CALGARY,
AB, Nov. 15, 2022 /CNW/ - Alvopetro
Energy Ltd. (TSXV:ALV); (OTCQX: ALVOF) is pleased to announce a 50%
increase in our quarterly dividend, to US$0.12 per common share, an intention to launch
a share buyback program under a normal course issuer bid ("NCIB")
and operating and financial results for the third quarter of 2022
including another record quarter of funds flow from operations of
$13.3 million. We will host a live
webcast to discuss Q3 2022 results on Wednesday November 16, 2022, beginning at
9:00 am Mountain time.
President & CEO, Corey C.
Ruttan commented:
"With continued strong operating and financial results, and
with our debt now fully repaid, we are pleased to announce a 50%
increase in our quarterly dividend following on the 33% increase
earlier this year. Our dividend program and the proposed NCIB will
provide us with maximum flexibility to meet our strategy to
maintain a balanced organic growth and stakeholder return
model."
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.
Quarterly Dividend Increased 50% to $0.12 per Share
Alvopetro is pleased to announce that our Board of Directors has
approved a 50% increase in our quarterly dividend, to $0.12 per common share, payable in cash
on January 13, 2023, to shareholders of record at the close of
business on December 30, 2022. This dividend is designated as
an "eligible dividend" for Canadian income tax purposes.
Dividend payments to non-residents of Canada will be
subject to withholding taxes at the Canadian statutory rate of
25%. Shareholders may be entitled to a reduced withholding
tax rate under a tax treaty between their country of residence and
Canada. For further information, see Alvopetro's website
at https://alvopetro.com/Dividends-Non-resident-Shareholders.
Normal Course Issuer Bid
In connection with our long-standing balanced and disciplined
stakeholder return and organic growth model, our Board has provided
approval to submit an application to launch a share buyback program
under a NCIB, subject to securities law and customary approvals.
Once approved, the NCIB, combined with our quarterly dividends,
will provide us with flexibility in managing our returns to
stakeholders.
Financial and Operating Highlights – Third Quarter of
2022
- Daily sales averaged 2,642 boepd in Q3 2022, a 7% increase from
the Q3 2021 average of 2,459 boepd and a 12% increase from the Q2
2022 average of 2,359 boepd. The expansion of our gas processing
facility was completed at the end of July and available processing
capacity has now increased to 500,000 m3/d (18 MMcfpd) contributing
to higher volumes in the quarter.
- As of August 1, 2022, Alvopetro's
natural gas price has been reset to the new ceiling price of
$10.22/MMBtu. Due to the appreciation
of the BRL in the first half of 2022 compared to second half of
2021, the BRL contracted price remained consistent at BRL1.94/m3. With all natural gas sales in Q3 2022
at the ceiling price, our average realized natural gas price
increased to $11.18/Mcf compared to
the Q3 2021 average price of $7.07/Mcf. Higher commodity prices and higher
daily sales volumes resulted in a 67% increase in our natural gas,
condensate and oil revenue compared to Q3 2021.
- Our operating netback was $59.83
per boe in Q3 2022, an improvement of $23.45 per boe from Q3 2021 (+64%). Despite
consistent BRL denominated natural gas pricing, our operating
netback decreased $4.13 per boe from
Q2 2022 (-6%) due to the devaluation of the BRL relative to the USD
and lower Brent pricing on condensate.
- We generated cash flows from operating activities of
$13.8 million ($0.40 per basic share and $0.37 per diluted share) and funds flows from
operations of $13.3 million
($0.39 per basic share and
$0.36 per diluted share), increases
of $6.6 million and $5.4 million, respectively compared to Q3
2021.
- We reported net income of $8.8
million in Q3 2022 compared to a loss of $0.02 million in Q3 2021.
- Capital expenditures totaled $8.7
million, and included drilling costs for our 183-B1, 182-C2
and Unit-C wells, testing costs on our 182-C1 well, long lead
purchases and development costs on our Murucututu project.
- All outstanding warrants were exercised in the quarter, with
1,342,978 warrants exercised by way of cashless exercise and
1,342,978 warrants exercised at a strike price of $1.80 per share. Alvopetro received cash proceeds
of $2.4 million and issued a total of
2,081,616 common shares on the exercise.
- We repaid the final $2.5 million
outstanding on the credit facility and the facility has now been
cancelled. As at September 30, 2022,
we had a net working capital surplus of $12.2 million, including $17.4 million in cash and cash equivalents.
- Our October 2022 sales volumes
averaged 2,720 boepd based on field estimates, with natural gas
sales of 15.6MMcfpd and natural gas liquids from condensate of 124
bopd.
The following table provides a summary of Alvopetro's financial
and operating results for three and nine months ended September 30, 2022 and September 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
September
30,
|
As at and Nine
Months Ended
September
30,
|
|
2022
|
2021
|
Change (%)
|
2022
|
2021
|
Change (%)
|
Financial
|
|
|
|
|
|
|
($000s, except
where noted)
|
|
|
|
|
|
|
Natural gas, oil and
condensate sales
|
16,672
|
9,963
|
67
|
46,431
|
25,084
|
85
|
Net income
(loss)(1)
|
8,795
|
(20)
|
-
|
26,541
|
2,817
|
842
|
Per share – basic
($)(1)(2)
|
0.26
|
(0.00)
|
-
|
0.78
|
0.09
|
767
|
Per share – diluted
($)(1)(2)
|
0.24
|
(0.00)
|
-
|
0.72
|
0.08
|
800
|
Cash flow from
operating activities
|
13,838
|
7,234
|
91
|
35,168
|
17,203
|
104
|
Per share – basic
($)(2)
|
0.40
|
0.22
|
82
|
1.03
|
0.52
|
98
|
Per share – diluted
($)(2)
|
0.37
|
0.20
|
85
|
0.96
|
0.50
|
92
|
Funds flow from
operations(3)
|
13,348
|
7,930
|
68
|
36,686
|
18,157
|
102
|
Per share – basic
($)(2)
|
0.39
|
0.24
|
63
|
1.08
|
0.55
|
96
|
Per share – diluted
($)(2)
|
0.36
|
0.22
|
64
|
1.00
|
0.52
|
92
|
Dividends
declared
|
2,896
|
2,023
|
43
|
8,340
|
2,023
|
312
|
Per
share(2)
|
0.08
|
0.06
|
33
|
0.24
|
0.06
|
300
|
Capital
expenditures
|
8,713
|
1,261
|
591
|
18,851
|
3,043
|
519
|
Cash and cash
equivalents
|
17,380
|
8,084
|
115
|
17,380
|
8,084
|
115
|
Net working capital
surplus (3)
|
12,225
|
6,839
|
79
|
12,225
|
6,839
|
79
|
Working capital, net of
debt(3)
|
12,225
|
294
|
4,058
|
12,225
|
294
|
4,058
|
Weighted average shares
outstanding
|
|
|
|
|
|
|
Basic
(000s)(2)
|
34,434
|
32,923
|
5
|
34,107
|
32,860
|
4
|
Diluted
(000s)(2)
|
36,939
|
35,310
|
5
|
36,693
|
34,717
|
6
|
Operations
|
|
|
|
|
|
|
Natural gas, NGLs and
crude oil sales:
|
|
|
|
|
|
|
Natural gas
(Mcfpd)
|
15,139
|
14,102
|
7
|
14,344
|
13,365
|
7
|
NGLs – condensate (bopd)
|
117
|
107
|
9
|
104
|
103
|
1
|
Oil (bopd)
|
2
|
2
|
-
|
6
|
2
|
200
|
Total
(boepd)
|
2,642
|
2,459
|
7
|
2,501
|
2,333
|
7
|
|
|
|
|
|
|
|
Average realized
prices(3):
|
|
|
|
|
|
|
Natural gas ($/Mcf)
|
11.18
|
7.07
|
58
|
11.03
|
6.30
|
75
|
NGLs – condensate ($/bbl)
|
101.57
|
79.36
|
28
|
109.38
|
73.04
|
50
|
Oil ($/bbl)
|
80.92
|
61.11
|
32
|
83.59
|
60.06
|
39
|
Company
total ($/boe)
|
68.59
|
44.04
|
56
|
68.00
|
39.39
|
73
|
|
|
|
|
|
|
|
Operating netback
($/boe)(3)
|
|
|
|
|
|
|
Realized sales
price
|
68.59
|
44.04
|
56
|
68.00
|
39.39
|
73
|
Royalties
|
(5.42)
|
(4.02)
|
35
|
(5.05)
|
(3.39)
|
49
|
Production
expenses
|
(3.34)
|
(3.64)
|
(8)
|
(3.77)
|
(3.65)
|
3
|
Operating
netback
|
59.83
|
36.38
|
64
|
59.18
|
32.35
|
83
|
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 nine months ended September 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.
|
Third Quarter 2022 Results Webcast
Alvopetro will host a live webcast to discuss Q3 2022 financial
results at 9:00 am Mountain time on
November 16, 2022. Details for
joining the event are as follows:
Date: November 16,
2022
Time: 9:00 a.m.
Mountain/11:00 a.m. Eastern
Link: https://us06web.zoom.us/j/83084021752
Dial-in Numbers: https://us06web.zoom.us/u/kgefFrJiJ
Webinar ID: 830 8402 1752
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.
Long-term Incentive Compensation Grants
In connection with our long-term incentive compensation program,
Alvopetro's Board of Directors (the "Board") has approved the
annual rolling grants to officers, directors and certain employees
under Alvopetro's Omnibus Incentive Plan. A total of
536,000 stock options, 122,000 restricted share units ("RSUs")
and 40,000 deferred share units ("DSUs") were approved by the
Board and are expected to be granted on November 24, 2022. Of the total grants, 248,000
stock options, 101,000 RSUs and 40,000 DSUs were granted to
directors and officers. Each stock option, RSU and DSU entitles the
holder to purchase one common share. Each stock option granted will
have an exercise price based on the volume weighted average trading
price of Alvopetro's shares on the TSX Venture Exchange for the
five (5) consecutive trading days up to and including November 24, 2022. All stock options, RSUs and
DSUs granted expire five (5) years from the date of the grant.
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.
Abbreviations:
bbls
|
=
|
barrels
|
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
|
Q2
2022
|
=
|
three months ended June
30, 2022
|
Q3 2021
|
=
|
three months ended
September 30, 2021
|
Q3 2022
|
=
|
three months ended
September 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
September
30,
|
Nine Months
Ended
September
30,
|
|
2022
|
2021
|
2022
|
2021
|
Operating netback - $
per boe
|
59.83
|
36.38
|
59.18
|
32.35
|
Average realized price
- $ per boe
|
68.59
|
44.04
|
68.00
|
39.39
|
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
September
30,
|
Nine Months
Ended
September
30,
|
$ per
share
|
2022
|
2021
|
2022
|
2021
|
Per basic
share:
|
|
|
|
|
Cash flows from
operating activities
|
0.40
|
0.22
|
1.03
|
0.52
|
Funds flow from
operations
|
0.39
|
0.24
|
0.96
|
0.55
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
Cash flows from
operating activities
|
0.37
|
0.20
|
1.08
|
0.50
|
Funds flow from
operations
|
0.36
|
0.22
|
1.00
|
0.52
|
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
September
30,
|
Nine Months
Ended
September
30,
|
|
2022
|
2021
|
2022
|
2021
|
Cash flows from
operating activities
|
13,838
|
7,234
|
35,168
|
17,203
|
Add back changes in
non-cash working capital
|
(490)
|
696
|
1,518
|
954
|
Funds flow from
operations
|
13,348
|
7,930
|
36,686
|
18,157
|
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 September
30,
|
|
|
2022
|
2021
|
Total current
assets
|
|
24,545
|
13,201
|
Total current
liabilities
|
|
(12,320)
|
(6,362)
|
Net working capital
surplus
|
|
12,225
|
6,839
|
Working Capital Net of 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 at September
30,
|
|
|
2022
|
2021
|
Net working capital
surplus
|
|
12,225
|
6,839
|
Credit Facility,
balance outstanding
|
|
-
|
(6,545)
|
Working capital, net of
debt
|
|
12,225
|
294
|
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
Company's dividend policy, plans for dividends in the future, and
the timing and taxation of such dividends, the Company's intention
to proceed with an NCIB, 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. Forward-looking statements are
necessarily based upon assumptions and judgments with respect to
the future including, but not limited to, expected approvals and
timing thereof with respect to an NCIB, equipment availability, the
timing and results of testing the 183-B1 well, the 182-C2 well and
the Unit C well, the success of future drilling, completion,
recompletion and development activities, foreign exchange rates,
expectations regarding Alvopetro's working interest and the outcome
of any redeterminations, the outlook for commodity markets and
ability to access capital markets, the impact of the COVID-19
pandemic, the performance of producing wells and reservoirs, well
development and operating performance, the timing of regulatory
licenses and approvals, general economic and business
conditions, forecasted demand for oil and natural gas, 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.