Alvopetro Hits Stride with Expanded Brazilian Gas Deal, Record Output

CALGARY, AB – April 01, 2026 – Alvopetro Energy Ltd. has significantly strengthened its position in the Brazilian energy market, announcing an expanded long-term gas sales agreement that boosts its firm sales volumes by 25% and fuels record-breaking production for the first quarter of 2026. The Calgary-based company's strategic moves in Brazil are translating into robust financial forecasts and growing investor confidence.

The announcement on Wednesday detailed a crucial update to Alvopetro's agreement with Bahiagás, the gas distribution company for the state of Bahia. This amendment increases the company's firm, non-interruptible gas sales commitment to 500,000 cubic metres per day (e3m3/d), securing a significant revenue stream through the end of 2027. This expansion comes as the company reports its highest-ever quarterly sales volumes, underscoring a period of successful operational execution and strategic growth.

A Lucrative Deal in a Liberalizing Market

At the heart of the announcement is the 25% increase in firm sales, representing an additional 100 e3m3/d of natural gas. This new tranche of sales, designated QDC2, covers the period from January 1, 2026, to December 31, 2027. Critically, its pricing is directly linked to international energy markets, set at 10.5% of the average Brent crude oil price from the preceding quarter.

This pricing structure positions Alvopetro to capitalize on strong global oil prices. With Brent forecasts from multiple financial institutions remaining robust for 2026, some projecting averages between $85 and $95 per barrel, the company’s revenue predictability is significantly enhanced. This move is particularly timely as Brazil continues its "Novo Mercado de Gás" (New Gas Market) reforms, a program designed to liberalize the domestic gas sector, reduce the historical dominance of state-owned Petrobras, and encourage competition from independent producers like Alvopetro.

The company’s existing firm sales contract (QDC1) for 400 e3m3/d also saw a favorable adjustment, with the price increasing 2% to BRL1.85 per cubic metre effective February 1, 2026. Based on current exchange rates and benchmark prices, Alvopetro projects its weighted average realized price for firm gas sales will climb steadily throughout the year, from an expected $10.09 per thousand cubic feet (Mcf) in the current quarter to a forecasted $12.87/Mcf by the August-October period.

Record Production Fuels Financial Optimism

The expanded sales agreement is underpinned by impressive production growth. Alvopetro announced that its first-quarter sales hit a new company record, averaging 3,124 barrels of oil equivalent per day (boepd) based on field estimates. This represents a 24% surge compared to the average for the full year 2025. March sales were even stronger, averaging 3,209 boepd, with Brazilian operations contributing 3,014 boepd of that total.

This performance has not gone unnoticed by the market. The company’s stock (TSX-V:ALV) has been trading at 52-week highs, and financial analysts have maintained a positive outlook. Following strong Q4 2025 results, where realized natural gas prices approached C$10/Mcf, analysts reiterated "Buy" ratings with price targets around C$12.00. Projections for Q2 2026 suggest adjusted operating cash flow could reach between $13 million and $15 million as the full impact of higher Brent-linked pricing materializes.

With the new contract in place, Alvopetro projects its total 2026 sales from its Brazilian assets—primarily the Caburé and Murucututu natural gas fields—to average approximately 2,900 boepd. This would mark a 20% increase over the 2,417 boepd sold in Brazil during 2025, cementing the country as the core driver of the company's growth.

Balancing Growth with Operational Diligence

While celebrating record sales, Alvopetro continues to focus on future development and managing the complexities of its operations. The company is currently mobilizing a drilling rig to its 'D' pad to begin drilling the 183-D1 Caruaçu development well later this month. This new well is a key part of its $21 million capital expenditure program for Brazil in 2026, which is largely focused on expanding infrastructure to support sustained, higher production rates.

This forward momentum is balanced with a pragmatic approach to operational challenges. The company reported that its 183-1 well, after stimulation of a lower Gomo interval, experienced low reservoir inflow and is currently shut-in while remedial alternatives are evaluated. This highlights the inherent risks in resource extraction, which Alvopetro appears to be managing alongside its expansion efforts.

The company's long-term outlook is bolstered by a significant increase in its proven and probable (2P) reserves, which grew by 43% to 13.1 million boe, giving it a reserves life index of over 12 years. This foundation supports a multi-year growth trajectory and provides a buffer against the typical declines seen in mature fields.

Alvopetro's strategy involves a balanced capital allocation model, aiming to reinvest approximately half of its cash flows into organic growth opportunities while returning the other half to its stakeholders. This approach, combined with its strategic focus on Brazil's geologically prospective and fiscally attractive regions, positions the company to continue capitalizing on the growing demand for natural gas within the state of Bahia and beyond.