Alvopetro Energy (ALVOF) Q2 2024 earnings summary

Executive summary

• July 2024 production surged 49% over Q2, reaching 2,432 BOE/day, driven by flexible contract pricing and operational improvements.

• Working interest in the Caburé unit increased to 56.2% effective June 1, 2024, following a positive redetermination and interim arbitration order, though the result is under dispute.

• Ongoing organic growth initiatives focus on Murucututu, with recompletions and infrastructure ready for immediate production.

• Balanced capital allocation model splits cash flow between reinvestment and stakeholder returns, supported by a proven management team and ESG commitment.

• Share repurchase program (NCIB) is planned, complementing over $43.8 million already returned to shareholders via dividends.

Financial highlights

• Q2 2024 production averaged 1,629 BOE/day, with 95% natural gas.

• Q2 2024 funds flow from operations was $7.9 million, with working capital at $14.7 million and $19.7 million in cash.

• Q2 2024 operating netback margin reached 89%, with realized price of $71.97/BOE and netback of $64.30/BOE.

• Net income for Q2 2024 was $2.4 million, down 76% year-over-year, mainly due to lower sales and higher FX losses.

• Q2 2024 revenue was $10.7 million, down 23% year-over-year, reflecting lower sales volumes and realized prices.

Outlook and guidance

• Near-term production goal is 3,000 BOE/day, with ongoing efforts to reach 18 MMcfepd and a longer-term vision of 35 MMcfepd.

• Expectation to maintain July production levels through the rest of the year, with no specific quarterly guidance.

• Ongoing multi-year development at Murucututu, targeting reserves, contingent, and prospective resources.

• Additional development wells and facility expansions planned for Caburé and Murucututu projects.

• Natural gas pricing for interruptible volumes will be reviewed monthly due to ongoing demand fluctuations in Bahia.