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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.

Absolutely nothing that hasn't been released by Chaco themselves, pointless really

Agree Martin

It's as if they picked up the CHP RNS a day or so ago and simply copied it into their report.

As you say, totally pointless and worthless.

Do these guys get paid for this?

Beau

Does anyone have an inside ear in CHP? if so it would be ever so helpful to tell their PR people to get off their butts and start upbeat news casts ,eg WOW! are we on to something big , watch this space. It would make us all feel good and may even increase the SP! and thats what its all about.

Like Regal Petroleum did, you mean?

11p in a couple of weeks. l may well be wrong but early reports in Alexanders connections" definately stated the rig that CHP proccured for work in Columbia had been damaged in transit.. Rather than admit to "delay " due to taking receipt of damaged goods {co-orperate suicide in mining jargon } CHP have seen fit to issue a RNS explaining this delay by stating the rig is being "serviced". Hmm Not too much difference in something being "damaged " or or having the need to be " serviced" is there? " ...All i know is that if this rig isnt onsite and ready by mid march this thing will drift to 11p... ..

service is just routine after every drill. on course and onsite now i would imagine. it mentioned spudding from 1st march so all in place. will take a time to assemble from now to the 1st.

So what if it does drift to 11p by mid March. Long term holders are in the stock as a result of their assessment of the likelihood of CHP finding reasonable quantities of oil. If the company's first drilling takes a few extra weeks, who cares.

For those who are so impatient that they can't handle this programme - open up the racing pages, choose your horse and put your money there!

city pages give better choice and geater chance of success!

lizard

I don't dispute your point re routine PPM (it makes sense actually) and, hence, shouldn't this have been anticipated rather than issuing a timetable estimate for it to be proven, again, as inaccurate? If it should have been anticipated, then frankly, that is piddle poor and naive management.

I don't have a problem with waiting for the spud date to occur but I would rather not have to endure unfulfilled timetable estimates for that to cause negative sentiment when the delays are announced and would just prefer them to say nothing until the day arrives. Just my opinion of course.

My hope, whether naive or not, is for positive anticipation of a March spud date and slow rise to 15/16p where this acts as a platform if and when positive drilling results ensue. I'd prefer the base at this point to be higher rather than lower, as would we all. But, as I said, probably very naive of me.

black

I personally wouldn't be too worried if 11p came (I don't think that will happen but of course wouldn't be surprised) as long as negative news didn't contribute to that sentiment. The only ones hurting, I assume, would be the T Traders who are either forced to close or keep rolling and rolling. Must be painful.

AIMHO of course.

Beau

TFC, I believe that your information is a few weeks out of date.

SSure

Not sure what you mean by your last post so I'd ask - if the announcement concerning the further rig delay didn't hit until the 19th, how can his info be "a few weeks out of date".

Beau

His talking about French Connections infomation.

Just checking in whilst taking a break in Brazil and trying to catch up on all posts. Can see Ive missed a little activity of the sort we dont want but overall little changed. Sitting tight.

Beau,

I stand corrected on my price predictions for this and next week, looks like you are more likely be to right.

TFC

Why don't you have a little short then???

steve...more luck than judgement mate. LOL.

ald - I too thought SS was referring to TFC's last post which as far as I'm concerned didn't contain info 2/3 weeks old. Always happy to be corrected as I'm more than likely wrong.

Beau

Beau62, I think the original intended spud date was 15/2 with a poss. delay of 3-4 days if there were any transit problems. Obviously if that was correct then there were and they seem to have taken longer for the operator to sort out. I doubt the next date will be missed but it would be worth the operator trying to regain some of the time lost; maybe that is wishing for too much although I would like to think that we shall get a further update early next week.

i think chp have given themselves a cushion by saying first two weeks. imo spudding could well start first week in march. that would make timeframe about two -three weeks from intial date. enough time to service the rig and assemble on site. it does actually mention in last rns spudding from 1st not rig due onsite.

i'm sure spudding belongs on SEO thread (this man is an arsehole!)

It's always nice to have newsflow, especially if it's good, we have been waiting what seems to be a lifetime for oilflow from CHP, but when you're looking at shares on a daily basis as we are, your perceived timescales can appear longer than they actually are. Just have a bit more patience and hopefully we will reap the rewards.
2517

Tks for the reply ss.