Earnings release
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ALVOPETRO NEWS RELEASE Alvopetro Announces Q2 2026 Financial Results Calgary , Alberta , August 5 , 2026 - Alvopetro Energy Ltd. ( TSX - V : ALV ; OTCQX : ALVOF ) ( " Alvopetro " or the " Company " ) announces an operational update , our financial results for the three and six months ended June 30 , 2026 , and details for our Q2 2026 earnings call . 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 : " We've continued to deliver strong results in 2026 with Q2 sales volumes of 3,067 boepd , driving revenues of $ 19.2 million with funds flow from operations of $ 14.1 million . With a realized natural gas price of $ 10.98 / Mcf we posted an operating netback of $ 59.08 / boe and an 86 % operating netback margin . These margins and results highlight the quality of our asset base underpinning our 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 . " Operational Update Development Activities In June , we completed drilling the 183 - D1 well on our 100 % owned Murucututu natural gas field to a total measured depth ( " MD " ) of 3,263 metres between our previously drilled 183 - A3 and 183 - D4 wells . Based on open - hole logs , the well encountered potential net natural gas pay in both the Caruaçu Member of the Maracangalha Formation and the Gomo Member of the Candeias Formation , with an aggregate 47.7 metres total vertical depth ( " TVD " ) of potential natural gas pay . We have now completed the well in three intervals and expect to have the well on production later this month . In July , we commenced drilling the 183 - H2 well . This well is targeting the prospective resource portion of the Caruaçu structure . We are currently at a depth of 1,399 metres and expect drilling to be completed later this month . Following this well , we plan to move the drilling rig to the 183 - G2 location , the first Caruaçu development well from our newly constructed 183 - G well pad . In the second half of 2026 we are also focused on expanding our field production facility and pipeline offtake capacity from the Murucututu field as well as enhancing our natural gas processing facility to accommodate increasing proportions of richer gas production from Murucututu . July Sales Volumes July sales volumes averaged 3,134 boepd ( based on field estimates ) , including 2,995 boepd from Brazil ( with natural gas sales of 16.8 MMcfpd , associated natural gas liquids from condensate of 185 bopd and oil sales of 8 bopd ) and 139 bopd from oil sales in Canada .
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2 Natural gas, NGLs and crude oil sales: July 2026 June 2026 Q2 2026 Brazil: Natural gas (Mcfpd), by field: Caburé 13,216 11,846 12,040 Murucututu 3,592 4,110 4,278 Total natural gas (Mcfpd) 16,808 15,956 16,318 NGLs (bopd) 185 172 167 Oil (bopd) (1) 8 3 8 Total (boepd) – Brazil 2,995 2,834 2,894 Canada: Oil (bopd) – Canada 139 156 173 Total Company – boepd(2) 3,134 2,990 3,067 (1) Oil sales volumes in Brazil relate to the Bom Lugar and Mãe da lua fields. Alvopetro has entered into an assignment agreement to dispose of the fields, the closing of which is subject to standard regulatory approvals, including approval of the ANP. (2) Alvopetro reported volumes are based on sales volumes which, due to the timing of sales deliveries, may differ from production volumes. Quarterly Natural Gas Pricing Update As previously announced, effective August 1, 2026, our natural gas price under our long-term gas sales agreement was adjusted to BRL2.00/m3 on the first 400e3m3/d (14.1 MMcfpd) reference volumes (“QDC1”) with the incremental 100 e3m3/d (3.5 MMcfpd) reference volumes (“QDC2”) adjusted to BRL1.91/m 3. This represents increases of 5% and 19% respectively for QDC1 and QDC2 relative to the May 1, 2026 price reset. Based on our average heat content to -date and the June 30, 2026 BRL/USD exchange rate of 5. 18, our weighted average realized price (QDC1 + QDC2) on firm natural gas sales during the August 1, 2026 to October 31, 2026 period is expected to be $ 11.70/Mcf, 7% above our Q2 2026 realized price of $10. 98/Mcf. Amounts ultimately received in equivalent USD will be impacted by exchange rates in effect during the relevant period. Financial and Operating Highlights – Second Quarter of 2026 ➢ Average daily sales in Brazil in Q2 2026 were 2,894 boepd(1) (+26% from Q2 2025 and -1% from Q1 2026). In Canada, daily sales averaged 173 bopd(1) (+25% from Q2 2025 and -10% from Q1 2026). Overall, total daily sales averaged 3,067 boepd (+26% compared to Q2 2025 and -2% compared to Q1 2026). ➢ Our average realized natural gas price was $10.98/Mcf (+3% from Q2 2025 and +8% from Q1 2026). Our overall average realized sales price per boe was $68.72/boe (+9% from Q2 2025 and +11% from Q1 2026). ➢ Our natural gas, oil and condensate revenue increased to $ 19.2 million, an increase of 37% from Q2 2025 due to higher sales volumes and an increase of 10% from Q1 2026 due to higher realized sales prices. ➢ Our operating netback (2) in the quarter was $59.08 per boe, increases of $4.36 per boe compared to Q2 2025 and $6.96 per boe compared to Q1 2026. ➢ We generated funds flow from operations (2) of $14.1 million ($ 0.37 per basic and diluted share ), increases of $3.7 million compared to Q2 2025 and $1.6 million compared to Q1 2026. The increase relative to Q2 2025 was primarily driven by higher sales volumes. The increase relative to Q1 2026 was due to higher realized sales prices. ➢ We reported net income of $9.8 million ($0.26 per basic and diluted share), increases of $2.9 million compared to Q2 2025 and $1.7 million compared to Q1 2026. ➢ Capital expenditures in Q2 2026 of $7.5 million included costs to drill the 183 -D1 well on Alvopetro’s 100% Murucututu field as well as initial costs for upcoming drilling and facilities projects in Brazil. ➢ Our working capital(2) was $14.1 million as of June 30, 2026 and our working capital, net of debt was $6.1 million. (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.
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3 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 Ended June 30, As at and Six Months Ended June 30, 2026 2025 Change (%) 2026 2025 Change (%) Financial ($000s, except where noted) Natural gas, oil and condensate sales 19,180 14,010 37 36,572 28,023 31 Net income 9,764 6,830 43 17,823 12,900 38 Per share – basic ($)(1) 0.26 0.18 44 0.47 0.35 34 Per share – diluted ($)(1) 0.26 0.18 44 0.47 0.34 38 Cash flows from operating activities 13,919 10,473 33 24,636 19,290 28 Per share – basic ($)(1)(2) 0.37 0.28 32 0.66 0.52 27 Per share – diluted ($)(1)(2) 0.36 0.28 29 0.65 0.51 27 Funds flow from operations(2) 14,098 10,366 36 26,603 19,588 36 Per share – basic ($)(1)(2) 0.37 0.28 32 0.71 0.53 34 Per share – diluted ($)(1)(2) 0.37 0.27 37 0.70 0.52 35 Dividends declared 4,477 3,660 22 8,885 7,303 22 Per share(1) 0.12 0.10 20 0.24 0.20 20 Capital expenditures 7,519 8,986 (16) 12,668 17,361 (27) Cash and cash equivalents 35,056 15,001 134 35,056 15,001 134 Working capital(2) 14,133 6,838 107 14,133 6,838 107 Working capital, net of debt(2) 6,133 6,838 (10) 6,133 6,838 (10) Weighted average shares outstanding Basic (000s)(1) 37,731 37,261 1 37,579 37,278 1 Diluted (000s)(1) 38,265 37,795 1 38,155 37,770 1 Operations Average daily sales volumes(3) Brazil: Natural gas (Mcfpd), by field: Caburé (Mcfpd) 12,040 11,811 2 11,867 11,761 1 Murucututu (Mcfpd) 4,278 1,191 259 4,536 1,639 177 Total natural gas (Mcfpd) 16,318 13,002 26 16,403 13,400 22 NGLs – condensate (bopd) 167 128 30 171 131 31 Oil (bopd) 8 3 167 10 7 43 Total (boepd) - Brazil 2,894 2,298 26 2,915 2,371 23 Canada: Oil (bopd) - Canada 173 138 25 183 69 165 Total Company (boepd) 3,067 2,436 26 3,098 2,440 27 Average realized prices(2) Natural gas ($/Mcf) 10.98 10.62 3 10.56 10.53 0 NGLs – condensate ($/bbl) 105.35 72.32 46 93.77 76.78 22 Oil ($/bbl) 77.55 47.10 65 66.28 48.31 37 Total ($/boe) 68.72 63.20 9 65.23 63.43 3 Operating netback ($/boe)(2) Realized sales price 68.72 63.20 9 65.23 63.43 3 Royalties (4.04) (2.97) 36 (4.12) (5.28) (22) Production expenses (5.39) (5.37) 0 (5.32) (5.34) 0 Transportation expenses (0.21) (0.14) 50 (0.21) (0.07) 200 Operating netback 59.08 54.72 8 55.58 52.74 5 Operating netback margin(2) 86% 87% (1) 85% 83% 2 Notes: (1) Per share amounts are based on weighted average shares outstanding other than dividends per share, which is based on the numb er of common shares outstanding at each dividend record date. The weighted average number of diluted common shares outstanding in t he computation of funds flow from operations and cash flows from operating activities per share is the same as for net income per share.
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4 (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. Q2 2026 Results Webcast Alvopetro will host a live webcast to discuss our Q2 2026 financial results at 8:00 am Mountain time on Thursday August 6, 2026. Details for joining the webcast are as follows: DATE: August 6, 2026 TIME: 8:00 AM Mountain/10:00 AM Eastern LINK: https://us06web.zoom.us/j/85865558118 DIAL-IN NUMBERS: https://us06web.zoom.us/u/kdkEw5S5Wa WEBINAR ID: 858 6555 8118 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 a nd 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 boepd = barrels of oil equivalent (“boe”) per day bopd = barrels of oil and/or natural gas liquids (condensate) per day BRL = Brazilian Real e3m3/d = thousand cubic metre per day m3 = cubic metre m3/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) Q1 2026 = three months ended March 31, 2026 Q2 2025 = three months ended June 30, 2025 Q2 2026 = three months ended June 30, 2026 GAAP or IFRS = IFRS Accounting Standards
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5 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 indus try, 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 a s 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 a non-GAAP ratio 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 Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating netback - $ per boe 59.08 54.72 55.58 52.74 Average realized price - $ per boe 68.72 63.20 65.23 63.43 Operating netback margin 86% 87% 85% 83% Funds Flow from Operations Per Share and Cash Flows from Operating Activities 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, divide d by the weighted average shares outstanding for the respective period. Cash flows from operating activities per share is a supplementary financial measure computed as cash flows from operating activities 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:
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6 Three Months Ended June 30, Six Months Ended June 30, $ per share 2026 2025 2026 2025 Per basic share: Cash flows from operating activities 0.37 0.28 0.66 0.52 Funds flow from operations 0.37 0.28 0.71 0.53 Per diluted share: Cash flows from operating activities 0.36 0.28 0.65 0.51 Funds flow from operations 0.37 0.27 0.70 0.52 Capital Management Measures Funds Flow from Operations 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 t he 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 Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cash flows from operating activities 13,919 10,473 24,636 19,290 Changes in non-cash working capital 179 (107) 1,967 298 Funds flow from operations 14,098 10,366 26,603 19,588 Working Capital Working capital is computed as current assets less current liabilities. Working capital is a measure of liquidity, is used to evaluate financial resources, and is calculated as follows: As at June 30, 2026 2025 Total current assets 44,059 22,915 Total current liabilities (29,926) (16,077) Working capital 14,133 6,838 Working Capital, Net of Debt Working capital net of debt is computed as 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 June 30, 2026, Alvopetro’s working capital exceeds the non-current balance outstanding on the loan. As at June 30 2026 2025 Working capital 14,133 6,838 Loan, non-current (8,000) - Working capital, net of debt 6,133 6,838 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.
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7 “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). 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 convers ion 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 500 e3m3/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 g as. 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 463e3m3/d (16.4MMcfpd). Well Results Data obtained from the 183-D1 well identified in this press release, including potential net pay should be considered preliminary. There is no representation by Alvopetro that the data relating to the 183 -D1 well contained in this press release is necessar ily 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”, “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 indica tions 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 sales price, gas sales and gas deliveries under Alvopetro’s long -term gas sales agreement, future production and sales volumes, expected timing of production commencement from certain wells, 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, 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 activitie s, 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
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8 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 conflicts, 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 co rrect. 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 a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans w ith respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipmen t and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and foreign exchange rate fluctuations, market uncertainty associated with trade or tariff disputes, and general economic conditions. 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. Although Alvopetro believes that the expectations and assumptions on which such forw ard-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 no t exhaustive. Additional information on factors that could affect the operations or financial results of Alvopetro are included in our AIF which may be accessed on Alvopetro’s SEDAR + profile at www.sedarplus.ca. 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. FOR FURTHER INFORMATION, PLEASE CONTACT: Corey C. Ruttan, President, Chief Executive Officer and Director, or Alison Howard, Chief Financial Officer Phone: 587.794.4224 Email: info@alvopetro.com www.alvopetro.com TSX-V: ALV, OTCQX: ALVOF