Amerisur operations 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 issued a positive operations update today, with the main highlights being:

• Platanillo-16 in the Platanillo Field, Colombia, has been completed and becomes the 11^th successful well of the current drilling campaign, being drilled on time and under budget.  The well was completed for commercial production and flowed 320 BPD of 30.7 API oil on test with trace water at a controlled 17% drawdown.

• The Environmental license application for the Ecuadorian part of the pipeline is currently under review by the Ecuadorian authority and the application to the Colombian licensing agency will be made in the next few days.  The Company has received from the Ecuadorian Ministry the schedule of transport tariffs.  These tariffs are substantially lower than current costs of trucking oil and, usage of the pipeline will result in an 85% reduction in transport costs compared to Rio Loro-Dina. 

 

• Current field production using trucked oil transport to Orito, Rio Loro-Dina and Rio Loro-Vasconia and Babillas stations is approximately 7,300 BOPD.

• In Paraguay, the 416km 2D seismic acquisition programme in on track.

Amerisur is becoming a solid performer in its exploration programme and with positive developments on the pipeline project, it appears to be addressing the negative logistic issues that has held back the share price.  At about 8.5x Investec Securities' estimate for 2014 earnings, there would seem to be a substantial margin of safety in today's price.