CALGARY, AB, Aug. 11, 2021 /CNW/ - Alvopetro Energy Ltd.
(TSXV: ALV) (OTCQX: ALVOF) announces our second quarter 2021
financial results, an operational update and details of our
upcoming annual general meeting.
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.
Operational Update
Our natural gas price under our long-term gas sales agreement
was reset to BRL1.31/m3, a 24%
increase from our February 1, 2021 contracted price
of BRL1.06/m3. Based on our average heat content to date
and assuming the July 30, 2021
USD/BRL exchange rate of 5.12, this equates to $7.72/mcf as of August 1,
2021.
In July we commenced construction on our Gomo/Murucututu
pipeline which will connect our 183(1) well to our Caburé transfer
pipeline. All pipe has been received in the field, welding
commenced, and ditches are now being opened to start installation.
We anticipate construction will be completed and the 183(1) well to
be tied-in and on production by the end of the year.
We plan to commence drilling our 182-C1 and 183-B1 natural gas
exploration wells later in the third quarter of this year following
rig maintenance and acceptance of the contracted drilling rig.
Financial and Operating Highlights – Second Quarter of
2021
- We averaged daily natural gas sales in the quarter of 13.5
mmcfpd with associated natural gas liquids sales from condensate of
105 bopd and oil sales of 5 bopd, bringing our overall average
daily sales volumes to 2,361 boepd, a 9% increase from the first
quarter.
- We generated natural gas and condensate revenues of
$8.2 million, with an operating
netback of $31.58/boe, a 7% increase
of $3.06 per boe from the first
quarter. Our natural gas sales price averaged $6.06/mcf, a 7% increase from the average
realized price in the first quarter of $5.68/mcf. Overall, our averaged realized price
per boe increased $2.63 per boe to
$38.08 per boe.
- Our funds flow from operations improved to $5.5 million ($0.05
per basic share and per diluted share) compared to $4.8 million in the first quarter. Cash flows
from operating activities improved $1.4
million to $5.7 million
($0.06 per basic share and
$0.05 per diluted share).
- We reported net income of $3.6
million, an increase of $4.7
million from the prior quarter due mainly to the recognition
of an unrealized foreign exchange gain of $2.8 million compared to an unrealized loss of
$2.1 million in the first quarter,
partially offset by increased deferred tax expense of $0.4 million and current tax expense of
$0.3 million.
- Capital expenditures of $0.9
million included $0.5 million
for the Gomo/Murucututu pipeline extension, $0.2 million in costs for the upcoming 183(B1)
and 182(C1) exploration wells to be drilled later this year and
$0.2 million in capitalized
G&A.
- We completed an amendment to our credit facility (the "Credit
Facility"), extending the maturity date by one year to October 8, 2023, and eliminating the 3% per annum
interest payable in kind ("PIK") as of April
15, 2021.
- As at June 30, 2021, we had a net
working capital surplus of $4.5
million, including $4.2
million in cash and cash equivalents. During the quarter we
repaid $5.5 million of our Credit
Facility reducing the balance outstanding to $7.5 million as of June
30, 2021, and the Company's net debt to $3.0 million, an improvement of $4.2 million from March
31, 2021.
The following table provides a summary of Alvopetro's financial
and operating results for the three and six months ended
June 30, 2021 and June 30, 2020. As Alvopetro had not yet commenced
commercial operations in the three months ended June 30, 2020, supplemental financial information
has been presented for the first quarter of 2021. 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
|
As at and Six
Months
Ended June 30
|
|
Q2
2021
|
Q1 2021
|
Q2 2020
|
2021
|
2020
|
Financial
|
|
|
|
|
|
($000s, except where
noted)
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
8,182
|
6,939
|
40
|
15,121
|
101
|
Net income
(loss)
|
3,637
|
(1,088)
|
(1,168)
|
2,549
|
(3,531)
|
Per share – basic
($)
|
0.04
|
(0.01)
|
(0.01)
|
0.03
|
(0.04)
|
Per share – diluted
($)(1)
|
0.03
|
(0.01)
|
(0.01)
|
0.02
|
(0.04)
|
Cash flows from
operating activities
|
5,665
|
4,304
|
(1,094)
|
9,969
|
(2,034)
|
Per share – basic
($)
|
0.06
|
0.04
|
(0.01)
|
0.10
|
(0.02)
|
Per share – diluted
($)(1)
|
0.05
|
0.04
|
(0.01)
|
0.10
|
(0.02)
|
Funds flow from
operations (2)
|
5,471
|
4,756
|
(973)
|
10,227
|
(1,646)
|
Per share – basic
($)
|
0.05
|
0.05
|
(0.01)
|
0.10
|
(0.02)
|
Per share – diluted
($)(1)
|
0.05
|
0.05
|
(0.01)
|
0.10
|
(0.02)
|
Capital
expenditures(3)
|
918
|
864
|
1,645
|
1,782
|
3,255
|
Total
assets
|
79,322
|
76,022
|
71,466
|
79,322
|
71,466
|
Cash and cash
equivalents
|
4,249
|
4,983
|
3,150
|
4,249
|
3,150
|
Net working capital
surplus (deficit)(2)
|
4,499
|
5,775
|
(286)
|
4,499
|
(286)
|
Net
debt(2)
|
3,046
|
7,254
|
15,478
|
3,046
|
15,478
|
Weighted average
shares outstanding (000s)
|
|
|
|
|
|
Basic
|
99,794
|
99,705
|
98,437
|
99,750
|
98,372
|
Diluted
(1)
|
104,701
|
99,705
|
98,437
|
103,919
|
98,372
|
Operations
|
|
|
|
|
|
Natural gas, crude
oil and natural gas liquids sales:
|
|
|
|
|
|
Natural gas
(mcfpd)
|
13,512
|
12,464
|
-
|
12,991
|
-
|
NGLs – condensate
(bopd)
|
105
|
98
|
2
|
101
|
4
|
Oil (bopd)
|
5
|
-
|
12
|
2
|
9
|
Total
(boepd)
|
2,361
|
2,175
|
14
|
2,269
|
13
|
|
|
|
|
|
|
Average realized
prices:
|
|
|
|
|
|
Natural gas
($/mcf)
|
6.06
|
5.68
|
-
|
5.88
|
-
|
NGL – condensate
($/bbl)
|
74.47
|
64.41
|
37.27
|
69.65
|
62.21
|
Oil ($/bbl)
|
59.63
|
-
|
30.25
|
59.63
|
36.81
|
Company total
($/boe)
|
38.08
|
35.45
|
31.13
|
36.82
|
43.91
|
|
|
|
|
|
|
Operating netback
($/boe) (2)
|
|
|
|
|
|
Realized sales
price
|
38.08
|
35.45
|
31.13
|
36.82
|
43.91
|
Royalties
|
(2.82)
|
(3.30)
|
(3.89)
|
(3.05)
|
(5.65)
|
Production
expenses
|
(3.68)
|
(3.63)
|
(28.02)
|
(3.66)
|
(34.78)
|
Operating
netback
|
31.58
|
28.52
|
(0.78)
|
30.11
|
3.48
|
|
|
|
|
|
|
|
Notes:
|
(1)
|
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)
|
Non-GAAP measure -
see "Non-GAAP Measures" section within this news
release.
|
(3)
|
Includes non-cash
capital expenditures of $0.35 million and $0.40 million for the
three and six months ended June 30, 2020.
|
Annual General and Special Meeting
As announced by the Company on July 21,
2021, we will be holding our Annual General and Special
Meeting (the "Meeting") on Thursday August
12, 2021, beginning at 2:00
pm. We invite all shareholders and any interested parties to
attend. We will commence with the formal business of the meeting
where shareholders will be asked to vote on all matters set forth
in the Management Information Circular (the "Circular"). Only
registered shareholders who held shares in their name as of
July 2, 2021, the record date of the
Meeting, or their validly appointed proxyholders who have signed
into the online webcast, are entitled to vote on the resolutions
during the Meeting. The Circular and all related meeting
materials are available on our website at
https://alvopetro.com/Shareholder-Documents.
Webcast Details:
Date: Thursday August 12, 2021
Time: 2:00 p.m. MDT (4:00 p.m. EDT)
Webcast: https://virtual-meetings.tsxtrust.com/1106
If you are a registered shareholder and have not yet voted your
shares and wish to do so at the meeting, please select "I have a
control number" when signing in and use the control number found on
the form of proxy from our transfer agent, TSX Trust company along
with the password: alvopetro2021 (case sensitive).
If you are a beneficial shareholder, you will not be entitled to
vote your shares at the meeting but we still encourage you to
attend. Please select "I am a guest" and fill in the required
information.
Following the formal portion of the Meeting, we will deliver a
corporation presentation to provide an overview of our operations
and discuss our Q2 2021 results. Following the presentation
there will be a question and answer period.
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.
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
|
BRL
|
=
|
Brazilian
Real
|
m3
|
=
|
cubic
metre
|
mcf
|
=
|
thousand cubic
feet
|
mmcf
|
=
|
million cubic
feet
|
mmcfpd
|
=
|
million cubic feet
per day
|
Q2
2020
|
=
|
three months ended
June 30, 2020
|
Q1
2021
|
=
|
three months ended
March 31, 2021
|
Q2
2021
|
=
|
three months ended
June 30, 2021
|
Non-GAAP Measures. This news release contains
financial terms that are not considered measures under
International Financial Reporting Standards ("IFRS"), such as funds
flow from operations, funds flow per share, net working capital,
net debt, and operating netback. These measures are commonly
utilized in the oil and gas industry and are considered informative
for management and shareholders. Specifically, funds flow from
operations and funds flow per share reflect cash generated from
operating activities excluding changes in non-cash working capital.
Management considers funds flow from operations and funds flow per
share important as they help evaluate performance and demonstrate
the Company's ability to generate sufficient cash to fund future
growth opportunities. Net working capital consists of current
assets less current liabilities and is used to evaluate the
Company's financial resources. Net debt is computed as the carrying
amount of the Company's credit facility decreased by net working
capital surplus or increased by net working capital deficit and is
used by management to assess the Company's overall debt position
and borrowing capacity. Operating netback is determined by dividing
natural gas, oil and condensate sales (after sales taxes) less
royalties, transportation and production expenses by sales volumes.
Management considers operating netback important as it is a measure
of profitability per barrel of oil equivalent sold and reflects the
economic quality of production. Funds flow from operations, funds
flow per share, net working capital, net debt and operating
netbacks may not be comparable to those reported by other companies
nor should they be viewed as an alternative to cash flow from
operations, net income or other measures of financial performance
calculated in accordance with IFRS. 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" section of the Company's MD&A
which may be accessed through the SEDAR website
at www.sedar.com.
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", "plan", "intend" and
other similar words or expressions are intended to identify
forward-looking information. More particularly and without
limitation, this news release contains forward-looking information
concerning the plans relating to the Company's operational
activities and the forecasted natural gas price under the Company's
long-term gas sales agreement. The forward–looking
statements are based on certain key expectations and assumptions
made by Alvopetro, including but not limited to the extent of
future gas sales under the Company's long-term gas sales agreement,
future foreign exchange rates, the timing of regulatory licenses
and approvals, the success of future drilling, completion, testing,
recompletion and development activities, the outlook for commodity
markets and ability to access capital markets, the impact of the
COVID-19 pandemic, the performance of producing wells and
reservoirs, well development and operating performance, general
economic and business conditions, weather and access to drilling
locations, the availability and cost of labour and services,
environmental regulation, including regulation relating to
hydraulic fracturing and stimulation, the ability to monetize
hydrocarbons discovered, the regulatory and legal environment and
other risks associated with oil and gas operations. The reader is
cautioned that assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be incorrect. Actual results achieved
during the forecast period will vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors. 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 these and other factors that could affect
the operations or financial results of Alvopetro are included in
our annual information form which may be accessed through the SEDAR
website 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.