The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
I too wouldn't rule out a bid. However any bid would have to start at 80p minimum just to cover the asset value, and that is assuming Fortuna is a total write off!
'Active management of SP' nicely sums up what is happening. Instst. will be accumulating. Could get nasty, depends how badly they want your stock. Just hold tight and don't sell - this will come good eventually
I agree. It could drop to the 30p area before there is a rapid bounce. So I have a core holding just in case it all comes good but will be looking for a buying opportunity is Fortuna is written off. After that it looks like clear blue sky and the real value should become much clearer!
Thanks for the info. I was wondering why the sudden drop late yesterday. I just wish we could get Fortuna out of the way one way or the other! When that is out of the way there is a decent company waiting to move forward.
At the half year Ophir had net assets of $1087m. Write off the outstanding $300m for Fortuna and you have assets of $787m or 605 million pounds - twice the current market cap. Crazy!
London-listed Ophir Energy has begun operations on the Paus Biru-1 exploration well in the Sampang PSC offshore Indonesia.
The Sampang PSC is operated by Ophir Energy’s subsidiary Santos Sampang Pty Ltd with a 45% interest. The partners are Singapore Petroleum Sampang Ltd with 40% and Cue Energy’s subsidiary Cue Sampang Pty Ltd with 15%.
Cue Energy, a partner in the project, said on Friday that the work on the Paus Biru-1 well began on Thursday, October 18, with the installation of a 30-inch conductor.
From Arteesresso on another Board
https://www.google.co.uk/amp/s/www.marketscreener.com/amp/CUE-ENERGY-RESOURCES-LIMI-6864849/news/Cue-Energy-Resources-Paus-Biru-1-Exploration-Well-Primary-Objective-Logging-27544986/
Paus Biru-1 Exploration Well Primary Objective
Logging
• Paus Biru -1 exploration well reached TD at measured depth 710m
• Elevated gas readings were observed through the primary objective Mundu Formation
• Positive indications of reservoir and hydrocarbon on LWD logs
• Wireline Formation Testing Logging program has commenced
Melbourne, Australia 5 November 2018: Cue Energy Resources Limited (ASX:CUE), through its 100% owned subsidiary Cue Sampang Pty Ltd, advises that the Paus Biru-1 exploration well in the Sampang PSC, Indonesia, reached TD of 710mMD at 2230hrs (local time) 3 November 2018. The planned TD was extended during drilling due to formation observations.
Elevated gas readings were encountered through the Primary target Mundu Formation. Following preliminary interpretation of the logging while drilling, a full suite of wireline logs including formation wireline testing, which obtains formation pressures and fluid samples, will be run to further assess the interval. Data obtained will help establish the fluid content, hydrocarbon columns and hydrocarbon saturation of possible reservoir intervals encountered, and to an extent, the permeability and producibility of these zones.
Biggest trade volume in over two years. A lot of stock changing hands - whether it is good news or bad we know not.. The price ends down but I suspect it is being held within a range. Time will tell
Crazily undervalued at these prices but I like the Company's strategy emphasis of returning value to shareholders. That's what the institutions want to hear. With Fortuna still hanging over it, it could stay at these levels a little longer but eventually value will out! Who knows, if they could pull a rabbit out of the hat with regard to Fortuna, it could seriously fly. A takeover is also not impossible.
The price action stinks of a classic AIM lowball takeover or Management Buyout. seen it so many times, you march the share price down to a point where most investors would just be glad to get out, you get an analyst to come up with a valuation not much more than the current market cap, offer what looks like a generous premium on the bid (but in reality just takes you back to the price a few months ago) and get management to recommend the offer. Why would the Directors do that? Well lucrative new positions on the Board of the acquiring company together with share options in said company could be used to entice cooperation.
If anyone thinks this is pure fantasy look what happened with Ithaca not that long ago. Totally corrupt but there is no come back and for most investors no option but to take what is on offer. Watch this space!!
JTD. It is not a conviction, it is a view of what might well happen. So why don't I sell up and buy back lower? The answer is I am not a trader and there is a possibility that something will happen to cause the shares to shoot up and I would have to buy in higher. That might be an acquisition or a bid, or the drills come earlier than I expect, or production is much higher than I anticipate. I bought at a price that was higher than the current price and am happy to hold because I believe the stock will eventually come good. I don't see anything illogical in that view.
Hope you are right. I have just learnt to be pessimistic about timelines. Don't know how long the perforation work will take and bow to anyone with the technical knowledge about timelines. I am hoping that after the additional perforation, output from Mariposa at least doubles. I see any dip as short lived but I have no interest in trading and will continue to hold for the good times I anticipate. Good luck to all longs, we will have our day in the sunshine (eventually).
Amer is now all about the exploration but in the short term will be driven by production figures. Given past performance, I don't expect anything to spud before August. That means we will have one possibly two months production figures before we see a big change in momentum. I am anticipating a further bog drop in production in June or July just as a result of the perforation work on Mariposa. A temporary drop of 1000 bpd as a result of Mariposa coming off line could see us drop below 4000 bpd. That I hope will mark the bottom before a big bounce back once exploration finally gets underway. So I see one further sell off possibly down to 13p or 14p temporarily as a response but that will likely be short lived. What could change that is if things move faster than I anticipate or there is other positive corporate news. The other thing that could impact the SP is if we have a big buyer effectively putting a floor under the price. At the moment there seems to be a buyer around at the 16p level which is encouraging (could it be that the company themselves are seeking to limit further short term volatility by instigating a buy-back at 16p). Just my thoughts and I am usually wrong!
Whether the lower production this month is an aberration or not, in which case we model 2018 exit production at either 5,000 bopd or 6,000 bopd; and Whether any drilling success gets tied-in on time around March 2019 or it slips to Mid-2019: AMER prodn scenario analysis As I say above, the analysts are clustering around 7,500-8,000 bopd and so look to us to be forecasting around the pessimistic scenario. At 7,500 bopd, Cash Flow from Operations (CFO) could range from $47-68m depending on oil prices (assuming they stay in the current 1-year range of $50-$75/bbl). That implies a Price to CFO of 3.9x-5.8x. Not a demanding multiple. At 10,000 bopd CFO rises to $62-91m, and a P/CFO of 3.0x-4.4x. At 12,500 bopd CFO rises to $78-114m, and a P/CFO of 2.4x-3.5x. Therefore, the market is, in our view, pricing in even more pessimism than the analysts. The upside potential relative to downside risk over the next 12 months, combined with the active newsflow, is why we like it. To conclude I deliberately chose a share that has production because I�m not a fan of pure exploration plays as candidates for a portfolio. These companies with production and cash generation still bring a lot of risk but the risks are easier to understand and the cash flow allows these companies to survive when there is an inevitable slump in oil prices. As I outline above, there is a lot of subjectivity in shares like Amerisur and we need to be comfortable with those risks before we add them to our fund. The same goes for anyone looking at this sector.
be dictated by results from the Platanillo drilling (mentioned above) and the first well in the block. The two choices are an N-sands large look alike (number 3 in presentation, page 19) which would most likely be favoured if the drilling of the North of Platanillo licence proves successful, whilst the smaller Bienparado would be drilled otherwise, as a similar play to existing Platanillo production nearby. Lastly Amerisur has Putumayo 12 (60% working interest) and 9 (100% ownership) blocks both with three well drilling programs and with 2D seismic activity on-going. These wells are slated for later in the year and we shouldn�t be surprised to see a few of these perhaps slip into early 2019, more details are likely to emerge nearer spud date. However with a combined net to Amerisur prospective 289 mmbo there is a large potential prize waiting any drilling success from these six planned wells. Slide 24 is worth a glance with Putumayo 30, Terecay and Tacacho combined having 926 mmbo prospective resources. If Amerisur can grow its shorter-term cash flows then it has a whole host of prospectivity to drill into through the next three years or so but to really make any inroads in here they need to be a larger business with a bigger balance sheet. Perhaps these land assets might attract a larger balance sheet partner or takeover of the business given current high oil prices. The success of its own pipeline investment is now becoming clear, so far the opex savings on a quite low average throughput have paid back the capex over only 15 months. However, its real value can only increase if exploration can provide the output to step up throughput to more like 20,000 bopd in a couple of year�s time. Experienced Management Long-term, stable and experienced Management are a crucial factor for a business when we�re assessing whether it should be in our fund. Amerisur is in a strong position on this front. CEO John Wardle is based in-country, he has been in place over 10 years and he has a track record of getting things done in a country where this is no easy task. He�s also survived through the cycle as oil prices have ranged from $36/bbl to well over $100/bbl and all the way back down again during his tenure. Time for the back of an envelope� Making the VERY rough and arbitrary estimate that seven out of 14 wells and the increased perforation at Mariposa provide 7,000 bopd then current production could double by mid-2019. Current sell side analysts that provide estimates have well below this sort of production increase in their estimates. Most analysts seem to be clustered around the 7,500-8,000 bopd range for 2019. See recent notes from GMP FirstEnergy (here) and Arden Partners (here). Undertaking some basic scenario analysis, below are four scenarios for 2019 production. The two variables we�ve used are: Whether the lower production this month is an aberration or not, in which case we m
and these usually, as a rule of thumb, produce something like a factor of 3x the uplift compared to a vertical well if successful. This gives a rough range of 1,000-5,000 bopd from these three wells. However, with drilling the concept of a "sure thing" does not exist. Therein lies a big part of the risk and the opportunity that markets price into companies like this. Amerisur do operate in a relatively low risk area, as compared to oil basins in other regions both onshore and offshore. According to management, the average success rate since 1966 of a well bringing oil to surface is 85% in the area. Another caveat though, �bringing oil to surface� is not the same thing as flowing commercial barrels. If all three wells came in it�s likely management would continue to drill further wells here using up the spare slots on location which would be the best result for shareholders. Licence CPO-5 (Amerisur owns 30% with ONGC as operator) is also a three well campaign targeting the Indico, Aguila and Sol prospects. Management gives a net 40.58 mmbo (million barrels of oil) estimate for all three wells combined, and it flags this estimate as conservative. Two interesting facts about these wells are: Firstly, the nearby Maripasa-1 well was previously a success, testing at 5,400 bopd but choked back to 3,000 bopd of current production from only 10ft of perforation, out of 110ft of pay depth. Since initial production in November 2017 there has been no drop in pressure or flow at all and it could be that this producing asset has much better sizing than initially appreciated. The 10ft of perforation is likely to be increased by another 22ft which should, therefore, increase the wells production rate. Secondly, in the block to the north (LLA-34) are a series of producing fields (combined production 55,000 bopd) owned by Geopark and Parex. Through a series of successful drilling campaigns these fields have significantly increased in resource and production in the last three years. Amerisur�s three drilling prospects are all on trend but focused on different structure types which have been somewhat derisked by their similarity to the successful Mariposa-1 well. Any success from each of these wells could make a significant difference to valuation. It�s worth noting that Geopark has taken its Colombian production from 3,440 bopd in 2012 to almost 22,000 in 2017, mainly on the back of its assets to the north of CPO-5. Putumayo 8 (50% ownership) sits to the west of the currently producing Platanillo block and the all important OBA export pipeline. Here AMER is due to drill two wells, the first one is actually being drilled from their neighbours existing and producing oil pad but into Amerisur�s block meaning any success can be brought onto production rapidly whilst the second well has a choice of two objectives and a final decision will be dictated by results from the Platanillo drilling (mention
This has been posted on the ADvFN board: https://*********************/blogs/the-naked-fund-manager/the-naked-fund-manager-analysing-an-e-p-like-amerisur Oil prices have been on a tear so far this year (much to this commentator�s surprise) and correspondingly many UK-listed oil related shares have gained significantly year to date. Therefore, I thought it might be of interest to briefly outline how I think about an Oil & Gas Exploration and Production (E&P) company. How to look at a company like Amerisur One laggard that is in our fund (so I fully accept mine is a conflicted view) and has taken a hit this morning is Amerisur. The shares are broadly flat on a 12-month view, compared to Brent which has steadily risen 65% over the same period. How do production and the Balance Sheet look? Amerisur is a Colombian-based but AIM-listed business. It has a market cap of US$270m and a net cash balance sheet of US$39m. In 2017, production averaged 4,857 bopd (Barrels of oil per day) with an exit rate at year-end of 6,951 bopd. That delivered revenues of $92.5m and Operating Cash Flow of $30m. That�s a market valuation of exactly 9x reported Operating Cash Flow. Management usefully publish their production every month. Frequent and regular transparency is paramount when looking at these sorts of companies and this level of disclosure is a real rarity in the sector. It is to be applauded. Amerisur has averaged around 6,100 bopd for the first five months of 2018. Although today�s announcement for May shows there have been production issues such as lower production rates and increased water cut, meaning May�s oil production was only 4,800 bopd. This hit shares c.9%. What are Management planning on drilling this year? Whilst we are now in June and Amerisur has so far not drilled a single well, Management are hoping to complete 14 wells by 2018 year-end in a $61m capex program; a significant investment amount when set against their existing market cap. This second-half-weighted drilling campaign should generate a veritable avalanche of upcoming news flow. The recent AGM presentation gives an excellent overview of the business and planned drilling campaign: Http://www.amerisurresources.com/investor-centre/reports-and-presentations and is useful to have to hand when reading this. One thing that attracts me most to Amerisur and this drilling campaign is that, if successful, nearly all of the wells can be rapidly hooked up onto production rather than suffering from a long lead time to cash flow as often can be the case for smaller oil stocks. The three wells at Platanillo all focus on the N sand opportunity and are drilled from a single pad that has capacity for six wells from this location. The first two wells are vertical and an excellent result for each would be 1,000+ bopd whilst a poor number might be 200 bopd, both eventualities are quite possible; the third well is a horizontal well
What disappointing me more than the declining production is that the 'exciting' drilling programme is forever being kicked down the road. It was June, then July, and now it is 'third quarter' - which just gives them leeway to push it into August/September. It's like a bad dream where the faster you run towards something, the further away it gets! I was also disappointed there was no mention of the further perforations of Mariposa. Has the work started yet? If not, that well will presumably be taken off line so that next months production figures could be even worse!
JTD: Keep up the good work. Your research is the backbone of this Board and much appreciated by everyone (including those who post rarely but read everything daily). Your contributions are always well researched and insightful and, I suspect, come from a deeper knowledge of the oil industry than most of us possess. Many thanks.
My dream is that all three come in with consistent pressures and the conclusion that they are a continuous field with the source/kitchen lying somewhere to the south in the as yet unsurveyed remainder of the CPO5 block. Ah well, it does no harm to dream!
They always know more than we do. Inevitably. But, until it is proven, it wouldn't be classed as insider dealing.