Mr. Corey Ruttan reports

ALVOPETRO ANNOUNCES 2023 YEAR END RESERVES

Alvopetro Energy Ltd. has released its reserve data as at Dec. 31, 2023, with total proved plus probable (2P) reserves of 8.7 million barrels of oil equivalent (boe) and a before-tax net present value discounted at 10 per cent (NPV10) of $309.7-million, risked best estimate contingent resources of 5.4 million boe (NPV10 of $126.1-million) and risked best estimate prospective resources of 9.6 million boe (NPV10 of $184.9-million). The reserves and resources data set forth herein are based on an independent reserves and resources assessment and evaluation prepared by GLJ Ltd. (GLJ) dated Feb. 26, 2024, with an effective date of Dec. 31, 2023 (the GLJ reserves and resources report).

The GLJ reserves and resources report incorporates Alvopetro's working interest share of remaining recoverable reserves held by Alvopetro in the Cabure and Murucututu natural gas fields and the Bom Lugar and Mae-da-lua oil fields, as well as Alvopetro's working interest share of remaining recoverable resources held by Alvopetro in the Murucututu natural gas field. With respect to Murucututu, Bom Lugar and Mae-da-lua, Alvopetro's working interest share is 100 per cent. With respect to the unitized area (the unit), which includes the company's Cabure and Cabure Leste fields (collectively referred to as Cabure in this news release) and two fields held by its third party partner in the unit, Alvopetro's working interest share as of Dec. 31, 2023, was 49.1 per cent, with the remaining 50.9 per cent held by Alvopetro's partner. As previously announced by the company, the first redetermination of the working interests to each party commenced in the fourth quarter of 2023. The parties engaged an independent expert to evaluate the redetermination. Pursuant to the provisions of the UOA, where an expert is engaged, the expert's determination shall be made using what is commonly referred to as the pendulum method of dispute resolution. Under this method, the expert is not required or permitted to provide their own interpretation but is required to select the single final proposal (between the two partners' respective final proposals), which, in the expert's opinion, provides the most technically justified result of the application of the relevant information and data and material provided to the expert consistent with the UOA and all related documents. As of the date of this news release, the outcome of the expert's decision and the resulting working interest to Alvopetro following the decision is uncertain. The resulting impact on Alvopetro's reserves and future cash flows may be material and may have a material adverse effect on Alvopetro. The impact on Alvopetro's working interest will be effective on the first calendar day of the second month following the date of the decision of the expert, subject to any government approvals that may be required. The decision of the expert is expected near the end of the first quarter of 2024. The GLJ reserves and resource report and the references included herein are based on the 49.1-per-cent interest in Cabure, Alvopetro's working interest share as of Dec. 31, 2023. The reserves data included in this news release and in the GLJ reserves and resources report may be materially impacted following the expert's decision.

All monetary references herein refer to United States dollars, unless otherwise stated.

Dec. 31, 2023, GLJ reserves and resource report:

• Proved reserves (1P) decreased 30 per cent to 2.7 million boe proved reserves mainly due to 2023 production and technical revisions related to the 197-1 and 183-1 Murucututu wells. Alvopetro is working to enhance production from these wells with optimizations in 2024.
• 2P reserves decreased 4 per cent from 9.0 million to 8.7 million boe after 800,000 boe of production in 2023. Production in 2023 was offset by improved recovery factors at Cabure due to the agreed unit development plan and new additions associated with the discovery at the 183-A3 well in the Caruacu formation.
• Proved plus probable plus possible reserves (3P) increased to 15.2 million boe from 14.4 million boe as a result of additions associated with the discovery at the 183-A3 well in the Caruacu formation.
• 2P NPV10 decreased 11 per cent to $309.7-million due to changes in forecast natural gas prices and 2023 production, offset mainly by additional value associated with discovered zones in the Caruacu formation on the company's Murucututu natural gas field.
• Risked best estimate contingent resources increased from 2.9 million boe to 5.4 million boe at Dec. 31, 2023, with an NPV10 of $126.1-million, increases from Dec. 31, 2022, of 84 per cent and 103 per cent, respectively. The increases were associated with the discovery at the 183-A3 well in the Caruacu formation.
• Risked best estimate prospective resources decreased from 12.5 million boe to 9.6 million boe with an NPV10 of $184.9-million, decreases of 23 per cent and 29 per cent, respectively, from Dec. 31, 2022. The decrease was due primarily to adjustments to the probabilistic models incorporating the logs results for the Gomo zone at the 183-A3 well.

Pricing assumptions -- forecast prices and costs

GLJ employed the following pricing and inflation rate assumptions as of Jan. 1, 2024, in the GLJ reserves and resources report in estimating reserves and resources data using forecast prices and costs.

As of Feb. 1, 2024, Alvopetro's contracted natural gas price under the terms of its long-term gas sales agreement is based on the ceiling price within the contract. Pricing is forecast to stay slightly below the ceiling for future price adjustments. The ceiling price incorporates assumed U.S. inflation of 2 per cent.

GLJ reserves and resources report

The GLJ reserves and resources report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the COGE Handbook) that are consistent with the standards of National Instrument 51-101 (NI 51-101). GLJ is a qualified reserves evaluator as defined in NI 51-101. The GLJ reserves and resources report was an evaluation of all reserves of Alvopetro, including Alvopetro's working interest share as of Dec. 31, 2023, of the unit (referred to herein as the Cabure natural gas field), Alvopetro's Murucututu natural gas project, as well as its Bom Lugar and Mae-da-lua oil fields. The GLJ reserves and resources report also includes an evaluation of the gas resources of the company's Murucututu natural gas field. In addition to the reserves assigned to Alvopetro's Murucututu field, contingent resource was assigned to the area in proximity to its existing Murucututu reserves, deemed to be discovered. The area mapped by 3-D seismic west and north of the area defined as contingent was assigned prospective resource. Additional reserves and resources information as required under NI 51-101 will be included in the company's annual information form for the 2023 fiscal year, which will be filed on SEDAR+ by April 30, 2024.

Future development costs (1) (2) (3) (7) (8)

An attached table sets out the total development costs deducted in the estimation of future net revenue attributable to proved reserves, proved plus probable reserves and proved plus probable plus possible reserves (using forecast prices and costs), by field, in the GLJ reserves and resources report. Total development costs include capital costs for drilling and completing wells and for facilities but exclude abandonment and reclamation costs.

The future development costs for the Cabure field include Alvopetro's working interest share (49.1 per cent) for three development wells in the proved category and an additional two development wells in the probable and possible categories. Also included in future development costs for Cabure are costs associated with a facilities upgrade planned at the field for compression of natural gas to be delivered to Alvopetro's natural gas processing facility. In prior years, Alvopetro reflected all equipment rental payments associated with its gas treatment agreement with Enerflex Ltd. as part of future development costs; however in 2023, such costs are now incorporated within operating expense along with other operating costs associated with the agreement. The future costs associated with equipment rental are also reflected as a capital lease obligation on the company's financial statements.

The future development costs for the Murucututu field in the proved category include one development well and stimulation costs for the 183-1 and 183-A3 wells and one project to improve recovery from the 197(1) well. The probable category also includes an additional two development wells along with additional stimulation projects at the 183-1 and 183-A3 wells. The possible category includes one additional well.

The future development costs for Bom Lugar in the proved category include costs to stimulate the BL-06 well drilled by Alvopetro in 2023. Costs in the probable category also include one development well and costs for facilities upgrade. Future development costs at the Mae-da-lua field relate to a stimulation of the existing producing well.

Alvopetro's share of future development costs is summarized in attached tables.

The GLJ contingent resource report for Murucututu assumes capital deployment starting in 2025 for the drilling and completion of wells with total project costs of $20.8-million and first commercial production in 2025. The information presented herein is based on company net project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.

There can be no certainty that the project will be developed on the timelines discussed herein. The project is based on a predevelopment study. Development of the project is dependent on several contingencies as further described in this news release. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.

Summary of development pending risked company gross contingent resources (1) (2) (5) (6)

The GLJ reserves and resources report estimates the chance of development as the product of two main contingencies associated with the project development, which are: (1) the probability of corporate sanctioning, which GLJ estimates at 95 per cent; (2) the probability of finalization of a development plan, which GLJ estimates at 95 per cent. The product of these two contingencies is 90 per cent. As there is no risk related to discovery, the chance of commerciality for the contingent resource is therefore 90 per cent which is the risk factor that has been applied to the development risked company gross contingent resources and the net present value figures reported in attached tables.

The GLJ reserves and resources report for Murucututu prospective resources assumes capital deployment starting in 2026 for the drilling and completion of wells and pipeline expansion costs, with total project costs of $75.8-million and first commercial production in 2026. The information presented herein is based on company project development costs. The recovery technology assumed for purposes of the estimate is based on established technologies utilized repeatedly in the industry.

There can be no certainty that the project will be developed on the timelines discussed herein. Development of the project is dependent on several contingencies as further described in this news release. The project is based on a conceptual study. Significant positive factors relevant to the estimate include existing production in close proximity, proximity to infrastructure, existing long-term gas sales agreement and corporate commitment to the project. Significant negative factors relevant to the estimate include reservoir performance and the economic viability of the project (with sensitivity to low commodity prices), access to and amount of capital required to develop resources at an acceptable cost, and regulatory approvals for planned activities including stimulations and new infrastructure developments.

Summary of development risked company gross prospective resources (1) (2) (4) (6)

The GLJ reserves and resources report estimates the chance of commerciality as the product between the chance of discovery and the chance of development. The chance of discovery of the prospective resources has been assessed at 90 per cent, while the chance of development has been assessed as the same as for the contingent resources described above at 90 per cent. The resulting chance of commerciality is 81 per cent, which has been applied to the company gross unrisked prospective resources and the net present value figures reported in attached tables.

Upcoming 2023 results and live webcast

Alvopetro anticipates announcing its 2023 fourth quarter and year-end results on March 19, 2024, after markets close and will host a live webcast to discuss the results at 8 a.m. Mountain Time on March 20, 2024. Details for joining the event are as follows.

Date:  March 20, 2024

Time:  8 a.m. Mountain Time (10 a.m. Eastern Time)

Zoom webinar ID No.:  83920744797

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. 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.