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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.

WHAT'S HAPPENING WITH CHP??? SALES HAVE GONE MAD!!! WHERE'S THE INCREASE WE HAVE ALL EXPECTED?

The true bid / offer spread seems to be 14.25 to 14.60, there are no late trades just look at the times, large late trades are marked down with a L .

apart from the 500,000 and 200,000 trades.One of which was a T trade

Next move??

ellio, Difficult to call how CHP's sp will move in the short term; I am surprised that its latest potential at Primavera West has not been better received but maybe institutional investors need to have Graham Stevens sitting in front of them to explain his, and the independent view, of the seismic. From what I hear he is very excited about this block's potential because from the seismic it apparently appears to form part of the same structure that has already produced some large oil finds.
I have a suspicion that there are alot of short positions open as well judging by some of the posts on other threads. Every time the sp rises CHP is an easy target on that front until the company can categorically increase the reserves they already have. For the moment it seems to be a case of being patient since there is potential for news on many fronts over the next quarter.

Sharesure - agree entirely. I had a good conversation with Martin Groak a week ago, saying much the same (re first part of your post). I'm happy for it to tread water around here for the time being and then I think we'll see a smart move higher - I suspect the mm's are utilising this weak price. Plus Paraguay later in the year.

I think you have hit the nail on the head there Sharesure re the shorters. They do risk being caught out in the next few weeks by the analysts report being published.

On one hand we could say the shorters are helping us over the short term, if 14.5p is as far down as CHP will go with selling pressure from the bears, then the buying from fresh investors and panic buying to cover shorts as news breaks will really set the sp alight. Especially if it suprises us all.

MPH, Not on this BB, but some of the comments made on other BB's by those who so obviously have short positions and who will do what they can to make money, even if that means posting comments which are downright lies, need to be given a pasting sometime soon.

MPH/Sharesure-with you all the way-the next few weeks shoul tell!

MM are offering 13.75 on a buy now, just tested the water with a small top up.

Cannot understand why there has not been more interest in CHP, great potential IMHO.

A bit of a squeeze going on me thinks ??

mph/sharesure

I totally disagree with both of you regarding the recent falls. I also disagree that the tax year had anything to do with it.

Firstly the fall has nothing to do with company valuations or company fundamentals.

Prior to the Primavera announcement too many people were too long. They were not in a position to buy more shares - because they were fully extended. These shares, unless paid for, had to be sold at some stage. Everyone who knew about Primavera - and it's potential - were already invested.

The recent sp fall has to do only with this supply/demand dynamic. The city folks know the score. They wouldn't be buyers until all these long trades had unwound. I think that thsi is just about done now. I didn't buy any shares prior to the Primavera announcement, but I have bought some more this morning.

Best wishes

Alfred

GED have fallen back these last 2 days also, is it just a South American thing ?

Interesting viewpoint AP
2517

SS - I have sent u an email

Alfred - smart call. Not sure that I would have agreed with you a week ago - but experience and time seem to be winning here. Well done - I hope you have called the bottom and we can now see a gradual and steady rise as news filters out to support it.

Regards

Very tempted to sell at a loss.

KD.

Hello Keaydian i to am tempted in selling but that is called short term thinking, the price might fall a little lower to perhaps 12p may be. but it wont be long before the upward trend continues as we have all this news to look forward, i think just hold tight.

KEAYDIAN
If you must sell, wait (if you can) for a newsflow spike, from what the more informed posters on this thread are saying (SS; MPH) there will be plenty of news with CHP.
2517

bhunt1910, re #157 Have replied; let me know if you do not receive it.