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.

merrill and scap high bid @ 6.1
wdbm a tad under @ 6.05

Stewart, You asked a question re value to of CHP with only Deal 1 :

Oct. 2005 :Deal 1 : Estimated recoverable oil : 20m - 70m barrels.

Value in the ground at $5/barrel = $100 - $350m of which CHP get 25%,
CHP share = $25m - $87.5m or 14.3m - 50m
390m shares in issue = 3.67p - 12.8p / share.
CHP value oil in the ground at $10/barrel; that would double these sp figures.

Mar. 2006 : Deal 1 : Assuming oil being extracted.
Value of CHP's 25% share of oil at wellhead : $175m - $612m. (Based on $35/barrel)
100m - 350m
490m shares in issue (assumes 100m placing at 6p to raise 6.0m?)
= 20.4p - 71.4p/ share

BUT this is only Deal 1 (of hopefully 3 deals) and doesn't take into account any potential for finds in Paraguay.

I think CHP missed a trick not doing some calculations for everyone, even if they req'd a range. Interested in anyone else's take on just that one deal.

Interesting figures Sharesure.

Even taking a conservative middle of those estimates at say 40m barrels the calculations look encouraging:

40m x $5pb = $200 = 114.3m
25% of 114.3 = 28.57m
28.57m/390m shares = 7.3p per share

So 40m barrels would be a share price of about 7.3p

Thats JUST in the ground, JUST this deal and JUST Colombia.

When you start factoring the other 55% deals, prices at the wellhead and Paraguay you can see how much potential their really is.

Another quick calculation shows that for just this 25% deal the share price when the oil is at the well head equates to 51p with 390m shares in issue and 40p with 490m shares in issue.

I do not wish to post my figures that take into account the other deals as I expect I'll be accused of ramping which I am not.

ShareSure/MPH,

sorry to disagree with your calculations - but at least we can do so reasonably and understand each others positions :-)

CHP do not have the money available to make Deal 1 happen. Therefore in doing the suggested calculations, we would have to assume that the additional 125M shares had been placed to get the necessary funds. I also believe that the current position (before any new placement) is roughly 405M shares. Therefore I would suggest any workings should use 530M as the divisor to arrive at the share price.

The other factor we could take into account is Paraguay (well at least the 2 former Ameriseur areas) because the rights already belong to CHP - done deal. Also, there will be no placement or capital funding for Paraguay because the company has already said it will do a farm-in deal with an operator and take a net profit interest.

all IMHO. WDIK, PDYOR.

camlad

Check this out - Paraguay oil pipeline project to Uraguay port

http://www.rigzone.com/news/article.asp?a_id=25922

Are you assuming camlad that the placing is at 6pence then?

Also what are you basing your assumption their are an extra 15m shares in circulation on?

Camlad, Unless I am missing something we are all in the same area on this, except you say that the no. of shares in issue will be 40m greater than my estimate. We'll have to differ on that.
I didn't include any hope value for Deals 2 & 3 in Colombia or for Paraguay because I was trying to assess the impact on sp of Deal 1 in Colombia on its own. I agree that that is being unduly conservative since from the comments made by GS on behalf of the local 45% trio in the region, either they are going to have very red faces or more likely are going to end up very rich out of this. I hope they do get very rich because the other 55% is CHP's share.
Whatever figures you take of yours, MPH's or mine, you reach the same conclusion - this stock is not priced to include its real potential.

Sharesure/MPH,

on page 25 of the annual report to 31 March 2005, there's a list of the major shareholders with the number of shares they own and the % of the issued shares that represents. If you use any of them (e.g. Candley have 18,214,936 shares = 4.5%) you can work out that 100% is roughly 405M [there are variations caused by the % being rounded to 1 dp]. I wouldn't swear to it, but I think the extra 15M has been caused by directors options.

I haven't assumed a placement at 6p - I just don't know the placement price. I am assuming that the Board will now raise enough to cover all their requirements and therefore will use the full 125M at this stage. [If they only wanted to cover the Repsol deal, then they wouldn't place anything like 125M (IMHO) since they only need $7.5M (plus some leeway, so maybe 5M?).] But in my own calc of NAV and SP I've assumed 530M shares and no further fund-raising required.

If I wasn't clear enough in my last post I apologise. I do agree with you that the SP now undervalues the company based even on NAV only.

WDIK, PDYOR.

camlad

CHACO RESOURCES PLC


Chaco Colombian Joint Venture Update


*Alea Field: Total Mean Truncated Resources of 38.1 million barrels of oil

Chaco Resources Plc ('Chaco' or 'the Company') announced on the 3rd and 5th
October 2005 that it had entered into a farm-in agreement to earn a 25% interest
in the Alea Field in Colombia's Putumayo Basin from Repsol SA ("Repsol") by
funding certain appraisal operations.
Further to those announcements, Chaco advises that the Mean Truncated Resources
calculated by Repsol for the field's Lower U Sand are 20.8 million barrels of
oil recoverable and for the Upper U Sand are 17.3 million barrels of oil
recoverable.
The field has currently one discovery well drilled on the structure which tested
a stabilised flow-rate of 533 barrels per day on a 1/2 inch choke from the Lower
U Sand. The Upper U Sand was not tested in the well, but is indicated by
Repsol's log analysis to be oil-bearing.

Mean Truncated Resources are probable recoverable oil reserves arrived at by a
volumetric statistical analysis which assumes certain parameters from the known
data and which applies a probability analysis to the likely degree of oil-fill
of the field down-dip from the discovery well. Conversion of Mean Truncated
Resources to proven reserves will require confirmation data from at least one
step-out well drilled down-dip from the discovery well, and ultimate proven oil
reserves may be higher or lower than the stated Mean Truncated Resources


Background

Chaco Resources Plc is the successor company to Gold Mines of Sardinia Plc. In
2004, the Company changed its name and its strategy to one of pursuing
hydrocarbon exploration and development opportunities in South America, focusing
initially on Paraguay. Two local companies, Amerisur SA and Bohemia SA, were
acquired for shares whereby Chaco obtained preliminary rights to approximately
4.7 million hectares they together held under three applications. Two of the
three applications covering approximately 2.3 million hectares were
subsequently granted as Exploration and Production concessions and the third is
still in process. For various reasons, the country has seen comparatively little
exploration activity to date, but it is of interest due to commercial extraction
of hydrocarbons having been made in adjoining countries from hydrocarbon basins
which extend into Paraguay. All the historical seismic data relative to the
applications was purchased at the time of the acquisitions and is currently
being re-processed using modern computers and analytical programs. On
completion of this first phase, the Company plans to review its strategic
options in terms of doing further seismic work and/or initiating a drilling
program. The Company's stated intention is to bring in farm-in partners for
this second phase.

Chaco was subsequently introduced to opportunities in Colombia, where a
fundamental change in the fiscal laws and an overhaul of the state's management
of hydrocarbon exploration and production permits created a very favourable
investment environment. Chaco teamed up with strategic joint-venture partners
who have many years of experience operating in Colombia and through whom it has
been seeking to participate in exploration and production (E&P) concessions.

Chaco Resources Plc (AIM Trading Symbol: CHP) has offices in the UK, Western
Australia and Paraguay and intends to open an office in Colombia shortly.

Caught the MM's napping and added a small topup to my holding.

MPH - well done - thats more like it

Baza

This is good news:
All figures are recoverable oil

38.1m x $5bp (in the ground) = $190.5m
25% for chaco = $47.625m = 27.2m

27.2/390m = 7p per share.

Just on this deal alone in the ground.

At the wellhead based on $35 per barrel and 500m in issue to allow for the placing the figures give a 38pence share price.

You get the potential other licenses and paraguay thrown in for free with those figs.

Baza, I'm glad chaco have finally released some news, we should see a significant lift from here onwards. Especially if the other applications are successful.

Now up 10%, this news will get noticed and all set for the next RNS on Paraguay

MPH, re projections. Thanks for redoing them to reflect today's news. I will be interested to see if others side with the mgt's view that oil in the ground is worth $10/barrel. That would effectively double our short term sp calculations. Anyone any views on the value of oil in the ground? $5/barrel or $10/barrel?

ss - ,..and I thought you were the expert !!

Hopefully more news on its way

Baza

Baza, Don't think I've ever said that! I always use $5/barrel because it generally means that the actual figures turn out better. At the AGM CHP were using $10/barrel. (as does a mining friend of mine)
The implications of CHP winning Deals 2 & 3 where they would have a 55% share (cf 25% on Deal 1) would give an sp of around 80p. A big IF, but if CHP's anticipated timetable of within 10 & 20 days of the AGM for each of the next two deals, that should make the next 2 weeks exciting for the sp.

Sharesure, I have asked around and have been told that the last takeover in the sector valued reserves in the ground at approx $17 per barrel (I'll try and find a link to that and post it). However $12 is considered a conservative estimate.

So recalculating the figures using $10 and $12 per barrel in the ground gives 14p and 16.7p respectively for the share price.

I don't want to repeat myself but I must stress that those share price calculations are for the first confirmed deal ONLY. Paraguay is not included, nor are the other potential deals.

MPH thanks. I knew that I was being conservative but didn't realise I was so low.
Looks like the sp can afford to rise quite significantly when the deal is more widely appreciated. It was highlighted tonight in one of the market round-up reports so should open stronger tomorrow. I would also expect WDBM to be back in the market for more stock as I am pretty sure they know that the other negotiations are going to be concluded favourably.

How long before the market properly wakes up to CHP's actual & potential assets? I wasn't overwhelmed by yesterday's uptick at all.