Alvopetro Announces August Production

Source: www.gulfoilandgas.com 9/8/2020, Location: South America

Alvopetro Energy Ltd. announces August natural gas sales from our Caburé Project under our long-term Gas Sales Agreement ("GSA") with Bahiagás and a prospective resource assessment and evaluation of natural gas associated with our planned 2021 exploration drilling program.

In August, daily sales averaged 10.6 mmcfpd (301 103m3/d), with associated condensate sales of 96 barrels per day for combined total sales of 1,867 boepd. At the current rate of production, we expect to generate approximately US$24.5 million of EBITDA by the end of 2021 allowing us to focus on returning capital to our stakeholders, and on our next phase of growth.

Future Growth
We plan to continue the evaluation of the Gomo tight gas deliverability at our 183-1 wellbore by completing an optimized production test in the second half of 2020. This test involves the installation of a plunger lift to remove the completion fluid from the wellbore, designed to properly test and forecast expected longer-term productivity of the well. Concurrently, we plan to complete the permitting process for an 8-kilometre flowline to connect the 183-1 well to our Caburé Transfer Pipeline. The investment decision on the Gomo pipeline is contingent on the results of the production test.

In the fourth quarter of 2020, we expect to commence civil work on our 182-C1 and 183-B1 natural gas exploration prospects located 9-kilometres north of our Gas Treatment Plant. We plan to fund these wells from free cash flow, and to commence drilling in the first half of 2021. We recently completed an independent prospective resource assessment of these prospects as summarized below. Both prospects target the prolific Agua Grande Formation as the primary target, and the Sergi Formation as the secondary target. Nearly 60% of the production in the Recôncavo Basin comes from these two formations.

Corey Ruttan, President and CEO commented "When compared to our year-end Caburé proved plus probable reserves of 6.2 mmboe, each of these two natural gas prospects has the potential to materially increase our production and reserves, and can be a key step in achieving our medium-term goal to maximize utilization of our Gas Plant to its design capacity of 18.0 mmcfpd."

Our strategy is to balance stakeholder returns with the reinvestment of cash flows in the upstream part of our business and other new business development initiatives to maximize the utilization through our Gas Treatment Plant and Gas Sales Agreement.

Prospective Resource Summary
The resource data set forth in this news release is based upon an independent prospective resource assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated September 4, 2020, with an effective date of July 31, 2020 (the "GLJ Prospective Resource Report"). The GLJ Prospective Resource Report was prepared in accordance with the Canadian Oil and Gas Evaluation ("COGE") Handbook and National Instrument 51-101 of the Canadian Securities Administrators ("NI 51-101").


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