Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES JANUARY 2023 SALES VOLUMES, OUR SEMI-ANNUAL NATURAL GAS PRICE REDETERMINATION, 2023 CAPITAL PLANS AND AN OPERATIONAL UPDATE

Alvopetro Energy Ltd. has provided its January, 2023, sales volumes, its Feb. 1, 2023, natural gas price redetermination, its 2023 capital plan and an operational update.

All amounts contained in this new release are in United States dollars, unless otherwise stated.

Corey Ruttan, president and chief executive officer, commented:

"Building on our record year in 2022 we are looking forward to our 2023 capital plan. Our focus this year is on adding production and reserves from our lower-risk development opportunities. We have made the key infrastructure investments necessary to realize the full potential from our Murucututu natural gas project. This project has significant reserves and resources and our goal is to unlock this potential with a multiyear development plan starting this year."

January, 2023, sales volumes

January sales volumes averaged 2,754 boepd (barrels of oil equivalent per day), including natural gas sales of 15.6 MMcfpd (million cubic feet per day), associated natural gas liquids sales (condensate) of 141 bopd (barrels of oil and/or natural gas liquids (condensate) per day) and five bopd of oil sales, based on field estimates -- a 1-per-cent increase from the company's Q4 average daily volumes.

Operational update and 2023 capital plans

Murucututu (100 per cent Alvopetro)

On Alvopetro's Murucututu project, it expects to commence the stimulation on its 197 well later this quarter. The company has already completed the work to tie in this well to its 183 facility and expects to commence production in the second quarter. Alvopetro also plans to drill two fit-for-purpose Gomo development wells in 2023. One of these locations has additional uphole exploration potential in the Caruacu and Marfim formations. Total capital expenditures of $16-million are budgeted for Murucututu in 2023.

Cabure (49.1 per cent Alvopetro)

Alvopetro's 2023 capital budget includes an expansion of the unit facilities and drilling two additional development wells. Total expenditures of $3-million are budgeted for Alvopetro's share of 2023 capital expenditures on the Cabure project.

Bom Lugar (100 per cent Alvopetro)

In 2023, Alvopetro plans to drill up to two development wells on the Bom Lugar oil field, targeting the Caruacu formation with additional potential in the deeper Gomo and Agua Grande formations. Capital expenditures of up to $11-million are budgeted in 2023 for Bom Lugar, including the development wells and facility upgrades.

Mae-da-lua (100 per cent Alvopetro)

Alvopetro's 2023 capital expenditures include $500,000 at the Mae-da-lua field, where the company plans to complete a stimulation of its existing well to improve oil recovery rates.

Exploration (100 per cent Alvopetro)

In 2022, Alvopetro drilled two exploration prospects, 182-C and 183-B. The company encountered thick, hydrocarbon saturated zones in the Sergi formation, which have demonstrated low permeability during testing operations. Alvopetro continues to evaluate alternatives to enhance permeability in the Sergi formation in both wells and in the Agua Grande formation of the 183-B1 well. Alvopetro is evaluating alternatives to remediate possible permeability impacts from near-wellbore damage. This work is expected to start with the 182-C2 well later this quarter. Capital costs of $400,000 are currently budgeted on these projects in 2023, including final testing costs on 182-C2 incurred in January. Future capital expenditures will depend on these initial results.

Semi-annual natural gas price redetermination

Effective Feb. 1, 2023, Alvopetro's natural gas price under its long-term gas sales agreement with Bahiagas has been adjusted to 2.00 Brazilian real (BRL)/cubic metre (m3), or $11.88/Mcf (based on the company's average heat content to date and the Jan. 31, 2023, BRL/U.S. foreign exchange rate of 5.10). This price represents an increase of 3.6 per cent from Alvopetro's prior contracted price and will be effective for natural gas sales from Feb. 1, 2023, to July 31, 2023. Including recently approved and enhanced sales tax credits, the company's realized gas price, net of sales taxes, is expected to be $12.40/Mcf (based on the company's average heat content to date and the Jan. 31, 2023, BRL/USD foreign exchange rate of 5.10).

Corporate presentation

Alvopetro's updated corporate presentation is available on its website.

About Alvopetro Energy Ltd.

Alvopetro Energy's vision is to become a leading independent upstream and mid-stream operator in Brazil. The company's strategy is to unlock the onshore natural gas potential in the state of Bahia in Brazil, building off the development of its Cabure natural gas field and its strategic mid-stream infrastructure.

We seek Safe Harbor.