Amerisur finals

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 announced their full year results to 31 December 2013 today with revenue up 301.0% to US$169.2m, operating profit up 279.1% to US$74.3m and EPS up 236% at $0.044.  Free cash flow was a healthy $32.5m and they ended the year with net cash of $71.6m up from $47.0m last year. 

Management expect the capital expenditure programme for 2014 to be $75m which is well covered by the opening net cash and expected free cash flows in the year.

These results although good, have been constrained all year by the ongoing transportation of oil to the export markets.  This has off-set a quite exceptional year of exploration and discovery, indeed management state that although the Platanillo field production remains constrained in the range 7,000 to 7,500 BOPD they say that a conservative estimate for production capacity is approximately 10,000BOPD. 

With Proven & Probable reserves of 32.8m barrels, a healthy 2014 drilling programme of seven new wells in Platanillo, three in Put-12 and a first well in Paraguay, along with the completion of the Ecuadorian pipeline in the second half of the year that will substantially ease capacity issues; this year could form a strong base for substantial growth during 2015 and beyond.   

Management state that they are confident that their programme for 2014 will allow them to significantly increase production, increase their reserves and continue their strategically sound approach to exploration.

These numbers place the current share price of 56.5p on a P/E above 21; so it would appear no longer substantially underpriced, but further drilling successes and finally resolving the transportation problems this year and 2015 results may move today's price down to a low single digit P/E.  Still plenty of risk here, but today's price is a better offer than a year ago (52p), due to that risk reducing.