Friday, March 11, 2022

Flotek Industries (FTK)
Estimates and Price Target Raised On Transaction Details

Flotek Industries, Inc. creates solutions to reduce the environmental impact of energy on air, water, land and people. Flotek Industries, Inc. is a technology-driven, specialty chemistry and data company that helps customers across industrial, commercial and consumer markets improve their Environmental, Social and Governance performance. Flotek’s Chemistry Technologies segment develops, manufactures, packages, distributes, delivers, and markets high-quality cleaning, disinfecting and sanitizing products for commercial, governmental and personal consumer use. Additionally, Flotek empowers the energy industry to maximize the value of their hydrocarbon streams and improve return on invested capital through its real-time data platforms and green chemistry technologies. Flotek serves downstream, midstream and upstream customers, both domestic and international. Flotek is a publicly traded company headquartered in Houston, Texas, and its common shares are traded on the New York Stock Exchange under the ticker symbol “FTK.” For additional information, please visit Flotek’s web site at www.flotekind.com.

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

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

Flotek expands its agreement with Profrac. Revenues now estimated to be $2 billion. Management held a call with analysts and investors to discuss an expansion of its agreement with Profrac. Management was very upbeat about the deal and provided additional details regarding its expectations for revenues ($200 million/year), timing details (in place by summer), and the company’s ability grow supply (plant at 50% capacity, little additional capital required). Management also indicated that it now expects Flotek to be cash flow positive by year end and throughout the life of the contract.

The arrangement provides additional benefits.  In addition to the bottom line, the agreement provides other, less-quantifiable benefits. These include revenue stability, critical mass to expand its customer base and purchase supplies at better rates, and a partner to draw attention to its environmentally-friendly energy solutions. Both firms have an incentive to see the other’s operations grow and …

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. 

  Image: Brookhaven Nat’l Lab (Flickr)

Toward Batteries that Pack Twice as Much Energy Per Pound

 

David L. Chandler | MIT News Office

 

In the endless quest to pack more energy into batteries without increasing their weight or volume, one especially promising technology is the solid-state battery. In these batteries, the usual liquid electrolyte that carries charges back and forth between the electrodes is replaced with a solid electrolyte layer. Such batteries could potentially not only deliver twice as much energy for their size, they also could virtually eliminate the fire hazard associated with today’s lithium-ion batteries.

But one thing has held back solid-state batteries: Instabilities at the boundary between the solid electrolyte layer and the two electrodes on either side can dramatically shorten the lifetime of such batteries. Some studies have used special coatings to improve the bonding between the layers, but this adds the expense of extra coating steps in the fabrication process. Now, a team of researchers at MIT and Brookhaven National Laboratory have come up with a way of achieving results that equal or surpass the durability of the coated surfaces, but with no need for any coatings.

The new method simply requires eliminating any carbon dioxide present during a critical manufacturing step, called sintering, where the battery materials are heated to create bonding between the cathode and electrolyte layers, which are made of ceramic compounds. Even though the amount of carbon dioxide present is vanishingly small in air, measured in parts per million, its effects turn out to be dramatic and detrimental. Carrying out the sintering step in pure oxygen creates bonds that match the performance of the best coated surfaces, without that extra cost of the coating, the researchers say.

The findings are reported in the journal Advanced Energy Materials, in a paper by MIT doctoral student Younggyu Kim, professor of nuclear science and engineering and of materials science and engineering Bilge Yildiz, and Iradikanari Waluyo and Adrian Hunt at Brookhaven National Laboratory.

“Solid-state batteries have been desirable for different reasons for a long time,” Yildiz says. “The key motivating points for solid batteries are they are safer and have higher energy density,” but they have been held back from large scale commercialization by two factors, she says: the lower conductivity of the solid electrolyte, and the interface instability issues.

The conductivity issue has been effectively tackled, and reasonably high-conductivity materials have already been demonstrated, according to Yildiz. But overcoming the instabilities that arise at the interface has been far more challenging. These instabilities can occur during both the manufacturing and the electrochemical operation of such batteries, but for now the researchers have focused on the manufacturing, and specifically the sintering process.

 

These discs were used for testing the researchers’ processing
method for solid-electrolyte batteries. On the left, a sample of the solid
electrolyte itself, a material known as LLPO. At center, the same material
coated with the cathode material used in their tests. At right, the LLPO
material with a coating of gold, used to facilitate measuring its electrical
properties. Credit: Pjotrs Žguns

 

Sintering is needed because if the ceramic layers are simply pressed onto each other, the contact between them is far from ideal, there are far too many gaps, and the electrical resistance across the interface is high. Sintering, which is usually done at temperatures of 1,000 degrees Celsius or above for ceramic materials, causes atoms from each material to migrate into the other to form bonds. The team’s experiments showed that at temperatures anywhere above a few hundred degrees, detrimental reactions take place that increase the resistance at the interface — but only if carbon dioxide is present, even in tiny amounts. They demonstrated that avoiding carbon dioxide, and in particular maintaining a pure oxygen atmosphere during sintering, could create very good bonding at temperatures up to 700 degrees, with none of the detrimental compounds formed.

The performance of the cathode-electrolyte interface made using this method, Yildiz says, was “comparable to the best interface resistances we have seen in the literature,” but those were all achieved using the extra step of applying coatings. “We are finding that you can avoid that additional fabrication step, which is typically expensive.”

The potential gains in energy density that solid-state batteries provide comes from the fact that they enable the use of pure lithium metal as one of the electrodes, which is much lighter than the currently used electrodes made of lithium-infused graphite.

The team is now studying the next part of the performance of such batteries, which is how these bonds hold up over the long run during battery cycling. Meanwhile, the new findings could potentially be applied rapidly to battery production, she says. “What we are proposing is a relatively simple process in the fabrication of the cells. It doesn’t add much energy penalty to the fabrication. So, we believe that it can be adopted relatively easily into the fabrication process,” and the added costs, they have calculated, should be negligible.

Large companies such as Toyota are already at work commercializing early versions of solid-state lithium-ion batteries, and these new findings could quickly help such companies improve the economics and durability of the technology.

The research was supported by the U.S. Army Research Office through MIT’s Institute for Soldier Nanotechnologies. The team used facilities supported by the National Science Foundation and facilities at Brookhaven National Laboratory supported by the Department of Energy.

 

Suggested Reading

Lithium Battery vs. Hydrogen Fuel Cell Vehicles

Lithium Prices Continue Their Ascent

EV Inflation Outpacing Traditional Cars

Is the Index Bubble Michael Burry Warned About Still Looming?

 

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Tuesday, March 08, 2022

Indonesia Energy Corp (INDO)
Rating Lowered In Response To Meteoric Rise In Stock Price

Indonesia Energy Corp Ltd is an oil and gas exploration and production company focused on Indonesia. It holds two oil and gas assets through its subsidiaries in Indonesia: one producing block (the Kruh Block) and one exploration block (the Citarum Block). The Kruh Block is located to the northwest of Pendopo, Pali, South Sumatra. The Citarum Block is located to the south of Jakarta.

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

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

The shares of INDO have risen from $2.90 at the beginning of the year to $62.46 (up 2054%) briefly trading above $86 at one point. Most of the rise has come in the last five trading days with the stock beginning last week at $13.30. The impetus for the rise was a jump in oil prices (up from $101 to $120 last five trading days). However, the jump in the shares of INDO far surpasses that justified by the rise in oil prices. We would remind investors that there is little to report recently from an operational point of view regarding the company.

The stock price has soared past our price target of $15, which was raised just last Tuesday.  We warned at the time of our price target increase that the shares of INDO are thinly traded and can be volatile. We also said that the increase in our price target was using up our gun powder and that future target increases would be difficult. Now that the stock has risen to a level more than five times …

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 2021 Year End Reserves With a 52% Increase In 2P NPV Before Tax

News, and Market Data on Alvopetro Energy

 

CALGARY, AB, March 8, 2022 /CNW/ – Alvopetro Energy Ltd. (TSXV:ALV) (OTCQX: ALVOF) announces our reserves as at December 31, 2021 with total proved plus probable (“2P”) reserves of 8.7 mmboe and a before tax net present value discounted at 10% of $297.0 million.  The before tax net present value of our 2P reserves (discounted at 10%) increased by 52% from December 31, 2020, primarily due to increases in forecasted natural gas prices. 2P reserve volumes decreased by 9% due to 2021 production. In addition, Alvopetro announces the December 31, 2021 assessment of the Company’s Murucututu natural gas resource (previously referred to as the Gomo natural gas resource) with risked best estimate contingent resource of 3.5 mmboe and risked best estimate prospective resource of 12.1 mmboe, both of which are virtually unchanged from December 31, 2020.  The Murucututu natural gas contingent and prospective resource values (risked best estimate net present value before tax, discounted at 10%) increased by 61% to $60.7 million and by 44% to $208.7 million, respectively.  The reserves and resources data set forth herein is based on an independent reserves and resources assessment and evaluation prepared by GLJ Ltd. (“GLJ”) dated March 7, 2022 with an effective date of December 31, 2021 (the “GLJ Reserves and Resources Report”).  

All references herein to $ refer to United States dollars, unless otherwise stated.

December 31, 2021 GLJ Reserves and Resource Report Highlights

• 2P net present value before tax discounted at 10% increased 52% to $297.0 million primarily due to higher forecasted commodity prices.
• Proved reserves (“1P”) and 2P reserves decreased to 4.4 mmboe (-13%) and 8.7 mmboe (-9%) respectively, due to 2021 production volumes.
• This represents a 2P Net Asset Value of CAD$11.20/share ($8.77/share).
• Risked best estimate contingent and risked best estimate prospective resource of 3.5 mmboe and 12.1 mmboe, respectively were consistent with prior year with an increase of 61% and 44% respectively on risked best estimate before tax net present value discounted at 10%, due primarily to higher forecasted commodity prices.

Corey Ruttan, President and Chief Executive Officer, commented:

“Our 2021 year-end reserves and resource evaluations highlight the strong profitability from our Caburé natural gas field and the long-term potential of our Murucututu project. The increase in forecasted cash flows reflects the impact of global commodity prices on our forecasted natural gas prices under our long-term gas sales agreement and our most recent price increase effective February 1, 2022. Our 2022 capital program is focused on natural gas exploration and development aimed at expanding our production and reserve base and maximizing the utilization of our strategic midstream infrastructure that is concurrently being expanded to a capacity of at least 500,000 m3/d (17.7 mmcfpd).”

SUMMARY

December 31, 2021 Gross Reserve and Gross Resource Volumes: ^{(1)(5)(6)(7)(8)(9)(10)(11)(14)}

Net present value before tax discounted at 10%:^{(2)(5)(6)(7)(8)(9)(10)(11)(12)(13)}

NET ASSET VALUE

Following the December 31, 2021 reserves evaluation, based on the before tax net present value of Alvopetro’s 2P reserves (discounted at 10%), our total net asset value is $297.3 million; CAD$11.20 per common share outstanding.  Our 2P net asset value of $297.3 million is before including the before tax net present value (discounted at 10%) of our risked best estimate risked contingent resource of $60.7 million and our risked prospective resource of $208.7 million from the Murucututu natural gas field.

PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS 

GLJ employed the following pricing and inflation rate assumptions as of January 1, 2022 in the GLJ Reserves and Resources Report in estimating reserves and resources data using forecast prices and costs.

As of February 1, 2022, Alvopetro’s contracted natural gas price under the terms of our long-term gas sales agreement is based on the ceiling price within the contract and is forecasted to remain at the ceiling price until 2024. The forecasted prices in the GLJ Reserves and Resource Report do not reflect the most recent increase in global commodity prices which further extends the period under which Alvopetro’s contracted price will be at the ceiling in the contract.  The ceiling price incorporates assumed US inflation of 5% in 2022, 3% in 2023 and 2% thereafter.

GLJ RESERVES AND RESOURCES REPORT 

The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (“COGEH”) that are consistent with the standards of National Instrument 51-101 (“NI 51-101”). GLJ is a qualified reserves evaluator as defined in NI 51-101. The GLJ Reserves and Resources Report was an evaluation of all reserves of Alvopetro including our Caburé and Caburé Leste natural gas fields (collectively referred to as our Caburé natural gas field), our Murucututu natural gas project (previously referred to as Gomo), as well as our Bom Lugar and Mãe-da-lua oil fields. The GLJ Reserves and Resources Report also includes an evaluation of the gas resources of our Murucututu natural gas.  In addition to the reserves assigned to our two existing Murucututu wells (197-1 and 183-1) and two additional development locations, contingent resource was assigned to the area in proximity to our existing Murucututu reserves, deemed to be discovered.  The area mapped by 3D seismic west and north of the area defined as contingent was assigned prospective resource. Additional reserves and resources information as required under NI 51-101 will be included in the Company’s Annual Information Form for the 2021 fiscal year which will be filed on SEDAR by April 30, 2022.

December 31, 2021 Reserves Information:

Summary of Reserves ^{(1)(3)(4)(5)(7)(8)}

Summary of Before Tax Net Present Value of Future Net Revenue – MUS ^{(2)(5)(7)(8)(12)(13)}

Summary of After Tax Net Present Value of Future Net Revenue – MUS ^{(2)(5)(7)(8)(12)(13)}

Future Development Costs ^{(2)(5)(7)(8)(12)(13)}

The table below sets out the total development costs deducted in the estimation in the GLJ Reserves and Resources Report of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs), by field. Total development costs include capital costs for drilling and facility and pipeline expenditures but excludes abandonment and reclamation costs.

Under each reserve category, Alvopetro has elected to reflect 100% of the contractual obligations pursuant to our Gas Treatment Agreement with Enerflex, including all operating, capital, and related financing costs for the full duration of the agreement. These costs are mainly attributable to the Caburé field and also represent the majority of the future development costs for the Caburé field in the table below. The future costs associated with equipment rental are also reflected as a capital lease obligation on our financial statements other than future anticipated equipment rental costs associated with the facility expansion, which will be reflected once completed.

The future development costs for the Murucututu field in the proved category are for the remaining costs anticipated in 2022 for the pipeline and field facility development to tie-in the 183(1) well to Alvopetro’s midstream assets, as well as a development location. In the probable and possible categories, there are future development costs for an additional development location and the stimulation and tie-in of the 197(1) well. Also included in the Murucututu future development costs for all reserve categories are a portion of the anticipated contractual obligations associated with the expansion of the gas treatment facility. The future development costs for Bom Lugar in the proved category include costs for a directional wellbore and facilities upgrade. A second directional well is included in the future development costs for the possible category for Bom Lugar. Future development costs at the Mãe-da-lua field relate to a stimulation of the existing producing well.

Reconciliation of Alvopetro’s Gross Reserves (Before Royalty) ^{(1)(5)(7)(8)(13)}

December 31, 2021 Murucututu Contingent Resources Information:

Summary of Unrisked Company Gross Contingent Resources ^{(1)(3)(4)(5)(7)(10)(11)}

Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Contingent Resources- MUS ^{(2)(5)(10)(11)(12)(13)}

The GLJ Contingent Resource Report for Murucututu assumes capital deployment during 2023 for the drilling of wells and expansion of facilities, with total project costs of $23.9 million and first commercial production in 2023. There can be no certainty that the project will developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release.  The information presented herein is based on company net project development costs.

Summary of Development Pending Risked Company Gross Contingent Resources^{(1)(3)(4)(5)(7)(10)(11)}

The GLJ Reserves and Resources Report estimates the Chance of Development as the product of two main contingencies associated with the project development, which are: 1) the probability of corporate sanctioning, which GLJ estimates at 95%; 2) the probability finalization of a development plan, which GLJ estimates at 95%. The product of these two contingencies is 90%.   As there is no risk related to discovery, the Chance of Commerciality for the contingent resource is therefore 90% which is the risk factor that has been applied to the Development Risked company gross contingent resources and the net present value figures reported below.

Summary of Development Pending Risked Before Tax Net Present Value of Future Net Revenue of Contingent Resources- MUS^{(2)(5)(10)(11)(12)(13)}

December 31, 2021 Murucututu Prospective Resources Information:

Summary of Unrisked Company Gross Prospective Resources ^{(1)(3)(4)(5)(7)(9)(11)}

Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Prospective Resources- MUS ^{(2)(5)(9)(11)(12)(13)}

The GLJ Prospective Resource Report for Murucututu assumes capital deployment starting 2024 for the drilling of wells, expansion of field facilities, and additional pipeline capacity, with total project costs of $66.1 million and first commercial production in 2024. There can be no certainty that the project will developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release.  The information presented herein is based on company project development costs.

The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.   

Summary of Development Risked Company Gross Prospective Resources^{(1)(3)(4)(5)(7)(9)(11)}

The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.   

Summary of Development Risked Before Tax Net Present Value of Future Net Revenue of Prospective Resources- MUS^{(2)(5)(9)(11)(12)(13)}

Upcoming 2021 Results and Live Webcast

Alvopetro anticipates announcing its 2021 fourth quarter and year-end results on March 17, 2022 after markets close and will host a live webcast to discuss the results at 8:00 am Mountain time, on the March 18, 2022. Details for joining the event are as follows:

DATE: March 18, 2022TIME: 8:00 AM Mountain/10:00 AM EasternLINK: https://zoom.us/j/99386897923  DIAL-IN NUMBERS: https://zoom.us/u/aixrWbAbO  WEBINAR ID: 993 8689 7923

The webcast will include a question and answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.

Corporate Presentation

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

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

FOOTNOTES

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 news release are in United States dollars, except as otherwise noted.

Oil and Natural Gas Reserves. The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company’s reserves as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022. All net present values in this press release are based on estimates of future operating and capital costs and GLJ’s forecast prices as of December 31, 2021. The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to the Alvopetro’s reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company’s reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Contingent Resources. This news release discloses estimates of Alvopetro’s contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company’s contingent resources as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022.

Prospective Resources – This news release discloses estimates of Alvopetro’s prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company’s prospective resources as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022.

 

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.

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 the plans relating to the Company’s operational activities and the expected natural gas price, gas sales and gas deliveries under Alvopetro’s long-term gas sales agreement. The forward–looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to 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.

Non-GAAP Measures. This news release contains financial terms that are not considered measures under International Financial Reporting Standards (“IFRS”), such as working capital net of debt and net asset value. Working capital net of debt is computed as current assets less the sum of current liabilities and the carrying amount of the Company’s credit facility. Net asset value is computed based on the before-tax net present value of the Company’s proved plus probable reserves, discounted at 10%, increased by the Company’s working capital net of debt.  The non-GAAP measures do not have standardized meanings under IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. While these measures may be common in the oil and gas industry, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP measures referred to in this report should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company’s reported financial performance or position.  For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the “Non-GAAP Measures” section of the Company’s most recent MD&A which may be accessed through the SEDAR website at www.sedar.com.

SOURCE Alvopetro Energy Ltd.

Carl Icahn Selling into Warren Buffet’s Buying, Can they Both be Right?

 

“We started buying on Monday, and we bought all we could,” Warren Buffett told CNBC. The Berkshire Hathaway CEO was discussing a new 91.2 million share stake his company took in Occidental Petroleum (OXY). At the same time, Carl Icahn, another renowned investor, has been selling shares of OXY. Can they both be right?

 

Warren Buffet on OXY

Buffett pulled the trigger on $4.5 billion of Occidental, an energy exploration and production company, last week.  This gives Berkshire close to a 10% stake in the company. This is an increase in exposure for Berkshire as it also has positions worth $10 billion of preferred shares, along with warrants to buy 83.9 million common shares exercisable at $59.62.

Berkshires 2021 annual report showed they held $144 billion in cash and equivalents.

Carl Icahn on OXY

Billionaire investor Carl Icahn, sold his remaining lot of OXY last week. According to The Wall Street Journal, Icahn made about $1 billion on Occidental stock and still holds about 15 million in warrants (OXY WS). The warrants, which trade at around $34, have an exercise price of $22 a share (current level $57-$58).

Icahn still continues to have exposure to the energy sector through a roughly 6.4% stake worth $2 billion in Cheniere Energy (LNG), a liquefied natural gas producer, and a controlling interest worth $1 billion in CVR Energy (CVI), a petroleum refiner.

The activist investor became involved with Occidental in 2019 around the same time as Buffett. He urged the company to not pursue the debt-financed deal for Anadarko, which Buffett was for and helped enable with loans. Berkshire’s warrants and preferred shares were part of financing the arrangement.

 

Buffett vs Icahn

When you find two legendary investors taking opposite sides of the same trade at the same time, in a sector that is moving quickly, it’s worth stopping to try to understand why. Berkshire Hathaway’s Buffet, who is 91, was a heavy buyer of OXY while Carl Icahn, 86, was selling a huge position put on in 2019.

Description:
Since March 2019 OXY has consistently performed below the energy sector and S&P 500

 

There have been other times when one of these two was buying into the other’s selling. In 2016, Icahn exited a position in Apple (AAPL) he had held for about three years. Also, in 2016 Buffett began scaling into Apple. Icahn made a reported $2 billion profit on 180 million shares of Apple. It is unclear if the redeployment of the proceeds of this sale outpaced the earnings that would have occurred if he held Apple, which has grown 500% since.

Apple has been Buffett’s biggest public market win in the past decade. Berkshire holds about 900 million shares worth $145 billion, more than four times its cost.

Investment Styles

As an activist investor, Icahn’s primary methodology is to own a significant enough amount of a company to influence how the company is run. If a profit presents itself, he is likely to take it. Such was the case with the doubling of OXY in two months’ time this year.

Berkshire’s portfolio is mostly non-public companies it owns outright. As for publicly traded stocks, Buffett’s style is to be patient waiting for value in terms of price and potential.  Buffett has described his favorite holding period as “forever.”

Berkshire is also cash-heavy and should like to deploy $80 billion, but has been priced out of stocks and acquisitions for several years now. With recent market weakness, there may be some big purchases on the horizon.

Take-Away

Investors have different time frames and risk tolerance. More active traders like Icahn may sell if they see other opportunities where they believe the capital could produce a better return, whereas Berkshire’s longer-term view and huge cash position, could make their transactions based on a totally different set of factors. For Berkshire, this purchase may be as easy to understand as asking “do we expect OXY to perform better than cash.”

 

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading

Using Warren Buffett’s SEC Filing as an Oracle

Cathie Wood Says Benchmark Funds are Where the Risk Is

Michael Burry vs Cathie Wood is Not an Even Competition

Warren Buffett vs Elon Musk, Who’s Right

 

Sources

https://www.channelchek.com/news-channel/Pros_and_Cons_of_a_Company_Like_Berkshire_Hathaway_in_your_Portfolio

https://www.cnbc.com/2022/03/05/berkshire-hathaway-reveals-5-billion-stake-in-oil-giant-occidental-petroleum.html

https://www.sec.gov/Archives/edgar/data/315090/000089924322009579/xslF345X03/doc4.xml

https://www.barrons.com/articles/warren-buffett-was-buying-occidental-carl-icahn-was-selling-who-will-be-right-51646672487?mod=hp_columnists

 

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Carl Icahn Selling into Warren Buffet’s Buying, Can they Both be Right?

 

“We started buying on Monday, and we bought all we could,” Warren Buffett told CNBC. The Berkshire Hathaway CEO was discussing a new 91.2 million share stake his company took in Occidental Petroleum (OXY). At the same time, Carl Icahn, another renowned investor, has been selling shares of OXY. Can they both be right?

 

Warren Buffet on OXY

Buffett pulled the trigger on $4.5 billion of Occidental, an energy exploration and production company, last week.  This gives Berkshire close to a 10% stake in the company. This is an increase in exposure for Berkshire as it also has positions worth $10 billion of preferred shares, along with warrants to buy 83.9 million common shares exercisable at $59.62.

Berkshires 2021 annual report showed they held $144 billion in cash and equivalents.

Carl Icahn on OXY

Billionaire investor Carl Icahn, sold his remaining lot of OXY last week. According to The Wall Street Journal, Icahn made about $1 billion on Occidental stock and still holds about 15 million in warrants (OXY WS). The warrants, which trade at around $34, have an exercise price of $22 a share (current level $57-$58).

Icahn still continues to have exposure to the energy sector through a roughly 6.4% stake worth $2 billion in Cheniere Energy (LNG), a liquefied natural gas producer, and a controlling interest worth $1 billion in CVR Energy (CVI), a petroleum refiner.

The activist investor became involved with Occidental in 2019 around the same time as Buffett. He urged the company to not pursue the debt-financed deal for Anadarko, which Buffett was for and helped enable with loans. Berkshire’s warrants and preferred shares were part of financing the arrangement.

 

Buffett vs Icahn

When you find two legendary investors taking opposite sides of the same trade at the same time, in a sector that is moving quickly, it’s worth stopping to try to understand why. Berkshire Hathaway’s Buffet, who is 91, was a heavy buyer of OXY while Carl Icahn, 86, was selling a huge position put on in 2019.

Description:
Since March 2019 OXY has consistently performed below the energy sector and S&P 500

 

There have been other times when one of these two was buying into the other’s selling. In 2016, Icahn exited a position in Apple (AAPL) he had held for about three years. Also, in 2016 Buffett began scaling into Apple. Icahn made a reported $2 billion profit on 180 million shares of Apple. It is unclear if the redeployment of the proceeds of this sale outpaced the earnings that would have occurred if he held Apple, which has grown 500% since.

Apple has been Buffett’s biggest public market win in the past decade. Berkshire holds about 900 million shares worth $145 billion, more than four times its cost.

Investment Styles

As an activist investor, Icahn’s primary methodology is to own a significant enough amount of a company to influence how the company is run. If a profit presents itself, he is likely to take it. Such was the case with the doubling of OXY in two months’ time this year.

Berkshire’s portfolio is mostly non-public companies it owns outright. As for publicly traded stocks, Buffett’s style is to be patient waiting for value in terms of price and potential.  Buffett has described his favorite holding period as “forever.”

Berkshire is also cash-heavy and should like to deploy $80 billion, but has been priced out of stocks and acquisitions for several years now. With recent market weakness, there may be some big purchases on the horizon.

Take-Away

Investors have different time frames and risk tolerance. More active traders like Icahn may sell if they see other opportunities where they believe the capital could produce a better return, whereas Berkshire’s longer-term view and huge cash position, could make their transactions based on a totally different set of factors. For Berkshire, this purchase may be as easy to understand as asking “do we expect OXY to perform better than cash.”

 

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading

Using Warren Buffett’s SEC Filing as an Oracle

Cathie Wood Says Benchmark Funds are Where the Risk Is

Michael Burry vs Cathie Wood is Not an Even Competition

Warren Buffett vs Elon Musk, Who’s Right

 

Sources

https://channelchek.vercel.app/news-channel/Pros_and_Cons_of_a_Company_Like_Berkshire_Hathaway_in_your_Portfolio

https://www.cnbc.com/2022/03/05/berkshire-hathaway-reveals-5-billion-stake-in-oil-giant-occidental-petroleum.html

https://www.sec.gov/Archives/edgar/data/315090/000089924322009579/xslF345X03/doc4.xml

https://www.barrons.com/articles/warren-buffett-was-buying-occidental-carl-icahn-was-selling-who-will-be-right-51646672487?mod=hp_columnists

 

Stay up to date. Follow us:

Alvopetro Announces 2021 Year End Reserves With a 52% Increase In 2P NPV Before Tax

News, and Market Data on Alvopetro Energy

 

CALGARY, AB, March 8, 2022 /CNW/ – Alvopetro Energy Ltd. (TSXV:ALV) (OTCQX: ALVOF) announces our reserves as at December 31, 2021 with total proved plus probable (“2P”) reserves of 8.7 mmboe and a before tax net present value discounted at 10% of $297.0 million.  The before tax net present value of our 2P reserves (discounted at 10%) increased by 52% from December 31, 2020, primarily due to increases in forecasted natural gas prices. 2P reserve volumes decreased by 9% due to 2021 production. In addition, Alvopetro announces the December 31, 2021 assessment of the Company’s Murucututu natural gas resource (previously referred to as the Gomo natural gas resource) with risked best estimate contingent resource of 3.5 mmboe and risked best estimate prospective resource of 12.1 mmboe, both of which are virtually unchanged from December 31, 2020.  The Murucututu natural gas contingent and prospective resource values (risked best estimate net present value before tax, discounted at 10%) increased by 61% to $60.7 million and by 44% to $208.7 million, respectively.  The reserves and resources data set forth herein is based on an independent reserves and resources assessment and evaluation prepared by GLJ Ltd. (“GLJ”) dated March 7, 2022 with an effective date of December 31, 2021 (the “GLJ Reserves and Resources Report”).  

All references herein to $ refer to United States dollars, unless otherwise stated.

December 31, 2021 GLJ Reserves and Resource Report Highlights

• 2P net present value before tax discounted at 10% increased 52% to $297.0 million primarily due to higher forecasted commodity prices.
• Proved reserves (“1P”) and 2P reserves decreased to 4.4 mmboe (-13%) and 8.7 mmboe (-9%) respectively, due to 2021 production volumes.
• This represents a 2P Net Asset Value of CAD$11.20/share ($8.77/share).
• Risked best estimate contingent and risked best estimate prospective resource of 3.5 mmboe and 12.1 mmboe, respectively were consistent with prior year with an increase of 61% and 44% respectively on risked best estimate before tax net present value discounted at 10%, due primarily to higher forecasted commodity prices.

Corey Ruttan, President and Chief Executive Officer, commented:

“Our 2021 year-end reserves and resource evaluations highlight the strong profitability from our Caburé natural gas field and the long-term potential of our Murucututu project. The increase in forecasted cash flows reflects the impact of global commodity prices on our forecasted natural gas prices under our long-term gas sales agreement and our most recent price increase effective February 1, 2022. Our 2022 capital program is focused on natural gas exploration and development aimed at expanding our production and reserve base and maximizing the utilization of our strategic midstream infrastructure that is concurrently being expanded to a capacity of at least 500,000 m3/d (17.7 mmcfpd).”

SUMMARY

December 31, 2021 Gross Reserve and Gross Resource Volumes: ^{(1)(5)(6)(7)(8)(9)(10)(11)(14)}

Net present value before tax discounted at 10%:^{(2)(5)(6)(7)(8)(9)(10)(11)(12)(13)}

NET ASSET VALUE

Following the December 31, 2021 reserves evaluation, based on the before tax net present value of Alvopetro’s 2P reserves (discounted at 10%), our total net asset value is $297.3 million; CAD$11.20 per common share outstanding.  Our 2P net asset value of $297.3 million is before including the before tax net present value (discounted at 10%) of our risked best estimate risked contingent resource of $60.7 million and our risked prospective resource of $208.7 million from the Murucututu natural gas field.

PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS 

GLJ employed the following pricing and inflation rate assumptions as of January 1, 2022 in the GLJ Reserves and Resources Report in estimating reserves and resources data using forecast prices and costs.

As of February 1, 2022, Alvopetro’s contracted natural gas price under the terms of our long-term gas sales agreement is based on the ceiling price within the contract and is forecasted to remain at the ceiling price until 2024. The forecasted prices in the GLJ Reserves and Resource Report do not reflect the most recent increase in global commodity prices which further extends the period under which Alvopetro’s contracted price will be at the ceiling in the contract.  The ceiling price incorporates assumed US inflation of 5% in 2022, 3% in 2023 and 2% thereafter.

GLJ RESERVES AND RESOURCES REPORT 

The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (“COGEH”) that are consistent with the standards of National Instrument 51-101 (“NI 51-101”). GLJ is a qualified reserves evaluator as defined in NI 51-101. The GLJ Reserves and Resources Report was an evaluation of all reserves of Alvopetro including our Caburé and Caburé Leste natural gas fields (collectively referred to as our Caburé natural gas field), our Murucututu natural gas project (previously referred to as Gomo), as well as our Bom Lugar and Mãe-da-lua oil fields. The GLJ Reserves and Resources Report also includes an evaluation of the gas resources of our Murucututu natural gas.  In addition to the reserves assigned to our two existing Murucututu wells (197-1 and 183-1) and two additional development locations, contingent resource was assigned to the area in proximity to our existing Murucututu reserves, deemed to be discovered.  The area mapped by 3D seismic west and north of the area defined as contingent was assigned prospective resource. Additional reserves and resources information as required under NI 51-101 will be included in the Company’s Annual Information Form for the 2021 fiscal year which will be filed on SEDAR by April 30, 2022.

December 31, 2021 Reserves Information:

Summary of Reserves ^{(1)(3)(4)(5)(7)(8)}

Summary of Before Tax Net Present Value of Future Net Revenue – MUS ^{(2)(5)(7)(8)(12)(13)}

Summary of After Tax Net Present Value of Future Net Revenue – MUS ^{(2)(5)(7)(8)(12)(13)}

Future Development Costs ^{(2)(5)(7)(8)(12)(13)}

The table below sets out the total development costs deducted in the estimation in the GLJ Reserves and Resources Report of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs), by field. Total development costs include capital costs for drilling and facility and pipeline expenditures but excludes abandonment and reclamation costs.

Under each reserve category, Alvopetro has elected to reflect 100% of the contractual obligations pursuant to our Gas Treatment Agreement with Enerflex, including all operating, capital, and related financing costs for the full duration of the agreement. These costs are mainly attributable to the Caburé field and also represent the majority of the future development costs for the Caburé field in the table below. The future costs associated with equipment rental are also reflected as a capital lease obligation on our financial statements other than future anticipated equipment rental costs associated with the facility expansion, which will be reflected once completed.

The future development costs for the Murucututu field in the proved category are for the remaining costs anticipated in 2022 for the pipeline and field facility development to tie-in the 183(1) well to Alvopetro’s midstream assets, as well as a development location. In the probable and possible categories, there are future development costs for an additional development location and the stimulation and tie-in of the 197(1) well. Also included in the Murucututu future development costs for all reserve categories are a portion of the anticipated contractual obligations associated with the expansion of the gas treatment facility. The future development costs for Bom Lugar in the proved category include costs for a directional wellbore and facilities upgrade. A second directional well is included in the future development costs for the possible category for Bom Lugar. Future development costs at the Mãe-da-lua field relate to a stimulation of the existing producing well.

Reconciliation of Alvopetro’s Gross Reserves (Before Royalty) ^{(1)(5)(7)(8)(13)}

December 31, 2021 Murucututu Contingent Resources Information:

Summary of Unrisked Company Gross Contingent Resources ^{(1)(3)(4)(5)(7)(10)(11)}

Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Contingent Resources- MUS ^{(2)(5)(10)(11)(12)(13)}

The GLJ Contingent Resource Report for Murucututu assumes capital deployment during 2023 for the drilling of wells and expansion of facilities, with total project costs of $23.9 million and first commercial production in 2023. There can be no certainty that the project will developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release.  The information presented herein is based on company net project development costs.

Summary of Development Pending Risked Company Gross Contingent Resources^{(1)(3)(4)(5)(7)(10)(11)}

The GLJ Reserves and Resources Report estimates the Chance of Development as the product of two main contingencies associated with the project development, which are: 1) the probability of corporate sanctioning, which GLJ estimates at 95%; 2) the probability finalization of a development plan, which GLJ estimates at 95%. The product of these two contingencies is 90%.   As there is no risk related to discovery, the Chance of Commerciality for the contingent resource is therefore 90% which is the risk factor that has been applied to the Development Risked company gross contingent resources and the net present value figures reported below.

Summary of Development Pending Risked Before Tax Net Present Value of Future Net Revenue of Contingent Resources- MUS^{(2)(5)(10)(11)(12)(13)}

December 31, 2021 Murucututu Prospective Resources Information:

Summary of Unrisked Company Gross Prospective Resources ^{(1)(3)(4)(5)(7)(9)(11)}

Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Prospective Resources- MUS ^{(2)(5)(9)(11)(12)(13)}

The GLJ Prospective Resource Report for Murucututu assumes capital deployment starting 2024 for the drilling of wells, expansion of field facilities, and additional pipeline capacity, with total project costs of $66.1 million and first commercial production in 2024. There can be no certainty that the project will developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release.  The information presented herein is based on company project development costs.

The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.   

Summary of Development Risked Company Gross Prospective Resources^{(1)(3)(4)(5)(7)(9)(11)}

The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.   

Summary of Development Risked Before Tax Net Present Value of Future Net Revenue of Prospective Resources- MUS^{(2)(5)(9)(11)(12)(13)}

Upcoming 2021 Results and Live Webcast

Alvopetro anticipates announcing its 2021 fourth quarter and year-end results on March 17, 2022 after markets close and will host a live webcast to discuss the results at 8:00 am Mountain time, on the March 18, 2022. Details for joining the event are as follows:

DATE: March 18, 2022TIME: 8:00 AM Mountain/10:00 AM EasternLINK: https://zoom.us/j/99386897923  DIAL-IN NUMBERS: https://zoom.us/u/aixrWbAbO  WEBINAR ID: 993 8689 7923

The webcast will include a question and answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.

Corporate Presentation

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

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

FOOTNOTES

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 news release are in United States dollars, except as otherwise noted.

Oil and Natural Gas Reserves. The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company’s reserves as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022. All net present values in this press release are based on estimates of future operating and capital costs and GLJ’s forecast prices as of December 31, 2021. The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to the Alvopetro’s reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company’s reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Contingent Resources. This news release discloses estimates of Alvopetro’s contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company’s contingent resources as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022.

Prospective Resources – This news release discloses estimates of Alvopetro’s prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company’s prospective resources as at December 31, 2021 will be contained in the Company’s annual information form for the year ended December 31, 2021 which will be filed on SEDAR (www.sedar.com) on or before April 30, 2022.

 

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.

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 the plans relating to the Company’s operational activities and the expected natural gas price, gas sales and gas deliveries under Alvopetro’s long-term gas sales agreement. The forward–looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to 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.

Non-GAAP Measures. This news release contains financial terms that are not considered measures under International Financial Reporting Standards (“IFRS”), such as working capital net of debt and net asset value. Working capital net of debt is computed as current assets less the sum of current liabilities and the carrying amount of the Company’s credit facility. Net asset value is computed based on the before-tax net present value of the Company’s proved plus probable reserves, discounted at 10%, increased by the Company’s working capital net of debt.  The non-GAAP measures do not have standardized meanings under IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. While these measures may be common in the oil and gas industry, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP measures referred to in this report should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company’s reported financial performance or position.  For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the “Non-GAAP Measures” section of the Company’s most recent MD&A which may be accessed through the SEDAR website at www.sedar.com.

SOURCE Alvopetro Energy Ltd.

Cathie Wood is Even More Positive About Innovative Companies with Global Turmoil

 

Does the sudden increase in traditional energy prices indicate a need to retreat back to drilling and fracking, or is it a sign of the need for renewables? Cathie Wood, founder of Ark Invest said the sudden increase in oil’s price will further drive a switch to new technologies like electric cars (EVs). She believes the longer-term move is that, as she predicted, Ark Invest funds will see outsized returns as innovation prevails in the coming years.

 

Russia exports a third of all crude oil and is also a large exporter of natural gas, nickel, and wheat. The troublesome conflict in Ukraine has driven an increase in commodity prices, as the US and its allies consider whether they should implement a ban on oil from Russia.

 

On Sunday Cathie Wood was on CNBC’s “Capital Connection and expressed, “We’re going to be looking at a lot of demand destruction and substitution into innovation. Electric vehicles, as opposed to gas-powered vehicles, would be the biggest one.” Ark Invest’s flagship Ark Innovation exchange-traded fund (ARKK) has dropped more than 35% so far in 2022. Part of this fall-oof was Russia’s attack on Ukraine which caused investors to shun high-risk assets. Wood expects the conflict will further tech innovation, which is the mainstay of Ark Invest. The new set of challenges, she believes, are solved by many of the innovative companies that are represented in the ARK portfolios. Wood expects automation and EVs to counteract concerns like higher gas prices and labor shortages.

 

Cathie Wood admitted, “We’ve been in a terrible bear market for innovation.” She now sees a pattern developing similar to the early days of the pandemic, which resulted in gains for the Ark Innovation ETF that reached a high in early 2021. She reminded the CNBC interviewer, “… if you look from the bottom of the coronavirus to that peak in February of 2021, we were up 358%. Why? Because innovation solves problem.”

 

Ark’s funds have seen significant inflows since January 17, Ms. Wood believes investors are now averaging down, and as a strategy buying at lower levels. She said, “Given our expectations for growth in these new technologies, I think we’re going to see some spectacular returns.” The well-followed investor reminded that while public markets are pricing cutting-edge tech stocks lower, private markets have seen a 20% increase. She attributed this to the tendency of investors in public markets to be focused on benchmarks, which she called a massive misallocation of capital last month. Wood also dismissed the role of the tech giants in the S&P 500, saying, “Our technology stocks are going to be the future successes, and they will end up in the indexes.”

Paul Hoffman

 

Managing Editor, Channelchek

 

Suggested Reading

Michael Burry’s Public Investments in SPACs, Prisons, and Electric Hogs

Cathie Wood Thinks if There is No Blood in Your Street, You Should Move

Is the SEC conducting Unfounded Investigations on Elon Musk?

Seizing Assets of Wealthy and Powerful Russians to Help Weaken Resolve

 

Sources

https://www.cnbc.com/2022/03/07/cathie-wood-says-she-still-expects-to-see-spectacular-returns-over-the-next-5-years.html

 

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  Image: Jennifer Granholm, US DOE

The International Energy Agency Takes Steps to Put a Ceiling on Oil Prices

 

As a proactive step to prevent oil price increases from further dampening global economic growth and household budgets, the International Energy Agency (IEA) has agreed to a coordinated and strategic release of 60 million barrels of its oil stockpiles, according to its press release. Half of the 60 million barrels to be spread to various countries will come from the U.S. Strategic Petroleum Reserve, with the rest from Europe and Asia.

The U.S. portion of the petroleum release represents approximately 5% of the country’s reserves. It is the second time the U.S. has dipped into its petroleum stockpile during the year the Biden administration has occupied the White House.

 

About the IEA

The IEA is made up of 30
member countries. It was created during the oil crisis in 1974 to help coordinate a collective response to major disruptions in the supply of oil. Over the years, the agency has evolved, but petroleum remains a key aspect of its work. Additionally, the IEA has evolved and expanded significantly, taking an “all-fuels, all-technology” approach. Today the IEA recommends policies that enhance the reliability, affordability, and sustainability of energy. It looks at the full spectrum of issues, including renewables, oil, gas, and coal supply along with demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and others.

The IEA’s decision to tap oil reserves represents its first release since the Libyan civil war eleven years ago. Prior to that, the IEA released oil reserves during the 1991 Gulf War and the 2005 hurricane season that included Hurricane Rita and Katrina.

Market Reaction

Despite the additional supply soon to hit world markets, Brent and WTI crude oil is still surging and at over $100 per barrel the commodity has surpassed its highest price since 2014. Around the world, this increase in energy costs is adding to inflationary pressures.

 

 

Historical Meeting

The extraordinary IEA Governing Board meeting was chaired by U.S. Secretary of Energy Jennifer Granholm who is the current Chairman.

The meeting was openly partisan, showing solidarity with the people of Ukraine and their democratically elected government against Russia’s lack of recognition of Ukraine’s sovereignty and territories. According to the press release, the IEA Ministers noted with concern the energy security impacts of the egregious actions by Russia and voiced support for sanctions imposed by the international community in response.

What Else?

The IEA Ministers noted that Russia’s invasion comes against a backdrop of tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term.

IEA members hold emergency stockpiles of 1.5 billion barrels. The announcement of an initial release of 60 million barrels, or 4% of those stockpiles, is equivalent to 2 million barrels a day for 30 days. The coordinated drawdown is the fourth in the history of the IEA.

Russia is the world’s third-largest oil producer and the largest exporter. Its exports of about 5 million barrels a day of crude oil are roughly 12% of all global trade. Russia’s 2.85 million barrels a day of petroleum products are approximately 15% of global refined product commerce. An estimated 60% of Russia’s oil exports go to Europe and another 20% to China.

IEA Ministers also discussed Europe’s significant reliance on Russian natural gas and the need to look to other suppliers. On Thursday (March 3), the IEA Secretariat will release a 10-Point Plan for how European countries can reduce their reliance on Russia.

Paul Hoffman

Managing Editor, Channelchek

 

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Price Target Raised On Higher Oil Price Estimates (Research)

Trouble Ahead for Microchips, Energy, Food, Metals, and Transportation

Using Warren Buffett’s SEC Filing as an Oracle

 

Sources

https://www.iea.org/news/iea-member-countries-to-make-60-million-barrels-of-oil-available-following-russia-s-invasion-of-ukraine

https://www.iea.org/about/mission

https://rigcount.bakerhughes.com/

https://www.washingtonpost.com/business/energy/how-the-us-strategic-petroleum-reserve-works-quicktake/2022/02/28/c7e2c27a-98a5-11ec-9987-9dceee62a3f6_story.html

https://www.washingtonpost.com/business/energy/how-the-us-strategic-petroleum-reserve-works-quicktake/2022/02/28/c7e2c27a-98a5-11ec-9987-9dceee62a3f6_story.html

www.koyfin.com

 

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Tuesday, March 01, 2022

Indonesia Energy Corp (INDO)
Price Target Raised On Higher Oil Price Estimates

Indonesia Energy Corp Ltd is an oil and gas exploration and production company focused on Indonesia. It holds two oil and gas assets through its subsidiaries in Indonesia: one producing block (the Kruh Block) and one exploration block (the Citarum Block). The Kruh Block is located to the northwest of Pendopo, Pali, South Sumatra. The Citarum Block is located to the south of Jakarta.

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

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

We are raising our twelve-month price target on the shares of INDO. The shares have been extremely strong as of late rising more than 600% since the beginning of the year. The increase comes after a private placement of convertible debt in January that may have removed a financing overhang on the stock. However, there have been only limited operational developments. The stock has a history of being very volatile due to its small trading volumes and we have downgraded the stock in the past when it crossed our price objective. The recent strength has forced us to relook at our rating and price target, an action we had planned to take next month after the company reported financial results.


Our price objective increase comes due to higher oil price assumptions.  Oil prices continue to soar rising from the mid sixties at the beginning of the year to a current level in the mid nineties. In response, we are raising our 2022 WTI oil price estimate, our 2023 estimate and our 2024 estimate. More importantly, we are raising our long-term oil …

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. 

Monday, February 28, 2022

Gevo (GEVO)
Another Quarterly Loss But Year of Progress

Gevo Inc is a renewable chemicals and biofuels company engaged in the development and commercialization of alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks. Its operating segments are the Gevo segment and the Gevo Development/Agri-Energy segment. By its segments, it is involved in research and development activities related to the future production of isobutanol, including the development of its biocatalysts, the production and sale of biojet fuel, its Retrofit process and the next generation of chemicals and biofuels that will be based on its isobutanol technology. Gevo Development/Agri-Energy is the key revenue generating segment which involves the operation of the Luverne Facility and production of ethanol, isobutanol and related products.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

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

EBITDA losses continued in 4Q2021. Given the early stage of development of the renewable fuels concept, it isn’t surprising that EBITDA was negative $10.9 million due to limited revenue and continuing corporate/development costs. We expect negative EBITDA to continue into at least late next year. Gross losses of $4.3 million were slightly higher than $1.4 million last year due to operating expenses of $2.8 million, but total development and overhead costs dropped $4.4 million to $12.2 million.


Funding is visible into next year, but development goal of 1 BGPY by 2030 likely to require added capital.  Given 4Q2021 cash of $476 million and the scheduled financial closing of Net Zero One in 1Q2023, we don’t believe that added capital is required right now. Current cash creates a funding fairway into late 2022/early 2023, and we expect the recently refreshed $500 million ATM program will not …

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. 

Gevo Reports Fourth Quarter 2021 Financial Results

Research, News, and Market Data on Gevo

 

ENGLEWOOD, Colo., Feb. 24, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) today announced financial results for the fourth quarter of 2021 and summarized recent corporate highlights.

Recent Corporate Highlights

• On December 7, 2021, Kolmar Americas Inc and Gevo entered into a financeable fuel supply agreement for 45 million gallons per year of renewable, energy-dense liquid hydrocarbons.
• On November 16, 2021, Gevo signed a memorandum of understanding (MoU) with Sweetwater Energy, Inc., regarding the use of sustainably sourced agricultural residues and woody biomass as a feedstock for producing cellulosic alcohols and energy-dense renewable liquid hydrocarbons.
• On October 25, 2021, ADM, a global leader in nutrition and agricultural origination and processing, and Gevo signed a MoU to support the production of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels.
• On October 12, 2021, Gevo and Axens North America, Inc. (“Axens”) entered into an agreement that establishes a strategic alliance aimed at accelerating the commercialization of sustainable ethanol-to-jet projects in the United States.
• In December 2021, Argonne National Laboratory (“ANL”), a U.S. Department of Energy multidisciplinary science and engineering research center, reported the preliminary results of its life cycle analysis of Gevo’s planned Net-Zero plant to Gevo. ANL’s preliminary findings were consistent with Gevo’s findings that when renewable energy is used to power production processes, and the corn is produced with climate smart ag practices that drive the carbon intensity score of corn down, then the sustainable aviation fuel (“SAF”) that would be produced could achieve net-zero life-cycle emissions when measured using ANL’s GREET Model. When carbon capture sequestration technology is added as a de-carbonization tool, the life-cycle emissions should be negative according to the model. ANL is currently working through the scientific peer reviewed publication process.
• In January 2022, Gevo’s renewable natural gas (“RNG”) facilities in NW Iowa began to start-up operations. The start-up process is expected to take a few months and reach a steady state operation in the second quarter of 2022 which will allow time for Gevo to apply for credits under the federal Renewable Fuel Standard Program (“RFS”) and the Low Carbon Fuel Standard (“LCFS”) in California, including verification of carbon intensity levels and other requirements. Depending on the timing of the qualification and approval processes for obtaining credits under RFS and LCFS, Gevo expects to generate biogas revenues starting in the second quarter of 2022 and sales of credits under RFS and LCFS in the second half of 2022. Gevo expects that the RNG Project EBITDA¹ should generate approximately $16-22 million per year by 2023 depending on a variety of assumptions, including the value of credits under RFS and LCFS.   

2021 Fourth Quarter Financial Highlights

• Ended the quarter with cash, cash equivalents, restricted cash and marketable securities of $475.8 million compared to $522.4 as of the end Q3 2021
• Revenue of $0.1 million for the quarter compared to $0.5 million in Q4 2020
• Loss from operations of ($16.5) million for the quarter compared to ($7.6) million in Q4 2020
• Non-GAAP cash EBITDA loss² of ($10.9) million for the quarter compared to ($5.7) million in Q4 2020
• Net loss per share of ($0.08) for the quarter compared to ($0.15) in Q4 2020
• Non-GAAP adjusted net loss per share³ of ($0.08) for the quarter compared to ($0.07) in Q4 2020

Net-Zero 1 Update

Gevo continues to make progress on the design and engineering work related to its Net-Zero 1 Project. As a result of Gevo’s agreement and relationship with Axens, Gevo recently made the decision to utilize ethanol fermentation technology instead of isobutanol fermentation technology to produce SAF and other renewable hydrocarbon products at Net-Zero 1.

Gevo believes that there are several advantages of using ethanol fermentation technology at Net-Zero 1, including the following:

• Lower capital costs per gallon of hydrocarbon produced
• Increased production capacity of renewable hydrocarbons from 45MGPY to 60MGPY
• Process guarantees from Axens on the conversion of ethanol into SAF
• Lower technology and execution risk which are expected to make debt financing more readily available
• Leverages previous Net-Zero 1 engineering and design work from 2021
• The hydrocarbon plant design for Net-Zero 1 can be used at any ethanol plant that meets certain sustainability and carbon intensity score requirements which should enable Gevo to grow more rapidly to meet demand

Gevo currently expects to construct Net-Zero 1 in Lake Preston, South Dakota. In addition to Lake Preston, Gevo has identified several other attractive greenfield sites that are at least as attractive as Lake Preston from the standpoint of fundamental economics, access to sustainable feedstocks, deployment of renewable energy and transportation of finished product to market. Lake Preston is the furthest developed of the sites that Gevo has identified for Net-Zero 1. Gevo expects final site selection for Net-Zero 1 to occur later in 2022.

Gevo is targeting Net-Zero 1 to be mechanically complete in late 2024 and operational in 2025. Based on current assumptions, including those around future commodity pricing and future environmental benefit credit values, and preliminary engineering work, Gevo estimates Net-Zero 1 will have a fully installed and non-recourse project financed capital cost of approximately $900 million, to generate approximately $150-200 million of Net-Zero 1 Project EBITDA⁴ per year. Because Gevo can leverage a substantial amount of the work already done for Net-Zero 1, Gevo expects to order long lead equipment and begin site preparation in late 2022 with full construction commencing in 2023.

Commenting on the fourth quarter of 2021 and recent corporate developments, Dr. Patrick R. Gruber, Gevo’s Chief Executive Officer, said “It’s an exciting time to work for Gevo with plans moving forward on our first of its kind, fully-decarbonized alcohol-to-SAF plant that will produce commercial volumes of SAF. Our relationship with Axens is bearing fruit. Knowing how to convert ethanol into net-zero SAF and other hydrocarbons is key to our growth strategy, especially with the potential commercial relationships with ADM and other partners.”

Dr. Gruber continued, “Over the last twelve months, we’ve hired the leaders for our Net-Zero 1 Project. We are focused on engineering Net-Zero 1 so that we can get it built and operating.”

Fourth Quarter 2021 Financial Results

Revenue for the three months ended December 31, 2021 was $0.1 million compared with $0.5 million in the same period in 2020.

During the three months ended December 31, 2021, hydrocarbon revenue was nil compared to $0.4 million during the three months ended December 31, 2020. Gevo’s hydrocarbon revenue is comprised of sales of SAF and renewable premium gasoline.

During the three months ended December 31, 2021 and 2020, no significant revenue was derived at Gevo’s production facility in Luverne, Minnesota (the “Luverne Facility”) related to ethanol sales and related products.

As a result of COVID-19 and in response to an unfavorable commodity environment, Gevo terminated its production of ethanol and distiller grains in March 2020. As previously announced, the Luverne Facility is currently producing isobutanol that will be used as a feedstock for us to produce SAF and renewable premium gasoline to fulfill existing sales contracts. We also expect to utilize some of the isobutanol produced to develop certain isobutanol specialty markets. These renewable hydrocarbons will be produced at Gevo’s demonstration plant at the South Hampton Resources, Inc. facility in Silsbee, Texas (the “South Hampton Facility”).

Cost of goods sold was $2.8 million for the three months ended December 31, 2021, compared with $0.9 million in the same period in 2020. We began producing isobutanol during the third quarter 2021 resulting in higher production costs. The cost of goods sold was significantly higher for isobutanol without the coproduction of ethanol as operated in previous years as we worked to improve and refine our production processes. Cost of goods sold included costs associated with the production of isobutanol, SAF and isooctane as well as maintenance of the Luverne Facility and the South Hampton Facility.

Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $1.1 million related to production costs. Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $0.5 million related to research and development expense and sales, general and administrative expense.

Gross loss was ($3.8) million for the three months ended December 31, 2021, compared with a ($1.4) million gross loss in the same period in 2020.

Research and development expense increased by approximately $1.1 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to an increase in personnel and recruiting costs related to increased headcount and stock-based compensation as we work to improve our process for growing and fermenting yeast strains.

Selling, general and administrative expense increased by approximately $4.5 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to increases in personnel costs and recruiting related to increased headcount and stock-based compensation, increased professional fees, higher costs for insurance and increased consulting fees related to documenting our compliance with Section 404(b) of the Sarbanes-Oxley Act.

Preliminary stage project costs related to our RNG and Net-Zero projects were approximately $2.1 million during the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. During the three months ended December 31, 2021, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our Net-Zero projects. During the three months ended December 31, 2020, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our RNG project. During the three months ended December 31, 2021, we began capitalizing our Net-Zero 1 project costs after completing certain front-end engineering studies and determining it was probable that we would build the Net-Zero 1 project.

Loss from operations in the three months ended December 31, 2021 was ($16.5) million, compared with a ($7.6) million loss from operations in the same period in 2020.

Non-GAAP cash EBITDA loss⁵ in the three months ended December 31, 2021 was ($10.9) million, compared with a ($5.7) million non-GAAP cash EBITDA loss in the same period in 2020.

Interest expense decreased by $0.4 million in the three months ended December 31, 2021 as compared to the same period in 2020, due to the conversion of all Gevo’s 12% convertible senior secured notes due 2020/2021 to common stock during 2020.

Interest and dividend income during the three months ended December 31, 2021 increased $0.2 million compared to the three months ended December 31, 2020, primarily due to income received on marketable securities and restricted cash.

Gevo incurred a net loss for the three months ended December 31, 2021 of ($16.5) million, compared with a net loss of ($18.1) million during the same period in 2020. Non-GAAP adjusted net loss⁶ for the three months ended December 31, 2021 was ($16.5) million, compared with a non-GAAP adjusted net loss of ($8.1) million during the same period in 2020.

Cash, cash equivalents, restricted cash and marketable securities at December 31, 2021 totaled $475.8 million compared to $522.4 as of the end Q3 2021.

Webcast and Conference Call Information

Hosting today’s conference call at 4:30 p.m. EDT (2:30 p.m. MDT) will be Dr. Patrick R. Gruber, Chief Executive Officer, L. Lynn Smull, Chief Financial Officer, Heather Manuel, Vice President – Investor Relations & Communications and John Richardson, Investor Relations Manager. They will review Gevo’s financial results and provide an update on recent corporate highlights.

To participate in the conference call, please dial 1 (833) 729-4776 (inside the U.S.) or 1 (830) 213-7701 (outside the U.S.) and reference the access code 3465026# or through the event weblink https://edge.media-server.com/mmc/p/38zwqbqa.

A replay of the call and webcast will be available two hours after the conference call ends on February 24, 2022. To access the replay, please visit https://edge.media-server.com/mmc/p/38zwqbqa. 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 potential to yield net-zero greenhouse gas emissions when measured across the full lifecycle 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 lifecycle). 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 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, including, without limitation, Gevo’s business development activities, Gevo’s agreement with Kolmar Americas Inc., Gevo’s Net-Zero Projects, Gevo’s RNG project, fermentation technologies, the status of the engineering and design work for the Net-Zero 1 Project, the timing of Net-Zero 1, projections concerning Net-Zero 1, including projected capital costs, projected internal rates of return and projected EBITDA, Gevo’s ability to the commercialize its projects, Gevo’s offtake agreements, Gevo’s plans to develop its business, Gevo’s ability to successfully construct and finance its operations and growth projects, Gevo’s ability to achieve cash flow from its planned projects, the ability of Gevo’s products to contribute to lower greenhouse gas emissions and other statements that are not purely statements of historical fact. These forward-looking statements are made based on 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.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (“GAAP”), including non-GAAP cash EBITDA loss, non-GAAP adjusted net loss and non-GAAP adjusted net loss per share. Non-GAAP cash EBITDA loss excludes depreciation and amortization and non-cash stock-based compensation. Non-GAAP adjusted net loss and adjusted net loss per share excludes non-cash gains and/or losses recognized in the quarter due to the changes in the fair value of certain of Gevo’s financial instruments, such as warrants, convertible debt and embedded derivatives. Management believes these measures are useful to supplement its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management’s internal comparisons to Gevo’s historical performance as well as comparisons to the operating results of other companies. In addition, Gevo believes these non-GAAP financial measures are useful to investors because they allow for greater transparency into the indicators used by management as a basis for its financial and operational decision making. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under GAAP when understanding Gevo’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided in the financial statement tables below.

¹ RNG Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
² Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization and non-cash stock compensation to GAAP loss from operations. A reconciliation of cash EBITDA loss to GAAP loss from operations is provided in the financial statement tables following this release.
³ Adjusted net loss per share is a non-GAAP measure calculated by adding back non-cash gains and/or losses recognized in the quarter due to the changes in the fair value of certain of our financial instruments, such as warrants, convertible debt and embedded derivatives, to GAAP net loss per share. A reconciliation of adjusted net loss per share to GAAP net loss per share is provided in the financial statement tables following this release.
⁴ Net-Zero 1 Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
⁵ Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization and non-cash stock compensation to GAAP loss from operations. A reconciliation of cash EBITDA loss to GAAP loss from operations is provided in the financial statement tables following this release.
⁶ Adjusted net loss is a non-GAAP measure calculated by adding back non-cash gains and/or losses recognized in the quarter due to the changes in the fair value of certain of our financial instruments, such as warrants, convertible debt and embedded derivatives, to GAAP net loss. A reconciliation of adjusted net loss to GAAP net loss is provided in the financial statement tables following this release.

Gevo, Inc.
Condensed Consolidated Balance Sheets Information
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
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Gevo, Inc.
Condensed Consolidated Statements of Operations Information
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Gevo, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
Condensed Consolidated Statements of Stockholders’ Equity Information
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Gevo, Inc.
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Gevo, Inc.
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Gevo, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited, in thousands, except share and per share amounts)

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