Alvopetro Energy Ltd (TSX-V:ALV, OTC:ALVOF) has announced several recent achievements, including a 41% increase in sales volumes, driven by an updated gas sales agreement with Bahiagas.
On the operational front, Alvopetro is advancing its Murucututu project, with drilling underway at the 183-D4 well, following a successful 183-A3 well.
The company is also expanding in Western Canada through a partnership with Durham Creek Energy, targeting the Manville heavy oil fairway.
CEO Corey Ruttan joined Proacitve to discuss the updates.
Proactive: Welcome back inside our Proactive newsroom. Joining me now is Corey Ruttan, CEO of Alvopetro Energy. Corey, it's great to see you again. How are you?
Corey Ruttan: I'm well, thank you. Good to see you as well.
The company has some pretty interesting news. Let's start with your sales volumes. You must be happy with a 41% increase.
Yes, absolutely. We recently updated our long-term gas sales agreement with Bahiagas in December, which included a 33% increase in firm sales volumes. That translated into strong January sales of over 2,400 barrels of oil equivalent per day, up 41% over the fourth quarter of last year.
Because you're able to set certain prices, does this help provide more consistency moving forward?
Exactly. Increasing our firm sales volumes strengthens our base cash flow stream. We also enhanced the gas pricing mechanism in our contract, which now adjusts quarterly based on Brent oil and Henry Hub natural gas prices. In our latest update, our realized gas price exceeded $10.50 per MCF, which is quite attractive compared to North American standards.
You also announced growth plans, including the Murucututu field. Can you share more details?
Sure. We previously announced a positive result from our 183-A3 well in that project, where we have a 100% working interest. The well performed well above expectations. We're now drilling a follow-up well, 183-D4, located about 110 meters from the original well. We expect results by the end of this quarter.
And the plan is for several development wells there, correct?
Yes, that’s right.
In your news release, you also mentioned Canada and a partnership with Durham Creek Energy. Can you explain how this fits into your strategy?
Yes, we’ve always followed a capital allocation model where we invest roughly half of our cash flows in organic growth and return the other half to stakeholders. We've built a strong balance sheet, allowing us to seek new opportunities. Western Canada stood out, and now we can allocate growth capital across two countries.
You're targeting the Manville heavy oil fairway. What makes this opportunity compelling?
The area has significant oil in place per square mile. Operators are using new drilling technologies, including multilateral wells, which deliver high returns and fast payback periods. With a relatively small investment, we see potential to build a self-funding growth platform in Western Canada.
You're talking about potentially 100 development drilling locations. This sounds like a big year for Alvopetro.
Yes, we believe 2025 will be a breakout year for the company, and we’re off to a strong start.
Quotes have been lightly edited for clarity and style