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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.

blackdown, Haven't been quiet for any reason other than deciding to let CHP unfold their news. Today's news is only the start of what should come this month:
- drilling dates for PLO
-drilling dates for Primovera
-drilling dates on Alea (Ecopetrel's responsibility, so might be slower progress?)
-GED finding that 2 of their 5 Primovera drills hit oil in structures which span their boundary with CHP's block giving CHP immediate proven reserves.
-Possible JV on Canindeyu, although possibly too soon during November.
-I would still expect some Corporate changes like a new Nomad, new Broker and maybe a strengthening of the mgt. team in South America to make the mgt. of the company easier than has been possible with so much of the executive team in Perth, but the assets being in South America.

Cynic, I would say of course to a degree you're correct but not to start attributing value to the block when the likes of Petrobras are getting heavily involved in the area and the potential of a joint venture to push forward the exploration process would be naive. It will be interesting to see what Hardman have to say on this, should it not be too late for the next update.

of course potential has a value of a sorts, but not, i would posit, of sufficient magnitude to push sp to say 100

one man's worthless patch of pampas, another man's asset.

How gauche can a gaucho be?

.

Very odd how little interest there is in CHP right now given that 2 of GED's 5 Production wells being drilled this month are believed to be into structures shared by CHP - ie they will have to share what they find in those two areas. Sentiment on CHP will change very rapidly once the ramifications of any GED strikes are realised;how soon that news will be available depends on GED's drilling schedule. Anyone any ideas on that?
As for more CHP announcements - accepting that these seem to have the effect of lowering the sp! - there should be drilling dates out for CHP's New Year programme soon since it will likely take a few weeks to gear up ready for a start after Xmas.

not at all ..... CHP aren't drilling! .... i thought they had given an outline programme, but can't find easily and am bone idle

Might be worth having another look at the GED rns of August 22, announcing drill programme for this month.

'Commenting on the rig contract and potential of the Primavera field, Stephen Voss, Managing Director of Global, said:

"The Primavera wells represent quick and cheap drilling and have the potential to materially enhance our existing production within a short time-scale. Importantly, the signing of the rig contract provides us with greater comfort on our proposed drilling schedule and also increases the opportunity to book additional reserves at the year end.

"The Primavera field could in the management's opinion be analogous to the Rubiales field which is located in a similar geologic position near the margin of the Llanos basin and is considered to be one of the largest producing fields in Eastern Colombia."'

I think some are just moving money around to shorter timescales like goo,pci etc that are drilling now.
Our time is fast approaching and I for one will be having one last top-up at these levels soon, hopefully even cheaper than today.

confess i made a very nice profit and quick at PCI and took it

Well done cynic, me too although I've kept a few just in case the story is good.

Sharesure: cannot find any info on which wells GED are drilling first. Thought there would be a map on their website but couldn't find one. I see their sp is creeping up though - in anticipation of drilling?
I also think it's interesting to see PV compared with Rubiales. I know this has been commented on before but I guess I didn't realise the signficance until now.

The next few weeks could be very interesting especially if GED drilling goes well.

Header updated in various places

Evening all, like several people here have been recently lured by the riches at GOO, unfortunately got overly cautious and only made 40% profit, bugger, still bird in the hand, watching the action cosely now but too sensible to buy at those prices until see the news. Re GED here is excerpt of planned ops from 22/08/06 rns.

"The five Primavera wells are proposed to be drilled or spudded prior to the year
end to a depth of approximately 3,000 feet each with estimated drilling and
completion time per well totalling only fifteen days. Rig mobilization to the Primavera field is expected to commence in November 2006
with timing dependent on weather conditions in the Llanos Basin of far eastern
Colombia where the Luna Llena contract is located."

They must be moving that rig fast as there are only 56 days left in the year and 75 days worth of drilling without mobilisation between sites, so not withstanding Xmas and New Year work ethic we can expect some excitement and updates to start flowing (excuse the pun) in the next 2 weeks.

Just read the updated header...the above is for those who didn't read it like me!!

Bit of a mention here in "which AIM oil and gas companies have suceeded"
http://www.oilbarrel.com/home.html

greyhound - interesting find. Thanks.

Nice 600,000x buy,
Interesting to see the odd large buy soaking up the sells while this sleeping beauty catches up on sleep

cynic

to save you having to move your finger chp are expected to announce drilling contracts imminently for 2 areas in January 07 ie 7 weeks.