spike, thanks for the feedback but things are not exactly like this. - All the companies which are dependent on one single asset and lack diversification trade at a significant discount to the market. This is a fact. AMER is the exception to the rule but I think this will not last for long. A significant DOWNLEG can take place anytime. - AMER's Paraguay and PUT-12 are not producing anything. Paraguay has not been de-risked at all. Virgin land. It is stupid if some investors pay a premium for a completely uncharted land. I have numerous companies that went broke by drilling uncharted land. - Since you mention AMER's future production, Petroamerica will produce 30,000 bopd by 2016 according to the company's statements pro forma Suroco. - When you evaluate an energy company, you must not check the absolute figures, you must check the ratios instead. This is what the brokerages firms do. Based on these ratios, AMER trades 4-5 times higher than PTA. I am talking about EV/EBITDA and EV/Production. This gap is huge. In terms of EV/ 2P reserves, AMER trades much higher than PTA. - Quinde field. This field has GUSHERS ONLY and belongs to PTA now pro forma Suroco deal. The Quinde field is at Suroriente Block and is way superior to the Platanillo field that has wells which flow 300-500 bopd. PTA's gushers at the Quinde field flow from 2,500 bopd to 4,400 bopd. I am sure you get the difference.
RE: From the SA article about AMER ..
Tradernor - it was a very interesting article, I had been following Suroco for sometime and I believed they were undervalued, which I still don't think is fully valued and together with Petroamerica looks substantially undervalued as the article suggests. However I don't agree that Amerisur is overvalued, currently I think it is fairly valued and can even see the case that it is undervalued. Here is why... I don't see much advantage in diversification within Colombia even if it is over two oil producing regions. I see the fact that Amerisur has a single large field with significantly more reserves and resources than Petroamerica has across 15 different fields as being far more advantageous. Platanillo is currently 32MMBO of 2P - however with the recent extension south, the recent test of the N sands and the coring that will be done in plat-20 will likely push this up north of 40MMBO, potentially as high as 50MMBO - this is without the T, B and M2 sands and probably more importantly the extension north of the U sands. It seems fairly likely that ongoing development drilling over the next 2 years will result in upwards of 70million 2P and I could see it being nearer 100MMBO. This compares to the acreage in Putomayo that Petroamerica has across multiple small prospects which currently carry exploration and development risk together with much more work required to develop multiple small fields compared to one large field. As he mentions one driver of value in Colombia is acquisitions - a single 70MMBO field will be highly, highly atractive compared to multiple smaller fields So where the author sees Petroamerica to have an advantage due to diversification, I see Amerisur as having a large advantage due to significant economies of scale. Additionally Amerisur does have an additional highly promising resource in PUT-12 which is about to be developed, together with significant acreage in Paraguay As to some of the other metrics he presents. On EV/2P, as already discussed I expect a material upgrade to 2P reserves at the year end which will probably result in Amerisur being priced better than Petroamerica. On production, clearly Amer is overpriced at current levels, however we know field production capacity is already north of 10kbopd and is simply constrained by export capacity and this is being resolved as we speak and will eventually allow a significant increase in production. I think very importantly reserve life also gives AMER a premium - petroamerica may have improved it but it still stands at less than 6 years. Amerisur is currently over 10 years and even with production increases the reserve upgrades the RLI will likely increase. In short Amerisur should be able to get to 20kbopd production within 2 years, while maintaining 10 year RLI simply through cheap, low risk development drilling - some of this is priced in, hence the premium on current metrics, however I believe there is still room for good share price growth.
RE: From the SA article about AMER ..
That's totally untrue though, Amerisur may only have one producing asset (although we do also have Fenix), however we own the best licences in Paraguay and that alone could be the pathway to great riches. Obviously Paraguay is at a very early stage, however it certainly cannot be totally ignored and no value attributed to it.
RE: From the SA article about AMER ..
See the last paragraph of the article and you will find this excerpt.
From the SA article about AMER
I quote from this SeekingAlpha article that compares AMER to PTA (Petroamerica Oil): When it comes to investing in Colombia, my track record speaks volumes. So I assure you that Petroamerica is a diamond in the rough. Or to say it differently, Petroamerica is a "Parex Resources in the making". Petroamerica expects to be able to fully fund internally its operations for the year through the combination of free cash flow and cash-on-hand, while continuing to pursue select new business opportunities that will enhance the existing portfolio and provide additional future growth in its two core areas. I must also point out the tremendous valuation gap between Petroamerica and Amerisur Resources. First, Amerisur Resources has nothing more than one producing property (Platanillo Block) which translates into zero diversification. Second, Amerisur's Platanillo Block is right next to Suroco's (now Petroamerica's) Suroriente Block which is a gold mine, given that both the Cohembi and the Quinde oilfields are there. Third, Amerisur and Petroamerica are Net Debt free. In other words, there is nothing that makes Amerisur better than Petroamerica, and their tremendous valuation gap is beyond any understanding and completely unjustified. The inefficient market is here. The only reason behind this huge gap is the fact that Amerisur's primary listing is on the London stock exchange (ticker: AMER.L), and Amerisur's buyers (mostly European investors) do not have the opportunity to compare Amerisur to Petroamerica and realize the big picture. If Petroamerica had Amerisur's key metrics (EV/Production, EV/2P reserves, EV/EBITDA), Petroamerica should trade now between C$1.5 and C$2 per share. After all and as the story gets out, the bargain seekers will not afford to overlook Petroamerica at the current price of C$0.39. The stock has nowhere to go but up, given that Petroamerica's fair price compared to the peer group is C$0.85 per share, while the company's NAV is estimated at C$0.76 per share (low estimate). The link: http://seekingalpha.com/article/2447625-to-handsomely-beat-the-market-buy-petroamerica-oil-with-both-hands
RE: SeekingAlpha Article about AMER..
PTA is the ticker for Petroamerica Oil that drills right next to AMER in the Putumayo Basin.
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