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Amerisur Resources (AMER): Formal Sale Process to conclude in Q4 2019 | Nostrum Oil & Gas (NOG): Difficulties in Kazakhstan continue | Columbus Energy Resources (CERP) – Update on Saffron well - Rig ready to commence drilling operations
AMER NOG CERP
Amerisur Resources (AMER LN) (not covered): Reserves update in Colombia | Petrofac sells remaining 51% of Mexican operations | Ascent Resources (AST LN) (not covered): Completion of placing | Hurricane Energy (HUR LN) (not covered): 1H19 results
AMER HUR AST
Amerisur Resources (AMER) – Positive Reserves Update | Baron Oil* (BOIL): Award of UK 31st Offshore Round Licences
Amerisur Resources Baron Oil Plc
Amerisur (AMER LN) (not covered): 1H19 results | Igas Energy (IGAS LN) (not covered): 1H19 results | Hurricane Energy (HUR LN) (not covered): Well result in the UK | Providence Resources (PVR LN) (not covered): Placing | Energean Oil & Gas (ENOG LN) (not covered): 1H19 results | Tethys Oil (TETY SS)1,6; BUY, SEK85: August production in Oman
AMER STAR HUR ENOG 0A1V PVDRF
Amerisur Resources (AMER): Strategic Review Update | Providence Resources (PVR)/Lansdowne Oil & Gas* (LOGP): Barryroe Site Survey
Amerisur Resources Barryroe Offshore Energy PLC
Amerisur Resources (AMER): Operational Update | Lansdowne Oil & Gas* (LOGP)/Providence Resources (PVR): Funding Update | Ascent Resources (AST): Management Changes & Corporate Review | Egdon Resources (EDR)/Union Jack Oil (UJO): Wressle Planning Update | Victoria Oil & Gas (VOG): Term Sheet | Echo Energy (ECHO): Operational Update | Reabold Resources (RBD): Operational Update
AMER LOGP EDR VOG ECHO RBD AST
Amerisur (AMER LN) (not covered): Possible offer from Maurel & Prom (MAU FP) (not covered) | Hardy Oil & Gas (HDY LN) (not covered): Sales price for Indian asset increased | Jupiter Energy (JPR AU) (not covered): Fine in Kazakhstan | Rockhopper Exploration (RKH LN) (not covered) & United Oil & Gas (UOG LN) (not covered): Sale of Abu Sennan in Egypt
AMER HDY JPR RKH
Amerisur (AMER LN) (not covered): Strategic review process
Amerisur Resources
Amerisur Resources (AMER): Offer from Maurel & Prom | Jersey Oil & Gas (JOG): Licence Awards & Possible Equinor Option | Lansdowne Oil & Gas* (LOGP)/Providence Resources (PVR): Funding Update
AMER JOG LOGP
Amerisur Resources (AMER LN) (not covered): Update in Colombia | Petro Matad (MATD LN) (not covered): FY18 results | Equinor (EQNR NO) (not covered): Discoveries in Norway | Union Jack Oil (UJO LN) (not covered): Drilling update in the UK
AMER MATD UJO
Amerisur Resources (AMER LN) (not covered): Operations update in Colombia | Arrow Exploration (AXL CN) (not covered): Discovery in Colombia | Phoenix Global Resources (PGR LN) (not covered): 2Q19 update in Argentina | JKX Oil & Gas (JKX LN) (not covered): Drilling update in the Ukraine
AMER PGR JKX
Amerisur Resources (AMER): Operational Update | Phoenix Global Resources (PGR): Q1 Operational Update | UK Oil & Gas (UKOG): Production Update
AMER PGR UKOG
Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019. Alumasc Group plc, the prem ium building products, system s and solutions group, has announced its intention to m ove from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019 Argentex a UK-based forex service provider founded in 2011 by its current management team which operates as a Riskless Principal for nonspeculative and forward foreign exchange as structured financial derivatives is looking to join AIM. Offer TBC, expected 25 June
AMER CNC IGR MRIT IOM FIH WYG AVG ING SPSY
Amerisur Resources (AMER LN): Discontinuing coverage | lobal Petroleum (GBP LN)1: Speculative Buy, £0.05; Global wins further appeals in Italy | Nostrum Oil & Gas (NOG LN)1,7; Speculative Buy, £2.20: 1Q19 results
AMER GBP NOG
We are discontinuing coverage of Amerisur Resources, due to a reallocation of analyst resources.
Amerisur is an E&P company with assets onshore Colombia. The company achieved production of 5.4mbbl/d in 2018 generating US$34.0m of EBITDA, and has an ongoing 2019 drilling programme aimed at adding resources and production volumes.
Amerisur has released its 2018 results, reporting production of 5.4mbbl/d and end 2018 net cash of US$44.1m in line with our forecasts, though EBITDA of US$34.0m was behind due to slightly higher costs. We adjust our forecasts for this, but also for a redistribution of expected drilling CAPEX, detailed below. After a number of years of building its portfolio, Amerisur is now moving forward into a period of increasing drilling activity. This should initially comprise appraisal and exploration wells on CPO-5, with more drilling across the portfolio from H2 2019, all supported by the company’s production cash flows, existing balance sheet and the US$93m farm in by Occidental. Given the funding position and newsflow outlook, we have a Buy and 32p target.
Amerisur Resources (AMER LN) (not covered): FY18 results | Arrow Exploration (AXL CN) (not covered): Reserves update in Colombia | Aker BP (AKERBP NO) (not covered): 1Q19 update | Edgon Resources (AST LN) (not covered): Update in the UK | I3 Energy (I3E LN)1; Speculative Buy, £1.80: Operating update in the UK North Sea
AMER I3E AST
Amerisur (AMER LN) (not covered): reserves update in Colombia | Phoenix Global Resources (PGR LN) (not covered): 4Q18 operational update in Argentina | Jadestone Energy (JSE LN/CN): £0.50, BUY; 2019 guidance | SOCO International (SIA LN) (not covered): FY18 results | Independent Oil & Gas (IOG LN); BUY, £0.70: Opportunistic potential offer | Seplat Petroleum (SEPL LN); BUY, £2.70: 4Q18 results
AMER PGR JSE PHAR SEPL IO7
Amerisur Resources (AMER LN) (not covered): Operational update in Colombia | Melbana Energy (MAY AU) (not covered): Farm-out in Cuba | Ophir Energy (OPHR LN); Speculative Buy, £0.55: Possible cash offer for the company | Faroe petroleum (FPM LN); HOLD, £1.75: Well results in Norway | RockRose Energy (RRE LN) (not covered): Operational update in the North Sea | Energean Oil & Gas (ENOG LN) (not covered): New gas contract in Israel
AMER OPHR FPM RRE ENOG
Amerisur Resources (AMER LN) (not covered): Discovery in Colombia | Global Petroleum (GBP LN); SPECULATIVE BUY, £0.05: Wins in further appeals against environmental decrees in Italy | Aminex (AEX LN) (not covered): Kiliwani update in Tanzania | ExxonMobil (XOM US) (not covered) to sell interest in Mozambique
AMER GBP AEX 0R1M
Amerisur (AMER LN) (not covered): Farm out transaction in Colombia
Amerisur Resources (AMER LN) (not covered): Operational update in Colombia
Amerisur has released its H1 2017 results. Production of 6.0mbbl/d for the half was already reported (production January-August 5.7mbbl/d), driving revenue of US$67.9m, EBITDA of US$24.3m and net cash of US$49.3m. Operating costs also came in higher on maintenance and upgrade work carried out. We have made a number of changes to our forecasts (discussed below), including lower production, higher oil prices, and lower EBITDA, but higher net cash based on a level of CAPEX deferral. The new drilling programme continues, with Pintadillo-1 drilling ahead (potential for two follow-on wells) and a rig mobilised for Indico-1 (further two wells planned), making for a busier period of newsflow going forward, and giving the potential for production additions in the coming months. The existing production continues to support the company and fund an increasing amount of forward activity, and we maintain our Buy recommendation and 30p target.
Amerisur has released an operational update, and production numbers for August. This reports Pintadillo-1 drilling ahead, completion of Amerisur’s Chiritza repumping station works (with electrical power to now be installed by PetroAmazonas) and a new 2D campaign on Put-12 and Put-9 prior to drilling. All of this represents steady operational progress, working towards greater ramp up of the up to 14 well drilling programme. The Platanillo-22 workover is complete, with the well currently doing 415bbl/d on a low pump rate. This is less than previous plateau of around 1,000bbl/d, but there could be further perforation in the coming months to increase volumes. August production numbers are also reported at 4.9mbbl/d, for a 2018 average to date of 5.7mbbl/d. H1 results are due out next week on 13 September. We maintain our Buy recommendation and 30p target.
Amerisur has released an operational update, reporting on its activities across its Platanillo, CPO-5 and Put-8 blocks, and its Chiritza repumping station project.
Amerisur has released production numbers for June. These report average company production of 5.2mbbl/d (compared with 4.8mbbl/d in May), with a peak of 5.4mbbl/d. Volumes exported through the OBA pipeline were 4.3mbbl/d (compared with 4.1mbbl/d in May), with a peak of 4.5mbbl/d.
Amerisur is an E&P operating onshore Columbia. The company has high margin production from its Platanillo field and Mariposa-1 well supported by ownership of the OBA pipeline, which connects Platanillo into the Ecuadorian pipeline system. A new up-to-14 well drilling programme is about to begin, providing newsflow and a route to 20mbbl/d. Buy, 30p target (from 25p).
Amerisur Resources (AMER-LSE)6 ; REDUCE, £0.15: Reducing our production forecast | Phoenix Global Resources (PGR LN) (not covered): 1Q18 operating update | Sino Gas & Energy (SEH AU) (not covered): PSC update in China | Serinus Energy (SENX LN)1 : Speculative Buy, £0.25: Operational update in Romania
AMER PGR SEH SENX
Amersiur reported May 2018 production volumes of 4,807 bbl/d. For the first five months of 2018 production has averaged 6,133 bbl/d, which is significantly below our prior 1H18e production forecast of 6,800 bbl/d. We have reduced our 2018e and 2019e production forecast, noting the company’s challenges of achieving sustainable production of 7,000 bbl/d. We have reduced our target price to £0.15 per share and rating to REDUCE.
Amerisur recently released its 2017 results. These reported production of 4.9mbbl/d, which drove EBITDA of US$21.2m and operating cash flow of US$30.0m. After CAPEX of US$30.8m (principally production drilling on Platanillo, along with some acquisitions and OBA spending), this left net cash only a little lower than end 2016, moving to US$41.3m, from US$42.3m a year earlier. Production updates are plentiful from Amerisur, so the 2017 production number was in line with what we had expected. EBITDA was behind our US$26.4m forecast, principally due to higher OPEX than we had allowed for. Overall though, net cash was ahead of our US$33.8m forecast, mainly based on a cash tax rebate of US$5.1m received.
Amerisur Resources (AMER LN)6; HOLD, £0.20: Year-end 2017 results and reduced outlook | Sino Gas & Energy (SHE AU) (not covered): 1Q18 update in China | Valeura Energy (VLE CN)1,6; BUY, C$11.50: Realized natural gas prices increase 10%, pushing cash flow and NAV estimates higher | SDX Energy (SDX LN/CN)1,6; BUY, £0.60: LNB-1 gas discovery in Morocco | Tethys Oil (TETY SS)6; BUY, SEK80: March production in Oman
AMER SEH SDX 0A1V 83PN
Amerisur reported year-end 2017 results. The company reported 2H17 production that was 2% better than expected at 5,233 bbl/d, while cash flow of US$12 mm lagged our estimates. Year-end 2017 1P reserves decreased 8% to approximately 14 mmbbl, 2P reserves decreased 15% to approximately 21 mmbbl, and 3P reserves decreased 28% to approximately 22 mmbbl. The reserve decrease had a negative impact on our core NAV estimate. We have reduced our 2018e and 2019e production forecast. Production in 1Q18 of approximately 6,700 bbl/d tracked below our expectations and the 2018e capital program is weighted to the second half of 2018e.
Amerisur Resources (AMER LN)6 ; HOLD, £0.25: Amerisur meets exit 2017e production guidance | Cabot Energy (CAB LN)1 ; Speculative Buy, £0.08: Another very good well result in Canada | Egdon Resources (EDR LN) (not covered): Wressle development planning appeals rejected | Regal Petroleum (RPT LN) (not covered): Ukraine update | San Leon Energy (SLE LN) (not covered): Take-over discussions with Chinese firms terminated
AMER EDR ENW SLE CAB
Amerisur has reported that exit 2017 production volumes were in excess of 7,000 bbl/d, thereby meeting the company’s guidance. With actual results coming in line with our estimate, our 2018e and 2019e production forecasts of 7,800 bbl/d and 9,000 bbl/d, respectively, remain unchanged.
Amerisur Resources (AMER LN)6 ; HOLD, £0.25: 2017 production guidance at risk | Tethys Oil (TETY SS)6; HOLD, SEK50: 3Q17 Results | Eland Oil & Gas (ELA LN) (not covered): Opuama update in Nigeria
AMER ELA 0A1V
Event: Amerisur posted October 2017 average production of 6,172 bbl/d and a peak production rate of 7,398 bbl/d.
Amerisur has reported an update on its Platanillo-25 well. This has been drilled in the north of the Platanillo field from Pad 2N (the area of the majority of Amerisur’s recent drilling), and the initial well encountered thinner-than-expected net reservoir thickness in the producing U sand, reported last week. The well has now been sidetracked updip, and has encountered a 22ft net oil column in the U sand. This is expected to deliver more sustainable production than producing from the initial well would have. Production casing is now being run, and production is expected to begin in the next 10 days.
Amerisur Resources (AMER LN)6 ; HOLD, £0.25: Current production volumes in line with exit 2017 guidance | San Leon Energy (SLE LN): Eroton update in Nigeria
Amerisur Resources San Leon Energy Plc
In Amerisur’s monthly production update for September 2017, the company announced that current production volumes are approximately 7,400 bbl/d. The company is guiding toward exit 2017 production volumes in excess of 7,000 bbl/d.
Amerisur Resources (AMER LN)6 ; HOLD, £0.25: 2017 production guidance reduced, while the 2018e outlook remains unchanged | Diversified Gas & Oil (DGO LN) (not covered): Transfer of remaining Titan assets in production update | Caspian Sunrise (CASP LN) (not covered): BNG Operational Update in Kazakhstan | Canadian Overseas (COP LN) (not covered): £2.5 mm placing
AMER DEC CASP
Amerisur Resources (AMER LN)6 : HOLD, £0.25; 2017 production guidance under review after temporary shut-in | Echo Energy (ECHO LN) (not covered): Interim Results 2017 | Cairn Energy (CNE LN): Buy, £2.30 & Providence Resources (PVR LN) (not covered); Water found at Druid prospect | Rosneft Oil (ROSN LN) (not covered): 2Q17 results |
AMER CNE ECHO PVDRF
Amerisur Resources (AMER LN)6: HOLD, £0.30: Production volumes trending higher | Anadarko Petroleum (APC US) (not covered): More gas in Colombia | LGO Energy (LGO LN) (not covered): Operating update in Trinidad | Vermilion Energy (VET CN)1,6; BUY, C$63.00: Results as expected, outlook unchanged | Lundin Petroleum (LUPE SS/LUP CN) (not covered): 1Q17 results | Volga Gas (VGAS LN) (not covered): April 2017 production | Kuwait Energy: Intention to float in London | African Petroleum (APCL NO) (not covered): Contemplated Private Placement | Total (FP FP) (not covered): Boosting presence in Senegal upstream
AMER APC VET LYV VGAS APCL TTE CERP
Amerisur Resources (AMER LN)6; HOLD, £0.30: Year-end 2016 results and unchanged production outlook | Canacol Energy (CNE CN) (not covered): FY17 guidance | Schlumberger (SLB US) (not covered): MOU to take fund and operate a field in Argentina | Orca Exploration (ORC.A/B CN) (not covered): FY16 results | Victoria Oil & Gas (VOG LN)1,6; BUY, £1.15: Operational update | World crude oil markets: Less floating storage suggests tighter markets ahead
AMER CNEC SLB ORC/B VOG
Amerisur Resources (AMER LN)6; HOLD, £0.30: Reduced 2017e production outlook and year-end 2016 reserves | Condor Petroleum (CPI CN)8 ; BUY, C$3.50: Reports 4Q16 results and remains on track for first production from Turkey in mid-2017e | Hurricane Energy (HUR LN) (not covered): Halifax well update in the UK | Cairn Energy (CNE LN): BUY, £2.90: Update on the VR-1 well in Senegal by Far (FAR AU) (Not covered) | Royal Dutch Shell (RDSA/B LN) (not covered): Divestment of Gabonese assets
AMER HUR CNE SHEL CPI
Amerisur Resources (AMER LN)6; HOLD, £0.35: YE26 Reserves | Faroe Petroleum (FPM LN)6; Hold, £1.10 & Maersk Oil (not covered): Tyra field facilities redevelopment in the North Sea to extend Trym field production | SDX Energy (SDX LN/CN)1; BUY, £0.65: FY16 Results
AMER FPM SDX
Amerisur has announced the acquisition of a package of asset stakes in the Caguan-Putumayo basin from Canadian company Pacific E&P. The assets are 60% in Put-9 (taking Amerisur to 100%), 58% in Macaya, 100% in Terecay and 50.5% in Tacacho (taking Amerisur to 100%). Acquisition price is US$4.85m cash, plus royalties of 2% on the Terecay block and 1.2% on the Put-9 block. The assets are all exploration focused, with Put-9 and Macaya located so as to be able to take advantage of Amerisur’s OBA pipeline if production is established. Terecay and Tachaco may require other transport options. Overall the acquisition adds net 320mmbbl of mean prospective resources across a number of identified leads.
Amerisur Resources (AMER LN)6; HOLD, £0.35: consolidates acreage in the Putumayo Basin | Vermilion Energy (VET CN); BUY, C$65.00: Closes acquisition of assets in Germany | Serinus Energy (SEN CN); HOLD, C$0.70: Well in Tunisia temporarily shut-in | Jersey Oil & Gas (JOG LN): Discontinuing coverage | SacOil (SAC LN) (not covered): Discontinuing coverage | Weekly Crude Oil Cut
AMER VET JOG SAC SENX
Amerisur Resources (AMER-LN)6: Slight delays to production ramp-up and operational activity | Hurricane Energy (HUR LN) (not covered): Well update at Lincoln in the UK | BP (BP LN) (not covered): acquiring 10% in ADCO in Abu Dhabi | BP (BP LN) (not covered): acquiring interests in Mauritanian and Senegal assets from Kosmos Energy (KOS US) (not covered) | Canadian Overseas Petroleum (COPL LN/CN) (not covered): Dry hole in Liberia | San Leon Energy (SLE LN) (not covered): Potential take-over? | Impact Oil & Gas: raising capital
AMER HUR BP/ COPL SLE KOS
Amerisur Resources (AMER LN) | Tethys Petroleum (TPL CN/LN) | Roxi Petroleum (ROXI LN) | Tullow Oil (TLW LN) | Total (FP FP)
AMER CASP TLW TTE 0PRL
We recently attended a site visit to Amerisur’s Platanillo field in Colombia, and an associated presentation. We viewed the company’s OBA pipeline, which is about to come onstream to export oil via Ecuador, and will bring increased offtake capacity and OPEX savings. Amerisur also has drilling on a number of other fields coming up, providing newsflow but also production potential in the coming years. Challenges remain in securing additional pipeline capacity in Ecuador and successfully bringing on new fields to support the company’s target of 20mbbl/d by the end of 2019. In our view, the near-term newsflow, long-term growth profile and strong balance sheet (US$56.1m of net cash currently) lead us to maintain our Buy recommendation and 35p price target. We also update our model for new guidance on production and tax losses, upgrading 2017 (detailed below).
Amerisur recently hosted an Analyst trip to the Platanillo Field and OBA pipeline, while also highlighting an 11 well drilling program over the next 15 months, which is greater than previously anticipated. The Company has released its 2017e production guidance range between 7,500 bbl/d and 8,500 bbl/d. We have increased our 2017e production forecast by 9% to 7,600 bbl/d. We have increased our target price to £0.35 per share, while maintaining our Outperform ranking.
Amerisur reported 1H16 production of 2,642 bbl/d that was behind expectations, due to production being shut-in during the low crude oil price and the Company waiting to sell volumes through the OBA pipeline to realize a much better netback. The OBA pipeline is complete and undergoing final checks. The first exports through the pipeline will commence in the next few days, at which point production is expected to ramp-up to 7,200 bbl/d by exit 2016e and operating and transportation costs are expected to decrease over 40% to US$15/bbl. While our 2H16e outlook has been reduced, our 2017e production and financial estimates remain largely unchanged. With new drilling success, our 2017e production forecast could potentially be too conservative.
Market Impact: Positive. Amerisur announced that the Platanillo-8 well was successfully drilled ahead of schedule and below budget. The Company's operations will pick-up in 2H16e, with the drilling of up to two stepout wells at the Platanillo Field (100% WI), two exploration wells at the CPO-5 Block (30% WI), completion of the OBA pipeline, and continued seismic and evaluation work at the PUT-12 (60% WI) and Coati Block (60% WI, post farm-out terms being satisifed)
Market Impact: Positive. The farm-down of a 20% WI in the Coati Block (60% WI post farm-out) and the identification of the N Sand formation on the Platanillo Block (100% WI) are positive and offset the uncommercial well results of the Jaguarete-1 well in Paraguay. We previously assigned zero value to the Jaguarete-1 well.
Amerisur spud its Jaguarete-1 well April 22nd which has now reached a total depth of 8,626ft in the Itajuru basement formation. The Company noted positive indications of hydrocarbon potential while drilling and will acquire electrical logs to further define the reservoir and fluid characteristics. Once the logs have been interpreted, Amerisur will then decide whether to complete and test the well.
Amerisur has spudded its Jaguarete-1 well in the San Pedro Block within the Parana basin in eastern Paraguay using the Quieroz Galvao QG-1 drilling rig.
Impact: Neutral. Amerisur reported 2H15 constrained production of 4,351 bbl/d which beat our expectation of 4,179 bbl/d as reductions in production implemented by competitors in the area, allowed for increased capacity to be utilized by Amerisur. The Company has made progress with respect to its Oleoducto Binacional Amerisur (OBA) interconnector pipeline, which has now received all approvals and is in the finals stages of construction. The pipeline will run from the Ecuadorian border to the point of connection with the RODA gathering system, which will help to increase the amount of Amerisur's production brought to market, and reduce its current pipeline constraints.
Amerisur has issued 106 mm shares for net proceeds of US$35 mm. This implies an equity issue price of approximately £0.23 per share. The proceeds will be directed toward an increased 2016e capital program. We have reduced our 2016e production and cash flow estimates, based on Company guidance disclosed in the proposed placing document. The Company has provided a warning that 2015 year-end reserves will decrease, due to the decrease in the crude oil price and cumulative production of approximately 1.6 mmbbl since the last reserve report.
Market Impact: Positive. The Ecuadorian Ministry of the Environment has awarded the environmental license for the completion of the construction and operation of the pipeline that will move Amerisur's production through Ecuador to a new sales point. The Company has begun to drill and install the pipeline under the river, which is expected to take 35 days. Commissioning is expected by late March 2016e, with first transport shortly thereafter.
Amerisur is an E&P company operating in Colombia and Paraguay. It has 4.5mbbl/d of production from its flagship Platanillo asset and this is due to begin ramping up later this year when a new pipeline connection comes onstream reaching levels of 12mbbl/d in early 2017. The pipeline is also expected to drive significant OPEX savings. Amerisur’s focused operational programme will help the company defend cash flow in a low oil price environment allowing it to continue to progress key work programmes but also to be one of the first to benefit on price recovery. This leaves Amerisur in a strong position versus many peers and we initiate coverage with a Buy recommendation and 50p/share price target.
Market Impact: Neutral. Amerisur continues to expect to perform operational testing and commissioning of the pipeline, measurement and export pumping systems around year-end 2015. First sales volumes through the pipeline are expected shortly thereafter.
In this publication, we analyze each companies’ future development capital on 1P and 2P reserves in relation to our 2016e cash flow estimates and the reserve life. With year-end 2015 approaching and new reserve reports to soon be released under a substantially reduced crude oil price environment, we highlight those companies that might be at risk for a decrease in reserves, a greater decrease in reserve value, and/or a need for external sources of financing. Those companies at greatest risk include GeoPark (GPRK NY), LGO Energy (LGO LN), and Pacific Exploration & Production (PRE CN).
AMER GTE PXT TGL 0MDP CERP BNK PRE
Market Impact: Negative. The Loto-2 well tested two zones with in the Mirador formation, but unfortunately both zones tested a high water-cut and the well has been temporarily suspending further analysis of theresults. The well was drilled on schedule and under budget.
Amerisur reported 1H15 production of 4,524 bbl/d that was in line with our expectation of 4,500 bbl/d. Funds ow from operations was reported at US$8 mm or US$0.01 per share, versus our outlook of US$11 mm or US$0.01 per share. The difference in cash ow was mostly due to additional port taxes and handling charges imposed by the pipeline operators. These costs are temporary and will not be applicable when the OBA pipeline is operational. Our 2H15e production forecast has modestly improved to 4,700 bbl/d, as current production has slightly increased due to production optimization and reactivated production volumes from Pad 3N. Our 2016e production and financial estimates remain unchanged. The OBA interconnector pipeline system to Ecuador is expected to be operational by year-end 2015e.
Summary. Last week Amerisur announced the acquisition of two assets from PetroDorado. These are onshore Colombia and include the Loto discovery which is to have a second well drilled on it this month and possibly a further two on success. This drilling could result in first oil from Loto in 2015 facilitated by its Llanos basin location where several offtake options are available. Acquisition price is US$6m which can be satisfied in cash or shares at Amerisur’s option, cash carry on US$1m of seismic and a 2.5% royalty on CPO-5 production.
Market Impact: Slightly positive. Amerisur has agreed to acquire Petro Dorado South America, a subsidiary of Petro Dorado Energy (PDQ - TSX-V). Amerisur is acquiring a 30% WI in the CPO-5 Block and a 49.5% WI in the Tacacho Block. The potential tax benefit of US$20 mm from the acquisition more than offsets the acquisition cost of US$6 mm. Amerisur also has a near-term exploration catalyst with the Loto-2 well that is expected to commence drilling in July 2015e.
Amerisur has signed an agreement with PETROAMAZONAS for the construction of a pipeline from the Ecuadorian border to the RODA gathering system. The agreement outlines a minimum commitment to transport 5,000 bbl/d of crude oil at a transportation tariff of US$1.09/bbl. Civil works within the Victor Hugo Ruales central processing station are expected to commence in the next few days. Options for the transport and commercialization of Amerisur oil from Lago Agrio are being evaluated.
Market Impact: Positive. Amersiur has announced that the Colombian regulatory authority, ANLA, has approved the modification of the Platanillo Field global exploitation license for the construction and operation of the pipeline to Ecuador. The Company now has all the required Colombian permits for the pipeline to Ecuador. Amerisur continues to work toward completing the approval process with the Ecuadorian authorities, with the expectation for completion in the second half of 2015e. Currently, we are estimating that the pipeline is constructed and operational in the latter part of 2015e. We are forecasting renewed production growth in early 2016e, with the Company reaching 8,000 bbl/d in 2H16e
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