CALGARY, AB, Nov. 9, 2021 /CNW/ - Alvopetro Energy Ltd.
(TSXV:ALV) (OTCQX: ALVOF) announces our third quarter 2021
financial results and an operational update.
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 and CEO, Corey
Ruttan commented:
"I am very pleased with our Q3 2021 performance, which marks
a new level of delivery from both an operational and financial
perspective. We achieved record quarterly production of 2,459 boepd
under the strongest gas prices we have ever reported, resulting in
record operating netbacks and cash flow from operations. We have
also declared and paid our first quarterly dividend, underscoring
our transformation into a business that delivers both organic
growth and value through direct shareholder returns."
Operational Update
Production from our Caburé natural gas field continued at
consistent rates in October, with average daily natural gas sales
of 13.7 mmcfpd, associated natural gas liquids sales from
condensate of 99 bopd and oil sales of 5 bopd, for total average
daily sales of 2,382 boepd. We are forecasting a further increase
in our realized natural gas prices, to the ceiling within our
contract, effective February 1, 2022,
to BRL 1.90/m3, or
$10.15/mcf. This forecasted pricing
is based on commodity prices to date in 2021, GLJ Ltd.'s
October 1, 2021 commodity price
forecast, US CPI inflation to September 30,
2021, our average heat content to date of 107% and the
October 31, 2021 BRL/USD foreign
exchange rate of 5.643.
We continue to advance the installation of our Gomo/Murucututu
pipeline and expect our 183(1) well to be tied-in and on production
in early 2022. We have also notified Enerflex Ltd. to increase the
operational capacity of our gas processing facility to 500,000 m3/d (17.7 mmcfpd) under the
terms of our existing Gas Treatment Agreement, a 25% increase above
our current processing capacity. We expect that the additional
firm capacity will be available by June 1, 2022. The
additional available capacity will allow us to have flexibility to
process additional volumes from our Murucututu field with further
capital plans commencing in 2022, including stimulation and tie-in
of our 197(1) well and follow-up development wells.
Rig maintenance is ongoing for our contracted drilling rig for
our 182-C1 and 183-B1 natural gas exploration wells. We expect to
commence drilling the first prospect, the 182-C1 well, in
December.
Financial and Operating Highlights – Third Quarter of
2021
- Daily sales averaged 2,459 boepd, a 4% increase from the Q2
2021 average of 2,361 boepd and a 39% increase over the Q3 2020
average of 1,764 boepd.
- Our realized natural gas sales price averaged $7.07/mcf in the quarter, an increase of
$1.01/mcf (17%) from Q2 2021
following our August 1, 2021 natural
gas price reset which increased our contracted price from
BRL1.06/m3 to BRL1.31/m3, an increase from
$6.26/mcf to $7.72/mcf based on the July 30, 2021 BRL/USD exchange rate of 5.12 and
average heat content to date of 107%. Overall, our natural gas, oil
and condensate revenues increased to $10.0
million, a 22% increase over Q2 2021 revenue of $8.2 million.
- With higher overall realized sales prices, our operating
netback improved to $36.38 per boe,
compared to $31.58 per boe in Q2 2021
and $25.99 in Q3 2020. Our funds flow
from operations improved to $7.9
million ($0.24 per basic share
and $0.22 per diluted share) and cash
flows from operating activities improved to $7.2 million ($0.22
per basic share and $0.20 per diluted
share).
- We reported net income of $1.5
million, a decrease of $2.1
million from Q2 2021 despite higher funds flow from
operations due mainly to the recognition of an unrealized foreign
exchange loss of $1.8 million
(compared to a gain of $2.8 million
in Q2 2021).
- Capital expenditures totaled $1.3
million, focused on our Gomo/Murucututu pipeline
extension.
- We completed a share restructuring during the quarter,
repurchasing a total of 1,265,306 common shares, and consolidating
the remaining shares on an effective 3:1 basis resulting in a
reduction in our common shares outstanding from 99.8 million to
32.9 million immediately following the restructuring.
- On September 21, 2021, our Board
of Directors declared our first dividend of $0.06 per share to shareholders of record on
September 29, 2021. Total dividends
of $2.0 million were paid on
October 15, 2021.
- As at September 30, 2021, we had
a net working capital surplus of $6.8
million, including $8.1
million in cash and cash equivalents. During the quarter we
repaid $1.0 million of advances
outstanding under our Credit Facility reducing the balance
outstanding to $6.5 million as of
September 30, 2021. The Company's
working capital net of debt improved by $3.3
million to $0.3 million in the
three months ended September 30,
2021.
The following table provides a summary of Alvopetro's financial
and operating results for the three and nine months ended
September 30, 2021 and September 30, 2020. 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 September
30,
|
As at and Nine
Months
Ended September 30,
|
|
2021
|
2020
|
Change (%)
|
2021
|
2020
|
Financial
|
|
|
|
|
|
($000s, except
where noted)
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
9,963
|
5,320
|
87
|
25,084
|
5,421
|
Net income
|
1,490
|
6,483
|
(77)
|
4,039
|
2,952
|
Per share – basic
($)
|
0.05
|
0.20
|
(75)
|
0.12
|
0.09
|
Per share – diluted
($)(1)
|
0.04
|
0.19
|
(79)
|
0.12
|
0.08
|
Cash flow from
operating activities
|
7,234
|
1,971
|
267
|
17,203
|
(63)
|
Per share – basic
($)
|
0.22
|
0.06
|
267
|
0.52
|
(0.00)
|
Per share – diluted
($)(1)
|
0.20
|
0.06
|
233
|
0.50
|
(0.00)
|
Funds flow from
operations (2)
|
7,930
|
3,610
|
120
|
18,157
|
1,964
|
Per share – basic
($)
|
0.24
|
0.11
|
118
|
0.55
|
0.06
|
Per share – diluted
($)(1)
|
0.22
|
0.11
|
100
|
0.52
|
0.06
|
Capital
expenditures(3)
|
1,261
|
107
|
1,079
|
3,043
|
3,362
|
Total
assets
|
79,104
|
75,746
|
4
|
79,104
|
75,746
|
Cash and cash
equivalents
|
8,084
|
3,167
|
155
|
8,084
|
3,167
|
Net working capital
surplus (2)
|
6,839
|
2,233
|
206
|
6,839
|
2,233
|
Working capital, net
of debt (net debt)(2)
|
294
|
(13,103)
|
102
|
294
|
(13,103)
|
Weighted average
shares outstanding (000s)
|
|
|
|
|
|
Basic
|
32,923
|
32,818
|
0
|
32,860
|
32,800
|
Diluted
(1)
|
35,310
|
33,359
|
6
|
34,717
|
35,204
|
|
As at and Three
Months Ended September
30,
|
As at and Nine
Months
Ended September 30,
|
|
2021
|
2020
|
Change (%)
|
2021
|
2020
|
Operations
|
|
|
|
|
|
Natural gas, crude
oil and natural gas liquids sales:
|
|
|
|
|
|
Natural gas
(mcfpd)
|
14,102
|
10,105
|
40
|
13,365
|
3,393
|
NGLs – condensate
(bopd)
|
107
|
79
|
35
|
103
|
29
|
Oil (bopd)
|
2
|
-
|
-
|
2
|
6
|
Total
(boepd)
|
2,459
|
1,764
|
39
|
2,333
|
601
|
|
|
|
|
|
|
Average realized
prices:
|
|
|
|
|
|
Natural gas
($/mcf)
|
7.07
|
5.37
|
32
|
6.30
|
5.37
|
NGL – condensate
($/bbl)
|
79.36
|
44.75
|
77
|
73.04
|
46.16
|
Oil ($/bbl)
|
61.11
|
-
|
-
|
60.06
|
36.81
|
Company total
($/boe)
|
44.04
|
32.79
|
34
|
39.39
|
32.94
|
|
|
|
|
|
|
Operating netback
($/boe) (2)
|
|
|
|
|
|
Realized sales
price
|
44.04
|
32.79
|
34
|
39.39
|
32.94
|
Royalties
|
(4.02)
|
(2.81)
|
43
|
(3.39)
|
(2.85)
|
Production
expenses
|
(3.64)
|
(3.99)
|
(9)
|
(3.65)
|
(4.42)
|
Operating
netback
|
36.38
|
25.99
|
40
|
32.35
|
25.67
|
|
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 $0.4 million for the nine months ended
September 30, 2020.
|
Q3 2021 Results Webcast
We are hosting a quarterly results webcast to discuss our Q3
2021 results on November 10, 2021.
Details for joining the event are as follows:
DATE: November 10, 2021
TIME: 11:00 AM Eastern / 9:00
AM Mountain
LINK:
https://zoom.us/j/97259429873
DIAL-IN NUMBERS:
https://zoom.us/u/abU4Yuejrl
WEBINAR
ID: 972 5942 9873
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 Long-term Share Based Compensation Grants
In connection with our long-term share-based compensation
programs, Alvopetro's Board of Directors (the "Board") has approved
the annual rolling grants to officers, directors and certain
employees under Alvopetro's Stock Option Plan and Incentive Share
Plan. A total of 318,000 stock options, 66,500 restricted share
units ("RSUs") and 30,000 deferred share units ("DSUs") were
approved by the Board and will be granted on November 19, 2021. Of the total grants, 290,000
stock options, 58,000 RSUs and 30,000 DSUs were granted to
directors and officers. Each stock option, RSU and DSU entitles the
holder to purchase one common share. Each stock option granted will
have an exercise price based on the volume weighted average trading
price of Alvopetro's shares on the TSX Venture Exchange for the
five (5) consecutive trading days up to and including November 18, 2021. All stock options, RSUs and
DSUs granted expire five (5) years from the date of the grant.
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
2021
|
=
|
three months ended
June 30, 2021
|
Q3
2020
|
=
|
three months ended
September 30, 2020
|
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,
working capital net of debt (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. Working
capital, net of debt is computed as net working capital decreased
by the carrying amount of the Company's credit facility. Where the
resulting amount is negative, it is referred to as net debt. This
measure 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, working
capital net of debt (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", "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, forecasted
earnings, 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.
SOURCE Alvopetro Energy Ltd.