Tuesday, February 01, 2005

Block 1 PSC Signed In Sao Tome, AP Says; ChevronTexaco P.R. Says Company Plans To Start Exploration 'ASAP'; XOM Praises Boundary Dispute Resolution

After a flurry of hope following the discovery by Raging Bull's oiljunior that the online Sao Tome newspaper www.cstome.com had revealed the signing of the Block 1 Production Sharing Contract by ChevronTexaco in the Nigeria-Sao Tome Joint Development Zone, The Associated Press confirmed the story and moved it around the globe at 9:51am EST.


Sao Tome President Fradique de Menezes signs the Block 1 Production Sharing Contract, the first deal finalized in the Nigeria-Sao Tome Joint Development Zone. ERHC is awaiting awards in Blocks 2 through 6 that are expected later this week.

So far, reaction has been muted, although the stock traded two cents higher to $0.52 shortly after the opening and has steadily moved at $0.51 in the first 45 minutes, when volume topped 271,000.Update: By the 4pm EST closing in New York, however, the price had moved up a solid $.03 to $0.53, a gain of $3,690 for the ERHC On The Move portfolio (123,040 shares at an average $0.44 per share).
Volume for the day was 1,473,468, and I expect it to increase tomorrow.

The AP reported, in part:

Sao Tome, Nigeria in Oil Exploration Deal
Sao Tome, Nigeria Sign Oil Exploration Deal Worth $123 Million

Tuesday February 1, 9:51 am ET

SAO TOME, Sao Tome and Principe (AP) -- Sao Tome and Nigeria on Tuesday inked a deal worth US$123 million (euro94.5 million) with ChevronTexaco and Exxon Mobil Corp. for the rights to drill for oil in the Gulf of Guinea.

The two countries are selling the rights for blocs in a Joint Development Zone in the Gulf of Guinea, one of Africa's most active oil exploration areas. The deepwater zone is believed to hold at least 6 billion barrels of oil.

The deal for Bloc 1 was signed at a formal ceremony in Sao Tome, the capital of the impoverished twin-island nation that lies south of Nigeria, sub-Saharan Africa's biggest oil producer.

"This is an unparalleled event for the economies of both our countries," said Carlos Gomes, Sao Tome's chief representative on the two countries' Joint Exploration Authority.
...
The AP story is available on Yahoo Finance at http://biz.yahoo.com/ap/050201/sao_tome_nigeria_oil_1.html

Chevron PR Tells Of AIDS Commitment

ChevronTexaco moved its own story on PR Newswire with some important additional details, including an agreement to help prevent malaria and the spread of AIDS on Sao Tome:

ChevronTexaco and its Co-Venturers Sign Production Sharing Contract on Block-1 of Nigeria and Sao Tome and Principe Joint Development Zone

- Exploration Activities Expected to Commence Soon

LAGOS, Nigeria, Feb. 1 (PRNewswire) -- ChevronTexaco JDZ Limited, an affiliate company of ChevronTexaco Corp, today announced it has signed a Production Sharing Contract (PSC) with the Nigeria - Sao Tome and Principe Joint Development Authority (JDA) on Block 1 in the Joint Development Zone (JDZ). The block, which will be operated by ChevronTexaco, was awarded in April 2004 following ChevronTexaco's successful US$123 million bid. The PSC is expected to come into legal effect once remaining outstanding conditions have been met.

"We are very pleased to have reached this milestone," said Jay Pryor, Managing Director of ChevronTexaco's Nigeria/Mid-Africa upstream business unit. "The governments of Nigeria and Sao Tome and Principe deserve much recognition for their leadership and foresight in establishing the JDZ which today has led to this first PSC signing. We are looking forward to working with our co-venturers, ExxonMobil and Dangote Energy Equity Resources, and the JDA in launching exploration activities in the block as soon as possible."

Jay Pryor also praised the two governments for their commitment to transparency and accountability. "The PSC provides for the public disclosure of payments made under the contract, in keeping with the transparent manner in which the bid round was conducted," he said. "We commend the governments of Nigeria and Sao Tome and Principe for embracing these values and indicating their resolve and commitment to ensure a successful realization of a new standard of accountability. ChevronTexaco fully supports these efforts to ensure openness and public accountability in the development of oil and gas activities in the JDZ."

Pryor further noted that, as part of the company's commitment to local communities, ChevronTexaco is collaborating with the Sao Tome and Principe government on a project designed to roll back malaria while also helping to develop programs to enhance HIV/AIDS prevention and awareness among the country's teenagers.

Block-1 is located approximately 190 miles (300 kilometers) north of the city of Sao Tome in 5,700 feet (1,800 meters) of water. The consortium members are ChevronTexaco JDZ Limited (51%); Esso Exploration and Production Nigeria -Sao Tome "One" Limited (40%) and Dangote Energy Equity Resources Limited (9%), (a Joint Venture between the Dangote Group of Nigeria and Energy Equity Resources AS of Norway).

SOURCE: ChevronTexaco

CONTACT: Contact: Deji Haastrup, Lagos +234-1-8600-600 x 8216


ExxonMobil PR Praises Boundary Resolution

In a statement by the multinatiol giant ExxonMobil that accompanied release this morning of their blockbuster $24 billion 4th Quarter profits, the company took pains to praise both Nigeria and Sao Time and Principe for having done what many other nations involved in territorial disputes over international waters have not been able to do.

"We hope that Nigeria's and Sao Tome and Principe's approach will be emulated by others as growing world energy demand will continue to require new sources of supply," said Tim Cejka, president of ExxonMobil Exploration Company.

ExxonMobil Signs PSC for Exploration Activities in Nigeria and Sao Tome and Principe Joint Development Zone
Business Wire - February 01, 2005 11:43

IRVING, Tex., Feb 1, 2005 (Business Wire) -- Exxon Mobil Corporation (NYSE:XOM) announced today that its subsidiary, Esso Exploration and Production Nigeria-Sao Tome "One" Limited, has signed a Production Sharing Contract (PSC) with the Nigeria - Sao Tome and Principe Joint Development Authority (JDA) and consortium co-venturers ChevronTexaco and Dangote Energy Equity Resources, to explore for commercial hydrocarbons in Block 1 of the offshore Joint Development Zone (JDZ).

"ExxonMobil appreciates the opportunity to be one of the first companies to work with the JDA in the joint development zone," said Tim Cejka, president of ExxonMobil Exploration Company. "There are large areas around the world with significant hydrocarbon potential that are off limits because they lie under unresolved international territories. We hope that Nigeria's and Sao Tome and Principe's approach will be emulated by others as growing world energy demand will continue to require new sources of supply."

The signing of the PSC provides for Block 1 exploration to proceed in the JDZ, followed by economic development of discovered resources, if successful, for the benefit of both nations. It also provides for disclosure of payments made under the contract, in keeping with the transparent manner in which the bid round was conducted. The consortium fully supports these efforts to ensure openness and public accountability in oil and gas activities in the JDZ. Consortium members include Esso Exploration and Production Nigeria-Sao Tome "One" Limited (40 percent), ChevronTexaco JDZ Limited (51 percent, operator), and Dangote Energy Equity Resources (9 percent). The block was awarded in April 2004 and is located in 5,700 feet (1,800 meters) of water approximately 190 miles (300 kilometers) north of the city of Sao Tome.

ExxonMobil is a leading holder of deepwater acreage in the world's most attractive deepwater regions. In Africa, it has interests in 20 deepwater blocks totaling almost 22 million gross acres.

The ExxonMobil statement is available from Business Wire at
http://www.amtdrt.inlumen.com/bin/story?StoryId=
CqF8m0bKbmdmYyJqXnde.


There has not been any reporting to date on what the "conditions" are that must be met for the contract to take legal effect, but since the five parties signed them, they are unlikely to be significant roadblocks, I think.

15 comments:

RUBY1100 said...

Joe Oiljunior on RB posted it not me -
Nice to get the contract behind us, if only NITE would stop selling perhaps we could move up

...Joe Shea said...

Thanks, ruby - I'll correct that! And thank you, Oiljunior!

Anonymous said...

more on PSC BL 1 Historic Signing

ExxonMobil Signs PSC for Exploration Activities in Nigeria and Sao Tome and Principe Joint Development Zone
Business Wire - February 01, 2005 11:43

http://www.amtdrt.inlumen.com/bin/story?StoryId=CqF8m0bKbmdmYyJqXnde

IRVING, Texas, Feb 1, 2005 (BUSINESS WIRE) -- Exxon Mobil Corporation (NYSE:XOM) announced today that its subsidiary, Esso Exploration and Production Nigeria-Sao Tome "One" Limited, has signed a Production Sharing Contract (PSC) with the Nigeria - Sao Tome and Principe Joint Development Authority (JDA) and consortium co-venturers ChevronTexaco and Dangote Energy Equity Resources, to explore for commercial hydrocarbons in Block 1 of the offshore Joint Development Zone (JDZ).

"ExxonMobil appreciates the opportunity to be one of the first companies to work with the JDA in the joint development zone," said Tim Cejka, president of ExxonMobil Exploration Company. "There are large areas around the world with significant hydrocarbon potential that are off limits because they lie under unresolved international territories. We hope that Nigeria's and Sao Tome and Principe's approach will be emulated by others as growing world energy demand will continue to require new sources of supply."

The signing of the PSC provides for Block 1 exploration to proceed in the JDZ, followed by economic development of discovered resources, if successful, for the benefit of both nations. It also provides for disclosure of payments made under the contract, in keeping with the transparent manner in which the bid round was conducted. The consortium fully supports these efforts to ensure openness and public accountability in oil and gas activities in the JDZ. Consortium members include Esso Exploration and Production Nigeria-Sao Tome "One" Limited (40 percent), ChevronTexaco JDZ Limited (51 percent, operator), and Dangote Energy Equity Resources (9 percent). The block was awarded in April 2004 and is located in 5,700 feet (1,800 meters) of water approximately 190 miles (300 kilometers) north of the city of Sao Tome.

ExxonMobil is a leading holder of deepwater acreage in the world's most attractive deepwater regions. In Africa, it has interests in 20 deepwater blocks totaling almost 22 million gross acres.

CAUTIONARY STATEMENT: Estimates, expectations, and business plans in this release are forward-looking statements. Actual future results, including project plans, could differ materially depending on the outcome of exploration programs, commercial negotiations, changes in law or government policy, changes in long-term oil and gas prices or other market conditions affecting the oil and gas industry, and other factors discussed under the caption "Factors Affecting Future Results" in item 1 of ExxonMobil's most recent 10-K and available on our website at www.exxonmobil.com.

SOURCE: Exxon Mobil Corporation

ExxonMobil
Len D'Eramo, 713-656-4376

Copyright (C) 2005 Business Wire. All rights reserved.

...Joe Shea said...

That XOM release is already posted, above.

Anonymous said...

Joe - pretty sure that the guy in the photo is not Menezes.

...Joe Shea said...

I compared the photo to one of Menezes, and it seemed like him with his glasses. Is it Carlos Gomes, do you think? And is that Obasanjo beside him, or is it Daukoru, or someone else? It doesn't look like Obasanjo. If a head of state is not signing for Sao Tome, none is signing for Nigeria, other. Did you note the conditional statement in the releases, regarding "conditions" that must be met before it takes legal effect. I would gather that thiose conditions encompass more than the $123 million check. And I know Menezes has what seems like a larger, wider face. I'd appreciate the help of anyone who can make a positive ID, but as I say, if it is not him the resemblancer is pretty strong.

Anonymous said...

Joe thanks for the great information. You always had said you didnt think Exxon would ever sign the Block 1 PSC. So what are your thoughts on the signing? You must be pleased by the outcome as it does remove a major hurdle. On the negative side the share price of ERHC has not budged, yet.

...Joe Shea said...

Well, i began to regret that position about two weeks ago, and tried to modify it in recent posts. I was certainly wrong on that point. It's had only a buttressing effect on share price; it's kept us from falling, not pushed us upwards. One thing I notice on RB is a lot of hype about the probable effect of events like this one, which lately have prioven to be minimal. We didn't even get a bump to $0.55 cents from the Dow Jones story for more than about an hour. Awards are a sort of different category of news, though; they represent money in the bank. The current trading tends to confirm for me the effort of someone desperate to keep the price down. I think it's someone out there gunning for us, like Sir Sam Jonah. I think there may be ties between Energem and him, but the evidence is murky. As I understand it, Sahara is a subsidiary of Energem, and Energem is going to be the major oil broker in Sao Tome. That is a tricky situation, if so. Jonah's motive, as I see it, would be a hostile takeover attempt. As a South African, I am not sure he needs to register his ownership if he owns greater than 5 or 10 percent of a security subject to SEC regulation. I am connecting the two because of the bashers, mongo and Monkeytrots. Ted Botha, who is Mongo according to some, shares the same last name of a former South African PM, and he seems well-educated and his articles for African newspapers suggest some connections to influence as well. Jonah is the only prominent South African I can think of that is competing with us for blocks and may have a major but klittle-understood stake in the oil brokering that will take place after the awards. I apologize to Mongo, Botha and Jonah if I am wrong, and I reiterate that this is my speculation and well may be mistaken, as I was concerning the PSC. But the sum of the answer is that buying will be restrained, unfortunately, although perhaps with less success than in the most recent cases.

...Joe Shea said...

I see I forgot to mention that the two bashers are also South Africans. My line of inquiry makes little sense without that factoid.

Anonymous said...

Joe thanks for all of the insight. Interesting reading. I will also say that ERHC suffers a credibility problem with the average stock investor, as can be seen on yahoo message boards. When ERHC is mentioned posters on oil boards think of it as a nigerian scam. They take a glance at the number of shares outstanding, the lack of revenues, and the fact that we are run by a Nigerian bussiness man and they immediately brush it aside. In addition the whole JDA process has been fraught with so many delays that this fits into their line of reasoning.

The simple fact is that most have not done their DD and are too lazy to do so. Some have attempted to get the word out on ERHC on various yahoo boards and in the long run I believe that will be very beneficial. At least some level of debate is going on. It is better than apathy or total ignorance. Once awards are announced word will spread around much more quickly and investors will know what ERHC is. Even though many have still not bought into the story they at least are somewhat familiar with the situation.

Buying ERHC requires a paradigm shift in thinking that many average investors dont understand. We are talking about potentially billions of barrels of oil. Not millions. So that requires a shift to the high side on how high ERHC's market cap should be.

Anonymous said...

In terms of a paradigm shift that must take place, one only needs to look at the size of the signature bonus's offered on the respective blocks that ERHC will have percentages in. This alone justifies a higher market cap.

...Joe Shea said...

The point of that last comment of mine is that it appears to me that Mongo, Ted Botha, is the son of Pik Botha, who was in the UN in NY when Ted was born and served as South Africa's Minister of Energy. So I hink the people who put them up to the bashing was Sir Sam Jonah, the owner of Ashanti and Goldfields and Equator Exploration. I'm still searching for proof of that and it is not being stated by me as a fact but a supposition based on the evidence I have been able to gather so far.

Anonymous said...

Great work Joe.

tradertrades said...

Unbelievable.

tradertrades said...

If true, are they committing a crime?