______

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.

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?

dibbles, interesting thought as CDS are going to find it difficult to raise more exploration cash if territory has no value! But then, who ever believed that part of the Report?

Does the CHP management have a substantial share holding.
2517

2517 The mgt. does although at last reckoning I think that these were options. Now in a closed period - because of Results - but my guess is also because of price sensitive news which will probably always be the case - a bit of a joke when this market's reaction to news is to mark a stock down!

2517 - from the past full year accounts to 31 March 2005 :-

http://miranda.hemscott.com/ir/chp/ar2005/ar.jsp?page=19&zoom=1.0&layout=single

Something in the back of my mind makes me think GS has been granted a further option, if so you should find this in an RNS.

Tony

I notice that the last trade quoted on moneyam (100k at 16.49) was at an offer price of 11.25
I don't want to sound like I am obsessed with these day to day changes but I assume that is a mistake. If it isn't then surely this will open higher tomorrow.

bigwave, for info, in Bloomberg I see the trade is 100k at 16.50 10.25p - assuming we're sort of looking at the same thing.

Greyhound - (sorry for late reply) yes, I think it was. But we have opened at the same level today so I guess I doesn't really matter anyway!
Fingers crossed for a pick up today - I can feel the bounceback coming....

....ooops, spoke too soon!

Dealing has dried up.
2517

The pattern of trading, taking the last week, seems to show that PI's are being shaken out to make way for institutional buyers to mop up stock at a discount. Nothing has changed with CHP from the time when it traded at 15p/share other than it has drawn that much closer to the time when news flow will continue. I expect to see announcements on drilling dates and new areas - as always timescales with CHP are unpredictable and to be fair to the mgt. they probably do not know from one day to the next when any new areas will be awarded to them.
In the meantime now is not the time to let MM's or anyone else snatch your shares on the cheap before the Autumn activities.

Anyone know if the Colombian government has actully reduced coporation tax yet? The intention was to reduce tax from 38.5% to 28.5% helping to shore up production.

have topped at these low prices. onwards and upwards!!

explosive - was asking myself this morning as well and from reading the Hardman report, as yet they haven't however I do not know when this is expected?

http://news.independent.co.uk/business/analysis_and_features/article1197287.ece

re the Independent. I am not convinced. I would suggest that if there really was a rumour of that kind it would have surfaced on this or other bbs/newspapers by now.

agree bigwave. It's like finding a reason to suit the story - don't suppose the journalist has even heard of the Hardman report let alone read it. Also didn't mention year to date return still 44%. Perspective!

Greyhound - agreed. Never let the facts stand in the way of a good story!
However, I think it was inevitable that this was going to be the Chaco angle while the pearls in Hardman remained buried. We should be seeing the "Explorer worth ten times more, says analyst". It's frustrating but I think the story will get through eventually.

Stocks do fall for a reason. Look at VOG, it trended down for ages, then hey presto a dry well and a price collapse. Remember. Don't fall in love with your stock. Maybe someone knows something, maybe they don't, but the trend in all the junior oil explorers has been downwards. While oil prices remain high, oil producers are the ones making the money. Explorers have nothing but land, and even with the wonders of modern technology, a lot of wells come up empty or non commercial. As ever though. Just my opinion. Good luck with your investments.

Strawbs.

i have made a lot dosh on ludlow3 tips he is now tipping cey in i go.

This is the July update from Hardman, a much more bullish article, very impressed.

So much for the srticle in the Independant.


http://www.oil-barrel.com/advisers/hardman/julymonthly.pdf