AMER.L Regulatory News (AMER)

24 Nov 2006 07:01

Chaco Resources PLC24 November 2006 AIM: CHP 24 November 2006 CHACO RESOURCES PLC ("Chaco" or"'the Company") APPOINTMENT OF RESIDENT MANAGER IN COLOMBIA Chaco Resources PLC is pleased to announce the appointment of Dr. John Wardle asChaco's Resident Manager in Colombia, based in Bogota. Dr. Wardle holds a B.Sc. in Mining Engineering from the University of Nottinghamand a Ph.D. in Rock Mechanics and Geophysics from University of Wales. Sincegraduation in 1985 he has worked as a drilling engineer with a number ofinternational companies, including a year as Drilling Operations Superintendentin Colombia for BP Exploration Colombia Ltd, and more recently he has held anumber of senior management positions with oil exploration companies both inColombia and elsewhere. He is currently a principal of the Bogota-based company which is a jointventurer with Chaco in two of its Colombian projects and which already providestechnical advice and representation to Chaco. Dr. Wardle will assume immediate control and responsibility for theimplementation of all of Chaco's operations in Colombia and will report directlyto the Technical Director, Mr. Graeme Stephens. Chaco will also soon open asmall permanent office in Bogota. Mr. Stephens said today: "The appointment of John Wardle as our new ResidentManager in Colombia is a key part of our strategy and will give the Company amuch more visible presence in the country. John's wide practical andoperational experience, as well as his extensive contacts in the industry there,will certainly strengthen Chaco's position as a serious explorer in Colombia.He is currently working on the drilling plans for Chaco's three blocks inColombia and is in the final stages of ensuring that the rigs for Primavera andPuerto Lopez Oeste are secured. An update will follow once contracts have beencompleted." For further information contact: Nicola Brookes, Finance Director Chaco Resources plc Tel: 01494 431195 Marc Young Simon Robinson / Ana Ribeiro Daniel Stewart & Company plc Parkgreen Communications Tel No: 0207 776 6550 Tel: 020 7493 3713 Notes to Editors Background Chaco Resources Plc is the successor company to Gold Mines of Sardinia Plc. In2004, the Company changed its name and its strategy to one of pursuinghydrocarbon exploration and development opportunities in South America,currently in Paraguay and Colombia. Paraguay The Company focused initially on Paraguay. Two local companies, Amerisur SA andBohemia SA, were acquired for shares whereby Chaco sought rights to a total ofapproximately 4.7 million hectares to be held under three applications. Two ofthe three applications covering approximately 2.3 million hectares weresubsequently granted as Exploration and Production concessions and the third(Alto Parana, previously referred to as Canindeyu) for some 1.8 million hectareshas now been awarded. Under Paraguayan legislation, with respect to the twoestablished concessions, the Company must now select an area of no more than800,000 hectares per block to enter the four year exploration phase. For various reasons, the country has seen comparatively little explorationactivity to date, but it is of interest due to commercial extraction ofhydrocarbons having been made in adjoining countries from hydrocarbon basinswhich extend into Paraguay. All the historical seismic data relative to theconcessions has now been obtained and is currently being re-processed usingmodern computers and analytical programmes. On completion of this first phase,the Company plans to review its strategic options in terms of doing furtherseismic work and/or initiating a drilling programme. The Company's statedintention is to bring in farm-in partners for this second phase. Colombia Chaco was subsequently introduced to opportunities in Colombia, where afundamental change in the fiscal laws and an overhaul of the state's managementof hydrocarbon exploration and production permits created a very favourableinvestment environment. Chaco teamed up with strategic joint-venture partners(Expet S.A.) who have many years of experience operating in Colombia and throughwhom it has been seeking to participate in exploration and production (E&P)concessions. Interests in the following three concessions have been negotiated. Platanillo / Alea On 3 October 2005, the Company announced a joint venture with Repsol to exploitthe Platanillo block in the Putumayo Basin (on the Ecuadorian border) wherebythe Company could earn a 25% equity share by farming into a project containing adiscovery well (Alea 1) which had been capped in 1988, but which had flowed at533 barrels per day. Chaco's 100% carrying commitment was capped at $7.4 m inorder to earn its equity share (thereafter any additional expenditure is sharedby the partners pro-rata to their holding) and involves re-entering the firstwell, building an access road and drilling a step-out well to determine the sizeof the field. The Company is using a calculation of Mean Resources ofapproximately 20.6 million barrels in the Lower U Sand and a conservativeestimate of 6 million barrels in the Upper U Sand to establish possible value.The Lower U Sand flowed oil to surface during previous testing. The Upper USand has yet to be tested. In November 2005, Ecopetrol (ECP), the operator ofthe block, participated in the farm-out. On 10 October 2006, the Company announced that ECP had advised that it wasactively investigating other rig options to the very expensivehelicopter-supported operation that would be necessary to commence the re-entryand drilling programme before January 2007 (the end of Year 1). In addition ECPwas holding high level talks with the ANH to guarantee that the timingimplications of using the much cheaper land rig option were approved by them.The results of these negotiations should be known shortly. Puerto Lopez Oeste On 21 November 2005 the Company announced its second deal: a consortium, inwhich the Company can earn a 54% equity interest, was granted an exploration andproduction contract over the Puerto Lopez Oeste Block in the Llanos Basin, eastof Bogota. The programme involves: reinterpretation of existing seismic data,and to shoot, process and interpret around 100km of new seismic. The partnersare Expet S.A. and Consultoria Colombiana S.A. (CCSA), who are joint operators. On 3 October 2006, the Company announced that it had secured a change in theeastern boundary of the block resulting in the inclusion of the majority of thelarge Metica Sur (South) lead. Metica Sur is one of two interesting potential prospects identified as a resultof the reprocessing and interpretation of existing seismic in the Puerto LopezOeste Block, which was completed in September. The other, perceived as the moreinteresting of the two, is the Metica. Both are plays in the prospectiveMirador Formation. To mature these leads into prospects will require further seismic acquisitionand therefore a 100km new seismic programme has been contracted which commencedin late October. The geology of the Metica lead is controlled by the Metica 1Well, drilled in 1985 by Elf Aquitaine immediately to the northwest of theMetica lead, which recovered crude oil in a drill stem test of the MiradorFormation. Current mapping shows the well to be situated just outside theclosure of the Metica lead. If the Company enters the optional second year commitment, this includesdrilling one well, financed wholly by Chaco. Primavera The third E&P Contract, Primavera, also in the Llanos, was signed on 9 May bythe ANH, the Colombian state agency that oversees hydrocarbon permits. TheCompany will be able to earn a 55% equity interest in an E&P project for whichexisting seismic data already exists. The programme involves reprocessing andre-interpreting existing seismic and drilling two wells. The partners are Expetand Argosy Energy International (operator). Argosy was recently acquired byGran Tierra of Canada. Preliminary reports from the re-processing indicate that the CarboneraSandstones can be confidently mapped and the re-processing generally confirmsthe existence of a number of structural leads. Mapping of these re-processedlines was completed in September and 20 km of new seismic is being shot over twoof the leads with the objective of maturing these leads into drilling targets. Drilling on the first of these targets is scheduled to commence in February2007. For further information please see the Annual Report on the website:www.chacoplc.com Chaco Resources plc (AIM Trading Symbol: CHP) has offices in the UK, WesternAustralia and Paraguay and intends to open an office in Colombia shortly. This information is provided by RNS The company news service from the London Stock Exchange