Member Info for pickedpeck

Those Put8 seismics are additional, its a large block and they only have about a fifth of it covered with seismic data now as I understand it. The operations update RNS from April last year said:

'Amerisur has been informed by the Operator of block Put-8, Vetra Exploration and Production (50%), that regulatory permission has been received to drill the Miraparriba-1 well from the Cohembi-2 pad, an existing pad located in the adjacent Suroriente block (Vetra Exploration and Production 36.2% and Operator, Ecopetrol 48%, Gran Tierra 15.8%). The Suroriente block holds the Cohembi Field, which produces from the N Sand. Miraparriba-1 will be drilled as a directional well to the Miraparriba structure within the Put-8 block.
This agreement removes the requirement to obtain an environmental licence for the drilling of the well, thus reducing the time before drilling can occur. The Miraparriba structure is a low risk U and T sand light oil structural target covered by 3D seismic with gross P50 recoverable resources estimated at 4.4 mmbo by the Operator. The well is expected to spud in early May 2018. Put-8 is a 102,799 acre block which lies adjacent to the west of the Platanillo field.'

Plainly that didn't happen as Vetra was being sold to GTE, and Amersiur exercised right of refusal on the Put-8 block 50% not already held. Presumably as GTE now own the Suroriente block they are maybe less willing to allow Amerisur to drill the Put-8 block from their pad :)

Put9/12 neighbours Platanillo to the East, the Coendu prospect which is their target is not a long way into the block, certainly within reach of Plat infrastructure, but not sure if its close enough for a directional drill to work from a Plat 2N / Pintadillo pad. In the company presentation from last May they said additional seismic acquisition was underway with several targets identified.

CD - Did you fact check the seismic comments? They have had limited seismic data on Put-8 for some time and have an identified structure to drill, Mirraparriba. Put-9 and 12 similarly, the 2018 annual report said:

'At Put-12 and Put-9 we successfully acquired approximately 43km of seismic data over the Coendu prospect, with two of the six lines located within Put-9. The seismic has now been processed and is being interpreted prior to finalisation of the first Coendu drilling location which is shared between Put-12 and Put-9'

Similarly Put-8 came with seismic data enabling the targeting of the Mirraparriba structure drill target :
'Putumayo-8 lies adjacent to the west of the Platanillo field. The block is in Phase 1 of its exploration period, with a 2% X factor and low work commitments of one exploration well and 207km of 3D seismic. 49km of 3D seismic have already been acquired prior to the acquisition of the interest, and hence at no cost to Amerisur'

Paraguay is an irrelevance at this stage:

'Posted in Operations
The Company currently holds three prospection licences in the Pirity/Pilar basin complex in the west of Paraguay.
During 2017, a technical programme involving the detailed analysis of well data and samples and the reprocessing and reinterpretation of the seismic dataset from its exploration well, Jaguarete-1, was completed and as a result the Company relinquished its permit in San Pedro.
During 2018, the Company has impaired a further $1.4m of investment in Paraguay and is currently carrying less than $0.5m of investment on the balance sheet.
In line with Amerisur’s stated strategy, only technical review activity will take place in Paraguay in the near term.'

The production update yesterday of 5537 average daily production up to the end of June was interesting following on from the last one to the end of May at 5300. That implies total production in H1 was just over a million barrels, and that average production in June was over 6720bopd. With no contribution from any H2 drilling that would give FY production of 2.138MM Boe, about 10% more than last year.

Given a lot of the overheads are fixed, the netback of $46.5 achieved last year would mean the extra 200,000 production adds a decent amount of cash to the income statement.

As a bit of a distraction from the continuous take out price speculation has anyone kept track of OBA throughput now the Plat 22 sidetrack is complete? No mention of it for a while.

Sol result material only in that it is another hit, but also shows oil in more than one sand layer which could imply more targets in a full campaign. As BBN says 13km away from Mariposa and in the same sand layer formation is pretty interesting, and that is all still in just the NW corner of the block. Cpo5 is a company maker - for someone.

Sorry my bad, I had thought the M&P offer triggered Day 0, it doesn’t so we should get interims.

Beat me to it. The interesting factor is Day 39 being just a week or two before when AMER would normally publish Interim Results. I am hoping they will bring them forward rather than hiding the half year position from the wider market.

I agree the wider market is not yet putting a value on the very likely increased offers. As far as cards on the table so far there is only M&P, and the market is pricing only a slight premium to their offer.

As soon as an additional bidder(s) is confirmed the price will rise again, the more bidders confirm interest the more the price will go up. What we will not know for now at least are the back room deals being negotiated by the various interested parties. The Amerisur BoD will not be in all the conversations for sure.

The great thing for us shareholders is that it is very likely there will be multiple bidders based on the size and potential of the estate. Stifel put a benchmark down of 37p a share as house broker, it is very likely that is what the BoD believe the company in its current state to be worth. Even that allows no value from the exploration upside potential. The BoD will have communicated that valuation to the major shareholders, it’s publication timed with the offer is not at all accidental. I’d argue that the 37p is the real baseline, the actual price achieved will entirely depend on the pockets of the bidder and the fortitude of the shareholders. Some weak holders will definitely take less, but I doubt enough to win the day for the buyer. If multiple competing buyers ascribe a strategic value to Putumayo and OBA then the price could go a lot higher. CPO5 is a very nice asset and worth a few quid in its own right, but it has a way to go to reach its final potential and will be valued accordingly.

So in the best outcome we will have an auction with bidders competing for the assets, and we will not know the real price until (like an eBay listing) the last few minutes of the bid process. Even then the BoD May choose not to recommend the price to shareholders if it doesn’t meet their benchmark (reserve !), in which case bids could go hostile. A bidder may enter an offer before close of play that the BoD will recommend of course.

Anyone worked out the closing date for the process yet? 10th or 11th of September?

Possibly multiple better offers, I would be surprised if there was less than 4 indicative bids on the table already.

All the JW hype, the 1.3Bn unrisked reserves, ocean of oil, strategic infrastructure, and 10kbopd by end of... commentary has all been about these next two months. The exit strategy was always going to be a sale, it was just a question of when and for how much. I think the BoD have played a blinder so far, building a valuable asset base and partnerships. I don't believe for a moment they don't have a target price in mind. The fact we can't settle on a list of potential bidders is evidence of a top performance.

Got a great ringside seat for the final showdown.

One other point - in a break up sale the tax position may become very complex. Shares in the acquiring company may be exchanged - don't be too surprised to be offered London traded GTE shares plus some cash fro your AMER shares to minimise the taxation hit for the big holders.

Interesting point on valuation, but even more interesting that potential buyers have not been building a stake of any description with the cheaply available open market shares.

So on the surface the offer has come into the BoD to act on behalf of the (major) shareholders, but to conclude the purchase they need the shareholders to accept the offer in a vote. That means in reality Michinoko and others will very likely be at or close to the negotiating table. Us PIs will be told what the offer is, and as we collectively don't make a big enough chunk to stop a deal then the only way it won't go through is if one or more of the major holders doesn't say yes.

In other words the sale price is not about the closing price on Thursday, nor is it about the asset values - although that plays a part in what the buyer will offer up to, but it's all about what price the owners will take for their shares. Thats a lot harder to guess.

Directors will have known about initial interest for months, and will not have been able to buy because of insider trading rules. Its not like they got a bid in the post this morning

Lezzils - 37p is the house broker estimate of the net asset value. That allows for no upside from current or proposed exploration.

Speculatively (I do love a god conspiracy) OXY may have some early results from Putumayo seismic in hand, if they look positive then it would be far cheaper for them to buy the company now rather than after proving the reserves with drilling. Remember AMER claim unrisked reserves of over a billion barrels in those blocks. If that was 2P you'd get $8-10 a barrel in the ground, 50% in Oxy's hands already could make AMER still worth rather a lot. Would you risk paying half a billion now or five billion after paying for the privilege of drilling to put the price up. Don't forget OXY could also avoid risking $70m + of cost commitment to AMER by buying now.

OXY are trying to shift focus away from the increasingly unstable middle East to both the Permian and Colombia. As such this has to be attractive to them and must seem a pretty low risk bet. OXY could also drop the risk by selling CPO5 stake to ONGC, in the current state that might cover 40% or more of the cost of AMER to them.

So, I reckon OXY bidding, $500m minimum price, and done by September unless Geo or GTE want to counter offer, and they would have to have big cajones to do so. Sinopec are the other wildcard, they are neighbours and bought Emerald Energy off JW in the past, and Colombian assets are strategic to them too.

30m volume today, i guess that has cleared out any residual overhang and whatever the MMs had on the shelf. Should be interesting to see what happens next, a few trader profits or more people piling in ahead of bid details? Given the likely press coverage the latter is more likely I think.

Rhodi - the 'real' EV is 35-40p a share based on approximate asset values, but it has been trading at a massive discount to that for a long time so bids will start lower. Absolute baseline would be 25p a share, likely 30p. If an auction gets going a buyer may be prepared to pay 40p plus.

As a point to timing, they will not want to hang around until Indico 2 is drilled and puts another $50m on the price. Expect this done by September, ahead of interim results and Indico drilling.

£500m would be 41p a share. Anyone have any idea Michinoko's average holding price? A lot of the very large holders have been here a long time and will want to see a positive outcome, this could even be driven by them and explain why JW seems to have disappeared for the last six months.

Sum of net assets with potential for a buyer to realise the upside...
Put fields ex Plat - $200-250m
Platanillo - $150-200m
CPO5 - Lord knows, anywhere from $200 to $600m
OBA - $50-100m
Pessimistic value $600m plus $50m cash, call it £500m in round numbers. 40p a share or so. Then there is whatever value might be ascribed to the upside, could be nil, could be a lot depending on bidders.

Either way, it won't be selling for 15p a share, or 20 for that matter. I love it when a plan comes together :)

Wolster - I hold a similar share to BCN in HZM. Its not Lithium but Nickel, essential for electrodes and stainless steel. The capital requirements of both companies makes the current share price fairly meaningless, you are essentially buying an option rather than a share. HZM is £30m mkt cap, sat on a capex need of £600m or so that can only come from investors. BCN needing £420m is the same thing, future valuation is only related to the finance deal not the assets. Fashionable yes, but there is as much wishful thinking in the balance sheet vs valuation of these companies as there was in the .com boom.

AMER is unfashionable, the commentary on carbon makes the whole sector unfashionable for any investment vehicle with retail investors (most funds). The Real Politik means that the likely way this market will play out is consolidation to the (fewer) companies with enough scale to deliver a high income return for pension funds or state actors. The small growth E&P game is about looking like an attractive acquisition target to those global scale businesses as organic growth will never really gain credit and market value anymore. The speculative investment in AMER is about the value of the assets in terms of an acquisition for resources replacement by a big player, for example Oxy, ONGC, Shell, BP, Sinopec or others in play in Colombia already. The current share price is a reflection of the valuation of the free floating market shares, not the value of the tightly held majority of shares needed to make an acquisition fly. The underlying asset value growth, through drilling and seismic, is as a result way more important than the income. That's the strategy the company and the much maligned board have been pursuing, admittedly not as fast as most would want. There is no question the underlying asset value has increased and continues to increase.

So what that lot mean? I've got a much larger holding here than in HZM as I believe this will convert faster and has a more tangible base.

Tone here has changed, everyone a bit grumpy since Baysil went quiet. Reading the daily tea leaves isn’t helping much, OBA throughput and measly volumes aside there is nothing at all to go on, so the temptation is to looks at those looking for something significant where there isn’t anything. The ONGC tenders imply ramping up production at CPO5, but that will happen slowly over the next six to twelve months. Best bet from here is sit on your shares and check back in three months for the interims - yes that’s right folks, we are half way through the year at the end of this week! By they are announced we should have Indico 2 results, a solid hit and they may even feel sassy enough to launch a buy back, but personally I doubt it given the capital requirements coming up, why blow your cash pile when you know you’re going to need it shortly. No dividend either. It might sound daft to the impatient, but the first half has actually been pretty solid business wise, shame the share price doesn’t reflect it.

Just to remind us all what Putumayo was like until fairly recently have a look at this article from 2002. It is worth remembering that the people are the same population as live there now, this is inside one generation. https://www.culturalsurvival.org/publications/cultural-survival-quarterly/battle-putumayo