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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.

looks like we are slip,slip sliding away - until we get news

TIME TO TOP UP ON WEAK SP?

not yet, imo ..... no news expected for a while yet - Q1 2007 from memory - so plenty of time for further weakness

People forget only 10 days ago we had this article........

from The Independent & The Independent on Sunday
25 October 2006 13:09 Home > News > Business > Business Analysis & Features

Small Talk: South American oil minnow Chaco is worth exploring
By Michael Jivkov
Published: 16 October 2006
The South American oil and gas explorer Chaco Resources may well be worth keeping an eye on in the weeks ahead. Recent news from the AIM group has focused on its operations in Colombia, but word has it that an important announcement is on the way regarding its interests in Paraguay.

Chaco is said to be close to a deal with the government of the landlocked South American country which would double the size of its acreage there. News of the coup for the company could come as early as this week. The bloc Chaco hopes to win sits on a geological structure that runs into Brazil, where it is already producing oil. Given this fact, it is very likely that the Paraguayan side will also prove to be a success for explorers.

Sounds good to me! Buy on dips!

Intersesting - can only sell 5k online @12p - but can buy 100k @ 12.25 - Whats happening?

Just days ago you could not get this share for love nor money.?? -

Coutesy of Valentine - whom I think is well connected.

"The Paraguay process is nearing completion. All due procedures have been attended to. Byzantine in nature I'm told. Maybe tomorrow but if not then after weekend? New drilling expert and logistics manager, with a terrific pedigree, has joined the team and is 'on the ground' in Colombia. You may already know his name. Which means they will start to give out more significant info on certain critical dates in the near future. All tied together as he will be looking after both Colombian and Paraguayan business.
more significantly it means they mean bizness themselves. They are just quietly getting on with it and achieving goals. Primavera and Puerto Lopez Oeste are going to be major winners for us."

I think it was Valentine that said some months ago that "the drill is on its way to Alea and may even be drilling as I write" if my memory serves me right.
Lets hope his contacts have improved since.

All said in good faith I am sure. Someone said, of Alea, at the AGM 'the oil has been in the ground for several million years. Another few months won't change it much'. The problem with the Alea drilling schedule is the 'slow' operator, Ecopetrol, not Chaco.
Now that we have the rig expert on board such matters should be handled more efficiently. I have looked at this guy's CV and it is a cracker. We could not have a better man for the job, given his achievements.
Chivvying people who try to get info about progress and disseminate to fellow investors via the board is the beginning of disintegration of trust among the posters. I've seen it elsewhere. bickering and bitchiness.
Alea did not happen for good solid business reasons. It is merely put back for a while. I still believe they can get ia rig in there in a few days if necessary and get a result. they simply have put it on the back burner for a while, until Ecopetrel get act in gear, or not, and they find an alternative partner to sort it out. not an unreasonable possibility.
If we did strike oil at Alea in the short term it would raise the SP a little but it would also make us vulnerable to takeover by a hungry major who would get a viable minnow with huge potential reserves and we'd get about nowt, by comparison. I don't like the prospect of that after waitingthis long
Much better we hit oil in a 400m barrel field like primavera rather than a 38m one like Alea and then see where the sp goes to imo.
Primavera firm drilling dates on the way! who said that!!??

V interesting posts. As ever, patience is a virtue with this one.

Uponthe lowdown you seem to have some more info than is in the public domain - if you have looked at his CV - you must know who "He" is.

Do share it with us .

What else do you know ??

I wonder how quickly the market will respond to the award of the Canindeyu block in Paraguay. Its strategic position on the border with Brazil - opposite an existing Brazilian oil field - and with Petrobras having announced that it has diverted a multi billion dollar budget from its planned spending in countries like Venezuela because of the way it has been treated there - makes it very likely that they,Petrobras, will not waste too much time in renewing the approaches they apparently made to CHP about 18 months ago. From Petrobras' point of view it makes sense to strike a deal with CHP quickly otherwise it might find that CHP + another JV partner ends up sucking out their oil from the Paraguayan side of an existing Brazilian field. Petrobras moved very quickly to sign a JV for CDS's block which is half the size and not as well sited.

The Canindeyu block is the equivalent of something like 80-90 North Sea oil exploration blocks. I rate it as the most significant move they will have achieved, which is saying quite a lot when one considers what PLO and Primavera might contain.

Chaco will reveal the name in good time, bas.
I would mention it but I am not sure if he may be contractually bound by anyone..like Emerald energy whom he took from 10p to over two pounds in histime there. All based on work done in the Llanos region and the foothills of the Andes where Alea is located. Could not find a better prospect imo if you looked for a decade. I think all hand in glove from the start. the pieces are just falling together. poss more to come from this but let's let Chaco tell us what is happening. Be Patient.
Paraguay is first news followed by Colombian revelations plus maybe a new area near Alea..latter an educated guess.
Good luck to all long termers. Keep the faith.

Sounds very promising for the future.

Post 1566-Alea did not happen for good solid business reasons. It is merely put back for a while. I still believe they can get ia rig in there in a few days if necessary and get a result. they simply have put it on the back burner for a while, until Ecopetrel get act in gear, or not, and they find an alternative partner to sort it out. ?????

So was it for 'good solid business reasons' or Ecopetrol's incompetence ?

Chaco were ready to go on Alea, and Ecopetrol not. Chaco changed focus to getting Primavera and Puerto Lopez under way with the help of Expet, a local company, who seem to be more on the ball than Ecopetrol, the National Oil co.
I suspect Expet may be getting more of Chaco's business in future.
Chaco with the right competent 'operator' can draw on Alea whenever they choose. If another licence in the immediate vicinity became available with a conducive partner, who could work in close beneficial partnership with Chaco, then the scale of economics may be tipped in Chaco's, and the shareholders, favour to make the project more attractive, and profitable.
I doubt Chaco are going to fall out with Ecopetrol, the National Oil co, and jeopardise their growing presence in 'a very oily country'!
Good solid business reasons! Ecopetrol were not ready to go for 'environmental concerns'!

uotld - thanks for that - am reading between the lines and all is looking very promising. Cant remember who said it - but I probably should turn my PC off and come back in a couple of months - I know I should.............but probably wont

Up-thank you for your reply. I think i'll stick with the explanation given in the RNS dated 10/10/06 and it's possible consequences.

My pleasure, ncfl. I think Chaco and Ecopetrol came to a gentleman's agreement over that one. Graeme Stephens mentions 'environmental concerns' as Ecopetrol excuse for delay on a land based rig. The Heli-rig option would take too much out of the kitty at this stage when it can be better used in developing and guaranteeing drill dates for the 10x bigger Primavera site.
I think we shall see Primavera coming to the fore in the short term as Global energy(GED) get down to business and begin their programme on a cross-border chamber owned by both companies. That will be the kick-off for us unless, of course, Petrobras beat them to it by announcing a gas find in Paraguay first.
Let Chaco and their new chap take care of business. I believe all is going to plan, the new plan, now. Alea will be kept in reserve until such a time as Ecopetrol can arrange an acceptable entry point for a land delivered rig and, of course, lay on the means of taking away the oil that is undoubtedly there. It is pointless sending in a heli-rig at great expense, if the means to deliver to market are not up to speed.
I still contend that we may get another partner there if Ecopetrol continue to be tardy in this respect. A guess on my part here as I believe we may have other interests in the immediate vicinity soon; at least another option/partner with the means to access Alea in a mutually beneficial collaborative venture. I am having an educated guess here based on revelations still to be made.
Whatever; Chaco will be vigilant as to spending our money, as always, in order to extract the best value possible for their loyal shareholders.

Looking forward to next week now!

WILL BE TOPPING UP IF WE HIT 11.

i would not be at all surprised to see that happen as there is no real news due for some time from memory.
i took some flak here when i recently sold some of mine at 13 on the basis that i would be able to buy cheaper in due course.