Cash-rich Amerisur ready to bounce

Amerisur's chief asset is its 100 per cent working interest in the 11,341 hectare Platanillo block in Colombia. Almost uniquely, Amerisur has hardly a blemish on its drill-work since 2012, with 15 successful strikes in the current campaign on the block. Both reserves and production rates have ratcheted up as a consequence. At the end of last year, an independent reserves report published by Petrotech Engineering increased Amerisur's proven (1P) reserves by around two-thirds to 19.8m barrels, while proven and probable (2P) reserves were up 10 per cent to 32.8m barrels - that represents a net present value of $1.25bn pre-tax (£776m) at a 10 per cent discount rate - plenty of 'blue-sky' potential.

But for the moment, however, Amerisur is forced to truck its output from Platanillo. This is not only expensive, but around 242,000 barrels of production were lost during the first half of 2014 through logistical delays caused by national elections. Despite these problems, an average of 6,561 barrels of oil per day (bopd) was produced during the period - a 39 per cent increase on 2013 average. And work on an alternative pipeline conduit to Ecuador is well advanced. When operational, this will not only significantly reduce overall production costs by about $17 per barrel, but will allow Amerisur to raise production towards an initial plateau rate of 10,000 bopd.

Another potential share price catalyst in the offing is that after a number of years of preparatory work, including new 2D seismic data acquired earlier this year, Amerisur is set to commence a drilling campaign in the San Pedro contract in Paraguay targeting some 57m barrels of net risked resources. Broker Investec Securities estimates that this would be worth around 15p a share on a "risked" basis, although unrisked, San Pedro is valued at anything up to 146p a share. In addition, Amerisur is moving ahead with a multiple well joint-venture drilling programme at the 55,000 hectare Put-12 block (Amerisur 60 per cent), which is adjacent to Platanillo and shares its geology. The net risked resource at Put-12 is estimated at 48m barrels.