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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.

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.

Usually buying at mid or better is not the best of omens .Usually a seller on the book ,or mms with loads of stock . However with such a dearth of tangent fundementals i tend to use T/A esp. candlesticks when valuing such microcaps .As for CHP l will try and explain as simply as possible . -What with the current sequence of two dragon fly dogi it is suggestd not unlike like the hammer as an initial indicator of change in the stocks direction . - This dogi is one in which usually a situ in which sellers dominated session but buyers resurfaced at last minute to return to the days opening level . .So if the stock has been on a recent downward trend this candlestick is the first sign of the stock perhaps bottoming out / and vice versa -- lf stock has made a big move northwards and then this c/stick was formed [ but unlike first candle is empty this is cloured] it would in be first sign that momentum is perhaps on the wane...lts the verification with a combination of preceeding and proceeding candlesticks that gives you the true signal and not merely the first sign . At moment c/sticks indicate value of CHP worth buying at 12.00p and looking for 14.5/ 16-0. with a hiccup at 14,75 level , But this all all further confused by mms who shaved off o.5 point on thin silly volumes today -.friday - the trend should now be north yet sellers ruled the day from beggining to end what with little momentum to carry them forward ...l am hoping for 11p ,,,a tad lower if catch at right lDP . ,,but as yet cant see it ...relavent combination of c/sticks say a min of 11.8 to 12 .20.....up to 14.5 / 16p. .........then shorts play their part, coupled with profit takers.Sowith lots of traders/ holders out there with sizable holdings 500k plus watch yourselves .........As a long term investment - 2 years plus - it could eat up everyones t/hold on CGT a good few many times over ...........Or if well isnt in operation by April ..And "Alexanders " ( at 3500 per copy and end user prohibited from passing on more than an opinion of contents} clearly say they are not not drilling yet albeit rig on site . ......Begs the question ...Has exact location of spudding even been decided ,,,....As i said if your prepared to lock away this for a while you could do very well Just say, for example , the first well brought flowed through a 12/16 choke as little as 2500 bls / pdoe, it wouldnt be a company maker but with refineries paying over between 46 and $50 once again thats $125k a day or over $1 mn a week .....Even 1250 bbls would put a smile on a lot of faces . Anything in excess of 5 -10,000 bls p/d and your in clover with over $3.75 mln every week passing through cashflow ,,,,,,,nice ,, with no need to recourse to banks anymore ,,,,,,,,,l rememeber when 10,000 bls pdoe was derisory in very late 80s and 90s . Now it is reg as phenomenol success ....................still hoping to buy at 11p ...11.25 if in extragent mood lol bien afficalment ...@+ J..........

Primavera lies in the northeastern part of the Llanos Basin, see the insight into this area below....

Oil exploration and production in northeastern Colombia
Paul Dempsey (pdempsey@taats.com)
What follows is a brief rundown on the oil situation in northeastern Colombia. This information was compiled from published sources: I have no special in with oil companies, but I worked for years in the industry and have some first-hand knowledge Occidental operations in Colombia.
Background
The area of interest is the 200,000 sq km of low-lying grasslands, known as Llanos basin. Oil-rich sediments were deposited here during the late Cretaceous and early Tertiary ages, before the Andes mountains were formed. Major hydrocarbon reservoirs include the Barco, Mirador and Guadalupe.
The Colombian state oil company Ecopetrol has a fairly good reputation in oil industry circles. However, Ecopetrol has never been in a position to accumulate the capital necessary for sustained exploration programs. In the early 1980s, alarmed by increasing oil imports, the government liberalized the hydrocarbon law to attract foreign companies by offering them a percentage of production from any discoveries they made. Ecopetrol would become a silent partner in these ventures, collecting its share of production, but taking no direct part in operations.
This strategy worked, and by the early 1980s Elf, Intercol and Occidental were drilling exploratory wells in the Llanos. The big breakthrough came in 1983, with Occidentals discovery of the giant Cano Limon field.
This field lies in the northern Llanos basin, along the Aruca River that delineates the border between Colombia and Venezuela. Cano Limon is estimated to contain more than one billion barrels of oil in highly permeable, relatively shallow formations. In other words, it is a birds nest on the ground, with peak production of some 200,000 bbl/day, or 73 million bbl a year. Oil prices fluctuate, but have been averaging about $20/bbl. Subtract the lifting costs -- which should not be more than $3/bbl -- and you have an idea of what Cano Limon means to Oxy and to the Colombian government.
This discovery alerted other companies to the vast potential of the Llanos basin. In 1988, BP (British Petroleum), Total (a semi-autonomous French state oil company) and U.S.-based Triton Energy discovered Cusiana field in Casanare province. Reserves are estimated at 1.5 billion bbl of hydrocarbon liquids and 3.5 trillion cubic feet of natural gas. The nearby Cupaigua discovery holds about a half-billion barrels of oil. The combined output from these fields exceeds 45 million bbl/year and is rising as new wells are completed.
The state oil company Ecopetrol is also active in the Llanos and claims it has uncovered 1.3 billion barrels of oil.
In summary, the Llanos basin is a major and increasingly significant oil province. All of the major players -- Occidental, BP, Triton, Total and Ecopetrol have hit big. Nobody knows how much undiscovered oil remains, but the level of optimism (and greed) is extremely high. Think of Texas in 1930

lets get the drill bit dirty and see if we have those 400 million barrels down there ;-)

Sharesure - 16 Mar 2007 18:00 - 2722 of 2725

;-)

i'ld happily settle for 4000 or even 1400

sharesure, email me sometime, it would be nice to have a chat... my email is **********;-)

TFC ... Hi. I see you raise the question of whether the drill site has been selected yet. I would have thought so, for once they have selected the site, the spot has to undergo quite a bit of preparation before the rig can be moved on and assembled. (Ok, I am not an oil man, but from what I have learned and read, and hear from others). The site preparation does take a fair bit of time, and I can't see a drilling operator waiting around whilst they not only select the site, but prepare it too, for with drilling hire rates at sky high level, someone would be wasting a heck of a lot of cash, dithering around. I would rather think the drill site was actually selected and the site prepared well in advance of the rig arriving, and the concrete foundations have had enough time to set, etc, so it is completely ready for the rig's arrival.

On the subject of flow rates, I would personally not expect much more than 1000 bopd if we were very lucky, for the oil recovered may well be heavy-ish and so thicker from the Carbonera levels which are our primary target. If we were lucky to have the Mirador pass under our block, then we could expect maybe higher as that would produce lighter stuff. The Mirador would be a lovely bonus, but not one to bank on. The Carbonera is predicted to be under the block, the Mirador may or may not, as we are on the edge of its boundaries.

Just my opinion, of course.

El loco - Amities ! .....aww sorry ...was being generally petulant and sarcastic in suggesting ,for a single second, that CHP had not decided LONG AGO the preffered site for rig : something they have waited for with great patience when considering DES and FOGL have both been waiting 2 years for appropriate deep water rig/FPV and so forth. . Furthermore i agree ground workers have long been working in preparation of spudding . ........ln all seriousness i would imagine a very conservative parameter of between 250 / 500 bblsoe p/d for the first well would not be greeted with derision as it changes the status of company from pure expo to expo/ producer generating upto 200k p/w. A re-rating perhaps ?? what think you ? .Chart strongly called a buy @ 10.75 in Jan and again @ 11.25 with resistance currently @ 12.8p/ 13.25 ....Hopefully not oxy strike with high sulphur content which is not unusual in this region and used for bitumin ..ln saying that the Chinese constructing refineries to cope with the sour oil that American and europeon refineries cant deal with . .News must be soon forthcoming,,,,but hopefully not not before i get in @ 11p... ,,,,,,,,,,,,,,,bien afficalment ....b/c ..@+ J

FG, put you email address on here again; have been off line over the weekend. Tomorrow might be a good day.

hope not- i want more the cheaper the better.

Sharesure
We could use a good week to boost confidence.

someones just had 200k before open.

Just to keep folk abreast of developements going on elsewhere, one of my other oil stocks, Emerald Energy has been awarded another Colombian contract in the Llanos Basin. Perhaps we can expect an update here shortly?

.

well we should now be at 2500 feet,

Tanker : Was that not the last words uttered by the pilot on the late Jim Reeves aircraft before it smacked into a mountain or something. ?

Copied from across the way - I thought it was brilliant - courtesy of bwd

bigwavedave - 19 Mar'07 - 10:56 - 26577 of 26580


Some of you may remember the Wardle's Prayer from December when we were waiting for rig news. Here is a revised version. I suggest you all get down on your knees and repeat after me:

Our Chairman,
Who art in Chaco,
Business be thy game.
Thy rig has come?
In Llanos? And is it drillin?
Give us this day,
Our soddin news,
And forgive us our impatience,
As we forgive those whove been spudding before us.
So lead us into newsflow
And tell us about the formation,
Cos Im getting fed up,
With waiting and waiting,
For ever and ever.
Amen

you wouldnt believe that chaco was now at a company making stage within its development. still way below last yrs high c.18p and now drilling.

just thought id`e have a go at buying at 12.54pence on a 100000 trade and let me have them at mid price of 12.50, thats never happened to me before.