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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.

The call was because I envisaged the market falling further, though I was not brave enough to short it ....... Selling this morning, or at least MMs red pencil, was totally indiscriminate, but I fear there will have been much forced closing of positions as pre-set levels were hit ...... I confess that for all my correct calling and even evasive action, my own profit since 5/4/06 was also wiped out, but should not complain too loudly ...... Glad I kept nearly all my VOG and EME, especially the former

Later this week we might approach the real SP.

I look forward to that, although i have taken the patience will be rewarded approach and am happy to sit in the background and wait for lift off.

cynic

thats the lowest it got to and they probably held the news back on the placing because of the wider market.
either way i don't think we'll see the offer anywhere near what the institutions got them for.

doughboy66, thanks for your message. Would have replied via MAM but for some reason that does not seem to work. If you re-send with your email address I'll respond in more detail.

message for cynic

Have you seen how they've done up the old place?

message for cynic

Have you seen how they've done up the old place?

Yes ..... it looked quite good I thought even if you could not enter any comment! ..... Trouble is, LSE has been down too long I fear to recoup its lost members

yeah I stood at one end, shouted, and all I heard was an echo.
I've still got some of these chp.
Always do your own research, DYOR, blah blah
I bought these on your recommendation and I'm still showing a profit, howzat!

Glad to hear it ...... be very careful of any market rally for the next week or so, for it could be short-lived ...... as i mentioned yesterday, an awful lot of PIs and even professionals are now very jittery

As ever, markets driven by greed and fear.

Still holding and will do long term. This is a good company and the SP is undervalued IMHO.

I don't watch this everyday, leave it for a month, come back and be pleasantly surprised.

DYOR of course

anybody having trouble with advfn BB's?

robbi123 in answer to your query on ADVFN #3590 - I know that they are working on an all embracing update to ensure they have everything in it that they should have in the public domain + the Nomad needs to vet wording on the predictions. From what I believe to be the likely content the sp is due to advance strongly.

cheers sharesure, dont know if u got my othe post regarding hardman did u mate? i cant access advfn for some reason!

robbie123

No sign of you or post 3621.

tuttle - what do u mean mate? i cant access the BB on advfn which is really doing my nut in!

robbi - don't worry too much ... it's very quiet there today. smattering of muppets yesterday.

robbie123, try the email link by my name; would be interested to know what you do about the Hardman Report; bits are leaking out.

Robbi - I don't know whether this is the problem but just a suggestion. If you have cleaned up your PC recently, it may have "forgotten" your passwords etc. Have you tried logging in again with your username and password, as if you were a new user? Or instead of going straight to the BB, click on the monitor or homepage, give it a few secs, and then try the BB. Hope it works!