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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.

I was thinking of putting some money into CHP. The price is below my exit back in March (14.5), which is a little surprising considering the improved assets/prospects. I was waiting to see if GED provided any positive news before commiting any funds though, as that would give me some confidence in the share price (having only just averaged a profit last time). Now I think I'll wait until the volume picks up and some kind of direction is established before putting some money in.

Strawbs.

Nice 100,000 buy after the bell.

RNS out - but so far as I can see - it has absolutely no relevance to CHP !!

Agree with that and if a lower sp is to follow May well top up with profit taken in GOO.

Back in this morning (sooner than I thought) after the drop triggered a buy order. I can't find any bad news anywhere so I'm hoping the MM's have done me a favour for once by dropping the price......

Strawbs

don't mortgage the house! ...... at best, CHP is a high risk play with only "blue sky" by way of true assets

Don't worry Cynic. My investment might buy a large shed, but not much of a house these days..... In fact my entire stockmarket investment is only 20% of the profits I took out earlier in the year, so while I'd be annoyed if it all went up in smoke......I won't lose any sleep over it.

Strawbs.

Just short of 4m shares traded, high volume compared to recent days, and no news either.
2517

Volume is down to T Winnfrith saying he's scaling down his stakes in AIM stocks - Chaco included. Seems an odd decision given recent acquisitions of ne and expanded blocks + being nearer to drilling. CHP needs to anounce those dates soon for Jan/Feb 2007 drill programme (in line with the chairman's AGM statement). Think TW is totally wrong on Chaco but each to their own.

With a 2 : 1 ratio in favour of buyers atm, it would appear that a good many investors disagree with TW.
2517

Aye, hes getting older and his balls are getting a tad smaller now...:)
cant ignore his words of wisdom though...

Some might suspect him of trying to engineer a buying opportunity. It does strike me as odd that all summer when not much was happening he was rating CHP as a buy at a higher sp, then as we approach the period when CHP should show its potential ie drilling in qtr 1 2007, he advises selling. That doesn't add up even if he cloaks what he is saying by stating that it is a general concern with AIM stocks and in particular the market's decision to admit some Chinese IPO's. He has apparently also rubbished GFM; hard to see why as that company has delivered on every promise it has made and is now extremely profitable.

Don't get confused by what T W says and what he saids on behalf of E K.

The only thing you can be sure about when T.W. speaks, is that his mouth is open.

Yet some people would dispute that, suggesting he talks out of another part of his anatomy.

Anyone know if the 2mil t trade was a buy/sell?

Re the 2m trade today I think that it was probably a package of sells which has been mopped up by the same buyer who has been soaking up a load of CHP shares recently. I have heard of one City source which seems to have an insatiable appetite for stock in CHP when it is offered at bargain prices.

In a perverse way I think that over the next couple of weeks TW's stance may have done us a favour on two fronts:

a) Jolt the mgt into getting on with releasing news on, in particular, drilling dates.

b) Provide the extra impetus to the effort already being exerted from some quarters to have more senior mgt. and Board members with both oil production experience and track records in negotiating complex deals.

Whereas both of these issues might have taken a more leisurely pace, I suspect that they will now happen faster. New mgt. is almost certain to be accompanied by new financial backers taking positions so we may yet get an early rebound.

I think TW is being given too much credit over this, he has recently tipped stocks and had no effect on the sp performance.
The thing I liked most about Chaco when I bought in was the early guaranteed production/earnings from Alea which could then be used to help finance the other assets or at least shore up the sp as a producer.
We all know the reasons behind that delay now but a delay it is, whoever you blame.
Now that we await overdue drilling dates nervous or impatient sellers are almost inevitable imo.
There is little patience or forgiving in the current market especially on aim so I hope that Alea is our only delay but I don't think TW should get all the credit.

It's a fickle market, punters seem happy to pick up stock at 11p this morning. I for one was never in this stock for the short term fluctuations.

over 1m M trades this morning at full offer - and no movement - I dont understand ?

Dibbles, I'm not crediting him with all of the fall, but either it was coincidence or his comments were the catalyst for a spate of sells. In the current market it doesn't take much to spread nervousness. I have seen it used elsewhere when it is believed that a company may be nearing putting out news but that it is not quite ready. There are a range of items which could/should be issued over the coming weeks. Whilst these are certain to be reaassuring to shareholders and may strengthen the price if the market appreciates their significance, only positive drilling results in the New Year will really move CHP forward.