Alvopetro Energy reports higher Q2 revenue and cash flow as sales volumes increase

Alvopetro Energy Ltd (TSX-V:ALV, OTC:ALVOF, FRA:A6Y0) reported higher revenue, funds flow from operations and net income for the second quarter of 2026, with sales volumes and realized natural gas prices both higher year over year.

Total sales averaged 3,067 barrels of oil equivalent per day (boepd) during the quarter, up 26% from the same period a year earlier and down 2% from the first quarter.

Brazilian sales averaged 2,894 boepd, up 26% year over year, while Canadian sales averaged 173 barrels per day, up 25% from the second quarter of 2025.

The company's average realized natural gas price was $10.98 per thousand cubic feet (Mcf), up 3% from Q2 2025 and 8% from Q1 2026. The overall average realized sales price per boe was $68.72, up 9% year over year and 11% from the first quarter.

Natural gas, oil and condensate revenue increased to $19.2 million, up 37% from Q2 2025 and 10% from Q1 2026.

Funds flow from operations was $14.1 million, or $0.37 per basic and diluted share, up $3.7 million from Q2 2025 and $1.6 million from Q1 2026. Alvopetro wrote that the increase relative to Q2 2025 was primarily driven by higher sales volumes, while the increase relative to Q1 2026 was due to higher realized sales prices.

Net income was $9.8 million, or $0.26 per basic and diluted share, increases of $2.9 million from Q2 2025 and $1.7 million from Q1 2026.

Operating netback was $59.08 per boe, an increase of $4.36 per boe from Q2 2025 and $6.96 per boe from Q1 2026. The company reported an operating netback margin of 86%.

Capital expenditures in Q2 2026 totaled $7.5 million and included costs to drill the 183-D1 well on Alvopetro's 100%-owned Murucututu field, along with initial costs for upcoming drilling and facilities projects in Brazil.

Alvopetro completed drilling the 183-D1 well in June to a total measured depth of 3,263 metres. 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 of potential natural gas pay. The company has completed the well in three intervals and expects to have it on production later this month.

In July, Alvopetro commenced drilling the 183-H2 well, which is targeting the prospective resource portion of the Caruaçu structure. The company reported that drilling was at a depth of 1,399 metres and expects drilling to be completed later this month. Following the well, Alvopetro plans to move the drilling rig to the 183-G2 location, the first Caruaçu development well from its newly constructed 183-G well pad.

In the second half of 2026, the company is also focused on expanding its field production facility and pipeline offtake capacity from the Murucututu field, as well as enhancing its natural gas processing facility to accommodate increasing proportions of richer gas production from Murucututu.

July sales volumes averaged 3,134 boepd, based on field estimates. Brazil accounted for 2,995 boepd, including natural gas sales of 16.8 million cubic feet per day, associated natural gas liquids from condensate of 185 barrels per day and oil sales of eight barrels per day. Canadian oil sales averaged 139 barrels per day.

Alvopetro also provided an update on its natural gas pricing. Effective August 1, the company's natural gas price under its long-term gas sales agreement was adjusted to BRL2.00 per cubic metre on the first 400,000 cubic metres per day of reference volumes, with the incremental 100,000 cubic metres per day of reference volumes adjusted to BRL1.91 per cubic metre. The changes represent increases of 5% and 19%, respectively, from the May 1, 2026 price reset.

Based on the company's average heat content to date and the June 30, 2026 BRL/USD exchange rate of 5.18, its weighted average realized price on firm natural gas sales for the August 1 to October 31 period is expected to be $11.70 per Mcf, 7% above its Q2 2026 realized price of $10.98 per Mcf. 

Alvopetro reported working capital of $14.1 million as of June 30, with working capital net of debt of $6.1 million.

"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," Alvopetro CEO Corey Ruttan said.  

"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."