Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES Q3 2023 FINANCIAL RESULTS AND AN OPERATIONAL UPDATE

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

All dollar references 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:

"While sales volumes were lower in Q3 2023 due to temporary reductions in demand, we were still able to generate record operating netbacks of $70.34 per boe and $9.6-million of funds flow from operations. Our production rates in October increased back up to 1,839 boepd. Capital expenditures in Q3 were focused on drilling our 183-A3 well, the first fit-for-purpose development well on our Murucututu natural gas field. The initial results from drilling are promising and we look forward to completing the well and bringing it on production later in the year."

Operational update

Alvopetro completed drilling the 183-A3 well on its 100-per-cent-owned Murucututu natural gas field in October. The well was drilled to a total measured depth of 3,540 metres and, based on open-hole logs, the well encountered potential net natural gas pay in both the Caruacu member of the Maracangalha formation and the Gomo member of the Candeias formation, with an aggregate 127.7 metres total vertical depth of potential natural gas pay, using a 6-per-cent porosity cut-off, 50-per-cent Vshale cut-off and 50-per-cent water saturation cut-off. Subject to equipment availability and regulatory approvals, Alvopetro expects to commence completion operations on the well later this month. The well will then be put on production directly into the adjacent field production facility.

October sales volumes increased to 1,839 boepd, an 8-per-cent increase from Q3 2023. October sales included natural gas sales of 10.6 million cubic feet per day (mmcfpd), associated natural gas liquids sales from condensate of 67 barrels of oil per day (bopd) and oil sales of eight bopd, based on field estimates.

In October, Alvopetro completed the BL-06 well on its Bom Lugar field and brought the well on production. October production volumes are expected to be sold in November. Based on field production data, the well is currently producing at an average of 14 bopd.

Financial and operating highlights -- third quarter of 2023:

• With reduced offtake from Bahiagas during the quarter following reductions in end-user consumption, Alvopetro's average daily sales decreased to 1,696 boepd (minus 14 per cent from Q2 2023 and minus 36 per cent from Q3 2022).
• Alvopetro's average realized natural gas price increased to $13.06 per thousand cubic feet (mcf), a 17-per-cent increase from Q3 2022 with the 3-per-cent increase in Alvopetro's contracted natural gas price, enhanced sales tax credits available in 2023 and a 7-per-cent appreciation in the average Brazilian real to U.S. dollar in Q3 2023 compared with Q3 2022. With the higher natural gas price, Alvopetro's overall realized price per boe increased to $78.90 (plus 15 per cent from Q3 2022 and plus 2 per cent from Q2 2023).
• Alvopetro's natural gas, condensate and oil revenue was $12.3-million in Q3 2023, a decrease of $4.4-million (minus 26 per cent) compared with Q3 2022 and a decrease of $1.6-million (minus 12 per cent) compared with Q2 2023.
• Alvopetro's operating netback improved to $70.34 per boe (plus $10.51 per boe from Q3 2022 and plus 73 cents per boe from Q2 2023) with higher realized sales prices, partially offset by the impact of fixed operating costs with lower sales volumes.
• Alvopetro generated funds flows from operations of $9.6-million (26 cents per basic and 25 cents per diluted share), a decrease of $3.7-million compared with Q3 2022 and $1.4-million compared with Q2 2023.
• Alvopetro reported net income of $5.8-million in Q3 2023, a decrease of $3.0-million (minus 34 per cent) compared with Q3 2022 and $4.0-million (minus 41 per cent) compared with Q2 2023.
• Capital expenditures totalled $10.7-million, including drilling costs for the 183-A3 well on Alvopetro's Murucututu natural gas field, drilling and completion costs for the BL-06 well on the Bom Lugar field, and long-lead purchases for future capital projects.
• Alvopetro's working capital surplus was $11.4-million as of Sept. 30, 2023, decreasing $6.7-million from June 30, 2023, and $3.3-million from Dec. 31, 2022.

An attached table provides a summary of Alvopetro's financial and operating results for three and nine months ended Sept. 30, 2023, and Sept. 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+.

Q3 2023 results webcast

Alvopetro will host a live webcast to discuss its Q3 2023 financial results at 9 a.m. Mountain Time on Thursday, Nov. 9, 2023. Details for joining the event are as follows.

Date:  Nov. 9, 2023

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

Webinar ID:  85946332872

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.

Long-term incentive compensation grants

In connection with Alvopetro's long-term incentive compensation program, Alvopetro's board of directors has approved the annual rolling grants to officers, directors and certain employees under Alvopetro's omnibus incentive plan. A total of 638,000 stock options, 107,000 restricted share units (RSUs) and 31,000 deferred share units (DSUs) were approved by the board and are expected to be granted on Nov. 17, 2023. Of the total grants, 271,000 stock options, 70,000 RSUs and 31,000 DSUs will be granted to directors and officers. Each stock option, RSU or DSU entitles the holder to purchase one common share. Each stock option granted will have an exercise price based on the volume weighted average trading price of Alvopetro's shares on the TSX Venture Exchange for the five consecutive trading days up to and including Nov. 17, 2023. All stock options granted expire five years from the date of the grant. All RSUs and DSUs granted expire 10 years from the date of the grant.

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

We seek Safe Harbor.