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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.

buy on dips well things are slowly warming up here.

FG, If you are seriously considering a T20 my intuition would say do it this side of the w/e. Just a view. I also agree with your advice re patience although I can understand some feeling that we should have been where we are right now about 15 months ago. That cannot be altered but now is not the time to get bored and move on no matter how big that temptation is.

thanks shareshure ;-) . I feel CHP is getting ready to shine again!


the 30k buy just now is a good friend of mine ;-) (a non chp poster)

the past 20 posts have lost me ,,,: utterly confused .... Steveo. Regards. As for taking a short; its a tad too small for me personally . l will perhaps , and i mean perhaps, review that situ when m/c reaches in excess of 100M stg .. Now simply because i am not convinced by a companies case does not infer i would wish to go short .So please indulge me in clarifying what i have said that would make me want to "short " CHP. .Merely because i dont agree with the general consensus of opinion does not make me wrong. Besides shorting is a very serious tool ; after all more stocks usually rise rather than decline. Personally i dont short any stock unless one of four variables come into play . Their books are at best creative, and at worst, downright criminal or accountants/auditors/ FD resign or gearing is very heavy .{ ii } an abuse of shareholders funds by board/snr mananagement or breach of basic trust in knowingly passing misinformations or misleading interpretations to shareholders { iii} Company is no more than a fad or conduit for illegal monies; or a company with a heavy churn of senior staff ..iv ...s/p becomes extremely divorced from book value by characteristic market over-reaction ... Cynic Which man is an arsehole. ? ....@+ J...

TFC ,

Regards also..My point exactly, there is limted downside (you say 11p from 13p at time, take into account spread and you're looking at 10%), but potentially large upside, granted all speculation until they find oil (bar known reserves at Alea). So I wanted to point out that risk reward is worth the stake and that is why the share is still favourable at these prices if you are not risk averse. I would like to know how you surmise that rig will be delayed due to mechanical failure/damage rather than routine servicing. Is this is not also pure speculation? Even if it is it won't affect what is in the ground. You may decide it is overvalued at present but it is likely to increase until we have spud date and testing is completed. I beleive that momentum will continue to support the price and have therefore bought more last week. I will however be keeping a close eye on developments, if they are delayed alot sp will indeed drift to 11p.

As a holder emotion may have got the better of me, with regards to suggesting you might short it, I think I may have got a little attached to this share. If I was out of order I apologise.

Steve O

TFC ..... der Arschloch? Es ist mich!!

No man is an arsehole, entire of himself;
Every man is a piece of the excrement
(with apologies to John Donne)

now i'm upset .... thought i had exclusivity!

I think if GED's results are good, the investors over there not already in Chaco will start putting money in here as they will feel they are on a guaranteed cert. That alone will give us a couple of days of good rises on the run up to drilling, just like we've seen the rises with GED itself. This plus a driling RNS of our own, new fields and any other RNS, I do feel 20p is very possible in a few weeks. If we have good drilling results 30p is also more than possible in my opinion.

pure hypothesis and wishful thinking ..... but very much hope to lose my 100!

fatgreek you talk about the the rises in sp of ged,but you do not mention where they have fallen from,some 380pence to a pathetic 137 and no bad news to warrant the fall,i hope we do see a rise in the chp sp but lets not get carried away.

capetown - 24 Feb 2007 21:05 - 2495 of 2495

GED's previous falls have nothing to do with us. GED now have something to do with us as their field is in Primavera also! GED's drop is on the back of whatever else they as a company have been doing, of which I haven't been following but thats irrelevant as that is the individual companies performance... Now its a different story,,, with both companies operating in eachothers back yard, I feel I am right to say we have a connection now and operations carried out by GED will directly affect CHP, if they find millions of barrels of oil which is just up the road, it would endorse the fact CHP will find similar. Past history of another company isn't related to ours. And it's not getting carried away its whats on the table for all to see. There is a few miles only between the two blocks, I think 5 to be exact. So I think GED's operations right now are of interest to both us and them. I am not in GED but I hope they find good amounts of oil. my opinion of course, have a nice day.

Here is another posters opinion (not my own) from advfn...

trotting12 - 24 Feb'07 - 21:02 - 24116 of 24118


costas,,if we get good results,30p wouldnt even tempted me,,the fun is just starting at ged and i expect them to have a great week next week,if they come up with the goods ged and chp will do very very nicely.

ged,,should hit target depth on drill one,over the weekend,,by mid late next week they should give a early indication of result,,the tone of that rns will dictate our sp move,excluding any posotive news chp may release in the mean time,so i would guess chp should start next week quite strong with the pressure building all week.

fg

If GED do hit oil this week I think we will will see more than a couple of pence on CHP's price not even taking into account any other newes which may/may not happen.

All in all it is going to be a very interesting week either way for both stocks.

Fatgreek,
GED has fallen because of delays to its drilling programe i believe and stand to be corrected,a very small rise in the SP probably recent article in shares mag,
Agreed GED fall has nothing to do with us just pointing it out as you use it as an example of how its gone up,all i am pointing out is that it has gone up from a very depressed price,

CHP a high of 18pence is suffering with its sp also for recent delays and even if it goes up 30% there will be many who will still be waiting for 20p to break even,

Very hopefull that CHP will do well and lucky that i am in the black so far,but not getting exited just yet on the back of a 1% ged sp rise taking into acount the spread,

I admire your enthusiasm for CHP and hope you are CORRECT in your predictions for all us holders.

yuff - equally if GED hit dust then CHP may well fall back in sympathy.

stockdog

They would need to have appreciated first to fall back.But yes if they do rise on the back of GED then if GED do hit a duster then they would fall back, but oil has already been hit in this block 25 years ago but was not commercially viable then due to the low oil price and because shell probbaly wanted a bigger gusher.

why is everyone so hooked on GED? ..... just because it is the next door neighbour, does not de facto mean that CHP will hit the jackpot.

Cynic correct,and have you seen the graph for that share?

i have now, but while the chart pattern on GED is now encouraging, i have just posted there as below .....

"excuse me for being dense, but it seems unclear to me whether or not GED have actually found oil let alone in commercial quantities ..... if i am just being stupid, and a commercial well is about to start producing, why has the share price languished and even the rise on Friday was really not that exciting, especially when the spread seem to be 7/8p."

yuff, it is indeed probably the most exciting week of Chaco's history so far!