Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES AN OPERATIONAL UPDATE AND FIRST QUARTER FINANCIAL AND OPERATING RESULTS

Alvopetro Energy Ltd. has provided an operational update, and its first-quarter 2015 financial and operating results. All amounts contained in this news release are in U.S. dollars, unless otherwise noted.

Operational update

Alvopetro drilled its 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-per-cent water saturation and an average porosity of 12 per cent, using an 8-per-cent porosity cut-off. The well was completed, and three zones totalling 25 metres were perforated, testing less than 20 per cent 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 million cubic feet per day (IP90), are summarized in the associated table.

                            Unstimulated                                    
                         average 72-hour        Stimulated        Stimulated
                               test rate    deliverability    deliverability
Zone (measured depth)            (MMcfpd)     IP90 (MMcfpd)    IP365 (MMcfpd)

1) 1,460 to 1,469                                                            
metres                               3.6               9.2               4.4
2) 1,371 to 1,376 and                                                        
1,384 to 1,389 metres                1.9               1.5               1.4
3) 1,322 to 1,327                                                            
metres                               3.2               1.8               1.1
Total                                8.7              12.5               6.9

During the 72-hour test of each interval, the well flowed natural gas, on an unstimulated basis, at an average rate of 101,000 cubic metres per day (3.6 million cubic feet per day or 600 barrels of oil equivalent per day) from the first interval, 53,000 cubic metres per day (1.9 million cubic feet per day or 310 boepd) from the second interval and 89,500 cubic metres per day (3.2 million cubic feet per day or 527 boepd) from the third interval. The pressure transient analysis forecasts potential poststimulation rates with damage removed (expected to be achieved using a near-wellbore acid wash) on a combined basis indicating total deliverability of 12.5 million cubic feet per day (2,089 boepd) after three months (IP90) of continuous production and 6.9 million cubic feet per day (1,146 boepd) after one year (IP365) of continuous production.

During 2015, the company 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 the company is building a natural gas business in the state of Bahia, its capital program will be primarily focused on adding near-term production and cash flow from its oil prospects.

On May 24, 2015, the company 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 its current-phase exploration work commitment. Alvopetro recently identified two additional prospects on this block.

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

Alvopetro acquired the remaining working interest in its 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 per cent of the cost of a well drilled to the Gomo formation (3,200 metres vertical depth) to retain a 90-per-cent interest in the Gomo formation and a 50-per-cent interest in all formations above the Gomo. This acquisition allows the company to significantly reduce its capital commitments on block 170 by drilling a shallower well and to retain 100 per cent of the upside associated with this high-priority prospect.

The company is also sourcing a larger drilling rig capable of efficiently drilling its 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 is offsetting and analogous to its Bom Lugar producing field.

2015 capital plan

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

• Testing its 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 its 182(2) conventional oil exploration prospect;
• Drilling one additional conventional oil exploration prospect (block 170 or 107);
• Drilling one oil development well on its Bom Lugar mature field;
• Advancing its 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 -- first quarter 2015:

• Capital and other asset expenditures in the first quarter included $400,000 relating to completion and testing of its 197(2) well, $100,000 relating to civil construction for future well sites, facility costs of $100,000, and capitalized general and administrative costs of $300,000.
• The company's 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 first-quarter 2015 financial and operating results

The associated table provides a summary of Alvopetro's financial and operating results for the three months ended March 31, 2015, and March 31, 2014. The consolidated interim financial statements with the management's discussion and analysis (MD&A) are available on its website and will be available on the SEDAR website.

                        SUMMARY OF Q1 2015 RESULTS                                                  
                                                          Q1 2015   Q1 2014 
Financial                                                                   
($000s, except where noted)                                                 
Oil sales                                                     172       314 
Funds flow from operations (1)                             (1,357)   (3,016)
Per share -- basic and diluted ($)                          (0.02)    (0.04)
Net (loss)                                                 (1,563)   (4,021)
Per share -- basic and diluted ($)                          (0.02)    (0.05)
Capital and other asset expenditures                        1,354     7,371 
Total assets                                              113,834   155,936 
Debt                                                            -         - 
Net working capital surplus (1)(2)                         35,497    65,716 
Operations                                                                  
Operating netback ($/bbl) (1)                                               
Brent benchmark price                                       55.16    107.90 
Discount                                                    (9.65)    (7.96)
Sales price                                                 45.51     99.94 
Transportation expenses                                     (4.23)    (3.50)
Realized sales price                                        41.28     96.44 
Royalties and production taxes                              (3.97)   (10.82)
Production expenses                                        (65.63)  (103.12)
Operating netback                                          (28.32)   (17.50)
Average daily crude oil production (bopd)                      42        35 

(1) Non-GAAP measure
(2) Includes current restricted cash of $4.9-million (March 31, 2014:
    $6.0-million) but excludes non-current restricted cash of $8.2-million
    (March 31, 2014: $21.7-million).

Updated corporate presentation

The company's updated corporate presentation is available on its website.

Annual general meeting

Alvopetro's annual general meeting will be held on Tuesday, May 26, 2015, at 9 a.m. at the Centrium Place Conference Centre, 2nd floor (plus 15 level), 332 6th Ave. SW, Calgary, Alta., Canada. All interested parties are invited to attend. The annual general meeting will also be available via audio webcast.

We seek Safe Harbor.