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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.

sorry ss - nothing received so far. How very strange. Might be better through MAM after all ?

dibbles, doubt it makes any difference to programme but does demonstrate the growing interest in Colombia as having a lot of oil.

Down, down, down, when will the rot ever stop.

We should be getting news shortly for the final and signed aggrement from the primavera licence, may be neet week, which may turn things around.

Any way am holding tight and will add as and when.

Role on the summer and lets start drilling.

Before drilling commences there should be news on the independent report. I would expect them to confirm what Graham Stephens has said all along. He has considerable experience and a very good reputation as an exploration director to maintain. The independent firm doing the analysis is Hardman who are generally regarded as the best in the business. GS must have had a lot of confidence to have hired them instead of a 'soft touch' firm. He has always said that the area they have secured is the thicker end of a wedge shaped oil bearing structure and so Hardman's report should confirm that plus give a range of possible resources. That should provide a good basis for talking to prospective partners for moving forward without the need for CHP to raise more money in the medium term (or possibly ever)

Sharesure hi, i posted a few ago that the price would probably drop to 12p which a few on this board scoffed at, but at present it looks like a good call and without news the downtrend will obviously continue. I am a long term holder so not too concerned and totally agree about the need to merge with a partner for not only funds but speed as well. Keep us informed of any updates from chaco because at the moment we need some positive news especially for nervous few out there.

pisces, I'll post what I can. The only thing that has changed about the company in the last few weeks, ie after the Primavera west announcement, is that their prospects have improved. One small comfort in the sp drop is that that would not have been allowed to happen if there were plans to raise more cash. Small comfort I agree. The other aspect is that the sp falls have come on very low volumes so it indicates what will happen when there is an excuse for sentiment to change for the better.
I am a little surprised at today's drop if only because, if as a trader, you had a short running, would you keep it open at this sp over a 4 day BH w/e and with the prospect of press comment over the weekend and/or waking up on Tuesday to a 7.00 RNS. I would have thought the company might start to get concerned at the continual drift.

pisces, I'll post what I can. The only thing that has changed about the company in the last few weeks, ie after the Primavera west announcement, is that their prospects have improved. One small comfort in the sp drop is that that would not have been allowed to happen if there were plans to raise more cash. Small comfort I agree. The other aspect is that the sp falls have come on very low volumes so it indicates what will happen when there is an excuse for sentiment to change for the better.
I am a little surprised at today's drop if only because, if as a trader, you had a short running, would you keep it open at this sp over a 4 day BH w/e and with the prospect of press comment over the weekend and/or waking up on Tuesday to a 7.00 RNS. I would have thought the company might start to get concerned at the continual drift.

sharesure

That is exactly what has happened page 59 of the times today!

Online at http://business.timesonline.co.uk/article/0,,8211-2133828,00.html

Strawbs.

Nice rumour, hope its true.

Sharshure and Pisces,WOW what a rumour,wonder where they got it from?

tried to paste it on here,is it allowed?

Oil flow rates ahead of expectations,good luck to all that hold.

The Times is quite a supporter of Chaco; that is the second mention. Sunday Telegraph can also be expected to be watching Chaco closely but maybe they did their last piece too recently to pick up on this coming week's prospects. Suspect The Times piece is on the mark but only part of the story. I think what Hardman have to say on Primavera west is going to be the real eye-opener coupled with an Alea update.

Nice little write up in the Times, good spot Yuff. Let's hope there's more behind it and a bit of base building can take place at these levels.

Good article in The Times, page 59 it should certainly help matters and get the SP moving North again, here's the link.

http://business.timesonline.co.uk/article/0,,8211-2133828,00.html

How can flow rates at Puerto Lopez be ahead of schedule, we haven't drilled there yet?

Guess they're referring to the Alea field and have got their geography in a twist!!!

Kong

can't spell either (Columbia!!!) - they think we are in Canada

Well that says it all then

I'll try and post a link to the times article

http://www.timesonline.co.uk/article/0,,748-2133828.html

LL

Interesting to note in today's Telegraph that Taghmen Energy is looking to acquire the Colombian assets of Petroleos del Norte. Perhaps showing the area "hotting up"