CALGARY, AB , May 12, 2022
/CNW/ - Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces
record first quarter 2022 operating and financial results, an
operational update, an additional debt repayment and details of our
upcoming annual 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 and CEO, Corey
Ruttan commented:
"Our first quarter results highlight the strength and
profitability of our operations. This quarter sets a new record for
us for funds flow from operations with our highest quarterly
production to-date and two months at our higher contracted natural
gas price. These results allowed us to increase our quarterly
dividends to shareholders by 33% to US$0.08/share and we are also now firmly focused
on our next phase of growth with our recent 182-C1 exploration
success and the development of our Murucututu project."
Operational Update
In April, we completed drilling our 182-C1 well on Block 182
and, based on open-hole wireline logs, the well discovered 25
metres of potential net natural gas pay at an average 34% water
saturation and average porosity of 8.2%, using a 6% porosity
cut-off, 50% Vshale cut-off and 50% water saturation cut-off. We
plan to undertake a testing program to assess the productive
capability of the well and define a field development plan. We
expect testing to be completed later in the second quarter and we
also plan to drill a follow-up well on the block in the second half
of 2022. The drilling rig has now been mobilized to our next
exploration location, the 183-B1 well which we expect to spud later
this month.
On our Murucututu project, we have completed construction of the
pipeline to connect the 183(1) well to our Caburé pipeline and are
in the final stages of construction of our field production
facilities. We expect our 183(1) well to be tied-in and on
production later this quarter.
Debt Repayment
With our strong production levels and results to-date in 2022,
we have notified our lender that we will proceed with an additional
$2.5 million repayment of our
outstanding credit facility on May 16,
2022. This repayment will bring the outstanding balance
under our credit facility down to $2.5
million.
Financial and Operating Highlights – First Quarter of
2022
- Our daily sales averaged 2,501 boepd in Q1 2022, a 15% increase
from the Q1 2021 average of 2,175 boepd and a 3% increase from the
Q4 2021 average of 2,432 boepd. In Q1 2022, 96% of our sales
volumes were from natural gas.
- On February 1, 2022, our
contracted natural gas price under our long-term gas sales
agreement increased 48% to Brazilian real
("BRL")1.94/m3. With two months in the quarter at this
higher price, the current ceiling price in our contract, and an
appreciation of the BRL relative to the USD compared to Q4 2021 and
Q1 2021, our average realized natural gas price increased to
$10.03/Mcf compared to the Q4 2021
average price of $7.07/Mcf and the Q1
2021 average price of $5.68/Mcf.
- Higher commodity prices and higher daily sales volumes resulted
in a 101% increase in our natural gas, condensate and oil revenue
compared to Q1 2021.
- With higher realized sales prices, our operating netback
increased to $53.94 per boe in Q1
2022, an improvement of 89% from Q1 2021 and 48% from Q4 2021.
- We reported net income of $11.1
million compared to a loss of $1.1
million in Q1 2021 and net income of $2.6 million in Q4 2021.
- We generated funds flow from operations of $10.9 million ($0.32 per basic share and $0.30 per diluted share) and cash flows from
operating activities of $8.3 million
($0.25 per basic share and
$0.23 per diluted share).
- Capital expenditures totaled $3.8
million, focused on drilling costs for our 182-C1 well,
field production facility installation on our Murucututu project
and final Murucututu pipeline extension costs.
- We increased our quarterly dividend 33% to $0.08 per share, with total dividends of
$2.7 million declared in the
quarter.
- We repaid an additional $1.5
million of our credit facility, bringing the balance
outstanding to $5.0 million. As at
March 31, 2022, we had a net working
capital surplus of $12.3 million,
including $12.7 million in cash and
cash equivalents. The Company's working capital net of our credit
facility balance improved to $7.3
million, compared to $2.6
million as of December 31,
2021.
The following table provides a summary of Alvopetro's financial
and operating results for three months ended March 31, 2022 and March
31, 2021. The consolidated financial statements with the
Management's Discussion and Analysis ("MD&A) are available on
our website at www.alvopetro.com and will be available on the
System for Electronic Document Analysis and Retrieval (SEDAR)
website at www.sedar.com.
|
|
As at and Three
Months Ended
March 31,
|
|
|
|
|
2022
|
2021
|
Change (%)
|
Financial
|
|
|
|
|
|
|
($000s, except where
noted)
|
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
|
|
|
13,972
|
6,939
|
101
|
Net income
(loss)
|
|
|
|
11,115
|
(1,088)
|
-
|
Per share – basic
($)(1)
|
|
|
|
0.33
|
(0.03)
|
-
|
Per share – diluted
($)(1)
|
|
|
|
0.30
|
(0.03)
|
-
|
Cash flow from
operating activities
|
|
|
|
8,333
|
4,304
|
94
|
Per share – basic
($)(1)
|
|
|
|
0.25
|
0.13
|
92
|
Per share – diluted
($)(1)
|
|
|
|
0.23
|
0.13
|
77
|
Funds flow from
operations (2)
|
|
|
|
10,904
|
4,756
|
129
|
Per share – basic
($)(1)
|
|
|
|
0.32
|
0.14
|
129
|
Per share – diluted
($)(1)
|
|
|
|
0.30
|
0.14
|
114
|
Dividends
declared
|
|
|
|
2,715
|
-
|
-
|
Per
share(1)
|
|
|
|
0.08
|
-
|
-
|
Capital
expenditures
|
|
|
|
3,800
|
864
|
340
|
Total assets
|
|
|
|
93,816
|
76,022
|
23
|
Cash and cash
equivalents
|
|
|
|
12,740
|
4,983
|
156
|
Net working capital
surplus (2)
|
|
|
|
12,302
|
5,775
|
113
|
Working capital, net of
debt (net debt)(2)
|
|
|
|
7,257
|
(7,254)
|
-
|
Weighted average shares
outstanding (000s)
|
|
|
|
|
|
|
Basic(1)
|
|
|
|
33,907
|
33,242
|
2
|
Diluted(1)
|
|
|
|
36,628
|
33,938
|
7
|
Operations
|
|
|
|
|
|
|
Natural gas, NGLs and
crude oil sales:
|
|
|
|
|
|
|
Natural gas
(Mcfpd)
|
|
|
|
14,339
|
12,464
|
15
|
NGLs – condensate
(bopd)
|
|
|
|
99
|
98
|
1
|
Oil (bopd)
|
|
|
|
12
|
-
|
-
|
Total
(boepd)
|
|
|
|
2,501
|
2,175
|
15
|
|
|
|
|
|
|
|
Average realized
prices(2):
|
|
|
|
|
|
|
Natural gas
($/Mcf)
|
|
|
|
10.03
|
5.68
|
77
|
NGL – condensate
($/bbl)
|
|
|
|
106.42
|
64.41
|
65
|
Oil ($/bbl)
|
|
|
|
79.50
|
-
|
-
|
Company total
($/boe)
|
|
|
|
62.08
|
35.45
|
75
|
|
|
|
|
|
|
|
Operating netback
($/boe)(2)
|
|
|
|
|
|
|
Realized sales
price
|
|
|
|
62.08
|
35.45
|
75
|
Royalties
|
|
|
|
(4.35)
|
(3.30)
|
32
|
Production
expenses
|
|
|
|
(3.79)
|
(3.63)
|
4
|
Operating
netback
|
|
|
|
53.94
|
28.52
|
89
|
Operating netback
margin(2)
|
|
|
|
87%
|
80%
|
9
|
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.
|
First Quarter 2022 Results Webcast
Alvopetro will host a live webcast to discuss Q1 2022 financial
results at 8:00 am Mountain time on
May 13, 2022. Details for joining the
event are as follows:
Date: May 13,
2022
Time: 8:00 AM Mountain/10:00 AM Eastern
Link: https://us06web.zoom.us/j/84318417369
Dial-in Numbers: https://us06web.zoom.us/u/kckYUds2mG
Webinar ID: 843 1841 7369
|
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 and Special Meeting
We will be holding our Annual and Special Meeting (the
"Meeting") on Wednesday June 22, 2022
beginning at 9:30 am (Mountain time).
The Meeting will once again be held virtually at URL:
https://virtual-meetings.tsxtrust.com/1364, Meeting ID: 1364 and
Password: alvopetro2022 (case sensitive).
At the Meeting, shareholders will be asked to vote on the usual
annual general meeting matters, including the election of directors
(each of which is a current director of the Company) and the
appointment of auditors. In addition, shareholders will be asked to
vote on a new share-based compensation plan to replace Alvopetro's
existing Stock Option Plan and Incentive Share Plan. The Management
Information Circular and all related meeting materials, including a
Letter to Shareholders, are available on our website
(https://alvopetro.com/Shareholder-Documents) and on SEDAR
(www.sedar.com).
Corporate Presentation
Alvopetro's updated corporate presentation is available on our
website at:
http://www.alvopetro.com/corporate-presentation.
Social Media
Follow Alvopetro on our social media channels at the following
links:
Twitter -
https://twitter.com/AlvopetroEnergy
Instagram - https://www.instagram.com/alvopetro/
LinkedIn -
https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd.'s vision is to
become a leading independent upstream and midstream operator in
Brazil. Our strategy is to unlock
the on-shore natural gas potential in the state of Bahia
in Brazil, building
off the development of our Caburé natural gas field and our
strategic midstream infrastructure.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
All amounts contained in this new release are in
United States dollars, unless
otherwise stated and all tabular amounts are in thousands of
United States dollars, except as
otherwise noted.
Abbreviations:
|
|
|
boepd
|
=
|
barrels of oil
equivalent ("boe") per day
|
bopd
|
=
|
barrels of oil and/or
natural gas liquids (condensate) per day
|
BRL
|
=
|
Brazilian
Real
|
m3
|
=
|
cubic metre
|
Mcf
|
=
|
thousand cubic
feet
|
Mcfpd
|
=
|
thousand cubic feet per
day
|
MMcf
|
=
|
million cubic
feet
|
MMcfpd
|
=
|
million cubic feet per
day
|
NGLs
|
=
|
natural gas
liquids
|
Q1 2021
|
=
|
three months ended
March 31, 2021
|
Q4 2021
|
=
|
three months ended
December 31, 2021
|
Q1 2022
|
=
|
three months ended
March 31, 2022
|
Test Results
Data obtained from the 182-C1 well identified in this press
release, including hydrocarbon shows, open-hole logging, net pay
and porosities, should be considered to be preliminary until
testing, detailed analysis and interpretation has been completed.
Hydrocarbon shows can be seen during the drilling of a well in
numerous circumstances and do not necessarily indicate a commercial
discovery or the presence of commercial hydrocarbons in a well.
There is no representation by Alvopetro that the data relating to
the 182-C1 well contained in this press release is necessarily
indicative of long-term performance or ultimate recovery. The
reader is cautioned not to unduly rely on such data as such data
may not be indicative of future performance of the well or of
expected production or operational results for Alvopetro in the
future.
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.sedar.com.
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.sedar.com. 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 (barrels of oil
equivalent). 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.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).
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,
|
|
|
|
2022
|
2021
|
Operating netback - $
per boe
|
|
|
53.94
|
28.52
|
Average realized price
- $ per boe
|
|
|
62.08
|
35.45
|
Operating netback
margin - %
|
|
|
87
|
80
|
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 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:
|
|
Three Months
Ended
March
31,
|
$ per
share
|
|
|
2022
|
2021
|
Per basic
share:
|
|
|
|
|
Cash flows from operating activities
|
|
|
0.25
|
0.13
|
Funds flow from operations
|
|
|
0.32
|
0.14
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
Cash flows from operating activities
|
|
|
0.23
|
0.13
|
Funds flow from operations
|
|
|
0.30
|
0.14
|
Capital Management Measures
Funds Flow from Operations
Funds flow from operations is a non-GAAP capital management
measure that includes all cash generated from operating activities
and is calculated before changes in non-cash working capital. 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
March
31
|
|
|
|
2022
|
2021
|
Cash flows from
operating activities
|
|
|
8,333
|
4,304
|
Add back changes in
non-cash working capital
|
|
|
2,571
|
452
|
Funds flow from
operations
|
|
|
10,904
|
4,756
|
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, and is calculated as
follows:
|
|
As at March
31,
|
|
|
2022
|
2021
|
Total current
assets
|
|
21,930
|
8,905
|
Total current
liabilities
|
|
(9,628)
|
(3,130)
|
Net working capital
surplus
|
|
12,302
|
5,775
|
Working Capital Net of Debt (Net Debt)
Working capital net of debt is computed as net working
capital surplus decreased by the carrying amount of the Credit
Facility. Working capital net of debt is used by management to
assess the Company's overall financial position. As of March 31, 2022, Alvopetro's net working capital
surplus exceeds the balance outstanding on the Credit Facility.
|
|
As at March
31,
|
|
|
2022
|
2021
|
Net working capital
surplus
|
|
12,302
|
5,775
|
Credit Facility,
balance outstanding
|
|
(5,045)
|
(13,029)
|
Working capital, net of
debt (net debt)
|
|
7,257
|
(7,254)
|
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.
"Average realized price - $/boe" is comprised of natural
gas, condensate and oil sales as determined in accordance with
IFRS, divided by the Company's total natural gas, condensate and
oil sales volumes (barrels of oil equivalent).
"Royalties per boe" is comprised of royalties, as
determined in accordance with IFRS, divided by the total natural
gas, condensate and oil sales volumes (barrels of oil
equivalent).
"Production expenses per boe" is comprised of production
expenses, as determined in accordance with IFRS, divided by the
total natural gas, condensate and oil sales volumes (barrels of oil
equivalent).
Forward-Looking Statements and Cautionary Language
This news release contains forward-looking information within
the meaning of applicable securities laws. The use of any of the
words "will", "expect", "intend" and other similar words or
expressions are intended to identify forward-looking information.
Forward‐looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A
number of factors could cause actual results to vary significantly
from the expectations discussed in the forward-looking statements.
These forward-looking statements reflect current assumptions and
expectations regarding future events. Accordingly, when relying on
forward-looking statements to make decisions, Alvopetro cautions
readers not to place undue reliance on these statements, as
forward-looking statements involve significant risks and
uncertainties. More particularly and without limitation, this news
release contains forward-looking information concerning the plans
relating to the Company's operational activities, potential natural
gas pay in the 182-C1 well, the expected natural gas price, gas
sales and gas deliveries under Alvopetro's long-term gas sales
agreement, exploration and development prospects of Alvopetro, the
expected timing of certain of Alvopetro's testing and operational
activities, future results from operations, and the Company's plans
for dividends in the future. The forward‐looking statements are
based on certain key expectations and assumptions made by
Alvopetro, including but not limited to equipment availability, the
timing of testing of the 182-C1 well and the results from such
testing, the timing of regulatory licenses and approvals, the
success of future drilling, completion, testing, recompletion and
development activities, the outlook for commodity markets and
ability to access capital markets, the impact of the COVID-19
pandemic and other significant worldwide events, the performance of
producing wells and reservoirs, well development and operating
performance, foreign exchange rates, general economic and business
conditions, weather and access to drilling locations, the
availability and cost of labour and services, environmental
regulation, including regulation relating to hydraulic fracturing
and stimulation, the ability to monetize hydrocarbons discovered,
the regulatory and legal environment and other risks associated
with oil and gas operations. The reader is cautioned that
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
incorrect. Actual results achieved during the forecast period will
vary from the information provided herein as a result of numerous
known and unknown risks and uncertainties and other factors. In
addition, the declaration, timing, amount and payment of future
dividends remain at the discretion of the Board of Directors.
Although Alvopetro believes that the expectations and assumptions
on which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking
information because Alvopetro can give no assurance that it will
prove to be correct. Readers are cautioned that the foregoing list
of factors is not exhaustive. Additional information on factors
that could affect the operations or financial results of Alvopetro
are included in our annual information form which may be accessed
on Alvopetro's SEDAR profile at www.sedar.com. The
forward-looking information contained in this news release is made
as of the date hereof and Alvopetro undertakes no obligation to
update publicly or revise any forward-looking information, whether
as a result of new information, future events or otherwise, unless
so required by applicable securities laws.
SOURCE Alvopetro Energy Ltd.