U.S. Markets open in 7 hrs 20 mins

Alvopetro Announces Operational Update and First Quarter Financial and Operating Results

CALGARY , May 14, 2019 /CNW/ - Alvopetro Energy Ltd. (TSX-V: ALV; OTCQX: ALVOF) announces an operational update and our first quarter financial and operating results.

Operational Update

We continue to focus our efforts on the near-term development of our Caburé natural gas field. On May 10, 2019 , we received the environmental installation permits required to commence the construction of our strategic midstream infrastructure (100% Alvopetro) which underpins the commercialization of our Caburé natural gas field (49.1% Alvopetro).  This infrastructure includes an 11-kilometre transfer pipeline and the construction of a gas treatment facility (the "Facility").  All pipe for the transfer pipeline has already been shipped to the field staging area.  Our Facility is being constructed by Enerflex Ltd. whereby they will construct, own and operate the Facility.  Enerflex is responsible for all operations and maintenance of the Facility, and is warrantying the delivery schedule and on-stream performance of the Facility. Initial equipment for the Facility has been assembled, tested, and is ready for shipment to Brazil.  Civil construction at the Facility location has now commenced and Alvopetro expects to start natural gas deliveries from the Caburé field in early 2020.  Our natural gas will be sold under our long-term gas sales agreement with Bahiagas, the local distribution company for the state of Bahia.

We have received the permit to drill the 57(A1) well on Block 57. We expect to spud the well late in the second quarter, pending rig availability. Alvopetro received the environmental license for the stimulation of our 183-1 well, which will test initial deliverability of our Gomo natural gas project. We expect to complete this operation in the next three months, subject to equipment availability.

Financial and Operating Highlights – First Quarter of 2019

  • In the first quarter of 2019, we took delivery of all pipe for our 11-kilometre transfer pipeline to be built from the Caburé unit facilities to the gas treatment facility. Total capital expenditures of $1.2 million in the quarter included $0.9 million in respect of the Caburé pipeline and related work and an additional $0.2 million in capitalized G&A.
  • Our production was 14 bopd in the quarter and included an average of 3 bopd for our share of condensate sales from the Caburé unit. Early in the quarter the Company made the decision to permanently shut-in the producing well on the Bom Lugar field leading to lower production volumes compared to 2018; however, as a result of the associated personnel reductions and reduced workover and maintenance costs, our production expenses decreased 61% compared to both the first and fourth quarters of 2018.
  • We reported a net loss of $0.8 million in the quarter, primarily due to negative funds flow from operations of $0.6 million .
  • Cash and cash equivalents totaled $4.9 million as of March 31, 2019 .


Summary of Q1 2019 Financial and Operating Results

The following table provides a summary of Alvopetro's financial and operating results for the three months ended March 31, 2019 and March 31, 2018 . 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.

SELECTED QUARTERLY RESULTS


As at and Three Months Ended
March 31,


2019

2018

Financial



($000s, except where noted)



Oil and condensate sales

68

116

Net loss

(763)

(889)

Per share   – basic and diluted ($)(1)

(0.01)

(0.01)

Funds flow from operations (2)

(637)

(842)

Per share   – basic and diluted ($)(1)

(0.01)

(0.01)

Capital expenditures

1,249

1,276

Total assets

64,366

68,108

Cash and cash equivalents

4,868

7,542

Net working capital surplus (2)(3)

2,193

6,628

Common shares outstanding, end of year (000s)



Basic

96,593

85,167

Diluted (1)

107,450

91,706

Operations



Operating netback ($/bbl) (2)



Brent benchmark price

63.83

67.18

Discount

(10.87)

(5.18)

Sales price

52.96

62.00

Transportation expenses

-

(2.14)

Realized sales price

52.96

59.86

Royalties and production taxes

(7.01)

(6.95)

Production expenses

(73.21)

(126.14)

Operating netback

(27.26)

(73.23)

Average daily crude oil and condensate production (bopd)

14

21

(1)

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

(2)

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

(3)

Includes Other Liabilities of $2.3 million (March 31, 2018 - $nil) representing the payable to our partner on the Caburé natural gas field for joint unit development.  Alvopetro will reimburse our partner within 30 days of the earlier of March 31, 2020 or the commencement of production allocations. As Alvopetro anticipates commencement of gas production in early 2020, this balance was moved to current as of March 31, 2019.

 

Updated Corporate Presentation

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

Annual General Meeting

Alvopetro's Annual General Meeting will be held on Tuesday June 25, 2019 at the Eighth Avenue Place Conference Centre, Suite 410-B (Fourth Floor), 525 – 8th Avenue S.W., Calgary, Alberta Canada , beginning at 9:30 a.m. The Management Information Circular and all related meeting materials will be available on www.sedar.com later this month.

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 the construction of 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.

Non-GAAP Measures. This news release contains financial terms that are not considered measures under International Financial Reporting Standards ("IFRS"), such as funds flow from operations, funds flow per share, net working capital surplus and operating netback. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. Specifically, funds flow from operations and funds flow per share reflect cash generated from operating activities excluding changes in non-cash working capital. Management considers funds flow from operations and funds flow per share important as they help evaluate performance and demonstrate the Company's ability to generate sufficient cash to fund future growth opportunities. Net working capital surplus includes current assets less current liabilities and is used to evaluate the Company's financial resources. Operating netback is determined by dividing oil sales less royalties and production taxes, transportation and production expenses by sales volume of produced oil. Management considers operating netback important as it is a measure of profitability per barrel sold and reflects the economic quality of production. Funds flow from operations, funds flow per share, net working capital surplus and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations, net income or other measures of financial performance calculated in accordance with IFRS. 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" section of the Company's MD&A which may be accessed through the SEDAR website at www.sedar.com.

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  the expected timing and outcomes of certain of regulatory approvals and Alvopetro's operational activities and expected timing of commencement of gas sales under Alvopetro's long-term gas sales agreement. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to 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/May2019/14/c8237.html