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Amerisur production edges ahead

Amerisur's production realities may lag the promises, but recent signs are still encouraging
April 18, 2017

To a fault, Amerisur Resources (AMER) has been very good at keeping investors abreast of its progress in Colombia's Putumayo basin in recent years. When the OBA pipeline was being constructed, the market was provided with frequent photographic updates; now the pipe is in place, shareholders receive a monthly update on how much oil is flowing through it from the Platanillo field, under the Putumayo River and off to market in Ecuador.

IC TIP: Buy at 22.5p

Amid the news and oil flow, it is important not to lose sight of the financial position. On that count, full-year results were a slight disappointment, with an operating loss of $27.7m (£22.3m) arriving well above market expectations due to a $15.3m non-cash charge on Amerisur's Paraguay assets. Fortunately, the impairment didn't affect the cash position, and the company ended the year with sufficient funds to complete the 2017 drilling programme, the timing and order of which "will be subject to social, indigenous and licensing factors".

This month, the company hit a near-term OBA flow rate of 5,000 barrels a day (bopd), although this year's average production ceiling has been reduced to 7,000bopd, down from an earlier estimate of 8,500bopd.

On average, market analysts are predicting a pre-tax profit of $33.5m and EPS of 2.2¢ in 2017, rising to $63.3m and 3.6¢ next year.

AMERISUR RESOURCES (AMER)

ORD PRICE:22.5pMARKET VALUE:£273m
TOUCH:22.5-22.8p12-MONTH HIGH:33pLOW: 20p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:17¢NET CASH:$42m

Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201242.020.01.4nil
201316975.34.5nil
201419947.52.6nil
201561.2-25.1-2.5nil
201647.2-29.3-2.4nil
% change-23---

Ex-div: -

Payment: -

£1=$1.24