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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.

topped up today, price moved up, I expect it to do a repeat of 2 weeks ago, as expectation grows sp will move up again to test 14.5p.

investors mopping up this cheaper price!

Some very good buys comin through,2x 300k,bring it on

capetown - a rollover

quiet considering.

I think that we could take it that the Cachapa 1 well has already been spudded within the first half of March since the SE rules would have required a notification of any delay as it is price sensitive information.
Also would expect GED to give some test results today or tomorrow; reading their recent Primavera RNS does sound as though they found oil but maybe their first drilling was off structure. Only reckoning that because of their statement that the rig is staying on site whilst further seismic is considered.

good post sharesure,

Sizeable buy at 13.12p is encouraging

only 14 days till april,

Sharesure, interesting comments. You may well be correct, I was just of the opinion that an RNS would be issued for their first spudding. Are you hearing anything on the grapevine regarding this? Fully take your point about issuing delay notification however.

Oakapples,

That's a roll over

Thanks - must check my numbers !!

Greyhound, I suspect that the drill could have been on site at least a week already - whether it has been actually drilling I don't know and cannot find out - everyone nearby, including GED, seem to be keeping very very quiet. I could have a guess at when CHP will next announce something, but it would be only that, so is probably best left off here.

ss- im thinking on the lines of onsite progress. surely they would have told us by now if more delays?.

Thanks Sharesure. We're now second half of March, albeit in the same week and no further delay annoucement.

Topped up earlier @12.5p therefore midprice indications are buys...

When is Chaco going to move bigtime??? Getting bored with this

The post below is from my conversation with GED today.... I have posted it here for your information......

I called/spoke with a certain lady from another company and she told me the following..........

They originally planned to drill to 2550 feet and added 400 feet to get to the basement of the rock.
CHP ARE adjacent to them but she states that they wont get a royalty from the GED drill, only the government who arrange the lease gets the royalty.
When asked is she confident about finding oil, she said she will make the necessary announcements when possible .
HOWEVER, She has told me that GED have put alot of work into this and wouldn't do it if they didn't think it was worth it / there was oil there.
SHE ALSO SAID SHE KNOWS CHACO ARE ABOUT TO START DRILLING ANY DAY NOW!!!!!

Take from it what you will. GED seem to reckon there is oil there imo , CHP are about to start,,,, be patient people and bring me those blue lights baby!!!!!!!!!!!!!!!!!!!!!!

thanks for that fg- have freed some funds up today. looking to increase on chp hopefully around these levels on monday.

FG, on the issue of sharing production for fields which straddle two blocks in separate ownership, what she has told you is at odds with what everyone else I have spoken to about the ANH in Colombia has said. As for drilling I hope that she is out of date on that but have not yet been able to find out for certain.