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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.

even if just wishful thinking rather than factual .... lol

Clarity through communication resulting in confidence is the future objective correlative.
The oil in Alea has not gone anywhere.
We still have 25% of a guaranteed 38m barrels which in oil-speak could result in a max of 70m plus barrels. At say as little as $10 a barrel to Chaco, nay Amerisur Resources, that equals quite some income for a small producer

How should this guaranteed equity alone be demonstated in terms of share price?

Whispers say that alea may have more oil than first thought.

38m x $10 x 25% = $95m, or about $175m give or take for the upper figure.
Alea has been subject of conjecture as to exactly how much it may actually contain, and whether it may tap into a larger reserve coming out of Ecuador.
Let's see the first barrels delivered by later this year and things will definitely improve as regards sp.
Who knows with those sorts of 'guaranteed' barrels we could get attention from outside parties?
The road to Alea-1 is at least 60% constructed as per last RNS. Question is how long until the remaining 40% is finished? Not too long imho!

That figure is for the total reserve though, if working on 500 bopd looking at $40 per barrel, $6k per day to chaco= 1.8million per annum looking at 10x earnings values chaco at 18 million imho, so i'd say its already in the price.

553 pd was original figure for oil that came out under its own steam, so to speak. What if that figure were enhanced by more up-to-date pumping methods, and what if there were another step-out well nearer the 'sweet spot' plus one more on the northern edge as per indications from illustrations on CHP website and elsewhere?
You could easily be looking at upwards of 3000k barrels a day imo. Once they are pumping they will have a better idea of how much Alea may actually contain!
It won't produce before end of the year so academic at higher end for the moment.
But by the time Alea is well into production El Tigra could have 'proven' reserves in known oil producing territory from 3D-seismic tests which I understand will be done by end of year. El Tigra 2D tests within a couple of months.
It is up to assessment of the chaps in City now.

News will be forthcoming from Paraguay before long. CDS drill 2nd shallow well (2500') and BLR farm-in to completion on first, deeper, play. It is possible a bigger player could step into with more muscle than BLR soon?
Meanwhile I think Alea is worth somewhat more than current price.

We have new management who live and work in Colombia who wish to communicate actual facts rather than figures leaked out that turn out to be complete 'tosh'; bar expectations for the original Alea play where they may well have underestimated the contents! Now that would be ironic!
Bear in mind here that Blue Oar have been to Colombia. As far as I know Daniel Stewart went no further than the night sleeper to Aberdeen.
A subtle difference when convincing new Institutions to trust you and rejoin the party!
Reputations are being laid on the line here. No one of the new board, or at Blue Oar, wishes to sully their reputation by inviting allegations of incompetence, exaggeration and subterfuge again!

UOTLD..Point taken re modern methods and other holes, but I don't expect much to happen for the next few months re share price. IF they get other wells up and running would be very positive, but its going to be another wait. The price will recover though, given time. If you're prepared to hold, should eventually come good, to what degree thats always the burning question.

uponthelowdown - excellent post! I particularly agree that reputations are on the line and that BO will not be too pleased to have seen the share price half since they became NOMAD. Long term, we WILL most certainly recover, I just hope that Alea does indeed hold more than first thought, and if we did get a larger stake then that would be even better:)

WHY should the company and its sp recover? .... all i see are words like "hope" and "whisper" and "if" and "when" but unless there is something truly solid and FACTUAL then sp is heading south to oblivion.

Cynic,
It may head south now, but, and this is FACTUAL, there is oil at Alea, did you not read the posts? They just need to get round to pumping it out. So oblivion is a little strong I'd say. I am no longer very enamoured with the stock, however am holding onto some for when they do pump it out. They might find more, they might not. I'm going to wait and if it takes a year so be it.

there's plenty of oil in the north sea too, and even in the Jaguar field or thereabouts, but that did not stop ELP falling flat on its face

Cynic: Foregive me if you have been asked this before or indeed recently , but genuinely, may I ask what shares you rate as a buy at present ? Thanks in advance.

to buy today - well if the market was still open? ..... certainly PFC, to which i just posted ..... also .....

DOO and POG
as i think there could be some good upward movement in both in the very near future.

RTR
if you think the bid will succeed, then there is an easy(?) 50/75p there

PMO
a really good oilie whose price is a bit depressed following a couple of duds ... it's also a potential t/o target

RTN
see the thread .... i am a long term fan of this restaurant group and switch between this and DOM (which i am currently out of)

TAN
looks to have a very good future both now and also in the med and long term


is that enough for you to get on with?

i think i will also add both VML and UMN

i ducked out of VML this morning with a nasty loss, but was applying my own discipline ..... at the current level, there is quite a good argument for buying as "friend" Di has done and who has a pretty good feel for these things.

UMN had some good announcements to day and has just broken through the previous all time closing high ..... it has strtuggled to hold this in the past, but as i mentioned on the thread, this break, assuming it holds, could be like the cork from a bottle of fizz.

Cynic: Thank you for taking the trouble to share your opinion and rational behind selections. Will of course D.M.O.R ! Regards.

you will find my further thoughts on all those shares on the relevant threads +, if you can be bothered to trawl, my simple/simplistic charts.

there are other shares that i also hold which i would not necessarily recommend - e.g. GOO because it needs a miracle or SCHE or ICI or CW. because they are already well ahead of where i bought, CW being the oldest having entered the portfolio in early Feb

Can anyone suggest when the name change to Amerisur will occur?

On approval at the AGM - the date for which has not been fixed ! What do we read into a name change I wonder ?

Further example of the new management regime distancing itself from the old.