Member Info for pickedpeck

Thackers I feel your pain. Sharp spikes always cause dilemmas like those below, as what goes up fast can come down just as fast and it’s painful to watch yesterday’s profits wash away today. What I try and do is set a strategy before buying in. By a strategy there is an investment hypothesis ie why is it a good investment , and what is the timescale of that to be realised. The strategy also covers the amount I am prepared to invest / risk on that hypothesis and what my exit criteria, good and bad would be. Write it all down, and when in doubt have a think about what in your strategy could be wrong. Day to day prices will move up and down, but that shouldn’t change the strategy and the investment objective. My strategy for AMER is based on a move to profitability via production, potential for asset value growth, the macro economics affecting oil price, and a massive under rating of the above by the market. I expect to hold at least through 2018 to about May or June next year post FY2018 results and 2018 drilling program. If the current POO ($60+) is sustained, there are no natural disasters, and the drilling program reaches a decent percentage of its target then I would expect the exit price to be a lot nearer 50 than 20 pence, possibly from the far side even. Having said all that I still check the share price every day (more or less) and get distracted by price spikes up and down. Just in this case having a plan helps me be patient.

Sorry pressed the post bit a little too soon, I meant to add : Forward P/E 10 seems massively pessimistic even on current production figures.

So maybe lost in all the excitement, Q1 production was 601,706 barrels, they must have averaged at least $64 a barrel (maybe more) , that’s $38.5m revenue in the first quarter alone, getting close-ish to the FY17 first half value. If they just did that through the year (4x) revenue would be I.r.o. $154m for 2018, 67% up YoY against the recent results. If we assume that some of the 14 planned wells will also materially affect the 2P reserves and associated net asset values, I wonder how much profit there will be for 2018?

Bays, tend to agree, but hoping for more than +10p. I think it could justify that rise just in production, but if the 14 wells manage to double or treble the 2P then I would expect much higher. You really think CPO5 will be sold? All of their messaging seems to be on numbers of producing fields, selling cpo5 would seem to be contrary to that.

Just checked the financials, Dana Coffield did not have options or LTIP. Seems he thinks this is a good investment, and will only have been allowed to buy from yesterday because of blackout period rules. A good sign.

Depends if it is part of LTIP or some other bonus scheme. It’s rarely a bad sign mind you... Bought another 200k myself today, this is now my biggest holding. 14 wells, a few are bound to hit something ;)

Ha. Good effort. The $19.8 EBITDA Is from operations. Have you actually read the results?

I think target updates will have to come at the AGM, either voluntarily or through questions. They need to increase the 2P to be really in blue sky territory, a lot swings on the drilling program. If they can prove just 10% of the 1347MMboe mid range then we will all be wondering what to do with the cash.

No harm in hoping. ;) Want to take a stab at H1 2018 figures now Bailey? I think without something serious changing that H1 production will be more than 50% up on H1 2017. Average Q1 is roughly 6680 boepd , allowing for workovers in March i’d hope they get to 6800 for H1. Today’s profits were driven from production and oil prices both roughly a third lower than now.

These could be calculated from their stated production (see posts below). The Shell working capital statement is a big surprise though, that is clearly acceleration money and may mean they have a bigger program of drilling in mind than they can fund with their own $40m. Shell are no mugs, that’s the serious news here. Let’s see how the market reacts.

Net back of $60 would be a very happy place, although right now we should be getting more than $50 which is still a fairly happy place. 6,800 x $50 x 365 = $124m Game’s afoot Holmes, how the hell is the share price here?

Bays, peter piper picked a peck of pickled pepper, but the piper of Hamlin was the one that dragged all the rats out of town. Sadly I don’t play the pipes, so have to drive everyone mad with simple sums. I’m doing the sums because someone has to or we’ll all just turn into ranting cheerleaders for lynching the board or world war 3, whichever comes first. Personally I would like to just focus on the economics of the company, which under the current circumstances look ok to me, but then I appreciate I am one of the lucky ones not to be in much higher.

And just for fun... If they really get to 20,000 boepd in 2019 and oil stays at $70 or above... on an annualised basis that’s $511m revenue, with somewhere in the region of $400m EBITDA. A lot of black stuff to flow down the pipe between now and then mind you!

Incidentally, if they average 6,800 boepd in 2018, with oil at $65 their 2018 revenue would be $141m or so. Hardly a stretch to imagine those numbers, given production is already at that level or thereabouts and Brent is currently and also forecast to be $70+

Hi Velo, they have told us production @ 1.775MMboe , their sell rate for the first half was $47.60, just using that with no improvement in sell price in H2 gives the $83m forecast figure. If they managed just $53 a barrel in H2 revenue should be $90m, so how much they beat $83m by depends on the sell price realised in H2. Since July Brent has been over $50 though so who knows. I posted down below somewhere that I think their EBITDA will be I.r.o just short of $20m, net will depend on asset value shifts, but again with the extra revenue i’d hope they beat $2m by a wide margin.

One last anti-mushroom thing, I actually think the management have been pretty good at sharing information. We know 2017 production already, know how much they have put through the OBA, and have a pretty good idea of the sell price they have been getting. Not many of my other holdings , particularly small caps, are as forthcoming with production data. I have no problem with the RNS stream, it’s enough to encourage me to invest. I accept the risks of wells that don’t pay, but love the idea it’s backed by profitable production and no debt. Contrast with Premier or Enquest with huge debt piles for example.

Join the dots... I wasn’t having a go, I was asking a genuine question. As for the mushrooms thing, I wasn’t the first to use it on the thread below. Your comments on owning the company are also interesting. Warren Buffet says that don’t invest in any company you wouldn’t want to own completely (as is). It sounds like you wouldn’t like to own this company as is, so why invest here? It’s a genuine question, there are many O&G companies to choose from, and many other sectors with good opportunities. I am interested in what makes an unhappy investor stay and complain rather than sell and move on. I also have not accused anyone of being a ramper or deramper, just tried to move the debate to the financials rather than a lot of softer stuff that whilst it’s salaciously fascinating doesn’t really move the needle much as far as ROCE goes. I am a shareholder, my hope / investment plan for Amerisur is for them to achieve their 2019 target production figures. I expect the price to rise post results, probably peaking somewhere around 22-25p in June before dropping back prior to the interims in September and rising again to 25-30p for year end on the back of solid interim profits (which must be 2/3 in the bag already btw) and drilling reports. If they achieve their target or near it in 2019 and oil stays at $60+ then I would expect to be nearer 45p by the end of 2019, three times today’s price. That’s where I would aim to sell my holding unless there are additional prospects in the pipe by then. How do you see this all playing out over the next 18-25 months?

So we have less than one trading hour and a weekend of speculation to go before the results. No one has had a guess at eps, cash, EBITDA, or any other element of the results. Isn’t that strange? Speculation on share price should at least be based on the belief that there will be some positive numbers otherwise out all your money on a nag in the grand national!

Bakoven, if you’re holding and have all theses doubts why don’t you sell out? What do you think is going to happen that is making you hold? The BoD is rubbish, they can’t be reducing costs, they are bound to be over paying for transport, and so on... what’s your plan for the upside?

And by the way for those pattern investors, AMER has spiked post final and interim results every time for the last two years, followed by a sell off between results. It’s a private investor pattern that will break only with a change in II sentiment, a dividend may help that. Just a thought.