Technical Director, Graeme Stephens, said:
"The new detailed seismic that we ran over the two leads in the block did not support the earlier mapping and indicated that while potential targets were present, they were far too small to be of commercial interest. This is the smallest of our interests and our write-off on this area is not expected to exceed £0.9m.
"One advantage of reaching this decision at this time is that it enables us to devote funding which was earmarked for drilling in this block for targets of higher potential. We are currently in the final stages of negotiating such an opportunity and expect this to be finalized and announced in a few weeks' time."
Chaco Resources Plc is an oil and gas exploration and production company whose strategy is to pursue hydrocarbon exploration and development opportunities in South America. Chaco currently operates in Paraguay and Colombia.
The Puerto Lopez block was Chaco's second venture in Colombia, where a fundamental change in the fiscal laws and an overhaul of the state's management of hydrocarbon exploration and production permits has created a very favorable investment environment. Chaco teamed up with strategic joint-venture partners (Expet S.A.) 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<.
Two interesting leads were identified as a result of the reprocessing and interpretation of existing seismic in the Puerto Lopez Oeste Block, which was completed in September. To mature these leads into prospects required further seismic acquisition and therefore a 100km new seismic program was contracted. This was to enable Chaco to identify the location of the planned well. It is on the basis of this new seismic data that the company has decided to withdraw.
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