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@Pickedpick Yes thank you I have revisited the Indico tender, which has a very good map pinpointing Indico-1, Sol-1 and Aguila. As you say the road network looks pretty good. I still think the rig move would take some time but it is unlikely to have a substantial affect on the overall time period.
That being the case I am back to the proposals and discussions between the partners being the likely cause of the lengthier time table between Calao-1 test result and Sol-1 spud (46 days). If that is the case then perhaps we should be looking more towards the time frame between Indico-1 result and Calao-1 spud (assuming that the partners were indeed in agreement on the next drill).
If so then we should talking around 33 days. Today is day 30, so if that is indeed correct then the spud could well be announced from the start of next week.
That would certainly concentrate the minds of any potential suitors trying to strike a low deal.
Ross DOES speak dross.
Take the last post, for example: we are Brent pricing not WTI. Whilst not of itself a hanging crime, it is indicates a poor grasp of key company data.
rossannan - yeah, but certain AMER assets look more attractive the lower the ppb goes. should be win win. higher ppb, higher the reserves. lower the ppb, the more our Oil Transporation Company licence and infrastrucre saves in transports costs.
@BBN - "...the takeover Legal Guide ... is a fascinating insight into the Takeover Panel process..." - i'll put that one in my case for holiday...
I am aware the Put Up or Shut Up 28 day rule was removed. but i still think AMER will want to appear organsied in their handling of matters and provide a fairly regular update.
28 days to all interested parties sounds fair to me.
Just worth stating the obvious, it is 28 days to put an offer in, not to get the deal done. This will not be anywhere near a maiden acquisition for these parties - so, I would expect 28 days well enough time to assess and put an offer in. offer could have 'completion' ajustements for specific interim circumstances. so, no problemo.
For the avoidance of doubt, WTI being over $55 is not the significant and sustained oil price rally that could change the parameters of what is possible here, though every little helps.
BBN - Meta region is served by decent infrastructure and roads, the distance between the Wells is pretty irrelevant for a mobile rig. Think thunderbirds style all wheel drive mobile crane for the rig, the actual movement from one site to the other should take well under an hour! The time lag is disconnecting and decommissioning at the first site and the reverse at the second, in this case the Indico pad should have all services already in place and be ready to go, hopefully meaning minimal delay.
Have a look at the area, you can get the road Indico is off on google street view, it’s the road between Puerto Lopez and Cabuyaro .
Thanks BBN; your spud analysis looks sounds to me. I think I suggested Indico 2 results might come In early October at best; looks like your more detailed insight could bring us to a similar date.
As a PI, it’s always guesswork with Amer!
Ross does NOT speak dross Imho (neither here nor on the Cerp BB .. which is a pity as it's a nickname that always makes me laugh :-) )
@Bigsmoke Having read through the takeover Legal Guide that I posted here last Friday (which is a fascinating insight into the Takeover Panel process I might), the key take away at this stage is that there is no current deadline for a firm offer to be tabled. The formal sale process put pay to that when it removed the Put Up or Shut Up 28 day rule.
That said I would think that AMER will now look to establish some order to the process and I would not be surprised if they have given all interested parties the same 28 days that is reflected above. the 9th August announcement signaled the completion of the bidder list.
If 28 days has indeed been given then that would place the firm offer at around 6th September. However, I suspect with additional newer bidders now at the table and AMER wanting to secure the best bid through negotiation, the bid process may push out towards 42 days, so an announcement around 20th Sept.
Guessestimates aside, another key consideration is that any firm offer must be followed through by the bidder. Any negotiations that lead up to that firm offer are just that , negotiations, and therefore do not need to be announced.
That allows AMER the opportunity to 'discuss' possible offers and likely allow bidders who simply aren't in the ball park to fall away using a 'down tools' dispensation from the Takeover Panel.
Everyone involved will be walking a fine line because if rumors hit the market or the SP starts to move substantially then the Takeover panel may rule that an announcement needs to be made to ensure that all shareholders receive equal information on developments.
However, if AMER manage it well then there is no reason why we won't end up with 1 announcement of a firm offer from one party (possible sell off individual assets accepted) and that the BOD will both recommend the offer and give irrevocable undertakings for their shares with highly likely a number of major shareholders having already joined them.
The key of course will be how far the failed bidders are able to push the true bidder, a process we may never get to see. Although if the end price is palatable I really won't care too much.
we heard on Fri the 19 July. An update followed 3 weeks later on Fri the 09 August. I expect another update to follow this Fri, which will mark a further 3 weeks and 6 weeks since the first approach.
@cautionyourblast Working back through the pasts over the last few days I noted your opinion on the timelines for the spud at Indico-2.
My own thoughts are that the Calao-1/Sol timeline is likely the best guide for the time that ONGC are going to employ to get the Indico-2 drill going. I base this merely on the fact that the 2 drills are the closest match to the distance between Sol-1/Indico-2.
However, even then Indico-2 is a good 3-4 kms north of Calao-1, which is 50% more distance than that between Calao-1/Sol-1.
That's not to say that the distance is the key here, after all we are talking 46 days between the Calao-1 result and the Sol-1 spud (11th May - See RNS dated 14th May). That said I have no idea how the terrain is or how convoluted the path is between these pads but at the very least it cannot be all that straight forward.
Whatever the case Calao-1/Sol-1 is the most relevant example and as I have said it took 46 days between the two. However, as I have said previously there was clearly some discussion between the partners over the next drill site because AMER actually announced Indico-2 as the next drill when the Calao-1 result came in.
JW said at the time ;
"Amerisur has recommended to the Operator that drilling focus should return to the Indico structure for the moment, with the drilling of Indico-2, a low risk appraisal well. "
To date it has been 29 days since the Sol-1 result.
Opinion wise I lean towards the drill starting sooner than 46 days with spud within the next 10 days or so based the average performance across all drills since the Indico-1 test result but somewhere around 46 days shouldn't be ruled, as excruciating as it may sound.
Oh dear; I don’t seem to be able to get anything right! Perhaps I should sell up to give the share price an undoubted immediate boost...
@cautionyourblast The notification of results last year was on 7th Sept and the results 25th Sept. The date you have employed refers to 2017 when the notice was 24th Aug and the results 13th Sept.
Your post prompted me to visit the AMER website, which I noted has been overhauled. Perhaps this was already under construction prior to the takeover process starting but still of small interest at least that they are still concerning themselves with such things.
Last year:
Notice given - 24 August
Released - 25 September.
It’ll be fascinating to see how they word things this year if we are absent a meaningful bid at that stage.
If the “For Sale” sign hadn’t been stuck up, the current share price, frankly, would look even more crackers than it currently does.
Everybody can see that the share price has been walked down for precisely that reason. "How can a company valued at 10p be worth more than double?" says the charlatan. Hence the manipulation down from 20p in a bid to lower the final sale price. But, ultimately, such playground tactics are for kids. It is the value of the assets set against the costs that matter. The real numbers. And the more assets that are proven...
@Rosannan Fair enough. Your opinion is respected. In my view Indico 2 will deliver a substantial uplift in reserves and will boost the confidence of the market in CP0-5. Therefore, the current valuation of circa 17.3p holds no demons for me.
My plan was always to review my investment at the 2 year stage, which is circa end of 2020. Whilst things have been much slower than i had hoped for, I cannot see 2020 being anything other than a very busy year for the blocks AMER are involved in.
In 2020 ;
OXY will drill the Putamayo block ;
ONGC as slow as they are are clearly setting themselves up for a substantial increase in drilling activity on CP0-5 ;
Put 8, which is currently awaiting regulatory approval for change of ownership and drilling inside the block acreage, should achieve this by year end, setting things up for at least 2 drills in that year.
I am more than happy to wait that out. Those developments even in a restrained oil pricing environment should see some good value added from these levels. The sort of value that should have come this year.
Yes there is argument that AMER is a serial underachiever, but in 2020 much of the work is out of their hands and there is an argument to be had that 2019 was needed in order to enable 2020 to really deliver.
So whilst there might be some short term pain, I don't have any concerns. I have a greater concern that the BOD bail at a level that is too far below what all of that 2020 could potentially achieve.
BigBiteNow - You've basically stated my exact thoughts. The maths says one thing, our experience says another. Let's hope we're happy somewhere in the middle!
BBN
As I have said before, 2 things could change my 24p (or equivalent break up valuation) target - a significant and sustained oil price rally and, if the process lasts that long (it might well), an upside surprise from Indico-2. I accept that currency fluctuations could also play a part. In all this I am assuming that now the cat is out of the bag there is no going back, but if the BoD think otherwise that could be a painful scenario for shareholders in the short term.
As for the market getting the valuation wrong, well what exactly does it have to go on?
At the moment we have one "possible" offer but no firm offer and an intention to move forward with such an offer. Other than that we have a confirmation that "multiple parties" have agreed to take part on the process.
Therefore, the market has to factor in the possibility that these parties may walk away from the table. If so we are back to valuing AMER on what it has and what it is achieving to add further value to the business. Prior to the offer that was valued at 12.1p. Since then we have had very little to add to that and Brent oil has pulled back a couple of dollars.
Therefore, the market is highly likely hedging its bets until it has more information to work with. So to say that the market is factoring in a good percentage of the final valuation is for me incorrect. It is more about the risk reward between achieving the rise and suffering the fall should the process fall through.
One other key point I would like to add is that whilst AMER operational progress has been limited this year, there are at least 2 sizeable drills that are on the horizon, they being Indico 2 and 3 appraisal wells.
If the takeover isn't completed fairly speedily then at least one of those drills could well be completed. If it delivers the sort of additional reserves that have been strongly indicated in the previous CP0-5 updates, then the whole valuation will need to be reviewed, as will the starting point for it.
That may or may not be placing pressure on potential suitors interested in CP0-5 to finalise and position their bids at an appropriate level to ensure that their bid is accepted and Indico-2 never influences the process. If I was on the team of one of the suitors it would certainly be on the agenda.
That is yet another factor that throws any assessment of the market's valuation or indeed the willingness of the potential suitors to push their offers higher than the norm. For all we know they may factor in circa 50% of a good success at Indico in order to ensure they get it over the line and achieve the greater overall prize.
We are very much in a wait and see stance with the market likely to react as the risk is seen to either dissipate or grow.
man, i'll miss this BB when it is gone.
Rossannan As it stands, I tend to agree in part at least with your general direction.
This is because my previous experience of AIM listed takeovers tends to demonstrate that the sort of fair valuation that PIs believe should be achieved does not normally come to pass.
However, there are several differences here that should not be so easily written off simply because history says that is not the normal way of things.
Firstly, there is no hostility being demonstrated by any interested party. By that I mean M&P own no shares in AMER at this point in time and with the takeover panel in play, they cannot purchase shares without it being notifiable. Under takeover panel rules they also cannot hide said purchases through other parties, so the chat about funds purchasing on behalf of them (which I was involved in too) was incorrect. Assuming of course that everyone is playing with a straight bat, which I do until demonstrated otherwise.
If M&P intended to go down that route then they surely would have started to accumulate shares prior to making their approach public and allowing AMER to trigger the strategic review thus making everything public.
Secondly, AMER are choosing to strategically review the business, which includes a possible sale of the business, be it in parts or as one entity. At the end of that process if they have not received an offer(s) to their liking then they do not need to sell.
The combination of these two facts means that the process comes down to what someone is willing to pay and the BOD of AMER openness to accepting that offer, knowing it has to be put forward to all shareholders.
Of course the key is winning over the BOD and getting an offer recommended. Experience elsewhere tells me that this can be done at a level that is significantly below that which PIs would believe to be acceptable. However, it will be about balance and what the major shareholders indicate is an acceptable point to bow out.
But as i say the fact that no interested party holds any position means that the starting position of 12.1p (18th July day prior to Strategic review announcement),is not entirely reliable as a start point for your argument. Nor do previous historical cases including the ones I have seen hold a great deal of bearing either.
This is especially true when we fact in the company statement that "multiple parties have now agreed to participate in the FSP through the signing of a confidentiality agreement" (RNS 9th Aug). That fact alone ups the anti and removes a good percentage of all previous "AIM oiler" takeovers.
So to simply base the result of this particular process on previous experiences is for me a mistake at this time based on what we know to date.
That said I remain cautiously in the range of 24p - 30p camp because I expect the final price to fall significantly below the 'independant' valuation because that's AIM life. However, AMER has as good a chance as any to buck that trend.
Roth1
Okay, put it this way - give me one example of an AIM oiler that went for more than twice the share price it was at when it went “in-play” and within a reasonable timeframe (e.g. without the process stopping and starting again months later).
taking a kicking, anyone know why?
AMER will go and go for a tidy sum. :)
Does the market get it wrong. Well Greene king price was dropping on the lead up to the take over. The market did not see that coming did they. Guessing the market have underestimated the uniqueness of the assets that we have and the potential for prolific resources on our blocks which are very sizeable. I will still say a 40p knockout bid but I am of the same opinion as pp and Stifel released their price for a reason.....timing is everything and Columbia is as the say the flavour of the year. GLA.