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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.

capetown - he's away! see post above.

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

would like to see some solid news to support what currently looks like rather a frothy surge

agreed - we need some news to support the price and take it higher. If the news takes the SP over 19p I would be very happy.

20P is a better figure foe now.

capetown - I don't know sharesure but I am sure he will be keeping an eye on things!
It is difficult not to get excited but there will always be the buy-on-rumour-sell-on-news element with this. How much of that kind of buying has been built into the current price is anyone's guess.
However, the closer we get to becoming a producer the better - and I am still looking forward to learning about the company's other activities as per the Hardman update and the header here. All good stuff which hopefully will take us well north of here. As usual, we will just have to wait and see...!!!

Little bit of resistance at this 16p level but that purchase just through of 300k at 16.5p is keeping the pressure on.

Greyhound bought them first thing this morning have paid over the odds but have got them for 25 days up to agm, hope im`e correct.

Sure you are pisces ;)

Also, keep in the back of your minds that Hardman's valuation of 10.6 to 17p does not take into account anything for Paraguay, and does not include everything for Primavera or PLO. So any additional blocks won builds in further value from here.

With Petrobras now getting involved in Paraguay, some value should surely start to be attributed.

The 200 day MA went through the 50 day MA around the 22 august, initially the 50 day fell back but has now picked up again and both MA's are rising, now I know zilch about charts, but I seem to recall that when the 200 day crosses the 50 day (or is it the other way round) on a rising trend the sp is signalling a break to the upside. Could the more informed enlighten me please. Thanks.
2517

No expert myself but when the 50 breaks thru the 200 whilst both are rising its a golden cross and supposedly very bullish.

Golden Cross is formed when both trends are rising ..... in that instance, 50 dma was still falling

correct dibbles, but looking at my Bloomberg charts we're not quite there yet....

on its way though if price holds up, news flow should acheive that.

pisces,have you tried working smaller orders as big ones usually pay a premium if they take a while to work, just an observation as mm's mark up price for whole stock, might save some money depends on your commision charge.. if I'm wrong please let me know, I'm still learning. ;\

yes you are wrong ...... in fact, you can leave an order with an MM at a specific price with an instruction to accept part fill ..... thus you could have 4/5/6 parcels of shares making up your order, and if you are lucky, you may even get some below the top price you were prepared to pay

Steveo hi,i paid a premium anyway to get them on a t25 as apposed to a t10 with no premium, i have to wait longer to take a profit(hopefully) but found this strategy can save money in the long term.

Good start-need to get back to 16.5 or more.

thanks for the lesson, should come in useful oneday
:-)

A few buys coming through now.