Alvopetro announces an operational update and first quarter financial and operating results
Tuesday, May 26, 2020
Alvopetro Energy Ltd. (TSX VENTURE:ALV) is pleased to provide an operational update and announce our first quarter 2015 financial and operating results.

Operational Update

We drilled our first conventional exploration well, 197(2), late in 2014, reaching a total depth of 1,669 metres. Based on logs, the 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 well was completed and three zones totalling 25 metres were perforated, testing less than 20% of the overall net pay in the well, confirming a significant natural gas discovery. The results from the pressure transient analysis of all three zones, indicating a highly productive well of up to 12.5 MMcfpd (IP90).
During the 72 hour test of each interval the well flowed natural gas, on an unstimulated basis, at an average rate of 101,000 m3/d (3.6 MMcfpd or 600 boepd) from the first interval, 53,000 m3/d (1.9 MMcfpd or 310 boepd) from the second interval and 89,500 m3/d (3.2 MMcfpd or 527 boepd) from the third interval. The pressure transient analysis forecasts potential post-stimulation rates with damage removed (expected to be achieved using a near well bore acid wash) on a combined basis indicating total deliverability of 12.5 MMcfpd (2,089 boepd) after three months (IP90) of continuous production and 6.9 MMcfpd (1,146 boepd) after one year (IP365) of continuous production.

During 2015, we will be working diligently to unlock the value associated with the 197(2) discovery including; securing a natural gas sales contract, defining development costs and timing, and independently certifying resource estimates for the discovery. While we are building a natural gas business in the state of Bahia, our capital program will be primarily focused on adding near-term production and cash flow from our oil prospects.

On May 24, 2020 we commenced drilling the 182(2) well located on Block 182. The well is a conventional oil prospect targeting the Agua Grande formation, with additional potential in the Sergi Formation and satisfies our current phase exploration work commitment. We have recently identified two additional prospects on this block.

During 2014, we focused significant effort on reprocessing and interpreting our extensive 3D seismic database, enabling us to expand our 9-prospect inventory of conventional exploration opportunities to an 18-prospect inventory. One of our more prospective conventional oil exploration opportunities is a shallow target on Block 170, at 2,000 metres vertical depth, that we plan to drill in the second half of 2015.

We acquired the remaining working interest in our Block 170, subject to Brazil’s National Agency of Petroleum, Natural Gas and Biofuels approval. Prior to the acquisition, Alvopetro had a commitment to pay 100% of the cost of a well drilled to the Gomo Formation (3,200 metres vertical depth) to retain a 90% interest in the Gomo Formation and a 50% interest in all formations above the Gomo. This acquisition allows us to significantly reduce our capital commitments on Block 170 by drilling a shallower well and to retain 100% of the upside associated with this high priority prospect.

We are also sourcing a larger drilling rig capable of efficiently drilling our first Bom Lugar horizontal development oil well. It is expected this rig would also be used to drill the first of two conventional oil prospects on Block 107 which offsetting and analogous to our Bom Lugar producing field.

2015 Capital Plan

Alvopetro’s strategy targets three core opportunities: lower risk development drilling on our mature fields, an expanding inventory of shallow conventional exploration prospects, and the development of the significant hydrocarbon potential present in our deep Gomo resource play. Our base capital plan of $17 million is fully funded from financial resources on hand and is expected to include:

—  Testing our 197(2) natural gas discovery;
—  Building a natural gas business by securing a natural gas sales
    contract, defining development costs and timing, and independently
    certifying resource estimates for the 197(2) discovery;
—  Currently drilling our 182(2) conventional oil exploration prospect;
—  Drilling one additional conventional oil exploration prospect (Block 170
    or 107);
—  Drilling one oil development well on our Bom Lugar mature field; and
—  Advancing our Gomo resource play by completing and testing the 183(1)
    well and defining deliverability through the use of fracture
    stimulations and reservoir modelling.

Financial and Operating Highlights – Q1 2015

—  Capital and other asset expenditures in the first quarter included $0.4
    million relating to completion and testing of our 197(2) well, $0.1
    million relating to civil construction for future well sites, facility
    costs of $0.1 million, and capitalized general and administrative costs
    of $0.3 million.
—  Our cash, restricted cash and working capital resources remain strong at
    $43.7 million, with a working capital surplus of $35.5 million
    (including $36.7 million of cash and cash equivalents and $4.9 million
    of current restricted cash) as well as non-current restricted cash of
    $8.2 million.

Summary of Q1 2015 Financial and Operating Results

The following table provides a summary of Alvopetro’s financial and operating results for the three months ended March 31, 2020 and March 31, 2020. The consolidated interim financial statements with the Management’s Discussion and Analysis (“MD&A”) are available on our website at and will be available on the SEDAR website at
 Updated Corporate Presentation

Our updated corporate presentation is available at

Annual General Meeting

Alvopetro’s Annual General Meeting will be held on Tuesday, May 26, 2020 at 9:00 a.m. at the Centrium Place Conference Centre, 2nd Floor (+15 level), 332 – 6th Avenue S.W. Calgary, Alberta, Canada. All interested parties are invited to attend. Our Annual General Meeting will also be available via audio webcast:

Alvopetro Energy Ltd.’s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by applying innovation to underexploited opportunities, while maintaining our focus on being a low cost operator. Our strategy is to focus on three core opportunities including lower risk development drilling on our mature fields, shallow conventional exploration, and the development of the significant hydrocarbon potential present in our deep Gomo resource play. Alvopetro’s strong financial position, along with our talented team and highly prospective land base, position us to successfully pursue our strategy.

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