15^th September 2016

Amerisur Resources Plc ("Amerisur", "the Company" or "the Group")

Interim Results

"OBA pipeline complete and undergoing final commissioning, operational in the days ahead reducing OPEX per barrel to $15, drilling at Platanillo"

Amerisur Resources Plc, the oil and gas producer and explorer focused on South America, is pleased to announce its interim results for the six months ended 30^th June 2016 (the "Period").

Highlights:

Production

·      Oleoducto Binacional Amerisur ("OBA") interconnector pipeline is now completed and undergoing final checks with exports set to commence in the next few days - scheduled to reduce cost per barrel produced from $26 to $15

·      H1 2016 average production of 2,642 barrels of oil per day ("BOPD"), average realised price of US$35.7 per barrel

·      Currently producing at approximately 4,500 BOPD

·      Platanillo-8 spudded and successfully completed in July 2016 - currently producing from the T sand at 410 BOPD

·      Platanillo-20 re-completed in the U sand and is producing 775 BOPD in natural flow through a 32/64" choke

·      2016 targeted production exit rate of 7,200 BOPD

Exploration and Appraisal

·      Jaguareté-1 well, on the San Pedro Block in Paraguay, drilled on budget and safely encountered hydrocarbons in uncommercial reservoirs

·      Loto-1 in CPO-5 re-entered to test Mirador L4 zone, with results undergoing analysis

Corporate

·      OBA cluster area (Platanillo, PUT-8 and PUT-12) strengthened through acquisition of Platino Energy for a total consideration of $7.6m

·      A minimum of three fully funded wells planned in the OBA cluster area in the next 12 months

·      Board strengthened with the appointment of Chris Jenkins as an Independent Non-Executive Director

Financial

·      Successfully raised net proceeds of approximately $35 million through a share placing to fund growth

·      As a result of the lower oil price environment and the planned reduction in production:

o  Revenue of US$24.4 million (H1 2015: US$40.3 million)

o  Operating cash flow for the period of -US$0.4 million  (H1 2015: US$8.1 million)

o  Non-cash amortisation charge reduced to $4.4 million caused by a technical increase in reserves

o  Operating loss of US$7.2 million (H1 2015: Loss of US$6.5 million)

o  Loss before tax US$6.8 million (H1 2015: Loss of US$5.8 million)

·      Cash position at period end is US$56.1 million with no debt

Giles Clarke, Chairman of Amerisur said:

"We have made great strides in the first half, further diversifying our portfolio within the Putumayo region of Colombia, with activity levels across many blocks increasing as we deploy the capital raised in March.  I am particularly pleased the OBA pipeline is now fully completed and undergoing final commissioning checks before entering operation within days and as a result we are once again drilling wells on the Platanillo field to increase reserves and production and leverage the significantly reduced opex per barrel using the pipeline for oil evacuation. We would like to thank shareholders for their patience in what has been an exceptionally complex undertaking.

"Amerisur now has a cluster of assets around the OBA pipeline including the Platanillo field, Put-8 to the West of Platanillo and Put-12 to the East.  Following our successful placing of approximately $35 million in March, we have the capital to invest in drilling new wells at Platanillo, to increase both reserves and production and to move forward our acreage elsewhere in the portfolio such that Amerisur anticipates producing commercially from more than one oil field during 2017. Production in the second half is expected to ramp up (whilst preserving the integrity of the reservoir) and we are targeting a 2016 exit rate of 7,200 BOPD.

"We are prepared for an exciting second half and beyond.  The Board looks to the future with confidence."

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 the Platanillo field in southern Colombia. In 2016 Amerisur successfully built and is 100% owner of the strategic OBA pipeline into Ecuador. Amerisur's strategy is to acquire, explore and develop large acreage positions in major under explored basins located in South America. 

In Colombia, the Company is operator and has a 100% working interest in the Platanillo block which includes the Platanillo field, which produced an average of 4,437 BOPD during 2015.  The 11,341 hectare block is located in the Putumayo Basin.  Amerisur has a 50% working interest in the PUT-8 Block adjacent to the West of Platanillo, a 100% working interest and operatorship in the Coati Evaluation Area (Temblon Field) within the Coati Block (Amerisur 60% and operator) located in the South West of the Putumayo basin and a 100% working interest and operatorship in the Andaquies Block located in the north east of the Putumayo basin.

Amerisur has a 60% working interest and operatorship in block Put-12, a 55,000 hectare block which is adjacent to Platanillo and shares its geology and a 50% working interest in Put-30 a 38,514 hectare block, approximately 55 kilometres to the north of the Company's 100% owned Platanillo field. In addition, the Company has a 30% working interest in the CPO-5 contract, located in the Llanos basin and a 49.5% working interest in the Tacacho contract, located in the Caguan-Putumayo basin. 

In Paraguay, Amerisur is the largest acreage holder in the country, with approximately 4.8 million hectares covering four 100% owned oil and gas permits in the Paraguayan part of the Chaco and Parana Basins.

www.amerisurresources.com

In accordance with the AIM Rules - Note for Mining and Oil & Gas Companies - June 2009, the technical information in this announcement has been reviewed by John Wardle Ph.D., the Company's Chief Executive. John Wardle has 31 years' experience in the industry, having worked for BP, Britoil, Emerald Energy and Pebercan, and is a trained drilling engineer.

Estimates of reserves and resources contained in this announcement were prepared in accordance with the Petroleum Resource Management System guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers.

Chairman´s Statement

Introduction

We have made great strides in the first half, further diversifying our portfolio within the Putumayo region of Colombia, with activity levels across many blocks increasing as we deploy the capital raised in March.  I am particularly pleased the OBA pipeline has been completed and will be operational in the next few days and as a result we are once again drilling wells on the Platanillo field to increase reserves and production and leverage the significantly reduced opex per barrel using the pipeline for oil evacuation.

Post period end on 24^th August 2016 a peace deal between the Colombian Government and FARC was announced, following four years of formal negotiations.  FARC rebels are to disarm and demobilise and their leaders will be given a role in politics.  The Board anticipates this will lead to better security of infrastructure and an improved operating environment.  The final shape of the deal will be subject to a referendum if approved by Congress. As a reminder, Colombia has a strong democratic tradition, winning independence in 1819 and is a significant oil producer, producing an average of 1,005,400 BOPD in 2015.

In January, we acquired for $7.6 million Platino Energy which bought two key Putumayo blocks into the portfolio, the Put-8 block, which lies directly to the West of the Platanillo block and the Coati block which has a discovery on it and some very interesting exploration acreage. The acquisition brought with it significant tax losses and minimal work commitments, while also consolidating our position in the Putumayo basin.  The acquisition was in line with our strategy to expand the Company's asset base taking advantage of the low oil price environment (the Brent oil price was $27 per barrel at the time) to buy assets with significant resource potential at attractive valuations, while expanding our portfolio of opportunities, thus creating greater flexibility and diversity in our production base and forward planning.

Since then, we have farmed out some of the Coati exploration acreage to Canacol and I congratulate the executive for securing a farm out with a carry worth $10.75million, considerably more than the $7.6million we paid for the whole of Platino Energy.

During the first half, we drilled the Jaguareté-1 well on the San Pedro Block in Paraguay which has enabled us to retain all our acreage in country.  Whilst not a commercial discovery at this stage due to encountering a tight reservoir, it is the first ever confirmation of oil presence in the Parana basin in Paraguay, which could become a significant new oil province.  The challenge now is to define the geology encountered in order to further understand the characteristics of the reservoirs, since a higher quality of rock is usually required in order to produce economically. While those studies are underway, which may take up to 18 months to complete, the Company will restrict investment in Paraguay and concentrate on operations within our core area of Colombia.

Capital raise

Amerisur now has a cluster of assets around the OBA pipeline including the Platanillo field, Put-8 to the West of Platanillo and Put-12 to the East of Platanillo.  In order to maximise reserves in and production from the OBA cluster, in March a placing of new ordinary shares was undertaken to raise net proceeds of approximately $35 million. The Placing Shares issued represented approximately 9.6 per cent. of the Company's existing issued ordinary share capital. The new funds have enabled the execution of an active drilling programme at significantly lower costs due to the oil price climate such that we can increase reserves and production whilst maintaining our capital discipline and flexibility.  These activities will support production growth in the near as well as longer term and enable the Company to maximise the utilisation of its new, lower cost OBA export route.

Reserves

Reserves as at 31 December 2015 held up well, and after adjusting for 2015 production showed a slight increase. Certified 1P (Proven) gross field reserves were 15.2 million barrels of oil ("MMBO") (2014: 16.2 MMBO) after production of 1.62 MMBO during 2015 and 2P (Proven and Probable) gross field reserves were 23.7 MMBO (2014: 24.55 MMBO).

Board, Corporate Governance and People

I was pleased to welcome Chris Jenkins to the Board, as an Independent Non-executive Director. Chris is a Fellow of the Institute of Chartered Accountants in England and Wales, and was a partner for more than 20 years in KPMG's London office, during a 30 year career with the firm. He was lead audit partner for six FTSE-100 companies. At KPMG he fulfilled various leadership roles in the global Energy and Natural Resources ("ENR") practice including UK Head of ENR and, in the global ENR team, initially head of audit, and then EMA regional chairman.

Chris Jenkins continues to work with KPMG as a consultant. Chris has been appointed Chair of the Audit Committee, taking over from Nigel Luson.  I would like to thank Nigel for the energy he put into his role of chairing the Audit Committee.

The direction of travel on improving corporate governance at Amerisur is positive.  As part of that, at the AGM in May, for the first time, we put the Remuneration Report to a vote at the meeting and I was pleased to note that the resolution was passed with an overwhelming majority.

I would like to thank every one of our staff in Colombia for the magnificent achievement of getting the OBA pipeline built.  It is a remarkable achievement and positions Amerisur particularly well for the future.

Outlook

The outlook for Amerisur is strong.  Oil prices have rebounded from their lows to stabilize at around $45 to $50 per barrel.  At the same time, we are reducing opex per barrel for our production significantly from $26 per barrel to $15, which makes the production much more profitable and cash generative.   This has of course been enabled by the construction of the OBA pipeline, which after some weather related delays will shortly be operational and transporting our crude from the Platanillo field. 

We have the capital to invest in drilling new wells at Platanillo, to increase both reserves and production and to move forward our acreage elsewhere in the portfolio such that Amerisur anticipates producing commercially from more than one oil field during 2017. Production in the second half is expected to ramp up (whilst preserving the integrity of the reservoir) and we are targeting a 2016 exit rate of 7,200 BOPD.

We are prepared for an exciting second half and beyond.  The Board looks to the future with confidence.

Giles Clarke

Chairman

14^th September 2016

Chief Executive's Statement

With the strategic and operational decisions and actions taken in the first half, I believe Amerisur is better placed now for the future than it has ever been. We have an export pipeline which will reduce opex per barrel significantly, we have a broader portfolio of assets in Colombia, a strong balance sheet which we are deploying to increase reserves and production to leverage the OBA pipeline from a cluster of blocks geographically close to the pipeline.  Whilst production in the first half was lower, we used the downtime to improve the functioning of the Platanillo field, with technical improvements such as power generation with produced gas and more efficient water handling. We are anticipating a ramp up of production such that we exit 2016 producing something in the region of 7,200 BOPD.  In Colombia, we now have a more diverse and enriched portfolio of assets including:

·      100% of Platanillo - OBA cluster

·      50% Put-8 - OBA cluster

·      100% of Coati block evaluation area

·      60% of Coati block exploration area

·      60% Put-12 - OBA cluster

·      50% Put-30 - Potential future tie back to OBA

·      30% CPO-5

·      100% Andaquies

·      49.5% Tacacho - Potential future tie back to OBA

It bears mentioning that the portfolio reflects our concentration on the Putumayo basin, with interests in seven blocks where we have significant technical understanding, established assets and operational capabilities which are first class. The Putumayo, previously the area hardest hit by the activities of guerrilla groups, is the area likely to benefit most from the peace process in Colombia. In technical terms it also offers an area which is very lightly explored, but whose potential is confirmed by our success to date and the developments seen over the river in Ecuador. I am very pleased, in advance of the final peace accord with the Putumayo position which we have built at low cost, with producing assets, excellent offset exploration opportunities and the export infrastructure to render those assets highly profitable. This is a unique and powerful position within the basin.

Production

First half production averaged 2,642 BOPD, rather lower than last year as we have preserved reserves for the time when the OBA pipeline becomes operational, which means we make an additional $11 per barrel of profit. We are currently producing approximately 4,500 BOPD and will ramp up in the second half as we bring some of our shut-in wells into production and as new in-fill wells come on stream. Additionally, on success in the northern step out well, we will create a new production centre in Platanillo with an impact on both reserves and production.

Colombia Ecuador OBA Interconnector Pipeline System

After some delay due to unseasonably wet weather in the Putumayo, which resulted in severe flooding, I was pleased that the OBA pipeline was completed and accepted by the regulatory authorities in both Colombia and Ecuador in September. We are now completing instrumentation checks, communication trials while awaiting receipt of the decree permitting operation from the Hydrocarbon Secretariat in Ecuador (SHE). The export point certification from the Colombian Tax and Customs Authority (DIAN) was received on 14^th September 2016. Both these documents are formalisations of previous inspections whose results were positive. Assuming that the instrumentation and communication system checks are acceptable to us, we expect operations to commence, with first oil through the line in the days ahead.  Initial transport rates will be limited to approximately 1,500 BOPD, in order to allow precise measurement of tanked volumes and adjustment of the dynamic measurement systems, followed by ramp up to 5,000 BOPD in a matter of days or weeks.

Platanillo Drilling

Drilling has again commenced on the Platanillo field for the first time in over a year.  We commenced drilling operations on well Platanillo-8 on Pad 5 in the Platanillo field in June. Platanillo-8 was drilled using the Serinco D-10 rig.  Platanillo-8 encountered the reservoirs as per prognosis, and is currently producing from the T sand, at 410 BOPD with a jet pump and a water cut of 3.0%. 27 feet of net pay was also logged in the U sand formation in this well. The drilling, testing and completion of this infill well cost approximately $4 million.

The Serinco D-10 rig is currently being moved to Pad 2N to drill Platanillo-22 well. This well is a step out well to the north of established production.

At the same time, the workover rig Serinco D-6 was rigged up on Pad-5 in order to perform a recompletion of Platanillo-20. This operation is a continuation of the work programme developed through the various field studies performed over the last 18 months, including the Schlumberger study and will look to enhance production from the Platanillo license, for transport through the OBA pipeline system.  In Platanillo-20 the T sand, whose production had dropped post a close in period in March, caused in part by minor social unrest in the region, was isolated and the well re-completed in the U sand. A short interval of 10 feet was perforated with a very good result, and is producing 775 BOPD in natural flow through a 32/64"choke with 0.5% water cut.

A re-perforation of the U sand reservoir in Platanillo-10 ST1 was performed independently of the rig, adding 156 BOPD from this well.

Platanillo Exploration

The seismic inversion processing has now been completed and confirms a strong development of the N sand within the Platanillo contract area. The Company is currently designing an appraisal and development plan for that reservoir, already proven and tested in two Platanillo wells. The analysis of the seismic inversion data indicates a large N sand potential within the Platanillo block which will be appraised over the next years and should add significant value.

Additionally, further understanding of the U and T sand horizons has been achieved from the data, which offers additional future drilling and reserves potential.

We look forward to the outcome of Platanillo-22 which we expect in November, which will inform us of further exploration potential within the block.

Acquisition

In January we announced the acquisition of Platino Energy (Barbados) Ltd ("Platino"), a private company, from COG Energy ("COG") for a total consideration of $7.6million paid in Amerisur stock.  At the time, we replaced $1.7million of cash guarantees with the Agencia Nacional de Hidrocarburos ("ANH"), relating to the Platino assets and will have to pay a 2% net royalty per block to COG, once net production in each block exceeds 5,000 BOPD.  As part of the transaction, we acquired tax pools of approximately $24million which may be offset against future income and the transaction adds 190 MMBO of unrisked resources to Amerisur's asset base.

The strategic fit was clear to us given the location and prospectivity of the blocks acquired.  Some of these assets will have access to OBA, ensuring lower transportation and commercialisation costs.

The assets acquired through this transaction include:

·      50% (non-operated) working interest in PUT-8 Block adjacent to the West of Platanillo.  Vetra Energia S.L. ("Vetra") holds a 50% working interest and is the Operator. The block is currently in Phase 1 of exploration.

·      100% (Operator) working interest in the Coati Evaluation Area (Temblon Field) within the Coati Block located in the South West of the Putumayo basin. Canacol, after fulfilment of a carry in the next exploration well of $2.7million plus other costs up to an outstanding total of approximately $7million will be entitled to a 40% working interest in the exploration area of the block, which does not include the Coati Evaluation area (Temblon field), which will remain 100% to Amerisur. The block is awaiting an exploration environmental license to advance the planned exploration programme. A consulta previa with indigenous communities within the area is currently underway.

·      100% owned and operated Andaquies Block located in the north east of the Putumayo Basin with a one well commitment by May 2017.

Putumayo-8

The Put-8 Block, adjacent to the West of the Platanillo field, is in Phase 1 of its exploration period and has a 2% X Factor and low work commitments of one exploration well and 208km² of 3D seismic. The block has had limited exploration and is bordered by a number of proven oil fields. Two drill-ready prospects have been identified on the new 3D seismic, adjacent to the Platanillo field and significant upside has been identified in the N sands adjacent to the Cohembi field. The block has unrisked resources of 45MMBO and is currently awaiting an environmental license to advance the exploration programme.

After technical review, it is most likely that the PUT-8 Platanillo West well will be drilled as a vertical well from within the Put-8 block. However, its production would then be tied back into the OBA gathering system, hence accessing the better economics of that evacuation route. Our partner, Vetra, which operates this block is currently designing the forward programme.

Coati

The Coati Block, located in the South West of the Putumayo basin and adjacent to the Loro and Hormiga oil fields and on trend with the Charapa oil field in Ecuador, is in Phase 3 of its exploration period with no X Factor and low work commitments. Seven prospects and leads have been identified on 2D seismic with unrisked resources of 79MMBO. Towards the southern end of the block, in the Coati Evaluation Area (Temblón field), there is a proven hydrodynamic trap in the Caballos Formation and a structural accumulation in the T and U sands which have flowed oil and are awaiting extended testing. The Temblón field is currently in an evaluation period.

Additional prospectivity has been identified in the exploration areas of block with the Nasua prospect drill ready and N sands with stratigraphic potential in the North of the block. The block is awaiting an exploration environmental license to advance the planned exploration programme. A "consulta previa" with indigenous communities is required by law in order to commence the long term testing of these discoveries.  Once it has been tested for six months, some of the 16MMBO of contingent resources in the Temblon field is expected to be booked as reserves. The extended well test will commence later this year, in accordance with the advances made in the social consultations.

In June, Amerisur signed a modification of the farm out agreement with Canacol which increases the farm in participation of Canacol from 20% to 40% working interest in the exploration area of the Coati contract. The consideration for the farm in is a total carry of $10.75million, of which $6.95million is outstanding in favour of Platino Energy. Platino is operator of the Coati contract and a wholly owned subsidiary of Amerisur Resources Plc, having been acquired in January 2016 for a total consideration of $7million. This carry will fund investments associated with Exploration Phase III within the Coati block, and may be allocated towards seismic and drilling operations. Subsequent to the carry being satisfied, costs will be shared 60% Platino (Operator), 40% Canacol.

Andaquies Block

The Andaquies Block located in the north east of the Putumayo Basin has no X Factor and low work commitments of one exploration well by May 2017. The block has multiple proven reservoir targets, six mapped leads targeting both proven and novel plays and unrisked resources of 66MMBO prospects both proven and unproven and sits to the north east of a proven structural play within the Putumayo Basin. The block's exploration environmental license has been granted. The Company is currently reviewing the potential targets for the next exploration well.

CPO-5

Alongside its partner ONGC Videsh (70% and operator), the Company re-entered the Loto-1 well in the CPO-5 contract area in Colombia.  Loto-1 was drilled in 2013 prior to Amerisur's involvement in the block, and discovered oil in the Mirador formation, which was never successfully tested.  Analysis of the core and electric log data indicates 61 feet of net pay in the Mirador formation and indications of mobile oil in the L4 zone.  The re-entry was intended to test that zone. The test results are currently being analysed, but it is apparent that the initial water cut shown from these zones is relatively high, with an average of 63%. Over 8 days of test, a total of 2,626 barrels of oil at 22 degrees API was produced.  The reason for the water cut is under review, and is most probably associated with the poor cementation known to exist in Loto-1. However the presence of mobile, producible oil of reasonable quality is very encouraging for the Loto structure and the block as a whole.

Capital expenditure on the re-entry was approximately $300,000 net to Amerisur.

Amerisur acquired its 30% interest in the CPO-5 block as part of last year's $6 million acquisition of Petro Dorado South America SA, a subsidiary of Petro Dorado Energy Ltd.

Amerisur and our partner are currently planning to drill two exploration wells on structures defined by 3D seismic in the CPO-5 block. The first, Mariposa-1, is targeting a lower Sands (Une) objective which lies up dip of the Yatay-1 well and the Candelillas field development in the adjoining Guatiquia block. Yatay-1 produced over 9,000 BOPD of light crude on test. The second, Sol-1 will target a fault bound structure and has Mirador, Guadalupe and Une sands objectives. It is expected to drill these wells back to back in early 2017.

Putumayo-12

Due to the 29% X factor on Put-12, which in the context of sub $50 oil makes the economics less attractive, Company resources have been focused on other blocks. Following extended social consultations, and with the support of agreements made by Government with local groups, the new 2D seismic programme is expected to commence shortly.

Putumayo-30

We have an approved budget on the block for this year of $200,000, which is being invested in local scouting and security studies. Activity levels will remain low for the time being as there are no time pressures on commitments.

Paraguay

In April, the Jaguareté-1 well in the San Pedro block within the Parana basin in eastern Paraguay was spudded using the Quieroz Galvao QG-1 drilling rig.

The electrical logs obtained in the exploration well, were interpreted and initial analysis indicates the presence of oil saturations within low porosity sandstones of the Lima and Santa Elena formations. The company believes that the log data acquired and the cuttings samples obtained are the first demonstration of oil presence in the Paraguayan Parana basin. The reservoir quality indicates that the accumulations at this particular point in the structure and block are unlikely to be commercially extractable at the current time. In the Lima sandstone, a total of 198 feet of net sand was encountered, of which 126 feet demonstrated oil saturation in excess of 50%, but with an average porosity of only 7%. In Santa Elena, with 168 feet of net sand, oil saturations averaged 61%, with the majority of sands demonstrating over 75% oil saturation, but with similar porosity to the Lima formation. Observed porosities within the same formations in Asuncion-1 and Asuncion-2, drilled nearby by Pecten in 1982, exhibited significantly higher porosities of approximately 20%. The well was drilled on budget and safely.

The Company has now begun a technical programme, presented to and approved by the relevant authorities in Paraguay, to study the results of the well in order to determine whether the poor reservoir quality observed is likely to be a regional characteristic or more locally associated with the basement uplift observed in drilling. Additionally, cuttings samples will be analysed both for physical characteristics and an assessment of the oil quality present.

The technical programme will involve the detailed analysis of well data and samples and the reprocessing and reinterpretation of the seismic data set. Field operations in the San Pedro block will be suspended until the results of that study are fully known.  The Company will entertain farm-out discussions with interested industry parties, now a working hydrocarbon system has been proven.  The well was suspended with 7 inch liner cemented in place, and the drilling rig QG-1 has been released.

The challenge now is to define the geology encountered in order to further understand the characteristics of the reservoirs, since a higher quality of rock is usually required in order to produce economically. While those studies are underway, which may take up to 18 months to complete, the Company will restrict investment in Paraguay and concentrate on operations within our core area of Colombia.

Capex and Forward Planning

In March we raised $35 million to accelerate our drilling programme to increase reserves and production such that the lower opex per barrel delivered by the OBA pipeline can be leveraged further.

The Company is using the proceeds of the Placing to supplement its existing planned capital expenditure as follows:

Financial Review

Production remained constrained in the first half of the year prior to the OBA being commissioned and stronger netbacks being realised. Average production for the six months was 2,642 BOPD against 4,524 BOPD for the comparable period last year. There was a modest improvement in realised oil prices during the first half of the year to $35.7 per barrel from $34.45 in H2 2015 although this was still substantially lower than the $50.58 achieved in H1 2015. This had a significant impact on revenue which reduced to $24.4 million (2015 - $40.29 million).

The Company decided not to sell production at the end of December when WTI was around $30 per barrel but rather hold it in storage until prices recovered in the early part of the year. This inventory has now been sold and inventory at the end of the period reduced to 26,500 barrels (229,000 barrels Dec 2015).

Our non-cash amortisation charge reduced year on year to $4.4 million (H1 2015: $11.9 million) as a result of reduced production and the impact of the change in reserves at the end of the year.

Administrative expenses reduced to $7 million (H1 2015: $8 million) as the company benefited from cost control and the devaluation of the peso.

At the period end, the Group had a cash position of $56.1 million and no debt.  All commitments and planned discretionary programmes for 2016 are fully funded and the Company remains focused on efficient cost management. The Directors will not be recommending payment of a dividend.

Reserves

Following receipt of an independent reserves report for the Platanillo field as at 31 December 2015 undertaken by Petrotech Engineering Ltd, using the standards set by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers, certified 1P (Proven) gross field reserves were 15.2 MMBO (2014: 16.2 MMBO) after production of 1.62 MMBO during 2015 and 2P (Proven and Probable) gross field reserves were 23.7 MMBO (2014: 24.55 MMBO).

Production during 2015 was 1.62 MMBO; after adjusting for 2015 production, 2015 reserves represent a small increase from year end 2014.  This technical increase 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) takes account of the successful Long Term Test of the T sands from Platanillo-20 undertaken during the year.  In addition, the reserves have benefitted from an increase in the recovery rates per well following the Schlumberger integrated study and the results of the successful treatments of well Platanillo-14 and Platanillo-20.  During the period there were no reserve additions from the drilling of new wells as no new development or appraisal wells were drilled on the Platanillo field following the Board's responsible decision in Q1 2015 to shut in unprofitable production and only spend in risked capex what the production generated in cash flow.

The Board expects an increase in reserves once production ramps up, which will happen gradually following the commissioning of the OBA pipeline and once the much reduced opex per barrel comes through from production going through the OBA pipeline.  The additional drilling activity on Platanillo this year, including the two infill wells, one of which has already proved very successful, and up to two wells from the northern pad 2N, which seek to extend the field limits, together with the drilling of wells on Put-8 and Coati and the Long Term Test of the Temblon discovery to the south of the Coati block, should result in an increase in both 1P and 2P reserves.  It is worth noting that six months of Long Term Testing is required before resources in Coati can be categorised as reserves.

Summary and Outlook

In summary, much ground was made diversifying the portfolio and gearing up operations for the commissioning of the OBA pipeline.  We have an active work programme in the second half and we are expecting an exit production rate of 7,200 BOPD this year. The peace process in Colombia, which is nearing completion is particularly important for the Company, since it should facilitate our operations in Putumayo and the country as a whole, thus allowing us to rapidly realise the value of the portfolio we have built in the area for all stakeholders.

John Wardle

Chief Executive Officer

14^th September 2016