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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.

GED busy on Primavera over next 6 weeks.
2517

LONDON (AFX) - Global Energy Development PLC said it plans to drill three wells in the Primavera-Luna Llena field in Colombia.

GED update.

It has started to mobilise the drilling rig to the site, a move that will take three weeks to complete

Afterwards, it will spend another 10 days to drill the wells to a depth of up to 2,550 feet, followed by a 10-day production test.

'These three wells are intended to evaluate the hydrocarbon potential of the 'El Miedo' sandstone in the upper Carbonera formation,' Global Energy said.

other people's wells are fascinating but have no bearing on one's own ..... while GED may find oil, CHP could just easily find sand ...... ask anyone (mug) who bought into the ELP hype in Jaguar Field

As I understand it the field is adjacent to CHP licensce area and if succesful may have some % implication for chp due to them having a share of the lake so to speak. Only heard that on others research maybe someone could confirm

i think you are correct ... nevertheless, my observation still stands ..... you may recollect that ELP found bugger all in a similar situation

Who in their right mind would buy shares in a co with the epic---ELP, just asking for trouble ha!ha!.
2517

Oil prices moving back up could help as we get nearer to drilling.

nice one 2517,

bodeng I agree, winter here in the northern hemisphere, Iran bubbling a bit more, no progress being made there, Chavez screwing up his countries investment, all set to give oil a push in next couple of months I would think.

While there is nothing to add on CHP until the company does something (mid Feb?)or makes further announcements (hopefully much sooner), anyone who wants to get involved with a potential shell in the making might like to take a look at Worthington Group (WRN). It won't appeal to everyone on here but with today's announced property sale completion it should start to do what the Chairman and his co-director have been planning for the last year.
Apologies for this being 'off thread'.

Did you get into WNG when I mentioned it some while back?

I don't think anyone appears to have picked up on the Hardman update this week:-
http://www.hardmanandco.com/Research/Chaco_Resources_jan_07.pdf

Picked up on it but all that really matters is Primavera results. If its good we fly if not pastures green, the rest of the portfolio won't touch the sp after Primavera results should they be bad, and will only serve as a moderate pick up. Plenty who'll disagree and each to their own. After all this is nothing more than a free BB for every voice.

I agree absolutely with explosive. If next news is bad, share price will be hit hard - maybe as much as 50% and the knock on effect will be a loss of confidence in the management team. It mismanaged investor's expectations re PL and has some work to do to re-establish credibility.

Interesting article in Saturday's Times re AIM oil stocks. Winners and losers were listed, but no mention of CHP.

Blackdown, could you post the list of winners and losers please.

http://business.timesonline.co.uk/article/0,,9072-2569375,00.html

try this for the synopsis ......

Desperate for deals


Survivors, predators
Afren, Coastal Energy, EnCore Oil, First Calgary, Imperial Energy, Northern Petroleum, ROC Oil, Sterling Energy, Urals Energy

Potential targets
Ascent Resources, Desire Petroleum, Equator Exploration, Faroe Petroleum, Granby Oil & Gas, Meridian Petroleum, Petroneft, Rockhopper, White Nile

Strugglers
Cambrian Oil & Gas, Circle Oil, Forum Energy, Ithaca Energy, Landsdowne Oil & Gas, Medoil, Ramco Energy, Wham Energy, Victoria Oil & Gas

News out today on one of my other oil stocks, Emerald (EEN) on their current drilling in Colombia howing hydrocarbons. Anyway that's by the by, just one thing I noted was this comment... "This rig will now go on loan to another operator
to drill one well prior to returning to Emerald in April to continue with
Emerald's 2007 drilling programme."

Cynic, you have forgotten Oilex (OEX) which is a BUY.

Greyhound - very interesting. Emerald's rig was a few hundred kms away from our operations. However, our new man, Dr Wardle, was Emerald's main man in Colombia. Maybe he has called up his old mates and got an extra rig for us. Who knows? I have almost given up trying to work out what's going on.

Regretfully I have moved on from CHP (at a loss) as I believe the proceeds of this sale are better off invested in the Tomco (TOM) at 3p