Member Info for pickedpeck

They have not done an operations update later than the 9th of the month, so should be news tomorrow. They did say they were going to flow the Pintadillo well for 3 days so could be waiting to announce what the flow rate is. I wonder what else might be included? Spud date for Indico?

BIH - I think we might all be a bit over obsessed with the board and RH, it’s a good soap opera but is it really that relevant now he’s down to 1%? I think Vetra are in a mess, I suspect they have an exodus of staff and I blame incompetence rather than cunning plots. They are more likely holding out for a better price based on POO than drilling results miles away. Same with ONGC, I didn’t know this was their first ever E&P prospect globally which has been worked with local staffing, no wonder it’s slower than glaciation! They are bloody awful to work with when it’s their own staff let alone when you multiply Indian Bureaucrats x Manana Colombians. If they get all three wells done this year I’ll be happy and amazed in equal measure. Still it will be Christmas soon, and this years drama will be all over and we’ll be listening to Noddy Holder wishing it could be Xmas every day. I wish it was Xmas now and we had the drills in the bag!

Yep.Nothing measured for the U sand yet, that may also produce at a similar level given the similar net pay zone. Interesting to see whether they are prepared to produce from both sands from a single well as it seems the U sand has a much heavier API than the T.

And lastly... So we all know where we are talking about here is a map of the whole Putamayo basin and blocks:

http://blog.ceo.ca/wp-content/uploads/2014/10/map_putumayobasin.png

These are the GTE blocks

http://globenewswire.com/NewsRoom/AttachmentNg/035128d9-590a-4647-86e7-e4aee392c055/en

Check the Put production information from them at

http://www.globenewswire.com/news-release/2017/11/02/1173934/0/en/Gran-Tierra-Energy-Inc-Provides-Operations-Update-Highlighted-by-Acordionero-Production-Growth-Progress-with-the-A-Limestone-Play-and-Multi-Zone-Oil-Potential-in-the-Siriri-1-Explo.html

They are our neighbours to the West and are a bit further on in their development cycle.

By the way... a simple guesstimate of the Pintadillo reserves based on some GTE figures. GTE in Colombia claim an 11 year average reservoir lifecycle, I think that seems reasonable for a new Plat field.

590bopd x 365 x 11 = 2.4MMBoe P2

The pressure is pretty low though, and with a downhole pump you might be able to get to say 850bopd against the same reservoir life.

850bopd x 365 x 11 = 3.4MMBoe P2

GTE are currently using a higher value for oil in the ground, see https://www.grantierra.com/press-room/article/78-gran-tierra-energy-inc-achieves-283-2p-reserves-replacement-in-colombia-and-increases-2p-reserves-18-to-137-mmboe.html and the NPV calculation.

With low cost production possible due to OBA I don't see why AMER should be disocunted against the GTE levels. Their P2 is rated at an NPV ratio of $18.25 in the ground.

2.9MMBoe (average between the two figures above) x $18.25 = $53m NPV using the GTE ratios.

That's really conservative as we know nothing about the reservoir and flow parameters, but it sounds very promising, and there is ZERO on the balance sheet at the moment for this.

"We are excited by the progress being made at Indico-1, the second of our exploration wells in our current drilling programme, which we believe has the potential to add significant production volumes and RESERVES to Amerisur. The programme in CPO-5 also includes a further two exploration wells, Aguila-1 and Sol-1, targeting separate structures before the end of the year." - Three wells, not one, and by the end of the year. These will be expensive big bore production wells not exploration. The production and reserves from each could be significant in AMER terms.

"With respect to Miraparriba-1, I understand that the project has a high probability of proceeding as originally planned, drilling from the Cohembi 2 location. This agreement will allow the well to be drilled before the end of the year" - I think this may or may not happen, would be a nice bonus.

That's four wells by the end of the year, but I would also expect at least one and possibly two from Pintadillo given the recent discovery, I doubt they hit the optimal spot on the lower reservoirs given their target was the N sands anomaly. Given the rig is still there why not? I'd expect a spud in October.

And one other thing, those full year numbers won't be published until April, all we will see is drilling reports, reserves updates, and monthly production figures. Without analyst coverage us PIs will have to do the calculations ourselves until the spring.

I would sooner they used the cash to get a lot more aggressive about the drilling program in the rest of their Putamayo blocks than use ti to do a buy back. I would guarantee the major investors would feel the same.

The only downside of sitting on that much cash from my point of view is that it opens them up to being an easy hostile takeover target for a cheeky bid. The current share price will create doubts, and a good offer may tempt some to exit.

Having said that the I see the short term share price is a distraction to possibly be taken advantage of by PIs, its only so low based on excess liquidity as has been said a zillion times. Any offer would have to budge the serious investors and I doubt those billion plus shares would come to market for even 3x today's price. The real high volume long term holders will have an investment hypothesis that has not come to fruition yet.

So Bigsmoke... the next 90 days will be interesting indeed, not make or break but should see a significant transformation in the company balance sheet.

Focus - My thoughts are for the end of year are:

Indico 1 driilled, 2 follow on wells at least spudded, at least 1 reserves uplift statement for CPO-5. +10MMBoe to AMER.
Two additional T / U sand wells spudded, completed, and in production in Platanillo as follow ons.
Revised Platanillo reserves statement +5MMBoe or more
OBA pumping base load of 5000 bopd with peak at 6,000 bopd.
Total production i.r.o. 7000 bopd, peaking higher. Dependent on CPO-5 completion, may be lower in Dec but get there is Jan / Feb.
Total reserves i.r.o 25MMBoe P2.
Full year financials - $70m + net profit (min $30m from H2 operations, conservatively $20m asset value uplift). Stretch profit would be $100m net if both CPO-5 and the additional Plat wells come in with decent reserves statements. Cash at hand $75m for full year.

I don't expect the company to complete any of the other Putamayo wells before year end, although this would be a nice surprise if it happened. I see those as upside for 2019.

That a trade buyer hasn't been found for the RH tranche of shares which has pushed the price down to this level. I added pretty heavily (for me!) this week, and am moving to add some more this coming week. Anything below 15p is ridiculously cheap and a massive discount against the likely asset value.

Those wondering about production levels are missing the far more important likely news release. AMER need to issue a statement on the Pintadillo 1 reserves and subsequent asset value uplift. They have zero on the balance sheet right now for the T and U sands reserves in this part of the block.

The well head PSi at 110 is ok for initial production, but the fact they think a downhole pump will increase flow is really interesting in what it implies for the reserves. It would only really make economic sense if the pump will add at least a couple of hundred bopd.

The N sands seismic and in depth analysis they did of that target may say absolutely nothing about the T and U sands below. The deeper you go the less fidelity the seismic has, this find looks like it was a surprise, but then they did take the hole down to that level for some reason. The clear implication is that this T-sands layer could be productive in a wider area of the block, and the reserves statement may be large as a result.

So rather than speculating on the production for September (who cares as an LTH?) , I'd like to speculate that they may say they think there may be xMMBoE in the U and T sands... Any guesses? I am going to guess at least 5MMBoE P2, and maybe a lot more.

If the hit is 5MMBoe , then that value immediately adds on the the EV of the company, the way IIs value an E&P co. Use a multiple of $10 against current oil price and proximity to OBA and a low cost route to market. $50m on the EV... Now that's something to get excited about, let alone if it turns out to be bigger!

Do we know the U sands are sour? Heavier API yes, didn’t see anything about sulphur content.

Was a play for stock? No better way to trigger auto stop losses than a 15% morning drop. If I had cash available I would have bought a big lump this morning, quite frustrating to watch it bounce back without the cash to take advantage.

N-sands anomalies in Platanillo have large limestone content, no flow, no 11.88m reserve target.

However... Looking at the original plan the U and T sand levels are much deeper, T right at the bottom of the well and the reason the well went so deep in the first place. The N sands anomaly is only 2/3 of the way down the well!

15ft T-sand net pay of very light oil is not without incremental value. I am not sure where the 800k reserve quote is coming from, but that seems very low depending on the reservoir structure for 15ft of net pay.

The statement of production of 300k oil from the T-sands so far in Plat is also relevant, the Pintadillo well is a long way from the other wells and if there is any degree of reservoir continuity in the T-sands it may change the overall understanding of the block. There is no commentary of seismic understanding of the T-sand layer implying there isn't much in place, it seems the T and U sand discovery was maybe an expected surprise.

Calling it a 'long term test' allows them to dodge making a statement on the reserves until the test is complete.

See if you can find another LTT well that has been on test for over a year... What are they testing for and what is the timeline? When would it shift from being a test to being a production well and what are the criteria?

Doc, I saw somewhere that they were likely to bump it to around 10MM, still very conservative given the production. They will likely be holding it down to avoid paying tax on the asset until they are ready to start exploiting it, the production infrastructure and additional block drills need to be made before declaring its real value. Otherwise you pay the tax on the profit without being able to realise its value. I agree that block looks to have a massively understated value, but with ONGC in some disarray it seems and AMER as a 30% non-operating partner we just have to frustratingly wait for the Indians to sort themselves out.

Because even with the current net back at $47 per barrel on near 6,000 barrels per day - $105m ish per year- the company net profit is only $10m for the half year, or $20m for full year. Net back is great, but its not generating massive profit growth on its own.

The 9,000 capacity route needs filling with oil from other discoveries. AMER do not have the production capacity to fill it today.

The other point is the increase in asset value from those new discoveries will be worth far more to the share price than the increase in production income. 2P is worth i.r.o. $8 in the ground. A 10MMboe discovery would add something like $80m to the net asset value.

If AMER can make the 21MM 2018 plan, the 2018 will be better than good, if they can then in 2019 make the subsequent 110MMboe discovery plan work we will all be laughing at how we didn't know this was a 10 bagger all along.

Of course they will not be 100% successful, but I don't think they will 100% fail either, that's why I have over £100k invested here. In other words, enough of the sideshows, bring on the main event.

I am with JTD here. In the interest of transparency I have 750,000 shares and am absolutely not a shorter of AMER.

The interim results were in the lower end of the range I had hoped for, driven by lower price per barrel realised - average realised price of $64.2 (compared to $47.2 in H1 2017) - and lower production across the half even though this was already known. The COGS was also higher at $47m than expected.

EPS for H1 of 88 cents per share (0.67p) if repeated for H2 would give 1.34p , a P/E ratio of 11.5 on the surface. Re-baselining to take the the cash position out of the equation by subtracting cash (current + net receivables) from the mkt value gives: $241m mkt cap less $60m = $181m price / $21.6m pro rata for the year, a P/E of 8.4.

It is easy to argue that 8.4 is a low value against sector benchmarks, but there are other O&G companies in a similar boat. Bear in mind 8.4 literally means its take 8.4 years to earn the price back. Amerisur currently do not have 8.4 years of reserves able to sustain the current production rate.

What that all means is the only thing that will actually drive up the real value of the company is increasing the reserves, and hopefully later the corresponding production. The two ways to do that are acquisitions and drilling.

The good news is that being debt and mostly partner free, having a cash balance of $50m or more, and having a wide range of prospective blocks to go at makes this not only possible but extremely likely. To achieve maximum growth and shareholder return AMER need to make Putumayo look like a pin cushion of drill sites. The huge disappointment this year is that of the 14(!!!) wells promised earlier in the year they have managed to spud only one so far, and only a second seems imminent. The interims now state the 14 wells go out to Q3 2019. I also want the 2p of CPO-5 to be properly declared rather than the smoke and mirrors value it currently has.

I actually don't really care about Chiritza, or another block acquisition with primitive seismic. I want them to drill their blocks and increase the 2P reserves on time as committed, and generate profit through increase in asset value. Only that will really move the needle. If all they achieve this year is two new wells it will have been a very disappointing year.

Its a nice thought JTD, but I think we need something bigger to shift the share price from the doldrums.

It seems to me the bottom line is that the oil sector is fundamentally out of fashion, there is no real rationale for this company valuation. We should have somewhere near £40m in the bank based on prior cash and H1 income, so the company is being valued at about £140m, a real p/e of about 4 based on current oil price and production.

I think they need to increase the asset value with the drill and also declare a H1 dividend of 0.5-1p a share to compensate share holders for the delay in the drilling program.

Corporate machinations are all jam next decade, I would like something on my toast now please.

Just manipulating it the other way. This rise is on no volume and a widened spread. Nothing to get excited about yet.

Investment thesis is to buy and hold, there are multiple upside scenarios and very few downsides.

1. Dividend - At the current cash generation rate they will likely pay a dividend at FY rather than interim, but I guess it is possible for it to happen earlier given the sustained oil price. It would be nice to declare an intent that way, maybe something as high as 1p per share for the full year, maybe 0.3 interim, 0.7 FY? It would cost around $14m in cash for the FY.Unlike previously a dividend is affordable over and above capex plans. A dividend would make the share compellingly attractive and likely see us above 30p again, something that would help investor relations no end.

2. Hostile / Aggressive bid - The case for spending the cash on a major acquisition is pretty weak until they have exploited some of their already large estate of unproven assets. Distributing the cash a little makes them a little more defensive against an aggressive bid, right now they are vulnerable to being taken out for peanuts compared to their potential. Even now a take out would be closer to 30p than 20p should an aggressive bid come in. The big players could sweep this up in a blink, but may wait until the EV has increased.

3. Agreed bid - The board must have an eye out for this, but their view of the EV is almost certainly a lot higher than the market valuation, I would guess the management team and the board would rather realise some of that potential before cashing in, their target must be 2020 take out at least > 4x today's value.

4. EV expansion - The drill bit will increase the EV dramatically in H2 even with just a few of the planned drills completed. This combined with income will drive a rerate of the share price during H2 and beyond. They could strike out, but it seems unlikely.

Pessimistically I see 2x here by April. Optimistically with EV expansion, a dividend, and a potential bid maybe 3-4x in 2019. I'm off for the rest of the summer, see you at the interims.

https://www.cnbc.com/2018/07/06/big-oil-sowing-the-seeds-for-crude-prices-above-150-bernstein-warns.html Acquirer or acquiree? I think more likely the latter but at what price?