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