AMER.L Regulatory News (AMER)

3 Oct 2005 08:00

Chaco Resources PLC03 October 2005 CHACO RESOURCES PLC 3 October 2005 Chaco Signs Colombian Joint Venture Agreement •Farm-in agreement with Repsol •Appraisal and development of oil field in Putumayo Basin in Colombia •Existing discovery well flowed oil at 533 bbls / day in 1988 •$7.4m investment for a 25% share Chaco Resources Plc ('Chaco' or 'the Company') is pleased to announce that theCompany has entered into a farm-in agreement to join Repsol ExploracionColombia, a subsidiary of Repsol YPF, the former National Oil Company of Spain,to appraise and develop an undeveloped oil field in the Putumayo Basin ofColombia. Chaco has agreed to fund Repsol's cost of re-working existing seismic coverage,re-entering and testing an existing discovery well, which flowed oil at 533 bbls/day in 1988, and drilling a new stepout well to determine the possible lateralextent of the field. The Company will earn a 25% working interest in the block, which is operated byEcopetrol SA, the national oil company of Colombia. Potential oil reserves willnot be known until this work is completed but recent Repsol mapping hasindicated that the discovery well sits on a well defined structural closure. Theprogram cost to Chaco is capped at US$7.4m over the first year. Private Placing As announced on the 24th June 2005, the Company intends to fund this operationvia a private placing, and at an EGM of the Company held on the 18th July 2005,shareholders unanimously gave the Board the discretion to place up to125,177,500 shares for cash. Changes to Board composition The Company also announced on the 18th July that, in the event of its securingan interest in an exploration and development licence in Colombia, Graeme J.Stephens would be joining the Board as Technical Director. This appointment hasnow been confirmed. In order to make way for this addition to the Board and to allow for its futurerealignment in the light of the Company's new emphasis, Dr. Tom Elder and Mr.Lee Graber have agreed to stand down. Chairman's comment Chairman Mr. Jon Pither commented"This is a very significant step forward for the Company and we hope that itwill be the first of a number of exploration and production opportunities inColombia. On behalf of the Board, I should like to extend our very sincere thanks to Tomand Lee for the wonderful support they have consistently given to the Company,and to welcome Graeme, whose expertise will be pivotal at this very importantstage in the Company's development" 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, focusinginitially on Paraguay. Two local companies, Amerisur SA and Bohemia SA, wereacquired for shares whereby Chaco obtained preliminary rights to approximately4.7 million hectares they together held under three applications. Two of thethree applications covering approximately 2.3 million hectares weresubsequently granted as Exploration and Production concessions and the third isstill in process. For various reasons, the country has seen comparatively littleexploration activity to date, but it is of interest due to commercial extractionof hydrocarbons having been made in adjoining countries from hydrocarbon basinswhich extend into Paraguay. All the historical seismic data relative to the applications was purchased at the time of the acquisitions and is currentlybeing re-processed using modern computers and analytical programs. Oncompletion of this first phase, the Company plans to review its strategicoptions in terms of doing further seismic work and/or initiating a drillingprogram. The Company's stated intention is to bring in farm-in partners forthis second phase. 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 favourable investment environment. Chaco teamed up with strategic joint-venture partnerswho have many years of experience operating in Colombia and through whom it hasbeen seeking to participate in exploration and production (E&P) concessions. Graeme Stephens (65), who now joins the Board, is a geologist based in WesternAustralia, and has been in the oil industry for over 45 years. He has had seniorpositions all over the world, including Managing Director of LASMO Oil(Colombia) Ltd for two years in the 1990s and prior to that, Resident Manager ofMarathon Oil's northern Brazil operation. He has also been the Managing Directorof three publicly listed oil companies in Australia at various times during hiscareer. Most recently, he was general manager of Tanzoil NL, a company exploringin Tanzania. Chaco Resources Plc (AIM Trading Symbol: CHP) has offices in the UK, WesternAustralia and Paraguay and intends to open an office in Colombia shortly. Enquiries: Chaco Resources PlcMartin Groak : 07949 209 301Website: www.chacoplc.com Daniel Stewart & Company PlcMarc Young : 020 7776 6550 This information is provided by RNS The company news service from the London Stock Exchange