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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.

Dare i say we are heading towards 10 pence again/?

Mmmmm,9 pence today?

8.00-8.50 is at least closer to 10.00 than 5.00 .... lol!

Lets hope so Cynic.

Some very large buys,a most interesting days trading today.

Could get another rise first thing.

Why the resent rise in the sp is news expected.

Why the recent drop in GOO?

I dont think any news is expected in the near future,the recent rise i hope is a realisation of the value of the reserves.
I am confident we will be at 9p tommorrow and 10 by end of week.

And another 500k,B trade recorded @0723 @8.75,several 500k blocks ,how significant is this?,any comments?,I am back at breakeven now as must be the case by many other holders by now,this must be looking attractive to whoever has been buying of late.

I think that there may be news soon on a few fronts but the new mgt are keeping things very close; it didn't do any of us much good with the previous directors' habit of selectively leaking things months in advance of when they could actually announce things. There is obviously a reasonable demand for CHP shares at current levels and there was at the last placing price. I expect all of the recent timescales to be bettered in reality on the basis of 'under promise, over deliver'. I suspect a few who are nearer to the new mgt. reckon the same hence the slow but gradual rise. The current sp barely reflects Alea at its current % of reserves so at some time there is a lot of potential for this to advance rapidly - but in the light of PLO and PV it will likely take solid news to do that.

Probably a realisation that:

- Alea reserves worth current share price
- new management has got what it takes
- new management realises that future exploration needs to be funded through
production and will accelerate Alea development to achieve this.

May also be moves to do some sort of deal with one of the big players in this part of the world.

it's excitement over the new name .... lol!
much more prosaically, it is quite likely to be the usually leaping of lemmings in anticipation of good news, though there is no (substantiated) indication of same.

Lets wait and see than shall we Cynic.

Hi cynic, not spoken for a while, have you seen HAWK. its going great guns at the moment. 15% gain yesterday plus 10% so far today. 36p now, target forecast 83p. DYOR, sorry off thread but worth a look.

Nice 2.25mil buy,my predicted 10p may come sooner than end of this week.

oily .... yes; yet again i am letting you "Sirens of Spiv" seduce me and have just placed an order ..... will i regret it? .... time will tell


back on track .....
CHP had better have some good news in the immediate pipeline or serious bloodshed could ensue again.
The immediate level of 9.00 looks as though it could be a resistance in its own right anyway

.

Larger share of Alea and early entry date in offing.
How much do they have to pay for it?

Depends how big a stake it is? id say anywhere between 5-10million? how early for the re-entry?