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, 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.
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. 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.
CALGARY, AB, Aug. 9, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce financial results for the three and six months ended June 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:
“We continue to post strong results, generating an operating netback of $69.61 per boe and $11 million in funds flow from operations, highlighting the strong profitability of our operations. Our 2023 capital program is focused on adding 100% interest production from our Murucututu natural gas project and our Bom Lugar oil field. We have had exciting early results with the stimulation of our 197(1) Murucututu well and drilling our first oil development well at Bom Lugar.”
Operational Update
Drilling operations continue on the 183-A3 well on our Murucututu natural gas field. The well was spud on July 11th and is targeting shallower exploration potential in the Caruaçu Formation and the Gomo member of the Candeias Formation. We expect drilling to be completed later this quarter. We also expect to complete our recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.
Our natural gas price under our long-term gas sales agreement with Bahiagás was adjusted effective August 1st to BRL1.99/m3 or $13.25/Mcf, based on our average heat content to date, the July 31, 2023 BRL/USD foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of our natural gas sales from both our Caburé and Murucututu fields as of August 1, 2023.
Financial and Operating Highlights – Second Quarter of 2023
Average daily sales decreased to 1,975 boepd (-29% from Q1 2023 and -16% from Q2 2022) due mainly to reduced production from our Caburé natural gas field as a result of higher nominated volumes from our partner.
Our average realized natural gas price increased to $12.86/Mcf, an 8% increase from Q2 2022 with the 3% increase in our contracted natural gas price and enhanced sales tax credits available in 2023. Compared to Q1 2023, our realized sales price increased 7% due mainly to the appreciation of the BRL to the USD in Q2. With the higher natural gas price, our overall realized price per boe increased to $77.41 (+6% from Q1 2023 and +5% from Q2 2022), despite lower Brent pricing on condensate sales.
Our natural gas, condensate and oil revenue was $13.9 million in Q2 2023, a decrease of $1.9 million compared to Q2 2022 (-12%) due to a 16% decrease in production partially offset by the increase in realized sales prices per boe.
Our operating netback improved to $69.61 per boe (+$3.00 per boe from Q1 2023 and +$5.65 per boe from Q2 2022) with a higher realized sales price and lower royalties, partially offset by the impact of fixed operating costs with lower sales volumes.
We generated funds flows from operations of $11.0 million ($0.30 per basic share and $0.29 per diluted share), a decrease of $1.4 million compared to Q2 2022 and $3.9 million compared to Q1 2023.
We reported net income of $9.9 million in Q2 2023, an increase of $3.2 million (+49%) compared to Q2 2022.
Capital expenditures totaled $8.5 million, including drilling cost for our BL-06 well on our Bom Lugar field, stimulation costs for our 197(1) well on our Murucututu field, and long-lead purchases for future capital projects.
Our working capital surplus was $18.1 million as of June 30, 2023, a decrease of $2.8 million from March 31, 2023, and an improvement of $3.4 million from December 31, 2022.
The following table provides a summary of Alvopetro’s financial and operating results for three and six months ended June 30, 2023 and June 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 EndedJune 30,
As at and Six Months EndedJune 30,
2023
2022
Change
2023
2022
Change (%)
Financial
($000s, except where noted)
Natural gas, oil and condensate sales
13,914
15,787
(12)
32,074
29,759
8
Net income
9,852
6,631
49
22,054
17,746
24
Per share – basic ($)(1)
0.27
0.20
35
0.60
0.52
15
Per share – diluted ($)(1)
0.26
0.18
44
0.59
0.49
20
Cash flows from operating activities
13,473
12,997
4
27,329
21,330
28
Per share – basic ($)(1)
0.37
0.38
(3)
0.75
0.63
19
Per share – diluted ($)(1)
0.36
0.35
3
0.73
0.59
24
Funds flow from operations (2)
11,047
12,434
(11)
26,019
23,338
11
Per share – basic ($)(1)
0.30
0.37
(19)
0.71
0.69
3
Per share – diluted ($)(1)
0.29
0.34
(15)
0.69
0.64
8
Dividends declared
5,109
2,728
87
10,213
5,444
88
Per share(1)
0.14
0.08
75
0.28
0.16
75
Capital expenditures
8,521
6,338
34
11,812
10,138
17
Cash and cash equivalents
25,598
13,672
87
25,598
13,672
87
Net working capital surplus(2)
18,084
11,641
55
18,084
11,641
55
Working capital, net of debt(2)
18,084
9,096
99
18,084
9,096
99
Weighted average shares outstanding
Basic (000s)(1)
36,697
33,973
8
36,627
33,941
8
Diluted (000s)(1)
37,755
36,637
3
37,657
36,426
3
Operations
Natural gas, NGLs and crude oil sales:
Natural gas (Mcfpd)
11,269
13,546
(17)
13,520
13,940
(3)
NGLs – condensate (bopd)
92
97
(5)
111
98
13
Oil (bopd)
5
5
–
5
8
(38)
Total (boepd)
1,975
2,359
(16)
2,369
2,429
(2)
Average realized prices(2):
Natural gas ($/Mcf)
12.86
11.90
8
12.40
10.94
13
NGLs – condensate ($/bbl)
83.35
121.93
(32)
83.79
114.11
(27)
Oil ($/bbl)
63.93
94.47
(32)
68.00
83.90
(19)
Total ($/boe)
77.41
73.54
5
74.80
67.68
11
Operating netback ($/boe)(2)
Realized sales price
77.41
73.54
5
74.80
67.68
11
Royalties
(1.97)
(5.35)
(63)
(2.18)
(4.84)
(55)
Production expenses
(5.83)
(4.23)
38
(4.75)
(4.00)
19
Operating netback
69.61
63.96
9
67.87
58.84
15
Operating netback margin(2)
90 %
87 %
3
91 %
87 %
5
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.
Q2 2023 Results Webcast
Alvopetro will host a live webcast to discuss our Q2 2023 financial results at 9:00 am Mountain time on Thursday August 10, 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.
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
CAD
=
Canadian dollars
m3
=
cubic metre
Mcf
=
thousand cubic feet
Mcfpd
=
thousand cubic feet per day
MMcf
=
million cubic feet
MMcfpd
=
million cubic feet per day
NGLs
=
natural gas liquids
Q1 2023
=
three months ended March 31, 2023
Q2 2022
=
three months ended June 30, 2022
Q2 2023
=
three months ended June 30, 2023
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 EndedJune 30,
Six Months EndedJune 30,
2023
2022
2023
2022
Operating netback – $ per boe
69.61
63.96
67.87
58.84
Average realized price – $ per boe
77.41
73.54
74.80
67.68
Operating netback margin
90 %
87 %
91 %
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 EndedJune 30,
Six Months EndedJune 30,
$ per share
2023
2022
2023
2022
Per basic share:
Cash flows from operating activities
0.37
0.38
0.75
0.63
Funds flow from operations
0.30
0.37
0.71
0.69
Per diluted share:
Cash flows from operating activities
0.36
0.35
0.73
0.59
Funds flow from operations
0.29
0.34
0.69
0.64
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 EndedJune 30,
Six Months EndedJune 30,
2023
2022
2023
2022
Cash flows from operating activities
13,473
12,997
27,329
21,330
(Deduct) add back changes in non-cash working capital
(2,426)
(563)
(1,310)
2,008
Funds flow from operations
11,047
12,434
26,019
23,338
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 June 30,
2023
2022
Total current assets
32,801
21,461
Total current liabilities
(14,717)
(9,820)
Net working capital surplus
18,084
11,641
Working Capital Net of Debt
Working capital net of debt is computed as net working capital surplus decreased by the carrying amount of the Credit Facility. Working capital net of debt is used by management to assess the Company’s overall financial position.
As at June 30,
2023
2022
Net working capital surplus
18,084
11,641
Credit Facility, balance outstanding
–
(2,545)
Working capital, net of debt
18,084
9,096
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, condensate 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, condensate 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, condensate 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.
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 concerning 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, the expected timing of testing the BL-06 well and production commencement from the BL-06 well, anticipated duration of drilling operations for the 183-A3 well, 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.
CALGARY, AB, Aug. 9, 2023 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) is pleased to announce financial results for the three and six months ended June 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:
“We continue to post strong results, generating an operating netback of $69.61 per boe and $11 million in funds flow from operations, highlighting the strong profitability of our operations. Our 2023 capital program is focused on adding 100% interest production from our Murucututu natural gas project and our Bom Lugar oil field. We have had exciting early results with the stimulation of our 197(1) Murucututu well and drilling our first oil development well at Bom Lugar.”
Operational Update
Drilling operations continue on the 183-A3 well on our Murucututu natural gas field. The well was spud on July 11th and is targeting shallower exploration potential in the Caruaçu Formation and the Gomo member of the Candeias Formation. We expect drilling to be completed later this quarter. We also expect to complete our recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.
Our natural gas price under our long-term gas sales agreement with Bahiagás was adjusted effective August 1st to BRL1.99/m3 or $13.25/Mcf, based on our average heat content to date, the July 31, 2023 BRL/USD foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of our natural gas sales from both our Caburé and Murucututu fields as of August 1, 2023.
Financial and Operating Highlights – Second Quarter of 2023
Average daily sales decreased to 1,975 boepd (-29% from Q1 2023 and -16% from Q2 2022) due mainly to reduced production from our Caburé natural gas field as a result of higher nominated volumes from our partner.
Our average realized natural gas price increased to $12.86/Mcf, an 8% increase from Q2 2022 with the 3% increase in our contracted natural gas price and enhanced sales tax credits available in 2023. Compared to Q1 2023, our realized sales price increased 7% due mainly to the appreciation of the BRL to the USD in Q2. With the higher natural gas price, our overall realized price per boe increased to $77.41 (+6% from Q1 2023 and +5% from Q2 2022), despite lower Brent pricing on condensate sales.
Our natural gas, condensate and oil revenue was $13.9 million in Q2 2023, a decrease of $1.9 million compared to Q2 2022 (-12%) due to a 16% decrease in production partially offset by the increase in realized sales prices per boe.
Our operating netback improved to $69.61 per boe (+$3.00 per boe from Q1 2023 and +$5.65 per boe from Q2 2022) with a higher realized sales price and lower royalties, partially offset by the impact of fixed operating costs with lower sales volumes.
We generated funds flows from operations of $11.0 million ($0.30 per basic share and $0.29 per diluted share), a decrease of $1.4 million compared to Q2 2022 and $3.9 million compared to Q1 2023.
We reported net income of $9.9 million in Q2 2023, an increase of $3.2 million (+49%) compared to Q2 2022.
Capital expenditures totaled $8.5 million, including drilling cost for our BL-06 well on our Bom Lugar field, stimulation costs for our 197(1) well on our Murucututu field, and long-lead purchases for future capital projects.
Our working capital surplus was $18.1 million as of June 30, 2023, a decrease of $2.8 million from March 31, 2023, and an improvement of $3.4 million from December 31, 2022.
The following table provides a summary of Alvopetro’s financial and operating results for three and six months ended June 30, 2023 and June 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 EndedJune 30,
As at and Six Months EndedJune 30,
2023
2022
Change
2023
2022
Change (%)
Financial
($000s, except where noted)
Natural gas, oil and condensate sales
13,914
15,787
(12)
32,074
29,759
8
Net income
9,852
6,631
49
22,054
17,746
24
Per share – basic ($)(1)
0.27
0.20
35
0.60
0.52
15
Per share – diluted ($)(1)
0.26
0.18
44
0.59
0.49
20
Cash flows from operating activities
13,473
12,997
4
27,329
21,330
28
Per share – basic ($)(1)
0.37
0.38
(3)
0.75
0.63
19
Per share – diluted ($)(1)
0.36
0.35
3
0.73
0.59
24
Funds flow from operations (2)
11,047
12,434
(11)
26,019
23,338
11
Per share – basic ($)(1)
0.30
0.37
(19)
0.71
0.69
3
Per share – diluted ($)(1)
0.29
0.34
(15)
0.69
0.64
8
Dividends declared
5,109
2,728
87
10,213
5,444
88
Per share(1)
0.14
0.08
75
0.28
0.16
75
Capital expenditures
8,521
6,338
34
11,812
10,138
17
Cash and cash equivalents
25,598
13,672
87
25,598
13,672
87
Net working capital surplus(2)
18,084
11,641
55
18,084
11,641
55
Working capital, net of debt(2)
18,084
9,096
99
18,084
9,096
99
Weighted average shares outstanding
Basic (000s)(1)
36,697
33,973
8
36,627
33,941
8
Diluted (000s)(1)
37,755
36,637
3
37,657
36,426
3
Operations
Natural gas, NGLs and crude oil sales:
Natural gas (Mcfpd)
11,269
13,546
(17)
13,520
13,940
(3)
NGLs – condensate (bopd)
92
97
(5)
111
98
13
Oil (bopd)
5
5
–
5
8
(38)
Total (boepd)
1,975
2,359
(16)
2,369
2,429
(2)
Average realized prices(2):
Natural gas ($/Mcf)
12.86
11.90
8
12.40
10.94
13
NGLs – condensate ($/bbl)
83.35
121.93
(32)
83.79
114.11
(27)
Oil ($/bbl)
63.93
94.47
(32)
68.00
83.90
(19)
Total ($/boe)
77.41
73.54
5
74.80
67.68
11
Operating netback ($/boe)(2)
Realized sales price
77.41
73.54
5
74.80
67.68
11
Royalties
(1.97)
(5.35)
(63)
(2.18)
(4.84)
(55)
Production expenses
(5.83)
(4.23)
38
(4.75)
(4.00)
19
Operating netback
69.61
63.96
9
67.87
58.84
15
Operating netback margin(2)
90 %
87 %
3
91 %
87 %
5
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.
Q2 2023 Results Webcast
Alvopetro will host a live webcast to discuss our Q2 2023 financial results at 9:00 am Mountain time on Thursday August 10, 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.
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
CAD
=
Canadian dollars
m3
=
cubic metre
Mcf
=
thousand cubic feet
Mcfpd
=
thousand cubic feet per day
MMcf
=
million cubic feet
MMcfpd
=
million cubic feet per day
NGLs
=
natural gas liquids
Q1 2023
=
three months ended March 31, 2023
Q2 2022
=
three months ended June 30, 2022
Q2 2023
=
three months ended June 30, 2023
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 EndedJune 30,
Six Months EndedJune 30,
2023
2022
2023
2022
Operating netback – $ per boe
69.61
63.96
67.87
58.84
Average realized price – $ per boe
77.41
73.54
74.80
67.68
Operating netback margin
90 %
87 %
91 %
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 EndedJune 30,
Six Months EndedJune 30,
$ per share
2023
2022
2023
2022
Per basic share:
Cash flows from operating activities
0.37
0.38
0.75
0.63
Funds flow from operations
0.30
0.37
0.71
0.69
Per diluted share:
Cash flows from operating activities
0.36
0.35
0.73
0.59
Funds flow from operations
0.29
0.34
0.69
0.64
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 EndedJune 30,
Six Months EndedJune 30,
2023
2022
2023
2022
Cash flows from operating activities
13,473
12,997
27,329
21,330
(Deduct) add back changes in non-cash working capital
(2,426)
(563)
(1,310)
2,008
Funds flow from operations
11,047
12,434
26,019
23,338
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 June 30,
2023
2022
Total current assets
32,801
21,461
Total current liabilities
(14,717)
(9,820)
Net working capital surplus
18,084
11,641
Working Capital Net of Debt
Working capital net of debt is computed as net working capital surplus decreased by the carrying amount of the Credit Facility. Working capital net of debt is used by management to assess the Company’s overall financial position.
As at June 30,
2023
2022
Net working capital surplus
18,084
11,641
Credit Facility, balance outstanding
–
(2,545)
Working capital, net of debt
18,084
9,096
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, condensate 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, condensate 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, condensate 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.
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 concerning 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, the expected timing of testing the BL-06 well and production commencement from the BL-06 well, anticipated duration of drilling operations for the 183-A3 well, 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.
CALGARY, AB, Sept. 15, 2022 /CNW/ – Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that our Board of Directors has declared a quarterly dividend of US$0.08 per common share, payable in cash on October 14, 2022, to shareholders of record at the close of business on September 29, 2022. 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 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.
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 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 the COVID-19 pandemic 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.
