Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces the annual rolling grants of long-term incentive compensation to officers, directors and employees under Alvopetro's Omnibus Incentive Plan. A total of 251,000 stock options, 213,000 restricted share units ("RSUs") and 68,000 deferred share units ("DSUs") were granted on November 15, 2024 . Of the total grants, 163,000 RSUs and 68,000 DSUs were granted to directors and officers, with no stock options granted to any director or officer. Each stock option, RSU and DSU entitles the holder to purchase one common share. Each stock option granted has an exercise price of C$4.89 being 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 15, 2024 . All stock options, RSUs and DSUs granted expire on November 15, 2029 .
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Exclusive Interview with Alvopetro Energy CEO Corey Ruttan
In a recent interview with Alvopetro Energy (TSXV:ALV,OTCQX:ALVOF) President and CEO Corey Ruttan, he expressed confidence that his company is set to become a key player in Brazil’s open gas market.
Alvopetro's natural gas sales increased to 187 percent in October of this year, according to the company. With higher overall sales volumes, revenue rose to $12.9 million, an increase of $0.6 million from Q3 2023 and $2.2 million from Q2 2024.
To date, Alvopetro’s production accounts for roughly 13 percent of the natural gas produced in Bahia, and with investments already made in its gas production infrastructure and pipelines, any new natural gas discoveries moving forward can be quickly converted into production and cashflow.
Watch the full interview with Alvopetro Energy President and CEO Corey Ruttan.
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Alvopetro Energy
Investor Insight
Brazil’s expanding natural gas market, supported by an attractive and stable regulatory framework and fiscal regime offers a unique opportunity for Alvopetro Energy to leverage its high-potential assets and growth opportunities as an innovative natural gas company in the state of Bahia.
Overview
Alvopetro Energy (TSXV:ALV;OTCQX:ALVOF) is a pioneering independent natural gas producer in Brazil, and was the first company to deliver sales-specified natural gas onshore into the local distribution network, which was previously dominated by the state oil company. This milestone, achieved on July 5, 2020, marked the beginning of a new era in Brazil's gas market. As an independent upstream and midstream operator, Alvopetro engages in the acquisition, exploration, development and production of natural gas and oil. The company holds interests in the Caburé and Murucututu natural gas assets, Block 182 and 183 exploration assets, and Bom Lugar and Mãe-da-lua oil fields, which cover an area of over 22,000 acres in the Recôncavo basin onshore Brazil. Alvopetro Energy was incorporated in 2013 and is headquartered in Calgary, Canada.
Alvopetro adheres to a balanced capital allocation model, reinvesting half of its funds flow from operations in organic growth opportunities while returning the remaining 50 percent back to stakeholders (through dividends, debt and interest payments and capital lease payments). Since production came online in July of 2020, funds flow from operations has reached ~$140 million with 43 percent being reinvested into capital expenditure initiatives, 48 percent being returned to stakeholders, and 9 percent going back to strengthening the company’s balance sheet.
Alvopetro continues to focus on minimizing its environmental impact, responsibly supplying energy, and having a positive influence on the communities where it operates. Alvopetro currently invests in various voluntary social programs that have been well received by the community. The company’s focus has been on the sustainable development of its rural communities, entrepreneurship, education, cultural and sporting activities, as well as biodiversity preservation.Company Highlights
- Alvopetro is a leading independent upstream and midstream gas operator in the state of Bahia, Brazil.
- The company’s strategy is focused on unlocking Brazil’s on-shore natural gas potential, building off the development of its Caburé and Murucututu natural gas fields strategic midstream infrastructure.
- Over 95 percent of Alvopetro’s production is from natural gas and the company has a 2P reserve base of 9.6 MMboe.
- The company boasts high operating netbacks and profitability per unit of production, setting it apart from its Latin American and North American peers. The state of Bahia boasts a favorable fiscal regime with low royalties and a 15 percent income tax rate.
Key Projects
Caburé
The company’s flagship Caburé asset (56 percent Alvopetro) delivers the majority of Alvopetro’s current production. The project is a joint development (the unit) of a conventional natural gas discovery across four blocks, two of which are held by Alvopetro and two of which are held by its partner, with Alvopetro’s working interest being 56.2 percent following the first redetermination. The unit currently includes eight existing wells, with all production facilities already in place. The resource is well defined with 3D seismic surveys, particularly on the eastern side of a main bounding fault that runs roughly north-south through the Caruaçu formation. The company plans to drill an additional five wells in late 2024 and early 2025 to further improve the productive capacity of the field.
Midstream – Infrastructure and marketing (100 percent Alvopetro)
All of Alvopetro’s natural gas produced from Caburé and Murucututu are shipped via 100 percent owned and operated natural gas pipelines to Alvopetro’s natural gas processing facility (UPGN). At the UPGN, the natural gas goes through a mechanical refrigeration process, with condensate and water removed during the process, and condensate then gets trucked out and sold at a premium to Brent. The natural gas gets delivered to a receiving station (city gate) that was built by the company’s offtaker, Bahiagás, the distribution company for the State of Bahia. The gas then gets shipped via a newly built 15 km distribution pipeline to the Camacari industrial complex (~17.5 km away), where the vast majority of the natural gas in the state of Bahia gets consumed.
Natural gas is sold to Bahiagas under a long-term gas sales agreement, with pricing set semi-annually based on a blend of three international benchmark prices (Henry Hub, UK NBP and Brent oil equivalent) averaged over a period of time. The contract includes both a floor and a ceiling price, with adjustments for inflation.
Organic Growth Opportunities
Maximizing the Gas Plant
In the near-to-mid term, Alvopetro has a goal to maximize its gas plant capacity to 18 million cubic feet per day (or 3,000 barrels of oil equivalent per day), with a plan to double its capacity in the coming years through both ongoing development at the Caburé Unit and a multi-year development of the Murucututu field.
Unit Development
Alvopetro’s working interest in the Caburé Unit was recently increased from 49.1 percent to 56.2 percent and as a result, Alvopetro is now entitled to higher production entitlements from the Unit. In addition, with the unit development drilling activities planned to commence in 2024, the overall productive capacity of the Unit is targeted to increase.
Murucututu Gas
Alvopetro’s Murucututu asset (100 percent owned) sits immediately north of Caburé. The company is looking to optimize its existing wells, which will help cultivate a broader multi-year development plan. Independent reserve estimators, GLJ, highlight the potential for this field with 2P reserve totaling 4.6 million barrels of oil equivalent, risked best estimate contingent resource of 5.4 million barrels of oil equivalent and risked best estimate prospective resource of 9.6 million barrels of oil equivalent representing a significant addition to the company’s current 2P reserve base.
Management Team
Corey C. Ruttan – Chief Executive Officer
Corey C. Ruttan is the president, chief executive officer and director of Alvopetro. He was the president and CEO of Petrominerales, from May 2010 until it was acquired by Pacific Rubiales Energy in November 2013. Prior to that, he was the vice-president of finance and chief financial officer of Petrominerales. From March 2000 to May 2010, Ruttan was the senior vice-president and chief financial officer of Petrobank Energy and Resources, and held increasingly senior positions with Petrobank since its inception in 2000. He also served as executive vice-president and chief financial officer of Lightstream Resources from October 2009 to May 2010; served as vice-president of Caribou Capital from June 1999 to March 2000; and manager financial reporting of Pacalta Resources from May 1997 to June 1999. He began his career at KPMG where he worked from September 1994 to May 1997. Ruttan obtained his Bachelor of Commerce degree majoring in accounting from the University of Calgary in 1994 and his chartered accountant designation in 1997.
Alison Howard – Chief Financial Officer
Alison Howard is a chartered accountant with over 20 years of experience in Canadian and international taxation, accounting and finance. Howard joined Petrominerales in July 2011 as a tax manager and was subsequently promoted to tax director. From May 2008 to July 2011, Howard was the tax manager at Petrobank Energy and Resources. Prior to that, Howard spent a number of years at Deloitte LLP in Calgary. She obtained her Bachelor of Commerce degree from the University of Saskatchewan in 1999.
Adrian Audet – VP, Asset Management
Adrian Audet joined Petrominerales in 2013 and has held increasingly senior roles with Alvopetro since its inception. Audet has spent extensive time in Bahia overseeing the operations, realizing extensive cost savings and improvements in efficiency. Previously, Audet held engineering roles with increasing responsibility in the oil and gas industry. Audet began his career in 2006 and completed his masters and undergraduate degrees in mechanical engineering at the University of Alberta. Audet is a professional engineer registered with APEGA and is a CFA charterholder.
Nanna Eliuk – Exploration Manager
Nanna Eliuk is a professional geophysicist (M.Sc.) with over 23 years of diversified petroleum exploration and development experience. She has expertise in conventional and unconventional plays in both carbonate and clastic reservoirs in different depositional and structural settings (including pre-salt) in various basins around the world. Prior to joining Alvopetro, Eliuk was the senior explorationist of Condor Petroleum (Kazakhstan) for two years, and prior thereto, she was the vice-president of geophysics and land for Waldron Energy. Eliuk started her career in 1997, holding progressively senior roles at Husky Energy for five years, and at Compton Petroleum for over six years. Her extensive experience includes geophysical evaluation and analysis for business development opportunities and new ventures in various international basins, along with regional mapping, play fairway analysis, petroleum system evaluation, prospect definition, and seismic attribute analysis. Eliuk holds a masters degree in geology and geophysics, and a BSc. in geology.
Frederico Oliveira – Country Manager
Frederico Oliveira has held increasingly senior roles since 2008 and has expertise in regulations, contracts, partnerships, management and cost efficiency. He has held management roles in large private companies in Brazil, performing strategic planning, project implementation, process restructuring, efficiency and productivity improvements, and cost control. Oliveira obtained an MBA from the Federal University of Minas Gerais in 2004 and a Bachelor of Science degree in Mechanical Engineering from the Pontificia Universidade Catolica de Minas Gerais.
Alvopetro Announces Annual Long-term Incentive Grants
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Alvopetro Announces Q3 2024 Results and an Operational Update
Alvopetro Energy Ltd. (TSXV:ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces October 2024 sales volumes, an operational update and financial results for the three and nine months ended September 30, 2024 . We will host a live webcast to discuss Q3 2024 results on Thursday, November 7, 2024 at 8:00 am Mountain time .
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.
October Sales Volumes
October sales volumes averaged 1,912 boepd, including natural gas sales of 10.7 MMcfpd, associated natural gas liquids sales from condensate of 108 bopd and oil sales of 14 bopd, based on field estimates.
Natural gas, NGLs and crude oil sales: | October 2024 | September 2024 |
|
Natural gas (Mcfpd), by field: | |||
Caburé | 8,977 | 10,025 | 11,378 |
Murucututu | 1,767 | 1,176 | 616 |
Total natural gas (Mcfpd) | 10,744 | 11,201 | 11,994 |
NGLs (bopd) | 108 | 87 | 95 |
Oil (bopd) | 14 | 9 | 12 |
Total (boepd) | 1,912 | 1,963 | 2,106 |
Operational Update
On our Murucututu field, we finished the recompletion of our 183-A3 well in the third quarter. The well came on production during September and with this well on production through much of October, our natural gas sales from the Murucututu field increased 187% compared to Q3 2024. We are continuing to monitor production results from the well and we expect to drill a follow-up location up-dip from the 183-A3 well from a prebuilt well pad starting later this year.
In the fourth quarter we are planning an optimization project on our 183-B1 well which was originally drilled and tested in 2022.
Financial and Operating Highlights – Third Quarter of 2024
- Our average daily sales increased to 2,106 boepd in Q3 2024 (+24% from Q3 2023 and +29% from Q2 2024) with increased natural gas demand.
- Our average realized natural gas price decreased to $10.92 /Mcf (-16% from Q3 2023) in Q3 2024, due mainly to the devaluation of the BRL relative to the USD, which depreciated 14% compared to Q3 2023. Our overall averaged realized sales was $66.46 per boe.
- With higher overall sales volumes, our natural gas, condensate and oil revenue increased to $12.9 million , an increase of $0.6 million from Q3 2023 and $2.2 million from Q2 2024.
- Our operating netback (2) in the quarter was $59.19 per boe (- $11.15 per boe from Q3 2023) due mainly to the reduction in our realized sales price per boe.
- We generated funds flows from operations (2) of $9.9 million ( $0.27 per basic share and $0.26 per diluted share), an increase of $0.3 million compared to Q3 2023 and $2.0 million compared to Q2 2024 due mainly to higher sales volumes, partially offset by lower realized prices.
- We reported net income of $7.2 million in Q3 2024, an increase of $1.3 million compared to Q3 2023 and $4.8 million compared to Q2 2024 due mainly to higher sales volumes and foreign exchange gains in Brazil on U.S. dollar denominated intercompany balances and lease liabilities.
- Capital expenditures totaled $4.7 million , including costs to recomplete both the 183-A3 and the 183(1) wells on our Murucututu field and costs associated with the facilities upgrade at our Caburé field.
- Our working capital surplus was $15.8 million as of September 30, 2024 , increasing $2.7 million from December 31, 2023 and $1.2 million from June 30, 2024 .
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 September 30 | As at and Nine Months Ended September 30, | |||||
2024 | 2023 | Change (%) | 2024 | 2023 | Change (%) | |
Financial | ||||||
($000s, except where noted) | ||||||
Natural gas, oil and condensate sales | 12,879 | 12,313 | 5 | 35,303 | 44,387 | (20) |
Net income | 7,152 | 5,819 | 23 | 14,052 | 27,873 | (50) |
Per share – basic ($) (1) | 0.19 | 0.16 | 19 | 0.38 | 0.75 | (49) |
Per share – diluted ($) (1) | 0.19 | 0.15 | 27 | 0.37 | 0.74 | (50) |
Cash flows from operating activities | 10,714 | 12,469 | (14) | 27,787 | 39,798 | (30) |
Per share – basic ($) (1) | 0.29 | 0.34 | (15) | 0.75 | 1.07 | (30) |
Per share – diluted ($) (1) | 0.28 | 0.33 | (15) | 0.74 | 1.05 | (30) |
Funds flow from operations (2) | 9,886 | 9,618 | 3 | 26,309 | 35,637 | (26) |
Per share – basic ($) (1) | 0.27 | 0.26 | 4 | 0.71 | 0.96 | (26) |
Per share – diluted ($) (1) | 0.26 | 0.25 | 4 | 0.70 | 0.94 | (26) |
Dividends declared | 3,295 | 5,122 | (36) | 9,887 | 15,335 | (36) |
Per share (1) (2) | 0.09 | 0.14 | (36) | 0.27 | 0.42 | (36) |
Capital expenditures | 4,747 | 10,703 | (56) | 10,623 | 22,515 | (53) |
Cash and cash equivalents | 24,515 | 22,779 | 8 | 24,515 | 22,779 | 8 |
Net working capital (2) | 15,848 | 11,392 | 39 | 15,848 | 11,392 | 39 |
Weighted average shares outstanding | ||||||
Basic (000s) (1) | 37,300 | 37,138 | - | 37,286 | 37,086 | 1 |
Diluted (000s) (1) | 37,662 | 37,868 | (1) | 37,671 | 37,748 | - |
Operations | ||||||
Natural gas, NGLs and crude oil sales: | ||||||
Natural gas (Mcfpd), by field: | ||||||
Caburé (Mcfpd) | 11,378 | 8,949 | 27 | 9,817 | 11,757 | (17) |
Murucututu (Mcfpd) | 616 | 726 | (15) | 490 | 467 | 5 |
Total natural gas (Mcfpd) | 11,994 | 9,675 | 25 | 10,307 | 12,224 | (16) |
NGLs – condensate (bopd) | 95 | 81 | 17 | 83 | 101 | (18) |
Oil (bopd) | 12 | 3 | 300 | 12 | 4 | 200 |
Total (boepd) | 2,106 | 1,696 | 24 | 1,813 | 2,142 | (15) |
Average realized prices (2) : | ||||||
Natural gas ($/Mcf) | 10.92 | 13.06 | (16) | 11.70 | 12.57 | (7) |
NGLs – condensate ($/bbl) | 86.70 | 89.43 | (3) | 88.77 | 85.31 | 4 |
Oil ($/bbl) | 68.36 | 73.08 | (6) | 68.48 | 69.18 | (1) |
Total ($/boe) | 66.46 | 78.90 | (16) | 71.06 | 75.90 | (6) |
Operating netback ($/boe) (2) | ||||||
Realized sales price | 66.46 | 78.90 | (16) | 71.06 | 75.90 | (6) |
Royalties | (1.89) | (2.04) | (7) | (1.94) | (2.14) | (9) |
Production expenses | (5.38) | (6.52) | (17) | (6.23) | (5.22) | 19 |
Operating netback | 59.19 | 70.34 | (16) | 62.89 | 68.54 | (8) |
Operating netback margin (2) | 89 % | 89 % | - | 89 % | 90 % | (1) |
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 2024 Results Webcast
Alvopetro will host a live webcast to discuss our Q3 2024 financial results at 8:00 am Mountain time on Thursday November 7, 2024. Details for joining the event are as follows:
DATE: November 7, 2024
TIME : 8:00 AM Mountain/ 10:00 AM Eastern
LINK: https://us06web.zoom.us/j/82907827720
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kdJ7MOHaio
WEBINAR ID : 829 0782 7720
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:
X (Twitter) - https://x.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd.'s vision is to become a leading independent upstream and midstream operator in Brazil . Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil , building off the development of our Caburé 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 |
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) |
Q3 2023 | = | three months ended September 30, 2023 |
Q2 2024 | = | three months ended June 30, 2024 |
Q3 2024 | = | three months ended September 30, 2024 |
USD | = | United States dollars |
GAAP | = | 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. This calculation is provided in the and is calculated as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2024 | 2023 | 2024 | 2023 | |
Operating netback - $ per boe | 59.19 | 70.34 | 62.89 | 68.54 |
Average realized price - $ per boe | 66.46 | 78.90 | 71.06 | 75.90 |
Operating netback margin | 89 % | 89 % | 89 % | 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 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 September 30, | Nine Months Ended September 30, | |||
$ per share | 2024 | 2023 | 2024 | 2023 |
Per basic share: | ||||
Cash flows from operating activities | 0.29 | 0.34 | 0.75 | 1.07 |
Funds flow from operations | 0.27 | 0.26 | 0.71 | 0.96 |
Per diluted share: | ||||
Cash flows from operating activities | 0.28 | 0.33 | 0.74 | 1.05 |
Funds flow from operations | 0.26 | 0.25 | 0.70 | 0.94 |
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 | Nine Months Ended September 30, | |||
2024 | 2023 | 2024 | 2023 | |
Cash flows from operating activities | 10,714 | 12,469 | 27,787 | 39,798 |
Add back changes in non-cash working capital | (828) | (2,851) | (1,478) | (4,161) |
Funds flow from operations | 9,886 | 9,618 | 26,309 | 35,637 |
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 | |||
2024 | 2023 | ||
Total current assets | 30,197 | 27,354 | |
Total current liabilities | (14,349) | (15,962) | |
Net working capital | 15,848 | 11,392 |
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.
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 the plans relating to the Company's operational activities, proposed exploration development activities and the timing for such activities, the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement, 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, anticipated timing for upcoming drilling and testing of other wells, projected financial results, 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 and may vary depending on numerous factors, including, without limitation, the Company's operational performance, available financial resources and financial requirements, capital requirements and growth plans. There can be no assurance that dividends will be paid at the intended rate or at any rate in the future. Similarly, the decision by the Company to repurchase shares pursuant to the NCIB and the amount and timing of such repurchases is uncertain and there can be no assurance that the Company will repurchase any shares in the future. 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 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.
View original content: http://www.newswire.ca/en/releases/archive/November2024/06/c6752.html
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Alvopetro Announces Upcoming Investor Conference
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces that Corey C. Ruttan, President and Chief Executive Officer, will present at the Schachter Catch the Energy Conference on Saturday October 19, 2024.
Date: | October 19, 2024 |
Time: | 10:20 am to 10:55 am (Mountain time) |
Location: | Mount Royal University (4825 Mt Royal Gate SW, Calgary, Alberta) Bella Concert Hall & Ross Glen Hall (Presentation Room 2) |
Tickets: | https://gravitypull.swoogo.com/catchtheenergy2024 |
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.
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
YouTube -https://www.youtube.com/channel/UCgDn_igrQgdlj-maR6fWB0w
Alvopetro Energy Ltd.'s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé and Murucututu natural gas assets 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.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Corey C. Ruttan, President, Chief Executive Officer and Director, or
Alison Howard, Chief Financial Officer
Phone: 587.794.4224
Email: info@alvopetro.com
www.alvopetro.com
(TSXV: ALV) (OTCQX: ALVOF)
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/227002
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Alvopetro Announces September 2024 Sales Volumes and an Operational Update
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces September 2024 sales volumes and an operational update.
President & CEO, Corey C. Ruttan commented:
"We saw increased production levels through the third quarter, and we are very excited about strong early production results from our 183-A3 completion. We look forward to continued production from the well and based on these early results we expect to be drilling follow up locations starting later this year."
September Sales Volumes
September sales volumes averaged 1,963 boepd including natural gas sales of 11.2 MMcfpd, associated natural gas liquids sales from condensate of 87 bopd and oil sales of 9 bopd, based on field estimates. Our Q3 2024 sales averaged 2,106 boepd, a 29% increase compared to 1,629 boepd in Q2 2024.
Natural gas, NGLs and crude oil sales: | September 2024 | August 2024 | Q3 2024 | Q2 2024 |
Natural gas (Mcfpd), by field: | ||||
Caburé | 10,016 | 10,648 | 11,379 | 8,822 |
Murucututu | 1,185 | 336 | 615 | 422 |
Total Company natural gas (Mcfpd) | 11,201 | 10,984 | 11,994 | 9,244 |
NGLs (bopd) | 87 | 79 | 95 | 76 |
Oil (bopd) | 9 | 9 | 12 | 12 |
Total Company (boepd) | 1,963 | 1,919 | 2,106 | 1,629 |
Operational Update
In September, we finished the initial completion of our 183-A3 well. The well came on production during September and is still cleaning up as we produce natural gas and completion fluids. For the last 72 hours of continuous production, the 183-A3 well has produced at an average rate of 59.4 e 3 m 3 /d (2.1 MMcfpd) gas, 175 barrels of completion fluid per day and 50 barrels of condensate per day. Flowing wellhead pressure has averaged 1,195psi (8,239kPa) during this period, with the final value being 1,150 psi (7,926kPa). Production has been managed through a constant 18/64" choke and we still have not recovered all the completion fluid introduced into the well. In parallel, we finished the recompletion of our 183-1 well in an uphole Caruaçu zone and, based on swab results, we have contacted a zone that is only producing water. We will continue to monitor the production from the 183-A3 well and based on those results we expect to design a follow up intervention for the 183-1 well and commence a drilling project up-dip of the 183-A3 well from our prebuilt 183-D pad location.
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
YouTube - https://www.youtube.com/channel/UCgDn_igrQgdlj-maR6fWB0w
Alvopetro Energy Ltd.'s vision is to become a leading independent upstream and midstream operator in Brazil . Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil , building off the development of our Caburé and Murucututu natural gas assets 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 |
e 3 m 3 /d | = | thousand cubic metre per day |
m 3 | = | cubic metre |
m 3 /d | = | cubic metre 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.
Well Results . Data obtained from the 183-A3 well and the 183-1 well including production volumes should be considered to be preliminary. There is no representation by Alvopetro that the information 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 wells 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 proposed development activities planned by the Company and the timing of such activities. Forward -looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, expectations and assumptions concerning forecasted demand for oil and natural gas, 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, 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, general economic and business conditions, 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. 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.
View original content: http://www.newswire.ca/en/releases/archive/October2024/07/c4913.html
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Alvopetro Announces Q3 2024 Dividend of US$0.09 Per Share
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces that our Board of Directors has declared a quarterly dividend of US$0.09 per common share, payable in cash on October 15, 2024 to shareholders of record at the close of business on September 30, 2024 . 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 .
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.'s vision is to become a leading independent upstream and midstream operator in Brazil . Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé and Murucututu natural gas assets 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 expectations and assumptions concerning expectations regarding the demand for natural gas and oil, the performance of producing wells and reservoirs, well development and operating performance, the success of future drilling, completion, and testing activities, Alvopetro's working interest in properties and the outcome of future redeterminations, the outcome of any disputes, 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, foreign exchange rates, general economic and business conditions, weather and access to drilling locations, the availability and cost of labour and services, Alvopetro's working interest in properties and the outcome of future redeterminations, the outcome of any disputes, 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. 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.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.
View original content: http://www.newswire.ca/en/releases/archive/September2024/16/c6955.html
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Oil and Gas Price Forecast: Top Trends That Will Affect Oil and Gas in 2025
In 2024, the oil and gas markets were shaped by several significant trends including shifting demand, geopolitical turmoil and rising production.
As the two key oil benchmarks (Brent and West Texas Intermediate) struggled to maintain price gains made throughout the year the natural gas market was able to register a 55 percent increase between January and the end of December.
Starting the year at US$75.90 per barrel Brent Crude prices rallied to a year-to-date high of US$91.13 on April 5, 2024. Values sunk to a year-to-date low of US$69.09 on September 10. By late December prices were holding in the US$72.40 range.
Similarly, WTI started the 12-month period at US$70.49 and moved to a year-to-date high of US$86.60 on April 5. Prices sank to a year-to-date low of US$65.48 in early September. In late December values were sitting at the US$69.10 level.
While both oil benchmarks contracted by year’s end, natural gas made a late rally achieving its year-to-date high of US$3.76 per metric million British thermal units on December 24.
What trends impacted natural gas in 2024?
Although prices were able to register a late year rally, prices remained under pressure for the majority of 2024. Natural gas prices fell to a year-to-date low of US$1.51 in February, shortly after the Biden administration enacted a moratorium on new liquefied natural gas (LNG) projects in the country.
For Mike O’Leary, partner at Hunton Andrews Kurth, the president’s decision added further strain to the oversupplied market.
“The gas prices this year have been really under pressure,” O’Leary told the Investing News Network in a December interview. “We just have so much associated gas with the oil that's being produced that we just continue to have a glut of natural gas.”
He continued: “And with the moratorium imposed by the administration this year on LNG facilities, it's just exacerbating that, that that glut, for the time being, until at some point that hopefully the moratorium will be lifted, and we'll see more LNG facilities under construction.”
Hope that the moratorium would be lifted was further dampened in mid-December when the Department of Energy (DoE) released a study on the environmental and economic impacts of LNG exports, assessing their effects on domestic prices, supply, and greenhouse gas emissions.
The DoE analysis highlights a triple cost increase for US consumers from rising LNG exports: higher domestic natural gas prices, increased electricity costs, and higher prices for goods due to manufacturers passing on elevated energy expenses.
‘Special scrutiny needs to be applied toward very large LNG projects. An LNG project exporting 4 billion cubic feet per day – considering its direct life cycle emissions – would yield more annual greenhouse gas emissions by itself than 141 of the world’s countries each did in 2023,” the report read.
This latest development isn’t the only trend impacting US LNG producers.
“A series of warmer-than-expected winters has led to a large supply glut,” explained Ernie Miller, CEO of Verde Clean Fuels (NASDAQ:VGAS). “Natural gas suppliers need to work off those inventories – and see prices return to more rational levels – before they could even think of increasing production.”
After soaring to a 10 year high of US$9.25 in September of 2022 prices have been trending lower, trapped below US$4.00 since early 2023.
“Natural gas is dealing with a severe oversupply problem that has kept a tight lid on prices, and the only sector within natural gas that has held up well is LNG, which is a very small part of the overall gas market,” said Miller.
What trends impacted oil in 2024?
Oil prices exhibited volatility through the year but found support by ongoing production cuts from OPEC+ and steady demand recovery in key economies. US oil production reached a record-high of 13.2 million barrels per day, reflecting resilience despite challenges such as declining rig counts.
Geopolitical tensions, including the Israel-Hamas conflict, added uncertainty to global supply chains.
Meanwhile, Chinese oil demand softened, with lower-than-expected economic performance dampening consumption growth. In contrast, Europe continued its push for renewable energy while navigating supply challenges tied to Russian sanctions.
In the US Trump’s election victory and his repeated campaign exclamations of “Drill, Baby Drill” added optimism to the sector, although as FocusEcnomics Editor and Economist Matthew Cunningham pointed out it could be easier said than done.
“Politicians’ rhetoric often divorces from reality, and in Trump’s case this is no different. He probably will succeed in boosting domestic production of oil and gas, by issuing more leases for drilling on federal land and scrapping environmental regulations. Nonetheless, he is unlikely to boost output by as much as his “drill, baby, drill” comment indicates,’ said Cunningham.
He added: “Historically, the power of US presidents to influence oil and gas production has been dwarfed by that of the market: Ultimately, the price of oil and gas will determine if American shale firms will drill. Our Consensus forecast is currently for U.S. crude production to rise by 0.7 million barrels next year, about 3 percent of 2024 output.”
This sentiment was echoed by Miller, whose company Verde Clean Fuels makes low carbon gasoline.
“While President-elect Trump is likely to remove restrictions from oil producers, it doesn’t mean those producers will necessarily be drilling more wells or increasing domestic production. With oil prices hovering around US$70 a barrel – down from US$85 in the spring – oil companies don’t want to create an oversupply scenario driving prices even lower,’ said Miller.
Regardless of Trump’s directive producers will likely remain prudent.
“The major oil companies have learned hard lessons from previous cycles, that they need to maintain discipline and a strong balance between supply and demand so they can protect their margins,” Miller added
O’Leary also thinks Trump's campaign promises, if followed through, could add more price volatility to the market.
“Even though he said that the energy companies here in the States realize they don't really want to open the spigots, because that's going to drive the price down,” said O’Leary.
“If the US did that and overproduced OPEC would say, well, we need to defend our market share, so they might just go ahead and open their spigots up, and that would further drive the price down,” he said, adding that Trump’s pro-energy stance could result in more capital for the sector.
Trump’s tough tariff talk
Shortly after winning the US election the president-elect began touting 25 percent tariffs aimed at ally nations Canada and Mexico.
Over several decades trade between the three nations has become increasingly interconnected adding tariffs to all or some goods and services could weaken continental relations and result in an escalating back and forth.
In 2023, the US imported 8.51 million barrels per day (b/d) of petroleum from 86 countries.
Canada and Mexico topped the list of countries with Canada supplying 52 percent and Mexico 11 percent.
“There's a lot of concern that if the oil and gas sector is not exempt, and he has said nothing about exempting it, that that could drive the prices up for the consumers here in the in the country and do just the opposite of what I think Trump really wants to do, which is to fight inflation,” said O’Leary.
As FocusEconomics editor and economist Cunningham pointed out we could see a repeat of the 2018 trade war if the tariffs are enacted, which would ultimately hurt the US oil and gas sector.
“During the 2018 trade war with China, Chinese buyers of oil and gas erred away from purchasing U.S. supplies of the fuel. US oil prices fell relative to European ones, and US liquified natural gas exports to China fell to zero after Beijing hiked tariffs on the fuel to 25 percent,” said Cunningham.
In October, FocusEconomics surveyed 15 economists on whether Trump would implement a 10 percent –20 percent blanket tariff on imports and two-thirds responded that he will, he added.
Geopolitical uncertainty
Looking to the year ahead our experts see geopolitics as a major trend to watch.
“As in recent years, wars in the Middle East and Eastern Europe will continue to support oil and gas prices by unsettling trade flows and raising the risk of supply disruptions. That said, it seems likely that conflicts in both regions will come closer to winding down in 2025 than at the start of 2024,” said Cunningham.
Israel has largely dismantled Hamas’ leadership, while Ukraine faces potential negotiations with Russia following recent military setbacks and Donald Trump’s re-election, given his focus on brokering a deal. These developments could exert downward pressure on oil and gas prices in the coming year, he went on to explain.
Due to these factors FocusEconomics panelists have cut their forecast for average Brent prices in 2025 by 7.6 percent.
Miller expects some volatility, but moreover resilience in the energy sector.
“The largest spikes in volatility we’ve seen are directly related to the war in the Middle East. However, interestingly, those spikes have been very short-lived, and prices settled back and have been drifting lower for months,’ he said. “I think it’s fair to say that, by and large, global energy markets have been remarkably resilient, considering there are two wars going on. That stability has worked as a bit of a tailwind for economies because oil is among the largest expenses for many industries, including air travel and trucking.”
For O’Leary, this year’s geopolitical shifts, notably the Ukraine war, have reshaped global energy dynamics. Europe, aiming to reduce reliance on Russian energy, has turned to the global market, securing LNG supplies from the U.S. and Australia. This has increased LNG demand but hasn’t significantly lifted natural gas prices, which remain low.
Meanwhile, companies pursuing greener energy strategies are reassessing due to high costs, with some shifting focus from green hydrogen, produced via electrolysis, to blue hydrogen derived from natural gas, which is more cost-effective.
Oil and natural gas trends to watch in 2025
Oil and gas market watchers should be on the lookout for more uncertainty as we enter 2025.
O’Leary is keeping an eye on the growing energy demands of data centers and AI are straining power grids, spurring interest in solutions like hydrogen, nuclear power, and co-located facilities. However, delays in permitting new energy infrastructure, such as LNG facilities and pipelines, remain a significant hurdle.
Geopolitically, he sees the Ukraine war’s resolution stabilizing oil and gas markets, though Europe is unlikely to fully trust Russia as an energy supplier again.
Miller will be watching OPEC+ decisions and actions, as they continue to influence global oil supply dynamics.
Additionally, the performance of major economies across the US, Europe, and Asia will also play a critical role in shaping demand. Seasonal weather conditions could have a significant impact, particularly if the US and Europe experience a colder or warmer-than-usual winter. Lastly, any major geopolitical developments involving oil-producing nations could cause unexpected shifts in the market.
Economist Cunningham pointed to several trends that investors should be mindful of.
“Black swan events—those that are rare and difficult to predict, like the wars in Gaza and Ukraine—are, by their unforeseen nature, some of the primary movers of volatility in oil and gas markets,” said Cunningham. “Donald Trump, who styles himself as a master dealmaker, is the main wild card. Trump likes to cloak himself in the guise of a black swan—a “madman” à la Nixon—that is hard to read and will push his interlocutors to the brink in order to force them to accept his terms.”
He warns that trade wars would send energy prices plunging, while tighter sanctions on oil-producing Iran and Venezuela—two of Trump’s bugbears—could send them higher.
The oil market faces uncertainty on both supply and demand fronts in 2025, he explained.
OPEC+ cohesion is under pressure as competition from non-member producers rises, with the group planning to increase production starting in April. On the demand side, emerging Asia is expected to drive crude consumption, though China's economic performance remains a key variable. Additionally, the potential global economic impact of Donald Trump’s re-election looms.
Analysts predict a slight slowdown in global GDP growth in 2025, with both China and the US set to decelerate.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
5 Best-performing Canadian Oil and Gas Stocks in 2024
The 2024, the oil market experienced notable fluctuations influenced by global economic trends and geopolitical events. Early in the year, prices remained relatively stable, with Brent crude averaging around US$80 per barrel.
However, as the year progressed, several factors contributed to increased volatility. A significant slowdown in China's economy led to reduced demand growth, prompting the International Energy Agency (IEA) to revise its global oil demand growth estimate for 2024 down to 910,000 barrels per day.
Simultaneously, global oil production saw modest increases. The IEA also reported a rise of 0.6 million barrels per day in global liquid fuels production for 2024, with non-OPEC+ countries contributing significantly to this uptick.
Geopolitical tensions, particularly involving major oil-producing nations, added layers of complexity to the market. Despite these challenges, the market displayed resilience, with prices fluctuating within a relatively narrow range. By mid-December, crude oil prices had risen to approximately US$74 per barrel, marking a six-week high.
Looking ahead, forecasts suggest that oil prices may average around $75 per barrel in 2025, with potential declines in subsequent years.
Against that backdrop, the five top-performing oil and gas stocks on the TSX and TSXV have seen share price growth. All year-to-date performance and share price data was obtained on December 19, 2024, using TradingView’s stock screener, and the oil and gas companies listed all had market caps above C$10 million at that time.
1. Sintana Energy (TSXV:SEI)
Year-to-date gain: 234.85 percent
Market cap: C$410.61 million
Share price: C$1.11
Sintana Energy, an oil and gas exploration and development company, operates across five highly prospective onshore and offshore petroleum exploration licenses in Namibia and Colombia.
The company saw tailwinds early in the year after releasing updates on exploration in Namibia’s Orange Basin. It made two significant light oil discoveries in January at petroleum exploration license 83.
February saw more share price growth when Sintana was listed on the TSX Venture 50 as the top energy performer.
In June, the company finalized its acquisition of a 49 percent interest in Giraffe Energy Investments as per an agreement dated April 24. Giraffe Energy holds a non-operating 33 percent stake in petroleum exploration license 79 in Namibia, and the remaining 67 percent of the license is owned by operator National Petroleum of Namibia.
Shares of Sintana marked a year-to-date high on June 11 to trade for C$1.42.
In late August, the company released its financial results for Q2 2024, which saw an overall net loss of C$2.7 million primarily driven by general and administrative expenses.
Recently Sintana announced a new exploration and appraisal campaign in Namibia’s Orange Basin, targeting blocks 2813A and 2814B under petroleum exploration license 83.
2. Arrow Exploration (TSXV:AXL)
Year-to-date gain: 26.56 percent
Market cap: C$117.2 million
Share price: C$0.40
Arrow Exploration, through its wholly owned subsidiary Carrao Energy, operates in Colombia with a focus on developing its portfolio of oil assets in the country. The company's strategy is to target the expansion of oil production in key basins, including the Llanos Basin, Middle Magdalena Valley and Putumayo Basin.
Arrow Exploration holds high working interests in its assets, which are predominantly linked to Brent pricing.
In June, Arrow announced that it had successfully brought the first of four planned Ubaque horizontal wells into production, reporting that the Carrizales Norte B pad (CNB HZ-1) was producing 3,150 barrels of oil per day (bpd) gross, with 1,575 bpd net to Arrow, and has a water cut of less than 1 percent.
This news sent Arrow's share price significantly upward registering a year-to-date high of C$0.60 on August 25.
The company released its Q2 results on August 29, reporting total oil and gas revenue of C$15.1 million for the period, up 47 percent year-on-year. Its current production is 5,000 barrels of oil equivalent per day.
In late September, after bringing another two wells online, Arrow announced that CNB HZ-5, its fourth horizontal well on the Carrizales Norte B pad in Colombia, is now producing over 2,700 barrels of oil per day gross. The company expects strong long-term performance.
For Q3 2024 Arrow reported its “strongest quarter” driven by record production, revenue, EBITDA, and cash flow. The company successfully drilled three horizontal development wells in the Carrizales Norte field, boosting operational momentum.
Arrow also posted C$21.3 million in oil and natural gas revenue, net of royalties, a 53 percent increase compared to Q3 2023.
3. Condor Energies (TSX:CDR)
Year-to-date gain: 23.24 percent
Market cap: C$114.68 million
Share price: C$1.75
Condor Energies concentrates on the exploration, development and production of natural gas in Turkey, Kazakhstan and Uzbekistan. The company is currently building Central Asia's inaugural liquefied natural gas (LNG) facility.
In late January, Condor secured a natural gas allocation from the Kazakhstan government for its maiden modular LNG production facility. The gas allocation will be instrumental in liquefying feed gas to produce up to 350 metric tons per day of LNG, equivalent to about 210,000 gallons per day, the company said.
Condor’s shares reached a year-to-date high in February to trade for C$2.76.
In March, the energy company began a production-enhancement operation for eight natural gas condensate fields in Uzbekistan. Gas output will be directed to the domestic market through state entity agreements. Condor has agreed to cover project costs and receive a share of the generated revenues. The company launched a multi-well workover program at the fields in June.
In July, Condor signed its first LNG framework agreement for producing and utilizing LNG to power rail locomotives in Kazakhstan.
In mid-August, Condor released its Q2 report, highlighting that Uzbekistan production averaged 10,052 barrels of oil equivalent per day (boe/d) for the period, consisting of 59.03 million cubic feet per day and 213 barrels of oil per day of condensate. Q2 sales of gas and condensate from Uzbekistan totaled C$18.95 million.
Condor recently secured a second natural gas allocation from Kazakhstan's state authority for its planned LNG facility near the Kuryk Port on the Caspian Sea. The allocation will fuel a low-carbon LNG production site capable of producing the energy equivalent of 565,000 liters of diesel per day, according to a September announcement.
The company’s Q3 results highlighted positive results for its gas field enhancement project in Uzbekistan, with production averaging 10,010 boe/d and sales reaching C$19 million. Results from the multi-well workover program have exceeded expectations,
Condor reported, increasing gas flow rates by 100 percent to 300 percent.
Earlier this month the company closed a brokered financing raising C$19.4 million.
4. Imperial Oil (TSX:IMO)
Year-to-date gain: 18.62 percent
Market cap: C$48.47 billion
Share price: C$90.34
Calgary-based Imperial Oil is a prominent Canadian energy company involved in the exploration, production, refining and marketing of petroleum products. With a history spanning over 140 years, Imperial operates diverse assets across Canada, including oil sands, conventional crude oil and natural gas assets.
On February 2, Imperial released its Q4 2023 results, highlighting upstream production of 452,000 barrels of oil equivalent per day, “marking its highest level in over three decades.”
Additionally, Imperial initiated steam injection at Cold Lake Grand Rapids, pioneering the industry's first deployment of solvent-assisted SAGD technology. Downstream operations performed strongly, with refinery capacity utilization reaching 94 percent following the successful completion of the largest planned turnaround at the Sarnia site.
In this year's Q2 results, Imperial reported quarterly net income of C$1.13 billion along with operating cashflow of C$1.63 billion, or C$1.51 billion when excluding working capital. According to the company, its upstream production reached 404,000 gross boe/d, its highest second quarter production in over 30 years. The Kearl project matched its highest-ever second quarter production at 255,000 gross boe/d, with Imperial's share being 181,000 barrels. Cold Lake also performed strongly, with production of 147,000 bpd.
During the period, the company achieved first oil at Grand Rapids and renewed its annual share repurchase program, aiming to buy back up to 5 percent of its outstanding common shares.
On November 1, Imperial announced a quarterly dividend of C$0.60 per share, payable on January 1, 2025, to shareholders of record as of December 3, 2024. This matches its previous quarterly dividend.
Imperial saw its shares reach a year-to-date of C$108.03 on November 21, 2024.
In mid-December the company released its 2025 guidance. In it Brad Corson, chairman, president and chief executive officer laid out Imperial's plans for the year ahead.
“Our 2025 plan builds on our momentum and positions the company to achieve even stronger operating performance with higher volumes and lower unit cash costs at Kearl and Cold Lake,” he said. “In the Downstream, a lighter turnaround schedule supports higher refinery throughput year-over-year, and start-up of the Strathcona Renewable Diesel project is expected to increase product sales.”
5. Athabasca Oil (TSX:ATH)
Year-to-date gain: 15.68 percent
Market cap: C$2.55 billion
Share price: C$4.87
Athabasca Oil is focused on developing thermal and light oil assets within Alberta's Western Canadian Sedimentary Basin. The company has established a substantial land base with high-quality resources. Its light oil operations are managed through its private subsidiary, Duvernay Energy, in which the company holds a 70 percent equity interest.
At the end of July, Athabasca released its Q2 results, reporting average Q2 production of 37,621 boe/d, resulting in an increase in its annual production guidance to 36,000 to 37,000 boe/d. The company also achieved record adjusted funds flow of C$166 million and cashflow from operating activities of C$135 million.
Athabasca Oil's Q3 results, released in late October, underscored a strong third quarter with average production of 38,909 boe/d, an 8 percent year-over-year increase. Adjusted funds flow reached C$164 million, marking a 25 percent increase per share.
In early December Athabasca Oil announced its 2025 budget, focusing on enhancing cash flow per share and committing 100 percent of free cash flow to shareholder returns through share buybacks.
The company also plans to invest approximately C$335 million in capital expenditures, aiming for an average production of 37,500 to 39,500 barrels of oil equivalent per day, with an exit rate of around 41,000 boe/d.
Athabasca shares rose to a year-to-date high in August when they were trading for C$5.66.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Hydrogen's Role in Addressing Australia’s Energy Crisis
Faced by challenges of a continuing energy crisis, Australia stands at a pivotal crossroads in its transition towards a low-carbon future. This article delves into the critical role that clean hydrogen could play in addressing Australia's energy challenges.
For investors, understanding these developments is crucial, as they represent not only a shift in national energy policy but also significant opportunities in an emerging market.
Australia’s energy crisis is characterised by gas shortages and soaring prices that have persisted into 2023. This predicament stems from a combination of factors, including delayed maintenance of generation plants, flooding of coal mines, high international prices for natural gas and coal and increased demand during colder weather. These pressures have caused substantial disruptions in the energy supply chain, severely affecting the stability of the country's east coast energy market.
While the Australian Energy Regulators have noted some improvements compared to the previous year, many vulnerabilities persist. Gas and electricity supply issues remain critical, prompting discussions around the need for expedited government reviews of energy reliability and infrastructure investments. The ongoing crisis poses serious concerns not only for energy security but also for the broader economy, with predictions suggesting that energy costs could further drive inflation and impact growth prospects.
In light of these challenges, Australia urgently needs to diversify its energy portfolio and develop low-carbon alternatives. The lack of developed reserves and the increasing pressure to meet emissions targets have turned attention towards innovative energy solutions, with clean hydrogen emerging as a promising contender in the transition to a more sustainable energy future.
Hydrogen: A path to clean energy transition
Clean hydrogen has gained significant traction as a lower-carbon solution capable of addressing Australia's energy crisis while aligning with global sustainability goals. As a versatile energy carrier, hydrogen can be produced through various methods, with "green" hydrogen — produced using renewable energy sources — being the most environmentally friendly option.
The potential of hydrogen in the global energy transition is reflected in impressive market projections. The global hydrogen market, valued at approximately US$204.5 billion in 2024, is expected to grow at a compound annual growth rate (CAGR) of 12.3 percent from 2025 to 2034. More specifically, the green hydrogen market size, currently pegged at US$7.98 billion, is projected to grow at a CAGR of 38.5 percent from 2025 to 2030, underscoring the robust growth anticipated as governments and industries prioritise low-emission energy solutions.
The International Energy Agency forecasts that low-emissions hydrogen production could reach 49 million tonnes per annum by 2030, an increase of nearly 30 percent from previous estimates. This growth is crucial for developing hydrogen production capacity that not only meets domestic needs but also positions countries like Australia to become exporters of hydrogen-based fuels and materials.
Clean hydrogen's role extends beyond energy solutions; it is pivotal in reducing CO2 emissions, particularly in heavy industries. The sector's expansion is supported through targeted government policies that encourage investment and create demand for low-emission hydrogen, aligning with global emissions-reduction goals and energy independence initiatives.
Strategic investments in clean energy solutions
As Australia navigates its energy transition, forward-thinking companies are positioning themselves at the forefront of clean energy innovation. BPH Energy (ASX:BPH), listed on the Australian Securities Exchange, serves as a prime example of strategic investment in the burgeoning hydrogen sector.
BPH Energy has made significant strides in the clean energy sector, particularly in hydrogen technologies, through its investment in Clean Hydrogen Technologies, aligning with the wider industry trend toward lower-carbon solutions. As of December 2023, BPH holds a 19.5 percent ownership interest in Clean Hydrogen Technologies, bolstered by a series of investments including a recent commitment of an additional US$250,000.
In June 2023, BPH announced that Clean Hydrogen Technologies and its subsidiary Onshore Energy entered into a hydrocarbon process agreement, signaling a collaborative phase to enhance hydrogen technology deployment. This partnership aims to streamline processes which could facilitate the commercialisation of hydrogen technologies, an essential aspect of Australia's broader clean energy goals.
BPH Energy's strategic moves reflect an anticipation of a booming hydrogen market, projected to expand as governments worldwide enforce stricter emissions regulations and demonstrate a commitment to achieving climate neutrality. By positioning itself as a key player in the transition to clean energy through substantial investments in hydrogen technologies, BPH Energy provides a promising outlook for investors interested in sustainable energy sectors.
Investment appeal in the evolving energy landscape
The compelling case for investing in emerging energy technologies, particularly in clean hydrogen, is driven by several factors that highlight its growth potential and strategic importance in the global energy transition:
- Market growth projections: The anticipated expansion of the hydrogen market, with projections indicating substantial growth over the next decade, presents a significant opportunity for investors to capitalise on this emerging sector.
- Policy support: Governments worldwide are implementing policies to encourage investment in low-emission hydrogen production and create demand for hydrogen-based solutions, providing a supportive environment for industry growth.
- Emissions-reduction potential: As industries and governments seek to meet ambitious emissions targets, clean hydrogen offers a viable solution for decarbonising sectors that are difficult to electrify, such as heavy industry and long-haul transport.
- Energy security: Investing in clean hydrogen contributes to energy diversification and independence, reducing reliance on traditional fossil fuels and enhancing national energy security.
- Technological advancements: Ongoing research and development in hydrogen production, storage and utilisation are driving down costs and improving efficiency, making hydrogen increasingly competitive with conventional energy sources.
- Export opportunities: Countries with abundant renewable energy resources, like Australia, have the potential to become major exporters of clean hydrogen, opening up new economic opportunities.
Investor takeaway
The continuously evolving global energy landscape is creating new investment opportunities in the clean hydrogen space, representing not just a potential solution to immediate energy crises but also a strategic positioning for the future of energy. Companies like BPH Energy, through their targeted investments in hydrogen technologies, are at the forefront of this transition, offering investors exposure to a sector poised for significant growth and impact.
As Australia grapples with its energy crisis and seeks to transition towards a low-carbon future, clean hydrogen emerges as a promising solution with substantial investment potential. The convergence of market growth projections, supportive policies and the pressing need for sustainable energy alternatives creates a compelling narrative for investors looking to participate in the clean energy revolution.
This INNSpired article is sponsored by BPH Energy (ASX:BPH). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by BPH Energyin order to help investors learn more about the company. BPH Energyis a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with BPH Energyand seek advice from a qualified investment advisor.
Prospectus Update - Permission to Issue Shares
Alvopetro Announces November 2024 Sales Volumes, Sales Contract Update, and Q4 2024 Dividend
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces November 2024 sales volumes, an update to our long-term natural gas sales agreement, and our Q4 2024 dividend.
President & CEO, Corey C. Ruttan commented:
"In 2024 we increased our productive capacity at Caburé and, with our recent success at Murucututu, this has allowed us to commit to a higher level of base committed firm sales volumes starting in 2025 further strengthening our disciplined capital allocation model, balancing returns to stakeholders and organic growth."
November Sales Volumes
November sales volumes averaged 1,465 boepd including natural gas sales of 8.1 MMcfpd, associated natural gas liquids sales from condensate of 110 bopd and oil sales of 9 bopd, based on field estimates. Our November sales were impacted by reduced demand in the state of Bahia resulting mainly from facility turnarounds. During this period Alvopetro also shut in all production for a 2-day period to complete mandatory turnaround and inspection works at all facilities. Based on field estimates, natural gas sales volumes to-date in December have averaged 11.6 MMcfpd.
Our Murucututu sales volumes accounted for 28% of November natural gas sales. Murucututu production in November was entirely from our 183-A3 well which was being prioritized and continues to perform well above expectations.
Bahiagas Sales Agreement Update
Alvopetro and Bahiagás have agreed to update our long-term gas sales agreement to increase Alvopetro's share of Bahiagas' supply and better align the contract with prevailing market conditions, highlighted as follows:
- Increasing Alvopetro's contracted firm volumes starting January 1, 2025 by 33% up to 400 e3m3/d(1).
- Adjusted the natural gas pricing model to be recalculated quarterly and to be a function of Brent oil equivalent prices and Henry Hub natural gas prices resulting in quicker adjustments for commodity price and foreign exchange rate fluctuations.
- Removed the contractual floor and ceiling provisions.
- Enhanced supply failure penalty mechanisms to reduce Alvopetro's exposure in the event of any supply failures.
- Retained existing take or pay provisions requiring Bahiagas to pay for any gas not taken to the extent deliveries are less than 80% of firm volumes monthly, or less than 90% annually. For reference in 2024, while Bahiagas was managing demand disruptions, Alvopetro delivered 104% of the firm contracted amount on average to-date.
- The updated contract extends to December 31, 2034.
The contracted firm volumes would be satisfied with delivered natural gas sales of 371 e3m3/d (13.1 MMcfpd)(1). At this sales level and including expected natural gas liquids (condensate) yields our 2025 sales volumes would average approximately 2,310 boepd, a 28% increase from forecast 2024 sales. Using currently forecast commodity prices in the futures markets, a constant foreign exchange rate of 6.05BRL:1USD, 2.2% US inflation, 4.1% Brazilian inflation and our average heat content, our natural gas price is forecast to average $10.37/Mcf in 2025. This is approximately 2.5% lower than what would be forecast under our previous natural gas pricing model.
(1) The 2025 firm volume of 400 e3m3/d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Note that 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% hotter than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e3m3/d (13.1MMcfpd).
Q4 2024 Dividend
Our Board of Directors has declared a quarterly dividend of US$0.09 per common share, payable in cash on January 15, 2025, to shareholders of record at the close of business on December 31, 2024. 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.
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
YouTube -https://www.youtube.com/channel/UCgDn_igrQgdlj-maR6fWB0w
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 assets 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
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.
Well Results. There is no representation by Alvopetro that the information contained in this press release with respect to production data from the 183-A3 well 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 future production and sales volumes, Alvopetro's natural gas price and expected sales under the Company's long-term gas sales agreement, the Company's dividends, plans for dividends in the future, and the timing and amount of such dividends and the expected tax treatment thereof. 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. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, expectations and assumptions concerning forecasted demand for oil and natural gas, 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, the outcome of any disputes, 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, general economic and business conditions, 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. 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 Rock Royalties
Investor Insight
Source Rock Royalties offers investors exposure to oil and gas production without operational costs, providing steady cash flow through its diversified portfolio of royalties and mineral rights.
Overview
Source Rock Royalties (TSXV:SRR) is a Calgary, Canada based company exclusively focused on oil & gas royalties in the provinces of Alberta and Saskatchewan. Source Rock's portfolio primarily consists of royalty interests focused on oil, with concentrations in southeast Saskatchewan, central Alberta and west-central Saskatchewan. The portfolio comprises:
- Various gross overriding royalty interests in southeast Saskatchewan.
- A gross overriding royalty in largely contiguous Clearwater interests in Central Alberta.
- A production volume royalty in Viking mineral rights in east-central Alberta.
- Various gross overriding royalties in central Alberta.
- Various gross overriding royalties in the west-central Saskatchewan Viking light oil play.
Since its inception, Source Rock Royalties has consistently pursued royalty acquisitions, even amidst significant energy market fluctuations. The company has primarily concentrated on non-marketed royalty acquisitions rather than opportunities marketed through formal third-party processes. Leveraging strong relationships within the oil and gas sector in the Western Canadian Sedimentary Basin, Source Rock identifies and accesses niche royalty acquisitions.
Source Rock acquired new royalties worth nearly C$13 million in 2023 and a total of C$16.5 million since its IPO in March 2022. These acquisitions effectively doubled Source Rock’s royalty acreage, significantly enhancing both its current royalty production and its exposure to potential undeveloped drill locations. Source Rock generated C$6.6 million in royalty revenue in 2023, the highest in its 11-year history. Source Rock has generated C$5.8 million royalty revenue for the first nine months of 2024.
Source Rock endeavors to keep costs low, thereby maximizing cash flows. Aside from the CEO and CFO, additional technical oil and gas professionals are engaged by Source Rock as consultants on an as-needed basis. Source Rock Royalties employs only one full-time staff member. The low-cost base ensures consistent cash flows as evidenced by its more than 11+year track record of delivering positive funds from operations.
Strong cash flow allows the company to consistently pay dividends. Source Rock has paid ~$19 million in dividends to shareholders from 2014 to Q4 2024. Source Rock’s per share dividend has increased by 30 percent since March 2023.
The current monthly dividend is $0.0065 and is sustainable given that it can comfortably be funded by current operations even at a lower oil price scenario of ~C$60/bbl (or ~US$50/bbl WTI).
The management and board of directors have a proven track record of creating value in the oil & gas industry. The insiders own 10 percent of Source Rock’s common shares, aligning their interest to that of the shareholders by directly participating in the same financings as outside shareholders since inception. The company has a strong institutional shareholder with CN Rail Pension Fund owning approximately 20 percent of Source Rock’s common shares. Source Rock Royalties has a clean capital structure with only 45.5 million common shares issued and outstanding.
Source Rock focuses on a balanced growth and yield model, limiting volatility in returns for shareholders. Source Rock offers investors a unique opportunity to gain exposure to the oil & gas sector in Canada.
Company Highlights
- Source Rock Royalties is a Calgary, Canada based pure-play oil and gas royalty company, with a focus on Alberta and Saskatchewan; the only junior oil and gas royalty company listed on the TSXV.
- Source Rock Royalties concentrates on acquiring royalties in areas with proved reserves, foreseeable future high rate-of-return drilling upside, and partnering with operators that are financially and operationally prudent.
- Owning and managing royalties is a capital-light business model offering the benefit of sharing in production revenue without exposure to the capital costs associated with drilling, development, maintenance, abandonment, environmental and other obligations.
- Source Rock Royalties has a diversified oil-focused portfolio of royalty interests concentrated in southeast Saskatchewan, central Alberta, and west-central Saskatchewan with well-positioned royalty payors. Oil exposure allows for a strong netback (profit) per barrel even during periods of lower commodity prices.
- Source Rock Royalties has a proven track record of executing its balanced growth and yield business model. The company has achieved 11 years of positive cash flow and provided ~$19 million in dividends back to shareholders since 2014.
- Source Rock Royalties anticipates its current monthly dividend of $0.0065 to be comfortably funded with cash flow by current operations down to oil prices of ~C$60/bbl (or ~US$50/bbl WTI).
- The management and board of directors have a proven track record of creating value in the oil & gas industry. The insiders own 10 percent of Source Rock’s common shares, aligning their interests with that of the shareholders.
- The company has a strong institutional shareholder, with CN Rail Pension Fund owning approximately 20 percent of Source Rock’s common shares.
- Insiders and key shareholders have an average cost on their shares of ~$0.90 (there were never any cheap Founders or seed shares issued).
- Source Rock Royalties does not use debt in its business and always maintains a cash balance.
Royalty Assets
Source Rock's current portfolio comprises royalties primarily focused on oil (95 percent), spread across southeast Saskatchewan, central Alberta and west-central Saskatchewan. The company holds varying gross overriding royalties in more than 150,000 gross acres of land. Additionally, Source Rock owns a production volume royalty in Viking mineral interests situated in lands in east-central Alberta.
The majority of Source Rock's royalties are derived from top-line revenue, resulting in minimal exposure to deductions linked to production costs from wellbores and the sale of various commodities. Also, the majority of its current royalty payors are financially stable and possess robust capabilities to efficiently operate and enhance the value of the lands in which Source Rock holds royalties. Some of the key royalty payors include Whitecap Resources (TSX:WCP), Rubellite Energy (TSX:RBY), Surge Energy (TSX:SGY), Veren (TSX:VRN), Anova Resources (Private), Marling Resources (Private) and Axiom Oil & Gas (Private), among many others.
1. SE Saskatchewan Light Oil Gross Overriding Royalties
The company holds gross overriding royalties in approximately 35,000 gross acres of land in southeast Saskatchewan. The key operators include Whitecap Resources, Vermilion Energy (TSX:VET), Anova Resources (Private), Veren (TSX:VRN), Tundra Oil & Gas (Private), ROK Resources (TSXV:ROK), Woodland Development (Private) and Saturn Oil & Gas (TSX:SOIL). Future development activities on gross overriding royalty lands will be focused on the Frobisher Formation. The Frobisher Formation, characterized by shallow depths and conventional light oil, does not necessitate hydraulic fracturing, making it one of Canada's most economically viable light oil plays.
2. Clearwater Heavy Oil Gross Overriding Royalty
The company holds a gross overriding royalty in approximately 60,000 net acres (95 sections) of largely contiguous land in the Figure Lake area of central Alberta. Rubellite Energy is the operator of gross overriding royalty lands and the production is entirely from the Clearwater Formation. The gross overriding royalty initially carries a royalty rate of 1.5 percent until the cumulative royalty revenue received by Source Rock matches the purchase price. At that point, the royalty rate decreases to 1 percent. The operator has committed to drill 59 horizontal wells on the lands between December 2023 and June 2026.
3. Hamilton Lake Unit Viking Light Oil Royalty
Source Rock earns a production volume royalty supported by production from Hamilton Lake Unit and Viking lands of Axiom Oil & Gas. Pursuant to the production volume royalty agreement, Source Rock's remaining entitlement to royalty volumes from the Hamilton Lake Unit is as follows:
- 2024 – 75 bbl/d; 2025 – 70 bbl/d; 2026 – 39 bbl/d
- 2027 to 2034 – 20 percent lower on a per-day basis than the prior calendar year; and
- January 1, 2035 – conversion to a 0.50 percent gross overriding royalty in the Hamilton Lake Unit or a $500,000 pay-out, at the discretion of the royalty payor.
4. Central Alberta and Saskatchewan Gross Overriding Royalties
Source Rock owns varying gross overriding royalties in approximately 60,000 gross acres of land located in west-central Saskatchewan and central Alberta. The west-central Saskatchewan gross overriding royalty lands produce predominantly light oil from the Viking and Mannville formations. The Central Alberta gross overriding royalties produce from various formations and include exposure to several low-decline properties that are under waterflood.
Management Team
Brad Docherty – President, Chairman and Chief Executive Officer
Brad Docherty is the Founder of Source Rock Royalties, and has held the positions of president, chief executive officer and chairman of the company since its incorporation. Previously, he was a corporate finance & securities lawyer at Gowlings and served as the president, CEO and director of Exito Energy and Exitio Energy II, both capital pool companies on the TSXV.
Cheryne Lowe – Chief Financial Officer
Cheryne Lowe is a seasoned financial professional with extensive experience in companies listed on the Toronto Stock Exchange. She also brings a background in the upstream oil and gas industry and the Canadian capital markets. Her most recent role was interim CFO at AgJunction (TSX:AJX), an agriculture technology company, which was acquired in late 2021. Previously, she served as CFO and corporate secretary at Pine Cliff Energy (TSX:PNE), and as vice-president finance and CFO at Orlen Upstream Canada and its predecessor, TriOil Resources. Lowe began her career with KPMG and later worked as an Institutional Research Associate with Tristone Capital.
John Bell – Director
John Bell is the president at Kerrobert Fuels and was previously the president and chief financial officer at WCSB Blockchain Infrastructure. Prior to this, he served as the director of finance at Tidewater Midstream and Infrastructure (TSX:TWM).
Dean Potter – Director
Dean Potter serves as the executive chairman and CEO of Burgess Creek Exploration. Additionally, he is the president at DPX, a private company engaged in petroleum exploration and development. He is a member of the Saskatchewan oil and gas Hall of Fame and has more than 40 years of geological expertise that has been focused on making discoveries in SE Saskatchewan.
Gary McMurren – Director
Gary McMurren is the vice-president of engineering at Southern Energy (TSXV:SOU). He was previously the vice-president of engineering at Gulf Pine Energy Partners. Formerly, he held various engineering roles with Athabasca Oil (TSX:ATH).
Shaun Thiessen – Director
Shaun Thiessen is vice-president of land and business development at Astara Oil. Prior to this, he held the same title at Astra Oil from inception until its sale. Formerly, he was the director of land at PrairieSky Royalty (TSX:PSK).
Scott Rideout – Director
Scott Rideout is vice-president of land at Headwater Exploration (TSX:HWX). He was previously vice-president of land at Baytex Energy (TSX:BTE), and prior to that at Raging River Exploration until its sale.
June-Marie Innes – Director
June-Marie Innes is currently CFO at Thread Innovations. She previously held progressively more senior roles at Tamarack Valley Energy (TSX:TVE).
Jordan Kevol – Director
Jordan Kevol is currently COO at Westgate Energy (TSXV:WGT), a private oil and gas producer. Previously, he was the president and CEO of Blackspur Oil.
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