TIDMAMER
RNS Number : 4344U
Amerisur Resources PLC
07 April 2016
7 April 2016
Amerisur Resources Plc ("Amerisur", "the Company" or "the
Group")
Final Results for the year ended 31 December 2015
"Accelerated 2016 work programme to increase reserves and
production in a low cost environment"
Amerisur Resources Plc, the oil and gas producer and explorer
focused on South America, announces its audited results for the
full year ended 31 December 2015 (the "Period").
Operational
-- Strong progress made with the Oleoducto Binacional Amerisur
("OBA") interconnector pipeline system which has received all
necessary approvals and is now in the final stages of
construction
o Agreement with PETROAMAZONAS EP signed for the construction
and operation of the pipeline from the Ecuadorian border to the
point of connection with the RODA gathering system for the
transport of Amerisur's crude oil
o Modification of the Platanillo environmental license to
approve the construction and operation of the pipeline in Colombian
territory received
o Award by Ecuadorian Ministry of the Environment of the
environmental license to PETROAMAZONAS EP post period end
o Construction and testing of OBA pipeline from central VHR facilities to VHR-20 platform
-- Successful acquisition of Petro Dorado South America SA
("PDSA"), a subsidiary of Petro Dorado Energy Ltd ("PDEL") for $8.4
million including:
o 30% (non-operated) working interest in the CPO-5 contract,
located in the Llanos basin. ONGC Videsh Ltd holds a 70% working
interest and is the Operator
o 49.5% (non-operated) working interest in the Tacacho contract,
located in the Caguan-Putumayo basin. Pacific Stratus Energy holds
50.5% and is the Operator
o Potential tax benefit to the Company of up to approximately
$20 million from acquired tax losses
-- Schlumberger comprehensive report on strategic options for
field management and optimisation of the Platanillo field
production to be trialed and applied
-- Loto-2 suspended pending further analysis of results having
been drilled under budget at $1.19 million net to Amerisur
-- FY 2015 average production constrained at 4,437 barrels of
oil per day ("BOPD") and average realised price of $42.85 per
barrel
Financial
As a result of the lower oil price environment and the planned
reduction in production:
-- Revenue of $61 million (FY 2014: $199 million)
-- Gross profit before amortisation/depreciation $12 million (FY2014: $102 million)
-- Operating loss of $24 million (FY 2014: Profit of $69 million)
-- Loss before tax $25 million (FY 2014: Profit of $47 million)
-- Non-cash amortisation charge increased to $23 million
following the reduction in reserves at the start of the year
-- Cash position at period end of $42 million with no debt
Post period end
-- Successfully acquired Platino Energy (Barbados) Ltd
("Platino"), a private company, from COG Energy ("COG") for a total
consideration of $7 million in January 2016 with tax pools of $24
million which may be offset against future income
o Adds an additional 190 million barrels of oil ("MMBO") of
unrisked resources in the Putumayo Basin with limited capex
commitments over the next three years
o 50% (non-operated) working interest in PUT-8 Block adjacent to
the west of Platanillo. Vetra Energia S.L. ("Vetra") holds a 50%
working interest and is the Operator
o 100% (Operator) working interest in the Coati Evaluation Area
with the discovered Temblon Field within the Coati Block located in
the South West of the Putumayo basin
o 100% owned and operated Andaquies Block located in the north
east of the Putumayo Basin with a one well commitment by May
2017
-- Successfully raised net proceeds of approximately $35 million
of growth capital through the placing of 106,000,000 new ordinary
shares of 0.1 pence each at a price of 25 pence per share in March
2016
-- Independent reserve report at 31 December 2015 for the
Platanillo field confirming 1P (Proven) gross field reserves were
15.2 MMBO (2014: 16.2 MMBO) after production of 1.62 MMBO during
2015 and 2P (Proven and Probable) gross field reserves were 23.7
MMBO (2014: 24.55 MMBO)
Outlook
-- 2016 targeted production exit rate of 7,200BOPD from Platanillo
-- OBA interconnector pipeline on track to be operational
shortly and as a result, expectations of a significant reduction in
the Company's operating costs per barrel
-- All commitments and planned discretionary programmes for 2016
are fully funded from internal resources and the Company remains
focused on efficient cost management
-- Capex for the year is planned to be $62 million of which $9
million relates to the completion of the OBA
-- Active work programme in 2016 with the acquisition of 3D
seismic at Coati to locate drilling opportunities and the drilling
of:
o Two further Platanillo infill wells
o Up to two step out wells from Platanillo northern Pad 2N
o A well on Put-8 potentially from the Platanillo 5S Pad
o Coati development well
o Coati long term testing ("LTT") on at least the successful well Coati-1
o Drilling of the Jaguareté-1 well in Paraguay with the
potential to open up a new hydrocarbon province where the Company
has a large acreage position
Giles Clarke, Chairman of Amerisur said:
"2015 was another busy year for the Company with significant
cost reductions delivered early to help preserve the Company's cash
position, a broadening of the Company's asset base through
opportunistic low cost acquisitions and a focus on executing the
OBA pipeline, a strategically important regional asset. In the face
of the rapidly falling oil price, the Company revised its operating
activity plan in early 2015 to fit the lower oil price environment
and to ensure its healthy balance sheet and track record of
excellent capital discipline was maintained while protecting the
Company's valuable reserve base. As a result production was
constrained at c, 4,350 BOPD.
"Excellent progress has been made with the OBA pipeline which is
expected to be operational shortly. Once operational, the economics
of the Company's production improve dramatically, with cash
operating costs per barrel anticipated to reduce significantly over
a period of time as production gradually ramps up. An update video
of work on the under river crossing is now available on the Company
website.
"The Company has a busy 2016 work programme across its portfolio
following the successful $35 million placing in March 2016, with
the objective of leveraging the OBA pipeline, increasing reserves
and production while maintaining the high levels of capital
discipline shown to date by the Company. Your Board looks to the
future with confidence."
Ends
Enquiries:
Billy Clegg/Georgia Tel: +44 (0)203 757 4980
Mann
Camarco
Callum Stewart/Ashton Tel: +44 (0)20 7710 7600
Clanfield
Stifel Nicolaus
Europe Limited
Chris Sim Tel: +44 (0)207 597 4000
Investec
Darrell Uden/Daniel Tel: +44 (0)207 653 4000
Conti
RBC Capital Markets
Notes to editors
Amerisur Resources is an independent full-cycle oil and gas
company focused on South America, with assets in Colombia and
Paraguay and production from the Platanillo field in southern
Colombia. Amerisur's strategy is to acquire, explore and develop
large acreage positions in major under explored basins located in
South America. The Company's distinctive approach has been to own
100% of its assets at early stages in order to have full control
over the fields' development. That requirement is now being relaxed
as a sound production baseline has been established and in response
to the widening opportunity set to which the Company has
access.
In Colombia, the Company is operator and has a 100% working
interest in the Platanillo block which includes the Platanillo
field. Which produced an average of 4,437 BOPD during 2015. The
11,341 hectare block is located in the Putumayo Basin. The Company
has a 60% working interest and operatorship in block Put-12, a
55,000 hectare block which is adjacent to Platanillo and shares its
geology and a 50% working interest in Put-30 a 38,514 hectare
block, approximately 55km to the north of the Company's 100% owned
Platanillo field. In addition, the Company has a 30% working
interest in the CPO-5 contract, located in the Llanos basin and a
49.5% working interest in the Tacacho contract, located in the
Caguan-Putumayo basin. The Company has recently acquired 50%
working interest in the PUT-8 Block adjacent to the west of
Platanillo, a 100% working interest and operatorship in the Coati
Evaluation Area (Temblon Field) within the Coati Block located in
the South West of the Putumayo basin and a 100% working interest
and operatorship in the Andaquies Block located in the north east
of the Putumayo basin.
In Paraguay, Amerisur is the largest acreage holder in the
country, with approximately 5.2 million hectares covering five 100%
owned oil and gas permits in the Paraguayan part of the Chaco and
Parana Basins.
John Wardle is CEO of Amerisur, having worked in Colombia since
1994, first for BP Exploration and subsequently for Emerald Energy.
The Company is chaired by Giles Clarke and is listed on the AIM
Market of the London Stock Exchange.
Competent person: Technical information in this announcement has
been reviewed by John Wardle Ph.D., the Company's Chief Executive.
John Wardle has 31 years' experience in the industry, having worked
for BP, Britoil, Emerald Energy and Pebercan, and is a trained
drilling engineer.
www.amerisurresources.com
Chairman's Statement
(MORE TO FOLLOW) Dow Jones Newswires
April 07, 2016 02:00 ET (06:00 GMT)
We are pleased to announce the Company's Results for the year
ended 31 December 2015. 2015 was another busy year for the Company
with significant cost reductions delivered early to help preserve
the Company's cash position, a broadening of the Company's asset
base through opportunistic low cost acquisitions, a focus on
executing the OBA pipeline, a strategically important regional
asset and ongoing capital discipline. Particular progress was made
in 2015 with the OBA pipeline which is expected to be operational
shortly.
Early in 2015, in the face of the rapidly falling oil price, the
Company revised its operating activity plan to fit the lower oil
price environment and to ensure its healthy balance sheet and track
record of excellent capital discipline was maintained. The Board
took a conservative view (at the time) of oil prices, assuming WTI
oil prices of $48 per barrel for the year. In that context the
Board conducted a review of the 2015 plan, with the aim of
minimising the use of high cost transportation until such time as
the OBA pipeline to Ecuador was operational, and / or a return to a
higher oil price, thus protecting the Company's balance sheet and
highly valuable reserve base. In short, production from higher cost
pads in the Platanillo field was stopped and more volume was sent
through the lower cost Orito pipeline, with trucking to Rio Loro
halted.
Strategy
The Company's strategy is to ensure the lowest cost profitable
production from the Platanillo field, to increase 1P and 2P
reserves and to diversify the Company's production base through
both continuing exploration on current assets and pursuing
opportunistic and attractive, low cost acquisitions. The objective
is to broaden its drilling opportunities from solely Platanillo,
leading to production from more than one oil field while creating
attractive and extensive running room in a balanced and diversified
portfolio.
In line with this strategy, in June 2015 Petro Dorado South
America SA ("PDSA"), a subsidiary of Petro Dorado Energy Ltd
("PDEL") was acquired. We paid a total of $8.4 million,
compromising of $6 million of Amerisur stock and the replacement of
$2.4 million of deposits to support cash guarantees. Post period
end, the Company acquired Platino Energy (Barbados) Ltd
("Platino"), a private company, from COG Energy ("COG") for a total
consideration of $7 million satisfied in shares. These recent
acquisitions will help deliver a diversified production base and in
turn allow us to reach our goal faster than we would have been able
to without the oil price fall and associated consequential
difficulties felt by over indebted oil companies operating in the
Putumayo. In both cases much work has been done to de-risk the
journey to diversified production. The OBA pipeline, now in the
final stages of construction, will allow us to operate and produce
oil at a vastly lower cost to rivals and is no doubt the key to
unlocking the potential from the Putumayo.
Whilst Amerisur produces solely from one oil field the Board is
unlikely to recommend payment of a dividend and for the year ended
31st December 2015 no dividend payment will be made. Returns to
shareholders however are discussed regularly by the Board and
firmly remain a goal.
I was pleased to note that despite the constraints of the
Company's work programme in 2015 in the interests of capital
discipline, the executive managed to increase reserves slightly
during the period, a testament to their exceptional abilities and
their knowledge of the Platanillo field.
Board, Corporate Governance and People
During the year all our staff, the vast majority of which are
located in Bogota in Colombia, worked tirelessly to reduce costs,
increase the efficiency of our existing assets, grow our asset base
and deliver the OBA pipeline, a transformational project for the
Company providing significantly improved economics. I would
personally like to thank them for their hard work and dedication in
challenging market conditions.
The Company recognises the importance of good corporate
governance and the Company's direction of travel in that regard is
positive. In January 2015, Stephen Foss was appointed Senior
Independent Non-Executive Director. Mr Foss has over 30 years of
experience in the capital markets industry, having spent his career
in Australia, Canada and the UK. He previously led the Royal Bank
of Canada's International Equities business for Europe and
Australasia, prior to joining its global investment banking
division in February 2011 to concentrate on senior client coverage,
Sovereign Wealth Funds and origination in the natural resources
sector. After graduating with a Bachelor of Arts with Honours from
the University of Western Ontario, Mr Foss began his career at the
Sydney Stock Exchange and subsequently held a number of senior
management positions with another global investment bank. Mr Foss
chairs the Remuneration Committee and sits as a member of the Audit
Committee.
In addition, there have been a number of remuneration changes
during the year. The Remuneration Committee is now fully
independent. Following consultation with shareholders on its
remuneration during the first half of 2015, the Committee appointed
h2glenfern Remuneration Advisory to carry out a review of its board
remuneration policies. This was followed, at the beginning of 2016,
by further consultation with shareholders after which the
Remuneration Committee made a number of changes to its remuneration
policy. The key area where changes are to be made is in relation to
long-term incentives and given the low oil price environment,
executive pay levels have been largely frozen.
During the year, Dr. Douglas Ellenor, Non-Executive Director of
the Company, renounced all of his 300,000 options over new ordinary
shares at 0.1p each which he held under the Company's 2013 LTIP
scheme. As of 31 December 2015, Dr. Ellenor had zero LTIP share
options in the Company. In addition, on 10 December 2015 Jade Oil
& Gas Consulting, which Dr. Ellenor is a shareholder and a
Director, terminated its Technical Consulting Services agreement
with Amerisur Resources. As a result Dr. Ellenor is deemed an
independent Director under the UK Corporate Governance Code of the
Financial Reporting Council which sets out the best practice and as
a result Amerisur Resources has a total of three independent
Non-Executive Directors.
The Company's achievements were recognized last year when
Amerisur won "Best Oil & Gas PLC" at the 2015 UK Stock Market
Awards. The awards, which celebrate the best of UK PLC and
recognize companies which have created shareholder value, were held
on Thursday 26 March 2015. The other nominees for the category of
"Best Oil & Gas PLC" included; BP, Shell, Sound Oil and Premier
Oil.
Governments
The Governments of both Colombia and Ecuador have shown great
foresight in agreeing to the building and commissioning of the OBA
pipeline. Bi-lateral infrastructure projects between two countries
are extremely complicated as the building of the Channel Tunnel
between the UK and France demonstrated. Both President Correa and
President Santos have shown visionary leadership, and both
governments have worked closely to create this major project.
Amerisur is proud to play its part.
Post balance sheet
Post balance sheet, the Company raised $35 million of new equity
capital following a roadshow to inform shareholders where the
Company was with the OBA pipeline. It was clear from both
shareholders and prospective investors that there was support for
an acceleration of the 2016 activity programme to take advantage of
lower drilling costs to increase reserves, and production to
increase flows through the OBA pipeline which is expected to reduce
cash opex per barrel from approximately $27 to $15. Due to the
support from institutional investors, the Company was able to raise
the capital we wanted to expand more rapidly.
Outlook
With the OBA pipeline now in the final stages of construction
and due to be operating in May, the economics of the Company's
production improve dramatically, with cash operating costs per
barrel anticipated to reduce significantly over a period of time as
production gradually ramps up. The lower opex costs will enable us
to increase production from the Platanillo field despite the low
oil price environment, which, following the advice received from
Schlumberger in a report commissioned by Amerisur, will be done
carefully and responsibly so as to preserve the long term integrity
of the reservoir. The new capital raised in March has enabled us to
accelerate the 2016 activity plan to increase reserves and
production. We are proceeding with: social consultations and
environmental licensing for a Long Term Test ("LTT") and further
wells in Coati together with a 3D seismic programme on the Coati
license to optimise drilling locations and further define the
potential of the field; two step out wells drilled from Platanillo
Pad 2N; a well on Put-8 from the Platanillo West pad; a development
well on Coati; a Put-8 South N sand anomaly well and two further
Platanillo infill wells.
In our planning assumptions, we have used $35 per barrel as the
basis for Amerisur's activities in 2016 and the Board remains
committed to the high levels of capital discipline shown to date by
the Company.
Giles Clarke
Chairman
6 April 2016
Chief Executive's Statement
(MORE TO FOLLOW) Dow Jones Newswires
April 07, 2016 02:00 ET (06:00 GMT)
The team worked hard in 2015 in the context of the falling oil
price to cut costs, to advance the OBA pipeline project, ensure the
oil production we decided to produce was economic while remaining
focused on cost management and capital discipline. We also took the
opportunity of making two small but attractive acquisitions during
this low oil price period allowing us to consolidate our position
in the Putumayo while maximising the potential returns of the OBA
pipeline investment and efforts and increase profitable production.
We were pleased to have increased reserves during the period,
despite the low activity levels on the Platanillo block and look to
2016 with confidence given the accelerated activity plan following
the successful $35 million placing in March 2016.
Profitable Production
At the start of the year the Board conducted a review of the
2015 activity plan, with the aim of minimising or eliminating the
use of high cost transportation until such time as the pipeline to
Ecuador was operational, and / or oil price returned to higher
levels, thus protecting the Company's balance sheet and highly
valuable reserve base.
Due to reductions in production implemented by other operators
in the area, available discharge volume at Orito increased thus
allowing the Company to take advantage of this increased available
capacity. As a result the Company suspended production from higher
cost pads where transportation and lifting costs were higher and
produced approximately 4,500 BOPD from Pads 5 and 9, which could be
lifted at a cost of approximately $12 per barrel and transported
through Orito at a cost of approximately $15 per barrel. Rio Loro
transportation at a cost of $23 per barrel was, by virtue of our
increased capacity at Orito, eventually suspended.
Amerisur has also made significant progress in the reduction of
field operating costs, with important discounts being obtained from
contractors and other suppliers. This led to the Company
reactivating a limited production volume from Pad 3N in May due to
an improvement in operational netback from this production pad.
Additionally the Company implemented structural changes in the
operation of Pads 9 and 5, including the use of produced gas for
power generation and the installation of fully electrically powered
lifting systems in place of diesel prime movers.
During the period Platanillo field production was 1,619,682
barrels, averaging 4,437 BOPD. It is the Company's intention to
increase production as the OBA pipeline becomes operational and
infill wells come on stream, projecting an exit rate of 7,200 BOPD
at the end of 2016. The cash opex per barrel of oil produced at
Platanillo and transported through the OBA pipeline is expected to
be below $15, creating a strong positive effect on the netbacks of
the increased production.
Successful delivery of the Colombia Ecuador OBA Interconnector
Pipeline System
Much focus during the year was on obtaining the appropriate
permissions to construct and operate the OBA interconnector
pipeline. Significant progress was made during the period,
including in Colombia the modification of the Platanillo
environmental license to approve the construction and operation of
the pipeline in Colombian territory. We were also delighted to
announce post period end that in February 2016, PETROAMAZONAS EP
had been awarded by the Ecuadorian Ministry of the Environment the
environmental license for the completion of the construction and
operation of the 10.8" (nominal) pipeline to the Victor Hugo Ruales
("VHR") field from the VHR-20 location to the Ecuadorian-Colombian
border. Since that time the Company has begun the drilling of the
under river crossing and construction of the last 3.8km of OBA line
from Pad VHR-20 to the point at which the under river crossing
reaches surface. To reach this milestone we successfully signed an
agreement with PETROAMAZONAS EP in May 2015 entitled "Convenio de
Cooperacion para el Uso de la Red de Oleoductos del Distrito
Amazonico" which permited the construction and operation of the 10"
(nominal - 10.8" physical) pipeline from the Ecuadorian border to
the point of connection with the Red de Oleoductos Amazona ("RODA")
gathering system for the transport of Amerisur's crude oil. In
addition the agreement included the definition of construction and
responsibilities during use of the system, a minimum volume
commitment and transport tariffs applicable to Amerisur crude oil.
The minimum transport volume guaranteed by PETROAMAZONAS EP to
Amerisur is 5,000 BOPD. The transport tariff from the point of
reception to the point of delivery at Lago Agrio has been agreed at
$1.09 per bbl. Negotiations are underway to confirm the routes,
usages and tariffs for onward transport and potentially local sale
for refining.
The technical capacity of OBA is between 50,000 and 70,000 BOPD,
hence additional transport capacity may become available in the
future as the system is commissioned and upgrades to RODA are
implemented.
Post period end, strong progress has been made on the
construction of the OBA and it is expected that the pipe will be
brought under the river in April.
Acquisitions of low cost, attractive, value accretive assets
We recently made two acquisitions containing a number of
promising assets with significant resource potential, at attractive
valuations and with associated tax losses, the majority in
locations near to our existing portfolio, with the consideration
being in shares. This provides the Company with greater flexibility
and diversity when planning for the future. We acquired PDSA for a
total of $8.4 million, compromising of $6 million of Amerisur stock
and the replacement of $2.4 million of deposits to support cash
guarantees. This consideration was paid in Amerisur stock, based on
the 5 day VWAP preceding the due date for each instalment, at the
election of Amerisur. We also agreed to the provision of a 2.5% net
royalty to PDEL on production arising from the assets acquired.
This royalty is post any overriding government royalties. We paid
50% of PDSA net costs (approximately $2 million net) for the
405km(2) 3D seismic programme in Block CPO-5. Amerisur will
reimburse PDEL for the remaining 50% of those seismic costs from a
further 2.5% royalty until those costs have been recovered.
The assets acquired through the transaction were 30%
(non-operated) working interest in the CPO-5 contract, located in
the Llanos basin with ONGC Videsh Ltd ("ONGC") holding a 70%
working interest and is the Operator and a 49.5% (non-operated)
working interest in the Tacacho contract, located in the
Caguan-Putumayo basin. Pacific Stratus Energy holds 50.5% and is
the Operator. PDSA carries current tax losses of approximately $57
million, representing a potential tax benefit to the Company of up
to approximately $20 million.
Post period end, we acquired Platino for a total consideration
of $7 million paid in stock through the issuance of 22,711,494
Ordinary Shares. The payment was based on the 30 day VWAP prior to
closing. In addition Amerisur replaced $1.7 million of cash
guarantees with the Agencia Nacional de Hidrocarburos ("ANH"),
relating to the Platino assets and Amerisur will also pay a 2% net
royalty per block to the vendor, COG, once net production in each
block exceeds 5,000 BOPD. Platino carries tax losses of
approximately $24 million which may be offset against future income
and the Putumayo assets acquired will have access to Amerisur's OBA
pipeline, ensuring lower transportation and commercialisation
costs. The transaction adds 190 MMBO of unrisked resources to
Amerisur's asset base and carries low capital commitments.
The assets acquired through the Platino transaction are a 50%
(non-operated) working interest in PUT-8 Block adjacent to the west
of Platanillo. Vetra Energia S.L. ("Vetra") holds a 50% working
interest and is the Operator. The block is currently in Phase 1 of
exploration. We also acquired 100% (Operator) working interest in
the Coati Evaluation Area with the discovered Temblon Field within
the Coati Block located in the South West of the Putumayo basin. A
third party operator, active in Colombia, after fulfilment of a
carry in the next exploration well of US$2.7MM will be entitled to
a 20% working interest in the exploration area of the block, which
does not include the Coati Evaluation area (Temblon field), which
will remain 100% to Amerisur. The Company is currently conducting
social consultations and preparing the application for an
environmental license to advance the planned Coati Long Term Test
LTT and exploration programme. We also acquired a 100% owned and
operated Andaquies Block located in the north east of the Putumayo
Basin with a one well commitment by May 2017.
Platanillo
Platanillo has now produced a total of 6.59 MMBO. Given the
production history now established, the shutting in of the northern
pads and trimming of production in remaining wells, Amerisur
commissioned an integrated study by Schlumberger of the entire
field well inventory. This study encompassed petrophysical,
reservoir core, production data and fluids characteristics. The
objective of the study was to recommend an ongoing production
strategy for the field, together with individual well
recommendations for optimum performance. These recommendations
ranged from chemical treatments to alleviate scale and asphaltene
formation, (now partially tested in the interventions performed on
Pads 9 and 5 during the period) to recompletions and changes to
perforation strategy. The study included both the U sand and T sand
reservoirs.
As the OBA comes on line the Company intends to further trial
and apply both internal and Schlumberger recommendations for field
management and optimisation.
(MORE TO FOLLOW) Dow Jones Newswires
April 07, 2016 02:00 ET (06:00 GMT)
58km(2) of 3D seismic in the northern portion of the Platanillo
block was completed in July, within budget. The analysis of this
data reveals some exciting structures which are independent of the
Platanillo main field and gives us greater confidence of additional
potential to the north of Platanillo. However, given the
geographical location of those structures in relation to both
Put-12 and Put-8 prospects, they are unlikely to be drilled until
beyond 2017.
Following the Company's successful placing of $35 million in
March 2016 we intend to accelerate exploration, appraisal and
development activity on the Company's licenses in Colombia in order
to take advantage of current low drilling and service costs. In
Platanillo we intend to increase our low cost production through
the drilling of at least two further infill wells, which carry low
risk and additionally to drill a step out well from the northern
pad 2N. On success in this continuation of the Platanillo
structure, at least one further well would be drilled there.
Reserves
At the end of each year, Petrotech Engineering Ltd, using the
standards set by the Oil and Gas Reserves Committee of the Society
of Petroleum Engineers, undertakes an independent study of the
Company's reserves and resources. I was encouraged that the 2015
work programme, whilst limited and constrained by the Company's
strict capital discipline, added value and reserves to the asset
base. Despite producing 1.62 MMBO from Platanillo with no new wells
drilled, we did produce for the first time over an extended period
from the T sands during the year, and also carried out considerable
work with Schlumberger on the operation of the wells to review
enhancing production and increase the recovery rates per well
completing the successful treatments of well Platanillo-14 and
Platanillo-20. These works resulted in a slight technical increase
to the Company's certified 1P (Proven) gross field reserves from
year end 2014 to 15.2 MMBO (2014: 16.2 MMBO) after production of
1.62 MMBO during 2015 and 2P (Proven and Probable) gross field
reserves were 23.7 MMBO (2014: 24.55 MMBO).
The Board expects an increase in reserves once production
increases again from currently shut in pads, which will happen
gradually with the operation of the OBA pipeline which is due
shortly. In addition, the additional drilling activity planned on
Platanillo in 2016, including the infill wells and up to two wells
from the northern pad 2N, which on success will extend the field
limits, together with the drilling of wells on Put-8 and Coati and
the Long Term Test of the Temblon discovery to the south of the
Coati block, should result in an increase in both 1P and 2P
reserves. However, it is worth noting that six months of LTT is
normally required before resources can be categorised as reserves,
hence timing will dictate whether those new reserves will be
incorporated by the end of 2016.
Putumayo-8
Acquired in January 2016, the Put-8 Block is adjacent to the
west of the Platanillo field and is in Phase 1 of its exploration
period with a 2% X Factor and low work commitments of one
exploration well and 208km(2) of 3D seismic. Amerisur has a 50%
(non-operated) working interest and Vetra holds the remaining 50%
and is Operator. The block has had limited exploration and is
bordered by a number of proven oil fields. Two drill-ready
prospects have been identified on new 3D seismic, adjacent to the
Platanillo field and significant upside has been identified in the
N sands adjacent to the Cohembi field. The block has unrisked
resources of 45 MMBO and is currently awaiting an environmental
license to advance the exploration programme.
We are currently reviewing design considerations to drill a well
in the northern part of Put-8, one option being to drill from the
Platanillo 5S Pad, which will reduce both time and cost.
Coati Block
Acquired in January 2016 as part of the Platino transaction, the
Coati Block, 100% owned and operated by Amerisur (a third party is
currently completing commitments to acquire 20% working interest in
the exploration sector of the block), is located in the South West
of the Putumayo basin, adjacent to the Loro and Hormiga oil fields
and is in Phase 3 of its exploration period with no X Factor and
low work commitments. Seven prospects and leads have been
identified on 2D seismic with unrisked resources of 79 MMBO.
Towards the southern end of the block, in the Coati Evaluation Area
which contains the Temblon field, there is a proven hydrodynamic
trap in the Caballos Formation and a structural accumulation in the
T and U sands which have flowed oil and are awaiting extended LTT.
The Temblon field is currently in an evaluation period. Amerisur
estimates that the currently defined closure of the Temblon field
may hold 23.2 MMBO of resources. Management believe that the
potential may indeed be superior to that, hence the plan to acquire
a 3D seismic survey over the field. Additional prospectivity has
been identified in the exploration areas of the block with the
Nasua prospect drill ready and N sands with stratigraphic potential
in the North of the block. The block is awaiting an exploration
environmental license to advance the planned exploration programme.
A "consulta previa" with indigenous communities is required by law
in order to commence the LTT of these discoveries and is
underway.
We plan to acquire 3D seismic data across the Temblon field and
further 2D in the northern parts of the block during 2016, followed
by development and exploration drilling.
Putumayo-12
The acquisition of the 2D seismic programme has been delayed due
to social issues in the Putumayo region, which have prevented the
entry of the technical teams. These issues are directed against the
National Government and in some cases other operators in the
region; however Amerisur has been affected in a knock-on manner.
The currently planned programme is directed at the western
prospects in the block, which are the most relevant for now, since
on success they can be rapidly tied back into the Platanillo
infrastructure and the OBA pipeline. It is envisaged that the 2D
seismic programme will commence again in Q3 2016 and, with receipt
of the required environmental license; the first well in Put-12
could be spudded in the early part of 2017. There is an X factor of
29% in this block and thus the superior economics of Put-8, with a
2% X factor, together with similar, nearby structures will lead us
to prioritise the northern part of Put-8 in terms of drilling.
Putumayo-30
In October 2014 the Company announced the award of a new
exploration license, Put-30 to Talisman Colombia Oil & Gas Ltd.
("Talisman Colombia") in the Ronda Colombia 2014 licensing round.
The block has a 4% X factor. The Company formed a joint venture
with Talisman Colombia, an affiliate of Talisman Energy Inc.
(subsequently acquired by Repsol) with the parties each holding a
50% working interest in the license. Put-30 covers approximately
38,514 hectares and lies within the northern Putumayo basin,
approximately 65km from the Company's 100% owned Platanillo field.
During the period local scouting activity took place in line with
Phase 1 of the Contract and the next activity in the contract will
be to acquire a 2D seismic programme covering 209km. This is
expected to commence in early 2017.
Andaquies Block
The Andaquies Block, 100% owned and operated by Amerisur was
also part of the Platino acquisition and is located in the north of
the Putumayo Basin with no X Factor and low work commitments of one
exploration well by May 2017. The block has multiple proven
reservoir targets, six mapped leads targeting both proven and novel
plays and unrisked resources of 66 MMBO and sits to the north east
of a proven structural play within the Putumayo Basin. The block's
exploration environmental license has been granted.
CPO-5
CPO-5 was acquired in June 2015 as part of the PDSA transaction.
Amerisur has a 30% (non-operated) working interest in CPO-5 with
ONGC holding 70% and Operatorship. It is an Exploration and
Production Contract with an 8% sliding scale royalties and a 23% X
Factor. It covers 198,000Ha and is located to the south of block
Llanos 34 and to the east of the Corcel fields. The block includes
the evaluation area related to the Loto-1 oil discovery. That well
was drilled in 2013 and tested oil in the Mirador formation during
a short test however lack of zonal isolation prevented performance
of a LTT. Core and electric log data indicate 61ft of net pay
within the Mirador. 405km(2) of new 3D data has been acquired in
the north western sector of the block, adjacent to the Guatiquia
and Akira discoveries, and covering the entirety of the Loto
structure. A further two wells within the north western sector of
the block, Kamal and Metica also tested oil, and these structures
are also covered by the new 3D data. Amerisur interpretation of the
existing data indicates potential oil in place for the Loto
structure of approximately 44.46 MMBO. The contract is currently in
Phase 2, where exploration commitments are 250km(2) of 3D seismic
and one exploration well.
Well Loto-2 was successfully drilled in October 2015 to a total
depth of 10,320 ft MD, and a liner was run and cemented. Two zones
within the Mirador formation, L1 and L3 were tested, where electric
log analysis indicated the existence of 54ft net pay. L1 tested
water and oil with water cut (BS&W) of 96% and 16(o) API oil
and L3 tested water and oil with BS&W of 97% and 10(o) API oil.
Loto-2 has been temporarily suspended pending further analysis of
these results. The well was drilled for a total cost of $3.98
million, $1.19 million net to Amerisur/PDSA and testing costs were
$0.80 million net to Amerisur. The operations were completed on
time and under budget, at 69% of the planned expenditure, due to
excellent operational planning and execution. Following technical
review with our partner, the Company plans to re-enter Loto-1 to
further test the L4 interval of the Mirador formation. This is
expected to begin in May 2016.
(MORE TO FOLLOW) Dow Jones Newswires
April 07, 2016 02:00 ET (06:00 GMT)
The Company and ONGC are currently reviewing a number of other
drilling opportunities within CPO-5.
Tacacho Contract
As part of the PDSA transaction, Amerisur acquired a 49.5%
(non-operated) working interest in the Tacacho Exploration and
Production contract located in the Caguan-Putumayo basin with
Pacific Stratus Energy holding the remaining 50.5% and
Operatorship. The contract has an 8% sliding scale royalties and a
0% X Factor, covering 238,000Ha in the eastern Caguan-Putumayo
basin. This is a heavy oil exploration play, supported by regional
studies which indicate a continuation of the heavy oil trend
extending from the eastern Llanos basin through to the ITT field
complex in the eastern Oriente basin of Ecuador. Additionally, the
well Solita-1, drilled nearby by Texaco in 1948 indicated the
presence of hydrocarbons in the Pepino formation. Large structures
have been defined on existing 2D seismic, with closures at both the
base and top of the Pepino formation. The contract is currently in
Phase 1, where the exploration commitment is 480km of 2D seismic,
has an estimated cost of US$9 million (gross). The phase is
currently suspended while social consultations and security
planning is performed.
Paraguay
Amerisur has the largest acreage position in the country with
two exploration and production and three prospecting permits
covering approximately 5.8 million hectares. We plan to drill the
Jaguareté-1 well in the San Pedro block, Parana basin in April 2016
which is expected to take 38 days. Current drilling costs are much
lower than previously during the time of high oil price, and the
expected dry hole cost with logging of the well is expected to be
approximately $9 million. This well is targeting the Santa Elena
and Lima formations and carries prospective resources of 106
MMBO.
2016 capex / work programme
With the OBA pipeline almost completed and operational at the
time of writing, internal resources and the funds from the placing
will be used to accelerate activity to increase reserves and
increase production through the OBA pipeline. 2016 will be a much
busier year for the Company than originally anticipated, with a
great deal of value driving activity, including:
-- Coati 3D seismic, locating drilling opportunities
-- Two further Platanillo infill wells
-- Up to two step out wells from Platanillo northern Pad 2N
-- A well on Put-8 potentially from the Platanillo 5S Pad
-- Coati development well
-- Put-8 South N sand anomaly well
-- Coati LTT on at least the successful well Coati-1
-- Drilling of the Jaguareté-1 well in Paraguay with the
potential to open up a new hydrocarbon province where the Company
has a large acreage position
Capex for the year is planned to be $62 million of which $9m
relates to the completion of the OBA.
Financial Review - robust balance sheet with no debt
2015 was a challenging year for the company, and indeed the
whole oil industry. Average realised prices reduced from $90.04 per
barrel in 2014 to $42.85 in 2015. This coupled with the planned
reduction in production levels, discussed earlier, had a
significant impact on revenue which reduced to $61 million (2014 -
$199 million).
The second half of the year was further impacted by reduced oil
prices resulting in an operating loss for the year of $24 million.
Gross realised selling prices averaged $50.58 per barrel in the
first half of the year and fell to $34.45 in the second half. The
average realised price for the year averaged at $42.85 per barrel.
Inevitably this resulted in reduced cash generation in the second
half the year and consequently a slowing down of our capital
program. Production will remain constrained until the OBA is
commissioned and stronger netbacks can be realised. The gross loss
for the year of $12 million is stated after a non-cash charge of
$24 million for amortisation and depreciation resulting in a
positive cash contribution from sales during the year of $12
million.
The Company decided not to sell production at the end of
December when WTI was around $30 per barrel but rather hold it in
storage until prices recovered in the early part of the year. This
had an impact on 2015 sales and also is reflected in an increase in
inventory and reduced year end receivables. Inventory at the end of
December was 229,000 barrels with $3.5 million of costs relating to
this inventory expensed in 2015. As reported at the half year, our
non-cash amortisation charge increased significantly year on year
to $23 million following the reduction in reserves at the start of
the year and our first half costs were impacted by approximately $4
million of port related charges which did not reoccur in the second
half.
Administrative expenses reduced to $11 million in 2015. At the
period end, the Group had a cash position of $42 million and no
debt. All commitments and planned discretionary programmes for 2016
are fully funded from internal resources and the Company remains
focused on efficient cost management. The capital expenditure
programme for 2016 is $62 million, including approximately $9
million for the completion of the construction of the Ecuador
Interconnector Pipeline and associated facilities. The Directors
will not be recommending payment of a dividend.
In March, the Company undertook an equity placing of 106,000,000
new ordinary shares of 0.1 pence each at a price of 25 pence per
Placing Share, raising net proceeds of approximately US$35 million.
The Placing Shares represented approximately 9.6 per cent. of the
issued share capital. Simultaneously to the Placing, the Joint
Bookrunners placed approximately 9.4 million existing Amerisur
shares to institutional investors on behalf of Petrodorado Energy
Ltd.
John Wardle
Chief Executive Officer
6 April 2016
Reserves and Resources figures in this announcement have been
calculated using the standards set by the Oil and Gas Reserves
Committee of the Society of Petroleum Engineers.
Petrotech Engineering Ltd is an independent reserves assessor
and conducts independent reserves reports for companies such as
Canacol Energy Ltd, Pacific Rubiales and Petro America Oil Corp
amongst others.
Glossary
"BOPD" barrels of oil per day
------------------- ---------------------------------
"MMBO" million barrels of oil
------------------- ---------------------------------
"Proven Reserves" those quantities of petroleum,
or "1P" which, by analysis of
geoscience and engineering
data, can be estimated
with reasonable certainty
to be commercially recoverable,
from a given date forward,
from known reservoirs
and under defined economic
conditions, operating
methods, and government
regulations. If deterministic
methods are used, the
term reasonable certainty
is intended to express
a high degree of confidence
that the quantities will
be recovered. If probabilistic
methods are used, there
should be at least a 90%
probability that the quantities
actually recovered will
equal or exceed the estimate.
------------------- ---------------------------------
"Proven + Probable those additional Reserves
Reserves" or "2P" which analysis of geoscience
and engineering data indicate
are less likely to be
recovered than Proved
Reserves but more certain
to be recovered than Possible
Reserves. It is equally
likely that actual remaining
quantities recovered will
be greater than or less
than the sum of the estimated
Proved plus Probable Reserves
(2P). In this context,
when probabilistic methods
are used, there should
be at least a 50% probability
that the actual quantities
recovered will equal or
exceed the 2P estimate.
------------------- ---------------------------------
Consolidated income statement
for the year ended 31 December Year ended Year ended
2015 31 December 31 December
2015 2014
$'000 $'000
Revenue 61,201 199,464
Cost of sales (73,534) (117,501)
------------- -------------
Gross (loss) / profit (12,333) 81,963
Total administrative expenses (11,459) (13,168)
------------- -------------
Operating (loss) / profit (23,792) 68,795
Impairment of intangible
assets - (26,485)
Net foreign exchange gains 1,230 5,081
Finance charge (2,767) -
Finance income 191 103
(Loss) / profit before
tax (25,138) 47,494
Capital taxation (625) (522)
------------- -------------
(Loss) / profit after capital
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taxation (25,763) 46,972
Income taxation (981) (19,584)
------------- -------------
(Loss) / profit attributable
to equity holders of the
parent (26,744) 27,388
============= =============
(Loss)/Earnings per share
Basic (cents per share) (2.51) 2.58
Diluted (cents per share) (2.48) 2.55
Consolidated statement of comprehensive
income
for the year ended 31 December Year ended Year ended
2015 31 December 31 December
2015 2014
$'000 $'000
(Loss) / profit attributable
to equity holders of the parent (26,744) 27,388
Other comprehensive income:
Items that may be classified
subsequently to (loss)/ profit
Foreign exchange differences
on retranslation to presentational
currency 421 65
Recycle of profit on available-for-sale
financial asset to income statement
for the year - (704)
Total other comprehensive income
/ (loss) 421 (639)
Total comprehensive (loss)
/ income for the year (26,323) 26,749
============= =============
Consolidated balance sheet
31 December 31 December
2015 2014
$'000 $'000
Assets
Non-current assets
Goodwill 514 514
Other intangible assets 27,002 8,215
Property, plant and equipment 141,437 135,303
Total non-current assets 168,953 144,032
Current assets
Trade and other receivables 13,571 28,006
Inventory (crude oil) 6,958 550
Investments - -
Cash and cash equivalents 42,323 95,629
------------- -------------
Total current assets 62,852 124,185
------------- -------------
Total assets 231,805 268,217
============= =============
Equity and liabilities
Equity
Issued capital 1,560 1,544
Share premium 113,555 109,070
Investments revaluation - -
reserve
Other reserve 10,979 7,060
Foreign exchange reserve 9,829 9,408
Retained earnings 53,723 80,179
------------- -------------
Total equity 189,646 207,261
Non-current liabilities
Remediation provision 2,730 7,350
Deferred tax liability 10,515 10,084
------------- -------------
Total non-current liabilities 13,245 17,434
Current liabilities
Trade and other payables 28,914 34,383
Current tax liabilities - 9,139
-------------
Total current liabilities 28,914 43,522
------------- -------------
Total liabilities 42,159 60,956
-------------
Total equity and liabilities 231,805 268,217
============= =============
The financial statements were approved by the Board of Directors
and authorised for issue on 6 April 2016. They were signed on its
behalf by:
N. Harrison
Director Company number: 04030166
Consolidated statement of changes in equity
Investments Foreign
Share Share revaluation Other exchange Retained Total
capital premium reserve reserves reserve earnings equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January
2014 1,535 108,160 704 3,932 9,343 52,281 175,955
========== =========== ============= ========== ========== ============ ==============
Share options
exercised 9 910 - (510) - 510 919
Equity settled
share options - - - 3,638 - - 3,638
Transactions
with owners 9 910 - 3,128 - 510 4,557
Profit for
the year - - - - - 27,388 27,388
Other comprehensive
income:
Foreign exchange
differences
on retranslation
to presentational
currency - - - - 65 - 65
Recycle of
profit on
available-for-sale
financial asset
to profit and
loss for the
year - - (704) - - - (704)
Total comprehensive
income - - (704) - 65 27,388 26,749
---------- ----------- ------------- ---------- ---------- ------------ --------------
At 31 December
2014 1,544 109,070 - 7,060 9,408 80,179 207,261
Share options
exercised 16 4,485 - (288) - 288 4,501
Equity settled
share options 4,207 4,207
Transactions
with owners 16 4,485 - 3,919 - 288 8,708
Loss for the
year - - - - - (26,744) (26,744)
Other comprehensive - - - - - - -
income:
Foreign exchange
differences
on retranslation
to presentational
currency - - - - 421 - 421
Total comprehensive
loss - - - - 421 (26,744) (26,323)
---------- ----------- ------------- ---------- ---------- ------------ --------------
At 31 December
2015 1,560 113,555 - 10,979 9,829 53,723 189,646
========== =========== ============= ========== ========== ============ ==============
Consolidated cash flow statement
Year ended Year
31 December ended
31 December
2015 2014
$'000 $'000
Cash flows from operating activities
(Loss)/Profit for the year (26,744) 27,388
Adjustments for:
Finance income in the income statement (191) (103)
Tax in the income statement 1,606 20,106
Depreciation 23,860 20,005
Impairment - 26,485
Share options charge 4,207 3,638
Finance Charge 2,767 -
Loss on disposal of investments - 381
(Increase)/Decrease in inventory (6,408) 654
Decrease/(Increase) in trade and
other receivables 14,435 (7,305)
Decrease in trade and other payables (9,668) (1,406)
--------------------- ---------------------
Net cash generated by operations 3,864 89,843
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April 07, 2016 02:00 ET (06:00 GMT)
Tax paid (10,314) (26,671)
Net cash (used in)/generated by
operating activities (6,450) 63,172
Cash flows from investing activities
Interest received 191 103
Payments for property, plant and
equipment (29,994) (42,339)
Payments for investments - (6,695)
Disposal of investments - 16,989
Payments for exploration and evaluation
assets (18,787) (8,120)
Net cash used in investing activities (48,590) (40,062)
Cash flows from financing activities
Proceeds from issue of equity
shares on exercise of options 4,501 919
Finance charge (2,767) -
Net cash generated by financing
activities 1,734 919
--------------------- ---------------------
Net (decrease)/increase in cash
and cash equivalents (53,306) 24,029
Foreign exchange differences - -
Cash and cash equivalents at the
start of the year 95,629 71,600
--------------------- ---------------------
Cash and cash equivalents at the
end of the year 42,323 95,629
===================== =====================
Notes to the preliminary announcement
1 Basis of preparation
The summary accounts do not constitute statutory accounts as
defined in section 435 of the Companies Act 2006, but has been
extracted from the statutory accounts for the period ended 31
December 2015 on which an unqualified audit report has been issued.
The statutory financial statements for the period ended 31 December
2015 were approved by the directors on 6 April 2016, but have not
yet been delivered to the Registrar of Companies.
The financial statements have been prepared in accordance with
applicable International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretation Committee (IFRIC)
interpretations as adopted by the EU. The Group financial
statements consolidate those of the company and of its subsidiary
companies drawn up to 31 December 2015.
Intra-group transactions are eliminated on consolidation and all
figures relate to external transactions only. Acquisitions of
subsidiaries are dealt with by the acquisition method of accounting
except for those qualifying as group reconstructions where merger
accounting is used. The results of newly acquired companies are
consolidated from the date that control passed.
2 Posting of accounts
The Report and Accounts for the period ended 31 December 2015
will shortly be available on the Company's website and will be sent
to registered shareholders who have elected to receive paper
communications by post in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MMGGDZVZGVZZ
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