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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.

Come on guys,all cynic said was that if there was no oil find then the sp would fall,

Yes, of course CHP is speculative, (like any other share including a few FTSE 100 stocks of recent times,) particularly if you evaluate it on a drilling by drilling basis since there are almost certain to be some dusters; but, if you hold the shares over the whole currently funded drilling programme, then it would be very unlucky/inept for the company not to strike some oil in Primavera. As for the re-drilling of the plugged hole in Platinillo, it is not a case of whether there is oil since the previous drilling already showed there to be a commercial find. The drilling of a step out well will show just how much more there is, and if the field is full to spill point. The upper sands which were not tested first time round will also be explored.
Platinillo once it is unplugged and flowing will likely support a higher sp on its own so to a large extent other than the vagaries of the market and the oil sector in particular the value of any investment in CHP seems to be reasonably well covered. The main area of risk remaining must be the oil price and political factors.
Anyway, don't respond to this as I cannot be bothered to post any more on this issue.

we shall see ..... as i said, CHP is part of my spivvy portfolio ..... most unlikely to add to it, but then shall probably continue to hold all 3 too

Who cares ?

CHP is a BUY at 10.75p (mid price)

Perhaps, spivvy is speculative wearing lizardskin shoes and a sharp suit.

Public opinion seems to be that CHP is worth about 10.65p a share these days. No doubt the book-makers have judged it by its jacket.

Exactly n/2-- who cares ? ( cynic aside , who is long - he tells us ) I don't care
what other peoples thoughts are, as my investment in CHP / GED are based on
my own reserch and the +/- of good flow rates in their proven area.
Of coarse its a gamble. You don't get anywhere in life unless you take chances !
Do not be put off by MMs tree shakes / cynics / critics / etc..
'Well' thats my 1st post for this yr.-- lets see ?

700,000 CHP @ 10p
80,000 GED @ 1.18p

and adding on dips

Regards and good luck---------NR

Well SD and Cynic I hold CHP and GOO (sold half on doubling of SP so on a freebie)and many many more speculative stocks like VML and HYR. My whole portfolio is made of them and it is up 270% in 3 yrs....now and again I lose everything like NML (sorry SD) but every now and again one makes me alota money GFM 29p-89p and then again 66p and still holding at 113P. I held SEO 4p- 26p and 11p-14p but definitely no longer in SEO. CHP I'm holding cos' the potential is still there...these are all stocks you gotta be in if you are prepared to lose the lot ...occasionally I do!! Most of them do ok ish...30% increase or more this could be CHp or it could be more likely a double my money job in which case I will sell half and go on another freebie unless of course it becomes less risky like KMR 14p- currently 43.75p in which case I will hold for greater profits. If I didn't think like this I would stick the money in a building society :-)
Di

Great answer Dynamite, win some, lose some, that's the nature of the game.

there is a continent of difference between putting all your money on a few dodgy shares in the vague hope that a couple will come through and putting it in a building society ...... as with most things in life, a balance brings the best results in the long run ...... or to use the analogy of the goldrush prospectors - a handful made a fortune (which they probably then blew) while the great majority went away with zilch; Mr Levi and his ilk were the ones who made the real money

I think we have all got the point. In fact, we all got the point some time ago and this game of ping pong is getting very tedious.

If CHP strikes oil the company will increase in value, probably substantially. If it doesn't it won't. For those that don't like this level of risk, there are plenty of other investments to consider.

Therefore cynic, are you suggesting maybe we should be looking at CRA and the like.

Cynic...there is also a 'continent of difference' between a doggy share..YOO for instance and a speculative share like CHP.
Di

YOO???? ...... CRA?????

was the message this morning that Cantor Fitzgerald had bought into chaco, or have they sold out ?

bought in

tud - increased by 3.75m

BRING IT ON CHACO!!!!,

The increase in holding as per RNS does that explain the two 1mill buys last week + the 500thou,x3 buys?

oil thats what it means,buy,

Oh how I agree - my portfolio is currently 83% up and I only hold speculative stocks. Its the fun I like. More serious cash is held in boring but necessary ISAs and PEPs