Numbers can only tell you so much. Half-year production volumes and cash flows for Amerisur Resources (AMER) were down on the corresponding period in 2015, but the South America-focused driller has been preserving its high-quality reserve base while crude prices have been in the doldrums. Average production during the period came in at 2,642 barrels of oil per day (bopd), well down on the daily rate of 4,524 barrels drawn during the first half of last year. Revenues were also pinched through an average realised oil price of $35.7 (£27) per barrel, a 17 per cent decline from the achieved price through 2015.
However, Amerisur's cost profile and unit profitability are about to change dramatically, which has precipitated a ramp-up in production rates. That's because the long-awaited Colombia-Ecuador interconnector oil pipeline is undergoing final system checks. Operations should commence within a matter of days following formal regulatory approvals. Once in service, the pipeline will reduce operating costs to $15 a barrel, and increase profitability by an additional $11 per barrel. Given the opportunity cost, it's easy to see why management deliberately chose to pare back production.
Investec expects an adjusted loss of $14.3m for the December year-end, leading to a loss per share of 1.3¢. That reverses to a profit of $33.4m and EPS of 1.6¢ in 2017.
| AMERISUR RESOURCES (AMER) | ||||
|---|---|---|---|---|
| ORD PRICE: | 24p | MARKET VALUE: | £290m | |
| TOUCH: | 23.75p-24p | 12-MONTH HIGH: | 34p | LOW: 17p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 19¢* | NET CASH: | $56.1m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 40.3 | -5.8 | -0.6 | nil |
| 2016 | 24.4 | -6.8 | -0.7 | nil |
| % change | -39 | - | - | - |
Ex-div: - Payment: - £1 = $1.32 *Includes intangible assets of $46.9m, or 4¢ a share. | ||||
