AMER.L Regulatory News (AMER)

27 Dec 2006 12:31

Chaco Resources PLC27 December 2006 27 December 2006 (AIM:CHP) CHACO RESOURCES PLC ("Chaco" or "the Company") SUCCESSFUL CONCLUSION OF NEGOTIATIONS WITH ANH -AMALGAMATION OF YEARS 1&2 OF PLATANILLO E&P CONTRACT Chaco Resources, the oil and gas explorer in Paraguay and Colombia announcesthat Ecopetrol, the Operator of the Platanillo Block in Colombia has obtainedapproval from the ANH to amalgamate Years 1 & 2 of the Platanillo E&P contract.This amalgamation was sought due to new environmental regulations in Colombiawhich had caused delays in environmental licencing for the access road and drillsite which would have resulted in the Operator not being able to complete theYear 1 work obligation by the anniversary date of January 10th, 2007. Theamalgamation of Years 1 & 2 now requires that the re-entry of Alea 1, thedrilling of Platanillo 1 appraisal well and the drilling of a second appraisalwell need to be finished before the end of the second permit year on Jan 10th,2008. Technical Director Graeme Stephens said today "This ruling is good news for thejoint venture as it will now allow the Operator, Ecopetrol, to plan andimplement a logical operations programme that accommodates the recently imposedenvironmental requirements for site access, without having to resort to the veryexpensive helicopter supported operation which would otherwise have beenneeded to try to meet the timing deadline. Early Joint Venture meetings areplanned to review the Operator's new timetable for the re-entry of Alea 1, thedrilling of Platanillo 1 and the drilling of an additional appraisal well, anddetails will be released as soon as this timetable is finalised." Competent person: Technical information in this announcement has been suppliedor verified by Graeme Stephens, the Company's Technical Director. Mr Stephens isa qualified geologist and has been a member of the American Association ofPetroleum Geologists since 1970. For further information contact: Nicola Brookes, Finance DirectorChaco Resources plcTel: 01494 431195 Lindsay Mair Simon RobinsonDaniel Stewart & Company plc Parkgreen CommunicationsTel No: 0207 776 6550 Tel: 0207 494 9023 Notes to Editors Background Chaco Resources Plc is an oil and gas exploration and production company whosestrategy is to pursue hydrocarbon exploration and development opportunities inSouth America. Chaco currently operates in Paraguay and Colombia. The Platanillo block was Chaco's first venture in Colombia where a fundamentalchange in the fiscal laws and an overhaul of the state's management ofhydrocarbon exploration and production permits has created a very favourableinvestment environment. Chaco has teamed up with strategic joint-venturepartners (Expet S.A.) who have many years of experience operating in Colombiaand through whom it has been seeking to participate in exploration andproduction (E&P) concessions. 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 re-entering the first well, buildingan access road and drilling a step-out well to determine the size of the field.Thereafter any additional costs will be funded in proportion to equity held,i.e. with Chaco funding 25% of any excess. The Company is using a calculation ofMean Resources of approximately 20.6 million barrels in the Lower U Sand and aconservative estimate of 6 million barrels in the Upper U Sand. The Lower U Sandflowed oil to surface during previous testing. The Upper U Sand has yet to betested. In November 2005, Ecopetrol, the operator of the block, participated inthe farm-out. More detailed information on Chaco's activities in both Colombia and Paraguaycan be found on the company's 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