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I’ve been giving this a lot of thought and concluded a few things post RNS, hopefully helpful. The re-rating of AMER will not happen the day that news is released. Private investors react, Institutions consider and estimate future value over time. The EV increased significantly with the RNS this week with the obvious potential for much more, this enables PIs to react faster than the IIs, the latter’s buy notes and investments will be longer term and slower to arrive. You’ll start to see the net effect in 3-6 months rather than 1-6 days, the full effect of the 2019 exploration programme is 12 months + away. If you’re a trader this doesn’t help, but I’m not so I don’t care much, I’ll still be holding going into 2020 unless there is a bid by then. Production in Platanillo is tailing off badly and without new wells to shore it up will continue to do so. The company has underplayed this, not hidden but not clearly stated is nearly as bad. However again I don’t care much, it has served its purpose, a relatively small block with sufficient production to fund capex elsewhere and to be the catalyst of the transformational deals just done. The project capacity to manage those additional wells may be beyond AMER. It has funded the OBA strategic pipeline which opens up the value of the Amerisur Putumayo blocks, drawing in OXY and likely others in future. I expect a further exploration partnership or farm out for the remainder of the blocks not covered by the OA deal in the first half of this year. I agree with the poster below that the board have played a blinder with the acquisitions made and deals cut. Phenomenal really. Operationally though they may have consistently exaggerated their capability with the possible intent of drawing partner interest. They simply don’t have the scale to execute these programs themselves, and a pinch of salt is absolutely necessary on their own operational promises. It will be interesting to see the AGM presentation to see if the partner driven strategy becomes an explicit intent rather than hinted at in the JW podcast. However having said that clearly the main probabilities of success here are now being driven by those global scale, highly competent, and well funded partners rather than Amerisur’s rather asthmatic internal capability. This massively de-risks the future program and means I am content to wait for the transformation to happen rather than watching the day to day shifts and individual announcements. I see the development of CPO-5 into a world class multi billion dollar asset as pretty much inevitable from this point with a value to AMER on its own far in excess of the current mkt cap. It’s almost an embarrassingly huge asset for a company this size to be sat on. It will go slower than we all want, ONGC are slooooowwww and bureaucratic, don’t be too disappointed if Jan turns to Feb for spudding. There will be more holes in t

The cynic in me thinks that the announcement of production is delayed to be offset by the news of spudding the next well in CPO-5, I suspect both will arrive more or less together.

We need to bear in mind a couple of things though:

1. These production figures give a pretty close insight into the full year revenue and profit numbers and are very sensitive as a result. I would expect them this week, any more delay looks more suspicious.

2. The current production and resultant profitability needs to be at a level sufficient to fund the AMER and Partner exploration program through cash generation. It has already achieved that goal at least for the next two years given the expected current cash balance and partner investment. Focus of return for shareholders should be (and is) much more on the E than the P of this E&P company as asset value growth will far outstrip production growth. P at the end of this year is going to be a lot more important in my investment hypothesis than the figure today.

We may see a change in strategy from AMER that JW hinted at in the BRR podcast. For all the world it sounded like the focus was now only on the two partnership programs with ONGC and OXY. AMER's own programs for the PUT blocks outside the OXY deal barely mentioned. This may be understandable given the surprising scale of the Indico find and nature of the OXY deal, but I would rather we had the ability to keep multiple programs in flight ourselves. No mention lately of the U&T sand find at Pintadillo for example.

I'd like some insight into the 2018 AMER drill program that, like the 2017 one, turned into a slim shadow of what was promised. I'm more relaxed about this than a year ago given the potential to have growth driven by the partners rather than AMER themselves as it certainly reduces the risk and should result in a better outcome, but I am looking forward to hearing what's proposed at the AGM. We may need to organise some block voting before then.

Bakoven, did you actually read the article? Seems you misunderstood it. The deal is for a minimum of 5,000 boepd through SOTE, not a maximum. It’s committing a significant part of capacity for the next 15 years to Amerisur. Amerisur is known to be engaged in Consultia Previa in several of its blocks. That’s not news, they have made it clear themselves. If you’re shorting you should play on everyone’s concerns on production levels, that seems to have traction. However your big problem is CPO-5, with no outstanding consultia previa, and already with some seismic coverage and more to come, is now producing somewhere near 8000boepd from 2 wells, with four more imminent. Assuming they hit in a similar way then Amerisurs production - that can be sold at the well head with no pipeline dependencies- leaps to 30% of 24,000 plus the 4-5k from Putumayo. 10,000 + boepd by the end of the year even without any activity from OXY. Good luck with the shorts, you’re going to need it post RH.

Tweedle, the last update I have is from the Annual Financial Statement in March 18.

Substantial shareholdings
The following shareholders held 3% or more of the issued share
capital of the Company as at 31 March 2018:

Shareholder Number of shares % of issued capital (as at date of notification)

Michinoko Ltd 134,452,585 11.08
Fidelity Worldwide Investment (FIL) 104,148,479 8.58
River & Mercantile Asset Mgmt 76,809,479 6.33
AXA Investment Managers UK 69,125,693 5.70
Hargreave Hale 74,214,405 6.12
Mr Rex Harbour 52,805,530 4.35
Invesco Asset Management 46,502,617 3.83
Hargreaves Lansdown Asset Mgmt 43,931,210 3.62
Interactive Investor Sharedealing 40,005,679 3.46

After this was posted the only II activity looks like the burn down of the Rex Harbour holding above, presumably finished in November. Taking this list less than 50% of shares with major holders, although John Wardle would now make it onto the bottom of this list I think with about 3%. There are a further 3% of unissued options which would be a minor dilution if issued.

Bottom line is this looks like there are a lot of small investors, and a potentially higher than normal free float created in part by RH selling down from 135m shares or so. That's still suppressing the price for now.

II interest will come based on EV, I don't think they want to commit to higher EV yet to avoid taxation on the capital gain, I don't think the other proposed reasons for understating reserves hold water. I don't think ONGC will want to continue that game this year though, and even Duque is saying 'play the game chaps' so I expect a massive step change in EV based on reserves at some point soon followed by some II buying. Looking at the buys over the last week there are a lot of round numbers suggesting bigger orders being filled already, I suspect we may get some holdings announcements in the next few weeks.

Margaret, a number of my larger trades had to be broken up (by my broker) and appeared as a set of smaller trades. I made a buy order of 300k not so long ago and it was broken into 7 different visible trades over a 10-15 minute window, incidentally all at different prices. It cheered me up no end that no one MM had stock to fill a relatively small order like that.

esox- this is not really very similar to Sound. Amerisur has a similar but slightly lower market cap than Sound energy (about 20% or so), but that’s where the similarities stop. Amerisur at the last results had a fair pile of cash in the bank (maybe $70m), has already built and commissioned its key pipeline, has a revenue stream of maybe $2.5m per week or so and is exploring 11 blocks in two productive basins in Colombia in partnership with two major multinational companies. On top of that it has just hit a very large oil find big enough to prompt the president of Colombia to tweet about it. Sound’s assets appear to be land rather than production, and whilst it has found gas it hasn’t got an evacuation route yet although does have a plan to build one. It’s paying suppliers in new equity, presumably to preserve the cash it’s burning through. Both have E&P potential, but at are very different stages of maturity. The difference in the mkt cap really highlights the negative effect of Rex Harbour sell off on Amerisur, otherwise you would expect Amer to be a multiple of the value of Sound.

WTI looks set to go through $52 today also. Sharp rise today, big API draw in the US this week. Should be sector relevant tomorrow.

I know this is the AMER board, but it could be that the recent oil price rally prompts our other key partner OXY to accelerate their spend, potentially on AMER and / or Colombia. It’s great to have a partner with more cash than they quite know what to do with. This Motley Fool article about their 2019 strategy is interesting: https://www.fool.com/investing/2019/01/08/this-oil-stock-is-planning-to-prosper-in-2019-no-m.aspx

Wolster, name changes are never as simple as they look as it means novating the contracts from one name to another, and almost always the contracts have ‘flaws’ that one side or the other would take the novation opportunity to ‘fix’. That’s why PSC acquisitions even for the big boys are dealt with by these small Ltd liability companies share equity. Shell is well over 200 Ltd companies for example. A good way of getting better publicity is the ‘Petrodorado, a wholly owned subsidiary of Amerisur Resources’ in any statements. I am surprised Elodie has not been ready to leverage the name like this especially given the recent publicity

Suffice it to say 100% of my daughter’s CTF is now invested in AMER :), she is 2.5 years away from being 18 and being able to cash it. I might have ‘a few’ shares held in other vehicles too btw...

So there are games going on here, by ONGC, the Amer BoD, and Now Duque telling them the government is watching and they can’t continue to dodge the asset value. This is clearly a very high value asset that needs rapid investment and development, it’s a crazy idea that Amer would sell it undeveloped. It would be like selling a winning lottery ticket for a fiver and patting yourself on the back for doubling your money. I am super glad we have a large scale partner in this block. The share price will be a wild ride, but the asset value is a multiple of the current mkt cap let alone the potential income and forward PE potential. I would be very surprised if we don’t see at least 100p a share some time in the next 18 months, and that may turn out to be really very conservative depending on what happens with the oil price. Just as a thought experiment... Mariposa, 5 x Indico wells, 4 x Aguila, 4 x Sol all drilled in 18 months and producing just 4K barrels each. 5 x new OXY exploration wells, each producing just 1k bopd, plus 5k existing production could add up to AMER producing 25k + bopd. Let’s say their net back is $40pb for easy sums. That’s a million dollars a day income, $365m p.a. gross , maybe $250m net (no debt, fixed costs, low variable). A low sector PE of 10 would value them at $2.5Bn or £2Bn ignoring cash at hand and asset values. 8-10 bagger from today. All future looking, netbacks could be higher or lower depending on price. Production from the wells may be lower etc etc.

Does everyone understand this? Continuation of the same play, one field. 241 feet of pay. The reason the president is tweeting about this is that this is a material find to Colombia GDP. If the fairway is just square which seems very unlikely (elongated to SW much more likely) then... 6500 x 6500 = area = 42,250,000 square metres 241 at Indico to 120 at Mariposa thickness say 180feet average across the area, 55 metres. Volume of play = 55 x 42.25m metres = 2.3Bn metres cubed. The sandstone is 17% porous and saturated with no OWC and negligible gas, so 17% of that volume is oil. 2.3Bn x 0.17 cubic metres of oil = 395m cubic metres of oil. Converting cubic metres of oil to barrels 395,000,000 x 6.2898 = 2.489Bn barrels of oil. That’s billion with a B. That’s the oil in place. Light oil 35-40 API will give a high recovery rate maybe up to 50%. Let’s call it 1.2Bn recoverable. The drilling campaign this year might make that the baseline 3P if not 2P. Amerisur have a 30% stake so 360m recoverable barrels. Value in the ground varies, but $6-8 is normal in region, given the scale maybe as high as $10 or even $12. Scale means lower cost per barrel recovery so higher in the ground value. At an optimistic $10 that’s a $3.6Bn value to Amer. No offence to anyone, but this is a Holy F*cking Sh*t moment for ONGC and Colombia let alone a minnow like Amer. This is a similar scale to their entire optimistic unrisked estimate for finds in the whole of Putumayo. Whatever the strategy was before this, it just changed. Would someone please check my sums and make sure I haven’t moved the decimal point please.

That’s a pretty extensive 3D seismic program, thanks Bumbling, I had missed this. The maps in the tender document (page 60 ish) make interesting reading. Two separate 3D targets in the centre of the block which coincide with the fault lines and traps from the Amerisur presentation. I expect Amerisur will have to pay 30% of the seismic costs, could be pretty expensive given the size of the targets.

By the way, the new Indico well could be 1400bopd net to Amerisur, at an $8 discount to Brent $50 a barrel ish, less low production costs and royalties , maybe $35 net to Amer per barrel? $18m additional gross profit p.a. just from this well. 4 more the same from this pad would be lovely in terms of revenue and profits, but 2P is where it’s at and they won’t state that for ages.

I think it is more important to look further back for fair valuation. The Rex Harbour sell off drove the price down over the last 18 months and this completely suppressed any share price progress from the developments in that period. Up to mid 2017 in a similar oil price era to today the share price spent 18 months in the 25 - 28 p range. Fair value on top of that for a few things should be taken into account : 1. OBA pipeline commissioned opening up economically viable production in Putumayo blocks. 2. Several increases in block estate through acquisition. 3. Cash position increased significantly - cash value per share iro 4 - 5p, 20-25% of mkt cap. 4. Transformation deal #1 with Oxy Andina to accelerate Putumayo exploration 5. Transformational find in Cpo5 of potentially massive reserves ending any concerns over reserves depletion 6. Miscellaneous discoveries in Platanillo - Pintadillo et al. Each of these points would add value to the baseline, some more than others. This is in the process of moving back to a more sensible trading range post RH. It's not too big a stretch for each of the above points to add worthwhile value per share, with #5 potentially a game changer.

I've been busy looking at LLA34 to the NE of CPO-5 . The available information from both GeoPark and Parex has been recently updated, and I just love the new field maps from both. Have a look at these maps / slides: https://goo.gl/images/3Y8riN https://parexresources.com/wp-content/uploads/2018/12/Parex-Corporate-Presentation-2018_December_18-2.pdf - pages 13, 14, 16 and 17. http://www.amerisurresources.com/pdf/Amerisur_PDSA_Presentation_280615.pdf LLA-34 with somewhere just short of 500MM combined 1P, 2P, and 3P reserves and 65kbopd production is 68,382 acres in size. The multiple LLA34 fields are an obvious continuous trap against the fault line that runs NE-SW across the block, with the fields significantly widening as they exit the block at the SW corner into CPO-5. The GeoPark picture explains how the oil ended up in the lovely thick trap... The Amerisur link shows the key fault line curving to run more westerly than SW - slides 6 & 7. That's exactly where Mariposa and now Indico have intercepted what for all the world looks like exactly the same field structures but bigger and thicker. On Page 17 of the Parex presentation the block in between the two yellow Parex blocks (LLA34 and CPO11) is CPO 5, this highlights the location of the fields. CPO5 is more or less 7 times the area of LLA34 @ 492,235 acres, with what looks like exactly the same Une formation and large scale fault trap structure running into it, but bigger and with possibly another set of traps (to explore later) in the SE of the block. Once you have digested that the CPO 5 block could hold much larger reserves than the one to its NE that is 1/7th of the size but has half a billion barrels in it... Then look at the AMER presentation (third link) for the shrewd bit of business done to acquire this on page 3. It and Tacacho combined cost $6m and came with $20m tax savings. I think it may be worth a touch more than that now. There is no asset value in the books right now for CPO5. Its all upside.

The only time you should go all in is with money you can afford to lose all of and not look back with any regret. Appetite for risk is key. With any oil and gas share there are always risks. A well blow out, a pipeline leak, something untoward happening to key staff etc. The company is in essence pumping highly flammable material out of the ground at high pressure. Fortunately they seem competent and careful and have an excellent safety record to date. Risk is there but minimised. Colombia has not been politically stable for long, and whilst it is not showing signs of wanting to follow Venezuela into the 9 circles of hell, FARC still exists and a lot of farmers are growing Coca plants rather than pepper or beans. There are weather presents risks too, last year floods disrupted many of the areas AMER wanted to drill, created from an El Nino event. The region is seismically active and prone to earthquakes > 6.0 which like the weather can trigger landslides. The Putumayo blocks in particular are close to seismically active areas. Amerisur have been operating in Colombia long enough to have dealt with all the above issues multiple times, and their new partner Oxy Andina, even more so. Again geopolitical risks there but minimised through local knowledge. Having said all that Mr Stockmarket himself, Warren Buffet, made most of his money looking at the fundamentals of a company, and if he liked what he saw he went in heavily. Maybe not quite all in , but not far off. He didn't make his huge returns by picking a hundred shares that went up 5% each, he made it by picking a handful that went up 100% or more. His investments in ABC, American Express, Disney, GEICO, Coca Cola were all huge stakes in massive companies at a time when they were distressed and others were selling. Amerisur has the potential to be a multiple of its current value based on the exploration prospects it has. CPO5 alone potentially justifies a multiple of the current valuation. Thats a pretty high reward side of the equation for the risks above. I am not sure it qualifies as a Berkshire Hathaway target, but it does fit the criteria: undervalued assets, easy to understand distressed price, massive upside potential, high liquidity. I'm not quite all in, but have a pretty large bet on this to do well.

Well (no pun intended) that is interesting.

Their text is different to the Amerisur announcement:

“The (Indico-1) well was successfully logged and found to have 284 feet of gross thickness and 241 feet net pay, single hydrodynamically connected reservoir with no indication of oil-water-contact,” the company said.
Last year, OVL had discovered commercial oil in the well Mariposa-1, which is about 6.5 km from Indico-1, and the continuation of same play is confirmed in the recent well, OVL said."

Amerisur's announcement on the 10th of December had 208 feet of net pay, this seems to up that to 241 feet, that's a pretty worthwhile increase if accurate. They also say 'Single Hydrodynamically connected reservoir', I think we all assumed that. However the other even more interesting change in communication is 'The continuation of same play is confirmed in the recent well'. That last one is a humdinger and much more positive than AMER's statement, and it seems to confirm a single minimum 6.5km diameter field between Mariposa and Indico. Likely diameter is a fair bit bigger than 6.5 given the net pay thickness of Indico, i.e. its not at the edge.

DYOR, but a volume calculation at a conservative 15% (could be as high as 25-35%) saturation for the mean net pay should put a smile on any AMER investor's face. In good porous sands like these and with light oil we may get a 50% recovery.

By the way, the well names planned - Calao and Pavo Real - in English Calao is Hornbill, but Pavo Real is something of a play on words. Literally it means peacock, or alternatively Pavo is Turkey and Real is, well, real. Peacock or Real Turkey? I think the latter, and its named that way because if it comes in we are really talking turkey in this field.

Baysil... You could halve the numbers, 125MMBoE would equate to $300m net asset value to AMER. There is more down there than that though, it will just take time to prove. This is not about a revenue stream for AMER, this is massive EV step change. Bear in mind their prospective target for Putumayo in total is over 1.3Bn BoE reserves. Have a look at what Oxy are fishing for (half the Put total) in the blocks they are buying into as part of the farm out announcement:

'Amerisur Exploracion Colombia, a subsidiary of the Company will be the operator of the Farm-out Blocks, which extend over 1.4 million acres and have prospective resources of 656 MMBO.'

They have given Oxy half of that prospective total, but its another 325MMBO to AMER maybe, another >$600m if it comes in that way. Then there is the other half of their PUT estate. The outside maybe some time ever value here is pretty bloody enormous, it will be an interesting journey in some pretty big steps, we are just taking the first ones.

The BoD have shown a new level of faith in the future of the company. Since the announcement of the OXY farm out deal on the 23rd of November the BoD have bought 10.6m shares. Thats a lot of personal wealth going into the company, I think they essentially called bottom as Rex Harbour finished selling. The day before that all started, the 22nd of November, the closing price was 10p a share. We've seen a 97% increase in the share price in six weeks.

I think the current BoD buys may well be ahead of another similar percentage increase over the next three months. The run up to the annual results in April should see the share price in the high 30s based on the new drills and the start of the execution of the OXY program. Production figures may be a distraction, I think it was a good call to move these to quarterly as they do not drive the EV / Valuation of the company and the monthly figure was misdirecting investor focus.

By the end of 2019 we could be anywhere. I think 60p is a conservative and achievable target.

Exciting times.

$600m to Amerisur would be based on a total find of 250MMBoE, using the going rate for Llanos of around $8pb in the ground. (30% of 250,000,000 x $8). Its not hard to imagine the fields in CPO5 reaching that number or even much higher, but it will take time to hit that as a 2P reserve figure, not least because the company is still understating what it thinks it has found for whatever reason (most likely minimising tax).

The upcoming drills will really solidify ideas on what is down there, but i would bet even after the next four they will still not be willing to state the 2P to that level even if it becomes increasingly obvious to be the case. Even after these upcoming drills they will have only just scratched the surface of the block's potential.