Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES RECORD Q1 2023 FINANCIAL RESULTS, AN OPERATIONAL UPDATE AND DETAILS FOR OUR UPCOMING AGM

Alvopetro Energy Ltd. has released record financial results for the three months ended March 31, 2023, an operational update, and details of its coming annual general and special meeting on June 21, 2023.

All dollar references herein refer to U.S. dollars, unless otherwise stated, and all tabular amounts are in thousands of U.S. dollars, except as otherwise noted.

President and chief executive officer Corey C. Ruttan commented: "Once again, we achieved record results this quarter, generating an operating netback of $66.61 per [barrel of oil equivalent] and $15-million in funds flow from operations, highlighting the strong profitability of our operations. Our production allocations from the Cabure unit declined in April and May, and our capital program in 2023 is focused on adding additional production from both our Murucututu natural gas field and our Bom Lugar oil field. We are looking forward to completing the stimulation on our 197(1) well and bringing the well on production later this month."

Operational update

It is stimulating the final stage of its 197(1) well at its Murucututu natural gas field. The well has already been tied into its 183(1) facility, and it is finalizing installation of necessary equipment and expects the well to be on production later this month. Additional development on this field in 2023 includes drilling two fit-for-purpose development wells, the first of which it expects to commence drilling in the third quarter.

On its Bom Lugar field, it spudded its first development well (BL-06) on April 30 and have drilled to a 1,150-metre measured depth of the expected 3,400 metres. The BL-06 well is targeting the Caruacu formation with additional potential in the deeper Gomo and Agua Grande formations. It expects drilling to be completed late in the second quarter.

Financial and operating highlights -- first quarter of 2023:

• For the third consecutive quarter, its average daily sales reached a new quarterly record, with Q1 2023 sales of 2,767 barrels of oil equivalent per day (2 per cent from fourth quarter 2022 and 11 per cent from first quarter 2022).
• Effective Feb. 1, 2023, its natural gas price under its long-term gas sales agreement with Bahiagas increased 4 per cent to 2.00 Brazilians reais per cubic metre. This price is effective for all natural gas sales from Feb. 1 to July 31, 2023. With the increased natural gas price effective for two months in the quarter and including enhanced sales tax credits available as of Jan. 1, 2023, its averaged realized natural gas price increased to $12.06 per thousand cubic feet (8 per cent from Q4 2022 and 20 per cent from Q1 2022). With the higher natural gas price applicable, its overall realized price per boe increased to $72.92 (7 per cent from Q4 2022 and 17 per cent from Q1 2022) despite lower Brent pricing on condensate sales. Higher realized prices and daily sales volumes resulted in a 30-per-cent increase in its natural gas, condensate and oil revenue compared with Q1 2022.
• With higher realized sales prices and lower effective royalties, its operating netback increased $12.67 per boe from Q1 2022 to $66.61 per boe in Q1 2023 (23 per cent) and increased $6.53 per boe from Q4 2022.
• The company generated record funds flows from operations of $15.0-million (41 cents per basic share and 40 cents per diluted share), an increase of $4.1-million compared with Q1 2022 and $1.8-million compared with Q4 2022.
• The company reported net income of $12.2-million in Q1 2023, an increase of $1.1-million (10 per cent) compared with Q1 2022.
• Capital expenditures totalled $3.3-million, including stimulation costs for its 197(1) well on its Murucututu field, testing costs for its 182-C2 well, testing of the Unit-C well and facility expansion at the Cabure unit, and long-lead purchases.
• In January, it received approval from the TSX Venture Exchange for a normal course issuer bid, which permits Alvopetro to repurchase up to 2,876,414 common shares from Jan. 6, 2023, to the earlier of Jan. 5, 2024, or when the NCIB is completed or terminated by Alvopetro. In addition, in March, it received approval from the TSX-V to enter into an automatic share purchase plan (ASPP), which allows for repurchases under the NCIB at times when it may not otherwise be permitted to repurchase shares due to regulatory restrictions and customary self-imposed blackout periods. No repurchases have been made under the NCIB.
• Its Q1 2023 dividend increased 17 per cent to 14 cents per share. The Q1 2023 dividend was paid on April 14, 2023, to shareholders of record on March 31, 2023.
• Its cash and working capital increased to $20.9-million, an improvement of $6.2-million compared with Dec. 31, 2022, and an increase of $8.6-million compared with March 31, 2022.

The attached table provides a summary of Alvopetro's financial and operating results for the three months ended March 31, 2023, and March 31, 2022. The consolidated financial statements with management's discussion and analysis are available on its website and will be available on the SEDAR website.

Q1 2023 results webcast

Alvopetro will host a live webcast to discuss its Q1 2023 financial results at 8 a.m. Mountain Time on Thursday, May 11, 2023. Details for joining the event are as follows.

Date:  May 11, 2023

Time:  8 a.m. Mountain Time/10 a.m. Eastern Time

Webinar ID:  891 9392 6478

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

Annual general meeting

Alvopetro's annual general and special meeting will be held on Wednesday, June 21, 2023, at the Penn West Plaza Conference Centre (Suite 211, 207 9th Ave. Southwest, Calgary, Alta.) beginning at 9:30 a.m. Mountain Time. The management information circular and all related materials will be available on its website and SEDAR later this month.

All interested parties are invited to attend the meeting. It will also broadcast the meeting by live webcast for the interest of all shareholders. Please be advised that shareholders will not be able to vote any shares through this webcast format. Details for joining the event are as follows.

Date:  June 21, 2023

Time:  9:30 a.m. Mountain Time/11:30 a.m. Eastern Time

Webinar ID:  831 6168 7257

Corporate presentation

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

Alvopetro's vision is to become a leading independent upstream and mid-stream operator in Brazil. Its 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.