The GLJ Reserves and Resources Report incorporates Alvopetro's working interest share of remaining recoverable reserves held by Alvopetro in the Caburé and Murucututu natural gas fields and the Bom Lugar and Mãe-da-lua oil fields as well as Alvopetro's working interest share of remaining recoverable resources held by Alvopetro in the Murucututu natural gas field. With respect to Murucututu, Bom Lugar, and Mãe-da-lua, Alvopetro's working interest share is 100%. With respect to the unitized area (the "Unit") which includes our Caburé and Caburé Leste fields (collectively referred to as "Caburé" in this news release) and two fields held by our third-party partner in the Unit, Alvopetro's working interest share as of December 31, 2024 was 56.2%, with the remaining 43.8% held by our partner.
All references herein to $ refer to United States dollars, unless otherwise stated.
President & CEO, Corey C. Ruttan commented:
"Our 2024 year end reserves reflect a strong year for Alvopetro resulting from our successful redetermination increasing our Caburé Unit working interest from 49.1% to 56.2% and strong results from our 183-A3 well in the Caruaçu Formation on our 100% interest Murucututu project. These successes allowed us to commit to a higher level of base committed firm sales volumes with our offtaker, Bahiagás, for 2025 and further strengthens our disciplined capital allocation model, balancing returns to stakeholders and organic growth."
December 31, 2024 GLJ Reserves and Resource Report:
- 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 on 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 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 .
(1) Refer to the sections entitled " Oil and Natural Gas Advisories – Other Metrics " for additional disclosures and assumptions used in calculating production replacement ratio.
SUMMARY
December 31, 2024 Gross Reserve and Gross Resource Volumes : (1)(2)(3)(4)(5)(6)
December 31, 2024 Reserves (Gross) | Total Proved (1P) | Total Proved plus
Probable (2P) | Total Proved plus
Probable plus Possible (3P) |
| (Mboe) | (Mboe) | (Mboe) |
Caburé Natural Gas Field | 2,147 | 4,121 | 5,465 |
Murucututu Natural Gas Field | 2,216 | 4,563 | 7,265 |
Bom Lugar Oil Field | 124 | 422 | 638 |
Mãe-da-lua Oil Field | 27 | 42 | 61 |
Total Company Reserves | 4,512 | 9,148 | 13,428 |
|
|
|
|
December 31, 2024 Murucututu Resources (Gross) | Low Estimate | Best Estimate | High Estimate |
| (Mboe) | (Mboe) | (Mboe) |
Risked Contingent Resource Risked Prospective Resource | 2,570 4,830 | 4,549 10,208 | 6,127 17,076 |
See 'Footnotes' section at the end of this news release |
Net Present Value Before Tax Discounted at 10% : (1)(2)(3)(4)(5)(6)(7)(8)
Reserves | 1P | 2P | 3P |
| ($000s) | ($000s) | ($000s) |
Caburé Natural Gas Field | 106,514 | 185,164 | 234,176 |
Murucututu Natural Gas Field | 67,797 | 134,792 | 200,732 |
Bom Lugar Oil Field | 2,882 | 6,857 | 11,388 |
Mãe-da-lua Oil Field | 459 | 966 | 1,532 |
Total Company | 177,651 | 327,779 | 447,828 |
|
|
|
|
Murucututu Resource | Low Estimate | Best Estimate | High Estimate |
| ($000s) | ($000s) | ($000s) |
Risked Contingent Resource Risked Prospective Resource | 58,505 88,427 | 109,951 208,880 | 146,405 351,902 |
See 'Footnotes' section at the end of this news release |
PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS
GLJ employed the following pricing and inflation rate assumptions as of January 1, 2025 , in the GLJ Reserves and Resources Report in estimating reserves and resources data using forecast prices and costs.
Year | Brent Blend
Crude Oil FOB
North Sea ($/Bbl) | NYMEX Henry Hub
Near Month
Contract ($/MMBtu) | Alvopetro-Bahiagas
Gas Contract $/MMBtu* (Current Year) | Alvopetro-Bahiagas
Gas Contract $/MMBtu* (Previous Year) | Change from prior
year |
2025 | 75.25 | 3.19 | 9.23 | 10.08 | -8 % |
2026 | 77.50 | 3.85 | 10.11 | 10.44 | -3 % |
2027 | 80.08 | 4.16 | 10.55 | 10.51 | 0 % |
2028 | 82.69 | 4.25 | 10.66 | 10.48 | 2 % |
2029 | 84.34 | 4.33 | 10.47 | 10.63 | -2 % |
2030 | 86.03 | 4.42 | 10.71 | 10.82 | -1 % |
2031 | 87.76 | 4.50 | 10.96 | 11.04 | -1 % |
2032 | 89.50 | 4.60 | 11.22 | 11.26 | 0 % |
2033 | 91.20 | 4.69 | 11.48 | 11.48 | 0 % |
2034** | 92.94 | 4.78 | 11.74 | 11.71 | 0 % |
* Net of applicable sales taxes expected to apply |
**Escalated at 2% per year thereafter |
GLJ RESERVES AND RESOURCES REPORT
The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook" or "COGEH") that are consistent with the standards of National Instrument 51-101 ("NI 51-101"). GLJ is a qualified reserves evaluator as defined in NI 51-101. The GLJ Reserves and Resources Report was an evaluation of all reserves of Alvopetro including our working interest share as of December 31, 2024 of the Unit (referred to herein as the Caburé natural gas field), our Murucututu natural gas project, as well as our Bom Lugar and Mãe-da-lua oil fields. The GLJ Reserves and Resources Report also includes an evaluation of the gas resources of our Murucututu natural gas field. In addition to the reserves assigned to our Murucututu field, contingent resource was assigned to the area in proximity to our existing Murucututu reserves, deemed to be discovered. The area mapped by 3D seismic west and north of the area defined as contingent was assigned prospective resource. Additional reserves and resources information as required under NI 51-101 will be included in the Company's Annual Information Form for the 2024 fiscal year which will be filed on SEDAR+ ( www.sedarplus.ca ) by April 30, 2025 .
December 31, 2024 Reserves Information:
Summary of Reserves (1)(2)(3)
| Light & Medium Oil | Conventional Natural Gas | Natural Gas Liquids | Oil Equivalent |
| Company Gross | Company
Net | Company
Gross | Company
Net | Company
Gross | Company
Net | Company
Gross | Company
Net |
| (Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) |
Proved |
|
|
|
|
|
|
|
|
| Producing | 4 | 4 | 14,874 | 14,323 | 190 | 183 | 2,673 | 2,574 |
| Developed Non-Producing | 146 | 136 | 1,396 | 1,342 | 10 | 10 | 389 | 369 |
| Undeveloped | - | - | 7,843 | 7,529 | 143 | 138 | 1,451 | 1,392 |
Total Proved | 150 | 139 | 24,113 | 23,194 | 343 | 330 | 4,512 | 4,335 |
Probable | 313 | 292 | 23,934 | 22,931 | 333 | 319 | 4,635 | 4,433 |
Total Proved plus Probable | 463 | 431 | 48,047 | 46,124 | 677 | 649 | 9,148 | 8,768 |
Possible | 235 | 219 | 22,302 | 21,352 | 328 | 313 | 4,280 | 4,091 |
Total Proved plus Probable plus Possible | 699 | 650 | 70,349 | 67,476 | 1,004 | 962 | 13,428 | 12,859 |
See 'Footnotes' section at the end of this news release |
Summary of Before Tax Net Present Value of Future Net Revenue - $000s (1)(2)(3)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Proved |
|
|
|
|
|
| Producing | 145,792 | 134,892 | 125,270 | 116,873 | 109,547 |
| Developed Non-Producing | 19,256 | 15,218 | 12,375 | 10,316 | 8,780 |
| Undeveloped | 81,878 | 55,499 | 40,006 | 30,234 | 23,666 |
Total Proved | 246,927 | 205,609 | 177,651 | 157,423 | 141,993 |
Probable | 306,142 | 205,419 | 150,128 | 115,530 | 91,857 |
Total Proved plus Probable | 553,069 | 411,027 | 327,779 | 272,953 | 233,849 |
Possible | 348,169 | 184,292 | 120,049 | 86,800 | 66,442 |
Total Proved plus Probable plus Possible | 901,238 | 595,319 | 447,828 | 359,753 | 300,291 |
See 'Footnotes' section at the end of this news release |
Summary of After Tax Net Present Value of Future Net Revenue – $000s (1)(2)(3)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Proved |
|
|
|
|
|
| Producing | 130,855 | 121,530 | 113,190 | 105,860 | 99,436 |
| Developed Non-Producing | 15,471 | 12,283 | 10,012 | 8,353 | 7,105 |
| Undeveloped | 61,008 | 42,127 | 30,708 | 23,341 | 18,293 |
Total Proved | 207,334 | 175,939 | 153,910 | 137,554 | 124,834 |
Probable | 234,053 | 160,795 | 119,072 | 92,190 | 73,390 |
Total Proved plus Probable | 441,387 | 336,734 | 272,982 | 229,744 | 198,224 |
Possible | 244,094 | 132,792 | 87,980 | 64,288 | 49,541 |
Total Proved plus Probable plus Possible | 685,481 | 469,526 | 360,962 | 294,032 | 247,765 |
See 'Footnotes' section at the end of this news release |
Future Development Costs (1)(2)(3)(7)(8)
The table below sets out the total development costs deducted in the estimation of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs), by field, in the GLJ Reserves and Resources Report. Total development costs include capital costs for drilling and completing wells and for facilities but excludes abandonment and reclamation costs.
The future development costs for the Caburé field include Alvopetro's working interest share (56.2%) for two development wells in the proved category and an additional three development wells in the probable and possible categories.
The future development costs for the Murucututu field in the proved category include three development wells and a stimulation project at the 183-1 well. The probable category includes an additional two development wells .
The future development costs for Bom Lugar in the proved category include costs to stimulate the BL-06 well. Costs in the probable category also include one development well and costs for facilities upgrade. Future development costs at the Mãe-da-lua field relate to a stimulation of the existing well.
Alvopetro's share of future development costs are summarized as follows:
$000s, Undiscounted | 2025 | 2026 | 2027 | 2027 | 2029 | Remaining | Total |
Proved |
|
|
|
|
|
|
|
| Caburé Natural Gas Field | 3,443 | - | - | - | - | - | 3,443 |
| Murucututu Gas Field | 13,010 | 8,095 | - | - | - | - | 21,105 |
| Bom Lugar Oil Field | - | 500 | - | - | - | - | 500 |
| Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 |
Total Proved | 16,453 | 9,135 | - | - | - | - | 25,588 |
Proved Plus Probable |
|
|
|
|
|
|
|
| Caburé Natural Gas Field | 8,743 | - | - | - | - | - | 8,743 |
| Murucututu Gas Field | 13,010 | 21,774 | - | - | - | - | 34,784 |
| Bom Lugar Oil Field | - | 5,967 | - | - | - | - | 5,967 |
| Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 |
Total Proved Plus Probable | 21,753 | 28,281 | - | - | - | - | 50,034 |
Proved Plus Probable Plus Possible |
|
|
|
|
|
|
|
| Caburé Natural Gas Field | 8,743 | - | - | - | - | - | 8,743 |
| Murucututu Gas Field | 13,010 | 21,774 | - | - | - | - | 34,784 |
| Bom Lugar Oil Field | - | 5,967 | - | - | - | - | 5,967 |
| Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 |
Total Proved Plus Probable Plus Possible | 21,753 | 28,281 | - | - | - | - | 50,034 |
See 'Footnotes' section at the end of this news release |
Reconciliation of Alvopetro's Gross Reserves (Before Royalty) (1)(2)(3)(8)
| Proved
(Mboe) | Probable
(Mboe) | Proved Plus
Probable
(Mboe) | Possible (Mboe) | Proved plus
Probable plus
Possible (Mboe) |
December 31, 2023 | 2,727 | 5,983 | 8,711 | 6,497 | 15,208 |
Discoveries | - | - | - | - | - |
Extensions | 1,833 | (1,833) | - | - | - |
Technical Revisions | 611 | 486 | 1,097 | (2,217) | (1,120) |
Production | (660) | - | (660) | - | (660) |
December 31, 2024 | 4,512 | 4,635 | 9,148 | 4,280 | 13,428 |
See 'Footnotes' section at the end of this news release. |
December 31, 2024 Murucututu Contingent Resources Information:
Summary of Unrisked Company Gross Contingent Resources (1)(2)(5)(6)
Development Pending Economic Contingent Resources | Low Estimate | Best Estimate | High Estimate |
Conventional natural gas (MMcf) | 15,442 | 27,326 | 36,810 |
Natural gas liquids (Mbbl) | 282 | 500 | 673 |
Oil equivalent (Mboe) | 2,856 | 5,054 | 6,808 |
See 'Footnotes' section at the end of this news release. |
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Contingent Resources- $000s (1)(2)(5)(6)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Low Estimate | 194,005 | 104,907 | 65,035 | 43,899 | 31,279 |
Best Estimate | 395,351 | 197,993 | 122,199 | 84,357 | 62,149 |
High Estimate | 573,506 | 269,157 | 162,703 | 111,941 | 82,752 |
See 'Footnotes' section at the end of this news release . |
The GLJ Contingent Resource Report for Murucututu assumes capital deployment starting in 2026 for the drilling and completion of wells with total project costs of $27.6 million and first commercial production in 2026. The information presented herein is based on company net project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. The project is based on a pre-development study. Development of the project is dependent on several contingencies as further described in this news release. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Pending Risked Company Gross Contingent Resources (1)(2)(5)(6)
The GLJ Reserves and Resources Report estimates the Chance of Development as the product of two main contingencies associated with the project development, which are: 1) the probability of corporate sanctioning, which GLJ estimates at 95%; 2) the probability of finalization of a development plan, which GLJ estimates at 95%. The product of these two contingencies is 90%. As there is no risk related to discovery, the Chance of Commerciality for the contingent resource is therefore 90% which is the risk factor that has been applied to the Development Risked company gross contingent resources and the net present value figures reported below.
| Low Estimate | Best Estimate | High Estimate |
Conventional natural gas (MMcf) | 13,898 | 24,593 | 33,129 |
Natural gas liquids (Mbbl) | 254 | 450 | 606 |
Oil equivalent (Mboe) | 2,570 | 4,549 | 6,127 |
See 'Footnotes' section at the end of this news release. |
Summary of Development Pending Risked Before Tax Net Present Value of Future Net Revenue of Contingent Resources- $000s (1)(5)(6)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Low Estimate | 174,640 | 94,396 | 58,505 | 39,484 | 28,127 |
Best Estimate | 355,872 | 178,170 | 109,951 | 75,896 | 55,910 |
High Estimate | 516,214 | 242,218 | 146,405 | 100,721 | 74,453 |
See 'Footnotes' section at the end of this news release. |
December 31, 2024 Murucututu Prospective Resources Information:
Summary of Unrisked Company Gross Prospective Resources (1)(2)(4)(6)
Prospective Resources | Low | Best | High |
Conventional natural gas (MMcf) | 32,247 | 68,282 | 114,219 |
Natural gas liquids (Mbbl) | 588 | 1,222 | 2,045 |
Oil equivalent (Mboe) | 5,963 | 12,603 | 21,081 |
See 'Footnotes' section at the end of this news release. |
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Prospective Resources - $000s (1)(4)(6)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Low Estimate | 419,522 | 199,745 | 109,233 | 65,060 | 40,823 |
Best Estimate | 1,039,969 | 464,830 | 257,956 | 161,030 | 107,769 |
High Estimate | 1,897,537 | 800,305 | 434,532 | 270,057 | 181,411 |
See 'Footnotes' section at the end of this news release . |
The GLJ Reserves and Resources Report for Murucututu prospective resources assumes capital deployment starting in 2026 for the drilling and completion of wells and pipeline expansion costs, first commercial production in 2027 and with total project costs of $75.6 million in Low case, $90.3 million in the Best case and $97.7 million in the High case. The information presented herein is based on company project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release. The project is based on a conceptual study. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Risked Company Gross Prospective Resources (1)(2)(4)(6)
The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.
| Low | Best | High |
Conventional natural gas (MMcf) | 26,120 | 55,309 | 92,517 |
Natural gas liquids (Mbbl) | 477 | 990 | 1,656 |
Oil equivalent (Mboe) | 4,830 | 10,208 | 17,076 |
See 'Footnotes' section at the end of this news release. |
Summary of Development Risked Before Tax Net Present Value of Future Net Revenue of Prospective Resources- $000s (1)(4)(6)(7)(8)
| Undiscounted | 5 % | 10 % | 15 % | 20 % |
Low Estimate | 339,934 | 161,755 | 88,427 | 52,651 | 33,026 |
Best Estimate | 842,544 | 376,454 | 208,880 | 130,380 | 87,246 |
High Estimate | 1,537,171 | 648,183 | 351,902 | 218,687 | 146,893 |
See 'Footnotes' section at the end of this news release. |
UPCOMING 2024 RESULTS AND LIVE WEBCAST
Alvopetro anticipates announcing its 2024 fourth quarter and year-end results on March 18, 2025 after markets close and will host a live webcast to discuss the results at 8:00am Mountain time , on 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 .
FOOTNOTES
(1) | References to Company Gross reserves or Company Gross Resources means the total working interest share of remaining recoverable reserves or resources held by Alvopetro before deductions of royalties payable to others and without including any royalty interests held by Alvopetro. See the section entitled " Oil and Natural Gas Advisories – Cabur é Working Interest " at the end of this news release for additional details with respect to Alvopetro's working interest share of the Caburé natural gas field. |
(2) | The tables above are a summary of the reserves of Alvopetro and the net present value of future net revenue attributable to such reserves as evaluated in the GLJ Reserves and Resources Report based on forecast price and cost assumptions. The tables summarize the data contained in the GLJ Reserves and Resources Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly. |
(3) | Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. |
(4) | Prospective Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery as described in footnote 6. |
(5) | Contingent Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates as described in footnote 6 and may be subclassified based on project maturity and/or characterized by their economic status. The Contingent Resources estimated in the GLJ Reserves and Resources Report are classified as "economic contingent resources", which are those contingent resources that are currently economically recoverable. All such resources are further sub-classified with a project status of "development pending", meaning that resolution of the final conditions for development are being actively pursued. The recovery estimates of the Company's contingent resources provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. There is uncertainty that it will be commercially viable to produce any portion of the resources. Actual recovered resource may be greater than or less than the estimates provided herein. |
(6) | Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate. |
(7) | The net present value of future net revenue attributable to Alvopetro's reserves and resources are stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well abandonment and reclamation costs for only those wells assigned reserves and material dedicated gathering systems and facilities. The net present values of future net revenue attributable to Alvopetro's reserves and resources estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve and resource estimates of the Company's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves and resources will be recovered. Actual reserves and resources may be greater than or less than the estimates provided herein. |
(8) | GLJ's January 1, 2025 escalated price forecast is used in the determination of future gas sales prices under Alvopetro's long-term gas sales agreement and for all forecasted oil sales and natural gas liquids sales. See https://www.gljpc.com/sites/default/files/pricing/Jan25.pdf for GLJ's price forecast. |
Alvopetro Energy Ltd.'s 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.
All amounts contained in this news release are in United States dollars, except as otherwise noted.
Abbreviations:
1P | = | proved reserves |
2P | = | proved plus probable reserves |
3P | = | proved plus probable plus possible reserves |
Mbbl | = | thousands of barrels |
Mboe | = | thousand barrels of oil equivalent |
MMbtu | = | million British Thermal Units |
MMcf | = | million cubic feet |
MMboe | = | million barrels of oil equivalent |
$000s | = | thousands of U.S. dollars |
Oil and Natural Gas Advisories
Oil and Natural Gas Reserves
The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company's reserves as at December 31, 2024 will be included in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
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 the Alvopetro's reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
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 will be contained in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
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 will be contained in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
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.
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 prepared 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 % |
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 plans relating to the Company's operational activities, proposed development activities and the timing for such activities, capital spending levels and future capital costs, the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement and arbitration procedures associated with the redetermination of working interests of the Caburé natural gas field. 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 future 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. 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.
SOURCE Alvopetro Energy Ltd.
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