Anyone know whats up with Amersiur Resources ?

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14th Jul '17 by The Phoenix

10 comments 5633 reads

Hi any thoughts on this one I know oil is down by all counts stock overhang but seems in permanent down-trend.

Forecasts are for a swing back into profit next year and has decent net cash understand also the famous pipeline is not currently handling the amount of oil expected which isn't helping.

Any other thoughts appreciated.

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About the Author

The Phoenix

Premium Member

10 comments

aflash

14th Jul '17

Can not explain.
My last girlfriend is Columbian. Talking to her and her two children and following the news I learned how wild the place is. Pipeline could easily be bombed.
With this background I have traded the shares at least four times over the past two years, never trusting a long hold or large amounts. I buy around 22p and have sold at 21 for a loss and 25, 27 and 29 for profit. Recently back in and showing a loss like you.
According to Malcolm Graham Wood the company is well run and has plenty of ressources. Stockopedia does not help with Junior Ressource stocks much except during the Oil crash it showed Dragon Oil DGO as strong so I bought and it was taken over.
This time it shows AMER has more value than AEN but less than PPC, two other South American Oilies I follow.
It gives AMER a slightly better quality rank.
Another data base I use shows AMER has more value than AEN and PPC.
So I shall hold.
If I buy more it will only be to catch an intraday Lo and sell on the bounce.

ajbowden

15th Aug '17

This company Amerisur Resources (LON:AMER) has a serious communication problem.
Its took the BOD several weeks to report thats its main Platanillo field was shut down due to social unrest.
How much trust can you have in them after that ?
These small oilers can alway drift even lower no matter how bombed out they appear on the surface.
Agreed that they appear to have limited debts and decent cash flow but as outlined by aflash they are limited due to dependenace on OBA pipeline for exporting their oil at commercial rates. The governament are trying to takeownership of the pipeline company by backdoor means of limiting its operation.
I don't hold.

LongValue

27th Sep '17

The impression I have is that the stock has turned a corner since it announced its interim results on Monday. Apparently, production is now running at some 6000 BOPD. The OBA has reduced operating costs from US$27.2 per barrel to US$17.7. At 7000 BOPD this is expected to go down even further to US$15. It's also targeting between 176 MMBO and 226MMBO in a fully funded drilling programme in areas it knows well and where it has had considerable exploration success. Tellingly, it is also about to install a third pump that will give it a capacity to put up to 28800 BOPD through the OBA. I suspect the market is now factoring in what it's actually doing rather than what it has been planning to do.

nicobos

19th Jul '19

https://www.stockopedia.com/share-prices/amerisur-resources-LON:AMER/news/amerisur-resources-strategic-review-including-formal-sale-process-urn:newsml:reuters.com:20190719:nRSS1179Ga/

Any thoughts on prospective value?

LongValue

19th Jul '19

Figuring out what it's worth will be very difficult. That said, it's highly cash generative and debt-free. It also has a strategic alliance with Occidental which will take much of the cost of developing its assets off its shoulders. As I have mentioned before, this seems to put Occidental in pole position to buy the company outright. And not forgetting that Colombia focused oil producer, Gran Tierra, obtained a London listing in October 2018 which could open up the possibility of merging at least some of the business.

Of course, the company may be split and sold piecemeal. It seems fairly reasonable to assume that ONGC would like complete control of CPO-5. Its 100% owned OBA pipeline has a strategic value and a 50,000 BOPD capacity - it uses barely a fraction of its potential. In many ways, the OBA pipeline typified the management approach - a great idea that was never really exploited to the full.

It might be useful to bear in mind that Amerisur's last placing was in March 2016 at 25p. I suspect that the institutional investors who took up the offer will be looking at getting their money back and some. Not wishing to repeat what I have already covered, this is a link to another thread where I analysed the company more fully and gave reasons why I bought and, ultimately why I sold. And I should point out that I am now, once again, an investor.

https://www.stockopedia.com/content/amerisur-resources-the-jigsaw-comes-together-244473/

Lordyjordy

20th Jul '19

Interesting stuff.

I've been invested here since 2014. Have followed the highs and lows since.

I do find the timing of this interesting, it seems to me that they are selling out just at the point when their asset purchases (during the down time) and recent partnerships would be kicking in.

Is this an admission of failure or do they feel the timing is good to sell the company without taking the risk that their purchased assets actually produce.

I have to say the continual missed targets, moving from monthly production updates to quarterly, lack of major success with the drill bit, and lack of visibility coming from the company means ill be happy when this is sold. Hopefully for a profit....

LongValue

21st Jul '19

The company's RNS seems to indicate that it has received a formal takeover offer for the entire business as well as offers for various parts of the operation. As I have argued before, the company's plans and its assets are, in my view, first-class and this appears to be reflected in the interest. The real issue lies with the execution of those plans and the management of its assets.

If we take a look sideways and the same team are behind Ironveld (LON:IRON) and Kazera Global (LON:KZG) (I am also an investor in this business). The former is now up for sale. While the latter is about to complete a JORC report. They appear to have a myriad of international business interests that draw upon their resources.

As for the timing, I suspect that institutional investors have simply had enough. Its RNSs have often appeared almost aspirational. For example, its routine lateness or lack of delivery would largely go unexplained. They seemed to act more like owners than managers.

gus 1065

22nd Jul '19

Putative opening cash and shares bid from French O&G Maurel & Pom valuing Amerisur Resources (LON:AMER) at 17p a share (Friday’s share price rise to 16.5p seemed remarkably well informed). Company presumably thought it was a low ball offer hence opening up the books announcement last Friday to potential suitors.

https://www.investegate.co.uk/maurel---38--prom/rns/possible-offer-for-amerisur-resources-plc/201907220700051989G/

Hopefully more interest will be smoked out by this.

Gus.

LongValue

22nd Jul '19

The bid does seem a tad on the low side. And it's not even an all-cash offer. Moreover, it's less than the March 2016 placing price of 25p per share when the company raised US$35 million. When one considers its situation at the time, it appears even less attractive. By most metrics, it's now in a far stronger position. Both its reserves and production levels are higher. It has successfully developed CPO-5 with its Indico-1 well. Its cash pile is higher. It has added considerable value to its OBA pipeline by increasing pumping capacity on the Colombian side while building the Chiritza re-pumping station in Ecuador (This was effectively at no cost as the outlay will be offset against fees for using the RODA network in Ecuador). It has also obtained a higher guaranteed minimum capacity through the pipeline and now has permission to transport third-party oil. And of course, it has tied up a major deal with Occidental Petroleum that will expedite the development of its acreage and reduce its capital expenditure and therefore its risk.

In summary, I think that any serious bid needs to be rather higher than 25p per share.

saurabh2k26_stocko

22nd Aug '19

interesting stuff...

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The Phoenix

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