Alvopetro Energy Ltd. is pleased to announce financial results for the three and six months ended June 30, 2023 and an operational update.
All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
President & CEO, Corey C. Ruttan commented:
"We continue to post strong results, generating an operating netback of $69.61 per boe and $11 million in funds flow from operations, highlighting the strong profitability of our operations. Our 2023 capital program is focused on adding 100% interest production from our Murucututu natural gas project and our Bom Lugar oil field. We have had exciting early results with the stimulation of our 197(1) Murucututu well and drilling our first oil development well at Bom Lugar."
Operational Update
Drilling operations continue on the 183-A3 well on our Murucututu natural gas field. The well was spud on July 11th and is targeting shallower exploration potential in the Caruaçu Formation and the Gomo member of the Candeias Formation. We expect drilling to be completed later this quarter. We also expect to complete our recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.
Our natural gas price under our long-term gas sales agreement with Bahiagás was adjusted effective August 1st to BRL1.99/m3 or $13.25/Mcf, based on our average heat content to date, the July 31, 2023 BRL/USD foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of our natural gas sales from both our Caburé and Murucututu fields as of August 1, 2023.
Financial and Operating Highlights – Second Quarter of 2023
Average daily sales decreased to 1,975 boepd (-29% from Q1 2023 and -16% from Q2 2022) due mainly to reduced production from our Caburé natural gas field as a result of higher nominated volumes from our partner.
Our average realized natural gas price increased to $12.86/Mcf, an 8% increase from Q2 2022 with the 3% increase in our contracted natural gas price and enhanced sales tax credits available in 2023. Compared to Q1 2023, our realized sales price increased 7% due mainly to the appreciation of the BRL to the USD in Q2. With the higher natural gas price, our overall realized price per boe increased to $77.41 (+6% from Q1 2023 and +5% from Q2 2022), despite lower Brent pricing on condensate sales.
Our natural gas, condensate and oil revenue was $13.9 million in Q2 2023, a decrease of $1.9 million compared to Q2 2022 (-12%) due to a 16% decrease in production partially offset by the increase in realized sales prices per boe.
Our operating netback improved to $69.61 per boe (+$3.00 per boe from Q1 2023 and +$5.65 per boe from Q2 2022) with a higher realized sales price and lower royalties, partially offset by the impact of fixed operating costs with lower sales volumes.
We generated funds flows from operations of $11.0 million ($0.30 per basic share and $0.29 per diluted share), a decrease of $1.4 million compared to Q2 2022 and $3.9 million compared to Q1 2023.
We reported net income of $9.9 million in Q2 2023, an increase of $3.2 million (+49%) compared to Q2 2022.
Capital expenditures totaled $8.5 million, including drilling cost for our BL-06 well on our Bom Lugar field, stimulation costs for our 197(1) well on our Murucututu field, and long-lead purchases for future capital projects.
Our working capital surplus was $18.1 million as of June 30, 2023, a decrease of $2.8 million from March 31, 2023, and an improvement of $3.4 million from December 31, 2022.
