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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.

All buys so far but volume low at the moment.

Sharesure good morning,

MAJESTIC it is then.

Sharesure, Capetown: are you into crosswords or something? Sounds like a cryptic clue...

BIGWAVEDAVE,in short NO,

Looks like it will be a majestic rise today dont you think?

see chart on post 1892 ..... sp now hitting 200 dma ..... will it falter or is there sufficient interest or momentum to force it through and to hold it there?

Cynic,good morning,lets hope its the latter,as it has been prety stagnent at 12/12.50 range.

capetown----re post 1910, I have the same effect on sp's - just when you think it's safe to say something positive WALLOP, it bites you on the bum. Cynic looks like you're correct about the resistance, it may take a couple of attempts but I have no doubt it will break through, hopefully today.
2517

Looking for the break up through 15p to reverse the dominant trend.

free stock charts from www.advfn.com

2517GEORGE,panic NOT,it did this yesterday and went up again

There will also be many bored holders who bought at 16/17p last time we had a rise who i guess will be waiting in the wings to sell

thanks SD .... a very useful chart

Bwd, intentionally cryptic; all will become clear soon. Meanwhile we could do with a few more followers taking up advance positions. The drop back is only temporary in my view as I have been asked if I'd like to sell some stock. Very easy to answer that one!

Sharesure - yes, thought so. And they are talking about "magic wands" on the other thread now. All very mysterious but I am content to wait for the proverbial rabbit to be pulled out of the hat. Meanwhile, hold 'em off as long as you can!

Sharesure,the wait is killing me

Very quiet after such a good start.

purchase of 150k at 13p and they drop the price well down on the bid to get some stock in.

If this was a liquid stock where the current price was based soley on buying / selling pressure and not mm intervention - this stock on breaking the downward trend would go only one way UP!!!
With news just round the corner (which two months is) for a chance at possible 120p increment (40p wouldn't be bad would it) there is no way without mm playing games - setting there own valuation - this share would be way ahead of it's present valuation.
Still no worries with Primavera, Plo, Alea and the Paraguay acreage even the mm's will go with the flow.
Why?
It will suit them to do so !!

KirkA, You are right about liquidity or lack of it. In the Annual report some 63% of the shares were held within 20 blocks, only some of which were multiple nominee holdings eg ex WDBM, now Evo. If the qualification bar was lowered a little more to cover all 3m+ shareholdings, I would estimate that it would be likely that some 75% or more of the share register would be included. Whilst it means games can be played now which is annoying, when news of oil/gas strikes comes in, then the lack of liquidity will exaggerate the rise in sp.
All the same, it is frustrating to watch the sp be manipulated lower after such a strong start this morning. The current sp is below where it should be even without any speculative element for drilling prospects to improve on existing known assets like Alea.
Chaco's day will come in the end but it is certainly requiring from us abnormal doses of patience at the present time.

Sharesure
Will you explain on the other bb about the liquidity problem it may explain why we can't keep the SP up.

At present the same small % of shares are being traded between private investors on a daily basis.
The large share holders - the holders with 75% of the share capital are not trading. It would not pay them to buy or sell in quantity there are simply too few buyers or sellers.
Market Makers earn money by creating volume share movement. With the limited true volume of shares available they create maximum volume by trading on the hopes and fears of the few.
Move the share up the hopers buy in - take the price to the artificial resistance point and sharply move down.
At this point those who hoped for the big pay out turn fearful and sell only for the next set of hopefuls to buy back in at an artificial support.
This state of play exists because the price of this share in the eyes of the small investor is based on rumour. The large investor has faith and sees the picture.
The support and resistance levels in CHP's case is market maker based. There are not enough buyers and sellers to set true market support and resistance lines.
The trade pool has become very shallow and to create the maximum volume has become more volatile.
When company making news arrives the new influx of small investors / day traders / short term investors will create a demand far exceeding the pool share. Price will rocket towards the consensus sell valuation of the majority holders.
Thats why I'm waiting for the market price and not the makers.

Happy to hold for that news !!