Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES Q2 2023 FINANCIAL RESULTS AND AN OPERATIONAL UPDATE

Alvopetro Energy Ltd. has released its financial results for the three and six months ended June 30, 2023, and has provided an operational update.

All references herein to dollars refer to United States 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:

"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-per-cent 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 the company's Murucututu natural gas field. The well was spudded on July 11 and is targeting shallower exploration potential in the Caruacu formation and the Gomo member of the Candeias formation. Alvopetro expects drilling to be completed later this quarter. It also expects to complete its recently drilled Bom Lugar well (BL-06) and have the well on production in the third quarter.

Alvopetro's natural gas price under its long-term gas sales agreement with Bahiagas was adjusted effective Aug. 1 to 1.99 Brazilian reais per cubic metre (m3) or $13.25 per thousand cubic feet (mcf), based on the company's average heat content to date, the July 31, 2023 Brazilian-real/U.S.-dollar foreign exchange rate of 4.74 and enhanced sales tax credits applicable in 2023. This new gas price is effective for all of Alvopetro's natural gas sales from both its Cabure and Murucututu fields as of Aug. 1, 2023.

Financial and operating highlights -- second quarter of 2023:

• Average daily sales decreased to 1,975 barrels of oil equivalent per day (boepd) (minus 29 per cent from Q1 2023 and minus 16 per cent from Q2 2022) due mainly to reduced production from Alvopetro's Cabure natural gas field as a result of higher nominated volumes from the company's partner.
• Alvopetro's average realized natural gas price increased to $12.86 per mcf, an 8-per-cent increase from Q2 2022, with the 3-per-cent increase in Alvopetro's contracted natural gas price and enhanced sales tax credits available in 2023. Compared with Q1 2023, Alvopetro's realized sales price increased 7 per cent, due mainly to the appreciation of the Brazilian real to the U.S. dollar in Q2. With the higher natural gas price, Alvopetro's overall realized price per boe increased to $77.41 (plus 6 per cent from Q1 2023 and plus 5 per cent from Q2 2022), despite lower Brent pricing on condensate sales.
• Alvopetro's natural gas, condensate and oil revenue was $13.9-million in Q2 2023, a decrease of $1.9-million compared with Q2 2022 (minus 12 per cent), due to a 16-per-cent decrease in production, partially offset by the increase in realized sales prices per boe.
• Alvopetro's operating netback improved to $69.61 per boe (plus $3 per boe from Q1 2023 and plus $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.
• Alvopetro generated funds flows from operations of $11.0-million (30 cents per basic share and 29 cents per diluted share), a decrease of $1.4-million compared with Q2 2022 and $3.9-million compared with Q1 2023.
• Alvopetro reported net income of $9.9-million in Q2 2023, an increase of $3.2-million (plus 49 per cent) compared with Q2 2022.
• Capital expenditures totalled $8.5-million, including drilling cost for Alvopetro's BL-06 well on its Bom Lugar field, stimulation costs for Alvopetro's 197(1) well on its Murucututu field and long-lead purchases for future capital projects.
• Alvopetro's 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 Dec. 31, 2022.

The attached table provides a summary of Alvopetro's financial and operating results for three and six months ended June 30, 2023, and June 30, 2022. The consolidated financial statements with the management's discussion and analysis (MD&A) are available on Alvopetro's website and will be available on SEDAR+.

Q2 2023 results webcast

Alvopetro will host a live webcast to discuss its Q2 2023 financial results at 9 a.m. Mountain Time on Thursday, Aug. 10, 2023. Details for joining the event are as follows.

Date:  Aug. 10, 2023

Time:  9 a.m. Mountain Time (11 a.m. Eastern Time)

Dial-in numbers:  available on-line

Webinar ID No.:  837 2379 6296

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.

Corporate presentation

Alvopetro's updated corporate presentation is available on the company's website.

Alvopetro's vision is to become a leading independent upstream and mid-stream operator in Brazil. Its strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of its Cabure and Murucututu natural gas fields and its strategic mid-stream infrastructure.

Non-GAAP (generally accepted accounting principles) 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 (international financial reporting standards) and might not be comparable with 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 with similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this report 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. For more information with respect to financial measures that 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 SEDAR+.

We seek Safe Harbor.