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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.

Something definateley going on,people in the know buying again,expect a rise back towards recent highs soon,without news is my guess.

Think it may be the tail end of the line of stock which has been overhanging CHP for a couple of weeks having found a new holder. As to why that line of shares was being sold I don't think it was a reflection on CHP, more a necessity on the part of the last holder.
Also think tomorrow might be a very good day to mark that by some news of drilling contracts or other items. Hope that comes right.

Good to see you sharesure,i am not convinced i think in the know have been buying,if as you say any news tommorrow would add to my feeling that we are always the last to know,

The sp must go up soon on this amount of buying.

No such thing as "Must". The stock market is a fickle place. Would not surprise me at all to see it mark down one more time before moving up .

AGREED but it will go up,not bothered about the current sp price,in for the longterm

Anyone solved the puzzle of a trade of 3.4mil at a so called mid price - time for a coffee, at least I might get a kick.

Probably tha Cana Petrolium purchase that I said about on the 23 Nov.

Oily rag

You really take that rumour serious?

M

oily - According to Reuters, Cana Petroleum is (despite its name) a computer company.
http://stocks.us.reuters.com/stocks/fullDescription.asp?symbol=CNPM.PK&WTmodLOC=C5-Profile-1
I'm not saying you are wrong but it would be strange...although the company does have interests in Colombia and its name would suggest an interest in hydrocarbons.
We also have Cannacord Capital involved with this share...all very baffling.

BWD

It could be this one.

http://www.canapetroleum.com/index.php

Although some of the information does not 100% stack up!
Sometimes it thinks its an oil company, then it thinks its an IT company.

I think its a scam, a view that has been previouly aired.

m

whats this canapetroleum theory all about then??

robbi - like moneylender, I suspect it is a red herring.

Try this , it will confirm its BS!

http://www.redorbit.com/news/technology/727440/spam_spam_spam_spam_spam__receive_a_hot_email/?source=r_technology

M

cheers - thought much the same to be honest.

I posted this over on another thread, and still think it is possible:

Nick - what would they buy with it? I would expect them to acquire them with the placing funds which I believe is taking place, hence the static price and small spread. Say they did acquire Expet, it would give them a stake of 85% in Primavera (the major asset in the portfolio) and a stake of around 75% in PLO (which if you look at the nearest Mirador fault located 90 or so kms away could contain up to 100m bbo). I would say that would be good business as I dont believe that they would be too expensive to acquire. Also, if you look at the previous RNS, Chaco are setting up a small permanent office in Bogota, what better way to do this than buying a local company with expertise. If this did happen, Chaco would in turn be an operator and have more influence on both Primavera and PLO especially as Expet are one of the joint operators.

We shall see, but for those who are patient, I firmly believe that the final pieces of the jigsaw are falling into place.

Good luck all

Robbie

I posted the same scenario about 10 days ago, but I did not expect it to
continue like this and certainly expected some kind of update news from the company before now.
The volumes here are getting silly or the volume in the ground
is growing, so why isnt the share price!!

M

Robbie, I am puzzled by the recent dealings other than thinking that one of Merrels' clients has had a line of stock to clear ( probably for no other reason than they need to raise some cash) and I think one of the bigger nominee holders on the back page of the accounts has been happy to soak these shares up, albeit at a trickle, whilst there is no news on several matters available to be released yet, even though most, including me believe that to be imminent. I do not think the company is looking to place any more shares at the current price and if they had already done so they would have had to RNS that by now.
Other than that I do not know what else is stopping CHP returning to a higher sp and moving on up to reflect its increasing potential and the approach to drilling.

Sharesure
SP starting to climb back a little.

Good to see we finally got our long awaited tick up after all this buying

Tick up, what tick up, I don't call 0.5p a tick up. 10p would be a tick up.

Interesting article in yesterday's Sunday Telegraph re exploration companies.