Member Info for pickedpeck

Bumbling - I agree that in order to conclude the sale in Q4 they have to have a pretty near bid submission date. It will have to go to a shareholder vote, and after the vote there will still be 4-6 weeks of activities to conclude the transfer. I also think to get the sale done this year 31st October bids submission date would be reasonable, at the absolute latest second week in November but then the end of the process starts to clash with christmas. Bids in by 31st, evaluated and then a recommended offer put to shareholders within two weeks of that.

Pru passing their loss onto M&G. You can bet this is a pretty hefty paper loss for them at the point of transfer.

@Bigsmoke - Nope, 10% wasn't the reason I bought either. I was intending to hold for recovery, it just seems there is more down than up there at the moment. I put the money into HZM which is another punt on another commodity :)

The debt story here is weird. The lack of debt has enabled AMER to buy up the asset base it has through exploiting liabilities and commitments of rivals without going to the banks, but they have managed to produce effectively a net zero profit for a couple of years despite no interest payments. They've done this by minimising the NAV changes, almost going out of their way to avoid having a tax liability. Quite clever really. For debt in an oilie Baysil's PMO baby, or ENQ really highlight how you can be punished despite decent production. ENQ have 68k bopd production (10x AMER's), but the mkt cap is only just ahead of AMER due to their crushing debt pile. Imagine what 68kbopd would be worth debt free!

Bigsmoke - sold those PDL shares you let me have a few weeks ago. Decided the update on Monday wasn't as good as I'd hoped, still copped 10% profit though so not all bad.
Bunsen - I've got quite a lot of shares here, - not in TR1 territory quite yet, but I've pretty much already gone as large as I care to. Its tempting to buy more but that's quite a big enough punt for me on this. Nothing is ever certain in investing, it is all about probabilities. I think there is a very high probability of a good return here, but I nor anyone else here should ever tell you what to do with your money, that's your decision.
@ the dude with the 4 share sale... Don't forget the buying fees and stamp duty in your calculation. I think you should be ok to ignore any CGT consequences for now though.

9th of August they also said:
'Shareholders are strongly advised to take no action in respect of their shares until completion of the FSP.'
We all got a bit excited about the use of the word 'strongly' at the time, the latter wording is more normal.

No, the Financial Year for Amerisur ends on 31st December. The UK tax year ends in March. Different things.

Bunsen - every sign so far has been for a sale to happen. The worry I have is will one of the multiple interested parties meet the asking price, and I am sure that’s what is stopping a pile in effect too. On top of that there is precious little operational and communications activity, in these media streaming times people want instant gratification from their purchases, quite simply it is a bit quietly boring waiting for the deal to be announced. Shallow trader types seem to have wandered off, whilst institutions are tweaking only based on find variations having already taken their starting positions. Only a few have added more than a couple of million shares.

I’m obviously invested, I won’t put more in but have certainly put my money and mouth in the same place. I agree it is quite surprising that there are not more people believing the take out price will be worth the risk.

Well so far, no, we are not being told much about the sales process, I would suggest we are being given pretty much the legal minimum of information. That of course is helping stop the share price inflating, presumably the desired effect.

Starting to head the same way. I think the news today was good enough, added half a million shares or so today. I think the reaction today is a tester to see who wants to be in or out. The volumes don't match the share price movement unless there is a big delayed trade hiding.

Treasures - I can't see anyone that is wanting to potentially acquire doing so without access to the data room meaning they must have at least registered interest. In all probability a bid deadline will have been set (I'd argue that this is material enough to need its own RNS but apparently not) and after that the board will down select to negotiate with a smaller number of bidders. It could be at that point one of the bidders that doesn't make the down selection may go off reservation and start playing games, but I wouldn't say its likely as they will have had to have misjudged their offer badly to have been excluded in the first place.
So basically, I expect a fairly civilised close out of the deal with a winning offer backed by the board (aka major investors) and put to vote. Disruption of that process is possible, but I'd argue not likely.

One last point , a buyer would be explaining the net asset value vs the purchase price, nothing to do with the open market share price at all. They would explain NAV, the expected ROCE, with an estimated time to payback and IRR after that. Any company justifying raising finance either internally or externally to make the purchase would never, not ever, refer to the open market share price back in the summer as the first question from the CFO / bankers would be ‘and how is that relevant to what you have to pay to acquire the company now?’

Yep I know, punchy indeed, but a buyer is not looking at the 10- 12 p price from the summer , they have to come up with a price to move the holders of 2/3 of the stock. What I am saying is 10p is no more relevant than 50p was in 2014, it was the current market price of the free floating non-tightly held shares at that point in time. You didn’t see Michinoko ‘stop lossing’ out their 130m shares did you? 58% of shares are held by institutional investors with 3% or more.

It’s nonsense to suggest that the company could have been bought for the mkt cap when the business was 10p a share, as M&P proved with their cheeky 17p , 70% premium to that offer. It didn’t exactly take long to react to that did it?

The management wanting out is also in the end irrelevant, between them they only own less than 5% of the shares. The buyers are not buying the company from the management, the management is acting on behalf of the major investors who actually own the company. I don’t see any of them regarding 10p as their starting point, I think they will be looking at what they have invested, what the asset valuation is (as per Stifel), and not taking too big a hair cut on that.

The question really is what will Michinoko take for their 130m share slice? I don’t think it starts with a 2.

Yep, simply there aren’t that many shares in free float, and any serious buying likely to influence the game would massively inflate the share price as a result. Two thirds tightly held remember, even if a buyer went mad and bought a third of the free float, what do you think would happen to the share price?

So... if the sale price is 35p plus, it would explain why the share price has NOT responded in line. There is the real and obvious question will a buyer be prepared to pay the near 2x to open market price that 35p would represent. Pretty clearly there are not many who think that is a shoe in or the price would be a lot closer to the asking price, the free float being taken up by opportunist buyers and price inflating as a result.

On the other hand, I think the boards last messages strongly suggest they have a buyer for the whole shebang. The strategic review seems to have concluded a whole company sale is the best option, the most likely way to reach that conclusion would be if you were pretty sure that outcome would happen. There is of course one other scenario, that the offers for the pieces were not up to the mark, forcing the board to ask for the whole business sale. Again, without insider knowledge you may think that likely.

So here we are waiting for Godot. I think its basically 35p plus or no sale.

Parking the JTD vs CD Bulletin Bored celebrity death match for a moment I've been giving some thought as to what the actual board may be looking for and why.
There are two way of looking at Amerisur - An Operational E&P company seeking to grow production, or An Asset Acquisition and Development company using production funding to acquire assets and add value to them.

Under the former hypotheses the company has not done especially well(s), failing to expand production beyond 7,000bopd and not developing production on the broad asset base. JTD is right, every drilling promise has been broken and the litany of excuses would be huge if they actually took the time to even bother to make them. I think this really casual attitude to E&P work can be explained by gross incompetence, or alternatively that E&P is really just lip service for their underlying property strategy.
On that latter vision they have played a blinder, acquiring & maintaining control over a wide range of acreage with huge potential, adding value through opening up the OBA pipeline, equally importantly forming a funded exploration partnership with Oxy. Oxy are absolutely a company capable of exploiting the assets in a way that AMER have shown they are not.

So if you take the latter strategy as the board's base plan, then what are they and key shareholders expecting as an exit? Before Rex Harbour decided to start his prolonged exit post board fall out in mid 2017 the share price hovered between 25 and 30p a share for the two years between 2015 and mid 2017. To be clear I think the RH share dumping of 100m plus shares into free float coincided with sentiment to push the sp down from mid 20s to 10p.

This was also in a time where oil was a lower price per barrel (40s and 50s) than now, production was significantly lower, the OBA was not open, CPO-5 had no significant drills, and we had not completed a couple of interesting acquisitions like PUT-8. Michinoko have been touted as having taken on a placement at 25p a share, presumably they did so on the basis that it represented good value.

I don't believe the board and key share holders will accept a takeout price lower than a 40% premium to their perceived 25p base value. The free float of shares which change hands through the market represent no more than 30% of the listed shares (before RH around 20%), the rest have been pretty tightly held, around 2/3 in the hands of the board and large investors alone. Those large investors will all be looking for a return against their entry price.

Whichever way I look at it I struggle to think they will accept less than a 40% premium to 25p, or 35p a share. Stifel giving a current fair asset based value of 37p, with clear indicated upside on the unexploited assets for a buyer, also ties in.

Why this matters is obvious. The PIs that populate this and other boards are irrelevant to take out price, the major holders will want their 35p plus.

Haven’t speculated about the no sale option much yet as I believe it is more than 90% likely to be sold.

However, imagining for a moment it does not what would happen?
Firstly the BoD position would be untenable. Operations have all but stalled, and expectations raised amongst shareholders that they will get a return on their investments. The major shareholders and almost all PIs would riot!
I think GC would be out, he had a close shave anyway at this years AGM and knows it, so the sale process is his last hurrah.
A new chairman would be appointed probably under the direction of Michinoko. They have been quiet throughout, but in the case of no sale the options would depend on the underlying reason. It would be safe to assume operational failure would be the only main driver of not being sold, so a new chairman would have that as a prime focus to fix.
The new chairman may well keep JW, but appoint a COO to drive execution of the E&P programs hard with a view to selling in 2 years time.
The share price would be all over the place, likely many investors / short term players would lose patience and dump shares collapsing the price short term. The assets and core value are still there though, and if driven with new vigour we could see the company strongly recover from the initial drop. They have no debt and could weather any share price drop at least short term whilst restructuring a bit.
All of which turmoil is highly unlikely, first of all because the BoD are highly motivated to avoid it.

Before I was so rudely truncated I was going to say price is likely to be in the range 25-35p, a lower bid won't cut it, and a higher bid would only emerge if there is head to head bidding by two or more companies that REALLY want the assets. The house broker as a proxy for the BoD indicated 37p a share as fair value for the company at the start of the FSP, you could potentially look at that as the asking price.

Potential buyers include Occidental Andina (Oxy), for whom the whole share capital purchase price would be relatively small change, and much smaller than the full development cost of the fields should they choose to buy in. Colombia looks a good bet for low cost onshore development, and committing a significant spend to the country may well align with several oil major strategies. AMER would just be an accelerator, sitting as it does on semi evaluated blocks with key infrastructure already in place.

So ... fair price may well indeed be 37p a share , or about £450m, just short of 2x today's mkt cap. The question is whether there is a company out there prepared to pay the asking price, or whether bidders will, like M&P tried, attempt to get a bargain. I don't believe there is any possibility of a bid being accepted below 25p, and even at that price major investors such as Michinoko may well decline the break even offer.

Simple version of the story:
The share price had fallen from the 30s+ in 2014 down into the 10s based on perceived operational performance and the unfashionable non-eco credentials of the wider sector. A lot of the fall was driven by a major investor, Rex Harrison, falling out with the board and dripping his 120m shares into the market over about a year or so. Most private investors and some corporate ones looked at the land bank and potential asset value, the lack of debt, the newly stabilized political environment in Colombia, the 200ft column of oil discovery in CPO5, the strategic value of the OBA pipeline, and the Oxy buy in to several Amerisur Putumayo blocks and surmised the company was significantly undervalued against its asset base, choosing to hold or add. There are split views on whether operational expansion or a buyout exit would be the best way forward. A lot of investors have been very frustrated at the inability of the company to move quickly operationally or to hold to program commitments for a variety or reasons, not least of which is the snail like incompetence of ONGC as a partner in CPO5. Amerexiteers just point at the asset base and say a take out is inevitable, bring it on.

Hovering between 10 and 12p a share with not a lot of operational progress made did indeed attract an inward bid from Maurel and Prom, a French company backed by the Indonesian state oil company Pertamina. They seemingly saw a potential opportunity to snatch the company on the cheap and submitted a cheeky 17p cash and shares offer which was very promptly rejected by the BoD. However to the Amerexiteers delight this triggered a strategic review and formal sale process (FSP).

John Wardle, CEO, recently moved his own holdings in AMER into another company (Tracarta). This indicated he believed a whole sale would be likely, no need to protect from Cap Gains unless you are going to make a cap gain. He can sort out the legality of that later with HMRC, however a couple of weeks after that move the company announced that instructions to bidders in the FSP were now to offer for the whole share capital.

The only reason to make this move is they already believe there is a viable whole share capital offer likely to come in. The other option of selling some assets to accelerate development elsewhere is now off the table.

The reason the SP hasn't risen further is because it is hovering just in advance of where the M&P offer came in at, and in the present circumstances it seems few want to bet on a much higher take out bid despite all the signs that one will. Volumes in the last weeks since the FSP process first started have tailed off, everyone is sitting (as advised in RNS from the company) on their shares. I doubt there is a big free float out there, few longer term holders here have sold many shares and no institutions have made significant moves.

So one or more bids are very likely to come in the next few weeks. Price is likely to be in the r

One thing that will be a relief is not having to follow ONgC machinations any more. I have a largish team in India, staffing there is a nightmare. I have more fraud, corruption, and general HR scandals to deal with there than everywhere else I have teams combined, and their government processes reflect this.

Reflecting this ONGC are awful to do business with on any level, but even the non state run energy companies are barely any better. It’s a beautiful country with amazing people, but compared to say China or a Western country, it really is quite impossible to do business in or with India.

This is not leakage, this is people putting money (back) in ahead of the expected sale announcement. If you can play the calendar well you can get most of the expected return in a shorter time period. I don’t see any big buys going through, few deals above £100k in play. Any really significant movement of share blocks now would see the price rocket as speculation about aggressive bids would be rife. I expect 2-4 weeks for offer(s) to be made public, in between now and then we may slide up into the low 20s as anticipation builds and money flows in.