President & CEO, Corey C. Ruttan commented:
“In 2024 we increased our productive capacity at Caburé and, with our recent success at Murucututu, this has allowed us to commit to a higher level of base committed firm sales volumes starting in 2025 further strengthening our disciplined capital allocation model, balancing returns to stakeholders and organic growth.”
November Sales Volumes
November sales volumes averaged 1,465 boepd including natural gas sales of 8.1 MMcfpd, associated natural gas liquids sales from condensate of 110 bopd and oil sales of 9 bopd, based on field estimates. Our November sales were impacted by reduced demand in the state of Bahia resulting mainly from facility turnarounds. During this period Alvopetro also shut in all production for a 2-day period to complete mandatory turnaround and inspection works at all facilities. Based on field estimates, natural gas sales volumes to-date in December have averaged 11.6 MMcfpd.
Our Murucututu sales volumes accounted for 28% of November natural gas sales. Murucututu production in November was entirely from our 183-A3 well which was being prioritized and continues to perform well above expectations.
Bahiagas Sales Agreement Update
Alvopetro and Bahiagás have agreed to update our long-term gas sales agreement to increase Alvopetro’s share of Bahiagas’ supply and better align the contract with prevailing market conditions, highlighted as follows:
The contracted firm volumes would be satisfied with delivered natural gas sales of 371 e3m3/d (13.1 MMcfpd)(1). At this sales level and including expected natural gas liquids (condensate) yields our 2025 sales volumes would average approximately 2,310 boepd, a 28% increase from forecast 2024 sales. Using currently forecast commodity prices in the futures markets, a constant foreign exchange rate of 6.05BRL:1USD, 2.2% US inflation, 4.1% Brazilian inflation and our average heat content, our natural gas price is forecast to average $10.37/Mcf in 2025. This is approximately 2.5% lower than what would be forecast under our previous natural gas pricing model.
(1) The 2025 firm volume of 400 e3m3/d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Note that Alvopetro’s reported natural gas sales volumes are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro’s natural gas is approximately 7.8% hotter than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e3m3/d (13.1MMcfpd).
Q4 2024 Dividend
Our Board of Directors has declared a quarterly dividend of US$0.09 per common share, payable in cash on January 15, 2025, to shareholders of record at the close of business on December 31, 2024. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
Corporate Presentation
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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 and Murucututu natural gas assets 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
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 (6Mcf/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 news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Well Results. There is no representation by Alvopetro that the information contained in this press release with respect to production data from the 183-A3 well 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.
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