President & CEO, Corey C. Ruttan commented:
"Through 2024 we increased our productive capacity both at the Caburé Unit and on our 100% interest Murucututu project. This allowed us to increase our firm natural gas sales volumes for 2025 resulting in a strong start to the year with a 37% increase in our sales volumes. We are increasing our base dividend to US$0.10 per share, consistent with our long-standing commitment to a more disciplined capital allocation model, balancing returns to stakeholders and organic growth."
Operational Update
As announced on December 17, 2024 , our updated long-term gas sales agreement came into effect on January 1, 2025 increasing Alvopetro's contracted firm reference volumes by 33%. As a result, Alvopetro's daily sales in January and February increased 37% from Q4 2024 sales to an average of 2,375 boepd, including 13.4 MMcfpd of natural gas, natural gas liquids sales from condensate of 129 bopd and oil sales of 10 bopd. Effective February 1, 2025 , our natural gas price under our long-term gas sales agreement with Bahiagás has been adjusted to BRL1.95 /m 3 , a 7% increase from the January 2025 price of BRL1.83 /m 3 and consistent with the Q4 2024 price of BRL1.94 /m 3 . All natural gas sales from February 1, 2025 to April 30, 2025 will be sold at BRL1.95 /m 3 ( $10.55 /Mcf, net of applicable sales taxes, based on average heat content to date and the January 31, 2025 BRL/USD exchange rate of 5.83).
On February 5, 2025 , we announced the terms of a farmin agreement in Canada , pursuant to which Alvopetro agreed to fund 100% of two earning wells in exchange for a 50% non-operated working interest in 12,243 acres (6,122 net acres) of land in Western Saskatchewan . The first two earning wells have now been drilled and are being completed and equipped. Both wells are expected to be on production within the next 30 days. Alvopetro's estimated total costs for the two earning wells is expected to be approximately C$4.0 million ( $2.8 million ). After these initial two earning wells Alvopetro's working interest will be 50%.
On the Company's Murucututu natural gas field, we spud the first of two development wells planned for 2025 in February. Drilling is underway. On the unitized area (the "Unit") which includes the Caburé natural gas field, Alvopetro has five development wells planned for 2025, with the first well expected to be drilled in April.
On February 26, 2025 , we announced our December 31, 2024 reserves based on the independent reserve assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated February 26, 2025 with an effective date of December 31, 2024 (the "GLJ Reserves and Resources Report"). Highlights include:
- After 2024 production of 0.7 MMboe, 1P reserves increased 65% to 4.5 MMboe, representing a 1P production replacement ratio (1) of 372%. The increase was mainly due to the successful working interest redetermination at the Caburé field and increases of Caruaçu assigned reserves on our 100% Murucututu field following success on the 183-A3 well completion, somewhat offset by technical revisions related to the Gomo Formation.
- 2P reserve volumes increased 5% to 9.1 MMboe, representing a 2P production replacement ratio of 167% (1) . The increase in 2P volumes was due to the higher working interest on the Caburé field following the redetermination, partially offset by 2024 production of 0.7 MMboe. At Murucututu, additional reserves associated with the Caruaçu reservoir were offset by technical revisions reducing reserves assigned to the Gomo Formation.
- With increased reserve volumes, 1P net present value before tax, discounted at 10% ("NPV10") increased 53% to $177.7 million and 2P NPV10 increased 6% to $327.8 million .
- Risked best estimate contingent resources decreased by 0.8 MMboe from 5.4 MMboe to 4.5 MMboe at December 31, 2024 with a NPV10 of $110.0 million , decreases from December 31, 2023 of 15% and 13% respectively. The decreases were associated with the migration of volumes to reserves for the Caruaçu Formation.
- Risked best estimate prospective resources increased from 9.6 MMboe to 10.2 MMboe with a NPV10 of $208.9 million , increases of 6% and 13% respectively from December 31, 2023 .
Financial and Operating Highlights – Fourth Quarter of 2024
- Our average daily sales decreased to 1,738 boepd in Q4 2024 (-19% from Q4 2023 and -17% from Q3 2024) with reduced natural gas demand as well as shutdowns during the month of November for planned facility turnarounds and inspections.
- Our average realized natural gas price decreased to $10.51 /Mcf in Q4 2024 (-18% from Q4 2023 and -4% from Q3 2024), due mainly to the devaluation of the BRL relative to the USD, which depreciated 18% compared to the average rate in Q4 2023. Our overall averaged realized sales price was $63.88 per boe (-18% from Q4 2023 and -4% from Q3 2024).
- With lower sales volumes and lower prices, our natural gas, oil and condensate revenue decreased to $10.2 million (-33% from Q4 2023 and -21% from Q3 2024).
- Our operating netback (1) in the quarter was $55.09 per boe (- $14.60 per boe from Q4 2023) due mainly to the reduction in our realized sales price per boe as well as higher production expenses per boe with lower overall production.
- We generated funds flows from operations (1) of $7.0 million ( $0.19 per basic share and per diluted share), decreases of $5.4 million compared to Q4 2023 and $2.9 million compared to Q3 2024 due mainly to lower sales volumes and lower realized prices.
- We reported net income of $2.2 million in Q4 2024, an increase of $1.6 million compared to Q4 2023 despite lower sales volumes and realized prices due to impairment losses recognized in Q4 2023, offset by foreign exchange losses in Q4 2024 compared to foreign exchange gains in Q4 2023.
- Capital expenditures totaled $4.7 million , including costs to re-enter the 183-B1 well on our exploratory Block 183 and costs associated with the facilities upgrade at our Caburé field.
- Our working capital surplus was $13.2 million as of December 31, 2024 , increasing $0.1 million from December 31, 2023 and decreasing $2.7 million from September 30, 2024 .
Financial and Operating Highlights – Year Ended December 31, 2024
- Our annual sales volumes averaged 1,794 boepd (93% natural gas, 6% NGLs from condensate and 1% from crude oil production), a decrease of 16% compared to 2023.
- We reported net income of $16.3 million , compared to $28.5 million in 2023 (-43%).
- We generated funds flow from operations (1) of $33.3 million ( $0.89 per basic share and per diluted share), a decrease of $14.8 million compared to 2023.
- Capital expenditures totaled $15.3 million in 2024.
- Dividends declared totaled $0.36 per share in 2024 compared to $0.56 per share in 2023 (-36%).
| (1) Refer to the sections entitled " Oil and Natural Gas Advisories – Other Metrics " and " Non-GAAP and Other Financial Measures ". |
The following table provides a summary of Alvopetro's financial and operating results for the periods noted. 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 Ended December 31 | As at and Year Ended December 31, |
| 2024 | 2023 | Change (%) | 2024 | 2023 | Change (%) |
| Financial |
|
|
|
|
|
|
| ($000s, except where noted) |
|
|
|
|
|
|
| Natural gas, oil and condensate sales | 10,214 | 15,300 | (33) | 45,517 | 59,687 | (24) |
| Net income | 2,243 | 652 | 244 | 16,295 | 28,525 | (43) |
| Per share – basic ($) (1) | 0.06 | 0.02 | 200 | 0.44 | 0.77 | (43) |
| Per share – diluted ($) (1) | 0.06 | 0.02 | 200 | 0.43 | 0.76 | (43) |
| Cash flows from operating activities | 7,114 | 7,904 | (10) | 34,901 | 47,702 | (27) |
| Per share – basic ($) (1) | 0.19 | 0.21 | (10) | 0.94 | 1.29 | (27) |
| Per share – diluted ($) (1) | 0.19 | 0.21 | (10) | 0.93 | 1.26 | (26) |
| Funds flow from operations (2) | 6,966 | 12,393 | (44) | 33,275 | 48,030 | (31) |
| Per share – basic ($) (1) | 0.19 | 0.33 | (42) | 0.89 | 1.29 | (31) |
| Per share – diluted ($) (1) | 0.19 | 0.33 | (42) | 0.89 | 1.27 | (30) |
| Dividends declared | 3,283 | 5,127 | (36) | 13,170 | 20,462 | (36) |
| Per share (1) (2) | 0.09 | 0.14 | (36) | 0.36 | 0.56 | (36) |
| Capital expenditures | 4,682 | 4,934 | (5) | 15,305 | 27,449 | (44) |
| Cash and cash equivalents | 21,697 | 18,326 | 18 | 21,697 | 18,326 | 18 |
| Net working capital (2) | 13,181 | 13,117 | - | 13,181 | 13,117 | - |
| Weighted average shares outstanding |
|
|
|
|
|
|
| Basic (000s) (1) | 37,315 | 37,262 | - | 37,289 | 37,121 | - |
| Diluted (000s) (1) | 37,566 | 37,963 | (1) | 37,558 | 37,770 | (1) |
| Operations |
|
|
|
|
|
|
| Average daily sales volumes: |
|
|
|
|
|
|
| Natural gas (Mcfpd), by field: |
|
|
|
|
|
|
| Caburé (Mcfpd) | 7,476 | 11,699 | (36) | 9,228 | 11,742 | (21) |
| Murucututu (Mcfpd) | 2,231 | 546 | 309 | 928 | 487 | 91 |
| Total natural gas (Mcfpd) | 9,707 | 12,245 | (21) | 10,156 | 12,229 | (17) |
| NGLs – condensate (bopd) | 109 | 92 | 18 | 90 | 99 | (9) |
| Oil (bopd) | 11 | 10 | 10 | 12 | 6 | 100 |
| Total (boepd) | 1,738 | 2,143 | (19) | 1,794 | 2,142 | (16) |
|
|
|
|
|
|
|
| Average realized prices (2) : |
|
|
|
|
|
|
| Natural gas ($/Mcf) | 10.51 | 12.85 | (18) | 11.42 | 12.64 | (10) |
| NGLs – condensate ($/bbl) | 75.95 | 89.45 | (15) | 84.84 | 86.29 | (2) |
| Oil ($/bbl) | 61.74 | 73.67 | (16) | 66.94 | 71.22 | (6) |
| Total ($/boe) | 63.88 | 77.60 | (18) | 69.31 | 76.33 | (9) |
|
|
|
|
|
|
|
| Operating netback ($/boe) (2) |
|
|
|
|
|
|
| Realized sales price | 63.88 | 77.60 | (18) | 69.31 | 76.33 | (9) |
| Royalties | (2.15) | (2.07) | 4 | (1.99) | (2.13) | (7) |
| Production expenses | (6.64) | (5.84) | 14 | (6.33) | (5.38) | 18 |
| Operating netback | 55.09 | 69.69 | (21) | 60.99 | 68.82 | (11) |
| Operating netback margin (2) | 86 % | 90 % | (4) | 88 % | 90 % | (2) |
|
|
|
|
|
|
|
|
| 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. |
|
|
Quarterly Dividend of US$0.10 per Share
With our updated gas sales agreement in effect as of January 1, 2025 and higher production levels forecasted in the first quarter of 2025 our Board of Directors determined it was appropriate to increase the declared quarterly dividend to US$0.10 per common share, payable in cash on April 15, 2025, to shareholders of record at the close of business on March 31, 2025. 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 .
Annual Information Form
Alvopetro has filed its annual information form ("AIF") with the Canadian securities regulators on SEDAR+. The AIF
includes the disclosure and reports relating to oil and gas reserves data and other oil and gas information required
pursuant to National Instrument 51-101 of the Canadian Securities Administrators. The AIF may be accessed
electronically at www.sedarplus.ca and on our website at www.alvopetro.com .
2024 Results Webcast
Alvopetro will host a live webcast to discuss our 2024 financial results at 8:00 am Mountain time on Wednesday March 19, 2025. Details for joining the event are as follows:
DATE: March 19, 2025
TIME : 8:00 AM Mountain/ 10:00 AM Eastern
LINK: https://us06web.zoom.us/j/84540021301
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kBRCh4fgE
WEBINAR ID : 845 4002 1301
The webcast will include a question-and-answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com .
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation .
Social Media
Follow Alvopetro on our social media channels at the following links:
Twitter - https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related 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 |
| 1P | = | proved reserves |
| 2P | = | proved plus probable reserves |
| 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 (condensate) |
| NPV10 | = | net present value before tax, discounted at 10% |
| Q3 2024 | = | three months ended September 30, 2024 |
| Q4 2023 | = | three months ended December 31, 2023 |
| Q4 2024 | = | three months ended December 31, 2024 |
| USD | = | United States dollars |
| GAAP or IFRS | = | IFRS Accounting Standards |
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 (boe). 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 boe basis.
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 December 31, | Year Ended December 31, |
| 2024 | 2023 | 2024 | 2023 |
| Operating netback - $ per boe | 55.09 | 69.69 | 60.99 | 68.82 |
| Average realized price - $ per boe | 63.88 | 77.60 | 69.31 | 76.33 |
| Operating netback margin | 86 % | 90 % | 88 % | 90 % |
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 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 Ended December 31, | Year Ended December 31, |
| $ per share | 2024 | 2023 | 2024 | 2023 |
| Per basic share: |
|
|
|
|
| Cash flows from operating activities | 0.19 | 0.21 | 0.94 | 1.29 |
| Funds flow from operations | 0.19 | 0.33 | 0.89 | 1.29 |
|
|
|
|
|
| Per diluted share: |
|
|
|
|
| Cash flows from operating activities | 0.19 | 0.21 | 0.93 | 1.26 |
| Funds flow from operations | 0.19 | 0.33 | 0.89 | 1.27 |
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 December 31, | Year Ended December 31, |
| 2024 | 2023 | 2024 | 2023 |
| Cash flows from operating activities | 7,114 | 7,904 | 34,901 | 47,702 |
| Changes in non-cash working capital | (148) | 4,489 | (1,626) | 328 |
| Funds flow from operations | 6,966 | 12,393 | 33,275 | 48,030 |
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 December 31 |
|
| 2024 | 2023 |
| Total current assets |
| 26,984 | 25,995 |
| Total current liabilities |
| (13,803) | (12,878) |
| Net working capital |
| 13,181 | 13,117 |
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).
Oil and Natural Gas Advisories
Oil and Natural Gas Reserves
The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under National Instrument 51-101 ("NI 51-101"). Full disclosure with respect to the Company's reserves as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ). The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook" or "COGEH") that are consistent with the standards of NI 51-101. GLJ is a qualified reserves evaluator as defined in NI 51-101.
All net present values in this press release are based on estimates of future operating and capital costs and GLJ's forecast prices as of December 31, 2024 . The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to Alvopetro's reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Cabur é Working Interest
Alvopetro's working interest in the Caburé natural gas field is 56.2% as of December 31, 2024 and the date hereof. This working interest is subject to redetermination, the first of which was completed in April 2024 . An independent expert (the "Expert") was engaged in connection with the first redetermination to evaluate the redetermination and the impact to each party's working interest. Following the Expert's decision, Alvopetro's working interest was increased from 49.1% to 56.2%. Alvopetro's partner filed a notice of dispute with respect to the Expert's decision, seeking to stay the redetermination procedure. Alvopetro subsequently filed a request for emergency arbitration before the International Chamber of Commerce ("ICC") seeking to make the Expert decision effective starting on June 1, 2024 . In May 2024 , Alvopetro received the decision of the emergency arbitrator ("the Order") wherein the arbitrator found in favour of Alvopetro, making the Expert decision effective June 1, 2024 until such time as the dispute is reviewed by and decided upon by an arbitral tribunal pursuant to the Rules of Arbitration of the ICC. The redetermination dispute has proceeded to a full arbitration under the Rules of the ICC, however the timing and outcome of the full arbitration is uncertain and the resulting impact on the reserves and the net present value of future net revenue attributable to such reserves as presented herein may be material. In addition, future redeterminations may also have a material impact on Alvopetro's reserves and future cash flows.
Contingent Resources
This news release discloses estimates of Alvopetro's contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company's contingent resources as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ).
Prospective Resources
This news release discloses estimates of Alvopetro's prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company's prospective resources as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ).
Other Metrics
This new release contains references to "production replacement ratio", a metric commonly used in the oil and natural gas industry, which has been calculated by management. This term does not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
"Production replacement ratio" is calculated by dividing the change in reserve volumes plus current year production by current year production. Alvopetro's 1P production replacement ratio and 2P production replacement ratio in 2024 is calculated as:
| 1P | 2P |
| Reserve volumes as at December 31, 2024 – Mboe | 4,512 | 9,148 |
| Reserve volumes as at December 31, 2023 – Mboe | 2,727 | 8,711 |
| Reserve additions – Mboe | 1,785 | 437 |
| 2024 production – Mboe | 657 | 657 |
| Change in reserves before 2024 production - Mboe | 2,442 | 1,094 |
| 2024 production replacement ratio | 372 % | 167 % |
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.
Contracted Natural Gas Volumes
The 2025 contracted daily firm volumes under Alvopetro's long-term gas sales agreement of 400 e 3 m 3 /d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Alvopetro's reported natural gas sales volumes are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro's natural gas is approximately 7.8% higher than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e 3 m 3 /d (13.1MMcfpd).
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", "plan", "may", "believe", "estimate", "forecast", "anticipate", "should" 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 the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement, the timing and taxation of dividends and plans for dividends in the future, plans relating to the Company's operational activities, proposed exploration and development activities and the timing for such activities, capital spending levels, future capital and operating costs, future production and sales volumes, the expected timing of production commencement in Canada , arbitration procedures associated with the redetermination of working interests of the Caburé natural gas field, anticipated timing for upcoming drilling and testing of other wells, and projected financial results. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to 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 and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, 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, the outcome of any disputes, the outcome of redeterminations, 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, and 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. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. 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 trade or tariff disputes, 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 AIF 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.
SOURCE Alvopetro Energy Ltd.
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