______

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.

Can someone also tell me what the charts are saying now?

Thanks.

KD.

Well, Keaydian, I know nothing but what I see is that (ignoring the phoney spike on Primavera Day - honest, it's a new public holiday in Colombia!) we've been in a downward sloping flag since the 18.5p peak of late Feb - typically a continuation movement from where we should break north again by the height of the original flag (12.5 to 18.5 = 6p) from the break out point which looks very like very close to today's close, say 16.50p, since we very nearly made break out today. That should take us up to another peak of 22.50p from where another downward sloping flag will most likely develop . . . etc.

Of course, sudden good news (or bad) would outweigh any pure chart effect.

The chart tells me to hold happily.

sd

Thanks for that stockdog - is it a device you use ourself and do you find it successful?

Sharesure, please see your email.

Regards,
KJ

Thanks Stockdog.

KD.

KJK, will drop you an email in next 30 mins.
Stewart, in answer to your query re Paraguay, I reckon that the local directors may be trying to get confirmation on the Bohemia area before getting to the UK. If they also achieve an agreement on a farm-in deal on condition that the area is granted to them, then that would be a really massive stride forward. I guess we just have to wait, albeit not very long.

just tried buying some more at 8.20am but there are 50 buy orders in front of mine, good sign though.

Great start- Is the report coming out today!

Camiladasi and Stewart3250 - thanks for that. My memory isn't what it used to be.... Will re-read my Chaco blurb!

when is the news out please.

The problems with dogs is that they disappear without trace for a while and then appear up some hole or other. So this is where sd is hiding! Didn't need to follow him but have and taken out a nice exploratory stake. Assuming there is no smoke without fire, or oil, that is.

Eric

Tanker, Sometime between now and next Tuesday morning in my view unless they are going to make all those present at the first Presentation insiders. Hardly likely!

Eric, good to see you wandering in on this one; what took you so long?

Welcome aboard Eric...It's been a good ride aready and it's only just started and now we have our doggy here too :-)
Di

Thanks, sharesure and dynamite. I'd been in somewhat safety first mode but decided to take profits on AZM and ASC and go for shorter term returns with DEBT and CHP. You can't argue against the quality of the subscribers!

Eric

should be fun...

Neety, you should receive an email from me; some replies I have done don't seem to get through so if it doesn't arrive please re-send your original with an email address.

sharesure . i have been in for a long time have 250 000. thank you for your post i am also in cey . prty lloy mrw . seo. fao. pgd. afd been in afd since 32p.

and vog.

Tanker, interesting list; if you know anything special on any of them click on the email for me as some folk get annoyed at O/T comments, although for the immediate time CHP seems to have gone to sleep. Know that will not last long.

buy cey a cert.afd 300p coming