Amerisur Resources (AMER)

Friday, 8th June 2018 10:20 - by Rajan Dhall

The share price of Amerisur Resources is pretty low in my opinion considering the Co. produces a fair amount of oil and the price of the commodity. The Co. reported that total production was 149,030 barrels of oil during May and average daily production was 4,807 barrels of oil per day.

Having said this there are some problems, the companies Platanillo field has been hit by ongoing maintenance. with the company stating ' a reduction in production from certain key wells due to various causes. The well Platanillo-6, which had been returned to levels of approximately 260 bopd post its workover experienced an increase in water cut which is under investigation.' but some of the maintenance work in the other Platanillo units was successful. Elsewhere, extreme weather conditions seem to be hampering the companies plans in other areas with Pintadillo and Llanos affected. 

Nevertheless the company have stated 'The continuing cycle of well work is frustrating, however I believe that our understanding developed over the 11 years of production experience in Platanillo will give us success in this process, which is to be expected given the growing age of the well stock and the volumes produced to 31 May - over 10,041,419 barrels of oil. The weather conditions in the Putumayo were of course expected, and taken into account in our planning.'

Looking at the chart now we have seen a significant pick up in volume over the last few weeks.  The 13p area was well supported and it seems traders believed there was value here. Moving on the 20p area is significant for me as if it breaks on good volume I believe it will indicate the tide may have turned. It sounds strange to say this stock is dependant on the weather but it actually may be. Once we see stable production and better news about working conditions (flooding) I feel we could see a nice move. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.