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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.

so now you have it, from the engine driver himself ..... suppose you could change your handle to toerag to avoid any chance of confusion ... lol!

I'm clad you got that of your chest OILYWAG sorry oilyrag as in I'm the driver not the oilyrag, I have never assumed for one minute that you where the same I know you deal in oily stocks and the other oily in Well seo and oily Wife and girl friends mmm a bit confusing.

I was just pointing out that seo raised the same amount 15m and look what happened the sp as long as chp spend it in the right direction they shouldn't have the same problem.

not a dig at anyone, but just a wry observation ..... over the last few days, a number of "friends" have got very excited because there was a lot of traffic and/or sp went up by 0.25 or even 0.50 ....... today, the table has turned, for whatever reason, and sp is down 1.00, also on quite heavy traffic, but (almost) nary a comment

Sorry driver, I thought that because I mentioned a target price to get back in, that you were suggesting that oilywag had mentioned this price on SEO, and because of previous mistaken identity I assumed wrongly that you were having a go.

The drop is overdone..as it was before. This 'placing' has been in the bag for a while now by all accounts.
More news on Alea and 'other projects' soon.
More Alea and more EL Tigra/Fenix, I believe.
Low risk, high return is the motto as GC said recently.

being cynical (qui? moi? mais non!) one might think that the rise over the last few days has been manipulated in some way, so as to take up any surplus stock lying around and thus ameliorate the effect on sp of this 6p placing ...... certainly there is no guarantee that 6p will provide a floor, but whether it falls through it without bad news is, i would have thought fairly unlikely

I thought you were the french connec. just for a second. lol.

i hope i write a little more succinctly than he!

oilyrag
Apologies accepted

Uponthelowdown
Upon the low down, what's that all about?

Exactly what it says. More Alea = higher percentage of the oil contained.
Let them get on with it. I believe they are making progress and so do the investors who stumped up 15m.
More Fenix is more fenix farm-in's.
Wait for the news. Just a matter of time.

Up on the lowdown.
courtesy: Chris Smither singer/songwriter.

Cynic,i go away for one day and........,
I thought you were keeping an eye on these for us holders??,

Guess a placing is better than a rights issue,i am still hopefull.

Where is everyone- is it the calm before the storm.

Wating patiently. We have had a reasonable amount of practice so far. Probably going to be three months or so before anything serious happens.

Wating patiently. We have had a reasonable amount of practice so far. Probably going to be three months or so before anything serious happens.

Just looked in and Oh dear look at the sp, thats 50%+ down on these! Serious we've seen positive is still to happen.

Blackdown 3 months?
I thought there was a meeting next month. I would hope something comes out there.

what does todays announcement mean - are the management confident for the future or just making yet another quick buck ?

Ordinarilly one would see this as confidence in the future of the company - especially with the number of options granted. and I hope this is so.

However - once burnt !!!!

It would have been better if the options had been split into tranches and set at progressively higher exercise prices. Bearing in mind he appoints the remuneration committee the way it has been done looks like a mutual backscratch.

Thanks guys, you've both basically said exactly what my first thoughts were at 8am !! Lets hope it's both confidence for the future developments as well as a mutual backscratch to keep the board contented.