Q1 2026 Alvopetro Energy Ltd Earnings Call

May 8, 2026

Corey C. Ruttan: I'm joined by Alison Howard, our Chief Financial Officer, and Adrian Audet, our Vice President, Asset Management.

Corey Ruttan: I'm joined by Alison Howard, our Chief Financial Officer, and Adrian Audet, our Vice President, Asset Management.

Alison Howard: Good morning, everyone. Just a few administrative points before we jump into our presentation. We will be recording today's call, and we will have a replay available on our website later on today. All attendees have been placed in listen-in-only mode for the duration of the presentation. We will have a Q&A session at the end of our presentation, and you can start logging any questions that you have using the Zoom Q&A button that you should see on your screen. If you've dialed in by phone, you can also send any questions to socialmedia@alvopetro.com. Lastly, we will be going through various non-GAAP measures and making forward-looking statements throughout this presentation.

Alison Howard: We do encourage you to read through all of the disclosures and cautionary statements that we have, both in our corporate presentation on our website as well as in our MD&A that is also on our website.

Corey C. Ruttan: Great. Thank you, Alison. If you recall, at the beginning of 2025, we did upgrade our gas sales agreement. When you combine that with some of the strength that we demonstrated on our Murucututu project, particularly with the 183-D4 well, we were able to deliver some pretty strong results in 2025. Our production was up 41% year over year, and we exited the year with a record quarter of 2,867 barrels of oil equivalent per day in Q4. We are pleased to say that we had an even higher record quarter in Q1 this year that we just announced along with the financial results here at over 3,100 barrels of oil equivalent per day.

Corey Ruttan: Great. Thank you, Alison. If you recall, at the beginning of 2025, we did upgrade our gas sales agreement. When you combine that with some of the strength that we demonstrated on our Murucututu project, particularly with the 183-D4 well, we were able to deliver some pretty strong results in 2025. Our production was up 41% year over-year, and we exited the year with a record quarter of 2,867 barrels of oil equivalent per day in Q4. We are pleased to say that we had an even higher record quarter in Q1 this year that we just announced along with the financial results here at over 3,100 barrels of oil equivalent per day.

Corey C. Ruttan: We did upgrade our gas sales agreement again at the beginning of 2026, increasing our firm supply again by another 25%. If you compare Q1 on a quarter-over-quarter basis, we are up 9%. If you compare Q1 to our 2025 average, we're up about 25%. Pretty strong start. You can see we just recently announced our April production as well, which continued at a pretty consistent level to Q1. Lastly, I think, you know, if you consider this growth that we've been able to generate over this period of time, I think it's pretty impressive, especially when you consider it in the context of the fact that we're paying out about half of our cash flows in returns to stakeholders.

Corey Ruttan: We did upgrade our gas sales agreement again at the beginning of 2026, increasing our firm supply again by another 25%. If you compare Q1 on a quarter-over-quarter basis, we are up 9%. If you compare Q1 to our 2025 average, we're up about 25%. Pretty strong start. You can see we just recently announced our April production as well, which continued at a pretty consistent level to Q1. Lastly, I think, you know, if you consider this growth that we've been able to generate over this period of time, I think it's pretty impressive, especially when you consider it in the context of the fact that we're paying out about half of our cash flows in returns to stakeholders.

so if you recall at the beginning of 2025, we did upgrade our gas sales agreement, uh, and then when we combined that, with some of the strengths, that we demonstrated on our Market, 222 projects, particularly with the 183 D4. Well, uh, we were able to, to deliver some pretty strong results in 2025. Uh, our production was up 41% year-over-year and we exited the year, uh, with a record quarter 2867 barrels of oil, equivalent per day in the fourth quarter. Uh, and we're pleased to say that we had an even higher record quarter in q1 of this year that we just announced uh, with along with the financial results here to over, 3,100 barrels of oil equivalent uh uh per day. Um we did upgrade our gas sales agreement again at the beginning of 2026, increasing our firm, um Supply Again by another 25%. So if you compare q1 uh, on a quarter over quarter base,

We were up, uh, 9% if you compare q1 to our 2025 average. Uh, we're up about 25%. So uh pretty strong start and you can see, we just recently announced our April production as well. Which continued at a pretty consistent level to to q1.

Uh, lastly, I think, you know, if you consider this growth that we've been able to generate over this period of time, I think it's pretty impressive especially when you consider it in the context.

Um, of the fact that we're paying out about half of our cash flows um, in in returns to stakeholders.

Alison Howard: Okay. Jumping into our Q1 2026 results that we released. Starting with our operating net back, that is a measure of our operating profitability. We measure it in per barrel of oil equivalent. Just a reminder, to calculate that we start with our realized sales price that's at the top of the chart. We deduct off royalties. That's the orange bar. We've combined production and transportation expenses. That's the gray bar. Then the green bar is our operating net back. Looking at Q1, we had a realized sales price of $61.77. That was up over $2 from Q4 2025. Included in that are natural gas sales were just over $10 per Mcf at $10.14.

Okay, so jumping into our q1.

Alison Howard: Our royalties of CAD 419 is an effective royalty rate of just under 7%, which is consistent with last quarter. 6.4% in Brazil and 13.6% in Canada. Production and transportation costs decreased overall, both overall in terms of dollars and also per BOE. With that increased production, they were down CAD 0.76 per BOE or about 12% from Q4. Our operating netback, with all of those improvements, was up CAD 2.42 compared to Q4. Brazil netback just over CAD 53, and Canadian netback just over CAD 36. That translates into an operating netback margin when you look relative to our realized price of 84%.

Are we measured in per barrel of oil equivalent, um, just a reminder to calculate that we start with our realized sales price. That's at the top of the chart, we deduct off, royalties with the orange bar. Um, we've combined production and transportation expenses. That's the gray bar and then the green bar is our operating that back. So looking at, um, q1, we had a realized sales price of 6177, uh, that was up over $2 from Q4 2025, um, included in that are natural gas sales were just over ten dollars per mcf at $10.14. Um, our royalties of 419 is an effective royalty rate of just under 7% which is consistent with last quarter, um 6.4% in Brazil and 13.6% in Canada, um, production and transportation costs. Um, decreased overall, um, both overall in terms of dollars and also per

Alison Howard: Again, when you compare that to other companies operating in South America and in North America, that's, you know, really industry-leading netback margins. If you layer in the fact that we qualify for the CSLL tax incentive in Brazil, which reduces our effective rate to just over 15%, and we actually have no current tax in Canada right now because we have tax credits to offset our earnings here, that really allows us to generate funds flow from operations on this base level of production. On the funds flow from operations, this chart here just compares our Q4 of $10.6 million to Q1 of $12.5 million. We were up $1.9 million.

Boe, with that increased production. Um, they were down 76 cents per Boe, or about 12% from Q4, um, and our operating that back, um, with all of those improvements was up $2.42 compared to Q4, um, Brazil netback just over $53 and Canadian that back, just over 36 dollars that translates into an operating net back margin. When you look relative to our realized price of 84% um,

Um, and again, when you compare that to other companies operating in, um, South America and in North America, that's, you know, really industry-leading, that back margins. Um, if you layer in the fact that we qualify for the Sudene tax incentive in Brazil, which reduces our effective rate to just over 15%, and we actually have no current tax in Canada right now because we have taxes to offset our earnings here, um, that really allows us to generate, um, funds flow from operations on this, um, base level of production.

Alison Howard: The bulk of that is increase in revenues, both in terms of our sales volume increase as well as our realized price increase. As I mentioned as well, production expenses were down on a dollar basis compared to Q4. Our interest in other income was higher than Q4. Our G&A was down. Partially offsetting that was higher royalties, you know, with those higher revenues and also higher current tax. Very strong quarter here at $12.5 million funds flow. Similarly, on net income, we saw an increase of $2.5 million. That's again impacted by all those same things that funds flow was impacted by. Also saw an improvement on our FX, so there was higher FX gains this quarter of $1.7 million.

So on the funds flow from operations. Um, this chart here just Compares our Q4 of 10.6 million to q1 of 12.5 million. So we were up 1.9 million. The bulk of that is increase in revenues. Both, in terms of our sales volume increase as as well as our realized pricing increase. Um, as I mentioned as well, production expenses, were were down on a dollar basis compared to Q4 our interest in other income was higher than Q4 GNA was down, um, and then partially offsetting that was higher royalties, you know, with those higher revenues and also um higher current tax, but very strong quarter here at 12.5 um million funds flow.

Alison Howard: The change was $1.7 million compared to losses last quarter. Offsetting that, we did have higher depletion and depreciation, finance expense, and also deferred tax. Overall, net income up $8.1 million this quarter.

Similarly, on net income, we saw an increase of 2.5 million that's again, in impacted by all, those same things that funds flow was impacted by, um, also saw an improvement on our FX. So there was higher FX games, um, this quarter of 1.7 million or the change was 1.7 million compared to losses last quarter. Um, offsetting that we did have higher depletion and depreciation, um, Finance expense, and also different tax. But overall, um, net income of 8.1 million this quarter,

Corey C. Ruttan: As a reminder, we did declare again a $0.12 US per share dividend in Q1. This just shows the dividend history since we introduced the dividend in Q3 2021. That dividend translates into a current yield of about 7.6%. In total, since inception, we've now paid dividends of nearly $2 per share or over $70 million back to shareholders. This slide just highlights our more disciplined capital allocation model, where we're basically trying to take roughly half of our cash flows and return it to stakeholders and take the other half and reinvest it in growing our business.

Corey Ruttan: As a reminder, we did declare again a $0.12 US per share dividend in Q1. This just shows the dividend history since we introduced the dividend in Q3 2021. That dividend translates into a current yield of about 7.6%. In total, since inception, we've now paid dividends of nearly $2 per share or over $70 million back to shareholders. This slide just highlights our more disciplined capital allocation model, where we're basically trying to take roughly half of our cash flows and return it to stakeholders and take the other half and reinvest it in growing our business.

Uh, so as a reminder, we did declare again a a 12 cent us per share dividend in the first quarter of this show, just shows the dividend history, since we introduced the dividend in the third quarter of 2021. Uh, that dividend translates into a current yield of about 7.6% on in total since Inception. We've now paid dividends of nearly $2 per share or over 70 million dollars back to back to shareholders.

Corey C. Ruttan: The chart that you see on the left here, all the green lines with the black dots show all the cash funds flow from operations each quarter. The cash inflows each quarter. Alison just highlighted, twelve and a half million dollars for Q1 2026, which was up 18% over Q4 last year. All the stacking bars just show the cash outflows in each particular quarter. All the various shades of green are the various returns to stakeholders, and the yellow are the capital expenditures that we've been making in each individual quarter. The pie on the right-hand side just shows in total since July 2020, we've now had cumulative funds flow from operations of $217 million.

Corey Ruttan: The chart that you see on the left here, all the green lines with the black dots show all the cash funds flow from operations each quarter. The cash inflows each quarter. Alison just highlighted, twelve and a half million dollars for Q1 2026, which was up 18% over Q4 last year. All the stacking bars just show the cash outflows in each particular quarter. All the various shades of green are the various returns to stakeholders, and the yellow are the capital expenditures that we've been making in each individual quarter. The pie on the right-hand side just shows in total since July 2020, we've now had cumulative funds flow from operations of $217 million.

This slide just highlights our more disciplined uh Capital allocation model where we're basically trying to take roughly half of our cash flows and return it to stakeholders and take the other half and return it or and reinvest it in in growing our business. Um the chart that you see on the left here, all the green lines with the black dots show all the C.

Corey C. Ruttan: Of this, almost, just over half has been reinvested and just shy of half has been returned to stakeholders in these various forms. We have announced some upgrades to our gas sales agreement recently. This graph just kind of highlights the fact that we've got two different pricing formulas under our firm sales to Bahiagás. Now, the red line is the kind of historical contract that we've had. We're currently selling about 80% of our gas under this formula in red. At the beginning of 2026, we added another firm layer of gas sales under this QDC2 formula, which is this orangey brown color at the bottom here. About 20% of our sales on that.

Corey Ruttan: Of this, almost, just over half has been reinvested and just shy of half has been returned to stakeholders in these various forms. We have announced some upgrades to our gas sales agreement recently. This graph just kind of highlights the fact that we've got two different pricing formulas under our firm sales to Bahiagás. Now, the red line is the kind of historical contract that we've had. We're currently selling about 80% of our gas under this formula in red. At the beginning of 2026, we added another firm layer of gas sales under this QDC2 formula, which is this orangey brown color at the bottom here. About 20% of our sales on that.

The p on the right hand side, it just shows in total since July of 2020. Uh, We've now had cumulative funds flow from operations of 217 million us of this almost. Uh, just over half has been reinvested and just shy of half has been returned to to stakeholders in these various forms. So,

Corey C. Ruttan: When we do a weighted average of the two, it's the green line that you see here, which becomes our weighted average realized price. You can see the price gets adjusted quarterly. We most recently announced our 1 May price, which was using Q1 2026 commodity prices up to over $11 per Mcf. If we use the futures market for the forecast period, so to the right of this dashed line that you see here, you see another forecasted sharper increase forecast for 1 August, up to on a combined basis, excuse me, of over $13 per Mcf. We have also added the formulas down below.

Corey Ruttan: When we do a weighted average of the two, it's the green line that you see here, which becomes our weighted average realized price. You can see the price gets adjusted quarterly. We most recently announced our 1 May price, which was using Q1 2026 commodity prices up to over $11 per Mcf. If we use the futures market for the forecast period, so to the right of this dashed line that you see here, you see another forecasted sharper increase forecast for 1 August, up to on a combined basis, excuse me, of over $13 per Mcf. We have also added the formulas down below.

Um, we have announced some upgrades, uh, to our gas sales agreement. Uh, recently, um, in this graph just kind of highlights the fact that we've got 2, different pricing formulas, under our, our, our firm sales to the heia gas. Now, the red line is the the kind of historical contract that we've had, we're currently selling about 80% of our gas under this formula in red. And then at the beginning of 2026, um, uh, we added another firm layer of gas sales under this qdc 2 formula which is this orangey brown color at the bottom here uh um about 20% of our sales on that. And then when we do a weighted average of the 2, it's the green line that you see here, which becomes our our weighted average realized price, you can see the price gets adjusted quarterly. So we most recently announced our May 1st price, which was using q1 2026 commodity prices up to, uh,

Corey C. Ruttan: The red line, the original contract we had, the way the formula works is we have a fixed component that does get indexed to inflation, and then the variable component is based kind of at half on a function of Brent and the other half on a function of Henry Hub. A premium to Henry Hub plus another fixed margin that also gets adjusted for inflation. We calculate a US dollar per MBtu price. And then for our gas, which is kind of hotter than average, we apply this factor to get to a US dollar per Mcf price. You can see for QDC2, it's entirely a function of Brent, which is a little bit different. I think that covers it.

Corey Ruttan: The red line, the original contract we had, the way the formula works is we have a fixed component that does get indexed to inflation, and then the variable component is based kind of at half on a function of Brent and the other half on a function of Henry Hub. A premium to Henry Hub plus another fixed margin that also gets adjusted for inflation. We calculate a US dollar per MBtu price. And then for our gas, which is kind of hotter than average, we apply this factor to get to a US dollar per Mcf price. You can see for QDC2, it's entirely a function of Brent, which is a little bit different. I think that covers it.

Over 11 dollars per mcf. And then if we use the Futures Market, uh, for the forecast, period, so to the right of this dash line that you see here. Um, you see another forecasted, uh, sharper increase forecast for August, 1st up to a combined basis, excuse me. Um, of over $13 us per mcf, and then we have also added the formulas down below. So the red line that the original contract. We had the way the formula works is we have a fixed component that does get indexed to inflation. And then, the variable component is based, kind of at half on a function of Brent, and the other half on a front function of Henry Hub. So a premium to

Henry Hub, Plus another fixed margin, uh, that also gets him, uh, adjusted for inflation. We calculate a US dollar per minute btu price and then for our gas, which is kind of hotter than average. We apply this factor to get to, um, a US dollar per mcf price. And then you can see for qdc 2. It's entirely a function of Brent, um, uh, which is a little bit different and, um,

I think that that covers it.

Corey C. Ruttan: We've established a strong platform in Brazil, and now our activity is focused on our next growth objectives. Our biggest growth opportunity is our 100% working interest Murucututu project, which is just north of Caburé. We made a significant discovery on this block with our 183-A3 well, and then the 183-D4 follow-up well. 183-D4 came on production last August, well ahead of expectations, and the production from this well continues to be strong through the Q1 of this year. We have a facilities focused 2026 plan to unlock the potential of this asset and set the stage for the next phase of growth in this area.

Corey Ruttan: We've established a strong platform in Brazil, and now our activity is focused on our next growth objectives. Our biggest growth opportunity is our 100% working interest Murucututu project, which is just north of Caburé. We made a significant discovery on this block with our 183-A3 well, and then the 183-D4 follow-up well. 183-D4 came on production last August, well ahead of expectations, and the production from this well continues to be strong through the Q1 of this year. We have a facilities focused 2026 plan to unlock the potential of this asset and set the stage for the next phase of growth in this area.

So we've established a strong platform in Brazil and now our activity is focused on our next growth objectives.

So our biggest growth opportunity is our 100% working interest Market Tutu project, which is just north of Cabaret. We made a significant discovery on this block with our 183-A3 well, and then

The 183 D4, follow-up. Well and 183 D4 came on production, last August. Well ahead of expectations and the production from this well continues to be strong through the first quarter of this year.

So, we have a facilities focused 2026 plant to unlock the potential of this asset and set.

Corey C. Ruttan: First, we are going to quadruple the Murucututu takeaway capacity for the field itself, and then we're also expanding our gas plant, UPGN Caburé, to add the processing flexibility to facilitate this Murucututu growth. We have a combination of reserves and resources with GLJ that demonstrates the potential of this Murucututu asset, and we're working to migrate this into production and cash flow to support our longer term growth objectives. In the field itself, we're well underway with our 2026 development plan. We're increasing the field processing takeaway capacity fourfold for this field. We're in the procurement process of the main processing equipment for this field, for this field expansion, and we're looking forward to installing this equipment over the next coming quarters.

Corey Ruttan: First, we are going to quadruple the Murucututu takeaway capacity for the field itself, and then we're also expanding our gas plant, UPGN Caburé, to add the processing flexibility to facilitate this Murucututu growth. We have a combination of reserves and resources with GLJ that demonstrates the potential of this Murucututu asset, and we're working to migrate this into production and cash flow to support our longer term growth objectives. In the field itself, we're well underway with our 2026 development plan. We're increasing the field processing takeaway capacity fourfold for this field. We're in the procurement process of the main processing equipment for this field, for this field expansion, and we're looking forward to installing this equipment over the next coming quarters.

This uh, stage for the next phase of growth, uh, in this area. So first we are going to quadruple the uh, Merit 222. Takeaway capacity for the field itself, and then we're also expanding our gas plants or UPG and Cabaret to add the processing flexibility to facilitate this work to to growth.

So we have a combination of reserves and resources with glj, that demonstrates the potential of this Market to to asset and we're working to migrate this into production and cash flow to support our longer term growth objectives.

Adrian Audet: We're also expanding the field egress by increasing the pipeline capacity of up to 600 E3 M3 a day. To do this, we're going to loop the existing 4-inch pipeline with an 8-inch pipeline. Currently, we're in the permitting process of this, and the line pipe itself is being manufactured in Brazil. At the field itself, we're also drilling a follow-up well, a 183-D1 well, which is right where the cursor there. We started this project at the end of April, so we're right in the middle of the drilling project right now. We're gonna be completing this as soon as practical. Once the break relieves, we can bring on the completion equipment and tie that into the existing pipeline facilities.

Corey Ruttan: We're also expanding the field egress by increasing the pipeline capacity of up to 600 E3 M3 a day. To do this, we're going to loop the existing 4-inch pipeline with an 8-inch pipeline. Currently, we're in the permitting process of this, and the line pipe itself is being manufactured in Brazil. At the field itself, we're also drilling a follow-up well, a 183-D1 well, which is right where the cursor there. We started this project at the end of April, so we're right in the middle of the drilling project right now. We're gonna be completing this as soon as practical. Once the break relieves, we can bring on the completion equipment and tie that into the existing pipeline facilities.

So on the field itself, we're well underway with our 2026 uh, development plan. So we're increasing the field processing takeaway capacity 4-fold for this field. So we're in the procurement process of the main processing equipment, for this field, for this field expansion, and we're looking forward to, uh, installing this equipment for the next coming quarters. And we're also expanding the field egress, uh, by increasing the pipeline capacity of up to 6003 M3 a day. So to do this, we're going to Loop the existing 4 inch Pipeline with an 8 inch pipeline.

So currently, we're in the permitting process of this, and the line pipe itself is being manufactured in Brazil.

At the field itself. We're also drilling at, uh, follow-up well at 183 D1 well, which is right where the cursor is there. Um,

Right now.

Adrian Audet: This development well will add additional production capacity for this field. Also, currently, we're building a Gomo pad, which is sort of where the cursor is there. This is a location that's going to support up to 4 additional Caruaçu development locations. This pad is going to be pipeline connected as we do our other looping project. The second phase of development that we're focusing on in 2026 is our midstream project at UPGN Caburé itself. This year, our plan is to optimize the processing capacity of this facility to improve the ability to increase additional amounts of Murucututu gas, which is hot gas.

Corey Ruttan: This development well will add additional production capacity for this field. Also, currently, we're building a Gomo pad, which is sort of where the cursor is there. This is a location that's going to support up to 4 additional Caruaçu development locations. This pad is going to be pipeline connected as we do our other looping project. The second phase of development that we're focusing on in 2026 is our midstream project at UPGN Caburé itself. This year, our plan is to optimize the processing capacity of this facility to improve the ability to increase additional amounts of Murucututu gas, which is hot gas.

Maybe we're going to be uh, completing this as soon as practical. So once the brake leaves, we can bring on the completion equipment and tie that into the existing pipeline facilities. So this development will add additional production capacity for this field.

Also currently, we're we're building a g-pad.

Which is sort of where the cursor is there. And so, this is a location that's going to support up to 4 additional cover risu development locations,

And this pad is going to be pipeline-connected as we do our other looping project,

And so the second phase of of development that we're focusing on in 2026 is our Midstream project at UPG and Cabaret itself.

Adrian Audet: The target capacity of this project is an overall gas plant rate of 600 E3 M3 a day, but will allow up to 300 E3 M3 a day of Murucututu gas to be blended with our Caburé gas. This project has already been initiated with our facilities partner, Enerflex, and we expect this to be online at the end of Q3. This project will allow us to substantially increase the amount of offtake from our Murucututu asset. All right. Moving on to Western Canada.

Corey Ruttan: The target capacity of this project is an overall gas plant rate of 600 E3 M3 a day, but will allow up to 300 E3 M3 a day of Murucututu gas to be blended with our Caburé gas. This project has already been initiated with our facilities partner, Enerflex, and we expect this to be online at the end of Q3. This project will allow us to substantially increase the amount of offtake from our Murucututu asset. All right. Moving on to Western Canada.

So this year our plan is to optimize the processing capacity of this facility to improve the ability to increase additional amounts of Merck 22 gas which is which is hotter gas

So the target capacity of this project is an overall gas plant rate of 683 m³ a day, but we'll allow up to 30,083 m³ a day of MERC 22 gas to people that did with our capital de again.

So, this project has already been initiated with our facilities partner, Aniflex, and we expect this to be online at the end of the third quarter.

So this project will allow us to substantially increase the amount of offtake from our work to to asset.

Corey C. Ruttan: I think everyone's probably aware that we announced a strategic reentry into the Western Canadian Sedimentary Basin through two transactions last year, which culminated in an area of mutual interest, highlighted in green on the map that you see here, which basically covers the entire Saskatchewan side of the Mannville Stack Heavy Oil Play fairway, with also with some recent land acquisitions that brings our land holdings to over 100 square miles of land on a gross basis. We're 50% interest in that, so over 32,000 net acres of land. We've now got 3.5 net wells on production.

Corey Ruttan: I think everyone's probably aware that we announced a strategic reentry into the Western Canadian Sedimentary Basin through two transactions last year, which culminated in an area of mutual interest, highlighted in green on the map that you see here, which basically covers the entire Saskatchewan side of the Mannville Stack Heavy Oil Play fairway, with also with some recent land acquisitions that brings our land holdings to over 100 square miles of land on a gross basis. We're 50% interest in that, so over 32,000 net acres of land. We've now got 3.5 net wells on production.

All right. Um, moving on to western Canada. Um, I think everyone's probably aware that we announced a strategic re-entry into the Western Canadian. Sedimentary Basin through 2 transactions last year. Uh which culminated in an area of mutual interest. Uh, highlighted in green on the map that you see here, which basically covers the entire Saskatchewan side of the mannville stack, heavy oil, play Fairway, um, with also with some recent land Acquisitions. That brings our land Holdings to over 100 square miles of land on a growth basis. We're 50% interest in that. So over 32,000 net acres of land. Um,

Corey C. Ruttan: We did have some initial reserve recognition from our independent reserve evaluator, GLJ, at the end of last year, based on the limited amount of activity that had happened to that stage, 735,000 barrels of oil equivalent, with an NPV of just over $12 million. They were able to assign just 8 gross or 4 net undeveloped locations to the asset based on the drilling at that point. You'll see on the next slide here, this just highlights that. Through the earning process, we also really helped delineate 3 core areas, Mulberg, Salvador, and Lashburn. That's where the 8 undeveloped locations that GLJ assigned reside. You can see we have an inventory of over 100 locations that we see.

Corey Ruttan: We did have some initial reserve recognition from our independent reserve evaluator, GLJ, at the end of last year, based on the limited amount of activity that had happened to that stage, 735,000 barrels of oil equivalent, with an NPV of just over $12 million. They were able to assign just 8 gross or 4 net undeveloped locations to the asset based on the drilling at that point. You'll see on the next slide here, this just highlights that. Through the earning process, we also really helped delineate 3 core areas, Mulberg, Salvador, and Lashburn. That's where the 8 undeveloped locations that GLJ assigned reside. You can see we have an inventory of over 100 locations that we see.

We've now got uh 3 and a half net Wells on production. We did have some initial Reserve recognition from our independent Reserve evaluator dlj at the end of last year based on the limited amount of activity that had happened to that stage 735,000 barrels uh of oil equivalent to with an npv of just over 12 million dollars. They were able to assign just 8 uh gross or 4, net undeveloped locations to the asset, based on the drilling at that point, but you

See, on the next slide.

Um,

Corey C. Ruttan: The type curves that GLJ assigned on a 2P or proved plus probable basis, for the three different areas are highlighted on the graph here, with, you know, initial production rates, you know, somewhere between 110 and close to 150 barrels of oil per day on a gross basis, and cumulatively producing over the life of the well between 100 and 175,000 barrels per well. You know, we certainly think that we've, you know, another substantial area for growth for ourselves here. If you use even just a $70 flat oil price forecast, the rates of return that these types of projects would generate, you know, we're targeting between 50 and over 100% IRR.

Corey Ruttan: The type curves that GLJ assigned on a 2P or proved plus probable basis, for the three different areas are highlighted on the graph here, with, you know, initial production rates, you know, somewhere between 110 and close to 150 barrels of oil per day on a gross basis, and cumulatively producing over the life of the well between 100 and 175,000 barrels per well. You know, we certainly think that we've, you know, another substantial area for growth for ourselves here. If you use even just a $70 flat oil price forecast, the rates of return that these types of projects would generate, you know, we're targeting between 50 and over 100% IRR.

This this just highlights that so through the earning process, we also really helped um delineate uh 3 core areas, uh meberg Salvador and lashburn, that's where the 8 undecillion.

Corey C. Ruttan: It's pretty compelling and gives us good exposure to oil prices. Just to wrap up this part of the call, you know, to reiterate, I think we had a pretty amazing year last year, and we continued to deliver some pretty strong results to start off 2026. We continued to benefit from very attractive natural gas prices, industry-leading operating netbacks and operating netback margins. In addition to the strong production growth that we had last year through to date, even April of this year, just as a reminder, we also were able to generate some pretty substantial reserve growth. Over 43% increase in our 2P reserves, even after considering that we produced close to 1 million barrels of oil equivalent last year and replaced production over 5 times.

Corey Ruttan: It's pretty compelling and gives us good exposure to oil prices. Just to wrap up this part of the call, you know, to reiterate, I think we had a pretty amazing year last year, and we continued to deliver some pretty strong results to start off 2026. We continued to benefit from very attractive natural gas prices, industry-leading operating netbacks and operating netback margins. In addition to the strong production growth that we had last year through to date, even April of this year, just as a reminder, we also were able to generate some pretty substantial reserve growth. Over 43% increase in our 2P reserves, even after considering that we produced close to 1 million barrels of oil equivalent last year and replaced production over 5 times.

So, um, you know, we certainly think that we've, uh, don't you know, another substantial area for growth for ourselves here. If you use even just a $70 flat oil price forecast, the rates of return that these types of projects would generate, you know, we're targeting between 50% and over 100% IRR. So it's pretty compelling and gives us good exposure to oil prices.

Corey C. Ruttan: This strong free cash flow generation capacity that we have really does help underpin the more balanced and disciplined capital allocation model that we have. For value investors, trading at about 60% or less than 60% of our 2P NPVs. For yield investors, that $0.12 per share dividend translates into 7.6% dividend yield at current prices. For growth investors, I think we have a pretty exciting capital program ahead of us, looking to unlock a lot of value, especially when you consider it relative to our existing enterprise value. The nice thing is we now have growth opportunities both in Brazil as well as an attractive inventory of heavy oil drilling opportunities in Western Canada.

Corey Ruttan: This strong free cash flow generation capacity that we have really does help underpin the more balanced and disciplined capital allocation model that we have. For value investors, trading at about 60% or less than 60% of our 2P NPVs. For yield investors, that $0.12 per share dividend translates into 7.6% dividend yield at current prices. For growth investors, I think we have a pretty exciting capital program ahead of us, looking to unlock a lot of value, especially when you consider it relative to our existing enterprise value. The nice thing is we now have growth opportunities both in Brazil as well as an attractive inventory of heavy oil drilling opportunities in Western Canada.

Corey C. Ruttan: Obviously, we had another record quarter to start off 2026 at over 3,100 barrels of oil equivalent per day, which was up another 25% from an already very strong year last year. The capital program that Adrian walked through earlier really helps put the pieces in place to give us the opportunity to deliver another 20-plus% year-over-year growth potential for 2027. I think, like I said earlier, I think if you can consider that in the context of paying out half of our cash flows to stakeholders, it really is quite exceptional, especially when you compare it to virtually all of our peers. With that, we'll start the question and answer period. If you haven't had the chance, please log your question into the Q&A portal.

Corey Ruttan: Obviously, we had another record quarter to start off 2026 at over 3,100 barrels of oil equivalent per day, which was up another 25% from an already very strong year last year. The capital program that Adrian walked through earlier really helps put the pieces in place to give us the opportunity to deliver another 20-plus% year-over-year growth potential for 2027. I think, like I said earlier, I think if you can consider that in the context of paying out half of our cash flows to stakeholders, it really is quite exceptional, especially when you compare it to virtually all of our peers. With that, we'll start the Q&A period. If you haven't had the chance, please log your question into the Q&A portal.

Capacity that we have, really does help underpin the more balanced and disciplined, Capital allocation model that we have. Um for Value investors uh trading at about 60 or less than 60% of our 2p, npvs for yield investors that us 12 cent per share. Dividend translates into 7.6% dividend yield at current prices and for growth investors, I think we have a pretty exciting Capital program ahead of us, uh, and looking to unlock a lot of value, especially when you consider it relative to our existing Enterprise Value. And the nice thing is we now have growth opportunities both in Brazil as well as in attractive, inventory of heavy oil, uh drilling opportunities in western Canada. Um obviously we had another record quarter to start off 2026 at over 3,100 barrels of oil, equivalent per day which was up another 205% from an already very strong uh year last year.

This year and then the capital program that Adrian walks through earlier really helps put the pieces in place to give us uh the opportunity to to deliver another 20 plus percent year-over-year growth potential for 2027. So I think, like I said earlier, I think if you can uh, consider that in the context of paying out half of our cash flows to stakeholders. Um, it really is quite exceptional, especially when you compare it to virtually all of our peers. So,

With that, we'll start the question and answer period. If you haven't had the chance, please log your question into the Q&A portal.

Alison Howard: We have a few questions in here. How much CapEx will you have in 2026, and how much in Brazil for infrastructure versus drilling? We announced our capital plan, or our capital budget, in February, for Brazil of roughly 21 million. We did kick off some projects in Q1, but there's probably still approximately 19 million of that remaining. From the facilities and pipeline, I think we are forecasting approximately $7 million. We, of course, are drilling this, 183-D1 well right now. That is what is included so far in the plans for Brazil. Obviously, we are in a position to accelerate capital spending and accelerate wells, as we see fit with our strong cash position right now.

Okay. Um, you have a few questions in here. Um, how much capex will you have in 2026 and how much in Brazil for infrastructure versus Drilling?

So we announced our Capital plan or our capital budget um in February um for Brazil roughly 21 million. Um we did kick off some projects in q1 but there's probably still approximately 19 million of that remaining um from the facilities and pipeline. I think we are forecasting approximately 7 million dollars. Um, and then we, of course, are drilling this um, 183 D1? Well, right now and, um, that is, what is included so far in the plans for Brazil? But obviously, we are in a position to accelerate, um, Capital spending and and accelerate wealth. Um, as we see fit with our strong cash position right now.

Alison Howard: You have a very strong balance sheet position and we are in a positive macro environment. How do you think about capital allocation, in particular of the excess cash flow versus what would have been expected pre the Iran conflict?

um,

you have a very strong balance sheet position and we are in a positive macro environment. How do you think about Capital, allocation in particular of the excess Cash Flow versus? What would have been expected? Pre the Iran conflict?

Corey C. Ruttan: You know, I think our capital program in Brazil, in particular, is pretty well established. I think, you know, the balance sheet combined with the anticipated, you know, we've had a pretty big increase in production. If you combine that with the productive, or sorry, the gas price expectations that I showed on the slide earlier, it's natural to assume we're gonna have pretty strong cash flow projections as we move through the year. We have a lot of flexibility from that and the balance sheet, which, you know, if we decided to accelerate some of our planned 2027 drilling into 2026 in Brazil, for example, we have the flexibility to do that. You know, those are the types of decisions we'll make as we progress through the current drilling operation.

Corey Ruttan: You know, I think our capital program in Brazil, in particular, is pretty well established. I think, you know, the balance sheet combined with the anticipated, you know, we've had a pretty big increase in production. If you combine that with the productive, or sorry, the gas price expectations that I showed on the slide earlier, it's natural to assume we're gonna have pretty strong cash flow projections as we move through the year. We have a lot of flexibility from that and the balance sheet, which, you know, if we decided to accelerate some of our planned 2027 drilling into 2026 in Brazil, for example, we have the flexibility to do that. You know, those are the types of decisions we'll make as we progress through the current drilling operation.

Yeah. So you know, I think our Capital program um, in Brazil in particular is pretty well established. I think, you know the balance sheet combined with the anticipated, you know, we've had a a pretty big increase in production. If you combine that with the productive, uh,

Or sorry, the gas price. Um,

Corey C. Ruttan: In Western Canada, in particular, obviously, those higher oil prices really help improve the rates of return that I alluded to earlier. We are working with our partner to build out our next phase of drilling for the Western Canadian asset, and I think we have a lot of flexibility to expand that.

Corey Ruttan: In Western Canada, in particular, obviously, those higher oil prices really help improve the rates of return that I alluded to earlier. We are working with our partner to build out our next phase of drilling for the Western Canadian asset, and I think we have a lot of flexibility to expand that.

Expectations that I showed on the slide earlier, it's natural to assume we're going to have pretty strong, um, cash flow projections as we move through the year. So we have a lot of flexibility from that and the balance sheet, um, which, you know, if we decided to accelerate some of our plan 2027 drilling into 2026, in Brazil for example, we have the flexibility to do that. Um, and, you know, those are the types of decisions we'll make as we progress through the current drilling operation in western Canada, in particular. Obviously, those higher oil prices really help improve the rates of return that I alluded to earlier. So we are working with our partner to build out our next phase of drilling for the western Canadian asset. And I think we have a lot of flexibility too.

Alison Howard: Okay, this sort of follows on to that. What will determine the pace of investment into Canada as the returns should be very strong given the current oil price? Will you look to hedge to lock your returns if prices stay around current levels? Are there any constraints in terms of oil service drilling capacity to execute?

Corey C. Ruttan: No, I think based on all the work that we've done to date, you know, there's ample availability of services. I think the natural drilling window, just the way Canadian breakup works and then all that would be a program that would be in the summer here. We wouldn't see any real impediments. We are trying to work collaboratively with our partner to lay out that program. Like I said, I think we have a lot of flexibility as we move through the year.

Okay. This sort of follows on to that—what will determine the pace of investment into Canada? As a return, it should be very strong given the current oil price. Will you look to hedge to lock your returns and prices, say, around current levels? And are there any constraints in terms of oil service or drilling capacity to execute?

Corey Ruttan: No, I think based on all the work that we've done to date, you know, there's ample availability of services. I think the natural drilling window, just the way Canadian breakup works and then all that would be a program that would be in the summer here. We wouldn't see any real impediments. We are trying to work collaboratively with our partner to lay out that program. Like I said, I think we have a lot of flexibility as we move through the year.

uh,

Alison Howard: Okay. On the Murucututu asset, can you explain why you think you experienced low reservoir inflow in the lower Gomo Interval in your 183-1 well, and any read-through to future drilling?

Perfectly with our partner to, to lay out that program. But like I said, I think we have a lot of flexibility, um, as we move through the year.

Corey C. Ruttan: Yeah. We are continuing to evaluate the results from this specific well. As we focus our development at the Caruaçu Reservoir, we plan to drill all or some of these wells into the Gomo Reservoir as well, and we will look to complete those wells similar to how we've completed the 183-D4 well last year. We do remain confident that we have a large potential resource in the Gomo to develop.

Corey Ruttan: Yeah. We are continuing to evaluate the results from this specific well. As we focus our development at the Caruaçu Reservoir, we plan to drill all or some of these wells into the Gomo Reservoir as well, and we will look to complete those wells similar to how we've completed the 183-D4 well last year. We do remain confident that we have a large potential resource in the Gomo to develop.

Okay, on the Merc 22 asset. Um, can you explain why you think you experience low Reservoir inflow in the lower go interval in your 1831 well and any read through to Future Drilling?

Yeah, we are continuing to evaluate the results from the specific wealth. As we focus, our development, at the Kuru Reservoir, we plan to drill all the or some of these Wells into the goal Reservoir as well. And we will look to complete those Wells similar to how we've completed the 1833 D4. Well, last year, we do remain confident that we have a large potential resource in this, in the go to develop.

Alison Howard: For the 183-D1 well that you're drilling right now, what are your expectations in terms of production rate?

Um for the 183 D1, well that you're drilling right now. What are your expectations in terms of production rate?

Corey C. Ruttan: Well, this is the D1 is an offset to D4 and A3, so from a reserves perspective, this is a development well, so we'd expect it to be similar to what our other wells came online at.

Corey Ruttan: Well, this is the D1 is an offset to D4 and A3, so from a reserves perspective, this is a development well, so we'd expect it to be similar to what our other wells came online at.

Well, this is the Deep D D1. It's an offset to D4 in A3, so from a reserves perspective, this is a development. Well, so we've expected it to be similar to what our other wells came online at, but

Alison Howard: Okay. Do you see any opportunities for M&A in both or either country in 2026?

Okay. Um do you see any opportunities for m&a in both or either country in 2026?

Corey C. Ruttan: Well, the short answer is yes. You know, we don't usually talk about any detailed kind of business development plans. To be frank, there's probably a lot more opportunity in Western Canada, certainly a lot more operators. You know, we're certainly seeing a lot more product, let's say, being offered. We continue to remain, you know, anything that's happening certainly in our basin in Brazil is, you know, an obvious strategic fit for us as well.

Corey Ruttan: Well, the short answer is yes. You know, we don't usually talk about any detailed kind of business development plans. To be frank, there's probably a lot more opportunity in Western Canada, certainly a lot more operators. You know, we're certainly seeing a lot more product, let's say, being offered. We continue to remain, you know, anything that's happening certainly in our basin in Brazil is, you know, an obvious strategic fit for us as well.

Uh,

Well, the short answer is yes. Um, you know, we don't usually talk about any details—kind of business development plans. Uh, to be frank, there's probably a lot more opportunity in Western Canada. Certainly a lot more operators, and, you know, we're certainly seeing a lot more, um, product, let's say, being offered. Uh, we continue to remain, you know, remain anything that's happening—certainly in our basin in Brazil, as of is, is, you know.

Alison Howard: Are there any plans to hedge prices this year?

And obvious strategic fit for us as well.

Alison Howard: Are there any plans to hedge prices this year?

Corey C. Ruttan: you know, we've got a pretty strong balance sheet, so I think, and the, and the rates of return on the projects that we're talking about in Brazil, you know, I don't think we really need to do that, but it's something we'll continue to evaluate.

Um, are there any plans to hedge prices this year?

Corey Ruttan: you know, we've got a pretty strong balance sheet, so I think, and the, and the rates of return on the projects that we're talking about in Brazil, you know, I don't think we really need to do that, but it's something we'll continue to evaluate.

Uh, you know, we've got a pretty strong balance sheet. So I I think um and the and the rates of return on the projects that we're talking about in in Brazil, you know, I don't think we really need to do that but it's something we'll continue to to evaluate.

Alison Howard: Okay. Let me just double-check. I think that's it for questions right now.

Okay, let me just double check.

Corey C. Ruttan: All right. Well, as usual, if you have questions after the fact, feel free to reach out to any one of us, and we look forward to updating you next time around after our Q2 results. Thank you again.

Corey Ruttan: All right. Well, as usual, if you have questions after the fact, feel free to reach out to any one of us, and we look forward to updating you next time around after our Q2 results. Thank you again.

I think that's it for questions right now.

All right, well as usual, if you have questions after the fact, feel free to reach out to any one of us, and we look forward to updating you next time around, after our Q2 results. Thank you again.

Alison Howard: Goodbye

Goodbye.