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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.

unfortunately, on the back of that apparent SELL recommendation, 12m shares have now been dumped!!! ...... Don't be silly; of they haven't

that explains the markdown then, but not many takers selling.
Makes them look a little silly when institutions have just bought 26m at more than the current price.

sharesure when somethink is good it is good . sowhy is this not moving . any other news will not mattter. not being rude.

Tanker, you could find a cure for cancer and in the current market and you wouldn't make any headway. If you don't believe in what Chaco Resources are doing sell up and buy something else; I, and a number of others, won't be following you.
Good luck with the investment you replace it with.

In this sort of environment nothing much is moving on news , especially oil stocks, lock in and hold.

evilratboy- yer right. i think this is a stock with potential but you will have to do better than that.

Bloody VOG have decided to move today .... downhill!

Most were expecting volatile times ahead (not to say it's over yet) but sticking to your beliefs is important. Fundamentally I'm feeling this is knee-jerk reaction (across the board), and should hopefully turn out to be a heathly correction. Not sure I buy the story of significant global inflation and with Chaco things have fundamentally changed - for the better.

LIZARD - Email the guy at Shares magazine if you dont believe me. His name is Steven Frazer ... sfrazer@shares.msm.co.uk

I was pissed about this sell recommendation as they tipped it last week as a 10 bagger !!!!!!!

don't follow these journalists myself. they were saying the above for alk. 2006 is the year for alk a 10 bagger. now they have written it off i have bought in.

You would've thought with all this "investor fear" around they could get the sentiment indicator (or whatever it is) right. Hopefully we'll see a correction printed next week. I'm not too worried though. I'm 70/30 cash/equities at the moment, so will be looking for bargains over the summer if things have settled down by then.

Strawbs.

All resource stocks at the moment are seeing the aftermath of the recent boom. In the time I've held Chaco I've seen only a 10% fall in the sp when most others have suffered greater falls. GFM a mining stock also held saw the bid hit 1 last week and today its 76p. No doubt these falls will both recover when panic selling stops.

If you've all done your own research into Chaco then you'll know that apart from the changes daily in sp nothing else has changed. Oil supply will catch demand though the summer when demand is lower as analysts forecast, come winter demand will again pull away from supply. Should global tension worsen then this will happen before winter. In the meantime we wait for news or sell. Personally I will continue waiting and enjoy buying on low dips until news is released.

Finally I wouldn't take too much notice of SELL tips from magazines etc. With recent falls in resources many magazines will look to take profits early and diversify stocks held. Thus reducing readers maket risk.

DOW AND S&P WILL END UP TODAY! THerefore we will definately see rises 2morrow! Yesterday's fall (lowest since Jan 2006) has left sp's inexpensive. So I see better things for Eo. COP and CHP!

good job we dont listen to you jameel!

sharesure . i am not selling my 250.000. i just want to know why funds are told news that we are not.surely that is illegal.

Tanker, I think that what they are told makes them insiders which prevents them buying any more shares than they take in the Placing. They would also be barred from selling too. I am presuming that neither side will want that situation to exist for too long and so I think it is a reasonable assumption that there will be a further announcement very soon - more likely early next week?

Sharshure,thx for getting back to me,

Do you remember the last time we had a placing there was a delayed reaction b4 the sp suddenly jumped?,looks like its abt to do the same?

capetown, the jump is more abvout hardman info leakage

Cheers jamee,long may it continue

Go on CHP, Get up thars!