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.

capetown,

Let's hope so. I wouldn't rule out a few tree shakes and other strange movements along the way though. :-) All in my opinion of course. Have a good evening everyone.

Strawbs.

you too mR Strawbs

F18

I would expect a delayed positive reaction to the news to now set in and the sp to advance over the rest of the week; there is no doubt in my mind that in gaining the 'thicker end of the wedge' formation in Primavera, CHP has successfully suckered the existing incumbent into being confined to its original area (which isn't that bad at an estimated 400m. barrels) but precluded them from being able to go for the potentially more oily area in the west of the region. It may be that they were unaware of the potential to the west until it was too late as I have been told that the seismic showing the western geology did not come to light until late on in the application proceedings. Whether that was due to someone being astute at Chaco's local office, I don't know, but they are extremely pleased with themselves that that is how this application has 'played out'

Have to say this thread and site is far more civilised than a certain other reknowned site. Unbelievable with the amount of idiots and imbecile juveniles deramping owing to the SP downward movement.

Anyway, good lucj to all on here (and thanks Sharesure for your invaluable contribution).

Kong

27.3.05 Price Movemenent

Have just been reflecting on the price movement following the RNS. I suppose we should all have expected something like this today, Monday. Remember the price has risen from 10p or so in anticipation of the news, that is an 80% increase.

Also, the old adage seems always to hold true, buy the rumour and sell the news. There will always be short-term traders who skim these sorts of profits, nothing wrong with that.

And there will always be shorters who hope to ride down stocks, whose prices have risen sharply and where no profits exist currently. Nothing wrong with that but everything wrong with deramping IMO (I just filter them and hope that others can see through them).

So where does that leave us?

I wonder if the selling has yet run its course. There are always those who have been at work, God forbid, and not have access to the Internet during the day. They might be short-termers who wish to sell and may do so tomorrow. Others may take fright seeing a fall in the price toady and sell tomorrow.

So I am will not be surprised to see a price fall tomorrow but what do I know?

Much more important is to assess the RNS for underlying value attaching to the shares. Im working on this now and will post my assessment based on Chaco managements own figures tomorrow.

KJ - well, it seems that just shy of 18m shares traded - 4th highest volume in 2 years - were so disappointed with the news that they caused the SP to fall 0.5p, 2.85%. Of the largest trades (84k and above, some 6.6m) 41% were sells and 59% buys (sorry, I don't have figures for all trades).

Confirmation of the Primavera contract is self-evidently a great removal of risk, albeit drilling itself is some way off. With highly speculative valuations north of 200p being frequently "calculated" over recent weeks by a number of the more intelligent and seemingly genuine posters, it seems inconceivable that CHP is not worth at least 10% of that, somewhere in the 20's - unless they have chosen the one dry spot in Colombia, that is. Not to mention 2 other holdings in Colombia and 2, soon to be 3, holdings in Paraguay which in themselves must underpin the present SP.

Anywhere north of 20p represents a thoroughly satisfactory gain on my holdings from 6.65p, 10.30p and 15.75p over 5 months to 2 weeks. There may well be some more selling over the next days or so by short-term traders who didn't manage to get out yesterday to chase some other rainbow. However, when this froth has blown away, we will be left with a more serious set of investors ready to face the long climb north with patience and determination, nourished by a good many news opportunities along the way as 2D is re-analysed and the first 2 shallow wells are drilled during the remainder of this year.

Alternatively, assuming none of CHP's 6 territories produce a single drop of oil, with a trailing stop loss currently set at 15.75p, what's my down side?

I look forward to your further analysis later today.

I echo KingKong's comments re that other board - unbelievable noise to signal ratio!

Thanks once again to Sharesure, Bodeng, M_P_H and all those who have provided valuable information and insights into this share.

sd

I attach an update from GED - which borders the new Chaco field

Global Energy Development PLC
28 March 2006


Immediate Release 28 March 2006


GLOBAL ENERGY DEVELOPMENT PLC


RESERVE REPORT AND OPERATIONS UPDATE



Global Energy Development PLC ('Global' or the 'Company'), the Latin America
focused petroleum exploration and production company (LSE-AIM: 'GED'), is
pleased to announce details from the reserve report prepared on the Company by
its independent engineers Ryder Scott Company, LP ('Ryder Scott') as at 31
December 2005 and provide an operations update.


Reserve Report


In line with the newly published Guidance Note for Mining, Oil and Gas companies
listed on the AIM Market of the London Stock Exchange, Global is providing
further details of its recently completed Competent Persons Report prepared by
the independent petroleum engineers Ryder Scott. Ryder Scott reported that as at
31 December 2005, proved plus probable reserves ('2P reserves') net to Global
totalled 17.5 million barrels of oil and proved plus probable plus possible
reserves ('3P reserves') net to Global totalled 67.5 million barrels of oil.
Based upon an approximate Brent Price of $58 per barrel, this being the closing
price as at 31 December 2005, Future Net Revenues ('FNR') for the 2P reserves
net to Global totalled $621 million and FNR for the 3P reserves net to Global
totalled approximately $2.8 billion.


Operations


Production


The Tilodiran 1 and Macarenas 1 wells within the Rio Verde contract in Colombia
both ceased production during the fourth quarter of 2005 due to casing failures
and neither has contributed to production so far in 2006. These wells were first
drilled over a decade ago by a previous operator and recompleted by Global,
Tilodiran 1 in December 2004 and Macarenas 1 in January 2005. Workovers to
restore production on these wells are unlikely to commence until the second half
of 2006 due to a shortage of workover rigs and necessary downhole equipment.


Completion operations are underway on the new exploratory well, Tilodiran 2,
within the Rio Verde contract. This well was successfully drilled to a final
depth of 13,350 feet and intercepted six potentially oil productive zones.
Global is currently testing the Upper Massive Ubaque reservoir, which is the
first of several production tests on this well. A current natural flow rate from
this single zone was approximately 1,125 bopd plus gas. A full scale production
test has yet to be fully completed. Global anticipates announcing results
periodically throughout the remainder of the testing process.


The Company experienced production outages within the two producing fields of
its Alcaravan contract in Colombia from the beginning of February through to
early March related to temporary surface equipment repairs and downtime. As of
mid March 2006, production levels were returned to normal and as of today
production is running at improved levels.


Since mid March 2006 production has been positively influenced by the successful
improved recovery programme underway within the Colombian Bocachico contract.
The Company commenced the pilot test phase of a cyclic CO2 injection project in
late 2005 on the premise that the effect of CO2 injection would be to swell the
oil in place thereby reducing its density and viscosity, improving overall oil
mobility and potentially increasing production and reserve recovery rates.
Global successfully injected 311 tons of CO2 into the Torcaz 2 well and this
well absorbed the CO2 for two weeks and was then opened to production. The
improved production rate from this well is in-line with the forecasts contained
within the engineering feasibility study conducted by Ryder Scott prior to the
project's implementation.


Since the beginning of the year production from the Colombian Los Hatos and
Bolivar contracts has been stable and in line with management's expectations.


The management's production expectations for the year have been formulated using
the independent Ryder Scott reserve report dated 31 December 2005 which
forecasts total 2006 production, net to Global, of approximately 500,000 barrels
of oil. Production net to Global on an annualized basis is at this point below
management's expectations for the year. However, due to ongoing activity as
detailed above the management expects the shortfall in production to be made up
during the remainder of the year.


Exploration


Within the Colombian Caracoli contract, reprocessing of vintage seismic test
lines has yielded favourable results and will now allow full scale reprocessing
of all existing seismic data. The Company is planning an initial seismic program
designed to further define the Tasajero anticline located on the west side of
the Caracoli contract area. It is anticipated that the seismic program be
executed in the second half of the year and will provide sufficient information
to select a drilling location that will adequately test the Tasajero prospect in
the first half of 2007.


A program to delineate the El Miedo field within the Colombian Luna Llena
contract, involving the acquisition of new seismic and the drilling of at least
two wells, is currently being designed. It is expected the delineation program
design will be completed within the first half of the year and logistical
operations to deliver and supply the necessary equipment to the El Miedo field
area will commence early in the second half of the year.


Evaluation of geologic features similar to the El Miedo field is now underway
throughout the Valle Lunar Technical Evaluation Agreement area. Specific
features have been identified and further data acquisition and analysis is
currently being planned.


The design of the seismic acquisition program for the Bretana field area within
the Peruvian Block 95 Area contract has been completed and submitted for the
necessary environmental review process. The Company will soon begin preparing a
tender to solicit bids from qualified seismic acquisition contractors with an
expectation that seismic will be acquired in the second half of 2006.


The Panamanian government is currently reviewing an advanced draft contract for
the Garachine Block Area which will convert the Technical Evaluation Agreement
into a long-term contract. Final completion of the contract is expected within
the first half of this year.


Capital expenditure in 2006 is currently projected to be approximately $23
million as per the Ryder Scott reserve report. This figure may be revised
downwards during the year if delays in scheduling equipment continue.
Conversely, it may alter upwards if the results from the Tilodiran 2 well prompt
the Company to accelerate the drilling of additional wells on the Rio Verde
contract area in the second half of 2006.


Managing Director's Overview


Commenting on Global's operations to date in 2006, Stephen Voss, Managing
Director of Global Energy Development PLC, said:


'The independently reported reserves indicate the vast potential of the Company
and scope of the individual exploration projects being developed. The projects
provide us with a very active drilling programme over the next few years.


Although we are frustrated with the mechanical problems and continuing delays in
scheduling equipment that have hampered our production growth so far in 2006 we
remain hopeful of remedying these problems and confident of building on
production elsewhere within our portfolio.


We are currently testing one of several potentially productive formations within
the Tilodiran 2 well. Even though a full scale production test has yet to be
fully completed, the Upper Massive Ubaque is naturally flowing 16 API gravity
oil at a rate of approximately 1,125 bopd plus substantial, unmeasured natural
gas. The Company has installed a 48/64ths choke in order to restrict the flow
rate to match the available surface processing and storage equipment. We are
encouraged by this early result and will test each of the remaining prospective
zones over the next few weeks in order to assess the aggregate production rate
potential of this well.


Global is also encouraged by the early production test data obtained from our
C02 improved recovery project located in our Torcaz field. The Torcaz 2 well is
responding in line with previous expectations and additionally, the Torcaz 3
well is showing evidence of C02 recovered in association with formation oil
indicating more effective reservoir continuity than anticipated of the Mugroso
producing formation. If this proves to be the case it will provide further basis
for the expansion of our C02 program in the Torcaz field.


Global continues to be convinced of the high potential of its portfolio of
contracts.'

Plenty of L's and T's appearing on the "trades" page again today. A sure sign the price is being held down to fill higher value orders. No way of knowing how long this will continue, but when the brakes come off the price should start moving up again. Hopefully IC and/or Shares magazine will have some positive comment later in the week to help get things moving. As ever, just my opinion.

Strawbs.

Nervous times aren't they, sellers in the ascendancy locking in profits no doubt, natural thing to do, perhaps with a view to getting back in lower down, my floor for CHP is 13p, almost double what I paid for my first tranche, unless that is reached I will stay in.
2517

I'll be holding on for the long term. The company meets my three main criteria; Good managment, plenty of assets and strong potential. This time of year is always prone to profit taking. Everyone's trying to use up the CGT allowance before April. Still. I don't mind lot's of sellers. That can push the price up too. :-)

As always. Just my opinion.

Strawbs.

It's certainly a prolonged bout of selling, mainly smallish amounts though.
2517

One thing worth remembering: humans behave remarkably like sheep at times!

One thing worth remembering: humans behave remarkably like sheep at times!

Just started a new thread in order to keep the assets at the start of the discussion and as and when I get further news I will amend the information. Feel free to offer any comments you would like included or migrate to that one. Thanks to grevis2 for starting this thread all that time ago - is he/she still out there?

Possibly Shares magazine or the IC will comment favourably on CHP's Primavera deal; typically none of the Press has noted the award, to my knowledge.

I`m more than a little surprised at the markets reaction to CHP but i for one am more than happy to hold.

28.3.06 ***VALUATION OF CHACO WITH PRIMAVERA***

The current share price is 15p and my realistic valuation per share, discounted to present day values is 264p, based on 350m bls for Primavera. However, I believe this is highly conservative for reasons that I will explain below.

This valuation increases to a share price of 301p once Colombia introduces the reduced rate of corporation tax at 28.5%.

Im using the same approach as previously, based on Chacos own figures as included in their AGM Presentation (see Updated AGM Columbia Presentation http://www.chacoplc.com/index.html ) and provided at the AGM.

Shares in issue - at 31.3.05 390m, plus shares issued re Paraguay 19m, placing 85m, placing on 17th Feb 13.6m and options 13m. TOTAL 521M shares in isuue.

Oil price assumed $65 at an exchange rate of US$/ of 1.75.

Net assets:
1. Per balance sheet 31.3.05 - 1.3m
2. Cash from 17th Feb placing - 1.5m
3. Future cash from exercise of options - 0.5m
4. Columbia, Alea, net present value end 2006 $100m - 57m
5. Columbia, Puerto Lopez, 2006 NPV could be worth $63m - 36m
6. Paraguay, my estimated value of Chaco in Paraguay - 18m.

Therefore, the current 2006 net present value of Chaco's current assets is 114m.

The value per share of Chaco's assets is therefore 114m divided by 521m shares, giving 22p.

Primavera:

Chaco has a 55% stake
Resource assumption 350m barrels
Oil price is currently around $65
vs $ rate is currently around 1.75
Future values are discounted at 10% pa.

Puerto Lopez has a Net Present Value of $63m for a 55% share based on a 10m resource estimate at $65 per barrel.

By multiplying the Puerto Lopez value of $63m by 35 we can get an estimate of the potential of the Primavera field. This value of Primavera is $2205m or 1260m in our money. This equates to a net present value share price of 242p for Primavera alone.

Chaco has to drill 2 shallow holes to test Mirador to validate their resource assumptions. However, past holes have all showed oil and one flowed oil. All of these were drilled substantially off structure. Modern seismic also indicates a number of untested structural closures, some of which are very large in areal extent.

Adding Primavera, to the other assets gives a net present value per share of 22p (other assets) plus 242p (Primavera based on 350m bls) giving 264p.

The 350m bls comes from Chacos management who have always acted with caution and integrity. I regard the 350m bls as the minimum level. My view is that we can discard the 1.8m bls mentioned by someone as this was a figure relating to an adjacent field. I would not be surprised to see an eventual figure nearer to 1bn bls as the upper scenario.

All of the above is based on a corporation tax rate of 38.5% in Colombia. The government there is proposing to reduce it to 28.5%, which would increase the valuation per share to 301p.

The current share price is 15p!

Tomorrow I will show the effect of making different assumptions and their effect on Chacos valuation.

Any comments, questions or challenges all most welcome. Sorry but I will only be able to respond twice daily at present.

Yeserday, I believed that today Chaco might suffer today and so far it has. But I think the above valuation of Chaco's assets indicates a very favourable risk/reward ratio. A downside of maybe 25% and an upside of 500%/600% in the short term, ie 12 months.

Any intending investor, including institutions, will expose themselves to huge regret IMO if they wait for another 1p or 2p before buying. This share could easily jump 5p or 10p in a day once sellers have left and sentiment changes.

Regards,
KJ

KJ
When do think we might see the 5 to 10p jump-this week?

Lots of big T trades during the day, and then again at the end. Plenty of selling too. Maybe the MM's will push the price up tomorrow and get a few buyers interested. :-) Not sure we'll see a 10p jump this week, but in my opinion we'll be heading back towards 18p before too long.

Strawbs.

Interesting post KJK...I'm no expert on this, but isn't there a different (lower) USD valuation for oil still in the ground???

Still a long holder of these and looking forward to a steady rise.

Mr Mole, yes there is but as far as I understand it is more a rule of thumb approach. The approach I have used is incorporating Chaco management's own detailed figures and calculations. It is therefore much more accurate than the dollar figure for oil in the ground.

Once you have a net asset figure of 301p per share you can then discount it for your perception of the risk that:
1. oil may not be discovered in the quantities assumed and projected.
2. the change in the rate of corporation tax in Columbia may not happen.

If you took a view the the combined risk of the both 1 and 2 above disappointing is, say, 80% then discount the projected share price by 80% to give a share price today of 60p. Discount it at 90% and you get 30p!

This is another way of illustrating what I meant by saying the risk reward ratio is hugely attractive at a share price of 15.75p.

Regards,
KJ