Amerisur Resources is exploring for oil and gas in South America, currently in Colombia and later it plans to exploit its licences in Paraguay. It has a new Board of Directors and following a recent Placing at 6p (250m shares) sufficient cash to see through its current drilling plans and carry out some further corporate asset improvement opportunities.

Valuation of Amerisur Resources : 'Rule of Thumb' based on c.800m shares and using 10% DCF on oil at $70/barrel is 0.75p on the sp for every 1m barrels (CHP's share) that is proved in the ground.

Amerisur (formerly Chaco Resources) now has two exploration blocks in Colombia which it is currently evaluating and preparing to drill, one of these in the last quarter of 2007. It has also applied for further blocks in Colombia which are also believed to offer near term production. It also has three substantial areas in Paraguay and is awaiting news on a fourth. The next six months (May-November 2008) should see a steady news flow as it establishes the companys transformation from being an exploration company to becoming a significant oil production company. Set out below are some of the milestones which should produce announcements and have a positive effect on the share price. Any potential reserves are quoted in recoverable oil assets.



Platinillo, Colombia :

100% interest in a field currently assessed at holding 38.1m barrels of light sweet crude oil. Previously this a well flowed at 533 b/d before it was capped.Modern extraction methods may achieve up to double this output/well. Drilling completed for assessment and details of reserve figures and resumption of production daily figures awaited at Dec.2009. (Some guessestimates suggest the field might contain as much as 70m-100m barrels.)

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Tigra/Fenix block

100%% Further 3D seismic is completed; previous drilling has resulted in 30,000 barrels of oil from this block. Other blocks nearby in the Magdalena basin have also produced well. Drilled 11/2009; optimistic RNS (17 leads to follow)but reserve figures awaited

RNS :Expect further news on this block imminently and maybe a JV or other arrangement to speed up the timescale to production



Additional blocks to be announced

New local management team, in particular the CEO, is reputed to have some excellent contacts which will bring some high quality blocks to Amerisur in the coming months.

Curupayty Block, Paraguay :

1.39m hectares in north, close to Bolivia. Two wells previously drilled and both showed oil.

RNS : Expect JV with larger producer.



San Pedro Block, Paraguay :

1m hectares in south-east. Previous drilling showed oil.

RNS : Expect JV with larger producer.



Parana Basin, Paraguay :

Canindeyu block covering 1,789,000 hectares. Bordering Brazil. Oil field on Brazilian side already drilled. Chaco also expect to find oil and, at a deeper level, considerable quantities of gas. Chaco has obtained valuable historic seismic for re-evaluation.

RNS : Presidential Decree received 2/11/06.. Petrobras has announced its intention to increase substantially its effort to exploit Paraguay's hydrocarbons and has announced a farm-in on CDS's adjacent block. Possibility that they or another major will do likewise with Amerisur



Corporate Activity : The new Chairman is believed to have been brought on board to prove some or all of the existing Colombian assets and get these oil producing, arrange a JV on the Paraguayan assets before negotiating a sale of the company as consolidation of explorers in the region continues. An exit sp north of 1.00 over the next 12 months might be a reasonable target provided the drilling programme lives up to expectations, the price of oil remains at/above current levels and an approach is made for the company.

little bit of profit taking today.

Inevitable, given the rises over the last few weeks.

It is disappointing that volumes are low today after the news.

Whilst the news was encouraging, it's the next steps that will have more impact:

* Fenix - whether there is likely to be a commercially exploitable amount of oil
* Actual production rates for Plat, so that the net income per day can be deduced.

Would anyone argue with 1p on the sp/1 mb oil in the ground as a valuation at current oil prices.
Example calculation: Recoverable Reserves of 150mb at 2/3 to reflect risk = 100 mb. assume long term oil price of $40/barrel less Cost of extraction, delivery and tax etc of $20/b = Profit/barrel of $20/b. 100mb at $20/b profit = $2.0 b. 800m shares = $2.5/share = 1.56 sp. ie 1p sp for every 1 mb Recoverable Reserves.

Interested in anyone else's version; this has aimed at being conservative in terms of the maths. The Recoverable Reserves is based on some very speculative suggestions way back, we won't know how realistic those are for a little time yet. If they turn out to be at all accurate then the future looks very promising.

A split of the company into Chaco Colombia and Chaco Paraguay must then be a priority.

SS,

I thought it was $5/barrel in the ground. That is say 3.25/barrel. So 100 million would be 325 million = 39p/share (833 million shares). I believe that bids for companies with proven recoverable reserves can be higher than $5/barrel.

There are some figures of extraction costs/barrel (Plat) in the AGM presentation based on various levels of production. Got a feeling that at 500 barrels/day, the margin may be something in the order of $40/barrel with oil at current levels.

Blackdown, The basis for my calculation came from an oil explorer FD but it looks like he may be being a bit optimistic cf your basis. Another contact maintains that the most reliable basis is oil production pa multiplied by discounted (heavily) future profit streams for the number of years the well/field is expected to produce for.

I guess that the best test would to examine all the other explorers to see how their reserves and production match up to market cap but that would not take into account country and cost of production or tax regime.

Alternatively we just have a drink and wait....?

I'll go with option 2, it sounds more relaxing.

9m sell at a low price, this cant be right?

It was deleted

Sharesure
Would anyone argue with 1p on the sp/1 mb oil in the ground as a valuation at current oil prices.
Example calculation: Recoverable Reserves of 150mb at 2/3 to reflect risk = 100 mb. assume long term oil price of $40/barrel less Cost of extraction, delivery and tax etc of $20/b = Profit/barrel of $20/b. 100mb at $20/b profit = $2.0 b. 800m shares = $2.5/share = 1.56 sp. ie 1p sp for every 1 mb Recoverable Reserves.

Hi Sharesure
No problem with your math but if we say 1p per mbo in the ground as a valuation why do we then turn it in to 1.56p per mbo, and that must be for a buy out price because it may take 20-30 years to get the oil out of the ground. I would be very happy to have 100 m barrels and have a share price of 25p with potential of more around the corner, but a take out price of 1.56 would be very nice indeed.
Thanks Martin

Anyone that gets a rapidfile share Email off Bhunt
its a virus dont open it!

Thanks for that ML.
2517

Thanks for the heads up, mate. All clear so far!

Rns today sounds very promising here.

LONDON (Dow Jones)--Amerisur Resources PLC (AMER.LN), an oil and gas producer and explorer focused on South America, said Thursday that drilling of the Iguasa-1 well in Colombia has now passed 5,300 ft and is progressing satisfactorily towards the prognosed Lower Esmeraldas and Lisama sands to a final depth of 6,500 ft.

MAIN FACTS:

-9.5/8 inches casing was successfully run and cemented at 4,230 ft.

-In the course of drilling the previous section of the well, hydrocarbon indications were encountered in various levels.


-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842

Don't mean to be a doom merchant, but the longer holders of this share have all been here before......all fantastic progress reports, up until the final report..... As a current long term holder, I like most are hoping this does come to fruition this time around, god knows we deserve it with the patience we've shown.

and i now watch GOO and AMER (and EME) with quiet amusement, having bailed out of both a long time ago

cynic

get back in-this has the potential to be another gkp.

You never know. The RNS was about as bullish as I have ever read from AMER and Giles seemed very excited by what he said.

Also I see no mention at all of any water being encountered.

it's a joke company that has disappointed far too often for it to be worth considering throwing money at it
should it prove otherwise, there'll be plenty of money to be made by climbing in then