LONDON (Alliance News) - Amerisur Resources PLC on Thursday said it fell into the red during 2015, posting a substantial pretax loss for the year after its operations became uneconomical, but it said its outlook for 2016 is much brighter and should lead to higher production and lower costs.
The oil and gas producer operating in Colombia and Paraguay saw revenue fall by more than 69% in 2015 to only USD61.2 million from the USD199.5 million generated in 2014, which caused its operations to deliver a gross loss of USD12.3 million compared to the healthy USD82.0 million gross profit the year before.
A small reduction in administrative costs and the absence of any impairments was still not enough to offset the revenue fall, causing Amerisur to post a USD25.1 million pretax loss for 2015, swinging from the USD47.5 million profit reported in 2014.
Administrative costs fell to USD11.5 million from USD13.2 million, and the company did not book any impairments compared to the USD26.5 million worth of impairments booked during 2014. However, its net foreign exchange gain shrank to USD1.2 million from USD5.1 million, and Amerisur booked USD2.8 million worth of finance charges that were not present at all in the previous year.
Revenue in the year was slashed by the dramatic fall in oil prices, declining to an average of USD42.85 per barrel in 2015 from USD90.04 per barrel in the previous year, alongside the planned reduction in production which led to the amount of oil being extracted decreasing to 4,437 barrels of oil per day from the 6,242 barrels a day in 2014.
Amerisur made the decision to scale back production from its high-cost wells and suspend new drilling activity in early 2015 in light of lower oil prices as it attempted to rein in expenditure. However that led to its sole-producing Platanillo field in Colombia producing less and also to a reduction in the company's oil reserves at the end of the year.
Amerisur's proven gross field reserves at the end of 2015 stood at 15.2 million barrels after production during the year reduced those reserves from 16.2 million barrels at the end of 2014.
The main focus for Amerisur during 2015 was the completion of the OBA pipeline which will stretch from the Platanillo field in Colombia to the oil pipeline system in Ecuador. The pipeline is expected to materially lower its operating costs, which in turn will allow those higher-cost producing wells that have been shut-in to be brought back online.
The pipeline is in the "final stages of construction", Amerisur said, and should lead to its production rate exiting 2016 at around 7,200 barrels of oil per day in 2016, which would be 62% higher than the average rate produced in 2015.
Amersiur has recently guided that average production in 2016 will be around 5,300 barrels of oil per day, which would represent a 19% lift from 2015 but still way below what was being produced back in 2014.
The company had also previously guided that the introduction of the pipeline will reduce operating costs to just USD15 per barrel from the current USD25.
"Excellent progress has been made with the OBA pipeline which is expected to be operational shortly. Once operational, the economics of the company's production improve dramatically, with cash operating costs per barrel anticipated to reduce significantly over a period of time as production gradually ramps up," said Chairman Giles Clarke.
Although 2015 was a struggle, the outlook gets better for Amerisur as it said all of its commitments and planned development programmes for the remainder of 2016 are fully funded, giving itself a USD62.0 million budget. Amerisur also said it remains debt free with USD42.0 million of cash in the bank.
Notably, that USD62.0 million budget is higher than its previous budget for 2016 which was revealed only last month and guided at USD57.0 million.
"The company has a busy 2016 work programme across its portfolio following the successful USD35 million placing in March 2016, with the objective of leveraging the OBA pipeline, increasing reserves and production while maintaining the high levels of capital discipline shown to date by the company," said Clarke.
Amerisur shares were trading flat at 28.50 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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