______

UPDATED 22/1/07

Valuation of Chaco Resources : 'Rule of Thumb' based on 550m shares and using 10% DCF on oil at $60/barrel is 1p on the sp for every 1m barrels (CHP's share) that is proved. Until oil reserves are proven the 1p/1m barrels will be discounted by the market.

Chaco Resources now has three exploration blocks in Colombia and three areas in Paraguay. The next year should see a steady news flow as it establishes the companys transformation from being an exploration company only to also becoming a significant oil production company. Set out below are some of the milestones which should produce announcements and have a positive effect on the share price. All reserves are quoted in recoverable oil assets.



Alea, Colombia :

25% interest in a field currently assessed at holding 38.1m barrels of light sweet crude oil. Drilling of the field by the operating partner, Ecopetrol, was programmed for 2006 to provide early cash flow, but a shortage of drilling rigs, then the rainy season and increased environmental requirements have caused a re-think and it is now expected that this block will be drilled in first half 2007.The proposal to drill a step out well as part of that drilling programme will also provide the opportunity to establish if the estimate of recoverable oil should be increased. (Some estimates suggest the field contains as much as 70m barrels.)

RNS : Updated w/c 30/4//07. Drilling contract should be imminent but actual drilling unlikely to take place second half 2007.



Puerto Lopez, Colombia :

54% Interest in a field containing light sweet crude oil.On 3.10.06 CHP announced that the original TEA area had been extended by the ANH to include further territory which it is expected will greatly increase the potential to find and exploit a structure which may contain as much oil as there is believed to be in Primavera, where Hardman and Co estimate that there is a potential value of 120p per CHP share.

RNS :Updated 22/1/07. Further seismic now obtained and decision not to proceed made because closures too small to be economic and drilling funds earmarked for this project now being retained for use on a more prospective block yet to be announced



Primavera west, Colombia :

55% interest. Two shallow drills in April turned out to be dry. Areas adjacent to this block contain oil (Cana Limon, also in the Mirador basin, the largest oilfield so far, 1.8b barrels) Chaco believe that the area in their block contains the thicker end of a wedge shaped oil-bearing sandstone structure; the area to the east in the neighbouring block has been estimated as containing 400m barrels and the El Miedo oilfield, 8 kms.away has 325m barrels. ANH Contract signed w/c 8/5/06 (1 week sooner than forecast). GED are drilling their neighbouring block in February 2007; two of their targets may contain oil deriving from Chaco's area so some earlier cash flow may result.

RNS : The drilling programme has now been completed but the company has yet to say whether the block will be explored further or abandonned.

New block announced in April known as Tigra in the Magdelana Basin. CHP has a 48.75% interest. Believed to be very promising but company is doing 3-d seismic over the next 18 months with drilling projected in the following 16 months. (Timescales seem to be set to allow a lot of room for delays or speeding up if progress is easier than anticipated)



Curupayty Block, Paraguay :

1.39m hectares in north, close to Bolivia. Two wells previously drilled and both showed oil.

RNS : Expect partnership with larger producer.



San Pedro Block, Paraguay :

1m hectares in south-east. Previous drilling showed oil.

RNS : Expect partnership with larger producer.



Parana Basin, Paraguay :

Canindeyu block covering 1,789,000 hectares. Bordering Brazil. Oil field on Brazilian side already drilled. Chaco also expect to find oil and, at a deeper level, considerable quantities of gas. Chaco has obtained valuable historic seismic for re-evaluation.

RNS : Presidential Decree received 2/11/06.. Petrobras has announced its intention to increase substantially its effort to exploit Paraguay's hydrocarbons and has announced a farm-in on CDS's adjacent block. Possibility that they or another major will do likewise with CHP



Corporate Activity :

CHP obtained an independent evaluation of their exploration assets by Hardman and Co., during July 2006.This is updated monthly. As Chaco Resources line up their assets ready for production they may attract a bid. There are also other actions that the mgt. could take to increase the Chaco's asset share subject to negotiation since the position of the Colombian state oil company, Ecopetrol, is believed to be under review. Other actions could be taken which would have the attraction in bringing more resources to bear on a quicker timeframe plus help streamline the management of their assets. De-merging the Colombian and Paraguayan assets at an appropriate time might hold out some advantages to shareholders at some stage.
Last Placing announced at 15.1p per share on 18/5/06.
Chairman and FD bought shares 8/06 and the Chairman recently exercised his option on further shares which would suggest that he regards the share price to be going north from here on.
Updated 22/1/07.




Here are some dates for your diary courtesy of KJKelly, who posts on ADVFN

1. Curupayty - complete reprocessing of seismic by end July 06
2. Curupayty - complete interpretation of seismic by end August 06
3. Curupayty - decide whether to proceed to drilling or proceed with a farmout campaign - end September 06
4. Platanillo - commence re-entry of Alea 1 early in 1st quarter 2007
5. Primavera - two structural targets will be selected from 10 potential targets for drilling commencing Feb. 2007.
6.Hardman updates should now happen monthly.

Cynic hi, you seem to be a man with knowledge,could you answer me a question. When a company releases an rns do they have to give so many days notice or can they issue news at any given time of the day. Just curious really and does it cost a lot of money.

RNSs cab be issued at any time, though they often come just before market opening or just after the close, for fairly obvious reasons. In fact, with regard to shareholdings etc, I think the announcment has to be made within 2 working days. As for cost, it must be pretty negligible.

Weeeeeeeeeeee, up we go.

true, though volumes (as with VOG today) are not really much heavier than usual

True cynic ,but since 10p there have been a series of higher highs and lower lows, surely a good technical indicator.

i too keep my fingers Xed ..... VOG suddenly roaring without any news

so are the large sells at the end of today just positions being wound up after a good week? Lets hope so, can't help thinking we're getting nearer to a big event for us holders.

glad to see VOG recover today, odd market though. }:-{

A small mention in the daily express today saying about directors buying prompted by the recent price slide, guess it wont do any harm..... !

Hi

Would not pay much attention to what the Express say. Some junior reporter looks at the BB and tries to make up a story without checking facts.
Same paper on Sat (12th) said that GOO rose because of production testing. Amazing considering that the company has announced it will not commence testing until 18th Aug.
REgards
SM

Looking forward to a good week.

just picked up a 7500, showing as a sell though.

looks like get em at 13.25 whilst you can.....evo now at 14.25 offer

14.25 seems a bit high!

I dont know bodeng....being long on this stock, I'd rather see 20p!
evo have always looked like buyers rather than sellers, hope the others get on board this side of Christmas!

From Oil Barrel

Chaco Hopeful Of Securing Rig To Test Alea Oilfield In Q4 2006 To Move Towards First Production In 2007
Booming oil and gas prices mean that equipment to access new reserves is not only trading at a premium but is proving nigh on impossible to secure at any price. Demand for rigs is far outstripping worldwide supply and this means many companies are being forced to shelve or rethink dearly held business plans.

AIM-quoted Chaco Resources has been among those to suffer from rig delays. The South American oil junior is keen to make that all important step from explorer to producer and reckons it has just the project to take that step next year. The project in question is the Alea oilfield in the Platanillo Block in Colombia, in which Chaco is earning a 25 per cent interest by spending up to US$7.4 million. But it has struggled to drill an all-important test well on the deposit because of rig shortages.

The field is operated by state oil firm Ecopetrol with Spanish oil giant Repsol holding 35 per cent. The Alea field was tested by previous operator Repsol back in 1988, when Alea-1 flowed at 533 barrels per day. Back then the oil price was low, Colombias fiscal regime was punishing and the security situation was a concern. Those dynamics have now changed: oil prices are nudging historic highs, the Colombian regime is one of the most attractive in the world and the security situation is vastly improved. Perhaps the strongest testimony to the changed conditions is the fact that Repsol, the oil firm that allowed the field to lie dormant in the wake of the 1988 test, has decided to stick with the project and help move it forward.

The Alea field is thought to hold P90 resources of 7.4 million barrels of crude in the Lower U sands with mean contingent and prospective resource of 20.6 million barrels. There is additional potential for a further 16.7 million barrels in the higher risk and untested Upper U sands.

The field partners plan to re-enter Alea-1 in the fourth quarter of this year to re-test the Lower U sand before testing the untried Upper U sands. They also plan to drill a step-out well closer to the down dip limited of the field closure to define the possible extent of the accumulation.

The timing of this work will, of course, depend on rig availability. However, company chairman John Pither said recently that the rig-related delays endured to date were easing and drill rigs are now becoming available. Ecopetrol has offered the field partners use of a drilling slot in its helirig drilling contract but they are also evaluating cheaper options to get this well drilled.

If the Alea operation is successful, then the field partners would move towards first production in 2007. This would be significant for Chaco. According to Mark Parfitt, an analyst with Hardman & Co, the start-up of production in 2007 would unlock net revenues of more than 10 million during the first year of production.

Chaco has two other projects in Colombia. The Puerto Lopez Oeste Block lies in the southwest of the prolific Llanos Basin, due north and on trend with the Valdivia oilfield. Chaco is earning a 54 per cent stake in this block. Hopes the acreage might be home to a Valdivia lookalike have been frustrated by a study of the geological data but the partners have identified an interesting Llanos Mirador fault trap play, Metica-1, which could hold 30 million barrels of recoverable oil. This looks promising - the Apiay field lies 80 km to the west of the block shares a similar geological setting and holds around 100 million barrels - but will require further technical work to firm up the lead to prospect status. A 2D seismic shoot is scheduled to get underway this autumn.

The Primavera Block, in which Chaco is earning a 55 per cent stake by spending US$3.5 million, lies in the northeastern part of the Llanos Basin. This is an area that has been widely overlooked because of local security concerns, which have now been largely resolved. The crude in this part of the basin is expected to be heavy and will trade at a discount but, given that oil prices continue to bubble at over US$75 a barrel, this is no reason not to pursue exploration opportunities.

Existing wells to the east of the block found good oil shows in the 1980s including one, El Miedo-4, which recovered 97 barrels of 19-degree API oil in eight hours. It appears that these old wells were not properly sited and failed to intersect a closed structure: the application of modern seismic could unlock the dormant potential of this heavy oil area. Chaco is hopeful of drilling two targets here before year-end.

Chaco is also active in Paraguay. Unlike Colombia, this is real frontier exploration territory. Chaco has rights to vast tracts of virgin exploration acreage and has been conducting seismic and data studies to get a handle on its acreage. It is, however, seeking partners to help share the costs and risks before moving into the drilling phase. The companys hopes for this high risk project were boosted earlier this year when Brazilian oil giant Petrobras announced plans to explore in the Chaco region of northern Paraguay. Chairman John Pither described this as a significant development with respect to the possibility of finding hydrocarbons in the region.

For now, however, many investors will rightly rank Chacos holdings in Colombia to be of more immediate interest. This is a country that has attracted growing numbers of oil juniors in recent years: it has a licensing system that pro-actively opens dormant acreage to new players and its favourable fiscal terms, recently enhanced by plans to cut by one third the rate of corporation tax from 38.5 per cent to 28.5 per cent, only add to its attractions.

nice post bazza

Agreed and much appreciated but didn`t do much for the SP - perhaps too much reading and info for some punters

good buying opportunity below lowest value in hardman report

sorry, got that wrong lowest value was 10.6p, still an opportunity though

Amities / whilst naturally wishing all holders good luck l remain notably weary and as yet unconvinced by this stock. .l cannot deny the Busines model appears not unfeasible with reasonable acreage especially that near the prolific Cusiana Field in the LLanlos foothills in Columbia .But i hate companies re-inventing themselves and having failed at one enterprise embark upon another, and in a sector of which they are pure novices and will RELY heavily upon their operators. Remember it usually takes 7 to 10 years to bring a well into operational status. lt takes a lot of hard work and even more capital lot to get that oil {lf you are lucky enough to make a commercial discovery }from the wellhead downstream for piping or shipping. . . l think if we are honest enough to admit it that the only reason behind the inception of this company was the exploitation of the huge hike in crude prices . l have very serious doubts about the ability of management operating in the cut throat economics of oil where connections is all and everything . l have a feeling that any whiff of oil at any of their sites they will be leveraged out by " Big Oil " . l have no doubts at all oil exists in abundance in the Latin Americas .Scrutinising the "gushers of the past 20 years such as the Yuzhno Khilcuyu field or the Sihil field in Mexico or the Masila fields in the Yemen to the San Juan basin and Barracuda field in Brazil or the jujo tecominoagan fields in Tobasco / Mexico -ALL found by smaller players YET whose logo do you always see ? , Yes , Big Oil . Always ! The small operator is squeezed out but not without reward . .Fact . @+ J ...watching with interest from the sidelines musing over the capital BP has allocated for exploration in this region .As have all the players in "Big OIL"... .