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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.

We are on the move!!!!

Strawbs if you remember this is what happened at the 11pence mark and it jumped to abt 16 on no news

Capetown,

Your well timed comments reminded me of that very fact, which is why I topped up and went overweight again from neutral. Many thanks for the reminder. :-)

Strawbs.

somethings brewing in the background, hope its good news.

shes off!!

I suspect all the presentations have helped spread the word. Plenty of near term prospects, and a number of rumours circulating, so I've no doubt something will be announced soon. Just my opinion of course.....

Strawbs.

Plus of course there is the "self fullfilling prophecy" aspect. If the price starts moving up, people feel the need to buy in just in case they've missed the boat, which makes the price move up more......

I'm hoping there's some substantial support behind it though. Wouldn't like to see the price slide post RNS as with Primavera.

Strawbs.

hmmmm I would like to see this break 19p today :)

Chp was also tipped as a buy in the latest shares magazine

sidtrix could you possibly quote the content of shares mag' recommendation please?

baker12, you're about right there. But discount it like stockdog has and the result is still pleasing I'm sure you will agree.

Generally small oil companies produce about $25 net profit for each barrel extracted and sold.

Sorry schiff... just had 5 mins spare to quickly read the article on my way in... Chaco was listed as a part of their cover story (50 shares to invest in... or something like that! The shares were divided into diff type of investor categories)

I suspect MMs may well have marked price up in light of Shares article. That said there is reasonable buying volume out there with some decent sized trades. I'd like to see volume doubled by EOD - above average rather than below, to confirm this is a genuine move up, not an MM game.

Fair bit of selling in the last 1/2 hour is this one of those famous 'tree shakes'?
2517

Could be. Prices also tend to drift down around lunchtime, as the buying and selling activity slows. Guess we'll have to wait until the end of the day to see how much strength is behind this rise.

Strawbs.

Stockdog i suspect over the coming months that anything under 30p will be considered a cheap purchase for chaco mainly down to fact that there not reliant on any particular area. Thats the beauty of having a diverse porfolio of land all with huge potential. Even if one fails the chances of striking oil are still in chacos favour and that to me is what makes this company so exciting.Obviously once production starts on one site it will hopefully finance the others.Next few weeks should be exciting to say the least.

Re Shares mag. article - that came out on 4/5/06. Current issue has no further comment, so today's rise has nothing to do with that.

MPH
indeed very pleasing, my only suprise considering the information already in the public domain is this isn't 30 to 34p

Just had a look at the CHP trades. A 900K sell at around 12.30 appears to have killed the upward momentum. Still a good rise though.

Strawbs.

Sidtrix, I have this weeks Shares and Chaco isn't mentioned (not that I can find, please correct me if I'm wrong). It was covered in last weeks' cover story as a share for the "agressive, high risk growth investor"....
edit: I see you got there first Sharesure

Sorry, must have been last weeks (was on holiday and hence must have picked up an older one!) yeah it was the high risk growth investor share...