Amerisur Resources Share Discussion Threads

[rollthedice] 15/6/2017 12:26

@FA ~ I think if we're honest we've all been there & learnt the lesson!

[charlieeee] 15/6/2017 11:12

To maximise value under P/E or NPV calculations, the asset has to be fully exploited at the earliest opportunity and both punish, to some extent, strategic delay.

Price earnings can be applied to historic, current or projected earnings and whilst historic is easier to use for comparative purposes, current is what is applicable when making a comment about current market cap.

FA, P/E calculations clearly don't give "the answer" to the value question, but can be a useful metric in calculating the underpin in any hybrid producer/exploration company such as AMER and hence my response to rollthedice on the current market cap. For an investor such as myself, I am not prepared to take pure exploration risk, so I do my base calculation and then see the upside as pure (to use a non accounting term) jam. That was why I found today's RNS so reassuring: the underpin (and cash flow to support development) was confirmed.

Al, I have a different operating profit per barrel from you and of course, it does change daily with the POO. I'll save the P/E v NPV debate for another day, as, having enjoyed this morning's really positive RNS, I have no inclination to sour that mood (either for myself or others).

[foiledagain] 15/6/2017 11:06

roll

I've known some investors who blind pick stocks....and they still have as much success if not more than others (not including me of course...well let's not go there)

[al101uk] 15/6/2017 10:46

rollthedice,

Circa 20p as fair value for Plat at current reserves and production rate seems about fair.

As you say it's a good base, on to which you can add your hopes, dreams and realistic expectations.

[al101uk] 15/6/2017 10:43

FA,

What's your preferred way of assessing the investment potential Amerisur?

[rollthedice] 15/6/2017 10:39

@FA - no I don't use P/E I was simply responding to charlieeee's comment about current market cap being supported by a P/E of 6. There have been a number of decent past posts (including yours al101uk and fadilz's) on valuing current production & reserves which for c$45pb, 5000bopd, 25m reserves etc would support a share price of c20p. I'm not suggesting it's going there (again) or that those fairly reflects exploration upside or I wouldn't bother holding but on the flip side no fireworks likely either without significant progress, production or POO increase or news.

Of the broker notes Peel Hunt, for all they've been knocked for their conservative estimates, have been closer to the mark than others.

Using the dark arts of charting does seem to deliver better results. The amount of times there's been a gap up on a share and you think on an investment case 'it isn't going back there again' but it invariably does cannot be ignored IMHO.

[lucyp00p] 15/6/2017 10:33

Surely p/e valuation assumes the only strategy is sell as much as you can for whatever you can get and takes no account of any long term plan such as OBA capacity uplift. Still it is a method no doubt.

[foiledagain] 15/6/2017 10:21

Mar. Touche


I'm no fan of charts either!

Roll: If you are invested in Amerisur but use P/E ratios as your guiding lights, then I really suggest you consider the earlier advice about not investing in oil and gas as a good proportion of the price in such companies, especially AIM is the potential to grow rapidly, and indeed CPO-5 might just be a catalyst for Amerisur being taken out. But using P/E for an AIM oil and gas exploration and production company is just nuts.

But what seems stranger is you invested in Saffron Energy? Did you use P/E in the decision there?

The good news for anyone who doesn't rely on P/E is that with today's news we should pass through the 5000, but OBA throughput is down to if the planned and unplanned maintenance is done.

[marnewton] 15/6/2017 10:18

And people wonder why I use charts;¬)

M

[foiledagain] 15/6/2017 10:15

The problem as stated again and again is you cannot use the same metrics as for a retailer or a services company in valuing oil and gas.

If valuation was always going to be on production and reserves how would you value an explorer?

How would you value start up companies.

On a profit basis it would be always be zero.

[al101uk] 15/6/2017 09:55

rollthedice,

"AMER's existing production & reserves do not justify even current reduced market cap "

What value do you allocate to existing production and reserves?

[lucyp00p] 15/6/2017 09:36

AIM listed companies and the market in general getting panned today in The Times. Apparently we are all fools.

[rollthedice] 15/6/2017 09:30

AMER do not have a P/E ratio of 6. Last years was -9. Even stripping out non-cash impairments etc still leave you negative.

[al101uk] 15/6/2017 09:24

A PE of 6 would indicate profits of £46.5 million.
Assuming profit of $20, that's 3 million barrels of oil.
Assuming 5000 bopd, we only produce 1.8 million barrels of oil yearly.
You need production of 10.5K bopd to justify a PE of 6.

I'm not saying we are over valued, just that picking a PE ratio is a flawed valuation metric. For a start it doesn't give any credit for reserves booked and without a timescale it's pretty meaningless. Forward PE of 6 two years from now could be very pessimistic.

To be fair PE ratio is pretty meaningless in most situations, it's just especially so for an oil company.

[charlieeee] 15/6/2017 09:07

rollthedice

On a straightforward P/E ratio of 6x a ratio which is adequately backed up by existing reserves (and bearing in mind that in any such calculation we have the benefit of tax losses) at 5000 BOPD, the operation as it stands today more than justifies the existing Market cap.

That calculation adds nothing for increased Plat production which is clearly on the cards and wholly ignores Mariposa.

[foiledagain] 15/6/2017 09:05

One thing to remember is although I'm surprised sometimes at Amerisur completions which seem dated. They have the data from all the logs, I dont

[al101uk] 15/6/2017 08:59

23rd December 2016 Plat-24 was spudded and started to produce at a rate of 420bopd on the 24th January 2017.

Platanillo-24... post the organic treatment the well is producing approximately 820 bopd in a stable manner

Great news and money well spent assuming they can transport the stuff to market.

The costs of maintaining well production is still a worry for me, work overs may be a normal part of business in the oil production game, but the frequency and cost for the wells at Plat is what concerns me.

[rollthedice] 15/6/2017 08:49

@FA thanks for your opinion. You are wrong in your assumptions about me. On any reasonable measure AMER's existing production & reserves do not justify even current reduced market cap IMHO. Having no debt is a major positive and one of reasons I've continued to hold... and yes I do hold AMER... but until they significantly increase production or there is a hike in POO share price isn't moving anywhere fast.

[charlieeee] 15/6/2017 08:42

What effect it has on the share price is quite a different consideration, but this is an RNS which fills in all the gaps left by the somewhat no-event recent production RNS.

Looking back, Plat 24 per the RNS of 24th January was on 420 BOPD from the lower U sand and now we are told that the workover has boosted this to 820 BOPD in a stable manner.

5 more candidates to come: Plat 20, 9, 14, 12 and 5 (but the previous RNS read as if only Plat 12 still to be done).

Plat 22 up from the initial 700 BOPD as per RNS of 5th May so we are not looking at really quick declines in the recent wells.

Plat 25 going ahead and that, now that they have so much additional data on the structure, will be targeted to hit the jackpot, one has to assume: in itself, it is a vote of confidence in the Pad 2 area, which was originally planned for 2 wells and the third came into play once they saw what they had got.

All this will impact on the reserves: in April, they were saying up from 1.4 to 7.82 on this alone.

Being greedy, I want Platanillo to really perform, as well as CPO-5, particularly as the cash flow it will generate is needed to fund that discovery: this RNS gives a good indication of just how good Plat can be (and always better to have to two horses in the race).

[davwal] 15/6/2017 08:39

We urgently need news on improvements to the network. Increased production that simply exacerbates the negative impact of throughput constraints almost looks like bad news. Most bizarre...

[foiledagain] 15/6/2017 08:36

roll. I am sorry to say this but your posts illustrate you really shouldn't be invested in oil or gas companies.

Money is always needed and always has been to maintain oil wells, gas wells and most everything else.

The current volumes can hardly be said to be pitiful where the company has no debt, and still around the 5000bopd and producing from some formations, with so much more potential.

If it was obvious workovers are of existing wells, why put existing wells in the comment.

I have difficulty in believing you are an investor in Amerisur as it would be easier to believe from the post that you are just shorting.

[foiledagain] 15/6/2017 08:32

What I am surprised at is leaving Plat 21 producing at all. If the cement job was faulty, the contractor should redo it at their cost now.

If not, there is no incentive for a contractor to follow quality control or any other standards if they don't have the potential for loss by a poor cement job or any job a contractor is engaged on.

What I am a bit surprised at is what seems really old completion methods which seem more in keeping with the 80s-90s, where some zones are left untapped, no comingling from different reserves drilled in the same well, and what appears to extreme caution with perforating very small portions of what are announced as substantially larger pay zones even though we are using sophisticated testing whilst drilling which should allow better definition of producing zones.

[rollthedice] 15/6/2017 08:23

@FA of course I'm stating the obvious workovers are of existing wells but money is still needed to maintain even current pitiful production volumes and there's no obvious step change to 7500bopd let alone any higher.

[marnewton] 15/6/2017 08:19

My days ( y e a r s ) in and out of Emerald (EEN) were dogged by downhole problems, but we were eventually sold at a handsome profit.

M