25th Apr 2007 07:00
Chaco Resources PLC25 April 2007 25th April 2007 CHACO RESOURCES PLC ('Chaco' or 'The Company') Farm-in Agreement with Fenix Oil and Gas SA ("Fenix") Highlights: • Farm-in agreement with Fenix Oil and Gas SA ("Fenix"), 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 discovering oil; and • 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. Chaco Resources plc (AIM:CHP), the oil and gas explorer and developer focused inSouth America, announces that it has signed a farm-in agreement with Fenix Oiland Gas SA ("Fenix"), to earn a substantial interest in the Fenix Block, an areaof 24,117 hectares located in the Middle Magdalena Basin of Colombia. Chaco will earn a net 48.75% interest in this block by paying 100% of the costof a 3D seismic survey of approximately 100 km^2 during the phase 1 period of18 months and drilling one exploratory well to approximately 8,000 feet in thephase 2 period of 14 months. The operator of the block is Fenix Oil and Gas SA.Chaco is fully funded for the phase 1 commitment. Monies are currently held inescrow by Banco de Credito in Bogota, Colombia. The assignment of interest to Chaco by Fenix under the farm-in agreement issubject to approval by the relevant Colombian government authority, AgenciaNacional de Hidrocarburos ("ANH"). This approval has been formally requested andis now being processed. The Middle Magdalena basin lies between the eastern and central ranges of theAndes mountains and has been a prolific producer of oil over many years withdiscovered reserves of approximately 1.9 billion barrels of oil and 2.5 TCF ofgas in over 41 distinct fields. The Fenix Block is located in a thrusted sectionof the basin which is structurally complex, and is on trend with some of themost significant discoveries in the area. Recent renewed exploration success inthe basin by other operators has been largely due to the application of modern3D seismic technology and enhanced structural modelling techniques which haveenabled the accurate mapping of complex structures. An existing well in the Block, La Tigra 10, currently shut in, has produced over30,000 barrels of 23degreesAPI to 33degreesAPI oil during testing andintermittent production since 1969. This well will be one of a number ofexisting leads to be detailed by the new 3D seismic survey. John Wardle, CEO, said: "We are very excited by this new opportunity which gives Chaco exposure to athird very prospective basin in Colombia. An active petroleum system in thisstructurally complex basin has generated large volumes of oil but the difficultyin the past has been to properly delineate potential trapping structures using2D seismic. Now that modern 3D seismic, coupled with structural modellingtechniques are being used, the discovery ratio has improved significantly. Weare confident that our extensive 3D survey in phase 1 will confirm a number ofhigh potential targets, the best of which will be drilled in phase 2." Giles Clarke, Chairman, commented: "This agreement is a sound illustration of the direction the new board is takingthis Company. We are focusing on working up lower risk opportunities aiming todeliver significant medium term cash flows through strong high levelrelationships in Colombia." "Our new partners in this block have a wide experience in both the oil and gasand industrial sectors in Colombia, which, in combination with our team'sexperience will enhance the efficiency of the project. We look forward toworking with them to explore this outstanding block. The board believes this newrelationship has important potential for Chaco." Competent person: Technical information in this announcement has been reviewedby John Wardle Ph.D., the Company's Chief Executive. Dr Wardle has 23 yearsexperience in the industry, having worked for BP, Britoil, Emerald Energy andPebercan, and is a trained drilling engineer. - Ends - For further information, call: Jerry Keen, Blue Oar Securities - 020 7448 4400 Billy Clegg/Caroline Stewart, FD - 0207 831 3113 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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