3rd May 2007 07:01
Chaco Resources PLC03 May 2007 03-05-07 CHACO RESOURCES PLC ('Chaco' or 'the Company') Results for the year ended 31 March 2007 Chaco Resources PLC, the oil and gas explorer and developer focused in SouthAmerica announces audited results for the year ended 31 March 2007. Highlights: • Giles Clarke appointed Chairman, John Wardle appointed CEO, Nick Harrison appointed Finance Director with another senior Board appointment due imminently • New management focussed on prioritising advanced projects including the Alea discovery in the Platanillo contract area and recently announced Fenix block - Withdrawal from Puerto Lopez Oeste as new seismic data did not indicate area commercially viable - Drilling at Primavera unsuccessful • Progress with Platanillo block. Key milestones include: - Environmental approval clears way for active work programme - Progress with maintenance of existing road and upgrade of two bridges - 65% complete - estimated completion by the end of Q2 2007 - Civil works to construct new access road and well locations will begin shortly and be complete during Q3 2007 - Workover rig will be used to re-enter Alea-1, estimated Q4 2007 - 1500HP rig will be used to drill Platanillo-1 & 2 - drilling during Q4 2007 - Appraisal data will be available from new wells prior to year end - Potential for first production in 2007 ahead of full scale development • Farm-in agreement with Fenix Oil and Gas S.A., to earn a 48.75% interest in the Fenix Block, an area of 24,117 hectares located in the Middle Magdalena Basin of Colombia: - Proven petroleum system with previous wells on block producing oil - Region has been a prolific producer of oil over many years with discovered reserves of approximately 1.9 billion barrels of oil and 2.5 TCF of gas in over 41 distinct fields • Fenix milestones: - 3D seismic survey put out to tender - prices received are in line with budget and contract to be awarded shortly, with completion expected Q4 2007 - 2D reprocessing put out to tender, work to begin mid-May and results expected mid June - Exploration well due to spud Q4 2008 in second exploration phase • Paraguayan subsidiary, Bohemia S.A. awarded evaluation permit over third area (Alto Parana) in Paraguay - San Pedro & Alto Parana 2D acquisition Q4 2007, seismic interpretation completed by Q3 2008, potential spud date Q2 2009 • Proposed change of name to Amerisur Resources plc Giles Clarke, Chairman, commented: "Your Company has seen major changes since I became Chairman, after a year ofdisappointing progress. "We now have an outstanding team in place, and a focussed strategy of deliveringnear term cash flows and value to shareholders. "The new Board anticipates an improvement in exploration results as the Companymoves to becoming an oil producer from lower risk exploration acreage with theknown presence of hydrocarbons. I look forward to reporting on the progress wewill be making throughout the coming year." - Ends - For further information contact: Billy Clegg/Caroline Stewart, Financial Dynamics, 020 7831 3113 Jerry Keen, Blue Oar Securities, 020 7448 4492 Report of the Chairman Introduction Your Company has seen major changes at the end of this year since I becameChairman, after a year of disappointing progress. New management I became your Chairman in February 2007 towards the end of the financial year,and Dr John Wardle became Chief Executive. Nick Harrison became Finance Directorin April 2007. I commend them to you. I expect to announce another senior Board appointment imminently and furthernon-executive appointments during the course of the current year. Dr Wardle has established a strong executive team in Colombia in preparation forsolid growth in our activities there. Mr Valdovinos, the Director withparticular responsibility for Paraguay, has built a firm presence for theCompany in Asuncion, and we expect to add further high calibre personnel. As a result of these changes, a number of former Directors stepped downincluding Jon Pither, who chaired the Company for several years as both GoldMines of Sardinia and Chaco, John Morris, who was Chief Executive, DouglasJendry, Martin Groak who was Finance Director and Nicola Brookes who replacedhim. Operations The new management is now focussed on prioritising the Company's mostprospective regions with existing discovery at Alea and excellentexploration prospects in the new Fenix block. At the same time, the Company haswithdrawn from Puerto Lopez Oeste as new seismic data did not indicate the areato be commercially viable. In addition, drilling at Primavera was unsuccessful. The Company has made progress with its Platanillo block, which has existingcontingent and prospective resources with the Alea discovery, and we can expecta very busy period ahead on the block as we drive forward the work programme todeliver near term production for the Company. I am delighted to announce that the operator (Ecopetrol) received theenvironmental license in April 2007, which has effectively removed the principalimpediment to progress. The maintenance of existing road and upgrade of the twobridges is making excellent progress, and is now 65% complete. We estimate thatthis will be largely complete by the end of the first half of this calendaryear. A workover rig will be used to re-enter Alea-1, with operations due to begin inQ4 2007. I would like to reiterate that Alea 1 was drilled in 1988 and testedan oil discovery at 533 bpd. We can expect further drilling on the Platanilloblock at Platanillo 1 and 2 which will be drilled in the last quarter of theyear. Dependent upon results, Platanillo-3 could spud Q2 2008. Our new acquisition of a significant interest in the Fenix block in the MiddleMagdalena Basin, an area of proven oil fields of very commercially attractivesize, has given us another important asset to rank alongside Platanillo, andalso a partnership with the Montoya Group, one of the largest commercialenterprises in Colombia. Your Board regards this as a relationship which theCompany will seek to foster and more opportunities will flow from this. Theblock is in a proven petroleum system with previous wells on the Blockdiscovering oil. The region itself has been a prolific producer of oil over manyyears with discovered reserves of approximately 1.9 billion barrels of oil and2.5 TCF of gas in over 41 distinct fields. The Company has a busy time ahead on the Fenix block as we work to get toproduction as soon as possible. Scouting and reconnaissance is now largelycomplete and the Directors are very pleased with what has been discovered. As aresult, 3D seismic has been bid out and prices received are in line with budget.We will be awarding the contract shortly. 2D reprocessing has already been bidout and work will begin mid-May, with results expected in June. The 3Dacquisition will commence in Q3 2007 and be completed by the end of the year.The results will then be interpreted with drilling location identified in Q22008 and the first exploration well will be spudded in Q4 2008. We have now established several interesting areas for exploration in Paraguay,and the coming year will see a significant amount of seismic studies to enableus to focus drilling activities. Our Paraguayan subsidiary, Bohemia S.A. wasawarded an evaluation permit over a third area, Alto Parana. We will be takingthis acreage forward with 2D seismic acquisition on San Pedro & Alto Parana inQ4 2007, with the seismic interpretation being completed by Q3 2008 and apotential spud date Q2 2009. Corporate During the past year, the Company placed 26,666,667 new ordinary shares at 15pper share, which raised £4m gross. In addition the Company placed a further16,500,000 new ordinary shares at 11.5p per share, which raised £1.9m gross. During the period, losses increased from £811,000 to £5,427,000, including anexceptional item of £4,295,000, representing primarily a provision forimpairment of investments in Primavera and Puerto Lopez Oeste. Loss per shareincreased from 0.18p to 1.02p (0.21p before exceptionals). Since I became Chairman, we have changed our Nominated Advisor and Broker toBlue Oar Securities Plc, who have an excellent oil and gas team, and FD hasbecome our PR adviser. Your Board have determined that a change of name would more appropriatelydescribe the Company's area of activity, and will be proposing at the AGM thatthe Company's name be changed to Amerisur Resources plc. Outlook Your Company has seen major changes at the end of this year since I becameChairman, after a year of disappointing progress. We now have an outstanding team in place and a focussed strategy of deliveringnear term cash flows and value to shareholders. The new Board anticipates an improvement in exploration results as the Companymoves to becoming an oil producer from lower risk exploration acreage with theknown presence of hydrocarbons. I look forward to reporting on the progress wewill be making throughout the coming year. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2007 31 March 31 March 2007 2006 £000 £000________________________________________________________________________________________________________________ Turnover - - Administrative expenses (1,354) (939) Exceptional item - provision for impairment of investment in JANEs and intangibles (4,295) - ________________________________ Operating loss (5,649) (939) Net interest receivable and similar income 222 128 ________________________________ Loss on ordinary activities before taxation (5,427) (811) Tax on loss on ordinary activities - - ________________________________ Loss for the financial year (5,427) (811) ________________________________ Loss per share - basic (1.02)p (0.18)pLoss per share - fully diluted (1.02)p (0.18)p CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2007 Group Group 31 March 31 March 2007 2006 £000 £000________________________________________________________________________________________________________________ FIXED ASSETSIntangible assets 738 739Tangible assets 13 3Investments 5,568 604 ________________________________ 6,319 1,346 CURRENT ASSETSDebtors 242 22Cash at bank and in hand 2,103 5,565 ________________________________ 2,345 5,587 Creditors: amounts falling due within one year (1,525) (140) ________________________________ NET CURRENT ASSETS 820 5,447 ________________________________ TOTAL ASSETS LESS CURRENT LIABILITIES 7,139 6,793 ________________________________ CAPITAL AND RESERVESCalled up share capital 555 507 Shares to be issued 167 167Other reserves 13,616 7,891Profit and loss account (7,199) (1,772) ________________________________ Total Equity Shareholders' Funds 7,139 6,793 ________________________________ CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2007 31 March 31 March 2007 2006 £000 £000________________________________________________________________________________________________________________ NET CASH OUTFLOW FROM OPERATING ACTIVITIES (130) (780) ________________________________ RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received and similar income 222 128 TAXATION - - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase of tangible fixed assets (11) (1)Purchase of intangible fixed assets (207) (47)Acquisition of investments (9,079) (604) ________________________________ NET CASH OUTFLOW FROM CAPITAL EXPENDITUREAND FINANCIAL INVESTMENT (9,297) (652) ________________________________ NET CASH OUTFLOW BEFORE FINANCING (9,205) (1,304) FINANCINGIssue of shares 6,074 6,581Expenses and commission paid in connection with share issues (331) (354) ________________________________ NET CASH INFLOW FROM FINANCING 5,743 6,227 ________________________________ (DECREASE)/INCREASE IN CASH (3,462) 4,923 ________________________________ Notes 1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Company. 2. The summary accounts set out above do not constitute statutory accounts as defined by section 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 March 2007, the summarised consolidated profit and loss account and the summarised consolidated cash flow statement for the year then ended have been extracted from the Company's statutory accounts for the year to 31 March 2007 upon which the auditor's opinion is unqualified. The statutory accounts for the year ended 31 March 2007 were approved by the directors on 3 May 2007, but have not yet been delivered to the Registrar of Companies. 3. The Annual Report and Accounts for the year ended 31 March 2007 will be sent by post to all registered shareholders in due course. 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