In a July 7 research note, Mackie Research Capital Corp. analyst Bill Newman reported that Alvopetro Energy Ltd. (ALV:TSX.V; ALVOF:OTCQX) "achieved an important milestone" by connecting Brazil's Caburé to Bahiagás' distribution network and commencing its first physical sales production from the natural gas field.
"This is an important milestone as the company is now generating free cash flow that can be reinvested into other growth opportunities. We expect the stock to trade up on the news," Newman stated.
"Natural gas and revenue are flowing," Newman added. "With the production facilities in place, new discoveries can be quickly monetized."
The analyst noted that Alvopetro ramped up its natural gas production on July 6 to 10.6 million cubic feet per day (10.6 MMcf/d). For each million British thermal units of gas it sells, it will receive US$5.13 this month.
Revenue of US$5.9 million is expected in H2/20, Newman highlighted, with a near tripling to US$16.7 million in 2021. The Calgary-based firm is expected to use the cash flow for other growth opportunities its portfolio of assets presents.
Newman also pointed out that Alvopetro intends to expand production to 17.6 MMcf/d, the total capacity of its transfer pipeline and gas treatment facility. To do so, the company plans to start a drill program, perhaps in late 2020.
Mackie has a Speculative Buy rating and a CA$1.65 per share target price on Alvopetro. In comparison, the stock is now trading at CA$0.78 per share.
Read what other experts are saying about:
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Alvopetro Energy. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from Mackie Research, Alvopetro Energy Ltd., Update, July 6, 2020
RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE
1. None Applicable.
2. Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.mackieresearch.com.
ANALYST CERTIFICATION
Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst's personal views and (ii) no part of the research analyst's compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.
