CALGARY,
AB, May 10, 2023 /CNW/ - Alvopetro Energy Ltd.
(TSXV: ALV) (OTCQX: ALVOF) is pleased to announce record financial
results for the three months ended March 31,
2023, an operational update and details of our upcoming
annual general and special meeting on June
21, 2023.
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:
"Once again, we achieved record results this quarter,
generating an operating netback of $66.61 per boe and $15
million in funds flow from operations, highlighting the
strong profitability of our operations. Our production allocations
from the Caburé Unit declined in April and May and
our capital program in 2023 is focused on adding additional
production from both our Murucututu natural gas field and our Bom
Lugar oil field. We are looking forward to completing the
stimulation on our 197(1) well and bringing the well on production
later this month."
Operational Update
We are now stimulating the final stage of our 197(1) well at our
Murucututu natural gas field. The well has already been tied into
our 183(1) facility and we are now finalizing installation of
necessary equipment and expect the well to be on production later
this month. Additional development on this field in 2023 includes
drilling two fit-for-purpose development wells, the first of which
we expect to commence drilling in the third quarter.
On our Bom Lugar field, we spud our first development well
(BL-06) on April 30th and have
drilled to 1,150 meters measured depth of the expected 3,400
meters. The BL-06 well is targeting the Caruaçu Formation with
additional potential in the deeper Gomo and Agua Grande Formations.
We expect drilling to be completed late in the second quarter.
Financial and Operating Highlights – First Quarter of
2023
- For the third consecutive quarter, our average daily sales
reached a new quarterly record, with Q1 2023 sales of 2,767 boepd
(+2% from Q4 2022 and 11% from Q1 2022).
- Effective February 1, 2023, our
natural gas price under our long-term gas sales agreement with
Bahiagás increased 4% to BRL2.00/m3.
This price is effective for all natural gas sales from February 1 to July 31, 2023. With the increased
natural gas price effective for two months in the quarter and
including enhanced sales tax credits available as of January 1, 2023, our averaged realized natural
gas price increased to $12.06/Mcf
(+8% from Q4 2022 and +20% from Q1 2022). With the higher natural
gas price applicable, our overall realized price per boe increased
to $72.92 (+7% from Q4 2022 and +17%
from Q1 2022), despite lower Brent pricing on condensate sales.
Higher realized prices and daily sales volumes resulted in a 30%
increase in our natural gas, condensate and oil revenue compared to
Q1 2022.
- With higher realized sales prices and lower effective
royalties, our operating netback increased $12.67 per boe from Q1 2022 to $66.61 per boe in Q1 2023 (+23%) and increased
$6.53 per boe from Q4 2022.
- We generated record funds flows from operations of $15.0 million ($0.41 per basic share and $0.40 per diluted share), an increase of
$4.1 million compared to Q1 2022 and
$1.8 million compared to Q4
2022.
- We reported net income of $12.2
million in Q1 2023, an increase of $1.1 million (+10%) compared to Q1 2022.
- Capital expenditures totaled $3.3
million, including stimulation costs for our 197(1) well on
our Murucututu field, testing costs for our 182-C2 well, testing of
the Unit-C well and facilities expansion at the Caburé unit, and
long-lead purchases.
- In January we received approval from the TSX Venture Exchange
("TSXV") for a normal course issuer bid (the "NCIB") which permits
Alvopetro to repurchase up to 2,876,414 common shares from
January 6, 2023 to the earlier of
January 5, 2024 or when the NCIB is
completed or terminated by Alvopetro. In addition, in March we
received approval from the TSXV to enter into an automatic share
purchase plan ("ASPP") which allows for repurchases under the NCIB
at times when we may not otherwise be permitted to repurchase
shares due to regulatory restrictions and customary self-imposed
blackout periods. No repurchases have been made under the
NCIB.
- Our Q1 2023 dividend increased 17% to $0.14 per share. The Q1 2023 dividend was paid on
April 14, 2023 to shareholders of
record on March 31, 2023.
- Our cash and working capital increased to $20.9 million, an improvement of $6.2 million compared to December 31, 2022 and an increase of $8.6 million compared to March 31, 2022.
The following table provides a summary of Alvopetro's financial
and operating results for three months ended March 31, 2023 and March
31, 2022. The consolidated financial statements with the
Management's Discussion and Analysis ("MD&A") are available on
our website at www.alvopetro.com and will be available on the
System for Electronic Document Analysis and Retrieval (SEDAR)
website at www.sedar.com.
|
|
As at and Three
Months Ended
March
31,
|
|
|
|
|
2023
|
2022
|
Change (%)
|
Financial
|
|
|
|
|
|
|
($000s, except
where noted)
|
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
|
|
|
18,160
|
13,972
|
30
|
Net income
|
|
|
|
12,202
|
11,115
|
10
|
Per share – basic
($)(1)
|
|
|
|
0.34
|
0.33
|
3
|
Per share – diluted
($)(1)
|
|
|
|
0.33
|
0.30
|
10
|
Cash flows from
operating activities
|
|
|
|
13,856
|
8,333
|
66
|
Per share – basic
($)(1)
|
|
|
|
0.38
|
0.25
|
52
|
Per share – diluted
($)(1)
|
|
|
|
0.37
|
0.23
|
61
|
Funds flow from
operations (2)
|
|
|
|
14,972
|
10,904
|
37
|
Per share – basic
($)(1)
|
|
|
|
0.41
|
0.32
|
28
|
Per share – diluted
($)(1)
|
|
|
|
0.40
|
0.30
|
33
|
Dividends
declared
|
|
|
|
5,104
|
2,716
|
88
|
Per
share(1)
|
|
|
|
0.14
|
0.08
|
75
|
Capital
expenditures
|
|
|
|
3,291
|
3,800
|
(13)
|
Cash and cash
equivalents
|
|
|
|
24,623
|
12,740
|
93
|
Net working capital
surplus(2)
|
|
|
|
20,915
|
12,302
|
70
|
Working capital, net of
debt(2)
|
|
|
|
20,915
|
7,257
|
188
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
Basic
(000s)(1)
|
|
|
|
36,323
|
33,907
|
7
|
Diluted
(000s)(1)
|
|
|
|
37,470
|
36,628
|
2
|
Operations
|
|
|
|
|
|
|
Natural gas, NGLs and
crude oil sales:
|
|
|
|
|
|
|
Natural gas
(Mcfpd)
|
|
|
|
15,795
|
14,339
|
10
|
NGLs – condensate (bopd)
|
|
|
|
130
|
99
|
31
|
Oil (bopd)
|
|
|
|
5
|
12
|
(58)
|
Total
(boepd)
|
|
|
|
2,767
|
2,501
|
11
|
|
|
|
|
|
|
|
Average realized
prices(2):
|
|
|
|
|
|
|
Natural gas ($/Mcf)
|
|
|
|
12.06
|
10.03
|
20
|
NGLs – condensate ($/bbl)
|
|
|
|
84.10
|
106.42
|
(21)
|
Oil ($/bbl)
|
|
|
|
72.29
|
79.50
|
(9)
|
Company
total ($/boe)
|
|
|
|
72.92
|
62.08
|
17
|
|
|
|
|
|
|
|
Operating netback
($/boe)(2)
|
|
|
|
|
|
|
Realized sales
price
|
|
|
|
72.92
|
62.08
|
17
|
Royalties
|
|
|
|
(2.34)
|
(4.35)
|
(46)
|
Production
expenses
|
|
|
|
(3.97)
|
(3.79)
|
5
|
Operating
netback
|
|
|
|
66.61
|
53.94
|
23
|
Operating netback
margin(2)
|
|
|
|
91 %
|
87 %
|
5
|
Notes:
|
|
(1)
|
Per share amounts are
based on weighted average shares outstanding other than dividends
per share, which is based on the number of common shares
outstanding at each dividend record date. The weighted average
number of diluted common shares outstanding in the computation of
funds flow from operations and cash flows from operating activities
per share is the same as for net income per share.
|
(2)
|
See "Non-GAAP and
Other Financial Measures" section within this news
release.
|
Q1 2023 Results Webcast
Alvopetro will host a live webcast to discuss our Q1 2023
financial results at 8:00 am Mountain time
on Thursday May 11, 2023. Details for joining the event are
as follows:
Date: May 11,
2023
Time: 8:00 AM
Mountain/10:00 AM Eastern
Link: https://us06web.zoom.us/j/89193926478
Dial-in numbers: https://us06web.zoom.us/u/kcmVqG8cd9
Webinar ID: 891 9392 6478
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.
Annual General Meeting
Alvopetro's annual general and special meeting (the "Meeting")
will be held on Wednesday June 21,
2023 at the Penn West Plaza Conference Centre (Suite 211,
207 9th Avenue SW, Calgary,
Alberta) beginning at 9:30 a.m.
Mountain time. The management information circular and all
related materials will be available on our website and
www.sedar.com later this month.
All interested parties are invited to attend the Meeting. We
will also be broadcasting the meeting via live webcast for the
interest of all shareholders. Please be advised that shareholders
will not be able to vote any shares through this webcast format.
Details for joining the event are as follows:
Date: June 21,
2023
Time: 9:30 a.m. Mountain
time/11:30 a.m. Eastern
Time
Link: https://us06web.zoom.us/j/83161687257
Dial-in numbers: https://us06web.zoom.us/u/kescBXNcZh
Webinar ID: 831 6168 7257
Corporate Presentation
Alvopetro's updated corporate presentation is available on our
website at:
http://www.alvopetro.com/corporate-presentation.
Social Media
Follow Alvopetro on our social media channels at the following
links:
Twitter -
https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn -
https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd.'s vision is to
become a leading independent upstream and midstream operator in
Brazil. Our strategy is to unlock
the on-shore natural gas potential in the state of Bahia
in Brazil, building
off the development of our Caburé natural gas field and our
strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
Abbreviations:
$000s
|
=
|
thousands of U.S.
dollars
|
bbls
|
=
|
barrels
|
boepd
|
=
|
barrels of oil
equivalent ("boe") per day
|
bopd
|
=
|
barrels of oil and/or
natural gas liquids (condensate) per day
|
BRL
|
=
|
Brazilian
Real
|
CAD
|
=
|
Canadian
dollars
|
Mcf
|
=
|
thousand cubic
feet
|
Mcfpd
|
=
|
thousand cubic feet per
day
|
MMcf
|
=
|
million cubic
feet
|
MMcfpd
|
=
|
million cubic feet per
day
|
NGLs
|
=
|
natural gas
liquids
|
Q1 2022
|
=
|
three months ended
March 31, 2022
|
Q1 2023
|
=
|
three months ended
March 31, 2023
|
Q4 2022
|
=
|
three months ended
December 31, 2022
|
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.sedar.com.
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.sedar.com. Operating netback is a common metric used in the oil
and gas industry used to demonstrate profitability from
operations.
Non-GAAP Financial Ratios
Operating netback per boe
Operating netback is calculated on a per unit basis, which is
per barrel of oil equivalent ("boe"). It is a common non-GAAP
measure used in the oil and gas industry and management believes
this measurement assists in evaluating the operating performance of
the Company. It is a measure of the economic quality of the
Company's producing assets and is useful for evaluating variable
costs as it provides a reliable measure regardless of fluctuations
in production. Alvopetro calculated operating netback per boe as
operating netback divided by total sales volumes (barrels of oil
equivalent). This calculation is provided in the "Operating
Netback" section of the Company's MD&A using our IFRS
measures. The Company's MD&A may be accessed through the SEDAR
website at www.sedar.com. Operating netback is a common metric used
in the oil and gas industry used to demonstrate profitability from
operations on a per unit basis (boe).
Operating netback margin
Operating netback margin is calculated as operating netback per
boe divided by the realized sales price per boe. Operating netback
margin is a measure of the profitability per boe relative to
natural gas, oil and condensate sales revenues per boe and is
calculated as follows:
|
|
Three Months
Ended
March
31,
|
|
|
|
2023
|
2022
|
Operating netback - $
per boe
|
|
|
66.61
|
53.94
|
Average realized price
- $ per boe
|
|
|
72.92
|
62.08
|
Operating netback
margin
|
|
|
91 %
|
87 %
|
Funds Flow from Operations Per Share
Funds flow from operations per share is a non-GAAP ratio that
includes all cash generated from operating activities and is
calculated before changes in non-cash working capital, divided by
the weighted the weighted average shares outstanding for the
respective period. For the periods reported in this news release
the cash flows from operating activities per share and funds flow
from operations per share is as follows:
|
|
Three Months
Ended
March
31,
|
$ per
share
|
|
|
2023
|
2022
|
Per basic
share:
|
|
|
|
|
Cash flows from
operating activities
|
|
|
0.38
|
0.25
|
Funds flow from
operations
|
|
|
0.41
|
0.32
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
Cash flows from
operating activities
|
|
|
0.37
|
0.23
|
Funds flow from
operations
|
|
|
0.40
|
0.30
|
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
March
31,
|
|
|
|
2023
|
2022
|
Cash flows from
operating activities
|
|
|
13,856
|
8,333
|
Add back changes in
non-cash working capital
|
|
|
1,116
|
2,571
|
Funds flow from
operations
|
|
|
14,972
|
10,904
|
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 March
31,
|
|
|
2023
|
2022
|
Total current
assets
|
|
33,264
|
21,930
|
Total current
liabilities
|
|
(12,349)
|
(9,628)
|
Net working capital
surplus
|
|
20,915
|
12,302
|
Working Capital Net of Debt
Working capital net of debt is computed as net working capital
surplus decreased by the carrying amount of the Credit Facility.
Working capital net of debt is used by management to assess the
Company's overall financial position.
|
|
As at March
31,
|
|
|
2023
|
2022
|
Net working capital
surplus
|
|
20,915
|
12,302
|
Credit Facility,
balance outstanding
|
|
-
|
(5,045)
|
Working capital, net of
debt
|
|
20,915
|
7,257
|
Supplementary Financial Measures
"Average realized natural gas price - $/Mcf" is comprised
of natural gas sales as determined in accordance with IFRS, divided
by the Company's natural gas sales volumes.
"Average realized NGL – condensate price - $/bbl" is
comprised of condensate sales as determined in accordance with
IFRS, divided by the Company's NGL sales volumes from
condensate.
"Average realized oil price - $/bbl" is comprised of oil
sales as determined in accordance with IFRS, divided by the
Company's oil sales volumes.
"Average realized price - $/boe" is comprised of natural
gas, condensate and oil sales as determined in accordance with
IFRS, divided by the Company's total natural gas, condensate and
oil sales volumes (barrels of oil equivalent).
"Dividends per share" is comprised of dividends declared,
as determined in accordance with IFRS, divided by the number of
shares outstanding at the dividend record date.
"Royalties per boe" is comprised of royalties, as
determined in accordance with IFRS, divided by the total natural
gas, condensate and oil sales volumes (barrels of oil
equivalent).
"Production expenses per boe" is comprised of production
expenses, as determined in accordance with IFRS, divided by the
total natural gas, condensate and oil sales volumes (barrels of oil
equivalent).
BOE Disclosure
The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to
barrels of oil equivalence is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. All boe
conversions in this news release are derived from converting gas to
oil in the ratio mix of six thousand cubic feet of gas to one
barrel of oil.
Forward-Looking Statements and Cautionary Language
This news release contains forward-looking information within
the meaning of applicable securities laws. The use of any of the
words "will", "expect", "intend" and other similar words or
expressions are intended to identify forward-looking information.
Forward–looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A
number of factors could cause actual results to vary significantly
from the expectations discussed in the forward-looking statements.
These forward-looking statements reflect current assumptions and
expectations regarding future events. Accordingly, when relying on
forward-looking statements to make decisions, Alvopetro cautions
readers not to place undue reliance on these statements, as
forward-looking statements involve significant risks and
uncertainties. More particularly and without limitation, this news
release contains forward-looking statements concerning the expected
timing of production commencement from the 197(1) well, expected
timing of completion of drilling operations at the BL-06 well,
plans relating to the Company's operational activities, proposed
exploration development activities and the timing for such
activities, exploration and development prospects of
Alvopetro, capital spending levels, future capital and
operating costs, future production and sales
volumes, the expected natural gas price, gas sales and gas
deliveries under Alvopetro's long-term gas sales agreement, and
projected financial results. Forward-looking statements are
necessarily based upon assumptions and judgments with respect to
the future including, but not limited to, expectations and
assumptions concerning the timing of regulatory licenses and
approvals, equipment availability, the success of future drilling,
completion, testing, recompletion and development activities and
the timing of such activities, the performance of producing wells
and reservoirs, well development and operating performance,
expectations regarding Alvopetro's working interest and the outcome
of any redeterminations, environmental regulation, including
regulation relating to hydraulic fracturing and stimulation, the
ability to monetize hydrocarbons discovered, the outlook for
commodity markets and ability to access capital markets, foreign
exchange rates, general economic and business conditions,
forecasted demand for oil and natural gas, the impact of the
COVID-19 pandemic, weather and access to drilling locations, the
availability and cost of labour and services, the regulatory and
legal environment and other risks associated with oil and gas
operations. The reader is cautioned that assumptions used in
the preparation of such information, although considered reasonable
at the time of preparation, may prove to be incorrect. Actual
results achieved during the forecast period will vary from the
information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors. In addition, the
declaration, timing, amount and payment of future dividends remain
at the discretion of the Board of Directors. Although we believe
that the expectations and assumptions on which the forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because we can give no
assurance that they will prove to be correct. Since forward looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses, reliance on industry
partners, availability of equipment and personnel, uncertainty
surrounding timing for drilling and completion activities resulting
from weather and other factors, changes in applicable regulatory
regimes and health, safety and environmental risks), commodity
price and foreign exchange rate fluctuations, market uncertainty
associated with financial institution instability, and general
economic conditions. The reader is cautioned that assumptions used
in the preparation of such information, although considered
reasonable at the time of preparation, may prove to be incorrect.
Although Alvopetro believes that the expectations and assumptions
on which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking
information because Alvopetro can give no assurance that it will
prove to be correct. Readers are cautioned that the foregoing list
of factors is not exhaustive. Additional information on factors
that could affect the operations or financial results of Alvopetro
are included in our annual information form which may be accessed
on Alvopetro's SEDAR profile at www.sedar.com. The
forward-looking information contained in this news release is made
as of the date hereof and Alvopetro undertakes no obligation to
update publicly or revise any forward-looking information, whether
as a result of new information, future events or otherwise, unless
so required by applicable securities laws.
SOURCE Alvopetro Energy Ltd.