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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.

Here, here. As i've said previously, these options should only be awarded on a reward basis, not just as and when they feel like it. They should be trying to gain the support of its P'I's not alienating them which they seem to be doing at present with this move.

Or is it basically true that the new board, in particular the chairman, is not interested in having the smaller P.I's invested in `his' company but only larger institutions.....makes you think

makes me think i'm even more glad to have cut my losses some weeks back

Unfortunately down too much to cut my losses at mo, so simply hoping they pick up somewhere in the (near-ish) future...you never know for sure with these companies, either very hot or very cold, no happy medium

SS, I agree but they could not gain entry, easily and economically, back then. It is most frustrating but they appear to be making solid progress now, at least they claim to be. I expect they will give us an update on the roads and bridges in Putomayo, currently under construction. Drilling and opening up two years ago was possible but were they able to get the stuff out as easily? Wardle has a neat spin up sleeve regarding the extraction process I understand! Again possibly they will reveal logistical intentions at the AGM by which time they may be only a month away from initial delivery!
Personally I cannot stomach any more disappointments and don't believe we'll get them now.
Rewards may not be as much as were projected for the chimeara that was PLO and PV but real rewards they will be, and once under way they will bring a lot more to the table in terms of new near production lences.
Let's get Alea producing first!!
If we are funding a road to Alea it is only logical it goes on to Meycaya, John Wardle/Expet other interest in Platanillo, virtually adjoining Alea field. I have no reason to believe CHP have any interest here presently but they could have!
I'll give another month or so.

Just had a look at GoogleEarth for the Putomayo area and there are no rivers to cross of any note there. Thinking about it rivers were never a factor under the old management. It was always just a question of chopping back the overhanging greenery and tarmacing the road and getting the oil 40kms to the Colombian pipe. Never a mention of a bridge before. Now it is 'roads and bridges', or was in the last RNS, 60% constructed. Therein lies the clue, I believe.
The main river is the Putomayo dividing Colombia and Ecuador.

So, any comment on the proposed new placing?

volume at last!

The x trade,any comments?

Probably no more than adjusting different holdings between two individuals/funds for tax purposes.
CHP will continue in the doldrums in my view until the AGM has taken place; after that I would hope that the newsflow will be a contiuous stream of director holdings, notifiable stakes, and news of drilling earlier at Alea plus an increased % share of a bigger reserve. Until then we all might as well just tuck them away forget about it.

what sort of timeframe are we talking about, for tucking them away ?

25 years

AGM is June 28, so you have only got couple of weeks or so to wait.

Some news from Bogota overnight. Fenix Oil and Gas, our partners in the Fenix block in the Magdelana Basin are stumping up $2.5million to cover phase one of exploration. Chaco previously said it will pay all of the costs of the seismic so this must be additional cash. I expect CHP will tell us more at the AGM.

Harvey, if you are still in the UK give me a call.

Anyone know why we've seen so much action today?

Two large buys of + 1million,volume increasing.

And the buying continues,tempted to top up from here,any views?

Yes: we could well see some action following the AGM. I'm tempted myself.

im not- ridiculous mkt cap for a company that does what?.

production 0, drilling 0, failed ramped up acreage, board sackings, expensive inactive board, failed reserve estimates, dumped acreage at financial loss - need i go on.

will continue to short this.

and i will continue to buy,,,lol.