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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.

Dibbles, thanks. Paraguay is supposedly sitting on gas reserves larger than the North Sea ever had. Hope it is in CHP's licence areas but we will have to wait several months before we find out unless a partnering deal is done with someone else like Petrobras who have more resources available to explore the areas faster.

While the news for CHP (and GOO) is indeed positive, don't get too carried away for it is not that exciting!

cynic, think that you are wrong on that one.It may not all be unveiled this week or over the next couple of RNS's but if they can confirm several hundred million barrels of oil by the end of this year I think that would be enough to justify my assertion that this is the Cairn Energy of South America. Maybe you don't know the right contacts on CHP.
As for GOO I don't research that company or have any contacts who know it well.

Rob, great company, but 50% is not good, could come good, extremely good at that, people who invest generally only look for the good points, i could make a great case for every share i have bought, and i'll mention more than one that has gone scat... did i see it coming, did i hell, cos most of the time the market doesn't even know when somethings adrift, just a generalisation but surely 20% is plenty enough of one share, i have quite a few of these and have topped up recently, and looking for more, trouble is most investors think these are worth 2 +, if thats true why aren't they 2 now...? the market is never wrong...

sound like the cynic now... Hello R, how goes it?

Hi Ted ..... good to see you here ..... Got pretty splattered like a lot of peeps over the last week or two, but now making a good attempt at recovery ..... Confess I am still rather wary at the speed of the apparent recovery, but now the long w/e is nearly over, we may get some rather more logical trading, insofar as there ever is any!

Big Ted..... I've personally seen no evidence that people think this is worth 2+ at the present time, just that it has the right ingredients to head that way with good management and a little luck.......

If markets recover we may get our update.

Re Dibbles post #546 as and when there are independent assessments of reserves (expected soon after the internal update expected any day now) keep in mind the 'rule of thumb' that in CHP's case each 1m barrels of oil in the ground is worth 1p on the sp. That calculation is based on oil at $60/barrel so at the current price of oil it is all extra profit above that figure.You can double that sp estimate if another company tries to buy out CHP at some stage. I don't think that anyone expects the sp to reflect that value overnight since a risk premium will apply until the oil is actually coming out of the ground. It will be interesting to see what that risk rate is factored in at by the market.

Had another little top-up, it feels great getting in below recent institution price...LOL

Just need that update now, come on Chaco........

Topped up as well, look good value at present (IMHO of course) .

Well done chesneya, even without the expected update, we can't be far from Alea production by now hopefully.

Re RNS's
Expect the first to be Graeme Stevens'internal progress report, the second (2 days later?) to be the really important one - Hardman Resources report - with figures etc, plus possibly a third giving info. on which institutions took part in the placing if that triggered a notifiable holding.
The wait for this info. follows a pattern with CHP - it seems to take forever to get info. out but is probably a lot to do with time zones. At least when it does come it has always been as good as or better than the predictions.

Re Presentations
Agree with those comments that these were too anodyne to really excite because they lacked figures, although there was plenty there in the content but just watered down because of the new rules. For instance, Puerta Lopez Oueste where the initial prediction was a 10m barrel field (based on an outdated/wrong seismic map, now looks to contain several times the predicted original reserves. Watch for Hardman Report in how far they verify that new estimate as that will be an independent view which has to be more valuable no matter how trustworthy, competent and cautious the mgt are.

Sharesure, very much agree, frustrating the wait but will be worth it, ok to put up your post on the other board.

I see it's there, thanks.

Thanks Sharesure, still sitting here patiently trying not to become to focused on short term fluctuations. I feel the Hardman report is going to be a significant step forward and give us a solid idea of the sort of cash flow that Chaco can generate years down the line if they decide to drill and not sell to a bidder.

Although even if Chaco were looking to accept a bid, the report will give us an idea on the companies long term value, and the sort of sp figures we should expect to be thrown onto the table.

Yep, waiting it out also. Like M_P_H says will they sell to a bidder, drill or even maybe sell say 10% of a wells production in exchange for a third party drilling the wells and becoming opperator. Revenue less expense. Fingers crossed the Hardman report is as good as were expecting..

Ticked up at the end on mostly sells from what I can see, unless we have a big buy in the background???
On the subject of takeovers I don't know much about EEN for example but I do know they are also in Colombia with current production yet little sign of takeover interest in them so I was just wondering why we think Chaco is a likely takeover candidate so early on?

The french connection ,april 5th 2006, Chaco resources no more than a bunch of severe no marks who decided to form a company for hydrocarbons simply on the massive hike in the global oil price...its a stinker...Management are green between the ears. They are not oilers!!!! Look at there backgrounds!!!! The whole project is not worth a carrot.
Would be nice to prove you wrong Frenchie, then we shall see who`s green between the ears!!!

pisces - what??????????

pisces you got that from the AFR thread didn`t you ,i do remember looking at it and thinking what a cheek as he was once a holder.He carried on by saying he sold out at 18p and would look to buy back in at the 10p-12p level,all i can say is good luck because if it goes that low i`m going to remortgage the house.