Member Info for JP2000

You’re reading too much into it, on the 1st July volume was 1530, could be due to technical issues. The tanks filled up and then follows two days of above average volumes. This seems much more plausible and has been repeated numerous times.

(I mean this in a friendly way)

One moment you advocate AMER needs to get big fast, the next moment a share buyback.

Getting big means M&A which may not be attractive at these levels, or it means rapid organic expansion which is cash intensive.

Buying back shares may have no impact on share price other than allowing IIs to exit at a relatively good price compared to dumping or dripping 80m shares into the market. There might be some logic where the SP is stable and not being sold down but ultimately AMER is in the exploration business (when it finally happens) and if that's not attractive then it needs to hand surplus capital back to shareholders. If GTE (?) offered $400m cash for CPO5 then yes a capital distribution might be appropriate but didn't we just partner with Oxy for 5 blocks?

19-20,000 bopd is possible though bear in mind its 30% i.e. c6,000, then add on 4-4500 for Plat and we might get something from Put 9 so 10-12,000 net to AMER by year end is certainly possible.

err because of a number of IIs selling holdings constantly dripping stock into the market and until they finish the SP is going nowhere.

Sector sentiment effected by climate change hyped up in the media, pension and insurance companies divesting 'toxic' assets.

Exploration weighted towards Q4 so JTD is correct to say come back in 3 months when the major drills should be ramping up.

The reserves attributed to Mariposa must be materially low otherwise the life of the well has c2 years left at these rates

You're missing quite a lot:

Operatorship.

Untied anywhere between $30-40m of CAPEX which they absolutely need for 2020/21.

Manages drill risk.

Goodwill to Oxy.

Drill pad within Put 8 gives more flexibility.

But, in the short term yes it does delay the first drill.

I had reservations about the original first refusal purchase because it tied up $19m plus another $15-20m in exploration costs, given the size of the first two prospects it didn't make sense for AMER to go it alone.

Very good news with Oxy farm out but why o why did they not announce this at the time particularly when the Oxy deal was inked before the Vetra deal was signed?

Secondly why do they not set realistic expectations for the first drill rather than BS like "later in the year"?

Deal approval c6months (late Sept/early Oct).

Approvals for new pad and drill? sequential to deal approval (3-6 mths) or concurrent subject to Deal?

Lead time to build drill pad, 2-3 mths?

Drill date? between Dec and Apr

JTD: when they announced the drill plan around Apr there was no mention of Aguila though I assumed if you went to the trouble of moving a rig for a modest well 4mmbo then surely you'd drill the prospect next door straight. Indico 2 & 3 were vaguely pushed back to later in the year supposedly because ONGC were concerned about meeting the contract obligations. You wonder if this is about ONGC internal politics or a more dynamic drill programme based on new data.

As you say fingers crossed on Sol as they should be at TD about now.

JTD: when they announced the drill plan around Apr there was no mention of Aguila though I assumed if you went to the trouble of moving a rig for a modest well 4mmbo then surely you'd drill the prospect next door straight. Indico 2 & 3 were vaguely pushed back to later in the year supposedly because ONGC were concerned about meeting the contract obligations. You wonder if this is about ONGC internal politics or a more dynamic drill programme based on new data.

As you say fingers crossed on Sol as they should be at TD about now.

Plat very good.
Sol 1 duster? Why else would they move the rig unless they’ve abandoned Aquila drill

General disclosure of price sensitive information
11. An AIM company must issue notification without delay of any new developments which are not public knowledge which, if made public, would be likely to lead to a significant movement in the price of its AIM securities. By way of example, this may include matters concerning a change in:
— its financial condition;
— its sphere of activity;
— the performance of its business; or
— its expectation of its performance.
-----------------------------------------------------------------------

Plat 26 could be 400-500bopd which is c6-7% of volumes, maybe anything under 10% is immaterial although they could use twitter or a presentation or other soft ways to communicate if an RNS is not required.

Sol-1, people are saying c40 days is about right

OBA volumes holding up nicely 4500bopd suggests Plat 26 infill has been successful. Results from Sol in about 2 weeks

Have also booked

http://www.scottishoilclub.org.uk/190919.htm

Attendance is free but whether open to PIs is questionable

Disappointing production aside, BoD have transformed the prospects of AMER over the last 4 years at minimal cost. The limiting factor going forwards is cash particularly when the main partners ramp up exploration and development, c$30m a year is peanuts as they’ll need to be spending $75-100m per year very shortly. If the exploration portfolio is financed out of retained earnings and a bit of debt we’ll plod along slowly, JW’s comment about CPO5 being self funding after 3 discoveries doesn’t take into account substantial development costs including new pipelines required to keep transport costs down, just need to see ONGC tenders to realise discoveries need investment.

A share buyback suggests you’re ignoring equity financing, makes no sense to buyback shares today when in all likelihood they’ll be issuing new shares within the next 3 years. Share buybacks typically occur where a company has excess cash and the reduction in capital is earnings enhancing. Lets get real, AMER doesn’t remotely have excess cash in the context of the exploration programmes.

Think of a lifecycle curve, capital distribution is much safer during a mature sustainable phase rather than during rapid expansion, the obvious examples being easyJet & Ryanair who didn’t pay dividends for the first 10 years when their businesses expanded 10 fold. Its worth noting the airline sector is highly risky due to $ rate, oil and consumer demand, many airlines have gone bust so robust finances required.

To add balance easyJet’s shares took off when they issued special one off dividends and then went to a dividend (30% retained earnings) model. The parallels with AMER suggest regular dividend payments around 2023-24.

This might be stating the obvious, are the winning companies all Colombian or is it a case of having to partner with a Colombian company?

It means JW is busy with corporate stuff rather than getting the drill turning in 2019. In practice it will mean another 29% X factor block so unless you're literally sitting on an ocean of oil then you do a bit of seismic and wait 5 years.

In terms of the current share price then Sol is a free drill ie no value attributed. Resource 4mmbo although potentially up to 25mmbo. AMER is not even valued on current production cash flow.

Unless there’s a knockout bid, the first thing a low bid achieves is to initiate an auction for the north and south blocks or counter bids. There really is very little chance of this going cheap.

Broadly speaking there's 4 weeks in between drills plus another 2 weeks of set up time to move pads so end of Oct sounds about right, depends whether there's any sense of urgency. Maybe they'll build a second wellhead at Indico in the meantime to give further flexibility and keep Indico 1 going full throttle.