TIDMAMER
RNS Number : 6941D
Amerisur Resources PLC
02 February 2015
02 February 2015
Amerisur Resources Plc
Revised 2015 Plan, Outlook and Guidance Statement
Amerisur Resources Plc ("Amerisur" or the "Company"), the oil
and gas producer and explorer focused on South America, is pleased
to provide a 2015 update to shareholders in the context of the WTI
oil price, currently at approximately $48.
Highlights:
2015 plan
-- Given the prevailing oil price and a conservative oil price
assumption for 2015, and whilst the Company waits for the
commissioning, construction and operation of the Ecuador
interconnector, the Board has decided to optimise production from
the Company's low lifting and transportation cost platforms in the
Platanillo field
-- 4,500 bopd to be produced in the interim from Pads 5 and 9,
which can be lifted at a cost of approximately $12 per barrel and
transported and commercialised through Orito and the OTA system at
approximately $12 per barrel
-- Production from more expensive pads to be temporarily
suspended and transportation to Rio Loro at a cost of $23 per
barrel to be reduced to a nominal daily volume, so preserving this
delivery option
-- Production is expected to be increased to a 2015 exit rate of
8,200 bopd once the pipeline to Ecuador is operational and
delivering transportation costs of under $5 per barrel. This is
expected by the start of H2 2015
-- Production is expected to be increased through 2016, as
pipeline capacity further increases and expected sales prices
improve
-- Capital expenditure guidance for 2015 revised to
approximately $45 million from $95 million, fully funded from
operating cashflow and cash resources
-- 3 exploration wells to be drilled in 2015
o Platanillo 21 and 22
o Putumayo 12 first exploration well to be spudded in December
2015
2014 highlights
-- 2014 average production of 6,242 barrels of oil per day
("bopd"), up 32% (2013 average production: 4,730 bopd)
-- 2014 year end cash position $96MM
Revised 2015 WTI oil price assumptions
Base case assumptions
The Board has taken a conservative view on oil price assumptions
for 2015, where broker forecasts for the 2015 oil price range from
$46 to $67.5, and are thus using a WTI oil price assumption of $48
per barrel for 2015 and $65 for 2016.
In this context the Board has conducted a review of the 2015
plan, with the aim of minimising the use of high cost
transportation until such time as the pipeline to Ecuador is
operational, and / or a rapid return to a higher oil price, 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 has increased thus
allowing the Company to take advantage of this increased available
capacity. For example, over the last 7 days the Company has
delivered an average of 4,200 bopd into the Orito facility,
compared to an average of 2,358 BOPD in December 2014
As a result the Company has suspended production from higher
cost pads where transportation, lifting and royalties would be
close to the current oil price and will produce approximately 4,500
bopd from Pads 5 and 9, which can be lifted at a cost of
approximately $12 per barrel and transported through Orito at a
cost of approximately $12 per barrel. Rio Loro transportation at a
cost of $23 per barrel has been reduced to a nominal daily volume
in order to create strong netback benefits while ensuring the
delivery facility is maintained. The suspension implemented at Pads
3 and A can be quickly reversed and that production brought on
stream at any moment should sales prices increase or costs
reduce.
Amerisur has also made significant progress in the reduction of
field operating costs, with important discounts being obtained from
contractors and other suppliers. The Company expects to continue
with those efforts, bringing tariffs to levels significantly lower
than those of 2014.
It is the Company's intention to increase production once the
export pipeline to Ecuador is in operation, projecting an exit rate
for 2015 of 8,200 bopd. The transportation costs through the
pipeline are expected to be below $5 per barrel creating a strong
positive effect on netback on the increased production.
Pipeline update
Permissions are moving forward, and the Operation Letter of
Intent (LOI) with PetroAmazonas, the Operator of the Cuyabeño
gathering system is expected to be signed this week and the Board
is confident it will be in a position to commission, construct and
operate the Ecuador interconnector in H1 2015. The delay in the
delivery of the pipeline is mainly due to an expansion of the
technical scope of the project, which now contemplates a 10.8" line
over its entire length, reaching dedicated reception facilities at
the central VHR production station. In this way the need to utilise
an existing 6" flow line from platform VHR-21 is avoided, and full
capacity can be utilised without further investment or engineering
works. This technical scope has been approved by the Operator for
simultaneous operations. All required materials and services have
now been sourced and as such we are confident the system can be
delivered by H2 2015.
2015 capex guidance
The Company has reviewed in detail its capital expenditure for
2015 in the context of the lower oil price environment and has
revised its guidance from $95 million to $45 million, which is
fully funded from operating cashflow and cash resources. This sum
includes all one-off costs associated with the construction and
commissioning of the Ecuador export line. The revised 2015
exploration and development drilling and seismic plan is designed
to maximise the chance of success by controlling risk. The key
components of the forward programme into 2015 are as follows:
Platanillo (AMER 100% and Operator)
-- Construct, commission and operate Ecuador interconnector H1
-- Completion of 3D seismic on Platanillo North (northern 25% of the block)
-- Suspend Libelula-1 following mechanical problems at 7,850ft.
It is expected the Company will re-enter this well in 2016
-- Release the current rig (D-10) pending the results of this
seismic and defer drilling of Platanillo-21 and 22 until the
complete seismic data is available
-- The Company believes that drilling opportunities north of the
Piñuna Blanca river can be made more diverse and lower risk
following incorporation of the new, additional 3D seismic data and
that rig and service rates will be significantly lower in the
second half of 2015, when a rig will be contracted to continue the
Platanillo drilling programme
-- In H2 2015 drill two wells in Platanillo North - locations of
these wells will be defined by the new Platanillo North 3D data
-- Install efficient Horizontal Electrical Hydraulic Lifting systems on Pads 5 and 9
-- Construct a 10,000BO storage tank at Pad 5 to increase
flexibility in the production system and further reduce lifting
costs
-- Purchase rented production equipment at Pad 5
-- The mean prospective resources targeted by the 2015
Platanillo drilling programme will be defined once the 3D seismic
programme is completed
-- Estimated total Platanillo 2015 capex is $37m
Putumayo 12 (AMER 60% and Operator)
-- Complete Put-12 2D seismic, prioritizing the western
structures, which can be more rapidly licensed, drilled at lower
costs and monetized more rapidly than the more distant eastern
structures
-- Commencement of drilling programme; first target is Lead 1
similar in seismic terms to Platanillo and targeting mean
prospective resources of 106.6 MMBO to be spudded in December
2015
-- Estimated total Putumayo 12 2015 capex is $7m
Putumayo 30 (AMER 50%)
-- Commencement of 2D seismic programme covering 209km in early 2016
-- No capex is expected in Putumayo 30 during 2015
Paraguay (AMER 100% and Operator)
-- Defer Jaguarete-1 to 2016 or sooner should WTI recover to $85/bbl (under negotiation)
-- No capex is expected in Paraguay during 2015
Fenix (AMER 100% and Operator)
-- Defer Fenix drilling and conduct a strategic review of benefits of maintaining interest
The purpose of this programme is to protect all of the Company's
assets, whilst maintaining its exploration programme and
guaranteeing positive operational cashflow at low oil prices. The
programme is totally scalable in the event of a return to higher
oil prices when relatively higher cost production can be brought
back on stream very rapidly.
John Wardle, CEO of Amerisur commented:
"We have changed the 2015 plan in a responsible way ensuring a
high probability of delivery and securing a platform with good
upside potential. Importantly the main actions and savings can be
implemented immediately. This plan maximises operational netback
and gives flexibility in the case of a further sales price drop,
while allowing production to be ramped up quickly once the pipeline
becomes operational and / or sales prices rise. We have in effect
deferred production of 500,000 barrels of oil; however the
deferment period will be less than 12 months. This will have a
positive impact on the Platanillo field NPV should prices recover
more than the discount rate. The future period, though challenging,
will I believe offer us an exciting opportunity to re-set our
operating costs to extremely efficient levels, which will have
strong positive impact on our results going forward as we continue
to develop our exciting, highly prospective and diverse opportunity
set."
Giles Clarke, Chairman of Amerisur said:
"Amerisur is a strong, profitable, well financed Company, with
an exploration programme in 2015 which exposes our shareholders to
significant upside. The 2015 plan is firmly directed at profitable
activities to place the Company in a position to exploit all
opportunities that may arise as market values become less
volatile."
A presentation providing further detail can be found on the
website
http://www.amerisurresources.com/reportspresentations.html.
ENDS
Competent person: Technical information in this announcement has
been reviewed by John Wardle Ph.D., the Company's Chief Executive.
John Wardle has 28 years' experience in the industry, having worked
for BP, Britoil, Emerald Energy and Pebercan, and is a trained
drilling engineer.
ENQUIRIES:
Billy Clegg/Georgia Mann Tel: +44(0)203 757 4980
Camarco
Jeremy Low/Daniel Conti Tel: +44 (0)207 653 4000
RBC Capital Markets
Chris Sim Tel: +44 (0)207 597 4000
Investec
This information is provided by RNS
The company news service from the London Stock Exchange
END
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