Monday, August 15, 2022
Alvopetro Energy (ALVOF)
No surprises in quarterly results, time to shift focus to the future
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 our strategic midstream infrastructure.
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Alvopetro Energy reported 2022-2Q results significantly higher than last year and in line with expectations. Production of 2,359 boe/d (versus 2,361 last year and 2,501 last quarter) reflects a 5-day suspension of production in preparation for a processing plant expansion. The average gas price was $11.90/mcf. versus $6.06/mcf last year. With higher pricing, sales rose 93%, fund flow from operations rose 127%, and net income rose 74%. Results were in line with our expectations.
Positive pricing will continue for the immediate future and beyond. Contracted gas prices were set at $11.28/mcf. effective August 1, 2022. We believe the price Alvopetro will receive over the six months of this period’s pricing to be above $11.28/mcf and closer to $11.50/mcf. based on current exchange rates. Prices would have been set at a higher level had the increase not been constrained by a ceiling. In fact, Alvopetro management showed a chart with current prices indicating prices might have been as high $20 had there not been a ceiling. The indicated price is so far above the ceiling price that pricing will most likely be at the ceiling for the foreseeable future even if energy prices or the Real pull back from current levels….
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
