Member Info for jointhedots

This is really a quiet time for investors, during times like this my usual hope is that "shorters" etc don't target a company in the hope of weak resistance or the price simply drifts through boredom.

The RNS helped, it was essentially another load of Jam tomorrow, but it helped greatly as it was the first in ages (as I recall) not to have any real nasty surprises in it.

This is now like a coiled spring in terms of back-logged activity and the SP, how can JW fail? Well, jury is out, so many past failures dressed up as par for the course or unforeseeable when they are down to no more than poor management control. I'm in no mood for any more BS.

Having got that off my chest, I must say I'm very optimistic we shall see a rising SP up to year end unless the broader market or the Donald duck egg intervenes. The new president of Colombia was inaugurated last week and Nicky Healy UN representative and US Ambassador and others commented they were looking forward to increased trade, investment and political co-operation etc

We should be very optimistic about the operating environment for Amerisur - things are looking great..

Our price recovery is as much about that and the investment feeling towards the sector (peers) as anything in the Amerisur RNS - they simply didn't pull the rug this month.

WRT to the sector Geo park and Parex have been in the news again, positive for them of course, particularly Geo Park who have recorded a great increase in production from their neighbouring Llanos 34 block (supposedly analogous to CPO-5, we where looking for extensions to their prolific fields). Unlike Amer, their SP has performed brilliantly this year, they got on with their drilling programme and in their update from the CEO announced plans to accelerate drilling. So frustrating, don't want to hear JW pleased with building a pumping station to solve a problem of Amerisur's making (didn't get the deal right in initial negotiations), I want comments like those from CEO at Geo Park.

In truth all our problems stem from our managements failure (a complete failure) to begin their much heralded, game changing, drilling programme - they must start to multi-task, for god's sake there are wells which where supposed to be kicking in during this period which are totally independent of the 3 which we focus on - what has happened to them, no news at all? They should be independent of the reported issues and progressing NOW!

JW has some serious questions to answer WRT programme management.

I will post the full text (don't usually) in a moment because IMO it really demonstrates the huge failure of our management team, the lost opportunity, underlying SP weakness and really massive potential being squandered. We have gone backwards whilst our peers have prospered, all is not lost but JW needs to up his game or make way for a can-do CEO.

Remains undiminished and as things unfold politicall, strategically and operationally seems to be getting much better.

Nevertheless the SP performance last week was horrendous - the chancge of auditor did not go down well yet it is clearly a simple attempt to reduce costs (else the current auditor would be duty bound as would directors to advise of any issues).

Anyway, maybe next week wil be the turning point.

Intreresting development in Venezuela, a drone attack to try to assassinate the President and he is blaming Colombia - why would the out-going presidente bother? No impact on Amerisur, but maybe the oil price.

https://www.bbc.com/news/world-latin-america-45073385

Is just farcical - there is simply no rationality to it.

Irrespective of the self-inflicted wounds of the past year the company is still in possession of great business, substantial cash and an envious selection of licensed blocks in an significantly improved business environment.

The SP is worse than at the height of the credit crunch when the oil price was under half its current level and there where question marks over the survival of all oil companies.

The management have truly ballsed things up, but what really annoys me is that they simply act as though all is OK, like it's nothing to do with them instead of taking action to address issues.

I suppose, the up side is that for anyone with the foresight to see value, there should be good money to be made here.

eldo - all operators that want to drill or set up anything have been having trouble with indigenous communities.

As I pointed out the other day some of Amerisur's blocks are most likely still in force majeure, most likely because of it, I believe that was the problem with the block we just acquired from Gulf Keystone. Some blocks and mining licenses have even been abandoned due to it and as I posted the opther day a proposed new system would allow bogged down blocks to be swapped.

Apparently, a Colombian court made a judgement a while ago that local communities could veto a project via referendums on top of the Environmental battles they already use - hence the current bottlenecks as they hold up projects, often for alleged political reasons.

Anyway, do not despair, as I posted a few weeks ago the new president is allegedly going to sort the industry out. Most importantly IMO, he is going to adjust the tax systems so that local communities get more of the revenues from activity in their region - this is apparently what all the problems are really about - money for the local economy. Some sites have been attacked by frustrated local because they haven't provided enough jobs to locals.

Hence Amerisur spending loads on keeping the locals sweet, I don't think it's because JW is simply a nice guy.

Just under $75/barrel again, high profit territory for Amerisur, irrespective of the bad sentiment Amerisur should be doing really well financially.

If the suggested amendments to licensing is implemented, the clause which allows licenses to be swapped would add an intrinsic value to Put 14 that is not currently available to Gulf Keystone - if the local consultation drags then the arrangement would presumably allow Amer to request a swap for another block and be released from any work commitment or bond - Amer could actually receive some free cash at least in theory.

Deals don't come any better, a perfect fit to our portfolio, and the seller providing cash to smooth the free block.

The work commitment is well down the line so has no impact on current plans.

Great deal

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/AMER/13735169.html

Though getting into the position of having to work over Plat 22 again is an atrocious performance, I believe it is by far the best option to do it immediately so I reluctantly commend JW for grasping the nettle.

Financially and operationally it is the only sensible option, as the new site was not even ready the delay should be immaterial and on success the increase in revenue will be significant. A no-brainer, which in useful or they could have made the wrong decision, lol

Had they moved the rig production would be lost for ever, the thing now is that Plat 22 is effectively like having a new well drilled - the outcome is the same, from a highly productive well to a dud if the workover fails.

The bid submission deadline for ONGC managers for Indico-1 and the other wells closed on the 23rd June, that is the last tender for Indico-1 and I guess as soon as it is assigned the well can start - the rig was supposedly contracted ages ago so I would hope is being installed now. The sooner it starts the better as IMO it is by far the most significant well and will take the intense negative emphasis off other operations - simply spudding will be greeted positively IMO

The current demise for Amerisur is IMO all attributable to self inflicted wounds - which hopefully our glorious BoD will start to address soon. I say "start" because they really haven't fixed or improved anything of substance in the last 9 months - that is the root of our problem with SP IMO.

In sharp contrast is the massive improvement in all external factors (beyond our BoD's control, so they can't screw up) The oil price as remained high and stable, business/oil positive parliaments and presidents now preside over Colombia and Ecuador, FARC rebels have kept to their peace deal, peers, partners and new entrants are targeting the region, the general trend for oil is still up despite best efforts from market players to suppress it.

Finally, on the positive side or at least benign is something that is probably not quite so obvious, a strong dollar.
I read an article yesterday about a strengthening $ capping the oil price, on the face of it not good for Amerisur. Except when you consider our costs are in various currencies (Colombian Peso, £ and $) so costs reduce or remain stable. Then ultimately any profit is turned into £ sterling at a favourable rate - the opposite to going on hols and getting screwed with a weak £. Perhaps there are positives in Britex after all.

If you think this is insignificant, think again, when the Russians had sanctions imposed the Rouble dropped like a stone the one saving grace (probably saved the economy from disaster) was that oil was sold in $ and most costs where in Roubles, so oil sales became hugely profitable and presumably still are though I no longer track.

Though we don't know what proportion of cost are in $, at leastour BoD and UK head office are big costs and should be in £.

Just to put it in perspective, in 2014 the $/£ ratio was at a recent high of approx 1.72, by Feb 17 it was at a low point for the £ of 1.23. It currently sits at 1.31 $/£ which is getting near to the low and the trend is a rising $.

The difference in currency exchange from the 2014 dollar low and now is quite significant, 30% to the good from the high point, so after that long winded attempt at an explanation my point is that we are in effect getting more for our oil as the $ strengthens and if the rising $caps oil and brings stability that's a positive not a problem for shareholders. If as looks likely the Britex fiasco drives the £ lower then the one bright spot might be your Amerisur shareholding.

All good external factors!!

It is again being reported that Indian is targeting the oil exports from Colombia and Ecuador for heavy oil supply.

ONGC, must surely be interested in Amerisur and not just for CPO-5, the huge heavy oil potential of our blocks must be attractive.

They have registered interest in Ecuador and have various partners in Colombia that could join them, I find it highly unlikely they would not be a potential buyer if our BoD was receptive.

I suppose demand for Colombian oil might also push the price a little higher.

Extract:
"As availability of Venezuelan heavy crude declines, Indian buyers appear to be sourcing the fuel elsewhere in South America, with cargoes recently leaving Colombia and Ecuador, Kallanish Energy learns.

The Asian giant is expected to receive two 1-million-barrel crude shipments from Colombia in August, analytical company Vortexa said this week.

Meanwhile, another cargo carrying Ecuadorian oil should arrive in early September at the Indian Sikka port, a move last seen a year ago."

http://www.kallanishenergy.com/2018/07/26/india-looks-at-colombia-ecuador-for-heavy-crude/

Welcome to purgatory, IMO you are likely to have bought in at a really opportune moment (much cheaper than poor saps like me), you're right the market is sleeping here - I think most see no reason to buy in until the good news starts to flow - I think the news will start to flow very soon, how can it not!

I'm not over keen on the word bounce wrt SP, it is loaded with a suggestion of a fall back, I .know it's splitting hairs, but I really think once Amerisur starts to move it will be resilient and rise to levels no one dare speculate at the moment for fear of being accused of ramping.

It's being reported by Reuters that ANH (Colombian oil and gas regulator) is to adopt a new system for bidding for oil blocks to speed thing up and encourage participation.

Read the linked article to find out more - for those that can't be bothered I think the interesting points for Amer point of view are:
...Contract will be adjusted to accommodate oil price fluctuations - maybe Amerisur's terms will be improved
... that companies can propose an area of interest and then get preferential treatment in buying it
...and that blocks subject to social problems in getting permissions to progress can be swapped for a new block(bear in mind almost ALL of Amer's blocks have at some time been in force majeure and some still may be though they don't advertise it).

Those concessions, if actually introduced could, be very useful for Amerisur with their in-depth knowledge of the country and number of blocks.

All this is before the new president comes into office and his initiatives are likely to provide even more security and improved terms.

Extract:
"BOGOTA, July 24 (Reuters) - Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said, after repeated cancellations of its latest oil round.

The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said."

https://www.rigzone.com/news/wire/colombia_could_create_new_system_for_oil_round_bidding_amid_delays-24-jul-2018-156391-article/

I realise this is all seems a little obtuse having just received news from the company - but that news is what it is (dull) and will be forgotten by most after the next RNS, everyone's exhausted their comments already. IMO the political and investment environment is worth tracking as it open or closes doors to more longer term strategic possibilities, a great investment climate ultimately makes Amerisur a better investment, even if not yet reflected in the price. So here's a little more:

As well as the visit to Europe the Ecuadorian's have apparently sent a delegation to a meeting of the biggest regional trade group, the Pacific Alliance, with the objective of building ties and eventually joining. They seem to be sending out a clear message that they are open for business.

First thing is this Pacific Alliance includes Colombia so surely must good for Amerisur who transport across the border - then more importantly it signifies a chance of focus of their economy away from the far left insular approach that has plagued South America.

The elections in both Colombia and Ecuador have returned pro-business governments and Amerisur are in the perfect position to reap the benefits in coming months and years - they simply need to get their short term act together. All is still to play for, if only they could only achieve something, anything, the market might begin to see that.

Extract:
"On July 24, the Ecuadorian delegation will hold meetings with presidents and technical guides from Chile, Peru and Colombia which are part of the Business Council of the Pacific Alliance and with Mexican leaders.

For his part, Pablo Campana, minister of Foreign Trade and Investments, participated in the meeting of ministers of the bloc in Puerto Vallarta where he explained the reasons why Ecuador made the political decision to strengthen trade ties with the Pacific Alliance.

Alarcon highlighted that the Pacific Alliance is the world’s eighth economic and exporting power.

“Ecuador has lost too much time being isolated from real integration, which is what generates jobs and prosperity. Now it has taken an important step to open up to global businesses,” he said and added that regionally, the bloc represents 37% of the GDP, accounts for 52% of total trade and attracts 45% of direct foreign investment."

https://www.andes.info.ec/es/noticias/economy/1/ecuadorians-pacific-alliance

Some BB readers may recall I posted an article about the Ecuadorians visiting Scotland to tap up investors who had shown an interest in investment in oil and particularly blocks which are on offer.

Then yesterday, another bunch of articles appeared which speculated the President was in the UK discussing Julian Assange - apparently they have just refuted that and most interestingly clarified the reasons for the visit and it includes a visit to Scotland to talk to businessmen. I suspected a President would want to discuss business as does the UK.

Presidents don't usually visit Scotland on just for a chat and certainly not to talk to just junior oilies, there must be big players, unless some of them can tap significant money he would not be there.

Very good news for Amerisur if a big UK outfit makes a move in the region and I would be surprised if GC wasn't there, (even better news for Julian Assange)

Extract:
"It should be remembered that, in this international tour, the Head of State and his delegation will not address issues concerning the asylum granted to Mr Julian Assange, since its purpose is participation in the world meeting and the economic and commercial promotion of Ecuador in Spain, England and Scotland," the statement said.

The President will also travel to the University of Edinburgh, and later will talk with businessmen interested in investing in Ecuador."

http://www.theguardian.com.au/story/5543209/ecuador-leader-wont-discuss-assange-in-uk/

Docisacoc - the timing is surprising.

Hopefully it's because they don't want any perceived negatives for the impending production update or maybe they have something positive to RNS in the coming days - god knows we need some good news from them. They seem to specialise in failing to achieve targets, it's only become more obvious recently as their rate of success at delivering disappointing news has become 100% - outstanding by any measure.

Unless of course they were so excited they just couldn't wait to deliver their cunning plan. Turnaround imminent maybe.

Didn't I read somewhere and hear in Malcy interviews this year was going to be exciting, a bit like Donald Trump they meant to say unexciting. lol

On the basis of the RNS, I suspect our management have a very good idea what the problem is and it looks like a cock up associated with the pump change.

The really good new is that the wells are not watering out and if they do need to recement and/or reperforate as suggested then full production should be restored

"Should the forward programme involve an isolation and re-perforation of the reservoir interval as per management expectations, the operation is expected to take approximately ten days."

The ten day timeframe coincides with the due time when we expect our production update.

As Doc says "not bad news".

Sorting the Plat 22 as top priority is absolutely the right decision, N-sands is not ready yet and any oil discovered there will take longer to get on production. It looks like the fall in production is tied to the pump change that damaged the well now we have more information, so I'm more optimistic of success. It needs sorting.

Same old , same old with new well progress, no surprises there, production should be largely the same as previous months as a review(conducted in June doesn't stop production) and the well was only producing at 350 barrels/day as I recall so loss is not a new blow.

The most important thing is to deal with the problem ASAP.

They really are the pits as a management team though, backed themselves into a corner though inaction when drilling could have progressed. Some of our very large BoD really need to earn their corn.

SP getting hammered on opening, an overreaction IMO, but it will recover as it's already too cheap for a profitable company, and when there is a realisation that nothing has changed.

Progress at a snails pace, but it is not a setback.

Apparently, the President of Ecuador, Lenin Moreno, is currently on a visit to London and then Paris.

He is supposedly here to speak at the 2018 Global Disabilities Summit, but the rumour is that he here to negotiate turning over Julian Assange who has cost them a fortune to support in their embassy The new president is apparently not prepared to foot the bill anymore and I suppose wants a better relationship with the UK - wants investment.

It just crossed my mind that the foreign office usually tries to drum up trade whenever a senior foreign government official visits, so perhaps there are other purposes, it seems a long journey to simply do what he could do via intermediaries. Perhaps he's also tapping up investors after all London is a premier investment hub, I'm sure if there is any opportunity to meet the guy our Chairman will have done it.

Seems to be reacting slowly to the increased tension between US-Iran

As usual the SP has been slapped down on Monday morning and can now spend the rest of the session playing catch up. I think the SP will rise over the week though as we get closer to the monthly update

bakoven - of course it's wet, I posted several times, places in Colombia are candidates for the wettest place on Earth. as I recall it's somewhere in the Orinoco river system and ultimately feeds the Amazon. Our local rivers though large by normal standards are simple the norm. It beggars belief that our management have not made full provision for ground water problems - sure rainfall can halt play but simply being water-logged I don't buy the excuse. They have had years to pick drilling sites and establish the ground conditions.

I firmly believe JW has finally realised the seriousness of the delays and associated shareholder annoyance and fully expect the N-Sands programme to progress quickly. The key is him having the foresight not to let other aspects (other blocks) slip behind - "multi-tasking" is the term generally applied.

I reckon there should be around five rigs drilling concurrently later in the first few weeks of Q3, they should be planning for that - else the drilling programme has already failed! It's very obvious the programme is under threat, if not under water.

What a crazy world we're in - the Iranian are always good for a good threat to start the mother of all wars as is the way with the extremist sector of the Arab world.

But come on the US president joining in, the US has been a bastion of reasoned, measures responses - not any more. what is incredible is that the oil market seems to simply shrug off such comments, in previous periods of tension prices soared, this morning there is little reaction.

Oil could pop significantly higher if things escalate.

Lat night President Trump traders threats allegedly saying "To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!
4:24 AM - Jul 23, 2018 "

and "
In a separate development on Sunday, US Secretary of State Mike Pompeo said the Iranian regime "resembles the mafia more than a government".

Addressing a group of Iranian Americans in California, Mr Pompeo denounced Mr Rouhani and Iranian Foreign Minister Javad Zarif, who negotiated the nuclear deal, as "merely polished front men for the ayatollahs' international con artistry"."

https://www.bbc.co.uk/news/world-us-canada-44919772

Doc - In theory at the same rate it will take a long time to clear RH but in practice he doesn't sell in a uniform manner, as soon as the BoD give the market have a reason to pile in the shares could be literally be swallowed up within a day or two with trade buyers entering the fray.

The three big trading periods I highlighted over the past 3 months each accounted for the transfer of around 4% of the company, it is not hard to image significantly more volume when there is evidence the BoD have made progress.

I believe he doesn't want to sell them cheaply, I think it's a fair assumption, hence perhaps why such a small quantity sold. I really don't think his shares are a significant factor anymore, our crushed SP is all about our operational performance.