Alvopetro Energy Ltd. announces January 2025 sales volumes of 2,457 boepd, including natural gas sales of 13.8 MMcfpd, associated natural gas liquids sales from condensate of 141 bopd and oil sales of 18 bopd, based on field estimates. This represents a 41% increase from Q4 2024.
Quarterly Natural Gas Price Update
As announced on December 17, 2024, our updated long-term gas sales agreement came into effect on January 1, 2025 increasing Alvopetro's contracted firm volumes starting January 1, 2025 by 33% up to 400 e3m3/d. The updated natural gas pricing model is recalculated quarterly based on Brent oil equivalent prices and Henry Hub natural gas prices resulting in quicker adjustments for commodity price and foreign exchange rate fluctuations. Effective February 1, 2025, our natural gas price under our long-term gas sales agreement with Bahiagás has been adjusted to BRL1.95/m3, a 6.5% increase from the January 2025 price of BRL1.83 and consistent with the Q4 2024 price of BRL1.94/m3. All natural gas sales from February 1, 2025 to April 30, 2025 will be sold at BRL1.95/m3 ($10.55/Mcf, based on average heat content to date, the January 31, 2025 BRL/USD exchange rate of 5.83, net of expected sales taxes applicable).
Operational Update
In the fourth quarter we attempted an optimization project on our 183-B1 well on Block 183 which was originally drilled and tested in 2022. The plan included sidetracking from the existing wellbore and re-entering the Sergi Formation horizontally. Unfortunately, we encountered challenges during the project that resulted in the loss of the bottom hole assembly and the abandonment of the operation with costs totalling approximately $4.0 million.
On our Murucututu field, based off the successful recompletion of our 183-A3 well in the third quarter we plan to spud 183-D4 location this week. The 183-D4 location is targeting the Caruaçu Member approximately 110 metres up-dip of the 183-A3 location. This location also has an uphole exploratory target in the Marfin Formation. We expect to announce results from the 183-D4 well near the end of the first quarter.
Following this Murucututu well, we plan to drill and complete five development wells at our Caburé Unit as part of the agreed development plan with our partner. During the month of January, we also completed the commissioning phase of our recently installed compression system at Caburé increasing our productive capacity from the Unit.
Strategic Entry into Western Canadian Growth Opportunity
Alvopetro has been pursuing additional growth opportunities to complement our existing asset base to continue our disciplined capital allocation model where we look to reinvest approximately half our cash flow into organic growth and return the other half to stakeholders. The Western Canadian Sedimentary Basin ("WCSB") offers high-quality assets with large resources in place with access to a high-quality service industry, and leading-edge technology deployment. With our past experiences and our headquarters in Calgary, we are well positioned to create a complementary growth platform with the opportunity to deliver attractive returns for shareholders.
Initial Focus Area - Mannville Heavy Oil Fairway
The Mannville multi-zone heavy oil fairway targets the Colony, McLaren, Waseca, Sparky, GP, Rex, Lloydminster, and Cummings formations containing a large amount of original oil in place and providing attractive economics through the application of multilateral drilling and other technologies.
Farmin – Partner with Proven Track Record
Alvopetro is partnering with Durham Creek Energy Ltd., an established operator with a proven track record. Alvopetro has agreed to fund 100% of two earning wells at an estimated total cost of C$4.5 million in exchange for a 50% working interest in 19.13 sections (12,243 acres) of land in western Saskatchewan. With success, the land position could support upwards of 100 development drilling locations.
President & CEO, Corey C. Ruttan commented:
"Alvopetro's strong financial position and cash flows from operations help position the Company to maximize shareholder returns from our combined asset base. With exposure to projects in Brazil and now also in Canada, it allows us to allocate capital across a growing inventory of high rate of return opportunities and to continue our disciplined capital allocation model."
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation.
