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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 - Thanks for your posts here and on the other bb. I think Sondex (SDX) is worth a look (although you probably know all about this company already). It is doing some excellent business, it seems to me, but was oversold when the markets wobbled a few weeks ago. It fell from about 320p to 250-ish. It's picking up again now to about 280. The company had a positive write up in The Times yesterday.
As far as CHP is concerned, I am now more heavily invested than I had ever intended but currently in the red. I thought that the 15p placement would give us a solid base but, clearly, I was wrong.
I am baffled as to why we are now at the same level as Feb even though Chaco is in a far better position now than six months ago.
I didn't expect any spectacular effect from Hardman but I certainly didn't think it'd take another series of knocks this week.
I see that the company has a PR firm - I have no idea what their brief/contract is but I can see no evidence of them producing any results.
As I have said on the other bb, I really do think Chaco has some great stuff to talk about (and thanks to Hardman it would be an easy write-up from a journalist's point of view). It would be a shame if this opportunity was lost as some press coverage would be a fillip for us all. I know media coverage can have short-term benefits only but the drip-drip effect of Chaco being written about does give investors confidence over the longer term.
Good luck everyone.

bwd, I'll take a look at SDX.
CHP's drop seems to be happenning on very small volumes which seems to prove that it is just a general disinterest in the stock at the moment. They do have a PR company although I think that probably all they do is send out copy to the press rather than actively promote CHP.
Some of the more prominent brokers were given many copies of the Hardman Report to attract additional institutional support but the trading volumes so far would not suggest that any have yet come on board. Maybe the holiday period doesn't help. I also think that CHP urgently needs an oil and gas specialist nomad to explain what the Hardman report should have said but didn't ( because it was leaned on by RPS [known to be very cautious] who were advising Daniel Stewart????). Frankly, I'd rather that CHP hadn't released the Report in its current form but waited until they had sorted out a nomad more suited to where they now are in terms of nearing drilling and production.
There are, as has been stated on here before, a number of other news items which are imminent; an earlier than expected drilling programme would excite interest.

Thanks Sharesure. I agree with you about the effect of future news. There are lots of developments to look forward to. The danger is that the story, if written now, will be "Chaco down after disappointing review values explorer at 10.6p" instead of "Chaco up after review values explorer at 1.20"
For what it's worth, I am sticking with this one despite the kicking. I look forward to: "Investors' patience rewarded as Chaco confirms massive oil strike."

Just in case anyone thinks I am being too negative, I have picked up some more today because I am confident that this will bounce back when the story (eventually) gets through. If it was a good price at 10p in Jan/Feb it is a much better price now. This week's drop has hardly been on the back of any volume worth talking about and it would not be unreasonable to see this back at the recent placement price of 15p.

BIGWAVEDAVE,if i had any money i would be JOINING you

Price now at lower end of valuation of Hardman report, I think these explorers are now finding sp's around known resources rather than possibles. That makes it difficult short-term traders to make quick bucks on the sharp rises/falls but does provide good buying opportunities for investors who are prepared to wait for stories to unfold. I made a quick buck myself on CHP earlier in the year but kept on my watchlist for the Summer and have bought back in for the long-term a few weeks ago. Didn't expect to see 10.5p so may add some more. I too would like to thank sharesure for his efforts on this thread.

Sharesure, looks like your becoming very popular..... Who knows you could even win the year end Most Popular Poster Award or Most Respected Award. Anyway keep up the hard work for all our sakes, and a big thankyou to all who have contributed their research and time to this tread!

explosive, couldn't cope with that! This is about to enter a very interesting phase.

A lot of nonsense on the other bb-nice to see the small rebound.

oh joy!

Just monitor the end of day B and T trades which seem to be mopping up all the small sells by bored PI's. It always seems to happen.

share sure have bought 20000 more and hope you are correct.

And there, I thought your view was that I was ramping CHP! I have done more checking and cross checking on this stock than anything else I have ever invested in for the reason that this now represents for me the largest investment I have ever made. I know one large City broker who also knows the company extremely well who has bought a lot of the shares for his personal pension fund (and he is not that far off retirement age!) which also gives me comfort that I shall be a very happy shareholder before long. You have been fortunate in my view to buy stock at an sp which is low due an artificial market correction. Good luck to you.

Hi Sharesure, hope they arn't grinding you down.
I'm confident Chaco will come good, Alea is virtually guaranteed afterall, but even with GS aboard arn't you slightly concerned that they could come up empty elsewhere?

is this rumour true from another thread chp expected to sign deal (decree) on the paraguay acreage this month?. well we are in the last week of the month so?

Just assuming would be my guess, but it can't be far away now, good or bad....

Go on CHP, get up thars!

Thats better, it would have been a shame to finish red on such a blue day..

dibbles, no, not being ground down; a bit of volatility in the sp just gives a reminder that you can 'know' the best news in the world on a particular stock but it won' stop the market misreading it.
Re Drilling, I regard the two wells to be drilled at Alea will show that the 20m barrels allowed for by Hardman will increase to 40m (almost guaranteed) to 70m barrels when the second well proves (if it does) that this field is full to spill point.
As for other areas, we have to rely on Graeme Stephens' reputation for knowing his way around seismic records and accurately assessing where to drill. His view has always been that some of the previous attempts by others in the past have been off structure.
I expect some quite significant buying to develop later this week, not because of any news necessarily but because the current sp is a joke.
Re Paraguay 3rd area - I don't think even CHP's mgt. know an exact date for when they will hear that news since it relies on politicians! Also should it matter if no value is going to be put on acquiring territory! Absurd, I know, but that is what Hardman and Co have allowed themselves to be bullied into reporting; I doubt that they seriously believe that either and the moment anyone exploring the Chaco region finds something then they will address that anomaly very quickly.

I see CDS have hit problems and have stated that other company's have shown an interest in their blocks.
I wonder if Chaco find them interesting?