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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.

Looks like another good start to the day

13 is my lucky number and I feel it coming on ;)

Investors wait patiently for Chaco Time

A busy 2007 could breath life into Chaco's share price after a pretty disappointing last year or so. The Latin America based oil explorer plans to start drilling on 3 projects, Platanillo,Peuto LopezOeste, and first up the Primavera prospect in Colombia. But the company admits that it may have to be flexible, with neither the timing nor the drilling logistics easy to predict.

In the meantime, with no revenues as yet, losses widening for the 6 months to end of September going from 380k to 590k.

However Chacos management remain convinced that 2007 will be the watershed that its investors are hoping for, a year in which it should make the sizeable transition from pure explorer to a producing company.

Shares says: a breakthrough is on the cards but further patience is required for now

.by Steven Frazer (Shares Mag)

Good start to the day.

while it is indeed encouraging to see sp ticking up by a steady 0.25p a day for the last few days, the chart below indicates there may be some quite serious resistance at about 13p as general chart resistance + hitting 200 dma

Most probably an unanswerable question at this stage, but does anyone have any sort of guestimates as to how high this share could go price-wise in the next year or two, assuming everything goes to plan drilling wise ? I obviously realise its only personal opinions tho, but just interested in the general consensus on this board

anywhere up or down ..... if no result, then don life jacket ..... on a technical view, all time high of about 18p is always likely to prove a significant resistance .... unless of course CHP hit the oil equivalent of Eldorado

tudwick check out Sharesures 1st ever post on this BB on page one it gives you a fairly detailed valuation and share price albeit 1 year ago and excludes news and plots since then

tudwick - my crystal ball tells me that "if all goes to plan" that the shares will be consolidated, say 15 to 1 and that anything up to and beyond 800p might be expected. I know - "I should take more water with it" but water and oil don`t mix.!

if consolidated at 15:1 and sp is currently +/-13p, then base is near enough 200 ...... by what logic do you get to 800p?

tudwick, 1p on the sp/1m barrels (CHP share) is a reasonable guide, with potentially double that if there is a takeover approach at some stage later in 2007. As for what amounts of oil CHP will find it's anyone's guess although Platinillo which may yet get drilled first should provide CHP with upwards of 48m barrels if all goes as planned. PLO and Primavera - I've heard varying estimates - but think that it is better to wait and see. If Hardman are right, and some think that they were encouraged to be conservative by CHP's nomad, then Primavera alone may be worth 120p/share.
As for current strengthening in the sp I think it is a mixture of:
- a seller prior to xmas having completed that process (either for good, or for now)
- a realisation that soon CHP will be drilling.
- GED's current/imminent drilling of production wells on their neighbouring Primavera block may mean that CHP becomes a producer overnight.
- speculation that some other important moves are afoot - which I believe is likely to be the case but we may have to wait a few weeks to find out what those are.

Thanks one & all for the replies, i'm in for the long haul anyway, but was interested in people's thoughts at this stage. Here's hoping

SS - I know you have probably said this before - but why do Chaco become an oil producer overnight if GED hit oil in primavera. Not sure I understand the logic. Apologies for being a thicko

Barry, GED's block has two structures which are reckoned to continue into CHP's block. GED are so confident that the five wells they are drilling are production wells, two of which might help Chaco; in the event that GED strike oil on those there is an automatic right for CHP to share in the output. Having said that, a look at GED's sp today suggests that they are not on the brink of a big strike at the moment!

Thanks SS

Just as well Chaco have no oil yet - so they remain quite unaffected by the $3 drop in crude. Lol!

Resistance at 13p is minor IMHO. I'm more interested in breaching the May downtrend, currently crossing the chart at 14p, before moving on to re-conquer the 16p previous peak.

200 dma often has a strong psychological effect as does all time high ..... but will rely on you to keep us posted on trend line ...... Fully concur that a strong break - i.e. reversal of trend - can be very potent

Everything's possible, especially if there is no follow through with anticipated news during Q1. The older I get the happier I am to acknowledge the less I know, largely due to the increasingly evident unknowability of life rather than any failing faculties.

As for Eldorado - we just need to discover half of the top bar of the first 'E' to perk the SP up no end.

Sharesure,
You can tell me if I'm wrong here, but I think what you are saying in post 1855 is that GED are going to the extra expense of drilling production wells rather than bog standard exploration wells, because they are so confident of striking oil.....Just wanted to clarify this as it re-enforces Chaco's confidence in the area.

Lincoln, Yes, exactly.