Alvopetro Announces Q2 2026 Financial Results

CALGARY, AB, Aug. 5, 2026 /CNW/ -- Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces an operational update, our financial results for the three and six months ended June 30, 2026, and details for our Q2 2026 earnings call. 

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've continued to deliver strong results in 2026 with Q2 sales volumes of 3,067 boepd, driving revenues of $19.2 million with funds flow from operations of $14.1 million. With a realized natural gas price of $10.98/Mcf we posted an operating netback of $59.08/boe and an 86% operating netback margin. These margins and results highlight the quality of our asset base underpinning our balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders."

Operational Update

Development Activities

In June, we completed drilling the 183-D1 well on our 100% owned Murucututu natural gas field to a total measured depth ("MD") of 3,263 metres between our previously drilled 183-A3 and 183-D4 wells. Based on open-hole logs, the well encountered potential net natural gas pay in both the Caruaçu Member of the Maracangalha Formation and the Gomo Member of the Candeias Formation, with an aggregate 47.7 metres total vertical depth ("TVD") of potential natural gas pay. We have now completed the well in three intervals and expect to have the well on production later this month.

In July, we commenced drilling the 183-H2 well.  This well is targeting the prospective resource portion of the Caruaçu structure.  We are currently at a depth of 1,399 metres and expect drilling to be completed later this month.  Following this well, we plan to move the drilling rig to the 183-G2 location, the first Caruaçu development well from our newly constructed 183-G well pad. In the second half of 2026 we are also focused on expanding our field production facility and pipeline offtake capacity from the Murucututu field as well as enhancing our natural gas processing facility to accommodate increasing proportions of richer gas production from Murucututu.

July Sales Volumes

July sales volumes averaged 3,134 boepd (based on field estimates), including 2,995 boepd from Brazil (with natural gas sales of 16.8 MMcfpd, associated natural gas liquids from condensate of 185 bopd and oil sales of 8 bopd) and 139 bopd from oil sales in Canada.

Quarterly Natural Gas Pricing Update

As previously announced, effective August 1, 2026, our natural gas price under our long-term gas sales agreement was adjusted to BRL2.00/m³ on the first 400e³m³/d (14.1 MMcfpd) reference volumes ("QDC1") with the incremental 100 e³m³/d (3.5 MMcfpd) reference volumes ("QDC2") adjusted to BRL1.91/m^3. This represents increases of 5% and 19% respectively for QDC1 and QDC2 relative to the May 1, 2026 price reset.

Based on our average heat content to-date and the June 30, 2026 BRL/USD exchange rate of 5.18, our weighted average realized price (QDC1 + QDC2) on firm natural gas sales during the August 1, 2026 to October 31, 2026 period is expected to be $11.70/Mcf, 7% above our Q2 2026 realized price of $10.98/Mcf. Amounts ultimately received in equivalent USD will be impacted by exchange rates in effect during the relevant period.

Financial and Operating Highlights – Second Quarter of 2026

• Average daily sales in Brazil in Q2 2026 were 2,894 boepd⁽¹⁾ (+26% from Q2 2025 and -1% from Q1 2026). In Canada, daily sales averaged 173 bopd⁽¹⁾ (+25% from Q2 2025 and -10% from Q1 2026). Overall, total daily sales averaged 3,067 boepd (+26% compared to Q2 2025 and -2% compared to Q1 2026).
• Our average realized natural gas price was $10.98/Mcf (+3% from Q2 2025 and +8% from Q1 2026). Our overall average realized sales price per boe was $68.72/boe (+9% from Q2 2025 and +11% from Q1 2026).
• Our natural gas, oil and condensate revenue increased to $19.2 million, an increase of 37% from Q2 2025 due to higher sales volumes and an increase of 10% from Q1 2026 due to higher realized sales prices.
• Our operating netback⁽²⁾ in the quarter was $59.08 per boe, increases of $4.36 per boe compared to Q2 2025 and $6.96 per boe compared to Q1 2026. 
• We generated funds flow from operations⁽²⁾ of $14.1 million ($0.37 per basic and diluted share), increases of $3.7 million compared to Q2 2025 and $1.6 million compared to Q1 2026. The increase relative to Q2 2025 was primarily driven by higher sales volumes. The increase relative to Q1 2026 was due to higher realized sales prices.
• We reported net income of $9.8 million ($0.26 per basic and diluted share), increases of $2.9 million compared to Q2 2025 and $1.7 million compared to Q1 2026.
• Capital expenditures in Q2 2026 of $7.5 million included costs to drill the 183-D1 well on Alvopetro's 100% Murucututu field as well as initial costs for upcoming drilling and facilities projects in Brazil.
• Our working capital⁽²⁾ was $14.1 million as of June 30, 2026 and our working capital, net of debt was $6.1 million.

The following table provides a summary of Alvopetro's financial and operating results for the periods noted. The consolidated financial statements with the Management's Discussion and Analysis ("MD&A") are available on our website at www.alvopetro.com and will be available on the SEDAR+ website at www.sedarplus.ca.

Q2 2026 Results Webcast

Alvopetro will host a live webcast to discuss our Q2 2026 financial results at 8:00 am Mountain time on Thursday August 6, 2026. Details for joining the webcast are as follows:

DATE: August 6, 2026
TIME: 8:00 AM Mountain/10:00 AM Eastern
LINK: https://us06web.zoom.us/j/85865558118
DIAL-IN NUMBERS: https://us06web.zoom.us/u/kdkEw5S5Wa  
WEBINAR ID: 858 6555 8118

The webcast will include a question-and-answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.

Corporate Presentation

Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation. 

Social Media

Follow Alvopetro on our social media channels at the following links:

X - https://x.com/AlvopetroEnergy 
Instagram - https://www.instagram.com/alvopetro/
LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd

Alvopetro Energy Ltd. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Abbreviations:

Non-GAAP and Other Financial Measures

This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. While these measures may be common in the oil and gas industry, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this news release should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company's reported financial performance or position. These are complementary measures that are used by management in assessing the Company's financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures and Other Financial Measures" section of the Company's MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca.

Non-GAAP Financial Measures

Operating Netback

Operating netback is calculated as natural gas, oil and condensate revenues less royalties, production expenses, and transportation expenses. This calculation is provided in the "Operating Netback" section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.

Non-GAAP Financial Ratios

Operating Netback per boe

Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent ("boe"). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company's producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (boe). This calculation is provided in the "Operating Netback" section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca.

Operating Netback Margin

Operating netback margin is a non-GAAP ratio calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:

Funds Flow from Operations Per Share and Cash Flows from Operating Activities Per Share

Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities calculated before changes in non-cash working capital, divided by the weighted average shares outstanding for the respective period. Cash flows from operating activities per share is a supplementary financial measure computed as cash flows from operating activities divided by the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share are as follows:

Capital Management Measures

Funds Flow from Operations 

The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company's ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:

Working Capital

Working capital is computed as current assets less current liabilities. Working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows: 

Working Capital, Net of Debt

Working capital net of debt is computed as working capital decreased by the non-current portion of the loan. Working capital net of debt is used by management to assess the Company's overall financial position. As of June 30, 2026, Alvopetro's working capital exceeds the non-current balance outstanding on the loan.

Supplementary Financial Measures

"Average realized natural gas price - $/Mcf" is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company's natural gas sales volumes.

"Average realized NGL – condensate price - $/bbl" is comprised of condensate sales as determined in accordance with IFRS, divided by the Company's NGL sales volumes from condensate.

"Average realized oil price - $/bbl" is comprised of oil sales as determined in accordance with IFRS, divided by the Company's oil sales volumes.

"Average realized price - $/boe" is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company's total natural gas, NGL and oil sales volumes (barrels of oil equivalent).

"Dividends per share" is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

"Royalties per boe" is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).

"Production expenses per boe" is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).

"Transportation expenses per boe" is comprised of transportation expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).

BOE Disclosure

The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Contracted Natural Gas Volumes

The contracted daily firm volumes under Alvopetro's long-term gas sales agreement of 500 e³m³/d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Alvopetro's reported natural gas sales volumes are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro's natural gas is approximately 8% higher than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 463e³m³/d (16.4MMcfpd).

Well Results

Data obtained from the 183-D1 well identified in this press release, including potential net pay should be considered preliminary. There is no representation by Alvopetro that the data relating to the 183-D1 well contained in this press release is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future.

Forward-Looking Statements and Cautionary Language

This news release contains forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expect", "intend", "plan", "may", "believe", "estimate", "forecast", "anticipate", "should" and other similar words or expressions are intended to identify forward-looking information. Forward‐looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking statements concerning the expected natural gas sales price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement, future production and sales volumes, expected timing of production commencement from certain wells, plans relating to the Company's operational activities, proposed exploration and development activities and the timing for such activities, capital spending levels, future capital and operating costs, anticipated timing for upcoming drilling and testing of other wells, and projected financial results. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, environmental regulation, including regulations relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, the outcome of any disputes, the outcome of  redeterminations, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global conflicts, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, and the regulatory and legal environment and other risks associated with oil and gas operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with trade or tariff disputes, and general economic conditions. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our AIF which may be accessed on Alvopetro's SEDAR+ profile at www.sedarplus.ca. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

SOURCE Alvopetro Energy Ltd.

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