CALGARY, AB, March 8, 2022 /CNW/ - Alvopetro Energy Ltd.
(TSXV:ALV) (OTCQX: ALVOF) announces our reserves as at December 31, 2021 with total proved plus probable
("2P") reserves of 8.7 mmboe and a before tax net present value
discounted at 10% of $297.0
million. The before tax net present value of our 2P
reserves (discounted at 10%) increased by 52% from December 31, 2020, primarily due to increases in
forecasted natural gas prices. 2P reserve volumes decreased by 9%
due to 2021 production. In addition, Alvopetro announces the
December 31, 2021 assessment of the
Company's Murucututu natural gas resource (previously referred to
as the Gomo natural gas resource) with risked best estimate
contingent resource of 3.5 mmboe and risked best estimate
prospective resource of 12.1 mmboe, both of which are virtually
unchanged from December 31, 2020.
The Murucututu natural gas contingent and prospective
resource values (risked best estimate net present value before tax,
discounted at 10%) increased by 61% to $60.7
million and by 44% to $208.7
million, respectively. The reserves and resources data
set forth herein is based on an independent reserves and resources
assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated
March 7, 2022 with an effective date
of December 31, 2021 (the "GLJ
Reserves and Resources Report").
All references herein to $ refer to United
States dollars, unless otherwise stated.
December 31, 2021 GLJ Reserves and
Resource Report Highlights
- 2P net present value before tax discounted at 10% increased 52%
to $297.0 million primarily due to
higher forecasted commodity prices.
- Proved reserves ("1P") and 2P reserves decreased to 4.4 mmboe
(-13%) and 8.7 mmboe (-9%) respectively, due to 2021 production
volumes.
- This represents a 2P Net Asset Value of CAD$11.20/share ($8.77/share).
- Risked best estimate contingent and risked best estimate
prospective resource of 3.5 mmboe and 12.1 mmboe, respectively were
consistent with prior year with an increase of 61% and 44%
respectively on risked best estimate before tax net present value
discounted at 10%, due primarily to higher forecasted commodity
prices.
Corey Ruttan, President and
Chief Executive Officer, commented:
"Our 2021 year-end reserves and resource evaluations highlight
the strong profitability from our Caburé natural gas field and the
long-term potential of our Murucututu project. The increase in
forecasted cash flows reflects the impact of global commodity
prices on our forecasted natural gas prices under our long-term gas
sales agreement and our most recent price increase effective
February 1, 2022. Our 2022 capital
program is focused on natural gas exploration and development aimed
at expanding our production and reserve base and maximizing the
utilization of our strategic midstream infrastructure that is
concurrently being expanded to a capacity of at least 500,000 m3/d
(17.7 mmcfpd)."
SUMMARY
December 31, 2021 Gross Reserve
and Gross Resource
Volumes: (1)(5)(6)(7)(8)(9)(10)(11)(14)
|
|
|
|
December 31, 2021
Reserves (Gross)
|
Total
Proved (1P)
|
Total Proved
plus
Probable (2P)
|
Total Proved
plus
Probable plus Possible (3P)
|
|
(Mboe)
|
(Mboe)
|
(Mboe)
|
Caburé
Property
|
3,224
|
5,141
|
6,796
|
Murucututu
Property
|
1,024
|
3,286
|
5,974
|
Other
Properties
|
173
|
310
|
606
|
Total Company
Reserves
|
4,421
|
8,737
|
13,376
|
See 'Footnotes'
section at the end of this news release
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021
Murucututu Resources (Gross)
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
|
(Mboe)
|
(Mboe)
|
(Mboe)
|
Risked Contingent
Resource
Risked Prospective
Resource
|
2,715
6,555
|
3,465
12,127
|
5,697
17,937
|
See 'Footnotes'
section at the end of this news release
|
Net present value before tax discounted at
10%:(2)(5)(6)(7)(8)(9)(10)(11)(12)(13)
|
|
|
|
Reserves
|
1P
|
2P
|
3P
|
|
(MUS)
|
(MUS)
|
(MUS)
|
Caburé
Property
|
150,414
|
216,859
|
265,483
|
Murucututu
Property
|
20,239
|
72,307
|
135,821
|
Other
Properties
|
3,107
|
7,833
|
15,418
|
Total
Company
|
173,759
|
297,000
|
416,723
|
See 'Footnotes'
section at the end of this news release
|
|
|
|
|
|
|
|
|
|
|
|
Murucututu
Resource
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
|
(MUS)
|
(MUS)
|
(MUS)
|
Risked Contingent
Resource
Risked Prospective
Resource
|
48,505
100,348
|
60,669
208,677
|
108,043
312,055
|
See 'Footnotes'
section at the end of this news release
|
NET ASSET VALUE
Following the December 31, 2021
reserves evaluation, based on the before tax net present value of
Alvopetro's 2P reserves (discounted at 10%), our total net asset
value is $297.3 million; CAD$11.20 per common share outstanding. Our
2P net asset value of $297.3 million
is before including the before tax net present value (discounted at
10%) of our risked best estimate risked contingent resource of
$60.7 million and our risked
prospective resource of $208.7
million from the Murucututu natural gas field.
|
|
|
|
Net Asset Value
(in MUS, other than per share amounts)
|
1P
|
2P
|
3P
|
Before Tax Net
Present Value, discounted at 10% (MUS)
|
173,759
|
297,000
|
416,723
|
Working capital net of
debt – as at September 30, 2021(a)(b)
|
294
|
294
|
294
|
Total Net Asset
Value(b),(c)(d)
|
174,053
|
297,294
|
417,017
|
CAD per
basic share(e)
|
6.56
|
11.20
|
15.71
|
a)
|
Working capital net
of debt is computed as the Company's net working capital the
carrying amount of the Company's Credit Facility, decreased by net
working capital surplus, as of September 30, 2021.
|
b)
|
Non-GAAP measure. See
'Non-GAAP Measures' in this news release.
|
c)
|
Alvopetro has
reflected the contractual obligations pursuant to our September
2018 Gas Treatment Agreement with Enerflex, including the equipment
rental component of the agreement which is treated as a right of
use asset and reflected as a capital lease obligation on our
financial statements. As the future capital lease payments reduce
the forecasted future net revenue in all reserves categories, the
capital lease obligation as reflected on the Company's financial
statements has not been included in the table above.
|
d)
|
The net asset value
reflected above includes the present value of before tax cash flows
from the Company's reserves only. No amounts have been included
with respect to contingent or prospective resource
volumes.
|
e)
|
Converted to Canadian
dollars ("CAD") based on the exchange rate on March 7, 2022. The
per share calculation is computed based on 33.9 million common
shares outstanding as of March 7, 2022.
|
PRICING ASSUMPTIONS – FORECAST PRICES AND COSTS
GLJ employed the following pricing and inflation rate
assumptions as of January 1, 2022 in
the GLJ Reserves and Resources Report in estimating reserves
and resources data using forecast prices and costs.
Year
|
Brent Blend
Crude Oil FOB
North Sea
($/Bbl)
|
National
Balancing Point
(UK) ($/mmbtu)
|
NYMEX Henry
Hub
Near Month
Contract ($/mmbtu)
|
Alvopetro-Bahiagas
Gas Contract $/mmbtu (Current Year)
|
Alvopetro-Bahiagas
Gas Contract $/mmbtu (Previous Year)
|
Change from
prior
year
|
2022
|
76.00
|
20.75
|
3.80
|
9.51
|
6.40
|
49%
|
2023
|
72.51
|
12.00
|
3.50
|
10.09
|
6.65
|
52%
|
2024
|
71.24
|
8.50
|
3.15
|
9.86
|
6.89
|
43%
|
2025
|
72.66
|
8.67
|
3.21
|
9.00
|
7.14
|
26%
|
2026
|
74.12
|
8.84
|
3.28
|
8.89
|
7.31
|
22%
|
2027
|
75.59
|
9.02
|
3.34
|
8.99
|
7.45
|
21%
|
2028
|
77.11
|
9.20
|
3.41
|
9.15
|
7.59
|
21%
|
2029
|
78.66
|
9.39
|
3.48
|
9.33
|
7.74
|
21%
|
2030
|
80.22
|
9.57
|
3.55
|
9.52
|
7.90
|
21%
|
2031*
|
81.83
|
9.76
|
3.62
|
9.71
|
8.06
|
20%
|
*Escalated at 2%
per year thereafter
|
As of February 1, 2022,
Alvopetro's contracted natural gas price under the terms of our
long-term gas sales agreement is based on the ceiling price within
the contract and is forecasted to remain at the ceiling price until
2024. The forecasted prices in the GLJ Reserves and Resource Report
do not reflect the most recent increase in global commodity prices
which further extends the period under which Alvopetro's contracted
price will be at the ceiling in the contract. The ceiling
price incorporates assumed US inflation of 5% in 2022, 3% in 2023
and 2% thereafter.
GLJ RESERVES AND RESOURCES REPORT
The GLJ Reserves and Resources Report has been prepared in
accordance with the standards contained in the Canadian Oil and Gas
Evaluation Handbook ("COGEH") that are consistent with the
standards of National Instrument 51-101 ("NI 51-101"). GLJ is a
qualified reserves evaluator as defined in NI 51-101. The GLJ
Reserves and Resources Report was an evaluation of all reserves of
Alvopetro including our Caburé and Caburé Leste natural gas fields
(collectively referred to as our Caburé natural gas field), our
Murucututu natural gas project (previously referred to as Gomo), as
well as our Bom Lugar and Mãe-da-lua oil fields. The GLJ
Reserves and Resources Report also includes an evaluation of the
gas resources of our Murucututu natural gas. In addition to
the reserves assigned to our two existing Murucututu wells (197-1
and 183-1) and two additional development locations, contingent
resource was assigned to the area in proximity to our existing
Murucututu reserves, deemed to be discovered. The area mapped
by 3D seismic west and north of the area defined as contingent was
assigned prospective resource. Additional reserves and resources
information as required under NI 51-101 will be included in the
Company's Annual Information Form for the 2021 fiscal year which
will be filed on SEDAR by April 30,
2022.
December 31, 2021 Reserves
Information:
Summary of Reserves
(1)(3)(4)(5)(7)(8)
|
|
|
|
|
|
Light & Medium
Oil
|
Residue
Gas
|
Natural Gas
Liquids
|
Oil
Equivalent
|
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
Company
Gross
|
Company
Net
|
|
(Mbbl)
|
(Mbbl)
|
(MMcf)
|
(MMcf)
|
(Mbbl)
|
(Mbbl)
|
(Mboe)
|
(Mboe)
|
Proved
|
|
|
|
|
|
|
|
|
|
Producing
|
0
|
0
|
18,267
|
17,287
|
180
|
171
|
3,224
|
3,052
|
|
Developed
Non-Producing
|
26
|
23
|
2,095
|
1,953
|
52
|
48
|
427
|
397
|
|
Undeveloped
|
147
|
138
|
3,254
|
3,012
|
80
|
74
|
770
|
714
|
Total
Proved
|
173
|
161
|
23,616
|
22,252
|
312
|
294
|
4,421
|
4,163
|
Probable
|
137
|
128
|
22,731
|
21,331
|
390
|
365
|
4,316
|
4,048
|
Total Proved plus
Probable
|
310
|
289
|
46,347
|
43,583
|
702
|
659
|
8,737
|
8,212
|
Possible
|
296
|
277
|
23,401
|
21,866
|
443
|
413
|
4,639
|
4,334
|
Total Proved plus
Probable plus Possible
|
606
|
565
|
69,748
|
65,448
|
1,146
|
1,072
|
13,376
|
12,545
|
See 'Footnotes'
section at the end of this news release
|
Summary of Before Tax Net Present Value of Future Net Revenue
- MUS
(2)(5)(7)(8)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Proved
|
|
|
|
|
|
|
Producing
|
175,800
|
162,812
|
150,414
|
139,568
|
130,152
|
|
Developed
Non-Producing
|
13,952
|
10,341
|
7,977
|
6,411
|
5,327
|
|
Undeveloped
|
35,028
|
22,103
|
15,369
|
11,298
|
8,559
|
Total
Proved
|
224,780
|
195,256
|
173,759
|
157,277
|
144,037
|
Probable
|
267,646
|
168,096
|
123,240
|
96,623
|
78,449
|
Total Proved plus
Probable
|
492,425
|
363,352
|
297,000
|
253,900
|
222,486
|
Possible
|
316,880
|
175,731
|
119,723
|
89,422
|
70,217
|
Total Proved plus
Probable plus Possible
|
809,305
|
539,083
|
416,723
|
343,322
|
292,703
|
See 'Footnotes'
section at the end of this news release
|
Summary of After Tax Net Present Value of Future Net Revenue
– MUS
(2)(5)(7)(8)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Proved
|
|
|
|
|
|
|
Producing
|
158,208
|
146,984
|
136,050
|
126,439
|
118,078
|
|
Developed
Non-Producing
|
11,493
|
8,683
|
6,730
|
5,402
|
4,469
|
|
Undeveloped
|
26,984
|
17,474
|
12,283
|
9,039
|
6,802
|
Total
Proved
|
196,686
|
173,141
|
155,064
|
140,880
|
129,349
|
Probable
|
207,798
|
135,466
|
100,859
|
79,563
|
64,708
|
Total Proved plus
Probable
|
404,484
|
308,607
|
255,923
|
220,443
|
194,057
|
Possible
|
241,128
|
139,526
|
97,153
|
73,331
|
57,863
|
Total Proved plus
Probable plus Possible
|
645,612
|
448,133
|
353,076
|
293,774
|
251,919
|
See 'Footnotes'
section at the end of this news release
|
Future Development Costs
(2)(5)(7)(8)(12)(13)
The table below sets out the total development costs deducted in
the estimation in the GLJ Reserves and Resources Report of future
net revenue attributable to proved reserves, proved plus probable
reserves and proved plus probable plus possible reserves (using
forecast prices and costs), by field. Total development costs
include capital costs for drilling and facility and pipeline
expenditures but excludes abandonment and reclamation costs.
Under each reserve category, Alvopetro has elected to reflect
100% of the contractual obligations pursuant to our Gas Treatment
Agreement with Enerflex, including all operating, capital, and
related financing costs for the full duration of the agreement.
These costs are mainly attributable to the Caburé field and also
represent the majority of the future development costs for the
Caburé field in the table below. The future costs associated with
equipment rental are also reflected as a capital lease obligation
on our financial statements other than future anticipated equipment
rental costs associated with the facility expansion, which will be
reflected once completed.
The future development costs for the Murucututu field in the
proved category are for the remaining costs anticipated in 2022 for
the pipeline and field facility development to tie-in the 183(1)
well to Alvopetro's midstream assets, as well as a development
location. In the probable and possible categories, there are future
development costs for an additional development location and the
stimulation and tie-in of the 197(1) well. Also included in the
Murucututu future development costs for all reserve categories are
a portion of the anticipated contractual obligations associated
with the expansion of the gas treatment facility. The future
development costs for Bom Lugar in the proved category include
costs for a directional wellbore and facilities upgrade. A second
directional well is included in the future development costs for
the possible category for Bom Lugar. Future development costs at
the Mãe-da-lua field relate to a stimulation of the existing
producing well.
|
|
|
|
|
|
|
|
MUS,
Undiscounted
|
2022
|
2024
|
2024
|
2025
|
2026
|
Remaining
|
Total
|
Proved
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
3,000
|
1,730
|
1,730
|
1,730
|
5,096
|
-
|
13,286
|
|
Murucututu Gas
Field
|
10,550
|
433
|
441
|
-
|
-
|
-
|
11,424
|
|
Bom Lugar Oil
Field
|
333
|
2,771
|
-
|
-
|
-
|
-
|
3,104
|
|
Mãe-da-lua Oil
Field
|
-
|
439
|
-
|
-
|
-
|
-
|
439
|
Total
Proved
|
13,883
|
5,373
|
2,171
|
1,730
|
5,096
|
-
|
28,253
|
Proved Plus
Probable
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
3,000
|
1,730
|
1,730
|
1,730
|
1,730
|
4,237
|
14,157
|
|
Murucututu Gas
Field
|
16,350
|
1,463
|
441
|
450
|
459
|
468
|
19,631
|
|
Bom Lugar Oil
Field
|
333
|
3,517
|
-
|
-
|
-
|
-
|
3,850
|
|
Mãe-da-lua Oil
Field
|
0
|
439
|
-
|
-
|
-
|
-
|
439
|
Total Proved Plus
Probable
|
19,638
|
7,149
|
2,171
|
2,180
|
2,189
|
4,705
|
38,078
|
Proved Plus
Probable Plus Possible
|
|
|
|
|
|
|
|
|
Caburé Natural Gas
Field
|
3,000
|
1,730
|
1,730
|
1,730
|
1,730
|
5,786
|
15,706
|
|
Murucututu Gas
Field
|
16,350
|
1,463
|
441
|
450
|
459
|
946
|
20,109
|
|
Bom Lugar Oil
Field
|
333
|
7,514
|
-
|
-
|
-
|
-
|
7,847
|
|
Mãe-da-lua Oil
Field
|
0
|
439
|
-
|
-
|
-
|
-
|
439
|
Total Proved Plus
Probable Plus Possible
|
19,683
|
11,146
|
2,171
|
2,180
|
2,189
|
6,732
|
44,101
|
See 'Footnotes'
section at the end of this news release
|
Reconciliation of Alvopetro's Gross Reserves (Before
Royalty)
(1)(5)(7)(8)(13)
|
|
|
|
|
|
|
Proved
(Mboe)
|
Probable
(Mboe)
|
Proved Plus
Probable
(Mboe)
|
Possible (Mboe)
|
Proved plus
Probable plus
Possible
(Mboe)
|
December 31,
2020
|
5,108
|
4,485
|
9,593
|
4,615
|
14,209
|
Extensions
|
176
|
(176)
|
-
|
-
|
-
|
Technical
Revisions
|
(12)
|
11
|
(1)
|
24
|
23
|
Economic
Factors
|
9
|
(4)
|
5
|
-
|
5
|
Production
|
(861)
|
-
|
(861)
|
-
|
(861)
|
December 31,
2021
|
4,421
|
4,316
|
8,737
|
4,639
|
13,376
|
See 'Footnotes'
section at the end of this news release
|
December 31, 2021 Murucututu
Contingent Resources Information:
Summary of Unrisked Company Gross Contingent Resources
(1)(3)(4)(5)(7)(10)(11)
|
|
|
|
Development
Pending Economic Contingent Resources
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
Residue gas
(MMcf)
|
15,719
|
20,061
|
32,984
|
Natural gas liquids
(Mbbl)
|
389
|
496
|
815
|
Oil equivalent
(Mboe)
|
3,008
|
3,839
|
6,313
|
See 'Footnotes'
section at the end of this news release.
|
Summary of Before Tax Net Present Value of Future Net Revenue
of Unrisked Contingent Resources-
MUS (2)(5)(10)(11)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Low
Estimate
|
158,700
|
84,965
|
53,745
|
37,370
|
27,487
|
Best
Estimate
|
222,759
|
109,139
|
67,223
|
46,563
|
34,432
|
High
Estimate
|
415,317
|
193,940
|
119,715
|
84,746
|
64,509
|
See 'Footnotes'
section at the end of this news release.
|
The GLJ Contingent Resource Report for Murucututu assumes
capital deployment during 2023 for the drilling of wells and
expansion of facilities, with total project costs of $23.9 million and first commercial production in
2023. There can be no certainty that the project will
developed on the timelines discussed herein. Development of the
project is dependent on several contingencies as further described
in this news release. The information presented herein is
based on company net project development costs.
Summary of Development Pending Risked Company Gross
Contingent Resources(1)(3)(4)(5)(7)(10)(11)
The GLJ Reserves and Resources Report estimates the Chance of
Development as the product of two main contingencies associated
with the project development, which are: 1) the probability of
corporate sanctioning, which GLJ estimates at 95%; 2) the
probability finalization of a development plan, which GLJ estimates
at 95%. The product of these two contingencies is 90%.
As there is no risk related to discovery, the Chance of
Commerciality for the contingent resource is therefore 90% which is
the risk factor that has been applied to the Development Risked
company gross contingent resources and the net present value
figures reported below.
|
|
|
|
|
Low
Estimate
|
Best
Estimate
|
High
Estimate
|
Residue gas
(MMcf)
|
14,187
|
18,105
|
29,768
|
Natural Gas Liquids
(Mbbl)
|
351
|
448
|
736
|
Oil equivalent
(Mboe)
|
2,715
|
3,465
|
5,697
|
See 'Footnotes'
section at the end of this news release.
|
Summary of Development Pending Risked Before Tax Net Present
Value of Future Net Revenue of Contingent Resources-
MUS(2)(5)(10)(11)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Low
Estimate
|
143,226
|
76,681
|
48,505
|
33,726
|
24,807
|
Best
Estimate
|
201,040
|
98,498
|
60,669
|
42,023
|
31,074
|
High
Estimate
|
374,824
|
175,031
|
108,043
|
76,483
|
58,219
|
See 'Footnotes'
section at the end of this news release.
|
December 31, 2021 Murucututu
Prospective Resources Information:
Summary of Unrisked Company Gross Prospective Resources
(1)(3)(4)(5)(7)(9)(11)
|
|
|
|
Prospective
Resources
|
Low
|
Best
|
High
|
Residue gas
(MMcf)
|
42,228
|
78,126
|
115,553
|
Natural gas liquids
(Mbbl)
|
1,044
|
1,931
|
2,856
|
Oil equivalent
(Mboe)
|
8,082
|
14,952
|
22,115
|
See 'Footnotes'
section at the end of this news release.
|
Summary of Before Tax Net Present Value of Future Net Revenue
of Unrisked Prospective Resources-
MUS (2)(5)(9)(11)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Low
Estimate
|
474,489
|
220,405
|
123,722
|
77,245
|
51,350
|
Best
Estimate
|
1,005,490
|
449,220
|
257,284
|
167,675
|
117,555
|
High
Estimate
|
1,584,857
|
678,025
|
384,741
|
252,103
|
178,690
|
See 'Footnotes'
section at the end of this news release.
|
The GLJ Prospective Resource Report for Murucututu assumes
capital deployment starting 2024 for the drilling of wells,
expansion of field facilities, and additional pipeline capacity,
with total project costs of $66.1
million and first commercial production in 2024. There
can be no certainty that the project will developed on the
timelines discussed herein. Development of the project is dependent
on several contingencies as further described in this news
release. The information presented herein is based on company
project development costs.
The GLJ Reserves and Resources Report estimates the Chance of
Commerciality as the product between the Chance of Discovery and
the Chance of Development. The Chance of Discovery of the
prospective resources has been assessed at 90%, while the Chance of
Development has been assessed as the same as for the Contingent
Resources described above at 90%. The resulting Chance of
Commerciality is 81%, which has been applied to the company gross
unrisked prospective resources and the net present value figures
reported below.
Summary of Development Risked Company Gross Prospective
Resources(1)(3)(4)(5)(7)(9)(11)
The GLJ Reserves and Resources Report estimates the Chance of
Commerciality as the product between the Chance of Discovery and
the Chance of Development. The Chance of Discovery of the
prospective resources has been assessed at 90%, while the Chance of
Development has been assessed as the same as for the Contingent
Resources described above at 90%. The resulting Chance of
Commerciality is 81%, which has been applied to the company gross
unrisked prospective resources and the net present value figures
reported below.
|
|
|
|
|
Low
|
Best
|
High
|
Residue gas
(MMcf)
|
34,250
|
63,366
|
93,723
|
Natural gas liquids
(Mboe)
|
847
|
1,566
|
2,317
|
Oil equivalent
(Mboe)
|
6,555
|
12,127
|
17,937
|
See 'Footnotes'
section at the end of this news release.
|
Summary of Development Risked Before Tax Net Present Value of
Future Net Revenue of Prospective Resources-
MUS(2)(5)(9)(11)(12)(13)
|
|
|
|
|
|
|
Undiscounted
|
5%
|
10%
|
15%
|
20%
|
Low
Estimate
|
384,847
|
178,765
|
100,348
|
62,652
|
41,649
|
Best
Estimate
|
815,529
|
364,352
|
208,677
|
135,997
|
95,346
|
High
Estimate
|
1,285,440
|
549,930
|
312,055
|
204,475
|
144,931
|
See 'Footnotes'
section at the end of this news release.
|
Upcoming 2021 Results and Live Webcast
Alvopetro anticipates announcing its 2021 fourth quarter and
year-end results on March 17, 2022
after markets close and will host a live webcast to discuss the
results at 8:00 am Mountain time, on
the March 18, 2022. Details for
joining the event are as follows:
DATE: March 18, 2022
TIME: 8:00 AM Mountain/10:00
AM Eastern
LINK:
https://zoom.us/j/99386897923
DIAL-IN NUMBERS:
https://zoom.us/u/aixrWbAbO
WEBINAR ID: 993 8689
7923
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
socialmedia@alvopetro.com.
Corporate Presentation
Alvopetro's updated corporate presentation is available on our
website at:
http://www.alvopetro.com/corporate-presentation.
FOOTNOTES
(1)
|
Mboe = thousands of
barrels of oil equivalent.
|
(2)
|
MUS = 000's of U.S.
dollars.
|
(3)
|
Mbbl = thousands of
barrels.
|
(4)
|
MMcf = Million cubic
feet.
|
(5)
|
References to Company
Gross reserves or Company Gross Resources means the total working
interest share of remaining recoverable reserves or resources owned
by Alvopetro before deductions of royalties payable to others and
without including any royalty interests owned by
Alvopetro.
|
(6)
|
References to "Other
Properties" refers to the Company's Bom Lugar and Mae-da-lua oil
fields.
|
(7)
|
The tables above are
a summary of the reserves of Alvopetro and the net present value of
future net revenue attributable to such reserves as evaluated in
the GLJ Reserves and Resources Report based on forecast price and
cost assumptions. The tables summarize the data contained in the
GLJ Reserves and Resources Report and as a result may contain
slightly different numbers than such report due to rounding. Also
due to rounding, certain columns may not add exactly.
|
(8)
|
Possible reserves are
those additional reserves that are less certain to be recovered
than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
|
(9)
|
Prospective Resources
– Prospective Resources are defined in the COGE Handbook as those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective
resources have both an associated chance of discovery and a chance
of development. There is no certainty that any portion of the
prospective resources will be discovered and even if discovered,
there is no certainty that it will be commercially viable to
produce any portion. Prospective Resources are further subdivided
in accordance with the level of certainty associated with
recoverable estimates assuming their discovery as described in
footnote 11.
|
(10)
|
Contingent Resources
are defined in the COGE Handbook as those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters or a lack of
markets. It is also appropriate to classify as contingent resources
the estimated discovered recoverable quantities associated with a
project in the early evaluation stage. Contingent Resources
are further classified in accordance with the level of certainty
associated with the estimates as described in footnote 11 and may
be subclassified based on project maturity and/or characterized by
their economic status. The Contingent Resources estimated in the
GLJ Reserves and Resources Report are classified as "economic
contingent resources", which are those contingent resources that
are currently economically recoverable. All such resources
are further sub-classified with a project status of "development
pending", meaning that resolution of the final conditions for
development are being actively pursued. The recovery estimates of
the Company's contingent resources provided herein are estimates
only and there is no guarantee that the estimated resources will be
recovered. There is uncertainty that it will be commercially viable
to produce any portion of the resources. Actual recovered resource
may be greater than or less than the estimates provided
herein.
|
(11)
|
Low Estimate: This is
considered to be a conservative estimate of the quantity that will
actually be recovered. It is likely that the actual remaining
quantities recovered will exceed the low estimate. If probabilistic
methods are used, there should be at least a 90 percent probability
(P90) that the quantities actually recovered will equal or exceed
the low estimate.
|
|
Best Estimate: This
is considered to be the best estimate of the quantity that will
actually be recovered. It is equally likely that the actual
remaining quantities recovered will be greater or less than the
best estimate. If probabilistic methods are used, there should be
at least a 50 percent probability (P50) that the quantities
actually recovered will equal or exceed the best
estimate.
|
|
High Estimate: This
is considered to be an optimistic estimate of the quantity that
will actually be recovered. It is unlikely that the actual
remaining quantities recovered will exceed the high estimate. If
probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered
will equal or exceed the high estimate.
|
(12)
|
The net present value
of future net revenue attributable to Alvopetro's reserves and
resources are stated without provision for interest costs and
general and administrative costs, but after providing for estimated
royalties, production costs, development costs, other income,
future capital expenditures, well abandonment and reclamation costs
for only those wells assigned reserves and material dedicated
gathering systems and facilities. The net present values of future
net revenue attributable to the Alvopetro's reserves and resources
estimated by GLJ do not represent the fair market value of those
reserves. Other assumptions and qualifications relating to costs,
prices for future production and other matters are summarized
herein. The recovery and reserve and resource estimates of the
Company's reserves and resources provided herein are estimates only
and there is no guarantee that the estimated reserves and resources
will be recovered. Actual reserves and resources may be greater
than or less than the estimates provided herein.
|
(13)
|
GLJ's January 1, 2022
escalated price forecast is used in the determination of future gas
sales prices under Alvopetro's long-term gas sales agreement and
for all forecasted oil sales and natural gas liquids sales. See
https://www.gljpc.com/sites/default/files/pricing/jan22.pdf
for GLJ's price forecast.
|
(14)
|
The GLJ Reserves and
Resources Report was an evaluation of the Company's contingent and
prospective resource of the Company's Murucututu natural gas
project and excluded an evaluation of the 183-B1 and 182-C1
exploration prospects which were evaluated by GLJ in an independent
resource assessment dated September 4, 2020 with an effective date
of July 31, 2020. For further details, see our September 8, 2020
press release and the annual information for the year-ended
December 31, 2020 which has been filed on SEDAR.
|
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 news release are in
United States dollars, except as
otherwise noted.
Oil and Natural Gas Reserves. The disclosure in
this news release summarizes certain information contained in the
GLJ Reserves and Resources Report but represents only a portion of
the disclosure required under NI 51-101. Full disclosure with
respect to the Company's reserves as at December 31, 2021 will be contained in the
Company's annual information form for the year ended December 31, 2021 which will be filed on SEDAR
(www.sedar.com) on or before April 30,
2022. All net present values in this press release are based
on estimates of future operating and capital costs and GLJ's
forecast prices as of December 31,
2021. The reserves definitions used in this evaluation are
the standards defined by COGEH reserve definitions and are
consistent with NI 51-101 and used by GLJ. The net present values
of future net revenue attributable to the Alvopetro's reserves
estimated by GLJ do not represent the fair market value of those
reserves. Other assumptions and qualifications relating to costs,
prices for future production and other matters are summarized
herein. The recovery and reserve estimates of the Company's
reserves provided herein are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates provided
herein. Possible reserves are those additional reserves that are
less certain to be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or
exceed the sum of proved plus probable plus possible
reserves.
Contingent Resources. This news release
discloses estimates of Alvopetro's contingent resources and the net
present value associated with net revenues associated with the
production of such contingent resources as included in the GLJ
Reserves and Resources Report. There is no certainty that it will
be commercially viable to produce any portion of such contingent
resources and the estimated future net revenues do not necessarily
represent the fair market value of such contingent resources.
Estimates of contingent resources involve additional risks over
estimates of reserves. Full disclosure with respect to the
Company's contingent resources as at December 31, 2021 will be contained in the
Company's annual information form for the year ended December 31, 2021 which will be filed on SEDAR
(www.sedar.com) on or before April 30,
2022.
Prospective Resources – This news release
discloses estimates of Alvopetro's prospective resources included
in the GLJ Reserves and Resources Report. There is no certainty
that any portion of the prospective resources will be discovered
and even if discovered, there is no certainty that it will be
commercially viable to produce any portion. Estimates
of prospective resources involve additional risks over estimates of
reserves. The accuracy of any resources estimate is a function of
the quality and quantity of available data and of engineering
interpretation and judgment. While resources presented herein are
considered reasonable, the estimates should be accepted with the
understanding that reservoir performance subsequent to the date of
the estimate may justify revision, either upward or downward.
Full disclosure with respect to the Company's prospective
resources as at December 31, 2021
will be contained in the Company's annual information form for the
year ended December 31, 2021 which
will be filed on SEDAR (www.sedar.com) on or before April 30, 2022.
Abbreviations:
|
|
|
1P
|
=
|
proved
reserves
|
2P
|
=
|
proved plus probable
reserves
|
3P
|
=
|
proved plus probable
plus possible reserves
|
CAD$
|
=
|
Canadian
dollars
|
F&D
|
=
|
finding and
development costs
|
FDC
|
=
|
future development
costs;
|
Mboe
|
=
|
thousand barrels of
oil equivalent
|
MMbtu
|
=
|
million British
Thermal Units
|
MMcf
|
=
|
million cubic
feet
|
MMcf/d
|
=
|
million cubic feet
per day
|
MMboe
|
=
|
million barrels of
oil equivalent
|
MMUS
|
=
|
millions of U.S.
dollars
|
MUS
|
=
|
thousands of U.S.
dollars
|
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. 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 and the expected natural gas price, gas
sales and gas deliveries 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 equipment availability, 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, 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. 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.
Non-GAAP Measures. This news release
contains financial terms that are not considered measures under
International Financial Reporting Standards ("IFRS"), such as
working capital net of debt and net asset value. Working capital
net of debt is computed as current assets less the sum of current
liabilities and the carrying amount of the Company's credit
facility. Net asset value is computed based on the before-tax net
present value of the Company's proved plus probable reserves,
discounted at 10%, increased by the Company's working capital net
of debt. The non-GAAP measures do not have standardized
meanings under IFRS and therefore are unlikely to be comparable to
similar measures presented 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 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. 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 most recent MD&A
which may be accessed through the SEDAR website at
www.sedar.com.
SOURCE Alvopetro Energy Ltd.