CALGARY, AB, March 5, 2024 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces February 2024 sales volumes of 1,477 boepd including natural gas sales of 8.3 MMcfpd, associated natural gas liquids sales from condensate of 72 bopd and oil sales of 19 bopd, based on field estimates. February sales volumes were impacted by reduced nominations from our offtaker, Bahiagás mainly in the latter half of February. Effective March 1, 2024 deliveries to Bahiagás have increased back to over 10.6 MMcfpd.
Natural gas, NGLs and crude oil sales:
February2024
January 2024
Natural gas (Mcfpd), by field:
Caburé
7,875
9,305
Murucututu
449
382
Total Company natural gas (Mcfpd)
8,324
9,687
NGLs (bopd)
72
75
Oil (bopd)
19
9
Total Company (boepd)
1,477
1,699
Corporate Presentation
Alvopetro’s updated corporate presentation is available on our website at:
Alvopetro Energy Ltd.’svision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
boepd
=
barrels of oil equivalent (“boe”) per day
bopd
=
barrels of oil and/or natural gas liquids (condensate) per day
Mcf
=
thousand cubic feet
Mcfpd
=
thousand cubic feet per day
MMcfpd
=
million cubic feet per day
NGLs
=
natural gas liquids
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 expected natural gas price, natural gas sales and natural gas deliveries under the Company’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 expectations and assumptions concerning expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, the success of future drilling, completion, and testing, equipment availability, the timing of regulatory licenses and approvals, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, 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.sedarplus.ca. 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.
CALGARY, AB, Feb. 26, 2024 /CNW/ – Alvopetro Energy Ltd. (TSXV:ALV) (OTCQX: ALVOF) announces our reserves as at December 31, 2023 with total proved plus probable (“2P”) reserves of 8.7 MMboe and a before tax net present value discounted at 10% (“NPV10”) of $309.7 million, risked best estimate contingent resources of 5.4 MMboe (NPV10 $126.1 million) and risked best estimate prospective resources of 9.6 Mmboe (NPV10 $184.9 million). 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 February 26, 2024 with an effective date of December 31, 2023 (the “GLJ Reserves and Resources Report”).
The GLJ Reserves and Resources Report incorporates Alvopetro’s working interest share of remaining recoverable reserves held by Alvopetro in the Caburé and Murucututu natural gas fields and the Bom Lugar and Mãe-da-lua oil fields as well as Alvopetro’s working interest share of remaining recoverable resources held by Alvopetro in the Murucututu natural gas field. With respect to Murucututu, Bom Lugar, and Mãe-da-lua, Alvopetro’s working interest share is 100%. With respect to the unitized area (the “Unit”) which includes our Caburé and Caburé Leste fields (collectively referred to as “Caburé” in this news release) and two fields held by our third-party partner in the Unit, Alvopetro’s working interest share as of December 31, 2023 was 49.1%, with the remaining 50.9% held by our partner. As previously announced by the Company, the first redetermination of the working interests to each party commenced in the fourth quarter of 2023. The parties engaged an independent expert (the “Expert”) to evaluate the redetermination. Pursuant to the provisions of the UOA, where an Expert is engaged, the Expert’s determination shall be made using what is commonly referred to as the “pendulum” method of dispute resolution. Under this method, the Expert is not required or permitted to provide their own interpretation but is required to select the single Final Proposal (between the two partner’s respective Final Proposals), which, in the Expert’s opinion, provides the most technically justified result of the application of the relevant information and data and material provided to the Expert consistent with the UOA and all related documents. As of the date of this news release, the outcome of the Expert’s decision and the resulting working interest to Alvopetro following the decision is uncertain. The resulting impact on Alvopetro’s reserves and future cash flows may be material and may have a material adverse effect on Alvopetro. The impact on Alvopetro’s working interest will be effective on the first calendar day of the second month following the date of the decision of the Expert, subject to any government approvals that may be required. The decision of the Expert is expected near the end of the first quarter of 2024. The GLJ Reserves and Resource Report and the references included herein are based on the 49.1% interest in Caburé, Alvopetro’s working interest share as of December 31, 2023. The reserves data included in this news release and in the GLJ Reserves and Resources Report may be materially impacted following the Expert’s decision.
All references herein to $ refer to United States dollars, unless otherwise stated.
December 31, 2023 GLJ Reserves and Resource Report:
Proved reserves (“1P”) decreased 30% to 2.7 MMboe Proved reserves mainly due to 2023 production and technical revisions related to the 197-1 and 183-1 Murucututu wells. Alvopetro is working to enhance production from these wells with optimizations in 2024.
2P reserves decreased 4% from 9.0 to 8.7 MMboe after 0.8 MMboe of production in 2023. Production in 2023 was offset by improved recovery factors at Caburé due to the agreed Unit development plan and new additions associated with the discovery at the 183-A3 well in the Caruaçu Formation.
Proved plus Probable plus Possible reserves (“3P”) increased to 15.2 MMboe from 14.4 MMboe as a result of additions associated with the discovery at the 183-A3 well in the Caruaçu Formation.
2P NPV10 decreased 11% to $309.7 million due to changes in forecast natural gas prices and 2023 production offset mainly by additional value associated with discovered zones in the Caruaçu Formation on our Murucututu natural gas field.
Risked best estimate contingent resources increased from 2.9 MMboe to 5.4 MMboe at December 31, 2023 with a NPV10 of $126.1 million, increases from December 31, 2022 of 84% and 103% respectively. The increases were associated with the discovery at the 183-A3 well in the Caruaçu Formation.
Risked best estimate prospective resources decreased from 12.5 MMboe to 9.6 MMboe with a NPV10 of $184.9 million, decreases of 23% and 29% respectively from December 31, 2022. The decrease was due primarily to adjustments to the probabilistic models incorporating the logs results for the Gomo zone at the 183-A3 well.
SUMMARY
December 31, 2023 Gross Reserve and Gross Resource Volumes: (1)(2)(3)(4)(5)(6)
See ‘Footnotes’ section at the end of this news release
PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS
GLJ employed the following pricing and inflation rate assumptions as of January 1, 2024 in the GLJ Reserves and Resources Report in estimating reserves and resources data using forecast prices and costs.
Year
Brent Blend Crude Oil FOB North Sea ($/Bbl)
National Balancing Point (UK)($/MMBtu)
NYMEX Henry HubNear Month Contract($/MMBtu)
Alvopetro-Bahiagas Gas Contract$/MMBtu(Current Year)
As of February 1, 2024, 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. Pricing is forecast to stay slightly below the ceiling for future price adjustments. The ceiling price incorporates assumed US inflation of 2%.
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 (the “COGE Handbook”) 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 working interest share as of December 31, 2023 of the Unit (referred to herein as the Caburé natural gas field), our Murucututu natural gas project, 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 field. In addition to the reserves assigned to our Murucututu field, 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 2023 fiscal year which will be filed on SEDAR+ (www.sedarplus.ca) by April 30, 2024.
December 31, 2023 Reserves Information:
Summary of Reserves (1)(2)(3)
Light & Medium Oil
Conventional Natural Gas
Natural Gas Liquids
Oil Equivalent
Company Gross
Company Net
Company Gross
Company Net
Company Gross
Company Net
Company Gross
Company Net
(Mbbl)
(Mbbl)
(MMcf)
(MMcf)
(Mbbl)
(Mbbl)
(Mboe)
(Mboe)
Proved
Producing
8
7
11,460
11,000
122
117
2,039
1,957
Developed Non-Producing
142
133
–
–
–
–
142
133
Undeveloped
–
–
2,951
2,818
54
52
546
522
Total Proved
150
140
14,411
13,818
176
169
2,727
2,612
Probable
302
285
31,175
29,859
486
465
5,983
5,726
Total Proved plus Probable
451
425
45,586
43,677
662
634
8,711
8,338
Possible
224
211
34,253
32,785
565
540
6,497
6,215
Total Proved plus Probable plus Possible
675
635
79,839
76,462
1,226
1,174
15,208
14,553
See ‘Footnotes’ section at the end of this news release
Summary of Before Tax Net Present Value of Future Net Revenue – $000s(1)(2)(3)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Proved
Producing
114,762
106,922
100,204
94,364
89,230
Developed Non-Producing
6,337
5,157
4,257
3,570
3,040
Undeveloped
18,155
14,371
11,425
9,181
7,467
Total Proved
139,254
126,450
115,886
107,115
99,738
Probable
391,202
263,064
193,771
151,218
122,597
Total Proved plus Probable
530,456
389,514
309,657
258,333
222,335
Possible
538,835
271,641
172,416
124,475
96,580
Total Proved plus Probable plus Possible
1,069,291
661,155
482,073
382,808
318,915
See ‘Footnotes’ section at the end of this news release
Summary of After Tax Net Present Value of Future Net Revenue – $000s(1)(2)(3)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Proved
Producing
107,434
100,320
94,209
88,886
84,200
Developed Non-Producing
5,623
4,552
3,728
3,098
2,613
Undeveloped
14,191
11,454
9,192
7,412
6,022
Total Proved
127,248
116,326
107,129
99,396
92,834
Probable
297,522
205,240
153,457
120,748
98,250
Total Proved plus Probable
424,769
321,565
260,586
220,145
191,085
Possible
388,926
204,696
133,885
98,386
77,076
Total Proved plus Probable plus Possible
813,695
526,262
394,471
318,531
268,160
See ‘Footnotes’ section at the end of this news release
Future Development Costs (1)(2)(3)(7)(8)
The table below sets out the total development costs deducted in the estimation 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, in the GLJ Reserves and Resources Report. Total development costs include capital costs for drilling and completing wells and for facilities but excludes abandonment and reclamation costs.
The future development costs for the Caburé field include Alvopetro’s working interest share (49.1%) for three development wells in the proved category and an additional two development wells in the probable and possible categories. Also included in future development costs for Caburé are costs associated with a facilities upgrade planned at the field for compression of natural gas to be delivered to Alvopetro’s natural gas processing facility. In prior years, Alvopetro reflected all equipment rental payments associated with our Gas Treatment Agreement with Enerflex Ltd. as part of future development costs; however in 2023, such costs are now incorporated within operating expense along with other operating costs associated with the agreement. The future costs associated with equipment rental are also reflected as a capital lease obligation on our financial statements.
The future development costs for the Murucututu field in the proved category include one development well and stimulation costs for the 183-1 and 183-A3 wells and one project to improve recovery from the 197(1) well. The probable category also includes an additional two development wells along with additional stimulation projects at the 183-1 and 183-A3 wells. The possible category includes one additional well.
The future development costs for Bom Lugar in the proved category include costs to stimulate the BL-06 well drilled by Alvopetro in 2023. Costs in the probable category also include one development well and costs for facilities upgrade. Future development costs at the Mãe-da-lua field relate to a stimulation of the existing producing well.
Alvopetro’s share of future development costs are summarized as follows:
$000s, Undiscounted
2024
2025
2026
2027
2028
Remaining
Total
Proved
Caburé Natural Gas Field
6,993
–
–
–
–
–
6,993
Murucututu Gas Field
2,050
6,885
–
–
–
–
8,935
Bom Lugar Oil Field
–
510
–
–
–
–
510
Mãe-da-lua Oil Field
–
551
–
–
–
–
551
Total Proved
9,043
7,946
–
–
–
–
16,989
Proved Plus Probable
Caburé Natural Gas Field
6,993
2,504
–
–
–
–
9,497
Murucututu Gas Field
3,950
20,655
–
–
–
–
24,605
Bom Lugar Oil Field
–
6,059
–
–
–
–
6,059
Mãe-da-lua Oil Field
–
551
–
–
–
–
551
Total Proved Plus Probable
10,943
29,769
–
–
–
–
40,712
Proved Plus Probable Plus Possible
Caburé Natural Gas Field
6,993
2,504
–
–
–
–
9,497
Murucututu Gas Field
3,950
27,540
–
–
–
–
31,490
Bom Lugar Oil Field
–
6,059
–
–
–
–
6,059
Mãe-da-lua Oil Field
–
551
–
–
–
–
551
Total Proved Plus Probable Plus Possible
10,943
36,654
–
–
–
–
47,597
See ‘Footnotes’ section at the end of this news release
Reconciliation of Alvopetro’s Gross Reserves (Before Royalty) (1)(2)(3)(8)
Proved(Mboe)
Probable(Mboe)
Proved Plus Probable(Mboe)
Possible(Mboe)
Proved plusProbable plus Possible(Mboe)
December 31, 2022
3,909
5,128
9,037
5,345
14,382
Discoveries
–
1,398
1,398
2,488
3,886
Extensions
–
148
148
(148)
–
Technical Revisions
(400)
(690)
(1,090)
(1,188)
(2,278)
Production
(782)
–
(782)
–
(782)
December 31, 2023
2,727
5,983
8,711
6,497
15,208
See ‘Footnotes’ section at the end of this news release.
December 31, 2023 Murucututu Contingent Resources Information:
Summary of Unrisked Company Gross Contingent Resources (1)(2)(5)(6)
Development Pending Economic Contingent Resources
Low Estimate
Best Estimate
High Estimate
Conventional natural gas (MMcf)
20,952
32,062
35,433
Natural gas liquids (Mbbl)
386
591
653
Oil equivalent (Mboe)
3,878
5,935
6,559
See ‘Footnotes’ section at the end of this news release.
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Contingent Resources- $000s (1)(2)(5)(6)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Low Estimate
279,201
146,114
91,400
63,327
46,651
Best Estimate
470,246
226,624
139,760
97,612
73,016
High Estimate
540,860
246,103
148,348
102,781
76,691
See ‘Footnotes’ section at the end of this news release.
The GLJ Contingent Resource Report for Murucututu assumes capital deployment starting in 2025 for the drilling and completion of wells with total project costs of $20.8 million and first commercial production in 2025. The information presented herein is based on company net project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. The project is based on a pre-development study. Development of the project is dependent on several contingencies as further described in this news release. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Pending Risked Company Gross Contingent Resources(1)(2)(5)(6)
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 of 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.
Low Estimate
Best Estimate
High Estimate
Conventional natural gas (MMcf)
18,909
28,936
31,978
Natural gas liquids (Mbbl)
349
533
590
Oil equivalent (Mboe)
3,500
5,356
5,919
See ‘Footnotes’ section at the end of this news release.
Summary of Development Pending Risked Before Tax Net Present Value of Future Net Revenue of Contingent Resources- $000s(1)(5)(6)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Low Estimate
251,978
131,868
82,489
57,153
42,102
Best Estimate
424,397
204,528
126,134
88,095
65,897
High Estimate
488,126
222,108
133,884
92,760
69,214
See ‘Footnotes’ section at the end of this news release.
December 31, 2023 Murucututu Prospective Resources Information:
Summary of Unrisked Company Gross Prospective Resources (1)(2)(4)(6)
Prospective Resources
Low
Best
High
Conventional natural gas (MMcf)
31,903
64,251
101,392
Natural gas liquids (Mbbl)
588
1,184
1,869
Oil equivalent (Mboe)
5,905
11,893
18,768
See ‘Footnotes’ section at the end of this news release.
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Prospective Resources – $000s (1)(4)(6)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Low Estimate
395,126
179,911
96,052
56,094
34,354
Best Estimate
959,658
413,788
227,919
142,785
96,201
High Estimate
1,628,234
680,308
376,039
240,051
165,845
See ‘Footnotes’ section at the end of this news release.
The GLJ Reserves and Resources Report for Murucututu prospective resources assumes capital deployment starting in 2026 for the drilling and completion of wells and pipeline expansion costs, with total project costs of $75.8 million and first commercial production in 2026. The information presented herein is based on company project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release. The project is based on a conceptual study. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Risked Company Gross Prospective Resources(1)(2)(4)(6)
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.
Low
Best
High
Conventional natural gas (MMcf)
25,876
52,112
82,237
Natural gas liquids (Mbbl)
477
961
1,516
Oil equivalent (Mboe)
4,790
9,646
15,222
See ‘Footnotes’ section at the end of this news release.
Summary of Development Risked Before Tax Net Present Value of Future Net Revenue of Prospective Resources- $000s(1)(4)(6)(7)(8)
Undiscounted
5 %
10 %
15 %
20 %
Low Estimate
320,477
145,922
77,906
45,497
27,864
Best Estimate
778,356
335,614
184,859
115,810
78,027
High Estimate
1,320,623
551,782
304,997
194,700
134,513
See ‘Footnotes’ section at the end of this news release.
Upcoming 2023 Results and Live Webcast
Alvopetro anticipates announcing its 2023 fourth quarter and year-end results on March 19, 2024 after markets close and will host a live webcast to discuss the results at 8:00am Mountain time, on March 20, 2024. Details for joining the event are as follows:
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.
References to Company Gross reserves or Company Gross Resources means the total working interest share of remaining recoverable reserves or resources held by Alvopetro before deductions of royalties payable to others and without including any royalty interests held by Alvopetro. With respect to the Caburé natural gas field, Alvopetro’s working interest was 49.1% as of December 31, 2023 but is subject to redetermination, the first of which is currently underway. The outcome of this redetermination is unknown and the resulting impact on the reserves presented herein may be material.
(2)
The tables above are a summary of the reserves of Alvopetro and the net present value of future net revenue attributable to such reserves as evaluated in the GLJ Reserves and Resources Report based on forecast price and cost assumptions. The tables summarize the data contained in the GLJ Reserves and Resources Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly.
(3)
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.
(4)
Prospective Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. 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. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery as described in footnote 6.
(5)
Contingent Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates as described in footnote 6 and may be subclassified based on project maturity and/or characterized by their economic status. The Contingent Resources estimated in the GLJ Reserves and Resources Report are classified as “economic contingent resources”, which are those contingent resources that are currently economically recoverable. All such resources are further sub-classified with a project status of “development pending”, meaning that resolution of the final conditions for development are being actively pursued. The recovery estimates of the Company’s contingent resources provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. There is uncertainty that it will be commercially viable to produce any portion of the resources. Actual recovered resource may be greater than or less than the estimates provided herein.
(6)
Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
(7)
The net present value of future net revenue attributable to Alvopetro’s reserves and resources are stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well abandonment and reclamation costs for only those wells assigned reserves and material dedicated gathering systems and facilities. The net present values of future net revenue attributable to Alvopetro’s reserves and resources 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 and resource estimates of the Company’s reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves and resources will be recovered. Actual reserves and resources may be greater than or less than the estimates provided herein.
(8)
GLJ’s January 1, 2024 escalated price forecast is used in the determination of future gas sales prices under Alvopetro’s long-term gas sales agreement and for all forecasted oil sales and natural gas liquids sales. See https://www.gljpc.com/sites/default/files/pricing/Jan24.pdf for GLJ’s price forecast.
Alvopetro Energy Ltd.’svision 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.
Abbreviations:
1P
=
proved reserves
2P
=
proved plus probable reserves
3P
=
proved plus probable plus possible reserves
Mbbl
=
thousands of barrels
Mboe
=
thousand barrels of oil equivalent
MMbtu
=
million British Thermal Units
MMcf
=
million cubic feet
MMboe
=
million barrels of oil equivalent
$000s
=
thousands of U.S. dollars
Oil and Natural Gas Advisories
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, 2023 will be included in the Company’s annual information form for the year ended December 31, 2023 which will be filed on SEDAR+ (www.sedarplus.ca) on or before April 30, 2024. The GLJ Reserves and Resources Report incorporates Alvopetro’s working interest share of remaining recoverable reserves and resources. With respect to the Caburé natural gas field, Alvopetro’s working interest was 49.1% as of December 31, 2023 but is subject to redetermination, the first of which is currently underway. The outcome of this redetermination is unknown and the resulting impact on the reserves and the net presented value of future net revenue attributable to such reserves as presented herein may be material.
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, 2023. 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, 2023 will be contained in the Company’s annual information form for the year ended December 31, 2023 which will be filed on SEDAR+ (www.sedarplus.ca) on or before April 30, 2024.
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, 2023 will be contained in the Company’s annual information form for the year ended December 31, 2023 which will be filed on SEDAR+ (www.sedarplus.ca) on or before April 30, 2024.
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 redetermination and Alvopetro’s working interest share of the unitized area and the potential impact of the redetermination on Alvopetro, plans relating to the Company’s operational activities, proposed development activities and the timing for such activities, capital spending levels and future capital costs, 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 expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, the success of future drilling, completion, testing, recompletion and development activities, the performance of producing wells and reservoirs, well development and operating performance, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, general economic and business conditions, the impact of the COVID-19 pandemic, weather and access to drilling locations, the availability and cost of labour and services, 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.sedarplus.ca). 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.
Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Alvopetro released November production volumes that accelerated its recent upward trend. Alvopetro reported November gas production of 12.9 mmcfe/day (up from 10.6 mmcfe/day in October), oil production of 15 boe/day (vs. 8 boe/day), and NGL production of 105 boe/day (up from 67 boe/day). Production was depressed over the summer due to allocation issues with a joint venture partner and demand issues from Bahia Gas, Alvopetro’s primary natural gas customer. Total production was 2,264 boe/day in November.
Total production remains below peak levels but is approaching that level quickly. Production peaked at 2,771 MBOE/day in the quarter ended March 31, 2023. However, with production rising 425 MBOE/day in the most recent month, it is quickly returning to past production levels. Importantly, oil and natural gas production is the fastest growing component of Alvopetro energy portfolio providing additional diversification and lessening its reliance on Bahia Gas.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
CALGARY, AB, Nov. 8, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce financial results for the three and nine months ended September 30, 2023 and an operational update.
All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
President & CEO, Corey C. Ruttan commented:
“While sales volumes were lower in Q3 2023 due to temporary reductions in demand, we were still able to generate record operating netbacks of $70.34/boe and $9.6 million of funds flow from operations. Our production rates in October increased back up to 1,839 boepd. Capital expenditures in Q3 were focused on drilling our 183-A3 well, the first fit-for-purpose development well on our Murucututu natural gas field. The initial results from drilling are promising and we look forward to completing the well and bringing it on production later in the year.”
Operational Update
We completed drilling the 183-A3 well on our 100% owned Murucututu natural gas field in October. The well was drilled to a total measured depth of 3,540 metres and, based on open-hole logs, the well encountered potential net natural gas pay in both the Caruaçu Member of the Maracangalha Formation and the Gomo Member of the Candeias Formation, with an aggregate 127.7 metres total vertical depth of potential natural gas pay, using a 6% porosity cut-off, 50% Vshale cut-off and 50% water saturation cutoff. Subject to equipment availability and regulatory approvals, we expect to commence completion operations on the well later this month. The well will then be put on production directly into the adjacent field production facility.
October sales volumes increased to 1,839 boepd, an 8% increase from Q3 2023. October sales included natural gas sales of 10.6 MMcfpd, associated natural gas liquids sales from condensate of 67 bopd and oil sales of 8 bopd, based on field estimates.
In October we completed the BL-06 well on our Bom Lugar field and brought the well on production. October production volumes are expected to be sold in November. Based on field production data, the well is currently producing at an average of 14 bopd.
Financial and Operating Highlights – Third Quarter of 2023
With reduced offtake from Bahiagás during the quarter following reductions in end user consumption, our average daily sales decreased to 1,696 boepd (-14% from Q2 2023 and -36% from Q3 2022).
Our average realized natural gas price increased to $13.06/Mcf, a 17% increase from Q3 2022 with the 3% increase in our contracted natural gas price, enhanced sales tax credits available in 2023 and a 7% appreciation in the average BRL to USD in Q3 2023 compared to Q3 2022. With the higher natural gas price, our overall realized price per boe increased to $78.90 (+15% from Q3 2022 and +2% from Q2 2023).
Our natural gas, condensate and oil revenue was $12.3 million in Q3 2023, a decrease of $4.4 million (-26%) compared to Q3 2022 and a decrease of $1.6 million (-12%) compared to Q2 2023.
Our operating netback improved to $70.34 per boe (+$10.51 per boe from Q3 2022 and +$0.73 per boe from Q2 2023) with higher realized sales prices, partially offset by the impact of fixed operating costs with lower sales volumes.
We generated funds flows from operations of $9.6 million ($0.26 per basic and $0.25 per diluted share), a decrease of $3.7 million compared to Q3 2022 and $1.4 million compared to Q2 2023.
We reported net income of $5.8 million in Q3 2023, a decrease of $3.0 million (-34%) compared to Q3 2022 and $4.0 million (-41%) compared to Q2 2023.
Capital expenditures totaled $10.7 million, including drilling costs for the 183-A3 well on our Murucututu natural gas field, drilling and completion costs for the BL-06 well on our Bom Lugar field, and long-lead purchases for future capital projects.
Our working capital surplus was $11.4 million as of September 30, 2023, decreasing $6.7 million from June 30, 2023 and $3.3 million from December 31, 2022.
The following table provides a summary of Alvopetro’s financial and operating results for three and nine months ended September 30, 2023 and September 30, 2022. The consolidated financial statements with the Management’s Discussion and Analysis (“MD&A”) are available on our website at www.alvopetro.com and will be available on the SEDAR+ website at www.sedarplus.ca.
As at and Three Months EndedSeptember 30,
As at and Nine Months EndedSeptember 30,
2023
2022
Change (%)
2023
2022
Change (%)
Financial
($000s, except where noted)
Natural gas, oil and condensate sales
12,313
16,672
(26)
44,387
46,431
(4)
Net income
5,819
8,795
(34)
27,873
26,541
5
Per share – basic ($)(1)
0.16
0.26
(38)
0.75
0.78
(4)
Per share – diluted ($)(1)
0.15
0.24
(38)
0.74
0.72
3
Cash flows from operating activities
12,469
13,838
(10)
39,798
35,168
13
Per share – basic ($)(1)
0.34
0.40
(15)
1.07
1.03
4
Per share – diluted ($)(1)
0.33
0.37
(11)
1.05
0.96
9
Funds flow from operations (2)
9,618
13,348
(28)
35,637
36,686
(3)
Per share – basic ($)(1)
0.26
0.39
(33)
0.96
1.08
(11)
Per share – diluted ($)(1)
0.25
0.36
(31)
0.94
1.00
(6)
Dividends declared
5,122
2,896
77
15,335
8,340
84
Per share(1)
0.14
0.08
75
0.42
0.24
75
Capital expenditures
10,703
8,713
23
22,515
18,851
19
Cash and cash equivalents
22,779
17,380
31
22,779
17,380
31
Net working capital surplus(2)
11,392
12,225
(7)
11,392
12,225
(7)
Weighted average shares outstanding
Basic (000s)(1)
37,138
34,434
8
37,086
34,107
9
Diluted (000s)(1)
37,868
36,939
3
37,748
36,693
3
Operations
Natural gas, NGLs and crude oil sales:
Natural gas (Mcfpd), by field:
Caburé (Mcfpd)
8,949
15,139
(41)
11,757
14,344
(18)
Murucututu (Mcfpd)
726
–
–
467
–
–
Total natural gas (Mcfpd)
9,675
15,139
(36)
12,224
14,344
(15)
NGLs – condensate (bopd)
81
117
(31)
101
104
(3)
Oil (bopd)
3
2
50
4
6
(33)
Total (boepd)
1,696
2,642
(36)
2,142
2,501
(14)
Average realized prices(2):
Natural gas ($/Mcf)
13.06
11.18
17
12.57
11.03
14
NGLs – condensate ($/bbl)
89.43
101.57
(12)
85.31
109.38
(22)
Oil ($/bbl)
73.08
80.92
(10)
69.18
83.59
(17)
Total ($/boe)
78.90
68.59
15
75.90
68.00
12
Operating netback ($/boe)(2)
Realized sales price
78.90
68.59
15
75.90
68.00
12
Royalties
(2.04)
(5.42)
(62)
(2.14)
(5.05)
(58)
Production expenses
(6.52)
(3.34)
95
(5.22)
(3.77)
38
Operating netback
70.34
59.83
18
68.54
59.18
16
Operating netback margin(2)
89 %
87 %
2
90 %
87 %
3
Notes:
(1)
Per share amounts are based on weighted average shares outstanding other than dividends per share, which is based on the number of common shares outstanding at each dividend record date. The weighted average number of diluted common shares outstanding in the computation of funds flow from operations and cash flows from operating activities per share is the same as for net income per share.
(2)
See “Non-GAAP and Other Financial Measures” section within this news release.
Q3 2023 Results Webcast
Alvopetro will host a live webcast to discuss our Q3 2023 financial results at 9:00 am Mountain time on Thursday November 9, 2023. Details for joining the event are as follows:
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.
Long-term Incentive Compensation Grants
In connection with our long-term incentive compensation program, Alvopetro’s Board of Directors (the “Board”) has approved the annual rolling grants to officers, directors and certain employees under Alvopetro’s Omnibus Incentive Plan. A total of 638,000 stock options, 107,000 restricted share units (“RSUs”) and 31,000 deferred share units (“DSUs”) were approved by the Board and are expected to be granted on November 17, 2023. Of the total grants, 271,000 stock options, 70,000 RSUs and 31,000 DSUs will be granted to directors and officers. Each stock option, RSU and DSU entitles the holder to purchase one common share. Each stock option granted will have an exercise price based on the volume weighted average trading price of Alvopetro’s shares on the TSX Venture Exchange for the five (5) consecutive trading days up to and including November 17, 2023. All stock options granted expire five (5) years from the date of the grant. All RSUs and DSUs granted expire ten (10) years from the date of the grant.
Alvopetro Energy Ltd.’svision 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 and Murucututu natural gas fields 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.
Abbreviations:
$000s
=
thousands of U.S. dollars
bbls
=
barrels
boepd
=
barrels of oil equivalent (“boe”) per day
bopd
=
barrels of oil and/or natural gas liquids (condensate) per day
BRL
=
Brazilian Real
Mcf
=
thousand cubic feet
Mcfpd
=
thousand cubic feet per day
MMcf
=
million cubic feet
MMcfpd
=
million cubic feet per day
NGLs
=
natural gas liquids
Q2 2023
=
three months ended June 30, 2023
Q3 2022
=
three months ended September 30, 2022
Q3 2023
=
three months ended September 30, 2023
USD
=
United States dollars
Non-GAAP and Other Financial Measures
This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed 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 and other financial 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. These are complementary measures that are used by management in assessing the Company’s financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. 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 and Other Financial Measures” section of the Company’s MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca.
Non-GAAP Financial Measures
Operating netback
Operating netback is calculated as natural gas, oil and condensate revenues less royalties and production expenses. This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.
Non-GAAP Financial Ratios
Operating netback per boe
Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent (“boe”). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company’s producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (barrels of oil equivalent). This calculation is provided in the “Operating Netback” section of the Company’s MD&A using our IFRS measures. The Company’s MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations on a per unit basis (boe).
Operating netback margin
Operating netback margin is calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:
Three Months Ended September 30,
Nine Months EndedSeptember 30,
2023
2022
2023
2022
Operating netback – $ per boe
70.34
59.83
68.54
59.18
Average realized price – $ per boe
78.90
68.59
75.90
68.00
Operating netback margin
89 %
87 %
90 %
87 %
Funds Flow from Operations Per Share
Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by the weighted the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share is as follows:
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
$ per share
2023
2022
2023
2022
Per basic share:
Cash flows from operating activities
0.34
0.40
1.07
1.03
Funds flow from operations
0.26
0.39
0.96
1.08
Per diluted share:
Cash flows from operating activities
0.33
0.37
1.05
0.96
Funds flow from operations
0.25
0.36
0.94
1.00
Capital Management Measures
Funds Flow from Operations
Funds flow from operations is a non-GAAP capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company’s ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:
Three Months Ended September 30,
Nine Months EndedSeptember 30,
2023
2022
2023
2022
Cash flows from operating activities
12,469
13,838
39,798
35,168
(Deduct) add back changes in non-cash working capital
(2,851)
(490)
(4,161)
1,518
Funds flow from operations
9,618
13,348
35,637
36,686
Net Working Capital
Net working capital is computed as current assets less current liabilities. Net working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows:
As at September 30,
2023
2022
Total current assets
27,354
24,545
Total current liabilities
(15,962)
(12,320)
Net working capital
11,392
12,225
Supplementary Financial Measures
“Average realized natural gas price – $/Mcf” is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company’s natural gas sales volumes.
“Average realized NGL – condensate price – $/bbl” is comprised of condensate sales as determined in accordance with IFRS, divided by the Company’s NGL sales volumes from condensate.
“Average realized oil price – $/bbl” is comprised of oil sales as determined in accordance with IFRS, divided by the Company’s oil sales volumes.
“Average realized price – $/boe” is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company’s total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
“Dividends per share” is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
“Royalties per boe” is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
“Production expenses per boe” is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
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 (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Testing and Well Results
Data obtained from the 183-A3 well identified in this press release, including hydrocarbon shows, open-hole logging, net pay and porosities should be considered to be preliminary until testing, detailed analysis and interpretation has been completed. Hydrocarbon shows can be seen during the drilling of a well in numerous circumstances and do not necessarily indicate a commercial discovery or the presence of commercial hydrocarbons in a well. There is no representation by Alvopetro that the data relating to the 183-A3 well contained in this press release is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future.
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 statements concerning potential net natural gas pay in the 183-A3 well, the timing of competion of the 183-A3 well, anticipated timing of commencing production from the 183-A3 well, expectations regarding future development plans for the Murucututu natural gas field , plans relating to the Company’s operational activities, proposed exploration development activities and the timing for such activities, exploration and development prospects of Alvopetro, capital spending levels, future capital and operating costs, future production and sales volumes, production allocations from the Caburé natural gas field, the expected natural gas price, gas sales and gas deliveries under Alvopetro’s long-term gas sales agreement, anticipated timing for upcoming drilling and testing of other wells, projected financial results, the expected timing and outcomes of certain of Alvopetro’s testing activities, and sources and availability of capital. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, 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. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with financial institution instability, and general economic conditions. 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. 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.sedarplus.ca. 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.
Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Alvopetro reported 2023-3Q net income of $5.8 million or $0.15 per diluted share. Results were slightly below our projections for net income of $6.3 million, or $0.17 per share. Sales were $12.3 million versus our $11.8 million estimate. With sales volume preannounced on a monthly basis and natural gas prices (95% of sales) preset by Alvopetro’s Gas Sales Agreement, there is little variance to expectations.
Production costs per unit rose explaining the slightly lower-than-expected results. Production expenses per barrel of oil equivalent (BOE) produced were $6.52 versus $3.34 last year and $5.77 last quarter. We attribute the rise to lower production volume and do not view it as an area of concern. Operating netbacks (realized prices less royalties and production costs) were $70.34 per BOE up from $59.83 last year and $67.46 last quarter. Higher netbacks reflect a natural gas price reset in February and August that increased pricing as well as a decrease in royalty costs.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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 Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Production in the month of October was 1,839 boe/d, up from 1,203 boe/d in September. Production has been anemic in recent months due to partner nomination issues in the Cabure field and demand issues by Bahia Gas. The production increase, and the fact that it largely came from the Cabure field, is a positive indication that Alvopetro’s growth plans are getting back on track. Management has set a near-term goal of reaching 3,000 boe/d and a long-term goal of 5,833 boe/d.
Speaking of growth, results from a new oil well look positive. Alvopetro completed the BL-6 well in the Bom Lugar field. The well is averaging 13 boe/d, more that all other existing oil production. The Bom Lugar field could be an important field for the company as it seeks to expand operations and reduce dependency upon natural gas sales to Bahia Gas. We believe the success of the BL-6 well will lead to management putting additional resources into the Bom Lugar field.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
CALGARY, AB, Oct. 23, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce the release of our 2022 Sustainability Report (the “Report”), highlighting our approach to environmental, social and governance (“ESG”) practices for the year ended December 31, 2022 and outlining our commitment to building a sustainable future for all of our stakeholders. A full copy of the Report, which was approved by Alvopetro’s Board of Directors, can be found on our website at https://alvopetro.com/Sustainability.
2022 ESG highlights included:
Natural gas focused production (96% of total 2022 production);
Alvopetro’s locally produced natural gas resulted in average savings of 57% for consumers relative to imported LNG;
Maintained low emission intensity with Scope 1 & 2 emissions intensity of 7.4 kg CO2e per boe;
No reported environmental spills;
Zero lost-time safety incidents;
33% of our total workforce and 38% of our senior leadership team positions are held by women;
Strengthened commitment to biodiversity and conservation with our northeastern collared sloth conservation program;
Expanded social investment programs to benefit over 600 recipients, increasing spending by 156% ; and,
With increased production and cash flows, we paid over $20 million in royalties, income taxes and sales taxes, contributing to direct and indirect benefits for the communities we operate and to Brazil as a whole.
Alvopetro Energy Ltd.’svision 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 and Murucututu natural gas fields and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
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 Alvopetro’s approach to ESG practices and plans for the future. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to expectations and assumptions concerning the success of future drilling, completion, testing, recompletion and development activities, equipment availability, the timing of regulatory licenses and approvals, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, 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, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, 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.sedarplus.ca. 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.
CALGARY, AB, Oct. 11, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce that we have now completed drilling the 183-A3 well on our 100% owned Murucututu natural gas field. Based on open-hole logs, the well encountered potential net natural gas pay across two separate formations totaling 127.7 metres, with an average porosity of 10.3%.
President and CEO, Corey C. Ruttan commented:
“The results from our uphole 183-A3 Caruaçu exploration target has significantly exceeded our pre-drill expectations and has the potential to open up a large stacked multi-zone development opportunity in further support of our longer-term natural gas growth objectives.”
The 183-A3 well was drilled to a total measured depth (“MD”) of 3,540 metres. Based on open-hole logs, the well encountered potential net natural gas pay in both the Caruaçu Member of the Maracangalha Formation and the Gomo Member of the Candeias Formation, with an aggregate 127.7 metres total vertical depth (“TVD”) of potential natural gas pay, using a 6% porosity cut-off, 50% Vshale cut-off and 50% water saturation cutoff.
Caruaçu Exploration Target
In the Caruaçu Member, a total of 116.1 metres TVD of potential net natural gas pay was encountered between 2,542 metres and 3,062 metres, at an average 38.5% water saturation and an average porosity of 10.4%. Alvopetro currently has no reserves or resources assigned to this Target.
Candeias Formation
In the Gomo Member of the Candeias Formation, a total of 11.6 metres TVD of potential net natural gas pay was encountered between 3,085 metres and 3,270 metres, at an average water saturation of 30.6% and an average porosity of 9.1%. Our Proved reserves for this development well had estimated 12.5 meters of net natural gas pay with porosity of 11.0% and 17% water saturation.
Based on these drilling results, subject to regulatory approvals and equipment availability, we plan to complete the well and put it on production directly to the adjacent field production facility.
Alvopetro Energy Ltd.’svision 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 and Murucututu natural gas fields and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Testing and Well Results. Data obtained from the 183-A3 well identified in this press release, including hydrocarbon shows, open-hole logging, net pay and porosities should be considered to be preliminary until testing, detailed analysis and interpretation has been completed. Hydrocarbon shows can be seen during the drilling of a well in numerous circumstances and do not necessarily indicate a commercial discovery or the presence of commercial hydrocarbons in a well. There is no representation by Alvopetro that the data relating to the 183-A3 well contained in this press release is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future.
Cautionary statements regarding the filing of a Notice of Discovery. We have submitted a Notice of Discovery of Hydrocarbons to the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (the “ANP”) with respect to the 183-A3 well. All operators in Brazil are required to inform the ANP, through the filing of a Notice of Discovery, of potential hydrocarbon discoveries. A Notice of Discovery is required to be filed with the ANP based on hydrocarbon indications in cuttings, mud logging or by gas detector, in combination with wire-line logging. Based on the results of open-hole logs, we have filed a Notice of Discovery relating to our 183-A3 well. These routine notifications to the ANP are not necessarily indicative of commercial hydrocarbons, potential production, recovery or reserves.
Oil and natural gas reserves. This news release includes certain information contained in the independent reserves and resources assessment and evaluation prepared by GLJ Ltd. (“GLJ”) dated February 27, 2023 with an effective date of December 31, 2022 (the “GLJ Reserves and Resource Report”). Specifically, this news release contains information concerning proved reserves in the GLJ Reserves and Resource Report applicable to the 183-A3 well. The information included herein 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, 2022 is included in the Company’s annual information form for the year ended December 31, 2022 which has been filed on SEDAR+ (www.sedarplus.ca) 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 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
Forward-Looking Statements and Cautionary Language. This news release contains “forward-looking information” within the meaning of applicable securities laws. The use of any of the words “will”, “expect”, “intend” and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking information concerning potential net natural gas pay in the 183-A3 well and expectations regarding future development plans for the well and the Murucututu natural gas field. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to expectations and assumptions concerning results from completing the 183-A3 well, equipment availability, the timing of regulatory licenses and approvals, the success of future drilling, completion, testing, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, 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, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, 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.sedarplus.ca. 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.
Alvopetro Energy Ltd.’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Michael Heim, Senior Vice President, Equity Research Analyst, Energy & Transportation, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Gas sales declined due to a temporary reduction in demand. Gas sales to Bahiagas in September averaged 6.8 MMcf/d down 35% from August sales and well below peak sales of 15.8 MMcf/d in the March quarter. Gas sales were below take or pay agreements by 1.2 MMcf/d, which will be treated as deferred revenue. Gas sales had been declining in recent months because Alvopetro’s joint venture partner in its primary field had increased its nominations for gas sales following the start-up of its plant. The decline in September is related to lower demand and comes in addition to nomination issues.
Management views the decline as temporary and is working to increase production in 100% owned fields. As we have indicated before, increased partner nominations will result in lower partner nominations in the latter years of well lives. In addition, Alvopetro is making progress drilling new wells that do not have nomination issues. Regarding the drop in demand, we would remind investors that the city of Bahia is a vibrant growing city that has limited gas supply options beyond Alvopetro. We are not concerned with a one-month decline in demand but recommend investors monitor demand issues going forward.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
CALGARY, AB, Oct. 5, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces September 2023 sales volumes and an operational update.
September 2023 Sales Volumes
September sales volumes averaged 1,203 boepd, including natural gas sales of 6.8 MMcfpd and associated natural gas liquids sales (“NGLs”) from condensate of 69 bopd, bringing our average sales volumes to 1,696 boepd in the third quarter of 2023.
Natural gas, NGLs and crude oil sales:
September 2023
August 2023
Q3 2023
Q2 2023
Natural gas (Mcfpd), by field:
Caburé
6,165
9,894
8,949
9,891
Murucututu
642
662
726
665
Total Company natural gas (Mcfpd)
6,807
10,556
9,675
10,556
NGLs (bopd)
69
84
81
84
Oil (bopd)
–
8
3
8
Total Company (boepd)
1,203
1,852
1,696
1,852
Our offtaker, Bahiagás reduced offtake in September due to a temporary reduction in end user consumption. As a result, natural gas nominations and production were below Bahiagás’ take or pay limits within our contract. Our contract requires that Bahiagás pay Alvopetro for the greater of actual gas delivered in the month or 80% of the Firm contracted volumes for the period. Our Firm contracted volume is currently 300,000 m3/d1 or 10.6 MMcfpd1, before adjusting for heat content of our delivered natural gas. As such, Bahiagas is required to pay Alvopetro for gas not taken up to 8.5 MMcfpd1. On a heat adjusted basis this amounted to 1.2 MMcfpd (35 MMcf) in September which is in addition to the September sales volume noted above of 6.8 MMcfpd. This volume paid but not taken by Bahiagas is to be compensated by Alvopetro in the future through natural gas deliveries in excess of 9.5 MMcfpd1. Natural gas deliveries during October have been approximately 8.7 MMcfpd to-date.
1 Volume represents contract volume based on contract referenced natural gas heating value. Note that Alvopetro’s delivered natural gas sales volumes, as reflected in the table above, are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro’s natural gas is approximately 7.5% hotter than the contract reference heating value.
Operational Update
In July, we spud our 183-A3 well on our Murucututu natural gas field. We are currently drilling at 3,383 metres and our plan is to drill the well to 3,480 metres total depth.
On our Bom Lugar field, we drilled the BL-6 well to a total depth of 3,244 metres. The well was completed in two intervals. The first Caruaçu interval from 2,591 to 2,598 metres was perforated and 28 barrels of fluid was swabbed over a 12-hour period with 17 barrels of 29 degree API oil and 39% water cut. The second Caruaçu interval from 2,486 to 2,598 metres swabbed 101 barrels of fluid over 24 hours with 89 barrels of 33 degree API oil and 12% water cut. We completed an organic acid stimulation and are equipping the well with an artificial lift system and expect to have the well on production next week.
Upcoming Investor Conference
Corey C. Ruttan, President and Chief Executive Officer, will present at the ‘Schachter Catch the Energy’ Conference on Saturday October 14, 2023, at 11:30 am (Mountain time).
Date:
October 14, 2023
Time:
11:30 am to 12:05 pm (Mountain time)
Location:
Mount Royal University (4825 Mt Royal Gate SW, Calgary, Alberta) Bella Concert Hall & Ross Glen Hall (Presentation Room 1)
The Conference is hosted by Josef Schachter, CFA and author of the Schachter Energy Report. Alvopetro’s presentation will include a moderated Q&A session. In addition, company personnel will be available throughout the day at Alvopetro’s booth to answer investor questions.
Alvopetro Energy Ltd.’svision 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 and Murucututu natural gas fields and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
bbls
=
barrels
boepd
=
barrels of oil equivalent (“boe”) per day
bopd
=
barrels of oil and/or natural gas liquids (condensate) per day
BRL
=
Brazilian real
m3
=
cubic metre
m3/d
=
cubic metre per day
MMBtu
=
million British thermal units
Mcf
=
thousand cubic feet
Mcfpd
=
thousand cubic feet per day
MMcf
=
million cubic feet
MMcfpd
=
million cubic feet per day
Q2 2023
=
three months ended June 30, 2023
Q3 2023
=
three months ended September 30, 2023
BOE Disclosure. The term barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Testing and Well Results. Data obtained from the BL-06 well identified in this press release, including initial testing data and associated production, should be considered to be preliminary. Production during testing is useful in confirming the presence of hydrocarbons, however, such production and production rates are not determinative of the rates at which such well will continue production and decline thereafter. Test results are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons and there is no representation by Alvopetro that the data relating to the BL-06 well contained in this press release is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future.
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 expected timing of certain of Alvopetro’s testing and operational activities including the expected timing of drilling the 183-A3 well, expected timing of production commencement from the BL-06 well, exploration and development prospects of Alvopetro, and expected natural gas sales and gas deliveries under the Company’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 expectations and assumptions concerning testing results of the BL-06 well, equipment availability, the timing of regulatory licenses and approvals, the success of future drilling, completion, testing, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, 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, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, 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.sedarplus.ca. 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.
CALGARY, AB, Sept. 14, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that our Board of Directors has declared a quarterly dividend of US$0.14 per common share, payable in cash on October 13, 2023, to shareholders of record at the close of business on September 29, 2023. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
Dividend payments to non-residents of Canada will be subject to withholding taxes at the Canadian statutory rate of 25%. Shareholders may be entitled to a reduced withholding tax rate under a tax treaty between their country of residence and Canada. For further information, see Alvopetro’s website at https://alvopetro.com/Dividends-Non-resident-Shareholders.
Alvopetro Energy Ltd.’svision 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 and Murucututu natural gas fields and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
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 Company’s dividends, plans for dividends in the future, the timing and amount of such dividends and the expected tax treatment thereof. 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 global pandemics and other significant worldwide events, 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, expectations regarding Alvopetro’s working interest in properties and the outcome of any redeterminations, 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. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. 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.
CALGARY, AB, Sept. 7, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces August 2023 sales volumes and an operational update.
August 2023 Sales Volumes
August sales volumes averaged 1,852 boepd, including natural gas sales of 10.6 MMcfpd, associated natural gas liquids sales (“NGLs”) from condensate of 84 bopd, and oil sales of 8 bopd, based on field estimates. Of the total natural gas sales of 10.6 MMcfpd, 9.9 MMcfpd was from our Caburé field, with 0.7 MMcfpd from our Murucututu field. Natural gas production from our Murucututu field declined from 0.9 MMcfpd in July to 0.7 MMcfpd in August and we are evaluating alternatives to improve the productive capability of the field.
Natural gas, NGLs and crude oil sales:
August 2023
July 2023
Q2 2023
Natural gas (Mcfpd), by field:
Caburé
9,891
10,697
10,759
Murucututu
665
872
510
Total Company natural gas (Mcfpd)
10,556
11,568
11,269
NGLs (bopd)
84
90
92
Oil (bopd)
8
–
5
Total Company (boepd)
1,852
2,018
1,975
In connection with a temporary reduction in end user consumption, our offtaker, Bahiagás, has provided notice to reduce natural gas nominations for the remainder of September to approximately 8.5 MMcfpd, and as such, we are expecting a reduction in September natural gas sales.
Operational Update
In July we spud our 183-A3 well on our Murucututu natural gas field. Alvopetro initially drilled to a total measured depth of 1,614 metres but encountered hole stability problems drilling the intermediate section within the Pojuca Formation in the intermediate 12 1/4″ hole section. We were able to successfully recover the directional drilling assembly and return it to surface and we then initiated a sidetrack from 800 metres. We completed drilling this sidetracked intermediate section to 1,707 metres and we are in the process of cementing this section in place. Our plan is to drill the well to 3,600 metres and we now expect to complete drilling operations in October.
On our Bom Lugar field, following an extended maintenance program on our contracted completions rig, we have now initiated completion operations of our BL-06 well. We expect to have the well on production later this month.
Alvopetro Energy Ltd.’svision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and our strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
bbls
= barrels
boepd
= barrels of oil equivalent (“boe”) per day
bopd
= barrels of oil and/or natural gas liquids (condensate) per day
BRL
= Brazilian real
m3
= cubic metre
MMBtu
= million British thermal units
Mcf
= thousand cubic feet
Mcfpd
= thousand cubic feet per day
MMcf
= million cubic feet
MMcfpd
= million cubic feet per day
Q2 2023
= three months ended June 30, 2023
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 expected timing of certain of Alvopetro’s testing and operational activities including the expected timing of drilling the 183-A3 well and testing the BL-06 well, expected timing of production commencement from the BL-06 well, exploration and development prospects of Alvopetro, and expected natural gas sales and gas deliveries under the Company’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 expectations and assumptions concerning testing results of the BL-06 well, equipment availability, the timing of regulatory licenses and approvals, the success of future drilling, completion, testing, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the impact of global pandemics and other significant worldwide events, 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, expectations regarding Alvopetro’s working interest and the outcome of any redeterminations, 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.sedarplus.ca. 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.
Western Midstream Partners, LP (NYSE: WES) is set to expand its footprint in the Powder River Basin through the acquisition of Meritage Midstream Services II, LLC (Meritage). This all-cash transaction comes with a price tag of $885 million and is expected to close in the fourth quarter of 2023, subject to regulatory approvals.
Meritage, headquartered in Denver, Colorado, operates a substantial natural gas gathering and processing business in Wyoming’s Powder River Basin. The acquisition will significantly increase WES’s natural gas processing capacity, taking it to 440 MMcf/d. Additionally, it will diversify WES’s customer base with long-term contracts and acreage dedications from reputable counterparties.
The Powder River Basin has attracted considerable investment due to its multi-stacked pay horizon potential, making it an appealing prospect for energy companies. As part of this acquisition, WES aims to enhance its position in the basin and pursue additional acreage dedications and business development opportunities.
Upon completing the transaction, WES anticipates recommending a Base Distribution increase of $0.0125 per unit, providing a potential boost for its investors.
This strategic move represents a significant step for WES in expanding its presence in a region with promising energy prospects.
