Amerisur Resources Share Discussion Threads

[rollthedice] 10/3/2017 16:13

^ Well AMER isn't looking too clever at the moment but with most of its production going through the OBA now it's in a better position than before to ride weak oil price. With no debt and increased acreage, the weakness in share price seems overdone so I don't think buying some is a bad pick amongst smaller oilers.

[valentine] 10/3/2017 16:01

20p offer? Are my eyes deceiving me? Where did I put that piggy bank key? 18p? Friday Wooster where are ya?

[fadilz] 10/3/2017 15:56

Good answer, and you may be right that we differ in our interpretation of the story, and perhaps in our attitude to risk.

But if the model demonstrates that the current valuation is about right, then sentiment and the honesty of management are not so much the issue (or at least nothing much has changed in that regard since Aug 2014). Your position really rests on your view of their competence in planning and negotiating the points you mention. Perhaps I am complacent, but I don't feel able to judge management against this list of failings, and I give them the benefit of the doubt.

And I partly think it is in the nature of small oilers that they are unpredictable - too many things are outside of their control. But this is what creates opportunity, and that takes us back to story and tolerance of risk.


So, I buy into these elements of story
- the OBA will get sorted,
- there is considerable exploration upside,
- prospects for the above will improve as the peace process matures.

I'm relaxed about timing. And in some ways the story has improved with the acquisition of distressed assets in Colombia. On this score, to the extent that I can judge, I give them good marks.


Lucyp00p, reserves may be artificially depressed by low production. But production volumes alone are not enough. To really fly we also need reserves and hence exploration success. Not just the 32m we had before, but multiples of that. Hope for peace, luck, and poo. We have the money to explore.

[fsawatcher] 10/3/2017 15:53

Chances of Gilesy boyo surviving AGM

N-n-nooooo chance

zeroooo

Wardle ? They gotta go coz they not tell shareholders about pump station probs when they shudda ave

who's gonna pay for it? Petroamaza-im-broke

[bulltradept] 10/3/2017 15:53

I fancy a few at 18.9 if it get there, might be just to shake some weak holders out though, given where stops might be placed.

[fsawatcher] 10/3/2017 15:49

It's Paul Hardcastle time


sing after me


N-n-n-n-nineteen, N-n-n-n-nineteen, N-n-n-n-nineteen

[lucyp00p] 10/3/2017 15:25

But the actuarial valuation of reserves differs from the geological assessment and is based on output. Therefore audited accounts use extrapolated reserves estimates based solely on production and ignore seismic or other data hence when we are only squeezing 5k BPD from the wells due to the need to minimise transport overhead, the company valuation suffers exponentially. Or at least that is what I believe JW said 2 agm's ago.

[eddie_yates] 10/3/2017 15:18

Lucy I posted this yesterday and I believe we are due a decent reserves upgrade

Last years reserves update stated that LTT at Coati could add to reserves and page 8 of Sept presentation titled "CONVERTING RESOURCES INTO RESERVES AT COATI" states that U & T structural trap tested in 3 Wells and Currently estimated at 16MMBO*
resources (low case).

[lucyp00p] 10/3/2017 14:44

It's all about the reserves. Constrained production = massively understated reserves based on standard formula. If we don't turn on the taps we will never be taken seriously.

[al101uk] 10/3/2017 14:20

fadilz,

We agree at the core of what we do and our modelling is similar. It's the assumptions, the story that is the difference between us.

If you look at the known things about the company you can get to a valuation that pretty much matches where we are and, as it should, it moves around with the oil price.

BUT, that's not where Amerisur should be in my opinion. Amerisur should be seen as a growth company and should be trading at a premium to it's core valuation. It isn't and that's a direct result of management. What could management have done differently:

1) Been honest on OBA progress and difficulties bringing in to production.
2) Been honest about the impending bottleneck once the OBA was brought online.
3) Better, they could have planned better and avoided these issues in the first place
4) Be honest about future plans,
Negotiating with PetroAmazonas... about what? (capex, transport cost, acquisition, pumping third party oil?)
What is the current capacity of the pipeline? (something between 5 and 18K, when we were pumping 1k bopd it could have been less?)
Why are we still pumping less than 5K bopd? (I reckon we now have 25k bopd potential)
Whats happened to all the shut in production, what are the plans for it?
Be clear about the issue around increasing pipeline production: is it just testing, pump capacity, commercial negotiation, local issues, all of the above, something else!?!

I can't value any premium I should be putting on Amerisur without answers to these questions and because of the poor quality information I've been given before, getting sketchy info now just doesn't cut it anymore.

Worst case Amerisur are stuck at 5k bopd because remedial work is required by PetroAmazonas and they aren't inclined to commit the funds. I don't want to believe this, but unless management tell us differently it works as a narrative, especially considering the history of the OBA where exactly this kind of thing was happening for over 2 years.

[valentine] 10/3/2017 13:22

Indigenas stirring it again in Quito next door to Eln meetings. Coincidence? Article also on cost to Ecopetrol for ELN pipeline attacks is staggering. Peace agreement is what we want and need.

[fadilz] 10/3/2017 13:19

To add to that, what I want from the directors is regular guidance as to profit/barrel, reserves, production rate. And I think they have been OK with that.

You could argue that they should have achieved OBA sooner, or been more up front about the difficulties. And there I agree. But for me, the longer term outlook is more important. And, in truth, poo is what has really scuppered us - and whose fault is that?

[fadilz] 10/3/2017 13:13

This is a belated response for al101uk, and others, to demonstrate that a simple NPV model is pretty accurate in predicting AMER share price. There is no need to invoke share manipulation, but if anyone prefers that route – that is your choice. Not saying it does not happen, just that it is not necessary to explain the current malaise.

If anyone wants to blame the directors for their losses, then I suggest provide a rationale for what they could have done differently to affect the NPV parameters.

--> looking at your post just now, al101uk, your model generates similar numbers - so perhaps we agree after all?

THE MODEL
Take any point in time as your baseline. Work out an NPV using then current profit per barrel, and then current production at a constant rate until reserves deplete.

Next, take any scenario of the same parameters (profit/barrel, reserves, production rate) and work out the change in NPV vs the baseline. Multiply share price at baseline by the ratio of NPV New / NPV baseline, and you have an estimated price.

Rule of thumb: You double share price (NPV10) if:
- You double profit per barrel, or
- Double reserves AND production rate

SCENARIOS
First row is my baseline (Edit: Aug 2014): share price 60p
Row 2-3 Current (Production cost $15/b, oil $45-55 ish). Share price 19-25p
Last row end 2019 (Reserves?): Share price: 85p
Reserves(mb)__Barrels/day___$/bbl profit___#Years___NPV10____xBase___sp
32.8__________6769__________62_____________13_______1,088____1.00___60.0
25.0__________4000__________30_____________17_______351______0.32___19.4
25.0__________4000__________40_____________17_______468______0.43___25.8
40.0__________7000__________40_____________16_______800______0.73___44.1
40.0__________12000_________40_____________9________1,009____0.93___55.6
60.0__________20000_________40_____________8________1,558____1.43___85.9

Disappointing vs outlook 2 years ago, but 4x current is my reason for holding.

[currypasty] 10/3/2017 09:33

results in a few weeks, should get a grip on just how 'healthy' the profit has been

[blackdown2] 10/3/2017 09:23

About 4,300 bopd. Virtually all via the OBA, so while production low, profit per barrel is healthy.

[kerri28] 10/3/2017 09:15

I'm a bit confused as to how much Amer are currently exporting, OBA and trucking, can anyone tell me please?

[al101uk] 10/3/2017 09:02

I keep going back to page 14 of the Feb presentation:

Design Volume (OBA & VHR reception) 50,000 BOPD; 18,000 BOPD pumping capacity currently installed.

[sleveen] 10/3/2017 08:37

I took that to mean negotiating further OBA capacity, but who knows?

[foiledagain] 10/3/2017 08:33

A bit confused over throughput, as last night I was speaking to someone very familiar with the area and they said that even without the new pumping station, the throughout through the OBA from Amerisur's pump to the OBA will take more than 5,000bopd?

He also pointed out that the last report did not show any contribution required for a new pumping station under 'additional investment' so what the negotiations are about is interesting.

I went back to the presentation and it is correct that no additional investment shows for the new pumping station.

A little while back someone posted a theory from some other board about Amerisur's strategy which concerned Ecuador more than Colombia, but I did not consider it seriously, but perhaps it has legs.

One thing I saw throughout the last presentation was a change of emphasis in titling, referring to the OBA clusters, and showing Ecuadorian oil wells too and you may draw whatever conclusion you wish from that, but confirming there is no 'additional investment' apparently required, at the same time as Amerisur's RNS yesterday said 'negotiation' is more interesting than it was.

[sleveen] 10/3/2017 08:26

Anyone seen a rainbow I could chase? :-)

[al101uk] 09/3/2017 23:25

Why would someone sell at 21p?

Assumptions:

Oil Price $50
Costs and Taxes $27.25
Admin $11 million
Reserves 24 million
Production 6200 bopd

Fair Value: 20.84p

Assumtions Change Oil Price: $55
Share Price: 24p

Assumpotion change oil price: $60
Share Price: 27.11p

Assumption change Reserves to 50 million
Share Price 34p

Assumption change production rate to 20k bopd
Share Price: 68.7p

Reduce oil price back to $55
Share price 61p

Reduce oil price back to $50
Share Price 53.5p

Reduce Reserves back to 24 million
Share Price: 31p

All assumptions are cumulative and tax moves with the profit per barrel, I've added cash of $55 million directly on to the the NPV.

If we have oil but are restricted forever at 6400, projecting out beyond 25 years of reserves becomes pointless because the discount makes the amounts negligible.

So the theoretical maximum reserves worth reporting would be around 58 million barrels.

Just for laughs:

Reserves: 50 million
BOPD: 20k
Oil Price: $100

Share Price: £1.29

Without the oil price slump and if management had delivered on what they promised, we could have been there folks.