Alvopetro Energy Ltd. press release

Alvopetro Announces Q2 2026 Financial Results

2026-08-05

TSXV - TSX Venture Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada · Corporate Finance

Canada NewsWire

CALGARY, AB, Aug. 5, 2026/CNW/ -- Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces an operational update, our financial results for the three and six months ended June 30, 2026, and details for our Q2 2026 earnings call.

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:

"We've continued to deliver strong results in 2026 with Q2 sales volumes of 3,067 boepd, driving revenues of $19.2 million with funds flow from operations of $14.1 million. With a realized natural gas price of $10.98/Mcf we posted an operating netback of $59.08/boe and an 86% operating netback margin. These margins and results highlight the quality of our asset base underpinning our balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders."

Operational Update

Development Activities

In June, we completed drilling the 183-D1 well on our 100% owned Murucututu natural gas field to a total measured depth ("MD") of 3,263 metres between our previously drilled 183-A3 and 183-D4 wells. Based on open-hole logs, the well encountered potential net natural gas pay in both the Caruaçu Member of the Maracangalha Formation and the Gomo Member of the Candeias Formation, with an aggregate 47.7 metres total vertical depth ("TVD") of potential natural gas pay. We have now completed the well in three intervals and expect to have the well on production later this month.

In July, we commenced drilling the 183-H2 well. This well is targeting the prospective resource portion of the Caruaçu structure. We are currently at a depth of 1,399 metres and expect drilling to be completed later this month. Following this well, we plan to move the drilling rig to the 183-G2 location, the first Caruaçu development well from our newly constructed 183-G well pad. In the second half of 2026 we are also focused on expanding our field production facility and pipeline offtake capacity from the Murucututu field as well as enhancing our natural gas processing facility to accommodate increasing proportions of richer gas production from Murucututu.

July Sales Volumes

July sales volumes averaged 3,134 boepd (based on field estimates), including 2,995 boepd from Brazil (with natural gas sales of 16.8 MMcfpd, associated natural gas liquids from condensate of 185 bopd and oil sales of 8 bopd) and 139 bopd from oil sales in Canada.

| Natural gas, NGLs and crude oil sales: | July

2026 | June

2026 | Q2

2026 | | Brazil: | | | | | Natural gas (Mcfpd), by field: | | | | | Caburé | 13,216 | 11,846 | 12,040 | | Murucututu | 3,592 | 4,110 | 4,278 | | Total natural gas (Mcfpd) | 16,808 | 15,956 | 16,318 | | NGLs (bopd) | 185 | 172 | 167 | | Oil (bopd)(1) | 8 | 3 | 8 | | Total (boepd) – Brazil | 2,995 | 2,834 | 2,894 | | Canada: | | | | | Oil (bopd) – Canada | 139 | 156 | 173 | | Total Company – boepd(2) | 3,134 | 2,990 | 3,067 |

| (1) | Oil sales volumes in Brazil relate to the Bom Lugar and Mãe da lua fields. Alvopetro has entered into an assignment agreement to dispose of the fields, the closing of which is subject to standard regulatory approvals, including approval of the ANP. | | (2) | Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. |

Quarterly Natural Gas Pricing Update

As previously announced, effective August 1, 2026, our natural gas price under our long-term gas sales agreement was adjusted to BRL2.00/m3 on the first 400e3m3/d (14.1 MMcfpd) reference volumes ("QDC1") with the incremental 100 e3m3/d (3.5 MMcfpd) reference volumes ("QDC2") adjusted to BRL1.91/m3. This represents increases of 5% and 19% respectively for QDC1 and QDC2 relative to the May 1, 2026 price reset.

Based on our average heat content to-date and the June 30, 2026 BRL/USD exchange rate of 5.18, our weighted average realized price (QDC1 + QDC2) on firm natural gas sales during the August 1, 2026 to October 31, 2026 period is expected to be $11.70/Mcf, 7% above our Q2 2026 realized price of $10.98/Mcf. Amounts ultimately received in equivalent USD will be impacted by exchange rates in effect during the relevant period.

Financial and Operating Highlights – Second Quarter of 2026

Average daily sales in Brazil in Q2 2026 were 2,894 boepd(1)(+26% from Q2 2025 and -1% from Q1 2026). In Canada, daily sales averaged 173 bopd(1)(+25% from Q2 2025 and -10% from Q1 2026). Overall, total daily sales averaged 3,067 boepd (+26% compared to Q2 2025 and -2% compared to Q1 2026). Our average realized natural gas price was $10.98/Mcf (+3% from Q2 2025 and +8% from Q1 2026). Our overall average realized sales price per boe was $68.72/boe (+9% from Q2 2025 and +11% from Q1 2026). Our natural gas, oil and condensate revenue increased to $19.2 million, an increase of 37% from Q2 2025 due to higher sales volumes and an increase of 10% from Q1 2026 due to higher realized sales prices. Our operating netback(2)in the quarter was $59.08 per boe, increases of $4.36 per boe compared to Q2 2025 and $6.96 per boe compared to Q1 2026. We generated funds flow from operations(2)of $14.1 million ($0.37 per basic and diluted share), increases of $3.7 million compared to Q2 2025 and $1.6 million compared to Q1 2026. The increase relative to Q2 2025 was primarily driven by higher sales volumes. The increase relative to Q1 2026 was due to higher realized sales prices. We reported net income of $9.8 million ($0.26 per basic and diluted share), increases of $2.9 million compared to Q2 2025 and $1.7 million compared to Q1 2026. Capital expenditures in Q2 2026 of $7.5 million included costs to drill the 183-D1 well on Alvopetro's 100% Murucututu field as well as initial costs for upcoming drilling and facilities projects in Brazil. Our working capital(2)was $14.1 million as of June 30, 2026 and our working capital, net of debt was $6.1 million.

| (1) | Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. | | (2) | See "_Non-GAAP and Other Financial Measures_" section within this news release. |

The following table provides a summary of Alvopetro's financial and operating results for the periods noted. The consolidated financial statements with the Management's Discussion and Analysis ("MD&A") are available on our website at www.alvopetro.comand will be available on the SEDAR+ website at www.sedarplus.ca.

| | As at and Three Months Ended

June 30, | As at and Six Months Ended

June 30, | | | | | | | | 2026 | 2025 | Change (%) | 2026 | 2025 | Change (%) | | | Financial | | | | | | | | | ($000s, except where noted) | | | | | | | | | Natural gas, oil and condensate sales | 19,180 | 14,010 | 37 | 36,572 | 28,023 | 31 | | | Net income | 9,764 | 6,830 | 43 | 17,823 | 12,900 | 38 | | | Per share – basic ($)(1) | 0.26 | 0.18 | 44 | 0.47 | 0.35 | 34 | | | Per share – diluted ($)(1) | 0.26 | 0.18 | 44 | 0.47 | 0.34 | 38 | | | Cash flows from operating activities | 13,919 | 10,473 | 33 | 24,636 | 19,290 | 28 | | | Per share – basic ($)(1)(2) | 0.37 | 0.28 | 32 | 0.66 | 0.52 | 27 | | | Per share – diluted ($)(1)(2) | 0.36 | 0.28 | 29 | 0.65 | 0.51 | 27 | | | Funds flow from operations(2) | 14,098 | 10,366 | 36 | 26,603 | 19,588 | 36 | | | Per share – basic ($)(1)(2) | 0.37 | 0.28 | 32 | 0.71 | 0.53 | 34 | | | Per share – diluted ($)(1)(2) | 0.37 | 0.27 | 37 | 0.70 | 0.52 | 35 | | | Dividends declared | 4,477 | 3,660 | 22 | 8,885 | 7,303 | 22 | | | Per share(1) | 0.12 | 0.10 | 20 | 0.24 | 0.20 | 20 | | | Capital expenditures | 7,519 | 8,986 | (16) | 12,668 | 17,361 | (27) | | | Cash and cash equivalents | 35,056 | 15,001 | 134 | 35,056 | 15,001 | 134 | | | Working capital(2) | 14,133 | 6,838 | 107 | 14,133 | 6,838 | 107 | | | Working capital, net of debt(2) | 6,133 | 6,838 | (10) | 6,133 | 6,838 | (10) | | | Weighted average shares outstanding | | | | | | | | | Basic (000s)(1) | 37,731 | 37,261 | 1 | 37,579 | 37,278 | 1 | | | Diluted (000s)(1) | 38,265 | 37,795 | 1 | 38,155 | 37,770 | 1 | | | Operations | | | | | | | | | Average daily sales volumes(3) | | | | | | | | | Brazil: | | | | | | | | | Natural gas (Mcfpd), by field: | | | | | | | | | Caburé (Mcfpd) | 12,040 | 11,811 | 2 | 11,867 | 11,761 | 1 | | | Murucututu (Mcfpd) | 4,278 | 1,191 | 259 | 4,536 | 1,639 | 177 | | | Total natural gas (Mcfpd) | 16,318 | 13,002 | 26 | 16,403 | 13,400 | 22 | | | NGLs – condensate (bopd) | 167 | 128 | 30 | 171 | 131 | 31 | | | Oil (bopd) | 8 | 3 | 167 | 10 | 7 | 43 | | | Total (boepd) - Brazil | 2,894 | 2,298 | 26 | 2,915 | 2,371 | 23 | | | | | | | | | | | | Canada: | | | | | | | | | Oil (bopd) - Canada | 173 | 138 | 25 | 183 | 69 | 165 | | | | | | | | | | | | Total Company (boepd) | 3,067 | 2,436 | 26 | 3,098 | 2,440 | 27 | | | | | | | | | | | | Average realized prices(2) | | | | | | | | | Natural gas ($/Mcf) | 10.98 | 10.62 | 3 | 10.56 | 10.53 | 0 | | | NGLs – condensate ($/bbl) | 105.35 | 72.32 | 46 | 93.77 | 76.78 | 22 | | | Oil ($/bbl) | 77.55 | 47.10 | 65 | 66.28 | 48.31 | 37 | | | Total ($/boe) | 68.72 | 63.20 | 9 | 65.23 | 63.43 | 3 | | | | | | | | | | | | Operating netback ($/boe)(2) | | | | | | | | | Realized sales price | 68.72 | 63.20 | 9 | 65.23 | 63.43 | 3 | | | Royalties | (4.04) | (2.97) | 36 | (4.12) | (5.28) | (22) | | | Production expenses | (5.39) | (5.37) | 0 | (5.32) | (5.34) | 0 | | | Transportation expenses | (0.21) | (0.14) | 50 | (0.21) | (0.07) | 200 | | | Operating netback | 59.08 | 54.72 | 8 | 55.58 | 52.74 | 5 | | | Operating netback margin(2) | 86 % | 87 % | (1) | 85 % | 83 % | 2 | | | | | | | | | | |

| 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. | | (3) | Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. |

Q2 2026 Results Webcast

Alvopetro will host a live webcast to discuss our Q2 2026 financial results at 8:00 am Mountain time on Thursday August 6, 2026. Details for joining the webcast are as follows:

DATE: August 6, 2026 TIME: 8:00 AM Mountain/10:00 AM Eastern LINK: https://us06web.zoom.us/j/85865558118 DIAL-IN NUMBERS:https://us06web.zoom.us/u/kdkEw5S5Wa WEBINAR ID:858 6555 8118

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.

SocialMedia

Follow Alvopetro on our social media channels at the following links:

X - https://x.com/AlvopetroEnergy Instagram - https://www.instagram.com/alvopetro/ LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd

_Alvopetro Energy Ltd. __is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related 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:

| $ or USD | = | United States dollars | | $000s | = | thousands of USD | | boepd | = | barrels of oil equivalent ("boe") per day | | bopd | = | barrels of oil and/or natural gas liquids (condensate) per day | | BRL | = | Brazilian Real | | e3m3/d | = | thousand cubic metre per day | | m3 | = | cubic metre | | m3/d | = | cubic metre per day | | Mcf | = | thousand cubic feet | | Mcfpd | = | thousand cubic feet per day | | MMcf | = | million cubic feet | | MMcfpd | = | million cubic feet per day | | NGLs | = | natural gas liquids (condensate) | | Q1 2026 | = | three months ended March 31, 2026 | | Q2 2025 | = | three months ended June 30, 2025 | | Q2 2026 | = | three months ended June 30, 2026 | | GAAP or IFRS | = | IFRS Accounting Standards |

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 MD&A which may be accessed through the SEDAR+ website atwww.sedarplus.ca.

Non-GAAP Financial Measures

Operating Netback

Operating netback is calculated as natural gas, oil and condensate revenues less royalties, production expenses, and transportation 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.sedarplus.ca. 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 (boe). 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.sedarplus.ca.

Operating Netback Margin

Operating netback margin is a non-GAAP ratio 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

June 30, | Six Months Ended

June 30, | | | | | 2026 | 2025 | 2026 | 2025 | | Operating netback - $ per boe | 59.08 | 54.72 | 55.58 | 52.74 | | Average realized price - $ per boe | 68.72 | 63.20 | 65.23 | 63.43 | | Operating netback margin | 86 % | 87 % | 85 % | 83 % |

Funds Flow from Operations Per Share and Cash Flows from Operating Activities Per Share

Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities calculated before changes in non-cash working capital, divided by the weighted average shares outstanding for the respective period. Cash flows from operating activities per share is a supplementary financial measure computed as cash flows from operating activities divided by 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 are as follows:

| | Three Months Ended

June 30, | Six Months Ended

June 30, | | | | $ per share | 2026 | 2025 | 2026 | 2025 | | Per basic share: | | | | | | Cash flows from operating activities | 0.37 | 0.28 | 0.66 | 0.52 | | Funds flow from operations | 0.37 | 0.28 | 0.71 | 0.53 | | | | | | | | Per diluted share: | | | | | | Cash flows from operating activities | 0.36 | 0.28 | 0.65 | 0.51 | | Funds flow from operations | 0.37 | 0.27 | 0.70 | 0.52 |

Capital Management Measures

Funds Flow from Operations

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

June 30, | Six Months Ended

June 30, | | | | | 2026 | 2025 | 2026 | 2025 | | Cash flows from operating activities | 13,919 | 10,473 | 24,636 | 19,290 | | Changes in non-cash working capital | 179 | (107) | 1,967 | 298 | | Funds flow from operations | 14,098 | 10,366 | 26,603 | 19,588 |

Working Capital

Working capital is computed as current assets less current liabilities. Working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows:

| | | As at June 30, | | | | | 2026 | 2025 | | Total current assets | | 44,059 | 22,915 | | Total current liabilities | | (29,926) | (16,077) | | Working capital | | 14,133 | 6,838 |

Working Capital, Net of Debt

Working capital net of debt is computed as working capital decreased by the non-current portion of the loan. Working capital net of debt is used by management to assess the Company's overall financial position. As of June 30, 2026, Alvopetro's working capital exceeds the non-current balance outstanding on the loan.

| | | As at June 30 | | | | | 2026 | 2025 | | Working capital | | 14,133 | 6,838 | | Loan, non-current | | (8,000) | - | | Working capital, net of debt | | 6,133 | 6,838 |

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.