LONDON (AFX) - Chaco Resources PLC said it is proposing the reverse takeover
of two Paraguayan companies -- Amerisur SA and Bohemia SA -- from Candey SA and
Daniel Sztern in exchange for 27,322,404 new ordinary shares in the company.
It also plans to raise up to 750,000 stg before expenses in a placing of
36,585,365 new ordinary shares.
The company's shares were suspended on Sept 3 and it said it expects this to
be lifted today. It has called an EGM for Nov 15 to approve the acquisition and
placing plans.
Amerisur holds two oil and gas prospecting permits in Paraguay and is the
registered applicant for exploration and exploitation concession contracts over
the same permit areas. Bohemia holds registered applications for an oil and gas
prospecting permit in Paraguay and for an exploration and exploitation
concession contract over the same area.
The exploration areas covered by these three applications comprise a total of
approximately 48,000 square kilometres of the Curypayty and Parana Basins.
Chaco said these basins extend respectively into Bolivia and Brazil, where
commercial oil and gas production has been established for many years from
similar geological sections.

It seems that the third Colombian deal (400m barrels of oil) is believed to have been awarded at 55% to Chaco and will be formally announced towards the end of January subject to the paperwork coming through. That may explain why a broker has been touting to buy 3m shares for a client and that in spite of today's predominance of sales the sp has stayed at the same level. CHP has already won the previous two Colombian deals which it applied for, but this third deal would take the company into a different league. As for expected sp, it should be significantly higher now and as a result of this third deal but so far the market is only waking up slowly to what Paraguay and Colombia have to offer as far as oil is concerned.

Sounds good Sharesure, thanks.

Very good news Sharesure!

Interesting, I will redo some calculations on that assumption and see what we get.

About bloody time - well done SS - good bit of ferreting

All very promising for a bit of upward momentum - thanks Sharesure.

Does anyone have any rough ideas as to how promising this could prove, price-wise ? Surely the current 7p is hugely underpriced considering ?

Current range seems to be between 10p and 1. Take your pick.

I've done some updated calculations on the assumption that Chaco is granted the E&P license for the Primavera field as rumoured by numerous sources.

Primavera Block @ 400m barrels.

I will assume that the 400m is the total oil and as in previous blocks 50% of that is actually recoverable.
Therefore recoverable oil = 200m barrels
55% stake of 200,000,000 barrels = 110,000,000 barrels for Chaco
@$10 per barrel in the ground = $1,100,000,000
Minus costs of $1.2m for 3 shallow test wells and $50k to re-process and re-interpret existing seismic data. This gives us $1,098,750,000 or 615,201,568

476.44m shares in issue is equal to 129p per share in the ground.

(Please refer to my previous post (#970) for a breakdown of other calculations)

So to summarise:
4p for Paraguay
14.9p-19.5p for Alea
3.1p for Puerto Lopez
129p for Primavera

Short/medium term:
Share price valuation for oil in the ground = 151p-155.6p

Longer term:
As oil starts to flow in each field, multiply the in ground valuation by 3.5 to allow for the increased value of oil at the well head (approx $35)

dyor imo

Interestingly didn't Simon Cawkwell (EK) say when he bought that his source suggested 200p was a reasonable target for Chaco?

Update on earlier note. Now between 10p and 200p!

MPH Thanks for doing your calculations. Looks very encouraging and your recollection about SC (EK) is correct. Maybe it was him trying to tease out another 3m shares from existing holders. He won't be having mine!
Blackdown, you seem doubtful? Once oil is flowing, ie a track record is being established ( as early as March 2006) this stock should fly. I hope CHP will eventually confirm the sort of calculations MPH has done; even if the market discounts those valuations for some reason, it is still going to result in a spectacular re-rating.

Just checked back and I can't find EK's comment to confirm. I did however see Tom Winnifriths comment in which he suggests if a big deal comes off then we are talking 100p+
One can assume that big deal is Primavera.

EDIT: Thanks for the confirmation re EK Sharesure.

mph, in plain english what are we assuming here, soory im new to this game so would weelcome your expert observations?

jameee106, we are assuming that chaco is granted the E&P licence for the primavera block (see Chaco Resources plc for details) and that the field contains approx 400m barrels of oil of which 50% are recoverable.

Ok so i assume that the possiblity of a licence is currently not factored in the sp and if a licence is granted were looking for sp equiv to what Tom Winnifriths is talking about? ie 100p.... What is the liklihood of a licence being granted?

Even if the market discounts to 1 I think we long term holders will be very happy!

Yeah if im right surely if it increases to 1 we all are happy? or am i missin a trick

There you go MPH, I am sure my friend will not mind me posting this :-

i asked simon cawkwell on another board his current views on chaco,his reply was roughly as follows,,,he picked up 2million shares in the last placing,at which time he was of the opinion[informed] that chaco had the potential to go to 2,he has not sold any,,,simon i hope you dont mind me posting this here,,,i hope sc will be a regular poster here once the chaco story starts to become clearer.once news on the 3rd field is released ,i think we can look forward to some steady news flow,leading up to chaco becoming a producing oil company by april,with some exciteing assets to test later in 06,07..

Thanks for finding that stewart!