AMER.L Regulatory News (AMER)

25th September 2017

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

Interim Results

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 30th June 2017 (the "Period").

Highlights:

Production and financial

· Average H1 production 4,475 BOPD up 69% (H1 2016: 2,641)

· 8 MMBO produced from Platanillo to date

· Average realised sales prices during the six-month period were $47.3 per barrel (FY 2016: $38.4)

· Operating net back per barrel¹ $29.6 up 164% (FY 2016: $11.2)

· Revenue $38.2m, up 57% (H1 2016 $24.4m)

· Adjusted EBITDA1 $7.6m, up 986% (H1 2016: $0.7m)

· Net cash generated by operations $8.5m (H1 2016 -$1.8m)

· Cash and cash equivalents $29.0m (FY 2016 $42.3m)

· Talisman and Pacific acquisitions approved by ANH

Exploration and Appraisal success

· Platanillo-22 drilled from Pad 2N, identifying an important extension to the block, with an inferred deeper oil-water contact, management estimate it is capable of delivering up to 7.82 MMBO of recoverable reserves

· Mariposa-1 discovery on CPO-5 - flowed at a stabilised rate of 4,601 BOPD of 40.8 degree API oil in natural flow from a limited perforation interval

· Mariposa Long Term Test expected to commence shortly

Strengthened Board

Reserves

· As at 31st December 2016, gross field reserves were 24.5 MMBO (2015: 23.7 MMBO), production of 0.809 MMBO in H1 2017

· Board expects drilling activity on Platanillo in 2017 to result in an increase in both 1P and 2P reserves

Outlook

· Average production guidance for the full year revised to approximately 5,000 BOPD, as a result of social issues in the Putumayo region which have now largely been resolved

· Current production in excess of 6,000 BOPD

· Exit rate for 2017 expected to be in excess of 7,000 BOPD

· Up to 16 wells by the end of 2018 all fully funded from existing cash resources and operating cash flow generated from activities

· Drilling of Platanillo-25 from Pad-2N commenced

· Three well drilling programme of N Sand Anomaly targeting 18.8 MMBO of resources to commence in Q1 2018

1 See glossary in Note 9.

Giles Clarke, Chairman of Amerisur, said:

"During the period, we continued to deliver on our strategy of building production and reserves through a large acreage position within the under-explored but geologically prolific Putumayo Basin. As well as increasing production significantly, in the first half we also delivered multiple successes with the drill bit at Platanillo and on CPO-5.

"Amerisur is well positioned with a strong balance sheet to further build on our successes to date and continue to grow production and reserves. Our broad portfolio provides the Company with a significant amount of flexibility with the drill bit to ensure we continue to deliver value in the current oil price environment. We remain very busy targeting up to 16 gross wells by the end of 2018 focusing on Pad 2N, Putumayo 9, Putumayo 8, CPO-5 and Putumayo 12, together with the N Sand anomaly wells on Platanillo, all fully funded from existing cash resources and cash generated from activities at $45 oil."

Enquiries:

Standard

Estimates of reserves and resources contained in this announcement were prepared using the standards set by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers / World Petroleum Congress 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 31 years' experience in the industry, having worked for BP, Britoil, Emerald Energy and Pebercan, and is a trained drilling engineer.

Inside Information

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Chairman's and Chief Executive's Statement

We are pleased to announce Amerisur's 2017 half-year financial results. During the period, we continued to deliver on our strategy of building production and reserves through a large acreage position within the under-explored but geologically prolific Putumayo Basin, creating a wide and deep portfolio of exploration opportunities. During the first half, we steadily increased production from the Platanillo field and in turn exports through the OBA, our wholly owned pipeline. We also strengthened the Board and continued to achieve success with the drill bit.

Operationally our performance has been strong with production levels in the period increasing steadily to 5,280 BOPD, with an average cash opex and transport cost per barrel of $17.7 compared to $27.2 in 2016. This is a result of increased OBA utilization, reduced operating costs and improved selling prices. This delivered $38.2m of revenue, $8.5m of net cash generated from operations and $7.6m of adjusted EBITDA. Production averaged 4,475 BOPD while our throughput through the OBA averaged 3,936 BOPD in the period, constrained by equipment maintenance activities in the RODA system of Ecuador and additional competing volumes within the northern part of Ecuador. Our negotiations with Petroamazonas to increase throughput continue to progress positively. Post-period end, production was temporarily suspended at Platanillo from 10th - 28th July as a result of social issues in the field and region following the ratification of the Colombian peace process in December 2016. We used this downtime to perform regular maintenance and enhancement works on the field to maximise the efficiency of our production. A further short suspension, from similar causes, was also experienced in early September. These issues have all now been largely resolved by the Government and the producing wells at Platanillo were carefully brought back on stream. We are currently producing in excess of 6,000 BOPD, and average daily OBA throughput when operating in September was 6,332 BOPD. A ramp up of production is occurring through the second half of the year and we continue to target an exit rate for 2017 in excess of 7,000 BOPD, primarily driven by increased production from the ongoing, low-cost drilling programme at Platanillo and CPO-5.

Our drilling campaign within the Platanillo block has been successful with Platanillo-22, drilled from Pad 2N, identifying an important oil pool extension to the block, with an inferred deeper oil-water contact expected to have the potential to deliver up to 7.82 MMBO of recoverable reserves in this northern structure and further increase the value of this field. Further drilling will be required to confirm the size of this reserve uplift. Our follow on well, Platanillo-21, demonstrated a further good result and consequently we have re-focused our forward drilling plan for the second half of 2017 to accelerate drilling in the north of the Platanillo Field, with the drilling of Platanillo-25 as previously reported and the drilling of the exciting N Sand Anomaly wells. The N Sand wells will be drilled from an entirely new pad further north on the block and are targeting 18.8 MMBO of prospective resources. 

Alongside our continued success in the Putumayo region, we drilled Mariposa-1, an exploration well in the Llanos CPO-5 licence with our partner ONGC, where the preliminary results were very encouraging. The well flowed at a stabilised rate of 4,601 BOPD of 40.8 degree oil in natural flow from a limited perforation interval. Post-period end the well was classified as a discovery and is currently about to enter a long-term test ("LTT") phase, expected to commence shortly. Partners have agreed to the drilling of a further well, Indico-1, in the first half of next year, designed to test the Mariposa play further up dip, and further wells are currently being planned in this exciting block, which sits alongside the prolific Llanos-34 contract.

The Board was significantly strengthened and refreshed in the first six months of the year and has enhanced the right set of complementary skills to deliver future growth.

At the beginning of the year the Board commenced a search process to appoint two additional independent Non-executive Directors: one with significant City experience and one with considerable oil industry experience. The extensive and thorough process, which was overseen by Chris Jenkins, an independent Non-executive Director, and managed by Preng & Associates, a leading executive search firm dedicated to the energy industry, resulted in the appointment of Dana Coffield as an independent Non-Executive Director and Alex Snow as Senior Independent Non-executive Director in April and May respectively.

Dana Coffield has over thirty years of international E&P experience encompassing North and South America, including Colombia, North Africa, Middle East and South East Asia. He has also joined the Remuneration Committee. Alex Snow has had a successful career in the City and was most recently CEO of Lansdowne Partners LLP, the leading institutional investor and wealth manager and founder and CEO of Evolution Group Plc the investment bank created in 2001 and subsequently sold in 2012 to Investec for £230 million. Alex has joined both the Remuneration and Nomination Committees.

During the period, Victor Valdovinos, George Woodcock and Nigel Luson retired from the Board and we thank them for their valuable contribution over the years. The Board of Amerisur now has two Executive Directors, five independent Non-executive Directors and a Chairman, exceeding the expected level of independent director representation for an AIM listed Company.

Following the ratification of the Colombian peace process in December 2016 the Government continues to make positive progress transitioning the country to peace and the disarmament of the FARC is now officially complete. The implementation of the Government's 'Sustiticion de Cultivos Ilicitos - illegal crop substitution programme', an important element of the peace process which compensates farmers for the eradication of their coca crop, initially resulted in social protests within the region and at the Platanillo field. These issues have subsequently been largely resolved by the Government and Amerisur remains committed to supporting the peace process and the implementation of social programmes within the local communities. As part of our long-term commitment to social investment we have continued to invest in sustainable alternative farming programmes. These include sweet pepper, condiment pepper, cattle rearing and other activities appropriate to the area. These investments provide local farmers with resources and farming skills such that they can swiftly make the transition to more socially desirable and profitable crops. Within the Putumayo we continue to bring positive social and economic benefits which impact positively on our ability to operate in this socially complex area undergoing radical change for the better.

Following the mud slide in Mocoa in the western Putumayo, Amerisur was heavily involved with the response activities led by the Colombian Authorities, providing specialist equipment, fuel, fresh water in bulk and logistical support including helicopter work and we have subsequently continued to help those communities impacted by this natural disaster.

As we proceed towards year end, we remain focused on ramping up production and the export of our crude through the OBA pipeline. Following downtime at Platanillo in July and September and the slower than expected progress bringing Mariposa on stream, average production guidance for the full year is revised to approximately 5,000 BOPD.

Amerisur is well positioned with a strong balance sheet to further build on our successes to date and continue to grow production and reserves. Our broad portfolio provides the Company with a significant amount of flexibility with the drill bit to ensure we continue to deliver value in the current oil price environment. We remain very busy targeting up to 16 wells by the end of 2018 focusing on Pad 2N, Putumayo 9, Putumayo 8, CPO-5 and Putumayo 12, together with the N Sand anomaly wells in the Platanillo block, all fully funded from existing cash resources and cash generated from activities (based on an assumed average oil price of $45). On success, all are capable of boosting our production materially within this time frame. Target capex for 2017 and 2018 is estimated to be $23m and $59m respectively.

We are incredibly excited by the potential within our portfolio and look forward to a profitable, cash flow positive second half and beyond.

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 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.

Amerisur 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 able to utilise this low-cost export route and provide the Company with the flexibility to pursue exploration opportunities capable of delivering significant value.

In the first half of 2017 production averaged 4,475 BOPD, with an average cash opex per barrel (excluding transport costs) of $12.8. Current production is in excess of 6,000 BOPD and the Company remains on track to exit 2017 in excess of 7,000 BOPD which will be driven primarily by increased production from the ongoing, low-cost drilling programme at Platanillo and CPO-5. Average production for H2 is expected to be between 5,000 and 6,000 BOPD following the temporary suspension of production at Platanillo in July and September 2017, as a consequence of social unrest in the region, issues which have subsequently been largely resolved by central Government.

Amerisur remains focused on delivering increased production from across its existing high quality portfolio of assets and diversifying its production base.

The current drilling programme detailed below is focussed on:

In August 2016, Amerisur achieved a key strategic objective, the successful delivery of its wholly owned export pipeline, the OBA, for the transport of Platanillo crude via the RODA system to Lago Agrio for further onward transport to the port of Esmeraldas in Ecuador. Amerisur has a throughput capacity under current agreement with Petroamazonas of a minimum of 5,000 BOPD, with the export of crude via the OBA commencing during October 2016. The average daily throughput for the period was 3,936 BOPD due to reduced capacity caused by equipment maintenance activities in the RODA system of Ecuador and additional competing volumes within the northern part of Ecuador. Through system optimisations and other factors in Ecuador, throughput in August averaged 5,888 BO per operational day, with a peak of 10,127 BO in a 24-hour period.

The Company's focus is to further increase the export of its crude through the OBA and progress further commercialisation options. The technical capacity of the transfer line is approximately 50,000 BOPD and the system has a currently installed export pump capacity of 19,200 BOPD. A third pump will shortly be installed at Pad 9S, raising export capacity to 28,800 BOPD. Negotiations continue with Petroamazonas regarding increasing throughput via focussed investments in Ecuadorian infrastructure.

Daily throughput is currently 6,500 BOPD and as a result of OBA use average cash opex/bl including transportation has reduced from $27.2 in 2016 to $17.7 in H1 2017 and will reduce to below $15 once its throughput reaches 7,000 BOPD. The Company is confident of obtaining capacity to transport further increased production levels via OBA in due course, however the Company holds additional export and sale options should production exceed transport capacity on a day to day basis.

Amerisur is focused on optimising its extensive acreage position and capital allocation to maximise the near-term value in its assets and has refocused its forward drilling programme. Following the success at Platanillo-22 which discovered an important extension to the Platanillo field, the Company has accelerated work in the north of the field. Amerisur continues to target a minimum of two further wells by the end of 2017, fully funded from existing cash resources and cash generated from activities (based on an assumed average oil price of $45) and expects total exploration and development expenditure to be around $82.3m in 2017 and 2018, split $23m in 2017 and $59.3m in 2018. This is broken down as follows:

In March 2017, the Company further bolstered its position in the Putumayo Basin and consolidated its portfolio around Platanillo, adding discovered oil and offset exploration with large potential through the acquisition of the outstanding working interest in the Put-9 and Tacacho blocks plus 100% working interest in Terecay and 58% of Mecaya from Meta Petroleum Corporation and Pacific Stratus Energy Colombia Corporation; subsidiaries of Pacific Exploration and Production ("Pacific"), a Canadian listed company (recently renamed Frontera Energy Corp.). The consideration for the acquisition was US$4.85m in total which has been paid in cash from existing resources. Additionally, a 2% overriding royalty interest (ORRI) will be payable to Pacific Exploration and Production in respect to Amerisur net production from the Terecay block and a 1.2% ORRI on net production from the Putumayo-9 block.  

The Company is Operator and has a 100% working interest in Platanillo, an 11,119-hectare block located in the Putumayo Basin, in the south of Colombia.

To date, the Company has successfully drilled 18 wells and three side-tracks in the main Platanillo structure from five pads (Pads-9S, 5S, A, 1N, 3N) and two wells in a separate structure to the north, which is a continuation of the Platanillo field but was found to have a deeper oil-water contact, from one pad (Pad 2N). The Company's wholly owned OBA transfer system transports production from the Platanillo field under the Putumayo River into the Victor Hugo Ruales pipeline infrastructure (RODA system to Lago Agrio) in Ecuador, and then onwards to the port of Esmeraldas for sale.

Platanillo main structure

At the beginning of the year, the Company successfully drilled Platanillo-24 as an infill well on the most northern developed lobe of the Platanillo main field structure, located between wells Platanillo-7 and 17. The well was drilled under time and under budget, to a total depth (TD) of 8,485 feet, achieving an offset of 1,275 feet to the east of Pad 3N. The reservoir section was logged and initial log analysis indicated the presence of 67.5 feet gross, 38 feet net oil column in the U Sand formation. The analysis of the T Sand indicates a 14 feet gross and 8 feet 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 7 feet was perforated in the Lower U Sand only.

Following the successful delivery of the OBA pipeline, the Company commenced a low-cost optimisation work programme across the Platanillo main field structure, performing organic chemical treatment to specific wells in order to maximise value from its producing assets to ensure they reach their full potential and in turn increase production to feed into the OBA system, exploiting this low cost, wholly owned export route. During the period, an organic chemical treatment was trialled on Platanillo-8, Platanillo-24 and Platanillo-20, increasing production from 108 BOPD to 350 BOPD, 420 BOPD to 820 BOPD and 610 BOPD to 1,310 BOPD respectively in a stable manner, using a hydraulic pump lifting system. Amerisur has identified candidates for similar treatments, including Platanillo-3, Platanillo, 4 Platanillo-5, Platanillo-9, Platanillo-14 and Platanillo-12. This treatment programme is currently ongoing.

Platanillo north

In March 2017, the Company successfully mobilised Serinco rig D10 to Pad 2N, currently the northernmost Pad on the Platanillo block, approximately 3.4 kilometres north of Pad 3N, to drill well Platanillo-22. The well was successfully drilled to a total depth of 8,720 feet, under time and budget.

Platanillo-22 initially tested at 613 BOPD, ahead of pre-drill estimates in the range of 300 to 400 BOPD, with 0.22% water cut from a 14 feet perforated interval in the Lower U Sand using a hydraulic pump lifting system. Following an optimisation of the hydraulic pump design the well is now producing approximately 1,000 barrels of 31.5 degree API oil per day under stable conditions with 0.1 % water cut and is being trucked to the southern pads for export via the OBA system. The tested oil quality was slightly lighter than the main Platanillo field.

The reservoir units in the Cretaceous Villeta formation were encountered slightly deeper than prognosed. However, the Oil Water Contact (OWC) within the reservoirs was encountered significantly deeper than expected, being 37 feet deeper in the Upper U and 23 feet deeper in the Lower U formations. No OWC was observed in the N sand. The T sand did not indicate pay in this well. The greater effective oil column in the U sands is likely to increase certified reserves in the field. The observed results suggest that the oil accumulation at Pad 2N has a separate closure compared to Pad 3N and the greater Platanillo field. This indicates the presence of a permeability barrier between those pads, which may be formed either by a sub-seismic fault or a stratigraphic feature which allowed the Pad 2N structure to be filled to a greater extent than the remainder of the field. Since receiving this data the Company has been closely evaluating the 3D seismic cube; reprocessing has identified certain subtle features within the basement and overlying formations which may be the cause of that barrier. Provisional re-mapping has been performed and the Company estimates, using volumetric calculations, the potential for up to 7.82 MMBO of recoverable reserves within the Pad 2N structure, as opposed to the previous estimate of approximately 1.4MMBO. The eventual reserve uplift will be defined by further drilling to establish the exact position of the barrier and hence the extent of the enhanced closure at Pad 2N. Amerisur is reviewing options for the well, which may be drilled from either Pad 2N or Pad 3N, post Platanillo 23.

Following the success at Platanillo-22 the drilling rig Serinco D-10 moved over to the adjacent drilling cellar on Pad 2N, to drill Platanillo-21, a short deviation directional well aimed at the crest of the mapped structure to a total depth of 8,447 feet measured depth, on time and budget and tested at 430 BOPD, ahead of pre-drill estimates in the range of 300 to 400 BOPD. The well has now been perforated and will be tested and placed on commercial production over the coming week.

The drilling of Platanillo-25, the third well on Pad 2N commenced on 21 September and is a medium step out well, whose reservoir target is approximately 600m south of Pad 2N. Planning continues for Platanillo-23, a potential well stepping out beyond Platanillo-25. This well will be confirmed following results from Platanillo-25.

Significant further upside has been identified in the Platanillo field, in addition to the separate northern structure, with the N Sand Anomaly in the north/central part of the field targeting 18.8 MMBOE.

The studies required to modify the Platanillo environmental licence to include further locations located over the N sand anomalies have been completed. The modification application was submitted on 18th August to ANLA. The Company expects approval of this application in December. After civil works, it is expected to spud the well in Q1 2018.

Putumayo-9 (Put-9) is located immediately to the north of Putumayo-12 (Put-12) and to the east of Platanillo. It carries an X factor of 22%. Amerisur increased its interest from 40% to 100% in March 2017 and is now Operator. 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, including the Airu-1 discovery, drilled in 1998.

There are some exploratory opportunities shared between blocks Put-12 and Put-9, since these have similar geological configurations and structural trends with a North-South preferential orientation that have continuity in both areas. In addition, 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 can be exported using the Platanillo infrastructure. The block has unrisked prospective resources of 53.5MMBO and a three well drilling programme is expected to commence in Q3 2018.

Amerisur has a 60% working interest and is Operator, and Pluspetrol has a 40% working interest. Put-12 is a 54,434-hectare block which is adjacent to Platanillo to the East and shares its geology. Acquired in November 2012, the bid included a commitment to a seismic acquisition programme and the drilling of one exploration well during the first three-year exploration phase. The block carries a 29% X factor. The Company intends to drill three wells on this block commencing in Q4 2018, initially focusing on Prospects 1 (Coembu), 6 (Maracaya) and 3, targeting unrisked mean prospective resources of 106 MMBO, 47 MMBO and 82 MMBO respectively. The exact order remains under review and depends upon the outcome of Lead 1, with the potential for the Company's focus to move towards drilling multiple wells on this prospect, given its proximity to the OBA.

A "Consulta Previa" (socialisation of projects with indigenous communities required by law) was completed with three indigenous communities (Buenavista, Santa Cruz de Piñuña Blanco and Bajo Santa Helena) which allow further seismic operations to be performed in the block.

However, the social issues resulting from the peace process with FARC have meant that the Company has not yet initiated seismic operations. Upon review of existing seismic data, reprocessed and interpreted during the period, the Company and partner have decided to drill Coembu prior to acquiring further seismic data. As such social consultations for the studies required to apply for an environmental licence are now underway.

Amerisur acquired Coati in January 2016. The Temblon area of 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 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, which management estimate contains 16 MMBO of contingent resources and 4 MMBO of prospective resources.

At the time of acquisition, five indigenous communities were certified within the block, with whom a "Consulta Previa" was underway. However, in April 2017 a further two communities were certified within the block. As such the previous "Consulta Previa" had to be terminated since it did not include all certified groups. The Company has now begun the process of defining the new "Consulta Previa" process in order to allow exploration works in the northern part of the block.

The Temblon area already enjoys the permissions required to perform a Long Term Test (LTT) of the Coati-1 well. The Company is reviewing technical options with respect to that activity.

Putumayo-8 lies adjacent to the west of the Platanillo field and is in Phase 1 of its exploration period with a 2% X Factor and low work commitments of one exploration well and 207 km2 of 3D seismic. 95 km2 of 3D seismic data has been acquired to date. Amerisur has a 50% (non-operated) working interest and Vetra holds the remaining 50% and is Operator.

Amerisur and the Operator have identified a number of attractive prospects within the block, two of which are covered by 3D seismic data. The Operator is currently preparing the environmental impact assessment for environmental licensing.

The block has unrisked prospective resources of 12.3 MMBO net to Amerisur.

Putumayo-30 covers approximately 38,514 hectares and lies within the Putumayo basin, approximately 55 kilometres to the north of both the Company's 100% owned Platanillo field and 60% owned Putumayo-12 Contract.

In December 2016 Amerisur acquired the outstanding working interest in the block from Talisman Colombia Oil & Gas Ltd, thus holding 100% and Operatorship.

The block has Cretaceous exploration potential in line with the adjoining Andaquies block (Amerisur 100%) and additionally has a recognized Tertiary play concept.

The"Consulta Previa" process is in progress and is expected to be completed in 2018. The block has unrisked prospective resources of 449MMBO.

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. Amerisur has a 30% (non-operated) working interest in the contract, ONGC Videsh Ltd holds a 70% working interest and is the Operator.

In May 2017, Amerisur and its partner successfully drilled the Mariposa-1 well to a total depth of 11,556 feet (MD). A 7" production liner was successfully run and cemented in the well and an interval of 12 feet of the 120 feet of net pay logged in the L3 sandstone was perforated in order to perform a short-term test with a drill-stem-test temporary string.  The well was tested in natural flow over a variety of choke sizes, together with appropriate closed-in pressure build up periods to ascertain reservoir parameters. The natural controlled flow rate recorded was approximately 4,601 barrels of oil per day of 40.8 degree API oil with a water cut of 0.35% and 348psi flowing wellhead pressure over a 40/64" choke and indicated strong further production potential.

The well is expected to be placed on LTT shortly.

The LTT will be followed by the drilling of Indico-1, a well targeting an updip section of the Mariposa play on the Lower Sands. This well is expected to spud in Q1 2018. The block has unrisked prospective resources of 142.3MMBO and 13.4MMBO contingent resources net to Amerisur.

Andaquies is 100% owned and operated by Amerisur and is located in the north east of the Putumayo basin. The block sits to the north east of a proven structural play within the Putumayo basin and has multiple proven reservoir targets, six mapped leads targeting both proven and speculative plays and unrisked resources of 82MMBO. Andaquies is contiguous with Putumayo-30, with no X Factor and low work commitments of one exploration well by May 2017. The Company has requested an extension of this period from ANH while environmental licensing is completed.

In March 2017, Amerisur acquired a 100% working interest in Terecay from Pacific (now Frontera Energy), which lies between Put-12 and Put-9 and Tacacho. Regional mapping has been completed, but more seismic data is required to determine if the structural trends from Put-13 and Put-14 blocks extend northward to Terecay. The regional seismic processing project commissioned by the Company is expected to assist in prospect definition.

In March 2017, Amerisur acquired the remaining 50.5% of Tacacho from Pacific and holds a 100% working interest and Operatorship. 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 480 kilometres of 2D seismic. The phase is currently suspended while social consultations and security planning is performed. The block has unrisked resources of 179MMBO.

Amerisur acquired a 58% working interest in Mecaya in March 2017 from Pacific. The block is in a faulted zone, with potential for traps similar to those in the Platanillo field and has proven oil, with the Mecaya-1 well drilled in 1989 by ECP flowing at 782 BOPD.

It is planned to present an application for environmental licensing and then perform an LTT of the well Mecaya-1.

As announced at the Company's full year results in April 2017, a technical programme involving the detailed analysis of well data and samples and the reprocessing and reinterpretation of the seismic data set from its exploration well, Jaguarete-1 is nearing completion. Until the results of this have been studied, very little capital will be spent on the Paraguay acreage. Activities in the first half on 2017 were minimal.

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, the report certified that 1P (Proven) gross field reserves were 15.1 MMBO (2015: 15.2 MMBO) after production of 1.13 MMBO during 2016 and 2P (Proven and Probable) gross field reserves were 24.5 MMBO (2015: 23.7 MMBO).

Production during 2016 was 1.13 MMBO; hence 2016 1P reserves, after adjusting for production, represent a small increase from year-end 2015.

The Company believes that the additional drilling activity on Platanillo this year and four wells from the northern pad 2N, which seek to extend the field limits, should result in an increase in both 1P and 2P reserves.

Financial Review

¹Non-GAAP terms - see glossary in Note 9.

Average daily production of 4,475 BOPD in H1 2017 represents a 69% increase on the same period in 2016 and 46% increase over FY 2016. Peak daily production in the six-month period was 5,280 barrels.

Average realised sales prices for the half year period were $47.2 per barrel, compared to $35.0 in H1 2016 and $38.4 for FY 2016.

Cost of sales comprise cost of operations, transport costs, inventory movement, high prices tariffs, royalties and depreciation. Cost of sales was $31.8 million for H1 2017 compared to $24.5 million for H1 2016, principally reflecting the increase in production.

Average transport costs have decreased from $11.4 per barrel in FY 2017 to $4.8 in H1 2017, principally due to the increased throughput of oil in the OBA pipeline.

Opex per barrel H1 2017 averaged $12.8 per barrel in H1 2017, a reduction of $3 per barrel when compared to FY 2016.

Operating netback improved from $11.2 per barrel in FY 2016 to $29.6 per barrel in H1 2017.

The group has a current tax charge for the period of $0.5 million (2016 H1: $0.5 million).

At the period end, the Group had a cash position (inclusive of restricted cash deposits) of $29 million and continues to have no debt.

The first half of 2017 saw a significant improvement in operating cashflows as a result of increasing production, higher oil prices and lower production costs, which alongside existing cash resources have funded the capital expenditure programme in the year to date.

The commitments and planned discretionary programmes for the remainder of 2017 and 2018 are expected to be fully funded from operations and the Company remains focused on efficient cost management.

Post period end, the Company cancelled its existing undrawn reserves based lending facility.

The Directors will not be recommending payment of a dividend.

The above consolidated income statement and statement on comprehensive income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

*Prior period balances have been reclassified (see note 2).

The above consolidated cashflow statement should be read in conjunction with the accompanying notes

Cash and cash equivalents at 30 June 2017 above include restricted cash of $4.6m.

Amerisur Resources Plc ("the Company") is principally involved in the exploration for and production of oil and gas in Colombia, South America.

The Company is a public limited company incorporated and domiciled in England and Wales. The address of its registered office is Amerisur Resources Plc, Lakeside, St. Mellons, Cardiff, CF3 0FB, United Kingdom.

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

These unaudited consolidated interim financial statements are for the six months ended 30 June 2017. 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 2016, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). A number of new standards, amendments to existing standards and interpretations were effective from 1 January 2017. The adoption of these amendments did not have a material impact on the group's condensed financial statements for the six months ended 30 June 2017.

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 2016. These statements do not constitute statutory accounts under s434 of the Companies Act 2006 (the "Act").

In order to be maintain consistency of accounting treatment between periods, certain prior period balances have been reclassified as follows:

i. A reclassification from share premium to a new merger reserve in relation to the acquisition of PDSA in 2015 where the excess over the nominal value of the fair value of the consideration where more than 90% of the shares are acquired through the issue of new shares should be recorded in a separate merger reserve.

ii. A reclassification between operating and investing cashflows in relation to the PDSA assets acquired through shares rather than cash.

The consolidated statutory accounts for the year ended 31 December 2016 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 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.

Segment Reporting

Our management information system produces reports for the Executive Board grouping financial performance under the following business areas:

· Colombia; and

· Paraguay

The UK is primarily considered to be an administrative extension of the Colombian and Paraguayan operations. The business segments are responsible initially for the exploration and evaluation of oil reserves and then the development and production of oil wells. As permitted by IFRS 8, these business segments are deemed to have similar economic characteristics and are similar, if not the same, in all of the following as they:

· are both involved in E&P, whose economics are heavily influenced by the international O&G market;

· are subject to a similar regulatory environment.

The business areas have been aggregated into a single reportable operating segment, namely oil exploration and evaluation (E&E) and development and production (D&P). Each month the Executive Board is presented with financial information prepared in accordance with IFRS as adopted in the EU and the accounting policies set out in Note 2 to the financial information as such information regarding this operating segment has already been disclosed in the financial statements.

In the period the following three customers (H1 2016: two, FY 2016: three) contributed to the majority of revenue:

Geographical information

The revenue split is based on revenue by origin of supply.

The combined Colombian tax rate for 2017 is 40%; 34% income tax plus 6% income surtax (2016: 40%).

¹ on 16 March 2017 the Group announced the following working interest asset acquisitions from Meta Petroleum Corporation and Pacific Status Energy Colombia Corporation (both ultimately owned by Pacific Exploration and Production, a Canadian Listed company).

· 60% of Put-9;

· 58% of Mecaya;

· 100% of Terecay; and

· 50.5% of Tacacho.

² in 2016, the Group recorded an impairment charge of $13.8m in relation to its E&E expenditure on the San Pedro block in Paraguay.

Oil development and production assets relate to the 100% owned Platanillo field.

The unaudited interim condensed consolidated financial statements were approved by the Board of Directors on 22 September 2017.

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

Forward Looking Statements

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.