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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.

Just my luck but I think I will hold it for the long term

"Also CHP has re-instated their sp quote in the FT as of last Saturday."- Sharesure

Sorry, What does this mean?
An ignorant Red fan.

P.s. I have been in since 5p days and have not sold a single share, in fact I have topped up a couple of times since.
I am very optimistic about the mid to long term future of this share.

Can I take this opportunity to thank two people.Firstly Alfred who gave me the initial heads up on this share and Sharesure for his invaluable contributions.Not to mention plenty others who contribute greatly... MPH, KJ and Ormo to name a few.

Up The REDMEN!!

hlyeo98

Think of this investment as if you were about to embark on a gap year, touring the world.

You have said goodbye to your relatives and those well travelled have promised that you will have a good time.

In a couple of weeks you will be in Thailand, or the city presentations wil have gone well encouraging institional investments.

Overland to Singapore, or Alea reserves upgraded.

Then the main event. Six months in Australia, or results of Primavera West appraisal. This you will remember for the rest of you life.

Over the Pacific to the West Coast of the USA. Production begins in Alea.

What a year. Of course you could get your plane hijacked between Sydney and Wellington - the company gets taken over.

Either way this company is in for a hell of an adventure over the next 12 months.

Alfred

Shankly re FT - in the share pages of the Financial Times. It might just get them more noticed by the FT when they announce future news items.

Thanks Sharesure.

Thanks for comforting me, Alfred

shankley, hyleo.

You're welcome.

Super analogy Alfred!

Luckily we're not investing in your geography, Alfred. Wellington is not on the way from Sydney to LA - lol!

Or is that analogous to having a dodgy pilot (bad management) in the cockpit?

lol

Shareshure,Good to see COP looking better for you,
Seems that the sp on CHP is settling down now .Some large buys coming through i hope to see a small and steady rise untill more news and then 20p,even if its for the pi that bought in at 19.

Capetown, Thanks; still wary of adding more COP, don't have the confidence in them as I do with CHP, but then I am not as close to what is going on there. In many ways, although it was probably painful for some, having the t/y/e shake-out was probably beneficial if it gives less room for detractors to rubbish the company. My view is that the correction has been overdone even on the known assets, so the potential is not even in the sp at current levels. Suspect that the independent/valuation review of assets will conclude that too.

LOTS of buying today,so far.

have added enough 83k.today this is cheap .

I have read the many views on the sale by Fidelity on this BB and on another. I just wonder why Chaco used their broker for the placing and not WDBR who handled the previous placing. I'm not saying that WDBR would not have included Fidelity in such a placing but it might have been wider spread than appears to have been the case, leaving the share price less exposed to such a large sale.

No doubt Chaco had their reasons.

I am wondering why the sp is up on all these sells,any views?

deleted by author. camlad

Could it be a large buy order waiting to be filled hence why the sp has not fallen ?,guess all will be revealed,(MRP holders smiling today.)

Most probably that some sells are in actual fact delayed buys and ther is at least one rollover of 250k which is recoreded as 2 * 250,000 sells.

Dont beleive everything you see - especially as the programme that identifies the trades is a predictive one and does no more than look at the price compared with the mid point. If it is lower than the mid point it assumes it is a sell and vice versa

Baza

THX BAZZA