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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.

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!

Exiting ?? oh indeed -absolutely bloody rivveting.I believe the general market is entering a very topsyturvy whte knuckle ride with emphasis on company fundementals alone. .A "swan market by any other name Not alot of activity on the face of it; but very hard legwork below the surface. . .....Currently the market has a severe downer on pure expos alone. Market bias towards producers / expos with solid "banked " reserves and strong cash flow is obvious; and even with all going to plan and "Big oil" drowning in cash , you are far from home and dry ...Bellweather BP has shed a tad shy 2oop this past q . Ever since oil began its rise $20 to $70pp pbb it has been accompanied by a plethora of IPO s to the junior AIM market- all related to the mining of hydrocarbon -covering all continents . Many noteable exceptions exist , BUT 75% at best are whimsical and whose acreage will never even see a drill-bit . and as such , and in a cash hungry sector , they are doomed to failure. While most will ultimately fail - or slowly decay - there are a few like CHP whose portfolio is impressive enough but the capital juste isnt there so to drill those most impressive sites so a j/v with "BIG OIL " is absolutely vital, and that, for the most part, is NOT neccassarily a good thing as many of you seem to imagine. . But without them CHP are utterly reliant on the results of the Primavera permit .,,,,,and get cash generative at least thus giving them a situ from which they can negotiate from strength. But if they are non commercial finds or worse CHP will be in a very unenviable position . Until Primavera strike commercially all they have is bits of virtually worthless paper-1/3 mn at best } and all this at atime when the market is entering a fathomless unpredicable cycle since Q4 2005 . ln addition . Dont forget. Even though a small delay in arrival of a rig seems a very small matter ,lt doesnt mean the operators team wont need paying as per contract. ! l cannot conceed there is more upside than downside but unfortunately it is out of CHPs hands as such now. More a question of geophysics now...and good luck !!..............and lest you be lucky enough , a shrewd hardfaced management that can cope with the ever increasing demands "Big oil" inflicts on minnows in which it enters a j/v and thats even if "BIG OIL " is even remotely even interested which i doubt ...........otherwise good luck ..............................juste looking with interest at a chart like the Alps Add 50 and 180 day eda its like the Andes .Add bolly bands its like the flaming Himalayas,,,ln short;,A short term traders absolute bloody dream . oh well you pays ya money ...et qui sait ? hehe .. ..

very well said indeed, i think a few are getting carried away here, lets find some black stuff before going overboard....

interest picking up.

Looking fwd. to a 'majestic rise' in the sp at last. New Board puts emphasis on production and sp but still retains non-execs to sniff out other new prospects although suspect that Dick the Dutchman might be quite useful on that front too.

SS - you were asking for change and it appears to have happened. Is this to your liking?

someone turned the damn chart upside down

Cynic,looks like someone about to turn the chart back the right way up?,

SS,good news,lets hope the sp and the markets reflect todays rns.

funds for the new deal?. looking for some blue today. last few days has seen some decent buying.

Morning Lizard,and it seems the buying continues,should be back to 13.25/13.50

Blackdown, yes, this bodes well. Ignore the temporary 0.25p off - don't think changes are always appreciated for what they are. The exec. directors from the GMS days are now in the background (half way house to some of them ceasing their involvement I would suspect); We now have the c550m shares that the thread header predicted nearly 12 months ago so calculations of 1p/1m barrels remains intact. Expect the Nomad/broker and PR firm for the company to be changed fairly soon since I cannot see GC putting up with them. Would like to know what GC's package is; I would hope that it is heavily incentivised towards the sp being much higher. No doubt his options package will follow as another RNS.

Cynic are you sure it was not you that was upsidedown this am?,there you go nice and BLUE,enjoy

Sharesure hi, at last i understand your cryptic clue,lets hope whatever flows isnt white, red or rose! Black would be nice though.

make sure you spend or even invest your new found wealth (0.0025) very wisely .... lol!

morning to you capetown. deal to be updated in a few weeks (rns 19/02).

Cynic,i cant spend my new found well as i am HOLDING.

Cynic, might be time for you to change your tune or CHP is going to make you look a little silly. ...and we wouldn't want that, would we? Don't answer this post as I have a train to catch.

I feel the appointments this morning are very exciting. I've actually heard of Giles Clarke and lets not forget this man created Majestic Wines and made it what it is today. I suspect we have acquired a very sharp business mind and deal maker. The most exciting appointment must be the Shell man though who appears to be a Sth American specialist.

ALso CHP have managed the placing with minimum fuss as ever, ensuring minimum bloodletting on the share price. It sounds very much to me like most of the cash raised is a deposit requirement or similar for a new permit....certainly hints at that in the RNS.

I feel that individuals of the calibre of Giles Clarke wouldn't be joining the board as chairman if we weren't going places.

Todays RNS is not earth shattering news but long term is a major building block. I am more confident than ever that my investment in CHP is safe and that the future is very rosy.