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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.

BWD, I wasn't able to stay over long after the AGM either as I had to get down to the West End. Re El Miedo, do you know for sure that it is 80kms away? If so I've been given wrong info. or made a mistake, but I no longer have my notes so I cannot check back. Suspect there will be some opportunities in 3 months or so when there may be a need for further CHP meetings so we'll catch up then.

Apologies sharesure; I feel quite embarrassed now. I was sure I read that somewhere and now, of course, I can't find it. I am sure you are correct. I must have fused a synapse. Forget I ever spoke! Above post removed.

BWD, No problem, what's in 50 miles difference anyway when you look at the size of the blocks?

Sharesure
Did you hear how the presentations went last week?

Nice updated header Sharesure, I have copied it onto ADVFN's.

Bodeng, No, I haven't heard anything and not seen any buying either to suggest bigger institutional investment yet. But maybe the award of the 3rd Paraguayan block sometime soon will start that off.
M_P_H, thanks. I hope there will be good reason to update further soon. Will alert you to that for ADVFN

Regarding Petrobras activity, here is a titbit from the People's Daily in China, which (strangely, I thought) carried a piece about the company's activity in Colombia.

I see that Petrobras is talking about a large oil find (700million barrels) in the Casanare district, which sits roughly within the Llanos basin. My Colombia map is not very detailed but the field appears to be in an area somewhere between PLO and Primavera. If anyone can be more accurate, please say.

I'm not saying it will impact on us but it is another indication of what can be found in this part of Colombia (assuming the report is accurate - I've not seen it repeated elsewhere).

http://english.people.com.cn/200610/19/eng20061019_313374.html

rather acidly (though a holder of CHP) I could equally comment that the North Sea is full of productive fields, but ELP signally failed to find one (glad I didn't hold any of those at the time or since)

Oh, cynic, how I swoon at your rapier-like wit. How silly of me to post something I thought might be of interest. I did refer to the post as a "titbit" which may not have any impact on CHP. Perhaps you didn't read that in your rush to say something "interesting."
It is just a little bit of info but I am sure everyone is fascinated to learn that the North Sea is full of productive fields too. Really? - I never knew. What amazing insight!
Petrobras activity in Colombia/Paraguay has been commented on by many - and this is for their benefit rather than yours because you obviously know it all already.

bwd ... so good to know u fancy a sabre against a rapier .... the former i am sorry to say, is rather unsubtle

Yeah? So is "Up yours."

calm down, calm down. It's always good to have a balanced view, I do think people get a little too personal in their opinions, we all want the same thing I presume, so it is good to keep a balanced debate. Now kiss and make up.

PS lets hope your article does have some reflection on future events BWD
PPS Cynic its good to have your views to keep heads out of the clouds a bit

LOL and some good judgement we hope to all

Merry Christmas

thought i'd be the first hic hic....

Thanks Bigwave, appreciate your comments.

Steveo - Merry Christmas
Greyhound - Cheers.

and I say keeping buying PFC and similar oil industry service providers

cynic,

off thread but have you looked at CIU?

no i hadn't .... just had a quick peek and certainly worth investigating further ..... slight caveat may be that this year seems to be the first time they have become profitable

http://www.oilandgascolombia.com/

Oil/gas conference to be held at the beginning of December. Organised by ANH

Greyhound
Is Chaco invited?

They are not advertised along with the big boys but I wouldn't have thought they'd miss the opportunity together with their partners.