Alvopetro Announces Record First Quarter 2022 Results, an Operational Update, Additional Debt Repayment, and Details of our Annual and Special Meeting
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 |
||||||
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 |
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 [email protected].
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.
Corey C. Ruttan, President, Chief Executive Officer and Director, or Alison Howard, Chief Financial Officer, Phone: 587.794.4224, Email: [email protected], www.alvopetro.com, TSX-V: ALV, OTCQX: ALVOF
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