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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.

slow and steady.

Well it sure is slow, nothing since 11.38am.
2517

A little press interest in the coming week would be handy, might be a write up in shares as they have been following it, would certainly help to drive a bit more interest. In the meantime apparently oil consumption expected to rise by 3.2% in coming year, add a few huricanes into the mix as it was quiet last year and (when? we are in production) should underline price handsomely, yes I know speculation..

But from 17th Feb it is year of the golden pig, and as I am said pig (although silver not gold) it means great luck, not really superstitious but you can't help thinking....

RNS would be handy, drill in place etc...

steve

"RNS would be handy, drill in place etc... "

Exactly what I want to see....won't get too excited until then.

Beau

Some thoughtless git just sold 500,000! Carry on

a rollover I think

indeed a rollover

beau- dont believe they have to rns. they may be drilling now for all we know?.

don't agree slithery one .... surely such info is price sensitive for share movement so pretty well (sorry about the pun on adjective+noun) obligatory

lizard

Kind of irrelevant in my view which news mechanism they use.

The point being, the Chaco Management need to give out the right signals by ensuring shareholders are kept abreast of developments and progress, hence the need for effective communication. Ever more essential, imo, during these times as the company is potentially on the threshold of moving from junior explorer to producer, very possibly a defining moment.

I've not been too complimentary of the way news announcements have been handled in the past and we can all recall in the last 6 months how positive news of sorts has been received like a slap in the face with a wet fish.

I'm hoping for an improvement in this area so let's see how things transpire.

Beau

just saying dont necessarily expect rns all the time on progress. rig on site, drilling now, drilled to depth etc etc. they can do this with updates via website which is cheaper.

Of course you are right on that score, lizard, I merely cut and pasted the comment made by big dave, so attached little importance to the detail, just choosing to take the general point made and comment as I did.

All down to effective communication regardless. We both agree on that mate.

Beau

anyway, in some ways would prefer nothing was reported until there is something concrete to say, even if bad ..... takes a bundle of hype out of the equation

cynic - 14 Feb 2007 17:46 - 2344 of 2344
anyway, in some ways would prefer nothing was reported until there is something concrete to say, even if bad ..... takes a bundle of hype out of the equation


Agreed, but i think this is normally the path Chaco take. You could never accuse Chaco of over hyping themselves !!

Hopefully in the next 6-8 weeks hype will not be an issue, cause the results will be in

Cynic, Thanks for the cheque. In the nicest possible way I really do look fwd. to handing it over to Trotting and I am would hope that he will generously reward his agent - but then again...?
As for comments today on commencement of drilling RNS I think that there is a view among some at Chaco, mainly down under, who do not see the need to give out information at every step. Most likely we will either get that information as an aside to other news being released or from reading Grand Tierra's website. So long as its's successful and happens soon, who cares.

rather hoped you would slag me off for not sending but admit otherwise in private e- .... lol!!

Just a thought.......I think that if we do strike oil, and trots wins, the cheque should go to charity! Im sure trots will be in a charitable mood if we do hit it! :)

just a thought......i think if we do strike oil, why not give both cheques to charity!

An even better idea would be that, if CHP strike oil on their first drill, then if everyone donated the first 1p of the price rise for every share they hold. There are 535,430,000 shares in existance. If you could persuade all institutions and holders to comply we could raise 5,354,300 for charity. The more you gain the more you contribute.

and i bet none of you buggers will actually match money with mouth!