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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.

Go on CHP, my old dear leaves for Las Vegas in 3 weeks and it would be nice to give her some stake money.

A few late buys.

I see that one of my other oil punts, Emerald Energy has been awarded a further contract in Colombia. So news is starting to come out of that area now.

With such a tight spread i would have thought there would have been much more trading in it today,guess its a case of holding ones breath

Next week could be interesting especially with the 18p prediction.

Exciting times ahead here. Very much looking forward to the next few weeks in this share.

bodeng, I think the last high will be blasted through quite easily this time. There is so much good news in the pipeline I cannot see it hanging about.

fairly significant support at 14.75 today, volume only moderate nice to see most people have a good degree of faith. can understand profit taking, 40% rise in 6 weeks can't be sniffed at, however could be 80% sooner than we think if sharesure's predictions correct, lets hope when they drill they get lucky wthin the first 3 holes, then I'll be a very happy chappy. come on you chaco. :-)

Well, it's only four weeks to the AGM and as the Hardman update points out "we would expect newsflow sooner rather than later on: progress at Alea, the new seismic acquisition programme for Puerto Lopez, and in Paraguay, the San Pedro data reprocessing and the third permit application".
Assuming they are correct (they should be) and the news is "positive", then it's going to be a very exciting month ahead.

dave

three weeks tuesday, even closer!

Mention in The Express again today.
David Shand indicates possibility of new licences granted in Colombia and Paraguay.

yuff - quite right! Even better... fingers crossed, as always.

uponthelowdown - he seems to be following this share (...or these boards). Hope he's right!

"Oil and gas explorer Chaco Resources eased 0.5p to 15.25p despite rumours that it could announce licences in Colombia and Paraguay."

Great news if David Shand is right.
Assuming he is right about the Paraguay block then we can probably expect further newsflow on the jv's as well.
It could be non-stop here before long, good luck to Chacoer's everywhere in the coming weeks.

dibbles, Reckon David Shand is absolutely correct; I shall miss the news flow this week (away until 26/9/06) but it looks pretty cerain that some more of the building blocks will be announced in the coming week and they will be very positive.

Exciting times ahead.

Me thinks old highs could well be broken this week,even 20p could be hit.Watch this space.

20P would be great at last!

Shareshure,

where are you,chp is abt to BLOW!

capetown - he's away! see post above.

well big w,lets hope its 20p for all of us and him when he gets back