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.

RNS Number:4030U
Chaco Resources PLC
21 November 2005


CHACO RESOURCES PLC

21 November 2005



Chaco Joint Venture Awarded Puerto Lopez Oeste Block in Colombia


- Puerto Lopez Oeste Exploration and Production Contract granted in
Colombia


- Chaco to hold 54% equity share in joint venture.


- Chaco to fund 100% of seismic programme and first well


- $1m of seismic to seek field : potential "look-alike" of field in
adjacent block

The Directors of Chaco Resources plc ("Chaco" or "the Company") are pleased to
announce that a joint venture group, in which Chaco will hold a majority equity
interest of 54%, has been awarded an Exploration and Production Contract over
the Puerto Lopez Oeste Block in the Llanos Basin of Colombia ("the Contract").
The Contract will be formally executed with the Colombian Government in the next
few weeks.

The block covers an area of 35,700 hectares and lies immediately north of, and
on trend with, the Valdivia Oil Field, which is currently producing in excess of
3,000 barrels of oil per day. The approved work programme for the block over the
next 12 months is to re-process and re-interpret the existing seismic lines in
the block as well as to acquire 100 km of new seismic data. This seismic
coverage is designed to locate a Valdivia Field look-alike which, if present,
would be drilled in the second year.

The partners in the joint venture are Expet S.A. and Consultoria Colombiana S.A.
Chaco will fund 100% of the seismic programme and the first exploration well in
order to retain a 54% equity interest. The cost of the seismic programme is
estimated at approximately US$1million.

Chairman Jon Pither commented "We are very pleased that our group has been
awarded this block which, although an exploration play, has the potential of
locating one or more Valdivia type fields on the same productive trend. This
award, coming so soon after the announcement of the Chaco farm-in to the Alea
Field Development Project, further cements our position as a serious player in
the exploration for, and development of, new fields in the exciting sub-Andean
basins of Colombia."

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 a total of
approximately 4.7 million hectares 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. On
3 October 2005, the Company announced a joint venture with Repsol YPF SA to
exploit the Alea field in the Putumayo (see website for details).

The Puerto Lopez Oeste block was the second of three applications submitted. The
third is highly competitive and the Company is keeping details confidential at
this point. Under current legislation, where an entity holds a Technical
Evaluation Area permit ("TEA"), in the event that another party submits a
development budget for all or part of that area, the TEA holder must match the
budget within 30 days or lose its rights over the block(s) in question. If the
TEA holder does not contest the third party's application, the hydrocarbons
ministry (ANH) will consider whether the third party meets its criteria for a
suitable applicant. The ANH has up to 60 days to deliver its verdict. It is in
this context that the Company has been submitting development budgets for
blocks in existing TEA's through its partners.

The Alea Block development budget was matched by Repsol, but they agreed to the
Company's farm-in proposal. In contrast, the Company's Puerto Lopez Oeste
application was not contested by the TEA-holder.


Website update

The Company's website is being improved and investors are invited to view the
changes in the Investor Information section which are scheduled to be completed
during this week, including dynamic share price feeds. The Colombia slide
presentation made by Graeme Stephens at the last AGM is also being updated to
reflect the latest financial estimates (based on a 54% equity holding) of the
return from a theoretical 10 million barrel field similar to Valdivia. When the
update has been completed, the presentation will be re-titled "Colombia
Presentation (updated)".

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

Enquiries:

Martin Groak : 07949 209 301

Website: www.chacoplc.com

Absolutely no reaction in the market - why ???

Baza

Perhaps everyone is asleep on Monday morning!

Tend to agree, hasn't been seen - must be the time of the release!

No - the MM's would have marked it up as soon as it ht the sscreens if it was really good news - which I thought it was. something is not quite right?

no reaction possibly because it is an exploration play - and will take the 1st year to redo and get new, seismic data for locating drill targets....which would then (i assume) be drilled in 2nd year...........effectively meaning there is a decent time lag in this project, as opposed to the Alea field project.

.....overall though, market does seem a bit quiet this morning.

bhunt1910, Well alot of us must be missing something then because it looks very good indeed, I think we need to give it a little time but I would have thought it would fly north very quickly, is it because size of fiels not specified exactly.

I think that the way the RNS is worded is probably too conservative when compared with the reality of what they now have. Expet as a partner is an important step as they wouldn't get involved with any company that they did not regard as a competent player. The 54% of 10m barrels could easily become 54% of double that reserve estimate on this field. After the problems of overstated reserves from other companies everyone now seems to be very worried not to get into the same problem.
What CHP has been underplaying is the value of Graeme Stephens and his other two local colleagues in Colombia. They have a mass of local knowledge and important contacts so are likely to pick up more and more TEA assets - so Expet probably have that in their sights.

Does the market think that there will be a share placing now ?

I don't believe so, I'd have thought this would have been well factored in before.

CHP said at the AGM that no Placing would be required for subsequent deals. This second deal is as stated at the AGM and it was said then that with Alea coming on stream within 6 months (now 2 months ago) the cash flows from that would fund the business plans of the future assets that are granted.

Sharesure,

Expet had been announced a while ago as CHP's JV partner - so that is not new news. Also, xpet is only a recently formed company (looks like it was specifically for the JV) and there is very little information on who they are or who is involved. They have no track record as a company.

The SP has not moved on the announcement news, so possibly the expectation of this had been built in or so widely predicted that it was expected. It may be that investors are unsure where the funding is coming from, although CHP has sufficient cash to back this without having to issue new shares or seek a further placement plus there is the expected revenue flow from Alea.

I personally think that again CHP is building up an impressive array of potential but still hasn't actually done any drilling and has no oil flowing yet. For me this is reducing the speculative risk of investment in CHP. There is still further positive news to come from CHP - down side is extremely limited IMHO.

I believe the stock is currently under-priced at the current level. It may be that the market is soft today or that investors want tangibles, i.e. oil in the pipeline, before re-rating this stock. But that gives an opportunity to get in for those with confidence.

WDIK, PDYOR.

camlad

Camlad, I thought Expet was backed by one of the national oil companies of either Brazil or Argentina; I am checking where I got that information from to verify it.

Agree with your other comments on CHP; it'll attract a re-rating sometime as it is building up its asset base. The news I want relates t the 3rd Colombian deal - which is potentially huge (AGM comment) - plus whether they have been awarded the 3rd licence area in Paraguay. This block was adjacent to another area where there was already oil flowing but where the well was across a country border on a field which is believed to span both country's territories.

Sharesure,

this is from a post that I put up elsewhere at the beginning of September:-

"I can see that Expet SA was only formed/registered in Bogota in October 2004 (fact).

In my opinion (and this is only a guess based on no facts whatsoever) Expet SA is a shell company that was formed for the purpose of ensuring the "correct" people would have an interest and would get financial benefits from any JV that Expet entered into - thus ensuring their support"

Judging by today's market reaction (or lack of) I think that only news of actual oil flowing will shift the SP dramatically. Even the 3rd Paraguayan license announcment would only be about potential, IMHO. In my opinion this is short-sighted by PIs but WDIK.

Stranger things than CHP climbing dramatically have happened in the past and I know that my reading of market sentiment is usually flawed.

WDIK, PDYOR.

camlad

At last - a bit of movement.

What is going on!

This is a bizarre market reaction to CHP's announcement this morning. The announcement on the 3rd Colombian application is also due very soon so maybe that will shake out some on the other boards who are apparently slagging off CHP, presumably to cover their short positions.
The current asset value of CHP's existing potential, plus a small amount for the speculative element of Paraguay, would give an sp approaching 20p immediately. So plenty of scope for a reassessment over the next few days before the further news on Colombia comes out.

Sharesure Thanks for the 20 p estimate-I was going to ask what Chaco was now worth-The current price seems crazy after such good news!

My reading is that short-term speculative holders (like me) hoped that the good news would cause a decent positive movement in the SP, in which case they would hold, but given there was no reaction they have sold out and moved on (unlike me) - a variation on buy on rumour, sell on fact. So quite happy that the price held up and will hold for more news on the Third Licence (da- da- da- da daah, da-daah, The Harry Llanos theme), but I have a very tight stop loss at break even on what I paid.

sd (BTW - that's Stupid Dog, Master RSI (rye sense of inhumour?)

Sold all my holding this morning, didn`t want to ,but lets get one thing straight there can be no sentiment whatsoever when the money is there to be banked.Potential and delivering the goods are worlds apart with a company like this and when estimates for getting oil out of the ground are banded about you have to sit down and think that they could be grossly undercosted.How many property programmes have you watched where a developer budjets for a certain price but ends up paying double, a similar scenario could apply to chaco.I will buy back in a few days when things have settled down and hopefully at a lower price ,the main reason for banking a nice profit this morning was because of no market reaction to the news out today.