Monday, May 16, 2022

Alvopetro Energy (ALVOF)
A strong quarter as higher prices take effect

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, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

First quarter results reflect higher prices. Revenues in the 2022 first quarter were $14.0m versus $6.9m and our $13.4m projection. Higher revenues reflect a 15% increase in production and a 48% increase in prices ($10.03/mcf). As a result of higher prices, operating netbacks rose to $53.94/boe from $28.52/boe. This is one of the best netbacks in the industry. 

Cash flow is soaring. Funds from operations rose to $10.9m versus $4.8m. The company has been active with its cash flow increasing its capital expenditures, paying down debt, and raising the dividend. Working capital less debt switched over to a positive position a few quarters ago and is now $7.3 million. With debt levels soon to be eliminated, the stakeholder focus will soon shift to equity shareholders. We expect additional dividend increases in upcoming quarters and would not be surprised to see the company initiate a share repurchase program in 2023….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.