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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.

Uponthe... re Unfair to elaborate ... think that you just did!! What you are 'speculating' about fits with a number of things that have been surfacing over recent weeks. Think the delicate negotiation period may have been passed now. Add in some corporate moves early in 2007 - some maybe in January - and that is why staying with this stock is likely to prove exciting very early in 2007 - and doesn't everyone need it after such a flat 2006?

sorry SS, but will believe it when i see it ...... Q1 for some good news would be nice, but this share (and most other E&Ps) is certainly very unexciting at present

Lull before the storm.

Perhaps news is close- a lot of detail given above.

uponthelowdown - interesting post. I have taken the liberty of pasting it onto another bb. Hope uou don't mind. If you do, let me know and I will remove it.

No problem mate. We'll see what's what when the erstwhile news appears. I thought maybe today but then there is always Thursday. Thursday is the sensible day of the week and perhaps would give a lot of interested parties, newspapers included, something to talk about over the break
If no news tomorrow then who knows. First day back at the office after New Year?
They are cutting it fine for Xmas now.

cynic, I accept that timing has always been a problem with CHP - caused by a combination of factors; the important part is that the content has always come through as trailed in the end. With the exception of a timely apology/explanation for failing to live up to assurances on qtr. 1 and qtr. 4 drilling of Alea/Platinillo. With a little bit of good fortune Uponthe...'s suggestion that it may now leapfrog both PLO and Primavera may be possible - with or without any site road. If the latter it may just cost more but might be worthwhile if other things drop into place.

uponthe... thanks. I would hate to see the "10p by Christmas" brigade get their way...but I can/will wait to see what it is announced. If there is rig/drill news I would like to think it will be copper-bottomed by now.
I wonder if they are waiting to lump some other announcement in with the drill dates (which are anticipated anyway) to give your slingshot turbo power.

BWD, I think it will take on a momentum of it's own, that will surprise a few, once it gets going. Just need to get those first bits of news plus maybe a few little surprises on top and we'll be on our way!

I like surprises...maybe something with the interims which should be tomorrow or Friday... but experience has taught me not to get my hopes up!

soon as the drilling dates and drilling start this will lift significantly, happy to wait till then, would top up if i had any cash at the mo, don't get a bonus in my career unfortunately...:-(

BWD, Yes..on a reality front the Interims are not likely to show much income as of yet. I do believe they may provide some insight for future potential. Better get some sleep now..eh? The excitment is getting to me.

Nothing special in interim, could go sub 10p to buy.

will almost certainly drift on news of delays

What a bargain! I'm encouraged by the statement and think the delays which we've known about and the logistical issues are pretty much factored in at this price. So Primavera could be first off but these 3 blocks are likely to be all coming together, hence the busy 6 months ahead. Plus regualar newsflow imminent.

sp will go down now and will raise again late april .

it is already at lower end of range of value as in Hardman report, if it goes any lower I'll sell my car and cycle to work, helps to balance the extremely mild environmental guilt, anyone got any thick gloves?

Seriously though, it is already excellent value for next years potential, although they still have to get anything up, but when those dates get closer expect big things from the sp.

Positive news will put it into orbit. Strong hold / add in my opinion.

in politically stable areas with good contacts and sound management, not content to fritter away cash but making concerted effort to maximise value for shareholders.

Sorry if this is a repeat - but a write up in Shares mag. today says

"Chaco Resources, the uk independent tapping prospects in Colombia and Paraguay, is pressing ahead by unveiling the start of a second phase on its Peuto Lopez Oeste block exploration programme in Colombia, having processed and studied seismic data at hand.

merry Xmas to all chaco holders, keep the faith, should be an intriguing year ahead

A good start to the day- a drilling contract next week would be great news.