Amerisur Resources : Final Results for the year ended 31 December 2017

16^th April 2018

Amerisur Resources Plc

Final Results for the year ended 31 December 2017

Active 2018 work programme to deliver increased reserves and production

Amerisur Resources Plc ('Amerisur' or the 'Company'), the oil and gas producer and explorer focused on South America, announces its audited results for the full year ended 31 December 2017.

Highlights:

Financial

Growing production and improving oil prices delivered a strong financial performance:

· Significant revenue growth of 96% to $92.5m (FY 16: $47.2m)

· Adjusted EBITDA of $19.8m (FY 16: $0.4m)

· Net cash from operating activities increased to $30.0m from ($3.3m)

· Strong cash position at year end of $41.3m with zero debt

· Post period end during April, Amerisur entered into a $35m working capital facility with Shell Western Supply and Trading Limited

Production and OBA

· FY17 average production of 4,857 BOPD, up 58%, with an average realised price of $50.0 per barrel

· Delivered 2017 exit rate of nearly 7,000 BOPD

· Diversification of production base from one to two oil fields in line with Amerisur's strategy

· FY17 OBA throughput average of 4,400 BOPD reducing average cash opex and transport costs per barrel to $18.6 (FY 16: $24.9)

· At $60 oil, with cash costs of production and transportation of below $20, cash netback in excess of $40 per barrel

Exploration

Drilling of seven exploration and appraisal wells:

· Platanillo-22 from Pad 2N at the beginning of the year identified an extension to the field to the north, with a deeper oil-water contact

· Mariposa-1 discovery in the CPO-5 block which sits on trend with the prolific Llanos-34 contract

Corporate

· Strengthened Board through the appointment of Dana Coffield as Independent Non-executive Director in April 2017 and Alex Snow as Senior Independent Non-executive Director in May 2017

Outlook

· Up to 14 fully funded exploration and development wells planned for 2018

· Ramp up of near term exploration activity:

o N Sand anomaly at Pintadillo-1 is one of four such anomalies identified by the Company in the central part of the Platanillo block. The well is targeting estimated P50 resources of 11.44 MMBO

o Regulatory permission received to drill the Miraparriba-1 well in the Put-8 block, a low risk U and T sand light oil structural target, with estimates of P50 gross resources of 4.4 MMBO. The well is expected to spud in early May 2018

o Indico-1, the first new well at CPO-5, estimated to hold P50 gross resources of 10.3 MMBO, is expected to spud by May 2018

A full review of operations can be found in the Annual Report on the Company's website.

Giles Clarke, Chairman of Amerisur, commented:

'We exited 2017 with strong production growth, a diversified production base, further upside identified through our exploration success in the north of the Platanillo field and Mariposa-1 in CPO-5 and a refreshed Board. Amerisur has low cost production with cash netbacks in excess of $40 per barrel of oil produced (at $60/bbl selling price) and generates significant cash flow from its operations. We have a strong balance sheet of $41m cash; a portfolio concentrated on the highly prospective Putumayo basin with significant upside of 1,376 MMBO in the mid case; and a team with an excellent discovery and value creation track record. Although we are seeing an improving market environment, with the oil price ending 2017 at $60/bbl, we remain focused on capital discipline and delivering against our strategy of being cash generative at a sub $45 oil price, achieved through increasing OBA throughput which delivers strong operating margins.'

'2018 is focused on successful exploration, growing our reserves and production levels, continuing to diversify our production base, and increasing OBA throughput. We will do this through our active fully funded drilling programme of up to 14 wells, with the spudding of Pintadillo-1 in the Platanillo N Sand, Miraparriba-1 in Put-8 and Indico-1 in CPO-5 targeting 26 MMBO of prospective resources, to commence in the coming weeks.

'Our extensive licence portfolio has delivered substantial exploration success and value creation to date and means we are well placed to generate significant future shareholder value.'

Ends

Enquiries:

Notes to editors

Amerisur Resources is an independent full-cycle oil and gas company focused on South America, with assets in Colombia and Paraguay and production from two fields in Colombia. In 2016 Amerisur successfully built and is 100% owner of the strategic OBA oil transfer line into Ecuador.

In Colombia, the Company is operator and has a 100% working interest in the Platanillo block which includes the Platanillo producing field in the Putumayo basin, and holds a 30% non-operated working interest in the CPO-5 block containing the Mariposa-1 producing field in the Llanos basin. Amerisur is currently producing approximately 6,500 bopd.

Amerisur has a strong position in the Putumayo basin and has a cluster of near term activity assets around the OBA export line.

These assessments are made in accordance with the standard defined in the SPE/WPC Petroleum Resources Management System (2007).

Competent person: Technical information in this announcement has been reviewed by John Wardle Ph.D., the Company's Chief Executive. John Wardle has 32 years' experience in the industry, having worked for BP, Britoil, Emerald Energy and Pebercan, and is a trained drilling engineer.

This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.

www.amerisurresources.com

Glossary

CHAIRMAN'S STATEMENT

Overview of the year

We exited 2017 with strong production growth, valuable 2P reserves and record resources. In 2017 Amerisur successfully executed its strategy and delivered growth. We finished the year in a strong position with a refreshed Board, an exit production rate of nearly 7,000 BOPD, and low cost production from two oil fields. Strong operating margins were achieved as a result of the low transport costs of our wholly owned OBA pipeline to Ecuador and our close control over costs. Further upside has been identified through our exploration success, including Platanillo-22, Platanillo-21 and Mariposa-1 in CPO-5, and our 14 well 2018 work programme is focused on building on the successes in 2017 as well as proving up new resources across our extensive asset portfolio.

Amerisur has low cost production with cash netbacks in excess of $40 per barrel of oil produced (at $60/bbl selling price) and therefore generates significant cash flow from its operations. As a result, it has a strong balance sheet with $41m of cash at year end; an extensive drilling programme in 2018; a portfolio concentrated on the highly prospective Putumayo basin with significant upside of 1,376 MMBO in the mid case; and a team with an excellent discovery and value creation track record. Although we are seeing an improving market environment, with the oil price ending 2017 at $60/bbl, we remain focused on capital discipline and delivering against our strategy of being cash generative at a sub $45 oil price, achieved through increasing OBA throughput which delivers strong operating margins.

People, Board and corporate governance

I would like to congratulate and thank Amerisur's excellent management and operational team based in Colombia who have worked diligently to deliver increased production, OBA throughput and exploration success.

The Board recognises the importance of good corporate governance practices and shareholder engagement and continues to make positive progress. Our achievements over the last year include Board refreshment, investor roadshows and expanded reporting by the Remuneration Committee.

A programme of Board refreshment was undertaken during the year to ensure the Board had the necessary skillset to continue to drive forward growth, resulting in a strengthened Board with five Independent Non-executive Directors, two Executive Directors and a Chairman. An extensive and thorough search process was overseen by Chris Jenkins, an independent Non-executive Director, and managed by a leading sector-focused executive search firm, Preng & Associates, to identify two new independent Non-executive Directors, one with City experience and the other with in depth industry knowledge. As a result, I was delighted to welcome Dana Coffield and Alex Snow to the Board in April and May respectively. Dana brings a wealth of industry knowledge to the role, having over 30 years of international E&P experience including in Colombia, and has joined the Remuneration Committee. Alex has had a successful career in the City, most recently as the CEO of Lansdowne Partners LLP, and brings significant financial expertise to the Board. Alex joined the Board as Senior Independent Director and sits on both the Remuneration and Nomination Committees. As previously announced, Victor Valdovinos, George Woodcock and Nigel Luson retired from the Board during the year and we thank them for the considerable contributions they each made during their tenure.

Political and social developments

The 2016 peace deal was a momentous event in Colombia's history following over 50 years of conflict. Steady progress has been made with its implementation, with the demobilisation of the FARC completed in 2017 and the conversion of that group into a political party. As part of the peace accords Government is committed to a large increase in rural investment, a significant part of which is being implemented in the Putumayo region. Whilst being geologically highly prospective, in previous decades the above surface social climate with the FARC has limited oil exploration and development in the Putumayo basin. With ten blocks in the basin, Amerisur is ideally placed to benefit from the opportunities the peace process is revealing. Geology does not respect national and political boundaries and there is every chance the Putumayo Basin in Colombia will be as prolific as Ecuador is over the Putumayo River to the south, which has not been restrained by similar social issues.

Having been present in the Putumayo basin for eleven years Amerisur is a significant investor in the region, has unparalleled insights and is committed to delivering positive social and economic benefits. Unsurprisingly the country's transition to peace has led to some local social issues and Amerisur has taken a central role in delivering a wide range of community projects to aid this complex process. An example of this is the sustainable alternative farming programmes we invest in, which are part of the Government's 'Sustiticion de Cultivos Ilicitos - illegal crop substitution programme'. These programmes provide local farmers with both the resources and skills required to transition to more socially desirable and profitable crops.

Alongside this we continue to help provide access to education for local children. At the Santa Isabel school, we have constructed two classrooms, two science laboratories and two sets of toilet blocks, with the aim of improving the quality of life of the children attending the school.

Dividend

It is Amerisur's aspiration to pay a dividend once it is delivering sustainable production from multiple fields. While the Company is making positive steps towards this goal, with production now coming from two oil fields, the Board will not be recommending a dividend for the year ended 31 December 2017. Cash returns to shareholders are discussed regularly by the Board and firmly remain a goal.

Outlook

Our success in 2017 positions the Company strongly for 2018 and we look forward to capitalising on the momentum that we have generated. 2018 is focused on successful exploration and growing production levels, continuing to diversify our production base, and increasing OBA throughput as well as delivering up to 14 fully funded exploration and appraisal wells by the end of the year in order to grow reserves and resources. Our extensive licence portfolio has delivered substantial exploration success and value creation to date and means we are well placed to generate significant future shareholder value.

The outlook for Amerisur is strong and as we see relative stability returning to the oil markets, your Board looks to the future with confidence.

Giles Clarke

Chairman

14 April 2018

CHief executive's STATEMENT

Introduction

In 2017, Amerisur delivered a number of strategic and operational objectives, including the diversification of our production base from one to two fields. This followed drilling success at Platanillo and the Mariposa-1 discovery in CPO-5, an important milestone for the Company. Alongside this we steadily and responsibly ramped up our low cost, low risk, high netback production at Platanillo and in turn OBA throughput, while consolidating our strategic position in the Putumayo basin.

With growing production and improving oil prices, the financial performance of the Company improved with revenue up 96% to $92.5m (2016: $47.2m), adjusted EBITDA up 4,850% to $19.8m, net cash from operating activities increased to $30.0m, positive operating profits for the year were $0.6m (2016: operating loss of $27.7m) and profit before tax was $0.6m (2016: loss before tax of $29.3m). Year-end total cash was $41.3m (2016: $42.3m).

The Putumayo basin is a highly attractive, underexploited basin and during the year we successfully executed a further opportunistic strategic transaction in the region delivering additional unrisked prospective resources of 321 MMBOE through the acquisition of the outstanding working interest in the Put-9 and Tacacho blocks together with a 100% working interest in Terecay and 58% of Mecaya from subsidiaries of Pacific Exploration and Production. The purchase price of $4.85m was paid from existing cash resources. Over the last three years, during the oil price downturn, Amerisur has completed four low cost, value accretive acquisitions, growing our portfolio to eleven blocks in Colombia, consolidating our acreage position around the OBA, delivering important resources, bolstering and providing significant flexibility in our drilling programme.

Exploration success

Our strong exploration and operations track record continued in 2017 with the successful drilling of seven exploration and appraisal wells. Within our 100% owned and operated Platanillo block, in addition to two infill wells, we drilled Platanillo-22 from Pad 2N at the beginning of the year, which flowed at 1,000 BOPD and identified an extension to the field to the north, with a deeper oil-water contact. Our follow-on well in Pad 2N, Platanillo-21, was a further encouraging result and as such our drilling programme in the second half of 2017 focused on the north of the block to map out the extension. The following two wells, Platanillo-25, and Platanillo-27, were less successful than the initial two wells, with a lower quality reservoir and poor initial production. These results led to a comprehensive review of the U and T sand reservoirs, both in-house and utilising an experienced technical specialist, Best Energy Services Ltd, based in Quito Ecuador who have deep knowledge of the basin. These studies included the cores taken in wells 21 and 20 in addition to production history and the complete geotechnical data suite, incorporating the 3D seismic data reprocessed by Signature of Calgary and greatly increased our understanding of the basin.

Following a rigorous permitting process civil works commenced during April 2018 in preparation for the drilling of up to three N Sand anomaly wells further north on the block, targeting 11.44 MMBO of prospective resources.

We added a second production field with the exciting Mariposa-1 discovery in the CPO-5 block, which sits on trend with the prolific Llanos-34 contract. Mariposa-1 was put on long-term test in November and was producing in excess of 3,000 BOPD at the end of the period. Mariposa-1 has produced 435,785bo at 8 April 2018. Plans are also in place with our partner to drill Indico-1, testing the Mariposa play further up dip in H1 2018 together with two further wells on the block during 2018.

Reserves and Resources

As at 31 December 2017 certified 1P (Proven) gross field reserves were 12.84 MMBO (2016: 15.11 MMBO) after production of 1.76 MMBO during the period and 2P (Proven and Probable) gross field reserves were 18.95 MMBO (2016: 24.47 MMBO). Cumulative total production from the Platanillo field at 31 December 2017 was 9.26 MMBO.

After production, current 1P reserves represent a decrease of approximately 0.5 MMBO from year end 2016. This technical decrease of the Expected Ultimate Recovery ('EUR') (a forward-looking model which assumes a decline factor and projects the volume of oil which will ultimately be recovered from each well) takes account of the wells drilled during the year, including the relatively poor reservoir quality and initial flow rates from wells Platanillo-25 and Platanillo-27. This results in a small decrease in expected EUR. The reduction in 2P reserves is also due to that effect, together with a refined mapping of the field after the reprocessing of the 3D seismic data by Signature Ltd of Calgary, part of our regional reprocessing project which covers our entire Putumayo portfolio.

Since the Mariposa-1 well is currently under Long Term Test, it has not entered the exploitation phase and hence the Operator is not required to report such reserves to the Agencia Nacional de Hidrocarburos (ANH). However, for guidance, the Company also commissioned an evaluation of reserves at the Mariposa discovery in block CPO-5 from Petrotech Engineering Ltd. 1P reserves were certified at 0.79 MMBO and 2P reserves at 1.30 MMBO to Amerisur on a working interest basis (30%).

The Company also commissioned an evaluation of reserves at the Mecaya block related to the well Mecaya-1 from Petrotech Engineering Ltd. 1P reserves were certified at 0.31 MMBO and 2P reserves at 0.45 MMBO to Amerisur on a working interest basis of 58%.

Hence total Amerisur 1P reserves at 31 December 2017 are 13.94 MMBO and 2P reserves are 20.70 MMBO.

At the end of the period, Amerisur had unrisked 2C resources of 35.49 MMBO and unrisked prospective resources of 1,367 MMBO in the mid case.

Production growth and diversification

Group production for 2017 averaged 4,857 BOPD, with an exit rate of nearly 7,000 BOPD, including production from both Platanillo and Mariposa-1 which came on stream in November 2017.

We have low cost, high netback production at Platanillo and during the period we steadily increased our production levels to nearly 7,000 BOPD with average cash opex and transport costs per barrel reducing to $18.6 (2016: $24.9) largely as a result of increasing throughput through the OBA.

During the year, the Platanillo field production was 1,735,804 barrels averaging 4,756 BOPD, up 58% on 2016. Production had to be temporarily suspended at Platanillo for short periods in July and September as a result of social issues in the region following the ratification of the peace process. These issues have been resolved by the Government and all of our producing wells were carefully brought back on stream, quickly and efficiently. We took advantage of this downtime to perform maintenance and enhancement works on the field to optimise our production.

Production throughput through the OBA averaged 4,440 BOPD in the period, with a peak of 10,127 BOPD. Volumes through the OBA were constrained in the first half of the year due to equipment maintenance activities in the RODA system and competing volumes in the northern part of Ecuador, which we do not envisage to impact throughput going forward; however, throughput steadily increased in the second half, with September seeing the one millionth barrel exported through the OBA. Post period end, on 20 February 2018 the Company transported its two millionth barrel through the OBA system. This generated a total saving of $20.3m during initial 15 months of operations, following investment of $22m to build the system. The OBA represents a low cost route to commercialisation with world class economics and the Company remains focused on increasing OBA throughput, driven principally by the Company's upcoming drilling campaign.

In January 2018, Petroamazonas EP and Amerisur signed the 'Second Cooperation Agreement for the Use of the Oil Pipeline Network of the Amazonian District (RODA)', which allows Amerisur to build and commission the Chiritza re-pumping station in Ecuador. Once operational, this will increase Amerisur's minimum carrying capacity through the RODA pipeline to 9,000 BOPD.

Amerisur achieved a significant milestone in November 2017 with production beginning on the Company's second oil field in Colombia following commencement of the Long Term Test (LTT) of the Mariposa-1 discovery on CPO-5. Production from the field ramped up to in excess of 3,000 BOPD at the end of 2017 and average Q1 2018 production was 3,186 BOPD. Platanillo Q1 2018 average production was 5,730 BOPD.

Near-term drilling plans

Alongside growing our low cost production base and OBA throughput, we are focused on leveraging our strategic position in the Putumayo and Llanos basins through the drill bit, targeting up to 14 wells by the end of 2018, with the objective of tying back our successes to the OBA. Our 2018 drilling campaign includes three wells on Putumayo 9, two wells on Putumayo 8, three wells on CPO-5 and three wells on Putumayo 12, together with up to three N Sand anomaly wells on Platanillo, all fully funded from existing cash resources and cash generated from activities. The prospects we plan to drill in this programme represent unrisked prospective resources of 131.53 MMBO in the mid case. Capex for the year is planned to be $61m.

2018 drilling programme

We have been busy performing preparatory works across our licences in Q1 2018 to ensure that on receipt of the relevant environmental and regulatory approvals we could move at pace to begin drilling. It is anticipated that the drilling of Pintadillo-1, the first of up to three wells targeting the N Sand anomaly and estimated to hold P50 resources of 11.4 MMBO; Miraparriba-1 in Putumayo-8, a low risk prospect estimated to hold P50 resources of 4.4 MMBO; and Indico-1, targeting the same play as the successful Mariposa-1 well in CPO-5, will commence in the coming weeks.

Outlook

With a strong balance sheet, production, strong cash generation and significant near term exploration upside, Amerisur has a solid platform to grow from. We have a busy year of drilling ahead and, in turn, the potential to diversify and grow our production base to three or more fields and we are confident of delivering further shareholder value.

John Wardle
Chief Executive Officer
14 April 2018

FINANCIAL REVIEW

¹ Adjusted EBITDA: Earnings before interest, tax, depreciation and amortisation adjusted to exclude share option charges.

² Sales revenue per barrel less cash lifting, water disposal and transportation costs

³ Cash operating costs represent the cash lifting and water disposal costs included in cost of sales in the field divided by production.

The significantly improved 2017 results were positively impacted by higher oil prices, reduced transportation costs and increased production with revenue of $92.5m, EBITDA of $19.8m and profit of $0.6m.

Production and commodity prices

Production levels for the year ended 31 December 2017 averaged 4,857 barrels of oil per calendar day (2016: 3,081), an increase of 58% for the year resulting from the drilling of six new wells in the Platanillo field and the commencement of production in November 2017 from the Mariposa-1 well in CPO-5.

Oil prices improved significantly in the second half of the year, bottoming out at around $45/bbl in June before reaching a two year high of $64/bbl in November. Average Brent crude for 2017 was $54/bbl (2016: $44/bbl). This, alongside increased volumes, resulted in revenues almost doubling from $47m in 2016 to $93m in 2017. Average realised prices were $50.0/bbl in 2017 compared to $38.4/bbl in 2016.

The Group did not hedge any of its forecast oil sales during 2017.

Operating costs

Cost of sales comprise cost of operations, transport costs, inventory movement, high prices tariff, royalties and depreciation. Cost of sales during 2017 was $74.5m, an increase of 56% compared to 2016 in line with the growth in production volumes.

Total cash operating costs per barrel stayed stable compared to 2016 at $14.7 per barrel ($14.9 per barrel in 2016). Transport costs however decreased significantly by $6.1 per barrel from an average of $10.0 in 2016 to $3.9 directly as a result of a full year's use of the OBA.

General and administrative expenses showed an increase of $4.3m from $11.9m in 2016 to $16.2m in 2017 as a result of higher technical fees, labour and community aid costs reflecting increased activity levels.

The Group recognised an impairment charge of $1.2m in relation to additional capital expenditure in Paraguay and the increase in the abandonment provision for the Fenix block, which has been relinquished during the year.

Taxation

The tax credit for the year of $12.2m (2016: $1.54m) consists of a deferred tax credit of $13.3m (2016: $2.31m) offset by a current tax charge, in relation to Colombian operations, of $1.0m (2016: $0.9m).

The deferred tax credit of $13.3m in 2017 (2016: credit of $2.4m) includes a one-off credit of $11.2m in respect of changes in Colombian tax base rules to bring them in line with IFRS, and a credit of $5.1m in relation to the recognition of a deferred tax asset on the carried forward tax losses in PDSA following a re-assessment of future profits available to utilise these losses.

At the period end, there is a net deferred tax asset of $5.1m in relation to tax losses in PDSA and a net deferred tax liability of $12.1m (2016: net deferred tax liability of $20.3m) for Amerisur Colombia.

A restatement of $12.2m has been made to increase the opening deferred tax liability as a result of deferred tax not being correctly recognised on consolidation entries that affect accumulated depreciation and gross costs of D&P assets. For further details please see page 72 of the Annual Report.

Corporation tax in Colombia includes a calculation based on the Company's net worth at the end of the previous tax year, called the presumptive tax charge.

Capital expenditure

In 2017 the Group invested $6.9m in exploration and evaluation assets, of which $4.8m related to the acquisition of blocks from Pacific, and $20.0m in development and production assets. In addition, $3.9m was invested in other property, plant and equipment, principally in relation to the OBA and other field plant and machinery. Importantly all asset expenditure during the year was wholly funded from operating cash flows and existing cash resources.

Cash and funding

The Group had cash, cash equivalents and restricted cash at the period end of $41.3m (2016: $42.3m), including $11.3m of restricted cash (2016: $2.2m). Restricted cash is cash pledged to secure letters of credit and to settle asset retirement obligations. The increase in restricted cash in 2017 relates to cash deposits required to be put in place for the new blocks acquired during the period.

The Reserves Based Lending facility was terminated in September 2017. Post period end during April, Amerisur entered into a $35m working capital facility with Shell Western Supply and Trading Limited (SWST) under which, at Amerisur's request, SWST will provide advance payments to Amerisur against deliveries of crude oil under an offtake agreement.

Cash flow generated from operating activities of $30.0m in 2017 significantly improved compared to 2016 levels (cash outflow of $3.3m). After capital expenditure of $30.8m and net financing costs of $0.2m, total net cash outflow for 2017 was $1.0m (2016: $0.04m).

Dividends

The Company does not propose to pay a dividend this year. The potential for the Group to pay dividends in the future is regularly reviewed by the Board.

Going Concern

The financial statements continue to be prepared on a going concern basis as set out on page 31 of the accounting policy section of the Annual Report.

Nick Harrison
Chief Financial Officer
14 April 2018

Consolidated Income statement

For the year ended 31 December

Consolidated statemeNt of comprehensive income

For the year ended 31 December