Alvopetro Energy Ltd.

Q4 operating netback was $55.09 per BOE, down $4.10 from Q3, on a realized sales price that was about 4% lower sequentially. Natural gas sales price was $10.51 per Mcf, also down about 4% from the prior quarter; royalties were $2.15 per BOE, implying a 3.4% effective royalty rate. Funds flow from operations was $7 million in Q4, net income decreased by $4.9 million versus Q3, and the foreign exchange result moved from a $600,000 gain in Q3 to a $2 million loss in Q4. The company ended 2024 with $13.2 million of working capital and no debt. For 2025, management said firm sales to Bahiagás increased from 300,000 cubic meters per day to 400,000 cubic meters per day, with realized gas price above US$10.50 per Mcf as of February 1, 2025. January and February production averaged 2,375 BOE/d, up 37% from Q4 production. The dividend was increased to US$0.10 per share for Q1 2025, up from US$0.09.

Corey Ruttan emphasized that the upgraded gas sales agreement, higher firm volumes, and reduced contract flexibility risk have strengthened the business and supported the dividend increase. He framed 2025 as a year of organic growth, with additional Caburé wells, ongoing Murucututu development, and a new Canadian platform that he said offers a different risk profile and attractive rates of return. His tone was upbeat and confident, while also noting capital allocation will remain flexible based on results and commodity prices.

Alison Howard said Q4 realized sales price fell about 4% from Q3 and natural gas pricing was $10.51 per Mcf, with lower volumes and slightly higher G&A contributing to sequential declines in funds flow and net income. She quantified Q4 funds flow from operations at $7 million, operating netback at $55.09 per BOE, and working capital at $13.2 million at year-end. She also noted the company is debt free, has been since September 2022, and that foreign exchange losses were tied largely to U.S.-dollar denominated balances and intercompany items in Brazil; she said FX hedging is evaluated but has been costly.

Analysts asked for the new Bahiagás firm volume level, and management said it rose from 300,000 cubic meters per day to 400,000 cubic meters per day, translating to about 13 million cubic feet per day and a little over 2,100 BOE/d of firm obligations. Questions on Canada focused on why enter a lower-netback jurisdiction; management said the Canadian deal offers compelling IRRs, quicker payouts, and a different risk profile, while Brazil remains attractive but more competitive and slower to build inventory. Management also said it expects to drill at least two to four additional Canadian wells in 2025, with first-well results and oil prices helping determine the pace, and it acknowledged the Caburé redetermination dispute will likely run well into next year through arbitration.