CALGARY,
AB, Feb. 28, 2023 /CNW/ - Alvopetro Energy
Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces our reserves as at
December 31, 2022 with total proved
plus probable ("2P") reserves of 9.0 MMboe and a before tax net
present value discounted at 10% of $348.2
million. 2P reserve additions replaced 132% of 2022
production. 2P reserve volumes increased by 3%, despite 0.9 MMboe
of production in 2022, due to reserve additions associated mainly
with two additional Murucututu development locations (previously
included in contingent resources). The before tax net present value
of our 2P reserves (discounted at 10%) increased by 17% from
December 31, 2021, due to reserve
additions and increases in forecasted natural gas prices. Alvopetro
also announces the December 31, 2022
assessment of the Company's Murucututu natural gas resource with
risked best estimate contingent resource of 2.9 MMboe and risked
best estimate prospective resource of 12.5 MMboe. The Murucututu
natural gas contingent and prospective resource values (risked best
estimate net present value before tax, discounted at 10%) are
$62.2 million and $259.1 million, respectively. 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 27, 2023 with
an effective date of December 31,
2022 (the "GLJ Reserves and Resources Report").
All references herein to $ refer to United
States dollars, unless otherwise stated.
December 31, 2022 GLJ Reserves and
Resource Report Highlights
- 2P net present value before tax discounted at 10% increased 17%
to $348.2 million.
- Proved reserves ("1P") decreased 12% to 3.9 MMboe and 2P
reserves increased 3% to 9.0 MMboe after 0.9 MMboe of production in
2022.
- 2P production replacement ratio(1) of 132%.
- 2P F&D costs(1) estimated at $28.66/boe.
- 2P recycle ratio(1) estimated at 2.1 times.
- 2P Net Asset Value(1) of CAD$13.56/share ($9.99/share) before any potential from contingent
or prospective resources.
- Risked best estimate contingent resource of 2.9 MMboe (NPV10
$62.2 million) and risked best
estimate prospective resource of 12.5 MMboe (NPV10 $259.1 million).
Corey Ruttan, President and
Chief Executive Officer, commented:
"Our 2022 year-end reserves and resource evaluations highlight
the continued strong profitability from our Caburé natural gas
field and the long-term potential of our Murucututu project. The
increase in forecasted cash flows reflects the impact of reserve
additions associated with our near-term development plans on our
Murucututu asset and increases in forecasted natural gas prices
under our long-term gas sales agreement. Our 2023 capital program
is focused on lower risk development opportunities including
accelerated activity on our Murucututu asset targeting the
long-term natural gas potential of this field."
(1)
|
Refer to the sections
entitled "Oil and Natural Gas Advisories – Other Metrics"
and "Non-GAAP and Other Financial Measures" for additional
disclosures and assumptions used in calculating production
replacement ratio, F&D costs, recycle ratio, net asset value
and net asset value per share.
|
SUMMARY
December 31, 2022 Gross Reserve
and Gross Resource
Volumes: (1)(2)(3)(4)(5)(6)
December 31, 2022
Reserves (Gross)
|
Total
Proved
(1P)
|
Total
Proved
plus
Probable
(2P)
|
Total Proved
plus
Probable plus
Possible
(3P)
|
|
(Mboe)
|
(Mboe)
|
(Mboe)
|
Caburé Natural Gas
Field
|
2,505
|
4,146
|
5,637
|
Murucututu Natural Gas
Field
|
1,232
|
4,584
|
8,149
|
Bom Lugar Oil
Field
|
148
|
269
|
542
|
Mãe-da-lua Oil
Field
|
25
|
38
|
55
|
Total Company
Reserves
|
3,909
|
9,037
|
14,382
|
See 'Footnotes'
section at the end of this news release
|
|
|
|
|
|
|
|
December 31, 2022
Murucututu Resources (Gross)
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
|
(Mboe)
|
(Mboe)
|
(Mboe)
|
Risked Contingent
Resource
Risked Prospective
Resource
|
2,639
6,774
|
2,907
12,501
|
4,228
18,481
|
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
Property
|
134,023
|
211,924
|
270,744
|
Murucututu
Property
|
33,034
|
126,946
|
222,675
|
Other
Properties
|
3,693
|
9,306
|
18,542
|
Total
Company
|
170,751
|
348,176
|
511,961
|
See 'Footnotes'
section at the end of this news release
|
|
|
|
|
|
|
|
Murucututu
Resource
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
|
($000s)
|
($000s)
|
($000s)
|
Risked Contingent
Resource
Risked Prospective
Resource
|
58,892
128,581
|
62,218
259,119
|
92,105
383,605
|
See 'Footnotes' section at the end of this news
release
|
NET ASSET VALUE
Following the December 31, 2022
reserves evaluation, based on the before tax net present value of
Alvopetro's 2P reserves (discounted at 10%), our total 2P net asset
value is $362.9 million; CAD$13.56 per common share outstanding. Our 2P
net asset value of $362.9 million is
before including the before tax net present value (discounted at
10%) of our risked best estimate risked contingent resource of
$62.2 million and our risked
prospective resource of $259.1
million from the Murucututu natural gas field.
Net Asset Value (in
$000s, other than per share amounts)
|
1P
|
2P
|
3P
|
Before Tax Net
Present Value, Discounted at 10% ($000s)
|
170,751
|
348,176
|
511,961
|
Net
working capital – as at December 31,
2022(1)(2)
|
14,698
|
14,698
|
14,698
|
Total Net Asset
Value(2),(3)(4)
|
185,449
|
362,874
|
526,659
|
CAD per basic
share(5)
|
6.93
|
13.56
|
19.69
|
(1)
|
Working capital is
estimated as of December 31, 2022 and based on unaudited financial
information and is subject to change. See "Unaudited Financial
Information" in this press release.
|
(2)
|
Non-GAAP measure. See
'Non-GAAP and Other Financial Measures' in this news release
for additional details.
|
(3)
|
Alvopetro has reflected
the contractual obligations pursuant to our September 2018 Gas
Treatment Agreement with Enerflex, including the equipment rental
component of the agreement which is treated as a right of use asset
and reflected as a capital lease obligation on our financial
statements. As the future capital lease payments reduce the
forecasted future net revenue in all reserves categories, the
capital lease obligation as reflected on the Company's financial
statements has not been included in the table above.
|
(4)
|
The net asset value
reflected above includes the present value of before tax cash flows
from the Company's reserves only. No amounts have been included
with respect to contingent or prospective resource
volumes.
|
(5)
|
Converted to Canadian
dollars ("CAD") based on the exchange rate on February 27, 2023.
The per share calculation is computed based on 36.3 million common
shares outstanding as of February 27, 2023.
|
PRICING ASSUMPTIONS – FORECAST
PRICES AND COSTS
GLJ employed the following pricing and inflation rate
assumptions as of January 1, 2023 in
the GLJ Reserves and Resources Report in estimating reserves
and resources data using forecast prices and costs.
Year
|
Brent
Blend
Crude Oil
FOB
North
Sea
($/Bbl)
|
National
Balancing
Point
(UK)
($/MMBtu)
|
NYMEX Henry
Hub
Near
Month
Contract
($/MMBtu)
|
Alvopetro-Bahiagas
Gas
Contract
$/MMBtu
(Current
Year)
|
Alvopetro-Bahiagas
Gas
Contract
$/MMBtu
(Previous
Year)
|
Change from
prior
year
|
2023
|
80.00
|
28.00
|
4.71
|
10.61
|
10.09
|
5 %
|
2024
|
80.50
|
24.15
|
4.50
|
10.96
|
9.86
|
11 %
|
2025
|
81.50
|
20.00
|
4.27
|
10.79
|
9.00
|
20 %
|
2026
|
82.00
|
14.00
|
4.35
|
11.01
|
8.89
|
24 %
|
2027
|
82.53
|
10.75
|
4.44
|
11.12
|
8.99
|
24 %
|
2028
|
84.14
|
10.98
|
4.53
|
10.75
|
9.15
|
17 %
|
2029
|
85.85
|
11.20
|
4.62
|
10.73
|
9.33
|
15 %
|
2030
|
87.58
|
11.43
|
4.71
|
10.88
|
9.52
|
14 %
|
2031
|
89.32
|
11.66
|
4.80
|
11.09
|
9.71
|
14 %
|
2032*
|
91.11
|
11.89
|
4.90
|
11.30
|
9.90
|
14 %
|
*Escalated at 2% per
year thereafter
|
As of February 1, 2023, Alvopetro's
contracted natural gas price under the terms of our long-term gas
sales agreement is based on the ceiling price within the contract
and is forecasted to remain at the ceiling price until 2027. The
ceiling price incorporates assumed US inflation of 3% in 2023 and
2% 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 ("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 Caburé and Caburé Leste natural gas fields
(collectively referred to as our Caburé natural gas field), our
Murucututu natural gas project (previously referred to as Gomo), 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. In addition to the
reserves assigned to our two existing Murucututu wells (197-1 and
183-1) and four additional development locations, 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 2022 fiscal year which
will be filed on SEDAR by April 30,
2023.
December
31, 2022 Reserves Information:
Summary of Reserves (1)(2)(3)
|
|
|
|
|
|
Light & Medium
Oil
|
Conventional
Natural
Gas
|
Natural Gas
Liquids
|
Oil
Equivalent
|
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
|
(Mbbl)
|
(Mbbl)
|
(MMcf)
|
(MMcf)
|
(Mbbl)
|
(Mbbl)
|
(Mboe)
|
(Mboe)
|
Proved
|
|
|
|
|
|
|
|
|
Producing
|
-
|
-
|
16,291
|
15,435
|
223
|
211
|
2,938
|
2,784
|
Developed Non-Producing
|
25
|
22
|
-
|
-
|
-
|
-
|
25
|
22
|
Undeveloped
|
148
|
140
|
4,040
|
3,787
|
125
|
117
|
946
|
888
|
Total
Proved
|
173
|
162
|
20,332
|
19,222
|
348
|
328
|
3,909
|
3,694
|
Probable
|
133
|
125
|
26,278
|
24,760
|
614
|
578
|
5,128
|
4,830
|
Total Proved plus
Probable
|
306
|
287
|
46,610
|
43,982
|
962
|
906
|
9,037
|
8,524
|
Possible
|
290
|
273
|
26,499
|
24,938
|
639
|
600
|
5,345
|
5,029
|
Total Proved plus
Probable plus
Possible
|
596
|
561
|
73,108
|
68,919
|
1,601
|
1,506
|
14,382
|
13,553
|
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
|
175,155
|
159,578
|
146,947
|
136,806
|
128,400
|
|
Developed
Non-Producing
|
454
|
453
|
446
|
437
|
427
|
|
Undeveloped
|
45,093
|
31,327
|
23,358
|
18,120
|
14,394
|
Total
Proved
|
220,702
|
191,358
|
170,751
|
155,363
|
143,221
|
Probable
|
380,085
|
240,807
|
177,426
|
140,449
|
115,665
|
Total Proved plus
Probable
|
600,787
|
432,165
|
348,176
|
295,813
|
258,886
|
Possible
|
441,963
|
239,781
|
163,785
|
124,468
|
99,884
|
Total Proved plus
Probable plus Possible
|
1,042,750
|
671,946
|
511,961
|
420,280
|
358,770
|
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
|
156,035
|
143,855
|
133,178
|
124,356
|
116,937
|
|
Developed
Non-Producing
|
383
|
384
|
380
|
373
|
365
|
|
Undeveloped
|
35,724
|
25,247
|
18,962
|
14,727
|
11,662
|
Total
Proved
|
192,142
|
169,486
|
152,520
|
139,456
|
128,964
|
Probable
|
289,379
|
190,348
|
142,952
|
114,291
|
94,583
|
Total Proved plus
Probable
|
481,521
|
359,834
|
295,473
|
253,747
|
223,547
|
Possible
|
329,908
|
187,660
|
131,716
|
101,493
|
82,000
|
Total Proved plus
Probable plus Possible
|
811,428
|
547,494
|
427,189
|
355,240
|
305,546
|
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 facility and pipeline
expenditures but excludes abandonment and reclamation costs.
Under each reserve category, Alvopetro has elected to reflect
100% of the contractual obligations pursuant to our Gas Treatment
Agreement with Enerflex, including all operating, capital, and
related financing costs for the full duration of the agreement.
These costs are mainly attributable to the Caburé field and also
represent the majority of the future development costs for the
Caburé field in the table below. The future costs associated with
equipment rental are also reflected as a capital lease obligation
on our financial statements. Also included in future development
costs for the Caburé field are two step-out wells and expansion of
the unit facilities.
The future development costs for the Murucututu field in the
proved category are for two development locations in the field and
the stimulation of the 197(1) well. In the probable and possible
categories, there are future development costs for two additional
development locations. Also included in the Murucututu future
development costs for all reserve categories are a portion of the
anticipated contractual obligations associated with the expansion
of the gas treatment facility. The future development costs for Bom
Lugar in the proved category include costs for one development well
and facilities upgrade. A second development well is included in
the future development costs for the possible category for Bom
Lugar. Future development costs at the Mãe-da-lua field relate to a
stimulation of the existing producing well.
$000s,
Undiscounted
|
2023
|
2024
|
2025
|
2026
|
2027
|
Remaining
|
Total
|
Proved
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
4,539
|
1,730
|
6,676
|
-
|
-
|
-
|
12,944
|
|
Murucututu Gas
Field
|
8,480
|
6,295
|
420
|
-
|
-
|
-
|
15,195
|
|
Bom Lugar Oil
Field
|
3,910
|
-
|
-
|
-
|
-
|
-
|
3,910
|
|
Mãe-da-lua Oil
Field
|
540
|
-
|
-
|
-
|
-
|
-
|
540
|
Total
Proved
|
17,469
|
8,025
|
7,096
|
-
|
-
|
-
|
32,590
|
Proved Plus
Probable
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
4,539
|
1,730
|
1,730
|
1,730
|
4,409
|
-
|
14,138
|
|
Murucututu Gas
Field
|
14,680
|
13,190
|
420
|
420
|
420
|
-
|
29,130
|
|
Bom Lugar Oil
Field
|
4,810
|
-
|
-
|
-
|
-
|
-
|
4,810
|
|
Mãe-da-lua Oil
Field
|
540
|
-
|
-
|
-
|
-
|
-
|
540
|
Total Proved Plus
Probable
|
24,569
|
14,920
|
2,150
|
2,150
|
4,829
|
-
|
48,618
|
Proved Plus Probable
Plus Possible
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
4,539
|
1,730
|
1,730
|
1,730
|
1,730
|
3,622
|
15,080
|
|
Murucututu Gas
Field
|
14,680
|
13,190
|
420
|
420
|
420
|
840
|
29,970
|
|
Bom Lugar Oil
Field
|
9,650
|
-
|
-
|
-
|
-
|
-
|
9,650
|
|
Mãe-da-lua Oil
Field
|
540
|
-
|
-
|
-
|
-
|
-
|
540
|
Total Proved Plus
Probable Plus Possible
|
29,409
|
14,920
|
2,150
|
2,150
|
2,150
|
4,462
|
55,240
|
See 'Footnotes' section at the end of this news
release
|
Reconciliation of Alvopetro's Gross Reserves (Before
Royalty) (1)(2)(3)(8)
|
|
|
|
|
|
|
Proved
(Mboe)
|
Probable
(Mboe)
|
Proved
Plus
Probable
(Mboe)
|
Possible
(Mboe)
|
Proved
plus
Probable
plus
Possible
(Mboe)
|
December 31,
2021
|
4,421
|
4,316
|
8,737
|
4,639
|
13,376
|
Extensions
|
182
|
808
|
990
|
990
|
1,980
|
Technical
Revisions
|
239
|
4
|
242
|
(283)
|
(41)
|
Economic
Factors
|
1
|
-
|
1
|
(1)
|
-
|
Production
|
(933)
|
-
|
(933)
|
-
|
(933)
|
December 31,
2022
|
3,909
|
5,128
|
9,037
|
5,345
|
14,382
|
See 'Footnotes' section at the end of this news
release
|
December
31, 2022 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)
|
14,800
|
16,302
|
23,711
|
Natural gas liquids
(Mbbl)
|
457
|
504
|
733
|
Oil equivalent
(Mboe)
|
2,924
|
3,221
|
4,684
|
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
|
197,575
|
103,633
|
65,254
|
45,386
|
33,458
|
Best
Estimate
|
228,494
|
112,051
|
68,940
|
47,609
|
35,054
|
High
Estimate
|
367,713
|
168,900
|
102,055
|
70,600
|
52,486
|
See 'Footnotes'
section at the end of this news release.
|
The GLJ Contingent Resource Report for Murucututu assumes
capital deployment starting in 2024 for the drilling of wells with
total project costs of $19.1 million
and first commercial production in 2024. 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)
|
13,357
|
14,713
|
21,399
|
Natural gas liquids
(Mbbl)
|
413
|
455
|
661
|
Oil equivalent
(Mboe)
|
2,639
|
2,907
|
4,228
|
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
|
178,311
|
93,529
|
58,892
|
40,961
|
30,196
|
Best
Estimate
|
206,216
|
101,126
|
62,218
|
42,967
|
31,636
|
High
Estimate
|
331,861
|
152,432
|
92,105
|
63,716
|
47,369
|
See 'Footnotes' section at the end of this news
release.
|
December
31, 2022 Murucututu Prospective Resources
Information:
Summary of Unrisked Company Gross Prospective Resources
(1)(2)(4)(6)
Prospective
Resources
|
Low
|
Best
|
High
|
Conventional natural
gas (MMcf)
|
42,273
|
78,017
|
115,335
|
Natural gas liquids
(Mbbl)
|
1,306
|
2,410
|
3,563
|
Oil equivalent
(Mboe)
|
8,351
|
15,413
|
22,786
|
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
|
608,512
|
281,759
|
158,531
|
99,430
|
66,486
|
Best
Estimate
|
1,261,728
|
560,612
|
319,476
|
207,106
|
144,368
|
High
Estimate
|
1,972,455
|
839,098
|
472,958
|
307,587
|
216,260
|
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 2025 for the drilling of wells, expansion of
field facilities, and additional pipeline capacity, with total
project costs of $70.0 million and
first commercial production in 2025. 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)
|
34,286
|
63,278
|
93,546
|
Natural gas liquids
(Mboe)
|
1,059
|
1,955
|
2,890
|
Oil equivalent
(Mboe)
|
6,774
|
12,501
|
18,481
|
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
|
493,550
|
228,528
|
128,581
|
80,645
|
53,925
|
Best
Estimate
|
1,023,358
|
454,700
|
259,119
|
167,979
|
117,094
|
High
Estimate
|
1,599,813
|
680,573
|
383,605
|
249,477
|
175,403
|
See 'Footnotes' section at the end of this news
release.
|
UPCOMING 2022 RESULTS AND LIVE
WEBCAST
Alvopetro anticipates announcing its 2022 fourth quarter and
year-end results on March 21, 2023
after markets close and will host a live webcast to discuss the
results at 9:00 am Mountain time, on
March 22, 2023. Details for
joining the event are as follows:
DATE: March 22,
2023
TIME: 9:00 AM
Mountain/11:00 AM Eastern
LINK: https://us06web.zoom.us/j/83279531812
DIAL-IN NUMBERS:
https://us06web.zoom.us/u/kcfqlsznW
WEBINAR ID: 832 7953 1812
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.
|
(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 11.
|
(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 11 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.
Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there
should be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
High Estimate: This is considered to be an optimistic estimate of
the quantity that will actually be recovered. It is unlikely that
the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there should be at
least a 10 percent probability (P10) that the quantities actually
recovered will equal or exceed the high 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, 2023
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/Jan23.pdf for
GLJ's price forecast.
|
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 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
CAD
= Canadian
dollars
F&D
=
finding and development costs
FDC
= future
development costs;
Mbbl
= thousands of
barrels
Mboe
= thousand
barrels of oil equivalent
MMbtu
= million
British Thermal Units
MMcf
= million
cubic feet
MMcf/d
= million
cubic feet per day
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, 2022 will be included
in the Company's annual information form for the year ended
December 31, 2022 which will be filed
on SEDAR (www.sedar.com) on or before April
30, 2023. 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,
2022. 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.
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, 2022 will be contained in the
Company's annual information form for the year ended December 31, 2022 which will be filed on SEDAR
(www.sedar.com) on or before April 30,
2023.
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, 2022 will be
contained in the Company's annual information form for the year
ended December 31, 2022 which will be
filed on SEDAR (www.sedar.com) on or before April 30, 2023.
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 press release contains metrics commonly used in the oil and
natural gas industry, which have been prepared by management,
including "F&D costs", "net asset value", "net asset value per
share", "operating netback per boe", "production replacement ratio"
and "recycle ratio". These terms do 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.
"F&D costs" are reflected on a per barrel of oil equivalent
and are calculated as the sum of capital expenditures in the
current year plus the change in FDC for the period, divided by the
change in reserves in the period, before current year production.
The estimated 2022 F&D costs are computed as follows:
2022 capital
expenditures(1) – $000s
|
24,795
|
Change in FDC from
2021(2) – $000s
|
10,540
|
Total -
$000s
|
35,335
|
Change in 2P reserves
before 2022 production(3) – Mboe
|
1,233
|
2022 estimated
F&D costs (per boe)
|
$28.66
|
(1)
|
The estimated 2022
capital expenditures noted above are unaudited and subject to
change upon completed of audited financial statements. Such changes
could be material. See "Unaudited Financial Information" for
further details.
|
(2)
|
Computed based on FDC
costs from the 2P reserves in the December 31, 2022 GLJ Reserves
and Resources Report less FDC costs from the December 31, 2021 GLJ
Reserves and Resources Report.
|
(3)
|
Computed as the change
in 2P reserves from December 31, 2021 to December 31, 2022 (which
increased 300 Mboe, from 8,737 Mboe to 9,037 Mboe) plus 2022 total
production of 933 Mboe.
|
"Net asset value" is based on the before tax net present value of
the Company's reserves as at December 31,
2022, discounted at 10% plus the Company's net working
capital balance estimated as of December 31,
2022. Net working capital is a capital management measure.
See "Non-GAAP and Other Financial Measures" below for
further details. The estimated net working capital as of
December 31, 2022 is unaudited and
subject to change upon completion of audited financial statements
for the year-ended December 31, 2022.
Such changes could be material. See "Unaudited Financial
Information" for further details.
"Net asset value per share" is based on the computation of net
asset value divided by basic shares outstanding of 36,311,579
adjusted to Canadian dollars based on the foreign exchange rate on
February 27, 2023.
"Operating netback per boe" is a non-GAAP financial measure and
operating netback per boe is a non-GAAP financial ratio. See
"Non-GAAP and Other Financial Measures" below for further
details. Alvopetro's operating netback for the year ended
December 31, 2022 is estimated at
$59.43 per boe. This estimate is
based on unaudited financial information and subject to change upon
completion of audited financial statements for the year-ended
December 31, 2022. Such changes could
be material. See "Unaudited Financial Information" for
further details.
"Production replacement ratio" is calculated as total reserve
additions divided by current year production. Alvopetro's 2P
production replacement ratio in 2022 is calculated as:
2P reserve additions
(1) – Mboe
|
1,233
|
2022 production –
Mboe
|
933
|
2022 2P production
replacement ratio
|
132 %
|
(1) See
computation in F&D costs above.
|
"Recycle ratio" is calculated by dividing the estimated 2022
operating netback by estimated F&D costs per boe for the year.
The Company's estimated 2022 recycle ratio is calculated as
follows:
2022 estimated
operating netback – $ per boe
|
$59.43
|
2022 estimated F&D
costs – $ per boe – see computation above
|
$28.66
|
2P recycle
ratio
|
2.1
|
Management uses these oil and gas metrics for its own performance
measurements and to provide shareholders with measures to compare
our operations over time. Readers are cautioned that the
information provided by these metrics, or that can be derived from
the metrics presented in this press release, should not be relied
upon for investment or other purposes.
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. The forward-looking statements are based on
certain key expectations and assumptions made by Alvopetro,
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, 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, 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. 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.
Unaudited Financial
Information
Certain financial and operating information included in this
news release for the year ended December 31,
2022 including, without limitation, 2022 capital
expenditures and the impact on F&D costs, working capital,
recycle ratio and operating netback, are based on estimated
unaudited financial results for the year then ended, and are
subject to the same limitations as discussed under Forward Looking
Statements and Cautionary Language set out in this news release.
These estimated amounts may change upon the completion of audited
financial statements for the year ended December 31, 2022 and changes could be
material.
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 news release 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 most recent MD&A which may be accessed through
the SEDAR website at www.sedar.com .
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 (a non-GAAP financial measure calculated as
natural gas, oil and condensate revenues less royalties and
production expenses) divided by total sales volumes (barrels of oil
equivalent). More details on the method of calculation is provided
in the "Operating Netback per boe" section of the Company's
MD&A. 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). The Company's operating
netback per boe is estimated at $59.43 per boe for the year ended December 31, 2022. This amount is unaudited and
subject to change as further discussed in the section "Unaudited
Financial Information".
Capital Management Measures
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. The Company's net working capital
as of December 31, 2022 is estimated
at $14.7 million. This amount is
unaudited and subject to change as further discussed in the section
"Unaudited Financial Information".
SOURCE Alvopetro Energy Ltd.