Alvopetro Announces 197(2) Discovery

CALGARY, ALBERTA--(Marketwired - Dec. 15, 2014) - Alvopetro Energy Ltd. (TSX VENTURE:ALV) is pleased to announce that our 197(2) well, located on Block 197 in the Recôncavo basin in the State of Bahia, Brazil, has discovered natural gas. The 197(2) well reached a total depth of 1,669 metres and has been cased and cemented. Based on cased-hole sonic and neutron logs, the 197(2) well encountered 78 metres of potential net natural gas pay, with an average 33% water saturation, and an average porosity of 12%, using an 8% porosity cut-off.

The 197(2) well offsets an existing discovery that has 67 metres of net pay. This offsetting well tested 3.6 mmcf/d and 21 bbls/d of condensate from a 4-metre perforated interval in the Caruaçu Member of the Maracangalha Formation, over a final 16-hour flow period, with a 32/64" choke and 1,267 psi flowing sand-face pressure. The operator of this offsetting well has submitted a delineation plan to the ANP.

Based on these results, and consistent with our natural gas commercialization objectives, we plan to commence a testing program on the 197(2) well with a service rig in early 2015, subject to customary regulatory approvals and equipment availability. Additional technical work and testing is required to determine the extent, if any, of potential commercial hydrocarbons associated with the 197(2) well.

This successful result is a significant milestone for a natural gas business in Bahia and supports our additional natural gas exploration prospects and our broader plans to develop the extensive Gomo natural gas potential we have discovered in our 197(1) and 183(1) wells drilled earlier this year.

Alvopetro's three-pronged strategy is to pursue our:

• Mature Oil 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 197(2) discovery is our second discovery on Block 197. Our 197(1) well was drilled to a total depth of 3,275 metres and encountered 43 metres of potential net hydrocarbon pay over several separate intervals. The lowermost 6 metres of net pay was perforated and flowed natural gas, without stimulation, at a rate of 40 mcf/day, with no water. This gas interval is part of a large geobody that we have mapped using 3D seismic over a large area, confirmed by our 183(1) well results. Based on logs, mapping and ongoing technical analysis, we internally estimate 1.3 TCF of total petroleum initially-in-place ("TPIIP") (natural gas) in this 5,460 acre geobody. We plan to complete and test the 183(1) well in early 2015.