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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.

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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thanks for your time

The sp re-attaining 16p is significant to how it will go forward next week. There is a large amount of very positive newsflow due out over the next 6 trading days, ie before the analyst presentations which have been scheduled for end April/2/5/06 onwards. Refer to the header on this thread, in particular to the latter part of it. If there is a conclusion on some of those items over the next few days, then Chaco's mgt. will have made a very significant move fwd. in building this company.

Sharesure
I think you are right-We seem to be rid of the negative posters on the other BB at least.

That was a good recovery for a short week.

if other BB = LSE, that is just because it's down for a few days.
I hold these too, but do not see sp going through the roof.
I am quite sure they will finalise the current licence sy=tuff and no doubt secure more ..... but though that may underpin the price, it surely won't (or shouldn't!) get that exciting until they actually start drilling (still a dangerous time!) and actually find the black stuff in good quantities.

Cynic I agree, until reserves are proven and the cost of production has been gained I have no reason to get on board. CHP on my watch list only because its very much discussed on other threads on moneyam.

An independant review of assets is taking place as we speak. In may well already be on Martin Groaks desk.

If Hardman confirms anywhere within 50% of the 400m barrels in place as estmated by G Stephens then unfortunately you won't get chance to get on board at anywhere like these levels.

As far as production goes, please read Sharesure's header. Chaco are more likely to either accept a bid or negotiate a joint venture prior to the production stage.

As an example say Chaco sold a 200mb proven field to another more experienced driller for as low as $5pb (I am led to believe that the average profit per barrel for oil producers is $25pb when the spot price is $60. So $5pb would seem a fair discount for the risk)

Thats approx 588m in Chaco's pocket. ($5 x 200m / 1.7)

Even if they threw in Paraguay, Alea and Puerto Lopez for that (which I doubt they would) we are still looking at 1+ per share. A pleasing result for any investor I'm sure you will agree.

Looking at it from another angle, by buying now you are of course at the mercy of the Hardman report, however even without Primavera I believe the current price is easily justified by Alea and Paraguay alone.

Take a poor scenario:
If Hardman were to come back and say, "sorry guys, that field's only got 75m proven"
That is still 121m (55% x 75m x $5 /1.7) worth of oil to Chaco at $5 pb, if they were to accept a takeover.

However if they decided to drill that, and achived the $25pb profit obtained by most other small oil companies then thats 606m worth of profit. Which takes us into the 100p+ level, admittedly on a longer timescale.

You can see why myself and others rate this share so highly and are not fazed when the price drops 4pence and the shorters climb on board. Ultimately the true value of a company will always prevail.

That is not investment advice by the way, mearly my take on the current situation. I'm sure many will dismiss 100p+ sp levels as ramping, without reading and researching fully themselves. That is their loss, I am confident and while the story is still as sweet as it looks right now, no pullback, tree shake, bear raid or de-ramp will get any of my shares.

As always please DYOR, IMO.

M_P_H - OK point taken on the reserve but still a small if. Now on production and please feel free to educate me if I've missed something here. I see no soil/core samples info, for all we know the "oil" could well be sat within a ferrite plate or similar.

Just a snippet from Global re Los Hatos 1 which i believe is next to us re Primavera
and the Mirador formation continues right across Chacos bit, the thicker end.
So you can see the potential and hence why i am holding long term. dyor aimo etc.


Global Energy Development PLC ("Global" or the "Company"), the Latin America
focused petroleum exploration and production company (LSE-AIM: "GED"), is
pleased to announce positive test results from its first exploratory well on the
Los Hatos Exploration and Production Concession Contract area in Colombia,
namely Los Hatos 1.

The Company perforated and tested the Mirador formation of Los Hatos 1 at a
maximum rate of 408 bopd and 700 mcfd with a total maximum rate of 525 boepd of
36 degree API gravity oil. BS&W was only 3%.

Los Hatos 1 will be placed on continuous production in seven days and means that
the Company will have production from five different contracts in Colombia in
addition to holding high-potential exploration acreage positions in Colombia,
Peru and Panama.

The Los Hatos Contract, which was signed in November 2004 and in which Global
owns a 100% working interest, covers 85,000 acres located in the central Llanos
region of Colombia and is adjoined to the Company's established, producing Palo
Blanco field within the Alcaravan Association Contract. The Los Hatos Contract
is subject only to an initial 8% royalty, with the size of the royalty to be
determined by future production levels.

This taken from Chaco report re Primavera and Mirador formation.

After extended and discreet negotiations, the Company was able to secure the
block which covers an area of approximately 146,100 hectares and lies north east
of Bogota. The first year programme involves the reprocessing of 300 km of 2D
seismic data and the drilling of two shallow wells to approximately 3,500 feet
in order to penetrate the Mirador formation, which is the principal reservoir in
the Llanos Basin. Other productive formations, such as the Carbonera, are also
present within the block acreage.

MPH, Interesting figures and I think that applying a heavy discount at this time is prudent until the Hardman Report is available. I have been told that the company is very pleased with what has been fed through so far on that report (told about a week ago) so the report could now be in a finished format now. None of the local directors are in Bogata; I understand that they departed on Thursday for a series of meetings somewhere else en route to the UK so don't think there will be any more information until they get to the UK next week sometime.

Sharesure

Have you and Martin Groak ever been seen in the same place at the same time?

Lol!

mph

Judging by the large buys this week others share your sentiment.
Things looking a little healthier this week, and oil reaching new highs this week are bound to help, all in all a good week after a few disappointing ones after chaco's best ever licence approval!

Re #229 I never reveal where I hear my information. Up to you whether you trust what I say; personally it makes little difference except that I hope by helping others to know more about what they are investing in, I will also continue to get help from them when they know something which might benefit me.

Sharesure,
Very good momentum on sp and good to see those large buys begining to feature on this stock,as always many thx for your fantastic posts.