CALGARY, AB, Sept. 10, 2021 /CNW/ - Alvopetro Energy Ltd.
(TSXV: ALV) (OTCQX: ALVOD) announces August sales volumes of 2,431
boepd based on field estimates, including natural gas sales of 13.9
mmcfpd, associated natural gas liquids sales from condensate of 105
bopd, and oil sales of 6 bopd, an increase of 1% from our average
sales volumes of 2,412 boepd in July. Effective August 1, 2021, our natural gas price under our
long-term gas sales agreement was adjusted to BRL1.31/m3 or $7.72/mcf based on our average heat content to
date of 107% and the July 30, 2021
BRL/USD foreign exchange rate of 5.12. This represents
a 24% increase from our February 1,
2021 contracted price of BRL1.06/m3. Higher gas prices and
sales volumes in August resulted in estimated August revenues of
$3.5 million, a 30% increase compared
to our monthly average revenues in the second quarter, a new
monthly record for the Company.
As announced on September 7, 2021,
we have completed our share consolidation and split (the "Share
Restructuring"). One of the main objectives of the Share
Restructuring was to reduce the cost of administering Alvopetro's
planned dividend program. Prior to the Share Restructuring,
there were a total of 99,828,295 common shares of Alvopetro
outstanding. As part of the Share Restructuring, 1,265,306
common shares are being repurchased at a price of C$1.12 per common share, representing 1.3% of the
total common shares outstanding prior to the Share Restructuring.
This will significantly reduce the number of small and odd-lot
shareholdings that were an artifact of our earlier corporate
spin-out after the sale of Petrominerales in 2013. The remaining
common shares participated in the 2,100 to 1 share consolidation
followed immediately by a 1 to 700 share split, for an effective
3:1 share consolidation. Following the Share Restructuring there
are 32,854,330 common shares outstanding. In connection with the
restructuring, Alvopetro has been assigned the temporary trading
symbol ALVOD on the OTCQX. We expect to revert to our ALVOF trading
symbol, however, the timing will be determined by regulatory
authorities.
Corey C. Ruttan, President and
Chief Executive Officer, commented:
With ongoing strong production results from our Caburé
project, combined now with a 24% increase in our realized natural
gas price, we continue to generate very strong cash flows. This
allows us to organically fund our upcoming exploration drilling
campaign, has allowed us to repay half of our outstanding debt in
the first year of operations and positions us to commence planned
dividends to shareholders by the first quarter of 2022. Now that we
have successfully completed our share restructuring, we can cost
effectively administer future recurring dividends when declared by
our Board of Directors.
Alvopetro's closing trading price on the TSX Venture Exchange
on Friday, September 3, 2021 of C$1.15 per
share equates to C$3.45 per share post-consolidation and
post-split. Following the Share Restructuring our net asset value
per common share has increased from C$2.44 pre-Share Restructuring to C$7.36 post-Share Restructuring.
|
|
|
2P Net Asset Value
(in MUS, other than per share amounts)
|
Pre-Share
Restructuring
|
Post-Share
Restructuring
|
Proved plus probable
reserves, before tax net present value, discounted at
10%(1)
|
$195,215
|
$195,215
|
Pro-forma net debt –
as at June 30, 2021(2)
|
(3,046)
|
(4,166)
|
Total Net Asset
Value(3)
|
$192,169
|
$191,049
|
Common shares
outstanding(4)
|
99,828,295
|
32,854,330
|
Net asset value -
$ per basic share
|
$1.92
|
$5.82
|
Net asset value -
C$ per basic share(5)
|
C$2.44
|
C$7.36
|
(1)
|
Before tax net
present value of proved plus probable reserves ("2P") as of
December 31, 2020 as evaluated by GLJ Ltd.
|
(2)
|
Net debt is computed
as the carrying amount of the Company's Credit Facility decreased
by net working capital surplus, as of June 30, 2021. For purposes
of the post-Share Restructuring net asset value, pro-forma net debt
has been adjusted for the shares repurchased at an aggregate cost
of $1.1 million.
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(3)
|
Alvopetro has
reflected all contractual obligations pursuant to our September
2018 Gas Treatment Agreement with Enerflex, including the equipment
rental component of the agreement which is treated as a right of
use asset and reflected as a capital lease obligation on our
financial statements. As the future capital lease payments reduce
the forecasted future net revenue in all reserves categories, the
capital lease obligation as reflected on the Company's financial
statements has not been included in the table above.
|
(4)
|
The common shares
outstanding post-Share Restructuring may be subject to final
adjustments due to rounding following the share split.
|
(5)
|
Converted to Canadian
dollars ("C$") based on the exchange rate on September 9,
2021.
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Corporate Presentation
Alvopetro's updated corporate presentation is available on our
website at:
http://www.alvopetro.com/corporate-presentation.
Social Media
Follow Alvopetro on our social media channels at the following
links:
Twitter -
https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn -
https://www.linkedin.com/company/alvopetro-energy-ltd
YouTube:
https://www.youtube.com/channel/UCgDn_igrQgdlj-maR6fWB0w
Alvopetro Energy Ltd.'s vision is
to become a leading independent upstream and midstream operator in
Brazil. Our strategy is to unlock
the on-shore natural gas potential in the state of Bahia
in Brazil, building
off the development of our Caburé 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
|
C$
|
=
|
Canadian
dollars
|
mmcf
|
=
|
million cubic
feet
|
mmcfpd
|
=
|
million cubic feet
per day
|
MUS
|
=
|
thousands of U.S.
dollars
|
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 the plans relating to the Company's
operational activities, the expected gas sales and gas deliveries
under Alvopetro's long-term gas sales agreement, and the Company's
plans for dividends in the future. The forward–looking
statements are based on certain key expectations and assumptions
made by Alvopetro, including but not limited to 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 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.
Oil and Natural Gas Reserves. The disclosure in
this news release summarizes certain information contained in the
independent reserve assessment and evaluation prepared by GLJ Ltd.
("GLJ") dated March 8, 2021 with an
effective date of December 31, 2020
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, 2020 is
included in the Company's annual information form for the year
ended December 31, 2020 which is
filed on SEDAR (www.sedar.com). 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, 2020. 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.
Non-GAAP Measures. This news release contains
financial terms that are not considered measures under
International Financial Reporting Standards ("IFRS"), such as net
asset value, net debt, and working capital surplus. Net asset value
is computed based on the net present value of the Company's proved
plus probable reserves (before tax), discounted at 10%, decreased
by the Company's net debt. 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. Net working capital is computed as current assets less
current liabilities. The non-GAAP measures do not have standardized
meanings under IFRS and therefore are unlikely to be comparable to
similar measures presented 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 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. 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 most recent MD&A
which may be accessed through the SEDAR website
at www.sedar.com.
SOURCE Alvopetro Energy Ltd.