Amersur price going up with pipeline Amerisur - No Longer A Pipe Dream...
With a market cap of around £400 million, Amerisur is the 559th largest company in the UK. It is an independent oil and gas production and exploration company focused on South America. It owns assets in Colombia and Paraguay, where it operates and holds a 100% working interest in the Platanillo block in Colombia. The 11,048 hectare block is located in the Putumayo Basin, in the south of Colombia. It operates and holds 60% working interest in Putumayo-12, a 54,444 Hectare block which is adjacent to Platanillo. The company also holds 100% of the Fenix block, a 24,117 hectare area in the Middle Magdalena Basin of Colombia.
It holds 100% ownership of five blocks, holding two exploration and production and three prospecting permits extending over 6.4mm hectares. That adds up to proven and probable (2P) commercially viable oil reserves in the region stand at 24.5 million barrels, worth nearly $1.5bn at current prices. In addition, the oil-rich fields in which it operates allows it to take oil out of the ground very cheaply, and profitably, even with the black gold substantially cheaper than this time last year, something that other operators have struggled to do. Indeed, some have been forced into the red as oil prices plunged - Afren being one of them.
On 12 June this year, shares in Amerisur jumped on news that a deal with Petroamazonas, Amerisur's new pipeline partner, had been reached. Petroamazonas is the company that operates the Amazonas pipeline network in Ecuador, and this deal will allow Amerisur to build a pipeline from the Ecuadorian border to the Amazonas pipeline network - the work can start immediately.
The company already has permission from the Colombian government to build the interconnecting pipeline between the Platanillo oil fields and into Ecuador. Investors are now waiting on the environmental permission from the Ecuadorian government -- management expects that this will be approved in due course. If the green light is given, the pipeline will run underneath the Putumayo River.
For me, if all goes well and the permissions are granted, investors could well see an upward re-rating of the shares as the pipeline will substantially reduce operating expenses and give, potentially significant production growth optionality. It is hoped that everything will be in place in the last quarter of this year.