Amerisur, Cairn

Amerisur Resources

A full update today from AMER which highlights quite what a good position the company is in. Q4 production was 4,602 b/d with a peak of 5,405 b/d, current production is 5,426 b/d.

The company has had an independent reserves report done which gives preliminary results on CPO-5 of gross 2P reserves of 22.7 mmbo at Indico-1X and 2.9 mmbo at Mariposa. Mean gross prospective resources of 49.3 mmbo are attributed to the LS3 play around the Indico and Mariposa discoveries which is right where the upcoming drilling programme is situated and there is plenty of upside.

Currently Indico is producing 5,130 b/d under choked natural flow whilst Mariposa continues to produce at 3,150 b/d and the operator is now preparing the FDP.

The company has an active drilling programme all of which is fully funded from internal resources and positive cash flow from internal producing assets and the company is debt free. Expect at least four wells on the Indico pad, as well as six wells on the Coendu structure (Put9 and 12) as well as the now infamous Miraparriba-1 well on Put 8. Given the partnership with Occidental Andina which adds a colossal amount of grunt in the south and has brought forward that drilling programme and with ONGC in the north where even more wells are being considered, activity in the portfolio has the opportunity to ‘transform Amerisur’ in the words of CEO John Wardle.

The last time I looked the shares were around 18.5p which is an astonishingly big discount to where the true valuation of AMER really lies. The company is creating shareholder value across the board with ‘material upside’ in the portfolio and an active programme with the drill bit across a number of prospects. The last year or so of throwing off cash will now enable the company to make substantial returns for shareholders, no wonder Mr Wardle says ‘ I have never been more excited by, or optimistic about the company’s future ‘. Time to follow the directors and buy the shares.

Cairn Energy

Today’s operational update from Cairn includes much good news on production, drilling programme and even upcoming developments but will surely be remembered for the optimism on the international arbitration with regard to India. In this respect they expect a final decision ‘in the near term’ and a positive result on their claim for $1.4bn which they are ‘confident’ about would surely reboot Cairn for the long term.

Back to basics, both SNE and Nova developments are on track and the Agar discovery evaluation  is ‘ongoing’. The drilling programme is ‘material’ with up to seven exciting wells in Mexico, the UK and Norway expected to spud with a combined target of over a billion barrels of oil.

Priduction last year was 17;500 b/d and guidance for 2019 is 19-22/- b/d net to Cairn. This gave revenue of $395m at $68pb and with cash of $66m and a draw of $75m of the $575m RBL a strong position after capex of $335m.

Cairn are in a strong position operationally and have a decent portfolio of assets in all areas of exploration, appraisal and development but for the time being the shares will be driven by India, like it or not…

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