CALGARY,
AB, Aug. 11, 2022 /CNW/ - Alvopetro Energy
Ltd. (TSXV: ALV) (OTCQX: ALVOF) announces operating and financial
results for the second quarter of 2022 including record funds flow
from operations of $12.4 million. We
will host a live webcast to discuss Q2 2022 results on Friday August 12, 2022 beginning at 8:00 am Mountain time.
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.
Financial and Operating Highlights – Second Quarter of
2022
- Daily sales averaged 2,359 boepd in Q2 2022, consistent with
the Q2 2021 average of 2,361 boepd and a 6% reduction from the Q1
2022 average of 2,501 boepd as a result of a planned five-day
shut-down of our gas processing facility to complete necessary work
in advance of the facility expansion.
- 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 all
natural gas sales in Q2 2022 at this higher price and an
appreciation of the BRL relative to the USD compared to Q2 2021,
our average realized natural gas price increased to $11.90/Mcf compared to the Q2 2021 average price
of $6.06/Mcf and the Q1 2022 average
price of $10.03/Mcf. Higher commodity
prices resulted in a 93% increase in our natural gas, condensate
and oil revenue compared to Q2 2021.
- With higher realized sales prices, our operating netback
increased to $63.96 per boe in Q2
2022, an improvement of 103% from Q2 2021 and 19% from Q1
2022.
- We generated cash flows from operating activities of
$13.0 million ($0.38 per basic share and $0.35 per diluted share) and funds flows from
operations of $12.4 million
($0.37 per basic share and
$0.34 per diluted share), increases
of $7.3 million and $7.0 million, respectively compared to Q2
2021.
- We reported net income of $6.6
million, an increase of $2.8
million compared to Q2 2021.
- Capital expenditures totaled $6.3
million, focused on drilling costs for our 182-C1 and 183-B1
wells, long lead purchases, final costs for our Murucututu field
production facility installation on other development costs on our
Murucututu project.
- We repaid an additional $2.5
million of our credit facility, bringing the balance
outstanding to $2.5 million. As at
June 30, 2022, we had a net working
capital surplus of $11.6 million,
including $13.7 million in cash and
cash equivalents. The Company's working capital net of our credit
facility balance improved to $9.1
million, compared to $7.3
million as of March 31,
2022.
- Effective August 1, 2022 our
natural gas price has been set at BRL1.94/m3 or $11.28/Mcf (based on our average heat content to
date of 107% and the July 31, 2022
BRL/USD foreign exchange rate of 5.19). The adjusted price is based
on the ceiling price in the contract, which was adjusted to
$10.22/MMBtu effective August 1, 2022. While the ceiling price increased
by 6% from the February 1, 2022
ceiling price, due to the appreciation of the BRL relative to the
USD in the first half of 2022 compared to the latter half of 2021,
the BRL denominated contractual price remained consistent. This
price will be effective for all natural gas sales from August 1, 2022 to January
31, 2023.
The following table provides a summary of Alvopetro's financial
and operating results for three and six months ended June 30, 2022 and June 30,
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 June
30,
|
As at and Six
Months Ended June
30,
|
|
2022
|
2021
|
Change (%)
|
2022
|
2021
|
Change (%)
|
Financial
|
|
|
|
|
|
|
($000s, except
where noted)
|
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
15,787
|
8,182
|
93
|
29,759
|
15,121
|
97
|
Net income –
restated(1)
|
6,631
|
3,784
|
75
|
17,746
|
2,837
|
526
|
Per share – basic
restated ($)(1)(2)
|
0.20
|
0.11
|
82
|
0.52
|
0.09
|
478
|
Per share – diluted
restated ($)(1)(2)
|
0.18
|
0.11
|
64
|
0.49
|
0.08
|
513
|
Cash flow from
operating activities
|
12,997
|
5,665
|
129
|
21,330
|
9,969
|
114
|
Per share – basic
($)(2)
|
0.38
|
0.17
|
124
|
0.63
|
0.30
|
110
|
Per share – diluted
($)(2)
|
0.35
|
0.16
|
119
|
0.59
|
0.29
|
103
|
Funds flow from
operations (3)
|
12,434
|
5,471
|
127
|
23,338
|
10,227
|
128
|
Per share – basic
($)(2)
|
0.37
|
0.16
|
131
|
0.69
|
0.31
|
123
|
Per share – diluted
($)(2)
|
0.34
|
0.16
|
113
|
0.64
|
0.30
|
113
|
Dividends
declared
|
2,728
|
-
|
-
|
5,444
|
-
|
-
|
Per
share(2)
|
0.08
|
-
|
-
|
0.16
|
-
|
-
|
Capital
expenditures
|
6,338
|
918
|
590
|
10,138
|
1,782
|
469
|
Cash and cash
equivalents
|
13,672
|
4,249
|
222
|
13,672
|
4,249
|
222
|
Net working capital
surplus (3)
|
11,641
|
4,499
|
159
|
11,641
|
4,499
|
159
|
Working capital, net of
debt (net debt)(3)
|
9,096
|
(3,046)
|
-
|
9,096
|
(3,046)
|
-
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
Basic
(000s)(2)
|
33,973
|
33,265
|
2
|
33,941
|
33,250
|
2
|
Diluted
(000s)(2)
|
36,637
|
34,339
|
7
|
36,426
|
34,075
|
7
|
Operations
|
|
|
|
|
|
|
Natural gas, NGLs and
crude oil sales:
|
|
|
|
|
|
|
Natural gas
(Mcfpd)
|
13,546
|
13,512
|
-
|
13,940
|
12,991
|
7
|
NGLs – condensate (bopd)
|
97
|
105
|
(8)
|
98
|
101
|
(3)
|
Oil (bopd)
|
5
|
5
|
-
|
8
|
2
|
300
|
Total
(boepd)
|
2,359
|
2,361
|
-
|
2,429
|
2,269
|
7
|
|
|
|
|
|
|
|
Average realized
prices(3):
|
|
|
|
|
|
|
Natural gas ($/Mcf)
|
11.90
|
6.06
|
96
|
10.94
|
5.88
|
86
|
NGL – condensate ($/bbl)
|
121.93
|
74.47
|
64
|
114.11
|
69.65
|
64
|
Oil ($/bbl)
|
94.47
|
59.63
|
58
|
83.90
|
59.63
|
41
|
Company
total ($/boe)
|
73.54
|
38.08
|
93
|
67.68
|
36.82
|
84
|
|
|
|
|
|
|
|
Operating netback
($/boe)(3)
|
|
|
|
|
|
|
Realized sales
price
|
73.54
|
38.08
|
93
|
67.68
|
36.82
|
84
|
Royalties
|
(5.35)
|
(2.82)
|
90
|
(4.84)
|
(3.05)
|
59
|
Production
expenses
|
(4.23)
|
(3.68)
|
15
|
(4.00)
|
(3.66)
|
9
|
Operating
netback
|
63.96
|
31.58
|
103
|
58.84
|
30.11
|
95
|
Operating netback
margin(3)
|
87 %
|
83 %
|
5
|
87 %
|
82 %
|
6
|
|
Notes:
|
(1)
|
The 2021 comparative
periods in the table above have been restated. See "Restatement of
the 2021 Comparative Period" section within the MD&A and Note
14 of the unaudited interim condensed consolidated financial
statements for the three and six months ended June 30, 2022 for
further details.
|
(2)
|
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.
|
(3)
|
See "Non-GAAP and
Other Financial Measures" section within this news
release.
|
Second Quarter 2022 Results
Webcast
Alvopetro will host a live webcast to discuss Q2 2022 financial
results at 8:00 am Mountain time on
August 12, 2022. Details for joining
the event are as follows:
Date: August 12,
2022
Time: 8:00 AM
Mountain/10:00 AM Eastern
Link: https://us06web.zoom.us/j/89887067576
Dial-in Numbers: https://us06web.zoom.us/u/kSVhrrkB0
Webinar ID: 898 8706 7576
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.
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 2022
|
=
|
three months ended
March 31, 2022
|
Q2 2021
|
=
|
three months ended June
30, 2021
|
Q2 2022
|
=
|
three months ended June
30, 2022
|
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 June
30,
|
Six Months
Ended June
30,
|
|
2022
|
2021
|
2022
|
2021
|
Operating netback - $
per boe
|
63.96
|
31.58
|
58.84
|
30.11
|
Average realized price
- $ per boe
|
73.54
|
38.08
|
67.68
|
36.82
|
Operating netback
margin
|
87 %
|
83 %
|
87 %
|
82 %
|
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 June
30,
|
Six Months
Ended June
30,
|
$ per
share
|
2022
|
2021
|
2022
|
2021
|
Per basic
share:
|
|
|
|
|
Cash flows from
operating activities
|
0.38
|
0.17
|
0.63
|
0.30
|
Funds flow from
operations
|
0.37
|
0.16
|
0.69
|
0.31
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
Cash flows from
operating activities
|
0.35
|
0.16
|
0.58
|
0.29
|
Funds flow from
operations
|
0.34
|
0.16
|
0.64
|
0.30
|
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 June
30,
|
Six Months
Ended June
30,
|
|
2022
|
2021
|
2022
|
2021
|
Cash flows from
operating activities
|
12,997
|
5,665
|
21,330
|
9,969
|
Add back changes in
non-cash working capital
|
(563)
|
(194)
|
2,008
|
258
|
Funds flow from
operations
|
12,434
|
5,471
|
23,338
|
10,227
|
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 June
30,
|
|
|
2022
|
2021
|
Total current
assets
|
|
21,461
|
8,413
|
Total current
liabilities
|
|
(9,820)
|
(3,914)
|
Net working capital
surplus
|
|
11,641
|
4,499
|
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 June 30, 2022, Alvopetro's net working capital
surplus exceeds the balance outstanding on the Credit Facility.
|
|
|
|
|
As at June
30,
|
|
|
2022
|
2021
|
Net working capital
surplus
|
|
11,641
|
4,499
|
Credit Facility,
balance outstanding
|
|
(2,545)
|
(7,545)
|
Working capital, net of
debt (net debt)
|
|
9,096
|
(3,046)
|
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).
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 (6 Mcf/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 MD&A are derived from converting gas to oil
in the ratio mix of six thousand cubic feet of gas to one barrel of
oil.
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, 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 and the 183-B1 wells 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 restated
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.