AMER.L Regulatory News (AMER)

13 September 2018

Amerisur Resources Plc ("Amerisur", "the Company" or "the Group")

Interim Results

Strong revenue growth, cash generation and profitability

Amerisur Resources Plc, the oil and gas producer and explorer focused on South America, is pleased to announce its interim results for the six months ended 30 June 2018 (the "Period").

Financial

· Strong revenue growth of 93% to $67.9m (H1 2017: $35.1m)

· Generated profit after tax of $10.8m (H1 2017: loss of $2.3m)

· Adjusted EBITDA of $24.3m (H1 2017: $7.6m)

· Increase in net cash from operating activities to $12.5m (H1 2017: $7.8m)

· Robust cash position of $49.3m (H1 2017: $29.0m)

Production and OBA

· H1 2018 average production increased 33% to 5,959 BOPD, with an average realised price per barrel of $64.2 (compared to $47.2 in H1 2017)

· H1 2018 OBA throughput average of 4,987 BOPD

· Concluded negotiations with Petroamazonas bringing Amerisur's guaranteed minimum carrying capacity through the OBA to 9,000 BOPD

· Post-period end, completed construction of Chiritza (re-pumping) station, with commissioning expected shortly

· Continuing focus on strong HSE practices, with no reported lost time incidents

Exploration and Appraisal

· Strong progress made performing preparatory works and civil works across Platanillo, Put-8 and CPO-5

· Post period end, the spudding of Pintadillo-1 occurred

· Completion of civil works at Indico-1 well in the CPO-5 block

· Signed value-accretive low-cost acquisition of 100% working interest in Put-14 post period end

Outlook

· Advancing near term exploration activities, with Indico-1 expected to spud in October

· Drilling plan continues, targeting prospective resources of 131.53 MMBO net. The eventual split between exploration and appraisal/development wells will depend upon success and choices made during the programme. A range of between 8 to 12 exploration wells and 2 to 6 appraisal wells are planned to be drilled between now and Q3 2019.

"The first half of 2018 has been a period of significant revenue growth for Amerisur, with our low-cost production and excellent netbacks delivering strong cash generation and profitability. As the owner and operator of the strategic OBA pipeline, we continue to deliver highly competitive operating margins and during the period, we were able to secure an increase in guaranteed minimum carrying capacity through the pipeline. We have now spudded the Pintadillo-1 well in the Platanillo block, the first of three fully-funded wells targeting the N Sand A anomaly, estimated to hold P50 resources of 11.44 MMBO.

"For the remainder of the year and into 2019, we remain focused on growing production levels from existing reserves and executing our drilling plan, which is targeting resources of 131.53 MMBO net."

Amerisur Resources is an independent full-cycle oil and gas company focused on South America, with assets in Colombia and Paraguay and production from two fields in 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 producing field in the Putumayo basin, and holds a 30% non-operated working interest in the CPO-5 block containing the Mariposa-1 producing well in the Llanos basin. Amerisur has a strong position in the Putumayo basin and has a cluster of near term activity assets around the OBA export line.

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 

Standard: These assessments are made in accordance with the standard defined in the SPE/WPC Petroleum Resources Management System (2007).

Competent person: Technical information in this announcement has been reviewed by John Wardle Ph.D., the Company's Chief Executive. John Wardle has 32 years' experience in the industry, having worked for BP, Britoil, Emerald Energy and Pebercan, and is a trained drilling engineer.

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

We are pleased to announce Amerisur's 2018 half-year financial results, a period of strong revenue growth, cash generation and profitability from our low-cost production with excellent cash netbacks which have capitalised on the higher oil price compared to the prior period.

We achieved a number of important milestones during the period and are currently drilling the first of three near term exploration wells, the first being Pintadillo-1, which is targeting total P50 resources of 11.44 MMBO (net). With the commencement of our drilling programme, the ability to have additional pipeline capacity in Ecuador has been one of our strategic priorities. In this regard, we brought negotiations with Petroamazonas earlier in the year to a successful conclusion with the signing of an agreement to bring Amerisur's guaranteed minimum carrying capacity through the OBA to a total of 9,000 BOPD. The Chiritza station construction was completed post period end and commissioning is expected to begin in September followed by full operation. Our delivery of this important project, on budget and ahead of schedule, is a timely milestone for Amerisur. We also transported our two millionth barrel through the OBA system, with the pipeline paying for itself in just 15 months of operation in February 2018.

Average production from our two producing fields, the Platanillo field and the Mariposa-1 Long term Test ("LTT"), increased 33% to 5,959 BOPD in the first half with peak daily production of 7,142 BOPD. This delivered $67.9 million of revenue, $12.5 million of net cash from operations and $24.3 million of adjusted EBITDA. Mariposa-1 continued to produce at a stable rate of 3,200 BOPD (gross), 960 BOPD (net working interest), during the period.

Following solid production at Platanillo in the first quarter, it somewhat reduced in the second quarter as a result of a number of workovers, the ongoing treatment and maintenance programme and a reduction in certain key wells, including Platanillo-22 which required further investigation as we worked to optimise production in a responsible operational manner for the long term. The remedial workover and cement repair at Platanillo-22 was successful and it is now producing 415 BOPD, with further work planned to increase production rates while assuring the integrity of the well.

Being dependent on Platanillo production and the constraints of equipment maintenance activities, production throughput of the OBA averaged 4,987 BOPD. Total investment in the OBA was $22 million and to date has delivered $26.6 million in savings through the reduction in transport costs. Our focus remains on increasing the throughput of this low-cost route to commercialisation which will generate further cost savings for the Company.

As at the end of August, we were producing in excess of 4,000 BOPD at Platanillo, alongside Mariposa-1 at 960 BOPD (net working interest), and we continue to work towards delivering increased production in the second half of the year, both from developed reserves and potential additions including from Pintadillo-1, the first well of our exploration programme which is now drilling.

Despite experiencing delays to our drilling campaign in the period due to a number of factors beyond our control, we progressed our preparations at the different well locations (Platanillo, Put-8 and CPO-5) to ensure that on receipt of regulatory and environmental approvals and weather permitting, we could begin drilling.

On 30 August 2018, the N Sand anomaly well Pintadillo-1 was spudded. This is one of four N Sand anomalies identified by the Company in the central part of the Platanillo block. The A anomaly has estimated P50 resources of 11.44 MMBO. At the time of writing 9.5-inch casing has been set and cemented at 5,486 feet. It is expected that we will have electric logs from the well in the weeks ahead.

In addition, following completion of civil works at Indico-1 well in CPO-5, located to the south of the prolific Llanos 34 block, rig E-2029, owned by Estrella, is currently mobilising to the site. Indico-1 is targeting the same play as the successful Mariposa-1 well, but is further up dip with P50 recoverable resources of 10.3 MMBO (gross). The well is expected to spud in October, and the operator currently expects to drill Aguila-1 (targeting 2.7 MMBO gross) and Sol-1 (targeting 4.0 MMBO gross) thereafter.

The operator of block Putumayo-8 ("Put-8"), Vetra, has informed the Company that due to organisational changes within Ecopetrol, the drilling of Miraparriba-1 (4.4 MMBO gross) from the Cohembi 2 pad is under review, and the Company expects to be updated in the course of September.

At Putumayo-12 ("Put-12"), after review of existing data and local weather and social related issues, Amerisur and its partner (Pluspetrol) had previously decided to proceed with the drilling of the Coendu prospect without acquiring further 2D seismic data over the prospect. However, due to recent improvements in the area this seismic acquisition is now underway, and will allow the location of Coendu-1 and subsequent wells to be optimised, reduce drilling risk and potentially fine-tune the resources estimate for this prospect. The programme is six lines of approximately 43-kilometre total extension, and is located in the north western corner of Put-12, adjacent to the Platanillo field. Two of these lines are located within block Put-9 which is 100% owned by the Company, with the intention of enhancing mapping of structural closure. The seismic acquisition is expected to be complete in the coming weeks, followed by processing and incorporation within our regional data set. This work is not expected to affect the chronogram for the drilling of Coendu. As previously reported, the Coendu prospect is shared between the block Put-12 and Put-9. Amerisur has also initiated the processes required for the preparation of the Drilling Environmental Licence at Coendu.

We are grateful to Dr Douglas Ellenor, who is retiring from the Board on 31 December 2018, for his wise advice during his ten years with Amerisur. The Board and Nominations Committee are in the process of improving the Board diversity balance and appointed external consultants to assist in the recruitment of a new Director with Corporate Social Responsibility ("CSR") and developing world experience in the natural resources industry.

As the country's transition to peace continues, Amerisur remains steadfast in its support of the process and continues to play a central, long term role in the implementation of social programmes within the local communities in the Putumayo, in particular sustainable alternative farming programmes. The peace agreement was signed in December 2016, and the FARC guerrilla group has, in the main, demobilised. However, a number of dissident groups continue, in tandem with other groups, to dedicate themselves to the illegal drug trade. This situation means that access into some of our prospective areas is still limited, leading to delays in gathering social and environmental information.

During the period the Company continued to focus on its CSR programme, with activities including:

· Community empowerment;

· Supporting local education;

· Sustainable productive projects with good agricultural and environmental practices;

· Strengthening institutional structures and management; and

· Strengthening opportunities for recreation, sport and culture.

As an example of our work in local education, in February 2018 we inaugurated a secondary education facility at Santa Isabel, comprising four academic classrooms and two chemistry and physics laboratories together with three new sanitary blocks. These new facilities allow students to progress beyond Colombian grade 9 education, previously only available on a boarding basis at considerable distance, which had not been a viable option for the majority of students.

The illegal crop substitution programme led by Government continues to advance. The programme is verified by the United Nations, which recently visited the area, observing growing adherence to the programme. Within the productive projects related to condiment pepper, part of the illegal crop substitution programme, an important advance was made in terms of product marketing, by the creation of the Production Committee, an integrated body which includes the Governor of Putumayo and the Secretary of Agriculture. The products generated in the communities are now more fully supported in terms of access to markets with the Committee studying supply and demand trends together with sales price. Additionally, a work agenda was established with ANDI (the National Industrial Association) to expand the market for these products, which are now becoming an important feature of Putumayo agriculture.

In addition, in the area of cattle rearing, an analysis was made of the farms and stock previously provided by Amerisur as social investment in the Peneya, Alea, Bajo Mansoyá and Sevilla areas, which suggested a number of potential improvements in the farming systems based on the experience gained to date. These include better grass yield and fencing subdivisions within the farms. This improvement plan is being structured to ensure its sustainability over time.

These investments are important in terms of demonstrating our commitment to CSR and fostering improved conditions for local stakeholders. However, they also bring tangible benefits to the Company.

The new Colombian government, led by Ivan Duque, which took office on 7 August 2018 represents a centrist position, with an ambitious manifesto of social equality, economic development, fiscal stability and the continuation of the peace process. Following legal change in 2015, the President may only serve a single term of four years. The President has shown himself to be extremely committed to supporting industry, and has underlined the importance of hydrocarbon exploration and production to the nation and the fulfilment of the aims of his administration. Government is currently canvassing the industry for suggestions to improve the efficiency of the agencies and Ministries, with the commitment to attack bureaucracy and minimise delays to oil projects. We expect the impact of this programme to become apparent in the coming months and these are potentially positive in terms of our activity plans in the future. In addition, President Duque has indicated that he considers the peace treaty must be adjusted to ensure that there be no impunity for crimes committed by FARC. This has led to an increase in the number of dissident groups, formed by ex-FARC members, who are responsible for increased rural insecurity. This situation affects the Company by again creating difficulty in accessing some areas for environmental and social studies, leading to potential delays in obtaining drilling and other environmental permits. However, we continue to monitor the situation in the field and in recent meetings with the new administration we are encouraged by the full support offered by government to ameliorate these situations.

Operationally the second half has continued at pace and the team remains focused on creating further value. In July we signed a value-accretive low-cost acquisition consolidating our acreage position further in the Putumayo, adding a 100% operated working interest in Putumayo 14 ("Put-14"), which is contiguous to the south of our 100% owned Terecay block and contains attractive follow on prospectivity.

Amerisur benefits from an extensive acreage position, built opportunistically but prudently in the oil price downturn, with a number of high value prospects and a fully funded, ongoing drilling programme to exploit these. This ensures we are well placed in the near term, to increase our reserves and low-cost production base materially as our exploration activity ramps up and in turn delivers sustainable growth.

We are currently drilling Pintadillo-1 on the Platanillo block, the first of our three near term exploration wells targeting 11.44 MMBO in the A anomaly, with Indico-1 in the CPO-5 block also spudding shortly. The drilling programme continues from there with near term new wells to be drilled targeting a further 131.5 MMBO net in aggregate.

There is strong momentum at Amerisur and we look forward to a further profitable, cash flow positive second half as we execute our busy drilling programme.

Giles Clarke John Wardle

Chairman Chief Executive

REVIEW OF ACTIVITIES

Amerisur has an extensive and diverse portfolio of production and exploration assets in Colombia with a strategic position in the Putumayo basin, an under-explored area with significant oil field potential, demonstrated by the Company's success to date in Platanillo and its proximity to the Ecuadorian border and Ecuador's prolific Oriente basin.

The Company has built its position in the Putumayo basin at low cost and has a cluster of assets around its wholly owned OBA pipeline including Platanillo, Put-8, Put-9, Coati, Mecaya and Put-12, which are potentially able to utilise this low-cost export route and provide the Company with the flexibility to pursue exploration opportunities capable of delivering significant value.

During the period, peak production reached 7,142 BOPD and a maximum of 6,541 BOPD transported through the OBA. H1 average production from our two producing fields, the Platanillo field and the Mariposa-1 LTT was 5,959 BOPD, up 33% on the H1 2017 average of 4,475 BOPD.

Despite stable production levels from the Platanillo field during the first part of the period, production during the latter months was impacted by downtime for well maintenance and workovers. The well treatment and maintenance programme continued post-period end as the reduced production from certain key wells was investigated further and remedied. On successful completion of the maintenance programme, current production is in excess of 4,000 BOPD and monitoring of the field continues in order to identify further opportunities for production optimisation.

In May 2017, Amerisur and its partner ONGC Videsh ("ONGC") successfully drilled the Mariposa-1 well to a total measured depth of 11,556ft. The LTT of the Mariposa-1 discovery commenced on 18 November 2017 and production has been maintained in a stable manner at a controlled gross rate of approximately 3,200 BOPD, 960 BOPD net to Amerisur. Total production to the end of August from Mariposa-1 has been 916,643 BO. After a review of reservoir parameters, the operator decided not to perforate an additional interval in the producing reservoir sands for the moment, and to review this option once Indico-1 is drilled. This decision will allow potential interference tests to be conducted should Indico-1 be successful. Gross 2P reserves for Mariposa-1 at 31 December 2017 were 2.65MMBO and, given the stability of production and the cumulative volume recovered to date, the Company expects an increase of reserves to be booked at year end for this well.

On 22 March 2018, the Company made its first complete tanker loading from Esmeraldas, in Ecuador, loading 350,000 BO aboard M/T Kerala, which was sold to Shell for $20.9 million. This was a significant milestone for Amerisur as an exporter of crude oil, as all cargoes had previously been shared. On 22 May 2018 we loaded a further full load of approximately 300,000 BO in M/T El Junior at a sales price of $20.3 million. In June we loaded approximately 129,000 BO in shared tankers for sales of $8.8 million and in September we expect to load a complete cargo of approximately 345,000 BO for expected sales value of approximately $24 million.

Amerisur's 100% owned OBA export pipeline transports production from the Platanillo field and its neighbouring blocks via the RODA system to Lago Agrio in Ecuador, and then onwards to the port of Esmeraldas for sale. Amerisur previously had a throughput capacity of a minimum of 5,000 BOPD under agreement with Petroamazonas. In January 2018, this agreement was revised to increase Amerisur's capacity to a minimum daily carrying capacity of 9,000 BOPD following commissioning of the Chiritza re-pumping station. Chiritza is located at 50.5km of the RODA pipeline system, between Cuyabeno and Lago Agrio. The re-pumping station is designed to increase the carrying capacity of this section of the RODA system.

Progress with the Chiritza re-pumping station during the period has been strong, with the project expected to be commissioned on budget and ahead of schedule. On 6 August 2018, the tie-in of the Chiritza manifold to the RODA main line was successfully performed, with booster pumps and control systems installed shortly thereafter. The construction works are now complete, and the project is expected to begin commissioning in September, following the installation of permanent electrical power systems by PetroAmazonas, in accordance with the agreement made in January 2018.

During the period, peak throughput via the OBA was 6,541 BOPD, compared to 5,766 in H1 2017. Approximately three million barrels have been carried by the system since start-up in October 2016. In the first half of the year 902,586 BO were transported compared to 711,622 in H1 2017. OBA throughput levels were impacted during the latter part of the period by the reduced production levels from the Platanillo field, whilst well treatment and workovers took place.

The OBA has reduced average transport costs since inception from $14.1 per barrel to $3.5 per barrel, saving a total of $26.6 million. Following completion of the Chiritza station we will be in a position to increase the throughput of this low-cost route to commercialisation with highly competitive economics.

Amerisur's strategy is to deliver sustainable growth through growing our low-cost production and OBA throughput by way of exploration success and we continue to target production from a minimum of three fields by the end of 2018. To that end, our exploration programme will accelerate over the coming months as we drill up to 14 wells fully funded from existing cash resources and cash generated from activities. The Company expects exploration and development expenditure on these wells to be around $61 million in 2018 and 2019, split $29 million in 2018 and $32 million up to the end of Q3 2019.

In July 2018, Amerisur announced that it had signed a farm-in agreement with Gulfsands Petroleum Plc ("Gulfsands") for the acquisition of the 100% operated working interest in the Put-14 block in Colombia. Put-14 is an exploration and production contract covering 46,361 hectares and is located in the Caguan-Putumayo basin bordering the south of the Terecay block, which is also 100% owned by the Company. A review of the contract area had indicated attractive follow-on prospectivity associated with the Terecay acreage.

The contract carries a 5% X factor and a "Consulta Previa" (socialisation of projects with indigenous communities required by law) is currently underway with a single indigenous community in the block. As part of the acquisition, Gulfsands is transferring the monetary guarantee lodged with the ANH for the Phase 1 work programme, in addition to contributing $1.3 million to the Consulta Previa and operational costs. Phase 1 commitments are the acquisition of 98km of 2D seismic data and the drilling of one exploration well. An application has been made to the ANH to transfer the operatorship and 100% working interest in the contract to Amerisur. Once approval from ANH has been received the Company will take over the management of the Consulta Previa process with the single indigenous community identified within the block.

This acquisition consolidates Amerisur's strategic position in the underexplored Putumayo basin, whilst also adding prospective acreage to the Terecay-Tacacho play fairway.

Platanillo

The Company is operator and has a 100% working interest in the 11,119-hectare Platanillo block, located in the Putumayo basin. As at 31 December 2017, the Platanillo block had gross 2P field reserves of 18.95 MMBO.

Since the Platanillo drilling campaign began in 2012, 17 wells and three side-tracks have been drilled in the main Platanillo structure from five pads (Pads 9S, 5S, A, 1N, 3N). Additionally, four wells have also been drilled from Pad 2N in a separate structure to the north, which is a continuation of the Platanillo field but has a deeper oil-water contact. Total production to the end of August from the Platanillo field has been 10,318,652 BO.

During the period, the Company has been undertaking a maintenance and well optimisation programme across the Platanillo main field and northern structure. Chemical washes were successfully performed on the Platanillo-21 and Platanillo-8 wells. A workover was also completed on Platanillo-6 and despite returning production to stable levels, an increase in water cut was experienced, however not at levels which would render a workover necessary. An effective treatment was also carried out on Platanillo-20 in May 2018, with production returning to previous levels in a stable manner.

Platanillo-21 and 24 continue to be under review for intervention following a small increase in water cut and a reduction of total fluid volumes. The wells appear to be stable currently and remain under observation, no intervention is currently planned.

After being put under review due to a fall in production rate, an organic treatment was performed on Platanillo-22 post-period end, which was partially successful. Subsequently, a workover was initiated in order to recover production capacity. During the initial phase of the workover, the logs run in the well indicated a severe degradation of the cement sheath, giving direct communication to a deeper aquifer. This significantly reduced oil production, whilst increasing water cut and flowing water into the oil leg of the reservoir. Although the reason for the degradation was not known, a cement squeeze operation was performed, and subsequent logs indicated that full integrity between the oil leg and the aquifer had been recovered. The well was recompleted and partially perforated, confirming the isolation at low production rates. The well is now producing approximately 415 BOPD at a low pump rate. A further perforation and pump increase may be performed to increase production rate once long term well parameters are determined.

Platanillo N Sands

In addition to the Platanillo main structure and northern extension, following compelling attribute analysis and in line with other local discoveries, Amerisur believes that there may be strong N Sand development in central and northern parts of the Platanillo block. Accordingly, the Company submitted a modified Platanillo Environmental licence application, which was approved by the Environmental Licensing Agency ("ANLA") in April 2018, allowing the building of a 3.8km access road and six well pads, with up to seven wells per pad.

The N Sand anomaly at Pintadillo is one of four such anomalies identified by the Company in the central and northern part of the Platanillo block. Pintadillo-1 is the first of up to three wells targeting the anomaly, which has been identified on 3D seismic and is estimated to hold P50 resources of 11.44 MMBO.

Despite difficult weather conditions and extensive flooding in the area, the civil works progressed during the period, although additional drainage and stabilisation works were required on the Pad A/Pintadillo-1 road. The works were completed in early August 2018, with the mobilisation of Rig D10 taking place on 18 August 2018 and spudding on 30 August 2018.

Pintadillo-1, a slightly deviated well planned to drill to a total measured depth of 8,448ft with an N Sand objective, is expected to take 22 to 30 days to drill. On success, produced fluids will be delivered to the Platanillo facilities for export via the OBA. A minimum of a further two wells are planned at this location should commercial quantities of oil be encountered at Pintadillo-1.

Putumayo-8

Put-8, in which Amerisur has a 50% non-operated working interest, is a 102,799-acre block which lies adjacent to the west of the Platanillo field. The block is in Phase 1 of its exploration period, with a 2% X factor and low work commitments of one exploration well and 207km2 of 3D seismic. 49km2 of 3D seismic has already been acquired prior to the acquisition of the interest, and hence at no cost to Amerisur. The block has unrisked mid-case prospective resources of 16.27 MMBO net to Amerisur.

The Miraparriba-1 structure is a low U and T sand light oil structural target and will be drilled as a directional well. It is a low risk prospect covered by 3D seismic, with estimates of P50 gross resources of 4.4 MMBO.

In March 2018, the operator of the Put-8 block, Vetra Exploration and Production ("Vetra") received regulatory permission to drill the Miraparriba-1 well from the Cohembi-2 pad, an existing pad located in the adjacent Suroriente block. This agreement removed the requirement to obtain an environmental licence for the drilling of the well. The operator has recently informed the Company that due to organisational changes within Ecopetrol, the drilling of Miraparriba-1 from the Cohembi 2 pad is under review, and the Company expects to be updated in the course of September.

CPO-5

CPO-5 is an exploration and production contract, covering 492,352 acres and is located to the south of the prolific Llanos 34 block and to the east of the Corcel fields. The block includes the Mariposa-1 well and the evaluation area related to the Loto-1 oil discovery. Amerisur has a 30% (non-operated) working interest in the contract, with ONGC holding a 70% working interest and the operatorship.

Preparations for the spudding of the Indico-1 well continued throughout the period despite inclement weather conditions. Indico-1 is targeting the same play as the successful Mariposa-1 well, but is further up dip in a larger structure and is estimated by the operator to hold P50 gross resources of 10.3 MMBO.

Following completion of civil works at Indico-1 well in CPO-5 during August, Estrella rig E-2029 is currently mobilising to the site. The well is expected to spud in October, and the operator currently expects to drill Aguila-1 (targeting 0.8 MMBO net) and Sol-1 (1.2MMBO net) thereafter.

Putumayo-12

Put-12 is a 134,509-acre block which is located adjacent to Platanillo to the east and shares its geology. Amerisur has a 60% working interest and operatorship of Put-12, with Pluspetrol having a 40% working interest. The block carries a 29% X factor. The Company acquired Put-12 in November 2012 and the bid included a commitment to a seismic acquisition programme and the drilling of one exploration well during the initial exploration phase.

A "Consulta Previa" was completed with three indigenous communities (Buenavista, Santa Cruz de Piñuña Blanco and Bajo Santa Helena), which allowed seismic operations to be performed in the block. After review with our partner, the Company initially decided to begin licensing for drilling of the Coendu prospect without further seismic acquisition. However, given improved access to the area, the 2D seismic programme over Coendu, which is shared between Put-12 and Put-9 began on 15 August 2018. This programme, of 42.3km over 6 lines will give improved geological control and allow optimum positioning of well Coendu-1. The data gathering for the preparation of the Coendu drilling license application is also underway.

The Company intends to drill three wells on this block commencing in Q2 or Q3 2019, initially focusing on Prospects 1 (Coendu), 6 (Maracaya) and 2, targeting unrisked gross prospective resources of 54 MMBO, (plus 16 MMBO in Coendu mapped in block Put-9), 46 MMBO and 19 MMBO respectively. The net mean resources to Amerisur are 71.56 MMBO. The exact order remains under review and depends upon the outcome of Coendu, with the potential for the Company's focus to move towards drilling multiple wells on this prospect, given its proximity to the OBA.

Putumayo-9

Put-9 covers 121,453 acres and is located immediately to the north of Putumayo-12 ("Put-12") and to the east of Platanillo, carrying an X factor of 18%. In March 2017, Amerisur increased its interest in Put-9 from 40% to 100% and is now also operator.

Existing seismic data shows there are several interesting structures shared between Put-12 and Put-9 and also independent structures lying within Put-9, as they have similar geological configurations and structural trends with a north-south preferential orientation that have continuity in both areas including the Airu-1 discovery, which was drilled in 1998. Furthermore, stratigraphic plays related to the pinch-out of the U and T Sands have been interpreted, whose mapped areas are shared by both blocks.

Oil production from Put-9 could be exported using the OBA pipeline. The block has unrisked mid case prospective resources of 64.43 MMBO and a three-well drilling programme is expected to commence in Q2 2019 targeting 37.8 MMBO.

A recent development in both Put-12 and Put-9 is an application by one of the indigenous communities, based in the Buenavista reserve, to extend their reserve to the east and north, claiming these to be "ancestral lands". In the case that this application is approved, a further "Consulta Previa" would be required in order to conduct operations within some parts of these blocks.

Reserves

In March 2018, the Company took receipt of an independent reserves report for the Platanillo field as at 31 December 2017 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 12.84 million barrels of oil (2016: 15.11 MMBO) after production of 1.76 MMBO during the year to 31 December 2017 and 2P (Proven and Probable) gross field reserves were 18.95 MMBO (2016: 24.47 MMBO). Cumulative total production from the Platanillo field for the year to 31 December 2017 was 9.26 MMBO.

After production for the year ended 31 December 2017, year-end 1P reserves represent a decrease of approximately 0.5 MMBO from year end 2016.

Since the Mariposa-1 well is currently under LTT, it has not entered the exploitation phase and hence the operator is not required to report such reserves to the Agencia Nacional de Hidrocarburos (ANH). However, for guidance, the Company also commissioned an evaluation of reserves at the Mariposa discovery in block CPO-5 from Petrotech Engineering Ltd. 1P reserves were certified at 0.79 MMBO and 2P reserves at 1.30 MMBO to Amerisur on a working interest basis (30%).

The Company also commissioned an evaluation of reserves at the Mecaya block related to the well Mecaya-1 from Petrotech Engineering Ltd. 1P reserves were certified at 0.31 MMBO and 2P reserves at 0.45 MMBO to Amerisur on a working interest basis of 58%.

Hence total Amerisur 1P reserves at 31 December 2017 were 13.94 MMBO and 2P reserves were 20.70 MMBO. Given the impressive production performance at Mariposa-1, it is reasonable to expect some increase in reserves at that field. Other reserves increases will be dependent upon exploration success in the current programme and the establishment of production history from those discoveries.

FINANCIAL REVIEW

¹Non-GAAP terms - see glossary for definition in Note 6.

Revenue for the period of $67.9m almost doubled compared to the same period in 2017 due to both higher production levels and average oil prices. This has resulted in an adjusted EBITDA for the period of $24.3 million compared to $7.6 million for H1 2017.

Revenue in H1 2017 and FY 2017 has been restated for the adoption of the new revenue standard 'IFRS 15' by $3.0 million and $7.3 million respectively in relation to royalties no longer being presented gross. An equal and opposite adjustment has been made to cost of sales hence this has is no impact on gross profit. See note 2 for further details.

Average daily production of 5,959 BOPD in H1 2018 represents a 33.2% increase on the same period in 2017 and 22.7% increase over FY 2017, despite being impacted by planned well maintenance and workovers. Peak daily production in the six-month period was 7,142 barrels.

Oil prices have continued to be generally volatile during the first half of 2018 with Brent crude prices averaging $70.6 per barrel, compared to $51.7 for the corresponding period in 2017. Average realised sales prices for the half year period were up by 36% to $64.2 per barrel, compared to $47.2 in H1 2017 and $50.0 for FY 2017.

Cost of sales comprise cost of operations, transport costs, inventory movement, high prices tariffs and depreciation. Cost of sales was $47.0 million for H1 2018 compared to $28.8 million for H1 2017 (as restated for the impact of the adoption of IFRS 15). The increase is principally due to higher production costs in line with increased activity, higher high price tariff charges and maintenance and workover costs.

Transport costs in H1 2018 have continued to decrease and for the half year were $3.5 per barrel (H1 2017: $3.9) due to higher volumes transported through the OBA pipeline and the impact of CPO-5 production that is sold direct from the well-head.

Average cash lifting costs per barrel in H1 2018 increased to $17.0 (H1 2017: $14.6) due to the impact of infrastructure improvements and maintenance related production variations during the period. As a result of improved selling prices, operating netback has increased from $31.4 per barrel in FY 2017 to $43.7 per barrel in H1 2018.

Administrative expenses were $8.2 million during the period, an increase of $0.9 million against the comparative period in 2017 reflecting general cost increases and minor changes in overhead allocation.

Finance and similar charges of $178,000 were significantly lower than in the same period in 2017 (H1 2017: $922,000) as a result of the finance charges for the RBL facility coming to an end in September 2017 following its cancellation.

The Group has a current tax charge for the period of $1.7 million (H1 2017: $0.7 million), of which $0.7 million relates to deferred tax.

At the period end, the Group's cash position (inclusive of restricted cash deposits) was $49.3 million (2017: $41.3 million).

During the period, the Group entered into a prepayment and offtake agreement with Shell Western Supply and Trading Limited (Shell). Under the terms of the agreements Shell will purchase 100% of the Group's oil production from the Platanillo field. At the period end, Shell had made a prepayment of $7.5 million, classified as deferred income within trade and other payables in the balance sheet.

The first half of 2018 continued to generate positive operating cashflows largely as a result of higher oil prices and higher average production, which alongside existing cash resources have funded the capital expenditure and maintenance programmes in the year to date.

The commitments and planned discretionary programmes for the remainder of 2018 are expected to be fully funded from existing cash resources and operational cashflow generated in the second half of the period. The Company remains focused on efficient cost management.

The Group has incurred total capital expenditure of $4.6 million during the period, relating to civil works and infrastructure upgrades in the Platanillo field.

The Directors will not be recommending payment of a dividend although dividend policy is kept under regular review.

CONSOLIDATED INCOME STATEMENT

All amounts relate to continuing operations

CONSOLIDATED BALANCE SHEET

.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED CASHFLOW STATEMENT

Amerisur Resources Plc ("the Company") is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Amerisur Resources Plc, Lakeside, St. Mellons, Cardiff, CF3 0FB. The primary activity of the Group is the exploration for and production of oil and gas in Colombia, South America.

The Company has its listing on the Alternative Investment Market ("AIM") of the London Stock Exchange.

These unaudited consolidated interim financial statements are for the six months ended 30 June 2018. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2017, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").

The consolidated interim financial statements have been prepared under the historical cost convention except for certain fair value adjustments required by certain standards. The Group's presentation currency is the US Dollar and amounts are rounded to the nearest thousand dollars ($'000) except as otherwise indicated.

These consolidated interim financial statements have been prepared in accordance with accounting policies consistent with those set out in the Group's financial statements for the year ended 31 December 2017, except for the adoption of new standards as described further below. These statements do not constitute statutory accounts under s434 of the Companies Act 2006 (the "Act").

The consolidated statutory accounts for the year ended 31 December 2017 have been filed with the Registrar of Companies. Those accounts have received an unqualified audit report and did not contain statements or matters to which the auditors drew attention under the Act.

The financial information contained in this report is unaudited. The consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cash flow statement for the six months to 30 June 2018, and the consolidated balance sheet as at 30 June 2018 and related notes, have been reviewed by the auditors, BDO LLP, and their report to the Company is attached.

The Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, these interim financial statements have been prepared on a going concern basis as the Directors are of the opinion that the Group has sufficient funds to meet their ongoing working capital and committed capital expenditure requirements. In making this assessment, the Directors considered the budgets, the cash flow forecasts and associated risks.

New standards issued and amendments made under IFRS, effective for periods beginning on 1 January 2018, are as follows.

· IFRS 15 'Revenue from Contracts with Customers';

· IFRS 9 'Financial Instruments';

· Conceptual framework for Financial Reporting 2018 (no stated effective date, therefore effective from the date of issue March 2018);

· Amendment to IFRS 2 'Share based payments', regarding the classification and measurement of share-based payment transactions;

· Amendment to IAS 40, 'Investment Property', regarding the transfer of property to, or from, investment property; and

· Annual improvements 2014-2016 IAS 28, 'Investments in associates and joint ventures'

The accounting policies adopted are consistent with those of the previous financial year except those changed as a result of adopting the new standards IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments'.

Adoption of IFRS 15

The Group has adopted IFRS 15 'Revenue from Contracts with Customers' from 1 January 2018. In accordance with the transition provisions in IFRS 15, the Group has adopted the new rules retrospectively and has restated the 2017 comparatives. The Group did not adopt any of the transitional provisions available on adoption of the new standard.

The only impact of adopting IFRS 15 is in relation to the presentation in the income statement of production-based royalties paid to the Colombian oil authorities (the "ANH"). Under previous accounting policy, royalties payable to the ANH were shown gross in revenue and cost of sales. Under IFRS 15, this contract does not meet the definition of a customer and as such the royalty income can no longer be presented as revenue. For the six month period to 30 June 2017, revenue and cost of sales have both been adjusted by $3.02 million and has no net quantitative impact on profits or retained earnings.

The Group's accounting policy under IFRS 15 is that revenue is recognised when the Group satisfies a performance obligation by transferring title to oil to a customer. The title typically transfers to a customer at the same time as the customer takes physical possession. Typically, at this point in time, the performance obligations of the Group are fully satisfied. Other than the presentational change described above, the accounting for revenue under IFRS 15 does not, therefore, represent a substantive change from the Group's previous accounting policy for recognising revenue from sales to customers.

Adoption of IFRS 9

IFRS 9 'Financial Instruments' replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The Group has amended its accounting policies for its adoption of IFRS 9 although there has been no impact on the Group's financial statements.

IFRS 9 introduces an impairment model requiring the recognition of 'expected credit losses', in contrast to the requirement to recognise 'incurred credit losses' under IAS 39. Trade receivables are generally settled on a short time frame without material credit risk concerns at the time of transition, so this change in policy had no impact on the amounts recognised in the financial statements.

At 30 June 2018, there are 32.5 million potential ordinary shares related to unexercised share options that are excluded from the EPS calculation as their inclusion would have an anti-dilutive effect. In 2017, there is no difference between basic and diluted EPS because all potential ordinary shares are anti-dilutive.

In July 2018, Amerisur announced that it had signed a farm in agreement with Gulfsands Petroleum Plc ("Gulfsands") for the acquisition of a 100% Operated working interest in the Put-14 block in Colombia. Put-14 is an exploration and production contract covering 46,361 hectares and is located in the Caguan-Putumayo basin bordering the south of the Terecay block, which is also 100% owned by the Company. The contract carries a 5% X factor and as part of the acquisition, Gulfsands is transferring the guarantee for the Phase 1 work programme, in addition to contributing $1.25m to the Consulta Previa and operational costs.

The unaudited interim consolidated financial statements were approved by the Board of Directors on 12 September 2018.

Copies of the Interim report are available by download from the Company's website at: www.amerisurresources.com

INDEPENDENT REVIEW REPORT TO AMERISUR RESOURCES PLC

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and related notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants

London

12 September 2018

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Forward looking statements and dates referenced in this announcement, in relation to Amerisur's exploration, development and production assets are estimates and subject to change. Oil and gas operations, particularly those relating to development stage assets, are subject to varying inputs that may impact timing, including inter alia permitting; environmental regulation; changes to regulators and regulation; third party manufacturers and service providers; political and social developments; the weather and asset partner and operator actions. The Company's estimates of timing for forward looking operations are based on the best information it has to hand at the time, however these timings may change with little or no notice to the Company. The Company will update the market as and when it becomes aware of a material change to any of the operations or timings referenced in this announcement.