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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.

Still just waiting for news or something to comment on!

pisces, still here waiting impatiently!! Wondering if they have a rig, hoping they drill it in the right direction, if it takes much longer might volunteer my services. Hope it does a goo..... :-)

One thing I don't get, if a rig is on its way/already on site as has been suggested for some time on the other thread by some well followed posters, why wouldn't Chaco just say so?

I remember in GFM last year it was even announced when equipment arrived at the dock.

Either Chaco's pr is poor or one or two posters have been exagerating slightly.

dibbles - there has been ambiguous talk about a rig. I believe someone close to the company said that they have "got" one. By this, I think they mean they have one booked, not that it is on site yet. Perhaps that isn't seen as important enough for an RNS. I don't know for sure; this is just my interpretation of what has been said. I am sure others have more info but expect all will be made clear in the near-term.

bigwavedave - the poster I'm thinking of said they had a rig and that it could be on site as we speak, and that was weeks ago.

Having said that, I'm not concerned as I see this as a great opportunity to buy more at levels I didn't think we would see again but if this is due to company pr you would hope that it would improve in the future.

If its not down to pr then I don't think all this nudge nudge wink wink helps.

dibbles, agreed. I try to ignore the "nudge, nudge" stuff. It's annoying and is usually written by rampers/derampers/schoolboys.

However, there are some very good posters here and on another board who have said things which were proved to be true later. They are worth listening to.

The company has missed a couple of good PR opps IMO but perhaps they don't think it's important at the this stage, or maybe they are just too busy. You can, actually, have too much good PR in the early stages of a company because when you do have something really big to talk about the impact is reduced. I would be happy to see the share price supported by work on the ground; otherwise it will be subject to attack by critics who say the sp is based only on pr, paperwork and potential.
It's the company's call though, and I'm sure they know what they are doing. As for the rig - I have no idea but if someone has, please enlighten.

Think the confusion over the availability of rigs for Alea (or Platenello as it is now called) is twofold. It isn't Chaco who are in the driving seat on that issue as they are not the operator only the funder of the first two holes as a condition of their buy-in. Ecopetrel are the operator at Alea and seem to have sourced one rig but ideally need two as one of the holes is only a re-opening and therefore doesn't require such a powerful one (and consequently expensive one.)
I suspect that this will all be announced when they have agreed with Ecopetrel how the holes are drilled but overriding that is a wish on Chaco's part to have these drilled as soon as they can without throwing money away. I am pretty sure that at the AGM they will want to have made substantial progress on this block if Ecopetrel are up to it (they are a state run oil co. at the moment, but soon to be part privatised; imagine DEFRA or some other similar civil service outfit in this country running something entrepreneurially!)
I would be surprised if much more time goes by without some further comment/RNS

Sharesure - many thanks for clearing that up. I guess these things are never straightforward. Yes, hopefully they will have made some headway by October. I look forward to hearing an official update regarding the rigs, assuming it's positive of course!

bigwavedave, there are potentially at least 7 separate pieces of news which are likely to be announced in the run up to the AGM. I am as certain as I can be that those pieces of news will be positive for Chaco so remain a very firm holder of this stock and would be prepared to buy more given any further funds becoming available. In the meantime I suspect that we have to watch the sp remaining at around its current level even though it is at the low end of Hardman's last appraisal; their September update should make interesting reading when it occurs since they will likely know details of the rig availability/drilling timetables for each of the 3 existing Colombian areas.

Sharesure
Am still waiting for more funds-hope I am not too late!

bodeng, cannot be precise for various reasons;

Sharesure - agreed. The company will certainly have lots to talk about over the next few weeks if their previously-stated timetable is still going according to plan. I suspect we are entering a new phase for Chaco as the programme of works begin to come together. It will be good to hear about seismic results, hardware, plant, and activity on the ground. Yes, I feel we are going to get talked about again. I sense we have also seen the start of fresh buying activity ahead.

Have to agree bigwavedave, certainly a steady stream of buys coming through. If any of the news is good its going to be far for profitable to buy in now, just wish we could break out above 13p and out of this current trading range.

pisces, I think that you can take for granted that the news flow due to be announced is going to be good. There are a lot of reasons for saying that, in particular the fact that even though the sp is now moving back up it is still well below the last placing price when it would be usual for the placing to have been carried out a discount to the value at that time. Once the news starts flowing again I think that you can then expect some interest from organizations like Wall Street Journal and other heavyweight magazines; it is easy to forget that there are a load of potential investors out there who have never heard of Chaco Resources, and of those who have, many of them will be watching from the sidelines to see why this stock is destined to be so good. I am convinced that it will be in the very near future but wouldn't blame those who want to see more proof even if that means they have to scramble to get on board at a later stage.

Sharesure, when in september does the hardman update come out , is it usually towards the end of the month.

pisces, don't know as there was no August update. In any case they would need the company to have started its releases of information before it could then put its interpretation on the news items, eg new blocks, drilling schedules, Paraguay etc. Chairman Jon Pither will want to make the AGM a smooth ride given how CHP has tested the patience and loyalty of long term holders. Plus he did buy more shares to put his money etc....

Now we're starting to see some interest as we break higher.

Since 11am a lot of buys coming through anybody heard any news yet, if so please post.

when is AGM? could not find a date on company news

cynic, re AGM : believe it is afternoon of 10/10/06.
Has anyone else rec'd the Report & Accs. in today's post? Packed with maps of blocks and showing existing oil finds and CHP in the midst of them all. Bears out GS's comment last year that you only need to put a stick in the ground to strike oil.