Friday, May 12, 2023
Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
2023-1Q results continued a steady upward production trend and biannual gas price resetting that has lead to higher revenues, fund flow from operations, and earnings. Results were generally in line with expectations. Although gas sales and prices were previously disclosed, total revenues were slightly below expectations due to lower natural gas liquid pricing. Royalty rates fell sharply due to a restructuring and lower natural gas prices.
Sale decline further explained. April volumes averaged 1,972 boepd vs. 2023-1Q production of 2,767 boepd. Management cited reduced demand and higher nominated volumes from its partner in the Cabure unit. Sales in the Cabure field are subject to a partnership agreement based on reserves in the ground. Alvopetro’s partner can then nominate the amount of reserves that are sold from its “piggy bank.” Bahia Gas, the consumer of Alvopetro’s gas supply, can take gas on a firm or interruptible basis. For a 7-10 day period, it took gas primarily from firm customers decreasing the demand for other customers.
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