CALGARY, Oct. 15, 2019 - Alvopetro Energy Ltd. (TSX-V: ALV; OTCQX: ALVOF) ("Alvopetro") announces first funding on our previously announced Credit Agreement and an operational update.
Credit Facility Funding
In connection with our US$15 million Credit Agreement (the "Facility") announced on September 23, 2019, we have satisfied all conditions to funding and funds from our first draw have been received. Net proceeds of the Facility will be used to fund: our recently drilled well on Block 57; the construction of the 11-kilometre Caburé transfer pipeline ('Transfer Pipeline"); Alvopetro's share of costs associated with the construction of the Gas Treatment Facility; Caburé unit development costs; Gomo development costs, including stimulation of our 183(1) well, our 8-kilometre Gomo pipeline extension and future drilling and completion activities and for general corporate purposes.
Caburé Unit Development (49.1% Alvopetro)
The Caburé Unit development plan includes construction of high-pressure facilities, tie-in of all wells, and drilling up to four new wells. The first two wells have now been drilled. The first well (1-IME-26-BA) was an exploration commitment well drilled 100% by our partner on Block 212, targeting the edge of the Unit's main reservoir, with a secondary target in the Pojuca Formation. The well was drilled to a depth of 1,549 metres measured depth ("MD") and encountered the edge of the pool. Based on our Partner's petrophysical analysis, the well encountered 15 metres of potential net pay in the Caruacu Member of the Maracangalha Formation, with average porosity of 14.1% and average water saturation of 40% along with 38 metres of potential net pay in the Pojuca Formation, with average porosity of 18% and average water saturation of 35%. Following a successful completion and test, the well will be included in the Unit. The second well (7-CARN-1D-BA) well was drilled to 1,739 metres MD. The well was drilled directionally from the IME-3 surface location and intersected the top of the Caruacu Member 490 metres southwest from the IME-3 penetration. The well encountered 101 metres of net pay MD (81 metres vertical depth) in the Caruacu Member with average porosity of 13.6% and average water saturation of 37%. The final development well on the east side of the main bounding fault is expected to be drilled starting later in October. Remaining field development, consisting of inter-well flowlines, the high-pressure facilities expansion, including connection to Alvopetro's Midstream Project, is expected to be completed in January 2020, and potentially an additional well depending on future production results from the offsetting existing well on the west side of the main fault.
Caburé Midstream Project (100% Alvopetro)
Our Caburé Midstream Project includes construction an 11-kilometre Transfer Pipeline and a Gas Treatment Facility. Over 75% of the pipe for the Transfer Pipeline has now been welded and 42% has been installed and buried. The Transfer Pipeline is expected to be completed in December 2019. The Gas Treatment Facility is being constructed by Enerflex Ltd. ("Enerflex") wherein they will construct, own and operate the Gas Treatment Facility. All of the processing skids have arrived in Brazil and cleared customs and are all at the field staging area. Enerflex has commenced field work for the installation of the processing skids. Alvopetro is responsible for site construction at the Gas Treatment Facility and is releasing the site to Enerflex in stages as construction is completed. The Gas Treatment Facility is expected to be commissioned in the first quarter of 2020.
Our natural gas is being sold under our long-term gas sales agreement with Bahiagás, the local distribution company for the state of Bahia. As part of this agreement, Bahiagás agreed to extend their distribution network by 15 kilometres and construct a new gas receiving station (City Gate) at the Facility site. Bahiagás has began construction along the pipeline right of way and will mobilize to construct the city gate this month. Bahiagas expects to complete their projects near the end of the first quarter of 2020 at which time Alvopetro plans to start natural gas deliveries from the Caburé field.
Gomo Tight Gas Resource (100% Alvopetro)
Alvopetro plans to commence the stimulation of our 183(1) well later in October, followed by another 72-hour production test and longer-term build up and pressure transient analysis. The well is then expected to be tied into our Transfer Pipeline via an 8-kilometre pipeline extension.
Alvopetro Energy Ltd.'s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and the construction of 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.
Testing and Well Results. Data obtained from the Caburé unit development wells identified in this press release, including net pay and porosities, should be considered to be preliminary until testing, detailed analysis and interpretation has been completed. There is no representation by Alvopetro that the data relating to these wells contained in this press release 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.
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" 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 the expected use of proceeds from the Facility, plans relating to the Company's operational activities and expected timing of commencement of gas sales under Alvopetro's long-term gas sales agreement. The forward?looking statements are based on certain key expectations and assumptions made by Alvopetro, including but not limited to the timing of regulatory licenses and approvals, the success of future drilling, completion, recompletion and development activities, the outlook for commodity markets and ability to access capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather and access to drilling locations, the availability and cost of labour and services, environmental regulation, including regulation relating to hydraulic fracturing and stimulation, the ability to monetize hydrocarbons discovered, 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. 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.
SOURCE Alvopetro Energy Ltd.
Corey C. Ruttan, President, Chief Executive Officer and Director, or Alison Howard, Chief Financial Officer, Phone: 587.794.4224, Email: firstname.lastname@example.org; www.alvopetro.com, TSX-V: ALV, OTCQX: ALVOF