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WRT oil prices: "We're at the most dislocated I've ever seen this market"

Not my words, from Jeff Currie, Goldman Sachs head of commodities research in an interview with CNBC back in November. Now almost a month on we are still in weak price territory. He cites "systematic trading" being responsible together with lack of discretionary money (no one can/prepared to assess the risk and trade, speculative positions have been closing).

Anyway, since then OPEC and others have cut supply. He makes the most important point that the market will eventually correct because of the real world fundamentals, pretty obvious.

Of course he's just one of a crowd of analysts with a huge range of views, but IMO (timing and catalysts aside) his assessment is spot in respect to the overshoot and correction.

IMO, the systematic trading, using algorithms, trends is what usually drives oil prices and subsequently share prices - oil companies are being hit very hard, beyond what is reasonable, as we are seeing now.

The reason for this post, stating the obvious, is that on every previous downcycle Amerisur has crumbled, yet IMO this time we have held up better than most other oilies, PMO now under half price, due to our excellent recent news - when the market eventually corrects the question is will Amerisur will correct to at least fall in-line with other oilies. i.e. more than double in price.

If systematic traders are forced by fundamentals to abandon their quest to bash the Amerisur SP I believe we will see a re-rating in 2019, starting with the Indico-1 update.

https://www.cnbc.com/video/2018/11/26/goldmans-commodities-chief-on-oils-price-plunge.html

The downward pressure is on all oil companies at the moment, but Amerisur has held up well and therecent news should put the SP significantly higher as the the story unforlds and the oil price corrects.

We can expect daily attempts to push the SP down and some shareholders to cash out for X-mas and eliminate the risk - it happens every year.

This year is more risky for them though as good or even fantastic news could arrive any day, no whinging please if caught out. Whatever happens in the short term. I expect a re-rate in 2019 to at least double the SP, that's my new years wish and only prediction for 2019

Clearly our BoD was pushed into releasing the news on the Indico-1 outcome early because of indications the news had been leaked, hence we perhaps didn't get the detail we should had they had time to wait for more detail from the operator.

They told us implicitly tat someone/entities are most likely receiving insider information and IMO no doubt playing the SP.

ONGC, don't release RNS's on well results as it is insignificant to their business, but I'm sure some of their employees will likely have loose tongues.

My point is that someone may well get knowledge of the flowrates and more detail before of BoD are even told, we need to be wary of manipulation especially to accommodate large buys, which are often disguised.

I hope of management have made representation to the regulator to investigate.

Notwithstanding that. the news could be anytime, I was a little puzzled about the speculation on the potential day, it's impossible to guess or calculate probabilities.

I'm sure o our team (not the BoD) will work straight through the X-mas break operations don't stop in developing counties - workers do long shifts, and have few breaks - typically 12hours/day 13days on 1day off.

On the basis of the above, I reckon our BoD will be conscious of not letting trading progress with undisclosed news pending and release as fast as possible, even if it is contrary to their usual MO

Very interesting article about the OPEC oil cuts over the last couple of years, it seems for all the fanfare about Saudi cuts they have now been overtaken be Venezuela for the first time,. a country that can't switch up it's production and is likely to be forced to cut further.

https://www.bloomberg.com/opinion/articles/2018-12-13/opec-oil-cuts-venezuela-tops-saudi-arabia-in-the-worst-way

With the other OPEC countries and allies now screwing down the taps and Iran stifled I think there is a game being played to pretend all is rosy in the cottage. TD exempted various countries from the oil sanctions on Iran not because he thinks it fair and nice, it's because the market could not stand the drop in supply that could last for years.

Also Libya - having all sorts of problems:
https://oilprice.com/Energy/Crude-Oil/Libyan-Oil-Production-Falls-300000-Bpd-In-December.html

WRT Russia there is a view that they have been flat out on production and there is no more room to increase at the moment - though the bravado from them always suggest they can.

With all these things the truth is an elusive thing, even the US had allegedly taken some oil from it's strategic reserve, IMO they may raid that without disclosing in order to create a narrative that there is a glut and please DT's supporters with low petrol prices.

Forgot to post the link to the Canadian thing

https://oilprice.com/Energy/Crude-Oil/Canadian-Crude-Rises-70-On-Unprecedented-Output-Cuts.html

As well as the OPEC and associates production cut, it looks like the Canadians have had enough of producing cheap oil.

Alberta Premier Rachel Notley has announced an oil production will be cut by 325,000 bpd from January.

That's a huge dip in supply and is perhaps more evidence that the world has had enough of being bullied by TD and acting as servants to US aspirations - maybe they might start adopting an attitude "Canada First"

I don't think supply is nearly a buoyant as some suggest, the key is the demand side where the antics of certain countries, notably the UK and US is causing uncertainty on the economic outlook.

Yes Britex again, it has the potential to cause turmoil and badly hurt our investments, particularly any based on UK success - Colombia might even be viewed as a safe haven should the worst occur. Safe haven Colombia! lol

No - Platinillo will not go on the back burner unless it runs out of potential, which is several years away, it's the nearest to the pipeline and so has the greatest economies.

I believe for 2119 they will go all out on every block that can get permissions to drill and has a clear path to monetisation.

I'm reallt looking forward to an update on the T-sands and assessment of the N-sands potential in other prospects. Just because the N-sands is washed out in the latest well does not mean it is in all locations and if the T-sands don't turn out to be a storm in a teacup then they could be persistent in other parts of Plat and so all the sands could be drilled together relatively cheaply.

It another case of an actual well allowing the Seismic interpretation to be tuned for further wells, I recall that the company also said they believed the N-sands contact was at a low spot in the structure (not optimal) so the fact it flowed at a very good bpd and water cut is very encouraging. I've been expecting an update on the plans, very soon I hope and fingers crossed we'll see another well spudded.

The SP almost has to go up in fits and starts unless the news is absolutely blockbuster, it's the way of things.

It's by far the safest and ultimately most profitable to allow all those that wish to sell to depart as cheaply as possible and no one gets badly hurt through an overshoot to the high side or low side.

In fact various posters have declared already this week they're only in it for the short term, some will only hold a few days, even hours if they get their few % profit.

The upward direction will continue for the near future and well into 2019 if the flow rates for Indico-1 impress.

Based on my last post about Loto-1 and 2 learning curve after which follow up wells where abandoned, I believe that the company's understanding of Mariposa/Indico will now be much more accurate.

The Seismic interpretation, is simply that "an interpretation" and clearly is was off the mark with various prospects.

I checked the estimated and actual depths of Mariposa and Indico and it was striking that Mariposa well depth was in fact over 1300 ft less than expected (appears a lot to me for a well that was drilled to 11556ft) and presumably drilled to the same basement as Indico-1. Then Indico-1 was less than 200ft out between plnned and actual, far more accurate. I don't know if it's just luck they where more accurate, bit I'm hoping it's because of increased understanding. Their understanding of the strata and reservoir must grow rapidly with every well. Their ability to recognise the potential thickness of the oil play should now be tuned up and if the commercial CoS approaches anything like our neighbours in LLA34 we are in for a very exciting year or two going forward.

It follows that this review they are now undertaking could significantly increase the expectations on Mariposa, Indico and many other prospects in the vicinity.

After Loto-1 and Loto-2 (which both found hydrocarbons the partners eventually decided it was not worth expending any more effort on trying to develop a productive operations due to water content and oil mobility problems and at that point they seem to have also realised the folly of trying to simply tag onto Geo-Park/Parex success in LLA-34 block and put their thinking heads on to look at additional Seismic data - that partial failure probably got us to where we are instead of plodding on with what would likely have been difficult production. I say partial failure, because there is oil there and they said it could be economic to produce as a bolt on to another operation - we are now building that "another" operation. That and others more Northerly prospect have not been full appraised and at the time of drilling (2015) JW said:

"CPO-5 is a very prospective block, where Amerisur holds a 30% working interest through a wholly owned subsidiary. The block is on trend with a number of important Llanos discoveries. Additionally we hold good quality 3D data over large areas of the block. These data are currently being processed and interpreted and initial analysis is very favourable. This 3D analysis, together with the results of the well currently drilling will allow an estimate of the full potential of the Loto structure. I look forward to the results from Loto-2, after which further wells will be drilled on this structure and potentially others identified by the 3D seismic. "

"Initial analysis of the Loto-2 well indicates there may be an issue with the mobility of the oil in place, coupled with the usual strong Llanos aquifer, and together with our partner ONGC Videsh we intend to further study the detailed test results with the objective of defining whether this accumulation can produce economically through the use of advanced techniques. As part of these studies, the partners are considering a further test of well Loto-1. The presence of heavy oil in the Llanos basin is wide spread, given the diversity of sourcing and migration mechanisms, which are the basis of the basin's prodigious potential. The block is on trend with a number of important Llanos light and medium oil discoveries and we remain convinced of the high potential within the structures already identified and the wider exploration opportunities held within the contract. It is very encouraging that we have been able to develop the drilling operations in such an efficient and cost effective way. This benefit will enable comprehensive exploration within CPO-5 at very reasonable cost."

I remind the BB of this because highlights the potential of the block and shows that the partners are still tuning their understanding of the block and geology with more seismic currently being tendered, Geo Park have tuned their understanding of their resource so much so that practically every well is successful.

ONGC have contracted for 4 wells with the current drill rig and if they plan more wells as they should then there are other rigs they can contract.

They suggestions have included drilling again on Loto to try to sort the water problems (it holds oil if they can isolate it. Drilling a second hole dependent upon the outcome at Indico-1, personally I think there will be an Indico-2 and even 3 in the next 12 months.

Our remaining 2 scheduled wells including Sol will only increase the potential for more well if the strike oil.

As regards the T sands, I guess they could drill up to 5 more wells under current permission and still drill other prospects as originally planned - the T sands is a completely unknown quantity, though the company did say they where aware it had potential even before drilling so presumably they are aware of other prospects.

If 2018 is characterised as the "Year of the Delay hopefully 2019 will be the "Year of the Turning Drill bit" for Amerisur, I couldn't stand another year of lame excuses. lol

WRT oil finds I think we all know it's not just about quantity, critical though that might be, there are a whole raft of parameters that dictate ultimately how lucrative a discovery might be.

In the Case of CPO-5 I have been considering these parameter and it really could not be better in all but a couple of areas.

Quantity - the company said "The Operator estimates a gross P50 recoverable resource at Indico-1 of 10.3 MMBO.". I believe it is safe to say that the P50 estimate is likely to beaten by a very significant margin.
Extraction - the oil is light, free flowing in very good, thick strata (if like Mariposa), so the payback on wells is likely to be rapid and lucrative - no drilling of dozens of wells for a few hundred barrels on oil/day and flow enhancements.
Quality - If Mariposa is anything to go by (it is IMO) then the quality will be in great demand and attract a premium.
Infrastructure - It is apparently near to necessary infrastructure and accessible to operate - no need for new pipelines etc.
Operator Capabilities - ONGC may be slow but they do have the depth capabilities within their company to develop the find into whatever potential it offers, including the capital to get on with it.
Political - Nationally it is excellent, and locally we only hear of the problems but I'm sure there are also many local supporters and company successes in public relations. Some trouble is par for the course.
Rule of Law - I suspect Colombia is a difficult country with respect to Business integrity with many demands for bribes, it tends to be the same in most developing countries but the most serious treat is clearly public unrest and even rebel activity - hopefully the government diffuses any tensions that arise.
Cost of Operating - wells are relatively cheap to drill, locals work cheaply and the government tax regime is not unreasonable for a developing country with the president vowing to reduce tax levels and encourage operators.

My view is that overall the potential based on what we know is massive and could easily out strip our existing operations in the next few years in terms of financial value. After all production volume is useless unless it has associated profit - prime example is shale where they have to (not choose to) keep expanding to cover costs and in many cases never making a profit - they're simply disguising a ponzi scam IMO.

If there was an award for the most annoying pest on a BB, you would get it. You appeared recently on the BB rubbishing the company and doing your absolute best to get holders to sell, presumably to line your own pockets, now you are allegedly a shareholder.

I suspect, that's no more than a maybe, as short/bear participants on BBs often become fake shareholders to cover embarrassment at getting it wrong or to reel participants and build plausibility in ready for the next series of negative posts.

Seen it many times, and as for six figure sums, do you mean £1000.00, do us a favour the size of yours is of no interest to us, it's sad that you feel a need for bragging (it looks to me like a face saving exercise). There will be shareholders with under £1000 who frequent the BB and their opinion and investment is just as important as yours, no one has seniority.

I recall a guy on another BB for a company where I held shares bragging about is shareholding and personal wealth of the order of £10m he reckoned and his intend to contact the company about taking a major shareholding. Needless to say it was proven as BS.

Your posts on other BB's where negligible whilst you where pounding this one with negative posts not so long ago, yet this is small change with significant sums elsewhere, smells of BS to me.

Nothing personal in this post but you chose your stance and made yourself an adversary - and I merely want all BB posters to realise this poster tried very hard to hurt shareholders and cause distress, it will be a long time before I trust him/her - you've been warned

over a few sessions I suppose allows anyone that wishes to sell to go without trashing the SP later.

I don't think anyone can crumble about the reaction to Indico, it may be muted but it is solid and real.

Wolster - just logged on to say the same thing, you beat me to it - it is very differnet from what we've had for many, many sessions where there has been a wide spread and a mark down.

So perhaps the game is up and we can get back to genuine trading, definitely a good signal but I'm not holding my breathe.

Hopefully, this is a assign that the II's are going to join the fray at long last, many of them stay carefully under 3% so holding RNS's do not necessarily follow - I love institutional holders as they tend to be much more long term than AIM private investors some of whom appear to be leveraged up to the eyeballs, and who change horses so often they never see a race through. Day traders is the term often used

No offence intended to anyone, each to his own. It's just the way it is these days with an army of AIM investors gambling on short term gains hence it is so easy to play games with us. II's tend to be steadfast in a commitment.

Hopefully, some deluded souls stayed short and are now feeling the pinch.

Once a short is placed that's it the damage is done, unless they close and reset - IMO they don't/won't go away as evidenced by certain posters returns periodically, they are trading short term and only go away when the game is up.

So I believe that they are best caught out be a sudden move - a flowrate of anything above 5000 barrels/d from Indico-1 should shake them off - the story is a full success at that stage as more wells can easily follow and IMO Amerisur will no longer be fertile ground for bashing the SP.

I'm much more optimistic about 2019 now and my only fear is our BoD's and ONGC's ability to pick up the pace of development. I would like to see a drilling programme announced for the T sands and the drill bit turning.

pickedpeck - I think you need to take a look at the current thinking, there was a rethink that maybe the logic is wrong and they are better considering trends laterally and I think that's why they are now heading N to S rather than skirting across the top of the block trying to link into LLA34 success. Have they cracked the code as operator Geo Park have to the North

It is also worth noting the flow rates in CPO-5 and sands appear far better than LLA34, good though they are - so though I agree with the potential it can be misleading to assume it's related too closely - wells to the side of our block also flowed at very high rates as I understand. Amerisur have a little graphic that they trot out in their presentations, or used to, that indicates surrounding flow rates

I think there is a good chance we've been lucky in finding something that will need it's own definition and hopefully be bigger than the find in LLA34 - I live in hope as I have for the past few years. lol

WRT your question - sale price is so difficult to estimate and likely to undervalue so I Amerisur are now set on seeing all projects through to full potential and making us all a lot of money. No dividend or sell down of Asset is my preferred course

Focus321 it's anybody's guess what the flowrate will eventually be.

As expectations were high pre-drilling and certainly inline or exceeding Mariposa-1, the the local cap on flow-rates is in excess of 10000 barrels/day - if we got an exceptional result like that then IMO the chance of this staying below 20p/share is very, very slim as with only a couple of extra holes CPO-5 would outstrip Putumayo in terms of production - wells would all pay for themselves in under a year.

bigspike - "At what point can we expect to know if mariposa and indico are in communication? "

Good question, as it naturally pushes the discovery's significance up greatly, I think our partner will not rush to make any statements on that opinion, having said that there a numerous indicators that they will use to determine if it is possibly connected.

From my experience of owning Hurricane shares one of the key indicators is oil/water contact and as there is none here I suppose that's part of the reason for a rethink of what they are looking at (i.e. bigger than expected).
They will also have pressures and oil characteristic etc so I suspect they'll develop a view on it very soon, before drilling more wells but as I said I think we are unlikely to get and confirmation, perhaps well into next year.