that analysts predict KGEI will be profitable this year, which aligns with the firm's projections of steady earnings per share. Furthermore, the company has been profitable over the last twelve months, reinforcing the positive outlook. It is worth noting, however, that Kolibri Global Energy does not pay a dividend to shareholders, which may influence investment decisions depending on individual strategies.
For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/KGEI. These insights could offer further guidance in evaluating the company's prospects and investment potential.
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