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Alvopetro Energy Ltd

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Alvopetro Announces Operational Update, Year-end 2017 Financial Results and Filing of Annual Information Form
Alvopetro Announces Operational Update, Year-end 2017 Financial Results and Filing of Annual Information Form

Canada NewsWire

CALGARY, March 20, 2018 /CNW/ - Alvopetro Energy Ltd. (TSX-V:ALV) announces our year-end 2017 financial results, the filing of our annual information form and provides an operational update.

Operational Update

In 2017, the National Agency of Petroleum, Natural Gas and Biofuels of Brazil ("ANP") was engaged to arbitrate the terms of the unitization of our Caburé natural gas field (the 197(2) and 198(A1) wells) with the adjacent resource owners. In January 2018, the ANP completed its technical review and determined the initial working interest share for each resource owner, allocating Alvopetro a 49.1% interest. The ANP is arbitrating the decision on Unit Operator and as necessary they will make the remaining determinations required to finalize the unitization, including the joint development plan and all related agreements.

In February 2018, we completed testing three separate intervals of our 183(1) well. The 183(1) well was originally drilled in 2014 to a total depth of 3,550 metres.  Over the six-hour and 34-hour test periods for the first and second intervals, the well flowed natural gas, on an unstimulated basis at an average rate of 240 Mcfpd (40 boepd) and 92 Mcfpd (15 boepd), respectively. During the second interval, 12 barrels of 61° API condensate was also recovered.  The third interval produced formation water and no material hydrocarbons.  We are analysing fluid composition and pressure data to predict productivity of this well on a stimulated basis.

Our near-term capital plan for 2018 is expected to be funded with existing cash balances on hand and includes:

  • Testing our 183(1) well, which was completed in February 2018 and, based on field cost estimates, a total of $0.8 million of costs were incurred;
  • Initial engineering and permitting work associated with the development of our Caburé natural gas field at an estimated cost of $0.3 million; and
  • Work in satisfaction of our commitment on Block 106, estimated at $0.3 million.

The Company will require financing to execute the full development of our Caburé field. Following completion of the unitization process and execution of a gas sales agreement, we expect to undertake a reserves evaluation of the field and initiate one or more financing alternatives to fund this development. 

Financial and Operating Highlights - Fourth Quarter 2017

  • We reported a net loss of $2.1 million in the fourth quarter, which included total impairment charges of $1.3 million as a result of impairments booked on our Mãe-da-lua field of $0.5 million and an additional $0.8 million on Blocks 169 and 255 and other E&E assets. Negative funds flow from operations improved to $0.8 million in the fourth quarter due to reduced G&A and E&E expenses.
  • Our production decreased to 17 bopd, a 39% decrease from the third quarter of 2017 as our Bom Lugar well was offline for much of the quarter due to a downhole pump failure. 
  • Capital expenditures of $0.4 million in the fourth quarter included capitalized G&A of $0.2 million, letter of credit ("LC") fees on our exploration work commitments and other recurring costs.
  • Our cash, restricted cash and working capital resources total $8.8 million, including cash and cash equivalents of $9.2 million.

Financial and Operating Highlights – Year-End 2017

  • Capital expenditures decreased to $5.4 million in 2017 compared to $8.4 million in 2016. During the year the Company drilled and tested the 198(A1) well and the 177(A1) well, incurring costs of $2.4 million and $1.1 million respectively. Additional capital expenditures included preliminary surveying and planning work on our Caburé gas field, capitalized G&A, LC fees and other recurring capital costs.
  • We reported a net loss of $7.1 million which included $3.7 million of impairment charges, due to the $2.4 million impairment recognized on Block 177 in the third quarter and the fourth quarter impairment of $1.3 million.

Summary of Q4 2017 and Year-End 2017 Results

The following table provides a summary of Alvopetro's financial and operating results for the periods noted. The audited 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. The summary of annual and quarterly results contained in this news release represents a comparison of the respective periods ended December 31, 2017 and December 31, 2016.

SELECTED QUARTERLY AND ANNUAL RESULTS


Three months ended
December 31,

Twelve months ended
December 31,


2017

2016

2017

2016

Financial





($000s, except where noted)





Oil sales

85

208

462

561

Net loss

(2,079)

(371)

(7,117)

(12,578)


Per share – basic and diluted ($)(1)

(0.02)

-

(0.08)

(0.15)

Funds flow from operations (2)

(775)

(1,006)

(3,254)

(4,695)


Per share – basic and diluted ($)(1)

(0.01)

(0.01)

(0.04)

(0.06)

Capital expenditures(3)

434

708

5,432

8,394

Total assets

68,715

77,052

68,715

77,052

Debt

-

-

-

-

Net working capital surplus (2) (4)

8,762

16,977

8,762

16,977

Common shares outstanding, end of year (000s)






Basic

85,167

85,167

85,167

85,167


Diluted (1)

91,706

92,041

91,706

92,041

Operations





Operating netback ($/bbl) (2)






Brent benchmark price

61.53

51.13

54.83

45.04


Discount

(6.48)

(8.82)

(6.36)

(8.64)


Sales price

55.05

42.31

48.47

36.40


Transportation expenses

(2.59)

(2.24)

(2.41)

(2.14)


Realized sales price

52.46

40.07

46.06

34.26


Royalties and production taxes

(6.48)

(4.48)

(5.35)

(3.83)


Production expenses

(112.05)

(34.58)

(86.45)

(74.82)


Operating netback

(66.07)

1.01

(45.74)

(44.39)

Average daily crude oil production (bopd)

17

53

26

42



Notes:


(1)

Consists of outstanding common shares and stock options of the Company.

(2)

Non-GAAP measure. See "Non-GAAP Measures" section within this news release.

(3)

Includes non-cash capital expenditures of $0.4 million in the twelve months ended December 31, 2017 (December 31, 2016 - $nil)

(4)

Includes current restricted cash of $0.1 million (December 31, 2016 - $0.1 million) and assets held for sale of $0.2 million (December 31, 2016 - $0.4 million).

 

Updated Corporate Presentation

Alvopetro's updated corporate presentation is available at: http://www.alvopetro.com/corporate-presentation.

Annual Information Form

Alvopetro has filed its annual information form (AIF) with the Canadian securities regulators on SEDAR. The AIF includes the disclosure and reports relating to oil and gas reserves data and other oil and gas information required pursuant to National Instrument 51-101 of the Canadian Securities Administrators.  The AIF may be accessed electronically from at www.sedar.com.

Alvopetro Energy Ltd.'s vision is to become a leading independent oil and natural gas 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 the construction of strategic midstream infrastructure.  Our efforts in the near-term are concentrated on concurrently finalizing a long-term natural gas sales contract and a mandatory unitization process.

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.

Testing and Well Results.  Data obtained from the 183(1) well identified in this news release, including hydrocarbon shows, open-hole logging, net pay, porosities, and testing data should be considered preliminary until detailed pressure transient 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 183(1) well contained in this news 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.

Abbreviations:



m3

=

cubic metre

m3/d

=

cubic metre per day

MMcf

=

million cubic feet

MMcfpd

=

million cubic feet per day

mmboe

=

million 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 (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.

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. More particularly and without limitation, this news release contains forward-looking information concerning exploration and development prospects of Alvopetro and the expected timing and outcomes of certain of Alvopetro's testing and operational activities. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to regulatory requirements including the completion of the unitization of certain fields, securing gas sales agreements, the timing of regulatory licenses and approvals, the success of future drilling, completion, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the performance of producing wells and reservoirs, well development and operating performance, 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.  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 these and other factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed through the SEDAR website 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.

View original content: http://www.newswire.ca/en/releases/archive/March2018/20/c8122.html

Corey C. Ruttan, President, Chief Executive Officer and Director; or Alison Howard, Chief Financial Officer, Phone: 587.794.4224, Email: info@alvopetro.com, www.alvopetro.com, TSX-V: ALVCopyright CNW Group 2018

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