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.

Sharesure, as requested

KJ Kelley - 30 Jan'06 - 14:25 - 6888 of 7823

WRITZ, Chaco's current valuation based on info presented at the AGM appears to be:

Shares in issue - at 31.3.05 390m, plus shares issued re Paraguay 19m, placing 85m and options 13m. TOTAL 507M

Net assets:
1. Per balance sheet 31.3.05 - 1.3m
2. Future cash from exercise of options - 0.5m
3. Columbia, Alea, net present value end 2006 $86m - 49m
4. Columbia, Puerto Lopez, 2006 NPV could be worth $49m - 28m
5. Paraguay. CDS has areas exclusively in Paraguay and is drilling currently. It has a market capitalisation of 18.4m. I don't know how its areas compare with Chaco's but I am assuming its reasonable to equate the value of Chaco's Paraguay areas with those of CDS. Value of Chaco in Paraguay - 18.4m.

Therefore the 2006 net present value of Chaco's current assets is 97.2m.

The value per share of Chaco's assets is therefore 100m divided by 507m shares, giving 19.1p.

The shares are currently priced at 12.4p, a discount of 35% on my projected Net Asset Value per share.

Now onto the 3rd application, Primavera.

Assumptions:
Chaco get a 55% stake
And the resource is 400m barrels
Oil price assumed is $55
Future values are discounted at 10% pa
Puerto Lopez has a Net Present Value of $49m based on a 10m resource estimate (see AGM presentation)

By multiplying the Puerto Lopez value of $49m by 40 we can get an estimate of the potential of the Primavera application. This value is $1960m or 1120m in our money. This equates to a net present value share price of 220p.

OK Chaco will have to drill 3 shallow holes to test Mirador to validate the resource assumptions. Their application probably commits them to do this within the next 12 months. However, past holes have all showed oil and one flowed oil. All of these were drilled substantially off structure. Modern seismic also indicates more than ten untested structural closures, some of which are very large in areal extent.

Adding all this up, if Chaco gets Primavera and the resource estimate proves to be 400m bls then the net present value of assets per share would be 19.1p plus 220p giving 240p. Remember this is based on an oil price of $55 per barrel.

OK, this is perhaps the upside. The actual outcome might be less than 400m bls but it does show the potential share price, which could exist in 1 to 2 years time as drilling and events unfold.

Regards,
KJ

Does KJ prpoerly take account of CHP only having a 55% interest in Primavera - is this the same as for Puerto Lopez? KJ has assumed it is in the numbers.

I'd probably quibble with $55pb and settle for $45pb, but that is still 180p + 19p = 199p.

Even if PV is only worth 55% of 180p, that's still 99p + 19p = 118p. That's 10 X from wheere we are now within a year or two - not bad.

sd

stockdog

We have already had this discussion on the other thread.

The numbers are accurate and assume that CHP wins 55% of 400 million barrels.

Thanks Alfred & Stewart. Then I go along with K J Kelly's thoughts on value for Colombia when Primavera gets announced shortly.
He may be right to be ultra conservative on the value of Paraguay, but if it drills in the way my contacts suggest it will from their modern interpretation of the seismic and current knowledge of the geology then there will be a great deal more potential sp upside down the line from those assets too. I am expecting the additional Paraguayan block to come through around Easter

Alfred, Stewart and Sharesure
thanks as always for the highly useful information and analysis.
sd

Seems a no brainer if you've got some spare cash...current sp 35% below 2006 nav, with the potential to be a 10 bagger. Well done to all the excellent posters on this thread and good luck.
LL

Sharesure/Stewart/Alfred
The potential seems enormous and next week should bring us closer to the start of the news we are all waiting for!Just spotted that CDS finished higher-drilling results in Paraguay are closer.

Upping my stake again this morning - the more research I do, the more I like the momentum gathering behind this stock.

CDS up -good number of buys-drilling results coming closer!

I expect the CHP sp to improve steadily as the next meeting date of the Colombian Hydrocarbons Dept. draws nearer. I still do not think that the current sp reflects anything other than the value of what CHP obtained under deals 1 & 2. That ,eaves deal 3 to get factored in and then Paraguay - the potential of the two blocks that they currently hold (one of which looks a fairly easy target for an oil discovery) and then the third block at Canindeyu, which should be little more than drilling into the existing field, where oil is already being extracted on the Brazilian side of the border, and extracting Paraguay's share of this oilfield which spans both countries territory. The newsflow is likely to increase steadily as the first half of 2006 unfolds.

Sharesure,
Where can I find out more information on Chaco's latest activities such as the info that you have just posted?
Thanks in anticipation
LL

Looks like it's starting to pick up a bit of pace...

LL, try their website first. I have had quite a few discussions over the years with the directors, tetchy ones when they were running GMS! and latterly easier ones now that they seem to have discovered a niche which they are working to their advantage. Stewart, Alfred Palfred and MPH who have posted on here are also knowledgeable on this stock. I rate this as one of the best that I have found for a good many years.

LL, You could have a look at the posts on ADVFN, check the ones by, Alfred Palfred, KJ Kelly, Valentine, and Trotting, also have you listened to the interview with John Morris and Graeme Stevens with Wall Street Reporter.


http://www.wallstreetreporter.com/linked.php?id=15765

Taghmen Energy seem to have got their licence so some permits are dribbling out from the Hydrocarbons Ministry.

Sharesure,

Is that not the licence they got from last month , there was a list on ADVFN, remember the list, Bodeng did you post them, I thought this particular list was not relevent to Chaco or have I got that wrong.

S3250, I think you're right. that was the list of NEW licenses announced by the ministry last month - now taghment are doing their PR bit about it.

CHP are biddding to take license from an existing holder - different process.

WDIK, PDYOR.

camlad

camiladasi,

Yes that is correct however the licence is awarded by the ADH, same ministry, different process.

Why is price ticking down, no reason, should be going the other way, MM's playing games, ah looks like a 750K sell @ 12.23p

Not a bad day-but should be fewer sellers as we get closer to 23rd!

Sharesure & stewart3250
Thanks for the help..Will take a look at ADVFN. Had a look at Chaco's website earlier today but couldn't find any real up-to-the minute latest info.
LL