Alvopetro Inc.

Alvopetro Inc.

April 30, 2013 18:29 ET

Alvopetro Announces 2012 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - April 30, 2013) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Alvopetro Inc. ("Alvopetro" or the "Company") today announces its financial and operating results and reserves for the year ended December 31, 2012. The Company's financial statements, management's discussion and analysis, and Annual Information Form for the year ended December 31, 2012 are available on the Company's website (www.alvopetro.com) or SEDAR (www.sedar.com).

Financial and Operating Summary

Three months ended
December 31,
Year ended
December 31,
($000's except per share amounts) 2012 2011 2012 2011
Financial
Natural gas sales 183 316 800 855
Funds used in operations (1) (888 ) (812 ) (3,812 ) (3,428 )
Per share - basic (0.02 ) (0.01 ) (0.07 ) (0.06 )
Per share - diluted (0.02 ) (0.01 ) (0.07 ) (0.06 )
Net income (loss) 1,831 (2,124 ) (2,177 ) (7,104 )
Per share - basic 0.03 (0.04 ) (0.04 ) (0.13 )
Per share - diluted 0.03 (0.04 ) (0.04 ) (0.13 )
Working capital (deficiency) (1) (4,109 ) (1,383 ) (4,109 ) (1,383 )
Operations
Average production:
Natural gas (Mcf/d) 416 602 510 416
Natural gas liquids (bbl/d) 8 14 12 10
Total (Mcfe/d) 464 688 581 474
Average sales price:
Natural gas ($/Mcf) 3.44 3.62 2.56 3.70
Natural gas liquids ($/bbl) 68.15 87.74 74.88 83.29
Total ($/Mcfe) 4.28 4.99 3.77 4.94
Operating netback (1) ($/Mcfe) 1.94 0.97 1.18 1.64
(1) The terms "funds from operations", "operating netback" and "working capital" are not recognized measures under IFRS. Management believes that in addition to net income, funds from operations and operating netback are useful supplemental measures as they provide an indication of the results generated by the Company's principal business activities before the consideration of how those activities are financed. Investors are cautioned, however, that these measures should not be construed as alternatives to net income determined in accordance with IFRS. The Company's method of calculating funds from operations may differ from that of other companies, and, accordingly it may not be comparable to measures used by other companies. The Company calculates funds from operations by taking cash flow from operating activities as determined under IFRS before changes in non-cash operating working capital and abandonment expenditures. Operating netback is calculated on a per Mcfe basis taking petroleum and natural gas sales and deducting royalties, operating expenses and transportation expenses. Working capital is calculated as current assets less current liabilities.

Combined Reserves Data

Management has combined the results of the Sproule Report (reserves on its Canadian properties) and Petrotech Report (reserves on its Brazilian properties) in the following tables. These tables may not be indicative of the combined reserves that would be obtained had they been evaluated by either reserves evaluator.

SUMMARY OF OIL AND GAS RESERVES AS OF DECEMBER 31, 2012

FORECAST PRICES AND COSTS

Reserves
Light/Medium Oil Natural Gas NGL
(MBbl) (MMcf) (MBbl)
Gross Net Gross Net Gross Net
Proved
Developed Producing 8.6 8.1 1,058 834 24.4 19.5
Developed Non-Producing 0 0 0 0 0.0 0.0
Undeveloped 107.7 101.8 0 0 0.0 0.0
Total Proved 116.2 109.8 1,058 834 24.4 19.5
Probable 712.4 673.2 2,115 1,778 23.0 18.4
Total Proved plus Probable 828.6 783.0 3,173 2,612 47.4 37.9

SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE AS OF DECEMBER 31, 2012

FORECAST PRICES AND COSTS

Before Income Tax Discounted At After Income Tax Discounted At Unit Value $/BOE Net Reserves Discounted at 10% before Income Tax
0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
(M$) (M$) (M$) (M$) (M$) (M$) (M$) (M$) (M$) (M$) ($/BOE)
Proved
Developed Producing 2,627 2,165 1,840 1,602 1,422 2,627 2,165 1,840 1,602 1,422 8.79
Developed Non-Producing 0 0 0 0 0 0 0 0 0 0 0
Undeveloped 4,711 3,769 3,067 2,530 2,109 4,711 3,769 3,067 2,530 2,109 28.48
Total Proved 7,338 5,934 4,907 4,132 3,531 7,338 5,934 4,907 4,132 3,531 15.48
Probable 34,476 25,766 19,603 15,116 11,765 25,435 18,543 13,697 10,195 7,598 18.02
Total Proved plus Probable 41,814 31,700 24,510 19,248 15,296 32,773 24,477 18,604 14,327 11,129 17.45
Notes:
(1) Managements combination of the Sproule Report and Petrotech Report estimates the Corporation's share of future capital expenditures necessary to achieve the estimated present worth of future net cash flows based on escalating costs from Proved Reserves to be US$1,881,000 and Proved and Probable Reserves to be US$16,153,000.

Corporate Highlights

The following are the highlights to date:

  • The Company closed the acquisition of Alvopetro S.A., a private Brazilian oil and gas company, on December 11, 2012. The Company's interest in the proved and probable reserves of Alvopetro S.A. at December 31, 2012 was 828.6 Mbbls of light/medium oil with future net revenues of US$20,628,000 (before income taxes, discounted at 10 percent);

  • The Company recorded a gain on the closing of the acquisition of Alvopetro S.A. of $3,075,000. The Company anticipates recording a further gain in future periods on the completion of two farm-in agreements for additional exploration lands in the Reconcavo Basin; and

  • It is expected that drilling will commence in the fourth quarter of 2013 with four wells being drilled offsetting legacy wells in the main depocentre of the exploration blocks targeting the tight Gomo sands and one development well on the Bom Lugar property. It is expected that the drilling rig contracted will run continuously on follow-up wells thereafter through 2014.

Natural Gas, Crude Oil and Natural Gas Liquids (NGL) Conversions

Certain crude oil and NGL volumes have been converted to cubic feet equivalent (cfe) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). Cfe may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.

Caution to Reader

This news release contains forward-looking information, including without limitation statements concerning the planned drilling program, the recognition of an additional gain on the acquisition, the ability to continue as a going concern, reserves, net present values, future capital, oil and natural gas prices, supply and demand. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Alvopetro at the time of preparation, may prove to be incorrect. The actual results achieved in future periods will vary from the information provided herein and the variations may be material.

The common shares of Alvopetro have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Alvopetro have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Contact Information

  • Alvopetro Inc.
    Mr. J. Cameron Bailey
    President and Chief Executive Officer
    (403) 398-3345 extension 2450
    (403) 398-3351 (FAX)
    cbailey@alvopoetro.com

    Alvopetro Inc.
    Ms. Jocelyn Tochor
    Corporate Manager
    (403) 398-3345 extension 2466
    jtochor@alvopetro.com

    Alvopetro Inc.
    Mr. Jamie Jeffs, CA
    Chief Financial Officer
    (403) 398-3345 extension 2470
    jjeffs@alvopetro.com