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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.

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

bigwave, that was my thinking exactly with linking Emerald/Wardle/Chaco. Long shot, but even so things are happening in Colombia.

Stephanie, Shame to see you've given up on CHP. Understandable in some ways because the newsflow and progress has been so patchy and slow to date. Keep an open mind about coming back in - February looks likely to be a very busy month with news possible on several fronts, not just drilling at Primavera which should have at least one of the holes completed and possibly the second being drilled.
Paraguay might start featuring as well.

Sharesure
We are getting nearer to the action now.

been hearing THAT for an awful long time ..... think i'll stay in hibernation!

Darkest hour is just before dawn!

and then the heavens open and it pisses with rain!

Cynic, just wondering where you got your nickname from.....

same place as i got my e-mail handle = rancid!

Cynic----for someone in hibernation you certainly type well. I think we're too close to news/action to sell CHP now.
2517

cynic, Agree that we have been told 'news soon' too often only for it to either not materialise or arrive weeks later. Barring something catastrophic think that we should be able to believe that in February there will be some drilling at Primavera and that the chances of each drill being successful should be better than evens by quite a margin. Apart from that my contacts seem to be suggesting that there is much more that may be ready to announce around the same time. This time I hope that they are right because it is easy to see why some are getting bored.

now is definitely not the time to give up on Chaco, too much going on around Primavera field, will need to have wiits about you should it not be better than evens. Still management seem sensible in their appraoch to all this, only time will tell if its all been worth the long wait.

Cynic, dawn in spring is a wonderful time, birds singing etc, are you still in or have you taken a step back for now after all your derogatory remarks about little oilers?

i still hold CHP (and GOO and VOG for my sins), but my "derogatory comments" about minnow E&P companies still hold good ..... i really do not subscribe to the view that the odds of CHP hitting commercial oil at all in Primavera are remotely as good as "better than evens", let alone on every drilling, as has been suggested ..... A good strike rate is prob about 4:1

Cynic, suit yourself - I think that we have a conservative mgt. team.

well (sorry about the pun) my dosh is on the line too!