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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.

sharpened stake + garlic for some I can think of!

Nice to see Chaco lifting a penny when many Fund managers are back at their desks. It gives us a clue as to the sentiment in the city for the small explorers with bags of potential.

I think the "summer drift" may well be over.

My own view is that this morning's interest is primarily due to the issuance of the accounts etc ...... I would not be surprised to see the price drifting gently back to where it opened.

ye right

cynic, don't think so as few seemed to have received theirs yet plus there is a string of news items due out in the run-up to the AGM. One item very likely this week, poss. more?

certainly I am not a seller but have not yet convinced myself to buy more ..... I am either prudent or greedy!

Each to their own but I think that the summer doldrums on this stock in particular are now over.

reading on advfn ludlow said oct in june he as just said again in oct . buy. what do you say sharesure,

Tanker, I reckon things will happen more quickly than October; I still think that this week and next will produce separate RNS's on things which we have all been waiting for. Just a view and I have been wrong-footed over timing before, but so far not the content.
From today's Report and Accs., Trotting, you achieve notoriety as the 17th largest shareholder in Chaco! You are in good company; there are some other good names there too. The top 20 shareholders own 63.42% of the stock so that limits what is available if others want to come in, assuming none of the top 20 wishes to sell any. Homestake Mining Co of California, 5th largest shareholder and is part of Barrick Gold, which is active in South America.
Suspect if they lowered the bar to 3.0m shares+ there would be quite a good group of other loyal holders, making the available supply of shares thinner still.
It all makes sense for this to zip away on drilling news.

Sharesure-IMO the next piece of news to fit the jigsaw will be the 3rd block in Paraguay.

Do you agree?

Have dangled a toe and bought a few more ..... if sp drops back, will then have room to top up

Gail The Chin, maybe but I think that there is a good chance that they have landed some other Colombian blocks, so maybe that's next? Either would be welcome + I accept Paraguay (3rd block) has been on the cards for a lot longer.

Thanks Sharesure-what a lovely day it has been-just need to keep the momentum going.
Question-How do we know if the mm's are really short of stock-the 2 late buys seem to indicate that this is the case hence the dramatic markup late on.

Gail The Chin, I think that the MM's must be short of stock because there are likely to be some short closers around and, with the sp now poised for a lot of imminent news, no long positions are likely to be closed. I know of three shareholders who have all rolled their T's and from memory there are some others due shortly which are unlikely to result in more stock being released. Until I read today's Report I hadn't realised how much of the company was in what could be termed institutional holdings. As you say a good day but hopefully only a taster of what will be commonplace in future.

Cynic - blimey your actully in a stock then..........

DON'T BE CHEEKY! Was already in CHP and bought a few rather than a lot more

Good start to the day.

DIARY OF A NERVOUS TRADER
Bought 500000 shares on 15th august on a t25 at 12.75pence thinking news would be out anyday,hopefully good news at that. Was going on holiday to ireland with family the following week so had to rely on next days papers for updates. Dont possess a mobile maybe i should. Anyway we were driving through some obscure mountain range when we stumbled upon a lovely cafe and to my daughters and friends delight they had an internet connection. After waiting for them to finish on msn talking to their buddies back home i managed to sneek on for 5 minutes and to my horror chaco were trading at 10.25p. At that point i was 12000 down and to be honest it took the gloss off my holiday. But i didnt panic and thankfully banked 8000 this morning. I still have a considerable holding in chaco which i am determined not to touch for at least 2 years and i am still convinced even as a novice trader the only way to make money on stocks like these is to hold long term with a certain amount of stock and t25 the rest, but i have now learnt not to be trigger happy. The chances are there will be a slight retracement barring any disasters followed by more upward momentum when news is out. Good look to all chacoites.

hats off pisces!

Blimey, just seen the intraday price hit 15p earlier.