Member Info for JP2000

Could do with BBN's insight.

What it says to me is:

ONGC more interested in exploration than production (or at least temporarily until they put more infrastructure into Indico/Mariposa).

Spud mid to late May as need to move rig.

Drill results any time between mid June to end of July.

Is this about a 4mmbo standalone resource or does it define southern reaches of oil bearing LSE?

Next drill Aguila 2.7mmbo

approx. 7.20 into interview, breaking news, next well Sol 1, Indico later this year.

Gonzo, 24p is the subject heading and the world doesn't revolve around your ramping. A bid, any level starts a feeding frenzy.

You've got to be a real muppet to think GTE turns up and offers 24p slam dunk everyone happy.

The situation is more complex and could play out in half a dozen ways.

I have no idea, no inkling if a bid is imminent. If GTE did bid it will either need to be agreed with the JVPs or will be the catalyst for a break up or bidding war.

The elephants in the room are Oxy & ONGC. They might be happy to partner with GTE, it might facilitate bids for their JV blocks or a white knight offer for the co if GTE made an offer. As we saw with Put-8 they might have first refusal rights which complicates matters. We don't know if GTE are the types to take a gamble pre Amer's major drill programme or are happy to pay for discovered banked reserves.

When will people realise AMER is valued on a multiple of its cashflows, not; 1P, 2P, the drill programme, OBA third party, farm outs or M&A or oil $70. The market might recognise future growth where there has been a good track record or for exceptional leadership. The best opportunity for bopd growth in 2019 lies with the Indico appraisal wells, results 1-30th June and 1-30 Aug.

http://www.amerisurresources.com/investor-centre/reports-and-presentations

14 May and now in London

As LC says 10,000bopd might equate to 80-100m EBITDA and I also agree that’s possible in 2019 and should be the target for BoD. The figures above are annualised therefore timing has a material impact on FY19 cash flow which is a reason to discount retained cash at year end. Prudence is certainly not not deramping. I have to admit being concerned how such good netback figures did not translate into EBITDA, and, discovering the high oil price tariff (a gain share tax) which is order of magnitude 10-15m (not separately disclosed and stuck in CoS). The X-factor is a static tax (23% CPO5, ??% Plat not disclosed ) but the baseline tax 8-20% and high oil tax ?% not disclosed are progressive taxes so as production and POO increase Amer’s profitability increases at a slower rate hence EBITDA and production are not 100% linear although you might argue production has to increase markedly for material impact in EBITDA. These taxes are above the line within turnover and cost of sales.

In conventional accounting EBITDA comes quite a long way down the P&L. What’s awkward is Amer expensing depreciation within cost of sales. Don’tknow which Gaap they’re using but I’ve never heard of depreciation within gross profit, surely this occurs after EBITDA.

These accounts are a nightmare to replicate or forecast without inside information or more transparency so we have to trust these are “strong results”. The slide 11 FY18 cash flow bridge isn’t stella news but is a useful framework for FY19 cash.

Lastly when talking about 2020 funding, Its mostly covered from internal resources although it’s not difficult to see them raising 100m, probably bonds backed up by Plat and CPO5 production, not new equity.

4 months into the 2019 and Amer hasn't given any forward forecasts which isn't surprising given the variables.

Opening Balance Jan 19 44.1
EBITDA 40.0 (but could be up to +60 based on new Indico drills, also flow-through from 2018)
Acquisition -19.0
Inventory Change 0.0 (assumes they don't stockpile)
CAPEX -35.0 (drill plan looks agressive for Amer, could end up being 20m. Excl Plat drill.
CT Tax Payable -5.0 (estimate)
VAT Receivable 15.0 (the one good surprise from 2018 results)
Working Capital -12.8 (increase inline with output)
Closing balance 31 Dec 19 27.3

The reason for focussing on this is that 2020 is a big year, wouldn't be surprised if CAPEX increases to 50-60m plus another 20m working capital which looks manageable utilising cash reserves, on-going retained earnings and the 30m drawdown but at some point they will need to raise more cash to accelerate exploration and development.

Can anyone ellaborate what the high prices tax is and how it operates?

You say no nasties but net cash generation 3m? Most PIs on this board were expecting a cash position of 70-90m.

OBA volume has shot up, last 3 days over 3900bopd, this looks significant.

Brace yourself, OBA has managed two consecutive days over 2800bopd and that hasn’t happened for some time.

http://www.controlhidrocarburos.gob.ec/wp-content/uploads/2019/04/

Willec, back in 2017 the share price was approx 25p on the basis of slides 12 & 13 (below). Compare and contrast how production has flatlined for the last two years, meanwhile in not reaching 15000bopd JW claims he's added near to $300m of value, the market simply says so what.

http://www.amerisurresources.com/images/rns-pdfs/AGM-Presentation-09-05-17.pdf

2019 production could be transformational if they follow the Jan 19 drill plan but we need to see solid progress.

2.3 pence for 1000 bopd gives a low end rough estimate

"what would Indico add to the sp?"

Can't answer that unless you make clear your assumptions about flow rates the new Indico drills?

Various ways to value an oil co although increased reserves, various corporate deals and a prospective drill programme have all failed to move the SP so basically the market only values cash generation.

Production has been broadly flat over the last 3 years and forecast growth just hasn't materialised so its not that surprising the share is unloved.

I created a forecast P&L model just concentrating on Platanillo & CPO5 and without new discoveries then the current share price 14-15p (assuming a low PE of 6) is about right. If half the 2019 drills are on time and successful then could be looking at +30p by year end using the same methodology.

This is reliant on production increasing from 5000 up to 10-12,000 bopd by 31st Dec and its certainly possible:

Plat 3500-4000
Mariposa1, 1000
Indico 1, 1500
Indico e1, 1000-1500
Indico e2, 1000-1500
Miraparriba-1, 2,000 (assuming 100% share)

Complete Plat workover, two more Indicos and one put 8 drill and they're virtually there, feet up and count the cash.

But there's more; Pavo Real-1, Sol 1, Aguila 1, Coendu-1-3 all wild cards with potential >5000bopd.

I can live with augmented and optimised drilling programmes (and even dry wells) BUT JW needs to ensure the programme runs like clockwork. If the story improves and sentiment returns then perhaps the market will apply a premium for 2020 drill programme.

A 3% stake costs £5m which is peanuts for most IIs and there have been no threshold RNSs for some time.

Faith in JW? He’s got 9 months to deliver net 10,000-12,000 bopd which actually isn’t that demanding given the drill programme (if it’s worth the paper it’s written on). Either he delivers this year or he’s toast and deservedly so.

Thanks. AMER never mention the baseline royalties but they’re quite material.

The ANH contracts to which we are a party all have royalties that are based on a sliding scale described in Law 756 of 2002. This royalty works on an individual oil field basis starting with a base royalty rate of 8% for gross production of less than 5,000 bopd. The royalty increases in a linear fashion from 8% to 20% for gross production between 5,000 and 125,000 bopd and is stable at 20% for gross production between 125,000 and 400,000 bopd. For gross production between 400,000 and 600,000 bopd the rate increases in a linear fashion from 20% to 25%. For gross production in excess of 600,000 bopd the royalty rate is fixed at 25%. In addition to the sliding scale royalty, the following blocks have additional x-factor royalties: Llanos-22, Putumayo-2, Putumayo-4 and Putumayo-7: 1%; Sinu-1 and Llanos-10: 3%; Putumayo-31: 12%; Sinu-3:17%; Llanos-1: 31%; Llanos-53: 33%; Llanos-70: 31%; Putumayo 25: 19%; Santana: 32% and Nancy-Burdine-Maxine: 20% for existing production and sliding scale for new discoveries or incremental production duly approved by ANH.

Not sure if this has been covered already.

Does anyone know why the PUT 8 X-factor is so low 2% as the block is a decent size c100,000 acres?

Is it down to terrain, geology, old seismics?