Is It Time To Buy Falklands Oil And Gas Limited & Amerisur Resources plc?

Are Falklands Oil and Gas Limited (LON:FOGL) & Amerisur Resources plc (LON:AMER) buys ahead of well results?

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Many oil and gas companies around the world have stopped drilling and, now more than ever, companies are conserving cash. However, there are still some fantastic opportunities to get exposure to the sector if you’re brave enough, and both companies mentioned here below are in the process of drilling important wells. For Falklands Oil & Gas (LSE: FOGL), the Humpback well could open up the South Falkland’s Basin. Amerisur Resources (LSE: AMER) are also drilling an important well in Colombia called Loto-2. 

Falklands Oil & Gas

The Falklands Oil and Gas story is one that’s very well known: it is on the cusp of releasing results from one of the most important wells in 2015 across the world. The company and partners are targeting the Humpback prospect which is thought to hold a mid-case of 510 million barrels of prospective resources. This is a huge prize and very important to the area if it is to become the next oil hub. The company announced that the target reservoir has been intersected and there are hydrocarbon showings, but the company doesn’t know if there are commercial amounts. Any success here should push FOGL’s share price higher and prove up the Southern Falkland’s basin. Noble Energy (FOGL’s partner) is very optimistic on the region, and says if Humpback comes in then there are many other targets that would be significantly de-risked in the area. 

Amerisur Resources

The company is currently testing the Loto-2 well and news is due any day. A successful result from this well should push Amerisur’s share price back closer to 30p. On 13 October, the company announced that the well had intersected 54ft of net pay in the Mirador Formation and testing was now needed. After the Loto-2 well, the company and its partners plan to drill another well called Loto North-1. The company operate in South America have a very robust balance sheet of over $50m in cash and no debt. By Christmas, the company should also have a new pipeline to transport its oil to market from its producing Platanillo field in Colombia. This pipeline will move oil in larger quantities and at a cheaper rate. This should significantly increase profit margins for Amerisur and should create good organic growth. Providing the pipeline comes online on time, then Amerisur will be a vastly different company in a few months’ time and one that will have a base of low-cost production. 

Obviously investing in oil & gas currently is risky… however, both companies have imminent price catalysts that could cause a re-rating of their respective share prices. All eyes are on these companies at the moment, and any word of good news will cause investors to pile into the shares as they seek returns in this tough oil market!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jack Dingwall has a long position in 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.

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