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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.

Daily Express - Hopes of a positive drilling update from Colombia lifts Chaco Resources

hmmm looking good...I'm hoping this is going to be another NOP for us all :-)

Its strange, the news article refers to drilling at Puerto Lopez again, whenever I've held oil stocks before you normally know the rig is on route, now on site etc.

Could they be quietly drilling now??????

Or maybe it's an update on planned drilling??

Greyhound, I do not know what drilling may or may not have taken place; sometimes it is hard to find out that sort of information, either because it is being done by an operator or because the company keeps it very quiet forcommercial reasons.
The current sp reflects the Alea reserves at their current level. Those of us who have researched this company for some time know the confidence that the mgt have in their seismic for the extra potential there and also what they should find in the other exploration areas; we also know that the mgt. are clever and would not employ a firm of the calibre and reputation of Hardman Resources to carry out an independent review without being very certain that the report will do anything other than independently endorse their views. Sit back and watch this stock march forward.

Dibbles: I've spent 20 years working for national newspapers - and, I have to admit, fact checking ain't what it used to be.The Times can't even spell Colombia. But there again.... sometimes they get it right....

Bigwavedave, I know the journalist that wrote that piece; he didn't get it from me but when I spoke to him yesterday he was extremely confident of his source. I hope he is right, although I can think of many other prospects which Chaco are likely to announce and which I would have thought will happen sooner than Puerta Lopez. Just have to wait and see.

Thats what I was getting at, we've had two rags now mentioning Puerto Lopez and although I wouldn't buy or sell on short newspaper articles, it does seem strange that both state PL.
I thought we would hear drilling news on Alea first but any newsflow is welcome.

I think you may be right there Sharesure, we are all aware that rigs are hard to come by at the moment. It would not surprise me one bit to hear that G Stephens had jumped the queue, obtained a rig from a contact on the quiet and was setting it up as we speak.
I dont think any of the other operators who have been waiting patiently for a rig in the area would be happy seeing Chaco churning out oil currently worth $70+pb before them.

Sharesure/MPH - in agreement. Certainly it seems that positive news is lurking, whatever that may be but with the experience of our management team I feel reassured that it's only a matter of time. Is it a certainty that there is a round of investor presentations in May or hearsay?

Greyhound, It is certain since I am going to one immediately after the May BH. Don't know if that is the first one they will have done. Suspect not, and that is why I think that there will be some general news release before that weekend, otherwise it would not be fair and/or legal to give only a small group of attendees information which is not generally available. Interested to hear from anyone going to a briefing next week either on here or by email.

Thanks Sharesure, good to know.

sharesure - re daily express. Thanks for that. Always happy to see CHP getting some attention. I hope he's right too! I'm happy to wait but confident there will be a succession of positive announcements in the near-term and through 2006. Cheers.

Bigwavedave, My comment was referring to the Times article on Good Friday. I think that the Express were just doing a 'me too' article to say that they had noticed the 'rumour'. The Times seem to have this on their 'one to watch' list which has to be a help if they keep popping up with snippets of news/gossip since it may make it too risky for shorters to sell and then denigrate the efforts of Chaco's mgt. in order to make a quick profit at the expense of the investors who actually are interested in Chaco becoming a South American legend.

Interesting piece in the Times today. Taghmen Energy will pay Petroleas del Norte of Colombia $32 million for 6.9 million barrels of 'probable and proven' reserves. This equates to $4.64/barrel.

A useful benchmark for Chaco? No indication, however, whether Taghmen are buying other assets/taking on additional liabilities within this price, so direct comparison may be flawed.

Sharesure - thanks again. I think we are on the brink of something good. I am waiting for the statement from Chaco which says "I told you so."

Some interesting chunky deals been going through, perhaps a bit of stake building.

Looks like a good time to accumulate as news are coming up soon.

Seems to be quite a few delayed trades going through.
2517

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