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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.

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)

Serious Board room changes this morning!!
Pithers, Brooks and Groak all go.

The Company will be moving its Registered Office to Lakeside, Fountain Lane, St
Mellons, Cardiff CF3 0FB with effect from 2 May 2007.


On my doorstep!

M

AT LAST !!! .....F*** amatuers they were .... Also early indicators suggest GED have struck sweet low sulpur oil .. Could be good for sentiment towards CHP ...,,,,,,,,,,,,,,,,,,,,,,,,But will the market be impressed by such collective change in board room ,,,,,,,,l am !! But will the market ??!!..,,,Looking at early pre market posturing/trading the answer appears to be no.......... { edited }

TFC

What early pre market trading?

M

just to throw more cold water, i attach an extract from an article on the SEY thread which, although it relates to Mauritania, could just as easily apply here .....

Their (Woodside's) experience at Chinguetti has been a pretty painful one they spent over a $1 billion to get that up and probably another $1.5 billion on exploration drilling all these fantastic structures but found zippo really.

No doubt the usual suspects will flame me for posting something negative (again!), but no probs if that is what excites them.

GED has been marked up 22%
That will certainly help
CHP this morning!!

As they are drilling slightly closer than
Mauritania to Chaco!!


M

Looks like new chairman bringing his own team on board.

Yes, but what damage as the old one left behind ?

'Global Energy Development Global Energy says Luna Llena 2 well in Colombia shows positive test results'

They targeted the Carbonera formation, thats where we are drilling now!!

If we are targetting the same formation are chances should have greatly improved!

The measured reservoir productivity of the Luna Llena 2 well exceeded the
Company's expectations.

Primavera HAS OIL!!!!

Interesting cull. A combination of new chairman bringing in his own team as you say blackdown and perhaps a fresh approach insisted by the institutions. I would just like to know in what direction we're heading, however positive to note that quite a few buys coming in.

perhaps one would be better served by putting some funds in GED which clearly has found good quantities of oil rather than staying in CHP which just might find the stuff because it is in the same area ...... remember ELP which had a site very close to a proven North Sea field and failed dismally?

and the market sees no link with GED either ...... of course that does not at all mean that CHP will not eventually find the stuff, but on the other hand .....

GOO is similarly speculative or worse

the party has started!

fg, looks like you can carry on posting, oh sorry that's the other board ;)