AMER.L Regulatory News (AMER)

12 Oct 2005 11:05

Chaco Resources PLC12 October 2005 CHACO RESOURCES PLC Chaco Colombian Joint Venture Update •Alea Field: Total Mean Truncated Resources of 38.1 million barrels of oil Chaco Resources Plc ('Chaco' or 'the Company') announced on the 3rd and 5thOctober 2005 that it had entered into a farm-in agreement to earn a 25% interestin the Alea Field in Colombia's Putumayo Basin from Repsol SA ("Repsol") byfunding certain appraisal operations.Further to those announcements, Chaco advises that the Mean Truncated Resourcescalculated by Repsol for the field's Lower U Sand are 20.8 million barrels ofoil recoverable and for the Upper U Sand are 17.3 million barrels of oilrecoverable.The field has currently one discovery well drilled on the structure which testeda stabilised flow-rate of 533 barrels per day on a 1/2 inch choke from the LowerU Sand. The Upper U Sand was not tested in the well, but is indicated byRepsol's log analysis to be oil-bearing. Mean Truncated Resources are probable recoverable oil reserves arrived at by avolumetric statistical analysis which assumes certain parameters from the knowndata and which applies a probability analysis to the likely degree of oil-fillof the field down-dip from the discovery well. Conversion of Mean TruncatedResources to proven reserves will require confirmation data from at least onestep-out well drilled down-dip from the discovery well, and ultimate proven oilreserves may be higher or lower than the stated Mean Truncated Resources 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. 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: Martin Groak : 07949 209 301 Website: www.chacoplc.com This information is provided by RNS The company news service from the London Stock Exchange