Mid-cap oil exploration and production companyAmerisur Resources(LSE: AMER) has slumped today, although there seems to be little in the way of news to explain the fall.
Indeed, at time of writing Amerisur has fallen nearly 9% today, despite releasing a stellar set of half-year results less than a week ago.
Amerisur has worked hard over the past few years to get its wholly ownedPlatanillo oil field into full production, and management has not disappointed. The company has transformed itself since 2009 as production has surged and the share price has followed suit, rising by 747% during the past five years.
And now Amerisur is coming of age. The companys productioncapacity is estimated to be in excess of 10,000bbl/d, exploration activities are fully funded and Amerisur has plenty of room to grow production.
However, at present Amerisursproduction is constrained at an average of 6,561 bbl/d during the first half due a lack of infrastructure. Specifically, the company has to truck its oil to market, which is hitting both production volumes profits.
Nevertheless, Amerisurs revenue during the first half of this year hit a record level of $114.1m, pre-tax profit of $50.8m was reported. These figures were up 77% and 75% respectively on the year-ago period.
Set for growth
Within the next few months, Amerisur expects to have completed the construction of a key pipeline linking its operations to export markets. This pipeline will have an immediate capacity of 4,000 bbl/d and will reduce transport costs from $23 bbl down to $6 bbl. So, with the new pipeline in place not only will Amerisurs sales jumped but the companys margins will also improve.
After taking this into account, City analysts have earnings per share of 5.39p pencilled in for 2015, which means that the company is currently trading at a forward P/E of 9.3. Additionally, Amerisur has no debt and cash generation is strong, so there is the possibility that a maiden dividend payout could be on the cards sometime in the near future.
Time to buy?
With a clean balance sheet and room for growth Amerisur is one of the strongest mid-cap oil producers on the market. That being said, the companys main oil producing acreage is located withinColombia, where the 50-year-old Revolutionary Armed Forces of Colombia (FARC), once considered the best-funded insurgency in the world, is still at large.
Still, Amerisurs low valuation and impressive record of growth goes some way to offsetting concerns about operating within the region.
Up to you
As usual, it remains your decisions whether you buy, sell, or hold Amerisurfollowing today’s news. However, if you decide to sell and are looking for other opportunities the Motley Fool is here to help.
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Rupert Hargreaves owns shares of Amerisur Resources. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.