CALGARY, May 17, 2016 /CNW/ - Alvopetro Energy Ltd. (TSX-V:ALV) is pleased to provide an operational update and announce our first quarter financial and operating results.  

Operational Update

We continue to maintain our focus on building a natural gas business by securing a gas sales contract and finalizing the field commercialization plan for our 197(2) gas discovery. Concurrently, we have taken steps to preserve our financial resources through cost reductions and a disciplined 2016 capital plan of $8.0 million focused on high potential exploration prospects. Our next well, the 256(A1) well, is a multi-zone prospect on Block 256 and one of our largest exploration prospects to date. Block 256 is located near existing State gas transmission infrastructure and the drilling of 256(A1) will fulfil our exploration work commitments on the Block. We have completed the majority of the site construction for this well and expect to commence drilling in the second half of 2016. 

In light of our continued efforts to reduce costs, we have terminated the production facilities rental contract for our 182(B1) well and plan to transition to company owned equipment over the coming months. The 182(B1) well will be offline during this period with production expected to resume in the third quarter of 2016. 

Financial and Operating Highlights – Q1 2016

• In the first quarter of 2016, our production increased to 58 bopd, primarily due to the 182(B1) well which came on production late in 2015 and contributed a total of 33 bopd in the quarter. 
• Capital and other asset expenditures of $3.1 million in the first quarter include $2.4 million in drilling costs for our 170(B1) well and $0.2 million in site construction for our 256(A1) well.
• We reported a net loss of $4.5 million in the first quarter, primarily due to a $3.0 million impairment booked on Block 170. On March 29, 2016, the Company notified the National Agency of Petroleum, Natural Gas and Biofuels ("ANP") of its intention to relinquish this block due to the lack of a commercial discovery of hydrocarbons on the 170(B1) well.
• In January 2016, the Company relinquished Block 196 and paid the related performance guarantee fee of $0.8 million. The Company had not identified any prospects on this block and the carrying value of the block had been fully impaired in the 2014 and 2015 financial statements.
• Our cash and working capital resources total $25.1 million, including $27.4 million of cash and cash equivalents. As of March 31, 2016, the Company no longer holds any restricted cash and all restricted cash balances outstanding at December 31, 2015 were made available during the three months ended March 31, 2016.

Summary of Q1 2016 Financial and Operating Results

The following table provides a summary of Alvopetro's financial and operating results for the three months ended March 31, 2016 and March 31, 2015. The consolidated financial statements with the Management's Discussion and Analysis ("MD&A") are available on our website at www.alvopetro.com and will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.

Annual General Meeting

Alvopetro's Annual General Meeting is scheduled to be held on Thursday, May 19, 2016 at 9:00 a.m. at the Centrium Place Conference Centre, 2nd Floor (+15 level), 332 - 6th Avenue S.W. Calgary, Alberta, Canada. All interested parties are invited to attend. For those unable to attend in person, a recording will be available on our website at www.alvopetro.com after the meeting.

Updated Corporate Presentation

Alvopetro's updated corporate presentation is available at: http://www.alvopetro.com/corporate-presentation.

Alvopetro Energy Ltd.'s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by applying innovation to underexploited opportunities. Our strategy is to focus on three core opportunities including lower risk development drilling on our mature fields, shallow conventional exploration, and the development of the significant hydrocarbon potential present in our deep Gomo tight-gas resource play.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

All amounts contained in this news release are in United States dollars, unless otherwise noted. 

Forward-Looking Statements and Cautionary Language. This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "plan", "intend" and other similar words or expressions are intended to identify forward-looking information. More particularly and without limitation, this news release contains forward-looking information concerning financial results and operating results, reserves and potential hydrocarbons in our assets, exploration and development prospects of Alvopetro and the expected timing of certain of Alvopetro's testing and operational activities. The forward‐looking statements are based on certain key expectations and assumptions made by Alvopetro, including expectations and assumptions concerning testing results, the timing of regulatory licenses and approvals, availability of capital, the success of future drilling and development activities, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Although Alvopetro believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Alvopetro can give no assurance that it will prove to be correct. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Alvopetro are included in our annual information form which may be accessed through the SEDAR website at www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and Alvopetro undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Non-GAAP Measures.  This news release contains financial terms that are not considered measures under Canadian generally accepted accounting principles ("GAAP"), such as funds flow from operations, funds flow per share, net working capital surplus and operating netback. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. Specifically, funds flow from operations and funds flow per share reflect 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 Company's ability to generate sufficient cash to fund future growth opportunities. Net working capital surplus includes current assets (including current restricted cash) less current liabilities (excluding the current portion of decommissioning obligations) and is used to evaluate the Company's financial leverage. Operating netback is determined by dividing oil sales less royalties and production taxes, 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 economic quality of production. Funds flow from operations, funds flow per share, net working capital surplus 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 GAAP.

SOURCE Alvopetro Energy Inc.