Alvopetro reports strong 2025 growth, expands Murucututu plans & announces Q1 2026 dividend

Hello, you're watching Proax, and I'm joined by Corey Rutan. He's the CEO of Alva Petro Energy.

Corey, very good to speak with you. You've described 2025 as a transformational year. What were the

key drivers behind that step change in production and reserves? And why does it matter for shareholders?

Right, no, thank you. Yeah, no, like I said, it really has been a transformational time at Alva Petro,

and it's mainly off the strength of our 183D4. Well, that we announced last year in Brazil on our 100%

owned Marikatu 2 project. But we also added a new growth platform in Canada, so there's been a

lot of changes last year. And I think if you consider the fact that we actually returned over 45%

of our funds flow from operations to stakeholders last year, while still achieving some pretty

impressive and significant growth in production and reserves, that's really why we're saying it was

an exceptional year. If you consider our 2025 production was up 41% year over year, our Q4

production off the strength of that well in Brazil, we exited the year with Q4 record production

of nearly 2900 barrels of oil equivalent per day. And then, you know, we've really kicked off

2026 with a very strong start of record monthly production number for us in January at nearly

3100 barrels of oil equivalent per day. So it works pretty exciting about where we stand today.

And you've announced a quarterly dividend, Corey, how should investors think about balancing

returns to shareholders with funding growth across your asset base?

Yeah, you know, off the strength of the production growth and reserve growth, which I didn't

speak to at all, maybe get to that. But yeah, I know we announced another 12-set US per share

quarterly dividend that translates into a yield of about 8% at yesterday's closing share price.

And we've always taken, I would say, a more balanced and disciplined approach to capital allocation,

where we're taking, you know, roughly half of our funds flow from operations and we're turning

that to stakeholders and then taking the other half of that and reinvesting in an organic growth.

You know, on the reserve front last year, you know, with all that reinvestment that you saw,

we had a pretty successful year on reserve growth as well. So even after producing about a

million barrels of oil equivalent, our 2P reserves were up 43% year over year, which replaced

production nearly five times. We were able to post finding and development costs of just over

15 dollars per BUE, which translates into a recycle ratio of 3.4 times. So, you know, strong

on the reserve side as well as the production. The Merukut-Suzu field is clearly central to your

story. What needs to happen operationally to scale production towards that 600,000 cubic

meters per day target? Yeah, so this is a real success story for us. You know, we had an initial

pipeline of facilities capacity there of 150,000 cubic meters of gas per day.

This well result that we had last year was easily double what we had expected going into it. So,

the good news is, you know, we're now faced with a facilities expansion project, which is a big

focus of our 2026 capital program. So, we're looking to basically increase the productive

take-away capacity from that field, basically four fold up to 600,000 cubic meters a day. And then,

in parallel, we're optimizing our natural gas processing plant to handle increasing proportions

of this richer Merukut-Suzu gas. So, those are projects that will execute through this year,

and then that will allow us to have a combined capacity of up to 600,000 cubic meters a day. So,

you know, that would represent, you know, relative to what we're producing in January,

that would be another 20% higher and a lot more flexible with respect to the ability to deliver

Merukut-Suzu gas. And then, in parallel, we'll ramp up our development drilling activity.

So, really, I'm locked to full potential of that asset.

Corey, you've got multiple meeting parts this year for new bells in Brazil to expansion in Canada.

What's the most important milestone that investors should watch for over the next six to 12 months?

Yeah, you know, it's really, you know, we've added a lot of reserves and resources associated

with that Merukut-Suzu asset, I think, in Brazil. It's, you know, finishing these facilities projects

and migrating that reserve and resource space into production and cash flow that will fuel

our additional growth objectives there in Western Canada, obviously, with the strengthening

commodity prices. We've got a deep inventory of open home multilateral wells to be drilled. We

think we have over a hundred gross tier one drilling locations. So, I think with commodity

prices, you'll see a ramp up an activity there and we're quite pleased with the initial results

that we achieved on that project in the first year.

So, I mean, as you mentioned, production up 41% reserves up 43%. A confidence,

this level of growth is sustainable and what's underpins the next phase?

Yeah, you know, I really think it comes down to, we often say that I'll go after from an investment

thesis or opportunity perspective really is a value yield and growth story. So, from a value

perspective with all of that value we added last year, we're actually still only trading

at 55% of our 2p net present values on a yield basis that 12 cent per quarter dividend, like I said,

translates into an 8% yield. But to your point, on the gross side, I think we have probably a

better inventory in front of us than we ever have mainly off the strength of that 183D

four result last year of Brazil and with the addition of the Canadian growth platforms. We have

this unique ability now to invest in both of those growth platforms across our portfolio.

If we can even continue at the January February production levels that we've had this year,

that will result in a 25% increase in production this year, year over year, followed off

of that 41% year over year growth year. So, I think in my mind, if we're returning half of our

cash flows to stakeholders and generating that type of growth, those would be too pre-success

of exceptional years for us. Well, Cory, it sounds like a great year behind you and another great

year ahead of you. Thank you very much for taking the time to speak with us. All right, thank you very

much. Let's Cory return. He's the CEO of Alvapet Show Energy.