Alaska Airlines and Gevo Enter into Sustainable Aviation Fuel Sales Agreement for 37 Million Gallons Per Year for Five Years

Research, News, and Market Data on Gevo

ENGLEWOOD, Colo., Aug. 03, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce a new fuel sales agreement with Alaska Airlines (NYSE: ALK). The Agreement provides for Alaska Airlines to purchase 37 million gallons per year of sustainable aviation fuel (SAF) for five years through Gevo’s future commercial operations. Gevo’s SAF deliveries are expected to begin in 2026.

Alaska Airlines is a member of oneworld® global alliance (oneworld), and this agreement falls under the purview of a memorandum of understanding (MoU) that Alaska Airlines and Gevo signed in March 2022, laying the groundwork for the 14 world-class airlines in the alliance to potentially purchase 200 million gallons of SAF per year, from Gevo’s future commercial production operations. Gevo and Alaska Airlines previously partnered in 2016 to demonstrate the use of the first cellulosic renewable jet fuel specified for use on a commercial airline flight, produced from the sugars of wood waste. This Agreement with Alaska Airlines expands the list of committed airline partners and supports Gevo’s pursuit of its stated goal of producing and commercializing a billion gallons of SAF by 2030.

“As we continue to grow our partnerships with oneworld airlines, I’m personally gratified to see that Alaska Airlines has joined our list of partners,” said Gevo CEO Dr. Patrick Gruber. “Alaska was the first airline to fly on a Gevo experimental fuel that we made from the cellulosic fiber of wood waste, providing a pathway and proof that waste woods can be used to make sustainable aviation fuel. When Alaska Airlines receives fuel from one of our Net-Zero facilities, they will do so having been a part of some of our very important initial testing and delivery of sustainable aviation fuel.”

Alaska Airlines is committed to alternatives that assist in its goal of reducing emissions, including the use of greener alternatives and the prioritization of programs that help them safely burn less fuel. They have committed to pathways that will help them achieve net-zero carbon emissions by 2040, with the stated goal of being “the most sustainable and fuel-efficient U.S. airline.”

“Using sustainable aviation fuel is a significant part of Alaska’s five-part path to reach net zero carbon emissions, and we are excited about this agreement with Gevo – alongside our partners American Airlines and others in the oneworld alliance.” said Diana Birkett Rakow, senior vice president of public affairs and sustainability at Alaska Airlines. “We also recognize that there is significant work required ahead – including public policy action – to make SAF a viable, affordable option at scale.”

To make renewable jet fuel, Gevo utilizes waste starch (or sugars) from field corn that has been utilized in the production of high protein animal feed. These non-edible waste products are fermented into alcohol and then chemically converted to a renewable jet fuel through proprietary processes. This fuel is an ASTM tested and approved drop-in replacement for fossil-based jet fuel.

The Agreement with Alaska Airlines is subject to certain conditions, including Gevo developing, financing, and constructing one or more production facilities to produce the SAF contemplated by the Agreement.

About Gevo
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that it possesses the technology and know-how to convert various carbohydrate feedstocks through a fermentation process into alcohols and then transform the alcohols into renewable fuels and materials, through a combination of its own technology, know-how, engineering, and licensing of technology and engineering from Axens North America, Inc., which yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

About
Alaska Airlines
Alaska Airlines and its regional partners serve more than 120 destinations across the United States, Belize, Canada, Costa Rica and Mexico. It emphasizes Next-Level Care for its guests, along with providing low fares, award-winning customer service and sustainability efforts. Alaska is a member of the oneworld® global alliance. With the alliance and its additional airline partners, guests can travel to more than 1,000 destinations on more than 20 airlines while earning and redeeming miles on flights to locations around the world. Alaska Airlines and Horizon Air are subsidiaries of Alaska Air Group.

Learn more about Alaska Airlines here: alaskaair.com

Forward-Looking
Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters, without limitation, including Gevo’s technology, the Agreement with Alaska Airlines, Gevo’s ability to develop, finance and construct one or more production facilities to produce the SAF contemplated by the Agreement with Alaska Airlines, the timing of Gevo producing the SAF for Alaska Airlines, the oneworld® Alliance, Gevo’s ability to produce SAF, the attributes of Gevo’s products, Gevo’s ability to create net-zero carbon intensity products, and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Media
Contact
Heather L. Manuel
+1 303-883-1114
IR@gevo.com

InPlay Oil Corp. Announces Renewal of Credit Facility and Provides Operations Update

News and Market Data on InPlay Oil Corp

CALGARY, Alberta, July 26, 2022 (GLOBE NEWSWIRE) — InPlay Oil Corp. (TSX: IPO) (OTCQX: IPOOF) (“InPlay” or the “Company”) is pleased to provide an operations update and announce the completion of the annual renewal of its syndicated Senior Credit Facility.

Senior Credit Facility Renewal

InPlay’s Senior Credit Facility remains unchanged in lending capacity and has been renewed at $79 million comprised of a $65 million revolving facility⁽¹⁾ and the remaining $14 million term facility. The borrowing base of the revolving facility has been reconfirmed at the same amount of $65 million and the term out date extended to November 30, 2022. In addition to the Senior Credit Facility, the Company’s $25 million four year term facility with the Business Development Bank of Canada remains in place, providing InPlay with $104 million of total lending capacity.

Operations Update

During the second quarter, InPlay drilled three (3.0 net) 1.5 mile Extended Reach Horizontal (“ERH”) wells in Pembina which came on production at the end of May. The average combined initial production (“IP”) rates of these wells over the first thirty and sixty days of production was 1,501 boe/d⁽²⁾ (89% light crude oil and NGLs) and 1,441 boe/d⁽²⁾ (88% light crude oil and NGLs) respectively, based on field estimates. The Company also completed the drilling operations of an additional two (1.9 net) 2 mile ERH wells in Willesden Green which have currently been completed and are in the early cleanup period. Construction of a modular multi-well facility in Willesden Green began during the quarter to accommodate current and future drilling in the area.

Extreme wet weather in late June delayed the start of our third quarter capital program. The program has now started with drilling operations underway on the second well of a three (2.9 net) ERH well pad in Willesden Green which is expected to be on production in late August.

The Company’s released 2022 guidance⁽³⁾ is reiterated with field estimated average corporate production for the second quarter of 2022 of approximately 9,150 boe/d⁽²⁾ (59% light crude oil and NGLs) which includes over 5,000 bbls of a light crude oil inventory build due to difficulty trucking oil at the end of June.  This is 11% higher than production in the first quarter of 2022. Current corporate production is approximately 9,550 boe/d⁽²⁾ (60% light crude oil and NGLs) based on field estimates, which is 16% above our average production during the first quarter of 2022.

As a result of using a consistent drill crew since the beginning of the year and exceptional project execution, the two 2 mile ERH wells in Willesden Green were drilled in 10.3 and 10.7 days respectively, which were among the fastest drilling operations for 2 mile wells in the area. In comparison to the last 2 mile wells drilled by the Company in Willesden Green in 2018 drilling times improved by approximately 20% which is a positive result for the Company and is an example of InPlay’s continuous drive to achieve operational efficiencies.

We are extremely excited about the excellent financial position of the Company with our strong balance sheet, a strong portfolio of assets that are providing top-tier growth and our ability to generate long-term, direct returns to shareholders. Management would like to thank our employees, board members and lenders for their ongoing support as the Company progresses forward. The Company looks forward to announcing further corporate and operational updates including the upcoming release of our record second quarter results before markets on August 11, 2022.

For further information please contact:

Doug Bartole President and Chief Executive Officer InPlay Oil Corp. Telephone: (587) 955-0632

Darren Dittmer Chief Financial Officer InPlay Oil Corp. Telephone: (587) 955-0634

Notes:

• The
  revolving facility consists of a $10 million operating line of credit and $55
  million revolving line of credit.
• See “Reader
  Advisories – Production Breakdown by Product Type”.
• Refer to
  InPlay’s press release dated May 11, 2022 for full details of our 2022 capital
  program, associated guidance and key budget and underlying assumptions related
  thereto.

 

Reader Advisories

Forward-looking Information and Statements

This news release contains certain forward–looking information and statements within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends”, “forecast”, “targets”, “framework” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward looking information and statements pertaining to the following: expectations regarding future commodity prices; future oil and natural gas prices; future liquidity and financial capacity; future results from operations and operating metrics; future costs, expenses and royalty rates; future interest costs; the exchange rate between the $US and $Cdn; future development, exploration, acquisition, development and infrastructure activities and related capital expenditures, including our planned 2022 capital program and associated guidance.

Forward-looking statements or information are based on a number of material factors, expectations or assumptions of InPlay which have been used to develop such statements and information but which may prove to be incorrect. Although InPlay believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because InPlay can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which InPlay operates; the timely receipt of any required regulatory approvals; the ability of InPlay to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which InPlay has an interest in to operate the field in a safe, efficient and effective manner; the ability of InPlay to obtain debt financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and the ability of InPlay to secure adequate product transportation; future commodity prices; expectations regarding the potential impact of COVID-19 and the Russia/Ukraine conflict; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which InPlay operates; and the ability of InPlay to successfully market its oil and natural gas products. The forward-looking information and statements included herein are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: the continuing impact of the COVID-19 pandemic and the Russia/Ukraine conflict; changes in our planned 2022 capital program; changes in commodity prices and other assumptions outlined herein; the potential for variation in the quality of the reservoirs in which we operate; changes in the demand for or supply of our products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans or strategies of InPlay or by third party operators of our properties; changes in our credit structure, increased debt levels or debt service requirements; inaccurate estimation of our light crude oil and natural gas reserve and resource volumes; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in InPlay’s continuous disclosure documents filed on SEDAR including our Annual Information Form and our MD&A.

This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about InPlay’s prospective capital expenditures, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. The actual results of operations of InPlay and the resulting financial results will likely vary from the amounts set forth in this press release and such variation may be material. InPlay and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. However, because this information is subjective and subject to numerous risks, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, InPlay undertakes no obligation to update such FOFI. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about InPlay’s anticipated future business operations. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.

The forward-looking information and statements contained in this news release speak only as of the date hereof and InPlay does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Production Breakdown by Product Type

Disclosure of production on a per boe basis in this press release consists of the constituent product types as defined in NI 51-101 and their respective quantities disclosed in the table below:

	Light and Medium Crude oil (bbls/d)		NGLS (boe/d)		Conventional Natural gas (Mcf/d)		Total (boe/d)
Corporate production	3,775		1,599		25,059		9,550
Q1 2022 Average Production	3,571		1,307		20,054		8,221
Q2 2022 Forecasted Average Production	3,872		1,419		23,154		9,150
Combined IP 30 – 3.0 net Q2/22 Pembina wells	793		163		3,270		1,501
Combined IP 60 – 3.0 net Q2/22 Pembina wells	681		175		3,510		1,441

Note:

• With respect
  to forward-looking production guidance, product type breakdown is based upon
  management’s expectations based on reasonable assumptions but are subject to
  variability based on actual well results.

References to crude oil, NGLs or natural gas production in this press release refer to the light and medium crude oil, natural gas liquids and conventional natural gas product types, respectively, as defined in National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“Nl 51-101”).

BOE Equivalent
Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.

 

Gevo Closes on Net-Zero 1 Production Facility Land in Lake Preston, SD, Plans Fall Groundbreaking

Research, News, and Market Data on Gevo

ENGLEWOOD, Colo., July 25, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce closing on the purchase of approximately 245 acres near Lake Preston, South Dakota for its first commercial scale sustainable aviation fuel (SAF) facility, Net-Zero 1. The site initially optioned for purchase by Gevo in December of 2020, is very favorable for producing low-carbon SAF.

“After just over eighteen months of due diligence at the site, we are excited to commit and move forward. The potential of what we are creating here is, I think, immense. We are working to bring sustainable agriculture into the solution to capture carbon and catalyze the build-out of wind, renewable hydrogen, and biogas, combined with new paradigms for managing energy. I expect that Lake Preston and South Dakota will showcase what works well when all the parts unite. I want to get on with it and show people what is possible,” said Dr. Patrick Gruber, Gevo’s Chief Executive Officer. “Capturing renewable energy and transforming it into SAF and other liquid hydrocarbon fuels is game changing. It enables the transformation of renewable energy and carbon, in the form of liquids, to anywhere it is needed, and it can be done on a net-zero GHG lifecycle basis when all of the parts of the business system are accounted for. We expect that Middle America will continue to lead the energy transition.”

“The local availability of low-carbon corn as a feedstock for our process makes Lake Preston a favorable location for this operation,” said Tony Wells, Gevo’s Site Leader and General Manager. “Additionally, the local wind conditions are ideal for the wind power that will provide electricity to our plant, and there is a good local market for the high-protein animal feed product that we will be selling.”

Gevo expects to break ground on the project in September of 2022, with the formal announcement of a groundbreaking event for state and local representatives, and select members of the media, coming next month. The associated wind energy project that will provide electricity to the facility is in development. This project schedule should allow Gevo to begin delivery of initial volumes of SAF in 2025 to fulfill a portion of existing supply agreements. Net-Zero 1 is expected to produce 55 MGPY of SAF, or 62 MGPY of total hydrocarbon volumes.

About Gevo
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

Forward-Looking
Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters, without limitation, including Gevo’s ability to develop, finance, construct and operate commercial production facilities to produce the SAF, including Net-Zero 1 in Lake Preston, financial projections, the attributes of Gevo’s products, and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Media
Contact
Heather L. Manuel
+1 303-883-1114
IR@gevo.com

 

Gevo Signs Sustainable Aviation Fuel Sales Agreement with American Airlines for 100 Million Gallons Per Year for Five Years

Research, News, and Market Data on Gevo

AGREEMENT
VALUED AT APPROXIMATELY $2.75 BILLION OVER FIVE YEARS

ENGLEWOOD, Colo., July 22, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce a new fuel sales agreement with American Airlines, Inc. (NASDAQ: AAL). The agreement sets forth the terms for the sale of 100 million gallons per year of sustainable aviation fuel (SAF) for five years from Gevo’s future commercial operations. Gevo’s delivery of SAF under this agreement is expected to begin in 2026. Gevo estimates that the agreement should generate approximately $2.75 billion of revenue over the five-year term, inclusive of the value of environmental benefits. The Agreement with American Airlines is the single, largest fuel sales agreement ever entered into by Gevo with a customer.

American Airlines is a member of oneworld® global alliance (oneworld), and this agreement falls under the purview of memoranda of understanding (MoU) that oneworld members and Gevo signed earlier in 2022, laying the groundwork for the 14 world-class airlines in the alliance to purchase 200 million gallons of SAF per year, from Gevo’s future commercial operations. This SAF purchase agreement expands the list of committed airline partners and supports Gevo’s pursuit of its stated goal of producing and commercializing a billion gallons of SAF by 2030.

“The expansion of the global development of the SAF marketplace has reached an exciting point,” said Dr. Patrick R. Gruber, Gevo’s Chief Executive Officer. “While there is a tremendous amount of work to complete to bring all the critical elements of net-zero carbon SAF to the marketplace, our memoranda of understanding with oneworld alliance members and this subsequent commitment from American Airlines demonstrates the important momentum that is building for these types of products. I’m thrilled that Gevo is poised to continue to provide leadership for this product development.”

In September 2020, oneworld became the first global airline alliance to announce a target of carbon neutrality by 2050, establishing its commitment to long-term sustainability for the industry. The alliance followed up that commitment with an intermediate goal to achieve 10% SAF use across the member airlines by 2030.

“Today’s announcement is a historic step forward for American and our industry as we work to reduce our carbon footprint,” said Jill Blickstein, American’s Vice President of Sustainability. “The use of SAF is a cornerstone of our strategy to decarbonize air travel. While this landmark investment represents meaningful action by American Airlines, driving progress at the scale and pace we need requires critical policy action in Washington and at the State level. Alongside our 
oneworld partners, we’re proud to lead the way in the shift to SAF and make progress toward our shared climate goals.”

Further commenting on the agreement, Dr. Patrick R. Gruber, Chief Executive Officer of Gevo, said, “We are on a mission to drive greenhouse gasses out of the fuel supply chain with practical technology that can be scaled. In order to drive the GHG gasses out, we need renewable carbon and de-fossilized energy to power our production facilities. We know how to produce SAF. We know that by replacing fossil-based grid electricity with green electricity, replacing fossil-based natural gas with biogas, producing and using green hydrogen, and by working with farmers to improve the production of food while generating raw materials for SAF, we have a business system where incentives are aligned to improve sustainability and drive change. These take-or-pay SAF contracts help us show investors and lenders that this market is real, and merits investment to build plants for SAF. We are creating a new business system, one that can generate revenue for Gevo and attractive investment returns while also solving problems that impact all of us. By working together, we really can change the world. With these contracts in place, we hope to accelerate the journey.”

The agreement with American Airlines is subject to certain conditions precedent, including Gevo developing, financing, constructing and operating one or more production facilities to produce the SAF contemplated by the agreement. A copy of the agreement between American Airlines and Gevo will be filed with the U.S. Securities and Exchange Commission on Form 8-K no later than Friday, July 22, 2022.

About Gevo
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business. Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI. Learn more at Gevo’s website: www.gevo.com

About
American Airlines Group
To Care for People on Life’s Journey®. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL and the company’s stock is included in the S&P 500. Learn more about what’s happening at American by visiting news.aa.com and connect with American on Twitter @AmericanAir and at Facebook.com/AmericanAirlines.

Forward-Looking
Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters, without limitation, including the agreement with American Airlines, Gevo’s ability to produce SAF, Gevo’s estimate of the revenue that might be generated from the agreement with American Airlines, the assumptions used to estimate potential revenue from the agreement, including, but not limited to future pricing of commodities and the future values of certain environmental benefits, Gevo’s technology, Gevo’s ability to develop, finance, construct and operate production facilities to produce SAF, the attributes of Gevo’s products, and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations, and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Media
Contact
Heather L. Manuel
+1 303-883-1114
IR@gevo.com

Image Credit: Andrew Gustar (Flickr)

What is Curtailment? An Electricity Market Expert Explains

Curtailment has a special meaning in electric power systems. It describes any action that reduces the amount of electricity generated to maintain the balance between supply and demand – which is critical for avoiding blackouts.

Recently, curtailment has made news in states like California and Texas that are adding a lot of wind and solar power. On very windy or sunny days, these sources may produce more electricity than the grid can take. So grid managers reduce production to manage that oversupply.

This can be a lost opportunity. Electricity from solar and wind, as well as existing nuclear plants, is inexpensive and emits less greenhouse gases than fossil fuels, so it may be in society’s interest to keep these generators running.

A Special Kind of Surplus

Consumers know about shortages and surpluses in the goods they buy. Shortages mean that shoppers can’t get that PlayStation 5 for Christmas – or, more critically, the bread, water or baby formula they need.

Surpluses look different, like unsold books classified as remainders or Easter candy discounted 80% at local drug stores on Monday morning.

But electricity is not like these goods. On today’s electric grid, shortages and surpluses can both result in the exact same thing – a blackout.

The North American grid transmits electricity as alternating current that changes direction back and forth, like water ebbing and flowing from a vintage hand pump as the handle is pushed up and down. Modern electricity grids require precise levels of frequency – the back-and-forth motion of power – to function properly.

The grid is designed to function at 60 hertz, which means that the flow of electric current shifts back and forth 60 times per second. This is achieved, in part, by ensuring that the amount of electricity produced at any given time is equal to the amount of electricity being used. If too little electricity is produced, frequency on the system drops. If too much electricity is produced, then frequency increases.

Modern power plants are designed to operate within a relatively narrow range around 60 hertz. If the actual frequency on the grid is outside that range, the plant can disconnect itself from the system. If enough plants do that, it causes a blackout.

As the U.S. electric power industry shifts increasingly to renewable sources, the national power grid will require major updates.

Managing the Flow

In some parts of the U.S., mostly the Southeast and the West, the same companies generate electricity and deliver it to customers. When power plants in a utility’s territory generate more electricity than customers are using, the company will simply produce less electricity from its most expensive power plant, or temporarily shut it off altogether.

But other states have restructured their electricity markets so that some companies produce power and others deliver it to customers. In these competitive markets, curtailment raises complex issues. Power generators stay in business by generating and selling power, so when demand drops, grid operators need a system to ensure that they make curtailment decisions fairly.

Often the first tool for choosing which plants to curtail is the prices that generators are paid. When supply grows or demand falls, the price of electricity falls. Some generators may decide that they are unwilling to produce electricity below a certain price and drop off if it hits that level.

If there’s still a power surplus, the organization that operates the grid steps in to manually curtail generators. They can either do this through signals in the grid’s data system or by contacting generators directly through phone calls. Power may be curtailed for five minutes or five hours, depending on how quickly the system returns to normal.

Overall, the U.S. needs more low-emissions electricity to help reduce air pollution and slow climate change. So curtailment isn’t a sound long-term strategy for managing power surpluses. It’s somewhat comparable to the early days of the COVID-19 pandemic when supply chain disruptions forced producers to throw away huge quantities of food even as grocery stores struggled to fill their shelves.

One solution is to expand energy storage so that generators can save excess power for a few hours instead of sending it straight into the grid. Another option is building more transmission to carry power to areas that need it. Both types of investments can reduce the need to curtail generation and forgo making clean, affordable electricity.

This article was republished with permission permission from  The Conversation, a news site dedicated to sharing ideas from academic experts. It represents the research-based findings and thoughts of Theodore J. Kury, Director of Energy Studies, University of Florida.

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Image Credit: Maureen (Flickr)

The Expected Slower Economy is Bringing Oil Prices Down

Oil is now below the level it was trading at on February 24 when Russia announced it would launch a “special military operation” within Ukraine. The price of oil dropped below $100 Bbl this week as an economic slowdown is built into the price models of commodity traders. Global growth forecasts were cut again on Wednesday (July 13) by the International Monetary Fund (IMF). This is the second growth forecast cut since April as the world’s economies face a myriad of risk factors. 

Source: Koyfin

One factor impacting IMF forecasts is the extreme pace of inflation in the US. A report of a Year-over-year pace of consumer inflation released this week shows prices have risen by 9.1% from June of last year. The actual pace of inflation has steepened in the past several months. Lower fuel prices, should they hold, may serve to temper the headline CPI number over the coming months.

However, the  Federal Reserve has indicated its resolve to stave off inflation by not taking half measures that prolong the problem. The acceleration of consumer prices has some economists and the futures market indicating some expect a full 100bp increase in overnight rates after the next meeting.

One of the advocates of a more aggressive Fed is Mohamed El-Erian, the Chief Economic Advisor at Allianz. El-Erian forecasted Wednesday that the Fed could raise interest rates by 100 basis points to stem historically high prices.

“The Fed now has no choice but to respond aggressively,” El-Erian wrote in a column for the Financial Times. “It is sure to increase interest rates by 0.75 percentage points later this month and could well consider a 1 percentage point rise.”

Meanwhile, those who wish to reduce Russian cash flow from petroleum sanctions may find the expected reduced demand due to a global recession a cause to rejoice. In 2021 Russia accounted for 13% of the world’s production of petroleum, the US produced 17%.

Drivers should find the price at the pumps level off some under the current conditions. If, however, the economic pace accelerates, the demand for oil may outstrip any spare production capacity they may have. This would push oil upward and could lead other prices even higher.

Take Away

Some self-correcting mechanisms in the world’s markets are creating an environment where slowing economies and forecasts for further slowing have caused commodities traders to reduce the prices they are willing to pay for oil. The lower prices and reduced demand could put a crimp on cash flow into the Russian economy.

Prices have dropped below the level they had been trading at before the war started. This could help slow the pace of inflation.

Paul Hoffman

Managing Editor, Channelchek

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https://www.ft.com/content/f8185c63-72c0-479d-80e9-e9c0bf8eb8c5

https://markets.businessinsider.com/news/commodities/oil-price-today-crude-preinvasion-levels-100-recession-fears-economy-2022-7

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Gevo to Report Second Quarter 2022 Financial Results on August 8, 2022

Research, News, and Market Data on Gevo

ENGLEWOOD, Colo., July 14, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) announced today that it will host a conference call on Monday, August 8, 2022, at 4:30 p.m. EDT (2:30 p.m. MDT) to report its financial results for the second quarter ended June 30, 2022 and provide an update on recent corporate highlights.

To participate in the live call, please register through the following event weblink: 
https://register.vevent.com/register/BI82c9f363e71c46baa4a8d5e9764fcdbd. After registering, participants will be provided with a dial-in number and pin.

To listen to the conference call (audio only), please register through the following event weblink: https://edge.media-server.com/mmc/p/65vvqgmx.

A webcast replay will be available two hours after the conference call ends on August 8, 2022. The archived webcast will be available in the Investor Relations section of Gevo’s website at www.gevo.com.

About Gevo

Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have the potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

Media Contact
Heather Manuel
+1 720-418-0085
IR@gevo.com

 

Aer Lingus Enters into New Fuel Sales Agreement with Gevo for 6.3 Million Gallons of Sustainable Aviation Fuel Per Year Over Five Years

ENGLEWOOD, Colo., July 13, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce a new fuel sales agreement with Aer Lingus, which is owned by International Airlines Group (IAG). The Agreement provides for Aer Lingus to purchase 6.3 million gallons per year of sustainable aviation fuel (SAF) for five years from Gevo’s future commercial operations. Aer Lingus expects to commence fuelling its aircraft with SAF from Gevo in 2026. The expected value for the Agreement is deemed to be $173 million, inclusive of the value from environmental benefits for Gevo.

Aer Lingus, the Irish flag carrier is committed to a lower-carbon future. As part of International Airlines Group (IAG), Aer Lingus has pledged to achieve net-zero carbon emissions by 2050 and has committed to powering 10% of its flights using sustainable aviation fuel (SAF) by 2030. The introduction of SAF as a renewable fuel source is instrumental for the airline in realizing its ambitions.

Gevo expects to continue to pursue its stated goal of producing and commercializing one billion gallons of SAF by 2030. By using the Argonne GREET model to provide a lifecycle inventory of carbon, Gevo has a business model designed to reduce greenhouse-gas emissions to net-zero over the entire lifecycle of each gallon of advanced renewable fuel, including its SAF, and that includes the emissions resulting from burning the fuel in engines to power transportation. The agreement with Aer Lingus further increases Gevo’s global impact by adding to its range of airline partners.

“Gevo’s sustainable aviation fuel delivers renewable energy to a transportation sector that is actively seeking to reduce its carbon intensity,” said Dr. Patrick R. Gruber, Gevo’s Chief Executive Officer. “Because our fuel is fungible and drop-in ready, it’s expected to have an immediate impact to help our partner airlines achieve their sustainability targets ahead of schedule.”

In addition to its investment in SAF, a critical focus of Aer Lingus’ sustainability program is the modernization of its fleet. In recent years the Irish flag carrier has invested in new generation, more fuel-efficient, aircraft such as Airbus A321neo. Aer Lingus plans to modernize further with A32neo aircraft and A321neo XLR.

Speaking about fuel supply deal, Aer Lingus Chief Executive Officer, Lynne Embleton said, “This agreement with Gevo marks an exciting and critical step on our journey to net-zero carbon emissions and underlines our commitment to powering 10% of flights using sustainable aviation fuel by 2030. The sustainable aviation fuel produced by Gevo will be used to power our flights from Los Angeles and San Francisco and, from 2026, 50% of fuel purchased by Aer Lingus from California will be sustainable aviation fuel.”

The Agreement with Aer Lingus is subject to certain conditions precedent, including Gevo developing, financing, and constructing one or more production facilities to produce the SAF contemplated by the Agreement.

About Gevo
Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

About Aer Lingus
Aer Lingus is the Irish flag carrier, founded in 1936. In summer 2022, Aer Lingus will operate over 100 routes, flying to over 71 direct routes and to 62 destinations from Ireland to the UK and Europe. The airline operates 16 transatlantic routes from Dublin, Shannon and Manchester UK to North America and the Caribbean. Aer Lingus is a 4-Star airline, awarded by Skytrax, the international air transport rating organisation. Aer Lingus is a member of International Airlines Group (IAG), one of the world’s largest airline groups.

Aer Lingus was awarded Stage 1 IEnvA certification in June 2021. This is an environmental management and evaluation system designed to independently assess and improve the environmental performance of an airline. Aer Lingus has begun its journey to achieving IEnvA Stage 2.

For more info, visit www.aerlingus.com.

Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters, without limitation, including Gevo’s technology, Aer Lingus, the International Airlines Group, IAG, Gevo’s ability to develop, finance, construct and operate commercial production facilities to produce the SAF for Aer Lingus, financial projections, the attributes of Gevo’s products, and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Image Courtesy of Alvopetro Energy

Why Natural Gas Opportunities Should Not Always be Lumped in With the Oil Sector

Oil and gas companies were the all-stars in 2021, and so far, in 2022, it is the only group in the green. The category’s performance during June was met with some deflated exuberance and has dipped, but is showing a return of 30.5% YTD. The reason for this is the rising demand for oil and the rising demand for natural gas that began long before Russia’s invasion of Ukraine. What is more compelling is if you look at the prices of oil and natural gas separately, you find natural gas prices are up an additional 18% over the price of oil. These are North American prices, but the trend is the same or more dramatic in other parts of the globe.

Source: Koyfin

The demand for natural gas began before the European war and is expected to outlast it. In fact, the rise in gas prices began in October 2020. So the upward trajectory is 20 months old and has included large dips and spikes as part of its climb. For investors on the fence about committing more to the energy sector, looking at the prices of the underlying commodity is critical to judge entry points. For those considering the only sector that is green this year, they may wish to further refine their selection and look at pure-play producers of natural gas. 

Natural gas is now viewed as a bridge source of energy. It has become clear that if more of our energy is to come from wind and solar, there will be a very long period where we will still require reliable, high-output energy from traditional sources. One of the reasons there are rising prices among all fossil fuels is because of the abrupt way many countries changed their energy policies. Most oil companies still don’t know where the country they operate in stands from quarter to quarter on oil acceptance. This is a problem, especially for the larger less nimble companies that are torn between using resources to build out biofuels or to lease and develop a production facility.

A clearer understanding of the benefits of natural gas allows it to be listed in the European sustainability classification as “Transitional
Activities” beginning in 2023. The category includes those not considered fully sustainable but have emissions below the industry average, and do not lock in polluting assets or crowd out greener alternatives.

Natural gas has quickly become the “must-have” ingredient for countries transitioning to alternative fuels.

There are many companies involved in the production of natural gas, most are part of a larger oil producer. If you wish to benefit from the increased demand of the “greener ” natural gas, a Google search of “pure play natural gas producers” will provide you with many companies to review. At the top of the list, assuming it’s alphabetized, is a unique company with a situation you may find quite compelling, Alvopetro Energy (ALVOF, ALV:CA) .

 

Alvopetro

Two years ago, Canadian independent Alvopetro managed to get approved to become Brazil’s first, and still only, non-government-owned producer of natural gas. Location sometimes is everything, and Brazil is the ninth-largest economy in the world.

Aside from current earnings that exceed expectations and a unique sharing policy with investors, Alvopetro has tremendous profitability per unit of production. In accounting, it’s called “netback,” it is the cash left after subtracting from revenues all costs associated with bringing the gas from the ground to market, including transportation, royalties, and production expenses. In this category, ALVOF is at the top of the industry.

The reasons Alvopetro has such a high netback are many, involving both costs and pricing. They have a low cost structure, including enviable operating costs, a low 15% tax rate, and transportation costs are minimal because an industrial area located fewer than 10 miles away has a demand for natural gas that exceeds supply. The pricing structure would also seem ideal for the company and shareholders as it assures prices move with what is happening internationally, yet it doesn’t subject the company to the daily ups and downs of the natural gas market. Alvopetro has negotiated a price formula that resets every six months on a price basket of the most common oil and gas benchmarks. This creates a natural hedge for the company and its customers.

Unique to ALVOF is its policy of reinvesting and distributing earnings. The company last paid a dividend that equates to a yield of 6.42% at today’s share price of $4.99. I spoke with CEO Corey Ruttan and he explained to me that “they follow a balanced approach taking roughly half of cashflows to reinvest in organic growth and return the other half to stakeholders.” On the organic growth front, Alvopetro has already announced discoveries at both their 2022 exploration prospects. On the return part of the model, they have paid down nearly all debt. The stakeholders include debt providers and shareholders and with the former being nearly repaid it paves the way for potential increases in returns to shareholders. 

Channelchek just did a C-Suite interview with Corey Ruttan the President and CEO of Alvopetro. In the discussion, you’ll learn in much greater detail the nuances that make this natural gas provider extremely unique for investors. Additional research reports on the company can be found here.

 

Take Away

Oil and gas producers have been the outperformers for over a year. They track the prices of the commodities they produce fairly closely. When one looks at the price of natural gas compared to oil, it has been pulling more than its share of the price increases. Because it is a very clean-burning fossil fuel it is now being viewed as “green energy” and more importantly recognized as critical to any global energy transformation.

There are many pure-play natural gas producers, Channelchek outlined the one above with a higher than average netback margin and a generous policy toward shareholders. Sign-up here for Channelchek and gain access to all equity research and receive news and ideas in your inbox each day. 

Paul Hoffman

Managing Editor, Channelchek

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Interview with Alovpetro Energy (ALVOF)(ALV.V) President & CEO Corey Ruttan

Sources

https://www.ft.com/content/3488236e-ff3b-47ad-9482-296c2f64a1f1

https://news.alphastreet.com/alvopetro-energy-ltd-alv-q1-2022-earnings-call-transcript/

https://www.argusmedia.com/en/news/2119344-alvopetro-breaks-petrobras-gas-monopoly-in-bahia

Corey Ruttan
President and CEO Alvopetro Energy

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Monday, July 11, 2022

Alvopetro Energy (ALVOF)
Drilling success paves the way for future growth

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.

Alvopetro announced multizone discovery at exploratory well. Management announced that it has discovered 34.3 meters of potential net hydrocarbon pay on well 183-B1. The discovery follows similar results at sister well 182-C1 as announced in April. Both wells will begin production testing shortly, which will help determine well economics. The discovery of hydrocarbons in the wells is not unexpected but an important step in the company’s growth plans.

The wells are more exploratory in nature and represent a step out of current production. Alvopetro’s drilling program can be described as a two-pronged approach that includes both developmental drilling in the Murucututu/Gomo Project and exploratory drilling  in the block west of Gomo. Developmental drilling is needed to maintain production and fill out this summer’s gas plant expansion to 18 MMcf/day. Exploratory drilling success is needed to justify future gas plant expansions in order to meet management’s long-term goal of reaching 35 MMcf/day….

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. 

Alvopetro Announces Multizone Discovery at 183-B1 Exploration Well and June 2022 Sales Volumes

Research, News, and Market Data on Alvopetro Energy

CALGARY, AB, July 7, 2022 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) We are pleased to announce a multizone discovery on our 183-B1 exploration location.  We completed drilling the 183-B1 exploration well on our 100% owned and operated Block 183 in the Recôncavo basin and, based on open-hole wireline logs and fluid samples confirming hydrocarbons, the well has discoveries in multiple formations with a total of 34.3 metres of potential net hydrocarbon pay, with an average porosity of 10.6% and average water saturation of 29.0%.

 President and CEO, Corey Ruttan commented:

“Preliminary drilling results from both of our 2022
conventional exploration wells represent significant steps forward in our
organic growth strategy. Our gas processing facility expansion is nearly complete,
and we look forward to production testing our latest discovery at 183-B1 as
well as our earlier success at the 182-C1 location.  These tests will help
define the full development and production growth potential of these exciting
new discoveries.”

The 183-B1 well was spud on June 5, 2022 and drilled to a total measured depth (“MD”) of 2,917 metres. Based on open-hole logs and collected fluid samples, the 183-B1 well encountered multiple zones of interest with an aggregate 34.3 metres of potential net hydrocarbon pay, using a 6% porosity cut-off, 50% Vshale cut-off and 50% water saturation cut-off:

Candeias Formation

A 5.3-metre-thick sand in the Gomo member of the Candeias Formation was encountered at 2,578 to 2,583 metres total vertical depth, with 5.3 metres of potential net light oil pay, at an average 35.0% water saturation and average porosity of 15.7%.  A fluid sample was also collected with a dual packer wireline tool recovering 37.1-degree API oil with no water to surface from 2,580 metres depth at a formation pressure of 4,317 psi.

Agua Grande Formation

A 19.8 metre-thick Agua Grande Formation sand was encountered at 2,677 to 2,697 metres total vertical depth with 11.4 metres of potential net natural gas pay, at an average 25.5% water saturation and average porosity of 11.9%. Of the 11.4 metres of potential net natural gas pay, 2.6 metres were encountered within the upper Agua Grande section the Agua Grande Formation, at an average 18.5% water saturation and an average porosity of 17.2%.  A fluid sample was collected from this upper section at 2,679 metres with a dual packer wireline tool recovering dry natural gas and no water to surface at a formation pressure of 3,984 psi.

Sergi Formation

In the Sergi Formation, a 78.4 metre thick sand-dominated interval was encountered at 2,809 to 2,887 metres total vertical depth. Hydrocarbon shows were present throughout drilling the entire section. Open-hole logs indicate 17.5 metres of potential light oil pay at an average 29.4% water saturation and average porosity of 8.3%. A fluid sample was collected from this section during modular formation dynamic testing (“MDT”), confirmed by lab analysis, recovered 40.7-degree API oil and no water to surface from 2,822 metres depth with a formation pressure of 4,740 psi. Within the 78.4 metre Sergi interval there is an additional 29.9 metres of Sergi sand that experienced significant wellbore washouts with possible net pay that is expected to be validated through testing. As such, this 29.9-metre interval is currently being excluded from calculated potential net hydrocarbon pay. 

Based on these drilling results, we plan to undertake a multi-zone testing program of the 183-B1 well, subject to customary regulatory approvals and equipment availability. This additional testing will assess the extent, if any, of commercial hydrocarbons associated with the well, the productive capability of the well and will help define the field development plan. 

Operational Update

Our Caburé gas plant expansion is scheduled to be completed later in July. Following the expansion, our available processing capacity is expected to increase by 25% to at least 500,000 cubic metres per day (18 MMcfpd).

On our Murucututu project, we expect to commence commissioning of our field production facility at our 183(1) location later in July.  We have also commenced field installation of the pipeline extension to tie-in our 197(1) well and expect construction to be completed in approximately three months.

June Sales Volumes

June sales volumes averaged 2,480 boepd, including natural gas sales of 14.2 MMcfpd, associated natural gas liquids sales from condensate of 102 bopd and oil sales of 5 bopd, based on field estimates.  Our sales volumes averaged 2,359 boepd in the second quarter of 2022, consistent with sales volumes in the second quarter of 2021 and a decrease of 6% from the first quarter of 2022 due to our planned five-day shutdown in May scheduled to complete advance work for our gas plant expansion. 

Corporate Presentation

Alvopetro’s updated corporate presentation is available on our website at:

http://www.alvopetro.com/corporate-presentation. 

Social Media

Follow Alvopetro on our social media channels at the following links:

Twitter – https://twitter.com/AlvopetroEnergyInstagram – 
https://www.instagram.com/alvopetro/LinkedIn – 
https://www.linkedin.com/company/alvopetro-energy-ltdYouTube: https://www.youtube.com/channel/UCgDn_igrQgdlj-maR6fWB0w

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.

Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this news release.

All amounts contained in this new release are in United States dollars,
unless otherwise stated and all tabular amounts are in thousands of United States dollars,
except as otherwise noted.

Abbreviations:

boepd	=	barrels of oil equivalent (“boe”) per day
bopd	=	barrels of oil and/or natural gas liquids (condensate) per day
MBOE	=	thousands of barrels of oil equivalent
MMcf	=	million cubic feet
MMcfpd	=	million cubic feet per day

BOE Disclosure. The term barrels of oil
equivalent (“boe”) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet per barrel
(6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. All boe conversions in this
news release are derived from converting gas to oil in the ratio mix of six
thousand cubic feet of gas to one barrel of oil.

Testing and Well Results.  Data obtained
from the 183-B1 well identified in this press release, including hydrocarbon
shows, open-hole logging, net pay and porosities, should be considered to be
preliminary until testing, detailed analysis and interpretation has been completed.
Hydrocarbon shows can be seen during the drilling of a well in numerous
circumstances and do not necessarily indicate a commercial discovery or the
presence of commercial hydrocarbons in a well. There is no representation by
Alvopetro that the data relating to the 183-B1 well nor the 182-C1 well
contained in this press release is necessarily indicative of long-term
performance or ultimate recovery. The reader is cautioned not to unduly rely on
such data as such data may not be indicative of future performance of the well
or of expected production or operational results for Alvopetro in the future.

Cautionary statements regarding the filing of a Notice of
Discovery. We have submitted a Notice of Discovery of Hydrocarbons to
the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (the
“ANP”) with respect to the 183-B1 well. All operators in Brazil are
required to inform the ANP, through the filing of a Notice of Discovery, of
potential hydrocarbon discoveries. A Notice of Discovery is required to be filed
with the ANP based on hydrocarbon indications in cuttings, mud logging or by
gas detector, in combination with wire-line logging. Based on the results of
open-hole logs, we have filed a Notice of Discovery relating to our 183-B1
well. These routine notifications to the ANP are not necessarily indicative of
commercial hydrocarbons, potential production, recovery or reserves.

Forward-Looking Statements and Cautionary Language. This
news release contains “forward-looking information” within the
meaning of applicable securities laws. The use of any of the words
“will”, “expect”, “intend” and other similar
words or expressions are intended to identify forward-looking information.
Forward?looking
statements involve significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not necessarily be
accurate indications of whether or not such results will be achieved. A number
of factors could cause actual results to vary significantly from the
expectations discussed in the forward-looking statements. These forward-looking
statements reflect current assumptions and expectations regarding future
events. Accordingly, when relying on forward-looking statements to make
decisions, Alvopetro cautions readers not to place undue reliance on these
statements, as forward-looking statements involve significant risks and
uncertainties. More particularly and without limitation, this news release
contains forward-looking information concerning potential hydrocarbon pay in
the 183-B1 well, exploration and development prospects of Alvopetro and the
expected timing of certain of Alvopetro’s testing and operational activities.
The forward?looking
statements are based on certain key expectations and assumptions made by
Alvopetro, including but not limited to expectations and assumptions concerning
testing results of the 183-B1 well and the 182-C1 well, equipment availability,
the timing of regulatory licenses and approvals, the success of future
drilling, completion, testing, recompletion and development activities, the
outlook for commodity markets and ability to access capital markets, the impact
of the COVID-19 pandemic, the performance of producing wells and reservoirs,
well development and operating performance, foreign exchange rates, general
economic and business conditions, weather and access to drilling locations, the
availability and cost of labour and services, environmental regulation,
including regulation relating to hydraulic fracturing and stimulation, the
ability to monetize hydrocarbons discovered, the regulatory and legal
environment and other risks associated with oil and gas operations. The reader
is cautioned that assumptions used in the preparation of such information,
although considered reasonable at the time of preparation, may prove to be
incorrect. Actual results achieved during the forecast period will vary from
the information provided herein as a result of numerous known and unknown risks
and uncertainties and other factors.  Although Alvopetro believes that the
expectations and assumptions on which such forward-looking information is based
are reasonable, undue reliance should not be placed on the forward-looking
information because Alvopetro can give no assurance that it will prove to be
correct. Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on factors that could affect the operations
or financial results of Alvopetro are included in our annual information form
which may be accessed on Alvopetro’s SEDAR profile at www.sedar.com.
The forward-looking information contained in this news release is made as of
the date hereof and Alvopetro undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new information,
future events or otherwise, unless so required by applicable securities laws.

SOURCE Alvopetro Energy Ltd.

Image Credit: It’s Our City (Flickr)

Monitoring the Gusher of Cross Currents in the Energy Industry

A plan from the White House to allow drilling in the Gulf of Mexico. Calls for a crude export ban. A Biden tweet asks companies running gas stations to drop prices. A proposed price cap on Russian oil. And OPEC-plus output is expected to remain steady. These are just some of the events impacting energy company stocks. Meanwhile, travel in the U.S. skyrocketed to levels not seen in years to kick off the summer vacation season. For their part, oil industry stocks, as measured by the XLE, are down 25% from their high a month ago (June 8), and are approaching their 200-day moving average. Is the cooling off in oil company stocks temporary? Could the recent sell-off attract dip buyers, and what is the overall health of the industry beyond the outside noise? 

Source: Koyfin

Selling Gulf Drilling Leases

On July 1, in a disappointment to some environmental groups, the Biden administration made two moves to open public lands to fossil fuel extraction. The administration held its first onshore lease sales, and it released a proposal for offshore drilling that could open parts of the Gulf of Mexico and Alaska’s Cook Inlet to leasing through 2028.

Oil industry officials said the action would do little to help counter high energy prices. This is important to the President as gasoline prices have been a daily reminder for voters of how life has changed since the President has taken office. Biden’s taking action against higher fuel prices could be seen as a political move aimed at helping the mid-term elections come out in favor of the President’s party. The oil industry officials throw cold water on any thinking that it would change prices, they say there will be a months-long gap before a new plan can be put in place. The oil industry spokespersons say the delay could cause problems in planning new drilling and potentially lead to decreased oil production. Overall, oil companies are hesitant to go all out and bid for leases and commit extraordinary resources to projects when the administration’s commitment is uncertain.

The administration had already suspended lease sales earlier in 2022, citing climate concerns. As a result of a court order by a U.S. district judge in Louisiana, the company involved was cleared to resume.

There is a long start-up time between the bidding process and the developing drilling operations. In the meantime, there is no sign for the oil companies to feel comfortable committing to long-range projects because the administration has not shown unwavering commitment. Resources allocated to what the administration says it is committed to, that is a move away from fossil fuels, would seem more appropriate in the long run for energy companies.

 

Export Ban Feasibility

The Biden administration wants to potentially place an outright ban on U.S. exports of oil and refined products. Speaking to reporters during a tour of the Strategic Petroleum Reserve in Louisiana, Energy Secretary Jennifer Granholm said that the administration was “not taking any tools off the table” in its effort to reduce prices at the pump, including reimposing the 1970s ban on oil exports that was lifted in 2015. This is confusing to consumers and oil companies alike as it was just last December that Granholm said an export ban was not under consideration. Secretary Granholm’s comments seem to mark a significant shift in energy policy for the administration.

A ban would have to take into account the complex global oil market. Each country does not produce the quality of crude oil or refined petroleum products used in its country. For many, imports from the U.S. have no substitutes. This would force them to find other providers, or do without. The highly advanced U.S. refining capabilities allow it to take low-cost heavy oil from Central America and Canada and turn it into high-grade gasoline. This ability to input low-cost crude and export high-value refined products is a net positive for the U.S. when measuring trade surplus’/deficits.

While an export ban may score points politically, it may not accomplish a useful goal. In January, the Dallas Federal Reserve released a study on the potential impacts of a crude oil export ban. It measures possible consequences on worldwide energy prices and their impact on Americans. The study concluded that a halt of U.S. exports “would lower the supply of oil in global markets and raise its price” and “one would expect global fuel prices, if anything, to increase as a result.”

Image: A tweet from @POTUS draws a snarky reply from the domestic oil and gas advocate USOGA.

OPEC-Plus Output Decision

OPEC+ is the name given to the combined oil-producing countries that include the 13 members of OPEC, and 10 other oil-producing countries including Russia. On Thursday (June 30) OPEC+ confirmed it would not increase output for the month of August any more than previously announced. The group had concerns about oversupplying in the face of mounting factors that could lead to a recession. Ironically, one of those factors is the tight global supply of oil.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (BPD) in July and August. The OPEC+ group of producers ended the meeting by agreeing to stick to its output strategy. The producers did not discuss policy for September or beyond.

Analysts Report

“Energy industry fundamentals remain strong.” Wrote Noble Capital Markets, Senior Energy Analyst Michael
Heim, in his quarterly
report on the industry released this week. Heim went on to write that cash flow levels are envious in the industry, and debt levels are being pared down. He maintains his positive bias toward the sector and favors small-caps within the sector “with the ability to expand operations.”

 
Take Away

Energy companies’ performance, particularly those involved in oil or natural gas, have had excellent performance over the past two years – they have been the top-performing sector so far this year. However there has been a bit of a dip, and there are many crosscurrents that could make a continued rise a bit choppier than it had been.

The outlook on the industry is positive as the companies are faced with an enviable number of options and opportunities to rework their finances and perhaps move into new projects, both traditional and future-looking.

They, however, need to pin down the administration on whether it is committed to their products long term. This nod to the future could open the door to more investment in production. Alternatively, if they are caught in political positioning that may not carry any weight six months down the road, wrong decisions now could be expensive.

Read Michael Heim’s Energy Industry Report – The Outlook for Energy Stocks Remains Favorable
here.

Paul Hoffman

Managing Editor, Channelchek

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Sources

https://insideclimatenews.org/news/01072022/public-lands-fossil-fuel-drilling-leases-biden/

https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/27/fact-sheet-president-biden-takes-executive-actions-to-tackle-the-climate-crisis-at-home-and-abroad-create-jobs-and-restore-scientific-integrity-across-federal-government/

https://www.npr.org/2022/07/02/1109552068/a-biden-administration-offshore-drilling-proposal-would-allow-up-to-11-sales

https://www.forbes.com/sites/daneberhart/2022/06/07/banning-us-exports-would-be-bidens-ultimate-energy-folly/

https://www.thehindu.com/news/international/opec-plus-the-cartel-and-its-allies-that-keep-oil-on-the-boil/article65493511.ece#:~:text=OPEC%20Plus%20refers%20to%20a,%2C%20Azerbaijan%2C%20Bahrain%2C%20Brunei%2C

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Tuesday, July 5, 2022

Energy Industry Report

The outlook for energy stocks remains favorable

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

Refer to end of report for Analyst Certification & Disclosures

• Energy stocks finally cooled off after five consecutive quarters of gains. The energy stock index declined 6.4% in the June quarter due to weakness in the overall market. The S&P Composite Index declined 16.4% during the quarter.
• Oil prices continued the climb begun in the spring of 2020 rising 5.5% in the quarter. The climb may have come to an end, however, with WTI prices peaking at $120 per barrel in the first week of June before settling at current levels near $108 per barrel. Supply concerns associated with the Ukraine conflict have been replaced by worries that economic tightening will lead to a slowdown in the world economy. OPEC announced production increases right at the end of the quarter, further putting pressure on prices. Active rigs have almost tripled in the last two years but remain below pre-pandemic levels and are only one-third of peak levels in 2015.
• Like oil prices, natural gas prices were strong in April and May but fell sharply in June. For the quarter, spot gas prices declined 3.9%. Gas in storage remains near the bottom of historical levels as the industry begins to refill storage fields
• Energy industry fundamentals remain strong. The recent drop in oil and gas prices does not concern us as prices are still well above the levels assumed in our financial and valuation models. Companies able to expand drilling efforts are doing so at a very high return on equity. Cash flow generation is high, and companies are facing the envious situation of trying to decide what to do with the cash. We maintain our positive bias on the group and favor small cap energy stocks with the ability to expand operations.

Energy Stocks

Energy stocks, as measured by the XLE Energy Index, finally cooled off after five consecutive quarters of gains. The XLE declined 6.4% in the June quarter. The decline was largely due to weakness in the overall market as oil and natural gas prices were largely unchanged. The S&P Composite Index declined 16.4% during the quarter. Looking at the XLE performance, it is interesting to note that the index’s performance was up sharply until hitting a peak on June 8^th and then declining 15% in the last three weeks of the quarter.

Oil Prices

Oil prices continued the climb begun in the spring of 2020. The climb may have come to an end with WTI prices peaking at $120 per barrel in the first week of June before settling at current levels near $108 per barrel. Supply concerns associated with the Ukraine conflict have been replaced by worries that economic tightening will lead to a slowdown in the world economy. OPEC announced production increases right at the end of the quarter, further putting pressure on prices. The gap between Brent and WTI pricing has grown with Brent oil prices now commanding a $7/bbl. premium. Oil future prices are currently backward declining a few dollars each month and falling below $100 by yearend. Drillers are beginning to react to higher oil prices, but the response has been slow. Active rigs have almost tripled in the last two years but remain below pre-pandemic levels and are only one-third of peak levels in 2015. As the chart below shows, there has been a disconnect between the oil rig count and oil prices in recent years that has become only more exaggerated in recent months with oil prices rising above $100.

Figure #1

 

 

Source: Baker-Hughes

 

Natural Gas Prices

Like oil prices, natural gas prices were strong in April and May but fell sharply in June. For the quarter, spot gas prices declined 3.9%. Gas in storage remains near the bottom of historical levels as the industry begins to refill storage fields. Gas storage is about 300 billion cubic feet or 12% below the trailing five-year average. This will most likely keep natural gas prices at elevated levels until the injections season ends in November.

 

Figure #2

 

 

 

 

Outlook

Energy industry fundamentals remain strong. The recent drop in oil and gas prices does not concern us as prices are still well above the levels assumed in our financial and valuation models. Companies able to expand drilling efforts are doing so at a very high return on equity. Cash flow generation is high, and companies are facing the envious situation of trying to decide what to do with the cash. Debt levels have been pared down and managements are reluctant to initiate/raise above in case the industry goes into a down cycle forcing them to reverse course. Share repurchase remains a viable option especially if energy stocks continue to be weak alongside the overall market. We maintain our positive bias on the group and favor small cap energy stocks with the ability to expand operations.

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words “we”, “us”, or “our” are solely the responsibility of Noble Capital Markets, Inc. (“Noble”) and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results.

Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

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Noble is not a market maker in any of the companies mentioned in this report. Noble intends to seek compensation for investment banking services and noninvestment banking services (securities and non-securities related) with any or all of the companies mentioned in this report within the next 3 months.

ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE

Senior Equity Analyst focusing on energy and utility stocks. 24 years of experience as an analyst. Chartered Financial Analyst©. MBA from Washington University in St. Louis and BA in Economics from Carleton College in Minnesota. Named WSJ ‘Best on the Street’ Analyst four times. Named Forbes/StarMine’s “Best Brokerage Analyst” three times. FINRA licenses 7, 63, 86, 87.

WARNING

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to by an investment advisor, that advisor may receive a benefit in respect of transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by . This report may not be reproduced, distributed or published for any purpose unless authorized by.

RESEARCH ANALYST CERTIFICATION

Independence Of View

All views expressed in this report accurately reflect my personal views about the subject securities or issuers.

Receipt of Compensation

No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.

Ownership and Material Conflicts of Interest

Neither I nor anybody in my household has a financial interest in the securities of the subject company or any other company mentioned in this report.

NOBLE RATINGS DEFINITIONS	% OF SECURITIES COVERED	% IB CLIENTS
Outperform: potential return is >15% above the current price	95%	28%
Market Perform: potential return is -15% to 15% of the current price	5%	2%
Underperform: potential return is >15% below the current price	0%	0%

NOTE: On August 20, 2018, Noble Capital Markets, Inc. changed the terminology of its ratings (as shown above) from “Buy” to “Outperform”, from “Hold” to “Market Perform” and from “Sell” to “Underperform.” The percentage relationships, as compared to current price (definitions), have remained the same.

Additional information is available upon request. Any recipient of this report that wishes further information regarding the subject company or the disclosure information mentioned herein, should contact Noble Capital Markets, Inc. by mail or phone.

Noble Capital Markets, Inc.
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Noble Capital Markets, Inc. is a FINRA (Financial Industry Regulatory Authority) registered broker/dealer.
Noble Capital Markets, Inc. is an MSRB (Municipal Securities Rulemaking Board) registered broker/dealer.
Member – SIPC (Securities Investor Protection Corporation)

Report ID: 24648