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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 was right!

TFC - apology accepted - we all get a wee het up in the heat of the moment at times.

My daughter expecting her second baby today - that puts things into perspective

robbi , i only post now and again but do look at certain posters on other boards . and follow 4 posters one is ludlow who as tipped afd cey which i bought and doing very well , no.

1.4 mill buy just in!

more likely a sell @ 8.75/9.25 spread

brian a sell would never have got that price for so many. think about it. the time that buy got worked through 8.9p was the going rate for a buy. No sell today has been at that price and you certainly wouldn't get that price for a sell that big , trust me on that.

It was a T trade

10:17 8.90p 1,389,200 123,639 Buy T

exactly a protected transaction - this is what caused the initial jump this morning imo.

Looks like the floor is in at 7 and the ceiling around 9, which goes back to previous resistance in September 06. I would expect the price to consolidate or drift back from here, unless new buyers can be attracted. Drilling success or further block announcements could help. I'll buy on drilling success, but will continue to watch for now.

In my opinion. Do your own research etc....

Strawbs.

o.k. FG. cheers

you're welcome ;-)

See if this moves up on monday as on previous trading day to recoup some of the
looses from the week before. (In Anttipation)

Regarding the success rates of wells in Colombia. From what I can gather, odds of 3:1, or 4:1 seem about right as a general rule. However, the odds of success may be much improved for Primavera.
According to a 2003 report by Emerald Energy, the success rate for the Llanos was 50 per cent. OK, it's a little dated but I wonder whether the facts have changed that much.

The report said: "Over the past year Emeralds strategy has been to re-focus its exploration from the high risk, high cost for high reward areas of
the Middle and Upper Magdalena Valley to lower risk, lower cost opportunities in the Colombian Llanos.The Llanos Basin is the
most important area of oil production in Colombia: in addition to its two super-giants (Cusiana and Cano Limon) there are
many other fields whose relatively small size (10-30 MMbbl recoverable) is more than compensated for by very high flow rates
and high recovery levels. Flow rates of up to 3,000 bopd from individual wells have been achieved in these smaller fields.These
are made possible by high quality reservoirs the pure quartz sandstones of the Carbonera, Mirador, Barco, Guadalupe
Gacheta and Une formations which all have outstanding porosity and permeability characteristics. An active regional aquifer
provides water drive.
The success rate of Llanos wells basin wide is, by worldwide industry standards, very high at around 50 per cent. Well developed
export infrastructure, low production costs, and increased reservoir understanding greatly enhance the economics of
Llanos developments. Also, it is a general observation that because of a combination of difficult logs, overbalanced mud, bad hole
conditions and equivocal test data in the old wells, re-drills often achieve success."

I believe our Dr Rock Wardle was EEN's ops manager for Colombia at this time.

The current sp barely reflects Chaco's current reserves in Alea. Any improvement in both % and amount of reserves (both items believed to be on the cards) should move the sp out of this range. That also means the 'considerable potential ' of the new block is also not priced in. In my view the progress of these two positive pieces of news is being slowed down for some reason.

SS,

Could they be waiting to see what happens with Primavera? Is there anything you can ellaborate with regards to how things are progressing at all on that front?

FG, no news at all other than quiet confidence.

thanks Sharesure

S/S AND fg
Stewart's meeting could be quite revealing.

Am I missing something re the 'new block'. Have details been provided yet as to what/where this is?

blackdown - no, there has been nothing official re the new block apart from mgt referring to an application in a recent rns. (Jan 18)