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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.

shows you what bollarks they come up with.
estimated 400MMbbl and 120p a share for Primavera and results show f all.

All they have drilled is one bit of Primavera. A bit harsh to write it off just yet.

Looks like 7p was the bottom.

For the time being.
2517

bd- they have done seismic they would have drilled in the most high potential area and with ged im not confident. .

From the header they were selecting 2 from 10 to drill, you would assume they would choose 2 with the best chances of a result.
2517

market cap - 39mil

proven/probable reserves at alea - minimum 20mboe

3 HUGE blocks in paraguay, one of which is adjacent to an already producing block in brazil

possible new licence with proven reserves

possible increased stake in alea

plus 3 more wells to drill at primavera

excellent management team with plenty of experience

ALL TO PLAY FOR AT THIS PRICE IMO....


sharesure - any thoughts after this horrible day mate??

nice of them to put it out just before easter nr close of trading.

robbi123
ss is still in the loo, I agree its still early days for CHP as for GOO both companies will come good in the end.

Not holding CHP but was drawn into watching from others posters posts about CHP, so have watched and my commiserations to all holders, its not a nice feeling to see the price hammered.

My comments would be that the move to drill Sayona next is perhaps not a good sign at all.

If you refer to the RNS on the 18th of Jan 2007, they state this

"The Operator, Gran Tierra Energy Inc, has advised that the rig arrived in
Colombia on 15 January 2007 and after drilling a well for another company will
move to the Cachapa wellsite. Following drilling Cachapa #1, the rig will move
to the Capibara wellsite, also in the Primavera Block."

But now they say they are going to drill Sayona. This means that potentially the Cachapa drilling logs have indicated that the Capibara area is very likely a dud as well, based on those actual Cachapa drilling results. This would be a double bad thing as the seismic was done on Cachapa and Capibara and not on Sayona (eg that money is now lost). For this reasoning to be effective there must be similarities between Cachapa and Capibara, and indeed there is if you refer to the 22nd December RNS :

"Technical Director, Graeme Stephens, commented, "It is good to finally have a rig contracted in this tight rig market. The latest mapping on the Cachapa and Capibara Prospects showed them both to be typical Llanos Basin fault structures with areas of closure of around 5 sq kms and 3 sq kms respectively. If the Carbonera fault traps prove to be productive, there is substantial follow-up potential in the block. Four of these fault structures have been delineated in the northern part of the block, and further detailed seismic is likely to indicate other comparable structures in the largely unexplored portion of the block to the south and west.".


Therefore, my opinion is you may have the double whammy of the Cachapa and Capibara both being potential duds, not openly said but easy to be seen in the RNS of Thursday, by the changing of the next drill to be Sayona.

I could well be wrong, but it may be a good idea to start asking some very searching questions to the CHP management of the implications of the Cachapa drill results and the impact on Capibara. Hopefully something will come good from Sayona to ease the pain.

I would echo Papals comments. Sorry to hear things haven't worked out.

Given the timing of the announcement (run up to the bank holiday), it's also possible that many "traders and investors" will have not reacted yet to the drilling results, so further selling on Tuesday can't be ruled out. Any further drilling will have the same percentage chances of success/failure as the last one did, but negative sentiment may also surpress the price for sometime. If other O&G failures are anything to go by, the MM's will no doubt make the price look tempting, only to drop it suddenly when the backlog is cleared (the dead cat bounce).

I would strongly advise against anyone "topping up". Far better to get something from your current holdings if the price recovers, than risk losing even more money if further drilling is unsuccessful.

In my opinion.....

Strawbs.

P.P. & Strawbs:
In spite of losing a bundle yesterday I reluctantly tend to agree with both the above posts. I am uncertain of any specific timescale re. re-entering the Alea field which IS believed to be commercially viable. The management need now to restore some credability not to mention cashflow , and to me the most obvious way would have been to exploit if possible what appears to be a proven resource first.
Would welcome any comments on the above. Regards.

I think Sharesure as changed his name to Shareunsure now.

Its bad form of him not to have posted yet, not the English way of doing thinks.

Annie,

Developing Alea would be sensible, but they only appear to have a small percentage of a relatively small potential resource. I suppose it might help the price recover slightly, but it could be sometime before the asset is developed (rig availability etc.) and producing. You probably need to ask yourself if it's worth waiting, or if the funds in CHP might earn you more elsewhere. Personally I wouldn't hold. I think the price is likely to suffer in the short term, as many will cut their losses.

Aldwickk,

I get the impression from some of Sharesures previous posts that he had a large holding in CHP. If that's the case he may be nursing some very large paper losses. I could also understand his reluctantance to post, having been so bullish on the company and thus far dissappointed. It's easy to be wrong when everyones happily in profit, but not so easy when everyones nursing losses. He might also be away over Easter.

In my opinion.....

Strawbs.

Presumably, the current management were aware that the drill that has just been abandoned was a dud when they appointed the new advisers. They have also distanced themselves from this particular concession, whilst indicating that they are negotiating for other opportunities.

My personal view is that CHP will come good but that, as ever, shareholders need to be patient.

Come back Sharesure all is

Amities Aldwick / Salut ! ...< last post as bored sick by this CHP > . French flag flys proud and high.. News has it that Field marshall Von Sharesure ignomiously surrendered his forces but has himself gone into hiding- .sources suggest a cubicle in a public lavatory in Bethnal Green or was it Hackney via 27 public houses and a trindaloo curry house ....ADMIT IT SS !! YOU WERE SOOO WRONG !!!! . Yet no contrition reg. your dogmatic opinions which verged on propoganda and misinformation . No plattitudes nor words of comfort then for your sychophants ?? l am surprised. . As it happens i derive absolutely NO satisfaction, and i emphasize , NO SATISFACTION from YOU or ANYONE nursing fiscal losses !!! And for that fact i am truly very sorry. But it was you and your fellow cronies continual demeaning of my opinions and my English that rankled me - pur et simple- and yet i was right all the time .As for tuesday it will bring only worse as those traders( who went home early for a long weekend unsuspecting an RNS so late in the day ) and PI's without access to the market on thursday afternoon, due to other work commitments, will be out like a shot : and in doing so will trigger a plethora of stop losses @ the 5p level NAV -- No more than 2p ,,.....MY position . VERY SHORT ........@J ....Robbi123 .....What a load of HOT AIR ! Results speak volumes . Bullshit walks ! ..@+ J .

lol very short, just like he bought 158k shares and sold for a profit although no trades matched up, i'll give him one thing he is king of the bullshitters!!!!!!!!!!!!

of course if it goes up tuesday he will pick a buy trade near the low and call it his LOL

wHAT AN ABSOLUTE pr**k ............!!! I WOULD never again BUY THIS utter DROSS...... l LOOK FOR VALUE ; NOT A GOOD LARRUPING !!!!!!! nOW PISS OFF AND PLAY WITH YOUR DOLLS...... and not the plastic ones. Mummy hid those in Daddys garage... Up on tuesday ..lol WHAT a tosser

TFC, I don't normally comment on you but if you have no interest in this share why waste your time posting on this board. It don't add up in my book.

Yuff, these people amaze me.