/C O R R E C T I O N -- Alvopetro Energy Ltd./

2025-05-07

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

Canada NewsWire

In the news release issued May 7, 2025 , by Alvopetro Energy Ltd., the company advises that the "Q1 2025 Results Webcast" and "Annual General Meeting" sections should each contain only one Zoom link. They should read "LINK: https://us06web.zoom.us/j/84476502014 " and "LINK: https://us06web.zoom.us/j/89512204386 " instead of the previously issued duplicates. The corrected release follows:

Alvopetro Announces an Operational Update, Q1 2025 Financial Results and Details for our Upcoming AGM

CALGARY, AB , May 7, 2025 /CNW/ - Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces an operational update, financial results for the three months ended March 31, 2025 and details for both our Q1 2025 earnings call and our upcoming annual general and special meeting.

All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.

President & CEO, Corey C. Ruttan commented:

"A 41% increase in Q1 2025 sales volumes provides a strong start to the year and we are well positioned for an exciting organically funded 2025 capital program. We now have the ability to invest in high rate of return opportunities in Brazil and the Western Canadian Sedimentary Basin. Our first two wells in Canada are exceeding expectations and we are looking forward to an expanding capital program including a strong inventory of oil drilling locations. These new opportunities further strengthen our disciplined capital allocation model, balancing returns to stakeholders and organic growth."

Operational Update

April Sales Volumes

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

2025 | March

2025 | Q1

2025 | | Brazil: | | | | | Natural gas (Mcfpd), by field: | | | | | Caburé | 12,532 | 12,652 | 11,710 | | Murucututu | 945 | 1,877 | 2,093 | | Total natural gas (Mcfpd) | 13,477 | 14,529 | 13,803 | | NGLs (bopd) | 126 | 146 | 135 | | Oil (bopd) | - | 12 | 10 | | Total (boepd) – Brazil | 2,372 | 2,580 | 2,446 | | Canada: | | | | | Oil (bopd) – Canada | 90 | - | - | | Total Company – boepd (1) | 2,462 | 2,580 | 2,446 |

| (1) Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. |

April sales volumes in Brazil averaged 2,372 boepd, including natural gas sales of 13.5 MMcfpd and associated natural gas liquids sales from condensate of 126 bopd, based on field estimates. Murucututu sales volumes were impacted by downtime on the 183-A3 well to complete an intervention to enhance productivity through the isolation of lower intervals. In Canada , the two wells drilled in the first quarter of 2025 came on production in April (50% working interest). After the initial clean-up period, oil sales commenced contributing an additional 90 bopd net to Alvopetro in April and bringing the Company's total sales to 2,462 boepd, based on field estimates, a decrease of 5% compared to March and an increase of 1% compared to Q1.

Quarterly Natural Gas Pricing Update

Effective May 1, 2025 , our natural gas price under our long-term gas sales agreement with Bahiagás has been adjusted to BRL2.08 /m 3 , a 7% increase from the February 2025 price of BRL1.95 /m 3 . All natural gas sales from May 1, 2025 to July 31, 2025 will be sold at BRL2.08 /m 3 ( $11.09 /Mcf, net of applicable sales taxes, based on average heat content to date and the April 30, 2025 BRL/USD exchange rate of 5.66).

Development Activities - Brazil

On our 100% Murucututu natural gas field, we spud the 183-D4 well targeting the Caruaçu Formation approximately 110 metres structurally updip of our 183-A3 success. Operational challenges associated with the drilling rig led to significant delays and while drilling the main target Caruaçu intervals we became differentially stuck ultimately resulting in the loss of the bottom hole assembly. We are currently drilling a sidetrack of the lower 680 metres of the well. We estimate total costs for the project of $7.7 million , of which $3.7 million was incurred in Q1 2025.

On the unitized area (the "Unit") which includes the Caburé natural gas field, we have five development wells planned for 2025, with the first wells expected to be drilled starting this quarter.

Western Canadian Strategic Entry

On February 5, 2025 , we announced a new strategic entry into Canada (the "Farmin"). Under the Farmin we agreed to fund 100% of two earning wells in exchange for a 50% non-operated working interest in 12,243 acres of land focused on the Mannville Stack heavy oil resource in Western Saskatchewan . This is currently one of the leading plays in the Western Canadian Sedimentary Basin with high original oil place reservoirs that are being effectively exploited using open hole multilateral drilling technology. Our objective with the strategic entry into Canada was to expand our inventory of highly prospective opportunities but with a differentiated risk profile. The early results from our first two earning wells in Western Canada demonstrate this vision. Within 45 days of finalizing the Farmin, with our partner, we had obtained two well licenses, surface access, constructed two well pads and drilled two multilateral wells with a total of over 15 kilometres of open hole reservoir contact. When we completed the Farmin we had established a gross initial production rate target of 100 to 120 bopd per well. Both earning wells were on production by early April and both are exceeding our pre-Farmin expectations. We have further expanded our joint Mannville focused land base up to 15,861 acres (7,931 acres net) and are looking forward to drilling up to an additional four (2.0 net) multilateral wells through the rest of 2025.

Financial and Operating Highlights – First Quarter of 2025

Alvopetro's updated long-term gas sales agreement came into effect on January 1, 2025 increasing our contracted firm volumes by 33%. As a result, our average daily sales increased to 2,446 boepd (1) in Q1 2025 (+44% from Q1 2024 and +41% from Q4 2024). Our average realized natural gas price decreased to $10.44 /Mcf in Q1 2025 (-17% from Q1 2024 and -1% from Q4 2024), due mainly to the devaluation of the BRL relative to the USD, which depreciated 18% compared to the average rate in Q1 2024. Our overall averaged realized sales price was $63.67 per boe (-16% from Q1 2024). With higher sales volumes, our natural gas, oil and condensate revenue increased to $14.0 million (+19% from Q1 2024 and +37% from Q4 2024). Our operating netback (2) in the quarter was $50.77 per boe (- $15.39 per boe from Q1 2024 and - $4.32 per boe from Q4 2024), due mainly to additional royalties in the quarter as well as lower realized sales prices. Royalties in the quarter increased to $7.60 per boe due to the recognition of additional gross-overriding royalty ("GORR") applicable on certain properties held by Alvopetro. The computation of the GORR was in dispute with the GORR holders, mainly with respect to the computation on natural gas. Subsequent to March 31, 2025 , Alvopetro received the findings of the appointed arbitral tribunal wherein the tribunal found in favour of the GORR holders. Alvopetro has estimated the additional GORR owing pursuant to the decision and recognized such amount (including inflation) as additional royalties in Q1 2025 as well as the estimated interest owing on the balance outstanding as finance expense. The computation of the additional GORR remains subject to the approval of, and adjustment by, the tribunal. We generated funds flows from operations (2) of $9.2 million ( $0.25 per basic share and $0.24 per diluted share), increases of $0.7 million compared to Q1 2024 and $2.3 million compared to Q4 2024 due mainly to higher sales volumes, partially offset by higher royalties and lower realized sale prices. We reported net income of $6.1 million , an increase of $1.5 million compared to Q1 2024 due to higher revenues and foreign exchange gains (compared to foreign exchange losses in Q1 2024), partially offset by higher royalties and higher depletion and depreciation. On February 5, 2025 , we announced the terms of a Canadian farmin agreement (the "Farmin"), pursuant to which Alvopetro agreed to fund 100% of two earning wells in exchange for a 50% non-operated working interest in 12,243 acres (6,122 net acres) of land in Western Saskatchewan . The two earning wells were drilled in the quarter at a total cost to Alvopetro of $2.6 million . With completion of the two earning wells, Alvopetro's working interest share is now 50%. Capital expenditures totaled $8.4 million , including costs for the two wells drilled in Canada , final costs on the 183-B1 re-entry, and costs associated with drilling the 183-D4 well on Alvopetro's 100% Murucututu field. Our working capital (2) surplus was $9.7 million as of March 31, 2025 , decreasing $3.4 million from December 31, 2024 .

| (1) Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. | | (2) Refer to the sections entitled " _Non-GAAP and Other Financial Measures _". |

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.com and will be available on the SEDAR+ website at www.sedarplus.ca .

| | | As at and Three Months Ended

March 31, | | | | | | | | | | 2025 | 2024 | Change (%) | | Financial | | | | | | | | ($000s, except where noted) | | | | | | | | Natural gas, oil and condensate sales | | | | 14,013 | 11,752 | 19 | | Net income | | | | 6,070 | 4,550 | 33 | | Per share – basic ($) (1) | | | | 0.16 | 0.12 | 33 | | Per share – diluted ($) (1) | | | | 0.16 | 0.12 | 33 | | Cash flows from operating activities | | | | 8,817 | 8,213 | 7 | | Per share – basic ($) (1) | | | | 0.24 | 0.22 | 9 | | Per share – diluted ($) (1) | | | | 0.23 | 0.22 | 5 | | Funds flow from operations (2) | | | | 9,222 | 8,513 | 8 | | Per share – basic ($) (1) | | | | 0.25 | 0.23 | 9 | | Per share – diluted ($) (1) | | | | 0.24 | 0.23 | 4 | | Dividends declared | | | | 3,643 | 3,296 | 11 | | Per share (1) (2) | | | | 0.10 | 0.09 | 11 | | Capital expenditures | | | | 8,375 | 2,439 | 243 | | Cash and cash equivalents | | | | 17,264 | 17,450 | (1) | | Net working capital (2) | | | | 9,742 | 15,047 | (35) | | Weighted average shares outstanding | | | | | | | | Basic (000s) (1) | | | | 37,312 | 37,282 | - | | Diluted (000s) (1) | | | | 37,752 | 37,693 | - |

March 31, | | | | | | | | 2025 | 2024 | Change | | Operations | | | | | | | | Average daily sales volumes (3) : | | | | | | | | Natural gas (Mcfpd), by field: | | | | | | | | Caburé (Mcfpd) | | | | 11,710 | 9,236 | 27 | | Murucututu (Mcfpd) | | | | 2,093 | 430 | 387 | | Total natural gas (Mcfpd) | | | | 13,803 | 9,666 | 43 | | NGLs – condensate (bopd) | | | | 135 | 78 | 73 | | Oil (bopd) | | | | 10 | 12 | (17) | | Total (boepd) | | | | 2,446 | 1,701 | 44 | | | | | | | | | | Average realized prices (2) : | | | | | | | | Natural gas ($/Mcf) | | | | 10.44 | 12.57 | (17) | | NGLs – condensate ($/bbl) | | | | 81.05 | 87.89 | (8) | | Oil ($/bbl) | | | | 64.96 | 65.06 | - | | Total ($/boe) | | | | 63.67 | 75.94 | (16) | | | | | | | | | | Operating netback ($/boe) (2) | | | | | | | | Realized sales price | | | | 63.67 | 75.94 | (16) | | Royalties | | | | (7.60) | (2.02) | 276 | | Production expenses | | | | (5.30) | (7.76) | (32) | | Operating netback | | | | 50.77 | 66.16 | (23) | | Operating netback margin (2) | | | | 80 % | 87 % | (8) |

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. |

Q1 2025 Results Webcast

Alvopetro will host a live webcast to discuss our Q1 2025 financial results at 8:00 am Mountain time on Thursday May 8, 2025. Details for joining the event are as follows:

DATE: May 8, 2025 TIME : 8:00 AM Mountain/ 10:00 AM Eastern LINK: https://us06web.zoom.us/j/84476502014 DIAL-IN NUMBERS: https://us06web.zoom.us/u/kcHhjt9Duj WEBINAR ID : 844 7650 2014

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 General Meeting

Alvopetro's annual general and special meeting (the "Meeting") will be held on Wednesday, June 18, 2025 at the offices of Torys LLP (Suite 4600, 525 8 th SW, Calgary, Alberta ) beginning at 9:30 a.m. Mountain time. The management information circular and all related materials will be available on our website and www.sedarplus.ca later this month.

All interested parties are invited to attend the Meeting. We will also be broadcasting the meeting via live webcast for the interest of all shareholders. Please be advised that shareholders will not be able to vote any shares through this webcast format. Details for joining the event are as follows:

DATE: June 18, 2025 TIME : 9:30 AM Mountain/ 11:30 AM Eastern LINK: https://us06web.zoom.us/j/89512204386 DIAL-IN NUMBERS: https://us06web.zoom.us/u/kenh5nLlte WEBINAR ID : 895 1220 4386

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. __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:

| $000s | = | thousands of U.S. dollars | | boepd | = | barrels of oil equivalent ("boe") per day | | bopd | = | barrels of oil and/or natural gas liquids (condensate) per day | | BRL | = | Brazilian Real | | 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 2024 | = | three months ended March 31, 2024 | | Q1 2025 | = | three months ended March 31, 2025 | | Q4 2024 | = | three months ended December 31, 2024 | | USD | = | United States dollars | | 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 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. 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 at www.sedarplus.ca .

Non-GAAP Financial Measures

Operating Netback

Operating netback is calculated as natural gas, oil and condensate revenues less royalties and production 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 is a common metric used in the oil and gas industry used to demonstrate profitability from operations on a per boe basis.

Operating netback margin

Operating netback margin is 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

March 31, | | | | | | | 2025 | 2024 | | Operating netback - $ per boe | | | 50.77 | 66.16 | | Average realized price - $ per boe | | | 63.67 | 75.94 | | Operating netback margin | | | 80 % | 87 % |

Funds Flow from Operations Per Share

Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, 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 is as follows: