Member Info for pickedpeck

YM... This is the rig: http://www.estrellaies.com/es/flyers_2014/equipo_2029.pdf

Yacht master, moving a rig is not the problem, think of them like mobile cranes, they are like something from Thunderbirds when you see one. You can literally drive them cross country! However once they have moved there is set up time. Depending on the type of rig and planned hole that can be from a few days to a month or more. This talk of 18 wells per pad is a little arbitrary. Offshore directional drilling can have dozens of wells from one rig (pad equivalent). It’s done because rigs are expensive, you can drill miles from one now. Not all pads are the same, and in Llanos and CPO5 there appears to be no restriction on making small cheap pads. I would be surprised in ONGC would drill more than six to eight directional wells from one of the existing smallish pads!simply because there is no need to.

Bays called it, its just a bit of pretend punt fun for the closing price result on Gold Cup day.

There is nothing else to talk about or speculate on that hasn't been covered dozens of times by informed and otherwise posters here, so in the absence of news why not have a little fun?

As for being a "serious" LTH I'm now in personally quite deep here as one of my very few core holdings. Before getting in like that I've read every RNS, all the content on GTE, Vetra, Oxy and many others. I've poured over balance sheets, the last five years of company presentations, I've read ONGC documents, tenders, even local news in Spanish, including 'that' website. I looked at pipeline maps and proximity to terminals, I even went back and looked at old Emerald news on Campo Rico, and even know JW went to university in Nottingham before really being educated at BP.

I've done all the sums, looked at the satellite pictures, even thought about going for a cheeky visit to understand the ground conditions better. I'm an ex E&P engineer, have worked on assets in the Middle East, Sakhalin, and Texas, and understand the risk vs reward on offer here. Geopolitical effects on global markets aside, I think I have done what I can to minimize the risk of investment.

Because I have done all that I've been confident to add to this most of the winter, so 10p on the share price would now represent a gain for me well into six figures. It doesn't mean I would sell at that price, I am hoping and believe the take out price will be much higher, but the on screen valuation would be quite a nice screen saver whilst waiting for the end game to happen. I'm not so well off that -5p wouldn't hurt on the back of a duster, but I am not leveraged for the shares so can dig in and wait it out if that happens. And yes, it might. Jaggers nailed it earlier, there is always the risk for poor or no containment in an independent trap. Given the shape of the anticline and the fault line positions it seems unlikely, but not impossible.

As for OWC I think most people here thought three months ago it was something that happened when you try and wash a frying pan. Not that there is anything wrong with life long learning :).

BF - one entry per player:) , interesting predictions , the average of the nine numbers posted so far is 20.98 , a 25% gain from today’s closing price. Any more - Bays? All news opportunities included. :)

Yup, I get that its 'nice' but is it quantifiable? In O&G you get 2P and 3P etc... You can create an EV calculation based on 2P and use it as a basis for valuation. The IRR in the investors presentation even with relatively conservative Nickel prices is in the mid 20s % wise. At that ROCE it would appear to be a no brainer to invest in, so why is the whole company valuation £30m ? If you put the whole company valuation on top of the capex ask it would hardly dent the ROCE ...

Just confused about the daft company valuation.

Betting Friday this week for an initial RNS... anyone want to enter the post announcement share price sweepstake for a week on Friday?

I am going to go with 21.5p a week on Friday... ie close of business 8 trading days from now.

There seems to be an inferred link to the Nickel price and the HZM share price. I presume that the link would be a lot more tangible if HZM was already producing!

Pardon my ignorance here, I understand O&G in the ground reservoir valuations at different project stages, I assume the same logic applies here? How much valuation is put on the prospectivity, and is there a reasonably standard mechanism for the value increasing as mine realisation project milestones are passed?

For example, will the recent approval materially affect the asset value on the balance sheet or is it just nice to have until we get production started?

Between 1145 and 1445, looks like the MM had a long lunch or was trying to work out wtf to do with the orders that just landed on them. A pause like that can be a very good trader sign, if only I was one. Being a trader implies buying and selling, I seem only able to do the first bit at the moment

Grecian 2000 full to spill :D There may be enough demand there to materially affect the hair price.

Just to avoid doubt, my comments are about how good, in fact how outstanding, AMER is as a long term investment. JW and the board have played an absolute blinder in building the asset base, and it is in the process of paying off massively with both CPO5 and the OXY Putumayo deals independently company makers. The enterprise value here is already over half a billion dollars and likely to rise fast over the next 18 months as drills come in across the blocks, take out value will be a multiple of today’s open market valuation. I have no problem saying that IIs are being dumb asses in missing this obvious, in fact absolutely blatant investment opportunity. This is my biggest holding by a long way now, it’s not without risk but the risk:reward ratio is extremely attractive given just a little patience. I don’t see a better investment on the London market right now.

Juxtapose, I agree the probable exit strategy for AMER will be to be acquired, I don't believe the shareholders will see true market value before then, we are nowhere near it now and there is little sign of the II buyers needed to realise the asset value on AIM appearing. The real trick will be making the company attractive for acquisition, a large cash pile and hugely under valued assets looks like a textbook acquisition target. I doubt AMER will exist in 18 months time, the closer we get to that time line the higher the EV and corresponding exit price will be. Day to day share price movement is irrelevant in that context other than it gives us all something to talk about while we wait for the asset value to grow and the offer to come in. With 2/3 + of shares tightly held the take out price will also bear no remblance to the open market price. With all that in mind you can play scenarios on what might really happen to the business in the meantime. - They won't invest heavily in OBA expansion - They won't burn cash fast drilling their own blocks - They will let ONGC and Oxy do the heavy lifting in increasing the asset values - I doubt they will go for extra blocks, they don't need them now to de risk the takeout - Cpo5 won't be sold as a separate asset Just a thought

Of a couple of things 1. A bit like Juxt, I am not entirely sure AMER and GTE are friendly. I agree with Juxt it would have been better to have the whole deal announced without the right of refusal issue outstanding. 2. Ecuador - I know you're a believer, I am less so. I would rather AMER focused on getting actual value from the (put) assets it is already sat on rather than buying into yet more blocks and commitments. I think in one of the videos JW more or less said the same thing, they have bought a base now the time is to turn it into assets and production. 3. I do not think they should sell Cpo5 at any price at the moment, let alone 150m. Its at least a billion dollar asset given 12-18 months of drilling, why on earth would they sell? They don't need the cash, they have liquidity of over $100m if you count undrawn debt facilties. 4. And under no circumstances am I a deramper, the 480k buy today was me adding, I have a lot in here but it's based on the expectation for the current assets turning to value over the next 12-18 months. I actually think Ecuador may even be dilutive on a two year view. 5. The share price is a product of institutional moves now, no institutions are buying into the sector in any meaningful way. Days gone by we would already be nearer a pound a share, but I think those days may be gone forever for the sector as a whole. We may be in a time of single digit PE for oilies. In these changed times offering an income may not be as ludicrous as it would have been in the past, it would certainly demonstrate confidence in ongoing revenue and profits.

Slide 23 shows project financing done at end of Q2 with final investment decision by end of year? I would expect the outline detail of the finance deal to be brought to the shareholders as soon as it is known, hopefully not long after mid year.

Thanks for the reply, I've been through the investor presentation and the RNS feed, the timelines look particularly interesting with the forecast of a finance deal by the end of Q2, then its down to confidence in predictable execution of the construction project and / or doing a fancy dance in front of potential buyers.

I see this as a hedge against some of my oil and gas shares, the EV market looks set to drive up demand for Nickel and then adding the considerations around the overall growth in the stainless market then this has to be one of the best 'vehicles' to get a scalable return on that demand growth.

BBN - Amerisur would likely charge in the range $7-$10pb for export via OBA, the $4 you quote is their current internal cost not commercial sell price of the service. They would add a reasonable margin on top of their costs to OXY or any other partner like GTE. This would still be much cheaper than the alternative trucking options at nearer $20pb cost.

At the higher end of the throughput scale this would likely be much reduced as the partners would argue that much of the per unit cost is fixed rather than variable and demand a volume discount, probably more in line with the relatively low RODA costs. Either way, the pipeline economics when you have the only pipe are very attractive, but can quickly become less so when more routes for evacuation are opened up. Make hay while the sun shines.

Just saying hello, I bought a few of these today as a long term play on the fundamental underlying asset value. The NPV figures from the Shareholder update look compelling enough to get them an attractive finance deal for construction, the announcement of which should see the price jump.

Any flies in the ointment I am not aware of? Looks like a longer term solid prospect assuming they get the right finance deal, or more likely get acquired by someone with the finances to exploit the assets.

Indico is already not isolated, Mariposa is the same LS3 formation, the sands run under the entire area. The fault trap map and the nature of the sands around them have to be established, each drill looks set to explore a different potential trap structure. As a result each drill should add incremental reserves, unless part of the trap system turns up dusty due to a lack of containment. It seems unlikely looking at the profile though, much more likely is a continued increase in the size of the discovery with each well between now and well into next year.

Just to add to your point JTD, I’ve been quiet here lately as I actually don’t want the price to rise just yet, I am moving some capital around and can’t buy until later this week at the earliest. The next set of buys will take me above 2m shares in AMER, I realise there is no such thing as a sure bet but at this price with these assets I am a buyer. I see an opportunity for a serious return here, fair value on the company should be much higher (2-3x) than today on any economic model, so any buys below that EV level would be a serious option. Even then there is still serious upside based on CPO5 and OXY prospects for EV enhancement. Obviously there is a seller at 17p holding the price down, good for me hopefully. I suspect funds are reducing their overall exposure to the sector as a whole as part of a wider strategy, macro level decisions like that mean micro opportunities abound.

I said I wasn’t going to post, but can’t resist solving some confusion here. When CPO-5 oil is sold at the well head it means it will be trucked the very short distance on good roads to a local pipeline terminal. Indico is next to a cross roads fgs! The Llanos basin is served by several large pipelines already in place, in particular look up Ocensa which has a carrying capacity of ~ 600kbopd. The CPO-5 oil gets such a good price at the well head because it is in high demand to cut with the bulk of Llanos oil which is heavy. Mixing the light and heavy crude makes export via pipeline much more viable, it’s really hard to pump heavy crude. So it really does only shave a few dollars off the Brent open market price, that’s unbelievably good / lucky and generates very high margins with zero infrastructure overheads. No wonder JW was grinning like a Cheshire Cat in the interviews. Also bear in mind 10,000 barrels is 400,000 gallons of 1.59m litres. A tanker truck holds about 10,000 gallons, so 40 trips a day, less than 2 an hour for a field producing 10kboepd. OBA although utterly tiny in comparison is strategically important as it is the only pipeline in Amersur’s part of Putumayo. Without that pipeline any production in region would have to be trucked via very dodgy roads and cost $20 + a barrel to transport to the nearest terminal. Strategically it is much much easier to expand an existing pipeline route than get the permissions to construct a brand new one, so it’s value in opening up Putumayo is huge, in fact without it the economic viability would be much more marginal. Amerisur have only been able to buy up the fire sale assets of other failed E&P companies because at low(ish) oil prices Putumayo exploration without an evacuation pipeline doesn’t work. Similarly OXY are putting big dollars in with Amerisur because they have the critical mass of land bank and associated prospects and the pipeline. It really is very well played, just need to wait for everyone to realise what that means for long term value. Have a look at this map, near in mind Putumayo is at the southern border where there are no pipelines shown and Llanos is pretty central. https://upload.wikimedia.org/wikipedia/commons/2/2c/Colombia_Pipelines_administrative_map-fr.svg

I see LSE cut the end off my post, I was going to say there will be lots more holes in the ground by December, and we will see the net effect of the 2019 active program by then. I expect this to at least double by year end, possibly as an outside bet 3x, an offer 4x. For me I am checking out now until the AGM, see some of you there. I am not going to watch the daily price saga, I’m a long way long on this now and can wait Incidentally, the decision not to sell any oil in dec impacts the FY18 figures and the reported cash. Maybe wise long term, but coinciding with the year end looks suspicious. 2019 is not make or break, it’s more like make or make more. PickedPeck out (until April) , GLA.