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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.

I don't think it would be a short. There has only been 2 trading days and the time the short would have been opened (if it was a short) we were already at these levels.

It is a buy. small punters sold and bigger boys are moving in picking them up in batches. Like we saw yesterday with the 2 x 500K buys. MM's books are level today.

RSI is way oversold also. Its touching 10 now. Should see a bounce now.

You could equally make the argument that it's only the large buy that's stopped the price sliding further. Also, if it is a short closing, the short could've been taken out weeks or months ago, and may be closing now to take advantage of fresh CGT allowances. It's worth remembering that people will have short views of a stock as well as long ones. Investors generally take out a position with a view to profit later, so the principal is the same either long or short. In fact, since you actually earn money whilst short (don't ask me to explain it), you could even say that being short might be doubley profitable. Given the odds of drilling success, shorting when drilling is announced might actually be a profitable play, although not totally without risk if something is found.

I don't hold and don't plan to, but thought it worth pointing out the alternative view.

Given the technicals however (RSI, Stocs etc.) I would agree that you could expect to see a bounce, or a consolidation at these levels. I don't think the MM's will be keen to let everyone make a profit by selling back large volumes of stock though, not without decent buying pressure anyway.

In my opinion.....do your own research.

Strawbs.

where is that 400.million barrels loads of oil , i say that if we do not get a note from gc soon then we will go a lot lower,

tanker - are you ludlow from advfn??

D'accord Strwawbs ..For a mere market watcher you certainly know your marbles ..........l seem to have a gut feeling there is a bastion, or rather , a stubborn pocket of support at 6p level . .....So shall be closing the second, and biggest, of my third shorts today. The third will remain open as a freebie on the banked profits from the former two .........AS with SEO and NML and PET before it , l have a feeling the demise of this shitty 3rd rate company will be long , painful and protracted ...and i havent the inclination nor time , to monitor it so closely . But with 200,000 free shares i should be quite happy reg. outcome ...but it is a sort of hollow victory ...mais c'est la vie mes amis .... c'est toute' @+ J

The market seems to have finally woken up to the thought that the sp at current levels is only valuing it on its existing known Alea reserves. That means that the result of the 2nd drill at Primavera is not being speculated, and neither is the new "exciting" Colombian block factored in or the possibility of an improved reserve on Alea. Paraguay is also not being valued.
I believe that the cause of the recent shake-out will become evident soon and I do not think that it was all to do with the Primavera dusters of GED or CHP.

Merci TFC. A few burnt fingers in the early years and lots of reading and research have helped. A number of people follow technical analysis though, and I often wonder if the technicals really predict a market move, or merely cause it to happen. Of course you can never be sure if MM's are playing games or not. For now the floor appears to be in at 7, but I suspect it will take some selling to test how committed the market makers realy are. I've no doubt many people bought at the lows and are only looking for a few ticks on the bid to take a profit. Time will tell.

Still only watching.....unless they find some oil.

In my opinion, do your own research.

Strawbs.

cheers sharesure, I think much the same, Alea is actually probably worth more than the current sp, particularly if we get a larger stake.

TFC - good to hear from my point of view, all the best in future (please dont short chp again, its not fair on us;) )

very strong buying action today!

very strong buying action today!

Talk that 2nd well spudded on Monday,9th?

I seem to remember that Alea was to add 17p to the value of CHP. No value had been added before drilling of Primavera and so therefore nothing should have been taken off for the duster. This is all a total sham as SP will recover in time, whatever the results. X trades when there is plenty of availability, strange, some one wants to fill a large order, question is how big?

Sharesure - its most definatley spudded, whether or not the results will be positive remain to be seen. I truly hope they are. I cant contemplate Primavera being a complete duff after all that was said about it last year.

robbi I think its not included in the SP any longer and anything positive from Primavera will send us into orbit.

In any event there is other positive news due on other fronts too. I still think that what we have just seen was engineered to some degree hence all the anxiety caused by giving no news of dates of drilling in advance. Would like to think that we have seen the last of the weak sp of recent times.
Also would be interested to see an RNS on +3% stakes and director Buys.

I can see us going back to 9p-9.5p now the dust has settled, news would be a massive bonus!

Agree with both of u there. There is no way, at this price Primavera is included in valuation. Alea alone is worth probably 50% more than the current SP. I would love to see a positive result fg, imagine the rise ;) but i will remain cautious until proven otherwise.

Sharesure - the fall does/has had a funny feeling to it, i was just discussing the possibility of director deals over on the other board, but many thought it would not be allowed during this period or before such price sensitive info?

The new block is what i am most looking forward to (and have been for the past 2 months)

another nice 500K buy just in!

how L2 FG??

1 vs 3 (I'd ignore it at the moment)

can only buy 100K online, I think a move up is immiinent imo

Volume just about to breach 7 million