Amerisur Resources Share Discussion Threads

[aceuk] 10/4/2019 20:26

Doh!

The idiot arrives - all costs in USD, money held in USD accounts produce profit or loss when accounted in GBP!

[al101uk] 10/4/2019 18:30

"If it's a function of the shift in the sterling value of dollar assets over the accounting period, then including it in the dollar denominated trading statement is just insane."

No it's shift in $ based liabilities due to the payments being due in a.n.other currency (Colombian pesos for example).

AMER sign a contract with payment due in six months, to be paid in non-US currency. They do not hedge that currency risk (as per note 37), sometimes that works for them, sometimes it works against them. The results are accounted for as FX gains/losses.

I'm not sure how much simpler I can make it. I've posted where it's explained in the results, I've posted links to Corporate Finance sites that show how it works. It's called "Transaction Exposure", you might think it's insane, but that's just the way it is.

... and it's the only rationale explanation to the item in the accounts that you find so vexing.

[swerves1] 10/4/2019 18:26

Moneylender, what I'm expecting for the Q1 figures are increases in production and further news on OBA transportation which I believe will be a big revenue earner.

[paradores] 10/4/2019 16:19

“Someone’;s been playing with this stock...”


(Cough) You reckon!? (Cough)

[knokke1] 10/4/2019 16:09

Have been waiting a long time to get back in, got hit on one of the price drops last year, dipped in and out to trade a little over, but feels like might finally be time to hold, if I'm wrong, I'll buy more when it goes down. The weak BoD held me back, they haven't delivered shareholder value despite a compelling story, the put there is a takeover, or if they reveal their well hidden talents then that's even better. Might not be the most rational investment case I'm making but this is AIM and someone's been playing with this stock for a while.

[knackers] 10/4/2019 16:03

Only about 25-30pc of Plat wells have been serviced so far though granted one of those was the first to be drawing from two zones. Given that servicing will be ongoing for the next 6-8 weeks we then have the infill well, we could be looking at closer to base production levels - even at these “dizzy” heights. Worth watching. Still more to come from Plat, don’t think they’re by any means done with the N sands either - as past drills have presented more than ‘shows’

[lucyp00p] 10/4/2019 15:54

Who's talking about share price movement? If you can't stay on topic what's the point. Do you not understand how accounting for currency losses on a dollar only denominated profit statement makes no sense, none at all unless currency speculation is going on, in which case, the activity should be declared. If it's a function of the shift in the sterling value of dollar assets over the accounting period, then including it in the dollar denominated trading statement is just insane.

[moneylender] 10/4/2019 15:09

Just II's afaik

Just realised the share price is approaching my average. The only bright star in the sky is OBA transportation and poss Indico2 for the first half of the year.

The question is will this form a base here or drop further, answers on a postcard?

[jp2011] 10/4/2019 14:30

Was it a public call or just IIs?

[moneylender] 10/4/2019 14:05

No excitement from the conference call yesterday then?

[al101uk] 10/4/2019 13:41

I refer you back to note 37 and the previous decade of results which are all stated in $'s.

Share price movement as a result of currency changes isn't the companies risk, it's yours.

The companies currency risk is primarily in the form of 75% of costs in currencies other than the $ vs 100% of revenue in $'s.

[lucyp00p] 10/4/2019 13:33

No risk in $ transactions. They can't be hedging back in to £'s, we never see a penny.

[lucyp00p] 10/4/2019 13:32

Oh God, give me strength. The published statements in the RNS are in US$'s. When the final year end results are published they will be in £'s I guess, at which point any FX adjustment is legitimate. If the fx loss is due to a restatement of figures in sterling terms, it should not be included in a $ based trading statement.

[al101uk] 10/4/2019 13:30

"FX losses crystallise when hedge positions are unwound"

What would a company be hedging against? Currency risk.

Why would it hedge currency risk? Because there is the potential for that risk to cost the business money.

How would that cost be shown in the accounts if there was no hedge? FX loss.

[al101uk] 10/4/2019 13:16

"Recording a Foreign Exchange Gain/Loss
When preparing the annual financial statements, companies are required to report the transactions in the home currency to make it easy for all stakeholders to understand the financial reports. It means that all transactions carried out in foreign currencies must be converted to the home currency at the current exchange rate when the business recognizes the transaction."

Paying a cost and recognizing the transaction does not necessarily happen at the same point.

[lucyp00p] 10/4/2019 12:50

Converting $'s into pesos does not create an FX loss, it's just a cost of doing business. FX losses crystallise when hedge positions are unwound, which is speculative. For example, if I buy euros tomorrow and not today, the euros just cost me more or less - it's not a forex trade which has a base against which I can show a gain or loss. Of course if they bought $20 million in pesos, and settled the bill in dollars, then sold the pesos for dollars, that would be a currency gain or loss. What transaction do you think can create this loss, because I sure can't find one.

[al101uk] 10/4/2019 12:08

Foreign exchange gains/losses are not new:

2015: +1.23 million
2016 Breakeven
2017: +1.36 million
2018: -2.6 million

Accounts are stated in $'s, but that doesn't mean all costs and all cash are in $'s, there will naturally be adjustments in forex. This year seems like a lot, but I wouldn't let it hold too much weight.

In fact, note 37:

"100% of the Group’s sales are denominated in US Dollars; however, approximately 75% of costs are denominated in other currencies, mainly Colombian Peso and any associated foreign exchange risk is not mitigated by the Group."

Depreciation is a fact of life in an oil company, you book the development costs to your balance sheet and depreciate that away as you pump the oil... or write it off if there was no oil.

Depreciation is up on last year, presumably because production is up. What you want to see is a good margin between depreciation and the value extracted, there, things are improving as the oil price improves.

Depreciation of CPO-5 only started in January 2018.

Also worth noting:

"The Group has two CGUs for its D&P assets (2017: one), neither of which had any indicators of impairment as at 31 December 2018 (2017: no indicators)."

So basically in my view, nothing to see here.

[moneylender] 10/4/2019 11:47

Swerves, dont expect too much from the ops update, it will only give production details, no financial guidance at all, we are left to guess that ourselves!

[lucyp00p] 10/4/2019 11:34

Your opinion might be able to explain how a set of $ based accounts exclusively showing trading in a dollar based asset and with a (presumably) $ based cost profile needs any kind of forex exposure, let alone a loss which is of the magnitude which can only be attributed to speculative transactions?Forgive me but I don't regard a $2.6 million loss or indeed a $21 million depreciation charge as insignificant, as I said this statement is dollar based rather than the published accounts which will be restated in sterling so they must have entered into a massive $ : ? forex deal which has been unwound with a huge and unexplained loss, wiping out a significant chunk of value.

[swerves1] 10/4/2019 11:21

Will the Q1 results be out as soon as next week?
I think these will surprise to the upside!

[hsduk101] 10/4/2019 10:28

Who would have thought oil companies would be so complex! Only my opnion but the said 2.6m loss is small compared to the profit or projected future works. Cant see it having an impact personally in the long run

[tsmith2] 10/4/2019 10:20

I wonder if our seller was cleared yesterday with those 3 large reported trades. I think management will make another splash after we get the quarterly next week

[moneylender] 10/4/2019 10:00

If you look at previous years accounts someone has been doing it for years. I don't recall seeing a loss for it in the past.