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