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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.

Sharesure,i am most encouraged by the fact that chp is holding its sp on such a bad day,if it can withstand this then it could be an indication of huge sp increase on solid good news,and couple large trades coming through.

GOOD LUCK TO ALL

Capetown, it is a justified position based on the prospects for CHP. Although it would help having better market conditions when news does get issued, I believe that it is only a question of the scale of the rise which comes from the rest of the world catching on.
Everyone just needs to keep to mind the conservatively calculated 'rule of thumb' that in the case of CHP every 1m barrels = 1p on the sp. If as is suspected even the original Puerta Lopez Oueste block is going to yield a 40-50m barrel share to CHP, Alea 10-20m barrel share to CHP and Primavera way more than those two put together, it's not too hard mathematically to calculate the upside. On top of those assets there is the real prospect of other Colombian areas being awarded (they have always made no secret of still seeking out additional blocks) and the Paraguayan areas where there is believed to be huge potential for both oil and gas finds.
Factor in a takeover at some stage at a 2p per share value for every 1m barrels in the event of that happening if you need any further justification for why we are all here.
If anyone posts on other BB's they are welcome to copy this.

Thanks for reminding us of the potential sharesure. Sometimes I think I'm losing the plot when I see the figures from my potential upside calculations............!

Is it really as simple as that, i.e.- 1p per 1m barrels?
I read somewhere that Max Petroleum have 1.3b barrels probable with a market cap of only 350m although I don't know anything more about them but I just wonder whether we can expect that kind of sp performance before drilling and proving up although I do expect to see the sp rise?
Genuine question so don't shoot me down!!!!

Cheers sharesure,

Got in blr,@1 and 1.30

dibbles, You are right to query any posts. The figures I prepared using a 10% pa DCF were verified by a reliable oil finance man - where CHP score in Colombia is that drilling shallow wells, which is what is required, is a fraction of the cost of drilling deep wells. I know that we should expect there to be a risk premium applied at the time of the announcements but as production time approaches the risk premium will steadily disappear.

Also Sharesure sandstone being a non-ferrous rock makes drilling relitively easy going. Two main advantages are it can be drilled quicker with less wear and tear to equipment and seismic data is more accurate as no iron/magnetic plates to confuse readings or drill through for that matter. Also with sandstone the rock allows for a good flow rate generally speaking and is idea for steam assistance. This was my main reason for buying as Primavera West has excellent potential, the others sites are all bonus factors to the sp in my mind.

OK Sharesure thanks....
explosive- great stuff, I'll make a note of that for future reference, thanks...

No problem Dibbles, I did some research on drilling ages back now and found it quite interesting, you can also check geographic information by doing searches in google. One thing though also worth noting is sandstone is porous so come the casing phase may take slighty longer. All in all though like sharesure says these are shallow wells so were only talking about a few days max...

Sharesure
Do we have to wait until Monday now for the RNS?

Someone on one of the other BB's was saying that an RNS would be out on the 13th (this was a few days ago). I remain sceptical (insider info and all that) - but will be interesting as Tuesday would be a favourite day to release news. The poster is usually a fairly reliable source.

Be interesting to see if he is accurate?

What makes you think that some punter on another BB has an inside line on something that is so price-sensitive on a company whose dealings are in South America ....... That is just too silly for words

As I said - it will be interesting to see. There is nothing else of note going on - so a bit of idle speculation will do no harm.

Bodeng, all I know is that there is a real wish to get out the information we have been waiting to see but there is a process that has to be gone through by all AIM stocks, namely that of getting the Nomad to verify and approve what is to be released. In my experience not all Nomads have the breadth of expertise or resources to carry out the requirements stipulated by the LSE in a timely fashion. Whether that is the problem in CHP's case remains to be seen; however I think we can all be certain that when the information releases start coming these will be as good as, or will exceed, what we have been hoping to read - keeping up a tradition which CHP has been establishing in previous RNS's

Thanks Sharesure

In my experience, bad news tends to have a shorter gestation period than good news.

so sharesure it must now be next week.13th.

When ever the news is released its released. No point counting days with a stock like this. I think we all get the feeling news will come sooner or later!!

In a strange way I think the anticipation of news anytime has helped support the sp to a point.
A lot of the smallcap exploration oilies have been hit really hard this week whereas we are still in this trading range at least. Fingers xxd.

I share the view that that it is pointless holding one's breath for an RNS but agree that the prospect of an RNS has helped buoy up the sp. Whether, Tanker, it is next Tuesday I haven't really a firm idea but hope that it comes by then.