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.

Blackdown: yes they should. Obviously not a priority but it is something which ought to be attended to.

Re 20k/day: it is doable. I suggested it once a couple of years ago and even then the figure was not disputed. I think it was also discussed at last year's AGM. But they can only produce what they can deliver and hopefully the bottleneck will be sorted in the next couple of months.

Thank you sharesure, have held for a few years now, halved my holding at a profit last year ( not as big as it could have been) , so will continue. 2 pound would just about sort the pension!!

Thanks, once again.

Went to an interesting investment pitch yesterday given by John Hamilton, Director, of President Petroleum plc. They have a block adjacent to Amerisur in Paraguay. They are forging ahead with their seismic and hope to have results of that by 3rd quarter 2013. They sound very confident about their prospects of continuing the discovery of more oil in the structure just over the border in Argentina. There each well drilled is producing around 6,000 barrels/day. Whether our acreage is comparable or better than President Petroleum's area is open for discussion. I know what I was told some way back by one of the previous Amerisur directors - his comment was that Amerisur had over 80% of Paraguay's best hydrocarbon areas within its licence allocations. Which of the two companies drills first is not known yet but, whichever does, if President's assumptions are proved right we are in for a huge advance.

Let us hope that they get on and drill the first well before too long and there is a positive result from it that enables them to do a decent deal with a bigger player. They are still a small outfit and need to use their resources effectively.

Sounds very promising, short term production constraints a slight inconvenience, but nothing more.
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Exaggerated drop on very little turnover. Suspect that T-traders are being eased out because they cannot see any sp changing news near enough to justify holding. They may be wrong-footed!!!!?

Agree SS. The suits will be in at 45p. Hold nerve.

Weakness may also be due to the New Colombian Tax Law. (see rns re GED)
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It doesn't seem to make a great deal of difference on my reading of it. But few businesses like tax changes, whether they are neutral or not. I think that the current weakness is an attempt at a tree shake (successful one at that!) In the past that has usually been followed by a strong bounce and then some news. We should be at target depth for the current drilling during this week.

Well I'm ensconced for the duration, the prospects look compelling and hopefully this is just nuisance value.
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They are in London for awards ceremony tonight. Not JW. He may be over shortly.
Visitors from London are expected in Puerto Asis and Bogota around end of Feb..influential visitors!

Upon, can you say more?

Right..got it.

Yes, thanks, I know exactly who you mean. I have lost touch with him in recent years; glad to hear that he hasn't retired. He suggested I get in to these when these were at 1p!!!! Mind you, he did intimate that it would be a 2-3 year ride!!!! And 11 years later, still a happy holder....! Maybe by the time these are ready to sell, CGT will have been abolished!

I think death will come before they abolish cgt !!

Hi there, I'm very impressed by the detailed knowledge of Amerisur on this thread. I'm relatively new to the story, so perhaps one of you can help. I like the momentum side of the story, with Plat volumes ramping up, and think the slight miss on 5,000 year end target completely irrelevant. But I'm struggling with how to value Amerisur. We know the market cap is £464mn on 1,032mn shares.

A) On operating earnings: We know that the estimated production should be 5,000 BPD in 2013. Assuming a 50% GM (which is what they achieved at the 2012 interims), can we therefore assume that Amerisur grosses 5,000 BPD x US$75 per barrel x 50% gross margin x 365 days / 1.6 for exchange rate = Gross Profit of £43mn? So far so good, but how to estimate admin costs? Is this where operating leverage will kick in? Because, if the GP is £43mn, the shares don't look compellingly cheap. Obviously this ignores the non producing Felix and Paraguayan assets.

B) On NAV. If the 2P reserves are 35MMBPD, as targeted in the interims, what value do we ascribe to each barrel. If US$20, then the value is about the share price. But is US$20 the right number? I have no idea how to value the Felix or Paraguayan acreage?

Your thoughts much appreciated. My gut instinct is this is a winner, but as they say 'hope is not an investment strategy'. It'd be nice to have some meat around it.

We get a lot more than $20 per barrel. High quality oil and getting better the further north they go in Plat. There is more than 35mmmbdp! 'Too much for a company the size of Amer to handle'.
PPC President are doing 3D seismics in prep for drilling later in year, maybe Q1 2014, in Paraguay. PPC seismics complete end March and results out in late July, allegedly. Positive results will boost Amerisur.
It costs us $10 a barrel to get out of ground. Current price for light sweet crude is in excess of $110 a barrel. We own 100% of Plat and Fenix plus high % of two new Colombian blocks east of Plat. 60%%??
Shipping the oil across Rio Putumayo into Ecuadorian pipeline to Pacific will de-risk delivery. Currently we truck it to a pipeline terminal in Colombia. A solution to restricted delivery is crucial. Another solution has been discussed and will allow them to increase production and deliver to another hungry market across the Pacific!
Amer have three more wells to go in current programme. The completion of which will allow them to safely boost production without risk to surrounding wells due to pressure imbalance. Difficult to say how much but in excess of 10k per day imo, maybe more. It is 'choked' back presently. Once the artificial restrictions are eased/solved it will take off.
End of Feb is a date in my calendar, for Plat! Who knows what will come along in between.
Fenix and Paraguayan plans are screaming out for explication.

The last figure for netback I recall is $67/barrel.

Interesting bounce back. Maybe GTE hostages being freed has helped. Or TD has been reached. Why does someone else always get the drop ahead of all other shareholders! Naive question!

Learning: Glad you like this BB. It doesn't get sidetracked too often like some other threads. The header information is now getting quite out of date but will get updated when the company publishes its latest resource estimate etc. It should be due soon but timing of information has always been an issue here, even if when it comes it has generally been excellent.

Amer got mentioned in Small cap mag and a well-known tipster has put 60p on it, maybe one and same. Hostage thing helps.
JW keeps a very low profile there. He speaks fluent Spanish and rides a motorbike.
He is well in with the local mayor/authorities for whom he has helped develop schools and, of course, the company have built roads and bridges which assists not just us but the military who are there in droves to get around and scare the guerrillas off.
JW is a man of influence in Colombia now.
I anxiously await to hear news of his radical plans for doubling production/delivery.