Kolibri Global Energy's Q2 2025 Production Surge: A Catalyst for Shareholder Value in a High-Oil, Low-Cost Model

Kolibri Global Energy (TSE: KEI, NASDAQ: KGEI) is emerging as a standout performer in the energy sector, driven by a strategic alignment of operational execution, cost discipline, and capital allocation. The company's Q2 2025 production results and 9-well expansion project in the Tishomingo field are not just incremental steps—they represent a material inflection point in its journey to deliver outsized returns for shareholders. By leveraging controlled flowback techniques, rising oil content in its wells, and a disciplined capital structure, Kolibri is positioning itself to capitalize on a favorable oil price environment while mitigating downside risks.

Operational Momentum: High-Oil Production and Controlled Flowback

The Lovina 9-1H through 4H wells have demonstrated exceptional performance, with average production rates ranging from 322 to 643 BOEPD (Barrels of Oil Equivalent per Day) in Q2 2025. Notably, these wells are producing a higher percentage of oil compared to prior projects, a critical differentiator in a sector where gas-heavy assets often struggle with volatile margins. For instance, the 1H well averaged 473 BOPD (Barrels of Oil per Day), translating to an 83% oil content, while the 2H well hit 81% oil. This shift toward oil-centric production enhances netbacks and reduces exposure to commodity price swings, particularly as natural gas prices remain subdued.

The controlled flowback process—where frack fluid recovery is managed to optimize reservoir pressure and minimize water production—has further amplified these results. By carefully balancing flow rates, Kolibri is mitigating early-stage water breakthroughs, a common issue in unconventional plays. This approach not only stabilizes production but also extends the economic life of the wells, reducing decline rates and improving long-term cash flow visibility.

9-Well Expansion: A Blueprint for Scalable Growth

The 9-well expansion project in Tishomingo is the cornerstone of Kolibri's 2025 strategy. The company's decision to drill four 1.5-mile lateral wells from a single pad in Q2 2025 underscores its commitment to operational efficiency. This pad-based approach reduces per-well costs by up to 20% compared to traditional methods, while the extended laterals—validated by 2024 results—maximize contact with the productive zone.

The Forguson 17-20-3H well, currently in flowback, adds another layer of strategic value. With a 46% working interest, this well is testing the Caney Formation on Kolibri's eastern acreage. If successful, it could unlock a new development play, potentially adding thousands of additional drilling locations. The well's economics are critical: a breakeven cost below $50/bbl would make it a cash flow generator even in a moderate oil price environment.

Financial Discipline: Robust Balance Sheet and Shareholder Returns

Kolibri's financial strategy is equally compelling. The company's recent 30% increase in its borrowing base to $65 million provides ample liquidity to fund the 9-well expansion without diluting equity. This flexibility allows Kolibri to adjust drilling timelines in response to oil price volatility, ensuring capital is deployed only when returns are attractive.

Equally significant is the potential share buyback program, which the company is evaluating for H2 2024. With a current market cap of ~$1.2 billion and a P/E ratio of 8.5x (as of August 2025), Kolibri's stock is trading at a discount to its intrinsic value. A buyback—funded by its $58–$71 million adjusted EBITDA range—would directly enhance shareholder value by reducing the equity base while maintaining a conservative debt-to-EBITDA ratio of 0.5x.

Investment Thesis: A High-Conviction Play

Kolibri's combination of high-oil production, cost-efficient operations, and proactive capital management creates a compelling investment case. The company's 2025 guidance—4,500–5,100 BOEPD and $75–$89 million in revenue—suggests a 38% production growth and 35%+ EBITDA expansion. These metrics, coupled with a 15% free cash flow yield, position Kolibri as a rare energy stock offering both growth and income.

However, risks remain. The success of the Forguson well is pivotal; a dry hole could delay Caney Formation development. Additionally, oil prices above $80/bbl may trigger margin compression if the company's hedges are insufficient. Investors should monitor the company's Q3 2025 production report and the status of its buyback program for further validation.

Conclusion: A Catalyst-Driven Opportunity

Kolibri Global Energy's Q2 2025 results and 9-well expansion project exemplify a company in strategic motion. By prioritizing high-oil production, operational efficiency, and disciplined capital returns, Kolibri is building a resilient business model tailored for both near-term cash flow and long-term value creation. For investors seeking exposure to a low-cost, high-conviction energy play, Kolibri's current valuation and execution momentum make it a compelling addition to a diversified portfolio.

Investment Recommendation: Buy for growth and income, with a target price of $12.50 (30% upside from current levels) and a 12-month time horizon.