AMER.L Regulatory News (AMER)

3 Oct 2006 07:01

Chaco Resources PLC03 October 2006 AIM: CHP 3 October 2006 CHACO RESOURCES PLC ("Chaco" or "the Company") IMPROVED PROSPECTIVITY THROUGH BOUNDARY CHANGES AT PUERTO LOPEZ BLOCK Chaco Resources Plc (AIM: CHP), the oil and gas explorer and developer focusedon South America announces that it has secured a change in the eastern boundaryof its Puerto Lopez Oeste block in the Llanos Basin of Colombia. Thegovernmental hydrocarbons agency of Colombia, the ANH, has formally notified tothe Company its approval of a modification to the boundary of the Puerto LopezOeste Block which will result in the inclusion of the majority of the largeMetica South lead. Metica South is one of two interesting potential prospects identified as aresult of the reprocessing and interpretation of existing seismic in the PuertoLopez Oeste Block, which was completed in September. The other is the Metica.Both are plays in the prospective Mirador Formation. To mature these leads into prospects will require further seismic acquisitionand therefore a 100km new seismic programme has been contracted which is due tocommence on October 23rd. The geology of the Metica lead is defined by theMetica 1 Well, drilled in 1985 by Elf Aquitaine immediately to the northwest ofthe Metica 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. Commenting on the boundary change and the results of the seismic interpretation,Mr Graeme Stephens, Technical Director, said: "This is a very pleasing result.The new boundary allows us to maximise the potential of this block, where wewere originally targeting a much smaller play. The Metica lead in particular,with further seismic control, will, we hope, develop into an attractive drillingtarget and the Metica Well has already proved the existence of an active oilmigration path in the area. " -Ends- Competent person: Technical information in this announcement has been reviewed by Graeme Stephens,the Company's Technical Director. Mr Stephens is a qualified geologist and hasbeen a member of the American Association of Petroleum Geologists since 1970. For further information contact: Nicola Brookes, Finance DirectorChaco Resources plcTel: 01494 431195Website: www.chacoplc.com Marc YoungDaniel Stewart & Company plcTel: 020 7776 6550 Simon Robinson / Ana RibeiroParkgreen CommunicationsTel: 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 obtained preliminary rightsto a total of approximately 4.7 million hectares held under three applications.Two of the three applications covering approximately 2.3 million hectares weresubsequently granted as Exploration and Production concessions and the third(Canindeyu) is still in process. Under Paraguayan legislation, with respect tothe two established concessions, the Company must now select an area of no morethan 800,000 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 theapplications was purchased at the time of the acquisitions and is currentlybeing re-processed using modern computers and analytical programmes. Oncompletion of this first phase, the Company plans to review its strategicoptions in terms of doing further seismic work and/or initiating a drillingprogramme. The Company's stated intention is to bring in farm-in partners forthis 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. Under current legislation, where an entity holds a Technical Evaluation Areapermit ("TEA"), in the event that another party submits a development budget forall or part of that area, the TEA holder must match the budget within 30 days orlose its rights over the block(s) in question. If the TEA holder does notcontest the third party's application, the hydrocarbons ministry (ANH) willconsider whether the third party meets its criteria for a suitable applicant.The ANH has up to 60 days to deliver its verdict. It is in this context that theCompany submitted development budgets for blocks in existing TEA's through itspartners. Platanillo / Alea On 3 October 2005, the Company announced a joint venture with Repsol to exploitthe Platanillo block in the Putumayo (on the Ecuadorian border) whereby theCompany 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 and involves drilling out the first well,building an access road and drilling a step-out well to determine the size ofthe field. The Company is using a calculation of Mean Resources of approximately20.6 million barrels in the Lower U Sand and 16.7 million barrels in the Upper Usand. The Lower U Sand flowed oil to surface during previous testing. The UpperU Sand has yet to be tested. In November 2005, Ecopetrol, the operator of theblock, also took an equity stake from Repsol. Puerto Lopez Oeste On 21 November 2005 the Company announced its second deal: a consortium, inwhich the Company can earn a 54% equity interest, had been granted anexploration and production contract over the Puerto Lopez Oeste Block in theLlanos, east of Bogota. The programme involves: reinterpretation of existingseismic data, and to shoot, process and interpret around 100km of new seismic.The partners are Expet S.A. and Consultoria Colombiana S.A. (CCSA), who arejoint operators. Reprocessing of existing seismic has identified two structures described in themain body of this announcement. If the Company enters the optional second year commitment, this includesdrilling one well. Primavera The third application, Primavera, also in the Llanos, was granted subject tocontract at the end of March 2006 and the contract signed on 9 May by the ANH,the Colombian state agency that oversees hydrocarbon permits. The Company willbe able to earn a 55% equity interest in an E&P project for which extremelyinteresting data already exists. The programme involves reprocessing andre-interpreting existing seismic and drilling two wells. The partners are Expetand Argosy Energy LLP (operator). Preliminary reports from the re-processing indicate that the CarboneraSandstones can be confidently mapped and the re-processing generally confirmsthe structural leads indicated in the block by the previous operator. Mapping ofthese re-processed lines should be completed in the fourth quarter after whichtwo targets will be selected for drilling in Year 1. Drilling on the first of these targets is scheduled to commence in January/February 2007. 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