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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.

Not the start to the week that was hoped for and really not acceptable given previous delays. Time for some changes in CHP's mgt. and the way that the company is run in my view.
Wish list :
1. Remove executive mgt functions spread over 3 continents.
2. In the future, centre on Colombia for Operations, and Strategy/Financial in London.
3. Replace some of existing Board here with properly incentivised directors who will also bring some sizeable institutional holdings so that they can act as a focus for mgt's performance.
4. Change the Nomad and/or Broker with one that understands oil expl. stocks.
5. Change the PR company in good time before drilling.
6. NO MORE DRILLING DELAYS!
7. Split Colombian and Paraguayan assets into two separately quoted companies and put much more effort than is apparent into bringing the Paraguayan exploration fwd. simultaneously.
And I guess I can keep on wishing since a similar list to the above was put to CHP mid last year and again before the AGM.

Sharesure
All good suggestions but not sure they will happen. In the meantime the SP should still recover with GED on schedule and drilling in 2 weeks.

sharesure- dont be daft two weeks come on.
its s america after all.

I dont think Sharesure is being unreasonable lizard, many of the points should have been acted upon a long time ago! I never understood why we have offices spread over 3 continents! and i dont think Daniel Stewart are up to it either! Get in a broker with experience in the sector and they will bring with it some extra research on top of the Hardman stuff! All excellent points, whether we have been delayed or not!

SSure

My take precisely.

Clearly the latest recruit, the doyen of Columbia allegedly, Wardle or whatever his name was, has no clout or handle here whatsoever, the operator just fudge along without any pressure or input from this indolent lot. A whole host of senior managers hanging on to salaries as the default negative news flows out again, unlike the black stuff. So tell me, what the duck were they all doing in Columbia last week then? Oh, I know, I nice little break and a couple of tequilas with the operator....never mind, they are only shareholders.

Frankly, this is just not good enough.

Very very disappointing.

Beau

i agree with bodeng. signals out of ged will react in chp sp. they have spudded so watching with interest.

Lizard, not being daft at all. Look at the slippage on Alea, the abandoning of PLO (after giving it such prominence) and Primavera has been put back more than once. Patience is one thing, fossilizing is another.

.

ss. you dont appear to be happy. will you still hold then?.

Lizard, Yes, because I am sure that if I am thinking like this, so will certain others eg WDBN (as was) who must be feeling that their patience has been tried to the limit.

thought so.
its frustrating but not unexpected. they should imo give longer timeframes.
makes life easier that way if things happen quicker it doesnt cause any drama.

they are new to operations really in this region so hopefully they will learn.

Possibly harsh, this could equate to circumstances beyond their control...


The Operator, Gran Tierra Energy Inc, has advised that the rig is currently in
Colombia and is being assembled and serviced before moving to the Cachapa
wellsite

we all know how difficult it is getting hold of rigs, nowadays...

share sure

Sometime ago you hinted to me that CHP may well be getting hold
of GED's rig before them, this obviously didnt happen as GED are now drilling in Primavera.
Any further thoughts as to why things didnt pan out the way you expected.

M

sp is now bang on 200 dma .... though hardly a fundamental reason, one would hope that this will provide the support required

M/L None to post - just picked up someone's wishful thinking. (now obviously)

Any downside should only be very temporary, it is another small delay but the geology hasn't changed. Rig procurement does need to be sharpened up alot, it had better be functioning correctly....

But at least they let us know something, better than keeping us all guessing. Either way by easter we should know one way or the other

Whilst I hope that GED is successful in Primavera and that has a positive effect on CHP, we really should not be hoping that work done by another company will drive up our share price. We should be doing all this ourselves by now!
I understand that today's news may not be because of any failings by CHP mgt., but this is nevertheless the third disappointment in recent months.
We are at a crucial stage and any failings now (real or perceived) will not be tolerated by the market. I am surprised we have not been punished more this morning but mgt really need to pull themselves together. If they did go to Colombia then I hope it was not just so they could hear the disappointments first hand.

bwd- thats the way it goes though sentiment driven.
if ged have positive results chp will move quick if they dont it will move quick the other way. ged testing three wells back to back i believe so chances of success are favourable.

SHARESHURE,
Your hard work on chp will be rewarded!!,13.25 close today?

Capetown, I suppose at 0.5p off CHP has got away with today's RNS comparitively lightly. That wish list I posted earlier is nevertheless an urgent requirement in my view. It could and should have been addressed last year either in whole or where possible but too much has been allowed to drift.