Corporate Presentation
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Corporate Presentation
Corporate Presentation May 2015 Cautionary Statements Forward Looking Statements. Statements in this presentation may contain forward-looking statements including management’s assessment of future plans, operations, expectations of future production and capital expenditures. Information concerning resources is deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be economically produced. These statements are based on current expectations that involve numerous risks and uncertainties, which may cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks inherent in the oil and gas industry, operational risks relating to exploration, development and production; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks; and fluctuation in foreign currency exchange rates and commodityprice fluctuation. As a consequence, actual results maydiffer materiallyfrom those anticipated in the forward-looking statements. Undiscovered Petroleum Initially-In-Place (“UPIIP”), equivalent to ‘undiscovered resources’, are those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UPIIP is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Discovered Petroleum Initially-In-Place (“DPIIP”), equivalent to ‘discovered resources’, is that quantity of oil that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves, and contingent resources; the remainder is unrecoverable. There is no certainty that it will be commerciallyviable to produce anyportion of the resources. Total Petroleum Initially-In-Place ("TPIIP“) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. There is no certainty that undiscovered resources will be discovered. If discovered, there is no certainty that it will be commerciallyviable to produce any portion of the resources. Test results. There is no representation by Al vopetro that the data relating to any well test results contained in this presentation is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future. Non IFRS Measures. This presentation contains financial terms that are not considered measures under International Financial Reporting Standards (“IFRS”), such as funds flow from operations, funds flow per share, operating netback and working capital. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. We evaluate our performance based on funds flow from operations. Funds flow from operations is a non-IFRS term that represents cash generated from operating activities before changes in non-cash working capital. Management considers funds flow from operations and funds flow per share important as they help evaluate performance and demonstrate the Alvopetro’s ability to have or generate sufficient cash to fund future growth opportunities. Working capital surplus includes current assets less current liabilities and is used to evaluate the Company's short-term financial leverage. Operating netback is determined by dividing oil sales less royalties, transportation and operating expenses by sales volume of produced oil. Management considers operating netback important as it is a measure of profitability per barrel sold and reflects the quality of production. Funds flow from operations, funds flow per share, working capital and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations, net income or other measures of financial performance calculated in accordance with IFRS. Net Present Value. The net present value of future net revenue attributable to Alvopetro’s reserves is stated without provision for interest costs and general and administrative costs, but after providing for estimated royalties, production costs, development costs, other income, future capital expenditures, and well abandonment costs for only those wells assigned reserves by Sproule. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Alvopetro’s reserves estimated by Sproule represent the fair market value of those reserves. Other assumptions and qualifications relating to costs, prices for future production and other matters are summarized herein. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein. 2 Alvopetro’s Vision and Strategy Our vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by being the lowest cost operator and applying innovation to underexploited opportunities. Alvopetro’s strategy pursues three core opportunities: • Large tighter hydrocarbon resource • Shallow conventional exploration • Mature fields 3 Recôncavo Basin, Brazil • Total Area: 10,000 square km • First oil drilled (1939) • 6,000 wells drilled • 86 producing fields • Developed infrastructure • TPIIP – 6.3 billion bbls (conventional) • OGIP – 3.2 TCF (conventional) • Cumulative production – 1.5 billion bbls • 34 degree API light oil • Oil production 41,000 bbl/d • Natural gas production 120 mmcf/d Alberta outline compared to Parnaiba Basin 4 Focused Land Base • 126,138 acres (100% WI) • 12 exploration blocks • 1,200 km2 of 3D seismic • Captured large portion of deep Gomo play fairway in Miranga Low – large tight natural gas resource • 18-well inventory of shallow conventional exploration prospects • 3 mature fields - NPV10 (AT) 2P reserves of US$13.0 million (as at December 31, 2014) Notes: (1) Does not include Recôncavo Blocks 169, 198, 255 and 256 awarded to Alvopetro in Brazil’s 12th Bid Round. (2) Internal Management estimate. 5 Seismic Processing is Critical BL-001 ~300 MB EUR BL-001 ~300 MB EUR SW NE NE SW Pojuca Mar fim Pr oducing Zone Pr e-Rift Processed Version from BDEP Reprocessed 3D 6 Recôncavo Basin Geological Model ANP 4th Bid round - Modified from Braga et al., 1987 7 Gomo Resource - Block 197/183 Pilot 197(1) Well • • • Encountered 43 metres potential net hydrocarbon pay Recovered over 78 metres of core Lower zone flowed natural gas at an average rate of 40 mcf/day, unstimulated 183(1) Well • Encountered 189 meters potential net hydrocarbon pay (3 key zones) • Upper thick zone: 46m of indicated net oil pay, average porosity 10% • 3m zone: 14% porosity zone • Deep natural gas zone: 93m of net pay, average porosity 7% • Recovered over 40 metres of core • Defined deep basin natural gas potential over a large mapped area 8 Block 197/183 Geobodies A’ A Jan2 183-1 197-1 Deep Natural Gas Geobody • Mapped off reprocessed 3D seismic • 1.3 TCF TPIIP (mgmt. est.) Upper Gomo Geobody • 96m net pay in 183(1), avg. porosity 11% Deep Gas Geobody 5,460 Acres Tested Gas A’ 3275m 3550m 183-1 A 197-1 Gas Geobody Isopach 20 m C.I. Seismic sequences can be mapped and aerial extent defined. 10 197(2) Well - Conventional Target IMET-3 offset well log • 198 1217m Caruacu Fm 197 Gas/water contact ALV 197(2) well IMET-3 well • Alvopetro 197(2) well drilled to 1,669 m and encountered 78 m of potential natural gas pay • Tested 3 intervals (15m of pay, combined results: 72hour test 8.7 mmcfpd • PTA – forecasted deliverability: IP90 12.5 mmcfpd, IP365 6.9 mmcfpd 1388m 211 Alvopetro 197(2) well offsets an existing discovery with 67 m of net pay that tested 3.6 mmcf/d from a 4metre perforated interval 212 Caruacu time structure 10 ms contour interval 10 Brazil: Gas Marketing Environment December 2014 Brazil Average Natural Gas Prices paid to Petrobras by local State distributors: • US$11.05/MMBtu • US$7.40/MMBtu (discounted) • • • High demand for natural gas in Brazil, approx. 1.3 Tcf demand/year. In 2014, on average, Brazil imported 30.0 mmcm/day of natural gas from Bolivia Gas infrastructure nearby Alvopetro’s operations (see below) December 2014 Brazil Average Natural Gas Prices paid by Industrial Consumers including taxes and tarrifs: • US$13.80/MMBtu December 2014 average International Pricing (Reference): • Henry Hub: US$3.52/MMBtu Sources: Brazilian Association of Large Industrial Energy Consumers and Free Consumer, and Brazil Ministry of Mines and Energ y (http://www.mme.gov.br/) 11 Gas Sales Options • • • • • Compressed natural gas Thermal power plants – 125 MW ~ 30 mmscfpd Bahia Gas – local State distribution company Large industrial users, largest consumes ~35 mmcfpd Petrobras – tie into national grid 12 Bom Lugar Development & Block 107 Prospect ALV-BL-2 (RQ-1) ALV-BL-8 ALV-BL-1 Bom Lugar Block 107 Alvopetro prospect location Alvopetro follow-up location • Alvopetro plans to drill two wells on our Bom Lugar Block in 2015 • ALV-BL-1 (Caruaçu 2,450 m) Sproule estimated 485,000 bbl recoverable per well based on BL-1 13 2015 Capital Plan and Strategy Alvopetro’s strategy pursues three core opportunities: • Large Tight Hydrocarbon Resource: proving the commercial viability of the Gomo resource in the Recôncavo Basin • Shallow Conventional Oil Exploration: targeting prospects generated from our reprocessed 3D seismic database • Mature Fields: development drilling focused on generating near-term oil production and sustainable operating cash flows Our US$17 million base 2015 capital forecast is expected to include: • • • • • Commercialize our 197(2) natural gas discovery Completing and testing the 183(1) well and defining Gomo deliverability through the use of fracture stimulations and reservoir modelling Currently drilling our 182(2) conventional oil exploration prospect Drilling one additional conventional oil exploration prospect (Block 170 or 107) Drilling our first oil development well on our Bom Lugar mature field 14 Accomplishments • Completed the Alvopetro reorganization from the sale of Petrominerales in Nov 2013 • Reprocessed all available 3D seismic • Successfully two-well Gomo pilot drilling two of the deepest wells in the area in the past 20 years (197(1) and 183(1)) • Defined an extensive deep natural gas resource opportunity • Drilled our first conventional exploration well – 197(2) natural gas discovery • Built an 18-well inventory of conventional exploration prospects • Increased our working interest in Block 170 to 100% • Enhanced our financial flexibility with EDC credit facility 15 The Alvopetro Opportunity • Experienced Team • Well capitalized - US$43.7 million(1) of financial resources • Highly under-explored prospective land base (126,138 acres 100% working interest) • Balanced suite of opportunities • Attractive valuation Note: (1) As at March 31, 2015, includes cash, restricted cash (current and non-current) and other working capital resources. 16 Contact us: Calgary, Canada: Alvopetro Energy Ltd. Suite 1175, 332 6th Ave. SW Calgary, Alberta, Canada T2P 0B2 Tel: (587) 794-4224 Email: [email protected] Salvador, Brazil: Alvopetro S/A Extração de Petróleo e Gás Natural Rua Ewerton Visco, 290, Boulevard Side Empresarial, Sala 2004, Caminho das Árvores, Salvador-BA CEP 41.820-022 TEL: + 55 (71) 3432-0917 Email: [email protected] www.alvopetro.com TSX-V: ALV
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