In a large, shallow pan heat the oil (about 1/4 inch) and fry the chicken until it starts to brown slightly.
Carefully add the water and cover.
Simmer the chicken for about 10 minutes, then remove the lid and let the water simmer until it is evaporated and the chicken is done (about 15 minutes for breast, and 20 for thighs, but always check with a thermometer to make sure the internal temperature is 165 degrees or higher)
Cut the stem off of the chile and then slit it down the side and remove the seeds.
Remove the chicken from the pan and add in tomatoes, onions, garlic, dried chile, peanuts and chicken broth and bring to a simmer for about 15 minutes.
Using a stick blender, blend the sauce right in the pan, then add the chicken back in and simmer for an additional 10 minutes so the flavors all meld together nicely.
If you don't have a stick blender, let the sauce cool and blend in a regular blender then bring back to a simmer in the pan with the chicken.