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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. The company was the first to deliver sales-specified natural gas onshore to the local distribution network 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.
State of Bahia – Reconcavo Basin
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 ~$156 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 (56.2 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 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 quarterly based on Brent and Henry Hub benchmark prices. Alvopetro recently announced an updated gas sales agreement effective January 1, 2025, increasing firm sales volumes by 33 percent.
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 2025, 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. 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.
Alvopetro Energy finished the recompletion of its 183-A3 well in the third quarter of 2024. The well came on production in September prompting the company’s natural gas sales from the Murucututu field in Q4 2024 to increase by 262 percent compared to Q3 2024. The company has a follow-up well planned for the field in early 2025.
Management Team
Corey C. Ruttan – President, Chief Executive Officer and Director
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.
Leading independent upstream and midstream gas developer in Brazil
Alvopetro Announces March 2025 Sales Volumes
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces March sales volumes of 2,580 boepd, including natural gas sales of 14.5 MMcfpd, associated natural gas liquids sales from condensate of 146 bopd and oil sales of 12 bopd, based on field estimates, bringing our average daily sales volumes to 2,446 boepd in Q1 2025, up 41% from Q4 2024.
Natural gas, NGLs and crude oil sales: |
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. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
boepd | = | barrels of oil equivalent ("boe") per day |
bopd | = | barrels of oil and/or natural gas liquids (condensate) per day |
Mcf | = | thousand cubic feet |
Mcfpd | = | thousand cubic feet per day |
MMcfpd | = | million cubic feet per day |
NGLs | = | natural gas liquids |
Q1 2025 | = | three months ended March 31, 2025 |
Q4 2024 | = | three months ended December 31, 2024 |
BOE Disclosure . The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
SOURCE Alvopetro Energy Ltd.
View original content: http://www.newswire.ca/en/releases/archive/April2025/03/c2450.html
News Provided by Canada Newswire via QuoteMedia
Alvopetro Announces Year End 2024 Financial Results, Q1 2025 Dividend of US$0.10/share and Filing of our AIF
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces an operational update, our financial results for the year ended December 31, 2024 a quarterly dividend of US$0.10 per common share and filing of our annual information form. We will be hosting a live webcast to discuss our Q4 2024 results on Wednesday March 19, 2025 at 8:00 a.m. 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.
President & CEO, Corey C. Ruttan commented:
"Through 2024 we increased our productive capacity both at the Caburé Unit and on our 100% interest Murucututu project. This allowed us to increase our firm natural gas sales volumes for 2025 resulting in a strong start to the year with a 37% increase in our sales volumes. We are increasing our base dividend to US$0.10 per share, consistent with our long-standing commitment to a more disciplined capital allocation model, balancing returns to stakeholders and organic growth."
Operational Update
As announced on December 17, 2024 , our updated long-term gas sales agreement came into effect on January 1, 2025 increasing Alvopetro's contracted firm reference volumes by 33%. As a result, Alvopetro's daily sales in January and February increased 37% from Q4 2024 sales to an average of 2,375 boepd, including 13.4 MMcfpd of natural gas, natural gas liquids sales from condensate of 129 bopd and oil sales of 10 bopd. Effective February 1, 2025 , our natural gas price under our long-term gas sales agreement with Bahiagás has been adjusted to BRL1.95 /m 3 , a 7% increase from the January 2025 price of BRL1.83 /m 3 and consistent with the Q4 2024 price of BRL1.94 /m 3 . All natural gas sales from February 1, 2025 to April 30, 2025 will be sold at BRL1.95 /m 3 ( $10.55 /Mcf, net of applicable sales taxes, based on average heat content to date and the January 31, 2025 BRL/USD exchange rate of 5.83).
On February 5, 2025 , we announced the terms of a farmin agreement in Canada , pursuant to which Alvopetro agreed to fund 100% of two earning wells in exchange for a 50% non-operated working interest in 12,243 acres (6,122 net acres) of land in Western Saskatchewan . The first two earning wells have now been drilled and are being completed and equipped. Both wells are expected to be on production within the next 30 days. Alvopetro's estimated total costs for the two earning wells is expected to be approximately C$4.0 million ( $2.8 million ). After these initial two earning wells Alvopetro's working interest will be 50%.
On the Company's Murucututu natural gas field, we spud the first of two development wells planned for 2025 in February. Drilling is underway. On the unitized area (the "Unit") which includes the Caburé natural gas field, Alvopetro has five development wells planned for 2025, with the first well expected to be drilled in April.
On February 26, 2025 , we announced our December 31, 2024 reserves based on the independent reserve assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated February 26, 2025 with an effective date of December 31, 2024 (the "GLJ Reserves and Resources Report"). Highlights include:
- After 2024 production of 0.7 MMboe, 1P reserves increased 65% to 4.5 MMboe, representing a 1P production replacement ratio (1) of 372%. The increase was mainly due to the successful working interest redetermination at the Caburé field and increases of Caruaçu assigned reserves on our 100% Murucututu field following success on the 183-A3 well completion, somewhat offset by technical revisions related to the Gomo Formation.
- 2P reserve volumes increased 5% to 9.1 MMboe, representing a 2P production replacement ratio of 167% (1) . The increase in 2P volumes was due to the higher working interest on the Caburé field following the redetermination, partially offset by 2024 production of 0.7 MMboe. At Murucututu, additional reserves associated with the Caruaçu reservoir were offset by technical revisions reducing reserves assigned to the Gomo Formation.
- With increased reserve volumes, 1P net present value before tax, discounted at 10% ("NPV10") increased 53% to $177.7 million and 2P NPV10 increased 6% to $327.8 million .
- Risked best estimate contingent resources decreased by 0.8 MMboe from 5.4 MMboe to 4.5 MMboe at December 31, 2024 with a NPV10 of $110.0 million , decreases from December 31, 2023 of 15% and 13% respectively. The decreases were associated with the migration of volumes to reserves for the Caruaçu Formation.
- Risked best estimate prospective resources increased from 9.6 MMboe to 10.2 MMboe with a NPV10 of $208.9 million , increases of 6% and 13% respectively from December 31, 2023 .
Financial and Operating Highlights – Fourth Quarter of 2024
- Our average daily sales decreased to 1,738 boepd in Q4 2024 (-19% from Q4 2023 and -17% from Q3 2024) with reduced natural gas demand as well as shutdowns during the month of November for planned facility turnarounds and inspections.
- Our average realized natural gas price decreased to $10.51 /Mcf in Q4 2024 (-18% from Q4 2023 and -4% from Q3 2024), due mainly to the devaluation of the BRL relative to the USD, which depreciated 18% compared to the average rate in Q4 2023. Our overall averaged realized sales price was $63.88 per boe (-18% from Q4 2023 and -4% from Q3 2024).
- With lower sales volumes and lower prices, our natural gas, oil and condensate revenue decreased to $10.2 million (-33% from Q4 2023 and -21% from Q3 2024).
- Our operating netback (1) in the quarter was $55.09 per boe (- $14.60 per boe from Q4 2023) due mainly to the reduction in our realized sales price per boe as well as higher production expenses per boe with lower overall production.
- We generated funds flows from operations (1) of $7.0 million ( $0.19 per basic share and per diluted share), decreases of $5.4 million compared to Q4 2023 and $2.9 million compared to Q3 2024 due mainly to lower sales volumes and lower realized prices.
- We reported net income of $2.2 million in Q4 2024, an increase of $1.6 million compared to Q4 2023 despite lower sales volumes and realized prices due to impairment losses recognized in Q4 2023, offset by foreign exchange losses in Q4 2024 compared to foreign exchange gains in Q4 2023.
- Capital expenditures totaled $4.7 million , including costs to re-enter the 183-B1 well on our exploratory Block 183 and costs associated with the facilities upgrade at our Caburé field.
- Our working capital surplus was $13.2 million as of December 31, 2024 , increasing $0.1 million from December 31, 2023 and decreasing $2.7 million from September 30, 2024 .
Financial and Operating Highlights – Year Ended December 31, 2024
- Our annual sales volumes averaged 1,794 boepd (93% natural gas, 6% NGLs from condensate and 1% from crude oil production), a decrease of 16% compared to 2023.
- We reported net income of $16.3 million , compared to $28.5 million in 2023 (-43%).
- We generated funds flow from operations (1) of $33.3 million ( $0.89 per basic share and per diluted share), a decrease of $14.8 million compared to 2023.
- Capital expenditures totaled $15.3 million in 2024.
- Dividends declared totaled $0.36 per share in 2024 compared to $0.56 per share in 2023 (-36%).
(1) Refer to the sections entitled " Oil and Natural Gas Advisories – Other Metrics " and " Non-GAAP and Other Financial Measures ". |
The following table provides a summary of Alvopetro's financial and operating results for the periods noted. The consolidated financial statements with the Management's Discussion and Analysis ("MD&A") are available on our website at www.alvopetro.com and will be available on the SEDAR+ website at www.sedarplus.ca .
As at and Three Months Ended December 31 | As at and Year Ended December 31, | ||||||
2024 | 2023 | Change (%) | 2024 | 2023 | Change (%) | ||
Financial | |||||||
($000s, except where noted) | |||||||
Natural gas, oil and condensate sales | 10,214 | 15,300 | (33) | 45,517 | 59,687 | (24) | |
Net income | 2,243 | 652 | 244 | 16,295 | 28,525 | (43) | |
Per share – basic ($) (1) | 0.06 | 0.02 | 200 | 0.44 | 0.77 | (43) | |
Per share – diluted ($) (1) | 0.06 | 0.02 | 200 | 0.43 | 0.76 | (43) | |
Cash flows from operating activities | 7,114 | 7,904 | (10) | 34,901 | 47,702 | (27) | |
Per share – basic ($) (1) | 0.19 | 0.21 | (10) | 0.94 | 1.29 | (27) | |
Per share – diluted ($) (1) | 0.19 | 0.21 | (10) | 0.93 | 1.26 | (26) | |
Funds flow from operations (2) | 6,966 | 12,393 | (44) | 33,275 | 48,030 | (31) | |
Per share – basic ($) (1) | 0.19 | 0.33 | (42) | 0.89 | 1.29 | (31) | |
Per share – diluted ($) (1) | 0.19 | 0.33 | (42) | 0.89 | 1.27 | (30) | |
Dividends declared | 3,283 | 5,127 | (36) | 13,170 | 20,462 | (36) | |
Per share (1) (2) | 0.09 | 0.14 | (36) | 0.36 | 0.56 | (36) | |
Capital expenditures | 4,682 | 4,934 | (5) | 15,305 | 27,449 | (44) | |
Cash and cash equivalents | 21,697 | 18,326 | 18 | 21,697 | 18,326 | 18 | |
Net working capital (2) | 13,181 | 13,117 | - | 13,181 | 13,117 | - | |
Weighted average shares outstanding | |||||||
Basic (000s) (1) | 37,315 | 37,262 | - | 37,289 | 37,121 | - | |
Diluted (000s) (1) | 37,566 | 37,963 | (1) | 37,558 | 37,770 | (1) | |
Operations | |||||||
Average daily sales volumes: | |||||||
Natural gas (Mcfpd), by field: | |||||||
Caburé (Mcfpd) | 7,476 | 11,699 | (36) | 9,228 | 11,742 | (21) | |
Murucututu (Mcfpd) | 2,231 | 546 | 309 | 928 | 487 | 91 | |
Total natural gas (Mcfpd) | 9,707 | 12,245 | (21) | 10,156 | 12,229 | (17) | |
NGLs – condensate (bopd) | 109 | 92 | 18 | 90 | 99 | (9) | |
Oil (bopd) | 11 | 10 | 10 | 12 | 6 | 100 | |
Total (boepd) | 1,738 | 2,143 | (19) | 1,794 | 2,142 | (16) | |
Average realized prices (2) : | |||||||
Natural gas ($/Mcf) | 10.51 | 12.85 | (18) | 11.42 | 12.64 | (10) | |
NGLs – condensate ($/bbl) | 75.95 | 89.45 | (15) | 84.84 | 86.29 | (2) | |
Oil ($/bbl) | 61.74 | 73.67 | (16) | 66.94 | 71.22 | (6) | |
Total ($/boe) | 63.88 | 77.60 | (18) | 69.31 | 76.33 | (9) | |
Operating netback ($/boe) (2) | |||||||
Realized sales price | 63.88 | 77.60 | (18) | 69.31 | 76.33 | (9) | |
Royalties | (2.15) | (2.07) | 4 | (1.99) | (2.13) | (7) | |
Production expenses | (6.64) | (5.84) | 14 | (6.33) | (5.38) | 18 | |
Operating netback | 55.09 | 69.69 | (21) | 60.99 | 68.82 | (11) | |
Operating netback margin (2) | 86 % | 90 % | (4) | 88 % | 90 % | (2) | |
Notes: | |
(1) | Per share amounts are based on weighted average shares outstanding other than dividends per share, which is based on the number of common shares outstanding at each dividend record date. The weighted average number of diluted common shares outstanding in the computation of funds flow from operations and cash flows from operating activities per share is the same as for net income per share. |
(2) | See "Non-GAAP and Other Financial Measures" section within this news release. |
Quarterly Dividend of US$0.10 per Share
With our updated gas sales agreement in effect as of January 1, 2025 and higher production levels forecasted in the first quarter of 2025 our Board of Directors determined it was appropriate to increase the declared quarterly dividend to US$0.10 per common share, payable in cash on April 15, 2025, to shareholders of record at the close of business on March 31, 2025. This dividend is designated as an "eligible dividend" for Canadian income tax purposes.
Dividend payments to non-residents of Canada will be subject to withholding taxes at the Canadian statutory rate of 25%. Shareholders may be entitled to a reduced withholding tax rate under a tax treaty between their country of residence and Canada. For further information, see Alvopetro's website at https://alvopetro.com/Dividends-Non-resident-Shareholders .
Annual Information Form
Alvopetro has filed its annual information form ("AIF") with the Canadian securities regulators on SEDAR+. The AIF
includes the disclosure and reports relating to oil and gas reserves data and other oil and gas information required
pursuant to National Instrument 51-101 of the Canadian Securities Administrators. The AIF may be accessed
electronically at www.sedarplus.ca and on our website at www.alvopetro.com .
2024 Results Webcast
Alvopetro will host a live webcast to discuss our 2024 financial results at 8:00 am Mountain time on Wednesday March 19, 2025. Details for joining the event are as follows:
DATE: March 19, 2025
TIME : 8:00 AM Mountain/ 10:00 AM Eastern
LINK: https://us06web.zoom.us/j/84540021301
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kBRCh4fgE
WEBINAR ID : 845 4002 1301
The webcast will include a question-and-answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com .
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation .
Social Media
Follow Alvopetro on our social media channels at the following links:
Twitter - https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Abbreviations:
$000s | = | thousands of U.S. dollars |
1P | = | proved reserves |
2P | = | proved plus probable reserves |
boepd | = | barrels of oil equivalent ("boe") per day |
bopd | = | barrels of oil and/or natural gas liquids (condensate) per day |
BRL | = | Brazilian Real |
Mcf | = | thousand cubic feet |
Mcfpd | = | thousand cubic feet per day |
MMcf | = | million cubic feet |
MMcfpd | = | million cubic feet per day |
NGLs | = | natural gas liquids (condensate) |
NPV10 | = | net present value before tax, discounted at 10% |
Q3 2024 | = | three months ended September 30, 2024 |
Q4 2023 | = | three months ended December 31, 2023 |
Q4 2024 | = | three months ended December 31, 2024 |
USD | = | United States dollars |
GAAP or IFRS | = | IFRS Accounting Standards |
Non-GAAP and Other Financial Measures
This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure . Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. While these measures may be common in the oil and gas industry, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this report should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company's reported financial performance or position. These are complementary measures that are used by management in assessing the Company's financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the " Non-GAAP Measures and Other Financial Measures " section of the Company's MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca .
Non-GAAP Financial Measures
Operating netback
Operating netback is calculated as natural gas, oil and condensate revenues less royalties and production expenses. This calculation is provided in the " Operating Netback " section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca . Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.
Non-GAAP Financial Ratios
Operating netback per boe
Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent ("boe"). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company's producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (boe). This calculation is provided in the " Operating Netback " section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca . Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations on a per boe basis.
Operating netback margin
Operating netback margin is calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:
Three Months Ended December 31, | Year Ended December 31, | |||
2024 | 2023 | 2024 | 2023 | |
Operating netback - $ per boe | 55.09 | 69.69 | 60.99 | 68.82 |
Average realized price - $ per boe | 63.88 | 77.60 | 69.31 | 76.33 |
Operating netback margin | 86 % | 90 % | 88 % | 90 % |
Funds Flow from Operations Per Share
Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share is as follows:
Three Months Ended December 31, | Year Ended December 31, | |||
$ per share | 2024 | 2023 | 2024 | 2023 |
Per basic share: | ||||
Cash flows from operating activities | 0.19 | 0.21 | 0.94 | 1.29 |
Funds flow from operations | 0.19 | 0.33 | 0.89 | 1.29 |
Per diluted share: | ||||
Cash flows from operating activities | 0.19 | 0.21 | 0.93 | 1.26 |
Funds flow from operations | 0.19 | 0.33 | 0.89 | 1.27 |
Capital Management Measures
Funds Flow from Operations
Funds flow from operations is a non-GAAP capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company's ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:
Three Months Ended December 31, | Year Ended December 31, | |||
2024 | 2023 | 2024 | 2023 | |
Cash flows from operating activities | 7,114 | 7,904 | 34,901 | 47,702 |
Changes in non-cash working capital | (148) | 4,489 | (1,626) | 328 |
Funds flow from operations | 6,966 | 12,393 | 33,275 | 48,030 |
Net Working Capital
Net working capital is computed as current assets less current liabilities. Net working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows:
As at December 31 | |||
2024 | 2023 | ||
Total current assets | 26,984 | 25,995 | |
Total current liabilities | (13,803) | (12,878) | |
Net working capital | 13,181 | 13,117 | |
Supplementary Financial Measures
" Average realized natural gas price - $/Mcf " is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company's natural gas sales volumes.
" Average realized NGL – condensate price - $/bbl " is comprised of condensate sales as determined in accordance with IFRS, divided by the Company's NGL sales volumes from condensate.
" Average realized oil price - $/bbl " is comprised of oil sales as determined in accordance with IFRS, divided by the Company's oil sales volumes.
" Average realized price - $/boe " is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company's total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
" Dividends per share " is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
" Royalties per boe " is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
" Production expenses per boe " is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
Oil and Natural Gas Advisories
Oil and Natural Gas Reserves
The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under National Instrument 51-101 ("NI 51-101"). Full disclosure with respect to the Company's reserves as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ). The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook" or "COGEH") that are consistent with the standards of NI 51-101. GLJ is a qualified reserves evaluator as defined in NI 51-101.
All net present values in this press release are based on estimates of future operating and capital costs and GLJ's forecast prices as of December 31, 2024 . The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to Alvopetro's reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Cabur é Working Interest
Alvopetro's working interest in the Caburé natural gas field is 56.2% as of December 31, 2024 and the date hereof. This working interest is subject to redetermination, the first of which was completed in April 2024 . An independent expert (the "Expert") was engaged in connection with the first redetermination to evaluate the redetermination and the impact to each party's working interest. Following the Expert's decision, Alvopetro's working interest was increased from 49.1% to 56.2%. Alvopetro's partner filed a notice of dispute with respect to the Expert's decision, seeking to stay the redetermination procedure. Alvopetro subsequently filed a request for emergency arbitration before the International Chamber of Commerce ("ICC") seeking to make the Expert decision effective starting on June 1, 2024 . In May 2024 , Alvopetro received the decision of the emergency arbitrator ("the Order") wherein the arbitrator found in favour of Alvopetro, making the Expert decision effective June 1, 2024 until such time as the dispute is reviewed by and decided upon by an arbitral tribunal pursuant to the Rules of Arbitration of the ICC. The redetermination dispute has proceeded to a full arbitration under the Rules of the ICC, however the timing and outcome of the full arbitration is uncertain and the resulting impact on the reserves and the net present value of future net revenue attributable to such reserves as presented herein may be material. In addition, future redeterminations may also have a material impact on Alvopetro's reserves and future cash flows.
Contingent Resources
This news release discloses estimates of Alvopetro's contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company's contingent resources as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ).
Prospective Resources
This news release discloses estimates of Alvopetro's prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company's prospective resources as at December 31, 2024 is included in the Company's annual information form for the year ended December 31, 2024 which has been filed on SEDAR+ ( www.sedarplus.ca ).
Other Metrics
This new release contains references to "production replacement ratio", a metric commonly used in the oil and natural gas industry, which has been calculated by management. This term does not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
"Production replacement ratio" is calculated by dividing the change in reserve volumes plus current year production by current year production. Alvopetro's 1P production replacement ratio and 2P production replacement ratio in 2024 is calculated as:
1P | 2P | |
Reserve volumes as at December 31, 2024 – Mboe | 4,512 | 9,148 |
Reserve volumes as at December 31, 2023 – Mboe | 2,727 | 8,711 |
Reserve additions – Mboe | 1,785 | 437 |
2024 production – Mboe | 657 | 657 |
Change in reserves before 2024 production - Mboe | 2,442 | 1,094 |
2024 production replacement ratio | 372 % | 167 % |
BOE Disclosure
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Contracted Natural Gas Volumes
The 2025 contracted daily firm volumes under Alvopetro's long-term gas sales agreement of 400 e 3 m 3 /d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Alvopetro's reported natural gas sales volumes are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro's natural gas is approximately 7.8% higher than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e 3 m 3 /d (13.1MMcfpd).
Forward-Looking Statements and Cautionary Language
This news release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend", "plan", "may", "believe", "estimate", "forecast", "anticipate", "should" and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking statements concerning the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement, the timing and taxation of dividends and plans for dividends in the future, plans relating to the Company's operational activities, proposed exploration and development activities and the timing for such activities, capital spending levels, future capital and operating costs, future production and sales volumes, the expected timing of production commencement in Canada , arbitration procedures associated with the redetermination of working interests of the Caburé natural gas field, anticipated timing for upcoming drilling and testing of other wells, and projected financial results. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, the outcome of any disputes, the outcome of redeterminations, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, and the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with trade or tariff disputes, and general economic conditions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our AIF which may be accessed on Alvopetro's SEDAR+ profile at www.sedarplus.ca . The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
SOURCE Alvopetro Energy Ltd.
View original content: http://www.newswire.ca/en/releases/archive/March2025/18/c2211.html
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Alvopetro Announces February 2025 Sales Volumes
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces February sales volumes of 2,285 boepd, including natural gas sales of 13.0 MMcfpd and associated natural gas liquids sales from condensate of 115 bopd, based on field estimates.
Natural gas, NGLs and crude oil sales: |
Sales volumes in February were impacted by reduced demand for the final 7 days of February. Sales in March are expected to be consistent with January.
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. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
boepd | = barrels of oil equivalent ("boe") per day |
bopd | = barrels of oil and/or natural gas liquids (condensate) per day |
Mcf | = thousand cubic feet |
Mcfpd | = thousand cubic feet per day |
MMcfpd | = million cubic feet per day |
NGLs | = natural gas liquids |
BOE Disclosure . The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Forward-Looking Statements and Cautionary Language. This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend" and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking information concerning future production and sales volumes and expected sales under the Company's long-term gas sales agreement. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. 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.
www.alvopetro.com
TSX-V: ALV, OTCQX: ALVOF
SOURCE Alvopetro Energy Ltd.
View original content: http://www.newswire.ca/en/releases/archive/March2025/05/c4751.html
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Alvopetro Announces 2024 Year End Reserves Including a 65% Increase in 1P Reserves
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces our reserves as at December 31, 2024 with total proved ("1P") reserves of 4.5 MMboe and total proved plus probable ("2P") reserves of 9.1 MMboe, increases of 65% and 5%, respectively, from December 31, 2023 . The before tax net present value discounted at 10% ("NPV10") of our 1P reserves increased 53% to $177.7 million and the NPV10 of our 2P reserves increased 6% to $327.8 million . We also announce risked best estimate contingent resources of 4.5 MMboe (NPV10 $110.0 million ) and risked best estimate prospective resources of 10.2 MMboe (NPV10 $208.9 million ). The reserves and resources data set forth herein is based on an independent reserves and resources assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated February 26, 2025 with an effective date of December 31, 2024 (the "GLJ Reserves and Resources Report").
The GLJ Reserves and Resources Report incorporates Alvopetro's working interest share of remaining recoverable reserves held by Alvopetro in the Caburé and Murucututu natural gas fields and the Bom Lugar and Mãe-da-lua oil fields as well as Alvopetro's working interest share of remaining recoverable resources held by Alvopetro in the Murucututu natural gas field. With respect to Murucututu, Bom Lugar, and Mãe-da-lua, Alvopetro's working interest share is 100%. With respect to the unitized area (the "Unit") which includes our Caburé and Caburé Leste fields (collectively referred to as "Caburé" in this news release) and two fields held by our third-party partner in the Unit, Alvopetro's working interest share as of December 31, 2024 was 56.2%, with the remaining 43.8% held by our partner.
All references herein to $ refer to United States dollars, unless otherwise stated.
President & CEO, Corey C. Ruttan commented:
"Our 2024 year end reserves reflect a strong year for Alvopetro resulting from our successful redetermination increasing our Caburé Unit working interest from 49.1% to 56.2% and strong results from our 183-A3 well in the Caruaçu Formation on our 100% interest Murucututu project. These successes allowed us to commit to a higher level of base committed firm sales volumes with our offtaker, Bahiagás, for 2025 and further strengthens our disciplined capital allocation model, balancing returns to stakeholders and organic growth."
December 31, 2024 GLJ Reserves and Resource Report:
- After 2024 production of 0.7 MMboe, 1P reserves increased 65% to 4.5 MMboe, representing a 1P production replacement ratio (1) of 372%. The increase was mainly due to the successful working interest redetermination at the Caburé field and increases on Caruaçu assigned reserves on our 100% Murucututu field following success on the 183-A3 well completion, somewhat offset by technical revisions related to the Gomo Formation.
- 2P reserve volumes increased 5% to 9.1 MMboe, representing a 2P production replacement ratio of 167% (1) . The increase in 2P volumes was due to the higher working interest on the Caburé field following the redetermination, partially offset by 2024 production of 0.7 MMboe. At Murucututu, additional reserves associated with the Caruaçu reservoir were offset by technical revisions reducing reserves assigned to the Gomo Formation.
- With increased reserve volumes, 1P NPV10 increased 53% to $177.7 million and 2P NPV10 increased 6% to $327.8 million .
- Risked best estimate contingent resources decreased by 0.8 MMboe from 5.4 MMboe to 4.5 MMboe at December 31, 2024 with a NPV10 of $110.0 million , decreases from December 31, 2023 of 15% and 13% respectively. The decreases were associated with the migration of volumes to Reserves for the Caruaçu Formation.
- Risked best estimate prospective resources increased from 9.6 MMboe to 10.2 MMboe with a NPV10 of $208.9 million , increases of 6% and 13% respectively from December 31, 2023 .
(1) Refer to the sections entitled " Oil and Natural Gas Advisories – Other Metrics " for additional disclosures and assumptions used in calculating production replacement ratio.
SUMMARY
December 31, 2024 Gross Reserve and Gross Resource Volumes : (1)(2)(3)(4)(5)(6)
December 31, 2024 Reserves (Gross) | Total Proved (1P) | Total Proved plus (2P) | Total Proved plus (3P) |
(Mboe) | (Mboe) | (Mboe) | |
Caburé Natural Gas Field | 2,147 | 4,121 | 5,465 |
Murucututu Natural Gas Field | 2,216 | 4,563 | 7,265 |
Bom Lugar Oil Field | 124 | 422 | 638 |
Mãe-da-lua Oil Field | 27 | 42 | 61 |
Total Company Reserves | 4,512 | 9,148 | 13,428 |
December 31, 2024 Murucututu Resources (Gross) | Low Estimate | Best Estimate | High Estimate |
(Mboe) | (Mboe) | (Mboe) | |
Risked Contingent Resource Risked Prospective Resource | 2,570 4,830 | 4,549 10,208 | 6,127 17,076 |
See 'Footnotes' section at the end of this news release |
Net Present Value Before Tax Discounted at 10% : (1)(2)(3)(4)(5)(6)(7)(8)
Reserves | 1P | 2P | 3P |
($000s) | ($000s) | ($000s) | |
Caburé Natural Gas Field | 106,514 | 185,164 | 234,176 |
Murucututu Natural Gas Field | 67,797 | 134,792 | 200,732 |
Bom Lugar Oil Field | 2,882 | 6,857 | 11,388 |
Mãe-da-lua Oil Field | 459 | 966 | 1,532 |
Total Company | 177,651 | 327,779 | 447,828 |
Murucututu Resource | Low Estimate | Best Estimate | High Estimate |
($000s) | ($000s) | ($000s) | |
Risked Contingent Resource Risked Prospective Resource | 58,505 88,427 | 109,951 208,880 | 146,405 351,902 |
See 'Footnotes' section at the end of this news release |
PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS
GLJ employed the following pricing and inflation rate assumptions as of January 1, 2025 , in the GLJ Reserves and Resources Report in estimating reserves and resources data using forecast prices and costs.
Year | Brent Blend | NYMEX Henry Hub ($/MMBtu) | Alvopetro-Bahiagas $/MMBtu* (Current Year) | Alvopetro-Bahiagas $/MMBtu* (Previous Year) | Change from prior |
2025 | 75.25 | 3.19 | 9.23 | 10.08 | -8 % |
2026 | 77.50 | 3.85 | 10.11 | 10.44 | -3 % |
2027 | 80.08 | 4.16 | 10.55 | 10.51 | 0 % |
2028 | 82.69 | 4.25 | 10.66 | 10.48 | 2 % |
2029 | 84.34 | 4.33 | 10.47 | 10.63 | -2 % |
2030 | 86.03 | 4.42 | 10.71 | 10.82 | -1 % |
2031 | 87.76 | 4.50 | 10.96 | 11.04 | -1 % |
2032 | 89.50 | 4.60 | 11.22 | 11.26 | 0 % |
2033 | 91.20 | 4.69 | 11.48 | 11.48 | 0 % |
2034** | 92.94 | 4.78 | 11.74 | 11.71 | 0 % |
* Net of applicable sales taxes expected to apply |
**Escalated at 2% per year thereafter |
GLJ RESERVES AND RESOURCES REPORT
The GLJ Reserves and Resources Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook" or "COGEH") that are consistent with the standards of National Instrument 51-101 ("NI 51-101"). GLJ is a qualified reserves evaluator as defined in NI 51-101. The GLJ Reserves and Resources Report was an evaluation of all reserves of Alvopetro including our working interest share as of December 31, 2024 of the Unit (referred to herein as the Caburé natural gas field), our Murucututu natural gas project, as well as our Bom Lugar and Mãe-da-lua oil fields. The GLJ Reserves and Resources Report also includes an evaluation of the gas resources of our Murucututu natural gas field. In addition to the reserves assigned to our Murucututu field, contingent resource was assigned to the area in proximity to our existing Murucututu reserves, deemed to be discovered. The area mapped by 3D seismic west and north of the area defined as contingent was assigned prospective resource. Additional reserves and resources information as required under NI 51-101 will be included in the Company's Annual Information Form for the 2024 fiscal year which will be filed on SEDAR+ ( www.sedarplus.ca ) by April 30, 2025 .
December 31, 2024 Reserves Information:
Summary of Reserves (1)(2)(3)
Light & Medium Oil | Conventional Natural Gas | Natural Gas Liquids | Oil Equivalent | ||||||
Company Gross | Company | Company | Company | Company | Company | Company | Company | ||
(Mbbl) | (Mbbl) | (MMcf) | (MMcf) | (Mbbl) | (Mbbl) | (Mboe) | (Mboe) | ||
Proved | |||||||||
Producing | 4 | 4 | 14,874 | 14,323 | 190 | 183 | 2,673 | 2,574 | |
Developed Non-Producing | 146 | 136 | 1,396 | 1,342 | 10 | 10 | 389 | 369 | |
Undeveloped | - | - | 7,843 | 7,529 | 143 | 138 | 1,451 | 1,392 | |
Total Proved | 150 | 139 | 24,113 | 23,194 | 343 | 330 | 4,512 | 4,335 | |
Probable | 313 | 292 | 23,934 | 22,931 | 333 | 319 | 4,635 | 4,433 | |
Total Proved plus Probable | 463 | 431 | 48,047 | 46,124 | 677 | 649 | 9,148 | 8,768 | |
Possible | 235 | 219 | 22,302 | 21,352 | 328 | 313 | 4,280 | 4,091 | |
Total Proved plus Probable plus Possible | 699 | 650 | 70,349 | 67,476 | 1,004 | 962 | 13,428 | 12,859 | |
See 'Footnotes' section at the end of this news release |
Summary of Before Tax Net Present Value of Future Net Revenue - $000s (1)(2)(3)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | ||
Proved | ||||||
Producing | 145,792 | 134,892 | 125,270 | 116,873 | 109,547 | |
Developed Non-Producing | 19,256 | 15,218 | 12,375 | 10,316 | 8,780 | |
Undeveloped | 81,878 | 55,499 | 40,006 | 30,234 | 23,666 | |
Total Proved | 246,927 | 205,609 | 177,651 | 157,423 | 141,993 | |
Probable | 306,142 | 205,419 | 150,128 | 115,530 | 91,857 | |
Total Proved plus Probable | 553,069 | 411,027 | 327,779 | 272,953 | 233,849 | |
Possible | 348,169 | 184,292 | 120,049 | 86,800 | 66,442 | |
Total Proved plus Probable plus Possible | 901,238 | 595,319 | 447,828 | 359,753 | 300,291 | |
See 'Footnotes' section at the end of this news release |
Summary of After Tax Net Present Value of Future Net Revenue – $000s (1)(2)(3)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | ||
Proved | ||||||
Producing | 130,855 | 121,530 | 113,190 | 105,860 | 99,436 | |
Developed Non-Producing | 15,471 | 12,283 | 10,012 | 8,353 | 7,105 | |
Undeveloped | 61,008 | 42,127 | 30,708 | 23,341 | 18,293 | |
Total Proved | 207,334 | 175,939 | 153,910 | 137,554 | 124,834 | |
Probable | 234,053 | 160,795 | 119,072 | 92,190 | 73,390 | |
Total Proved plus Probable | 441,387 | 336,734 | 272,982 | 229,744 | 198,224 | |
Possible | 244,094 | 132,792 | 87,980 | 64,288 | 49,541 | |
Total Proved plus Probable plus Possible | 685,481 | 469,526 | 360,962 | 294,032 | 247,765 | |
See 'Footnotes' section at the end of this news release |
Future Development Costs (1)(2)(3)(7)(8)
The table below sets out the total development costs deducted in the estimation of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs), by field, in the GLJ Reserves and Resources Report. Total development costs include capital costs for drilling and completing wells and for facilities but excludes abandonment and reclamation costs.
The future development costs for the Caburé field include Alvopetro's working interest share (56.2%) for two development wells in the proved category and an additional three development wells in the probable and possible categories.
The future development costs for the Murucututu field in the proved category include three development wells and a stimulation project at the 183-1 well. The probable category includes an additional two development wells .
The future development costs for Bom Lugar in the proved category include costs to stimulate the BL-06 well. Costs in the probable category also include one development well and costs for facilities upgrade. Future development costs at the Mãe-da-lua field relate to a stimulation of the existing well.
Alvopetro's share of future development costs are summarized as follows:
$000s, Undiscounted | 2025 | 2026 | 2027 | 2027 | 2029 | Remaining | Total | |
Proved | ||||||||
Caburé Natural Gas Field | 3,443 | - | - | - | - | - | 3,443 | |
Murucututu Gas Field | 13,010 | 8,095 | - | - | - | - | 21,105 | |
Bom Lugar Oil Field | - | 500 | - | - | - | - | 500 | |
Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 | |
Total Proved | 16,453 | 9,135 | - | - | - | - | 25,588 | |
Proved Plus Probable | ||||||||
Caburé Natural Gas Field | 8,743 | - | - | - | - | - | 8,743 | |
Murucututu Gas Field | 13,010 | 21,774 | - | - | - | - | 34,784 | |
Bom Lugar Oil Field | - | 5,967 | - | - | - | - | 5,967 | |
Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 | |
Total Proved Plus Probable | 21,753 | 28,281 | - | - | - | - | 50,034 | |
Proved Plus Probable Plus Possible | ||||||||
Caburé Natural Gas Field | 8,743 | - | - | - | - | - | 8,743 | |
Murucututu Gas Field | 13,010 | 21,774 | - | - | - | - | 34,784 | |
Bom Lugar Oil Field | - | 5,967 | - | - | - | - | 5,967 | |
Mãe-da-lua Oil Field | - | 540 | - | - | - | - | 540 | |
Total Proved Plus Probable Plus Possible | 21,753 | 28,281 | - | - | - | - | 50,034 | |
See 'Footnotes' section at the end of this news release |
Reconciliation of Alvopetro's Gross Reserves (Before Royalty) (1)(2)(3)(8)
Proved | Probable | Proved Plus | Possible (Mboe) | Proved plus (Mboe) | |
December 31, 2023 | 2,727 | 5,983 | 8,711 | 6,497 | 15,208 |
Discoveries | - | - | - | - | - |
Extensions | 1,833 | (1,833) | - | - | - |
Technical Revisions | 611 | 486 | 1,097 | (2,217) | (1,120) |
Production | (660) | - | (660) | - | (660) |
December 31, 2024 | 4,512 | 4,635 | 9,148 | 4,280 | 13,428 |
See 'Footnotes' section at the end of this news release. |
December 31, 2024 Murucututu Contingent Resources Information:
Summary of Unrisked Company Gross Contingent Resources (1)(2)(5)(6)
Development Pending Economic Contingent Resources | Low Estimate | Best Estimate | High Estimate |
Conventional natural gas (MMcf) | 15,442 | 27,326 | 36,810 |
Natural gas liquids (Mbbl) | 282 | 500 | 673 |
Oil equivalent (Mboe) | 2,856 | 5,054 | 6,808 |
See 'Footnotes' section at the end of this news release. |
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Contingent Resources- $000s (1)(2)(5)(6)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | |
Low Estimate | 194,005 | 104,907 | 65,035 | 43,899 | 31,279 |
Best Estimate | 395,351 | 197,993 | 122,199 | 84,357 | 62,149 |
High Estimate | 573,506 | 269,157 | 162,703 | 111,941 | 82,752 |
See 'Footnotes' section at the end of this news release . |
The GLJ Contingent Resource Report for Murucututu assumes capital deployment starting in 2026 for the drilling and completion of wells with total project costs of $27.6 million and first commercial production in 2026. The information presented herein is based on company net project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. The project is based on a pre-development study. Development of the project is dependent on several contingencies as further described in this news release. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Pending Risked Company Gross Contingent Resources (1)(2)(5)(6)
The GLJ Reserves and Resources Report estimates the Chance of Development as the product of two main contingencies associated with the project development, which are: 1) the probability of corporate sanctioning, which GLJ estimates at 95%; 2) the probability of finalization of a development plan, which GLJ estimates at 95%. The product of these two contingencies is 90%. As there is no risk related to discovery, the Chance of Commerciality for the contingent resource is therefore 90% which is the risk factor that has been applied to the Development Risked company gross contingent resources and the net present value figures reported below.
Low Estimate | Best Estimate | High Estimate | |
Conventional natural gas (MMcf) | 13,898 | 24,593 | 33,129 |
Natural gas liquids (Mbbl) | 254 | 450 | 606 |
Oil equivalent (Mboe) | 2,570 | 4,549 | 6,127 |
See 'Footnotes' section at the end of this news release. |
Summary of Development Pending Risked Before Tax Net Present Value of Future Net Revenue of Contingent Resources- $000s (1)(5)(6)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | |
Low Estimate | 174,640 | 94,396 | 58,505 | 39,484 | 28,127 |
Best Estimate | 355,872 | 178,170 | 109,951 | 75,896 | 55,910 |
High Estimate | 516,214 | 242,218 | 146,405 | 100,721 | 74,453 |
See 'Footnotes' section at the end of this news release. |
December 31, 2024 Murucututu Prospective Resources Information:
Summary of Unrisked Company Gross Prospective Resources (1)(2)(4)(6)
Prospective Resources | Low | Best | High |
Conventional natural gas (MMcf) | 32,247 | 68,282 | 114,219 |
Natural gas liquids (Mbbl) | 588 | 1,222 | 2,045 |
Oil equivalent (Mboe) | 5,963 | 12,603 | 21,081 |
See 'Footnotes' section at the end of this news release. |
Summary of Before Tax Net Present Value of Future Net Revenue of Unrisked Prospective Resources - $000s (1)(4)(6)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | |
Low Estimate | 419,522 | 199,745 | 109,233 | 65,060 | 40,823 |
Best Estimate | 1,039,969 | 464,830 | 257,956 | 161,030 | 107,769 |
High Estimate | 1,897,537 | 800,305 | 434,532 | 270,057 | 181,411 |
See 'Footnotes' section at the end of this news release . |
The GLJ Reserves and Resources Report for Murucututu prospective resources assumes capital deployment starting in 2026 for the drilling and completion of wells and pipeline expansion costs, first commercial production in 2027 and with total project costs of $75.6 million in Low case, $90.3 million in the Best case and $97.7 million in the High case. The information presented herein is based on company project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.
There can be no certainty that the project will be developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release. The project is based on a conceptual study. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.
Summary of Development Risked Company Gross Prospective Resources (1)(2)(4)(6)
The GLJ Reserves and Resources Report estimates the Chance of Commerciality as the product between the Chance of Discovery and the Chance of Development. The Chance of Discovery of the prospective resources has been assessed at 90%, while the Chance of Development has been assessed as the same as for the Contingent Resources described above at 90%. The resulting Chance of Commerciality is 81%, which has been applied to the company gross unrisked prospective resources and the net present value figures reported below.
Low | Best | High | |
Conventional natural gas (MMcf) | 26,120 | 55,309 | 92,517 |
Natural gas liquids (Mbbl) | 477 | 990 | 1,656 |
Oil equivalent (Mboe) | 4,830 | 10,208 | 17,076 |
See 'Footnotes' section at the end of this news release. |
Summary of Development Risked Before Tax Net Present Value of Future Net Revenue of Prospective Resources- $000s (1)(4)(6)(7)(8)
Undiscounted | 5 % | 10 % | 15 % | 20 % | |
Low Estimate | 339,934 | 161,755 | 88,427 | 52,651 | 33,026 |
Best Estimate | 842,544 | 376,454 | 208,880 | 130,380 | 87,246 |
High Estimate | 1,537,171 | 648,183 | 351,902 | 218,687 | 146,893 |
See 'Footnotes' section at the end of this news release. |
UPCOMING 2024 RESULTS AND LIVE WEBCAST
Alvopetro anticipates announcing its 2024 fourth quarter and year-end results on March 18, 2025 after markets close and will host a live webcast to discuss the results at 8:00am Mountain time , on March 19 , 2025. Details for joining the event are as follows:
DATE: March 19, 2025
TIME : 8:00 AM Mountain/ 10:00 AM Eastern
LINK: https://us06web.zoom.us/j/84540021301
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kBRCh4fgE
WEBINAR ID : 845 4002 1301
The webcast will include a question-and-answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com .
CORPORATE PRESENTATION
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation .
FOOTNOTES
(1) | References to Company Gross reserves or Company Gross Resources means the total working interest share of remaining recoverable reserves or resources held by Alvopetro before deductions of royalties payable to others and without including any royalty interests held by Alvopetro. See the section entitled " Oil and Natural Gas Advisories – Cabur é Working Interest " at the end of this news release for additional details with respect to Alvopetro's working interest share of the Caburé natural gas field. |
(2) | The tables above are a summary of the reserves of Alvopetro and the net present value of future net revenue attributable to such reserves as evaluated in the GLJ Reserves and Resources Report based on forecast price and cost assumptions. The tables summarize the data contained in the GLJ Reserves and Resources Report and as a result may contain slightly different numbers than such report due to rounding. Also due to rounding, certain columns may not add exactly. |
(3) | Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. |
(4) | Prospective Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery as described in footnote 6. |
(5) | Contingent Resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates as described in footnote 6 and may be subclassified based on project maturity and/or characterized by their economic status. The Contingent Resources estimated in the GLJ Reserves and Resources Report are classified as "economic contingent resources", which are those contingent resources that are currently economically recoverable. All such resources are further sub-classified with a project status of "development pending", meaning that resolution of the final conditions for development are being actively pursued. The recovery estimates of the Company's contingent resources provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. There is uncertainty that it will be commercially viable to produce any portion of the resources. Actual recovered resource may be greater than or less than the estimates provided herein. |
(6) | Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate. |
(7) | The net present value of future net revenue attributable to Alvopetro's reserves and resources are stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, well abandonment and reclamation costs for only those wells assigned reserves and material dedicated gathering systems and facilities. The net present values of future net revenue attributable to Alvopetro's reserves and resources estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve and resource estimates of the Company's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves and resources will be recovered. Actual reserves and resources may be greater than or less than the estimates provided herein. |
(8) | GLJ's January 1, 2025 escalated price forecast is used in the determination of future gas sales prices under Alvopetro's long-term gas sales agreement and for all forecasted oil sales and natural gas liquids sales. See https://www.gljpc.com/sites/default/files/pricing/Jan25.pdf for GLJ's price forecast. |
Alvopetro Energy Ltd.'s is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this news release are in United States dollars, except as otherwise noted.
Abbreviations:
1P | = | proved reserves |
2P | = | proved plus probable reserves |
3P | = | proved plus probable plus possible reserves |
Mbbl | = | thousands of barrels |
Mboe | = | thousand barrels of oil equivalent |
MMbtu | = | million British Thermal Units |
MMcf | = | million cubic feet |
MMboe | = | million barrels of oil equivalent |
$000s | = | thousands of U.S. dollars |
Oil and Natural Gas Advisories
Oil and Natural Gas Reserves
The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company's reserves as at December 31, 2024 will be included in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
All net present values in this press release are based on estimates of future operating and capital costs and GLJ's forecast prices as of December 31, 2024 . The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to the Alvopetro's reserves estimated by GLJ do not represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Cabur é Working Interest
Alvopetro's working interest in the Caburé natural gas field is 56.2% as of December 31, 2024 and the date hereof. This working interest is subject to redetermination, the first of which was completed in April 2024 . An independent expert (the "Expert") was engaged in connection with the first redetermination to evaluate the redetermination and the impact to each party's working interest. Following the Expert's decision, Alvopetro's working interest was increased from 49.1% to 56.2%. Alvopetro's partner filed a notice of dispute with respect to the Expert's decision, seeking to stay the redetermination procedure. Alvopetro subsequently filed a request for emergency arbitration before the International Chamber of Commerce ("ICC") seeking to make the Expert decision effective starting on June 1, 2024 . In May 2024 , Alvopetro received the decision of the emergency arbitrator ("the Order") wherein the arbitrator found in favour of Alvopetro, making the Expert decision effective June 1, 2024 until such time as the dispute is reviewed by and decided upon by an arbitral tribunal pursuant to the Rules of Arbitration of the ICC. The redetermination dispute has proceeded to a full arbitration under the Rules of the ICC, however the timing and outcome of the full arbitration is uncertain and the resulting impact on the reserves and the net present value of future net revenue attributable to such reserves as presented herein may be material. In addition, future redeterminations may also have a material impact on Alvopetro's reserves and future cash flows.
Contingent Resources
This news release discloses estimates of Alvopetro's contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company's contingent resources as at December 31, 2024 will be contained in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
Prospective Resources
This news release discloses estimates of Alvopetro's prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company's prospective resources as at December 31, 2024 will be contained in the Company's annual information form for the year ended December 31, 2024 which will be filed on SEDAR+ ( www.sedarplus.ca ) on or before April 30, 2025 .
Boe Disclosure
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Other Metrics
This new release contains references to "production replacement ratio", a metric commonly used in the oil and natural gas industry, which has been prepared by management. This term does not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
"Production replacement ratio" is calculated by dividing the change in reserve volumes plus current year production by current year production. Alvopetro's 1P production replacement ratio and 2P production replacement ratio in 2024 is calculated as:
1P | 2P | |
Reserve volumes as at December 31, 2024 – Mboe | 4,512 | 9,148 |
Reserve volumes as at December 31, 2023 – Mboe | 2,727 | 8,711 |
Reserve additions – Mboe | 1,785 | 437 |
2024 production – Mboe | 657 | 657 |
Change in reserves before 2024 production - Mboe | 2,442 | 1,094 |
2024 production replacement ratio | 372 % | 167 % |
Forward-Looking Statements and Cautionary Language
This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend" and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking information concerning plans relating to the Company's operational activities, proposed development activities and the timing for such activities, capital spending levels and future capital costs, the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement and arbitration procedures associated with the redetermination of working interests of the Caburé natural gas field. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, the outcome of any disputes, the outcome of future redeterminations, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, and the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed on Alvopetro's SEDAR+ profile at www.sedarplus.ca ). The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
SOURCE Alvopetro Energy Ltd.
View original content: http://www.newswire.ca/en/releases/archive/February2025/26/c7583.html
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Alvopetro Announces January 2025 Sales Volumes, Quarterly Natural Gas Pricing, an Operational Update and a Strategic Entry into the Western Canadian Sedimentary Basin
Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces January 2025 sales volumes of 2,457 boepd, including natural gas sales of 13.8 MMcfpd, associated natural gas liquids sales from condensate of 141 bopd and oil sales of 18 bopd, based on field estimates. This represents a 41% increase from Q4 2024.
Natural gas, NGLs and crude oil sales: |
Quarterly Natural Gas Price Update
As announced on December 17, 2024 , our updated long-term gas sales agreement came into effect on January 1, 2025 increasing Alvopetro's contracted firm volumes starting January 1, 2025 by 33% up to 400 e 3 m 3 /d. The updated natural gas pricing model is recalculated quarterly based on Brent oil equivalent prices and Henry Hub natural gas prices resulting in quicker adjustments for commodity price and foreign exchange rate fluctuations. Effective February 1, 2025 , our natural gas price under our long-term gas sales agreement with Bahiagás has been adjusted to BRL1.95 /m 3 , a 6.5% increase from the January 2025 price of BRL1.83 and consistent with the Q4 2024 price of BRL1.94 /m 3 . All natural gas sales from February 1, 2025 to April 30, 2025 will be sold at BRL1.95 /m 3 ( $10.55 /Mcf, based on average heat content to date, the January 31, 2025 BRL/USD exchange rate of 5.83, net of expected sales taxes applicable).
Operational Update
In the fourth quarter we attempted an optimization project on our 183-B1 well on Block 183 which was originally drilled and tested in 2022. The plan included sidetracking from the existing wellbore and re-entering the Sergi Formation horizontally. Unfortunately, we encountered challenges during the project that resulted in the loss of the bottom hole assembly and the abandonment of the operation with costs totalling approximately $4.0 million .
On our Murucututu field, based off the successful recompletion of our 183-A3 well in the third quarter we plan to spud 183-D4 location this week. The 183-D4 location is targeting the Caruaçu Member approximately 110 metres up-dip of the 183-A3 location. This location also has an uphole exploratory target in the Marfin Formation. We expect to announce results from the 183-D4 well near the end of the first quarter.
Following this Murucututu well, we plan to drill and complete five development wells at our Caburé Unit as part of the agreed development plan with our partner. During the month of January, we also completed the commissioning phase of our recently installed compression system at Caburé increasing our productive capacity from the Unit.
Strategic Entry into Western Canadian Growth Opportunity
Alvopetro has been pursuing additional growth opportunities to complement our existing asset base to continue our disciplined capital allocation model where we look to reinvest approximately half our cash flow into organic growth and return the other half to stakeholders. The Western Canadian Sedimentary Basin (" WCSB ") offers high-quality assets with large resources in place with access to a high-quality service industry, and leading-edge technology deployment. With our past experiences and our headquarters in Calgary , we are well positioned to create a complementary growth platform with the opportunity to deliver attractive returns for shareholders.
Initial Focus Area - Mannville Heavy Oil Fairway
The Mannville multi-zone heavy oil fairway targets the Colony, McLaren, Waseca , Sparky, GP, Rex, Lloydminster , and Cummings formations containing a large amount of original oil in place and providing attractive economics through the application of multilateral drilling and other technologies.
Farmin – Partner with Proven Track Record
Alvopetro is partnering with Durham Creek Energy Ltd., an established operator with a proven track record. Alvopetro has agreed to fund 100% of two earning wells at an estimated total cost of C$4.5 million in exchange for a 50% working interest in 19.13 sections (12,243 acres) of land in western Saskatchewan . With success, the land position could support upwards of 100 development drilling locations.
President & CEO, Corey C. Ruttan commented:
"Alvopetro's strong financial position and cash flows from operations help position the Company to maximize shareholder returns from our combined asset base. With exposure to projects in Brazil and now also in Canada , it allows us to allocate capital across a growing inventory of high rate of return opportunities and to continue our disciplined capital allocation model."
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation .
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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
All amounts contained in this new release are in United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
Abbreviations:
boepd | = | barrels of oil equivalent ("boe") per day |
bopd | = | barrels of oil and/or natural gas liquids (condensate) per day |
C$ | = | |
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.
Contracted firm volumes . The 2025 contracted daily firm natural gas volumes of 400 e 3 m 3 /d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. 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% higher than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e 3 m 3 /d (13.1MMcfpd).
Forward-Looking Statements and Cautionary Language. This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend" 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, the expected natural gas price and expected sales volumes under the Company's long-term gas sales agreement, and future capital plans and potential development opportunities associated with the WCSB farmin. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. 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.
www.alvopetro.com
TSX-V: ALV, OTCQX: ALVOF
SOURCE Alvopetro Energy Ltd.
View original content: http://www.newswire.ca/en/releases/archive/February2025/05/c0962.html
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Jupiter Energy
Investor Insight
Jupiter Energy’s strong cash flow, substantial proven recoverable reserves, and strategic foothold in resource-rich Kazakhstan present a compelling investment opportunity. Its commitment to sustainability—reinforced by a recent strategic investment in 100 percent gas utilization infrastructure—further enhances its long-term investor appeal.
Overview
Jupiter Energy Limited (ASX:JPR) is an established oil exploration and production company that operates three oilfields in Kazakhstan. The company is currently producing approximately 600 to 700 barrels of oil per day from its licensed fields, having successfully navigated Kazakhstan’s regulatory and operational landscape since 2008. Its operations are fully compliant, with its three full commercial production licenses secured until 2045/46/46.
Jupiter Energy is recognized as a reliable operator in Kazakhstan, holding 100 percent ownership of its licenses, which span approximately 123 sq km in the oil-rich Mangistau region. Strategically located near the port city of Aktau, its license area benefits from proximity to established oil processing facilities and extensive oil and gas infrastructure, including key pipeline connections to the country’s major refineries (see Figure 1).
The company has successfully navigated regulatory requirements to achieve full commercial production across its three oilfields—Akkar East, Akkar North (East Block), and West Zhetybai—all operating under 25-year commercial licenses. Jupiter’s strong compliance and operational framework reinforce its commitment to long-term, sustainable production in Kazakhstan.
Jupiter Energy’s reserve base has been independently confirmed by a Sproule International competent person’s report (CPR), effective 31 December 2023, detailing significant recoverable reserves.
According to the Sproule International CPR, released in January 2024, Jupiter Energy’s recoverable reserves under the SPE/PRMS classification are as follows:
- 1P Reserves: 14.691 million barrels (mmbbls)
- 2P Reserves: 36.487 mmbbls
- 3P Reserves: 46.796 mmbbls
These figures confirm Jupiter’s substantial reserve base, and correlate with its Kazakh State Approved Reserves which are recorded at approximately 52 mmbbls recoverable (using the GOST C1 + C2 classification methodology) (see Figure 2).
Figure 1: Total reserves for the Mangistau basin are estimated to be in excess of 5 billion barrels including two large oil fields, Uzen and Zhetybai.
On November 15, 2024, Jupiter Energy announced the completion of its gas pipeline integration project, connecting the Akkar East and Akkar North (East Block) oilfields to neighboring gas utilization facilities operated by its larger neighbour, MangistauMunaiGas (MMG). This integration ensures 100 percent utilization of all its associated gas, aligning with Kazakhstan’s environmental goals and enabling the Company to drill further wells whilst continuing to comply with Kazakhstan’s strict 100% gas utilisation policy.
The company plans to connect the West Zhetybai oilfield to this infrastructure as this oilfield is further developed. This project strengthens Jupiter’s relationships with MMG and the Kazakh Ministry of Energy, facilitating long-term production under its commercial licenses and enabling it to sell its oil into both the Kazakh domestic market as well as international oil markets.
Company Highlights
- Operating in Kazakhstan since 2008, with three oilfields under licence. The area is known as Block 36 (formerly Block 31).
- Holds commercial production licenses for all three of its oilfields, valid until 2045/2046/2046.
- Current production is approximately 640 barrels per day from four production wells, with plans to increase to approximately 1,000 barrels per day during 2025, with the drilling of a new production well (assuming success).
- Recent independent after-tax NPV of the oilfields (using a 20 percent discount) of US$180 million. This compares favourably to the Company’s current EV of approximately AU$63.5 million (~US$38 million) – based on a share price of AU$0.03 and balance sheet debt of ~$US15.1m.
- Operates in West Kazakhstan in the Mangistau region, a proven area for Kazakhstan’s oil reserves (see Figure 1).
- The company is cash flow positive at an operational level.
- Key shareholders include long term holders, Waterford (60 percent) and Blackbird Trust (21 percent).
- Jupiter’s recent strategic investment in its onfield gas utilisation infrastructure, signifies its commitment to sustainable operations, contribution to the welfare of the local community and support for Kazakhstan’s longer term commitment to a carbon free operating environment in the oil local industry.
Key Project: Block 36
Figure 2: Outline of Jupiter Energy’s oilfields located on Block 36
Block 36 is Jupiter Energy’s flagship project located in the Mangistau Basin of West Kazakhstan. Covering an area of approximately 123 sq km, it lies in a highly prospective region with proven oil reserves. The company acquired extensive 3D seismic data over the entire block and surrounding areas, totaling 235 sq km, which then enabled the identification of multiple drilling targets. The current reserve base covers 35 sq km, with further exploration targets available for drilling on the licence area, when funding for further exploration wells is available.
Jupiter has drilled nine wells on Block 36, targeting the Akkar North (East Block), Akkar East, and West Zhetybai oilfields (see Figure 3). The current production from Block 36 is approximately 640 barrels of oil per day, with plans to increase output to around 1,000 barrels per day during 2025, assuming success with the drilling of a new production well in 2H 2025. Further increases in production may also come via the workovers of existing wells and the drilling of further new wells, planned from 2025 to 2030.
Figure 3: Well locations on Block 36
At the helm of Jupiter Energy is a highly experienced corporate and technical leadership team, driving the company towards achieving its goals and increasing shareholder value.
Management Team
Geoff Gander - Chairman and CEO
Geoff Gander graduated from the University of Western Australia in 1984, where he completed a Bachelor of Commerce degree. He has been involved in the listing and running of public companies since 1994. He was appointed as a director of Jupiter Energy in January 2005 and he is currently responsible for the overall operational leadership of the company, as well as investor relations and group corporate development.
Baltabek Kuandykov - Non-executive Director
Baltabek Kuandykov is currently the president of Meridian Petroleum, a privately held Kazakh oil & gas company. He was formerly the president of Nelson Resources, an oil development and production company operating in Kazakhstan which was listed on the Toronto Stock Exchange until its acquisition by Lukoil in 2005. Kuandykov has considerable experience in the oil and gas industry in the region, having served as president of Kazakhoil (predecessor of the Kazakh State oil company KazMunaiGas), and is a well-respected consultant to Chevron Overseas Petroleum on CIS projects. He also worked in a senior capacity for Kazneftegazrazvedka and was president of Kazakhstancaspishelf. Kuandykov has extensive government experience in Kazakhstan, having served as deputy minister of geology, head of the oil and gas directorate at the Ministry of Geology, and was deputy minister of energy and fuel resources.
Alexey Kruzhkov - Non-executive Director
Alexey Kruzhkov holds an engineering degree and an MBA with over 10 years’ experience working in the investment industry, focusing primarily on the oil & gas, mining and real estate sectors. He has served as a director on the boards of companies listed in Canada and Norway. He is a member of the executive team of Waterford Finance and Investment Limited. He holds British and Russian citizenship.
Alexander Kuzev - Non-executive Director
Alexander Kuzev is an oil industry professional with over 26 years of experience. Most of his career has been spent working in the Former Soviet Union with much of that time responsible for the overall management of field operations with a focus on production sustainability, technology and field maintenance. He brings an important technical advisory skill set to the Jupiter Energy board, as well as in-country experience, having been involved with various Kazakhstan-based oil and gas operations since the late 1990s.
Keith Martens - Non-executive Director
Keith Martens has over 40 years’ experience as an oil finder and manager around the world. He has served as a technical advisor and consultant to a number of Australian oil & gas companies, and was instrumental in the discovery of Jupiter’s Akkar East and West Zhetybai oil fields when he was consulting to Jupiter Energy between 2007 and 2014. More recently, Martens has been working on the Eastern Margin of the Permian Basin in Texas with Winchester Energy and in the Paradox Basin in Utah and Colorado, as both lead explorationist and non-executive chairman of ASX listed Grand Gulf Energy (ASX:GGE).
Charbone Hydrogen
Investor Insight
Charbone Hydrogen offers a compelling investment opportunity in the US$89 billion green hydrogen market, leveraging a decentralized approach for scalable plant deployment and focusing on environmentally friendly production to reduce carbon footprints.
Overview
Charbone Hydrogen (TSXV:CH,OTCQB:CHHYF,FWB:K47) is the only publicly listed green hydrogen firm in Canada looking to expand across North America (US and Canada) with a pipeline of new projects. This is an opportune time for Charbone as the world races to find effective solutions to meet its net-zero ambitions by 2050. Green hydrogen could be a perfect fit as a potentially low-emitting fuel source. There is an increasing realization of the potential of hydrogen in serving as a low-emissions substitute for fossil fuels in residential as well as industrial use cases.
The Government of Canada has laid out its hydrogen policy, aiming to meet nearly 30 percent of its energy requirement in 2050 by hydrogen, as well as become one of the top three clean hydrogen producers globally. The presence of abundant hydroelectric power, favorable government policies, and a progressive tax regime should boost hydrogen production in the country. The 2023 federal budget includes more than $17 billion in tax credits over the next five years to help fund clean energy projects, including hydrogen.
Green hydrogen: key element to decarbonize the world
The US Department of Energy expects to produce 10 million metric tons (MMT) of hydrogen annually by 2030 and eventually reach 50 MMT by 2050. According to US Deputy Secretary of Energy David Turk, 50 MMT of hydrogen could power every bus, train, plane and ship in the US.
Charbone stands to benefit from rapid adoption of hydrogen as an alternative to fossil fuels. Moreover, Charbone’s focus solely on “green hydrogen” should further its position among investors looking for opportunities to invest in sustainable energy solutions. Green hydrogen is produced when the energy used to power electrolysis comes from renewable sources like wind, water, solar or nuclear. Charbone has clearly stated its intentions to leverage hydropower and nuclear energy to produce hydrogen.
Project Pipeline and Key Partnerships
Carbone forged strong partnerships to execute its business model.
Charbone has signed a memorandum of understanding (MoU) with ABB to collaborate on the development of up to 15 modular and scalable green hydrogen production facilities across North America over the next five years. Under the MOU, ABB will support CHARBONE in standardizing basic engineering for systems and components across its project portfolio, to increase energy efficiency and reliability.
Among the sites covered by the collaboration is Charbone's flagship Sorel-Tracy facility near Montreal in Québec, Canada, which is currently under construction. The Sorel-Tracy facility is located on a 40,000-square-meter land parcel along Quebec Highway 30, known as the “Steel Highway” because of the numerous steel mills and process plants operating along the highway.
The construction of Phase 1 of its Sorel-Tracy facility is being done in partnership with EBC, one of the largest construction companies in Quebec. EBC has a proven track record of designing and building facilities in Canada and the US. The partnership agreement gives EBC the right of first refusal to construct additional Sorel-Tracy phases, as well as one or all of Charbone’s facilities within the North American market.
In addition, Charbone has entered into several other strategic partnerships all aimed to expand its footprint in North America. The company entered into a special consultancy agreement with Enki GéoSolutions for potential partnership proposals as a co-operator and distributor of an emerging form of clean and renewable hydrogen, known as white or natural hydrogen.
In June 2024, Carbone executed a supply agreement for a complete containerized electrolyzer system ready for shipment to its flagship green hydrogen site in the City of Sorel-Tracy, Quebec. The electrolyzer has a higher capacity than originally planned and will significantly enhance initial operational capacity estimates. The company also acquired its first tube trailer for the transport and bulk delivery of compressed green hydrogen produced from the City of Sorel-Tracy, Quebec flagship project to local and domestic customers.
Charbone signed commercial supply agreements (CSAs) with a top-tier US industrial gas producer and distributor. The first CSA secures hydrogen supply ahead of Charbone’s own production, while the second expands its product offerings to include helium and other industrial gases. Positioned to capitalize on emerging North American opportunities, particularly in Canada, Charbone leverages its early-mover advantage to build strategic partnerships and strengthen its role in the low-carbon, high-purity hydrogen market.
Superior Plus
This partnership allows Charbone to sell hydrogen produced at the Sorel-Tracy facility to Superior Propane, a subsidiary of Superior Plus. Such supply agreements ensure that Charbone can generate cash flow immediately following the commencement of production.
Carbone Hydrogen entered into an off-take partnership with Superior Plus on the supply and
distribution of green hydrogen.
NEK Community Broadband
Another such supply agreement was signed in November 2023 with NEK Community Broadband, which ensures the supply of green hydrogen in the Northeast Kingdom of the state of Vermont (USA). NEK Broadband is building a high-speed broadband infrastructure and plans to install a hydrogen fuel cell backup system for a reliable power supply.
Oakland County Economic Development Department, Michigan
Further advancing its goal of US expansion, Charbone signed a memorandum of understanding in December 2023 with Michigan’s Oakland County Economic Development Department to set up Charbone’s first green hydrogen facility in the United States. Oakland County is home to major automakers, and a green hydrogen facility in their proximity will support the effort of producing environmentally friendly mobility options.
Being the only publicly listed green hydrogen player in Canada, Charbone offers investors a unique opportunity to participate in the rise of green hydrogen as a potential low-emitting alternative to fossil fuels.
Management Team
Dave Gagnon – Chairman and CEO
Dave Gagnon has been chairman and chief executive officer of Charbone Hydrogen Corporation since April 21, 2022. He has been a climate tech entrepreneur for the last 25 years, and was the first entrepreneur in Canada to start a wind turbine company and offer a new alternative energy solution in North America. Gagnon also worked with an institutional investor that manages several public pension plans, Caisse de depot et placement du Quebec, where he gained deep knowledge of the financial markets.
Benoit Veilleux – Chief Financial Officer
Benoit Veilleux was appointed as the CFO of Charbone on August 15, 2022. Veilleux has over 15 years of experience in corporate accounting and finance. He began his professional career at KPMG in 2003, where he managed and coordinated audit teams for public companies until 2010. Since then, he has worked with a number of companies including Air Liquide Canada and the Hypertec Group.
Daniell Charette – Chief Operating Officer
Daniell Charette has been the chief operating officer of Charbone since February 2019. He brings over 25 years of experience in running and managing renewable energy companies. He has worked in senior leadership roles with several renewable companies including NEG Micon A/S, Vestas and Brookfield Power. He has served on various association boards and councils, including the Canadian Wind Energy Association, Association Québécoise des Producteurs d’Énergie Renouvelable, and Latin Wind Energy Association.
Francois Vitez – Director
Francois Vitez is a hydropower and energy storage expert with more than 24 years of experience in the development, engineering and construction management as well as operations and maintenance of hydropower and energy storage projects in North America and internationally. He is a board member and chair of the Value of Hydropower committee at Waterpower Canada, vice-chair of the Energy Storage Association of Canada, board member of the California Energy Storage Association, and member of the International Hydropower Association.
Patrick Cuddihy - Hydrogen Operations Team
Patrick Cuddihy is a seasoned operations leader with over 20 years of experience at Air Liquide Canada, to its hydrogen operations team. Patrick brings a wealth of expertise in managing industrial gas production and distribution, having held senior roles including network sales director for Quebec Region, general manager for Pacific Region, director of procurement services, and director of logistics and assets for the Eastern Region.
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