Exploration in Chaco Basin

19 Jan 2006 07:00

Westmount Energy Limited19 January 2006 CONTACTS: Westmount Energy Limited Tel: 01534 814 209Derek Williams, ChairmanPaul Anderson, Director Ruegg & Co Limited Tel: 020 7584 3663Gavin BurnellBrett Miller Merlin Tel: 020 7653 6620Paul DownesTom Randell 19 January 2006 WESTMOUNT ENERGY LIMITED PARTICIPATION IN OIL & GAS EXPLORATION IN THE CHACO BASIN IN NORTH WEST PARAGUAY THROUGH CDS OIL & GAS GROUP plc AND OTHER RECENT EVENTS Westmount Energy Limited ("Westmount") the Jersey, Channel Islands, basedindependent energy investment company quoted on AIM, today announced it hasprovided a £500,000 Convertible Loan to AIM quoted CDS Oil & Gas Group plc ("CDS"),to be utilised solely towards the funding of its exploration programme in the ChacoBasin in North West Paraguay. The Loan is repayable on 29 December 2006, but in lieu of repayment, Westmounthas the option, at any time prior to 29 December 2006 to elect to subscribe for,and apply the amount of the Loan by subscribing for and paying up five millionnew ordinary shares of 1p each in CDS at a subscription price of 10p per share.Westmount will waive any interest and CDS will simultaneously procure the issueto Westmount of Warrants to subscribe for a further five million new ordinaryshares of 1p each in CDS at 10p per share for a period of one year thereafter. In the event Westmount has not exercised its rights as aforesaid, by 29 December2006 it has agreed to apply the Loan (including accrued interest thereon) inpaying up and automatically subscribing for on 29 December 2006, such number ofnew ordinary shares of 1p each in CDS as shall be found by dividing theaggregate amount of the Loan and accrued interest by the "Average Price" (namelythe average mid-market price per share of an Ordinary Share of 1p in CDS astraded on AIM for the previous 14 trading days prior to the 29 December 2006)less 5% thereof. CDS is a London based newly listed AIM company and owns CDS Energy S.A., aParaguayan company which was formed to pursue the exploration and developmentpotential of three blocks covering a large area (7.22 million acres or 29,210 km(2)) of North West Paraguay in South America. CDS has a 100% working interest in all three blocks, which include the 400km(2)Gabino Mendoza Block, the 4,911 km(2) PG&E Block and the 23,899 km(2) BoqueronBlock. These blocks include substantial exploration opportunities in a largeprospective area in the eastward extension of the Chaco Basin within Paraguay.CDS has recently announced that it had reached the planned depth of 1,635 metreson its first well in the Chaco region of Paraguay. The well has been cased andsuspended for further evaluation. The well, which was spudded on 25 November 2005, is located 200m southeast ofthe Independencia 1 well drilled in 1993 on the Gabino Mendoza block, which wasin turn a re-entry of the Mendoza 1-R well drilled by Pure Oil in 1959. Theprimary objective of the new well was a potential oil-bearing zone between 705metres and 1,600 metres, identified by CDS through its interpretation of seismicdata and the well logs of previous drilling operations. Early results have indicated the presence of hydrocarbons at various levelswithin the well, but are as yet inconclusive. CDS is currently engaged inanalysing the drilling logs and the results taken from sidewall cores toascertain the potential of the well. Further information will be provided in duecourse. James Wade, President and CEO of CDS, said: "There are encouraging indicationsfrom this well. However there is still a great deal of work required before wecan confirm the quality and quantity of the hydrocarbon indications we haveencountered." Commenting on the investment in CDS, Derek Williams, Chairman of Westmount,stated: "I am pleased, now that Westmount has received shareholders approval to itsReturn of Share Capital proposals, we are able to utilise part of our remainingfunds in providing assistance to CDS in bringing forward its encouragingexploration programme in NW Paraguay. Westmount has been able to take advantageof the opportunity to participate at an early stage in the largely underexplored and unexploited Paraguayan area of the Chaco Basin and one of the leastexplored hydrocarbon provinces left in South America." On other recent events at Westmount, Derek Williams, commented as follows: • "At the Extraordinary General Meeting of Westmount held on 22 December 2005, shareholders approved the Reorganisation of Westmount's Share Capital. • Westmount also announced on 22 December 2005 that the Board has been widened by the appointment of Paul Anderson, who has been closely involved with the administration of Westmount for over nine years. • On 17 January 2006 Westmount announced the appointment of Ruegg & Co Limited, an independent corporate finance house, established in 1992, which specialises in the AIM and OFEX markets, as Westmount's Nominated Adviser and Broker. • All of these moves have been designed to assist in the further development of Westmount and the growth in value per share for the benefit of shareholders. • Included in Westmount's current investment portfolio, besides the recent investment in CDS, Westmount owns 30,000,000 shares of Sterling Energy plc and 5,500,000 shares of Desire Petroleum plc. These three companies are all traded on the AIM market. Westmount also owns 244,000 shares of the presently unquoted Eclipse Energy, representing approximately 14% of the issued share capital of Eclipse. • Following the consolidation of 15,013,361 10p ordinary shares, Westmount has 7,506,680 20p ordinary shares in issue traded on AIM, held by approximately 1,500 shareholders. • There are also currently outstanding share options over 750,000 20p ordinary shares, exercisable at 1031/2p per share over various periods expiring on 31 December 2012. As previously announced, 600,000 of these share options are held by the four directors of Westmount, each holding 150,000 share options. The balance of share options over 150,000 20p ordinary shares have since been issued to Ruegg & Co Limited. • As a result of the Share Capital Reorganisation of Westmount, involving the return of capital of approximately £7,500,000 to shareholders, to facilitate this, there are also 15,013,361 unquoted B shares of 1p each in issue, which are in the course of being redeemed at 50p per share in cash." ENDS This information is provided by RNS The company news service from the London Stock Exchange