Monday, February 28, 2005

ERHE Plunges 12.26% On News Of More Award Delays

Profit-takers joined with doomsayers to sink ERHC Energy shares $0.078 today, a loss of $9,597 for the ERHC On The Move portfolio of 123,040 shares. Given that nothing has changed with respect to award delays, shares are likely to repeat the same performance tomorrow, and we expect a loss of $0.06 to $0.08 to the $0.47 range.

Volume was a substantial 4,356,390 shares, a larger number than the volume that took the share price up on Friday.

The price fall began shortly after the open, when the stock hit a momentary high of $0.65, and continued throughout the day. Friday's price surge was marked by a frenzy of last-minute buying in the late afternoon, when it still looked like awards would be made this week in the second licensing round for six choice oil blocks in the Nigeria Sao Tome and Principe Joint Development Zone. Now those awards appear to be delayed at least until April 15, and possibly for the customary (for Nigeria) four to six months.

The scenario again was one of "dueling dailies," as This Day Online suggested the delay was due to time given ExxonMobil to make its preferential choices in two blocks on offer, and The Punch of Nigeria laid the blame at the feet of Nigerian President Olusegun Obasanjo and Sao Tome and Principe President Fradique Menezes.

Those articles, ERHC On The Move said today, were likely to have been strategically planted stories that were intended to make cheaper shares available to some investors.

One trader posted on Raging Bull that he had seen a pattern in five sales that started below the bid price and drove the share price down each time. That has been a fairly common tactic used against ERHE and its predecessor, ERHC, in recent months, when investors gave up millions of shares at bargain-basement prices, spurred by negative news or no news and a dismal drop in share price as the days progressed.

If recent history is any judge, the buying may not begin again until the stock settles into the low $0.40s.

ERHC On The Move has neither bought nor sold the stock since November, and has not sold any shares in recent months. However, while we do not intend to sell ourselves, we recommend that investors who want to make short-term gains do so now and reposition themselves as the share price slips below $0.50.

We reiterate that the slide is only due to the desire of some traders, notably RB poster Stockhocker70, to make gains on the swing rather than any fundamental problem with the asset.

Disclosure: Stockhocker70, a self-admitted swing trader from Louisiana, TOS'd me from the ERHC board after I posted news stories from Nigerian newspapers that he claims were false but which in fact were truthful. Rather than continue to be harassed, I started this blog. We present news and opinion that is unrelated to any strategic decision on our part to buy or sell, and continually disclose our personal holdings here.

Awards Delayed As Presidents Wrangle, Paper Says

The Punch of Nigeria delivered a low blow to readers Monday morning in Africa, saying that the Nigeria-Sao Tome Joint Development Zone awards were delayed by disagreements between Nigerian President Olusegun Obasanjo and Sao Tome and Principe President Fradique Menezes.

The article was written so poorly and so thoroughly conflated two different licensing regimes that it could not be determined by a thorough reading exactly what tense the JDZ disagreement was in and whether that part of the delay was ongoing.

Awards of the six blocks in the JDZ were expected at the end of December, reset for the end of January, then set again for the end of February; a bidding round for 80 blocks owned exclusively by Nigeria was once set for late January and then for late February, but are now on hold until at least early March, the article appeared to say. That round had always been secondary to the JDZ round, and officials have long indicated that they hoped to complete it before the Nigerian round begins.

While the article carried the faint suggestion that no resolution ofthe JDZ bids was in sight, it repeatedly referred to only four blocks being on offer, as opposed to the five that were in fact offered, and at critical moments fails to reveal whether its author is referring to events in the past, present or future. That suggests the writer is not very well-informed about the bidding or the topic.

To some, it will appear that the purpose of the article is to allow prospective buyers to purchase more cheap shares after the price rose sharply in Friday's late trading. That may be a fair interpretation.

To others, it is evidence that the two governments are still in disagreement about what blocks should be awarded and to whom. The mention of four blocks could carry with it the suggestion that Block 6, which attracted only one known bidder, will be rebid in a third round with Blocks 7, 8 and 9.

My conclusions appear below. Here is the story:

Oil blocks: Presidential approval delays bidding
Michael Faloseyi
The Punch, Feb. 28. 2005

ABUJAThe annual bidding for oil block licences earlier scheduled for last week could not hold, following the failure of President Olusegun Obasanjo to give his approval.

Inability to secure presidential approval also led to the delay in the announcement of the winners for the four oil blocks placed on offer in the Joint Development Zone of Nigeria and Sao Tome and Principe.

A source in the Ministry of Petroleum Resources on Friday, confirmed the development and said that the 2005 oil block bidding was tentatively billed for the last week of February.

However, our source said, “following our inability to secure the presidential approval to advertise for the bids, the February date has become unrealistic, but we hope to get the approval very soon.”

The source was hopeful that the bids might be held in March when the approval of the president would have been secured.

“All the technical details have been concluded and passed to the President. We are expecting his approval and I believe that the bid would be opened within this first quarter since we have missed the February date,” source said.

The 2005 bidding rounds promised to be the largest ever in Nigeria with about 80 oil blocks spread across the inland basins, the Niger Delta region, deep and shallow offshore put on offer.

It was, however, not certain, if the planned digital bidding system that the Nigerian National Petroleum Corporation planned to establish as part of the reorganisation, dubbed, “Project Pace,” would be ready before the bids open.

Group Managing Director of the NNPC, Mr. Funsho Kupolokun, had in December 2004, said that awards of contracts in the Nigerian oil and gas industry would be done through Internet bidding system as from this year.

The corporation had in January, sent some of its top officials including a Group Executive Director, to Petrobas, Brazil’s state owned oil firm, to understudy how digital marketing is done.

However, sources in the corporation said on Friday that work was still going on on the website and how to ensure the system is run effectively.

Meanwhile, two months have elapsed since the promise by the Presidential Adviser on Petroleum and Energy Matters, Dr. Edmund Daukoru, to make public winners of the four oil blocks put on offer in the JDZ.

The source in the Ministry hinted on Friday that the winners would still be announced after the Presidents of both countries agreed on the details of the short listing done by the technical team that assessed.

The last paragraph is probably the best clue to the meaning of the story. It seems to say that while a "short list" of winners is complete, the two presidents are at odds as to which will be accepted. It has been known for some time that Sao Tome and Principe favored the highest bidders, while Nigeria tended to support those with the most technical capacity to get the drilling in deep offshore waters done.

The most important part of that paragraph is the phrase "after the Presidents of both countries agreed..." That conveys the sense that the Presidents had agreed on the "details of the short listing," which presumably (in the Western sense) includes both winners and non-winners.

However, the entire first sentence is cast in the subjunctive, framed by the word "would," and therefore no firm conclusions about its actual meaning are possible.

I could well be wrong, but I think this article is intended to precipitate selling so that those too late to the party can still gain entrance. Nonetheless, since Sam Dimka's suggestion that ExxonMobil's preferential rights selections - if made last Friday - would trigger awards on Thursday or Friday was also conditional, I am less convinced than I was that awards will still be made this week.

The new date for the Nigerian blocks offered by the author - "within the first quarter" - is novel, so new information may have been obtained by this writer. The quarter, of course, end on March 31, so it is another way of saying "the end of March," just as earlier the phrase was "the end of January" and "the end of February." And we have been given to believe that the closure of the JDZ round and the opening of the Nigerian round will happen at the same time.

The political situation in Nigeria is deteriorating, and if the paralysis extends even a month further, the second bidding round may not be completed for three or four months at the earliest. In that same event, some multinational oil firms may begin to abandon Nigeria altogether, as they are under fierce attack and gaining little support from the government that is supported largely by their royalties. This defies common sense, but politics always has.

Another article, in This Day Monday morning, says that now ExxonMobil is the hold-up, not the presidents as The Punch article states. It also gives an extra 15 days beyond what we were told before for the company to make its choices.
That article is at
I think it is a good sign that, at least in The Punch, ExxonMobil is no longer painted as the source of the delay, unless the entire purpose of the article was to absolve ExxonMobil of any role it may have had in delaying the awards thus far. Moving the blame from the company to the presidents would insulate the company from blame while putting the delay in the political realm, which is moved by nationalism and sometimes bribery.

But if the company is in fact no longer the hold-up, there is reason to believe that the presidents are less inclined than anyone to further delays. President Obasanjo himself was rumored by a Raging Bull poster to have taken a personal interest in moving the process towards a conclusion.

However, President Menezes is not so badly in need of money as he was four weeks ago, when the first Production Sharing Contract was signed and Sao Tome received a substantial check for its share of the $123 million signature bonus fee and there has been no indication at all that he is anxious to end the suspense.

It is also uncertain whether the newspaper was hoping to discredit either president with the article suggesting that they are responsible for delays. Both Obasanjo and Dr. Edmund Daukoru, to whom it has fallen to make the three false predictions so far reported, appear in candid photographs accompanying the article. Daukoru is somewhat redeeemed by the piece, which does not engage in overt finger-pointing, however.

Finally, the article seems to be setting the stage for a lengthy delay without knowing whether one is either wanted or necessary. Should the awards be announced this week, the article would not have been wrong; should they be announced four months from now, it would still not be wrong.

This ambivalence is intentional, moreover; the article seeks to create uncertainty in place of the positive expectations of thousands of investors around the world whose hopes and dreams are married to the companies involved. It is saying to those investors, "Wait and worry some more; we're not sure when things will be straightened out."

To me, the response to that message is to ignore it, as it carries no new information, and to worry if you are so inclined. I am not so inclined; I believe announcements will come "two weeks" from now, as always.

Friday, February 25, 2005

Heading North: ERHE Adds Another 16%

Warming to their task, ERHC Energy investors today drove the price up $08.8 cents, or 16 percent, yielding a $10,827.72 gain for the ERHC On The Move portfolio of 123,040 shares, and setting the stage for dramatic price increases next week as awards grow closer still.

It was the second time since January 1 that ERHE has gained more than $10,000 for us in a single day.

The good news for investors might not have been the gain, however, but the fact that the stock moved so far and so fast on a relatively low-volume day. Earlier this week, ERHE gained $0.06 on a pace-shattering Tuesday when more than 7 million shares were sold at the end of a three-day weekend.

As we grow closer to awards and news of our likely oil bonanza in West Africa's Gulf of Guinea spreads, it is not at all impoossible that we will see days where volume rises in excess of 10 million shares and price changes of $0.20 or more are common.

What the persistent, plucky and patient longs in ERHE have done is build themselves a lofty launch pad for major news of awards in the Nigeria-Sao Tome and Principe Joint Development Zone.

And with the treaty-backed preferential rights to 560 million barrels of oil - and the possibility of rights to billions more if we and our drilling consortia are made operators in one or more blocks - it is difficult to estimate how high the ERHE rocket may go.

As of 4pm EST today, there was as yet no confirmation of ExxonMobil's choices as to the exercise of its two 25 percent preferential rights in any of the five blocks on offer, nor any follow-up from the Joint Development Authority on the earlier suggestions by JDA spokesman Sam Dimka that awards could come next week.

Even if they do not come next week, the launch pad could still grow higher, giving investors a takeoff point somewhere in the $0.80 range.

Regardless of that, however, today's action validates the faith and dogged persistence - and the plain good luck - of ERHC Energy investors in the investment community.

The final volume was 3,703,500 shares, with 700,000 of those changing hands in the last 15 minutes towards a close of $0.638, just two-tenths of a cent below the high minutes earlier of $0.64.

Houston Chronicle Story On ERHC Nears Completion

I was interviewed today by the Washington-based senior reporter for the Houston Chronicle who is doing a major story suggested by ERHC On The Move several weeks ago.

A firm date for publication has not been set, but one target is next Sunday, he said.

The interview was wide-ranging, covering both the positives and negatives of ERHC's history and its present prospects.

The reporter had obviously done a great deal of homework and has worked hard to wade through claims and counterclaims in the relationship between ERHC and leaders of Sao Tome and Nigeria, and to understand the role of Sir Emeka Offor in the 40:60 royalty split between the two countries.

Thursday, February 24, 2005

Awards Could Come Next Week, Dimka Says; ERHE Holds On Through A Shake To Gain 4.6% And Rise 2.5 Cents In EH Close

Orangeandwhite0, the Raging Bull poster formerly known as markvo10 whose credibility was questioned and then confirmed by last week's JDA press release, today posted great news of another update from Sam Dimka, whose credibility was also questioned but whose information has now proven good, that awards could come next Thursday or Friday if, as he expects, ExxonMobil responds today to a request from the Nigeria-Sao Tome Joint Development Authority to exercise their preferential rights in the second licensing round.

Meanwhile, the anticipated shake from yesterday's S-8 news has materialized, but the sustained fall to $0.479 did not - so far; the day's low now stands at $0.49. At 10:30am EST, 728,010 shares traded and the ask was at $0.51 and the bid at $0.515, an $0.025 (4.83 percent) drop that is less earth-shattering than expected. At 10:35am EST, the bid moved to $$0.515 and trades started happening at $0.52, so the worst may be over.

Update, 11:06am EST The share price has recovered to $0.53, the last trade price in extended hours yesterday. The bid is at $0.525, and volume is a healthy 919,510.

Update, 3:12pm EST Some late buying including a 50K block have helped bump the bid to $0.525 after it languished before noon at $0.51, and the last sale (3:15pm) was at the new ask, $0.53, where several hundred thousand shares have moved in the past three or four minutes. Volume has risen to nearly 1,823,871 shares.

Update, 7:52pm EST ERHE investors have apparently weighed the dilution of 73 million new shares versus the attraction of a debt-free company poised for the award of some $28 billion worth of oil, and found in favor of the oil.

About three minutes after our 3:12pm update, buying suddenly exploded, driving the hard-to-move share price up $0.025 by the close of extended hours trading, and left short-sellers gasping at a 4.63 percent rise and a price of $0.565 on the last trade, recorded at 4:01:25pm EST. The bid moved up to $0.56, and the volume for the day was 2,191,594.

Here is the Raging Bull orangeandwhite0post from 9am EST this morning:



Just got off the phone with Sam Dimka. I asked him if XOM has repsonded back to the JDA yet. He said it is VERY likely that XOM will respond tomorrow. This is consistent with what Sam told me weeks ago that XOM would only take ONE week. He said that XOM could wait until next week to respond but he really expects them to respond TOMORROW. Sam went on to say that if XOM does respond tomorrow that the "JMC CERTAINLY WILL MEET NEXT THURSDAY OR FRIDAY." This date is consistent with what SwingK said earlier this week!!!!! IT's ALL COMING TOGETHER FOLKS!!!!!!!!!!!!!

Nigerian Panel Wants Oil-Profits Tax Hiked To 85%

A story from the respected Punch of Nigeria Thursday says panelists at a House of Representatives Committee on Petroleum Resources say oil comopanies are exploiting the country's laws to avoid taxes, and should pay an 85 percent rate instead of the current 50 percent rate, and would also require them to refine at least a quarter of all production oil insde Nigeria.

Here is the relevant part of that article, the top piece in today's Business section:

`Amend petroleum laws to increase profit tax’
by Michael Faloseyi and Chiawo Nwankwo

Feb. 24, 2005

ABUJA -- The House of Representatives has accused oil production companies of exploiting existing regulatory laws to Nigeria’s disadvantage.

It said the planned review of the Petroleum Act and the Deep Offshore and Inland Basin Production Sharing Contract Act, was therefore, to increase the petroleum profit tax from 50 per cent to 85 per cent and redress the trend.

The review of the laws is aimed at increasing the Federal Government’s share of the revenues from the sales of crude oil and operations of the crude oil exploration and production firms in Nigeria.

Chairman of the House Committee on Petroleum Resources, Dr. Cairo Ojougboh, who spoke atthe opening session of the public hearing on the review of the Acts held in Abuja on Tuesday, accused crude oil production companies in Nigeria of exploiting the existing laws to the detriment of the government.

Ojougboh said, “The oil and gas industry has been experiencing some difficulties in achieving the objectives of government with respect to revenue mobilisation and collection.

“Apparent difficulties found in the Petroleum Act and in the Deep Offshore and Inland Basin Production Sharing regimes are threatening to reduce the revenue available to government.”

“It is in line with these apparent distortions in the operations of the industry arising from defects in the Acts that the House of Representatives mandated the committee to investigate activities of oil companies’ operations in the upstream sector of the oil and gas industry.”

Ojougboh, however, said that the Federal Government would have to complement the planned review of the Act with investment in the infrastructure.

Giving an insight into the planned review of the petroleum laws, he said that the portion of the Petroleum Act that recommend 50 per cent petroleum profit tax would be amended to read 85 per cent.

The review would also compel oil companies to refine a minimum of 25 per cent of their total crude oil production locally as from April this year, to increase job opportunities in the country and ensure stable supply of petroleum products in the country.

It is unclear whether Nigeria can unilaterally increase taxes on oil companies doing business under the treaty that governs the Nigeria-Sao Tome and Principe Joint Development Zone and the accompanying Production Sharing Contracts that set tax and royalty rates, or whether the heightened cost of doing business in Nigeria would force foreign firms out of business there.

Wednesday, February 23, 2005

Enormous Changes At the Last Minute*

Shortly after the market closed, ERHC Energy reported to the SEC in an S-8 filing that the company's $12.6-million debt had been cancelled by issuance of $38 million in shares (valued at Wednesday's last extended-hours price, $0.53) and final payment of a $2.5 million credit line to the company's account to fund current operations.

When we issued a caveat yesterday noting that "The unanticipated happens often in Africa," we did not anticipate today's big move. Here's what happened:

Sir Emeka Offor, K.C., chairman of ERHC Energy and of Chrome Energy Services, its sole lender, issued himself $38,743,509.86 worth of unregistered - meaning they cannot be sold for a year because they were not purchased in a public offering - ERHC Energy shares, surrendering whatever was still available on a $2.5-million credit line for company operations, and in so doing wiped out all of our $12.646-million debt to his Chrome Energy Services, a Bahamas-based company which is controlled solely by him, while diluting the value of our stock by about 11.5 percent, or $0.061 cents at the current price.

The short-term consequence, barring news tomorrow morning of a new Joint Ministerial Council meeting to make awards, will be - at a minimum - a $0.061 cent drop in share price to account for dilution.

Then, and only then, will investors start to ask themselves, "What does it mean that this company has rights to a minimum of about 560 million barrels of oil and is debt-free, while selling at only $0.469 cents?" My answer to that would be, "What kind of a rate can you give me for a third note on my house?"

Regardless of how the stock is priced tomorrow, the dilution downer will be instantly erased in the warm glow of block awards.

I did some interesting math last evening, and like all my math someone should double-check it. But I figure that the dilution is going to cost us about $0.50 of the new high we expect to reach upon awards.

I had originally said in early January that I had expected $1.28. Then I bumped that after some good news to $1.78. The irony is that Mr. Offor would have seen greater actual cash appreciation from his 225-odd million shares at $1.78 than he will from 306 million at $1.28, by about $24 million.

A year from now, no one will ask, as one poster on the frantic Raging Bull ERHE message board did Tuesday when 2 million shares were sold into the surge, "Where are all the shares coming from?" At the current average daily volume, if each day only these shares were sold, it would take 146 consecutive trading days to sell all the sharas Offor acquired on Jan. 28.

Several posters on Raging Bull noted that the move was signalled clearly in the Dec. 10-K; none of them, however, posted about it at the time.

The dilution means that in effect we gave back all the gains since last Saturday's notification to ExxonMobil by the Nigeria-Sao Tome and Principe Joint Development Authority, some $0.061 cents, to about $0.479. For the ERHC On The Move portfolio of 123,040 shares, those $0.061 cents mean a paper loss of $7,505.44, which is likely to be topped by another $7,200 actual loss in share price this morning. Mr. Offor essentially relieved me of $14,700 before supper. I will, of course, get it back.

The new shares, giving Offor a total of 306,091,433, or 42.97 percent, helps solidify Offor's voting control of the company but leaves him about 7.04 percent of majority control. We will talk more about that soon.

Update, 1:53am EST, 2/25/05: The market did take back five cents of the six I predicted, but slowly gave it back - slowly, that is, until our post at 3:12pm EST (see the story above this one on Thursday's trading) - when we said the market had turned in our favor and the price suddenly began to rise, finishing in extended hours with a $0.025 gain. That amounted to a take-away for ERHC On The Move of $6,152 - $1,230 less than anticipated - and a giveback of all that and another $3,076. It would lead one to the conclusion that Mr. Offor is wiser than I am in these matters. But I did get it back.

Here is the press release:

ERHE: Agrees to Cancel Conv Note -
Issues 73.1M Cmn Shrs [delayed]

Ridgeland, MS, Feb. 23, 2005

ERHC Energy Inc (OTCBB : ERHE) reported that as January 28, 2005, ERHC Energy Inc. agreed to cancel that certain Consolidated Convertible Note, dated as of December 15, 2004, in favor of Chrome Energy, LLC, an affiliated entity, with a principal balance of $10,134,084.42 and accrued interest as of January 28, 2005 of $146,597.17 and that certain Promissory Note, dated as of December 15, 2004, in favor of Chrome with an original principal amount of $2,500,000 and accrued interest as of January 28, 2005 of $11,986.30. As of February 14, 2005, ERHC has received the entire $2,500,000 principal balance of the Promissory note and is therefore, canceling the Consolidated Note and the Promissory Note by converting the total outstanding principal and accrued interest as of January 28, 2005.

On January 28, 2005, ERHC agreed, upon the funding of the entire $2,500,000 of the Promissory Note, to issue to Chrome 73,100,962 of unregistered shares of ERHC common stock in conversion of the entire outstanding principal and accrued interest of the Consolidated Note and the Promissory Note. The Consolidated Note was converted at $0.175 per share pursuant to the terms of such note and cancelled in its entirety. The Promissory Note was converted at $0.175 per share pursuant to the terms of such note and cancelled in its entirety.

Go to to read the S-8 filing.

*Thanks to the late novelist Grace Paley for this headline.

Bloom's Still On The Rose As ERHE Climbs Again

Early pre-market trading, which has been rare in ERHE, drove yesterday's $0.54 close to $0.53 with an ask of $0.535 before the regular market opened.

At 9:28am EST, the volume was 16,900 and the selling had stopped.

Some 270,000 shares traded before the market opened Tuesday, driving the price $0.03 higher before the opening.

The price jumped immediately to $0.535 on 109,852 at 9:30, reached $0.54 at 9:31:08am EST, and $0.545 at 9:32:08 on 226,952 shares of volume.

Update, 1:31pm EST: After hitting a high of $0.555 at 12:41pm EST, the price has settled in at $0.055, $0.009 higher for the day, on good volume of 2,015,168 shares. Late afternoon trading is still expected to improve the price.

Update, 1:26am EST 2/24/05: The share price never got higher than $0.555, and actually closed down one-one thousandth of a cent, at $0.54. Extended hours trading at 4:02 took it down another cent, to $0.53, before the S-8 filing was announced at 4:06pm EST.

For ERHE, The Good News And The ... Good News

Everyone gets a chance to shine sometime, and the rest of this week is that chance for ERHC Energy (ERHE) investors.

After endless months of rumors, frustrations, price dips and a toxic jellyroll of poison pens and puffery on the Raging Bull ERHE message board, a verdict of sorts is in: Awards are going to be made, and if ERHE gets only the rights it earned for services to Sao Tome before its Joint Development Zone with Nigeria was even created, investors holding hundreds of thousands of shares are likely to be on their way to real wealth.

That would include the ERHC On The Move portfolio, which gained a little more than $7,200 on yesterday's $0.06 move. Just imagine the gains of investors like First Atlantic Bank Plc of Nigeria, whose own stock has traded at a frenzied rate on the Nigerian Stock Exchange ever since the bank won 60,000,000 shares from Chrome Energy Services Chairman Sir Emeka Offor in November.

But what if gets a little more than its preferential rights? What if it gets operatorship of Block 2 or 3 with its partners Devon Energy and Pioneer Natural Resources, or Block 4, with Noble Drilling?
If 4 billion bbls of crude is the most conservative estimate of reserves in the five blocks on offer. ERHC's guaranteed preferential rights entitle it to 14 percent of the blocks, or 560,000,000 barrels of oil valued at yesterday's closing price at $28.6 billion. Even after huge discovery and exploration costs, there's an awful lot of money left over for shareholders, and an awful lot of value not reflected as yet in its $0.54 price.

With the major uncertainties behind us, the issue for investors becomes the management of their gains. Taking profits prematurely could cost holders of just 10,000 shares a substantial appreciation in the next few months - if oil prices hold, if the share price holds after an initial run-up, and if Nigeria is not broken up or besieged again by the dogs of war.

Many credible investors see a near-term high in the $3.69 range, while I have been substantially less optimistic - suggesting a near-term high of $1.78 before a buyout bid become public in March - because of the vast selling of the kind we encountered yesterday (and so many of our 1,331 readers sent that article about market makers and manipulation to the SEC yesterday that the Google mail server stopped sending it).

But at the end of the day, albeit when it counted least - when most of the real energy was gone - we came out 12 percent ahead of the opening. I am deeply wary of the ability of shortsighted profit-takers and the rumored accumulators to sell us down against a tide of positive sentiment. That countercurrent tends to grow stronger every day that passes after news. But this week, I think, we are golden. Our time to shine has come.

Only awards will tell us how bright we may finally be.

For today, I like a gain in the $0.04 range as investors look at other issues and gauge the depth of the dollar's weakness and the strength of crude's price climb. I am not gong to guestimate on volume because I was so far off yesterday. but perhaps someo of those who comment here will suggest their targets.

Update, 1:26am EST 2/24/05: The share price never got higher than $0.555, and actually closed down one-one thousandth of a cent, at $0.54. Extended hours trading at 4:02 took it down another cent, to $0.53, before the S-8 filing was announced at 4:06pm EST.

Tuesday, February 22, 2005

ERHE Gains 6 Cents On Volume Of 7,125,427

Displaying its underlying strength in the face of heavy selling early in the day, ERHE soared $06.10 or 12.71 percent today to $0.541 on its heaviest volume in recent memory, topping more than 7,125,000 shares.

As predicted here yesterday, the movement fell squarely between $0.04 and $0.08 cents we advised; the high for the day was $0.555. We were far off on volume, though, expecting about 3 million shares, and we did not anticipate hitting the 7 million mark until Friday.

The sure, swift trading that opened the day boomed the stock $0.03 cents - a gain of $3,600 for the ERHC On The Move portfolio - before the opening, when a record 270,000 shares traded before the bell, but traders ran into heavy water they struggled against and finally overcame by late afternoon. More than 72,500 shares traded in the aftermarket.

It was a devastating day for ERHE short sellers, and millions of shares traded at $0.51 before other sellers realized they were playing a losing hand against a determined group of stockholders who understand the fundamentals of the "minnow" from Houston that has been a media phenomenon for almost two years. In the end, holders simply refused to sell at the bottom-feeder prices.

Remarkably, the ERHC Energy minnow swam upstream aginst a current of bearish sentiment that swept the Dow far downstream, closing lower by nearly 175 points. The NASDAQ Index fell 28.3 points, and the day ended up one of the worst for conventional stocks in many months.

According to the New York Times, much of the selling on the NYSE and other boards was driven by a 6.1 percent one-day hike in crude oil prices that lifted crude prices $2.80 to $51.15 a barrel. Oil prices rose when the dollar fell against the yen and other currencies, but majors did not fare well; ChevronTexaco hit a high of $61.08 before falling back to $59.45 and closing down $0.28. ExxonMobil fell $1.03 to $58.38 after briefly flirting with a high of $60.08.

Nigeria Set To Announce JDZ Winners, Paper Says; Posters Call For SEC Probe

Bassey Udo, the respected energy editor of Nigeria's Daily Independent, reports from Lagos this morning that the Joint Development Authority is ready to annojnce winners of the second round of bidding for five choice oil blocks in the Gulf of Guinea.

The statement comes as more than 3,207,000 shares traded in the first 70 minutes in of trading in ERHE today.

Market makers seemed determined not to let the stock rise to its natural level. Sellers who only wanted $0.50 for shares that would have commanded $0.55 dominated the market, again leading to calls for an investigation of trading in the stock by the U.S. Securities Exchange Commission.

"It's one of those mornings that make you want to call the SEC," one Raging Bull poster lamented as huge trades went through without any movement at the bid or ask.

Violations of SEC regulations governing market maker activities, which are already under scrutiny, can be requested via e-mail to

JDA to announce winners of 2004 licensing bid
by Bassey Udo

Energy Editor

LAGOS -- The Joint Development Authority (JDA) may soon announce winners of the 2004 Licensing Round result of the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).

Authoritative Presidency sources said on Monday in Abuja that ExxonMobil was at the weekend notified to take steps to exercise its pre-emptive rights in any of the oil blocs put up for bids during the licensing round held last December.

Following the 2001 treaty signed between Nigeria and Sao Tome creating the JDZ, multinational exploration and production (E&P) companies that operated in the territorial waters in years predating the agreement -ExxonMobil and Dangote-Energy Equity Resources and Environmental Remediation Holdings Corporation (ERHC) were assumed to possess pre-emptive rights over the area, an arrangement that conferred on them substantial rights of preference on some of oil blocs in the zone.

ExxonMobil alone has pre-emptive rights granted it in any three of the nine blocs on offer in the 2003 licensing round as well as in the five blocs on offer in the 2004 round provided it matched the highest price offered by the bonafide bidders.

ERHC, on the other hand, has preferential option rights in the JDZ as well as the country’s Exclusive Economic Zone (EEZ).

On the basis of the result of the 2003 licensing round, which they won with $123 million offer, the two firms were granted licences to jointly operate the Premier oil bloc-1 in the zone along with ChevronTexaco on 51:40:9 percentage equity ratio.

Announcement of the result of the 2004 Licensing Round bid has been hanging for more than one month to create room for the resolution of some issues surrounding the interests of the parties involved in the exploitation of natural resources in the zone.

Daily Independent gathered that with the notification issued to ExxonMobil to move to exercise its preferential rights within the next 30 days, the Joint Ministerial Council (JMC), made up of Ministers of Petroleum and senior officials of the two countries, will meet to give a final appraisal of the 26 bids that featured in the exercise before making public the winners.

High Hopes For ERHE Spur Investors; Big Gains Anticipated In Price And Volume Through End Of The Month

Well-founded and high expectations for ERHE's prospects are stirring investors around the world and on the Raging Bull message board, where nearly 500 posts in the past 24 hours greeted the official news from the Nigeria-Sao Tome Joint Development Authority (JDA) that awards are expected by the end of February.

Update: 270,000 shares moved in 10 trades at $0.49 before the opening bell. Pre-market trades of any quantity are rare for ERHC.

Update, 9:31am EST: 625,000 shares moved by the first minute of trading.

Update, 9:35am EST: 944,509 in the first five minutes, mostly at $0.51.

Update, 9:38am EST: 1,194,909, mostly up $0.03 at $0.51, in eight minutes.

Update, 9:40am EST: 1,208,409 at $0.51 in the first 10 minutes.

Update, 10:05am EST: 2,442,922 have moved, and ERHE is now at $0.515.

Even though this is the third announced deadline, the JDA is likely to meet this one, having got most of its major business out of the way. The only wild card in the deck is the deuce of 25 percent preferential rights dealt to ExxonMobil. A delay in exercising those rights on XOM's part could snag the process again, but none is anticipated.

A caveat: the unanticipated happens often in Africa.

Volume should be substantially higher than last week and should climb through Friday, the last day of trading before the referenced "end of the month" on Monday, Feb. 28.

I expect the news - good, bad or indifferent - to filter down slowly, as it usually does, and then gain strong momentum as new buyers move into the market.

Just the same, the stiock may open a half cent lower today as short sellers and others play their game, but ERHE should be well on its way to a February high by noon. Day traders should be in abundance by then, and 3 million shares should trade. Look for 7 million by Friday, and a similar or larger number on Monday next.

I also expect a minimum gain of four cents on Tuesday, and a maximum of eight cents. The good news is that the same gains could be repeated tomorrow and Thursday. By Friday, I expect that more breaking news will create its own paradigm. Gains could skyrocket, depending on the dominant rumors of the day.

With our recent major coverage, awareness of our prospects is at an all-time high, and that should be to our strong advantage in the rumor mill.

Nothing is guaranteed to anyone with respect to the awards themselves. While I believe we will win big, I could be in for a nasty surprise when the envelopes are opened; meanwhile, I look for every possible sign and omen in the press here and abroad and even in the tenor of discussions on RB, but I play the stock by the news that counts - the Reuters, Dow Jones, Lusa, AFP and AP stories that will detail the winning bids.

As always, there may be mistakes in the first reports that will initially hurt morale.

If the AP gets the story first, it is likely to drop ERHC's name in ERHE's Devon Energy/Pioneer Natural Resources (Blocks 2 and 3) and the Noble Energy (Block 4) consortia because it has never written a word about us.

The same is likely to be true of of the Portuguese reports from Lusa and French reports from the Agence France-Presse, but we can expect solid facts from the Vitrina and Tela Non Websites - if they are updated.

All-Africa is unlikely to have early reports. The Nigerian newspapers, too, seem incapable of covering the awards in a timely way and may well tip us early to bidders whom they favor, especially Conoil, rather than those who have actually won.

Reuters and UpstreamOnline are better than 50 percent likely to get the results right the first time.

Our best bet is for a wide-ranging and very accurate release from the Dow Jones News Service, which by now is certainly on the alert for errors regarding ERHE.

One lingering possibility is that the name submitted in our bid to the JDA is the one that will be announced, and if that is the case, there will be a delay in press coverage and as investors search out the defunct Environmental Remediation Holding Corp. name and find the ERHC Energy symbol, ERHE.

However it turns out, this is going to be a very exciting week. The last day of the month is next Monday, just five business days from today, and the action will be non-stop. Stay tuned.

To bring new investors up to speed, here is the Reuters story that ran yesterday about the awards process. Note that the percentage options exercised by ERHE in the first round were not identical to those in the second round, with the major differences being in Block 2 and Block 9. Here is the story:

ExxonMobil gets oil rights in Nigeria/Sao Tome zone
Reuters U.S. Company News
11:52 a.m. 02/21/2005

ABUJA (Reuters) -- ExxonMobil Corp. (XOM) received approval on Monday to exercise its rights in five offshore oil blocks on offer by Nigeria and Sao Tome to pave the way for final licence awards to be made, the bidding authority said.

The exploration blocks are located in the Gulf of Guinea, which has seen a swathe of huge deepwater oil discoveries over the past decade and could provide the United States with a strategic supplement to its energy supplies from the crisis-ridden Middle East.

The U.S.-based energy giant has a right to a 25 percent stake in any two blocks in the second bidding round which began in December, the Nigeria-Sao Tome Joint Development Authority (JDA) said in a statement.

The JDA received bids from 23 firms for five blocks in the deep waters shared by Africa's top oil producer and Sao Tome, a tiny, impoverished island nation taking its first steps into the world of big oil.

"As soon as ExxonMobil exercises its options, the JMC (Joint Ministerial Council) will be convened to approve the final structure of the award of the blocks ... This is expected to be done before the end of the month," the statement said.

ExxonMobil and a little-known U.S.-based firm ERHC Energy (ERHE) enjoy pre-emptive rights over the equity because they invested in exploration under a deal with the tiny island state before the disputed area became a Joint Development Zone managed bilaterally.

When the two countries agreed in 2000 to jointly develop the area, the two companies renegotiated their deals with the JDA and gained the rights.

Last year, ExxonMobil, the world's largest publicly quoted oil firm, exercised a 40 percent interest in block one, the most sought-after of the nine blocks offered in the first licensing round.

Houston-based Environmental Remediation Holdings Co., now renamed ERHC Energy Inc, took a 25 percent interest in block four, 20 percent in blocks three and nine, and 15 percent in blocks five and six before the first bidding round which opened in 2003.

ERHC Energy now has a bid for a 30 percent share of Block 2; Block 9 was not offered.

Oil Majors May Be Charged In Tax Avoidance Probe

The Nigerian government's tax compliance agency today announced that several "major" oil firms doing business in Nigeria may soon be charged with tax evasion, and revealed that 85 percent of all the goods imported via its bustling ports were illegally imported, the country's leading daily, "This Day," reported today.

The charges come as Nigeria's relationship with foreign oil companies and domestic producers is in a politics-driven state of flux. A strong current of nationalism runs through much of the Nigerian media these days, and its favorite target tends to be the companies that exploit its natural resources and generate almost $30 billion a year of the country's revenues.

Oil companies are facing new challenges from the government and other Nigerian groups on every side, including demands that they buy exhausted refineries, build multibillion-dollar natural gas processing plants, give up awarded oilfields that they have not been exploring sufficiently, and pay fines that have ranged as high as $1.2 billion.

Meanwhile, Nigerian criminal syndicates - many with powerful political connections - are siphoning vast amounts of oil from pipelines and tankers, and so-called community activists are rampaging across their processing facilities, causing as much as $500 million in damage in a single incident.

It takes courage, persistence and animal cunning to survive in the nation's overheated economic and political climate. So far, the major multinationals in Nigeria - Italy's Eni, Total, ExxonMObil, France's Elf Aquitaine, Royal Dutch/Shell and ChevronTexaco - are meeting the challenges, but it remains unclear how long they can do so on the Nigerian mainland.

Offshore Nigeria, and particularly the Nigeria-Sao Tome and Principe Joint Development Zone in the oil-rich Gulf of Guinea, is another matter. That region is guarded by an international treaty, and several nations take an active interest in ensuring its peaceful operation. The JDZ may one day be an imprtant alternative to crisis-ridden Mideast oil supplies, many believe.

Here is the This Day article, from its online site:
EFCC Probes Major Oil Firms Over Tax Evasion
by Onyebuchi Ezigbo

Feb. 22, 2005

ABUJA -- Chairman of the Economic and Financial Crimes Commission (EFCC) Mallam Nuhu Ribadu, said yesterday that his commission has initiated investigation into the allegation that some major oil companies in the country have, in connivance with certain government officials defrauded, Nigeria by evading tax payment.

Speaking as a guest lecturer at the opening ceremony of 33rd Class of the Chief Officer's Management Development Programme of the Nigeria National Petroleum Corporation (NNPC) held in Abuja, Ribadu said some un-named big oil companies have been evading payment of relevant duties and taxes to the Federal Government over the years and that EFCC is moving in to uncover the malpractices.

Aside from investigating the oil companies, Ribadu said EFCC is also focusing its searchlight on the banking sector, where a number of senior officials have been arrested and will soon face trial in court.

"We intend to investigate all movement of money by the banks and we will seize any ill-gotten money. Banks chief executives have been directed to make available regular reports on their transactions to the commission", he said.

He said that already EFCC is recovering some money for government and will move in to do a "detailed investigation".

Ribadu disclosed that the commission recently made a startling revelation when its team, which went to investigate affairs at the Nigerian Port Authority (NPA) warehouses discovered that 85 percent of the goods were illegally imported into the country.

He described the situation as an indictment on the operations of the Nigerian Customs Service.

Giving further run-down on the efforts of the commission so far, Ribadu said EFCC has succeeded in retrieving about $700 million (N30 billion) made up of cash and properties seized from people involved in 419 and other financial offences while more than 700 persons are being detained in its cell.

Meanwhile, Punch, a Nigerian daily, launched another attack on foreign companies that made it sounde very much like multinational oil service companies were trying to bend the rules of the Nigerian National Petroleum Corporation (NNPC) to obtain contracts.

Here is a partial text of that article in Tuesday's editions:

‘Foreign firms main culprits of contract abuse’
by Oluyinka Akintunde and Michael Faloseyi

Feb. 22, 2005

ABUJA -- The Senior Special Assistant to the President and Head of Budget Monitoring and Price Intelligence Unit, Dr. Oby Ezekwesili, on Monday said that some international companies and missions were the main culprits of abuses of contract procedures in the last three years.

She made this disclosure at a meeting with diplomatic missions and international agencies in Abuja.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala and her counterpart in the Federal Capital Territory, Mallam Nasir el-Rufai, also attended the meeting.

According to Ezekwesili, the BMPIU’s experiences over the past three revealed that abuses of contract procedures in most cases were aided and openly supported by some international companies with the collaboration of their Nigerian allies.

“At the BMPIU, we often get desperate calls from some missions asking us to bend the rules in favour of a company of their nationality.

“Today’s forum therefore is to seek your support in explaining to individuals and companies from your respective countries, who intend or are already doing business in Nigeria, that our public procurement reforms emphasize international best practices as obtainable in most of your country,” she explained.

The best practices, according to her, include transparency, honesty, competition, and value for money in all contract transactions.

The BMPIU’s boss refuted recent reports in the media alleging that the unit had been decentralized by the Federal Government.

“Let me comment briefly on the recent wrong and conflicting reports in some sections of the media that the Due Process Unit has been decentralised or that it has even been relieved of its functions. This is false.

“The BMPIU is intact, functional and has even been given more powers following Mr. President’s directive that the Nigerian National Petroleum Corporation’s and the Niger Delta Development Commission’s operations be brought under the Due Process Policy,” she said.

By the President’s directive, Ezekwesili said, all projects and operations of NNPC and NDDC have to be certified by the BMPIU.

Nigeria may be feeling particularly sensitive to such claims this week due to a second scathing indictment of its national probity yesterday by Transparency International, a corruption watchdog NGO that has labeled Nigeria the third most-corrupt nation in the world.

Monday, February 21, 2005

JDA Tells ExxonMobil To Exercise Its Rights, Sets 'End Of Month' As Likely Awards Date; XOM Again Declines To Comment

The Joint Development Authority of the Nigeria-Sao Tome and Principe Joint Development Authority (JDA) has finally notified ExxonMobil that the time has come to exercise its rights to two 25 percent entitlements in Blocks 2 and 4 of the Joint Development Zone (JDZ).

The long-delayed notification came over the weekend, the Authority said in a brief press release carried by Reuters, and ExxonMobil is expected to respond by the end of the month. It was the first time since a Dec. 31 deadline elapsed that the JDA has offered a date certain for awards, and only its second press release since last November. The JDA announced the signing of a Production Sharing Contract for Block 1 with winning bidders at the beginning of February.

ExxonMobil's director of upstream media relations, L.A. D'Eramo, refused to comment beyond Sunday's statement by Susan Reeves to ERHC On The Move, but the company has been roundly criticized for delaying the bidding process and depriving Sao Tome and Principe of much-needed signature bonus fees that could amount to more than $150 million after they are split 40:60 with Nigeria. Reeves had said that a comment could compromise "forward business plans."

The news was greeted by wait-weary ERHC investors with something akin to the relief felt by grain farmers at the end of a drought. It brought closer the ultimate conclusion of the bidding process, in which ERHC is entitled to receive its own preferential rights in six blocks of the JDZ - four of them bonus-free - and the much-awaited formal announcement of awards.

While nothing has confirmed them, rumors and hints persist that ERHC's consortium with Noble Drilling in Block 4 and Devon Energy and Pioneer Natural Resources in Blocks 2 and 3 will be awarded operatorships in at least two of those blocks.

However, ExxonMobil's two choices will determine 25 percent of the allocation of Blocks 2 and 4, so the decision by the multinational giant is fraught with consequences for all bidders who hope to gain operatorships in the second licensing round.

The first licensing round concluded in October with just one of nine blocks on offer being awarded to a consortium of ChevronTexaco, ExxonMobil and Norway's Energy Equity Resources, which is said to be considering a sale of its allocation.
ExxonMobil was said in reports from UpstreamOnline to want to sell its second-round choices to other participants, and has reportedly talked to ERHC and others about acquiring them.

Another indication that awards are imminent was the oddly-timed announcement in Algiers at the Cape II conference on African oil by Nigeria's de facto petroleum minister, Dr. Edmund Daukoru. He announced there that a bidding round for 80 blocks
that had been delayed several times will begin at the end of February - meaning that (at least to micro-observers like myself) that they have concluded all the major business of the seond JDZ round, which had in turn caused these other blocks' auction to be delayed.

Here is the Algerian story:

At the Cape II conference in Algiers, Nigeria’s Presidential Energy Advisor, Edmund Daukoru announced that his country would be holding a licensing round in late-February. The country’s licensing round was announced previously but has been delayed several times.

According to Daukoru, the government is offering up 80 permits for oil exploration. It would be the largest number of plots to be offered in one licensing round in Nigeria and the first time the country would hold an auction to select the winners. The plots are located onshore and offshore. Daukoru said the winners should be announced by August. Oil accounts for as much as 95% of the export revenue of Nigeria. It wants to raise production from 2.3 million to 4.5 million barrels a day by 2010.

That story is from

It is unclear what effect the press release and Reuters report will have on the share price when stocks open tomorrow, but if the three-day weekend rule - a formulation by this reporter that says the largest price changes come after a three-day weekend - holds fast, the price could see a rise in the $0.04 to $0.08 range to near the $0.55 mark.

Here is the official press release:



Following consultations between the leaders of the States Parties, the Joint Ministerial Council (JMC) has approved that the Nigeria-São Tomé and Prìncipe Joint Development Authority (JDA) notifies Exxon Mobil to exercise its preferential rights, in the ongoing JDZ Licensing Round.

2. Accordingly, Exxon Mobil was notified over the weekend. It would be recalled that the JMC has revalidated options already exercised by the ERHC following the 2003 Licensing Round.

3. As soon as Exxon Mobil exercises its options, the JMC will be convened to approve the final structure of the award of the blocks put on offer in the 2004 JDZ Licensing Round. This is expected to be done before the end of the month.

4. The recent signing of the PSC for Block 01 and the imminent award of additional blocks will usher in the exploration phase for oil and gas in the JDZ.

Nigeria-São Tomé and Prìncipe
Joint Development Authority

21 February 2005

Update, 2/22/05, 2:04am EST: In a note to ERHC On The Move late Monday afternoon, ExxonMobbil formally declined to comment:

2/21/2005 4:13:32
To: Joe Shea

Mr. Shea: Your recent inquiry regarding ExxonMobil's business activities in the Nigeria - Sao Tome Joint Development Zone (JDZ) has been referred to me for response. We appreciate your interest in ExxonMobil. As a matter of general practice, ExxonMobil does not comment or speculate on forward-looking business plans.

L. A. D'Eramo
Upstream Media Relations
Exxon Mobil Corporation

Sunday, February 20, 2005

XOM Won't Confirm JDA Notification

A spokesperson for ExxonMobil today would not confirm information posted on the Raging Bull ERHC Energy message board purporting to be from the Nigeria-Sao Tome and Principe Joint Development Authority and saying that the company has been notified that it must exercise its choices in Blocks 2 and 4 in the JDA's second licensing round within 30 days from Feb. 18.

To comment would be to discuss the company's "forward business plans," spokesperson Susan Reeves told ERHC On The Move.

A National Unity Conference Is Shadowed By Talk Of Breaking Nigeria Into Provinces

As Nigerians from all walks of life gathered to discuss national unity Monday during the controversial National Political Reform Conference at Abuja's International Conference Centre, young political activists from northern Nigeria say they are starting to support demands of ethnic activists from southern Nigeria who want to break up the nation into six provinces or even six countries, a credible report in the Sunday Independent said.

It is difficult to imagine the consequences of a mutually agreed-upon break-up that would return Nigeria to its pre-1966 situation, where six regional governments held near-absolute sway within their areas. But it is a maxim of geopolitical life that it is far harder to unify a nation than to divide it. And in the past, however, partition has always meant a civil war, whether in India, Ireland, Vietnam or the former Palestine.

What is novel about the Nigerian discussion of separation, however, is that parties may pulling for a peaceful separation on both sides. When it comes to dividing the lucrative natural resources possessed by Nigerian in abundance, though and the various infrastructure elements devoted to it, it is problematic to an extreme degree. If wars are fought about moeny, Nigerians bent on division would have plenty to fight about. The only certainty about such an outcome is that it would leave each of the states far less able to defend its interests, and far more vulnerable to manipulation from within and without.

A bloody and tragic civil war erupted in Nigeria in 1967 and only ended in 1970 with the surrender of Boafra and the deaths of hundreds of thousands of people. Biafra ran from Nigeria's western border to less than 200 miles from the eastern border, and occupied parts of both the north and south of the present Nigeria.

But in terms of a national economy, Nigeria's place among oil-producing states, and as a place for foreign investments and joint ventures between multinationals and indigenous firms, the discussion of a divided Nigeria can only stir worries.

Nigerian newspapers have close ties to political parties, and the national "confab" on unity, as the papers call President Olusegun Obasanjo's attempt to bring opposing sides together in the nation's capital for a meaningful dialogue about their county's future, has been a rich target for exploitation by his political foes.

Here is the Sunday Independent story:

NATIONAL DIALOGUE: North may demand split into six countries
by Chuks Ehirim

ABUJA -- Nigerians, especially those with the notion that delegates of northern extraction to the National Political Reforms Conference would fight against any move to use the platform of the confab to balkanise the country, may be in for the shock of their lives.

Information available to Sunday Independent points to the contrary. According to a highly placed source, who is one of the leaders of the Arewa Consultative Forum (ACF), the younger elements in the north, are already clamouring for possible break-up of Nigeria into “six new countries” based on the existing six geo-political zones or to the path of supporting those championing the cause of returning the country to its pre-1966 regional structure, with states within each geo-political zone becoming provinces.

These views were said to have been strongly canvassed by the younger elements during the meeting of the ACF in Kaduna, to harmonise the position of the North at the confab.

During the meeting, the source said, leaders of ACF such as its Chairman, Chief Sunday Awoniyi, who tried to toe the moderate view of preserving Nigeria as a sole, indivisible entity, were almost beaten up by the younger ones.

The ACF is said to have dusted up a position paper prepared for it in 2001 by the trio of Alhaji Sule Yahaya Haruna, Alhaji Ibrahim M. Ida (CON) and Mallam Adamu Adamu.

The 19-page paper had traced the clamour for restructuring of the country, a clamour it said is mainly coming from the South, and concluded that the North would not be the worst loser if the country splits.

“As the North continues to cling to the withering dream of a united Nigeria, other parts of the country are calling for a Nigeria of a different kind,” said the paper.

It said that a wrong impression is given by agitators of restructuring that “proponents of a united Nigeria are its biggest beneficiaries, or else, are the lazy parasitic ones, living off the hard work and the resources of the rest.”

The paper added that, “to be candid, we have reached a point whereby it is not out of place to give a very serious thought to the consideration of an alternative political arrangement, which will not only create greater political breathing space for the two sections of the country (North and South), but will also give each of the two sections greater responsibility over its affairs.”

The paper was even more emphatic when it said, “let it be borne in mind that unpalatable as it may seem, a possible break-up of Nigeria into several entities may not necessarily be anathema to the North, nor should it be an unthinkable political proposition for that matter.”

It recommended two options which should be canvassed in the event of a National Conference. These, it called THE WAY FORWARD and THE WAY OUT.

Under the way forward, it said it entails a reappraisal of the current arrangements in terms of the (i) extent of economic agitation and free movement of people in and within the whole entity; Nature of the political union, residential rights,(ii) inventory valuation and ownership of historical investments. Co-ownership of certain assets, sharing of all assets of entity, tenancy-in-common of international assets.

Political arrangements: What sort of constitution, what federating unit, economic regime and inter-regional trade, revenue allocation, provision of and responsibility for infrastructure?

On the "way out" option, it said, “There are three levels for consideration in this regard.” The three levels are: the de-amalgamation of North and South, the negotiation for a new international arrangement and the establishment of six new countries.

On de-amalgamation of North and South, the paper posited that “with the benefit of hindsight, the amalgamation of the Northern and Southern Protectorates and the Protectorate in Lagos in 1914 were probably Nigeria’s biggest political mistakes.”

It said that “a political problem needs a political solution. This solution may be found in de-amalgamating the North and South and creating two new independent states.”

It added that “as soon as the “de-amalgamation proclamation is made, the existing federal government should cease to exist.” It stated further that “all public officers will automatically revert to their side of the divide to fill positions made vacant due to the new arrangement.”

It also recommended that “all political office holders will act in a caretaker capacity until new internal arrangements are negotiated at a constitutional conference.”

This document, our source revealed, may likely form the fulcrum of the position of the Northern delegates at the National Conference. Even many of those who are not delegates to the conference are already canvassing views akin to those expressed by the three men who drafted the paper.

One of such men is an ex-officio member of the ruling Peoples Democratic Party (PDP)’s National Executive, Alhaji Ahmed Hassan, who has strongly argued that if the resource control agitators continue with it at the confab, the North would move for the control of its own resources too.

Friday, February 18, 2005

Awards 'Not Likely' In February, Dimka Says

Sam Dimka, the public relations director for the Nigeria-Sao Tome and Principe Joint Development Zone, told a regular and reliable source today that awards this months are "not likely."

The hold-up in the awards is not due to ExxonMobil, as this reporter and many others believe, but to a disagreement reported earlier between the two nations over which signature bonus fees to accept, Dimka said.

The JDZ has attracted large bids from companies that have little experience, and sometimes few resources, and that historically have made such bids on other concessions only to resell them to more substantial players.

But technical competence and deepwater experience are preferred by Nigeria, Dimka indicated, to larger quantities of upfront cash. Technical competence and deepwater experience can often result in fast-tracked drilling and early oil royalties that quickly exceed the bonus fees.

Here is the account of the conversation with Dimka emailed to ERHC On The Move:
Just got off of the phone with Sam D. had about a 12-minute
conversation with him.

The hold-up at this point is between the two states and signing bonus amounts in two blocks...obviously STP wants more up front. Nigeria (as Sam has said) has 40 years of Gas experience while STP has "nil". So STP does not really understand that the real $ is in production.

Block awards by the end of this month are "not likely." Sam is still very optimistic that it is moving forward and that these "minor" issues will be resolved quickly.

Once resolved XOM will be notified and will make their "decision". Sam says that XOM is not the hold-up and should not be the hold-up as they "already know what they want"..XOM is ready to get on with it as well...(indication was implied that XOM already has what it wants and I would assume that that is the Natural gas processing plant and electrical generation plant to be built in opinion).

Sam stated that as soon as minor issues are resolved, XOM notified, then JMC will meet for award announcements.

Sam pointed out several things...

There is only one functioning JDZ (two exist, the other being senegal/guinea) but it is not functioning).

The JDZ is only three years old and has succeeded in awarding a block and signing a PSC....

That the negotiations are between a former British colony with much oil and gas experience and a former Portugese colony with limited OG experience.

I have been critical in the past of their timelines, but we need to go back and read Sam's article of 2/14 and get outside of our Western thinking and see that without major bloodshed, two very different countries are negotiating to share a natural resource and IT IS WORKING!

It is going to happen, because STP needs the $.

On another note, I asked about companies without deepwater experience and his answer was that they were dealt with in light of their partnerships....same info, so I believe ERHE is a player beyond their pre-existing rights...all is well.

Dimka has been promising the awards "soon" for more than a month now, and most recently in a Feb. 15 article for This Day, a Nigerian daily newspaper.

Thursday, February 17, 2005

Nigeria Potentially Unstable, CIA Chief Warns

In a dramatic warning to U.S. oil companies doing business there, the new Director of the Central Intelligence Agency warned yesterday that Nigeria may suffer instability as ethnic militias continue attacking oil facilities in the southern Niger Delta region and Muslim unrest grows.

CIA chief Porter Goss also told the U.S. Senate that “extremist groups are emerging from the country's Muslim population of about 65 million.”

The CIA warning warning came as furious investors on the Raging Bull ERHC Energy message board repeatedly slammed Nigeria and Sao Tome for their failure to make awards as promised in the Nigeria-Sao Tome Joint Development Zone. At least a dozen posters repeatedly criticized the agencies responsible for announcing the awards, which were first promised for the end of December and then for the end of January, and now, according to JDA public relations director Sam Dimka on Tuesday, are expected "soon."

The JDA delayed announcement of awards in Block 1 of the JDZ last year for six months, and then awarded only one block.

That block went to ChevronTexaco (51 percent), ExxonMobil (40 percent) and Energy Equity Resources (EER), a Norwegian firm that got nine percent. A report in the occasionally reliable Afrca Energy Intelligence newsletter on Feb. 16, however, said EER is said to be selling its interest, and ExxonMobil has told JDZ officials it wants to farm out its two 25 percent entitlementsd in Blocks 2 and 4 rather than participate in the second licensing round for five blocks that ended Dec. 15.

A report in This Day Online, a Nigerian site, bannered the CIA story across its front page. Here is a relevant excerpt:

Nigeria Worries US
By Moses Jolayemi with agency report, 02.17.2005

WASHINGTON -- Nigeria is one of the potential areas for instability, the United States director of Central Intelligence Agency (CIA), Porter J. Goss, told the Congress yesterday.

“In Nigeria, the military is struggling to contain militia groups in the oil-producing south and ethnic violence that frequently erupts throughout the country," he said.

According to the CIA boss in a report titled “Global Intelligence Challenges 2005: Meeting Long-Term Challenges with a Long-Term Strategy” delivered to Senate yesterday “extremist groups are emerging from the country's Muslim population of about 65 million.”

He told the Senate that such chronic instability found in Africa “will continue to hamper counter-terrorism efforts and pose heavy humanitarian and peacekeeping burdens.”

Yesterday’s briefing, Goss explained, was to discuss the challenges facing America and its interests in the months ahead. He pointed out that “these challenges literally span the globe.”

“My intention is to tell you what I believe are the greatest challenges we face today and those where our service as intelligence professionals is needed most”, he added.

The U.S. officers, he said, are taking risks adding that he will encourage them to take more risks because “I would much rather explain why we did something than why we did nothing.”
Last week, basketball superstar Nigerian-born Akeem Olajuwon was accused of using a mosque he established and funded to donate money to a group which acts as a front for al-Qaida and Hamas terrorist groups. More than $80,000 given to charities were later determined by the US government as being for the groups, according to financial records obtained by The Associated Press.

Olajuwon told the AP he had not known of any links to terrorism when the donations were made, prior to the government's crackdown on the groups, and would not have given the money if he had known.

Oil Company Airstrips Run Afoul Of Abuja

Oil companies, including multinational players, are operating nearly 200 illegal airstrips in Nigeria, the Federal Government says, and some of them are used for illegal purposes.

The story got wide play in Nigerian newspapers this morning, but only one - the New Age daily, gave p[rominent coverage to the fact that they were operated by the country's petroleum Establishment.

Here is the relevant part of the story:

Oil firms operate 200 illegal air strips — Yuguda
Mobil 76, Shell 68, Chevron 25, Agip 13, Total 10

ABUJA -- The Federal Executive Council yesterday in Abuja approved a memorandum seeking to regulate the operation of private airstrips in the country with regard to the payment of fees by users and full security against economic sabotage. Minister of Aviation, Isa Yuguda told State House correspondents that oil companies own most of the illegal airstrips - numbering about 200.

According to him, these include Chevron with about twenty-five (25) airstrips; Shell Petroleum Development Company (68); Mobil Producing Unlimited (76); Total (10); Agip (13) and Conoil (1), adding that the operation of these airstrips “has meant that they are using the airspace illegally, and have not been paying fees as they are expected to do."

Further, Yuguda said the government discovered that some of the airstrips are used for smuggling, gun running and other forms of economic sabotage against the country.

The minister said also that approval had been given for the installation of flight landing equipment at the Akanu Ibiam Airport, Enugu at the cost of N241 million.

The project makes it 18 out of the 22 airports in the country which would be rehabilitated under a programme meant to upgrade airport facilities in the country.

The minister acknowledged that the Enugu Airport was one of the airports with serious deterioration in facilities, saying other equipments would be provided for its upgrading.

The oil companies apparently were not contacted for a response.

ERHC On The Move Averages 800 Readers Per Day

ERHC On The Move has reached an average of 800 readers each day in the first two weeks of February, Google's AdSense monitoring statistics show. The site is now listed as the third relevant link in Google searches for the term "ERHC."

Here are the statistics as delivered by Google:

Thursday, February 3, 2005 278
Friday, February 4, 2005 1,477
Saturday, February 5, 2005 497
Sunday, February 6, 2005 714
Monday, February 7, 2005 1,074
Tuesday, February 8, 2005 798
Wednesday, February 9, 2005 949
Thursday, February 10, 2005 764
Friday, February 11, 2005 860
Saturday, February 12, 2005 350
Sunday, February 13, 2005 263
Monday, February 14, 2005 1,190
Tuesday, February 15, 2005 1,081
Wednesday, February 16, 2005 909
Totals 11,204
Averages 800

We deeply appreciate your patronage.

Wednesday, February 16, 2005

(Almost) As Predicted, A Hard Bounce For ERHE

Sunday's longish article on ERHE contained this advice to readers:

What may happen instead is that accumulators will open the day with very low asks on a limited amount of stock, driving it sharply down in the thin market of recent weeks. Since they have slowly perfected this "dump and pump" technique, they ought to be able to get it down to $0.43, a very attractive level for such buyers (and for me) before they run out of idiots willing to sell. Recovery in advance of heat from leaks of pending awards announcements will be slow but steady, in this scenario.

It didn't take long for that prediction to come true! In pretty thin trading, sellers drove the price of ERHE down to $0.415 at 10:25am EST, but like a good man it could not be held down.

Within 32 minutes, the price had rebounded to .48, but not before lucky buyers picked up 57,480 shares at $0.42, 10,000 at $0.435, 20,000 at $0.44, 45,000 at $0.45, with the next trade going off a cent above today's opening at $0.47, followed by one each at $0.475 and $0.48, before the trading settled in at the $0.46 opening once again.

Tuesday, February 15, 2005

Silence Of The Bulls

Silence of the bulls?

Not a single share of ERHE, the newly minted symbol for ERHC Energy, was sold between 12:30 and 2:40pm EST today, and volume stood still for more than two hours at 209,810, the lowest level in months. At 2:40, another 1,000 shares traded.
As of 3:15pm EST nothing else had moved.

What can investors learn from this experience? Here are my observations.

  • Since volatility and volume are critical to day traders, very few are trading ERHE today.

  • Non-day-trading Investors who regularly post on the Raging Bull ERHC message board do not account for much of the daily trading - possibly less than 25 percent of it, collectively.

  • Anyone who had a "naked" short position in this stock is in a world of hurt, since they have no certificates to present to the stock transfer agent for new ones with our new CUSIP and the new ERHC Energy name.

I think we are in for a brief period of retrenchment, and then a time of steady growth leading up to the awards. If the conduct of the first round was any indication, it will take the Nigeria-Sao Tome and Principe Joint Development Authority about six months to sort out all of the bids and make their choice of operators and participants. As much as all of us had hoped for awards very soon - and they still could, surely - the JDA's track record does not encourage that hope. Then again, word of the awards may have leaked and smart investors may simply be trying to gain an inside track on the winners.

That longer-term timing, though, in addition to destroying the reputation of the awards-makers, would be a problem for any of the companies that want to bid on blocks in the Nigeran Exclusive Economic Zone, or on other blocks that are up for auction in July. But Nigeria and Sao Tome are unlikely to rush such a potentially profitable set of contracts through when oil price volatility is growing and dire predictions of shortages become more urgent.

While the prospect of a four-to-six month further delay may cause some investors to sell, that would probably be a mistake. Unless Osama bin Laden is captured, and the insurgency in Iraq and Afghanistan ends, and the Iranian and North Korean nuclear programs are abandoned, and the Israeli-Palestinian truce holds, and no new technology makes oil redundant, the price of oil is going to rise higher as Summer approaches.

The idea of $65-a-barrel crude is not the fantasy it once seemed. Awards after a substantial price rise could mean more money for ERHE shares than we ever dreamed possible.

Just the same, those who trade with a limited amount of cash might decide to jump out here, invest elsewhere until awards seem imminent (and don't they always?), and then jump back in. If that creates a tax loss, the deduction could be mighty useful if price hikes, awards and big profits for investors come about.

Monday, February 14, 2005

ERHC Changes Its Symbol To ERHE

After ERHC Energy's coporate chieftains openly declared that they would not change the symbol for our stock, the Over The Counter Builletin Board did it for them, as required when the stock's CUSIP number is changed.

Announced 10 minutes before the closing bell on Monday, the new symbol for ERHC Energy is ERHE, and the name of the company is now officially ERHC Energy.

The name change reflects the fact that the company has not done environmental remediation work in many years, and is now strictly in the energy business, CEO Ali Memon said at the company's shareholder meeting on Feb. 4, where ther name change was near-unanimously adopted.

The name and symbol change could prove to be a problem for short sellers, most of whom were probably caught by the short shares at the end of trading. When CUSIP numbers are changed, short sellers must present their certificates to the stock transfer agent to be issued new shares; that's impossible when shares are held in "naked short" positions as a result of having been sold and never physically delivered because they never existed.

The symbol change was heralded in a Business Wire press release that came out just before the close of business Monday:

ERHC Energy Inc. New Name and New Symbol Effective Feb. 15, 2005

February 14, 2005 15:50:00 (ET)

HOUSTON, Feb 14, 2005 (BUSINESS WIRE) -- Effective the opening of business Feb. 15, 2005, Environmental Remediation Holding Corporation (ERHC, Trade) has changed its name to "ERHC Energy Inc." and will trade on the Over the Counter Bulletin Board under the symbol "ERHE."

It will now use the CUSIP number 26884J 10 4.

SOURCE: Environmental Remediation Holding Corporation

ERHC, Houston
John Coleman, 713-626-4700

For the time being, this blog will merely duplicate the old one, located at

A new blog that - for the time being - will be only slightly different from this one has been created for the new symbol, at

Barron's Sneaky Valentine To ERHC

An article on page 12 of the Feb. 14 Barron's weekly, in Bill Alpert's "Follow-Up" column, is an inverted Valentine to ERHC - i.e., the pointed side is up - and a carefully mounted attack on ERHC's former owners, oil investor Phil H. Nugent of New Orleans and Washington, D.C., lobbyist Noreen Wilson.

The article is ostensibly about Global Environmental Energy Corp. (GEEC), where Wilson is vice president for U.S. operations, and Nugent - according to Alpert - is a "current associate." On Jan. 21, GEEC signed a contract worth $9.75 billion with two Chinese firms to build up to 1,330 plants by 2010 to convert garbage to gas to generate 10 percent of China's electricity needs. Last Spring, it had also closed a deal with 20 percent-owner Diamond Ridge Advisors for a $250 million credit line that was later increased, Barron's indicates, to $2.08 billion.

The company, headed by former Irish Prime Minister Albert Reynolds, got a $51 million check from Diamond Ridge in September that was rejected by its bank, and as of the Barron's Feb. 7 was expecting a wire transfer to replace it. There is no indication from Barron's or GEEC that the wire transfer has materialized, and that is the basis for the story - along with the fact that the CEO, a fellow named Chris McCormack, didn't turn up for a hearing because he was busy making deals and sent Wilson in his place. The mention of Wilson precipitated a discussion of her former project, Environmental Remediation Holding Corp (ERHC), now named ERHC Energy.
Here's how the paragraph reads:

"[ERHC co-founder Noreen] Wilson has a long history of working with [GEEC attorney Wayne] Hartke - but as a public relations person who was paid in stock to promote companies like Environmental Remediation Holding. As a company, ERHC obtained the right to explore for oil in Sao Tome and Principe, a tiny two-island nation off of Nigeria. Hartke and his father, the late Sen. Vance Hartke, once represented the country - and ERHC - in the U.S. The oil-exploration-rights deal was cited as unfair by the World Bank and criticized by others as one of the worst ever secured by an oil-owning nation. Wilson had arranged the deal, working with yet another current associate of Global Environmental named Phil Nugent. Sao Tome politicians have acknowledged receiving financial favors from ERHC. The securities lawyer for ERHC and many other deals promoted by Wilson was Donald F. Mintmire - a Palm Beach, Fla., lawyer convicted Wednesday by a federal jury in Miami of obstructing an SEC investigation into a citrus exporter unrelated to ERHC or Global. Mintmire will appeal the verdict. [GEEC attorney Joseph A.] Artabane says the Mintmire allegations surprised Wilson."

Alpert has employed the "bomb in a suitcase" technique I invented more than 30 years ago when I fell into public affairs work for a California company after returning from a bomb-filled tour of duty in Northern Ireland as a war and foreign correspondent for the Village Voice. In Belfast, I made the not-very-astute observation that the best way for IRA bombers to get their munitions into the Europa Hotel across the street from me was in a suitcase, because while the barriers outside the hotel neutered some effects of car bombs, no one searched the guests' suitcases. They were an afterthought, and the hotel's Achilles heel. It was bombed 27 times.

A "bomb in a suitcase" is a paragraph or so of information in a longer article that seems tangential to most readers, but to the wise is nothing less than a bombshell; it was the only point of writing the 10-paragraph, 800-word story in the first place.

A bit of "deconstructive analysis," if you will, shows that the lengthy, complex paragraph on ERHC is 34 lines and 179 words long, or about 22 percent of the words, and is twice as long as all but one of the other paragraphs, 15 lines longer than the next-longest and takes up a full 25 percent of the two-column story.

The former name of ERHC Energy, Environmental Remediation Holding Corp. (Alpert dropped the "Corp."), is used in boldface, as is that of GEEC, the only other boldfaced name in the story. Barron's fact-checkers presumably missed the Feb. 4 name change reported by Dow Jones, its corporate sister. The paragraph is elongated to 34 lines because it is squeezed into the right-hand column where its bold-faced name appears immediately next to the lone small chart on the page that shows the price history for "Global Environ Energy," tying the boldfaced name just right of it to the chart's title.

This handsomely designed suitcase fits the hotel - the story - quite nicely. The narrative fuse sizzles along through its ties to the attorney son of a United States Senator, pausing to declare Wilson a stock promoter (the Los Angeles Times, in a front-page story on ERHC in 2003, called her a lobbyist) before it moves into a discussion of the overly generous terms of ERHC's deal with Sao Tome and Principe, which was once represented by Hartke's firm, glowing more brightly as it implies ERHC bribed Sao Tome officials, and finally ignites the dynamite: the link to Donald Mintmire, the lawyer convicted of obstruction who represented Wilson, Nugent, Bass et alii when they owned ERHC and in other deals. Finally, the smoke appears, as Alpert acknowledges that Mintmire's conviction has nothing to do with either GEEC or ERHC. All in all, it is a powerful piece of work, and whoever planted this bomb in Alpert's ear was a master of destruction. Just the same, his handiwork is a dud.

Bill Alpert's "reverse Valentine" may have had the pointy side up, but smart investors who also read Barron's will probably recognize the meaning of it. For ERHC investors, what was "unfair" to Sao Tome and Principe was, by fiat, greatly generous to ERHC Energy. The worst deal ever made by an oil-owning nation, of course, was also just about the best deal any oil company has ever gotten.

I wonder if these smarter investors will also note that in a publication geared not to foreign policy experts but to small investors, Alpert's emphasis is on how bad the deal was for the tiny islands of Sao Tome and Principe (population 140,000), not how good it was for ERHC. No one ever got rich overestimating the intelligence of penny stock investors, but like Woody Guthrie's Depression Era potato soup, this article's agenda is so clear "that even some of them thar politicians could see through it."

So the investors Barron's has jilted have to ask, like an abandoned lover does, "Why, oh why?"

Here are some obvious answers: First, the author and his sponsoring sources - more about them later - wanted to damage the reputations of Phil Nugent and Noreen Wilson that investors like the many-aliased stockhocker70 have worked so hard to revive. Why Nugent and Wilson?

With the late Sam L. Bass, Jr., these two founded the current incarnation of ERHC in 1997, and took away some 116 million shares then valued at around $2 million (and now worth $58 million) when - well after Wilson's 1998 resignation - ERHC was sold, first to Geoffrey Tirman in 1999 and then to Sir Emeka Offor of Nigeria in 2001. Note that the main paragraph of Barron's GEEC story concerns not GEEC but a company Wilson and Nugent left (with their hoard of stock) seven years ago.

Now, after Emeka Offor's loss of 60 million shares in a lawsuit settled last Nov. 10, they own a goodly chunk of the shares that would be necessary to mount a takeover of ERHC. As we pointed out last week, if the 116 million they own could buy First Atlantic Bank's 60 million shares away for about $30 million - or simply gain its proxy for free - they would need only add another $30 million worth from the open market to gain voting control of ERHC Energy. ERHC's rights amount to about 14 percent of the estimated 4 billion barrels of oil waiting in the deep, dark waters of the Gulf of Guinea's Nigeria-Sao Tome and Principe Joint Development Zone and Sao Tome's Exclusive Economic Zone. At current prices, that oil is worth $25.6 billion. The Nugent-Wilson group, or a rival mischief-maker among the multinationals, could get voting control of it all for $62 million or less, if no one stops them.

But "Why, oh why?"

Barron's is a Dow Jones publication and a sister of the Wall Street Journal, CBS Marketwatch and Dow Jones News Service. In the past month, complaints from ERHC investors about errors have forced the Dow Jones News Service and Dow Jones Newswire to run one glowing 1,500-word story on ERHC three times and a handsome story on its shareholder meeting twice. The first story, by Norval Scott, liberally quoted Nugent as he praised ERHC and its prospects, and also mentioned Wilson (both were also key sources for the 2,400-word Los Angeles Times front-pager). That's a lot of backpedaling to do, and you could, if you chose, look at Alpert's column as Dow Jones' way of getting even. To me, though, our clever master of destruction merely used that anger to spur the Alpert piece.

Deconstruction is a useful tool because once it has cleared the smoke and contextual debris away, it leaves only motives left standing. But a little more of the bulldozer first.

Alpert left key facts out of his piece:

  • He never acknowledges that Wilson left ERHC in 1998, and that the trio sold ERHC to an interim owner, Geoffrey Tirman, in 1999, or that it was purchased in 2001 by Sir Emeka Offor, a friend of Tirman's.

  • Alpert fails to mention that it was Tirman who accused Sao Tome politicians of demanding bribes, and that partly as a result of the fallout he was forced to sell the company. ERHC's contract required it to pay some educational expenses for Sao Tome children to study in the United States in order to build a cadre of economically-enlightened technocrats. Those gifts were used in part by the children of powerful Sao Tome politicians, and thus became the "favors" Alpert mentions.

  • Alpert doesn't mention that ERHC's rights were challenged in Sao Tome's parliament this past year and that a bill to void them was rejected there.

  • Alpert fails to mention that the Paris-based International Chamber of Commerce was the arbitrator of ERHC's contract terms with Sao Tome, and that it upheld them, or that ERHC voluntarily renegotiated the rights with Sao Tome and got itself an even better deal.

  • Alpert fails to note that ExxonMobil and the South African-owned, London-based Equator Exploration Lltd. came by their preferential rights in the nine Joint Development Zone blocks and the Sao Tome Exclusive Economic Zone pretty much in the same way ERHC came by theirs. As political analyst Gerhard Seibert writes, "Indeed, Mobil was able to clinch an exclusive deal in STP (which apparently included the right to first refusal on all blocks) as other major companies such as Exxon and Shell were believed to have backed away from the offering because of unresolved issues concerning STP’s maritime boundaries with its neighbours."

  • Alpert also failed to mention that the rights ERHC gained are incorporated by reference into the formal international treaty between Nigeria and Sao Tome, leaving them virtually invulnerable to legal attacks.

  • Alpert could have told his readers that Mintmire hasn't been of counsel to ERHC for several years.

Obviously, Alpert was not working for his readers when he wrote this piece. So who planted his "bomb in a suitcase"? To answer that, the investigative journalist in me would say, "Follow the money." Let's see where that might lead:

  • Short sellers, including some of the professed longs who have touted GEEC on the ERHC message board, will benefit from a drop in share price, at least of GEEC. Cashing out now, though, might give Nugent and Wilson et alii enough cash to buy control of ERHC. You can be sure they will not be the last to bail - or to short. In fact, with a few filings, they may be able to make a fortune in both directions. Short sellers of GEEC may get mightily smacked, though, if the wire transfer materialized after Barron's Feb. 7 deadline; nothing in Nugent's and Wilson's histories suggests they can't deliver when the chips are down. The stock fell 12 percent on Friday, or some $0.20 cents, after the fourth day of exposure to the Barron's attack.

  • Savvy ERHC investors who understand the bulletproof nature of ERHC's deal may get a key buying opportunity shortly before awards are announced.

  • Accumulators, whom we insist are planning to take over ERHC, can consolidate their current holdings at anywhere from a future $0.27 to $0.42, where the share price is likely to land if awards don't come soon. But that presumes there are a lot of naive investors left in ERHC, and we're not sure that's the case. What may happen instead is that accumulators will open the day with very low asks on a limited amount of stock, driving it sharply down in the thin market of recent weeks. Since they have slowly perfected this "dump and pump" technique, they ought to be able to get it down to $0.43, a very attractive level for such buyers (and for me) before they run out of idiots willing to sell. Recovery in advance of heat from leaks of pending awards announcements will be slow but steady, in this scenario.

That brings us to the final pieces of the Barron's puzzle. Let's recall that several publications have gone out of their way to characterize the relationship between oil majors and ERHC, who are bidding against each other in the Joint Development Zone, as like that between hard-working people and "freeloaders," the word used in an article by an anonymous writer in the high-ticket "Energy Compass" on Feb. 8. Menas Associates, an oil consulting firm, talked about ERHC and one of its partners' "concerns about compliance with US regulatory regimes." Barry Morgan of UpstreamOnline, in the more benign form of implication, suggested the oil majors were essentially jealous that ERHC was getting for free what they pay dearly for. Seibert, an academic whose last reports appear to have been sponsored by someone unfriendly to ERHC, has pursued other attacks on ERHC through Yahoo's Sao Tome message board.

I believe these kinds of attacks, which are at once more covert - i.e., better hidden from the general investing community - and more focused in their placement, all serve the same interest: the multinational p.r. player ExxonMobil, portraying it only as a benevolent donor concerned with the welfare of Sao Tome (while raking in $25 billion in last-quarter profits, about 250 times more than Sao Tome's annual budget). Ironically, as UpstreamOnline and other publications have reported, it is ExxonMobil that is holding up the process that would finally deliver hundreds of millions of dollars in signature bonus fees to Sao Tome, and tens of billions of dollars in oil royalties down the line.

By directing attention away from its own delay in choosing how and whether to exercise its preferential rights in the second bidding round, ExxonMobil undermines ERHC's memorandized partnerships with Noble Drilling, Pioneer Natural Resources and Devon Energy, justifies the continued pauperization of Sao Tome and Principe, and uses its delays as leverage against both Sao Tome's financial needs and Nigeria's independent licensing schedule - it has its own Exclusive Economic Zone auction on hold pending ExxonMobil's decisions - in a far more effective way.

Both nations are thus being inexorably pressured by ExxonMobil, we believe, to break its treaty terms and abandon ERHC. So doing will make the Devon Energy, Noble Drilling and Pioneer Natural Resources bids - all based on ERHC's preferential rights - instantly evaporate, and give ExxonMobil, with its two 25 percent preferential entitlements in Blocks 2 and 4, operatorship in at least two and possibly three of the most promising offshore deposits in the world. As the Menas Associates newsletter pointed out, "Without Devon there was a possibility that ExxonMobil could have won the operatorship through exercise of its opt-in rights, though it may need a partner among the bidders."

We believe it has more than one among the bidders, and probably one of those five or six that appeared so late in the process that their names went unreported when the second-round bids were opened on Dec. 15.

ExxonMobil is a substantial advertiser, not to mention one of the largest companies anywhere, and we think their hand is behind the dud bombshell. They accomplished little, but they did undercut their rivals and at the same time put a crimp in one of the world's most important technologies. Nugent and Wilson are turning garbage into energy, and GEEC is growing fast, especially in China, which should become a major market for ExxonMobil but may not because of GEEC's waste gasification plants. There's a lot more garbage than there is oil, remember, and it's an awful lot cheaper to find. And even if it helps Nugent and Wilson make a fortune playing GEEC up and down and they then go for ERHC, that will disrupt and distract ExxonMobil's upstart rival and might spoil the party for our mid-tier partners.

Unfortunately for ExxonMobil, I think, its pure savagery on the playing fields of business has not translated into a popular political presence in Nigeria, which tends to control the Gulf of Guinea bidding process.

While most of the violence of indigenous assaults against multinational facilities have targeted those of Royal Dutch/Shell and ChevronTexaco [Disclosure: my family holds about 3,600 shares of CVX], ExxonMobil has done little to endear itself. It is a very, very long way from having co-opted majority politicians in either Nigeria or Sao Tome, I think. And if it has skillfully exploited opposition figures in the Nigerian Senate and Sao Tome parliament, I believe those figures have found their efforts on behalf of ExxonMobil a bit embarrassing. By refusing to cooperate further, the politicians may have to brave some modest scandal-mongering proposed to the press by ExxonMobil, but they will survive it a little wiser for wear.

So will ERHC Energy's 2,250 core investors, I hope, used, abused and now somewhat less confused by the tactical skills of one of the most powerful marketing companies on the planet.

Disclosure: Joe Shea owns 123,040 shares of ERHC.