CALGARY, AB, March 17, 2026 /CNW/ - Alvopetro Energy Ltd. (TSXV: ALV) (OTCQX: ALVOF) ("Alvopetro" or the "Company") announces an operational update, our financial results for the year ended December 31, 2025, a quarterly dividend of US$0.12 per common share and filing of our annual information form. We will be hosting a live webcast to discuss our Q4 2025 results on Wednesday March 18, 2026 at 8:00 a.m. Mountain time.
All references herein to $ refer to United States dollars, unless otherwise stated and all tabular amounts are in thousands of United States dollars, except as otherwise noted.
President & CEO, Corey C. Ruttan commented:
"2025 was a transformational year for Alvopetro. Mainly off the success of our 183-D4 well on our 100% owned Murucututu asset, year-over-year we increased average daily sales by 41% to 2,523 boepd and grew 2P reserves by 43% to 13.1 MMboe, replacing production over 5 times. With record production to start the year, we are well positioned for another exceptional year in 2026."
Operational Update
Following the success of our 183-D4 well on our 100% owned Murucututu field, we are now focused on enhancing and expanding our capacity to deliver additional Murucututu production, positioning this asset for sustained multi-year growth. We plan to expand our Murucututu field production facility and pipelines to support an increase in our Murucututu field capacity from our current level of approximately 150 e(3) m(3) /d up to 600 e(3) m(3) /d. Simultaneously, we plan to enhance our gas processing capabilities at UPGN Caburé to accommodate higher proportions of richer gas from Murucututu, and also targeting an overall capacity of up to 600 e(3) m(3) /d.
On the drilling and completions front, on our 100% owned Murucututu field, we have just recompleted our 183-1 well in a lower portion of the Gomo Formation and are working to bring the well back online. Upcoming plans on the field in 2026 involve drilling and completing a new well in the Caruaçu Formation, as well as permitting a new drilling pad to support future Caruaçu development updip of the successful 183-D4 well. We expect drilling to commence next month. At Caburé (56.2% working interest), 2026 capital plans include the sidetrack of one unfinished well from 2025.
In Canada, we have completed drilling two (1.0 net) additional wells in 2026 . One (0.5 net) well requires remedial action but we now have 7 (3.5 net) wells on production. We have also added an additional 5 gross sections of land in one of our core-areas bringing our land position to 80.5 gross sections (25,760 net acres) targeting the Mannville stack heavy oil play fairway with over 100 Tier 1 drilling locations.
On February 25, 2026, we announced our December 31, 2025 reserves based on the independent reserve assessment and evaluation prepared by GLJ Ltd. ("GLJ") dated February 25, 2026 with an effective date of December 31, 2025 (the "GLJ Reserves and Resources Report"). Highlights include:
-- 1P reserves increased 79% to 8.1 MMboe after 2025 production of 0.9 MMboe,
representing a 1P production replacement ratio(1) of 485%. The increase
was mainly due to results from our 183-D4 well on our Murucututu field
which commenced production in August 2025 and added an additional five
proved undeveloped locations to our 1P reserves as well as newly added
Canadian reserves of 0.3 MMboe.
-- 2P reserve volumes increased 43% to 13.1 MMboe, representing a 2P
production replacement ratio of 530%(1). Success on our 183-D4 well also
contributed to the bulk of the increase to 2P reserves which includes
eight undeveloped locations. In Canada, 0.7 MMboe of 2P reserves were
assigned.
-- With increased reserve volumes, 1P net present value before tax,
discounted at 10% ("NPV10") increased 38% to $245.6 million and 2P NPV10
increased 20% to $393.6 million.
-- 2P reserves life index(1) of 12.5 years.
-- 2P F&D costs(1) of $15.42/boe with a 2P recycle ratio(1) of 3.4 times.
-- Risked best estimate contingent resources decreased by 0.7 MMboe from 4.5
MMboe to 3.8 MMboe at December 31, 2025 with a NPV10 of $88.0 million,
decreases from December 31, 2024 of 16% and 20% respectively. The
decreases were associated with the migration of contingent resources to
Reserves for the Caruaçu Formation at Murucututu.
-- Risked best estimate prospective resources increased from 10.2 MMboe to
12.1 MMboe with a NPV10 of $264.3 million, increases of 19% and 27%
respectively from December 31, 2024. The increases were mainly due to
additional prospective resource in the Caruaçu Formation at
Murucututu adjacent to the assigned reserves area.
(1) Refer to the sections entitled "Oil and Natural Gas
Advisories -- Other Metrics" for additional disclosures
and assumptions used in calculating production replacement
ratio, 2P reserves life index, 2P F&D costs and 2P
recycle ratio.
Financial and Operating Highlights -- Fourth Quarter of 2025
-- Average daily sales in Q4 2025 were 2,867 boepd(1) (+65% from Q4 2024 and
+22% from Q3 2025). In Brazil, daily sales averaged 2,719 boepd (+56%
compared to Q4 2024 and +23% from Q3 2025) and in Canada, oil sales
averaged 148 bopd in the quarter (+7% from Q3 2025).
-- Our average realized natural gas price was $9.97/Mcf (-5% from Q4 2024
and -10% from Q3 2025). Our overall average realized sales price per boe
was $59.75/boe (-6% from Q4 2024 and -9% from Q3 2025).
-- Our natural gas, oil and condensate revenue increased to $15.8 million
(+54% from Q4 2024 and +11% from Q3 2025). The increases compared to Q4
2024 and Q3 2025 were driven by higher sales volumes, partially offset by
lower realized prices.
-- Our operating netback(2) in the quarter was $49.70 per boe, a decrease of
$5.39 per boe compared to Q4 2024 and a decrease of $6.20 per boe
compared to Q3 2025 due mainly to lower realized prices and higher
royalties.
-- We generated funds flows from operations(2) of $10.6 million ($0.28 per
basic and per diluted share), increases of $3.6 million compared to Q4
2024 and $0.1 million compared to Q3 2025.
-- We reported net income of $5.6 million ($0.15 per basic and diluted
share), an increase of $3.3 million compared to Q4 2024.
-- In October 2025, Alvopetro entered into an expanded area of mutual
interest (the "Expanded AMI") with our existing partner in Saskatchewan.
Under the terms of the Expanded AMI, Alvopetro agreed to fund 100% of the
costs for drilling two earning wells in exchange for a 50% working
interest in an additional 46.9 sections of land (15,010 net acres). The
two earning wells were drilled in Q4 2025. Capital expenditures in Q4
2025 of $4.9 million included the cost of these two earning wells and a
seismic program in Saskatchewan, additional Unit development costs to tie
in the wells drilled earlier in the year as well as costs for facilities
improvements at the Unit and Murucututu.
-- During the quarter Alvopetro entered into a $20 million loan agreement
(the "Loan"). The Loan has a two-year term and bears interest at 7% per
annum (payable quarterly), including all applicable charges and fees.
Repayments of the Loan commence quarterly on November 30, 2026, ending on
November 29, 2027.
-- Our working capital(2) surplus was $18.5 million as of December 31, 2025.
Our working capital surplus net of debt was $2.5 million as of December
31, 2025.
Financial and Operating Highlights -- Year Ended December 31, 2025
-- Our annual sales volumes averaged 2,523 boepd, an increase of 41% from
2024, with Brazil sales volumes of 2,417 boepd (+35% from 2024) and 106
bopd from the newly added Canadian operations.
-- We reported net income of $23.1 million, compared to $16.3 million in
2024 (+42%).
-- We generated funds flow from operations(1) of $40.6 million ($1.09 per
basic share and $1.08 per diluted share), an increase of $7.3 million
(+22%) compared to 2024.
-- Capital expenditures totaled $33.5 million in 2025.
-- Dividends declared totaled $0.42 per share in 2025 compared to $0.36 per
share in 2024 (+17%).
(1) Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes.
(2) See "Non-GAAP and Other Financial Measures" section within this news release.
The following table provides a summary of Alvopetro's financial and operating results for the periods noted. 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 SEDAR+ website at www.sedarplus.ca.
As at and Three Months As at and Year EndedDecember
EndedDecember 31, 31,
2025 2024 Change (%) 2025 2024 Change (%)
Financial
($000s, except
where noted)
Natural gas, oil
and condensate
sales 15,756 10,214 54 57,954 45,517 27
Net income 5,585 2,243 149 23,098 16,295 42
Per share --
basic ($)(1) 0.15 0.06 150 0.62 0.44 41
Per share --
diluted ($)(1) 0.15 0.06 150 0.61 0.43 42
Cash flows from
operating
activities 9,362 7,114 32 40,805 34,901 17
Per share --
basic ($)(1) 0.25 0.19 32 1.09 0.94 16
Per share --
diluted ($)(1) 0.25 0.19 32 1.08 0.93 16
Funds flow from
operations(2) 10,561 6,966 52 40,597 33,275 22
Per share --
basic ($)(1) 0.28 0.19 47 1.09 0.89 22
Per share --
diluted ($)(1) 0.28 0.19 47 1.08 0.89 21
Dividends declared 4,408 3,283 34 15,384 13,170 17
Per share(1) (2) 0.12 0.09 33 0.42 0.36 17
Capital
expenditures 4,883 4,682 4 33,493 15,305 119
Cash and cash
equivalents 32,372 21,697 49 32,372 21,697 49
Net working
capital(2) 18,450 13,181 40 18,450 13,181 40
Working capital,
net of debt(2) 2,450 13,181 (81) 2,450 13,181 (81)
Weighted average
shares outstanding
Basic (000s)(1) 37,260 37,315 - 37,270 37,289 -
Diluted
(000s)(1) 37,717 37,566 - 37,666 37,558 -
Operations
Average daily sales
volumes(3) :
Brazil:
Natural gas
(Mcfpd), by
field:
Caburé
(Mcfpd) 9,655 7,476 29 10,467 9,228 13
Murucututu
(Mcfpd) 5,437 2,231 144 3,080 928 232
Total natural
gas (Mcfpd) 15,092 9,707 55 13,547 10,156 33
NGLs --
condensate
(bopd) 184 109 69 149 90 66
Oil (bopd) 19 11 73 11 12 (8)
Total (boepd) -
Brazil 2,719 1,738 56 2,417 1,794 35
Canada:
Oil (bopd) -
Canada 148 - - 106 - -
Total Company
(boepd) 2,867 1,738 65 2,523 1,794 41
Average realized
prices(2) :
Natural gas
($/Mcf) 9.97 10.51 (5) 10.49 11.42 (8)
NGLs --
condensate
($/bbl) 69.18 75.95 (9) 73.75 84.84 (13)
Oil ($/bbl) 47.99 61.74 (22) 48.86 66.94 (27)
Total ($/boe) 59.75 63.88 (6) 62.92 69.31 (9)
Operating netback
($/boe)(2)
Realized sales
price 59.75 63.88 (6) 62.92 69.31 (9)
Royalties (3.83) (2.15) 78 (4.46) (1.99) 124
Production
expenses (6.03) (6.64) (9) (5.71) (6.33) (10)
Transportation
expenses (0.19) - - (0.14) - -
Operating
netback 49.70 55.09 (10) 52.61 60.99 (14)
Operating netback
margin(2) 83 % 86 % (3) 84 % 88 % (4)
Notes:
(1) Per share amounts are based on weighted average shares
outstanding other than dividends per share, which
is based on the number of common shares outstanding
at each dividend record date. The weighted average
number of diluted common shares outstanding in the
computation of funds flow from operations and cash
flows from operating activities per share is the same
as for net income per share.
(2) See "Non-GAAP and Other Financial Measures" section
within this news release.
(3) Alvopetro reported volumes are based on sales volumes
which, due to the timing of sales deliveries, may
differ from production volumes.
Quarterly Dividend of US$0.12 per Share
Our Board of Directors has declared a quarterly dividend of US$0.12 per common share, payable in cash on April 15, 2026 to shareholders of record at the close of business on March 31, 2026. The dividend is designated as an "eligible dividend" for Canadian income tax purposes.
Dividend payments to non-residents of Canada will be subject to withholding taxes at the Canadian statutory rate of 25%. Shareholders may be entitled to a reduced withholding tax rate under a tax treaty between their country of residence and Canada. For further information, see Alvopetro's website at https://alvopetro.com/Dividends-Non-resident-Shareholders.
Annual Information Form
Alvopetro has filed its annual information form ("AIF") with the Canadian securities regulators on SEDAR+. The AIF includes the disclosure and reports relating to oil and gas reserves data and other oil and gas information required pursuant to National Instrument 51-101 of the Canadian Securities Administrators. The AIF may be accessed electronically at www.sedarplus.ca and on our website at www.alvopetro.com.
2025 Results Webcast
Alvopetro will host a live webcast to discuss our 2025 financial results at 8:00 am Mountain time on Wednesday March 18, 2026. Details for joining the event are as follows:
DATE: March 18, 2026 TIME: 8:00 AM Mountain/10:00 AM Eastern LINK: https://us06web.zoom.us/j/82316007995 DIAL-IN NUMBERS: https://us06web.zoom.us/u/kdThlHQznI WEBINAR ID: 823 1600 7995
The webcast will include a question-and-answer period. Online participants will be able to ask questions through the Zoom portal. Dial-in participants can email questions directly to socialmedia@alvopetro.com.
Corporate Presentation
Alvopetro's updated corporate presentation is available on our website at:
http://www.alvopetro.com/corporate-presentation.
Social Media
Follow Alvopetro on our social media channels at the following links:
X - https://x.com/AlvopetroEnergy Instagram - https://www.instagram.com/alvopetro/ LinkedIn - https://www.linkedin.com/company/alvopetro-energy-ltd
Alvopetro Energy Ltd. is deploying a balanced capital allocation model where we seek to reinvest roughly half our cash flows into organic growth opportunities and return the other half to stakeholders. Alvopetro's organic growth strategy is to focus on the best combinations of geologic prospectivity and fiscal regime. Alvopetro is balancing capital investment opportunities in Canada and Brazil where we are building off the strength of our Caburé and Murucututu natural gas fields and the related strategic midstream infrastructure.
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.
Abbreviations:
$ or USD = United States dollars
$000s = thousands of USD
1P = proved reserves
2P = proved plus probable reserves
boepd = barrels of oil equivalent ("boe") per day
bopd = barrels of oil and/or natural gas liquids (condensate)
per day
BRL = Brazilian Real
e(3) m(3) /d = thousand cubic metre per day
m(3) = cubic metre
m(3) /d = cubic metre per day
Mcf = thousand cubic feet
Mcfpd = thousand cubic feet per day
MMcf = million cubic feet
MMcfpd = million cubic feet per day
NGLs = natural gas liquids (condensate)
NPV10 = net present value before tax, discounted at 10%
Q3 2025 = three months ended September 30, 2025
Q4 2024 = three months ended December 31, 2024
Q4 2025 = three months ended December 31, 2025
GAAP or IFRS = IFRS Accounting Standards
Non-GAAP and Other Financial Measures
This news release contains references to various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under GAAP and do not have a standardized meaning prescribed by IFRS and might not be comparable to similar financial measures disclosed by other issuers. While these measures may be common in the oil and gas industry, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. The non-GAAP and other financial measures referred to in this news release should not be considered an alternative to, or more meaningful than measures prescribed by IFRS and they are not meant to enhance the Company's reported financial performance or position. These are complementary measures that are used by management in assessing the Company's financial performance, efficiency and liquidity and they may be used by investors or other users of this document for the same purpose. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures used in this news release. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures and Other Financial Measures" section of the Company's MD&A which may be accessed through the SEDAR+ website at www.sedarplus.ca.
Non-GAAP Financial Measures
Operating Netback
Operating netback is calculated as natural gas, oil and condensate revenues less royalties, production expenses, and transportation expenses. This calculation is provided in the "Operating Netback" section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca. Operating netback is a common metric used in the oil and gas industry used to demonstrate profitability from operations.
Non-GAAP Financial Ratios
Operating Netback per boe
Operating netback is calculated on a per unit basis, which is per barrel of oil equivalent ("boe"). It is a common non-GAAP measure used in the oil and gas industry and management believes this measurement assists in evaluating the operating performance of the Company. It is a measure of the economic quality of the Company's producing assets and is useful for evaluating variable costs as it provides a reliable measure regardless of fluctuations in production. Alvopetro calculated operating netback per boe as operating netback divided by total sales volumes (boe). This calculation is provided in the "Operating Netback" section of the Company's MD&A using our IFRS measures. The Company's MD&A may be accessed through the SEDAR+ website at www.sedarplus.ca.
Operating netback margin
Operating netback margin is calculated as operating netback per boe divided by the realized sales price per boe. Operating netback margin is a measure of the profitability per boe relative to natural gas, oil and condensate sales revenues per boe and is calculated as follows:
Three Months EndedDecember 31, Year EndedDecember 31,
2025 2024 2025 2024
Operating netback
- $ per boe 49.70 55.09 52.61 60.99
Average realized
price - $ per boe 59.75 63.88 62.92 69.31
Operating netback
margin 83 % 86 % 84 % 88 %
Funds Flow from Operations Per Share
Funds flow from operations per share is a non-GAAP ratio that includes all cash generated from operating activities calculated before changes in non-cash working capital, divided by the weighted average shares outstanding for the respective period. For the periods reported in this news release the cash flows from operating activities per share and funds flow from operations per share are as follows:
Three Months EndedDecember 31, Year EndedDecember 31,
$ per share 2025 2024 2025 2024
Per basic share:
Cash flows from
operating
activities 0.25 0.19 1.09 0.94
Funds flow from
operations 0.28 0.19 1.09 0.89
Per diluted share:
Cash flows from
operating
activities 0.25 0.19 1.08 0.93
Funds flow from
operations 0.28 0.19 1.08 0.89
Capital Management Measures
Funds Flow from Operations
Funds flow from operations is a non-GAAP capital management measure that includes all cash generated from operating activities calculated before changes in non-cash working capital. The most comparable GAAP measure to funds flow from operations is cash flows from operating activities. Management considers funds flow from operations important as it helps evaluate financial performance and demonstrates the Company's ability to generate sufficient cash to fund future growth opportunities. Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flows from operating activities however management finds that the impact of working capital items on the cash flows reduces the comparability of the metric from period to period. A reconciliation of funds flow from operations to cash flows from operating activities is as follows:
Three Months EndedDecember 31, Year EndedDecember 31,
2025 2024 2025 2024
Cash flows from
operating
activities 9,362 7,114 40,805 34,901
Changes in
non-cash working
capital 1,199 (148) (208) (1,626)
Funds flow from
operations 10,561 6,966 40,597 33,275
Net Working Capital
Net working capital is computed as current assets less current liabilities. Net working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows:
As at December 31,
2025 2024
Total current assets 39,892 26,984
Total current liabilities (21,442) (13,803)
Net working capital 18,450 13,181
Working Capital, Net of Debt
Working capital net of debt is computed as net working capital decreased by the non-current portion of the Loan. Working capital net of debt is used by management to assess the Company's overall financial position. As of December 31, 2025, Alvopetro's net working capital exceeds the balance outstanding on the Loan.
As at December 31
2025 2024
Net working capital 18,450 13,181
Loan, non-current (16,000) -
Working capital, net of debt 2,450 13,181
Supplementary Financial Measures
"Average realized natural gas price - $/Mcf" is comprised of natural gas sales as determined in accordance with IFRS, divided by the Company's natural gas sales volumes.
"Average realized NGL -- condensate price - $/bbl" is comprised of condensate sales as determined in accordance with IFRS, divided by the Company's NGL sales volumes from condensate.
"Average realized oil price - $/bbl" is comprised of oil sales as determined in accordance with IFRS, divided by the Company's oil sales volumes.
"Average realized price - $/boe" is comprised of natural gas, condensate and oil sales as determined in accordance with IFRS, divided by the Company's total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
"Dividends per share" is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
"Royalties per boe" is comprised of royalties, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
"Production expenses per boe" is comprised of production expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
"Transportation expenses per boe" is comprised of transportation expenses, as determined in accordance with IFRS, divided by the total natural gas, NGL and oil sales volumes (barrels of oil equivalent).
Oil and Natural Gas Advisories
Oil and Natural Gas Reserves
The disclosure in this news release summarizes certain information contained in the GLJ Reserves and Resources Report but represents only a portion of the disclosure required under National Instrument 51-101 ("NI 51-101"). Full disclosure with respect to the Company's reserves as at December 31, 2025 is included in the Company's annual information form for the year ended December 31, 2025 which has been filed on SEDAR+ (www.sedarplus.ca). 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" or "COGEH") that are consistent with the standards of NI 51-101. GLJ is a qualified reserves evaluator as defined in NI 51-101.
All net present values in this press release are based on estimates of future operating and capital costs and GLJ's forecast prices as of December 31, 2025. The reserves definitions used in this evaluation are the standards defined by COGEH reserve definitions and are consistent with NI 51-101 and used by GLJ. The net present values of future net revenue attributable to Alvopetro's reserves estimated by GLJ do not 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. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Caburé Working Interest
Alvopetro's working interest in the Caburé natural gas field is 56.2% as of December 31, 2025 and the date hereof. This working interest is subject to redeterminations, the first of which was completed in April 2024. An independent expert (the "Expert") was engaged in connection with the first redetermination to evaluate the redetermination and the impact to each party's working interest. Following the Expert's decision, Alvopetro's working interest was increased from 49.1% to 56.2%. Alvopetro's partner filed a notice of dispute with respect to the Expert's decision, seeking to stay the redetermination procedure. Alvopetro subsequently filed a request for emergency arbitration before the International Chamber of Commerce ("ICC") seeking to make the Expert decision effective starting on June 1, 2024. In May 2024, Alvopetro received the decision of the emergency arbitrator ("the Order") wherein the arbitrator found in favour of Alvopetro, making the Expert decision effective June 1, 2024 until such time as the dispute is reviewed by and decided upon by an arbitral tribunal pursuant to the Rules of Arbitration of the ICC. The redetermination dispute proceeded to a full arbitration under the Rules of the ICC, however the timing and outcome of the full arbitration is uncertain and the resulting impact on the reserves and the net present value of future net revenue attributable to such reserves as presented herein may be material. In addition, future redeterminations may also have a material impact on Alvopetro's reserves and future cash flows.
Contingent Resources
This news release discloses estimates of Alvopetro's contingent resources and the net present value associated with net revenues associated with the production of such contingent resources as included in the GLJ Reserves and Resources Report. There is no certainty that it will be commercially viable to produce any portion of such contingent resources and the estimated future net revenues do not necessarily represent the fair market value of such contingent resources. Estimates of contingent resources involve additional risks over estimates of reserves. Full disclosure with respect to the Company's contingent resources as at December 31, 2025 is included in the Company's annual information form for the year ended December 31, 2025 which has been filed on SEDAR+ (www.sedarplus.ca).
Prospective Resources
This news release discloses estimates of Alvopetro's prospective resources included in the GLJ Reserves and Resources Report. There is no certainty that any portion of the prospective resources will be discovered and even if discovered, there is no certainty that it will be commercially viable to produce any portion. Estimates of prospective resources involve additional risks over estimates of reserves. The accuracy of any resources estimate is a function of the quality and quantity of available data and of engineering interpretation and judgment. While resources presented herein are considered reasonable, the estimates should be accepted with the understanding that reservoir performance subsequent to the date of the estimate may justify revision, either upward or downward. Full disclosure with respect to the Company's prospective resources as at December 31, 2025 is included in the Company's annual information form for the year ended December 31, 2025 which has been filed on SEDAR+ (www.sedarplus.ca).
Other Metrics
This new release contains references to metrics commonly used in the oil and natural gas industry, which have been calculated by management including "production replacement ratio", "reserve life index", finding and development costs ("F&D costs") and "recycle ratio". These terms do not have standardized meanings and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
"Production replacement ratio" is calculated by dividing the change in reserve volumes plus current year production by current year production. Alvopetro's 1P production replacement ratio and 2P production replacement ratio in 2025 is calculated as:
1P 2P
Reserve volumes as at December 31, 2025 -- Mboe 8,054 13,112
Reserve volumes as at December 31, 2024 -- Mboe 4,512 9,148
Reserve additions -- Mboe 3,542 3,964
2025 production -- Mboe 921 921
Change in reserves before 2025 production - Mboe 4,463 4,885
2025 production replacement ratio 485 % 530 %
"Reserve life index" is expressed in years and is calculated by dividing 2P reserve volumes by the Company's annualized Q4 2025 production of 2,867 boepd, as follows:
2P
2P Reserve volumes as at December 31, 2025 -- Mboe 13,112
Annualized Q4 2025 Total Production - Mboe 1,046
Reserve life index - years 12.5
"F&D costs" are reflected on a per barrel of oil equivalent and are calculated as the sum of capital expenditures in the current year plus the change in future development costs ("FDC") in 2P reserves for the period, divided by the change in 2P reserves in the period, before current year production. The 2025 F&D costs are computed as follows:
2025 capital expenditures - US$000s 33,493
Change in FDC from 2025(1) -- US$000s 41,856
Total 75,349
Change in 2P reserves before 2025 production(2) --
thousands of boe ("Mboe") 4,885
2025 F&D costs (per boe) -- US$ $15.42
(1) (Computed based on FDC costs from the 2P reserves
in the December 31, 2025 GLJ Reserves and Resources
Report less FDC costs from the December 31, 2024 GLJ
Reserves and Resources Report.)
(2) Computed as the change in 2P reserves from December
31, 2024 to December 31, 2025 (which increased 3,964
Mboe, from 9,148 Mboe to 13,112 Mboe) plus 2025 total
production of 921 Mboe.
"Recycle ratio" is calculated by dividing the 2025 operating netback by 2P F&D costs per boe for the year. The Company's 2025 recycle ratio is calculated as follows:
2025 operating netback -- US$ per boe $52.61 2024 F&D costs -- US$ per boe -- see computation above $15.42 2P recycle ratio 3.4
BOE Disclosure
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6 Mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this news release are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.
Contracted Natural Gas Volumes
The contracted daily firm volumes under Alvopetro's long-term gas sales agreement of 400 e(3) m(3) /d (before any provisions for take or pay allowances) represents contracted volumes based on contract referenced natural gas heating value. Alvopetro's reported natural gas sales volumes are prior to any adjustments for heating value of Alvopetro natural gas. Alvopetro's natural gas is approximately 8% higher than the contract reference heating value. Therefore, to satisfy the contractual firm deliveries Alvopetro would be required to deliver approximately 371e(3) m(3) /d (13.1MMcfpd).
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", "expect", "intend", "plan", "may", "believe", "estimate", "forecast", "anticipate", "should" and other similar words or expressions are intended to identify forward-looking information. Forward--looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the expectations discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events. Accordingly, when relying on forward-looking statements to make decisions, Alvopetro cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. More particularly and without limitation, this news release contains forward-looking statements concerning the expected natural gas price, gas sales and gas deliveries under Alvopetro's long-term gas sales agreement, the timing and taxation of dividends and plans for dividends in the future, future production and sales volumes, plans relating to the Company's operational activities, proposed exploration and development activities and the timing for such activities, capital spending levels, future capital and operating costs, anticipated timing for upcoming drilling and testing of other wells, arbitration procedures associated with the redetermination of working interests of the Caburé natural gas field, and projected financial results. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to the success of future drilling, completion, testing, recompletion and development activities and the timing of such activities, the performance of producing wells and reservoirs, well development and operating performance, expectations and assumptions concerning the timing of regulatory licenses and approvals, equipment availability, environmental regulation, including regulations relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, the outlook for commodity markets and ability to access capital markets, foreign exchange rates, the outcome of any disputes, the outcome of redeterminations, general economic and business conditions, forecasted demand for oil and natural gas, the impact of global pandemics, weather and access to drilling locations, the availability and cost of labour and services, and the regulatory and legal environment and other risks associated with oil and gas operations. 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. Current and forecasted natural gas nominations are subject to change on a daily basis and such changes may be material. In addition, the declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to
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