Amerisur Resources Share Discussion Threads

[sji] 18/8/2019 18:49

Although I have lost faith in our BOD, I do not think that they are so stupid to walk away with nothing in hand at this stage because given that THEY initiated the FSP, they would look stupid if they fail to sell, at least, some of our assets!

I am sure that unlike us, private investors, the big institutes know exactly what is happening at the negotiations (at least, those approached by M&P) and consequently, I hope that the share price will not continue to drift below 17p in the coming days because that would be very negative.

Keeping fingers crossed, I hope that AMER will soon issue some positive operational news (perhaps, some spudding of wells) to sustain the share price.

[lucyp00p] 18/8/2019 18:38

I guess we wait and see, but if no agreement is reached and the share price falls back to 12p, heaven forbid, then a buyer at 17 will be more than interested.

[sji] 18/8/2019 17:07

If our assets are really worth 38p, it would be stupid for a larger company with enough fire power not to take a shot at us when our share price is languishing at just 17p! A month ago, we languished at 12p and one prospective bidder moved forward.

Sorry to disappoint long-term holders on this BB, but the faith of AMER will be decided by the few institutional investors (who are currently being approached by M&P) who between them own 50% or very close! Although the very long-term holders over here have been loyal to AMER for so long, it is unlikely that they will be the ones that decide at which price AMER has to be sold.

[quidnunc] 18/8/2019 16:54

There's a lot of other tasty targets out there at the moment, many in a much weaker position than Amer having both a low share price and a poor cash and asset position. The Ftse has just hit a substantial low and the bond markets are entering brown pants territory so there will be opportunities aplenty for those with cash and vision. I doubt we will see a hostile takeover, we might see a marriage or merger and we might see Amer making a bid for further asset and acreage in the event that rivals stumble and fall. This company has come a long long way since I first started meeting people for curries in the Great Nep.Are you sure it's the beginning of the end?Maybe the end of the beginning ?Q

[foiledagain] 18/8/2019 16:48

quid. Yet even the IEA predict oil demand will increase and that is with all the emphasis on EV's and renewable energy in the mix.

[quidnunc] 18/8/2019 16:26

They would have to be in a position to take a contrarian bet in a situation that I predict will get worse before it gets better. A risky move as, in a recession and a murky market paradigm, cash is very much king. If Trumps trade war takes off, the landscape of the oil industry will shortly be rewritten against the shifting sands of international tensions.A hostile bid as per Lucy's suggestion would also need to be substantial enough to persuade the majority of long termers who's views are not really reflected by the busy scalpers that have invaded this bb since the review news broke.Despite their chatter, Moneylenders £1 per share is more realistic given that, as Lucy points out, GC et al aren't going to fold for anything stupidly low. He may be many things but not someone to lose his nerve on the wicket. Then there's Michinoko which seems to go into bat for GC's interests across the board. They are top trump in this exercise.Q

[blackdown2] 18/8/2019 15:20

Strongly disagree with Q for two reasons:

1. Potential bidders well aware of likelihood/impact of recession - they will be taking a 20 year view;

2. GC and Co have been in the driving seat since 2007 and want out.

[3roach] 18/8/2019 13:56

That would indeed be splendid.

[moneylender] 18/8/2019 13:54

£1 by Xmas

[lucyp00p] 18/8/2019 13:17

No deal doesn't mean no sale. These players can smell blood in the water, and I'm pretty sure that they will dispense with the courtship of GC and JW if the price is wrong and go hostile. I'm pretty sure the negotiations with GC will be a waste of time anyway as no matter what offer is tabled, it won't be enough.

[foiledagain] 18/8/2019 12:26

Agree

It will be a dilemma for the BoD though. In my opinion this situation similar to Ironveld was not their idea, but pressure upon them.

[acv74] 18/8/2019 11:00

If the price is not right for CPO-5 then just spin it out and keep it. ONGC will be trying to get it for a song...we shouldn't let them.

[charlieeee] 18/8/2019 10:59

Unlike Yatay, Mariposa has been carefully produced on a restricted basis to maintain integrity and hence being in steady production some two years after.

Read round Yatay 1 for the full story.

Indico is also evidencing steady production.

We complain about ONGC, but perhaps we should appreciate that they have produced these first two CPO-5 fields with great care, adding real value on a steady basis: not some two bit AIM company needing to grab headlines and the next tranche of cash from the market.

Even if the sale were not to go through (and I think that it will, to OXY) why would anyone criticize the BOD?

They took decisive action in the face of an unwelcome attempt to take the company out at an undervalue, showing flexibility in their approach to maximize value for shareholders (and of course, for themselves).

As far as possible, with their statements and new website, they are saying give us what we want or sod off: it is the reiteration of JW's statement at the AGM of the "piece of paper in his pocket" with AMER's value. GC, JW and AS have all sold companies for top dollar: I doubt if any other AIM company have such good collective experience and if there is a deal out there, they will do it.

Sometimes, "luck" is made and I do think that the foundation step in the ultimate sale was taken at the time of the OXY deal. Why bother with minnows, when partnering with a major, who can pony up for CPO-5 as well, making for a nice clean exit? The skill here will be to get decent offers from others to stretch OXY, given that interested parties went through such a similar exercise within the last year.

We certainly live in interesting times and it must be very uncomfortable for the shorters (stock on loan over 7.5 million at the last count) to think that an RNS could land, with the consequent jump in share price

If the price is right and there is no hostile bid (and no competition considerations)the process can be very quick: approval by 75% of the shareholders and ratified by the Court.

GLA

[xxnjr] 18/8/2019 10:01

sji,

It's worth taking a look at the production profile of Yatay, which is a very similar nearby compressive structure to Mariposa, producing similar API grade oil from the same LS3 sands. JW has a habit of referencing Yatay as one of Colombia's highest flowing wells. Initial results were spectacular.

"Yatay-1 well commenced drilling on November 19, 2010 and was put on production on January 4, 2011. Well logs indicate 114 feet of potential oil pay in the Lower 3 sand. The well commenced production at over 10,440 bopd of 43 degree API with less then a 1% water cut under natural flow. The well produced over 1.1 million barrels of oil in its first 4 months of production"

Mariposa-1 had 120m Net Pay also testing 43 degree API at 4601 bopd - Yatay's an analogue.

By 2013 Yatay field monthly field production was between 2,500 and 4,000 bopd.

By 2015 Yatay field monthly field production was between 900 and 1,200 bopd.

By 2017 Yatay field monthly field production was between 380 and 550 bopd

And this year monthly nos are: 470/470/433/444/499/442

All numbers taken from ANP Monthly Production Reports.

Above numbers suggest high initial flow rates are result of low viscosity high API oil, coupled with exceptionally high "Poroperm" values (producibility of the reservoir).

Mariposa seems very small geographically. Reserve numbers are also very small. So unless it's a small anticline that is "part of a bigger overall trapping system" the field may have the same fate as Yatay.

Indico looks bigger. Appraisal of that will be a useful data point.

[sji] 18/8/2019 09:51

FoiledAgain - And why, in your opinion, the same will not recur again in the event that no one is ready to buy our assets at the requested prices by our BOD? If no bid comes, then it means that only we see the high value in our assets! Remember that we now have MULTIPLE bidders evaluating our assets, no?

[foiledagain] 18/8/2019 09:23

sj1: Not for me. You can keep any bid at present unless its around the pound mark. The doomsayers that mention going back to 12p forget that the main reason we were at 12p was not fundamentals, not lack of cash, not lack of assets, but concerted major seller over a prolonged period, aided no doubt by those in the City not buying and why should they when they could short and leverage with impunity, having information to hand on a daily basis as to the situation with RH's shares. Information available quite cheaply to City companies but not often available to ordinary shareholders.

[sji] 18/8/2019 09:15

No agreed takeover will see us back to 12p or less in no time (see where all other oilers currently stand!) and then, a hostile bid at 17p will do the trick, no doubt about that (IMO)!

So, I think that our BOD is smart enough not to go this way. It would be wiser (for them) to negotiate an agreed takeover at a reduced price (say mid-20p) rather than insisting on asking for a higher price (which might still be what we are actually worth, say 38p) and finishing with nothing and risk a hostile bid at a much lower price.

Shareholders need to realise that although our assets might really be worth 38p (as indicated by our brokers), it might not be what the market is actually ready to pay for them. For example, Barclays has recently issued a note on Premier Oil stating a NAV of 120p and yet, the current share price is half that and still declining!

[foiledagain] 18/8/2019 08:38

quidnunc: I concur about likelihood of no deal, but I think there will have to be a significant sweetener for shareholders if the BoD are to survive at all, as no deal will be a vote of no confidence in their assertions on Amerisur being so undervalued, and would suggest then that other institutions selling have no confidence in the BoD also. I suspect they will get out of that by disposing of CPO5 with a special dividend, and you watch the drills at CPO-5 start hitting the spot every time if that happens.

[quidnunc] 18/8/2019 08:21

Don't pay the deposit just yet, I'm currently predicting No Deal after the review ends. To me the daily quartet of rns suggest that they are the result of ordinary day traders indulging in a bit of scalping and that the underlying position hasn't really changed markedly. I suspect that outside of Brexit which will have little direct impact and Rexit which did, we will also have to deal with global recession which will take four or five years to resolve itself. Suggesting that potential buyers will sit on their cash piles and wait for rivals to fail. A position that I suspect Amer will also assume.With both Argentina and Venuezuela technically bankrupt, we are likely to see all Latin American economies under the cosh and their Oil industries too.So I don't see any major share price changes in the near term.Maybe £1 by Xmas 2025?Q

[sji] 18/8/2019 08:06

andrewpbyles - Mariposa is a well whose production is consistent and predictable, making it one of our best assets. For a bidder, consistency in production is very important especially if the bidder takes on debt to pay for the acquisition. For this reason, our BOD consistently boasts of this well! The Platanillo field, on the other hand, being old and in decline, produces very erratic results and consequently, it is more difficult to project and plan for the future (for bidders, I mean). So, its value will diminish for them.

As regards the lower oil price and production figures that we have known about for months, it's nonetheless nothing positive at this time of negotiations. How can our BOD defend their request for a high price for our assets when they have earned less from them this year compared to last year? Let me refresh your memory about what our board have told us at the time of our final results (for 2018) on 9th April 2019:

QUOTE

John Wardle (CEO)

Outlook

Amerisur entered 2019 with; a robust balance sheet, a low-cost production base, an extensive prospective portfolio, strong major partners and a fully funded exploration and appraisal programme. With our experienced and committed management and operational team focused on executing our busy work programme, Amerisur has a solid platform from which to deliver future reserves, resources and production growth and exploration success and in turn further shareholder value.

Giles Clarke (Chairman)

Outlook

We continue to be guided by our core value of capital discipline, shown by our strong cash balance, and are focused on continuing to unlock the potential of our extensive portfolio, built at low cost during the downturn, to deliver shareholder value.

We are confident that in 2019 our fully funded work programme across CPO-5 and the Putumayo targeting gross prospective resources of 145 MMBO has the potential to deliver considerable exploration successes and, in turn, strong production growth with low upfront capex, albeit with any drilling activity, there may be some potential challenges. This includes up to a further five wells planned at CPO-5, a licence which management is confident has significant resource potential given the production profile and exploration success to date. Alongside this, our wholly-owned OBA pipeline continues to offer further growth potential through the export of both our own oil and third party crude.

2019 looks set to be an exciting year for Amerisur and the Board looks to the future with confidence.

UNQUOTE

Is there any indication in these statements that indicate that our production for the first 6 months will be less and our profits will be lower? So, why did they initiate the FSP at this time when the next figures will show declines compared to last year? It is so obvious that we attract multiple parties for our assets because they see an opportunity to grab our assets at distressed prices.

And the fact that our share price is falling back to the initial 17p prospective offer price is indicative of bad news (imo). Hopefully, AMER issues some positive news (Indico-2 spud?) VERY soon to push the price up again at least towards 20p or else we will fall below 17p!

[sji] 17/8/2019 23:12

andrewpbyles - yes, you're right up till June, Plat production was on the way up, month after month. Since the OBA average daily output for June works out at 4,304.43 bopd (129,133 boe / 30 days), when taking out the government's share, I would assume that third party oil was minimal during June, making the company's statement true but a bit misleading imo!

For July, the average daily OBA output works out at 3,866.87 bopd (119,873 boe / 31 days) and for the first half of August, 3,341.53 bopd (50,123 boe / 15 days), both substantially lower than June's average of 4,304.43! Since these figures exclude the barrels taken by the government, Plat's production should be slightly higher than these figures (but probably lower than June's). It also depends on the amount of third party oil that was pumped through the OBA that is included in the figures for July and August.

Earlier this week, ONGC reported lower profits for their Q1 because of lower realised oil price and lower production. AMER reports its interim results on 12th September and it too faces, lower interim profits than last year for the same reasons, lower realised oil price and lower production. Not a good way to increase our takeout price!

[xxnjr] 17/8/2019 20:44

Hello again TDI,

We've been hearing similar arguments for years. But shale output has increased relentlessly.

You and I had this discussion 6 months ago. Since then Shale output went up.

The Saudi's thought they could bankrupt Shale by over producing. It didn't happen. After the Saudi's burned through a sizeable chunk of their monetary reserves they gave up and OPEC were forced to introduce production quotas to re-balance the market. Didn't rebalance the market as Shale production went up.

More production quotas followed. Shale production went up further.

What am I missing?
Output numbers showing Shale going into reverse.

Maybe Shale will slow down due to the current lower oil price.
If it happens. Fair enough.

Only one problem, in that scenario the OP goes up again, and yet more Shale comes onto the market. The truth is none of us here can predict the OP. It could be $50 or $75. Nobody knows.

[muddy_40] 17/8/2019 19:29

Tyler

I am with you on the Shale oil, I have read lots of reports lately where it is going wrong, another thing is the US rig count is going down and the International is increasing,International is mostly offshore stuff in NS, Africa etc.. I thought that was supposed to be expensive so what does it tell you?

I still think we will see a drop in OP and that will be the final nail in a lot of Shale oilers, however, will the big oil just buy them cheap? I think we may see an oil crunch in next 3 years. SO Opec(SA) will have won the battle.