______

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.

thanks

Sharesure - Do you have any idea how long the reinterpretation of the 2D seismic data on Primavera will take. 300KM is a fair distance, also any idea whos doing the reinterpretation as I would have thought a 3rd party would be sourced with the task.

explosive, I don't know. In the short term I think you may find that they focus on Puerta Lopez Oueste where they are very excited about something they have seen in the seismic and also because others, like GED, are about to drill the next door block around Primavera and that might have a spin-off value to CHP.
We really need to have Graeme Stevens' update which I think is imminent since that will help fill in a number of gaps in what is currently known by the market.

Sharesure
An RNS today would make sense with the market recovering-but Chaco may want to make sure the time is right by waiting a couple of days.

Apologies for straying, but does anyone know anything about Barrick Gold Corp'n ?
Not exactly an environmentally friendly company, but then again, which mining companies are.

Barrick are a very big Canadian outfit with lots of tentacles (and maybe even testicles)

Just heard about a project called Pascua Lama in Chile in the Valle de San Felix that is rumoured to contain vast amounts of gold, silver and various other minerals. However, the project would be an environmental catastrophe for the indigenous people currently living there, seeing as the area in question provides them with the purest water possible from the glaciers, that would be destroyed by the mining.
Barrick are looking to mine here if possible.
If anyone knows any more on this, be much appreciated

If an RNS isn't put out this week don't read anything into that other than there are a number of threads to put into the announcements CHP want to make. When it does come out I believe we shall all have a much better view of just how good this investment is going to be but as in the past a measure of patience is required.
Will not be posting again until Monday.

Got my top-up today, 30k at 14.45p, if they go any lower I'll have to put "Er indoors" back out on the street.
Its for a good cause LOL

I think this proves what a good hold this will be.

FROM MONEYWEEK

commodities bubble, gold bullion, peak oil, gold reserves
Why commodities aren't in a bubble



24.05.2006


The consensus is that the commodities market is a bubble and that it has started to collapse.

This is how we see it.

Commodities bubble: is paper money better than gold?
Gold bullion has, following the recent sell-off, held above $680/oz. Golds initial $55 fall started on Thursday 12th May at a high of $730/oz and ended the Monday following at a low of $675/oz. Tuesday, Wednesday and Thursday the price held steady above $680/oz. There are strong hands at that price, otherwise prices would have escalated down further.

Of course, the market can make us all look foolish and it is quite possible that further price erosion could occur.

But has the world changed and do we now favour fiat money over real money? We dont think so!

Is it reasonable to expect the bull market in gold to have ended at $730/oz? We dont think so!

The gold price is set to go much higher unless the world economic conditions have suddenly changed beyond belief.

Morgan Stanley has produced some fascinating research concerning the worlds gold reserves, currently at the lowest level in history. On a percentage basis of total foreign reserves, they are as follows:

US 58.3%
Germany 42.0%
Netherlands 87.0%
Spain 15.0%
Austria 22.0%
Finland 77.0%
South Africa 24.0%
Belgium 20.0%
Italy 49.0%
Switzerland 38.0%
Great Britain 7.8% (thank you Gordon Brown for selling nearly all of our gold at less than $250/oz!)
Japan 1.8%
China 2.1%
Taiwan 3%
Singapore 1.7%
Indonesia 3.6%
Peru 3.9%
Russia 9%
Saudi Arabia 7.3%.

It is quite simple to deduce from this data that those nations with huge dollar reserves hold the least gold. It seems to us nigh-on certain that some of those Central Banks will prefer more gold and less dollars wouldnt you?

Commodities bubble: can oil production keep up with demand?
Meanwhile, the oil price has pulled back a little to just below $70/barrel but it is still a bull market. The hurricane season and the American driving season get nearer every day whilst the American-unfriendly oil producers of the world pose a genuine risk to supply stability. We see investment in this sector as being one of the keys to successful future performance, although there will be some volatility along the way.

Our concern is that the global economy could suffer deterioration and that could cause a price set-back. The fundamentals otherwise seem well set.

Demand from emerging Chindia is bound to increase whilst new oil discoveries of consequence are a thing of the past. Analysts calculate that oil company share prices are discounting a medium term oil price of $40-$45/barrel.

Put that alongside Professor Kenneth Deffeyes view. In 2001 he wrote Hubberts Peak: The impending world oil shortage. He reckons that by 2010 oil production will be 10% below todays level and by 2035 50% below todays level. Hardly the sort of conditions to drive the price of oil lower!

Although there has been speculation in these markets, pension funds now see the commodity market as a sector they must hold. They are long-term holders of the highest quality. There are lots of strong hands to buy these assets on pull-backs from the weak hands who panic out of them when the price seems high.

By John Robson & Andrew Selsby at RH Asset Management Limited, as published in the Onassis Newsletter, a fortnightly newsletter that gives insight into the investment markets.

For more from RHAM, visit http://www.rhasset.co.uk/

DIBBLES your post made me laugh on what was a miserable day,lets see if chp holds as it has done

Doughboy, thanks for posting that, interesting.
Frankly I couldn't believe it when Gordon Brown dumped 300(?) tons of our Gold reserves at a 20yr low. He got caught up in the hype of the Euro becoming the worlds reserve currency instead of looking towards China and India's increasing metals demand.
If I remember rightly didn't he flood the market with 25 ton batches, which of course depressed the price yet further. If he was working for an Invesment Bank and he recklessly dumped holdings like that, he'd have been out of the door before you could say P45.

Back on topic, Chaco is unfortunately at the mercy of the general market consensus at the moment. However in the current economic climate I can't think of a better place to invest my cash than a small Oil company with such great prospects and management. It's just a case of sitting tight.

db66,

Thanks for the article, succint and to the point. I am happy to hold as well :-)

Chaco is a good place to be at the moment.

doughboy, good article, I particularly like the pension fund part as this is very important (also in the general market malaise that we're seeing at the moment). MPH - my sentiments exactly on Gordon Brown dumping our gold, thought at the time why!

So we sit and wait on Chaco, would be nice to see the odd half pence tick higher for a few days. Long weekend lurking and any number of possible news articles.

ONE point TWO million buy @15,wish it was mine,getting better all the time,

looks like news is imminent then

Must have been following my lead or trying to keep "Er indoors" off the street.....

Looks promising either way.......

dibbles,keep er in doors and let her go when chp 1 a share!!,only for the afternoon that is to spend it

do u think CHP will reach 100p?