The long and winding road for a resource company can be tortuous for investors. From unfulfilled promises through to countless fundraisings. That said, the rewards can be enormous. If looked at as any other business, it produces at X and sells at Y. So long as both factors are within reason, the results can be astounding. I would suggest that Amerisur Resources, the Colombian focused oil company, is one of those few resource companies that really is on the verge of paying off.

It goes without saying, that it has been many years in the making. This includes exploration, development, acquisitions and the construction of an oil pipeline during Colombia's civil war. And, of course, the collapse in the oil price. Leaving aside, the perennial floods and political issues. So where is it now? The answer, I would argue, is in very good shape - both profitable and debt free. And with enormous upside. Essentially, the heavy lifting has been done.

Yes, I know. Who's interested in oil? Why bother? It's a yesterday industry. Well, for starters, Amerisur's cash cost of production has collapsed from around US$26 per barrel to under US$15 per barrel due to the completion of its OBA pipeline earlier in the year. This logistical improvement has also allowed it to change its oil blend and therefore improve its profit margins – it receives a little more than the WTI price rather than a little less. The pipeline has a capacity of some 50,000 barrels of oil per day and it recently installed pumping equipment to give it the ability to put through more than 28,000 barrels per day. At a cash cost of production of, say, US$15 per barrel and the WTI oil price at, say US$57 per barrel, it's a very profitable business model. And, of course, pumping other people's oil can be lucrative.

With low overheads and no grand London offices, it can afford to leave the oil in the ground when it suits. If the oil price is too low or the weather inclement, it can come back to it at a later date. Incidentally, it has a well respected and established in-country management team.

As for the OBA pipeline, it's 100% owned by Amerisur and stretches to Ecuador. Not only does it substantially reduce its cost of production but it also gives it…

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