Alvopetro Energy Ltd. announced the results of the Caburé Unit redetermination process wherein the appointed independent expert (the Expert) has found in favour of Alvopetro's final proposal, increasing Alvopetro's working interest to 56.2%. Highlights: Alvopetro's working interest in the Caburé Unit has been increased from 49.1% to 56.2%. The redetermined working interest is to become effective on June 1, 2024 (the Effective Date).

Incorporating the increased working interest, Alvopetro's share of proved plus probable reserves (2P) (effective December 31, 2023) in the Caburé Unit increases to 4.6 MMboe from 3.7 MMboe, a 25.4% increase. Alvopetro's total company 2P reserves (effective December 31, 2023) increases to 9.6 MMboe from 8.7 MMboe, a 10.8% increase. Following the Effective Date, Alvopetro's entitlement to natural gas production from the Unit will increase to 13.9 MMcfpd (before additional NGL volumes), compared to average 2023 natural gas production from the Unit of 11.7 MMcfpd per day.

Alvopetro retains right to nominate for additional gas volumes in excess of entitlement when those volumes are available at the Unit. Upon the Effective Date, Alvopetro will be pursuing right to assume Unit operatorship. Background: As previously disclosed, Alvopetro's Caburé natural gas discovery extends across two blocks owned by Alvopetro (Block 197 and 198) and two adjacent blocks owned by a third party (Blocks 211 and 212).

Under Brazilian legislation, petroleum accumulations straddling two or more licensed blocks must undergo unitization (pooling) in order to promote efficient and fair exploration and development. In April 2018, Alvopetro and the adjacent resource owner finalized the terms of the Unit Operating Agreement (UOA), the unit development plan and all related agreements, with Alvopetro's initial working interest share of the unitized area (the Unit) being 49.1% and Alvopetro's 50.9% partner being named initial operator. Under the terms of the UOA, the working interest split is subject to redeterminations.

The first redetermination was to occur 18 months after Alvopetro commenced production allocations but the parties agreed to defer the redetermination to include data up to October 31, 2023. Under the provisions of the UOA, the parties agreed that the redetermination would be evaluated by the Expert. Pursuant to the provisions of the UOA, where an Expert is engaged, the Expert's determination shall be made using what is commonly referred to as the "pendulum" method of dispute resolution.

Under this method, the Expert is not required or permitted to provide their own interpretation but is required to select the single Final Proposal (between the two partner's respective Final Proposals), which, in the Expert's opinion, provides the most technically justified result of the application of the relevant information and data and material provided to the Expert consistent with the UOA and all related agreements. Basis of Redetermination: The UOA and related agreements require that any redetermination of working interest to each party shall be based on the estimated ultimate recovery of all natural gas, natural gas liquids and crude oil that are projected to be recovered from the Unit commencing from first production (Unit Recoverable Volumes) on a best estimate basis. For purposes of the redetermination, each party presented their proposal as to Unit Recoverable Volumes for this purpose and the proposed redetermined working interest to each party following the redetermination.

Expert Decision: Alvopetro has received the Expert's final decision indicating the acceptance of Final Proposal which results in Alvopetro's working interest in the Unit being increased from 49.1% to 56.2% based on Unit Recoverable Volumes. Up until December 31, 2023, Alvopetro had received 470.9 million m3 (16.6 Bcf) of natural gas deliveries from the Unit. Based on the above redetermined interest, Alvopetro's remaining entitlement to Unit Recoverable Volumes effective December 31, 2023 is 1,047.5 million m3 (37.0 Bcf or 6,165 Mboe).

Effective Date: Pursuant to the provisions of the UOA and related agreements, the redetermined working interest is expected to become effective on June 1, 2024.