Well done to Amerisur team for hitting the 7kbopd exit rate. Not wanting to take too much gloss off it but most Amerisur Investors will be well aware that the same target was set in 2016. So just to keep some balance here, Amerisur have indeed hit the 7kbopd target albeit an entire 12 months late. Of course, investors with rose tinted glasses will point to the advantage of expending reserves at $55pb+ as infinitely better than $40pb. Quite true – but that’s not a reason to miss targets by 12 months+. That’s just poor management and poor guidance. But lets not dwell in the past too long and instead look forwards. Today, Amerisur are producing approx 7000bopd with a net back at roughly $47pb (assumes PoO at $62pb). Assuming 2018 averages 7kbopd, the revenue numbers would not be far off $330k per day. That’s potentially $120m rev in 2018 and that’s after stripping out the $15pb OPEX.
Now, the story gets better. Today, the company announced that the flagship Mariposa-1 well on the CPO-5 Licence block (AMER non operated 30% WI) has produced steadily with reduced choke at 3000bopd for the last 30 days+. ONGC (operator) and AMER will likley increase the flow rates further. TheShareHub’s target guide of 4500bopd for the first test well (issued last year) looks on track and should that be achieved and stabilised, it would add a further 500bopd to AMER’s 2018 production numbers and equates to an additional $6m+ after higher OPEX costs (trucked from CPO-5).
2018 ops consist of approx 10+ wells (as per 2017 guidance, although this could change) planned across the folio each with the potential to add 100bopd to 300bopd or more. It’s very possible for AMER to look at exiting 2018 with production rates close to 10kbopd. That’s certainly doable albeit optimistic. CAPEX is expected to be around $50m to $60m for the year assuming current costs from 2017 have been absorbed as per AMER’s Sept 17 presentation.
Regional Risks and unpredictable weather in Colombia have in the past stunted production levels and whilst these are temporary they should be factored into the numbers. Tax credits are in place although it’s likely that AMER will be paying a decent wedge along with the usual royalties on sales. That said, even if you assume average production of 8000bopd for 2018 and net backs after tax/royalties of $40pb (using WTi at $62pb) banks $115m or roughly $60m in profits after CAPEX of $55m.
Amerisur is debt free and there are not many companies out there doing $60m in profits and valued at $300m. Amerisur should justify a market cap twice that level. Poor management guidance and performance in 2016 is certainly a solid reason to give AMER a wide berth. But that’s 2016/17. Today, AMER is a different animal, PoO is looking stronger, more stable. It might take an earnings release and some real numbers before the markets wake up to AMER but for the moment, it’s there for the taking for any investor that likes undervalued stocks albeit with some regional risks attached. Of course – the same applies to any would be predators and I would not look too far for those. AMER’s neighbours in ONGC or Gran Tierra Energy have both hinted at making further acquisitions in 2018 and AMER’s exclusive (wholly owned) OBA pipeline to Ecuador is certainly a terrific asset to have in a region where ‘trucking’ oil is no easy feat.
Amerisur Resources is part of TheShareHub top ten for 2018. SP Target for 2018 = 65p.
4 January 2018
Amerisur Resources Plc
Monthly Production, OBA Throughput and Operational Update
Successfully delivered 2017 exit rate in excess of 7,000 bopd
Amerisur Resources Plc, the oil and gas producer and explorer focused on South America, is pleased to provide unaudited production from the Company’s two producing fields, the Platanillo Field and the Mariposa-1 Long Term Test (LTT), and provide OBA throughput data for the month of December 2017 (the “Period”).
— Total production was 215,481 barrels of oil (“BO”) during the Period.
— Average daily production was 6,971 barrels of oil per calendar day (“bopd”) during the Period.
— Peak daily production was 7061 bopd during the Period.
— 2017 year-end exit rate production is in excess of 7,000 bopd.
— Average daily production in 2017 on a calendar day basis was 4,862 bopd, broadly in line with guidance of 5,000 bopd.
— Total export volume was 184,555 BO during the Period.
— Average daily throughput was 6,152 BO during the Period.
— Peak daily throughput was 7,045 BO during the Period.
Production at Platanillo-25, the third well on Pad 2N, the northern extension of the Platanillo field has improved during the period as a result of careful management and is currently producing 218 bopd at low water cut. Platanillo-27, the fourth well on Pad 2N produced 115 bopd on test from a 12 feet section of net pay in the U Sand and has now been placed on production. Observed water cut on Platanillo-27 is higher than expected, and analysis of the produced water and cementation logs is underway.
Downhole pressure data from the ongoing Long Term Test of Mariposa-1 were retrieved during the last few days and analysis of that data has begun. The Operator and the Company will then decide on the parameters for the future development of the test, which may include a higher flow rate from this well. The LTT has continued to progress well, with a stable production over the last 30 days in excess of 3,000 bopd in natural flow over a 28/64″ choke with 565 psi wellhead pressure and approximately 0.13% water cut.
These data will vary month on month as development, appraisal and exploration operations continue, and also due to the factors involved in operating in the Putumayo region of Colombia. These factors include inclement weather, social issues with drilling and oil transportation and planned and unplanned shut downs for technical works undertaken among others. The data has not yet been approved by the Colombian Agencia Nacional de Hidrocarburos (ANH) or national customs and tax authorities DIAN and may be subject to revision.