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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.

Read on another BB that Blue Oar have a man in Colombia currently, presumably to write up the results of the drilling expected imminently - due back in London to issue a new note next week.

Everything crossed!

Stockdog. Another board as source? Sorry mate, I hear otherwise. A report is due but is a little further away than next week. It does not mean the Blue Oar man is not going out shortly; but is it to check on developments yet to be announced!?
They know about Alea already which underpins sp @10-12p
I expect news shortly but the full report will take a little time.He does have a some new territory to cover as well as a visit to Paraguay, which had no value attributed in previous DS reports.

At the risk of upsetting people on here, I doubt very much that anything will "underpin the shareprice" if drilling comes in empty. I've seen the same arguments used on VOG, EME and GOO before, and I'm affraid when a well comes in dry, the price suffers badly. The truth is the MM's don't want large volumes of stock, they want a good balance of buyers and sellers, and the easiest way to get that is to tank the price. I'm not saying the price wouldn't recover eventually, but people need to be realistic. Obviously if you're lucky, the reward side can also be just as good to the upside.

I don't hold, but I hope the long term holders here are rewarded with something.

In my opinion.....etc.

Strawbs.

ULTD - I'd bow to your superior wisdom, if you'd care to express it in unenigmatic tones. I only asked a question really, to stimulate debate, Was not looking to come top of the class. Just not very competitive, I guess.

Strawbs .... spot on! ..... for my sins, i have fairly modest holdings in CHP, GOO and PCI, none of which are currently performing at all ... at least DOO, which i also hold, does not have to drill for its oil!

Hi cynic, Do you feel 100 coming your way or not. If as rumour has it, there are 2 rigs on site, how are you ever going to prove which was the first to spud, or deliver? Or, are you both extending your bet to the results of both drillings?

the cynical or even realistic side to me says both wells be dusters, in which case, 100 won't go far in alleviating losses on this stock!

on what basis can you say that cynic? that would be truly disastrous if that was the case.....lets hope its not though!

I'd call that pessimistic, the optimist might say both will flow like the nile.

none whatsoever ..... other than the fact that barely 20% of holes ever strike commercial quantities of oil .... call me a liar if statistics show that to be 25%!

Is that 20% off all holes globally, or do some operators ever get a better result, the average might be 19.99995% so whoever's next could be the winner!!!!!LOL

Stockdog. What's enigmatic about they start next week.
and why go out if you have nothing new to measure up?
Blue O are measuring up assets.
What new assets do CHP have now to measure up?
Will he be visiting Primavera to check on new assets there?
or is there a new area to measure up?

i think that is globally and of course some operators are better or luckier than others ..... btw, i am not a statistician, but i believe the odds are the same on Hole 20 as they are on Hole 1

uponthelowdown - hopefully he will be looking at this new area, which seems to be taking forever to be signed off! if he is there next week, then there should be an indication whether we have any hydrocarbon shows from the first drill. In the meantime, the share price is continueing to drift, whether or not that is reflecting the possible outcome of the Cachapa result is anyones guess, could just be panicking sellers. However, news of this new block is very important in maintaining/boosting the current share price.

There is little mileage in these odds in my opinion, esp if they include wildcats (which they probably do).

Blue Oar rep going to S America is significant imo. Assuming he is going out a little later, would suggest he is going to see work being done; activity on the ground.

Would he still rush out with his slide rule if Primavera was likely to be unproductive? There wouldn't be much to see would there?

DAVE .... no need to rise to that very modest bait ...... at the end of the day, the results are all that count ...... Blue Oar = PR etc and is just so much hogwash

I see from the RNS just issed that Cantor now have a holding of 3.2% and I recollect their last statement back in March was no longer holding an interest.

So they ,Cantor,are now back in!.

Top of the class BWD!
Yes I can see from elsewhere the endemic negs have decided all is sackcloth and ashes 'oh woe is me' we have another Global Energy. Why come to this conclusion if unless you have some psychological quirk desiring self-destruction?
Exactly my point D. Why is a man going all the way to Colombia to measure an empty space? Maybe he has an interest in ornothology and is going to have a look at the local rodents and fuana and invertebrates?
Meanwhile what about the new area? Where is that?
He cannot be going to look at something he does not officially know about, or that shareholders do not already know about? Surely?
And if the new area is a piffling 38m brls like Alea(which could, in fact, be 100m if new seismic is to be believed plus taking a bigger slice of the percentage for CHP).
Then one can't believe anything anymore because the sentiment has been turned 180degs due to temporary disappointment on first dip on another company's project. Will there 2nd well come up a duster also? Doubt it!
Anyway I will leave the neg thinkers to their predictions and prognostications of impending disaster. Misery seems all that makes them truly happy.
I will deliberate on the few positives I have in my bag. ATB and TC.
Keep up with the good thoughts D.

capetown, not quite right. The previous statement was that they didn't hold a notifiable interest - that interest has now increased.