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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.

was not AGM today .... if so, must have been a big yawn, rather as i suspected it would be

AGM is 10.10.06 at 15.00 and it will be worth going to.

.

no wonder there were so few attendees this morning .... lol!

Was it Bernard Shaw or Osacr Wilde who said "a cynic knows the price of everything and the value of nothing". Maybe "the price of everything and the value of" were superfluous words as it turns out.

Sd. LOL

sd

very good!

cheeky bastard! Actually it was rightly applied to my father-in-law who is very thankfully my late f-in-l! .... He wasn't so much a cynic as a total pain in the arse!!

but yes, it was a quip ruefully coined by Oscar Wilde when complaining about the poor service offered by some of the rent boys in Reading Gaol

Cynic, You obviously deserved each other. We don't, so **** off

Was the Board meeting today fact or fiction?

Dibbles, it was scheduled for today so presumably took place by video link.
Think it likely that CHP's sp is the victim of a holder needing to realise cash to cover positions elsewhere, after all there have been a few mining stock disasters eg Asia Energy, (as suggested earlier by others.) Once that position has cleared - maybe already? - the sp is sure to strengthen ahead of the next RNS and AGM. Still expecting more announcements this week.

Thanks Sharesure, possibly some newsflow to come from that then.

I hope not too many here got caught up in the gambling stock falls the other day, never did like that sector although no doubt many made profits from it before the pack of cards tumbled.

Sharesure
Looking forward to news in the next few days before the AGM.

chairman excerising 1m options

Surprised that he had not done that sooner for CGT taper relief reasons.
Think that next week there are likely to be more presentations to institutions whilst the Perth based directors are in London. The announcement of drilling dates will make this company more attractive to an increased number of funds, when production starts, even more.

Re today' RNS : Expect to see some of the other directors following suit and exercising options to save income tax and start the taper relief clock going. The income tax is based on the difference between the current sp and the option price, so would/should be considerably more in a few months time. The Board would have been better off exercising their options last year, although it may be different for the Ozzy directors under their tax rules. Although whether CHP can remain independent long enough for the taper relief to apply is down to shareholders.
Has anyone on here considered what their reaction would be to a bid at 25-30p right now? I know my reaction would be to say 'no', but would everyone else have the same view? I hope that we are not about to be put to the test since I would be concerned that many would take the view that a profit is only a profit when it is realised.

I would say No - so much long term potential.

I want to be able to live off the dividend and pay minimal CGT

Sharesure - not sure it would matter what we said. It would be down to the major institutional holders and we'd all go along with what they decided. Still, if they did agree to sell at 30p, a 200% profit since you kindly introduced the topic last year would be just fine, thanks.

stockdog, I guess I must be greedy; either PLO or Primavera alone should be worth multiples of that sp and I suspect that we are under 4 months from finding out, with Alea in the meantime - possibly. But the first two are the mouthwatering prospects in my view.

News tomorrow would be welcome.