Amerisur shares jump in early trade

Wednesday, 2nd January 2019 09:23 - by Rajan Dhall

Amerisur shares are flying this morning after the operational update regarding the initial short-term testing at the Indico-1 well on the CPO-5 block (AMER 30%) and upcoming CPO-5 drilling programme.

Here are some of the highlights from the report:

·     STT at the Indico-1 well has flowed 35.9° API oil to surface from the Lower Sands ("LS3") of the Une formation at a series of choke sizes with a final flow rate of 4,530 barrels of fluid per day (gross) with a water cut of 0.33% at a choke size of 40/64" and a wellhead pressure of 241psi

·     Initial analysis by the Company indicates that a 283 feet gross, 209 feet net, oil column is present in the LS3 formation at Indico-1

·     Reservoir pressure data confirms an oil column throughout the LS3 reservoir, with no indication of Oil-Water-Contact ("OWC")

·     Indico-1 will continue to be produced under STT while application is made to ANH to begin a Long-Term-Testing ("LTT") programme on the well

John Wardle, CEO of Amerisur stated 'We are very pleased to have agreed an augmented drilling programme from the Indico pad with our partner. These wells already have all required environmental permits and hence can be drilled immediately, targeting important offsets to the Indico play'

From a chart point of view, I have updated my upside targets on the weekly chart below. We are very close to the 18p resistance point and this could be sticky as in early 2016 it provided massive support and the volume profile indicator on the left shows a low volume area which is a quite reliable signal for resistance. This is not to say it won't break it just needs some decent volume (buying) pressure to break through the area. Elsewhere, its good to see the trendline resistance break confirming the upward bias. I think the Co. shows a decent risk to reward opportunity and under 9p could be a good area for a stop loss. Longer term lets hope oil prices can recover to support the company. 

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.