Small Talk: South American oil minnow Chaco is worth exploring

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The Independent Online

The South American oil and gas explorer Chaco Resources may well be worth keeping an eye on in the weeks ahead. Recent news from the AIM group has focused on its operations in Colombia, but word has it that an important announcement is on the way regarding its interests in Paraguay.

Chaco is said to be close to a deal with the government of the landlocked South American country which would double the size of its acreage there. News of the coup for the company could come as early as this week. The bloc Chaco hopes to win sits on a geological structure that runs into Brazil, where it is already producing oil. Given this fact, it is very likely that the Paraguayan side will also prove to be a success for explorers.

Following the acquisition of two companies in September 2004, the group is thought to currently control about 10 per cent of Paraguay's hydrocarbon bearing areas. Chaco has since been in talks with the government to extend this. Although Paraguay does not produce any oil or gas at present, Petrobras, Brazil's state oil company, has recently intensified its activities in the country in the belief that it is resource rich.

Earlier this month, Chaco received an extension of the boundaries to its Puerto Lopez Oeste block in Colombia from the government. It plans to conduct additional seismic studies on the site later this month in order to be able to start drilling there in early 2007. Shares in the group closed at 13p on Friday. They hit an all-time high of 18p earlier this year.

PlusNet bid

At the end of August, Small Talk tipped the broadband provider PlusNet as vulnerable to takeover. Last week came the announcement that it had received a bid approach. The offer is thought to have come from BT Group and is likely to be pitched at around 210p a share, valuing it at £62m.

BT is clearly taking advantage of the weakness in PlusNet shares. They touched 420p in April but have been largely in retreat since, because of the intense competition in the broadband sector. PlusNet has about 200,000 subscribers and made a profit of £3m in the first half of this year. When this column highlighted the stock, investors could have picked it up at 113.5p. On Friday it closed at 200.5p - a rise of over 75 per cent in less than two months.

DevCap lays foundation

AIM has been swamped by property company floats over the past 12 months. In the main they have raised money for deals in foreign parts - Germany and Eastern Europe have been among the most popular destinations for the capital raised. This week will see a property group coming to the junior market with a much less exotic proposition.

DevCap believes there is plenty of money to be made from property development in the UK and today will unveil plans to raise £50m via a placing of shares at 100p. The group already has deals on the table which, when completed, will give it a portfolio of projects worth up to £80m. DevCap is targeting an annual dividend yield of 5 per cent. Bridgewell Securities, its broker, expects dealings in the stock to start on 22 November.

Redline makes beeline for Aim

A company leading the way in setting up wireless broadband internet services in the developing world will today trumpet its plans to list on the Alternative Investment Market.

Redline Communications, a Canadian company, makes and designs WiMax wireless broadband equipment which enables the delivery of high-speed internet access. WiMax is increasingly seen as the best way to provide the internet in developing countries because of its low cost, easy and rapid deployment and ability to deliver voice, data and video information.

Earlier this year, Redline secured a deal to roll out a WiMax network in Mozambique. Redline has completed similar contracts in China, Saudi Arabia, Croatia, Pakistan and Sri Lanka.

Founded in 1999, the Toronto-based company has grown fast. It has enjoyed revenue growth of over 1,200 per cent over the last three years - from $1.7m in 2002 to $23m in 2005, its last full financial year.

This week Redline's roadshow comes to London. The company's shares are expected to start trading on AIM early next month.