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.

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.

I wonder if the ghost of GMs of Sardinia is lurking in peoples' minds? They had pots of cash and real expectations but it all went wrong and shareholders of 5 years ago are nursing 50% losses.

In the presentation Chaco estimated the Puerto Lopez well contains 9.79mbo of which 50% is recoverable.

This gives us 4,895,000 barrels of recoverable oil in the ground.
CHP has negotiated a 54% stake in this which is = 2,643,300 barrels.
@ $10 per barrel in the ground that gives revenue of $26,433,000 less $1m in costs which gives us $25,433,000 or 14,960,588
At 475.44m shares in issue this is equal to 3.1p per share

Moving to the well head, at $35 per barrel the figures give us an asset valuation of 54,420,882 or 11p per share.

ADDED TO

The Alea field:
All figures were given as recoverable oil so no need to discount

38.1m recoverable barrels x $10bp (in the ground value) = $381m
25% for chaco = $95.25m = 56m
56m/475.44m = 11.8p per share.

At the wellhead based on $35 per barrel the figures give a 70pence share price.

This gives a combined share price of 14.9pence based on in the ground valuations (11.8p + 3.1p) of secured assets. When the oil starts moving to the well head we should be looking at 81p+

Of course these are all estimates based on the oil reserves claimed and current known costs. There may well be other costs but equally there may be more reserves.
However it gives us a good idea of the sort of potential there is and the sort of prices predators would have to pay if they wanted to take over Chaco.