AMER.L Regulatory News (AMER)

9 Aug 2005 07:00

Chaco Resources PLC09 August 2005 CHACO RESOURCES PLC NEWS RELEASE9 August 2005 London Stock Exchange - AIM Trading Symbol: CHP Chaco Subsidiary in Paraguay Granted Exploration and Production Concessions •Amerisur S.A.has been granted two hydrocarbon Exploration and Production Concessions totalling 2.4 million hectares via Acts of Congress in Paraguay •The passing of these Acts of Congress triggers the allotment of 16,393,442 new Ordinary Shares to the vendors of Amerisur S.A. Chaco Resources Plc ('Chaco' or 'the Company') is pleased to announce that onThursday, 4th August, 2005, the Congress of Paraguay passed two Acts approvingthe granting of two Exploration and Production Concessions to Chaco'ssubsidiary, Amerisur S.A. ('Amerisur') These Acts were the final steps in obtaining hydrocarbon exploration andexploitation rights over the Curupayty and San Pedro Blocks. In accordance with the Share Sale Agreement summarised in Part IX of theCompany's AIM Admission document* dated 20 October, 2004, the vendors ofAmerisur will be allotted a total of 16,393,442 new Ordinary Shares, being8,196,721 new Ordinary Shares in respect of each Concession passing into law.The Company has applied for the shares to be admitted to AIM on 12 August 2005. The Concessions The Curupayty and San Pedro Blocks cover approximately 2.4 million hectares ofthe northern Curupayty basin and the south eastern Parana basin. The Curupayty Block The Curupayty Block covers 1,391,214 hectares of the Curupayty basin located inthe very north of Paraguay, close to the border with Bolivia; an area where theterrain is generally flat. The prospective sedimentary section covers a clastic sequence ranging in agefrom Permian to Silurian. Exploration History Exploration commenced in the area 1950's with the drilling of two wells outsidethe current permit area, Madrejon 1 (1958) and La Gerenza 1 (1959). In the mid 1970s, Texaco acquired 1,840 kilometres of seismic data and in 1978spudded the Toro 1 well targeting a broad seismically defined feature. Afterencountering oil and gas shows in the Devonian below 1,500 metres they ran 5drill stem tests but they were either dry or tight. The well was abandoned at3,417 metres. Gato 1 was drilled 10 km northeast of Toro 1 and reached a depth of 1,646 metresin the Carboniferous Tupambi Formation. There were minor shows, but afterunsuccessful testing, the well was abandoned. Phillips acquired 817 km of new seismic data and drilled the Pantera 1 well in1995 on a structural high. The well was drilled to 2,133 metres and finished inDevonian clastics. Good reservoirs were intersected but no hydrocarbon showswere encountered. This was the last exploration effort in the area. Doug Jendry, Operational Director, commented"Exploration will concentrate on structural development of the area withparticular emphasis on stratigraphic/structural traps associated with thePalaeozoic glacial valleys. There is confidence that new seismic reprocessingand recording techniques will identify attractive prospects in the future." The San Pedro Permit The permit is located in south-eastern Paraguay and covers over 1,000,000hectares of the western flank of the Parana Basin. The Parana basin extends into Brazil where it reaches depths over 5,000 metres and where commercialquantities of hydrocarbons have been found and are now in production. The prospective sedimentary sequence is Palaeozoic in age and consists of asequence of marine, fluvio-lacustrine and glacial deposits overlain by agenerally non-prospective Mesozoic red-bed sequence. Exploration History Petroleum exploration began in the late 1970's when Anschutz Corporationrecorded airborne magnetics and drilled a number of core holes. Between 1979 and 1981 Shell (Pecten) recorded 2,046 km of seismic and drilledthe Asuncion 1 and 2 wells. Asuncion 1 commenced drilling in 1981 approximately170 km north-east of the Parguayan capital, Asuncion, encountering reservoirquality sandstones in the Carboniferous and Devonian horizons, as well as oilshows below 2,000 metres in the Devonian. After intersecting a number ofvolcanic sills, the well ceased drilling at 3,232 metres in the Ordovician. Asuncion 2 was located approximately 60 km to the north of the No. 1 well anddrilled to a depth of 2,865 metres. Again, oil shows and good quality reservoirswere intersected in the Carboniferous, however the objective, a possiblecarbonate build up, proved to be a thick diorite intrusion and the well stoppeddrilling at that point. Doug Jendry commented:"The permit is lightly explored but exploration so far has identified all theelements required to trap hydrocarbons. Modern exploration techniques,especially in seismic recording and processing, should allow us to identify thetrue potential of the area." Current Status The seismic data for all three areas, which dates back over a 30 year period andwhich is extensive, is currently being converted onto modern media. The datahas been examined, sorted and prioritised. Once it has been reprocessed and reinterpreted (scheduled for August / September), the Company will move forwardwith its strategic options. Any drilling programmes are expected to be fundedby farm-in partners. With both of Amerisur's exploration and production concessions passsing intolaw, the Company will be progressing Bohemia S.A.'s application for theCanindeyu block concession, which is currently at an early stage. Executive Director, John Morris, commented"The granting of these two concessions is the result of solid professional workfrom the team and constructive support from the Paraguayan authorities. TheBoard is very optimistic about the prospects in Paraguay" Colombia The Company is currently awaiting feedback from the Hydrocarbons Ministry withrespect to its first Exploration and Production (E&P) concession application,made through one of its joint-venture partners. Under the new regulations, a company or consortium can apply for an E&P permit in areas already held by otherparties under so-called Technical Evaluation Area (TEA) permits. The E&Papplicant must meet certain "corporate standing" criteria and submit a development budget which includes drilling. The holder of the TEA permit is thenadvised of the application and must respond within a month with at least amatching development commitment; otherwise it forfeits its rights over the relevant part of the TEA. It is in the context of such an E&P application thatthe Company is awaiting information. Background Chaco Resources PLC is the successor company to Gold Mines of Sardinia Plc. In2004, the Company changed its strategy to one of pursuing hydrocarbonexploration and development opportunities in South America, focusing initiallyon Paraguay. Two local companies, Amerisur SA and Bohemia SA, were acquired forshares whereby Chaco obtained preliminary rights to approximately 4.7 millionhectares they together held under three applications. For various reasons, the country has seen comparatively little exploration activity to date, but it is ofinterest due to commercial extraction of hydrocarbons having been made inadjoining countries from hydrocarbon basins which extend into Paraguay. All the historical seismic data relative to the applications was purchased at the timeof the acquisitions. A small, highly professional, but very cost-effectiveoffice was opened in Asuncion. 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 hasapplied for exploration and production (E&P) concessions. There has been asmall investment to get to this stage, but the presence of the Asuncion officehas allowed this to be kept to a minimum. In the event that a concession isgranted, Graeme Stephens, a former CEO of LASMO Colombia, has agreed in principle to join the board of Chaco to oversee that operation. On behalf of the Board of Chaco Resources PlcJohn MorrisManaging Director Enquiries:Martin Groak : 07949 209 301 (* The AIM Admission document dated 20 October, 2004 can be viewed at, ordownloaded from, the "Corporate Information" section of our website:www.chacoplc.com) This information is provided by RNS The company news service from the London Stock Exchange