CDS Oil & Gas Group plc expects to commence drilling the first appraisal well on its 100% Gabino Mendoza Block, in the Paraguayan Chaco before the end of October.

The well will be drilled 200m from the Independencia 1 well drilled in 1993. A production test on the Independencia 1 well was performed by CDS in March 2004 at which time it flowed dry gas at rates at up to 960 mcf/d. The new well will test for both gas and oil zones.

CDS has 100% working interests, subject to small overriding royalties, in the Gabino Mendoza, Boqueron and PG & E blocks.

26 exploration wells have been drilled on these properties since 1947, 22 with hydrocarbon shows. CDS says it intends to follow a drilling strategy of 200 metre step outs from the old wells with hydrocarbon shows.