Sterling Metals Corp. press release
Alvopetro Announces December 31, 2018 Reserves & Operational Update
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Canada NewsWire
CALGARY, March 7, 2019
CALGARY, March 7, 2019/CNW/ - Alvopetro Energy Ltd. (TSX-V:ALV; OTCQX: ALVOF) announces our reserves as at December 31, 2018with total proved plus probable ("2P") reserves of 6.1 MMboe and a before tax value discounted at 10% of US$145.0 million. The reserves data set forth herein is based upon an independent reserve assessment and evaluation prepared by GLJ Petroleum Consultants ("GLJ") dated March 7, 2019with an effective date of December 31, 2018(the "GLJ Report").
The majority of Alvopetro's reserves are from the Caburé natural gas field (Alvopetro 49.1% working interest). The field has four existing wells and the first phase of field production facility construction was completed in 2018. In 2019 the remaining field production facilities will be built and an additional three to four development wells will be drilled. Alvopetro's share of gas from the Caburé natural gas field will be shipped via an 11-kilometre transfer pipeline (Alvopetro 100%) to a natural gas processing facility operated by Enerflex under the terms of our September 2018Gas Treatment Agreement. All gas will then be sold by Alvopetro to Bahiagás under the terms of our May 2018long-term Gas Sales Agreement. Alvopetro is awaiting final installation permits for pipeline and facility construction and is targeting all infrastructure to be in place to commence first gas sales in January 2020. All pipe has been shipped to the field staging area and our pipeline contractor is ready to commence installation upon receipt of regulatory approvals. Initial equipment for the gas processing facility has been assembled, tested, and will be ready for shipment to Brazilbeginning in April.
On our deep basin Gomo natural gas project (Alvopetro 100% working interest), we have received the environmental license for the stimulation of our 183(1) well. We are in the process of securing a service rig and expect to complete the stimulation in the second quarter of 2019.
We have also received the permit to drill our Block 57 multi-zone oil prospect. Drilling will commence based on rig availability and we are currently targeting to spud the well in the second quarter of 2019.
2019 TSX Venture 50
Alvopetro was recently named to the TSX Venture 50, an annual showcase of top performing companies from five industry sectors. Alvopetro was the top performing 2019 Venture 50 company in the Energy sector, achieving a 169% improvement in market capitalization, a 137% share price change and overall trading volume of 14.9 million shares for the year ended December 31, 2018. A full listing of all TSX Venture 50 ranked companies and a profile video can be found by visitingwww.tsx.com/venture50. A direct link to Alvopetro's video can also be found at https://www.bnnbloomberg.ca/building-a-natural-gas-business-in-brazil-1.1222308and https://business.financialpost.com/business-trends/building-a-natural-gas-business-in-brazil.
Alvopetro Energy Ltd. Gross Reserves Summary at December 31, 2018_(1), (2), (3), (4), (5), (6)_
| | | | | | | Total Proved | Total Proved plus Probable | Total Proved plus Probable plus Possible | | Conventional Natural Gas (Mboe) | 3,485 | 5,586 | 8,393 | | Light & Medium Oil (Mbbl) | 175 | 310 | 600 | | Natural Gas Liquids (Mbbl) | 118 | 200 | 313 | | Total oil equivalent (Mboe) | 3,779 | 6,096 | 9,306 | | Before Tax Net Present Value, discount at 10% (MUS) | $88,981 | $144,950 | $209,585 | | After Tax Net Present Value, discounted at 10% (MUS) | $81,025 | $130,335 | $183,126 |
| (1) | Gross Reserves means the Company's working interest reserves before calculation of royalties. | | (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 based on forecast price and cost assumptions. The tables summarize the data contained in the GLJ 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) | MUS = 000's of U.S. dollars. | | (4) | Mbbl = thousands of barrels | | (5) | Mboe = thousands of barrels of oil equivalent | | (6) | 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 |
Net Asset Value
Following the December 31, 2018reserves evaluation, based on the before tax net present value of Alvopetro's proved plus probable reserves our total net asset value has increased to $155.0 million, reflecting CAD$2.16per common share outstanding.
| | | | | | | Net Asset Value (in MUS, other than per share amounts) | Total Proved | Total Proved plus Probable | Total Proved plus Probable plus Possible | | | Before Tax Net Present Value, discounted at 10% (MUS) | $88,981 | $144,950 | $209,585 | | | | Working capital – as at September 30, 2018 | 4,391 | 4,391 | 4,391 | | | Net proceeds from October 16, 2018 equity issuance | 3,935 | 3,835 | 3,835 | | | Materials and equipment inventory – as at September 30, 2018 | 1,823 | 1,823 | 1,823 | | Total Net Asset Value(1) | $99,030 | $154,999 | $219,634 | | | CAD per share(2) | $1.38 | $2.16 | $3.06 | |
| (1) | The long-term liability of $1.7 million as at September 30, 2018 is not included as a separate reduction in the computation of net asset value as these amounts are included as future development costs for the Caburé natural gas field. Alvopetro is required to reimburse our partner for the majority of our share of joint unit development costs of the Caburé natural gas field on the earlier of March 2020 or commence of production allocations to Alvopetro (which is anticipated to be January 2020). All existing and future costs to be reimbursed to our partner are therefore considered as future development costs in January 2020 and reduce the overall net present value of reserves of $145.0 million reflected in the table above. | | (2) | Converted to Canadian dollars ("CAD") based on the exchange rate on March 7, 2019. The per share calculation is computed based on 96.7 million common shares outstanding following the October 16, 2018 equity issuance. |
December 31, 2018 Reserves
The GLJ 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 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), the Gomo natural gas from the drainage areas around our 183(1) and 197(1) wells, as well as our Bom Lugar and Mãe-da-lua oil fields.
Summary of Reserves (1), (2), (3), (6), (8), (9)
Company Total
| | | | | | | | | | | | | 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 | 3 | 2 | - | - | - | - | 3 | 2 | | | Developed Non-Producing | 24 | 20 | - | - | - | - | 24 | 20 | | | Undeveloped | 148 | 139 | 20,911 | 18,401 | 118 | 104 | 3,752 | 3,310 | | Total Proved | 175 | 162 | 20,911 | 18,401 | 118 | 104 | 3,779 | 3,333 | | | | Probable | 135 | 125 | 12,607 | 11,098 | 81 | 72 | 2,318 | 2,047 | | Total Proved plus Probable | 310 | 287 | 33,519 | 29,499 | 200 | 176 | 6,096 | 5,379 | | | | Possible | 290 | 270 | 16,839 | 14,804 | 113 | 99 | 3,209 | 2,837 | | Total Proved plus Probable plus Possible | 600 | 557 | 50,357 | 44,303 | 313 | 275 | 9,306 | 8,216 | |
By Field
| | | | | | | | | | | | | | | Caburé Natural Gas Field | Gomo Gas Field | Bom Lugar Oil Field | Mãe-da-lua Oil Field | Total | | | | | | | | | Company Gross | Company Net | Company Gross | Company Net | Company Gross | Company Net | Company Gross | Company Net | Company Gross | Company Net | | | | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | (Mboe) | | | Proved | | | | | | | | | | | | | | Producing | - | - | - | - | - | - | 3 | 2 | 3 | 2 | | | Developed Non-Producing | - | - | - | - | - | - | 24 | 20 | 24 | 20 | | | Undeveloped | 3,227 | 2,836 | 376 | 335 | 148 | 139 | - | - | 3,752 | 3,310 | | Total Proved | 3,227 | 2,836 | 376 | 335 | 148 | 139 | 27 | 23 | 3,779 | 3,333 | | | | Probable | 1,387 | 1,219 | 796 | 703 | 121 | 113 | 14 | 12 | 2,318 | 2,047 | | Total Proved plus Probable | 4,614 | 4,055 | 1,172 | 1,038 | 269 | 252 | 41 | 35 | 6,096 | 5,379 | | | | Possible | 1,584 | 1,392 | 1,335 | 1,174 | 274 | 257 | 16 | 14 | 3,209 | 2,837 | | Total Proved plus Probable plus Possible | 6,198 | 5,447 | 2,507 | 2,212 | 542 | 509 | 57 | 48 | 9,306 | 8,216 | |
Summary of Before Tax Net Present Value of Future Net Revenue - MUS(1), (2), (3), (4), (5), (6), (7)
Company Total
| | | | | | | | | | Undiscounted | 5% | 10% | 15% | 20% | | | Proved | | | | | | | | | Proved Producing | (641) | (587) | (546) | (513) | (486) | | | Proved Developed Non-Producing | 199 | 195 | 184 | 169 | 154 | | | Proved Undeveloped | 125,089 | 105,225 | 89,343 | 76,572 | 66,205 | | Total Proved | $124,647 | $104,834 | $88,981 | $76,228 | $65,872 | | | | Probable | 109,221 | 76,830 | 55,969 | 41,949 | 32,183 | | Total Proved plus Probable | $233,868 | $181,663 | $144,950 | $118,177 | $98,056 | | | | Possible | 176,700 | 101,048 | 64,635 | 44,317 | 31,873 | | Total Proved plus Probable plus Possible | $410,569 | $282,712 | $209,585 | $162,494 | $129,928 | |
By Field
| | | | | | | | | | Undiscounted | 5% | 10% | 15% | 20% | | | Proved | | | | | | | | | Caburé Natural Gas Field | 115,615 | 97,823 | 83,605 | 72,108 | 62,708 | | | Gomo Gas Field | 5,638 | 4,304 | 3,256 | 2,477 | 1,900 | | | Bom Lugar Oil Field | 3,378 | 2,651 | 2,045 | 1,560 | 1,178 | | | Mãe-da-lua Oil Field | 16 | 55 | 75 | 83 | 85 | | Total Proved | $124,647 | $104,834 | $88,981 | $76,228 | $65,872 | | | Proved Plus Probable | | | | | | | | | Caburé Natural Gas Field | 184,030 | 147,011 | 119,532 | 98,732 | 82,702 | | | Gomo Gas Field | 40,331 | 27,043 | 19,294 | 14,470 | 11,271 | | | Bom Lugar Oil Field | 9,115 | 7,205 | 5,731 | 4,603 | 3,734 | | | Mãe-da-lua Oil Field | 393 | 404 | 394 | 373 | 349 | | Total Proved Plus Probable | $233,868 | $181,663 | $144,950 | $118,177 | $98,056 | | | Proved Plus Probable Plus Possible | | | | | | | | | Caburé Natural Gas Field | 268,328 | 200,635 | 154,413 | 121,885 | 98,358 | | | Gomo Gas Field | 121,266 | 65,744 | 42,261 | 30,240 | 23,124 | | | Bom Lugar Oil Field | 20,110 | 15,509 | 12,147 | 9,669 | 7,807 | | | Mãe-da-lua Oil Field | 865 | 824 | 764 | 700 | 639 | | Total Proved Plus Probable Plus Possible | $410,569 | $282,712 | $209,585 | $162,494 | $129,928 | |
Summary of After Tax Net Present Value of Future Net Revenue – MUS(1), (2), (3), (4), (5), (6), (7) ,(8), (9)
| | | | | | | | | | Undiscounted | 5% | 10% | 15% | 20% | | | Proved | | | | | | | | | Proved Producing | (641) | (587) | (546) | (513) | (486) | | | Proved Developed Non-Producing | 199 | 195 | 184 | 169 | 154 | | | Proved Undeveloped | 114,312 | 96,017 | 81,386 | 69,629 | 60,093 | | Total Proved | $113,870 | $95,625 | $81,025 | $69,286 | $59,760 | | | | Probable | 93,561 | 66,860 | 49,310 | 37,364 | 28,967 | | Total Proved plus Probable | $207,432 | $162,485 | $130,335 | $106,650 | $88,727 | | | | Possible | 138,895 | 81,570 | 52,792 | 36,328 | 26,099 | | Total Proved plus Probable plus Possible | $346,326 | $244,055 | $183,126 | $142,978 | $114,826 | |
| Notes: | | | (1) | 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 based on forecast price and cost assumptions. The tables summarize the data contained in the GLJ 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. | | (2) | Company Gross reserves means the total working interest share of remaining recoverable reserves owned by Alvopetro before deductions of royalties payable to others and without including any royalty interests owned by Alvopetro. | | (3) | There are currently four existing wells drilled within the unit area of the Caburé natural gas field and two wells drilled within the Gomo gas field. However, all reserves associated with these fields are classified as Proved Undeveloped or Probable Undeveloped due to the required construction of the pipeline and the gas processing facility. | | (4) | GLJ's December 31, 2018 escalated price forecast is used in the determination of future gas sales prices under Alvopetro's long-term gas sales agreement. | | (5) | The net present value of future net revenue attributable to Alvopetro's reserves is 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 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. | | (6) | 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 | | (7) | MUS = 000's of U.S. dollars. | | (8) | Mbbl = thousands of barrels | | (9) | MMcf = Million cubic feet |
Future Development Costs
The table below sets out the total development costs deducted in the estimation in the GLJ Report of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs). Total development costs include capital costs for drilling and facilities but excludes abandonment and reclamation costs.
Company Total
| | | | | | | | Forecast Prices and Costs | | | | | MUS_(1)_, Undiscounted | | Proved Reserves | Proved Plus Probable Reserves | Proved Plus Probable Plus Possible Reserves | | 2019 | | $5,040 | $5,040 | $5,040 | | 2020 | | 13,653 | 15,678 | 19,636 | | 2021 | | 2,167 | 2,167 | 2,167 | | 2022 | | 2,706 | 4,829 | 4,829 | | 2023 | | 6,731 | 6,731 | 6,731 | | Remaining Years | | 9,492 | 11,801 | 13,827 | | Total Undiscounted | | $39,789 | $46,246 | $52,230 |
| | | Notes: | | (1)MUS = 000's of U.S. dollars. |
By Field
| | | | | | | | | | | MUS_(1)_, Undiscounted | 2019 | 2020 | 2021 | 2022 | 2023 | Remaining | Total | | | Proved | | | | | | | | | | | Caburé Natural Gas Field | $4,340 | $8,146 | $1,730 | $1,730 | $6,276 | $8,555 | $30,777 | | | Gomo Gas Field | 700 | 1,989 | 437 | 976 | 455 | 937 | 5,494 | | | Bom Lugar Oil Field | - | 3,083 | - | - | - | - | 3,083 | | | Mãe-da-lua Oil Field | - | 435 | - | - | - | - | 435 | | Total Proved | $5,040 | $13,653 | $2,167 | $2,706 | $6,731 | $9,492 | $39,789 | | | Proved Plus Probable | | | | | | | | | | | Caburé Natural Gas Field | $4,340 | $8,146 | $1,730 | $1,730 | $6,276 | $9,890 | $32,112 | | | Gomo Gas Field | 700 | 3,274 | 437 | 3,099 | 455 | 1,911 | 9,876 | | | Bom Lugar Oil Field | - | 3,823 | - | - | - | - | 3,823 | | | Mãe-da-lua Oil Field | - | 435 | - | - | - | - | 435 | | Total Proved Plus Probable | $5,040 | $15,678 | $2,167 | $4,829 | $6,731 | $11,801 | $46,246 | | | Proved Plus Probable Plus Possible | | | | | | | | | | | Caburé Natural Gas Field | $4,340 | $8,146 | $1,730 | $1,730 | $6,276 | $10,380 | $32,602 | | | Gomo Gas Field | 700 | 3,274 | 437 | 3,099 | 455 | 3,477 | 11,412 | | | Bom Lugar Oil Field | - | 7,781 | - | - | - | - | 7,781 | | | Mãe-da-lua Oil Field | - | 435 | - | - | - | - | 435 | | Total Proved Plus Probable Plus Possible | $5,040 | $19,636 | $2,167 | $4,829 | $6,731 | $13,827 | $52,230 | |
| Notes: | | (1)MUS = 000's of U.S. dollars. |
Future development costs for Caburé are consistent amongst all three reserve categories and include costs for the 11‑kilometre transfer pipeline construction in 2019, the payments for full field development in 2020. Under each reserve category, Alvopetro has elected to reflect 100% of the contractual obligations pursuant to our September 2018Gas Treatment Agreement with Enerflex, including all operating, capital and related financing costs for the full duration of the agreement. Future development costs for additional compression at the Caburé field are included in 2023. The future development costs for the Gomo field in the proved category are for the stimulation of the 183-1 well, and the pipeline and field facility development to tie-in the well to Alvopetro's midstream assets. In the probable and possible categories, there are future development costs for the stimulation and tie-in of the 197-1 well, and future field compression. The future development costs for Bom Lugar in the proved category include costs for a directional wellbore and facilities upgrade. A second directional well is included in the future development costs for the possible category for Bom Lugar. Future development costs at the Mãe-da-lua relate to a stimulation of the existing producing well, planned in 2020.
Total Future Net Revenue (Undiscounted) – Forecast Prices and Costs
| | | | | | | | | | | (Undiscounted) | Revenue (MUS) | Royalties (MUS) | Operating Costs (MUS) | Develop- ment Costs (MUS) | Abandon- ment and Reclamation Costs (MUS) | Future Net Revenue Before Income Taxes (MUS) | Future Income Taxes (MUS) | Future Net Revenue After Income Taxes (MUS) | | | | | | | | | | | | Total Proved | 220,779 | 23,248 | 30,066 | 39,789 | 3,029 | 124,647 | 10,777 | 113,870 | | Total Proved plus Probable | 374,876 | 39,413 | 51,848 | 46,246 | 3,501 | 233,868 | 26,437 | 207,432 | | Total Proved plus Probable plus Possible | 614,004 | 64,527 | 82,527 | 52,230 | 4,152 | 410,569 | 62,242 | 346,326 |
Reconciliation of Alvopetro's Gross Reserves (Before Royalty)(1), (2), (3), (4)
| | | | | | | | | Proved (Mboe) | Probable (Mboe) | Proved Plus Probable (Mboe) | Possible
(Mboe) | Proved plus Probable plus Possible
(Mboe) | | December 31, 2017 | - | 697 | 697 | 172 | 869 | | Discoveries | 3,603 | 2,183 | 5,786 | 2,920 | 8,706 | | Extensions | 148 | (115) | 33 | 209 | 242 | | Improved Recovery | 31 | 14 | 46 | 16 | 62 | | Technical Revisions | 1 | (271) | (270) | (59) | (328) | | Disposition | - | (191) | (191) | (48) | (239) | | Production | (5) | - | (5) | - | (5) | | December 31, 2018 | 3,779 | 2,317 | 6,096 | 3,210 | 9,306 |
| Notes: | | | (1) | Gross Reserves means the Company's working interest reserves before calculation of royalties. | | (2) | Based on the GLJ price forecast effective December 31, 2018. | | (3) | Mboe = Thousand barrels of oil equivalent | | (4) | 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 or proved plus probable plus possible reserves |
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at: http://www.alvopetro.com/corporate-presentation.