While scanning Barchart’s Top 100 Stocks to Buy this morning, I came across a small-cap oil and gas stock based in Los Angeles. It started in Canada as BNK Petroleum and changed its name to Kolibri Global Energy (KGEI) in November 2020.
As a Canadian, I’m always interested in stocks affiliated to Canada, no matter how minor, to Canada. In this instance, the business was initially listed on the Toronto Stock Exchange in July 2008 before being uplisted to Nasdaq in October 2023.
Although it traded for over a decade on the TSX before its uplisting, its stock’s real gains have come since November when it announced excellent Q3 2024 earnings. KGEI is up 156% in a little over three months.
I’m not an oil specialist, but the small-cap stock is an interesting play for aggressive investors.
Here’s why.
Its Top and Bottom Lines Are Moving Higher
The company’s Q3 2024 revenue was $13.0 million, according to S&P Global Market Intelligence. That’s 420% higher than Q3 2020’s $2.5 million. Over the same period, its EBITDA (earnings before interest, taxes, depreciation and amortization) has grown 1,263% from $800,000 in Q3 2020, to $10.9 million in Q3 2024.
It’s doing something right. Investors will know more after it reports Q4 2024 results in early May.
In the meantime, it reported 2025 guidance in mid-January that included revenue of $82 million at the midpoint of its outlook, 38% higher than in 2024. On the bottom line, it expects adjusted EBITDA of $64.5 million, a healthy 78.7% margin.
“The average production, revenue, and adjusted EBITDA guidance for 2025 again show significant growth from the 2024 forecast numbers, even with a US$70 WTI price assumption. The Company intends to continue repurchasing shares and has, to date, repurchased approximately 280,000 shares,” stated CEO Wolf Regener.
Kolibri has proved reserves of 32.4 million BOE (barrels of oil equivalent) and proved and probable reserves of 54.1 million BOE. Only 24% of its proved reserves have wells drilled, leaving plenty of room for future growth.
In 2025, Kolibri plans to increase production in the Tishomingo Field by 38% to 40% over its 2024 guidance. It expects to produce between 4,500 and 5,100 boe/d (barrels of oil equivalent per day), hence the higher revenue and EBITDA.
It leases 17,170 net acres in the Tishomingo Field with 35 Caney wells in production, with an additional 58 to come online in 2025 or later. The average well costs $5.5 million to drill, $1.7 million less than its 2023 estimate.
So, its cost efficiency in producing BOE is very healthy.
Its Valuation Is Reasonable
Kolibri’s current enterprise value is $469.1 million, 7.8x EBITDA and 6.1x revenue. While the EV/Revenue multiple is higher than it’s been since 2020, its EV/EBITDA isn’t outlandish relative to its historical averages.
The company’s January 2025 presentation indicates that its enterprise value is 33% of its proved reserves, 120 basis points less than the average of 10 comparable Canadian oil and gas companies.
In 2023, its general and administrative expenses were $4.12 per BOE, the lowest since 2016. At the same time, its operating expenses in Q3 2024 were $6.63 per BOE, the third-lowest of the same 10 Canadian companies.
In the third quarter, its operating netbacks—the net income from a BOE after all expenses—were $51 higher its 10 U.S. comparables at $51, $9 higher than the second-highest comparable.
Based on a value of $981 million for its proven and probable reserves, its enterprise value is just half that amount, suggesting that more upside should be achievable in 2025.
The Bottom Line on KGEI
I’ll be honest: I’m not an expert on oil and gas companies. I really don’t enjoy covering them. However, as I look through the Top 100 Stocks to Buy, I see that it is only one of six energy stocks to make the list.
Further, each of the other five has a much larger market cap. That said, Kolibri, in the 31st spot, currently has the highest weighted alpha of the six, at 234.87. This is considerably higher than its 52-week return of 189.83%, suggesting that its momentum should continue to increase its share price in the near term.
With very little analyst coverage, should Kolibri continue to meet or exceed its guidance in 2025, any additional coverage will help move its share price into double digits.
On Feb. 17, Roth MKM, which has a Buy rating on KGEI stock, upped its 12-month target price to $11 from $6.75. As it continues to boost production, Roth MKM sees further gains in 2025.
I’m no oil geek, but if you’re an aggressive investor, I’d consider buying this for the long haul. It’s the real deal.
