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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.

SH thanks for that, I see the glass half full yet people on the other site like ACE accuse me for being a ramper, for what? I see the glass half full and there is still everything to play for. If we thought we had no chance with PV why would we drill another hole. We wrote off PLO because we thought it wasn't worth it so if we thought the same with PV we would have written it off too but we are drilling another prospect... Game is on and the derampers that pop up just want to take advantage of sentiment. I continue to be positive on CHP.

And sharesure, you have done a great job with informing us and letting us know infomation which you didn't have to do.

I appreciate your posts and although we are a little dissappointed with the first drill, chin up sir, tommorrow is another day and I do believe we we have all to play for until we drill the second hole, we don't know if the PV block is worthless.

imo we will get an announcement on the new block next week too. good luck to us all.

FG

Of course he's short 24 hours after the RNS, :-)
And when that 4.5m buy is filled on tuesday at 7.25p he'll probably be long again.

prob too late to short after the news, though i would not be a buyer either

I have been a holder of CHP for a long time now and have always read the posts with great interest. Thanks to you all.
Probably now, like the rest of you, I am somewhat numb at the news we received, at the last moment, yesterday.....In my limited experience, too late to take in and consequently, too late to react.
Disappointing for all of us, but probably most of all, Sharesure, after the huge amount of work and research he put into this, I can't believe that some are having a pop at him, just because the first hole is a duster. Even with all the technology in the world, a certain amount of good fortune, still plays an important role in exploration and drilling.
I know there will probably be another drop on Tuesday. Will those wishing to depart be able to get out, without further damage?
However, let's not be too disillusioned by this result, as we know it is not a one trick pony and the acreage available, to future drilling, is substantial.
Securing the contracts for the exploration, was the most important factor and commendable. The rest will follow eventually....
Which takes me on to another topic. The French Connection.
Now, I'm sure he will come back at me in a barrage of wit and Gallic charm, but I have to admit, I quite enjoy his posts, albeit sometimes rather long and difficult to interpret ( probably like this).....but always witty and well informed.
However, I must admit, I find his constant negativeness about certain shares, quite tiresome. However this shouldn't be a reason for discord.

Frenchy Boy....... I would rather take note of your comments and ask you very politely, instead of rubbishing the few topical shares, why not re-channel your superior Knowledge and come up with some positive comments, about a share of your choice....any share.
We are supposed to be here, to make money and most posters try to help each other. Why don't you give it a try?
Lets see if your tips can do any better than other traders. Negativeness doesn't help anyone, but I am sure you have a portfolio, (although never mentioned) and could suggest a few shares worthy of a look.
If you were sincere and positive in your approach, you would soon become a highly respected contributor to this board and a huge help to the smaller investor.
Remember FC.... if you can't help someone,.....then don't hinder them.
Bonne nuit !

Disappointing as it is, just because this first drill is a duster does not mean that other information or predictions about the future of this company are incorrect.

And I think we can leave the readers of the various posts over the past few days to make up their own minds about who is better informed about this company.

You noticed that frenchie did not tell us how many he shorted - nor at what price he sold them for.

I expect he will come back on Tuesday and tell us that he has bought them back and made a big profit - along with some made up prices. He has a habit of exaggerating his claims - just to make himself look good. I domt agree with others - I find his posts quite arrogant and leery - still it takes alsorts. I have now filtered him - because what little sense he sometimes makes is buried by all the rubbish he spouts.

nealo

He doesn't know how many he shorted yet until he finds the matching trade on tuesday.
I am sure he hopes that someone doesn't claim the trade as they did last thursday.

Thanks to those who have posted kind comments. Yesterday was a cold blast, not just for us but the institutions in the last Placing who provided cash for the next block. The directors, too, thought that 12p was a floor for the sp given that they bought shares at that level. As for the massive markdown on the drilling result, it is all the more curious because there was not any perceptible increase prior to drilling. Maybe the t/y/e didn't help plus a number of automatic stop losses probably kicked in, making the selling pressure even greater.Whether the rebound is quick next week might depend on how much pressure City holders put on the company to be speedier with more positive news which I reckon is there barring some minor finishing touches eg escow accounts being set up on the new block?
Where now? Alea is still there and more than supports the current sp in my view.
There is not just another drilling in the near future but also the liklihood of some other significant news eg the new block and poss. something on Alea. If my guess is right on the latter two items then the sp should recover very quicklly; I hope and expect that it does; for those with cash, maybe Cantors or another institution the current sp seems a gift.
Cynic: I will pay in Trotting's cheque to your account. I'm sure you regret winning but at least you can buy some bubbles in time for the next drilling result!
I am not intending to sell just because of one duster; I prefer to wait and see what the new block and Alea news.

Thanks sharesure. As ever, an objective and realistic post.

Note the time of the post, hours before the RNS.

TheFrenchConnection - 05 Apr 2007 13:36 - 2993 of 3053
Tu es la ? .Alors ! ...Yup my job is done. BORED stiff now !!,,,,10p was my target ...but the 10.25/50 spread had to suffice . A mere fun punt ..... c'est a'qui criera le plus fort; a'qui mieux mieux ,,un bon conseil >,,,Mefiez-vous des apparences..........For all that glitters be not gold .....bonne chance tu branleurs !
But should this ever to slide to 9p im going short bigtime

Fini ........ciao...........................@+ J

As you can see, T F C said 'should this ever to slide to 9p am going short bigtime '

Yuff & Nealo , your talking bollocks.

Yuff /Nealo Slt .... Long ? Me lol oh dream on !! Dont give up your day jobs as comedians please ..lf this piece of crap shot up to 15p on tuesday id still retain my short status .......l would NEVER buy this again ....l made an error ; but learnt from it .....Hardmans ,,lol Always been "pants" - to borrow an adjective one of my g/f uses.............@+J....

SS, Thanks for all your research and guidance on CHP over the years, I still have faith in them and you, after all you didn't pick the spot to drill, did you? I agree with TFC about this one maybe going down further but what I would like to know is, as per your last post, if your never going to buy this again, how can you possibly close your short position? I look forward to your solution with great intrest. Personnally I am looking to top up at sub 5p but will take a long look before I invest.

Oilyrag,

You said the same on the SEO thread, look what happen to them.

Who did pick the spot to drill ? . the odds of another dry well are much greater as this was their first choice.

Splitting hairs on T F C closing his short, was a silly thing to say.

as a poorer holder of CHP shares, all i will add is "I did warn you all" and remind that i was told in no uncertain terms that i was ridiculously gloomy in my prognostications - aka talking a load of bollocks ...... strange how opinions now change!

TFC - "id still retain my short status" I think the English word you're looking for is "stature" - at least that would fit with the observed facts - lol. Another one who needs the justification of their POV to prevail at all costs. Give it a rest, mate!

Aldwickk - absent a crystal ball, the chances of hitting oil in well 2 are pretty much the same as well 1. If the odds of hitting oil are 25% for each well, the odds of both being dry are 75% X 75% = 56.25. In other words the odds of either well hitting oil, before drilling either, is 43.75%. Now that we know result 1, the odds revert to the single well value of 25%.

Extending this thesis to well number 5, say, we get the chance of oil not being found in all of the next 4 as 75% X 75% X 75% X 75% = 31.64%. So the odds of hitting oil in at least one is 68.36%.

The game of oil exploration is won or lost by whether a company's cashflow can last as long as it takes to prove these odds.

Anyone know what CHP's cash level stands at as of now? From which deduct another 6 month's operating costs and $750k(?) per well. My guess is they need to strike oil on the next well, or ask for more money at about 5p a share.

I wait for this realisation to sink in on Monday. SP could go either way - complete the bounce or fall straight down - in the first few hours.

aldwickk

The facts are last week he apparently bought 158k wed sold thu even though no matching trades.
He always says the price is going to go down therefore on ther umpteenth occasion he was proved correct, I suppose he'll claim he shorted the 300k a couple of hours earlier and bought back at 6.75.
He also said numerous times on thu that was his last post he was moving on to BS opn other threads, notice he also lied about that as well,he is a serial liar who has been caught out several times already.

Yuff- Someone recently asked him to prove his skills by giving us a tip on a share which he thinks will do well. Amazingly, he didn't have anything to say. Funny that!

bigwavedave
I think TFC would say including me that VML will do well I hope, I don't know why all the attacks on TFC may be it helps with your loses if you don't like his comments then do not read his posts. For what it's worth IMO CHP now needs a bit more patients as with GOO.

driver
I agree patience is needed and maybe a smile too..

On a tour of New Zealand, the Pope took a few days off to visit the coast for some sightseeing.
He was cruising along the beach in the Pope-mobile when there was a frantic commotion just off shore.

A helpless man, wearing a France rugby shirt, was struggling frantically to free himself from the jaws of a 25 foot shark.

As the Pope watched in horror, a speedboat pulled up with three men wearing England rugby shirts.

One quickly fired a harpoon into the shark's side while the other two reached out and pulled the blue semiconscious Frog from the water.

Then using the long clubs, the three beat the shark to death and hauled it into the boat.

Immediately the Pope shouted and summoned them to him. "I give you my blessing for your brave actions.

I heard that there were some bitter hatreds between the French and the English, but now I have seen with my own eyes that this is not true."

As the Pope drove off, the harpooner asked his pals, "Who was that?"

"It was the Pope" one replied. "He is in direct contact with God and has access to all of God's wisdom."

"Well" the harpooner said, "he may have access to God and his wisdom, but he doesn't know anything about shark fishing.

Is the bait holding up OK or do we need to get another one?"