Alvopetro Announces 197(2) Discovery

CALGARY, ALBERTA--(Marketwired - Dec. 15, 2014) - Alvopetro Energy Ltd. (TSX VENTURE:ALV) is pleased to announce that our 197(2) well, located on Block 197 in the Recôncavo basin in the State of Bahia, Brazil, has discovered natural gas. The 197(2) well reached a total depth of 1,669 metres and has been cased and cemented. Based on cased-hole sonic and neutron logs, the 197(2) well encountered 78 metres of potential net natural gas pay, with an average 33% water saturation, and an average porosity of 12%, using an 8% porosity cut-off.

The 197(2) well offsets an existing discovery that has 67 metres of net pay. This offsetting well tested 3.6 mmcf/d and 21 bbls/d of condensate from a 4-metre perforated interval in the Caruaçu Member of the Maracangalha Formation, over a final 16-hour flow period, with a 32/64" choke and 1,267 psi flowing sand-face pressure. The operator of this offsetting well has submitted a delineation plan to the ANP.

Based on these results, and consistent with our natural gas commercialization objectives, we plan to commence a testing program on the 197(2) well with a service rig in early 2015, subject to customary regulatory approvals and equipment availability. Additional technical work and testing is required to determine the extent, if any, of potential commercial hydrocarbons associated with the 197(2) well.

This successful result is a significant milestone for a natural gas business in Bahia and supports our additional natural gas exploration prospects and our broader plans to develop the extensive Gomo natural gas potential we have discovered in our 197(1) and 183(1) wells drilled earlier this year.

Alvopetro's three-pronged strategy is to pursue our:

• Mature Oil Fields; development drilling focused on generating near-term oil production and sustainable operating cash flows;
• Shallow Conventional Oil Exploration; targeting prospects generated from our reprocessed 3D seismic database; and
• Large Tight Hydrocarbon Resource; proving the commercial viability of the Gomo resource in the Recôncavo Basin.

Our 197(2) discovery is our second discovery on Block 197. Our 197(1) well was drilled to a total depth of 3,275 metres and encountered 43 metres of potential net hydrocarbon pay over several separate intervals. The lowermost 6 metres of net pay was perforated and flowed natural gas, without stimulation, at a rate of 40 mcf/day, with no water. This gas interval is part of a large geobody that we have mapped using 3D seismic over a large area, confirmed by our 183(1) well results. Based on logs, mapping and ongoing technical analysis, we internally estimate 1.3 TCF of total petroleum initially-in-place ("TPIIP") (natural gas) in this 5,460 acre geobody. We plan to complete and test the 183(1) well in early 2015.

We recently completed workovers of two wells in our Jiribatuba field. Our Jiribatuba(9) well is in the process of being optimized, and our Jiribatuba(1) well is now producing 34 bbls/d of 35.9 degree API crude. Based on field estimates, Alvopetro's current total company production is 65 bbls/d.

Alvopetro's focus in 2015 will be building a sustainable base of production and cash flow through lower risk, oil-focused development and exploration drilling. Our financial resources enable Alvopetro to accomplish our 2015 capital plan with cash on hand. We plan to commence development drilling on our Bom Lugar mature oil field in the first half of 2015.

Alvopetro Energy Ltd.'s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by being the lowest cost operator and applying innovation to underexploited opportunities. Alvopetro aims to implement a large-scale, repeatable, low-risk, multi-well development program, utilizing advanced technology and completion techniques. Alvopetro's strong financial position, along with our experienced team of professionals, local operating capabilities and highly prospective land base, will enable us to efficiently develop our resource play opportunities.

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.

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 the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Total Petroleum Initially-In-Place ("TPIIP"). TPIIP are those quantities of petroleum estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. There is no certainty that undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

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", "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 reserves and potential hydrocarbons in our 197(2) well, exploration and development prospects of Alvopetro and the expected timing of certain of Alvopetro's testing and operational activities. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including expectations and assumptions concerning testing results on the 197(2) well, the timing of regulatory licenses and approvals, availability of capital, the success of future drilling and development activities, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. 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.

Testing and Well Results. Data obtained from the wells 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 wells 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 any well or of expected production or operational results for Alvopetro in the future.

Cautionary statements regarding the filing of a Notice of Discovery. We have submitted a Notice of Discovery of Hydrocarbons to the National Agency of Petroleum, Natural Gas and Biofuels (the "ANP") with respect to the 197(2) well. All operators in Brazil are required to inform the ANP, through the filing of a Notice of Discovery, of potential hydrocarbon discoveries. A Notice of Discovery is required to be filed with the ANP based on hydrocarbon indications in cuttings, mud logging or by gas detector, in combination with wire-line logging. Based on the results of mud-logging and cased-hole logs, we have filed a Notice of Discovery relating to our 197(2) well. These routine notifications to the ANP are not necessary indicative of commercial hydrocarbons, potential production, recovery or reserves. Data obtained from the 197(2) well identified in this press release, including hydrocarbon shows, cased-hole sonic and neutron 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 197(2) 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.