Monday, 9 February 2015

Amerisur pipeline update

Amerisur Resources is an independent full-cycle oil and gas company focused on South America, with assets in Colombia and Paraguay. I have a holding in my growth portfolio (epic code: AMER).

Amerisur today announced the signing of the Operation Letter of Intent by PetroAmazonas, the Operator of the CuyabeƱo gathering system, and the wider Amazonas pipeline network.

The LOI allows the final negotiation and signing of the final definitive agreements with PetroAmazonas and other Ecuadorian entities, ahead of construction of the pipeline.

In Colombia, the modification of the existing Platanillo environmental license to include oil transport by pipeline is being reviewed by the Licensing Authority and management expect a positive response. Following these approvals the Company expects to construct and commission the Ecuador interconnector in the first half of 2015.

In a presentation update here, management expect to produce a reduced 2.22m barrels of oil for 2015 at an average netback of $24.68 per barrel (assuming an average $48/bbl), producing EBITDA of $34m.  Assuming depreciation of ~$20m and ~37% tax, earnings will be around $9m or $0.009 per share.  With increased production in 2016 and management's assumption of an oil price of $65/bbl, then earnings will treble.  At 34p that places Amerisur on an enterprise value of 14x 2015 EBITDA and a P/E of 18x 2016 EPS - fully priced for now.

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