Alvopetro Energy Ltd. announces our first quarter 2021 financial results, formalization of our dividend policy and upcoming plans for a small lot common share buy-back.
Dividend Policy and Small Lot Common Share Buyback
Alvopetro's Board of Directors has formally adopted a dividend policy and strategy. We expect to commence paying dividends to our shareholders denominated in US$ as early as Q1 2022. Once the Company completes its 2021 exploration drilling campaign and finalizes the 2022 capital budget, the value and frequency of the dividend will be finalized.
To ensure dividends are promptly and efficiently paid to all shareholders it is strongly recommended that all registered shareholders migrate their registered shares to a brokerage account. Instructions to assist with this migration process are available by emailing email@example.com.
To further facilitate the cost-effective administration of the dividend program, and to create cost-effective liquidity for smaller shareholders, the Company also plans to conduct a one-time small lot common share repurchase which is expected to be facilitated through a consolidation, buyback or other alternative. Based on Alvopetro's current share price, the small lot repurchase is expected to cost less than $1.0 million. The repurchase will be implemented at the Company's sole discretion, subject to all required regulatory, court and shareholder approvals. Accordingly, we plan to move our AGM date to incorporate the inclusion of voting on this matter and will include additional information on the small lot repurchase with the meeting materials.
Corey Ruttan, President and Chief Executive Officer, commented:
"We look forward to our upcoming exploration drilling campaign. With our recent amendment to our credit agreement and with continuing strong operating and financial results from our Caburé project we are excited to accelerate our balanced stakeholder return and reinvestment model. Our objective is to balance accretive organic growth with a sustainable and attractive dividend yield."
Financial and Operating Highlights – First Quarter of 2021
- We averaged daily natural gas sales in the quarter of 12.5 mmcfpd with associated natural gas liquids sales from condensate of 98 bopd bringing our overall sales volumes in the quarter to 2,175 boepd, an 11.5% increase from the fourth quarter.
- We had an average realized natural gas sales price of $5.68/mcf, a 6% increase from the average realized price in the fourth quarter.
- We generated natural gas and condensate revenues of $6.9 million, with an operating netback of $28.52/boe, an increase of $0.60/boe from the fourth quarter.
- Our funds flow from operations improved to $4.8 million ($0.05 per basic share and $0.04 per diluted share) in the quarter compared to $4.3 million in the fourth quarter.
- We reported a net loss of $1.1 million in the quarter compared to net income of $2.8 million in the fourth quarter, due to an unrealized foreign exchange loss of $2.1 million compared to an unrealized foreign exchange gain of $1.8 million in the prior quarter.
- Capital expenditures of $0.9 million included $0.4 million in long lead purchases and $0.2 million in civil construction and other preliminary costs for our two exploration wells to be drilled in 2021.
- As at March 31, 2021, we had a net working capital surplus of $5.8 million, including $5.0 million in cash and cash equivalents. During the quarter we repaid $2.5 million of advances outstanding under our credit facility (the "Credit Facility") reducing the balance outstanding to $13.0 million as of March 31, 2021 and the Company's net debt to $7.3 million, an improvement of $2.6 million from December 31, 2020. In April we completed an amendment to our Credit Facility, extending the maturity date by one year to October 8, 2023 and eliminating the 3% per annum interest payable in kind as of April 15, 2021.
- Leverage remains low with net debt to annualized funds flow from operations of just 0.4 times.
Summary of Q1 2021 Financial and Operating Results
The following table provides a summary of Alvopetro's financial and operating results for the three months ended March 31, 2021 and March 31, 2020. As Alvopetro had not yet commenced commercial operations in the three months ended March 31, 2020, supplemental financial information has been presented for the fourth quarter of 2020 to enhance comparability.