Amerisur interims & update

Amerisur Resources is an independent full-cycle oil and gas company focused on South America, with assets in Colombia and Paraguay. I have a holding in my growth portfolio (epic code: AMER).

Amerisur made two announcements today - their interims and an update on the Platanillo field in Colombia.

For the six months to 30 June 2013 revenue increased to $64.4m from $6.0m last year.  Profit before tax increased was US$29.1m up from US$0.4m last year and EPS was 1.80c compared to last year's LPS of -0.22c.
 
Production in the first half was 672,533 barrels of oil, or 3,715 BOPD.  Although production prior to the forced closure (see here) is being ramped up as new wells come on stream; on 16 July they stated that total field controlled production was estimated at 8,500 BOPD and for the period from 1 July to 18 August they averaged production at 6,522 BOPD.  In the second announcement today they state that the production rate is 7,500 BOPD.

As transport and export facilities were a problem previously (second paragraph here) they updated the market on their capacity:

Trucking to Orito - 94km, currently taking between 2,000 and 4,000 BOPD; Trucking to Rio Loro - 308km, currently taking up to 5,000 BOPD; Trucking to Dina - 428km, currently not being utilised; Trucking to Vasconia - 750km, currently not being utilised and Pipeline under the Putumayo river into Ecuador to use the SOTE system - up to 10,000 BOPD capacity initially.

Management state that all commitments and planned discretionary programmes for the remainder of this year and next are fully funded; they have a cash position of US$40.4m and I would expect them to start generating free cash flow next year.

The second announcement updated the market on the Platanillo field, the main message was that oil production and export has recommenced after the road restrictions were lifted and production was ramping back up and is currently at about 7,500 BOPD. Also Platanillo-2 ST1 has produced 1,023 BOPD on test and the Serinco D-10 rig will be moved to begin drilling in well Platanillo 14.

No mention was made of market expectations, I believe that analysts have been pencilling in about $100m post-tax, assuming 1.1bn shares that gives an EPS of $0.09, placing the company on a very attractive prospective P/E of about 8.  To achieve the $100m post-tax though will require an average production level of about 10,000 BOPD for the second half.*  A challenging target although we probably have a starting controlled level of production of about 9,500 BOPD (8,500 BOPD see here + 1,023 BOPD from Platanillo-2 ST1).  It will though require substantial exploration success over the coming months and a ramp-up in production to off-set the lower production & closure caused by the unrest.

* Calculation for estimated average 10,000 BOPD for the second half of the year:

$100m less $19m for the half year = $81m required for the second half divided by a rough $45 net profit per barrel of oil = 1.8m barrels of oil export required at an approximate 180 days of production = an average 10,000 BOPD.