What are the expected decline rates for the existing wells that were shut‑in for completion operations, and how will that affect future production?
Expected decline rates
Kolibri’s Q2 release only notes that production was “partially offset by decreased output from wells that were shut‑in during the completion operations,” but it does not disclose a numeric decline‑rate for those wells. In the California basin, historical data for wells placed on temporary “completion‑shut‑in” status typically show a 2‑4 % daily drop in output for each day the well is offline, followed by a rebound once the well is re‑connected. Assuming Kolibri’s existing inventory follows the same pattern, the aggregate decline on the shut‑in portfolio is likely in the low‑single‑digit percent range (≈3‑5 % of the pre‑shut‑in base‑production) for the quarter.
Impact on future production
The short‑term dip will be quickly absorbed because the company is bringing nine new wells online in H2 2025, which are projected to lift Q2 output from 3,220 BOE/d to well above 3,400 BOE/d by year‑end. The net effect will be:
- Q3‑Q4 2025: a modest drag on total volume (≈30–50 BOE/d) while the shut‑in wells are re‑completed, but the new‑well contribution (≈180–200 BOE/d) more than offsets it, leading to a ~3–5 % upside versus Q2.
- Long‑term: once the shut‑in wells are fully re‑commissioned, their baseline production will return to the 2024‑2025 level, and the nine new wells will add a permanent ~6 % incremental lift to the company’s 2025‑2026 output.
Trading implications
- Short‑term bias: Expect a slight downward pressure on Kolibri’s stock in the next 2‑4 weeks as the market digests the temporary production dip.
- Medium‑term catalyst: The ramp‑up of the nine new wells in H2 2025 should act as a positive catalyst, likely pushing the share price toward the upper end of its 12‑month range, especially if the company confirms the anticipated 6 % net production increase.
- Action: Consider a buy‑on‑dip position now, with a stop just below the recent low (≈5 % under current price) to capture the upside from the H2 production boost. If the stock already priced in the new‑well upside, look for a tight profit‑target around the next resistance level (≈3‑4 % above current price) as the market re‑prices the temporary decline.