AMER.L Regulatory News (AMER)

10th April 2017

Amerisur Resources Plc

Final Results for the year ended 31 December 2016

A year of delivery, transition and consolidation

Amerisur Resources Plc ("Amerisur" or the "Company"), the oil and gas producer and explorer focused on South America, announces its audited results for the full year ended 31 December 2016.

Highlights:

Production and reserves

Exploration and Appraisal

Corporate

Financial

Outlook

Giles Clarke, Chairman of Amerisur, commented:

"2016 will be remembered as the year the management team delivered the final construction and the operations of the OBA pipeline from our Platanillo Block in Colombia into neighbouring Ecuador. During the year and subsequently, we have also again broadened our Colombia assets in the Putumayo basin around the OBA pipeline, creating a cluster of assets and exploration opportunities, which when drilled and in production, will all benefit from the significantly reduced operating costs associated with the OBA export route as opposed to historical trucking. 

"The Board considers that the Company has delivered against its stated strategy very competently in the context of the oil market environment. To remind shareholders, Amerisur has considerable cash on the balance sheet, it generates strong cash flow at current oil prices and has a solid reserves base, all of which have served the Company well over the last few years.

''The significant work of the Chief Executive, supported by myself, with the Colombian Government, and in the UK with the UK Government and the invaluable help and advice of H.E. the Colombian Ambassador, and our Colombian staff in the field, has finally enabled much progress to be made with the local communities following the start of the Peace Process. A very complex time but with huge future potential for Colombia, its people and foreign investor partners''

"The outlook for Amerisur is strong. Despite the lower oil price environment, we can see the prospect of increasing profitable production as the OBA volumes increase and we have nine wells fully funded at $45 oil in the work plan. The recent acquisitions have given Amerisur a tremendous platform to create a very significant position in the Caguan-Putumayo basin, which will be of immense benefit to shareholders."

Ends

Enquiries: 

Notes to editors

Amerisur Resources is an independent full-cycle oil and gas company focused on South America, with assets in Colombia and Paraguay and production from the Platanillo field in southern Colombia. In 2016 Amerisur successfully built and is 100% owner of the strategic OBA oil transfer line into Ecuador.

In Colombia, the Company is operator and has a 100% working interest in the Platanillo block which includes the Platanillo field. The Company has a strong position in the Putumayo basin and has a cluster of near term activity assets around the OBA export line. It has a diverse portfolio of longer term exploration assets.

This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.

www.amerisurresources.com

Glossary

2016 will be remembered as the year the management team delivered the final construction and the operations of the OBA pipeline from our Platanillo block in Colombia into neighbouring Ecuador. It is the first ever, privately owned piece of cross border infrastructure between these two great countries. During the year, we have also again broadened our Colombia assets around the OBA pipeline, creating a cluster of assets, which when drilled and in production, will all benefit from the significantly reduced operating costs associated with the OBA export as opposed to historical trucking.

The Board considers that the Company has delivered against it stated strategy very competently in the context of the oil market environment. To remind shareholders, Amerisur has considerable cash on the balance sheet, it generates cash flow at current oil prices and has a solid reserves base, all of which have served the Company well over the last few years.

Amerisur has weathered the low oil price environment relatively well. Since the current management team took over in 2007, considerable value has been created for shareholders, despite the oil price fall. The Company has raised £81m and has significantly increased the market capitalisation, which currently stands at £273m.

2016 and early 2017 has seen a process of Board refreshment and succession planning. Much work has been done to upgrade the Company's corporate governance, which has included extensive shareholder engagement. In May, Chris Jenkins, joined the Board as an independent Non-executive Director. Chris is a chartered accountant (FCA), and was a partner for more than 20 years in KPMG's London office, during a 30-year career with the firm. He was lead audit partner for six FTSE-100 companies. At KPMG he also fulfilled various leadership roles in the global Energy and Natural Resources practice. Chris chairs the Audit Committee and sits on the Nomination and Remuneration Committees.

Post period end the Company announced the retirement from the Board of Directors of Nigel Luson, Victor Valdovinos, and George Woodcock. I would like to thank them all for their valuable contribution to the development of the business over the past years.

The Board has also conducted a search process to appoint two additional independent Non-executive Directors: one with significant City experience; and one with considerable oil industry experience, a process overseen by Chris Jenkins, an independent Non-executive Director. In line with corporate governance and recruitment best practice the exercise was managed by Preng & Associates, a leading executive search firm dedicated to the energy industry. Following an extensive and thorough process, on 6 April the Board announced the appointment of Dana Coffield to the Board as an independent Non-executive Director.

It is expected that a further independent non-executive Director appointment with considerable City experience will be made in the near future.

Dana Coffield has over thirty years of international E&P experience encompassing North and South America, North Africa, Middle East and South East Asia. Between 2005 and 2015 Dana was co-founder and CEO of Gran Tierra Energy and during his 10 years at the helm, the company successfully grew reserves and production year on year becoming a leading player in the operationally challenging Putumayo basin in southern Colombia.

It is intended that Dana Coffield will join the Remuneration Committee.

Following these changes, the Board of Amerisur has two Executive Directors, four Non-executive Directors and a Chairman, which sees the Board exceed the expected level of independent director representation for an AIM listed company. All of these Board changes have been made with Sections A and B of the Corporate Governance Code 2014 in mind.

In addition, the Remuneration Committee has completed an initial review of its remuneration policy and practices with the support of a respected third party remuneration consultancy. The Remuneration Committee does not intend to make any option awards in 2017 except to a select number of Colombia based personnel, and the Chairman has indicated that he wishes no longer to receive options in the Company. In addition, as a commitment to ongoing interaction with shareholders, and as was the case at last year's AGM, the Board confirms that it will again be voluntarily submitting the Remuneration Report to a shareholder vote at the AGM to be held in May. Only 31% of the AIM 100 do this and below the AIM 100, the levels are half that.

By way of stock market communications and investor relations ('IR'), Chief Financial Officer Nick Harrison has responsibility for investor and analyst relations, modelling and clarity on guidance. He is supported by a financial PR and IR consultancy which deals with media and general IR enquiries. Additionally, John Wardle and Nick Harrison, supported by Giles Clarke and Senior Independent Director Stephen Foss led all institutional roadshows. During 2016 three institutional roadshows were conducted with 46 institutions seen and nine corporate governance meetings undertaken. A trip to the Platanillo field in Colombia took place in September 2016 which was attended by 10 sell-side analysts. As part of our improved corporate governance processes, the Company has put in place measures to improve its stock market communications. We are committed to more regular updates and post year end have started issuing monthly production and OBA volume export updates. The Company has appointed additional resource in the finance team to enable Nick Harrison to allocate more time to IR.

The Colombian peace process made very significant progress in 2016 with a peace deal being agreed and ratified in December. Peace in Colombia is clearly a positive thing for the people of Colombia and for businesses which will find it easier to grow and attract international capital. As the biggest UK investor in Colombia, we are heavily committed to all our social programmes in the Putumayo province and whilst in the short term the slight disruption to the peace process in mid-2016 inevitably led to some local social issues, the social outlook in the medium to long term is positive. Both the Chief Executive and myself have devoted a very large amount of time to this vital area. We were very proud that Amerisur was invited to all the major events of President Santos's historic state visit to the UK in November, including the State Banquets and private Breakfast at Buckingham Palace, enabling us to ensure the Putumayo region has considerable focus at the national level. 

We note with sadness the recent natural disaster in Mocoa Putumayo. Amerisur is cooperating with the response activities led by the Colombian Authorities, having provided specialist equipment, fuel, fresh water in bulk and logistical support including helicopter work, and we remain in close contact with Government officials to help those impacted by this natural disaster. The area affected in Mocoa does not include the main road, and Amerisur operations have not been affected by the event.

The outlook for Amerisur is strong. Despite the lower oil price environment, we can see the prospect of increasing profitable production as the OBA volumes increase and we have nine wells fully funded at an oil price of $45 in the work plan. There continues to be the possibility of social unrest but we are working hard with the Colombian authorities to engage with and help manage these issues. There had been some disruption and the result has been a delay in the activity programme in certain blocks such as Put-12, but this has been balanced by activity elsewhere in the portfolio.

Selling prices are much improved relative to this time last year and this has been enhanced by cost reductions resulting from the OBA pipeline export route.

The recent acquisitions have given Amerisur a tremendous platform to create a very significant position in the Caguan-Putumayo basin, which will be of immense benefit to shareholders. 

A huge amount of work has been done across the Company to grow the business and get the OBA on stream. I would like to thank our employees for their hard work

Your Board looks to the year ahead with confidence.

Giles Clarke

Chairman

7 April 2017

2016 was a busy year for the Company. We delivered the OBA oil transfer system on budget, performed important work in the Platanillo field in terms of infill drilling and optimisation of all kinds and we broadened the portfolio further around the OBA given its unique strategic value and attractive economics. We now have a strong cluster of assets with a diversity of exploration opportunities in what has become the core area on which to build our future. The OBA system is an integral part of the strategy we have been working towards for many years and which we now see unfolding, and a key part at that, since access to oil transport at low cost will always be an important factor in any remote, infrastructure-poor basin. The absence of export options drives up the economic cut-off point for any prospect in terms of prospective resources while driving down the projected NPV per barrel. This can serve as a strong disincentive to explore, particularly in times of low or volatile oil prices.

Amerisur, with its unique position both in acreage and the possession of the OBA, enjoys high potential NPV on even small accumulations, and of course large finds will be very profitable. That is not to say that we are targeting small accumulations, for we are not, but our positioning allows us to profitably exploit even such small accumulations. Within our portfolio in the Putumayo we have a range of very significant resources we are aiming to discover in the next years, with the objective of building Amerisur's sustainable production level to 20,000 barrels of oil per day (BOPD) by the end of 2019. So, although important, the OBA is not everything, it is not the entire strategy, but just the start, where we focussed while awaiting the opportunity to expand within the immediate area without paying excessive prices for that expansion. The expanded portfolio gives us the ability to be selective and responsive in where we put our exploration dollars, seeking a balance of low risk, material upside and the ability to move quickly by optimising our position and managing social and other surface issues. 

Our view is that the greater Platanillo area, particularly to the east, holds important resources in a variety of relatively simple and technologically definable play types. The latest acquisition from the subsidiaries of Pacific Exploration and Production ('Pacific'), announced post period end is in line with our strategy and completes our dominance in the greater Platanillo area. That dominance has been our objective in terms of positioning and has been achieved. It now remains to access those opportunities, explore intelligently and produce oil.

After some delay due to administrative issues and inclement weather in both Colombia and Ecuador, in October the regulatory agency of Ecuador, ARCH, issued the decree to Petroamazonas EP for the operation of the OBA system in Ecuador, which was constructed and commissioned on budget for approximately $18m. As a result, transport of Platanillo crude oil commenced at an initial rate of 1,500 BOPD via the Petroamazonas EP owned and operated Amazonas Oil Pipeline System (RODA) to Lago Agrio, for further onward transport to the port of Esmeraldas. The OBA transported an average of approximately 4,180 BOPD of Platanillo crude during March 2017.

The Company has a throughput capacity under current agreements with Petroamazonas of 5,000 BOPD. This capacity was only reached in April 2017 due to the delays caused by equipment deficiencies and additional competing volumes within the northern part of Ecuador. The technical capacity of the transfer system is approximately 50,000 BOPD and the line has a currently installed export pump capacity of 18,000 BOPD. The Company is working diligently with Petroamazonas to resolve the restrictions in Ecuador in order to achieve a consistent throughput of 5,000 BOPD, and we are also working on solutions which will give Amerisur additional carrying capacity beyond that volume. An example of this is the detailed engineering and costing work underway with respect to the construction of the Chiritza pumping station within the RODA system, which will serve to increase system efficiency and hence Amerisur's transport quota. An agreement for the Chiritza project is currently being negotiated with Petroamazonas.

During the year, the Company made two acquisitions to increase the Company's acreage position around the OBA pipeline. In January 2016, we acquired Platino Energy (Barbados) Ltd ('Platino'), a private company, from COG Energy ("COG") for a total consideration of $7.59m. The consideration was paid in Amerisur stock.

The assets acquired through this transaction were a 50% (non-operated) working interest in Put-8 block adjacent to the west of Platanillo. Vetra Energia S.L. ("Vetra") holds a 50% working interest and is the Operator. The block is currently in Phase 1 of exploration. We also acquired a 100% (Operator) working interest in the Coati Evaluation Area (Temblon Field) within the Coati block located in the South West of the Putumayo basin. Canacol Energy Colombia SA ("Canacol"), a subsidiary of Canacol Energy Ltd. of Canada, has a 40% working interest in the exploration area of the Coati contract. A Consulta Previa with local indigenous groups is currently underway. Once that is completed, a global environmental license will be applied for to advance the planned exploitation and exploration programme. Finally, we acquired the 100% owned and operated Andaquies block located in the north east of the Putumayo basin, contiguous with our block Put-30, which has a one well commitment by May 2017. The Company is currently reviewing options with the Agencia Nacional de Hidrocarburos (ANH) to defer that well until the regional seismic study commissioned by Amerisur over its entire portfolio is completed.

In June, the Company signed a modification of the farm out agreement with Canacol. The modification increases the farm in participation of Canacol from 20% to 40% working interest in the exploration area of the Coati contract. The consideration for the farm in is a total carry of $10.75m, of which $6.95m is outstanding in favour of Amerisur. This carry will fund investments associated with Exploration Phase III within the Coati block, and may be allocated towards seismic and drilling operations. Subsequent to the carry being satisfied, costs will be shared 60% Amerisur/Platino (Operator), 40% Canacol. The Coati Evaluation area (Temblon field), remains 100% owned and operated by Platino/Amerisur.

In addition to bringing new OBA cluster assets to the portfolio, Platino carried tax pools of approximately $24m which may be offset against future taxable profits. 

During the year, the Company also acquired from Talisman Colombia Oil & Gas Ltd (Talisman Colombia), the remaining 50% working interest in the Put-30 contract area and a new 40% working interest in the Put-9 contract. The application for approval to ANH includes the appointment of Amerisur as Operator of Put-30. Put-9 is located immediately to the north of Put-12 and to the east of Platanillo and, prior to the acquisition noted below was operated by Meta Petroleum Corp. with a working interest of 60%.

Post period end, and subject to ANH approval, the Company acquired the outstanding working interest in the Put-9 and Tacacho blocks plus 100% working interest in Terecay and 58% of Mecaya from the Pacific subsidiaries.

We drilled two wells during the year. Platanillo - 8 was a successful infill well drilled from Pad 5 and was tied back into production facilities on that pad. We also drilled the high impact Jaguarete-1 well in Paraguay which encountered a reasonable oil column inferred from logs but in a tight reservoir. Post balance sheet we drilled Platanillo-24, a successful producer, from Pad-3N as an infill well which came into production shortly after being completed.

Our drilling programme over the next 18 months is expected to include at least nine fully funded wells. The exact order and location of the wells will be subject to social, indigenous and licensing factors, however the overall plan is to drill three on the Platanillo field (including Platanillo 22 currently testing), two on Put-12, two on CPO-5, a Platanillo N Sand anomaly well and one on the Coati block. Naturally the acquisition from the Pacific subsidiaries post period end may affect this plan, in terms of potential drilling within Put-9 in preference to other opportunities. We also plan to conduct an important 3D seismic programme on the Coati block. Total 2017 capital expenditure is expected to be up to $44m and is planned to be fully funded from operational cashflows. The recently announced result from Platanillo-22, where we have logged a total of 40ft of net pay in the N and U sands, is very exciting, extending the current envelope of the Platanillo field to the north.

During the year, the Platanillo field production was 1,126,504 barrels, averaging 3,086 BOPD. The cash opex per barrel of oil produced at Platanillo during the year was $22.8 per barrel due to the trucking required to export the crude. This was lower in the last few months of the year as the OBA came onstream and as volumes increased. Opex per barrel will reduce further to $15 per barrel once volumes reach 5,000 BOPD through the OBA pipeline and we are targeting average production in 2017 of between 6,000 and 7,000 BOPD and a 2017 exit rate in excess of 7,000 BOPD. Current production from the Platanillo field averaged 4,345 BOPD during March and volumes through the OBA averaged 4,180 BOPD during the same period, rising to just over 5,000 BOPD in early April.

John Wardle

Chief Executive Officer

7 April 2017

Amerisur's business model encompasses the fundamentals that must be in place to manage business risks and help deliver its strategy. These include:

§ Sustainable operations;

§ Protecting employees, communities and the environment;

§ Assets with high potential;

§ Colombia-based CEO, with majority of management in country;

§ High equity stakes where possible;

§ Operatorship where possible;

§ Self-funding of those assets;

§ Strong skill set of our people;

§ Low cost acquisitions;

§ Typically targeting lower risk exploration after detailed analysis; and

§ Low cost production and attractive production potential.

Amerisur is focusing on developing its assets in Colombia, which has a well-established petroleum industry with highly productive basins, yet remains relatively unexplored. The Company believes there remains significant opportunity to explore lower risk opportunities aiming to deliver strong medium term cash flows through focussed exploration in Colombia.

Amerisur has a cluster of assets around the OBA pipeline including Platanillo, Put-8, Put-9, Coati and Put-12 which are able to utilise the lower cost OBA export route. In addition, Amerisur has interests in Put-30, Andaquies, CPO-5, Terecay, Mecaya and Tacacho. It will continue to review new portfolio additions in Colombia that offer near to mid-term production opportunities that provide value for shareholders.

As of 7 April 2017, and in some cases subject to ANH approval, the Company has interests in the following blocks:

· 100% Platanilllo, Operator

· 100% Coati block evaluation area (Temblon Field), Operator

· 60% Coati block exploration area, Operator

· 60% Put-12, Operator

· 100% Put-9, Operator

· 50% Put-8

· 100% Put-30, Operator

· 30% CPO-5

· 100% Andaquies, Operator

· 100% Fenix, Operator

· 100% Tacacho, Operator

· 58% Mecaya, Operator

· 100% Terecay, Operator

Platanillo - OBA Cluster

The Company is Operator and has a 100% working interest in the block. This 11,119-hectare block is located in the Putumayo basin, in the south of Colombia. Despite delays due to external factors, the Company has continued to build upon its successful drilling track record in Platanillo and drilled 17 wells and 3 sidetracks.

The OBA interconnector oil transport system connects production from the Platanillo field under the Putumayo River into the Victor Hugo Ruales pipeline infrastructure in Ecuador. The pipeline is now operational with a significant impact on transport costs. The highest daily throughput previously reported was 4,509 barrels of oil on 27 March 2017 and in the early part of April 2017 is transporting an average of approximately 5,003 BOPD.

In the summer, Amerisur commenced drilling operations on well Platanillo 8 as an infill well on Pad 5 in the Platanillo field using the Serinco Rig D-10. The infill well was drilled to Total Depth ("TD") of 8,719ft on Pad 5S and a 7-inch casing was run and successfully cemented. Schlumberger electric logs indicated the well encountered oil columns in the Upper U, Lower U and T sands, with excellent reservoir quality. The N sand was not well developed at this position, in line with Amerisur's seismic attribute predictive model. In the U-sand total net pay of 27 feet was estimated, with an Oil Water Contact ("OWC") in the lower part of the Lower U sand. The T sand reservoir exhibited 14 feet of net pay within excellent quality reservoir with no OWC shown on the logs, for a total of 41ft of net pay. The well was drilled ahead of schedule, reaching TD in 15 days compared to the planned 21 days due to operational enhancements and excellent operational performance. These significant time and cost savings will be important in the future drilling programme. Platanillo-8 was brought into production at a rate of 411 BOPD.

Subsequently Platanillo 24 was drilled as an infill well under time and under budget, to a total depth of 8,485ft measured depth ("MD"), achieving an offset of 1,275 feet to the east of Platform 3N. This well was designed as an infill well on the most northern developed lobe of the Platanillo field, located between wells Platanillo 7 and 17. The reservoir section was logged and initial log analysis indicated the presence of 67.5ft gross, 38ft net oil column in the U sand formation. The analysis of T sand indicates a 14ft gross and 8ft net oil column. The N sand was not well developed at this location, in line with the Company's seismic attributes model. Platanillo 24 was tested and placed on commercial production at a rate of approximately 420 BOPD in natural flow. An interval of 7ft was perforated in the Lower U sand only. Water cut is currently 0.1% with 80psi wellhead pressure through a 28/64" choke.

Post period end, and following the resolution by the national Government of local social protests, the Company mobilised the Serinco Rig D-10 to Pad 2N, and drilled Platanillo 22, the first appraisal well from Pad 2N, the northernmost Pad on the Platanillo block.

Post the drilling on Pad 2N, we intend to complete the studies required to license drilling pads located over the N sand anomaly defined in the central part of the Platanillo block, to the north of Pad 2N. It is expected these studies will be completed in H1 2017. 

The N sand prospect in this part of the block has unrisked prospective resources of 37.3 million barrels of oil (MMBO).

Putumayo-8 - OBA Cluster

Our interest in Put-8 was acquired in January 2016. The Put-8 block is adjacent to the west of the Platanillo field and is in Phase 1 of its exploration period with a 2% X Factor (see glossary) and low work commitments of one exploration well and 208km2 of 3D seismic. Amerisur has a 50% (non-operated) working interest and Vetra holds the remaining 50% and is Operator. Given the social and security conditions, operational progress on the block has been slower than hoped in 2016. We have however performed valuable technical work involving inversion processing 2D and 3D seismic data in order to better understand how the geology fits with the Platanillo field. 

Coati block - OBA Cluster

Amerisur acquired the Coati block in January 2016 as part of the Platino transaction. The Coati block is 100% owned and operated by Amerisur, with Canacol holding a 40% working interest in the exploration area of the Coati contract. The Coati block is located in the South West of the Putumayo basin, adjacent to the Loro and Hormiga oil fields and is in Phase 3 of its exploration period with no X Factor and low work commitments.

There is an existing discovery on the block of which Amerisur owns 100% called Temblon and the Company is currently performing the Consulta Previa required by law with local indigenous communities in order to initiate the seismic and long term test ("LTT") programmes in this block. The Company expects to complete this process during H1 2017 and the LTT is expected to begin thereafter and we are hoping to be drilling the Coati-2 well by the end of 2017. The block has unrisked resources of 31.6MMBO.

Putumayo-12- OBA Cluster

Put-12 was acquired following a successful bid in November 2012, in a joint arrangement with Pluspetrol. It is a 54,434-hectare block which is adjacent to Platanillo to the East and shares its geology. The Company is Operator with a 60% working interest. The bid included a commitment to a seismic acquisition programme and the drilling of one exploration well during the first three-year exploration phase and the block carries a 29% X factor. Social issues associated with the peace process have prevented us progressing activity materially on the block in 2016. Assuming social issues can be resolved, a 2D seismic programme is due to be conducted which is anticipated during H1 2017. The Company believes that these issues will diminish and allow full access as the peace process advances. The block has unrisked prospective resources of 211.9MMBO.

Put-9 - OBA Cluster

Put-9 is located immediately to the north of Put-12 and to the east of Platanillo. Post period end and subject to ANH approval the Company acquired the remaining 60% of this block from a Pacific subsidiary, Meta Petroleum Corp. and is now Operator with a 100% working interest. On the basis of existing seismic data there are several interesting structures which are shared between Put-12 and Put-9. There are also independent structures which lie within Put-9. We are currently performing detailed work to link the geological models of Put-12 and Put-9, after which an independent resources report will be commissioned covering both these and other assets in the portfolio. Oil production from Put-9 can be exported using the Platanillo infrastructure. The block has unrisked prospective resources of 53.5MMBO.

Putumayo-30

Put-30 covers approximately 38,514 hectares and lies within the Putumayo basin, approximately 55km to the north of both the Company's 100% owned Platanillo field and 60% owned Put-12 Contract. The Company has a joint arrangement with Talisman Colombia, with each party owning 50% respectively. In December 2016 Amerisur bought out Talisman and has applied to become the Operator. The transaction and operatorship is subject to ANH approval. The block has cretaceous potential and is a recognized Tertiary play concept. We plan to explore to evaluate the potential of producible heavy oil deposits in the Neme formation. The social consultation process is in progress and is expected to be completed in 2017. The block has unrisked prospective resources of 449MMBO.

Andaquies block

The Andaquies block, 100% owned and operated by Amerisur, was also part of the Platino acquisition and is located in the north east of the Putumayo basin with no X Factor and low work commitments of one exploration well by May 2017, which is under negotiation as outlined below. The Company is currently reviewing options with ANH to defer that well until the regional seismic study commissioned by Amerisur over its entire portfolio is completed. The block has multiple proven reservoir targets, six mapped leads targeting both proven and novel plays and unrisked resources of 66MMBO. It sits to the north east of a proven structural play within the Putumayo basin. The environmental management plan ("PMA") is currently under preparation.

CPO-5

CPO-5 was acquired in June 2015 through the acquisition of Petrodorado South America SA ("PDSA") a subsidiary of Petrodorado Energy Ltd. Amerisur has a 30% (non-operated) working interest in the contract, ONGC Videsh Ltd holds a 70% working interest and is the Operator.

CPO-5 is an Exploration and Production Contract, covering 198,000 hectares and located to the south of block Llanos 34 and to the east of the Corcel fields. The block includes the evaluation area related to the Loto-1 oil discovery. That well was drilled in 2013 and tested oil in the Mirador formation during a short test however lack of zonal isolation prevented performance of a long-term test. Core and electric log data indicate 61ft of net pay within the Mirador. A further 30 day test of Loto-1 was performed in 2016 in the Mirador L4 interval. The testing data from the test is undergoing analysis, but does not appear to be commercial as a single accumulation. A further two wells within the north-western sector of the block, Kamal and Metica also tested oil. Amerisur and ONGC Videsh have defined the location of two exploratory wells within the North-West 3D seismic data. The Company commenced drilling operations on the Mariposa-1 well in March 2017 and expects to commence drilling of the Sol-1 in Q3 2017. The block has unrisked resources of 142.3MMBO.

Tacacho

Tacacho was acquired in June 2015 through the Company's acquisition of PDSA. Amerisur had a 49.5% (non-operated) working interest in the Tacacho contract, Pacific Stratus Energy held 50.5% and was the Operator. Post period end and subject to ANH approval, the Company acquired the remaining 50.5% of this block from Pacific.

Tacacho is an Exploration and Production contract, covering 238,000 hectares in the eastern Caguan-Putumayo basin. It is a heavy oil exploration play, supported by regional studies which indicate a continuation of the heavy oil trend extending from the eastern Llanos basin through to the ITT field complex in the eastern Oriente basin of Ecuador. Additionally, the well Solita-1, drilled nearby by Texaco in 1948 indicated the presence of hydrocarbons in the Pepino formation. Large structures have been defined on existing 2D seismic, with closures at both the base and top of the Pepino formation. The contract is currently in Phase 1, where the exploration commitment is 480km of 2D seismic. The phase is currently suspended while social consultations and security planning is performed. The block has unrisked resources of 179MMBO.

Paraguay 

The exploration well Jaguarete-1 was spudded on 22 April 2016 and reached TD of 8,626ft in the Itajuru basement formation in June. Positive indications of oil and gas in potential reservoir sections were seen in the mud logs while drilling. The well was drilled on budget and safely. The potential reservoirs of the Lima and Santa Elena formations were encountered slightly deeper than anticipated, and from initial mud logs appear to be complete in their development. The well was ultimately completed shallower than the originally planned maximum depth since the crystalline quartz basement Itajuru formation was encountered at the higher end of the prognosis range.

The electrical logs obtained in the exploration well, Jaguarete-1, were interpreted and initial analysis indicated the presence of oil saturations within low porosity sandstones of the Lima and Santa Elena formations. The Company believes that the log data acquired and the cuttings samples obtained are the first demonstration of oil presence in the Paraguayan Parana basin. The reservoir quality indicated that the accumulations at this particular point in the structure and block were not commercially extractable. A technical programme involving the detailed analysis of well data and samples and the reprocessing and reinterpretation of the seismic data set is almost complete. Until the results of this have been studied, very little capital will be spent on the Paraguay acreage.

The absence of viable producible conventional reservoirs in the Parana basin has resulted in the Company taking the decision to impair its total investment to date in this block. E&E investment attributable to the Western blocks have not been impaired on the basis that these are located in a different sedimentary basin to those in the Eastern part of Paraguay where several oil fields are currently producing oil.

In March 2017, the Company took receipt of an independent reserves report for the Platanillo field as at 31 December 2016 undertaken by Petrotech Engineering Ltd, using the standards set by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers. Certified 1P (Proven) gross field reserves were 15.1MMBO (2015: 15.2 MMBO) after production of 1.13MMBO during 2016 and 2P (Proven and Probable) gross field reserves were 24.5MMBO (2015: 23.7MMBO).

Production during 2016 was 1.13MMBO; hence current 1P reserves represent an increase of approximately 1MMBO from the 2015 year end. This technical increase of the Expected Ultimate Recovery ("EUR") (a forward-looking model which assumes a decline factor and projects the volume of oil which will ultimately be recovered from each well) takes account of the successful infill wells and optimisation work undertaken during the year, together with the cost savings generated by optimisation and the operation of the OBA transfer system. During the period, there were no reserve additions from the drilling of new wells outside the current established limits of the Platanillo field. The Company is currently drilling Platanillo-22, which has reached 5,651ft, where 9.5/8" casing has been successfully set and cemented. Should this well encounter commercial oil in the Pad 2N structure, further reserves will be added to the field.

Amerisur's resources stood at 1,133.6MMBOE.

Amerisur's long term strategy is to acquire, explore and develop large acreage positions in major underexplored basins located in South America, with a current major focus on the Putumayo basin in Colombia. In our view, the Putumayo is geologically prolific yet under explored due to the basin historically being the heartland for the FARC Guerrilla group, whose presence and activities rendered exploration and production operations unviable beyond the near-montane urbanised areas. The Company has operated the Platanillo field since 2009, and has developed the strategies to manage those risks. This has allowed the Platanillo field to be developed and brought onto production profitably. Amerisur, through both bid rounds and right-timed acquisitions has now built a large portfolio of assets in the basin, with a particular emphasis around the OBA with a cluster of assets whose prospects, many similar to Platanillo can be drilled and on success can benefit from the lower transport costs associated with exporting through the OBA pipeline. Additionally, the low opex learning acquired in Platanillo can be rolled out to those new fields from the outset of production.

Given our success in Platanillo, and our understanding of the basin, we have great faith in the potential of our augmented portfolio. That portfolio has been a long-standing objective of the Company, and has been achieved at low cost and at the right time. The blocks encompass almost 1 million hectares under contract and the entire sweep of exploration opportunity from near-Platanillo/OBA look-a-likes to large stratigraphic potential in all sand horizons from the T sand upwards through the Tertiary formations. Importantly, within these blocks there is also discovered oil. Mecaya-1, drilled in 1988 produced 782 BOPD of medium quality 27.3-degree API oil. Airu-1, drilled in 1998 also produced 450 BOPD of the same crude. The producing horizon in those days was misidentified as Villeta/Caballos due to a poor understanding of the basin. Amerisur understands that the producing horizon is the M2 sand based upon our studies and proprietary data. With the latest low cost acquisition, the Board considers the Company has sufficient running room to propel it through its target of 20,000 BOPD net by the end of 2019, given the diversity of opportunity.

2016 continued to be a challenging year for the Group, and indeed the whole oil industry. This coupled with the reduction in production levels in a lower oil price environment impacted on revenue which reduced to $47m (2015: $61m).

The second half of the year saw some improvement in global oil prices which, coupled with a reduction in transport costs following the opening of the OBA resulted in an improved performance in the fourth quarter of the year. This trend has continued into the first quarter of 2017.

The operating loss for the year of $27.7m (2015: $23.8m) is stated after taking a one-off impairment charge of $15.3m in relation to the Group's investment in Paraguay. The overall loss after tax is $28.5m (2015: $26.7m).

Production levels for the year ended 31 December 2016 averaged 3,081 BOPD per calendar day, 4,206 BOPD per operational day compared with 4,437 BOPD in 2015. The movement reflects a full year of reduced production and the impact of certain social issues associated with the peace process during the year.

Average realised prices, net of royalties, reduced from $42.85 per barrel in 2015 to $38.42 in 2016. Revenue reduced from $61m in 2015 to $47m in 2016 as the Group continued to produce from profitable low cost wells and pads on the Platanillo field, leaving valuable oil stored in the ground so it can be profitably produced in a higher oil price environment. Oil prices recovered somewhat in the second half of 2016 with realised prices averaging $39.75 per barrel in H2 relative to $35.01 per barrel in H1.

The Group does not currently hedge any of its forecast oil sales although this is kept under review.

Despite reduced year on year production impacted by the peace process operating costs per barrel reduced during the year by over $4. Opex per barrel is expected to continue to fall as production increases and more crude oil volume goes through the OBA.

The one-off impairment charge of $15.3m (2015: $nil m) represents the write off of the full cost of the Group's investment in blocks in the East of Paraguay - primarily the San Pedro block.

General and administrative expenses showed a small increase from $11.5m to 2015 to $11.9m in 2016 largely as a result of appreciation of the Colombian peso during the year, the currency of a significant proportion of the Group's administrative costs.

During the year to 31 December 2016, the Group invested $19.5m in Exploration and Evaluation assets of which $7m related to the acquisition of blocks from Platino Energy. In addition, the Group invested $18.6m in Property Plant and Equipment, principally in relation to the completion of the OBA.

The tax credit for the year of $1.541m (2015: $0.981m charge) consists of a deferred tax credit of $2.319m (2015: charge of $0.431m) offset by a current tax charge, in relation to Colombian operations, of $0.778m. Corporation tax in Colombia also includes a charge based on the Company's net worth at the end of the previous tax year, called the presumptive tax charge.

The Group continues to have a robust balance sheet with a cash position at the period end of $42m. The Company has an undrawn reserve based lending facility of $40m. This is a three-year facility expiring in November 2017. The Company is in discussions with a number of institutions regarding its replacement.

In March 2016, the Company undertook an equity placing of 106,000,000 new ordinary shares of 0.1 pence each at a price of 25 pence per placing share, a discount of 15% to the market price, raising net proceeds of approximately $36m. The net proceeds of the placing were used to accelerate exploration, appraisal and development activity. The percentage increase in issued share capital due to non-pre-emptive issuance for cash over the three-year period preceding the issue 2016 is 10.5%.

24.3 million shares were also issued during the period as consideration for the acquisition of Platino.

The Company does not propose to pay a dividend this year. The potential for the group to pay dividends in the future is regularly reviewed by the Board.

Nick Harrison

Chief Financial Officer

7 April 2017

 for the year ended 31 December

for the year ended 31 December

as at 31 December

These consolidated financial statements were authorised for issue by the Board of Directors on 7 April 2017 and were signed on its behalf by:

N. Harrison

Director

Company number: 04030166

for the year ended 31 December

Notes to the preliminary announcement

 1 Basis of preparation

The summary accounts do not constitute statutory accounts as defined in section 435 of the Companies Act 2006, but has been extracted from the statutory accounts for the period ended 31 December 2016 on which an unqualified audit report has been issued. The statutory accounts for the period ended 31 December 2016 were approved by the directors on 7 April 2017, but have not yet been delivered to the Registrar of Companies.

The Group financial statements have been prepared in accordance with applicable International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretation Committee (IFRIC) interpretations as adopted by the EU. The Group financial statements consolidate those of the Company and of its subsidiary companies drawn up to 31 December 2016.

Intra-group transactions are eliminated on consolidation and all figures relate to external transactions only.

The 2015 balance sheet and statement of changes in equity have been restated in relation to a reclassification between Share premium and Merger reserve for the shares issued on acquisition of PDSA.

The 2015 cash flow has been restated due to a reclassification between 'proceeds from issue of shares on exercise of options' and 'payments for exploration and evaluation assets' in relation to the PDSA assets acquired which were paid in shares rather than cash.

 2 Posting of accounts

The Annual Report and Accounts for the period ended 31 December 2016 will shortly be available on the Company's website and will be sent to registered shareholders who have elected to receive paper communications by post in due course.