Alvopetro Energy Ltd (TSX-V:ALV, OTC:ALVOF) CEO Corey Ruttan talked with Proactive about the company’s record production results, new well performance, and expansion plans across Brazil and Canada.
Proactive: You're reporting your third quarter results to the end of September. Following that, October was a record month for Alvopetro — almost 2,900 barrels of oil equivalent a day. What's been driving that surge in production and how confident are you the momentum can continue into 2026?
Corey Ruttan: It's a pretty exciting result for us to be setting new production records at Alvopetro. The background of this is that late last year, we increased our productive capacity significantly off the strength of results from our 100% working interest Murucututu project onshore in northeast Brazil. That was the 183-A3 well, and that really gave us the confidence to amend our long-term gas sales agreement with our offtaker Bahiagas. As part of that, we increased our firm delivery obligations by about a third. That’s really helped us deliver strong production results.
In the first part of this year, our first quarter production was up 41% quarter-over-quarter. We've been consistent through the year. More recently, to drive that October record, we added a follow-up well — the 183-D4 — on the same project. That has helped establish the new record and positions us well as we exit this year and move into 2026 with an expanded Murucututu development program.
And what about financial results?
With the Q3 results announced yesterday, we posted strong financials — over $10 million US in funds flow from operations in the quarter alone. That was off production of 2,343 barrels of oil equivalent per day. We continue to have strong realized natural gas prices — over $11 US per MCF — which helps drive industry-leading operating netback margins. Our operating netback was nearly $60 US per BOE in the quarter.
You mentioned that 183-D4 well at Murucututu, which has outperformed expectations with more than 1,000 barrels a day on test. How does that result shape your development plans in Brazil?
We're extremely excited about the result. We drilled the 183-D4 well higher on the structure — over 100 metres higher — and completed it using leading edge North American completion technologies, used for the first time in Brazil. The initial 30-day average was close to 1,100 barrels of oil equivalent per day — nearly double the pre-drill expectations. This bodes well for our reserves and opens up a whole series of follow-up development locations to support long-term growth.
You’ve also been expanding in Western Canada with a new partnership across the Mannville Stack heavy oil play. How does that fit alongside your Brazilian gas business?
I think it's a really nice complement. Back in February, we entered the Mannville Stack heavy oil play in western Saskatchewan. More recently, we expanded that joint venture with our partner to cover the entire western Saskatchewan side of the fairway. This play has stacked, multi-zone heavy oil sands with a lot of original oil in place. We now have over 74 sections — that’s 74 square miles — of highly attractive acreage in a proven fairway.
We’ll use open-hole multilateral wells to unlock the potential and build out a multi-year inventory of drilling locations. These wells are relatively low cost and provide a good call option on oil prices, especially as prices rise.
Your natural gas contract price in Brazil has been adjusted slightly lower. How does that affect near-term cash flow? And how important are those extra spot sales above your firm contract volumes?
Yes, our third quarter price was quite high, helped by some foreign exchange adjustments. The November price is slightly down but still over $10 US per MCF, which is exceptional compared to North American prices. With all the new production we've brought on, we've also been selling some volumes on a spot basis, sometimes at lower prices. But overall, current production and recent performance should lead to a significant step up in funds flow from operations moving forward.
You talk about balancing growth with shareholder returns. With record production and strong cash flow, how are you thinking about dividends and capital allocation heading into 2026?
We've just gone through a big capital phase in both Canada and Brazil, so it’s a little slower now as we prepare for next year’s capital programs. Our general approach has always been to return about half of our funds flow to stakeholders, mostly through dividends, since we have no debt. The other half goes into reinvestment for organic growth. It's not a strict 50/50 rule, but since inception, that’s roughly how it’s been, and I expect that to continue.
Quotes have been lightly edited for style and clarity