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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.

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.

f'ing waste of big money changing the name

agreed, doesn't take much research to find out their past does it, just pandering to ego's I guess

Its a crap new name anyway.

Not seen it yet, but I am told CHP has been tipped in Investors Chronicle today as a "speculative buy".

copied from the other side
IC today:

Chaco Resources is changing its name yet again. But will the new name of Amerisur Resources prove third-time lucky for the exploration failure? Initially, the company was called Gold Mines of Sardinia, but it made little progress establishing a gold-mining operation on the island. Next, it changed its name to Chaco Resources to reflect a move into oil and gas exploration in the Chaco region of Paraguay. Nothing much happened, though, so the company has decamped to Colombia where there is plenty of oil - even if not, as yet, in any of the areas that it has been looking.

The latest preliminary statement for the year to end-March 2007 reports that Chaco has withdrawn from the Puerto Lopez Oeste block, because new seismic data indicated that the area was not commercially viable for oil production. Then, in April, it announced that the Sayona-1 well on the Primavera block in the Llanos basin - in which it had a 55 per cent interest - was dry. So, what will the company do next? The answer is appoint a new board with a lot of oil experience, in the form of new chief executive Dr John Wardle (ex BP, Britoil and Emerald Energy) and deputy chairman Mr Dick van den Broek (retired Latin American regional director for Royal Dutch Shell).

This new team's first move is to continue with the plan to re-enter the Alea-1 well on The Platanillo block in the final quarter of 2007. Chaco has also agreed a farm-in arrangement to earn a 49 per cent interest in the Fenix Block of 24,000 hectares in the Middle Magdalena Basin.


Last IC view: Fairly priced, 13p, 12 Jan 2007


The new team certainly has to prove itself - and fairly quickly. A speculative buy.

dynamite: ta v much

Capetown, In answer to your email (you didn't add a reply address) I am firmly holding these; Primavera was a setback but not a reason to give up on CHP. The new team has already put in place a number of things the previous mgt was advised to do prior to the last AGM. I view the 4th qtr of 2007 as a 3 month period when I think my view of the new mgt's policy will show through ie under promise, over deliver. I am expecting some more Colombian blocks to come through later this year, Alea to be successfully drilled with additional reserves being announced, Fenix timescales to be accelerated + some updates on the seismic evidence, and a farm in on Paraguay - closely followed by an offer for the company. My reasoning for all of this is why else would the new mgt. and institutions at the last Placing have got involved if all of this was not a possibility since I am now pretty certain that Primavera was known in advance to be more speculative by the time it was drilled than was previously thought when Hardman took a look at it for their report. Until September there is little reason to think that the sp will strengthen significantly unless there is some unexpected earlier corporate activity.