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magazineAmerisur Resources
Amerisur Resources (AMER:AIM) 26.1p
Gain to date: 0.4%
Original entry point: 26p, 21 Jul 2016
Our trade on Colombian oil producer Amerisur Resources (AMER:AIM) continues to tread water but we see scope for the shares to gather some steam in 2017. Gains are likely to be driven by a combination of oil price strength and low-risk production growth.
On 24 January the company announced the results of the latest well on its flagship Platanillo block, delivered ahead of time and under the $2m budget. Platanillo-24 is an infill well aimed at increasing recovery from the field.
With a tie-in to the Ecuadorean pipeline system up and running, a key rationale behind our positive call, the company should be able to ramp up Platanillo’s production which remains some way below its full capacity.
There is an active work programme in place for the coming months which includes the Platanillo-22 appraisal wells and the commencement of exploration drilling on its CPO-5 licence.
Cantor Fitzgerald analyst Sam Wahab reiterates his ‘buy’ advice and 45p price target. He says: ‘With a near term step change in cash flow generation through the de-bottlenecking of its production base, underpinned by a fully funded appraisal and high impact exploration programme in Colombia, we believe Amerisur’s shares offers a compelling entry point for investors.’
Keep buying at 26.1p. (TS)
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