Amerisur Resources Share Discussion Threads

[al101uk] 09/1/2019 16:38

fadilz,

On production costs.

I posted some time ago on how the Plat costs were broken down and I extrapolated what their version of production costs consisted.

If I remember correctly there's quite a gap between admin costs (central) and "production costs"... which I would previously have assumed to be most of the Opex, excluding tax/X-Factor etc.

At Plat, at least, there was a good chunk of costs associated with field maintenance that did not get lumped in to production costs, but was considered an on going operational cost.

I know last years results were pretty much as I'd expected, but for a chunk of Opex costs I hadn't accounted for, which then, obviously didn't drop to the bottom line as profit.

I'd go as far as to ignore what they quote as "production costs" now, as they are merely headline grabbers.

I'm still not running numbers, nor even digging out my spreadsheets until I have some real numbers worth running. My gut tells me I'd fall in line somewhere around the same fair value as you if I were to speculate.

[avsome1968] 09/1/2019 16:22

volume on the up also news soon

[westmoreland lad] 09/1/2019 16:03

sji -- It would be strange if you are wrong. Serious amount of buys between 3
and 4pm including 1 X 500k @ 20.10p and very few sells.


Buy Volume
4,767,039

Sell Volume
2,026,608

Total Volume
7,869,260

[leas1] 09/1/2019 15:51

Futures for Brent looking good with the Saudi's targeting a price of $80 in order to meet Government spending plans. In order to achieve that they will aim to cut production. Just getting better and better.

hxxps://www.investors.com/research/futures/crude-oil-prices-us-china-trade-talks-china-trade-war/

[sji] 09/1/2019 15:47

Am I right to expect a very big sale at end of day? A lot of buying but price not moving up!

[paradores] 09/1/2019 15:43

Clearly institutional interest

[xxnjr1] 09/1/2019 14:48

yes, very helpful, thanks for such a detailed reply Sogoesit. It probably comes down to all of the above reasons you cite ;-) ONGC Videsh and Occidental Andina input, may result in better well completions going forwards, on the blocks they have an interest in. Happy to hold for the long term.

and thanks, rollthedice regarding possible shut in/previous AMER responses.

[bryet] 09/1/2019 14:38

Sp marking time at the moment waiting for the next rns which if positive should push it to the next level 25/30p level imo.

[lucyp00p] 09/1/2019 13:42

Brent thru $60

[sogoesit] 09/1/2019 13:13

to xxnjr1:
"Normal stuff perhaps?"
A well designed well should be such as to last a life cycle (5-25 years) depending on the nature of production fluids. Production fluids may be "contaminated" eg with wax, corrosive chemical constituents or water-cutting (salt precipitation etc.) which erode, corrode or otherwise deteriorate the installed equipment (and near-wellbore reservoir!). But samples of fluid at the pre-design stage should enable a well to last. The problem is that, in remote/frontier regions or for "cost-saving" reasons or lack of in-country inventory, inappropriate or non-conformal materials and equipment are installed in the rush to produce and earn cash-flow. In short, compromises are made.
If the well is not optimally designed then contingency measures, and a maintenance/work-over plan (involving a dedicated workover unit?) should be available at a production field installation to cater for the increased work scope "normally".
Also, a lot of these wells are exploration wells converted to production as far as I can see/guess (I looked at Videsh's tender scope whose link was posted above to see the type of well materials used). Obviously an exploration well is usually a short life cycle well with the intent that it is discarded (P&Ad) and designed without the knowledge of the potential production fluids or strategy. Saving costs at the exploration stage could impact the likelihood of suitability for conversion to a producer unless this is adequately planned for.
Different Operators also work to different standards, some significantly so, under the general PSC obligation of "good oilfield practice".
Hope this helps.

[kaos3] 09/1/2019 13:05

which makes fair value atm moment around 30 - 35p imho

[kaos3] 09/1/2019 13:01

fadilz - I think it is cheap as it flows naturally (high pressure large diameter), low viscosity means lower maintenance, low cavity at holes, no flaring needed, no water separation and disposal, copy paste wells due to same structures in ordering equipment and local training, one pad multiple wells chance etc.

low costs make sense

[rollthedice] 09/1/2019 12:48

I wonder whether AMER have shut-in some production again at Platanillo given fall in price of oil? Previous posts quoting responses from AMER to queries have confirmed no operational issues or they would have been reported.

[xxnjr1] 09/1/2019 12:37

The only fly in the ointment is possibly Platanillo field. 17 wells + 3 side stacks (+ 4 wells on satellite accumulation), however P21 & P8 required chemical wash, P6 worked over but increase in water cut after work over, P21 & P24 under observation due to increased water cut/reducing volumes, P22 poor cement, re-cemented to shut off water. Normal stuff perhaps? Only mention this, as someone posted a link the other day, showing volumes down the OBA pipeline to Ecuador down to 2200 bopd. Does all Platanillo oil go down the OBA? Maybe temporary issue? Who knows? Something to keep an eye on, before winding up the spread bets to maximum tension? Not that I use spread bets.

[fadilz] 09/1/2019 12:35

Needs to include transport/trucking (and what else?) to make it comparable to the Plat costs. CPO-5 probably better located in relation to existing infrastructure than plat. Whatever, AMER will update in due course.

Edit: if 15 production cost is stated in same way as Plat, then add 14p to my earlier estimates (ie 44/54 for 60/70 oil) - minus the X factor

[gersemi] 09/1/2019 12:08

100k buy at 20.20p

[sogoesit] 09/1/2019 12:07

Yes, that's what I understood from his answer, xxnjr1.
When pushed he said that, with future production ramp-up, the production costs would fall into the 10-15/bbl range. Of course, as production rises, unit costs should decline (economies of scale).

Edit: I think he also said that the net-back looked pretty good due to favourable PSC term.

[xxnjr1] 09/1/2019 12:03

10-15 production cost is probably a directional aspiration, once they have more wells on line, and things are up and running, once infrastructure completed?

[charlieeee] 09/1/2019 11:55

It is light oil, Fadilz, a point made by JW at the AGM and has lower lifting costs.

If it flows steadily and consistently for over a year, with little intervention required, that obviously makes the difference on costs: it is part of the reason why everyone is so excited about this discovery.

[fadilz] 09/1/2019 11:52

Many thanks for the link xxnjr1. They do indeed say 10-15 production cost, but sounds astonishingly low to me. They also say 6 wells over coming 1 year or ?? (inaudible).

All good, but AMER will no doubt confirm details in due course. The really important piece is estimated net recoverable. Meanwhile, I am a happy holder and will not think us overvalued on current information - up to 25-30.

[leas1] 09/1/2019 11:51

Thanks xxnjr. Been looking at ONGC's tenders. I note a contract for SOL-1 supply of drill bits and equipment. Actively looking for JV's that may or may not form part of a drill rig. Outside of AMER it gives fellow investors a clue on operational priorities. If nothing else, worth a read.

hxxp://www.ongcvidesh.com/tenders/

[xxnjr1] 09/1/2019 11:15

another 6 wells to be drilled "quickly" by ongc videsh, plus Mariposa-1 and Indico-1 CDO-5 could be >20Kbopd in short order.

===========================================

May bring in a 2nd rig (from the recent rns)

[kaos3] 09/1/2019 11:13

lucy - yes for the selling price - depends what transportation is included. production (lifting probably) is towards ten

[lucyp00p] 09/1/2019 11:09

Malcy said Brent minus $8

[homebrewruss] 09/1/2019 10:52

fadilz, not sure of the exact costs but for CPO-5 don't they sell the oil direct from the wellhead though?