Corporate Presentation November 2014 Cautionary Statements Forward Looking Statements. Statements in this presentation may contain forward-looking statements including management’s assessment of future plans, operations, expectations of future production and capital expenditures. Information concerning reserves may also be deemed to be forward-looking statements as such estimates involve the implied assessment that the resources described can be economically produced. These statements are based on current expectations that involve numerous risks and uncertainties, which will cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks of the oil and gas industry (e.g. operational risks relating to exploration, development and production; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), fluctuation in foreign currency exchange rates and commodity price fluctuation. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Undiscovered Petroleum Initially-In-Place (“UPIIP”), equivalent to undiscovered resources, are those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UPIIP is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of UPIIP at this time. Discovered Petroleum Initially-In-Place (“DPIIP”), equivalent to "discovered resources", is that quantity of oil that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves, and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for these volumes of DPIIP at this time. There is no certainty that it will be commercially viable to produce any portion of the resources. Total Petroleum Initially-In-Place ("TPIIP“) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. There is no certainty that undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Non IFRS Measures. This presentation contains financial terms that are not considered measures under International Financial Reporting Standards (“IFRS”), such as funds flow from operations, funds flow per share, operating netback and working capital. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. We evaluate our performance based on funds flow from operations. Funds flow from operations is a nonIFRS term that represents cash generated from operating activities before changes in non-cash working capital. Management considers funds flow from operations and funds flow per share important as they help evaluate performance and demonstrate the Company’s ability to generate sufficient cash to fund future growth opportunities and repay debt. Working capital surplus includes current assets less current liabilities and is used to evaluate the Company's short-term financial leverage. Operating netback is determined by dividing oil sales less royalties, transportation and operating expenses by sales volume of produced oil. Management considers operating netback important as it is a measure of profitability per barrel sold and reflects the quality of production. Funds flow from operations, funds flow per share, working capital and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations, net income or other measures of financial performance calculated in accordance with IFRS. Test results. There is no representation by Alvopetro that the data relating to any well test results contained in this presentation is necessarily indicative of long-term performance or ultimate recovery. The reader is cautioned not to unduly rely on such data as such data may not be indicative of future performance of the well or of expected production or operational results for Alvopetro in the future. 2 Alvopetro’s Vision and Strategy Our vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by being the lowest cost operator and applying innovation to underexploited opportunities. Three-pronged strategy: • Mature fields • Shallow conventional exploration • Large tight hydrocarbon resource 3 History and Formation of Alvopetro Energy Ltd. December 2012: Petrominerales Ltd. acquired a 75% interest in seven exploration blocks in the Recôncavo Basin (Blocks 131, 132, 144, 157, 182, 196, 197) and three mature producing fields (Bom Lugar, Jiribatuba and Aracaju). May 2013: Acquired Blocks 170 and Block 183, and awarded Blocks 106 and 107 in the Recôncavo Basin, and Block 177 in the Tucano Basin in the Brazil 11th Bid Round. November 19, 2013: Petrominerales acquired the remaining 25% interest in Alvopetro for $9 million. November 28, 2013: Alvopetro was formed as a result of a plan of arrangement involving Petrominerales Ltd. and Pacific Rubiales Energy Corp., with Alvopetro capitalized with C$100 million cash and holding all of Petrominerales' former Brazil assets, including a talented team of technical professionals in Brazil and certain of the former Leadership Team and Board members of Petrominerales. Through the completed Arrangement, Pacific Rubiales acquired all of Petrominerales’ outstanding shares, with former shareholders of Petrominerales receiving, for each Petrominerales share held, cash consideration of C$11.00 per share and one share of Alvopetro. Alvopetro Energy Ltd., with its current Leadership Team and Board, commenced operations as a new resource company. Alvopetro was awarded Blocks REC-T 169, REC-T 198, REC-T 255 and REC-T 256 in the Recôncavo Basin in the Brazil 12th Bid Round. 4 Our Opportunity • Experienced Leadership Team and Board of Directors • Well capitalized - $63.7 million(1) of cash and working capital resources • 85.1 million shares outstanding • 148,500 gross acres (147,808 net acres) • Highly under-explored area • Large “unconventional” resource • Shallow exploration potential • 3 mature fields • Compelling fiscal regime Note: (1) As at September 30, 2014, includes cash, restricted cash (current and non-current) and other working capital resources. 5 Recôncavo Basin, Brazil • Total Area: 10,000 sq km • First oil drilled (1939) • 6,000 wells drilled • 86 producing fields • Developed infrastructure • TPIIP – 6.3 billion bbls (conventional) • OGIP – 3.2 TCF (conventional) • Cumulative production – 1.5 billion bbls • 34 degree API light oil • Oil production 41,000 bbl/d • Natural gas production 120 mmcf/d Alberta outline compared to Parnaiba Basin 6 Focused Land Base • 148,500 gross acres (147,808 net acres) • 16 exploration blocks • 1,055 km2 of 3D seismic • Initial focus is to demonstrate the commercial deliverability of Gomo sands • Captured majority of deep Gomo play fairway in Miranga Low • 14 wells with Gomo pay • Initial Gomo view - 1.2 billion bbls of UPIIP(1)(2) • Shallow conventional exploration potential – 9 prospects (250 million boe TPIIP, mid-point) • 3 mature fields - NPV10 (AT) 2P reserves of US$21.8 million 6 km Notes: (1) Does not include Blocks REC-T 169, REC-T 198, REC-T 255 and REC-T 256 awarded to Alvopetro in the Brazil 12th Bid Round. (2) Internal Management estimate. 7 Seismic Processing is Critical BL-001 ~300 MB EUR BL-001 ~300 MB EUR SW NE NE SW Pojuca Marfim Producing Zone Pre-Rift Processed Version from BDEP Reprocessed 3D 8 Recôncavo Basin Geological Model Gomo Play Fairway ANP 4th Bid round - Modified from Braga et al., 1987 9 Block 197 and 183 - Gomo Resource 197(1) Well • • • Encountered 43 metres of potential net hydrocarbon pay Recovered over 78 metres of core Lower zone, well flowed natural gas, at an average rate of 40 mcf/day, unstimulated 183(1) Well • Encountered 189 meters of potential net hydrocarbon pay (3 key zones) • Upper thick zone - 46m of indicated net oil pay, average porosity 10% • 3m, 14% porosity zone • Deep natural gas – 93m of net pay, average porosity 7% • • A major step in proving the commercial viability of the Gomo resource opportunity. Added deep basin natural gas potential over a large mapped area 10 Block 197/183 Geobodies A’ A Jan2 183-1 197-1 Deep Natural Gas Geobody • Mapped off reprocessed 3D seismic • 1.3 TCF TPIIP (natural gas) Upper Gomo Geobody • If oil, greater than 600 mmbbls TPIIP Deep Gas Geobody 5,460 Acres Tested Gas A’ 3275m 3550m 183-1 A 197-1 Gas Geobody Isopach 20 m C.I. Seismic sequences can be mapped and aerial extent defined. Brazil: Gas Marketing Environment Bahia, Brazil - Comparison between Natural Gas Prices for the Industrial Market (20,000 m³/day) and Fuel Oil • • • High demand for natural gas in Brazil, approx. 1.3 Tcf demand/year, 35% imported gas Gas infrastructure nearby Alvopetro’s operations Opportunity exists to sell natural gas directly to nearby large industrial end users March 2014 Brazil Natural Gas Prices: Brazil*: US$12.35/MMBtu Brazil**: US$8.19/MMBtu (discounted) Reference: Price paid for gas imported from Bolivia: US$10.29/MMBtu Fuel Oil: US$13.37/MMBtu Liquefied petroleum gas: US$11.19/MMBtu Henry Hub: US$ 4.40/MMBtu Sources: Brazilian Association of Large Industrial Energy Consumers and Free Consumer, and Brazil Ministry of Energy *Without discount ** In accordance with regulations, Petrobras may market its natural gas to large gas distribution companies at a price discounted by no more than a set amount. 12 Recôncavo Basin: Favourable Comparison to Analogous Oil Plays Canadian Bakken Cardium Argentina Brazil Basin ViewField West Pembina Mata Mora Reconcavo Geologial Age Devonian /Mississpian Cretaceous Cretaceous Cretaceous Target Zone Middle Bakken Cardium Vaca Muerta Gomo Lithology Sand/Siltstone Sandstone Silicoclastic Shale Sandstone Thickness 5m 5 - 8m 34 - 100m 10 - 200m Depth 1,500 - 2,000m 2,000m 3000 - 3500m 2500 - 3500m Porosity 10% 6 - 12% 4 - 14% 8 - 15% Permeabilities 0.2 - 0.6md 2 - 10 md 0.1 - 5.0md 0.1 - 4.0md Pressures 0.48psi/ft 0.53psi/ft 0.67 - 0.97 psi/ft 0.48 psi/ft 30 Day Average Rates 100 - 200 bbl/d 125 - 300 bbl/d 160 - 600 bbl To be determined Oil Saturations 50% 85% 75 - 85% 62 - 78% TPIIP Per Section 4.5 – 5 mmbbl 5.0 - 8.0 mmbbl 10 – 65 mmbbl 20 – 100 mmbbl Recovery Factor 10 - 15% 15% 10 - 15% 10 - 15% EUR Per Well 100,000 175,000 bbl 175,000 250,000 bbl 160,000 700,000 bbl 300,000 650,000 bbl Source: Industry Reports 13 Recôncavo Basin: Favourable Comparison to Analogous Gas Plays Barnett Duvernay Horn River Montney Brazil Basin Fort Worth Western Canadian Sedimentary Basin Horn River Basin Western Canadian Sedimentary Basin Reconcavo Geological age Mississippian Devonian Devonian Triassic Cretaceous Approximate age (years) 340 million 370 million 380 million 240 million 110 million Estimated area (sq. miles) 5,000 10,000 10,000 25,000 4,000 Depth (m) 1,800 - 2,750 2,700 - 4,000 1,600 - 3,000 1,600 - 2,800 2500 - 3500 Porosity (%) 3-9 3-8 3-9 3 - 18 3 - 15 Thermal maturity 1.2 - 2.0 1.6 - 2.0 2.2 - 3.8 0.8 - 2 0.9 – 1.4 Gross thickness 90 - 150 20 - 90 50 - 200 10 - 275 200 – 1,200 * Quartz (%) 40 - 60 55 - 80 55 - 80 30 - 60 45 - 65 Clay (%) 10 - 30 7 - 10 7 - 20 5 - 30 10 - 30 Brittleness High High High Varies Medium Pressure gradient 0.46 – 0.53 0.5 - 0.7 0.5 - 0.7 0.45 - 0.6 0.4 Total organic content (%) 3–8 2-5 2-7 1-5 1-5 Recovery factor (%) 20 - 40 20 - 40 20 - 40 20 - 70 20 - 70 Estimated ultimate recovery (Bcf/well) 1-4 3-6 3 - 12 2-7 2–7 Source: Industry Reports * Bruhn, 1999 14 2015 Capital Plan and Strategy Alvopetro’s three-pronged strategy is to pursue our: • • • Mature Fields; development drilling focused on generating near-term oil production and sustainable operating cash flows; Shallow Conventional Oil Exploration; targeting prospects generated from our reprocessed 3D seismic database; and Large Tight Hydrocarbon Resource; proving the commercial viability of the Gomo resource in the Recôncavo Basin. Our $25 million 2015 capital forecast, includes: • • • Drilling 2 wells on our Bom Lugar mature field; Drilling one conventional exploration well; and Advancing our resource play by completing and testing the 183(1) well and defining deliverability through the use of fracture stimulations and reservoir modelling. 15 Accomplishments • Completed the Alvopetro reorganization from the sale of Petrominerales Ltd. • Assembled high-quality team • Acquired 25% working interest partner • Secured seven new blocks at 2013 Brazil bid rounds and two by acquisition • Reprocessed all available 3D seismic • Successfully drilled and tested first Gomo well, 197(1), to 3,275 metres– exceeded expectations • Successfully drilled 183(1) well to 3,550 metres • Drilled the two deepest wells in the area in the past 20 years (197(1) and 183(1)) • Established an extensive deep natural gas resource opportunity • Built an initial 9-well inventory of conventional exploration prospects 16 Alvopetro - Early Stage Investment Opportunity • Attractive land position and fiscal regime • Captured majority of deep Gomo play fairway • Large resource opportunity • Shallow exploration potential • Mature fields • Well capitalized • Experienced Leadership Team and Board, holding >10% of Alvopetro’s basic shares outstanding • Strong operating platform in Brazil • Operational excellence and innovation 17 Contact us: Calgary, Canada: Alvopetro Energy Ltd. Suite 1175, 332 6th Ave. SW Calgary, Alberta, Canada T2P 0B2 Tel: (587) 794-4224 Email: [email protected] Salvador, Brazil: Alvopetro S/A Extração de Petróleo e Gás Natural Rua Ewerton Visco, 290, Boulevard Side Empresarial, Sala 2004, Caminho das Árvores, Salvador-BA CEP 41.820-022 TEL: + 55 (71) 3432-0917 Email: [email protected] www.alvopetro.com TSX-V: ALV