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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?- why would i wait a month or two. one could have missed the boat by then.i take it you have not researched Primavera and the Llanos Basin Colombia.

not without risk but if that were the case id be looking elsewhere and for sure another sector.

as i said, am more than happy to sit with what i have .... if CHP fortuitously (please note!) hits the jackpot, then my little stake may grow into a whole chateaubriand(!), and that is quite sufficient for me.

in the meantime, i am also very happy to be short Dow (and BFC) and, having closed my FTSE position on Friday night, will look again whether or not to be short once more.

not that concerned on global indices however we may well see 6000 ftse100 and 12000 on the dow.

cynic
I agree CHP is not a defensive stock also a holder, defensives are Bio (phama) and companies that are producing cash and plenty of it, MYH, VML, GTL, that I also hold.

don't know MYH at all and nor is there much to show on the "Quotes" page .... VML is quite tempting, though the fact that it is commodity based does not enhance it when the markets are looking bearish

cynic
True but look at the graph for Uranium, sorry to be of topic.

For once - I agree with cynics cautious outlook. I have a very large holding in Chaco and naturally would like to see a positive outcome to drilling over the next 3 or 4 weeks - but as with any "cert" - there is still a risk that whatever is found will not match the expectation.

And lets not forget - the pros (the MM's) just like the bookies look like they might , just might take a caning - so expect them to throw every trick in the book at you over the next few weeks.

Sharesure -Morelike cocksure. Tosser. Filtered . ...Another pot bellied middle aged golfer, l surmise ..hehe ...Naaaah i do not censor anyone . Read too much Zola and Voltaire to stoop to such negative depths ...But whose rattled your cage then Grandad ? ? ,,,,Finally. GED s five wells that are adjacent to CHP s acreage are merely delineation wells employing the destructive steam injection process; and by their own CEO s admission are capable of yielding no more than a couple of hundred bbls p/d each ..lts written here in black and white in Alexanders gas and oil connections .ln other words - A quick fix to bolster actual reserves which is the only vatiable that matters in such a topsy turvy market. ACTUAL reserves . NOT potential nor probable or possible or evenimagined .That word -Potential- covers a multiple of scenarios . lt means NOTHING !!; And, of course , so as to provide monies for their more ambitious programme elsewhere in Columbia . @+ J

El L ..Thank you for your thoughts on chp; both well thought out and fluently written. Most interesting as well -awful pun unintended . Personally not a fan of CHP; but you make a case of types .And for that reason alone you deserve the thanks of the thread . GED released an update on well today . On first glance it looks interesting ....Cynic .. l have this uneasy yukky feeling you should have kept that FTSE short open for today .Obviously hoping i am wildly wrong but in the much overused cliche ...c'est la vie ..Bonne chance mes amis @+ J

tfc - chp are drilling in Colombia i believe. Columbia?.

Columbia must be french for Colombia.

perhaps CHP have concluded that canada is a safer place for exploration than south america?

Lizard - was that just a spelling correction - or have you heard that they ARE drilling ???

i see in this time of uncertainty CHP's defensive qualies are coming to the for and outperforming most sectors again.
Lizard did you manage to get any.

i would bet that there is plenty of stock on offer!

TFC ... Well, thanks for the compliment.

But having talked about the prospect or absence of the Mirador sands, I wonder what was the reason they drilled much deeper than planned, and through the basement of the Carbonera? Remember, the Mirador actually lies directly below the Carbonera, so could it be? Is there just a small chance? Just a smidgeon of a chance thay their logs indicated something below? (otherwise, why did they do so?) If it is indeed the Mirador, then that is a good chance of light oil too. Bodes well, nay, even better, for us. omr

dont forget recent placing of stock today.

yuff- got some @13p.

lizard

making money now.


Of course when there is plenty of stock about the mm's like to raise the price and pay mmore for shares. LOL Especially when markets down 100pts, happens all the time!

indeed good to see sp pissing against the wind, so to speak!

cynic

reason for tick up is Graeme Stevens took 2.5m in options on friday and put them straight into his pension, looks like he is confident something is good.