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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.

We've made the results page in shares mag at least.
They are suggesting the company are having problems getting rigs which could push drilling into 2007.
Where do they get their info from?

Possibly from this BB ! - it has been mentioned.

dibbles, I think that the Shares article is wrong on a few counts eg losses reduced from y/e 2005 and all the information I get is that the rig availability is not now a problem - Jon Pither, chairman, says as much in his report. I have had the strongest hint that an earlier drilling of Alea is on the cards and Primavera is on track for its predicted timetable. It isn't the first time Shares mag has goofed on Chaco - it did so in its AIM companies rundown too.

Also when we met the management team (back in May?) and we asked the question about rig availability - it was not condidered an issue - even then

Good morning sharesure,even if there is a delay in rig availability as a long term investment in chp would this possibly only affect very short term investors if the suggestion of difficulty in rig availabilty were true?

As a generalisation on the oil industry, it is most certainly true that there is a shortage of all sorts of field equipment due to the upsurge in new E&P in the wake of sustained high oil and gas prices ...... That, incidentally, is why I think Petrofac is a very interesting investment prospect.

Do people actually read some of the posts on here.

The email I posted says "They have a rig"!

sorry my confusion posted on ADFN apologies

Sorry Taylor .... Indeed I had not tracked back to earlier posts and was reacting to the most recent ...... By the way, you actually rate ADVFN????

Capetown, Agree that if it were true then it is only a short term hiccup - but I have had the strongest of hints that they will bring some of the drilling forward to the cusp of the 3rd/4th quarter possibly in time to say something at the AGM. I too have heard that two different types of rig have been sourced for Alea, a lightweight rig to drill out the cement plug in the capped drillhole which already flowed oil and a more substantial rig for the second drillhole needed to establish if the well is full to spill point - which if it does - means a field of 70/80m barrels

Did'nt say I rated ADVFN but there are a few posters who share their knowledge on there, just the same as here, all boards get there share of good and bad posters. I have to say I do not post that often. I do my own research, and don't buy on the word of others, I trust my own instincts. BB's can be a dangerous place, you have to weed out the genuine posters from the rampers, derampers as we all know. Nobody really knows what a share is going to do, and I guess some people see these boards as support. I guess shares can be a risky game, but also if you get it right can bring some good rewards. best of luck to all

sharesure I do believe from the email from Chaco that they have a Heli Rig which will be used for both holes unless they can obtain a less powerful one, for the first hole which just needs unplugging, and should flow oil.

Taylorc

Nobody said they didn't have a rig, only that shares mag said they are having problems getting a rig.

Taylorc, I understood that two rigs had been sourced and, although one is termed a helirig , both are being transported to their respective drilling positions mostly by barge. I would have expected that the company will announce something on this very soon.

Hi Colleen,

I think the Oil Barrel article needs close reading!

It says we have a rig for Alea. Which is the case.

Essentially, we have two types of hole to drill at Alea. The re-opening of the Alea 1 well does not require a particularly powerful drill as it is drilling out the 'plug'. The second 'step-out well' does require a reasonably powerful rig.

The heli-rig proposed can do both wells, but it is 'overkill' for the first well - unnecessarily powerful - so if we can get a second, less powerful rig, we will save time and money.

Again, with Primavera, I am not aware of any issues with rigs. We are working with an excellent operator who has extensive local experience

I think the key message regarding rig availability is that we do not intend to stop after our first year programme! As we go forward, we have major ambitions for the first three projects, all of which involve drilling. I would hope that the rig prices will start to drift down once the supply increases.

In terms of your question regarding Alea. What we do know is that it has oil. It has almost certainly 7.4 million barrels and a mean expectation of 20 million barrels from the lower section alone. The upper section has not been tested, but if it tests positive, then, again, the mean expectation is 17.6 million barrels. If, however, the field is full to 'spill point', then the expectation rises.

But until you drill it you simply cannot know, even in an 'oily' country like Colombia.

Regards

short problems will be preent with chp, initially it will take a period of time before any decent news is available from CHp

short problems will be preent with chp, initially it will take a period of time before any decent news is available from CHp

they have found oil wait till next week.

who says? ... perhaps they just went to the local garage

cynic, Alea has already flowed in the past; the only issue now is whether there is more up to the spill point and whether it can flow at a greater rate than the first hole showed when it was drilled and flowed unaided at 533 barrels/day.